Fred F. French Investing Co., Inc. v. City of New York
| Citation | 39 N.Y.2d 587,385 N.Y.S.2d 5,350 N.E.2d 381 |
| Parties | , 350 N.E.2d 381, 6 Envtl. L. Rep. 20,810 FRED F. FRENCH INVESTING COMPANY, INC., Respondent-Appellant, v. CITY OF NEW YORK, Appellant-Respondent, and Ramsgate Properties, Inc., et al., Respondents-Appellants, et al., Defendant. |
| Decision Date | 04 May 1976 |
| Court | New York Court of Appeals Court of Appeals |
W. Bernard Richland, Corp. Counsel, New York City (Alfred Weinstein and L. Kevin Sheridan, New York City, of counsel), for appellant-respondent.
Bernard S. Meyer, Mineola, for respondent-appellant.
Lowell D. Willinger and Edward Brodsky, New York City, for respondents-appellants.
David W. Peck and Howard T. Milman, New York City, for the Tudor City Association, amicus curiae.
Plaintiff Fred F. French Investing Co., purchase money mortgagee of Tudor City, a Manhattan residential complex, brought this action to declare unconstitutional a 1972 amendment to the New York City Zoning Resolution and seeks compensation as for 'inverse' taking by eminent domain. The amendment purported to create a 'Special Park District', and rezoned two private parks in the Tudor City complex exclusively as parks open to the public. It further provided for the granting to the defendant property owners of transferable development (air) rights usable elsewhere. It created the transferable rights by severing the above-surface development rights from the surface development rights, a device of recent invention.
Special Term, in a studied and painstaking opinion, declared the amendment unconstitution and restored the former zoning classification, R--10, permitting residential and office building development. The Appellant Division, 47 A.D.2d 715, 366 N.Y.S.2d 346 unanimously affirmed, without opinion. By its appeal, the city seeks review of the declaration of unconstitutionality and the denial of its summary judgment motion on the issue of damages. By their cross appeals, plaintiff mortgagee and defendants, owners and mortgage interest guarantor, seek review of the denial of their summary judgment motions for compensation based on an 'inverse' taking.
The issue is whether the rezoning of buildable private parks exclusively as parks open to the public, thereby prohibiting all reasonable income productive or other private use of the property, constitutes a deprivation of property rights without due process of law in violation of constitutional limitations.
There should be an affirmance. While the police power of the State to regulate the use of private property by zoning is broad indeed, it is not unlimited. The State may not, under the guise of regulation by zoning, deprive the owner of the reasonable income productive or other private use of his property and thus destroy all but a bare residue of its economic value. Such an exercise of the police power would be void as violative of the due process clauses of the State and Federal Constitutions (N.Y.Const., art. I, § 6; U.S.Const., 14th Amdt., § 1). In the instant case, the city has, despite the severance of above-surface development rights, by rezoning private parks exclusively as parks open to the public, deprived the owners of the reasonable income productive or other private use of their property. The attempted severance of the development rights with uncertain and contingent market value did not adequately preserve those rights. Hence, the 1972 zoning amendment is violative of constitutional limitations.
Tudor City is a four-acre residential complex built on an elevated level above East 42nd Street, across First Avenue from the United Nations in mid-town Manhattan. Planned and developed as a residential community, Tudor City consists of 10 large apartment buildings housing approximately 8,000 people, a hotel, four brownstone buildings, and two 15,000 square-foot private parks. The parks, covering about 18 1/2% Of the area of the complex, are elevated from grade and located on the north and south sides of East 42nd Street, with a connecting viaduct.
On September 30, 1970, plaintiff sold the Tudor City complex to defendant Ramsgate Properties for $36,000,000. In addition to cash, plaintiff took back eight purchase money mortgages, two of which covered in part the two parks. Payment of the mortgage interest for three years was personally guaranteed by defendant Helmsley. Ramsgate thereafter conveyed, subject to plaintiff's mortgages, properties including the north and south parks to defendants, North Assemblage Co. and South Assemblage Co. Each of the mortgages secured in part by the parks has been in default since December 7, 1972.
