2 Misc. 2d 403 | N.Y. Sup. Ct. | 1956
This is a proceeding to acquire property located within the block bounded by East 56th Street and Second
The buildings involved in this proceeding differ from each other in design, arrangements, improvements, nature of construction and adaptability. Such differences contribute in varying degree to the enhancement of the valuation of the land. The court considers these elements in making the respective awards.
The court has made the statutory view and fixes the awards as follows:
Damage Parcel Land Improvements Total
1 $40,116 $10,000 $50,116
2 & 3 88,352 20,000 108,352
4 40,116 10,000 50,116
5
6 40,116 46,000 86,116
7 72,45 19,000 91,450
8 53,130 17,000 70,130
9 48,300 11,000 59,300
10 49,011 25,500 74,511
11 154,000 172,000 326,000
12 307,697 50,000 357,697
13 City of New York $1.
The following awards are made for fixtures:
Damage Parcel Amount
1 Herbert H. Friedlander $325
7 Victor Henschel, Inc. 1,300
9 Nathan and Solomonwitz d/b/a S. Solomonwitz Son 2,225
10 Decorators Show Boom Co. 850
11 Lenore Kroll, Inc. 1,200
11 Maud O’Connor Alriq d/b/a Maud Chezeelle 30,000
12 Tie Grafters, Inc. 950
12 Bestaurant Associates, Inc. 6,000
12 Bose Mildwoff 425
12 Paul & Gertrude Gottlieb d/b/a Ritz Plaza Tailors 1,060
12 Daniel Silver d/b/a Daniels Jewelry Shop 1,275
12 Minnie Miller d/b/a Sutton Card & Play Shop 250
12 Hamilton Dwight Co., Inc. 800
In the Parklin case (supra) it was pointed out that evidence of cost of reconstruction, even though not contradicted, may be rejected by the trier of the facts, where there is reasonable ground to question its reliability; that “ [w]here capitalization of potential or actual income indicates a value much greater than the claimed cost of reproduction, a court would at times be justified in rejecting the evidence of such cost of reproduction ” (supra, pp. 130-131). Where the city’s own expert has placed its “ economic” value, which can only mean its exchange or market value, in excess of $100,000 over his appraisal of its structural value, it is manifest that the latter is not a reliable figure. It would not therefore constitute, even for tax purposes, a maximum limit of valuation. The city’s contention thus appears to be without factual support and may be rejected on that ground.
However, I prefer to place my decision on a broader ground, and that is, that this maximum-limit principle established in tax certiorari proceedings is not controlling in condemnation proceedings.
In both, to be sure, it is the value.of the property — land and improvements — which must be fixed. Value, however, “is-a
No sound reason exists to limit in any way the consideration of all elements in the valuation process deemed relevant to the ascertainment of “just compensation ” to an owner deprived of his property. The concept of ‘‘ just compensation ’’ cannot be reduced to a formula (United States v. Cors, 337 U. S. 325), nor is it possible to have ‘‘ inexorable rules ’’ for the determination of value thereunder (United States v. Toronto Nav. Co., 338 U. S. 396, 402). But it may be stated as a broad proposition that the court endeavors to make an informed estimate as to the price which the property would bring in the market when offered for sale by a willing but not anxious seller to a buyer
If there is a definite market shown by frequent sales of similar property, such market value is the value to be fixed. But where the property — as is often the case — is not susceptible to the doctrine of market value, recourse must be had to other means of ascertaining value. The ultimate question is what is ‘ ‘ the value of the land as enhanced by the value of the structures ” upon it (Matter of City of New York, [Blackwell’s Is. Bridge], 198 N. Y. 84, 87, supra). The method to be pursued may vary according to the type of property involved. The last-cited case, merely established the proposition that where the building was suitable to the land, evidence of structural value was competent, though admittedly not conclusive, as bearing upon the question of its market value. Such evidence had, as a matter of fact, been formerly rejected as irrelevant.
