Westmoreland v. Beaumont Independent School District

STEPHENSON, Justice. This is an eminent domain case. Reba Cox Westmoreland appeals from a judgment rendered upon the jury verdict. The only special issue submitted inquired as to the market value of the tract of land taken. The instruction with that issue told the jury it could consider the value of buildings and other improvements on the land to the extent they enhanced the value of the land. The jury answered $40,000. Only two witnesses testified as to the value of the land. The landowner, Reba Cox Westmoreland, testified as follows: She is a nurse at Baptist Hospital. She was born in a house located on the property in question, which was built in 1910. There is a rent house on the property which was built before the home place. There is also a filling station on the property which was built in the early thirties and which had been rented for $75 per month shortly before this taking in October 1974. She has kept up with the real estate value in Beaumont. In her opinion, the market value of this property on the date of taking was $90,000. Edwin Terry, a witness called by the School District, testified as follows: He is a real estate appraiser and has been in that field the past twenty-four years. He was employed by the School District to appraise the property in question. The area is an older commercial neighborhood, and the values appear to be going down. The highest and best use of this property is for secondary commercial use. A typical purchaser would probably be buying the land only. The value is in the land itself. Out of the three approaches available — cost, income, and market — the cost approach was most indicative of market value and was given the most credence. The difficulty with the market approach was in finding similar property with similar improvement. In following the cost approach, the first step is to ascertain the value of the land by comparing it with other land sold in the vicinity that is similar. He examined sales that had occurred in the neighborhood. He confirmed a contract of sale of a tract of .517 acre out of the property in this suit, dated March 1974, from these landowners to Howell Liquidating, Incorporated, at a sale price of $8,000 or 36 cents per square foot. That tract did not include the two houses or the filling station. The second comparable is a sale from Michael to Taft, March 17, 1970, containing .944 acre located four or five blocks from the property in question. The consideration was $18,000 or 44 cents per square foot. It had a residence on it, which was moved, and a 2,230 square foot tile building on it which was later used as a grocery store. That building is superi- or to anything found on the property in question. It was at this point, over objection, that the trial court permitted Terry to testify to two comparables which were sales of vacant land, one at 19 cents and the other at 20 cents per square foot. The witness then testified as to one additional sale of a tract of land containing an old residence for $7,500 or 34 cents per square foot. He took those sales, plus additional sales, and arrived at a figure of 25 cents per square foot for the property in question, or $35,562. Then, continuing with the cost approach, he estimated the reproduction cost of the improvements, depreciated them, and placed the value at $4,400. Adding the two and rounding it out, he placed the total value at $40,000. Terry then explained the income approach and came up with a value of $40,-392. He also placed the value at $40,000 under the market approach, which included all of the comparables used in the cost approach. He then stated that, in his opinion, the fair market value of this property on the date of taking was $40,000. On cross-examination, Terry testified as to another sale of a tract of land with an old service station on it, which sold for $8,900 or 67 cents per square foot, with the [325] old service station worth about $2,000, reducing the value to 51 cents per square foot for the land. Then that last sale following confirmation was $15,000 resulting in a net value of 97 cents per square foot. The three points of error raised by the landowners all relate to the admission in evidence on direct examination testimony concerning the sales of unimproved land. The trial court had denied a motion in li-mine as to one of such sales. We are cited three Texas Supreme Court cases in support of these points of error. The first is Chaney v. Coleman, 77 Tex. 100, 13 S.W. 850 (1890). In this case the trial court excluded evidence as to the value of unimproved land, when the land being taken was improved, and the Supreme Court affirmed such action. The second case is City of Austin v. Cannizzo, 153 Tex. 324, 267 S.W.2d 808 (1954). In this case, the property taken was unimproved, and the Supreme Court held that evidence as to prices paid for improved property was not admissible, because they did not meet the test of similarity. The third case is State v. Chavers, 454 S.W.2d 395 (Tex.1970). This case involved the taking of unimproved land, and the trial court admitted evidence as to a sale of improved land. The Supreme Court held that such sale was not comparable and was not admissible. The language of this case makes it clear that an expert may take such type of transaction into consideration as a part of his mental processes in arriving at his opinion as to the market value of the property taken, but cannot testify on direct examination as to the facts of such sale. Counsel for the school district recognizes the rule set forth in the three cases mentioned above, but seeks to distinguish the present case. It is argued first that Chaney v. Coleman, supra, simply holds that if improved land is to be compared to improved land, the improvements must correspond. Then, as to Cannizzo, supra, and Chavers, supra, the rule is that when unimproved land is being taken, evidence as to sales of improved land is not admissible. But, that the converse of that rule has not been held to be true in this state. We are cited Housing Authority of the City of Dallas v. Hubbard, 274 S.W.2d 165 (Tex.Civ.App.—Dallas 1954, no writ), in which the Court of Civil Appeals held it was not error to allow a witness to testify as to the sale of unimproved land as a comparable in a taking of improved land. The witness allocated a portion of the value to the land and a portion to the improvement, and the court said that testimony did not violate the rule laid down by the Supreme Court that the value of unimproved property may not be determined by comparing its value with improved property. We are also cited State v. Adams, 489 S.W.2d 398 (Tex.Civ.App.