Court Opinion

ID: 5707557
Source: CourtListenerOpinion
Date Created: 2022-01-12 15:49:19.563931+00
Date Added: 2024-06-11T08:40:27.118688
License: Public Domain

Breitel, J.
(dissenting). The only question submitted in this action for a declaratory judgment is whether the language in the subject lease legally restricts the use of the premises to related automotive purposes. Not only is this the sole question concerning which the parties have asked for a judicial determination, but both have submitted it as the only material element at issue in the appraisal of the land for the purpose of filing the rent.
The court is unanimous in disagreeing with Special Term and finding that the purpose clause of the lease is merely descriptive and does not impose any legal restrictions on the use of the premises. Hence, on the only question of law submitted to the court there is unanimity.
The majority, however, has undertaken to decide a further question which apparently did not disturb the appraisers or able counsel for the present landlord and tenant. Going beyond the prayers in the pleadings and on the motions, the majority is instructing the appraisers to take into consideration the economic fact that the premises are encumbered by a renewed lease for a 21-year term, with a further right of renewal for 21 years. In this respect there is not only being decided more than the disputed legal question submitted, but the appraisers may be placed in a difficult, if not impossible, position.
Since this is an action for a declaratory judgment, the court is asked and is empowered merely to declare the rights of the parties concerning their jurai relations with respect to which *403there is a bona fide dispute. (See, e.g., Wardrop Co. v. Fairfield Gardens, 237 App. Div. 605; Goodman & Co. v. New York Tel. Co., 309 N. Y. 258; Matter of Smith, 242 App. Div. 832; Borchard, Declaratory Judgments [2d ed.], p. 29 et seq.) Beyond that, our courts do not determine questions of law merely — or for that matter, economic questions — in the absence of granting relief in conventional form. (Rules Civ. Prac., rules 211, 212; see, e.g., James v. Alderton Dock Yards, 256 N. Y. 298, 304-305; Matter of State Ind. Comm., 224 N. Y. 13; Tompkins, Inc., v. Security Trust Co., 277 App. Div. 1090; 1 Anderson, Declaratory Judgments [2d ed.], § 9 et seq.) Most disturbing, however, is the fact that the majority’s view may have created a dispute where none, so far as is known, existed before.
The case arises in odd fashion. The parties, or their predecessors, by their lease contract had agreed that the land value upon which the rental was to be based was to be determined by appraisers. The appraisers having disagreed with respect to whether the lease legally restricted the use of the premises, the court’s determination has been sought on that sole question of law.* Hence, for all that one may know, the appraisers may have already determined the effect of the most recently renewed lease, and the further right to renew, on the value of the land.
The procedural and jurisdictional questions are not all. There is also serious difficulty in instructing the appraisers that in valuing the land they should take into consideration the existence and term of the lease. Whether a lease for any term, short or long, increases or decreases the land value, as compared with its value if sold in fee simple, obviously depends on whether the landlord’s rights under the lease, particularly with respect to the right to receive rent, are valuable or not. A lease in which there is reserved a high rent will increase the land value. A lease in which the rent reserved is inadequate will decrease the land value, as compared with its value free and clear of any leasehold.
The foregoing is not only true with respect to the right to receive rent, however. A lease under which the landlord will take title to the buildings erected on the land by the tenant at the expiration of the lease may increase or decrease the value of the freehold, depending upon whether the buildings increase *404the value of the land or simply burden the landlord with the cost of demolition or reconstruction.
The parallels may be extended further. Yet, it is to fix the rent under the lease that the appraisal and this litigation were instituted. As a consequence, in determining the land value, to look to the lease term, even as only one of several factors, may involve an appraiser in an inescapable circle of reasoning.
The problem last discussed is not avoided facilely by limiting the appraisers to looking merely to the term of the renewed lease and the further right of renewal — on the theory that the term may affect the economic, as distinguished from the legal, use to which the tenant may put the land. For, a lease term abstracted from the other lease covenants, including that for the payment of rent, is an economic fiction, giving no index of value. Actually, in this case the point, to whatever extent it may have validity, becomes almost immaterial, since there is a possible term of 42 years involved which will support the amortization of most, if not all, buildings constructed for profit, or just short of it.
But there is still a further salient deficiency in reasoning which would relate the leasehold to the land value. The contract between the parties calls for an evaluation of the land. The use of the land as such is not legally restricted, as the court has found. Quite irrevelant to the land use is any economic restriction on the tenant in the use it may make of the land. Put another way, the contract calls for the evaluation of the land based on its highest economic use, not for the evaluation of the leasehold based on its highest economic use. The purpose of such valuation clauses is to reimburse the owner for the value of his land, not to determine the economic rent the tenant can profitably afford to pay.
On the analysis made, therefore, the taking into consideration by the appraisers of the mere existence of the renewed lease, and the right of a further renewal, involves hardly less than an economic renvoi. Of course, whether this be so is not of as serious moment as the fact that the court in a declaratory judgment action is deciding a .question not submitted to it as one in dispute. Moreover, the matter determined without submission of the parties is a purely economic one, namely, what effect a lease has on the value of the underlying freehold, and presumably, that is precisely the function of the appraisers and not the court.
Accordingly, the order of Special Term should be reversed on the law, plaintiff’s motion for summary judgment denied, *405and defendant’s motion for summary judgment granted in accordance with its prayer for relief, with costs to defendant-appellant.
Botein, P. J., and Rabin, J., concur with McNally, J.; Bbeitel, J., dissents and votes to reverse and grant summary judgment to defendant in opinion, in which M. M. Frank, J., concurs.
Order and judgment modified to provide that the appraisal of the fair market value of the land demised, for the purpose of establishing the annual rental for the renewal period commencing April 1, 1958, shall be made on the basis of the best use to which the land can be put and not limited to improvement as a garage, consideration, however, to be given to the term and renewal options affecting the land provided for and contained in said lease and modification thereof, and, as so modified, affirmed, without costs.

 Neither side, however, raises the question whether that, too, did not fall within the purview of the appraisers. Be that as it may, this court in Ruth v. S. Z. B. Corp. (2 A D 2d 970, affg. 2 Misc 2d 631) was confronted with a similar situation and a declaratory judgment, as requested by the parties, was granted. This surely is warrant for the court now to grant the relief requested by the parties, and with that there is no quarrel.