Town of Hempstead, Matter of, 1

• Citation: 467 N.Y.S.2d 676,97 A.D.2d 477
• Decision Date: 17 October 1983
• Docket Number: No. 1,No. 2,1,2
• Parties: In the Matter of TOWN OF HEMPSTEAD (Action). In the Matter of TOWN OF HEMPSTEAD (Action). Town of Hempstead, Respondent; Malibu Associates, Inc., Appellant; Ovide E. de St. Aubin and Honore de St. Aubin, Claimants-Respondents.
• Court: New York Supreme Court Appellate Division

Page 676

467 N.Y.S.2d 676

97 A.D.2d 477

In the Matter of TOWN OF HEMPSTEAD (Action No. 1).

In the Matter of TOWN OF HEMPSTEAD (Action No. 2).

Town of Hempstead, Respondent; Malibu Associates, Inc.,

Appellant; Ovide E. de St. Aubin and Honore de

St. Aubin, Claimants-Respondents.

Supreme Court, Appellate Division,

Second Department.

Oct. 17, 1983.

Hogan & Hogan, Garden City (Howard T. Hogan, Howard Thomas Hogan, Jr., Garden City, and Julius L. Sackman, New York City, of counsel), for appellant.

Farrell, Fritz, Caemmerer, Cleary, Barnosky & Armentano, P.C., Mineola (George J. Farrell, Jr. and Kenneth Henrie, Mineola, of counsel), for the Town of Hempstead.

Lapp & Bradie, Cedarhurst (Michael Bradie, Cedarhurst, of counsel), for claimants-respondents.

Before DAMIANI, J.P., and LAZER, GIBBONS and WEINSTEIN, JJ.

MEMORANDUM BY THE COURT.

In a condemnation proceeding, claimant Malibu Associates, Inc. appeals, as limited by its brief, on the ground of inadequacy, from so much of a partial final decree of the Supreme Court, Nassau County, dated May 2, 1979, as awarded compensation for the improvements on the condemned realty. By order dated April 6, 1981, this court reversed the partial final decree insofar as appealed from, on the law, and remitted the matter to Special Term for further proceedings (81 A.D.2d 591, 437 N.Y.S.2d 451). On June 23, 1982, the Court of Appeals reversed the order of this court and remitted the case here for consideration of the facts (Matter of Town of Hempstead [Malibu Assoc.], 56 N.Y.2d 1020, 453 N.Y.S.2d 641, 439 N.E.2d 357).

Partial final decree reversed insofar as appealed from, on the law and the facts, without costs or disbursements, and matter remitted to Special Term for a further hearing, and entry of a judgment in favor of claimants Malibu Associates, Inc. and Ovide E. de St. Aubin and Honore de St. Aubin, awarding them, subject to allocation in accordance with such agreement as they may have between them, (1) the stipulated sum of $1,380,000 for the beach club improvements (that sum representing reproduction cost less physical and functional obsolescence and a 5% economic obsolescence), less an amount, if any, for economic obsolescence in excess of the stipulated 5%, such excess (if any) over 5% to be determined by Special Term, based upon evidence adduced at the hearing, including any portions of the record of the original trial which the parties deem relevant and competent; (2) the sum of $175,000 for the residential structures; and (3) the value of the land (36.413 acres) based on the actual use on the vesting date, April 15, 1968.

The subject property was operated as a private beach club from approximately 1954 to the vesting date, April 15, 1968. After vesting, the Town of Hempstead continued to operate the property as a beach club. Trial was held in April and May, 1978. At the time of trial, 10 years after vesting, the town was still operating the premises as a beach club.

As noted in the dissenting opinion of Justice LAZER, rendered with respect to our original decision (81 A.D.2d 591, 593, 437 N.Y.S.2d 451, supra ).

"For 14 years, until the property was taken in 1968, Malibu or its subsidiaries operated a beach and cabana club on the premises, during which time Malibu also became the fee owner of a portion of the land. Since both the fee and leasehold interests were extinguished by the condemnation, Malibu and St. Aubin simplified adjudication of the conflict between their interests by agreeing that Malibu's interest in the land was 28.3% while its interest in the improvements was 71.7% with St. Aubin's interests the converse. The obvious consequence of the agreement was that an award which fixed a high improvement value would benefit Malibu, which had constructed the club facilities, while high land value was to St. Aubin's advantage. To accommodate this stipulation, the claimants requested the court to allocate its award to indicate separately the value of the land and the improvements. Malibu now attacks the allocations and the total amount awarded; St. Aubin defends both."

