Court Opinion

ID: 5777802
Source: CourtListenerOpinion
Date Created: 2022-01-12 17:44:48.811986+00
Date Added: 2024-06-11T08:41:54.966247
License: Public Domain

Steuer, J. (dissenting).
This claim in condemnation has been tried three times and it is, unfortunately, necessary for an understanding of the determination to review the prior history. The property, labeled Damage Parcel No. 9, is located on Park Row between Duane and Pearl Streets and, at the time of taking, was being used as a parking lot. At the first trial the value of the parcel was found to be $355,000. This figure was arrived at on proof of the following facts. Prior to the taking the owner had entered into a net lease with one Hallock by the terms of which Hallock agreed on an annual rental of $25,000. Hallock was to erect on the premises a 10-level “ Minit-Park ” garage. Plaintiff’s expert capitalized the rental at 7% and rounded off the result to reach $355,000. This court reversed (24 A D 2d 243, sub nom. Matter of City of New York [Friedman]) upon the ground that the basis used was too speculative, enumerating several factors such as that the proposed lease did not obligate the lessee to build a garage, that the option to vacate the existing tenancy had never been exercised, and the like. A second trial resulted in an award of $285,000. This figure was arrived at by comparing the sale of a garage at Cliff and Fulton Streets and adding approximately $6.50 a square foot to the sale price of that property. This court again reversed (31 A D 2d 530) on the grounds that using a single sale was not a reliable standard, that the properties were concededly not comparable, and that the contention that the Cliff-Fulton garage proved unprofitable should have been considered as bearing on comparability.
On the third trial, now under review, the award was again $355,000. The objections of the prior trials were on the surface overcome by the simplest means. The square foot area of the parcel was divided into the preconceived figure of $355,000. The same was done for the Fulton Street sale. The result shows a difference of 35%. It was then testified that the instant property was worth 35% more, and the circle was complete. This childish attempt at reconciliation of values is completely belied by the record. Reliance on a single sale is just as tenuous as. it was on the prior trial and just as open to criticism. An argument might be made that when there is only one sale that sale supplies the only standard. However, before a sale — whether it be the only one advanced or one of many—can be used, the property must be comparable. Here the record shows that the Fulton Street property was not comparable. The *161claimant’s expert when asked about it on cross-examination on the second trial, scornfully replied, “You might just as well ask me about a garage up in Albany.” If that were not enough, the differential employed, 35%, shows that there is no true relationship between the respective properties. Without the comparative sale approach, there is absolutely nothing to justify the result except the original capitalization approach.
It is unfortunate that this matter should have been nine years in the courts but it is equally unfortunate that a palpably wrong result should be condoned for that reason. Nor is it permissible to conclude that the city is at fault fur the delay. There can. be little doubt that the sad history of this case merely points up the ineptitude of the present judicial system of determining value. Where an adversary system requires a determination within the confines of a record consisting of the testimony of so-called experts, each hired for the purpose of attesting to an exaggerated value — one enhanced, the other depressed — little better can be expected.
A careful analysis of the evidence does provide a clue to the real value of the parcel. There is nothing unduly speculative about taking the capitalized rental of an executed lease, the bona fides of which is not questioned, as a basis for fixing value (City of Buffalo v. George Irish Paper Co., 26 N Y 2d 869). Nor do I find that the facts which induced this court on the first appeal to find the lease in question too speculative have survived more recent thinking on the subject. The failure of the new tenant to go ahead and of the claimant to exercise his option of cancellation could both have well been found to be the consequence of the anticipated taking on condemnation. Such a finding would be buttressed by the city’s failure to approve the plans for the projected garage within the usual time limits.
That is not to say, however, that the projected capitalization testified to represents value. The fault lies in the rate. Here again the basic fault in the system appears. The city never conceded that capitalization was a permissible approach, so it offered no proof of a proper rate. It did, however, offer proof of facts from which a rate could be deduced. There was proof, uncontradicted except as indicated below, that this type of garage was first built about 1950. The salient features are an unwalled structure with cubicles just wide enough to contain a car. The cars cannot be moved under their own power because there is insufficient space for the operator to get in or out of the car, and there are no ramps. Cars are moved *162by means of traveling elevators and they are taken on and off the elevator by a powered dolly. In the first 10 years of operation the mechanical problems in connection with this operation never were solved satisfactorily and operation never became feasible or profitable. As a result this type of operation, though theoretically desirable, has not prospered, and garages of the type, not proving profitable, have to a large extent been converted to more conventional operation or have been discontinued. The operation at Fulton Street was shown to have failed financially. The only counter to this testimony was the fact that the proposed lessee was an experienced garage operator who was willing to enter such a venture.
At the very best these facts show that the proposed use was a highly speculative venture and the rental was far from the category of an assured realizable income. It is fantastic to believe that an owner of property would be satisfied with a 7% return on a venture involving such a risk. The record is barren of proof as to what the return should be under these circumstances, but common experience shows that a return of 1% above the customary rate for a secured obligation is hardly realistic. To avoid an additional trial, it is submitted that if the claimant would stipulate to reduce the award to $200,000 (based on a capitalization rate of 12%%) an equitable award, and one in keeping with the other land values found in regard to other parcels in the taking, would result. Otherwise, an additional trial based on this guideline should be had.
McGtvern, J. P., Nunez and Tilzer, JJ., concur with McNally, J.; 'Steuer, J., dissents in an opinion.
Final decree, Supreme Court, New York County, entered on or about December 3, 1969, affirmed, without costs and without disbursements.