
    STATE of Louisiana, through the DEPARTMENT OF HIGHWAYS, Plaintiff-Appellee, v. Justin GRAS (The First National Bank of Shreveport, Testamentary Executor of the Succession of Justin Gras, and Mrs. Eugenie Torr Gras, Substitute Parties-Defendants-Appellants.), Defendants-Appellants.
    No. 9657.
    Court of Appeal of Louisiana. Second Circuit.
    Jan. 31, 1962.
    On Rehearing April 24, 1962.
    Simon, Carroll, Fitzgerald & Fraser, Shreveport, for appellants.
    W. Crosby Pegues, Jr., D. Ross Banister, Glenn S. Darsey, Braxton B. Croom, Ben C. Norgress and Chester E. Martin, Baton Rouge, for appellee.
    Before HARDY, AYRES and BOLIN, JJ-
   BOLIN, Judge.

The State of Louisiana, through the Department of Highways, instituted the present action in order to expropriate certain property of defendant located in the City of Shreveport for use in the highway project known as the Shreveport Expressway. The expropriation proceeding was instituted in accordance with LSA-R.S. 48:441-48:460. Pursuant to the statute, plaintiff attached to its petition an estimated value of the property which had been prepared by two expert appraisers selected by plaintiff. The estimate being in the sum of $67,700, such amount was deposited in the registry of the court and the possession and ownership of the property was transferred to plaintiff in order that construction of the highway could proceed. Defendant, not being satisfied with the amount tendered for the property thus taken, petitioned the court for a judicial fixing of the value of the property, and on this issue the case went to trial. Justin Gras died prior to trial and the First National Bank of Shreveport, Testamentary Executor of the Succession of Justin Gras, and Mrs. Eugenie Torr Gras were substituted as parties defendant. A trial on the merits resulted in a judgment in favor of defendants in the sum of $70,660.85, or an increase of $2,960.85 over the amount originally deposited in the registry of the court. It is from this judgment that defendants have appealed, and the only issue presented is the fair market value of the property expropriated.

The parcel expropriated consisted of a small tract situated on the west side of the 1400 block of Texas Avenue in the City of Shreveport. Improvements on the property consisted of an old two-story mill-type brick building which had been utilized by three commercial establishments on the first floor, and the second floor thereof was used as a rooming house. Located -yvithin the buildings were some movables such as fluorescent light fixtures, Venetian blinds, a hot water heater, etc.

During the trial below, plaintiff and defendants each offered the testimony of two expert appraisers in an effort to establish the fair market value of the property expropriated most favorable to them. For the State Lawrence L. May, Jr., and O. L. Jordan testified respectively, that the property was worth $67,000 and $67,700, and the appraisers for the defendants, M. E. Hurlbut and J. Pollard Sealy, Jr., testified respectively, that same had a value of $78,400 and $77,400. A study of the testimony of all the experts reflects that it was their general opinion the highest and best use of the property in question was without any improvements thereon, in which case it could be rented for a used car lot, a parking lot or for the display of outdoor billboard type advertisements. The evidence reflects that in the vicinity of the subject property, there were numerous vacant commercial establishments and business prospects in general for that section of Shreveport were not optimistic. However, there were several vacant lots in the area that were being used for the operation of retail used car outlets. In arriving at a fair market value of the property, Mr. Sealy did not fix any value for the improvements, he being of the opinion the property was worth more without the improvements than with them. Mr. May and Mr. Jordan rendered a rather detailed report of their findings and also testified rather extensively during the trial, and they did attempt to give some value to the improvements, as well as the land. All of the experts also made some effort to fix the value on the basis of the sales of other comparable properties in the area.

Because the improvements located on the property were approximately 60 years old, and no satisfactory cost or replacement system could be used to establish a fair market value, and also because no comparable sales were available for similar property in the area, the trial judge concluded the highest and best value for the property would be as an unimproved lot. Under these circumstances, the only approach available for him to arrive at a true value of the property was to decide what would be the maximum amount for which such unimproved property could be rented. There was rather extensive testimony during the trial as to the amount of rent received for similar property in the neighborhood. The Wiener estate owned property nearby which had been so rented for a number of years preceding this expropriation. The Wiener property had previously been expropriated for the expressway, but at the time of its expropriation, it was being rented for $450 per month. However, the same property had rented for as much as $600 per month in previous years and the monthly rent had apparently been reduced because of the threat of the impending expropriation proceedings. Under these circumstances, the trial judge reasoned that such a rental figure was too low for the subject property and he accordingly scaled upward his basis for arriving at a fair rental value of the subject property. In any event, in his written reason for judgment, he concluded the property could most profitably be used by renting same on a similar basis as the Wiener property.

