Case Name: I. L. F. Y. Co., Appellant, v. Temporary State Housing Rent Commission et al., Respondents; 425 Realty Associates, Appellant, v. Temporary State Housing Rent Commission et al., Respondents; Henry L. O'Brien, Appellant, v. Temporary State Housing Rent Commission et al., Respondents; Barget Realty Corporation, Appellant, v. Temporary State Housing Rent Commission et al., Respondents; In the Matter of Eager Realty Corp., Appellant, v. Thomas B. Parish, Local Rent Administrator, Respondent
Court: New York Court of Appeals
Jurisdiction: New York
Decision Date: 1962-05-10
Citations: 11 N.Y.2d 259
Docket Number: 
Parties: I. L. F. Y. Co., Appellant, v. Temporary State Housing Rent Commission et al., Respondents. 425 Realty Associates, Appellant, v. Temporary State Housing Rent Commission et al., Respondents. Henry L. O’Brien, Appellant, v. Temporary State Housing Rent Commission et al., Respondents. Barget Realty Corporation, Appellant, v. Temporary State Housing Rent Commission et al., Respondents. In the Matter of Eager Realty Corp., Appellant, v. Thomas B. Parish, Local Rent Administrator, Respondent.
Judges: 
Reporter: New York Reports
Volume: 11
Pages: 259–270

Head Matter:
I. L. F. Y. Co., Appellant, v. Temporary State Housing Rent Commission et al., Respondents. 425 Realty Associates, Appellant, v. Temporary State Housing Rent Commission et al., Respondents. Henry L. O’Brien, Appellant, v. Temporary State Housing Rent Commission et al., Respondents. Barget Realty Corporation, Appellant, v. Temporary State Housing Rent Commission et al., Respondents. In the Matter of Eager Realty Corp., Appellant, v. Thomas B. Parish, Local Rent Administrator, Respondent.
Argued March 26, 1962;
decided May 10, 1962.
Robert S. Fougner for I. L. F. Y. Co. and 425 Realty Associates, appellants. Albert W. Fribourg for Henry L. O’Brien and Barget Realty Corporation, appellants.
I. The rent freezing statute as applied to the fair return cases based on sales price is unconstitutional because it retroactively suspends the reasonable rent machinery while continuing control over appellants’ rents. (Trio Distr. Corp. v. City of Albany, 2 N Y 2d 690; Block v. Hirsh, 256 U. S. 135.) II. The rent freezing statute, including the retroactivity bar as applied to appellant 0 ’Brien and similar fair return cases based on equalized assessed valuation, is unconstitutional because it indefinitely suspends the reasonable rent machinery without the justification sustained in I. L. F. Y. Co. v. Temporary State Housing Rent Comm. (10 N Y 2d 263). III. Abrogation of the State’s reasonable rent fixing machinery for the pre-May 1,1962 period under State control and its transfer to successor city operation constitutes an invalid delegation of legislative power. IV. The rent freezing statute as applied to appellant Barget and similar capital improvement cases is unconstitutional as the taking of property without just compensation and in violation of the constitutional contract clause. (Matter of Alamac Estates v. McGoldrick, 2 N Y 2d 87; Matter of Kaplan v. Weaver, 4 A D 2d 865; Central Sav. Bank v. City of New York, 280 N. Y. 9; Russell v. Sebastian, 233 U. S. 195; New York Elec. Lines Co. v. Empire City Subway Co., 235 U. S. 179.) V. The objective to transfer rent control from State to city operations constitutes no justification for suspension of the reasonable rent machinery. (Teeval Co. v. Stern, 301 N. Y. 346; Matter of Schreiber v. McGoldrick, 307 N. Y. 650; Health Dept. v. Rector, Church Wardens & Vestrymen of Trinity Church, 145 N. Y. 32; Matter of Sipal Realty Corp. [Dankers], 8 N Y 2d 319.) VI. Transfer to the city of the power to determine pending protest proceedings is invalid as the deprivation of a vested right.
Irving Weissman for Eager Realty Corp., appellant.
