Keystone Associates v. State, 49592

• Decision Date: 01 June 1972
• Docket Number: No. 49592,49592
• Citation: 333 N.Y.S.2d 27,39 A.D.2d 176
• Parties: KEYSTONE ASSOCIATES, Appellant, v. STATE of New York, Respondent. Claim
• Court: New York Supreme Court — Appellate Division

Page 27

333 N.Y.S.2d 27

39 A.D.2d 176

KEYSTONE ASSOCIATES, Appellant, v. STATE of New York, Respondent.

Claim No. 49592.

Supreme Court, Appellate Division, Third Department.

June 1, 1972.

Bergreen & Bergreen, New York City (David Brady, Bernard D. Bergreen and Abraham Hornstein, New York City, of counsel), for appellant.

Louis J. Lefkowitz, Atty. Gen. (Ruth Kessler Toch and Grace K. Banoff, Albany, of counsel), for respondent.

Before HERLIHY, Presiding Justice, and GREENBLOTT, COOKE, SWEENEY and REYNOLDS, JJ.

HERLIHY, Presiding Justice.

This is an appeal from an order of the Court of Claims, 63 Misc.2d 455, 312 N.Y.S.2d 360, entered on June 26, 1970, which granted respondent's motion, pursuant to CPLR 3211, to dismiss appellant's claim.

Claimant appeals from an order of the court dismissing the instant claim against the State on the grounds that the court does not have jurisdiction of the subject matter and that the claim failed to state a cause of action.

In Matter of Keystone Assoc. v. Moerdler (19 N.Y.2d 78, 278 N.Y.S.2d 185, 224 N.E.2d 700, mot. for rearg. den. 19 N.Y.2d 598, 278 N.Y.S.2d 243, 224 N.E.2d 744) the facts are set forth in detail. The court held that Chapter 691 of the Laws of 1966 was unconstitutional in that it unreasonably deprived the appellant of the beneficial use of its property without payment of just compensation. After this determination the appellant filed the instant claim against the State seeking $3,599,761 as damages for the temporary appropriation of its interests during the period between the enactment of the statute and January 17, 1967, when it was finally issued a demolition permit.

In the event there has been an appropriation the question of sovereign immunity is of no consequence as the Constitution of this State expressly provides in subdivision (a) of section 7 of article I: 'Private property shall not be taken for public use without just compensation.'

If a valid statute or lawful action were essential to give rise to an appropriation, there would be no De facto appropriations (cf. City of Buffalo v. Clement Co., 28 N.Y.2d 241, 321 N.Y.S.2d 345, 269 N.E.2d 895). Negative easements created by statute or ordinances (e.g., zoning ordinances) pursuant to the police power are not a compensable taking within the meaning of said section 7 of article 1 (Terrace Hotel Co. v. State of New York, 19 N.Y.2d 526, 281 N.Y.S.2d 34, 227 N.E.2d 846), however, it has already been determined that chapter 691 of the Laws of 1966 did not constitute an exercise of the police power (Matter of Keystone Assoc. v. Moerdler, 19 N.Y.2d 78, Supra at 86, 87, 278 N.Y.S.2d 185 at 187, 224 N.E.2d 700 at 701).

That chapter 691 of the Laws of 1966, if valid, constituted an appropriation of compensable real property interests for the 180-day period at issue herein would appear reasonably certain from the decision in Matter of Keystone Assoc. v. Moerdler (supra). The court stated at page 89, 278 N.Y.S.2d at page 190, 224 N.E.2d at page 704:

'In summary, this statute was not one enacted in furtherance of the police power. In (sic) constitutes an unreasonable interference with property rights for which the State must provide a sure and certain fund for recovery of the damage which will be suffered. The amount of such fund must be established through the judicial process, not by the Legislature.'