—San Antonio 1972, writ ref’d. n. r. e.), a proceeding to condemn improved land, and the court held that evidence concerning the value of the land alone was admissible. We cannot agree with the argument of the School District that the converse of the rule of the Chavers Case, supra, is not true. We find no logical reason not to apply the Chavers rule in both situations. We hold that on direct examination testimony as to sale of unimproved property cannot be used as a comparable in a suit involving the taking of improved property. However, having determined the evidence was not admissible does not dispose of the point of error. We still must consider Texas Rules of Civil Procedure, rule 434 in determining whether or not there is reversible error. We have come to the conclusion that under the facts of this case no reversible error is shown. We have made a careful study of the Chavers Case, supra, especially as to the last point of error discussed on page 398 of [326] that opinion. Disposition of that point is stated as follows: “The final question is whether the error was so harmful as to require reversal and a new trial. We look to the entire record to decide if the error was ‘reasonably calculated to cause and probably did cause the rendition of an improper judgment in the ease.’ Gomez Leon v. State, 426 S.W.2d 562, 465 [565] (Tex.Sup.1968). The jury awarded the landowner the contended value of $300 per acre, supported by no sale other than the one from Neal to Anderson. This value was also supported by the independent opinion of the expert witness, but it was the ‘three hundred dollar sale’ which was repeatedly emphasized by landowner’s attorney. We believe the verdict was affected by this incompetent evidence.” (454 S.W.2d 398) We do not come to the same conclusion in this case. We do not believe the error complained of was reasonably calculated to cause, and probably did cause, the rendition of an improper judgment. As stated at the beginning of this opinion, the only witness to testify for the landowner was the landowner whose occupation was that of a nurse. She stated that in her opinion the market value of this property was $90,000 without giving a basis for that opinion. On the other hand, the witness called by the School District had twenty-four years’ experience in real estate and appraising. He testified in great detail as to the methods of appraising, as well as to the facts upon which he based his conclusions. He testified, without objection, to a contract of sale made by these landowners covering a part of the land taken by this suit. The contract of sale entered into by these landowners was for .517 acre of land for $8,000 or thirty-six cents per square foot. However, Terry testified that this .517 acre tract contained more frontage proportionately than the entire tract, and that made it more valuable per square foot. He also emphasized that the larger the tract, the less per square foot a tract of land, such as this, can be sold for. Terry testified to the sale from Michael to Taft which was an improved comparable. This sale was for forty-four cents per square foot, but that included the improvements, which were a residence that was removed and a tile building superior to anything on the property being taken in this case. Then followed the two comparables about which we have held the evidence was not admissible. Terry then testified to another improved comparable which sold for thirty-four cents per square foot and which included an old residence. Again, he emphasized the fact that this sale was a lot, 85 x 257.32 feet, and much smaller than the tract taken here, and, therefore, sold for more per square foot. He concluded his direct evidence by stating the value of this property to be $40,000 under the cost approach, income approach, and the market approach. In Chavers the objectionable opinion evidence was supported by the one objectional sale only, while here the expert witness listed three comparables to which there was no objection. It cannot be said that the value found by the jury is outside of the range of the testimony. The expert witness found that value ($40,000) by using all three recognized methods of appraisal, two of which are completely independent of the use of comparable sales. There is no rule of law which says the testimony of value witnesses must include a comparable equal to the market value they arrive at. As stated by this witness, it is almost impossible to find a comparable with the identical improvements, and to hold that if the comparable does not have improvements of the same or a lesser value, that it could not be used, would practically eliminate this type of appraisal. In the dissenting opinion a table of values is set forth under the headings “Admissible Evidence” and “Inadmissible Evidence.” Even a careful reader of that dissent might not realize that two of the three tracts listed under “Admissible Evidence” showing “cents per square foot,” include the value of [327] the improvements located upon each tract. A casual reader might be misled into believing the tracts shown under each category can be compared, and that the table demonstrates harm in this case to the landowners. This table appears in the brief filed by the landowners, who, while arguing that improved comparables are not admissible in this case, would use the improved comparable as a method of proving harm. Only the first tract shown under heading “Admissible Evidence” contained no improvements, it being the tract covered by the contract of sale entered into by the landowners. And, as set forth earlier in this opinion, reasons are given why the smaller and better located tract would be worth more per square foot than the tract as a whole. Throughout Terry’s testimony, it was made clear that the value of this property being taken is in the land, which is completely different from the Chavers Case, supra, where most of the value was in the improvements. Also, in Chavers, supra, the Supreme Court found it was reversible error to allow the expert witness to testify as to the allocation related to him by the seller (not a witness) between the value of the land and improvements. In the case before us, the only testimony as to allocation came from the expert witness. We find no reversible error. Affirmed.