I. Bent control laws generally are constitutional only as an exercise of the police power and in times of emergency. (People ex rel. Durham Realty Corp. v. La Fetra, 230 N. Y. 429; Orinoco Realty Co. v. Bandler, 233 N. Y. 24; Lincoln Bldg. Associates v. Barr, 1 N Y 2d 413; Teeval Co. v. Stern, 301 N. Y. 346.) II. The legislative determination of an emergency is not conclusive. (O’Gorman & Young v. Hartford Ins. Co., 282 U. S. 251; Wiggins v. Town of Somers, 4 N Y 2d 215; Matter of Hotel Assn, of N. Y. City v. Weaver, 3 N Y 2d 206; East N. Y. Sav. Bank v. Hahn, 182 Misc. 863, 293 N. Y. 622, 326 U. S. 230.) III. The police power extends only to such measures as are reasonable and embody reasonable and appropriate means. (Good Humor Corp. v. City of New York, 290 N. Y. 312; Adamec v. Post, 273 N. Y. 250; Moritz v. United Brethrens Church, 269 N. Y. 125; Matter of People [Tit. & Mtge. Guar. Co.], 264 N. Y. 69; Matter of Wulfsohn v. Burden, 241 N. Y. 288.) IV. The means adopted, the rent freeze, is unreasonable and inappropriate to the objectives of rent control. (Matter of Rudack v. Valentine, 163 Misc. 326, 274 N. Y. 615; People v. Faxlanger, 1 A D 2d 92,1 N Y 2d 393.) V. The rent freeze does not serve the public good and is, therefore, unconstitutional. (Barrett v. State of New York, 220 N. Y. 423; People v. Gillson, 109 N. Y. 389; People v. Equitable Trust Co. of New London, Conn., 96 N. Y. 387.) VI. The harm done by the rent freeze outweighs any contribution it may make to the public good. (People v. Faxlanger, 1 A D 2d 92, 1 N Y 2d 393.)
Louis J. Lefkowitz, Attorney-General (Irving Galt and Sheldon Raab of counsel), in his statutory capacity under section 71 of the Executive Law.
I. The constitutional questions are not properly before the court, since appellants are not aggrieved by the challenged provisions. (Matter of Self-Insurer’s Assn. v. State Ind. Comm., 224 N. Y. 13; Goodman & Co. v. New York Tel. Co., 309 N. Y. 258; Poe v. Ullman, 367 U. S. 497; Metropolitan Co. v. Brownell, 294 U. S. 580; Nebbia v. New York, 291 U. S. 502; New York State Thruway Auth. v. Ashley Motor Court, 12 A D 2d 223,10 N Y 2d 151; People v. Faxlanger, 1 N Y 2d 393.) II. Appellants are not aggrieved by transfer to the city of pending protest proceedings or of matters remanded after judicial review. (People ex rel. Brixton Operating Corp. v. La Fetra, 230 N. Y. 429, 257 U. S. 665.) III. Nor are appellants aggrieved by the rent increase “ freeze ” to May 1, since they do not allege deprivation of a reasonable rent during the transition period. (Teeval Co. v. Stern, 301 N. Y. 346, 340 U. S. 876; Teeval Co. v. McGoldrick, 304 N. Y. 859; Bowles v. Willingham, 321 U. S. 503; Matter of Schreiber v. McGoldrick, 307 N. Y. 650; Municipal Gas Co. v. Public Serv. Comm., 225 N. Y. 89.) IV. The temporary “ freeze ” of orders increasing residential rents, pending transfer of rent administration to the city, is a reasonable exercise of State police power to assure an orderly transition. (Lincoln Bldg. Associates v. Barr, 1 N Y 2d 413, 355 U. S. 12; Biddles v. Enright, 239 N. Y. 354; I. L. F. Y. Co. v. Temporary State Housing Rent Comm., 10 N Y 2d 263; Szold v. Outlet Embroidery Supply Co., 274 N. Y. 271, 303 U. S. 623; Williamson v. Lee Opt. Co., 348 U. S. 483; Goesaert v. Cleary, 335 U. S. 464; Roschen v. Ward, 279 U. S. 337; McGowan v. Maryland, 366 U. S. 420; Cleveland v. City of Watertown, 222 N. Y. 159; Matter of Engelsher v. Jacobs, 5 N Y 2d 370, 260 U. S. 902; Matter of Alamac Estates v. McGoldrick, 2 N Y 2d 87; Matter of 225 E. 70th St. Corp. v. Weaver, 6 N Y 2d 197; United States v. Jacobs, 306 U. S. 363; Pearsall v. Great Northern Ry., 161 U. S. 646; Norman v. Baltimore & Ohio R. R. Co., 294 U. S. 240; Health