Present:    All the Justices

THE LAMAR CORPORATION

v.   Record No. 002415  OPINION BY JUSTICE BARBARA MILANO KEENAN
                                       September 14, 2001
COMMONWEALTH TRANSPORTATION
COMMISSIONER OF VIRGINIA, ET AL.

              FROM THE CIRCUIT COURT OF HENRICO COUNTY
                       George F. Tidey, Judge


      In this appeal, we consider the extent to which a lessee

may participate in condemnation proceedings when the lessee owns

a billboard affixed to its leased portion of the condemned

property.

      L. F. Loree, III, and Norwood H. Davis, Jr., co-trustees

under the Goodwin Children's Trust Agreement (collectively, the

landowners), own a parcel of land located near the intersection

of Route 250 and Three Chopt Road in Henrico County.     Since

1983, the landowners have leased a portion of the property to

the Lamar Corporation, or its predecessors, to permit the

installation and maintenance of a "back-to-back," four-panel

billboard.   Lamar, in turn, has engaged in the business of

renting space and installing advertising on the billboard.

      In September 1995, the Commonwealth Transportation

Commissioner (the Commonwealth) recorded a certificate

condemning a portion of the landowners' property for

construction of improvements to Route 250.   The condemned
property included the portion of the landowners' property leased

to Lamar.

     At the time of the condemnation, the lease in effect

between the landowners and Lamar provided for a term of five

years beginning in August 1992.    The lease stated that it "shall

continue from year to year unless either party shall give the

other party written notice of nonrenewal at least 60 days prior

to the expiration of the then-current term."

     The lease provided ownership rights to Lamar in all

structures Lamar placed on the premises with the right to remove

any structures within 30 days after the expiration of the lease

term or any extension.   The parties agree that under the lease

terms, Lamar owns the billboard.       The lease also provided that

"[I]n the event of condemnation of the subject premises[,] . . .

[a]ny condemnation award for [Lamar's] property shall accrue to

[Lamar]."

     In April 1998, the Commonwealth filed a petition in the

trial court, requesting that commissioners be appointed to

determine the value of the land taken and any damage that may

accrue to the residue as a result of the taking.      Lamar filed a

petition to intervene in the first stage of the condemnation

proceedings (the valuation proceeding) as an " 'owner' of the

structure acquired by the Commonwealth," and as a "'tenant' of

the land acquired."


                                   2
     The Commonwealth moved the trial court to dismiss Lamar's

petition or, in the alternative, to restrict Lamar's

participation in the valuation proceeding to that of a "tenant"

to the extent authorized by Code § 25-46.21:1.   That statute

provides, in relevant part:

     Any tenant under a lease with a term of twelve months or
     longer may participate in the proceedings described in
     § 25-46.21 to the same extent as his landlord or the
     owner. . . . Nothing in this section shall be construed,
     however, as authorizing such tenant to offer any evidence
     in the proceedings described in § 25-46.21 concerning the
     value of his leasehold interest in the property involved
     therein or as authorizing the commissioners or jurors, as
     applicable, to make any such determination in formulating
     their report.

     Lamar also filed with the trial court a list of nominees to

serve as condemnation commissioners in the valuation proceeding.

The landowners moved to preclude Lamar from participating in the

selection of commissioners on the ground that "[t]he owner of a

leasehold interest such as a billboard is not a proper party" to

a valuation proceeding.   After hearing argument on the motions,

the trial court entered an order granting Lamar's motion to

intervene in the valuation proceeding as a tenant "to the extent

permitted by [Code] § 25-46.21:1," and granting the landowners'

motion to preclude Lamar from nominating commissioners.

     Lamar notified the Commonwealth and the landowners that it

planned to present expert testimony at the valuation proceeding

from Donald T. Sutte, a nationally recognized expert on the



                                 3
subject of billboard appraisals.       Lamar indicated that it

expected Sutte to testify that "just compensation in this case

consists of two elements: (1) the fair market value of the land

taken plus damages, if any, to the residue; and (2) the fair

market value of the billboard."

     The Commonwealth filed a motion in limine to exclude

Sutte's testimony on the ground that it would include "evidence

of the alleged economic value of Lamar's sign to Lamar."         The

Commonwealth contended that such testimony would be inadmissible

because it would be equivalent to evidence of Lamar's leasehold

interest in the property.