Soon after acquiring the Tudor City property, the new owner announced plans to erect a building, said to be a 50-story tower, over East 42nd Street between First and Second Avenues. This plan would have required New York City Planning Commission approval of a shifting of development rights from the parks to the proposed adjoining site and a corresponding zoning change. Alternatively, the owner proposed to erect on each of the Tudor City park sites a building of maximum size permitted by the existing zoning regulations.
There was immediately an adverse public reaction to the owner's proposals, especially from Tudor City residents. After public hearings, the City Planning Commission recommended, over the dissent of one commissione and on December 7, 1972 the Board of Estimate approved, an amendment to the zoning resolution establishing Special Park District 'P.' By contemporaneous amendment to the zoning map, the two Tudor City parks were included within Special Park District 'P'.
Under the zoning amendment, 'only passive recreational uses are permitted' in the Special Park District and improvements are limited to 'structures incidental to passive recreational use'. When the Special Park District would be mapped, the parks are required to be open daily to the public between 6:00 a.m. and 10:00 p.m.
The zoning amendment permits the transfer of development rights from a privately owned lot zoned as a Special Park District, denominated a 'granting lot', to other areas in midtown Manhattan, bounded by 60th Street, Third Avenue, 38th Street and Eighth Avenue, denominated 'receiving lots'. Lots eligible to be receiving lots are those with a minimum lot size of 30,000 square feet and zoned to permit development at the maximum commercial density. The owner of a granting lot would be permitted to transfer part of his development rights to any eligible receiving lot, thereby increasing its maximum floor area up to 10%. Further increase in the receiving lot's floor area, limited to 20% Of the maximum commercial density, is contingent upon a public hearing and approval by the City Planning Commission and the Board of Estimate. Development rights may be transferred by the owner directly to a receiving lot or to an individual or organization for later disposition to a receiving lot. Before development rights may be transferred, however, the Chairman of the City Planning Commission must certify the suitability of a plan for the continuing maintenance, at the owner's expense, of the granting lot as a park open to the public.
It is notable that the private parks become open to the public upon mapping of the Special Park District, and the opening does not depend upon the relocation and effective utilization of the transferrable development rights. Indeed, the mapping occurred on December 7, 1972, and the development rights have never been marketed or used.
Plaintiff contends that the rezoning of the parks constitutes a compensable 'taking' within the meaning of constitutional limitations.
The power of the State over private property extends from the regulation of its use under the police power to the actual taking of an easement or all or part of the fee under the eminent domain power. The distinction, although definable, between a compensable taking and a noncompensable regulation is not always susceptible of precise demarcation. Generally, as the court stated in Lutheran Church in Amer. v. City of New York, 35 N.Y.2d 121, 128--129, 359 N.Y.S.2d 7, 14, 316 N.E.2d 305, 310:
As noted above, when the State 'takes', that is appropriates, private property for public use, just compensation must be paid. In contrast, when there is only regulation of the uses of private property, no compensation need be paid. Of course, and this is often the beginning of confusion, a purported 'regulation' may impose so onerous a burden on the property regulated that it has, in effect, deprived the owner of the reasonable income productive or other private use of his property and thus has destroyed its economic value. In all but exceptional cases, nevertheless, such a regulation does not constitute a 'taking', and is therefore not compensable, but amounts to a deprivation or frustration of property rights without due process of law and is therefore invalid.
True, many cases have equated an invalid exercise of the regulating zoning power perhaps only metaphorically, with a 'taking' or a 'confiscation' of property, terminology appropriate to the eminent domain power and the concomitant right to compensation when it is exercised. Thus, for example, in Arverne Bay Constr. Co. v. Thatcher, 278...
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Table of Cases
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