At the trial, the town and the St. Aubins contended that the highest and best use of the property was single-family residential. Therefore, the property should be valued as raw acreage with an increment assigned for a potential for residential development. Using this approach, these two parties submitted differing values. The St. Aubins valued the property at $72,500 per acre and the town at $53,500 per acre. Claimant Malibu, however, contended that the highest and best use for the parcel was for beach club purposes and that circumstances dictated employment of a summation approach consisting of a land value of $35,000 per acre as enhanced by the stipulated sound value of the beach club improvements.

After a lengthy and complex trial, Special Term, on September 27, 1978, rendered a careful, in-depth decision. It found, inter alia, that:

"This Court finds from the evidence that the subject with its improvements was an ideal site for the bathing and recreational purposes to which it had been dedicated before and after acquisition, that such use conformed to comprehensive planning studies conducted by both [the Town of Hempstead] and Nassau County, that there was an increasing need and demand for such facilities, and that governmental bodies at many levels, including petitioner, were providing such facilities as essential to the health and welfare of their residents (Inc. Village of Lloyd Harbor v. Huntington, 4 N.Y.2d 182, 191 [173 N.Y.S.2d 553, 149 N.E.2d 851] )".

It also found:

"[I]t is a fact that in the main those beach club facilities owned and operated by Malibu have been operated by the petitioner since vesting to the date of trial."

We adopt these quoted findings.

The trial court concluded, however, that:

"From the totality of the evidence this Court finds that the highest and best use of the subject property was for the development of single-family residential homes, that the beach club improvements impeded the highest and best use of the land and thus may be awarded no value. In the Matter of City of New York (Coogan), (20 N.Y.2d 618, 632 [286 N.Y.S.2d 16, 233 N.E.2d 113] ), Judge Breital [sic ] stated: 'An improvement doomed to a loss operation has little or no value'

* * *

* * *

"From the findings made this Court determines that the following awards should be made to the claimants

                "36.413 acres of land at
                $59,000 per acre              $2,148,367.00
                "6 residential structures        175,000.00
                                           -----------------
                                              $2,323,376.00"
                

Thus, nothing was awarded for the beach club improvements.

Malibu, having an interest in the land and improvements, but a higher percentage of interest in the improvements than in the land, appealed.

On April 6, 1981, this court (81 A.D.2d 591, 437 N.Y.S.2d 451, supra ) reversed Special Term's partial final decree insofar as appealed from, and directed that the town compensate appellant Malibu for the reasonable reproduction value, less depreciation, of the beach club structures, such sum to be determined after a hearing at Special Term. We held, inter alia, that (p. 592, 437 N.Y.S.2d 451):

"Special Term found that the highest and best use of the condemned property would be single-family residential use, and thus denied compensation for the reproduction value of the beach club facilities, in that they interfered with the highest and best use of the property. We conclude that this ruling was error. There is substantial support for the proposition that the value of improvements which interfere with the judicially determined best use of condemned property, and which consequently must be destroyed, is not compensable (see Van Kleeck v. State of New York, 18 N.Y.2d 897 [276 N.Y.S.2d 633, 223 N.E.2d 41]; Matter of County of Nassau [Colony Beach Club of Lido], 43 A.D.2d 45 , affd. 39 N.Y.2d 958 [386 N.Y.S.2d 886, 353 N.E.2d 849]; Irv-Ceil Realty Corp. v. State of New York, 43 A.D.2d 775 ; Spano v. State of New York, 22 A.D.2d 757 ). However, this case is manifestly different. Not only did the improvements not have to be destroyed, but they were actually utilized by the town in connection with the use to which it put the property. Under circumstances such as these, where improvements inconsistent with the best use of the land are nonetheless utilized by the condemnor for the purpose for which they had been erected, the value of the improvements must be compensated (see Matter of Port Auth. Trans-Hudson Corp. [Hudson Rapid Tubes Corp.], 20 N.Y.2d 457 [285 N.Y.S.2d 24, 231 N.E.2d 734], remittitur amd. 20 N.Y.2d 968 [286 N.Y.S.2d 858, 233 N.E.2d 860]; cert. den. 390 U.S. 1002 [88 S.Ct. 1244, 20 L.Ed.2d 103]; Matter of City of New York [New Gen. Hosp.--Cinelli], 280 App.Div. 196 ; affd. 305 N.Y. 835 ; City of New York v. State of New York, 49 A.D.2d 659 ). It would be both irrational and unfair for the town to use the beach club structures for the same purposes as did appellant, and yet not compensate it for the structures because they are inconsistent with the best use of the land. Consequently, the town should compensate appellant for the reasonable reproduction value, less depreciation, of the structures, such sum to be determined after a hearing."

We note that in ...