Federated Homes, Inc. v. Berman

• Decision Date: 05 March 1968
• Parties: Application of FEDERATED HOMES, INC. and Clason Management Co., Petitioners, for judicial review under Article 78 of the Civil Practice Law and Rules, v. Frederic S. BERMAN, as City Rent and Rehabilitation Administrator, Respondent, Harding Park Association, Intervenor.
• Court: New York Supreme Court

Page 348

288 N.Y.S.2d 348

56 Misc.2d 160

Application of FEDERATED HOMES, INC. and Clason Management

Co., Petitioners, for judicial review under

Article 78 of the Civil Practice Law and Rules, v. Frederic S. BERMAN, as City Rent and Rehabilitation

Administrator, Respondent, Harding Park

Association, Intervenor.

Supreme Court, Special Term, New York County, Part I.

March 5, 1968.

McGowan & McGowan, New York City (Demov & Morris, New York City, by Eugene J. Morris, New York City, of counsel), for petitioners.

Gerald J. Turetsky, New York City (Arthur Kass, New York City, of counsel), for respondent.

Fribourg & Fribourg, New York City (Albert W. Fribourg, New York City, of counsel), for intervenor.

WILLIAM C. HECHT, Jr., Justice.

This and the companion Article 78 proceeding seek judicial review of a determination made by respondent City Rent and Rehabilitation Administrator, fixing maximum rents for certain parcels of land located in the Bronx.

Each of these 250 parcels was vacant land at the time when it was first rented, which was prior to May 1, 1950. Each tenant placed upon the rented land his own structure, designed exclusively for one-family occupancy. The one-family house on each of the parcels in question was vacant on October 1, 1953 or became vacant thereafter, and was purchased and acquired by the present tenant after that date.

The administrator grounded his determination on N.Y.City Administrative Code, section Y51--3.0, subdivision e(1) which includes in 'housing accommodations' which are subject to rent control 'any plot or parcel of land (as distinguished from any building constructed or placed thereon) which is not owned by the city and which was rented prior to May first, nineteen hundred fifty, for the purpose of permitting the tenant thereof to construct his own private dwelling * * * thereon and on which there exists such a private dwelling owned and occupied by a tenant of such plot or parcel.' The statute further provides for exemption from rent control of housing accommodations in one or two-family houses which were or shall become vacant on or after April first, nineteen hundred fifty-three, provided, however, that this exemption shall remain effective only so long as the housing accommodations are not occupied for other than single family occupancy (Administrative Code, supra, § Y51--3.0, subd. e(2)(i)(4), repeated in Rent Eviction and Rehabilitation Regulations, § 2f(12)).

The landlord's petition to reverse the determination which denied its protests regarding the above-described parcels is based on two contentions:

1. Neither the State Legislature nor the City Council could constitutionally impose rent control on these parcels of land.

2. If the parcels could constitutionally be placed under control, they were subject to decontrol pursuant to the foregoing subdivision e(2)(i)(4) and section 2f(12) of the Regulations.

In support of both contentions, it is argued that respondent's action so discriminates against petitioners--as compared to the other landlords of realty on which one-family homes are erected--as to amount to a deprivation of equal protection of the laws.

A. The Constitutional Issue

The Federal rent control laws included in the definition of controlled 'housing accommodations' not only 'any building, structure, or part thereof, or land appurtenant thereto' but also 'any other real or personal property rented or offered for rent for living or dwelling purposes' (50 U.S.C.A. Appendix, § 1892(b)). The instant parcels as well as all other land in the nation 'rented or offered for rent for living or dwelling purposes' were therefore subject to such control. At the time when the State assumed jurisdiction over residential rent control in 1950, the statute defined controlled 'housing accommodations' as confined to 'any building or structure, permanent or temporary * * * together with the land and buildings appurtenant thereto' (Emergency Housing Rent Control Law, § 2, subd. 2, Laws of 1946, ch. 274 as amended; see McKinney's Unconsolidated Laws, § 8582(2)). In 1961, this statute was construed as not including the rentals on the land herein (Clason Management Co. v. Temporary State Housing Rent Comm., 29 Misc.2d 258, 217 N.Y.S.2d 287; Clason Management Co. v. Herman, 14 A.D.2d 765, 220 N.Y.S.2d 352, affd. 10 N.Y.2d 1022, 224 N.Y.S.2d 693, 180 N.E.2d 271).

