Case Name: LAFAYETTE AIRPORT COMMISSION et al., Plaintiffs-Appellees, v. J. Maxime ROY et al., Defendants-Appellants
Court: Louisiana Court of Appeal
Jurisdiction: Louisiana
Decision Date: 1972-05-26
Citations: 265 So. 2d 459
Docket Number: No. 3817
Parties: LAFAYETTE AIRPORT COMMISSION et al., Plaintiffs-Appellees, v. J. Maxime ROY et al., Defendants-Appellants.
Judges: Before FRUGÉ, HOOD and MILLER, J J.
Reporter: Southern Reporter, Second Series
Volume: 265
Pages: 459–496

Head Matter:
LAFAYETTE AIRPORT COMMISSION et al., Plaintiffs-Appellees, v. J. Maxime ROY et al., Defendants-Appellants.
No. 3817.
Court of Appeal of Louisiana, Third Circuit.
May 26, 1972.
Dissenting Opinion June 12, 1972.
Rehearings Denied July 12, 1972.
Writs Refused Sept. 27, 1972.
Bailey & Mouton by William C. Hollier, Lafayette, Morgan J. Goudeau, III, Opelousas, Davidson, Meaux, Onebane & Donohoe by Edward C. Abell, Jr., Lafayette, for defendants-appellants.
William E. Logan, Jr., Lafayette, for plaintiffs-appellees.
Before FRUGÉ, HOOD and MILLER, J J.

Opinion:
MILLER, Judge.
The Lafayette Airport Commission and the Lafayette Parish Police Jury expropriated a 97 acre tract of land for extension of runways at the Lafayette Municipal Airport. Defendants A. J. Maxine Roy, Jr., and 15 other co-owners in indivisión, owners-lessors appeal contending that the $39,043.79 award should be increased. Defendant-lessee Acadian Development Corporation appeals seeking recognition of the leasehold interest it owned at the date of the taking, and an award therefor. Plaintiffs answered the appeal seeking a reduction in the award to landowners to the sum of $24,240.75. We amend the trial court judgment to substantially increase the trial court's award to landowners. We reverse in part to recognize the leaseholder's interest and award leaseholder the fair market value of its ownership.
Defendants own 219.8 acres out of which 97 acres were taken effective January 30, 1970. The physical aspects of the subject land together with a characterization of the claims is shown on plaintiffs' exhibit "3" & "I." There is a 10.7 acre tract northeast of the area taken which was not expropriated but which is considered by most experts to be effectively taken by the expropriation.
Five test borings were made by T. L. James on the subject land, two by Capizola & Associates and forty by Eustis Engineering Co. These indicated a sand deposit extending along the entire western edge of the subject land, consisting of 33.3 acres found in the 97 acre tract and 0.8 acres in the aforementioned 10.7 acre tract.
On August 1, 1956, landowners granted to Acadian Development Corporation a recorded sand and gravel mining lease encompassing the entire 219.8 acre tract for a minimum annual rental of $1,000 plus a 10 cents per cubic yard royalty on all sand removed. On July 1, 1963 these parties, by unrecorded amendment to the lease, released all but 80 acres of the tract to landowners. Acadian retained 80 acres under the amendment (this included all of the 34.1 acre sand deposit) .and was obligated to pay an annual minimum rental of $2,500 plus 22 cents per cubic yard royalty on all sand removed.
From 1956 to 1969, 856,689 cubic yards of sand have been removed and landowners have received $166,538.99 in royalties. In the seven years between January 1963 and December 1969 Acadian removed 657,876 cubic yards of sand for an annual average of 93,982 cubic yards. A total of $145,766.59 was paid to landowners during this period. The average annual yield from the property for the seven years prior to this taking was $20,824.
It was established that coarse sand which is found on this tract was unique and had a substantially higher value than fine sand. Fine sand suitable only for fill purposes is found to a depth of 35' from the surface and coarse sand suitable for concrete, asphalt, and mason mix is encountered at 35' and extends to a substantial depth below that. The overburden ranges from 0 to 10 feet and has been removed from 47% (16.1 acres) of the 34.1 acre sand deposit. This leaves 18 acres of sand deposit with overburden and fine sand in place.
The fine sand found to a depth of 35' (25' of sand plus 10' of overburden) has been removed on the 16.1 acres and the valuable coarse sand has been exposed. In the past 7 years, the ratio of coarse sand to fine sand has substantially increased in favor of coarse sand. By 1969, virtually all sand being removed from the 16.1 acre pit was coarse sand.
The taking was made subject to the reservation (LSA-R.S. 9:5806) in perpetuity in favor of defendants reserving all oil, gas and other minerals and royalties therefrom located under the expropriated property. The taking was also subject to existing oil, gas or mineral reservations or existing oil, gas or mineral leases.
Landowners contend and we agree that the taking of surface rights effectively took their sand deposit reserved to them under LSA-R.S. 9:5806. Defendants owners lessors claimed fee interest compensation for 17 of the acres taken, their interest as lessors-owners in the 80 acres under lease (which was also taken), and severance damages to the remaining acreage which they own in fee. Defendant lessee claimed recognition of and compensation for its leasehold interest in the 80 acres subject to its lease.
Plaintiffs denied lessee's interest. As against owners lessors, plaintiffs maintain that the entire 219.8 acres had only water access and should be valued accordingly.
In appraising the property the trial court properly ruled that access by road was available to landowners and its lessee.
Plaintiffs argue that by virtue of a December 30, 1941 cash sale, landowners transferred certain land to the Lafayette Parish Police Jury thereby causing the remaining tract to become an enclaved estate. Plaintiffs maintain that by virtue of this voluntary act, landowners should be deprived of the benefits of LSA-C.C. Art. 699 and 700 and be denied the status of landowners entitled to demand access. See Estopinal v. Storck's Estate, 44 So.2d 704 (La.App.Orl.1950) and Arcuri v. Cali, 244 So.2d 309 (La.App. 4 Cir. 1971), where plaintiff landowner sold himself into an enclaved estate. Plaintiffs also argue that even though defendants have no land access, they could not demand such access for an additional reason — they have water access along Bayou Tortue.
