Fruhling v. Amalgamated Housing Corp.

• Decision Date: 27 April 1961
• Citation: 215 N.Y.S.2d 493,175 N.E.2d 156,9 N.Y.2d 541
• Parties: , 175 N.E.2d 156 David FRUHLING, Appellant, v. AMALGAMATED HOUSING CORPORATION et al., Respondents.
• Court: New York Court of Appeals Court of Appeals

Page 493

215 N.Y.S.2d 493

9 N.Y.2d 541, 175 N.E.2d 156

David FRUHLING, Appellant, v. AMALGAMATED HOUSING CORPORATION et al., Respondents.

Court of Appeals of New York.

April 27, 1961.

Samuel B. Waterman and Nathan W. Math, New York City, for appellant.

Louis J. Lefkowitz, Atty.Gen. (Daniel M. Cohen, New York City, and Paxton Blair, Albany, of counsel), for Commissioner of Housing of the State of New York, respondent.

FROESSEL, Judge.

In this declaratory judgment action, we are called upon the decide whether plaintiff, a tenant stockholder of Amalgamated Housing Corporation, a private limited dividend co-operative corporation organized under the State Housing Law, may be properly subjected to a surcharge of 25% upon his rental or evicted from his apartment. The issues presented involve the applicability to plaintiff and Amalgamated of the Public Housing Law, and, in particular, subdivision 3 (par. (b)) of section 182 thereof, and, if so, the constitutionality of such application.

Subdivision 3 (par. (b)) of section 182, relating to co-operative housing companies and projects, provided at the time this action was instituted that apartments in such projects 'heretofore or hereafter constructed' shall be available for persons or families whose probable aggregate annual income does not exceed a 6 to 1 or in some cases a 7 to 1 income to rental ratio. It was also provided therein that an occupant whose income increases beyond the prescribed ratios may be permitted to remain in occupancy for three years with possible extensions, subject to approval by the Housing Commissioner. While plaintiff's appeal in this action was pending in the Appellate Division, the Legislature added the following clause to paragraph (b) of subdivision 3, effective March 8, 1960: 'However, the rent of such occupant (allowed to remain by permission of the commissioner though his income has increased above the statutory maximum) shall be increased in propertion to his ability to pay more, the amount of increase to be ruled upon and prescribed by the housing company with the approval of the commissioner.' L.1960, ch. 160. Under Familiar principles, we pass upon the applicability and validity of the statute as it existed on the date of this appeal, rather than the date of the commencement of this action (Strauss v. University of State of N.Y., 2 N.Y.2d 464, 467, 161 N.Y.S.2d 97, 98; Black River Regulating Dist. v. Adirondack League Club, 307 N.Y. 475, 486-487, 121 N.E.2d 428, 432; Quaker Oats Co. v. City of New York, 295 N.Y. 527, 536, 68 N.E.2d 593).

Treating first with the question of the applicability to plaintiff and Amalgamated of the income qualification, surcharge and eviction provisions of subdivision 3 (par. (b)) of section 182, it is principally urged by plaintiff that his occupancy is controlled exclusively by the provisions of the old State Housing Law, which allegedly did not impose like qualifications upon occupancy. ¹ The Legislature, however, has by express direction and other manifestations of legislative intent indicated otherwise. Plaintiff's contention, therefore, is without substance.

In 1939 the State Housing Law was replaced by sections 170-193 of the Public Housing Law. Section 193, though preserving the existence of private limited dividend housing companies already organized under the State Housing Law, such as Amalgamated, expressly made them 'subject to the duties, restrictions and liabilities' of the Public Housing Law. Some question as to the extent of the application of the Public Housing Law to them may arguably be raised by the qualification in section 193 preserving 'rents'. However, any possible doubt as to the application of section 182 (subd. 3, par. (b)), including its provisions as to rents, has been conclusively dispelled by the 1949 amendments (L.1949, chs. 616, 761) of paragraphs (a) and (b) of said subdivision 3, introducing the word 'heretofore' into the subdivision, which previously read 'hereafter' only. These amendments were expressly designed to overcome the decision of this court in Weinfeld v. Knickerbocker Village (286 N.Y. 590, 35 N.E.2d 934, affirming 261 App.Div. 383, 25 N.Y.S.2d 759, followed in Knickerbocker Village v. Lackow, 191 Misc. 874, 78 N.Y.S.2d 825, affirmed Knickerbocker Village, Inc., v. Greif, 191 Misc. 883, 83 N.Y.S.2d 161, affirmed 274 App.Div. 993, 85 N.Y.S.2d 315), which had limited the application of section 182, in accordance with the specific restriction therein contained, to projects constructed 'hereafter', i. e., after 1939. The 1949 amendments, in consequence, rendered section 182 applicable to all housing company projects, whether the corporation was incorporated hereafter or 'heretofore', and whether the project of the corporation was constructed hereafter or 'heretofore' (see N.Y.Legis.Ann.1949, Legis.Ann.1949, pp. 228-229).

Concluding then that section 182 (subd. 3, par. (b)) is clearly applicable to plaintiff and Amalgamated, we turn to the second issue presented, namely, whether such application violates constitutional guarantees. The claim is made that by subjecting Amalgamated and plaintiff in particular to income ratios as a condition of continued occupancy, and to surcharges in the event occupancy is permitted to continue, there is an impairment of contractual obligations and taking of property without due process of law.

The contract, now allegedly impaired, plaintiff maintains, was 'previously made on the faith of the State Housing Law'; so, too, the property rights now allegedly taken away in violation of due process derived from that contract and, in turn, the State Housing Law. By the express terms of the State Housing Law, however, any such contract and rights acquired thereunder were qualified ones. That law was designed to eradicate the 'congested and unsanitary housing conditions' existing 'in certain areas of the State in low priced dwellings' through the formation of limited dividend housing corporations to construct new housing facilities 'in accord with proper standards of sanitation and safety' 'at a cost which will permit monthly rentals which wage earners can afford to pay' (State Housing Law, § 2, Legislative Finding; ² emphasis supplied).

Amalgamated in return for the privilege of incorporation under the statute, with the attending benefits conferred such as tax exemptions in particular (State Housing Law, § 39) expressly agreed in its certificate of incorporation 'that all real estate acquired by it and all structures erected by it, shall be deemed to be acquired for the purpose of promoting the public health and safety and subject to the provisions of the state housing law.' State Housing Law, § 30, subd. 12; emphasis supplied. Needless to say, the State Housing Law thus incorporated by reference into Amalgamated's charter, by which it and of necessity its stockholder tenants were bound, was always subject to change in the future (here by Public Housing Law, § 182) as required to effectively promote the objects for which the statute was enacted.

It could hardly be maintained that the amendments to section 182 here in issue in particular those requiring eviction were other than reasonable revisions of the statute and the rights derived thereunder, designed to promote the objects of the statute and the public health and safety. The specific object of the statute was to eradicate slum dwellings by providing the occupants of such premises safe and sanitary low-cost apartments to which they could remove. The occupants of these slums were and are, generally speaking, the 'wage earners' of whom the statute's findings spoke initially, and who were later more specifically classified by reference to income to rental ratios. By promoting the vacancy of apartments in subsidized projects, reasonably based upon an increase in the tenant's income sufficient to permit him to relocate in nonsubsidized housing, those not as fortunate in lower income brackets, constrained theretofore to remain in their slum dwellings, are afforded the opportunity to remove therefrom and, in time, slum areas are lessened.

The provisions imposing a surcharge in lieu of eviction upon attaining a certain income level also have a tendency to promote the statutory purpose as do the eviction provisions, since a tenant subjected to a surcharge may thereby be induced...