Lincoln Bldg. Associates v. Barr

Decision Date11 July 1956
Citation153 N.Y.S.2d 633,135 N.E.2d 801,1 N.Y.2d 413
Parties, 135 N.E.2d 801 LINCOLN BUILDING ASSOCIATES, Appellant, v. Lockwood BARR, Respondent. LINCOLN BUILDING ASSOCIATES, Appellant, v. Joseph JAME, Respondent. LINCOLN BUILDING ASSOCIATES, Appellant, v. Martin STERN, Doing Business under the Name of Swim for Health Association, Respondent.
CourtNew York Court of Appeals Court of Appeals

Samuel I. Rosenman, Max Freund, Lawrence R. Eno. Milton Alder and Jerome L. Sindler, New York City, for appellant.

Jacob K. Javits, Atty. Gen. (James O. Moore, Jr., Albany, John Trubin, Abe Wagman, Joseph E. Ruggiero and Emil N. Baar, New York City, of counsel), in his statutory capacity under section 71 of the Executive Law, Consol.Laws, c. 18.

FROESSEL, Judge.

This appeal is taken directly to us under subdivision 4 of section 588 of the Civil Practice Act from three orders of the Municipal Court of the City of New York, Borough of Manhattan, Ninth District. It presents for our consideration the constitutionality of the 1955 re-enactment of the Business Rent Law, L.1955, ch. 701, McK.Unconsol.Laws, § 8551 et seq., insofar as it affects office Unconstitutionality is claimed by appellants under the due process and equal protection clauses, U.S.Const. 14th Amdt.; N.Y.S.onst. art. I §§ 6, 11; the contract clause of the United States Constitution, art. I, § 10, and our own constitutional provision prohibiting the taking of private property without just compensation, N.Y.Const. art. I, § 7, on the ground that the emergency originally justifying the law has now come to an end.

The law is clear. The principles by which to test the constitutionality of a statute resting on the police power have been asserted over and over again: A legislative enactment carries with it a strong presumption of constitutionality, i. e., it is presumed to be supported by facts known to the Legislature. United States v. Carolene Products Co., 304 U.S. 144, 152, 58 S.Ct. 778, 82 L.Ed. 1234; South Carolina State Highway Dept. v. Barnwell Bros., 303 U.S. 177, 191, 58 S.Ct. 510, 82 L.Ed. 734; Carmichael v. Southern Coal & Coke Co., 301 U.S. 495, 509-510, 57 S.Ct. 868, 81 L.Ed. 1245; Defiance Milk Products Co. v. Du Mond, 309 N.Y. 537, 540-541, 132 N.E.2d 829, 830; East New York Sav. Bank v. Hahn, 293 N.Y. 622, 627-628, 59 N.E.2d 625, 626, affirmed 326 U.S. 230, 66 S.Ct. 69, 90 L.Ed. 34. This presumption, however, is not irrebuttable, Defiance Milk Products Co. v. Du Mond, supra, 309 N.Y. at page 541, 132 N.E.2d at page 830, and courts may scrutinize the basis of legislative enactments predicated upon the existence of a particular state of facts, United States v. Carolene Products Co., supra, 304 U.S. at page 153, 58 S.Ct. 778; Chastleton Corp. v. Sinclair, 264 U.S. 543, 44 S.Ct. 405, 68 L.Ed. 841; but they may not be concerned with questions as to the 'reasonableness, wisdom, and propriety', South Carolina State Highway Dept. v. Barnwell Bros., supra, 303 U.S. at page 191, 58 S.Ct. at page 517; Day-Brite Lighting v. Missouri, 342 U.S. 421, 423, 72 S.Ct. 405, 96 L.Ed. 469; Defiance Milk Products Co. v. Du Mond, supra, 309 N.Y. at page 541, 132 N.E.2d at page 830; Thompson v. Wallin, 301 N.Y. 476, 488, 95 N.E.2d 806, 810, appeal dismissed 342 U.S. 801, 72 S.Ct. 92, 96 L.Ed. 607; Stubbe v. Adamson, 220 N.Y. 459, 469, 116 N.E. 372, 375; People v. Griswold, 213 N.Y. 92, 97, 106 N.E. 929, 931, L.R.A.1915D, 538, expediency, Thompson v. Wallin, supra; Carmichael v. Southern Coal Co., supra, 301 U.S. at page 515, 57 S.Ct. 868, or 'desirability' thereof, Daniel v. Family Sec. Ins. Co., 336 U.S. 220, 224, 69 S.Ct. 550, 93 L.Ed. 632, and 'Where the question of what the facts establish is a fairly-debatable one, we accept and carry into effect the opinion of the Legislature.' Old Dearborn Distributing Co. v. Seagram Corp., 299 U.S. 183, 196, 57 S.Ct. 139, 145, 81 L.Ed. 109; Stubbe v. Adamson, supra. Nor may courts substitute their judgment for that of the Legislature so long as there can be discovered 'any state of facts either known or which could reasonably be assumed' to afford support for the legislative decision to act. United States v. Carolene Products Co., supra, 304 U.S. at page 154, 58 S.Ct. 784; East New York Sav. Bank v. Hahn, 326 U.S. 230, 234, 66 S.Ct. 69, supra; South Carolina Highway Dept. v. Barnwell Bros., supra, 303 U.S. at page 191, 58 S.Ct. 510; Borden's Farm Products Co. v. Ten Eyck, 297 U.S. 251, 263, 56 S.Ct. 453, 80 L.Ed. 669. Applying these tests to the case at bar, we are of the opinion that the so-called office rent control law is clearly constitutional, and may not be invalidated by these proceedings.