The trial court properly held that Bayou Tortue affords no useful access and therefore, landowners and their lessee are in need of access. We quote approvingly from La.Law Rev. 315 where it is noted that:
"Today, even a property with access to a watercourse could well be considered as 'enclosed' with need for access to a public road."
This statement embodies the idea that the provisions of LSA-C.C. Art. 699 as amended in 1916 provided by implication that access to either a public road, railroad, tramroad or a watercourse was sufficient to deny landowner the right to passage on the estate of another was outdated. This may have been the reason for the 1970 amendment to LSA-C.C. Art. 699 which, among other things, deleted reference to water access or watercourse. The purpose of the 1916 amendment was " . . .to allow construction of the proper facility needed in a particular case according to the circumstances and the exigencies of the case." Rockholt v. Keaty, 256 La. 629, 237 So.2d 663 (1970). The implication of these amendments is not only that the needs of the particular estate must be taken into account in determining whether the "access" available to it is indeed access sufficient to prevent the application of Art. 699, but also, that water access is insufficient per se to prevent application of Art. 699.
In the present case, the mining of sand requires that dump trucks have access to defendant's land and therefore, the accessibility of Bayou Tortue affords defendant no proper access " . . . according to the circumstances and exigencies of the case."
Secondly, according to the testimony of both plaintiff and defendant witnesses, Acadian was being permitted access to the Airport road at the time of expropriation. This access had originally been granted pursuant to a lease between Acadian and the Airport Authority. The lease called for payment of $150 per year for use of the road and it expired on August 18, 1969 —-5 months before the taking. The record shows that this use continued for some two months after the taking. However, this access existed at the whim of the Airport Authority and without further showing we find that the taken property had no land access at the time of expropriation.
The Estopinal case only stands for the proposition that a landowner who enclaves himself must proceed under LSA-C.C. Art. 699 and not 701. Defendants still had a right to acquire a right-of-way at the time of the taking.
There is some difficulty with the application of LSA-C.C. Art. 699 to an owner who has enclaved himself. English Realty Company v. Meyer, 228 La. 423, 82 So.2d 698 (1955) held that where a landowner who originally had access, saw fit to voluntarily sell parcels of his land so as to enclave himself, he could not proceed under Art. 699 or 701 to regain access. This case would seem to preclude defendants action under Art. 699 were it not for the holding that " . . . the English Realty case cannot extend beyond the holding applicable to its particular facts." Rockholt v. Keaty, 256 La. 629, 237 So.2d 663 at 667. The facts of the case were that plaintiff had acquired the original tract subsequent to the expropriation and that he had plenty of access to available roads before selling most of the property to private purchasers. This is not the case before us.
This record shows that the 1941 sale to the Police Jury was made so that the present airport could be constructed on land so transferred. In the absence of amicable settlement, the Police Jury could have proceeded under its authority to expropriate (LSA-R.S. 19:2) and taken the land for such purpose. Rockholt v. Keaty, supra, held that if an estate loses its access via expropriation it becomes an "enclaved" estate within the meaning of LSA-C.C. Art. 699 to obtain access. This rule is applicable in this case. These landowners did not require the public authority to resort to expropriation, but have not thereby been deprived of their right to acquire access under 699. Indeed the expropriating authority is required to attempt to purchase via negotiation. Defendants are not to be punished for their cooperation in this endeavor. The argument that landowner has been adequately compensated in that sale, for his loss of access, is refuted in the Rockholt case. Applicable here is the statement that:
" . . .it would run contrary to public policy to encourage landlocking of such a valuable asset and forever removing it from commerce and from public as well as private benefit." 237 So. 2d 663 at 668.
We find that at the time of expropriation, the taken land had the right to acquire access under LSA-C.C. Art. 699 via the airport road. Compensation, of course, would have to be paid by defendant under Art. 699 for such access, but we believe that the Airport Authority, having leased such a right for $150 a year previously, has thereby set the amount of compensation it deems adequate. Since this amount is a nominal sum we find that it would have negligible adverse impact upon the market value of the taken land. Accordingly, the valuation of the taken land is virtually the same as if the land had access.
The water access is of no real value for access purposes but may have recreational value.
The trial court found that under LSA-C.C. Art. 2697, the lease terminated if the thing subject to the lease is taken for a public utility. It was held that the lessee had no leasehold interest in the property and lessee's claim was dismissed. We do not agree.
The general rule in Louisiana [State Through Department of Highways v. Sumrall, 167 So.2d 503, 509 (La.App. 1 Cir. 1964); In re Morgan R. R. v. S. S. Co., 32 La.Ann. 371 (1880)] and elsewhere, [See 27 Am.Jur. Section 250, 29A C.J.S. Eminent Domain § 198, and Nichols, Vol. 4 § 12:42(1)] is that if the lessor and lessee have provided in the lease that the lease shall he cancelled in the event of condemnation or a change in zoning, then the court must follow this mandate and the lessee will have no compensable interest. However, if there is no such provision, then lessee's separate substantive right is subject to compensation.
The unrecorded lease agreement contained this provision:
"It is provided however, that if, after the discovery and production of said minerals in paying quantities the production thereof should cease from any cause, this assignment shall terminate unless as-signee resumes or restores production or commences additional development operations within sixty days thereafter . " (Emphasis added.)
Since the clause phrases the discontinuance of production as "ceases" and provides for prevention of termination via a "restoration" of production (both phrases implying some transitory difficulty within lessee's control), the above clause does not contemplate the cessation of production because of condemnation of the property. The only clause dealing with "prevention" of production (under which category we would expect to find expropriation listed) addresses itself to strikes, accidents, action of the elements, war, etc., and makes no mention of expropriation.
