Court Opinion

ID: 5481865
Source: CourtListenerOpinion
Date Created: 2022-01-10 01:57:40.179651+00
Date Added: 2024-06-11T08:33:37.731078
License: Public Domain

Dye, J.
(dissenting). We all agree that since the subject property has been “ filled in and graded ” and is being used as a “ golf driving range ”, it comes within the meaning of the Emergency Rent Laws and that the defendants-respondents are entitled to continue in possession as a statutory tenant during the emergency (Commercial Rent Law, § 1; L. 1945, ch. 3, as amd.; McKinney’s Unconsol. Laws, § 8521 et seq.; Business Rent Law, § 1; L. 1945, ch. 314, as amd.; McKinney’s Unconsol. Laws, § 8551 et seq.). We disagree as to what constitutes the reasonable rent to be charged.
When the Legislature authorized a holdover tenant to continue in possession of the premises as a statutory tenant during the emergency, it also contemplated that the holdover tenant should pay a reasonable rent. When circumstances in a given case require the fixing of a reasonable rent the statute provides that *588‘‘ A net annual return of eight per centum- on the fair value of the entire property including the land shall be presumed to be a reasonable return.” (Commercial Rent Law, § 4, subd. 1; McKinney’s Unconsol. Laws, § 8524, subd. 1; Business Rent Law, § 4, subd. 1; McKinney’s Unconsol. Laws, § 8554, subd. 1.)
Here, on conflicting proof, the fair value of the property has been fixed at $220,000 which value having been affirmed in the Appellate Division is conclusive here. A majority here are about to adopt the rental as fixed at Special Term as the reasonable rent to be charged, viz., 3%% of the fair value plus taxes which will yield a return of $12,201.15, although the proof shows that the interest on the mortgage and the taxes aloné amount to $12,601.15 resulting in an annual cash loss to the owner of $400 without taking into consideration the mortgage amortization payments of $10,000 per year. The Legislature, as we see it, never contemplated such a result and to avoid its happening presumed that a net annual return of 8% on the fair value including the land was a reasonable return.
It seems manifestly inconsistent to deal with the subject property as business space in order to justify a holdover tenancy and at the same time reject the statutory presumption on the theory that it is inapplicable because the property is not being devoted to its best available use.
Best available use is an element of value and as we view the record, such use, as well as the actual use, was taken into consideration in fixing the fair value of the property. Here no proof was presented by the defendants relating to the rental value of the premises, such as proof of rental value of similar space, receipts by the tenant from the operation of the activities at the premises, nor indeed any proof whatsoever tending to rebut the presumption which the statute establishes, as was done in Matter of Appleby (Walsh Paper Co.) (301 N. Y. 643), and Matter of Rose (Williams Auction Sales Corp.) (297 N. Y. 978). Thus the statutory presumption - as to reasonable return on the fair value as found remains wholly unrebutted. The rental of $4,000, fixed in a lease made in 1947, with a 90-day (later increased to 180-day) termination clause, and under altogether different conditions, cannot outweigh the statutory presumption. The determination of Special Term gives the landlord no reasonable return, indeed no return at *589all, but a deficit. In the absence of rebutting proof well-recognized principles require that the legislative presumption be given effect. We may not assume that the legislative pronouncement on this subject was meaningless. When so viewed, the rental return as fixed by the Appellate Division at a statutory rate of 8% of the fair value of the property plus taxes is the reasonable rent.
The judgment of the Appellate Division should be affirmed, with costs.
Loughran, Ch. J., Lewis and Desmond, JJ., concur with Fuld, J.; Dye, J., dissents in opinion in which Conway and Froessel, JJ., concur.
Judgment accordingly. [See 303 N. Y. 1006.]