Historically, emergency business space controls had their genesis in chapter 314 of the Laws of 1945. As the preamble to that enactment pointed out, the nation was then engaged in World War II. War production, the production and distribution of essential civilian commodities, the rendition of essential services, professional and otherwise, priorities, rationing and other civilian controls to check inflation were the necessary order of things. Another aspect of the national effort to minimize the ravages of an inflationary economy was the control of rentals. The cessation of nonessential civilian construction of housing, business and commercial space was aggravated by increasing demands for such space. Out of this had arisen a condition where, as landlord itself describes it, 'business tenants found themselves in a hopeless bargaining position vis-a -vis their landlords'. See N.Y.Legis.Doc., 1945, No. 2, pp. 11-17; N.Y.Legis.Doc., 1945, No. 31, pp. 9-10. The act was 'declared to be a measure designed to protect and promote the public health, safety and general welfare, to aid the successful prosecution of the war, and essential civilian activities, and to conserve manpower, essential materials and transportation facilities, and to prevent inflation, and is made necessary by an existing emergency.' L.1945, ch. 314, § 1. We held the Business Rent Law constitutional in Court Square Bldg. v. City of New York, 298 N.Y. 380, 83 N.E.2d 843. The Commercial Rent Law was similarly upheld in Twentieth Century Associates v. Waldman, 294 N.Y. 571, 63 N.E.2d 177, 162 A.L.R. 197.

The rent laws were thereafter annually re-enacted, although with relaxing modifications from time to time. Without here narrating in detail the early history of and the subsequent amendments to office rent control laws, it may merely be noted that there is no real issue here as to the continuance of the emergency during the period following the close of World War II, and during the more recent warfare in Korea from 1950 to the summer of 1953.

In 1948, prior to the Korean conflict, the Temporary State Commission was created 'to survey and appraise' the rent laws, and 'to inquire into the need for amending and the gradual discontinuing of such laws'. L.1948, ch. 675. As a result of its studies then and during the following years, and as the emergency lessened in intensity, the commission recommended numerous amendments relating to various aspects of the rent laws to allow landlords increased rentals, greater freedom in recovering possession, and various types of other relief (as, e. g., see Business Rent Law, § 2, subd. (c) (allowing rent increases up to 30% over the June 1, 1944 rental); § 4 (allowing adjustment of rent to provide an 8% return on the fair value of the property); § 8 (allowing recovery of the property by landlord in a number of specific instances)). New construction has not been controlled since the enactment of section 14 by chapter 273 of the Laws of 1946, and vacated space became decontrolled since the enactment of section 12 by chapter 326 of the Laws of 1950.

In line with its work, the commission continued and continues to study and recommend. In 1955, the year in which the challenged statute was enacted, it conducted a public hearing on the extension of controls. Both tenants and landlords were represented the latter arguing that the controls should be abolished or relaxed, the tenants that they should continue. The commission, however, subsequently concluded only that 'Notwithstanding constantly increasing new rental space and an increasing number of vacancies, particularly in stores, the Commission determined that although lessened in severity, the emergency continues to an extent which justifies the continuance of the emergency laws for another year. The extension of these laws, however, is relaxed somewhat in a manner which ultimately will provide gradual decontrol.' N.Y.Legis.Doc., 1955, No. 73, p. 15. (Emphasis supplied.)

With this the Legislature agreed, and chapter 701 of the Laws of 1955 was passed unanimously in both houses and signed by the Governor effective July 1, 1955. This is the particular extension of the statute here under attack although the act was, after a further hearing on February 10, 1956, again extended until July 1, 1957 by chapter 735 of the Laws of 1956.

The question thus posed is whether there existed in 1955 a reasonable basis for findings justifying continuance of rent controls upon office space. In other words, was the legislative choice without rational basis? South Carolina State Highway Dept. v. Barnwell Bros., 303 U.S. 177, 191-192, 58 S.Ct. 510, supra.

The landlord, recognizing its heavy burden in overcoming the strong presumption of constitutionality, has adduced a large quantify of evidence which it claims demonstrates 'beyond any doubt' that while the statute as originally passed in 1945 was valid, it 'has ceased to be constitutional because there is no longer any emergency of any kind which sustains it' (emphasis supplied). Whereas the law is clear, the same may not be said about the evidence before us. Nor may we leave wholly out of consideration 'the pooled general knowledge' of the legislators themselves. East New York Sav. Bank v. Hahn, 326 U.S. 230, 234, 66 S.Ct. 71, supra.

While it is true that most of the...

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