Arlen of Nanuet, Inc., v. State

• Decision Date: 21 July 1966
• Docket Number: Nos. 39972,40099,s. 39972
• Citation: 272 N.Y.S.2d 565,50 Misc.2d 934
• Parties: ARLEN OF NANUET, INC. and Banner Holding Corp., Claimants, v. The STATE of New York, Defendant. Bernard S. SIEGEL, Leonard Greenberg, Bernard Hein, Gilbert Ancowitz andIrving A. Satty, Claimants, v. The STATE of New York, Defendant. Claim
• Court: New York Court of Claims

Page 565

272 N.Y.S.2d 565

50 Misc.2d 934

ARLEN OF NANUET, INC. and Banner Holding Corp., Claimants, v.The STATE of New York, Defendant.

Bernard S. SIEGEL, Leonard Greenberg, Bernard Hein, Gilbert

Ancowitz andIrving A. Satty, Claimants, v.The STATE of New York, Defendant.

Claim Nos. 39972, 40099.

Court of Claims of New York.

July 21, 1966.

David Marcus, New York City, for claimants, Bernard S. Siegel and others.

Skinner, Bermant, Leddy & Raber, New York City, by Bernard L. Bermant, New York City, of counsel, for claimants, Arlen of Nanuet, Inc. and another.

Louis J. Lefkowitz, Atty. Gen., for the State, Robert Schwartz and Richard A. Eagle, Asst. Attys.Gen., of counsel.

MEMORANDUM-DECISION

ALEXANDER DEL GIORNO, Judge.

These two claims, arising out of the same appropriation, were timely filed after the date of vesting, namely, May 10, 1961.The claimants' interests have not been assigned.The two cases, upon affirmance by the Appellate Division of an Order of consolidation made by a Judge of this Court, were consolidated for the purpose of this trial, but separate awards are to be rendered.Other facts pertaining to these claims will be set out in the decision.The findings of fact and conclusions of law submitted by the several parties have been passed upon in accordance with this decision which likewise denies or grants motions made during the trial upon which decision was reserved.

On January 4, 1961, claimantBanner Holding Corp. leased from claimants Siegel, et al., the vacant 26.783 acre subject premises, for a term of 25 years with three 25-year renewal options.The first year rental was $30,000.00.After the first year the rental provided for 24 years was $61,250.00 per annum, thus making the average rent $60,000.00 annually.All rents were net to the landlord.As set forth in the lease, (Claimants' ExhibitL--9, Pars. 4, 5, 27) its purpose was to permit construction by lessee-claimants of a large regional shopping center to be occupied by E. J. Korvette for whom Banner had erected, upon terms generally similar, some 11 other shopping centers.The pertinent portions of Paragraphs 4, 5, 27 are:

'4.CONSTRUCTION: Tenant may erect such buildings and improvements on the leased premises including (but without limitation those provided for in the Korvette sublease * * *

'5.BUILDING PERMIT AND FINANCING.Tenant agrees to use due diligence to apply for and obtain a building permit from the Town of Clarkstown to erect certain buildings as provided in said Korvette sublease promptly following agreement on the plans and specifications for said buildings between Tenant and the sublessee * * *

'27.KORVETTE SUBLEASE.Tenant expects to enter into an agreement of sublease for the premises herein leased to Tenant with E. J. Korvette, Inc., a New York corporation, as sublessee * * *

'Said Korvette Sublease may be modified or amended by the parties thereto only with the written consent of Landlord * * *'

The remaining option term for which the rent was to be from $60,000.00 to $90,000.00 net per year was to be determined according to a cost of living index agreement which was attached to the lease.The tenant also had an option to purchase the fee at a price over and above the then existing mortgage starting at $31,000.00 an acre from the 11th to 15th year, $32,000.00 an acre from the 15th to the 20th year, to $33,000.00 an an acre from the 21st to the 25th year.(See lease, Claimants' ExhibitL--9, Par. 33).

Thereafter, the claimantBanner Holding Corp., on March 7, 1961 entered into three separate subleases with Korvette (Claimants' Exhibits T--2, T--3, T--4, also T--63), encompassing 20 acres of the entire property under lease to Banner, with certain reservations as to the 6.783 acres.By the terms of these subleases, Banner was obliged to erect at its own expense a large discount department store, supermarket, patio shop and parking area as the basic obligation it assumed regarding the 20 acres (Parcel 1) for which Korvette would pay to Banner an annual net rental of $285,000.00.These structures, to be erected for occupancy by Korvette, were to contain a total area of 165,200 square feet, while the parking lot had to be improved with black top, lights, etc.Each of these subleases was for a term of 25 years, with two 10-year options to renew.At that time, it was contemplated by the parties that Korvette would release one of the other parcels contained in the 6.783 acres to Banner to permit erection by Banner of satellite stores in the Korvette operation.