LSA-C.C. Art. 2697 is designed in part to protect a lessee from the enforcement of the terms of the lease against him when the property has been taken from him. Planiol, Vol. 2, no. 1733 bears out this interpretation:
"The rent ceases to be due, when for whatever reason, the lessor cannot provide the lessee with the enjoyment of the thing. In other words, in the contract of lease, the risk is on the lessor."
The other general area of applicability of Art. 2697 was offered by Justice Sanders in his dissent to State Through Dept. of Highways v. Holmes, 253 La. 1099, 221 So.2d 811, 816 (1969). "The lessee has no claim for damages against the lessor. LSA-C.C. Art. 2697." Neither interpretation supports the trial court's application of Art. 2697 and it was therefore inappropriate.
We find that Acadian did indeed have a leasehold interest. Whether or not lessee established that its leasehold interest had a "leasehold advantage" and its value, if any, will be considered later.
The trial court improperly sustained plaintiff's objection to evidence of the quality and extent of the sand deposit and other physical attributes of the subject property (thickness of overburden, angle of stability of the sand deposit, etc.); evidence of the dollar amount of royalties paid under a sand mining lease, the volume of sand previously produced and the existence of a market for such sand; evidence of increased royalty payments; and evidence showing that neighboring properties sold for sand mining purposes were unable to produce comparable sand.
The general rule in Louisiana is that the measure of compensation to which the owner is entitled in an expropriation proceeding is the price which an equally informed willing buyer and seller would agree upon under usual and ordinary circumstances. State Through Dept. of Highways v. Barber, 238 La. 587, 115 So.2d 864 (1959); Parish of Iberia v. Cook, 238 La. 697, 116 So.2d 491 (1959). This price thus determined is nominated market value and " . . . means the worth of the land considered in the light of its best and highest use, this being the most favorable employment to which the property is adaptable and may reasonably be put in the not too distant future." State Through Dept. of Highways v. Rapier, 246 La. 150, 155, 164 So.2d 280, 282 (1964). The use must be one which affects the present market value of the land taken [Parish of Iberia v. Cook, supra], i. e. a use which would be considered by a willing buyer as affecting the market value. Parish of East Baton Rouge v. Ronaldson, 150 So.2d 356 (La.App. 1 Cir. 1963).
As a general proposition, it has been held by the Louisiana Supreme Court that any evidence which relevantly bears on market value may be admitted at trial. Shreveport v. Abe Meyer Corp., 219 La. 128, 52 So.2d 445 (1951). The trial court's refusal to allow evidence as to the value of the expropriated sand deposit requires the trier of facts to close his eyes to all evidence other than that the landowners had a sand deposit. Supposedly the quantity, quality, amount of overburden, the marketability and the income received by landowners for sand production would have no effect on the market value of this land. This is not supported by the law.
We acknowledge the rule that in determining the amount of compensation to be paid, courts must attempt to value land taken as a whole without separate valuation of its component parts. State Through Dept. of Highways v. D. H. Sanders Realty Co., 244 La. 934, 155 So.2d 24 (1964); State Through Dept. of Highways v. Hayward, 243 La. 1036, 150 So.2d 6 (1963). However, " . . . the single use which is most profitable usually will be used as a basis for computing market value if established as a use to which the property is adaptable and may reasonably be put in the not too distant future." Dakin and Klein, Eminent Domain in Louisiana, (1970), p. 170; Parish of Iberia v. Cook, 238 La. 697, 116 So.2d 491 (1959); State Through Dept. of Highways v. Ragusa, 234 La. 51, 99 So.2d 20 (1958). Therefore, in determining the highest and best use of a tract of land, it is necessary for courts to compare the various uses to which the land may be put. State v. Chadick, 226 La. 367, 76 So.2d 398 (1954). Logic dictates that this comparison could be fairly made only when each use is accurately gauged as to income potential. State Through Dept. of Highways v. Hedwig, Inc., 133 So.2d 180 (La.App. 4 Cir. 1961). And to this end, " . . . any evidence bearing on the potential use of the property is admissible, subject only to the general rules of evidence." Dakin & Klein, supra, p. 172; State Through Dept. of Highways v. Madden, 139 So.2d 21 (La.App. 2 Cir. 1962).
Applicable here is the rule quoted approvingly in State Through Dept. of High ways v. Hayward, 243 La. 1036, 150 So.2d 6 (1963) at p. 10:
" '. . . It was proper to show the quantity and quality of the sand, and these elements could be considered in arriving at the value of the land as a whole . .
See also, State Through Dept. of Highways v. Hart, 249 So.2d 310 (La.App. 1 Cir. 1971); State Through Sabine River Authority v. Miller, 184 So.2d 780 (La.App. 3 Cir. 1966); Nichols on Eminent Domain (Revised 3rd ed.) 1962, Vol. 4, Section 13.22 p. 408 et seq.; 29A C.J.S. Eminent Domain § 174, pp. 736, 737; Am.Jur.2d Vol. 27, section 290, pp. 91, 92.
The excluded evidence is properly before us in a proffer of proof.
It would be quite impossible to show that a tract of land was desirable for mining purposes without showing that some market existed for the product obtained therefrom. "Before the factor of the presence of minerals in the land may be considered, it has been held necessary to show a market, good or bad, large or small, for the minerals." 29A C.J.S. Eminent Domain § 174, pp. 736, 737. Furthermore, it would be difficult if not impossible to gauge the relative desirability of this use without a thorough examination of the type, distance, and demands of the particular market. Recognizing this, Louisiana courts have held that ". . . the potential market for an underlying mineral may be considered in determining the degree to which it enhances market value." State Through Dept. of Highways v. Hart, 249 So.2d 210, 316 (La. App. 1 Cir. 1971).
