New-York tribune., 1921-11-03
IJ.S.Court Fixes
s p. C.. as air
Rental Return
Judge Hand Rejects Equity
as Basis and Adopts Fee
Value of April L, 1920, in
! Setting Reasonable Profit
Lower Than State Rulings
Appellate Divisions May Be
Influenced by Decision: !:
Victory, Says Untermyer

Judge Learned Hand in the Federal
District Court yesterday handed down
decision in which he fixed ''rea-
scnahle rent" as per cent Of the vaiu-
alton of the real property involved. In
90 doing Judge Hand ran counter to a
recent decision in the Appellate Term
Of the Supreme Court, which held that
10 per cent return on the property
involved was reasonable.
The case in question, in which David
Whitshorn and other tenants brought
sction against the receivers for the
American Real Estate Company, Walter
c. Noyes and Alfred 6. Marling, was
argued before Judge Hand two weeks
AFRO. at which time Samuel Untermyer
appeared as special counsel for the
tenants.
ar untermyer issued statement
isst night III which he declared that
the decision should be very gratifying
to the tenants. Judge Hand, though
he refused to accept the equity in the
property as the basis on which to de-
Eec fdAuc- Nut Equity OASIS
te-nine a reasonable return, as the
tenants counsel had asked, ruled that
The fee value of April 1, 1920. rather
than that at the time of the litigation,
should be taken as the basis. Mr.. I'm
termyer had urged that per cent on
the equity was fair return: Judge
Hand allowed per cent on the fee
value of April I, 1890.
While the oplnion filed yesterday is
not Winding upon the state courts, it is
expected TO have considerable influence
there, as the appellate terms of the
Supreme Court in the 1st and I'd dis
tricts have failed 20 agree on any
point except in allowing that 10 per
cent constitutes reasonable return.
App peals are now pending in the Ap-
pellate bureaus in both local districts.
At present the courts in Brooklyn
ard the second district have as their
chief authority the decision in the case
of Hirsch VS.. Wiener, in which the
court allowed 10 per cent on the fee
v2lue Of the property at the time the
litigation began. In Manhattan and the
first district the precedent is set bv
The decisions in Hall Company VS.. Moos
and Schwart vs.. Deusch, which allow
10 per cent on the equity alone. de-
clarIng that testimony on the fee value
has no bearing on the rental and that
tae landlord can only demand the 10
per cent return on his own actual in
vestment. The interest upon any
mortgage must be 'included among the
operating expenses, according to these
rulings.
Judge Hand has taken the lead in
setting past date for the determine
ton OF the fee value. The fair return
which he allows is the lowest which
aas been set by any court.
Untermyer Sees Millions Saved q
IN his statement commenting on the
decision, Mr.. Untermyer said:
1T is long step toward minimizing
the effect OF the 10 per cent Brook
lyn decision, which, it is to be hoped,
the municipal judges in Brooklyn will
no longer find it necessary to fellow
Ice difference between the 10 per cent
rule and the per cent allowed by
Judge Hand alone means a reduction
OF 20 per cent in rents and should
represent saving of hundreds of
millions Of dollars to the tenants Of
New York City"
Judge Hand in ruling that values
of April 1, 1920, the date of the first
rent law, should be taken as the basis
lcr rentals, declared that he did not
smnk it would be possible to take the
AeH, aa"s Is retroactive. and that con-
Nquently fee values resulting from
Ii scarcity of homes IN to that tine
Hpuld have to be allowed He admitted
sn.at this would favor rent gougers at
ths expense Of those who had been
SLOW IN making demands upon their
tsna nts
Pee vafues,' he wrote, 'nad bssn of
gradual growth for many years, were
IS well recognized form Of property
as any other, and it cannot be sup
posed that the law meant TO confscate
ghem altogether, even for a period of
D~o years 1t follows that the fee