     The trial court entered an order granting the

Commonwealth's motion.   The trial court ruled that "the only

issues at this stage of the instant action are the determination

of the compensation award for the fair market value of the land

taken, and any damages or enhancements to the residue."      The

trial court also ruled that Lamar was not entitled to "a

separate valuation of its improvements."

     Following the trial court's ruling, Lamar notified the

landowners and the Commonwealth of its intention to present

expert testimony from Sutte and Ivo H. Romenesko, a licensed

commercial real estate appraiser.      The stated subject of their

anticipated testimony was "the fair market value of land and

improvements taken by the Commonwealth of Virginia and damages


                                   4
to the residue of the subject property."    Lamar stated that it

expected both Sutte and Romenesko to testify that the fair

market value of the land and improvements taken was as follows:

     .221 acre land taken                  $129,965

     temporary construction
     easement on .104 acre land             12,232

     billboard                             $ 60,600

     TOTAL FAIR MARKET
     VALUE OF TAKE                         $202,797

     The Commonwealth filed a supplemental motion in limine

seeking to prohibit Sutte's testimony in its entirety and any

testimony from Romenesko concerning "the value of the billboard

or Lamar's leasehold interest."   After a hearing, the trial

court excluded Sutte's proposed testimony and ruled that

Romenesko could not testify regarding his $60,600 valuation of

the billboard as part of the fair market value of the condemned

property.

     In a deposition containing Sutte's proffered testimony,

Sutte was asked whether he agreed with the landowners' expert

appraiser that no value should be assigned to the billboard

structure.   Sutte disagreed, stating that "[t]he signs

contribute value to the whole property.    They have a value."

Sutte testified that in making his appraisal, he disregarded

Lamar's lease and assumed that the land and the billboard

belonged to a single owner.


                                  5
     At the beginning of the valuation proceeding, Lamar asked

the trial court to clarify its ruling concerning the exclusion

of Romenesko's testimony.   The trial court stated, "I'm not

going to allow him to testify as to the value of the

billboard. . . . Even the fair market value."   Because

Romenesko's opinion of the fair market value of all property

taken would have included the fair market value of the

billboard, he did not testify at the valuation proceeding.

     Michael McCall, a licensed commercial real estate

appraiser, testified on behalf of the Commonwealth.    McCall

appraised the total fair market value of the condemned property

at $114,366, which included a value of $16,000 for the "sign

lease."   McCall explained that this "sign lease" valuation

represented the amount of rent the billboard would have been

expected to generate to the landowners over a five-year period.

McCall's appraisal did not include any valuation of the

billboard structure.

     R. W. Tolleson, a licensed commercial real estate

appraiser, testified on behalf of the landowners.   Tolleson

appraised the total fair market value of the condemned property

at $142,042.   Tolleson's appraisal did not include any valuation

relating to the billboard because the landowners asked him “not

to consider” the billboard.   In his testimony, Tolleson stated

that the billboard “may have had some interim value,” but added


                                 6
that in his opinion, the billboard “was not a proper use of the

site.”

     At the conclusion of the evidence in the valuation

proceeding, Lamar renewed its motion to introduce the valuation

testimony of Sutte and Romenesko.    Lamar argued that its

evidence was admissible to rebut McCall's valuation of the "sign

lease," and as evidence that was "contrary" to both McCall's

testimony and Tolleson's testimony.   The trial court denied

Lamar's motion.

     The commissioners returned an award of $115,000 for "the

value of the aforesaid land taken by [the Commonwealth]

(including any easements taken)" and $35,000 for the damage to

the residue.   The trial court overruled Lamar's exceptions and

entered judgment confirming the commissioners' award.

     Under Code § 25-46.28, the matter proceeded to a hearing

before the trial court (the allocation proceeding) to determine

the respective shares of the competing claimants, the landowners

and Lamar, in the award.   Lamar presented testimony from its

expert appraiser Sutte regarding his appraisal of the billboard

"structure, as well as the leasehold and the site itself."