ClaimantARLEN OF NANUET, INC., is the assignee of Banner for which reason the Claim of Banner Holding Corp. is hereby dismissed.

As a result of the appropriation on May 10, 1961, of 16 acres of the demised premises, which divided the unappropriated premises into two separate tracts, and in accordance with the provisions of the lease and subleases, all leases were cancelled by written notice, first by Korvette on May 25, 1961, and then by Arlen on May 26, 1961(Claimants' Exhibit L--31).

The individuals controlling Banner and Arlen of Nanuet are the same as those who, in name of Arlen Operating Corp., at the date of the instant appropriation, owned a leasehold of adjacent lands to the west of Smith Street, which street forms the westerly boundary of subject property.The adjacent parcel is known as the 'Built On' Parcel.It contains 25 acres and is quite similar to the subject parcel in frontage and topography.When first acquired, this 25-acre parcel had been destined by Arlen Operating Corp. as a site for a Korvette Shopping Center.However, Arlen ran into immediate difficulties with regard to the parcel known as 'Dellacroce' Parcel which was in the very middle of the assemblage.Later, Arlen, upon payment of a very high price, plus an exchange of land, obtained the Dellacroce Parcel.While thus stymied, and doubtful as to whether Dellacroce would sell, Arlen showed the subject parcel to the president of Korvette, who was very desirous of locating in Nanuet.Korvette became enthusiastic about the subject property and gave Banner the 'go ahead' signal to acquire it.On this 25-acre or 'Built On' parcel, however, since the original appropriation, Banner or Arlen have erected a shopping center similar to the one contemplated on the subject land (in fact making use where feasible of the plans originally drawn for Korvette for a portion of the subject land), except that the satellite leases, which had not been signed for the subject land on the date of the taking of the instant property, have been executed.As a result, Korvette, for the same buildings and land, is paying in rent the same $285,000.00 per year which it was to have paid on the appropriated site, and satellite tenants are paying additional rentals on additional buildings later erected, making the total net rents payable today on the 'Built On' Site in the sum of $356,000.00 per year.

Everyone agreed that Route 59 is a very important highway in Rockland County, perhaps the most important, for it runs from east to west, connecting Nyack on the east with Suffern on the west end of Rockland County with Nanuet in the middle.

The assemblage of the subject property by the Siegel group was accomplished by means of four deeds spaced in dates of purchase from January 28, 1960 to March 14, 1961, to Decision Realty Corp., which later conveyed the land to the Siegel group by deeds dated between October 18, 1960 and April 11, 1961.Decision Realty Corp. was a nominee corporation wholly owned by the five individual claimants, which they used only as a front for the assemblage.

The subject land, lying on the south side of Route 59, had a frontage on Route 59 of 1, 150 feet, 240 feet on Rose Road on the east, and 289 feet on Smith Street on the west (State's Exhibit N, appraisal, 'Plot Sketch').

The land rose gently from an elevation of 280 feet along Route 59 to 290 feet towards the rear of the plot on the south, and up to 304 feet on the east side near Rose Road, except that there was a low wet area starting about 100 feet west of Rose Road and near Route 59 extending westerly for perhaps 300 feet and to the south maybe 300 feet more.In this low area there was stagnant water which was caused by an open drainage ditch which received water that emptied from a State culvert that ran from north to south under Route 59, and which ditch coursed along the State's southerly right of way of Route 59.The elevation of the land along Route 59 varies generally from 4 to 8 feet below the level of new Route 59.

Upon viewing the property it seemed to the Court that a cut and fill operation within the land itself might have filled the lowland and leveled off the high spots, with perhaps some additional fill required to fill the wet land and level off the frontage about even with Route 59.Because of the size of the plot and the fact that the frontage area was destined for parking, a level two to four feet below the grade of Route 59 would have been no detriment to its use.

As stated, Nanuet is located at about the geographical center of Rockland County.In addition to the benefit of frontage on Route 59, the subject property was accessible from all sections of Rockland County, such as Spring Valley, 1/2 mile away; Pearl River, 2 1/2 miles distant; New City, 1 1/2 miles away by means of Route 59 and Route 303, as well as from the Thruway, Garden State Parkway and Palisades Interstate Parkway, which were about 1/2 mile away.

Route 59 had been reconstructed from the East before the appropriation as a four-lane highway, two lanes on each side of a wide, grassy mall, and has been extended to a point about one-quarter mile west of subject.From there, proceeding westerly, it is the same two-lane highway which has been there for many years.

The subject land which cost the Siegel group $248,000.00 to assemble was vacant except for a dilapidated house which all parties disregarded in their appraisals.The...