572 Warren St. (Project No. N.Y. 5-103) in Borough of Brooklyn, City of New York, In re

• Decision Date: 20 December 1968
• Citation: 298 N.Y.S.2d 429,58 Misc.2d 1073
• Parties: In re 572 WARREN STREET (PROJECT NO. N.Y. 5--103) IN the BOROUGH OF BROOKLYN, CITY OF NEW YORK.
• Court: New York Supreme Court

Page 429

298 N.Y.S.2d 429

58 Misc.2d 1073

In re 572 WARREN STREET (PROJECT NO. N.Y. 5--103) IN the

BOROUGH OF BROOKLYN, CITY OF NEW YORK.

Supreme Court, Special Term, Kings County, Part IV.

Dec. 20, 1968.

[58 Misc.2d 1074] J. Lee Rankin, Corp. Counsel for the City of New York; Dominick Sorrentino, Bronx, of counsel.

Samuel Goldstein & Sons, New York City, for claimant; Michael Goldstein, New York City, of counsel.

Romano & Schenker, New York City, for first mortgagee; Paul Schenker, New York City, of counsel.

MEMORANDUM

JAMES S. BROWN, Justice.

This is a proceeding in eminent domain to acquire a square block for a low cost housing site. The parcel involved here was known as #135--137 Third Avenue, Brooklyn.

In fixing the amount of just compensation to be awarded, the court must first determine when the property was appropriated by the City. The City contends that title vested on June 3, 1968 under a de jure appropriation. The claimant contends that due to the general knowledge of the condemnation in the area and the activities of representatives of the City Housing Authority in and immediately after the month of August 1967, a de facto appropriation of the property took place about that time.

In various definitions of market value by the courts, appear the words 'under ordinary conditions' or under 'ordinary circumstances' or words of similar import. Ordinarily, just compensation is measured by the fair market value of the property taken as of the date of vesting title. Generally speaking, that is still the general rule, but even that must yield to exceptional circumstances, for each case necessarily involves different facts and must be considered by itself (Matter of Board of Water Supply of New York, 277 N.Y. 452, 14 N.E.2d 789).

These premises consisted of a 4-story building with two ground floor stores and apartments on three floors above, on a plot 42 feet by 100 feet. There were 18 apartments, ranging from 3 to 5 rooms and bath, all of which were fully occupied until shortly before October 1967.

The proofs adduced, particularly the testimony of the site manager employed by the New York City Housing Authority, show that he was employed to supervise this project 'in the middle of 1967' (SM 69); that shortly after the middle of 1967, his employees, at his direction, began to call on each of the tenants in this block, including those in this building, to advise them of the contemplated condemnation. One of the former tenants, through a Spanish interpreter, testified that two employees of the Housing Authority called to see her on or about August 21, 1967 and gave her a letter on the letterhead of the Housing Authority dated on that date (Claimant's Exh. 17), which letter was headed 'Baltic Street-Third Avenue Area,' and at the same time gave her a pamphlet entitled 'Relocation Benefits and Services' which has on its cover 'New York City Housing Authority 250 Broadway.' (Claimant's Exh. 18).

This letter starts: 'As you probably know, the Board of Estimate has approved the plan and project for a low rent housing development in this area.' It then goes on to tell the recipient how to go about getting relocated. It assures the recipient 'You do not have to move now' and states that a representative of the Housing Authority 'will contact you shortly to determine your eligibility for an apartment in public housing.' Another sentence reminds the recipient, 'You are required to move out all furniture and personal belongings' (p. 1). Another sentence on page 5 reads: 'As a tenant of a building on a public housing site, you will be given high priority if you are eligible for an apartment in a public housing development.' It will be noted that this sentence is in the present tense and treats the property as already condemned for public use.

This booklet also sets forth the cash payments to which these tenants may become entitled, and states that the maximum for moving expenses and loss of property is $200 (p. 2) but also: 'The actual amount of relocation adjustment payment will be based on your family income.' The maximum that can be paid is $500.' (p. 3). This tenant also testified that when these two City representatives spoke to her in August 1967, they advised her that she would have money coming to her from the City (SM 54, 55). This was confirmed by the site manager who stated that these employees who worked under him were directed by him to tell the tenants that they would be entitled to moving expenses, if they moved out prior to condemnation (SM 72--73).