Appellants contend the lower court committed serious error in that it substituted its own opinion as to the market value of the property expropriated rather than accepting that of the experts. We find no merit in this contention. To the contrary, we are convinced the testimony of all experts was taken into consideration, but the court merely decided the highest and best use for the property would be to rent same as an unimproved lot. Such a conclusion was clearly predicated upon all the evidence. When evidence as to the sale of comparable property is unsatisfactory, ascertainment of true value must be sought upon a consideration of other factors and circumstances and the rental value of the property is always material if it throws light on the market value of the property. State of Louisiana through Department of Highways v. McDuffie, 240 La. 378, 123 So.2d 93 (1960) ; City of Alexandria v. Jones, 236 La. 612, 108 So.2d 528 (1959); Efurd v. City of Shreveport, 235 La. 555, 105 So.2d 219 (1958); State of Louisiana through Department of Highways v. Crockett, (La. App. 2 Cir., 1961) 131 So.2d 129; State of Louisiana through Department of Highways v. McNeely, (La.App. 2 Cir., 1961) 130 So. 2d 136; State of Louisiana through Department of Highways v. Varino, (La.App. 2 Cir., 1961) 129 So.2d 495.

Appellants also specify error in the lower court’s refusal to fix a value for the improvements on the property expropriated. We likewise find no error in this portion of the judgment appealed from. As previously stated, it is the duty of the court to ascertain the highest and best use of the property expropriated in order to arrive at fair market value. The court concluded in the instant case the highest and best use of the property was without the improvements being located thereon. In other words, if the court had separately fixed the value of the improvements in this case, the award would have been less favorable to the defendant. We feel our esteemed brother below very aptly answered this complaint in his written reasons for a new trial wherein he said:

“In arriving at the value fixed by us, we fixed a value for the land after the removal of the buildings, as all of the realtors testified that the highest use for the land would be for a parking lot or used car lot, which necessitated the removal of the structures on the land. We do not think it proper to fix a higher value for property to be converted into a used car lot, and then pay for the improvements situated on the lot. For these reasons, we think our previous value is fair. (Since the State will be required to remove the improvements from the land, we imagine they would be pleased to have defendant remove same for them.)”

Appellants also contend the district court erred in refusing to accept the amount fixed by their experts, and in not concluding that such experts were better qualified than those tendered by the highway department. Our examination of the record convinces us that all of the experts who testified were well qualified. Under these circumstances, it is'evident that the court could not accept the valuations of all such witnesses, but under such circumstances it was the court’s duty to give consideration to all such testimony and use its discretion in arriving at a fair value of the property expropriated and unless we are convinced the trial judge has abused his discretion in evaluating such testimony, we will not reverse his findings. State of Louisiana through Department of Highways v. Hub Realty Co., 239 La. 154, 118 So.2d 364 (1960); State of Louisiana through Department of Highways v. Glassell, 226 La. 988, 77 So.2d 881 (1955).

For the reasons assigned, the judgment appealed from is affirmed at appellants’ cost.

Affirmed.

ON REHEARING

HARDY, Judge.

We granted a rehearing in this case on application of defendants-appellants in order to permit a re-examination of the basis of valuation of the expropriated property. It is strenuously urged by counsel for applicants that we erred in affirming the judgment of the lower court. The specifications of error in this respect are that we did not give proper weight to the income return approach, and, alternatively, that we failed to accord any value to the improvements located upon the subject property.

Re-examination of the record indicates that the objections raised with respect to the basis of our valuation are valid, and, accordingly, we have carefully and thoroughly reconsidered the entire record in the light of these objections.

Adverting to the written opinion of the district judge after trial of this case, it is obvious that his conclusion as to valuation and the judgment rendered in accordance thereof was primarily predicated upon the square foot valuation of $3.25 which had been paid by plaintiffs for adjoining property owned by the Wiener Estate. In connection with the price paid for the Wiener property, our attention has been called to the fact that the record does not disclose the basis upon which the price was fixed. It is established that the plaintiff’s appraisers, Messrs. May and Jordan, had originally appraised the value of the Wiener property in the amount of $81,192.00, based upon a monthly rental of $450.00. Subsequently plaintiff procured the re-appraisement of the property, which fixed a value of $102,-161.00. This was the figure finally accepted by both parties upon the basis of which the negotiations between them were concluded.

