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 

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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-

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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 

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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, 

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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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