This tenant, and also the owner, testified that immediately after these letters and pamphlets were distributed throughout the house, tenants began to move out and the vacated apartments were promptly vandalized, with thefts of refrigerators, stoves, kitchen tubs, etc. By October 1 1967, the owner testified, and he was not contradicted, half of the tenants had moved and most of the others refused to pay any rent because of the assurance of the employees of the Housing Authority that they had money coming to them from the City (SM 47).

By the time the 1967 cooler weather came in, the landlord was getting practically no income whatsoever. None of the vacated apartments could be rerented because of the vandalism and also because the impending condemnation had been noised throughout the area by the City Housing Authority employees. As a result, the landlord could not raise the necessary funds for repairs or fuel, and by November, about 75% Of the tenants had vacated.

Counsel for the City throughout the trial contended that it was not the impending condemnation or the importuning of the tenants by the City Housing Authority with offers of payment of moving expenses if they moved prior to condemnation, but rather a series of Building Code violations going back to 1964, and lack of heat in midwinter 1967--1968 that caused the rapid exodus of the tenants.

The court observes, and it is significant, that despite such violations the building continued to be fully rented in July-August 1967, when it was first appraised by the City's appraiser (SM 14, 85) and it was not vacated until the tenants were showered with notices by the Housing Authority of the proposed condemnation and offers of new apartments and payment of moving expenses for those who moved out prior to condemnation. The court is convinced that it was the activities of the Housing Authority and not building violations that prompted the tenants to vacate and leave an almost empty building which as might be expected became a target for theft, vandalism and destruction, which, according to the City's own appraiser, was reduced in value by some $27,000 in a period of 10 months, when the City appraiser appraised it for the second time.

Sixteen of the eighteen tenants in the building had been receiving welfare assistance, and in December 1967 the Welfare Department sent a form letter dated December 26, 1967 to the few tenants who were still in possession, discontinuing all rent payments (Ex C16).

Meanwhile, violations piled up and on January 22, 1968 notices cutting the rents in half were served (Claimant's Ex. 15) which proved a useless gesture. At or before that time, the owner, with the cooperation of the first mortgagee who was willing to subordinate his mortgage (SM 64) called upon the City through its HRM Bureau (Housing Resources and Maintenance Corp.) for temporary relief. After some delay in processing, he was advised by a Mrs. Davidson of that bureau that since title vesting by the City was too close, no relief could be granted to him. This was all confirmed by the testimony of the mortgagee who had also spoken to Mrs. Davidson of this City bureau.

Finally, the City vested title on June 3, 1968, over ten months after it had let everyone know that the property was being condemned. There certainly was an undue delay between the planning stage and the taking date for which no explanation was offered.

In spite of all this background, it is the contention of the City that the owner is entitled to be compensated only for the entirely vandalized shell of a building that remained on the vesting date. The City's own expert admitted that he had been retained to appraise this property in July or August 1967, and that when he had examined it in July or August 1967, he found it to be fully rented. He then testified that he had fixed the then value of the premises at $41,000. He also said he had taken the then existing violations and condition of the property into consideration (SM 141).

However, he also reappraised the premises a second time as of the vesting date, June 3, 1968, at $13,900, although at that time, the assessed value of the property was still $40,000 (City's Appraisal Ex. 26). By then it was entirely vacant and boarded up.

The City may not by virtue of a condemnation and by its own action cause of depreciation in value of property to be condemned and then claim that just compensation is that depreciated value. The contention of the City that the award herein must be based on the value of the property as of the vesting date, June 3, 1968, cannot be accepted. As was stated by the court in Foster v. City of Detroit, Michigan, D.C., 254 F.Supp. 655 (June 1966):

'If it were, condemnign authorities could deprive thousands of property owners of the 'just compensation' to which they are entitled under the Fourteenth Amendment, by the simple procedure of commencing a condemnation action, prolonging it while they encourage deterioration of the area by filing a lis pendens, tearing down some buildings, ordering welfare tenants to move, etcetera, and then abandoning it and commencing new proceedings at which awards are based solely on value at that time.'

In City of Buffalo v. Strozzi, 54 Misc.2d 1031, 1035--1038, 283 N.Y.S.2d 919, 923--925 (October 1967) the court said:

'The time table of the various proceedings commenced by the City under Article 21 of the City Charter which...