In re the City of New York

20 N.Y.2d 618 | NY | 1967

Lead Opinion

Bergan, J.

On review of a decree entered at the New York Special Term fixing the amount of the award in condemnation for the acquisition of the Polo G-rounds at $2,614,175 for the land and $1,724,714 for the improvements, the Appellate Division affirmed the award for the land and reduced that for the improvements to $175,000.

If there be legally sufficient and substantial evidence to support the affirmed finding of the Special Term on the value of the land, it will be sustained here (Matter of City of New York [Sound View Houses — A. F. & G. Realty Corp.], 307 N. Y. 687; Mayer v. Temple Props., 307 N. Y. 559, 562; Farr v. Newman, 14 N Y 2d 183; CPLR 5501, subd. [b]).

In view of the difference of opinion between the Appellate Division and the Special Term as to the value of the improvements, the question is open here as to which decision is conformable with the weight of evidence (Matter of City of New York [A. & W. Realty Corp.], 1 N Y 2d 428, 430; People ex rel. MacCracken v. Miller, 291 N. Y. 55, 61; CPLR 5501, subd. [b]).

At the Appellate Division there was a majority vote to affirm the Special Term’s decision on the land value and a different majority vote to modify the decision on the value of the improvements. A somewhat similar situation exists in this court: a majority would affirm the Appellate Division and the Special Term on the land value; a majority would reverse the Appellate Division and affirm the Special Term on the value of the improvements.

The attack by the owners of the fee, claimants-appellants Coogan, on the land value as found and affirmed is based on their contention that since the Special Term was of opinion the best use of the land at the time of taking was “ its actual use ”; that since the actual use was as a stadium; and that since the only opinion evidence in the record of its value as a stadium was that given by a witness who stated that for stadium purposes the land had a value of $5.28 a square foot or $3,950,000, this amount is the only value attributable to the land supported by substantial evidence in the record.

The proof of value of $5.28 a square foot was not adduced by the Coogans, who contended for a higher value of $7 a square foot for high-rise apartment development. It was adduced by the claimant-appellant National Exhibition Company (New York Giants), the lessee of the Polo Grounds and the owner of the improvements. This claimant has, however, no legal interest in the award for the land.

The Special Term found the value of the land to be $3.50 a square foot to reach its award of $2,614,175. No witness testified to an opinion stating exactly this value. But there was a wide range of expert view as to value expressed in the record, related, in turn, to the further opinions of the witnesses as to what they thought would be the “ best use ” of the land; and the $3.50 per square foot found by the Special Term and by the Appellate Division lies well within the over-all range of this evidence.

The expert witness called by the city was of opinion the value was $2.64 a square foot; that its “best use” was for industrial development. The other witnesses testified, as it has been noted, to values of $7 and $5.28 respectively.

The conclusion of the Special Term ‘ ‘ After extensive analysis of the problems presented” that the land had a value of “ $3.50 per square foot overall ” and the acceptance by the Appellate Division of the “ correctness of the court’s finding ” in this respect, are based on substantial evidence, as we view it, and are permissible on analysis of this record.

This is not a case, then, in which there is no evidence within a range embracing the actual finding to sustain the decision ■as in Matter of City of New York (A. & W. Realty Corp.) (1 N Y 2d 428, 433, supra); or a case where there ought to be a remission to give consideration to factors not shown to have been weighed into the decision, as in Matter of City of New York (Clearview Expressway) (9 N Y 2d 439); nor is it a case where there has been an erroneous exclusion of relevant evidence, as in Matter of City of New York (Inwood Hill Park) (230 App. Div. 41, affd. 256 N. Y. 556).

It is, rather, a permissible factual evaluation in an area in which the Supreme Court, in its fact-finding role, is not bound rigidly to follow literally opinions expressed for its guidance (cf. Commercial Cas. Ins. Co. v. Roman, 269 N. Y. 451, 456), and where it can be seen that what has been found lies within the compass of relevant proof.

The appellants Coogan lay stress on the decision in Matter of City of New York (A. & W. Realty Corp.) (supra) as holding that the result reached here cannot be sustained. But that case turned upon the circumstance that there was no factual basis for the capitalization rates employed .at the Appellate Division which were higher than those testified to by any witness (p. 432). The court was careful, however, in holding that the record would not in that case sustain the capitalization rates, to observe that the decision did not mean “ that an award may never be higher or lower than the experts’ estimates of value ” (p. 433).

Because one witness called by a party who has only a tangential concern with the land value expressed the view that the best use of the land was for a stadium, the court, able to reach the same conclusion from a record showing long past and continued contemporaneous utilization of the land for just that use, was not on this record bound to say that the witness was just exactly right in his view that $5.28 per square foot was its value.