Those who would endeavor to extend this principle so as to limit “ value ” to the original cost of construction or the current cost of reconstruction less depreciation are adopting an economic theory which derives from Adam Smith’s classic doctrine that the value of an article equals the cost of its production. The modern appraiser has learned that the law of supply and demand will furnish a more correct index of value and that ‘‘ market value ’’, the standard in condemnation, is determined not so much by cost as by the relative desirability, abundance and utility of the particular property in the community. The Supreme Court criticized the cost theory in the following words: “ Original cost is well termed the ‘ false standard of the past ’ where, as here, present market value in no way reflects that cost. So with reproduction cost, when no one would think of reproducing the property.” (United States v. Toronto Nav. Co., 338 U. S. 396, 403, supra.) The court had earlier stated that value, not replacement cost, which might be greater or less than
We thus arrive at the capitalization of income method. It is obvious, of course, that the prime factor in the mind of the buyer who invests in real property is the realizable income therefrom. This is truly the product of the interplay of the forces of supply and demand. It is necessary, of course, to keep in mind that it is property which is being valued and not the business conducted thereon, and hence goodwill or elements of income influenced by management or method of operation must be eliminated in determining the basic income attributable to the property as such or its rental value. This concept of valuation is based on the idea that the net income derivable from a use of the property to which it is best adapted, when capitalized at the prevailing local rate of investment return, will produce a sum which is the practical equivalent of its true value. (We should at this point take note of the fact that where property is ‘‘ special ’’ in nature in the sense that it does not have a free market value and may not even be income-producing, such as a church or clubhouse, then the court is perforce obliged to accept the summation of the value of the land and the replacement value of the improvements).
In general, however, “ [r]ental value tends to prove fee value, because other things being equal, the income from property is a measure of its market value ” (Ettlinger v. Weil, 184 N. Y. 179, 183). Since rental value is affected by the use which may be made of the property and the type of building erected thereon, “ it-is proper to show, as bearing on the value of the property, that it is peculiarly adapted for any particular business ” so that the owner may “ receive its greatest value for any-available use to which it may be put ” (Matter of City of Rochester [Smith St. Bridge], 234 App. Div. 583, 586, 587). Accordingly it was competent ‘‘ to prove all the uses that could be made of the property; the value of the plant as a live, going flour mill, the increased value, if any, which the structures -so used had given to the land, and all the valuable appurtenances and availabilities of the property * * * These are things which a seller and a purchaser would consider on a sale ” (Banner Milling Co. v. State of New York, 240 N. Y. 533, 543). The claimant was there held entitled to compensation not merely for so much brick, lumber, etc., considered separately, but as synchronized into an efficient functioning unit of property which had enhanced the value of the land beyond the mere cost- of-the improvement. This view has been followed in the recent
It seems obvious that the natural result of such a method of valuation is one integrated figure for the value of the entire property based on use and derived from the synthesis of land and building. That was the procedure approved in Sparkill Realty Corp. v. State of New York (254 App. Div. 78, 82, affd. 279 N. Y. 656) where the claimant was held “ entitled to recover the value of the structures and also the value of the land enhanced by the improvements ”, consisting of a stone quarry plant serving the increasing market of the metropolitan district. The appellant, State of New York, urged that the land and the improvements should have been separately valued and separate findings made, contending also that the value of the property could not exceed the sum of the value of the land as" a naked site and the value of the improvements. The court held that no form of proof or findings was obligatory and that the integrated end-result chosen might be the best manner of stating the true value of this property.
The summation form has been adopted in almost all instances and no injustice is created thereby, however artificial its use when reliance is placed on the capitalization of income method, provided, of course, due allowance is made to arrive at a just total.
The values fixed by me for this property represent my'view of the proper income base and rate of capitalization to be used. Their allocation between land and building is not particularly significant so long as their sum meets the standard of ‘‘ just compensation ”. The constitutional mandate requires the court to disregard in a condemnation proceeding the artificial barrier of a maximum limit of reconstruction cost less depreciation. Were I to heed the city’s admonition and limit my building value to such cost, the net result would still be the same, since I would then be obliged to provide an appropriate increase in the value
Let the corporation counsel prepare and submit a tentative decree accordingly.
With regard to damage parcel 5 the city has posed a valua