It has been recognized that factors which bear upon market value of land used for mining purposes, are the amount of overburden, Mills v. United States, 363 F.2d 78, 80 (Ct. of Appeals, 8th Cir. 1966), and the side slope angle of stability (indicating volume of removal sand by showing how nearly vertical mining can be carried on without caveins — commonly referred to, erroneously, as "angle of repose"). United States v. Whitehurst, 337 F.2d 765, 768 (Ct. of Appeals, 4th Cir. 1964).
Evidence pointing to the impact that overburden and the slope of stability have not only upon the value of land for mining purposes but upon its possible use for mining is found in this record in defendants' proffer which shows that W. L. Daly of Daly Sand & Gravel, Inc. was forced to abandon mining operations on a nearby tract acquired from Patrick Bonin because of overly thick overburden and frequent caveins. We find evidence relating to overburden and slope of stability admissible as "evidence relevantly bearing on market value."
Evidence showing the increased market value of the 16.1 acres where the overburden has been removed is admissible on the same premise. Both plaintiff's witness Ralph H. McGee (Tr. 16-17) and defendant's witness Charles R. Holloway (Proffer 2-3) stated that land with less overburden is more desirable. A sand pit without overburden is even more valuable. Holloway 2, 3.
Furthermore, topographical factors generally and those relating to improvements such as land clearing which affect market value have been generally held admissible in La. Central Louisiana Electric Co. v. Fontenot, 159 So.2d 738 (La.App. 3 Cir. 1964); La. Power & Light Co. v. de Bouchel, 143 So.2d 270 (La.App. 4 Cir. 1962). Therefore evidence showing the cost of removal of overburden is admissible as a factor affecting market value.
Evidence concerning royalty income is admissible. Landowners have been receiving more than $20,000 per year from 1963 through the date of taking. Their yearly income is more than i/¿ the total awarded for 97 acres plus severance damages suffered by the remainder of the tract. It is obvious that the trial court did not consider the royalties which were received without expenditure of effort on the part of landowners. This evidence is also before us as a proffer of proof.
That the trial court erred in awarding less than two years income for the property is documented in the record, where, in response to the question of whether he would sell the tract for $40,000, plaintiff's appraiser J. Alfred Mouton answered "No." Tr. 40. The response supports our finding that a prospective purchaser would carefully consider the substantial yield from the property in arriving at a determination of the price he would pay for the property. It is no less certain that the owner would also consider this yield in determining the sale price. Such subjective considerations are the very crux of the notion of market value as determined by "an equally informed . . . willing buyer and seller". Applicable here is the rule that ". . . where such income is derived from the intrinsic nature- of the property itself, and not from a business conducted on the property itself, the courts, as a general rule, accede to the view that income from property in the way of rents and profits is an element of consideration in arriving at the market value or measure of compensation to be paid." 27 Am.Jur., Section 286, p. 87. Another pertinent observation is that "Property of the money-income type is worth literally nothing save for its promise to yield to its owner a money intake . . •" J. Bonbright, Valuation of Property, 176, 230-231 (1937).
Louisiana courts have consistently held that rent or income is a material factor in the determination of fair market value and evidence bearing upon such income is admissible. Housing Authority of New Orleans v. Brinkmann, 224 La. 262, 69 So.2d 37 (1953); Housing Authority of New Orleans v. Persson, 203 La. 255, 13 So.2d 853 (1943); Louisiana Highway Commission v. Paciera, 205 La. 784, 18 So.2d 193 (1944).
Royalties may be propérly characterized as rent. In King v. Harper, 33 La.Ann. 496 (1881), it was held:
"A mine or quarry, or land adapted to mining or quarrying, may be leased for a certain portion of the produce of such mine or quarry, and the fact that said portion is called 'royalty' instead of rent, is not of the least consequence. For 'rent (by whatever name called) is a certain profit in money, provisions, chattels or labor, issuing out of lands and tenements in retribution for the use.' "
And in Logan v. State Gravel Company, 158 La. 105, 103 So. 526 (1925) it was said that:
"the rent is always sufficiently certain if it can be readily ascertained."
See also Alvord v. Sun Oil Company, 251 So.2d 659 (La.App. 2 Cir. 1971) and Bouterie v. Kleinpeter, 258 La. 605, 247 So.2d 548, 553 (1971).
The erroneous ruling prohibiting evidence of the increased royalty payments was based upon the holding that the unrecorded agreement granting the increased royalty was inadmissible under the public records doctrine and could have no effect as to third parties, i. e. the plaintiffs. We do not agree.
Evidence concerning the unrecorded lease was admissible. The Louisiana Constitution of 1921, Art. 1, section 2 requires that " just and adequate compensation (be) paid . . ." for the taking of private property for public purposes. Also relevant are LSA-C.C. Art. 497 and 2633 and LSA-R.S. 19:9. The common thread running through these constitutional, codal and statutory provisions is that actual fair market value must be determined by whatever relevant, competent evidence is available, and the landowner must be compensated in that amount. These provisions command a complete and accurate evaluation of the "true" fair market value of the property. To prevent the creation of a runaway "seller's market" the law has set forth certain circumstances under which the seller must sell and has circumscribed the limits of the price he may re ceive. However, the law, (as set forth above) is meticulous and exacting in protecting the right of this "coerced seller" to receive full and fair compensation. To this end the jurisprudence has proclaimed that the seller and buyer must be considered "fully informed". State Through Dept. of Highways v. Hayward, 243 La. 1036, 150 So.2d 6, 8 (1963); State v. Burkes, 234 La. 659, 101 So.2d 193 (1958); State Through Dept. of Highways v. Mouledous, 200 So.2d 384 (La.App. 3 Cir. 1967). Therefore the purpose behind the registry rule, the protection of an ignorant good faith third party, has no application to the expropriating authority in the contest presently before us. To so apply it would facili-ta^ the creation of an artificial and inaccurate valuation of taken property and defeat our constitutional requirements.