It was further observed in the dissenting opinion of the then Chief Judge Desmond (p. 91, 278 N.Y.S.2d at page 191, 224 N.E.2d at page 705) '* * * the measure of damages for property appropriated for a temporary period of time is the loss of rental value during that time plus any damage to the fee caused by the temporary use (Mead v. State of New York, 24 A.D.2d 1043, 265 N.Y.S.2d 302; Spencer v. State of New York, 206 App.Div. 376, 201 N.Y.S. 261).'

There is no dispute that some of the alleged appropriation of property rights occurred as the result of compliance with the special law as has already been found by the Court of Appeals in the Moerdler case.

Doubt as to whether the trial court or this court could hold that as a matter of law there was no De facto appropriation is dispelled by the repeated references in City of Buffalo v. Clement Co. (supra) to the Moerdler case as an example of a De facto appropriation. Upon this motion it appears that there was in fact an appropriation of property interests necessarily temporary in nature prior to the final determination by the courts as to the validity of the special law. A De facto appropriation requires compensation to the same extent as a De jure appropriation. It is noted that the State was a party to the proceedings in Matter of Keystone Assoc. v. Moerdler (supra) by intervention.

Having determined that the claim cannot be dismissed at this stage of the proceedings for failure to allege an appropriation, the question would seem to remain as to whether or not there could be liability by the State.

Chapter 691 of the Laws of 1966 was acknowledged in both the majority opinion and the dissenting opinion in Matter of Keystone Assoc. v. Moerdler (supra) as being a taking expressly for the public use. A reading of Chapter 691 of the Laws of 1966 discloses that although the condemnation was to be accomplished by a presumably autonomous and private corporation, the initial 180-day appropriation would occur by the force and effect of the special law without any reference to condemnation proceedings. In any event, the Power to delegate rights of eminent domain for a public use by the State to a corporation not otherwise an agent of the State has long been established. (See Matter of Townsend, 39 N.Y. 171.) While the reasoning employed in Sage v. City of Brooklyn, 89 N.Y. 189 would not be applicable, the court therein imposed liability for compensation on a defendant not named as liable therefor in the taking statute.

Had our present special law been upheld it is remotely possible that the reference to the City of New York in section 9 thereof might have been construed to impose liability upon the city in accordance with the Sage case.

In the present case the power of eminent domain was exercised by the State of New York whether directly or indirectly through the created corporation and, in accordance with the Constitution on the present motion, a compensation claim for the De facto appropriation is sustainable. Since Chapter 691 of the Laws of 1966 was declared unconstitutional there is no autonomous corporation which could be liable and there would be no basis for liability on the part of the City of New York. No impediment is perceived as to liability on the part of the State and there would appear no basis for overriding the fundamental requirement of compensation as contained in our Constitution. For the foregoing reasons and more particularly, in reliance upon the Court of Appeals decision in Matter of Keystone Assoc. v. Moerdler (supra), it appears that the State is the proper party responsible for the alleged De facto appropriation.

The claim alleges damages and upon the present motion it does not appear necessary to consider what might or might not be recoverable. It is noted that in the case of Terrace Hotel Co. v. State of New York (supra) costs incurred in seeking damages for an appropriation were permissible where there was a discontinuance of the appropriation by the State. The State in enacting Chapter 691 specifically recognized that damages might occur as the result of the 180-day inference. It is noted that the claim indicates that the claimant has received some monies for damages from the fund provided in Chapter 691 of the Laws of 1966.

What damages, if any, the claimant is entitled to receive are not before the court.

Upon the present record it appears that the Court of Claims has jurisdiction and that the claim states a cause of action and, therefore, the order should be reversed and the motion to dismiss the claim denied.

Order reversed, on the law and the facts, and motion to dismiss claim denied, without costs.

GREENBLOTT and SWEENEY, JJ., concur. COOKE and REYNOLDS, JJ., dissent and vote to affirm in an opinion by REYNOLDS, J.

REYNOLDS, Justice (dissenting).

We would affirm the order of the Court of Claims dismissing appellant's claim on the grounds that the court did not have jurisdiction of the subject matter and that the claim failed to state a cause of action.

The Court of Appeals...