It cannot be said that the Wiener transaction should be accepted as being in the nature of a comparable sale as it is well settled that a sale of property to an expropriating authority, made under the threat of expropriation, is not to be considered as the result of free bargaining between a willing seller and a willing buyer; State of Louisiana Through Department of Highways v. McDuffie, 240 La. 378, 123 So.2d 93, and authorities cited therein.

No contention being made by either party with respect to a basis of valuation by reason of comparable sales, it is necessary to look to other factors. One of these, of course, is the so-called “income return approach”, which, though not controlling, has been many times recognized as a substantial factor in connection with the fixing of value; State v. McDuffie, supra; City of Alexandria v. Jones, 236 La. 612, 108 So.2d 528; Efurd v. City of Shreveport, 235 La. 555, 105 So.2d 219.

On the basis of the income return approach, Mr. May, one of the appraisers for the Department of Highways, fixed a net income allocated to both the land and the improvements in the amount of $4,776.00; Mr. Jordan, the other appraiser for - the State, fixed a net income on the same basis in the sum of $4,006.37, but qualified this finding by an expression of his opinion that the units involved “ — appear to be rented for less than a normal economic rent”; Mr. Hurlbut, an appraiser for defendants, evaluated the net income in the amount of $4,995.00, and Mr. Sealy, the other expert appraiser who testified as a witness on behalf of defendants, did not fix any rental income since his valuation of the land itself in the amount of $77,400.00 would effect a commensurate income equivalent.

On the basis of the above figures the average annual net income of the three experts who considered this factor would amount to $4,592.33. Upon the six percent basis used by these witnesses such a figure would justify a valuation of the property in the amount of approximately $76,540.00.

With reference to the alternative contention that the value of the improvements on the property should have been given consideration, we find it is true that the record establishes the fact that the building contained numerous plumbing, lighting, air conditioning and other fixtures .which could have been removed and used by defendants. Unquestionably, there was some salvage value with respect to the building itself and the fixtures which it contained. The opinion of the trial judge, which was quoted and adopted with approval by this court on original hearing, disregarded the value of the improvements on the ground that the valuation had been fixed upon the basis of the highest and best use of the land itself, which did not comprehend the improvements. However, we think the trial court was somewhat influenced in this respect by his parenthetical observation which we quoted in our original opinion as follows:

“(Since the State will be required to remove the improvements from the land, we imagine they would be pleased to have the defendant remove same for them.)”

Attached to defendants’ application for rehearing are communications requesting permission to remove certain items from the building on the expropriated .property and a refusal to grant such a request. While it is not proper for us to take these ex parte representations into consideration, it is appropriate for us to note that our State statutes place the control of surplus property, the assignment of the use of such property and the enforcement of regulations governing “ * * * the condemnation and disposition of movable properties of no further use to the state or its agencies.” under the authority of the Division of Administration, LSA-R.S. 39:4, subd. A (7). It follows that any judicial observation as to the attitude of the State or any of its agencies or departments with reference to the disposition of these improvements is purely speculative and therefore irrelevant.

The long established general rule governing the measure of compensation awarded the owner of property in expropriation proceedings has been fixed as the market value of the property. The equally well established exception to the rule arises in cases where there is no market value— such as the instant case—under which circumstance the owner is entitled to compensation representing the “ * * * full and perfect equivalent of the property taken * * * ” ; State Through Department of Highways v. Barrow, 238 La. 887, 116 So. 2d 703, quoting from Housing Authority of Shreveport v. Green, 200 La. 463, 8 So.2d 295, arid citing numerous authorities.

Even accepting the “—highest and best use of the property—” as being without the improvements, it, nevertheless, is evident that such a basis of valuation would fail to properly recompense defendants for the loss of income involved. Accordingly, we feel that a valuation should be fixed which would accomplish this result, and the only basis for such a computation must be found in the income values established by the respective experts as above noted. Since those values vary, and in consideration of what we regard as the equal experience and reliability of each of these expert witnesses, we can only conclude that the best, fairest and most acceptable income return estimate would be found in an average of their respective figures which we have calculated in this opinion, supra.

For the reasons assigned, the judgment appealed from is amended by fixing the market value of the property expropriated in the sum of $76,500.00, subject to credit for amounts previously paid by plaintiff in the total principal sum of $70,660.85.

It Is Further Ordered, Adjudged and Decreed that there be judgment herein in favor of the defendants, The First National Bank of Shreveport, Testamentary Executor of the Succession of Justin. Gras, and Mrs. Eugenie Torr Gras, and against the plaintiff, the State of Louisiana, through the Department of Highways, in the principal sum of $5,839.15, together with 5% interest on said sum from date of July 14, 1959, until paid, and, as amended, the judgment is affirmed.  