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LANCASTER REDEVELOPMENT AUTHORITY APPEAL (03/21/67)

decided: March 21, 1967.

LANCASTER REDEVELOPMENT AUTHORITY APPEAL


Appeal from judgment of Court of Common Pleas of Lancaster County, June T., 1965, No. 80, in re appointment of viewers for certain parcel of land located in First Ward of City of Lancaster, condemned by Redevelopment Authority of City of Lancaster.

COUNSEL

Frank Edward Roda, for appellant.

F. Lyman Windolph, with him Victor R. Bieber, and Windolph, Burkholder & Hartman, for appellee.

Bell, C.j., Musmanno, Jones, Cohen, Eagen, O'Brien and Roberts, JJ. Opinion by Mr. Justice Cohen. Mr. Justice Roberts dissents.

Author: Cohen

[ 425 Pa. Page 37]

This is an appeal by the condemning authority from a judgment entered on a verdict of $246,000 in favor of the condemnee in an eminent domain case. Pursuant to the Eminent Domain Code, Act of June 22, 1964, P.L. 84, § 101 et seq., 26 P.S. § 1-101 et seq. (Supp. 1966), the Redevelopment Authority of the City of Lancaster (condemnor) filed in the Court of Common Pleas of Lancaster County a declaration of taking of certain property belonging to the condemnee. At the time of the condemnation, the property consisted of a

[ 425 Pa. Page 38]

    theater operated by condemnee; a rear warehouse which was leased as a used furniture salesroom; and apartments which were vacant. The board of viewers awarded condemnee $201,500 in damages, and both condemnor and condemnee appealed to the court of common pleas. Following trial, the jury rendered a verdict in the amount of $246,000, and after dismissal of its motion for a new trial and the entry of judgment on the verdict, condemnor filed this appeal.

Condemnor has raised several meritorious issues in pursuit of a new trial. On direct examination, condemnee's expert valuation witnesses testified that the property was capable of being leased by the owner for a rental of twenty or twenty-five percent of the gross theater admission receipts. Condemnor sought to cross-examine these witnesses as to their computations in arriving at their opinions, but upon objection, was not permitted so to do. Section 705 of the Eminent Domain Code provides in relevant part: "Whether at the hearing before the viewers, or at the trial in court on appeal: (1) A qualified valuation expert may, on direct or cross-examination, state any or all facts and data which he considered in arriving at his opinion, whether or not he has personal knowledge thereof, and his statement of such facts and data and the sources of his information shall be subject to impeachment and rebuttal. (2) A qualified valuation expert may testify on direct or cross-examination in detail as to the valuation of the property on a comparable market value, reproduction cost or capitalization basis, which testimony may include but shall not be limited to the following: . . . (iii) The capitalization of the net rental or reasonable net rental value of the condemned property, including reasonable net rental values customarily determined by a percentage or other measurable portion of gross sales or gross income of a business which may

[ 425 Pa. Page 39]

    reasonably be conducted on the premises, as distinguished from the capitalized value of the income or profits attributable to any business conducted thereon."

In order to test the credibility of the expert witnesses for condemnee, as well as the correctness of their opinions that a reasonable net rental value of the property would be twenty percent (according to one expert) or twenty-five percent (according to another expert) of the gross receipts of the theater, condemnor sought to establish, by way of cross-examination, that a financial statement used by the witnesses in their computations indicated that the net profit of the theater to the owner-operator was substantially less than the dollar figures equivalent to the percentages of gross receipts testified to by condemnee's experts as the fair rental value of the property. Stated succinctly, all the condemnor sought to show by such cross-examination was that a tenant who leased the property at twenty or twenty-five percent of the gross receipts would pay more in rent than he derived as income on the property before the charge for rent. The comment to § 705(2) (iii) states that the income or profits of any business conducted on the condemned property may not be capitalized to show the value of the property. But this does not prevent the use of such data to discredit the testimony of an expert witness who has presented to the finder of fact an entirely unrealistic estimation of fair market value. Accordingly, we conclude that the court below erred in restricting condemnor's cross-examination with respect thereto.

Condemnor next complains of the trial court's refusal to allow its expert valuation witnesses to testify as to the facts and data which they considered in arriving at their opinion of fair market value. In ...


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