Great Atlantic & Pac. Tea Co. v. State

• Decision Date: 15 May 1968
• Docket Number: 39736,Nos. 39750,s. 39750
• Citation: 22 N.Y.2d 75,238 N.E.2d 705,291 N.Y.S.2d 299
• Parties: , 238 N.E.2d 705 GREAT ATLANTIC & PACIFIC TEA COMPANY, Inc., Appellant, v. STATE of New York, Respondent. GARFIELD HOMES, INC., Respondent, v. STATE of New York, Appellant. Claim
• Court: New York Court of Appeals Court of Appeals

Page 299

291 N.Y.S.2d 299

22 N.Y.2d 75, 238 N.E.2d 705

GREAT ATLANTIC & PACIFIC TEA COMPANY, Inc., Appellant, v. STATE of New York, Respondent.

GARFIELD HOMES, INC., Respondent, v. STATE of New York, Appellant.

Claim Nos. 39750, 39736.

Court of Appeals of New York.

May 15, 1968.

[238 N.E.2d 708] [22 N.Y.2d 78] Adolph Kaufman, Murray C. Spett and Morris Gutt, New York City, for appellant in the first above-entitled action.

Louis J. Lefkowitz, Atty. Gen. (Julius L. Sackman, Ruth Kessler Toch and Emil Woldar, Albany, of counsel), for respondent in the first above-entitled action.

Louis J. Lefkowitz, Atty. Gen. (Julius L. Sackman, Ruth Kessler Toch and Emil Woldar, Albany, of counsel), for appellant in the second above-entitled action.

Stephen B. Brown, Alfred Wohl and Charles A. Lubitz, Long Island City, for respondent in the second above-entitled action.

SCILEPPI, Justice.

Claimants A & P and the State appeal, pursuant to leave granted by this court from an order of the Appellate Division, Third Department, which unanimously affirmed judgments of the Court of Claims awarding the landlord, respondent Garfield Homes, Inc., the sum of $37,532.32 and the tenant, appellant A & P, the sum of $3,602.68 as damages for their respective interests in real property appropriated for highway purposes. This appeal was heard during the December 1967 Term of the court. On December 29, 1967 reargument was ordered (21 N.Y.2d 721, 287 N.Y.S.2d 684, 234 N.E.2d 706) and the reargument was heard during the February 1968 Term of the court.

In 1937, Garfield Homes, Inc. erected a one-story brick building on its premises at the northwest corner of Willis Avenue and Jericho Turnpike in Floral Park in accordance with plans and specifications furnished by When A & P quit possession of the building in June of 1960, it had a lease running until April 30, 1964 at an annual rental of $6,500 with an option to renew for five more years at an annual rental of $7,099. It was conceded by all witnesses, including those of the State, that the lease was a bargain and that the fair and reasonable annual rental value of the building was actually $9,000. The lease provided that the landlord was to make all exterior and structural repairs. No condemnation clause was included in the lease.

A & P. A & P has been in possession ever since under releases for various terms. The premises occupied by A & P were 50 feet wide and 125 feet deep. To the rear was an unimproved lot 25 feet by 100 feet, which was not used by the tenant.

The supermarket operated on the premises was profitable, and A & P would have exercised its option to renew the lease. The gross volume was over one million dollars a year and the annual net income fluctuated from $18,000 to $38,000.

The store, which had large show windows running completely across the building, fronted on Jericho Turnpike, the main thoroughfare in Floral Park. The only entrances and exits to the store were on this main street with the exception of two doors at the rear of the premises which were used for the unloading of trucks.

On October 30, 1959 the State appropriated in fee the entire frontage of the premises along Jericho Turnpike to a depth of about 18 1/2 feet and acquired a temporary easement to a depth of an additional 10 feet to enable it to demolish the portion of the building taken in fee. The area of the building prior to the appropriation was 6,250 square feet. The taking in fee and the temporary easement reduced the area to 4,825 square feet, or about 25% Less. When the State relinquished its temporary easement, 5,325 square feet remained.

Although the appropriation of the premises occurred on October 30, 1959, A & P remained in complete possession of the premises until June 30, 1960 and continued to pay rent to Garfield, the landlord, to that date.

On June 30, 1960 A & P vacated the entire premises and ceased paying rent. Upon vacating the store, A & P removed most of the fixtures therefrom and disposed of them. The State then began to tear down the portion of the building which was appropriated in fee. The demolition was completed no later than April 30, 1961.