Nor is the ultimate judgment of the Supreme Court expressed at Appellate Division in respect of the $3.50 per square foot value either arbitrary or ill-founded. The Appellate Division’s acceptance of the Special Term’s value is logically developed in the court’s opinion in a demonstration of the inherent weaknesses of the $5.28 value in the light of actual economic experience with the property. That this value was “ grossly exaggerated ’ ’, the opinion notes, ‘1 is virtually compelled by the facts ”.

There is, therefore, a sufficient record of substantial evidence to support the finding on the value of the land. The dissent of Justice McNally on the land value seems not to have rested on the legal insufficiency of the record to sustain the finding made, but rather on his view of the facts, a question open at the Appellate Division, that the “record supports” the land value for stadium use at $5.28, which is a very different question from that open in this court, now presented with an affirmed finding on this issue.

On the value of the improvements, the weight of evidence seems to sustain the view taken at Special Term in awarding $1,724,714 on the structures. The stadium was found to be a specialty for which reconstruction cost less depreciation is one accepted method of fixing value. The Special Term found the reconstruction cost of structures and fixtures to be $5,749,045, to which it applied a factor of 70% to represent physical and economic depreciation as well as obsolescence to reach $1,724,714.

The Appellate Division was of opinion that the depreciation factor was over 90% of the original value. It allowed, however, $100,000 for the remaining life of the structure, to which it added $75,000 as scrap value, to reach an over-all allowance for the structure of $175,000.

This method was somewhat differently based from the line of reconstruction cost less depreciation followed at Special Term, but, of course, the latter is not the only acceptable method to find value of a specialty. The end result reached at the Appellate Division is, however, to reduce by about 90% the amount found at Special Term, which is also the percentage the court found would have been appropriate to a depreciation of reconstruction cost.

The considerations which lead us to think that the evaluation of structures made at Special Term is conformable with the weight of evidence are in large measure those developed in the dissenting opinion of Justice Rabin on this aspect of the case. On the date of taking the stadium structure alone was assessed by the city for tax purposes at $525,000. This assessment did not include seats and parking lot fixtures to which an additional value of $450,000 is attributed. Assessed value, which is the judgment of officials charged with a special duty of limited scope, may not have large significance in a condemnatian proceeding, especially if there be other adequate proof in the record, but, in looking at the end result on appellate review, it seems to have some bearing that the same condemning authority will be called on to pay $175,000 to acquire property only a portion of which it had concurrently assessed at three times that sum.

Although the lease had only eight months to run at the time of taking, the record fully sustains the view that this was not the limit of the usefulness of the stadium nor the sole criterium of its value. There is proof that the stadium had a long period of future usefulness and the city’s witness said its life would exceed the term of the lease.

Although the New York Giants discontinued use of the Polo Grounds as a stadium and moved to San Francisco in 1957, four years before the condemnation, they continued to rent it as opportunity allowed for miscellaneous events and gatherings.

The city did not demolish the stadium at the time when the lease would have expired but continued it as a sports field for another baseball team. The city, in its brief in this court, notes that “ after title had vested, the New York Mets temporarily played at the Polo Grounds, pending the completion of the City-owned Shea Stadium”.

Indeed, it seems undisputed that the timing of the condemnation of this land, ultimately intended to be used for a public housing project, was to provide a stadium for the New York Mets. The stadium had, of course, since the New York Giants left it, suffered obvious economic depreciation and its obsolescence is shown in the record. But these factors were reflected fairly in the 70% depreciation found at Special Term, and this finding is in accord with the weight of evidence. The allocation of 85% of the award for the structures to the lessee was proper under the specific agreement of the parties and the terms of the lease.

The order of the Appellate Division should be modified by reinstating the award for improvements made in the decree entered at Special Term, and, as thus modified, affirmed, with costs to the city against appellants Coogan and costs to the lessee National Exhibition Company against the city.

---

Dissenting Opinion

Chief Judge Fuld

(dissenting in part). Although I agree with the majority that the courts below were correct in fixing the award for the land at $2,614,175,1 believe that both Special Term and the Appellate Division erred in fixing the value of the stadium and that there should be a new trial on this aspect of the case.

The court at Special Term fixed the value of the stadium at $1,724,714. It arrived at that amount by taking the claimant’s reproduction cost new '($5,749,000) — as to which there is no dispute — and subtracting therefrom a 70% discount for combined physical, functional and economic depreciation. Analysis of the evidence reveals that that percentage was made up of 48% for physical depreciation — as testified to by the claimant’s witness —11% for functional depreciation and 11% for economic depreciation — as testified to by one of the city’s experts.