Plaintiffs are expropriating land and evidence which relevantly bears on market value may be admitted at trial. Shreveport v. Abe Meyer Corp., 219 La. 128, 52 So.2d 445 (1951). Having previously found evidence of royalties relevant and admissible, we also find the change in the rate of royalties relevant and admissible.
The trial court erred in preventing cross-examination of the expropriating authorities experts on questions tending to show that alleged comparable sand producing lands used by their experts were not remotely comparable to landowners' property.
Professor Dakin states and we agree, that "the scope of cross-examination has not yet been judicially established in a Louisiana expropriation case." Dakin & Klein, supra, p. 387. It is pointed out that the Louisiana rule in civil cases is that a witness may be cross examined on the whole case irrespective of the extent of direct examination. King v. Atkins, 33 La.Ann. 1057 (1881). The rule generally followed in other states in expropriation cases is set forth in 5 Nichols, section 18.45(2), p. 219, 223:
"The scope of cross-examination of experts and other witnesses who have testified to value in land damage cases is very broad, since cross-examination is often the only protection of the opposing party against the unwarranted estimates that a certain class of mercenary experts is want to indulge in."
>fc j{i 5j< #
"When sales of comparable properties in the vicinity of the property involved have been testified to on direct examination, or are the basis of a witness' opinion as to value, cross-examination as to such sales is proper for the purpose of testing his knowledge of market values or lessening the weight of his opinion."
In light of Louisiana's relatively broad scope of cross-examination in civil cases generally, the above rule with respect to cross-examination as to comparable sales is the proper rule to be followed in Louisiana in expropriation cases.
Defendants properly preserved the excluded evidence by proffer under LSA-C.C.P. 1636. We will proceed to decide this case based in part upon the proffered evidence which we have found to be admissible. Broussard v. State Farm Mutual Automobile Insurance Company, 188 So.2d 111, 114 (La.App. 3 Cir. 1966).
THE AWARD — EVIDENCE
We turn now to summarize our findings from the testimony and statements of the non-appraisers for both plaintiffs and defendants. Plaintiffs' non-appraiser witness civil engineer Ralph D. McGee, Jr., was unable to compare the sand on defendants' property and that of the surrounding tracts which he studied.
From the testimony and statements of defendants' nonappraiser witnesses, Charles R. Holloway, Ralph L. Davenport, Thomas S. Broyles, James R. Gilbert and W. L. Daly, we find that the quality of sand on defendants' land was unique in the area within 75 miles of Lafayette and the expropriated sand mine enjoyed a virtual monopoly on the market — a situation unparalleled elsewhere in Louisiana. The side slope angle of stability in defendants' pit was 1 to 1 above water and 1 to 1.5 below water. With equipment presently owned by Acadian, the pit and the surrounding sand deposit, could be mined safely to a depth of 100 feet. Therefore there is approximately 3,361,847 cubic yards of recoverable sand on defendants' land.
After a depth of 35' (10' of overburden and 25' of fine sand) is reached, the sand mined is 80% coarse sand and 20% fine sand. Therefore, the recoverable deposit of 3,361,847 cubic yards does not consist entirely of coarse sand and since Acadian is no longer the only producer of fine sand in the area, it has no competitive advantage on the value of fine sand.
The overburden on defendants' land is only 10 feet which is substantially less overburden than was found on the alleged com-parables. In order to mine the land under the overburden, 1) the land has to be cleared and 2) the overburden removed. The cost of clearing the land is $500 an acre and the cost of removing overburden is 29 cents per cubic yard. Approximately 260,000 cubic yards of overburden were removed by Acadian in creating the existing 16.1 acre mining pit which was being mined at the 40' depth at the taking.
Holloway's valuation of Acadian's leasehold advantage is impressive because of his experience as sales manager for five sand and gravel companies and his ownership of another. City of Shreveport v. Abe Meyer Corp., 219 La. 128, 52 So.2d 445 (1951). He had no interest in the subject tract, but has had extensive experience in evaluating and purchasing sand mining properties all over Louisiana. He valued the leasehold advantage for Acadian at between $100,000 and $350,000, based partly on the fact that he knew of no other pit in Louisiana which enjoyed such a competitive advantage for material of this type. Royalties of 35 cents per cubic yard were common for this type material and Acadian's contract called for only 22 cents per cubic yard. Holloway reviewed the past markets and projected the future market for this product. The bases for his evaluations seem accurate and well founded.
Plaintiffs' appraisers were Mr. Preston Babineaux and Mr. J. Alfred Mouton. Babineaux has been in the appraisal business 12 years but this was his first appraisal of land on which a mining operation was in progress. Mouton has been in the real estate business for 33 years in Lafayette and has appraised property as part of that business. His son (a business partner) is a member of the expropriating authority, the Lafayette Parish Police Jury. Mouton admitted that he knew nothing about the market for mining properties and that he had no experience in valuing sand or mining properties. These appraisers worked together and submitted one report. Mouton's testimony was stipulated to be "substantially the same" as Babineaux's testimony.
These appraisers were advised by counsel that the cubic yard royalty paid was for value in a business and not part of a rent. Tr. 114. They understood that the economic rent received by landowners was $4.80 per acre per year, based on the recorded lease which provided for a minimum $1,000 per year lease for 219.8 acres.
The trial court accepted and summarized their appraisal in his written reasons. Tr. 169, 170.
