Cord Meyer Development Co. v. Bell Bay Drugs, Inc.

• Decision Date: 07 July 1967
• Citation: 229 N.E.2d 44,20 N.Y.2d 211,282 N.Y.S.2d 259
• Parties: , 229 N.E.2d 44 CORD MEYER DEVELOPMENT COMPANY et al., Respondents, v. BELL BAY DRUGS, INC., et al., Appellants.
• Court: New York Court of Appeals Court of Appeals

Page 259

282 N.Y.S.2d 259

20 N.Y.2d 211, 229 N.E.2d 44

CORD MEYER DEVELOPMENT COMPANY et al., Respondents, v. BELL BAY DRUGS, INC., et al., Appellants.

Court of Appeals of New York.

July 7, 1967.

H. Leo Kapner, New York City, for appellants.

Paul J. Goodman, Forest Hills, and Abraham Abramowitz, New York City, for respondents.

VAN VOORHIS, Judge.

Crestview Chemists, Inc. (hereafter called called Crestview) rents a pharmacy in a shopping center from its coplaintiff Cord Meyer Development Co., Inc. (hereafter called Cord Meyer) in Bayside, Queens. It is located in a commercially zoned area. Defendant Bell Bay Drugs, Inc. (hereafter called Bell Bay) rents space used as a pharmacy in a nearby professional medical building from defendant 212--26 Realty Co., Inc. (hereafter called Realty) which is located in a different zoning district in which professional medical offices are permitted but from which commercial businesses (including pharmacies) are excluded. Plaintiffs are suing for an injunction to restrain the conduct of a pharmacy by Bell Bay and for damages. The threshold question is whether plaintiffs have sustained special damage entitling them to sue. We are told that the lease between Crestview as tenant and Cord Meyer provided for payment of a fixed rental plus a percentage rental upon the volume of business transacted. This lease was offered in evidence for the purpose of showing that plaintiffs sustained special damage on account of the violation of the zoning ordinance by Bell Bay and Realty due to the diversion of business from Crestview on account of business competition. The trial court excluded the lease and evidence that Crestview lost business to Bell Bay, and dismissed the complaint upon the ground that there was no violation of the zoning ordinance by Bell Bay.

The Appellate Division held that there was a violation, and granted a new trial to determine whether Crestview and Cord Meyer had standing to sue. Bell Bay and Realty have appealed as of right upon stipulating for judgment absolute. Although we agree that the conduct of a pharmacy by Bell Bay in this professional building does constitute at least a formal violation of the zoning restriction to residential purposes, the order of Special Term dismissing the complaint should be reinstated for the reason that plaintiffs have not shown--even if the evidence that was excluded had been admitted--that they have standing to sue for an injunction or are entitled to recover damages.

It has long been held that property owners have no vested rights to monopolies created by zoning laws or ordinances. These are not enforced at the instance of one competitor in order to prevent or reduce competition. The Appellate Division recognized this in the case at bar by stating that 'a competitor may not obtain an injunction restraining violation of a zoning ordinance merely because he is a competitor (cf. Bazinsky v. Kesbec, Inc., 259 App.Div. 467, 19 N.Y.S.2d 716, affd. on other grounds 286 N.Y. 655, 36 N.E.2d 694; Farr v. Zoning Bd. of Appeals of Town of Manchester, 139 Conn. 577, 95 A.2d 792)'. This is well-established law (see 2 Rathkopf: The Law of Zoning and Planning (3d ed.), p. 40--14 citing Kamerman v. LeRoy, 133 Conn. 232; Circle Lounge & Grille v. Board of Appeals of Boston, 324 Mass. 427, 86 N.E.2d 920; Colantuoni v. Selectman of Belmont, 326 Mass. 778, 96 N.E.2d 870; Zuckerman v. Board of Zoning Appeals of Stratford, 144 Conn. 160, 128 A.2d 325). In the Circle Lounge & Grille case, the Supreme Judicial Court of Massachusetts, citing Bazinsky v. Kesbec, Inc. (supra) and St. Basil's Church of Utica v. Kerner, 125 Misc. 526, 531, 211 N.Y.S. 470, 474 said (324 Mass. p. 432, 86 N.E.2d p. 923) that, unless the statute indicates a contrary intent, 'a proprietor in a less restricted zone is not a 'person aggrieved' within the meaning of the statute by the introduction into a more restricted zone of any use permitted in the zone in which the proprietor's property is located.'

