Frankfurt v. Texas Turnpike Authority

• Decision Date: 18 February 1958
• Docket Number: No. 7001,7001
• Citation: 311 S.W.2d 261
• Parties: Victor FRANKFURT et al., Appellants, v. TEXAS TURNPIKE AUTHORITY, Appellee.
• Court: Texas Court of Appeals

Page 261

311 S.W.2d 261

Victor FRANKFURT et al., Appellants, v. TEXAS TURNPIKE AUTHORITY, Appellee.

No. 7001.

Court of Civil Appeals of Texas, Texarkana.

Feb. 18, 1958.

Rehearing Denied March 18, 1958.

Eades & Eades, Dalls, for appellants.

Locke, Locke & Purnell, J. L. Shook, Jess Hay, Wayne O. Woodruff, Dallas, for appellee.

CHADICK, Chief Justice.

This is a condemnation case and the judgment of the trial court is affirmed.

Appellee, Texas Turnpike Authority, condemned a strip of land off the rear of appellants' property to be used in the construction and operation of the Dallas-Fort Worth Turnpike project. Two different estates are involved in the land and improvements condemned. Appellants Victor Frankfurt and wife and Sol Minzer and wife are the owners of the fee estate and appellant W. B. Johnson is the owner of leasehold interest in the property upon which a tourist court and cafe business known as 'The Last Frontier' is operated. The lease agreement contained no provision fixing rights of the parties in event of condemnation and its unexpired term was 35 months from the date of taking.

After appeal from the Commissioners' award wherein the interest of each estate was apportioned, the court below rendered judgment upon a jury verdict condemning the strip of land and awarding appellants damages for their respective interests in each estate. The award of the jury exceeded the valuations testified to by appellee's expert witnesses, but was less than the valuation testified to by appellants' witnesses. No issues were raised except as to the amount of compensation and damages due the owners of the two estates.

Appellants' first point is concerned with the trial court's excluding from the jury's consideration the testimony of the expert witness DeWitt Knapp regarding the market value of the remaining property after the taking. Point 2 is directed at the court's failure to rescind its ruling in this regard on appellants' motion. The witness Knapp testified that in making his appraisals he used the 'cost approach,' the 'fair return for investment approach,' and the 'market comparison approach.'

The Turnpike Authority's brief in commenting on this witness' testimony says, 'Knapp's opinion as to values in this case was founded upon a number of sound reasons and appraisal approaches until he valued the remainder of the subject property, whereupon he scuttled the various methods formerly employed and based his valuation testimony solely upon the loss of anticipated gross income or profits for the next 20 years.'

This witness after testifying rather extensively was interrogated as to the value of the remainder of the subject property. His relevant testimony is reproduced as follows:

'Q. All right, now, have you applied any other depreciation to the property after condemnation? A. Yes, sir. I estimated that there was economic obsolescence on it or economic loss of value to the property.

'Q. All right, and what did you determine was the economic loss in the value? A. $55,860.00.

'Q. Can you tell me how you reached that figure? A. Yes, sir. I capitalized at seven and one-half per cent for 20 years the rental loss of $450.00 per month.

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'Q. Where do you get--what do you base your $55,860 functional depreciation on then? A. I base that upon the loss in value, because of the taking of the Turnpike and the fact that there will be loss in the gross income attributable to the property.

'Q. Is that the basis for your cost approach, your cost appraisal of the property before and after? A. For that part of the depreciation.'

In addition to this testimony the witness testified that he fixed the value of the property as he had testified out of his experience as a real estate man and appraiser and that he took into consideration the cost approach, the income approach and the market approach in arriving at his final conclusions as to such values. There is no question but that he had qualified himself as an expert witness whose testimony as to values and admissible. The testimony concerning the value of the subject property remaining was excluded on the motion of counsel for the Turnpike Authority as follows: 'All of the testimony of Mr. DeWitt Knapp relating to the value of the property remaining after the taking immediaterly after the taking by the Texas Turnpike Authority for the reason that such appraisal is based entirely upon the loss of anticipated speculative and conjectural profits or revenues or rentals from the property over the next 20 years, same being an improper measure of damages and the same being an element which is not compensable under the laws of the State of Texas.' The jury was instructed not to consider it. Appellants' motion to rescind such ruling was denied.