"VALUE OF WHOLE PROPERTY BEFORE TAKING
114.3 acres — recreational x $330 = $37,719.00
16.1 acres — borrow pit cavity x $400 = 6,440.00
27 acres — sand deposit X $550 = 14,850.00
62.4 acres — recreational X $330 = 20,592.00
219.80 acres Value of Whole Property before taking $79,601.00
VALUE OF PART TAKEN AS PART OF WHOLE PROPERTY AS THAT PART RELATES TO THE WHOLE
Acres taken: 96.963 acres
Classification of acres taken: 17.2 acres sand deposit @ $550 per acre = $ 9,460.00
16.1 acres borrow pit cavity @ $400 per acre = 6,440.00
63.663 acres recreational @ $330
per acre = 21,008.79
96.963 acres taken
Total value of part taken as it relates to the whole $36,908.79
VALUE OF REMAINDER BEFORE TAKING AS PART OF WHOLE PROPERTY
Value of whole property $79,601.00
Less:
Value of part taken as part of whole property 36,908.79
Value of remainder before taking $42,692.21
VALUE OF REMAINING PROPERTY AFTER THE TAKING AS A SEPARATE ENTITY (REMAINING ACREAGE AFTER TAKING 122.837 ACRES)
Classification of acres remaining:
9 acres undisturbed sand deposit @ $550 $ 4,950.00
.8 acres (change of highest and best use) @ $150 120.00
103.037 acres recreational land undisturbed @ $330 34,002.21
9.90 acres recreational land disturbed and isolated @ $150 1,485.00
Total value after taking of remaining 122.837 acres $40,557.21
MEASUREMENT OF SEVERANCE DAMAGES
Value of the remainder before taking as part of the whole property 122.837 acres - $42,692.21
Value of remaining 122.837 acres after taking as a separate entity 40,557.21
Severance damages $ 2,135.00
Therefore the just and adequate compensation and severance damages as found by plaintiffs' appraisers is as follows:
Just and adequate compensation $36,908.79
Severance damages 2,135.00"
These appraisers erred in concluding that Daly purchased a half interest in certain property (from Knight) when in fact Daly purchased a one-fourth interest. Other errors appear in their report, but their failure to consider 1) the quantity and quality of the sand deposits on the comparable and the taken tracts, 2) the relative problems relating to removal of overburden and 3) the market advantage enjoyed by defendants' sand mine, renders their appraisal unacceptable.
The opinion of each witness qualified and accepted as an expert is given effect if and when it appears to be well grounded from the standpoints of sincerity and good reasoning. Housing Authority of New Orleans v. Boudwine, 224 La. 988, 993, 71 So.2d 541, 543 (1954). If it is not so grounded, it will be disregarded. State Through Dept. of Highways v. D. H. Sanders Realty Co., 244 La. 934, 155 So.2d 24 (1963); State Through Dept. of Highways v. Barber, 238 La. 587, 115 So.2d 864 (1959). Among the factors which mitigate against the acceptance of a witnesses' testimony is his unfamiliarity with the type of property expropriated [Central La. Electric Co. v. Covington & St. Tammany L. & I. Co., 131 So.2d 369 (La.App. 1 Cir. 1961); State Through Dept. of Highways v. Milam, 130 So.2d 145 (La.App. 2 Cir. 1961)], lack of thoroughness of the appraisal [State Through Dept. of Highways v. Williams, 170 So.2d 152 (La.App. 2 Cir. 1964)], as well as clarity and organization [State Through Dept. of Highways v. American Credit Exchange, Inc., 161 So.2d 397 (La. App. 1 Cir. 1964)], lack of consideration of elements of value considered controlling by the courts [City of Natchitoches v. Cox, 135 So.2d 302 (La.App. 3 Cir. 1961)], and unsoundness of the reasons given in support of the estimate [State, Through Dept. of Highways v. Barber, 238 La. 587, 115 So.2d 864 (1959)]. Plaintiffs' appraisers have failed on all counts. The best summary on the issue of sincerity is the negative reply by Mouton when asked if he would sell the expropriated property for $40,000.
Defendants' expert appraisers were not allowed to testify concerning the quantity and quality of the sand deposit on defendants' tract as compared to alleged comparable tracts. Their reports are in evidence as proffers of proof. Mr. Allen J. Angers is a real estate appraiser possessing an unusually high degree of competence. Defendants' other appraiser Mr. Maurice J. Chappuis is also a highly experienced and qualified appraiser.
Angers concluded that the market data approach and capitalization of income established that $194,349.00 should be awarded landowners for the taken tract together with severance damages. Chappuis appraisal based on the market data approach and capitalization of income established a value of $155,000.00 for the taken tract together with severance damages.
We find errors in the calculations and assumptions in both the Angers and Chap-puis reports. The report of defendants' expert Mr. George Parker is too vague in the area of valuation and comparable sales. Defendants' last appraiser Mr. T. M. Wilkes made substantial erroneous assumptions in concluding Lnat $384,000.00 would be a proper award to defendants.
APPORTIONMENT OF AWARD
We next consider the apportionment of the award between lessor and lessee bearing in mind the admonition that:
"Since it is the property itself which is to be evaluated, and not the separate interests therein, the appraisal should generally be made for the property as a whole, without regard to various diverse interests which may exist; that is to say, the property should be appraised as if in a single ownership." S. McMichael's
Appraising Manual, p. 459 (4 ed. 1951). It is equally important to consider that
" • • where land subject to lease is taken, two separate sets of rights are acquired by the expropriator, those of the landowner and those of the lessee. Thus the expropriator cannot focus narrowly on the value of Landowner interest, and expect the lessee to derive his recompense from that award, or vice versa." State of Louisiana Through Sabine River Authority v. Carter, 293 F. Supp. 1171 (W.D.La.1968). See also State Through Dept. of Highways v. Holmes, 253 La. 1099, 221 So.2d 811, 814 (1969).