Dept. v. Rector, Church Wardens & Vestrymen of Trinity Church, 145 N. Y. 32; Matter of West, 289 N. Y. 423, 321 U. S. 36.) V. The transfer to the city of both protest proceedings pending before the State Commission on May 1 and matters remanded after judicial review in no way infringes appellants’ constitutional rights. (Fruhling v. Amalgamated Housing Corp., 9 N Y 2d 541, 368 U. S. 70; Matter of Rutherford Estates v. Dorman Prods., 301 N. Y. 767; Matter of Tartaglia v. McLaughlin, 297 N. Y. 419; Matter of Boardwalk & Seashore Corp. v. Murdock, 286 N. Y. 494; Greystone Hotel Corp. v. Morrow, 280 App. Div. 242; United States v. Schooner Peggy, 1 Cranch [5 U. S.] 103; Matter of Yasser v. McGoldrick, 306 N. Y. 924; Matter of Schrieber v. McGoldrick, 307 N. Y. 650.)
Jacob B. Ward and Harold Zucker for Temporary State Housing Rent Commission, respondent.
I. A temporary freeze, of short duration, to provide a bridge for an orderly transition of the residential rent control program from State to city administration, presents a rational exercise of police power. (Defiance Milk Prods. Co. v. Du Mond, 309 N. Y. 537; Lincoln Bldg. Associates v. Barr, 1 N Y 2d 413; Teeval Co. v. Stern, 301 N. Y. 346.) II. Appellants’ contentions are without merit. (I. L. F. Y. Co. v. Temporary State Housing Rent Comm., 10 N Y 2d 263.)
William L. Messing for Morris H. Kates, John Bogart and Norman P. Smith, respondents.
The proscription of involuntary rent increases until May 1,1962 was constitutional. (Teeval Co. v. Stern, 301 N. Y. 346; I. L. F. Y. Co. v. Temporary State Housing Rent Comm., 10 N Y 2d 263.)
Robert S. Garson for Thomas James, Inc., and others, amici curiæ.
I. The “ Freeze ” provisions of the statute read with the rest of the statute are unconstitutional. (People v. Kuc, 272 N. Y. 72; People v. Binge, 197 N. Y. 143; New York Cent. & H. R. R. R. Co. v. Williams, 199 N. Y. 108; People v. Gibson, 109 N. Y. 389; Oshkosh Waterworks v. Oshkosh, 187 U. S. 437.) II. Subdivisions 11 and 13 of section 1 of the statute, both because they would negate the voiding of the “freeze” provisions and because they would require improper action from the courts, should also be held unconstitutional.

Opinion:
Chief Judge Desmond.
These four actions and one proceeding were brought by owners of rent-controlled New York City residential properties for a declaration of unconstitutionality of so much of the 1962 amendments (L. 1962, ch. 21) to the State Emergency Housing Bent Control Law (L. 1946, ch. 274, as amd.) as prohibits any increase in rents (unless a tenant consents) during the period from the effective date of the amendments (Feb. 17, 1962) until May 1, 1962. On that latter date the City of New York pursuant to the 1962 act takes over rent control administration within its boundaries. The 1962 act transfers from the State to any city of 1,000,000 or more population (in other words, New York City) rent control in that city (§ 1, subd. 2), requires such city to establish its own rent agency to carry on such control after May 1,1962 (§ 1, subd. 4), authorizes the city to adopt local rent control laws and regulations effective after that date (§1, subd. 5) and as of that date transfers all rent control functions and duties from the State to the city agency (§1, subd. 6). The main attack of these suitors is against section 6 of the 1962 act which forbids any increase (absent voluntary written consent of a tenant) in regulated residential rents for the two and a half-month-period from February 17, 1962 to May 1, 1962. Subdivision 11 of section 1 explicitly provides for the continuance of processing by the new city agency of pending administration proceedings, and for the transfer of pending applications for that purpose.
