Evening star., 1922-01-03
RENT commission
DECISION REVERSED
|NM0NM0UTHCASE
Justice Van 0rsdel Directs
.Rehearing Of Complaints
Against Apartment House.
HELD INQUlSITION RATHER
THAN JUDICIAL INQUIRY
Rates Fixed Held Confscatory and
Are Declared Void-Court Re-
!. CARDS Action Unfair.

In reversing the decision of the
rent commission and directing re-
hearing of the Monmouth apartment
Louse case, Justice Van Orsdel, speak
ing for the District Court of Appeals
today declared that the proceedings
before the rent commission were
conducted more in the nature of
an inquisition than a judicial inves-
tigation in which tHe commission was
called upon to judicially determine
valuable property rights.
The appellate court finds that
James L. Karrick. owner of the
property, did not have fair and i'm
partial hearing before the rent COM
mission. The court points out that
parts Of the proceedings were con-
ducted in the absence OF counsel. the
commission acting In the double ca
pacity of judges and counsel ana IN
some instances counsel were no. al
lowed to be heard in defense OF defend
ants rights.
Six Per Cent Allowed.
The Court of Appeals holds that If
the commission sets the rental figure
at an amount which makes the net
income fall below per cent of the
value OF the property it should be
treated as "confiscatory.' This rate,
however, the court finds. must be
clear Of the ordinary expenses. In
arriving at this per cent standard
the court says. it considered the haz-
ards Of the business. the value OF
money at the present time and the
tyNfn
While the Ball act undertakes to
limit the appellate court to review
of questions of law, the court de-
cides that if 1t is suggested that the
rental rates fixed are such that they
will result in confiscation. it then be-
comes the duty Of the court. Tor tne
proper determination of that issue,
to review the proceedings before the
commission both as to law and fact.
Consideration Pointed Out.
In ascertainfng a reasonable rate in
any case, the court declares, the COM
nnfssion should first determine the fair
market value Of the property. In do
ing this it may consider original cost
as well as cost Of reproduction: also
rental value. These are elements to
be considered. none Of which or all
The second step Is to determine the
gross rentals demanded by the land
lord and then to compute the oper-
ating expenses and deduct the gross
expense from the gross rental. This
will give the net rental from which a
puted on the fair market value Of
the property.
Monmouth apartment case. the court
finds, shows that the cost Of the build
Ing ;oat be gssea at IS ah sss'' 5
makes a total Of S5s2.s15.4o. Taking
two.thirds Of this as basis upon
which to compute the value of the
seventy-six apartments affected by
the ruling. We have $36s.543.20. Two
thirds Of the operating expenses being
deducted leaves the percentage of re-
turn, the court finds. at 2.62 per cent.
Held ConAscatory.
1t is apparent, concludes Justice
Van Orsdel. that this result is SO un-
fair and unreasonable that 1t amounts
to deprivation of property without
due process of law within the inhibi-
tion Of the fifth amendment The
rates fixed are held to be confisca-
tory and therefore void.
Justice Hits Of the District Supreme
Court sat as a member of the court
in the absence of Chief Justice Smyth.
The Court of Appeals. in an opin-
ion by Justice Van Orsdel, upheld the
decision of the rent commission,
which had found James l.. Karrick
guilty of refusing to furnish William
A. Colman. tenant in the Monmouth
apartment house. with electric current
for a period Of twelve days, and
agreed with the commission's action
in fixing $3.50 as reasonable compen-
sation. The tenant attacked the va
lidity Of the Ball act, but the ap-
pellate court points out that the
United States Supreme Court has
made this no longer an open question,
and as the record docs not contain
the evidence offered before the COM
mission. the court 'presumes that the
finding of the commission is sup
ported by the testimony"
Chairman A. LeftWich Sinclair of
the District Rent Commission. when
apprised of the courts decision by a
Star reporter. withheld comment on
the case, stating that until the com
missioners and Attorney Chaplin
Brown had conferred, the attitude of
the rent board with regard to an an
peal to- higher courts would not be
disclosed.