Section 30 (subd. 20) of the Highway Law, Consol.Laws, c. 25 requires the State to file a certificate terminating the easement when the Superintendent of Public Works determines that the easement is no longer required. Although the State now contends that the temporary After the State completed demolishing the portion of the building taken in fee, it erected a wooden wall in front of the unappropriated remainder. This left the premises without any show windows and without any entrances and exits except for the small doors at the rear of the building. The sidewalk and highway in front of the property were torn up and available for use only by the construction workers. The interior of the store was substantially reduced in size and, even if the operation of a supermarket were possible, with the existing conditions of the exterior, it would have been necessary for A & P to rearrange stock, shelving, checkout counters, freezers, plumbing, wiring and other equipment and items.

easement was not needed or used after the demolition was completed, a terminating certificate was not filed until August 13, 1963. The landlord made no attempt to repair the premises or use the easement area during the period between the completion of the demolition and the filing of the termination certificate.

The Court of Claims held that the State's taking deprived A & P of the use of 25% Of the leased premises and, therefore, awarded it $3,602.68 which represented 25% Of the value of the lease. The court denied A & P compensation for its fixtures on the theory that A & P's removal and destruction of the fixtures without the State's consent exonerated the State from liability therefor. Garfield Homes, Inc. was awarded the sum of $27,297.32 for the fee taking. This award included compensation for (a) damages to Garfield's fee ($17,297.32) and (b) cost of curing its building front ($10,000). In addition, Garfield was awarded $10,235 for the 'rental value' of the temporary easement.

The Appellate Division unanimously affirmed.

A & P contends that the award for the damage to its leasehold is grossly inadequate; that the taking terminated its lease with Garfield and relieved it of its obligation under the lease to continue paying rent; that, if its lease was not terminated, it--not Garfield--is entitled to the award for the temporary easement. A & P also argues that it is entitled to compensation for the damage to its fixtures.

The State contends that the award of $10,235 for the 'rental value' of the temporary easement was excessive and improperly computed.

TERMINATION OF THE TENANCY

The court below noted that under the law of New York a partial taking does not terminate a tenancy. It held, however, that this question would be more properly determined in a suit between A & P and Garfield. Garfield presently has two actions pending in another

court against A & P for rent. Since the results of those suits will have a direct bearing upon the amount of damages to which the claimants are entitled, many, if not all, of the issues in those suits should be litigated in the Court of Claims in this condemnation proceeding. Consequently, it becomes necessary for us to discuss the effect of a partial taking on the tenant's obligation to pay rent. The law of New York is in accord with the law of a majority of [22 N.Y.2d 84] jurisdictions that a partial taking does not terminate a tenancy and relieve the lessee of the obligation to pay [238 N.E.2d 710] rent for the portion of the premises which remain (Duhain v. Mermod, Jaccard & King Jewelry Co., 211 N.Y. 364, 105 N.E. 657; 4 Nichols, Law of Eminent Domain (Sackman, 3d ed.), § 12.42(1)). A lessee, however, is entitled to an abatement of the rent for the portion of the premises appropriated by the State provided he pleads and demands an abatement in an action against him by the landlord for the entire rent reserved (Duhain v. Mermod, Jaccard & King Jewelry Co., supra; see, also, Fifth Ave. Bldg. Co. v. Kernochan, 221 N.Y. 370, 117 N.E. 579). Thus, A & P continues to be liable to Garfield for rent attributable to the portion of the premises not appropriated in fee by the State.

A & P'S CLAIM FOR DAMAGES TO ITS LEASEHOLD

Generally speaking, where there are two or more interests or estates in a condemned parcel, the proper mode of assessing damages is to ascertain first the damage to the fee as if it were unencumbered, and then to apportion that amount among all of the estates and interest which are held in the property (Matter of City of New York, on Behalf of New York City Housing Authority (Mott Haven Houses), 33 Misc.2d 808, 227 N.Y.S.2d 858, affd. 16 A.D.2d 637, 227 N.Y.S.2d 891, affd. 13 N.Y.2d 959, 244 N.Y.S.2d 458, 194 N.E.2d 424; Matter of City of New York (Allen St.), 256 N.Y. 236, 242--243, 176 N.E. 377, 379). A lease is an interest in property which is compensable if the property which is subject to a lease is condemned (Matter of Trustees of New York & Brooklyn Bridge (Clark), 137 N.Y. 95, 97, 32 N.E. 1054; Folts v. Huntley, 7 Wend. 210, 216; Matter of Daly, 29 App.Div. 286, 289--290, 51 N.Y.S. 576, 578--579; Pomeroy v. State of New York, 18 Misc.2d 377, 380, 191 N.Y.S.2d 84, 87). The damages to which a lessee is entitled are generally the value of the leasehold (Matter of City of New York (Delancey St.), 120 App.Div. 700, 708, 105 N.Y.S. 779, 784). In computing the value of the leasehold, the court must first ascertain the fair rental value of the premises and then deduct therefrom the actual rent reserved for the remaining period or term of the lease of course, the lessee's right to renew will affect the value at the leasehold and this must also be considered in determining its value In the case at bar, the State appropriated in fee 925 square feet of the building leased by A & P. The Court of...