The leading Louisiana case in the area of valuation of lessor-owner and lessee's interest is In re Morgan R. R. & S. S. Co., 32 La.Ann. 371 (1880). Landowners' rights were held to be a composite of two things: 1) the full ownership of the thing encumbered by the lease, and 2) the monthly rents during the term of the lease. As to lessee's interest, they held at page 375 that:
"If that right is worth no more than the lessee has agreed to pay for it, then, as the price, or rent in future, is yet to be paid, and as the company, holding the owner's rights, is the payee thereof, the company would owe the lessee nothing. But if the right is worth more than the sum so agreed to be paid for it, the lessee is certainly entitled to be paid the amount of this excess. He must have the value of the right which is taken away from him."
4s sfc
"The true question is, what advantage could the lessee get for the lease over the price or rent they are to pay? In other words, if the lease was put on the market for sale, what sum in excess of sixty dollars per month (contract rent in this case) could be obtained for it, the improvements put thereon by the present lessees being excluded from the calculation." (Parenthetical additions by writer.) At page 377.
In State Through Department of Highways v. Cockerham, 182 So.2d 786 (La.App. 1 Cir. 1965), writs refused 249 La. 110, 185 So.2d 219 (1966), lessee was awarded the present value of the lease advantage. There is an excellent summary of the law relating to apportionment of awards between lessor and lessee (without reference to a particular formulae, i. e. capitalization or market data, etc.) found in Cockerham (182 So.2d 786) at page 791.
THE AWARD — APPLICABLE LAW
Louisiana courts maintain a strong preference for the use of "comparable sales" in ascertaining market value. Dakin & Klein, supra, p. 181. As Professor Dakin points out "The appraiser's technique in using the comparables method is to select the most comparable sales of the most comparable properties and then to gain additional accuracy in comparison through the employment of adjustments to the price of the comparable." p. 181. These adjustments most frequently revolve around differences in time and circumstances of the sale, proximity and size of the parcels, and physical characteristics of the land.
Although there is substantial jurisprudential attachment to the concept of valuation based on comparable sales, " . . where the record contains no satisfactory evidence of sales comparable to that involved, ascertainment of the true value must be sought by a consideration of other factors and circumstances . . . " Rapides Parish School Board v. Nassif, 232 La. 218, 225, 94 So.2d 40, 42 (1957). See also State Through Dept. of Highways v. McDuffie, 240 La. 378, 123 So.2d 93 (1960).
Not infrequently, the sales found in the investigation are not helpful because of differences of time, location, or size of the land sold, or quality of the material, or mineable depth or zoning or other factors. Where mines are involved, fewer sales data of a comparable nature are available and market data is usually inapplicable. Owing to this condition, it usually becomes necessary to use other data (the royalty income) either as a check or for the purpose of arriving at a conclusion of value. See George L. Schmity "Condemnation Appraisal Handbook", Prentice-Hall, Inc. 1963.
In studying the appraisal reports, one becomes aware of the fact that of the multitude of variables involved in the comparative valuation of any two given tracts of sand mining land, only a handful are present in each report. Although some of the reports reach fairly similar approximations of value, their calculations were based on differently composed handfuls of factors. This helter skelter grasping of variables in an effort to properly adjust the "comparable" sales indicates to us the one basic flaw in the search for comparables — there are no comparable sales to relate to this taking.
Some of the variables involved in the comparisons of tracts of sand land are size of the deposit, depth of overburden, types of sand and their respective proportions of volume, slope of angle of repose, and market advantage. Cases in Louisiana have found lack of comparability on such relatively insignificant variables as shape and depth of a piece of property [State Through Department of Highways v. Cockerham, 182 So.2d 786 (La.App. 1 Cir. 1965)], and size [State Through Department of Highways v. Henry, 192 So.2d 801 (La.App. 1 Cir. 1966); State Through Dept. of Highways v. Bourgeois, 146 So.2d 642 (La.App. 1 Cir. 1962)]. It was observed in State Through Dept. of Highways v. McDuffie that where the adjustment of "comparable" involves too much speculation then the "comparables" are rendered unreliable. When such a situation is confronted, " . . . ascertainment of the true value must be sought by a consideration of other factors and circumstances, . . . Among such other factors is the rental-income approach method . . . " State Through Dept. of Highways v. Gras, 131 So.2d 628 (La.App. 2 Cir. 1961).
The Louisiana Supreme Court has, on occasion, seen fit to use capitalization of rentals as the method of valuation of taken property. State v. Tramuta, 234 La. 741, 101 So.2d 450 (1958); State Through Dept. of Highways v. McDuffie, 240 La. 378, 123 So.2d 93, and after an extensive review of Supreme Court decisions, Professor Dakin concludes that
" . . . it . . . appears that the method will be approved whenever market data on comparables are lacking or when a sufficiently strong case appears for the use of income as a measure of value as, for example, in the case of commercial rental properties leaving relatively uniqtie improvements with which to draw comparisons." p. 218 (Emphasis added.)
We note again that the sand deposit in this case is unique.
In other jurisdictions it is " . generally conceded that with respect to properties owned for income purposes the capitalization of income is the preferable method for calculating value, if the consideration is given to the other pertinent factors." 27 Am.Jur.2d, § 286, p. 87.
A complete explanation of the "Capitalized-income method" of valuation is found in Professor Dakin's work, supra, pp. 211-239 but a short definition taken from J. Bombright, Valuation of Property 176, 230-231 (1937) is that "In its more usual form, it involves a capitalization or discounted valuation of the realized or prospective net monetary income derivable by continuous exploitation rather than by resale."
As Dakin points out (p. 272): "The worth of such lease advantage would hence be the present value of an annuity consisting of such rent difference at whatever interest rate is deemed appropriate in light of the risks involved as to payment." A similar discounting formula would have to be applied to lessor's lease interest.