Several cases by the Texas courts have established the rule that any one familiar with the values in question may testify, leaving the sufficiency of the knowledge to the discretion of the trial judge in each case. 2 McCormick & Ray, Texas Law of Evidence, p. 258, Sec. 1422; Central State Bank of Coleman v. Henderson, Tex.Civ.App., 286 S.W. 518, wr. dism.; Premier Petroleum Co. v. Box, Tex.Civ.App., 255 S.W.2d 289, wr.ref., n.r.e.; Housing Authority of City of Galveston v. Henderson, Tex.Civ.App., 267 S.W.2d 843, no writ hist. The judge is given wide latitude in the exercise of his discretion. In this case the judge in the exercise of his judicial discretion apparently determined from the testimony that the value given by the witness was based solely upon his approach in which he capitalized at 7 1/2% for 20 years his estimated rental loss on the property.

While no Texas case is cited, it is the prevailing view in nearly all jurisdictions that this speculative, remote and uncertain loss of rentals cannot be considered as a basis for computing or ascertaining the market value of real property. Gauley & Eastern R. Co. v. Conley, 84 W.Va. 489, 100 S.E. 290, 7 A.L.R. 163. The Supreme Court (Commission of Appeals, Sec. B) in the case of Rowland v. City of Tyler, 5 S.W.2d 756, 760, a tax evaluation case rather than a condemnation, stated:

'* * * To use any one particular element as the sole standard by which to fix the value of all property is fundamentally wrong, and, in the very nature of things, prevents the ascertainment of the value contemplated by the Constitution. In many instances, the amount of rentals would be wholly misleading as applied to value, and a value fixed solely by such a method would not approximate the real value. Longtime rental contracts may be made in boom times or in times of depression, and if the amount of rental under such contracts were made the sole and determinative factor in fixing the value of the property covered thereby, the valuation arrived at by such plan would not represent a fair value either to the city or to the taxpayer. Again, many rental contracts are excessive because of bad business judgment on the part of the lessee, and for this reason could not properly be used as the decisive and controlling factor in fixing the values.'

Recognizing the latitude given the judge in passing upon the admission of testimony, his action can not be held reversible error in this instance. State v. Parkey, Tex.Civ.App., 295 S.W.2d 457, wr.ref., n.r.e.; Gulf, C. & S. Ry. Co. v. Ryon, Tex.Civ.App., 72 S.W. 72, no writ hist.; Tyler S. E. Ry. Co. v.Hitchins, 26 Tex.Cvi.App. 400, 63 S.W. 1069, no wr.hist. Appellants' Points 1 and 2 are overruled. Though this instance is thought not to show reversible error, it is suggested that justice might more nearly be done if the trial judge controlled such testimony by directions to the witness or by limiting consideration of the jury to the admissible portion of the testimony.

Appellants' third point alleges error of the trial court in refusing to permit cross-examination of an adverse expert witness on sales of other property in the neighborhood if the witness made the naked statement that property was not comparable. This point is respectfully overruled. Examination of the record does not disclose that appellant was denied cross-examination of a witness on any material fact.

Appellants' Points 4 and 5 relate exclusively to the W. B. Johnson leasehold interest and have no bearing on the merits of the appeal of Victor Frankfurt and Sol Minzer and their wives. Point 4 complains of the alleged error or the trial court in excluding testimony of expert witnesses as to the market value of a leasehold estate in the remainder of the property immediately before and after condemnation without regard to contract rental expressed in the lease. Point 5 complains of the trial court's failure to give a proper definition of the leasehold interest of W. B. Johnson and in refusing to submit appellant Johnson's requested charge thereon.

Two witnesses testified that the reasonable rental value of the property exceeded the contract rental of $2,000 per month by as much as $500 per month. W. B. Johnson himself testified he was paying too much rent in 1954, and had decided he had made a bad lease and requested his landlords to reduce his rent prior to condemnation. The Turnpike Authority's three valuation witnesses testified that the rental reserved in the lease was equal to or in excess of the reasonable market rental value of the premises covered by the leases. Thus there is a conflict in the evidence on this issue. For the purpose of these two points appellant Johnson assumes it to be proven...