Special Terms in New York and Kings Counties, holding that section 6 of the 1962 amendatory law was not violative of any constitutional rights of the owners, dismissed the four actions and one proceeding, respectively. The five owners took direct appeals to this court. Since these are direct appeals from the courts of original jurisdiction (Civ. Prac. Act, § 588, subd. 4), constitutional questions only may be presented and determined.
All five of the landlords take essentially the same position: that the February 17-May 1 freeze, added to previously mandated delays in ordering justified increases, makes the law as amended in 1962 unconstitutional as to them because, while continuing control over the rents, it ' ' retroactively ' ' suspends the operation of the machinery theretofore set up for providing reasonable rent adjustments. There is no question raised as to illegality of transfer of rent control from State to city.
There are different fact situations as to these several complainants. Plaintiff I. L. F. Y. Co. was the unsuccessful plaintiff in an earlier action against the State Commission, dismissal of which we affirmed last July (10 N Y 2d 263). In that suit I. L. F. Y. Co. was assailing April, 1961 amendments which postponed for a year commission action on the landlord's application filed by it in February, 1961 for higher rents to be based on the price paid for the property by I. L. F. Y. Co. on a purchase completed a week earlier, and which 1961 law forbade retroactivity for any such increase if and when granted. I. L. F. Y. Co. now alleges unconstitutionality of the added delay mandated by the 1962 law turning rent control over to the city. Present plaintiff 0 'Brien, as to a property he had owned for many years, filed with the State authorities in July, 1961 an application for a rent increase calculated according to that part of the statute (Emergency Housing Rent Control Law [L. 1946, ch. 274, as amd.], § 4, subd. 4, par. [a], cl. [1]) which allowed the use of equalized tax assessment valuation as a rent base. Plaintiff Barget Realty Corporation, as the result of the 1962 statutory freeze above described, has been barred temporarily from getting action on an application which it based on expenditures it made for improvement and rehabilitation of its tenanted real property, which expenditures under the statute (§4, subd. 4, par. [a], els. [6], [7]) and the Administrator's regulations would have justified upward adjustment of the rents. Plaintiff 425 Realty Associates and petitioner Eager are, like plaintiff I. L. F. Y. Co., faced with the 1962 law extension (until May 1, 1962, or later) of the one-year freeze legislated in 1961 as against rent increases based on recent sale prices of affected properties.
With our I. L. F. Y. Co. decision of last year (10 N Y 2d 263, supra) on the books, it would indeed be remarkable if we should hold the 1962 statutory freeze to be unconstitutional. Deferment is not the same as denial. Freezes and rollbacks of rent increases are, as we wrote in that earlier opinion, historically and constitutionally acceptable (see Teeval Co. v. Stern, 301 N. Y. 346, cert. den. 340 U. S. 876). The relatively short two and a half-month-hold-period ordered by the 1962 Legislature pending transfer of control to the city seems reasonably incidental to such a change-over. While the statute does not specify the reason for the short freeze, it is quite obvious that the suspension of the issuance of decisions on increase petitions was considered necessary for administration purposes — that is, to hold up increases until city control should begin to operate. Any such transfer necessarily produces some delays. It is, of course, presumed that the Legislature has investigated the situation and discovered a need for the requirement (I. L. F. Y. Co. v. Temporary State Housing Rent Comm., 10 N Y 2d 263, 269, supra, and cases cited). The 1962 act had been recom mended by the Joint Legislative Committee to Study Rents and Rental Conditions. Although these landlords had processed their several applications to points where favorable action was imminent, they had no " vested " rights to increase orders or to continuation of the rules or formulae on which their applications had been based (I. L. F. Y. Co. opinion, supra, p. 270, and cases cited). The Legislature concluded that one necessary or desirable condition of the concededly valid State-to-city rent regulatory power transfer was that there be a breathing spell during which no increase orders should be entered. This was a new situation requiring new treatment. We see nothing unconstitutional about the method chosen by the Legislature.
Since May 1, 1962 has now passed, we assume that the city has enacted and put into effect a local law for rent control, but the provisions, whatever they may be, of that local law are not before us and we do not take account of them in any way in making the present decision. Nor do we make any decision as to whether the new local law can or does affect any existing rights of any of the present appellants.
The judgments and order appealed from should be affirmed, with costs.