Since there are no comparable sales, the above authorities direct us to arrive at an award by way of the income capitalization approach. As noted earlier, we consider the entire mineral interest subject to expropriation to be 100% taken irrespective of the reservation thereof to defendants. State Through Sabine River Authority v. Salter, 184 So.2d 783 (La.App. 3 Cir. 1966) points up the fact that peculiarities in a mineral deposit and the resultant peculiar necessities for extraction can be such that an expropriation which would leave an ordinary deposit recoverable, will work a total taking on the peculiar deposit. Due to the fact that sand mining necessitates the creation of large pits and dredging operations thereon, and the fact that the airport expropriated this land for runways across the surface of the land, we find that the nature of the expropriation prevents future extraction of sand both from the taken land and from the 0.8 acre sand deposit on the land not taken.
On the expert testimony of Mr. James R. Gilbert we conclude that the sand deposit could be mined to a level of 100 feet below the surface of the land. With overburden of 10 feet this gives a depth of 90 feet of sand. On 16.1 acres of land approximately 40 feet of sand have been removed so that this area is 44% depleted. There are 1613 cubic yards per acre foot in a sand mine. Thus with 50' of mineable sand in the 16.1 acre tract and 90/ of mineable sand in the 18 acres, the total recoverable sand is 3,311,525 cubic yards.
The experts were persuasive in concluding that the average annual production for the last seven years is likely to continue. At the rate of 93,982 cubic yards per annum (the seven year average), it would take 35 years to produce the recoverable sand.
Because of the side slope angle of stability, the allowance for shallower production than projected, the allowance for less than 100% efficiency, the possibility of clay pockets, the possibility of competition with other sand or even the elimination of the market for such sand by other materials, we reduce the potential life span from 35 years to 20 years.
Based on this projection, we must determine the capitalization rate. Chappuis used a factor of 7.469 while Angers used 8.8124. We use a factor of 8.000.
Now the most crucial question is whether there will be a computation on the basis of contract rent or whether we have found a different economic rent. It will be recalled that a witness may be considered an expert in valuing land for a specific use if he is familiar with land so adapted. City of Shreveport v. Abe Meyer Corp., 219 La. 128, 52 So.2d 445 (1951). Furthermore, it has been held that when there are no comparables available, the testimony of persons who have dealt extensively with sales and purchases of lands in the area may be received as expert opinions to establish value. State Through Department of Highways v. Gielen, 184 So.2d 737 (La.App. 3 Cir. 1966). Therefore, we believe that Mr. Holloway is an expert in the field of valuation of said mine leases. We accept his testimony that 35 cents per cubic yard is a fair rental for this sand. This gives Acadian Development a lease advantage of 13 cents per cubic yard.
We allow for earnings of $30,000 per year (93,982 cubic yards per year times 35 cents = $32,893.70 rounded to $30,000 for market fluctuations). Projecting a 20 year income we arrive at a discount factor of 8.000 which is used to multiply the $30,000 annual income. Thus the total value of the sand pits as of January 30, 1970 is $240,000. Defendant landowners are entitled to 22/35 or $151,000 and defendant lessee is entitled to 13/35 or $89,000 as their respective interests in 34.1 acres of expropriated property.
Plaintiff took 97 acres and total severance damages are awarded for the isolated 10.7 acre tract making a total of 107.7 acres for which compensation is due. The $151,000 award to landowners is for their interest in the 34.1 acre sand mining property, all of which is under lease. This leaves the following lands to be valued:
RECREATIONAL
45.9 acres (subject to Acadian's lease).
9.9 acres (as severance — not under lease).
17. acres (taken — not under lease).
COARSE SAND LAND
0.8 acre (as severance — not under lease).
Mr. Chappuis offers an excellent selection and review of five comparable sales of recreational properties. After adjustments for time, size, desirability, drainage, topography and relation to Lafayette, he valued landowners' recreational land at $375 per acre. We accept this figure.
The 9.9 acres and 17 acres of unleased recreational property is valued at $10,-087.50.
Although the .8 acre of coarse sand land is not under lease, it was being mined up to the date of the taking. Exhibit I. It is therefore proper to award landowners the value of this tract as a component of the 34.1 acre sand deposit adjacent thereto rather than as a separate small unmineable tract. Nevertheless, we will not award the full $5,600 value since the tract is not under lease. An award of $2,000 appears appropriate under the circumstances.
Two of landowners' experts appraised landowners' reversionary interest in the 80 acres subject to Acadian's lease The third appraiser assigned no value to this reversionary interest on the basis that it was too speculative. We accept the latter conclusion for the reason that the lease for sand development may extend for an undeterminable period. We ac^.:pt Mr. Chappuis's conclusion that under these circumstances, investor's would not be interested in purchasing this interest.
We acknowledge that some of the cubic yardage deemed recoverable included some fine sand. However our computation is nonetheless valid because we have given the expropriating authorities every possible benefit in rounding off the computations.
The trial court judgment as to defendants landowners is amended to increase the award to defendants J. Máxime Roy et al. to the sum of $163,087.50, together with legal interest from the date of the taking. The judgment as to defendant lessee Acadian Development Corporation is reversed.
It is ordered, adjudged and decreed that Acadian Development Corporation have judgment against plaintiffs Lafayette Airport Commission and the Lafayette Parish Police Jury in the sum of $89,000, together with legal interest from the date of the taking.
The trial court assessed all court costs to plaintiffs and since no error has been assigned, we affirm that portion of the award. Costs of court on appeal are assessed to plaintiffs, but they are relieved from paying all except stenographers' costs for taking testimony. LSA-R.S. 13:4521.
Amended and affirmed in part; in part, reversed and rendered.
HOOD, J., dissents and assigns written reasons.
. As authorized by LSA-R.S. 2:138 et seq. and LSA-R.S. 2:381 et seq.
. The airport road runs near the western edge of defendants' property and as to both parties involved, was the most convenient means of access for defendant to cross plaintiffs' land to the public highway.