Sutte determined that the "fair market value of Lamar's

interests" was $60,600 based on a "sales comparison" method of

valuation, or $63,000 based on an "income" method of valuation.




                                 7
     The landowners presented testimony from their expert

appraiser Tolleson that the fair market value of the condemned

land was $577,500 per acre.   Over Lamar's objection, Tolleson

testified that, based on his per-acre valuation, the annual

economic rental value of the 500 square-foot portion of the

condemned land that had been leased to Lamar was $794 per year.

Tolleson's valuation of Lamar's interest in the condemned

property did not include any valuation relating to the billboard

structure.

     The trial court held that Lamar's interest in the award was

$6,462.   In its letter opinion, which was incorporated by

reference into the final judgment order, the court stated that

its determination of Lamar's interest was "based on the value of

the property based on the Commissioners' Award and two months of

gross income."

     On appeal, Lamar first argues that it qualifies as an

"owner" of condemned property under the Virginia General

Condemnation Act (the Act), Code §§ 25-46.1 through -46.36, and,

thus, was entitled to participate in the valuation proceeding as

an "owner" rather than as a "tenant."   Although the Act does not

define either term, Lamar emphasizes that the Act defines

"[p]roperty" to include "land," which is defined as encompassing

"land, lands and real estate and all rights and appurtenances

thereto, together with the buildings and other improvements


                                 8
thereon."   Code § 25-46.3.   Based on this terminology, Lamar

contends that it was an "owner" of "property" under the Act

because it owned an "improvement" on the land.     In the

alternative, Lamar argues that it should have been permitted as

a "tenant" to participate in the valuation proceeding under Code

§ 25-46.21:1 "to the same extent as . . . the owner."       Thus,

Lamar asserts that as either a "tenant" or an "owner," it had

the right to participate in the nomination of commissioners.        We

disagree with Lamar's arguments.

     We have adopted the general rule that as between a

condemnor and a lessee, structures such as billboards that are

affixed to land but owned by the lessee are realty.      Lamar Corp.

v. City of Richmond, 241 Va. 346, 351, 402 S.E.2d 31, 34 (1991);

Foodtown, Inc. v. State Highway Commissioner, 213 Va. 760, 763,

195 S.E.2d 883, 886 (1973).   The fact that the billboard is

"realty," however, does not mean that the lessee is entitled to

participate in a valuation proceeding to the same extent as the

owner of the underlying land.   We have held that a lessee who

owns a billboard affixed to condemned land does not have a

"separate, condemnable interest" entitling the lessee to a

separate condemnation proceeding.      Lamar, 241 Va. at 350, 402

S.E.2d at 33.   Instead, a lessee who wishes to protect his

interest in condemned property is permitted under Code § 25-




                                   9
46.21:1 to intervene as a "tenant" in the valuation proceeding

between the condemnor and the landowner.

     Neither Code § 25-46.21:1 nor any other provision in the

Act entitles a "tenant" to be treated as if it were an "owner"

of the underlying land.   The plain language of Code § 25-46.21:1

limits a tenant's participation to "the proceedings described in

[Code] § 25-46.21."   Those proceedings all occur after

commissioners have been selected and include a viewing of the

condemned property, a hearing on the issues joined, the filing

of exceptions to the commissioners' report, and the trial

court's determination confirming or setting aside the report.

     A different statute, Code § 25-46.20, governs the selection

of commissioners and has no provision allowing tenants to

participate in this process.   Therefore, the trial court did not

err in refusing to allow Lamar to participate in the selection

of commissioners because the Act restricts the right of a tenant

to participate in a valuation hearing in accordance with the

terms of Code §§ 25-46.21:1 and –46.21.

     Lamar next argues that the trial court erred in excluding

the testimony of Sutte and Romenesko from the valuation

proceeding.   Lamar contends that these experts properly

appraised the total value of the condemned property, including

the value of the billboard, as if the property were owned by a

single person and did not appraise Lamar's "leasehold interest."