There was no warrant or justification for such a technique or procedure. Actually, the city’s witness had testified that the physical depreciation, that is, wear and tear, of the stadium was 75%, and he added that he would further decrease this gravely depreciated value of the structure by subtracting 11% for obsolescence for functional depreciation and another 11% for economic depreciation. In short, then, it was his opinion that the value of the stadium was .only 3% of reproduction cost new (or $172,470) as opposed to Special Term’s 30% (or $1,724,714). Quite obviously, when considered in context, the estimate of economic depreciation given by this expert for the city cannot possibly be regarded as “ substantial evidence ” to support Special Term’s figure of 11%. (See Matter of City of New York [Sound View Houses — A. F. & G. Realty Corp.]. 307 N. Y. 687.)

On the other hand, the Appellate Division was in error in valuing the stadium as though its economic life were co-extensive with the term of the lease between the Coogans and the National Exhibition Company. That court expressly stated that it reduced the economic value of the stadium to $100,000 on the theory that the lease had only eight months to run at the time of the condemnation. The Appellate Division simply added $75,000 for scrap value, resulting in its finding of $175,000. As is manifest, the court arbitrarily dismissed the value which the structure might have had for a use other than as a baseball home of the New York Giants; for instance, the Mets used the stadium quite extensively for two years after the taking and evidence was at hand that the stadium had been used for football, soccer and other activities. The Appellate Division’s failure to give weight to evidence such as this was error as matter of law.

In my view, therefore, the case should be remanded to Special Term to take proof, on the one hand, of the extent of the stadium’s economic depreciation, including a consideration of the consequences of the claimant’s removal of its baseball team to San Francisco and, on the other hand, of the continuing usefulness of the stadium. Accordingly, the order appealed from should be modified to the extent of remanding the case to Special Term for a new trial as to the value of the stadium structure and, as so modified, affirmed.

---

Dissenting Opinion

Scileppi, J.

(dissenting in part). We agree with the majority’s holding that Special Term’s award of $1,724,714 for the improvements on the land should be reinstated. We disagree, however, with the majority’s position that the land award of $2,614,175 is supported by substantial evidence.

If stadium use is the most advantageous use to which the Polo Grounds can be put, it follows that the Coogans are entitled to be compensated for the land at a value calculated according to that use (Sparkill Realty Corp. v. State of New York, 254 App. Div. 78, affd. 279 N. Y. 656; Matter of City of New York [Inwood Hill Park], 230 App. Div. 41, affd. 256 N. Y. 556). Mr. McCann was the only expert who testified on the value of the land for stadium purposes. He appraised the land at $3,950,000 or $5.28 per square foot. Special Term found the highest and best use to be stadium use, but for some inexplicable reason awarded only $3.50 per square foot. In our opinion, the lower courts erred in placing this value on the land. Chief Judge Fuld stated the rule when he wrote for this court in Matter of City of New York (A. & W. Realty Corp.) (1 N Y 2d 428): “ While we recognize that a trier of facts is not bound by opinion testimony, even when uncontradicted (see Commercial Cas. Ins. Co. v. Roman, 269 N. Y. 451, 456), that does not mean that findings may be made in a valuation case, predicated solely and simply on the subjective judgment of judge or court, without any basis in the evidence. Awards higher or lower than the estimates of any of the opposing witnesses have been sustained where made by commissioners who were by statute authorized to act ‘ upon information received otherwise than by testimony given on the hearings. ’ (Matter of City of New York [East 161st St.], 159 App. Div. 662, 666.) The right, possessed by a judge or other trier of fact, to view the premises is sometimes given as an added justification for the power to disregard all the expert testimony. (See Matter of City of New York [East 161st St.], supra, 159 App. Div. 662.) However, we have expressly held that, where the proceeding is brought under a statute which limits , the trier of fact to a judicial consideration of the evidence, the function of the view is merely to enable him to understand and apply the testimony and not to act on his individual opinion in disregard of the evidence presented. (See People ex rel. Uvalde Asphalt Paving Co. v. Seaman, 217 N. Y. 70, 74 — 75; Matter of Gilbert, 176 App. Div. 850. And compare People ex rel. Olin v. Hennessy, 159 App. Div. 814, 817, with Matter of City of New York [East 161st St.], supra, 159 App. Div. 662, 666-667.)

“ In a case such as the one before us, there can be no doubt that the trial court, and the Appellate Division as well, are bound by the testimony in the record. (Administrative Code of City of New York, § B 15-19.0; see People ex rel. Uvalde Asphalt Paving Co. v. Seaman, supra, 217 N. Y. 70, 74.) This does not mean, however, that an award may never be higher or lower than the experts’ estimates of value; it is only requisite that there be evidence at hand to support the value actually found by the court. If, for instance, on the day before the taking the property had been purchased for a price below the lowest figure suggested by the City, and if other testimony were present establishing the sale as a fair indication of value, a court would be warranted in selecting a figure lower than that given by the expert. It is not, though, ‘ at liberty to find an arbitrary sum not sustained by any evidence in the record. ’ (People ex rel, Hallock v. Hennessy, 152 App. Div. 767, 770.) ” (Matter of City of New York [A. & W Realty Corp.], supra, pp. 432-433; see, also, Matter of City of New York [West Ave.], 27 A D 2d 539; Melander v. State of New York, 26 A D 2d 748; Fredenburgh v. State of New York, 26 A D 2d 966; Stiriz v. State of New York, 26 A D 2d 964; Triple Cities Shopping Center v. State of New York, 26 A D 2d 744; Dennis v. State of New York, 24 A D 2d 924; Matter of City of New York [Kramer Reatty Corp.], 16 A D 2d 148, affd. 12 N Y 2d 1094.)