Presiding Justice Botein dissented, saying (14 A.D.2d at p. 768, 220 N.Y.S.2d at p. 355) '(The Administrator's) statement that 'Housing units of this sort were known to constitute the sole and permanent dwelling of a considerable number of persons' is uncontradicted, as is his statement that 'this problem is not confined to this particular development herein in The Bronx, but also exists in various other parts of the city such as Rockaway, Coney Island and Staten Island and also in Westchester. A very substantial number of tenants are affected."

Judge Fuld also dissented on the basis of the foregoing dissenting opinion (10 N.Y.2d at p. 1024, 224 N.Y.S.2d at p. 693, 180 N.E.2d at p. 271).

Immediately following upon that decision, the Legislature enacted chapter 126 of the Laws of 1962, effective March 10. That expanded the definition of controlled 'housing accommodations' to include 'any plot or parcel of land which had been rented prior to May first, nineteen hundred fifty, for the purpose of permitting the tenant thereof to construct or place his own dwelling thereon, unless exempt or excluded from control pursuant to any other provision of this act' (McKinney's Unconsolidated Laws (1967 Supp.), § 8582 (subd. 2)). This legislation had been requested by the State Rent Administrator in view of the decision of the Court of Appeals in Clason Point case (L.1962, ch. 126, note; McKinney's Session Laws of N.Y., Vol. I, p. 182; see also Report of the New York State Temporary Commission to Study Rents and Rental Conditions, Legis.Doc.1962, No. 15, p. 14).

In approving the bill, Governor Rockefeller stated:

'This bill bridges a gap that has recently been found by the Court of Appeals to exist between the State Emergency Housing Rent Control Law enacted in 1950 and the Federal rent control laws that were in effect prior to that time.

'Under previously-existing Federal law, housing accommodations subject to rent control included any real property rented or offered for rent for living or dwelling purposes. Thus, prior to 1950, vacant, rented lands upon which tenants were permitted to construct their own dwellings, were subject to rent control.

'The definition of housing accommodations adopted by the Legislature when the State took over housing rent control in 1950, differed from the Federal definition and gave rise to litigation concerning the authority of the State Rent Administrator to fix maximum rentals or stay evictions from vacant, rented lands upon which tenants had constructed their own dwellings.

'The Court of Appeals recently ruled that such lands are not subject to rent control under existing State law, even though they were previously subject to rent control under Federal law. As a result of this court decision, approximately 2000 families in New York City and Westchester are reported now to be facing unwarranted rent increases and possible eviction.

'The Legislature has acted wisely to prevent these harsh consequences to the families concerned.' (N.Y.Legis.Annual, 1962, p. 316 McKinney's Session Laws of N.Y., 1962, Vol. 2, p. 3605).

Chapter 21 of the Laws of 1962 contains the following legislative finding:

'The legislature hereby finds that a serious public emergency continues to exist in the housing of a considerable number of persons in the state of New York which emergency was created by war, the effects of war and the aftermath of hostilities; that such emergency necessitated the intervention of federal, state and local government in order to prevent speculative, unwarranted and abnormal increases in rents; that there continues to exist an acute shortage of dwellings; that unless residential rents and evictions continue to be regulated and controlled, disruptive practices and abnormal conditions will produce serious threats to the public health, safety and general welfare; that to prevent such perils to health, safety and welfare, preventive action by the legislature continues to be imperative; that such action is necessary in order to prevent exactions of unjust, unreasonable and oppressive rents and rental agreements and to forestall profiteering, speculation and other disruptive practices tending to produce threats to the public health; that in order to prevent uncertainty, hardship and dislocation, the provisions of this section are necessary and designed to protect the public health, safety and general welfare, that the transition from regulation to a normal market of free bargaining between landlord and tenant, while still the objective of state policy, must be administered with due regard for such emergency; and that the policy herein expressed should now be administered locally within cities having a population of one million or more by an agency of the city itself' (McKinney's Unconsolidated Laws, § 8602).

The statute then provided that 'When it deems such action to be desirable or necessitated by local conditions in order to carry out the purposes of this section such city (having a population of one million or more) is hereby authorized and empowered to adopt and amend local laws or ordinances effective on or after May first, nineteen hundred sixty-two in respect of the regulation and control of residential rents, including but not limited to provisions for the establishment and adjustment of maximum rents, the classification of housing accommodations the regulation of evictions, and the enforcement of such local laws or ordinances.'

Pursuant to this delegation of authority, the City Council passed Local Law No. 20 of 1962. It contains a legislative finding identical in all material...