                                10
     In response, the Commonwealth argues that Lamar's proffered

valuation testimony was inadmissible because Lamar's experts

improperly included in their appraisal the value of the

billboard, which the Commonwealth contends is equivalent to the

value of Lamar's leasehold interest.   The Commonwealth also

contends that by taking the value of the billboard into account,

Lamar's experts failed to appraise the condemned property as if

it were owned by a single landowner.   The Commonwealth also

challenges the methodologies used by Lamar's expert Sutte to

value the billboard.   The Commonwealth contends that the record

shows that Sutte improperly relied in his "income" method on

evidence of the billboard's future business income, and that he

used inappropriate sales figures in his "comparable sales"

method.   We disagree with the Commonwealth's arguments.

     As a tenant, Lamar was entitled in the valuation proceeding

to introduce its own valuation testimony under Code § 25-

46.21:1, which authorizes a tenant "to offer admissible evidence

concerning the value of the property being taken or damaged."

Code § 25-252(a) provides that a condemnor who acquires real

property also acquires "an equal interest in all buildings,

structures, or other improvements located upon the real

property."   Code § 25-252(b) further provides:

     For the purpose of determining the just compensation
     to be paid for any building, structure or other
     improvement required to be acquired as above set


                                11
     forth, such building, structure or other improvement
     shall be deemed to be a part of the real property to
     be acquired notwithstanding the right or obligation of
     a tenant, as against the owner of any other interest
     in the real property, to remove such building,
     structure or improvement at the expiration of his
     term, and the fair market value which such building,
     structure or improvement contributes to the fair
     market value of the real property to be acquired or
     the fair market value of such building, structure or
     improvement for removal from the real property,
     whichever is the greater, shall be paid to the tenant
     therefor.

     We have recognized that a billboard affixed to condemned

property is a "structure," and that the fair market value of

such a structure is properly included in a total award of just

compensation, even when the lessee may remove the structure

under the terms of the lease.    Lamar, 241 Va. at 352, 402 S.E.2d

at 34; see Exxon Corp. v. M & Q Holding Corp., 221 Va. 274, 281,

269 S.E.2d 371, 376 (1980); Foodtown, 213 Va. at 763, 195 S.E.2d

at 886.    Thus, for purposes of determining just compensation in

a valuation proceeding, Code § 25-252 mandates the inclusion of

the fair market value of the billboard as determined by using

one of that statute's two specified valuation approaches,

whichever yields the greater valuation.

     This statutory directive is consistent with our prior

holdings that "the proper course is to ascertain the entire

[just] compensation as though the property belonged to one

person."    Lamar, 241 Va. at 350, 402 S.E.2d at 33 (quoting

Fonticello Mineral Springs Co. v. City of Richmond, 147 Va. 355,


                                 12
369, 137 S.E. 458, 463 (1927)); Stanpark Realty Corp. v. City of

Norfolk, 199 Va. 716, 724, 101 S.E.2d 527, 534 (1958) (quoting

Fonticello, 147 Va. at 369, 137 S.E. at 463).     The provisions of

Code § 25-252 are also consistent with the requirement of Code

§ 25-46.21:1 excluding evidence concerning the value of the

tenant's "leasehold interest."    Under either valuation approach

permitted by Code § 25-252, just compensation for the billboard

is determined based on its fair market value without regard to a

tenant's leasehold interest in the billboard.    Moreover,

compensation for the billboard structure is a component of the

total award of compensation for all property taken and, thus,

the ultimate effect of Code    § 25-252 is to value the billboard

as if it were owned by the landowners along with the underlying

land.

        Here, the evidence that Lamar sought to admit concerning

the "fair market value of land and improvements taken" satisfied

the requirements of Code § 25-252 and was improperly excluded.

Sutte testified in his deposition testimony that he valued the

billboard in terms of the fair market value that it

"contribute[d] . . . to the whole property."    He stated that in

making his appraisal, he disregarded Lamar's lease and assumed

that a single entity owned the land and the billboard.    As

evidence of the value that the billboard contributed to the

total value of the property, this testimony satisfied the first


                                  13
valuation approach set forth in Code § 25-252 and should have

been admitted during the valuation proceeding. 1

     We disagree with the Commonwealth's contention that Sutte's

use of "sales comparison" and "income" methods of valuation in

determining the billboard's value rendered his testimony

inadmissible.   Sutte testified that he is one of the leading

experts in the United States in the field of billboard

appraisal, and that these two approaches are typical methods

used to appraise the fair market value of billboard signs.    The

Commonwealth did not present any contrary evidence regarding the

use of these methods to determine the fair market value of a

billboard.   Moreover, the issue whether Sutte properly applied

these methods in fixing the fair market value of Lamar's

billboard structure is a matter related to the weight to be

given his testimony, which is not an issue before us in this

appeal.