The Appellate Division was of the opinion that McCann’s appraisal was not acceptable because he was a disinterested witness and because, at his valuation, the rental income accruing to the Coogans was less than a 2% return on their investment. The Appellate Division went on to hold (26 A D 2d 372, 375) that there were only two explanations for this meager return. “ [E]ither the tenant was paying less than a third of the proper rental in a situation where the landlord owned one of the very few properties large enough to accommodate the tenants’ enterprise, or the appraisal figure is grossly exaggerated. The latter view is virtually compelled by the facts ”,

The majority of this court is apparently in complete agreement with this reasoning and has adopted it as its own.

In our opinion, the Appellate Division’s reasoning leaves much to be desired. The fact that McCann was a disinterested witness should lend more weight to his testimony, not less. Furthermore, there is no evidence in the record to support the Appellate Division’s finding that McCann’s appraisal was grossly exaggerated. No one, not even the city, ever contended that the net rental of the land was indicative of its value. The long-term lease between the Coogans and the Giants was entered into in 1932 during a severe economic depression. The rental agreed to in those times cannot possibly be considered a fair rental by 1961 standards.

Assuming, arguendo, that McCann’s testimony was grossly exaggerated and unacceptable, the land award of $3.50 per square foot should not be affirmed. There is no evidence in the record to support such a finding. The holding of A. & W. Beatty {supra) is that, while expert testimony of valuation need not be accepted, the valuation which is adopted must be supported by the evidence and not merely speculative.

The majority takes the position that the land award of $3.50 per square foot is supported by substantial evidence because it is within the range of competing appraisals of value testified to by the experts — the highest appraisal being $7 per square foot for housing and the lowest being $2.64 per square foot for industrial use. This position is untenable. The fact of the matter is that there was just one appraisal for stadium purposes — that of $5.28 per square foot. If that appraisal is rejected, there is no other evidence in the record to support any award for the land based upon a highest and best use for stadium purposes. Appraisals for uses other than the one found to be the highest and best use cannot support an award for the use which is the highest and best use (Stiriz v. State of New York, supra).

The majority also takes the position that the basis for the acceptance of Special Term’s valuation is “ logically developed ” by the Appellate Division in its opinion. We cannot subscribe to that view. The Appellate Division’s opinion is as laconic as Special Term’s with respect to the basis of the land award of $3.50 per square foot. The portion of the Appellate Division’s opinion upon which the majority relies merely states that court’s reasons for rejecting McCann’s testimony. It refers to no evidence in the record which could possibly support Special Term’s award nor does it give any reasons for accepting that award.

Thus, in our opinion, there is absolutely no evidence in the record to support an award of $3.50 per square foot. Indeed, since McCann’s appraisal has been rejected, there is no evidence in the record to support any award for the land based upon the highest and best use for stadium purposes. The matter, therefore, should be remanded to Special Term for the taking of additional evidence on the value of the land for stadium purposes.

---

Dissenting Opinion

Breitel, J.

(dissenting in part). I agree with the majority opinion insofar as it holds that the Appellate Division properly fixed the land value. I disagree as to the reinstatement of the Special Term valuation of the improvements. In that respect I would affirm the holding of the Appellate Division. As that court found, the record makes it clear that the stadium had no persisting value; its interim use for a new major league team (the Mets) until a new place could be obtained for it in Queens County does not prove the contrary. Apart from use by a major league baseball team, the stadium, obsolescent as it was, and the land physically limited as it was, could be used only for events that would not support it. An improvement doomed to a loss operation has little or no value. A new stadium might have helped but it is evident that no one would choose to erect a new stadium of the same magnitude on this land.

Accordingly, the order of the Appellate Division should be affirmed in all respects.

On the appeal by the owners of the land as to the value of the land: Order affirmed, with costs.

Chief Judge Fuld and Judges Van Voorhis, Burke and Breitel concur with Judge Bergan ; Judge Scileppi dissents in a separate opinion in which Judge Keating concurs.

On the appeal by the lessee as to the value of the structure: Order reversed, with costs, and the award of Special Term for the value of the structure reinstated.

Judges Van Voorhis, Burke, Scileppi and Keating concur with Judge Bergan ; Chief Judge Fuld and Judge Breitel dissent in separate opinions.