The Massachusetts court said (p. 432, 86 N.E.2d p. 923) that 'although a proprietor's rights under the statute are not necessarily confined to his own zone, and may extend into another restricted zone, he is not entitled to protection greater than that afforded him in his own zone. That marks the outer limits of the rights intended to be conferred upon him.' Seemingly he would not be damaged.

Rathkopf adds (Op. cit., p. 40--16), properly, that the fact that a person is a competitor does not change his status as an aggrieved person if he has a property interest (as distinguished from his business interest) which will be adversely affected.

If the New York rule be as it is laid down in Massachusetts, upon citation of New York cases, then Crestview and Cord Meyer are not in position to enjoin Bell Bay. Crestview's pharmacy is in a commercial zone and it and its landlord are in no position to complain that Bell Bay is conducting a similar business in a residential zone. But that is not all. The only special damage which Crestview and Cord Meyer claimed at the trial was that the volume of Crestview's drug business had been reduced by competition by Bell Bay. The alleged error in the exclusion of evidence at the trial which was offered by plaintiffs to prove special damage consisted solely in the exclusion of evidence that Crestview operated on a percentage lease from Cord Meyer and that the rent paid to Cord Meyer was reduced by shrinkage in its volume of sales induced by competition from Bell Bay. If the value of plaintiffs' real property had been reduced, without regard to business competition, for example, by the operation nearby of a junkyard or slaughter house, it might well be that this would constitute such special damage as would entitle plaintiffs to injunctive relief. Even if the violator of the ordinance were conducting a similar business, it may well be, although we are not called upon to decide, that plaintiffs would be entitled to sue to restrain the violation if they could prove that the value of their property was decreased due to some offensive manner in which the business was conducted without relation to any competitive aspect.

In reversing Special Term, the Appellate Division did not distinguish between decrease in value of real property due to competitors in the same business to which the real property is devoted, and depreciation resulting from other factors. The Appellate Division said that

'one who suffers special damages as the result of a violation of a zoning ordinance may obtain an injunction to prevent its continuance and damages (Graceland Corp. v. Consolidated Laundries Corp., 7 A.D.2d 89, 180 N.Y.S.2d 644, affd. 6 N.Y.2d 900, 190 N.Y.S.2d 708, 160 N.E.2d 926; Marcus v. Village of Mamaroneck, 283 N.Y. 325, 28 N.E.2d 856; Rice v. Van Vranken, 132 Misc. 82, 229 N.Y.S. 32, affd. 225 App.Div. 179, 232 N.Y.S. 506, affd. 255 N.Y. 541, 175 N.E. 304; cf. Bazinsky v. Kesbec, Inc., (259 App.Div. 467, 19 N.Y.S.2d 716, affd. on other grounds 286 N.Y. 655), 36 N.E.2d 694; Rose v. City of New Rochelle, 19 Misc.2d 599, 119 N.Y.S.2d 900; Blumberg v. City of Yonkers, 21 A.D.2d 886, 251 N.Y.S.2d 750, affd. 15 N.Y.2d 791, 257 N.Y.S.2d 589, 205 N.E.2d 686).

'The trial court erroneously excluded most of the evidence bearing on the issues or damages and whether plaintiffs sustained special damage (cf. Humphrey v. Trustees of Columbia Univ., in City of New York, 228 App.Div. 168, 239 N.Y.S. 461; Fairview Hardware v. Strausman, 9 A.D.2d 944, 195 N.Y.S.2d 816; Kennedy v. Abarno, 277 App.Div. 883, 97 N.Y.S.2d 907; Ripley Mfg. Corp. v. Roosevelt Field, 18 A.D.2d 924, 238 N.Y.S.2d 133; 6 Carmody-Wait, New York Practice, p. 461). Accordingly, a new trial must be granted (cf. Graceland Corp. v. Consolidated Laundries, supra; Fairview Hardware v. Strausman, supra).' (25 A.D.2d 744--745, 269 N.Y.S.2d 67, 69--70).

It has long been held, and is generally provided in zoning ordinances or enabling acts, that the municipality may sue to enjoin violations (Town of Islip v. Summers Coal & Lbr. Co., 257 N.Y. 167, 177 N.E. 409). The general public cannot sue (Rathkopf, op. cit., p. 40--41 and cases cited). One who suffers special damages may bring an action for an injunction, however, as is stated in the opinion by the Appellate Division and is held in the cases cited in the excerpt from its opinion which has just been quoted. If it were true, as the latter part of the quotation from the Appellate Division says, that the trial court sustained objections to offers of evidence showing that plaintiffs did sustain special damage, this court would be required to grant judgment absolute on the stipulation. The error of the ...