     We also observe that Sutte's consideration of the income

generated by the billboard was not offered in the valuation

proceeding as an appraisal of the business conducted by Lamar on

the property, but as a component consideration of the intrinsic


     1
      We do not consider the second valuation approach under
Code § 25-252 for determining just compensation for the
billboard. Because Lamar's valuation testimony fell squarely
within the first approach, and because Lamar proffered no other
type of valuation testimony, we presume that the first approach
produced the "greater" valuation.

                                14
nature and value of the billboard structure.   See Ryan v. Davis,

201 Va. 79, 82, 109 S.E.2d 409, 413 (1959); Anderson v.

Chesapeake Ferry Co., 186 Va. 481, 495-96, 43 S.E.2d 10, 18

(1947).   Thus, his consideration of the income generated by the

sign was not a violation of the general rule barring a landowner

from presenting evidence of expected income from the operation

of a business conducted on the condemned property.     Id.

     We disagree with the Commonwealth's contention that the

exclusion of Lamar's expert testimony in the valuation

proceeding was rendered harmless by its admission in the

allocation hearing, since the amount of the total condemnation

award exceeded the amount of Lamar's claim for the billboard.

The trial court's exclusion of Lamar's expert testimony at the

valuation proceeding denied Lamar its right under Code § 25-

46.21:1 to offer admissible evidence during the valuation

proceeding concerning the value of its condemned property.

Absent Lamar's evidence or any other evidence attributing value

to the billboard structure, the commissioners' total

determination of just compensation for the condemned property

was erroneous as a matter of law, because their award did not

include compensation for the fair market value of the billboard

structure.

     Finally, Lamar argues that the trial court erred by

permitting the Commonwealth's expert appraiser, McCall, to


                                15
testify during the valuation proceeding about the value of the

"sign lease" to the landowners.    Lamar contends that McCall's

testimony was inadmissible because he appraised the value of the

lease to the landowners, rather than the value of the billboard

affixed to the land as if it belonged to the landowner.

     In response, the Commonwealth argues that McCall properly

valued Lamar's lease by considering only the lease's effect on

the value of the underlying fee.       The Commonwealth contends that

McCall's appraisal methodology was not improper because it

addressed the value of the lease only to the extent that the

lease provided income in rent paid to the landowners.      We are

not persuaded by the Commonwealth's arguments.

     Just compensation is measured according to the property's

fair market value and not by its peculiar value to the landowner

or to any other party.   See Fairfax County Park Authority v.

Virginia Dept. of Transp., 247 Va. 259, 263, 440 S.E.2d 610, 612

(1994); State Highway Commissioner v. Reynolds, 206 Va. 785,

789, 146 S.E.2d 261, 264 (1966).       Here, McCall's appraisal

addressed the peculiar value that Lamar's lease had to the

landowners.   His appraisal was based on the discounted annual

rent that the landowners could expect to receive under this

particular lease with Lamar over the next five years until the

property might be developed.   Thus, the trial court erred

admitting McCall's testimony because it addressed the value of


                                  16
Lamar's particular lease and likely renewals of the lease,

rather than the fair market value of the billboard structure as

if it belonged to the landowners.    See Lamar, 241 Va. at 350,

402 S.E.2d at 33 (quoting Fonticello, 147 Va. at 369, 137 S.E.

at 463); Stanpark Realty, 199 Va. at 724, 101 S.E.2d at 534

(quoting Fonticello, 147 Va. at 369, 137 S.E. at 463).

     For these reasons, we will reverse the trial court's

judgment and remand the case for new proceedings in accordance

with the principles expressed in this opinion. 2

                                             Reversed and remanded.




     2
      Based on our holding, we do not reach Lamar's additional
assignment of error regarding the trial court's instructions to
the jury at the valuation hearing, or the assignments of error
and cross-error addressing certain rulings of the trial court
during the allocation proceeding.

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