New York Law Review

Tag: eminent domain

  • Matter of City of New York, 39 N.Y.2d 573 (1976): Evidence Needed to Discount Property Value Based on Zoning Change Probability

    Matter of City of New York, 39 N.Y.2d 573 (1976)

    In eminent domain proceedings, any increment or discount ascribed to a reasonable probability of a zoning change impacting property value must be based on concrete evidence presented during the proceedings, not on the subjective judgment of the court.

    Summary

    This case concerns the valuation of property in an eminent domain proceeding. The central issue is whether the lower courts properly discounted the property’s value based on the probability of a future zoning change and termination of its nonconforming use. The Court of Appeals determined that the discounts applied by both the Special Term (65%) and the Appellate Division (25%) lacked sufficient evidentiary support. The Court emphasized that any adjustment to property value based on potential zoning changes must be grounded in specific evidence presented during the proceedings, not on the court’s subjective assessment.

    Facts

    The City of New York initiated eminent domain proceedings to acquire certain real property. At the time of the taking, the property was zoned and used in a manner that its owners claimed was its highest and best use. The lower courts considered the possibility of future zoning changes that could terminate the property’s nonconforming use. Special Term initially discounted the property’s value by 65%, anticipating a zoning change within ten years. The Appellate Division reduced this discount to 25%, still factoring in the probability of a zoning change. The Court of Appeals reviewed the case to determine whether these discounts were properly supported by evidence.

    Procedural History

    1. Special Term initially determined the property value and applied a 65% discount for the probability of a zoning change.

    2. The Appellate Division modified the Special Term’s decree, reducing the discount to 25%.

    3. The New York Court of Appeals granted leave to appeal.

    Issue(s)

    Whether a discount applied to the valuation of property in an eminent domain proceeding, based on the probability of a future zoning change, must be supported by evidence presented during the proceeding, or can it rest on the subjective judgment of the court?

    Holding

    No, because any increment or discount ascribed to a reasonable probability of a zoning change must have a basis in the evidence. The award cannot be sustained if the discount reflected by the decision rests on the subjective judgment of the court authoring that decision and is without evidentiary basis.

    Court’s Reasoning

    The Court of Appeals emphasized that while the probability of a zoning change is a relevant factor in determining property value in eminent domain proceedings, that probability (and its impact on value) must be proven with evidence. The Court found no testimony to support either the 65% discount applied by Special Term or the 25% discount applied by the Appellate Division. The Court quoted Special Term’s observation that “No evidence was offered by the claimant from which it could be determined what financial harm would result if his nonconforming use were terminated. No evidence was produced to guide such an assessment even though one of the principal reasons for the remand of the Appellate Division focused upon this very issue. The Court cannot assume that such evidence exists.” The Court explicitly stated that “the award here violates the well-recognized rule that an increment or discount ascribed to a reasonable probability of a zoning change must have a basis in the evidence”. Because the discount reflected by the decision rested on subjective judgment and lacked evidentiary basis, the Court reversed the Appellate Division’s order and remitted the matter to Special Term for further proceedings to obtain the missing evidence.

  • City of New York v. Exxon Corp., 39 N.Y.2d 430 (1976): Measure of Damages in Partial Takings Cases

    City of New York v. Exxon Corp., 39 N.Y.2d 430 (1976)

    In a partial taking case involving income-producing property, the measure of damages is the difference between the property’s value before and after the taking, and additional compensation for the taken portion and improvements constitutes double compensation unless the reduced rental income does not reflect the loss of the condemned portion; restoration costs are compensable if not reflected in reduced rental.

    Summary

    This case addresses the proper valuation method in a partial taking of income-producing property (a gas station). The City of New York condemned a portion of the property, leading to reduced rental income. The Court of Appeals held that the owner was entitled to the difference between the property’s value before and after the taking, based on capitalized income. Additional compensation for the land and improvements taken was deemed double compensation because the reduced rental already reflected this loss. However, the court upheld compensation for restoration costs necessary to return the station to working condition, as these costs were not reflected in the reduced rental income.

    Facts

    Exxon (formerly Humble Oil) owned a gas station property in New York City. The City condemned a portion of the property, reducing its size and the size of the service station building. As a result, the tenant requested and received a reduction in rent, reflecting the diminished size of the property and building.

    Procedural History

    The Supreme Court awarded compensation to Exxon, including amounts for the land and improvements taken, restoration costs, and relocation of fixtures. The Appellate Division affirmed the award. The City appealed, arguing excessive compensation. Humble also appealed, arguing its award for relocating fixtures was insufficient.

    Issue(s)

    1. Whether the property owner is entitled to additional compensation for the value of the land and improvements taken when the reduced rental income already reflects the loss of the condemned portion of the property?

    2. Whether the property owner is entitled to compensation for restoration costs of the remaining parcel after a partial taking?

    3. Whether the award to Humble Oil for relocating fixtures was properly calculated?

    Holding

    1. No, because additional payments for these items would constitute double compensation where the reduced rental rate already considers the loss of the condemned portion.

    2. Yes, because the affirmed finding of fact showed these expenditures were necessary to restore the station to working condition and this was not reflected in the reduced rental.

    3. Yes, the order of the Appellate Division should be modified by increasing Humble’s award to $10,700, the amount fixed by the Supreme Court, because the record supports the contention that no portion of the $10,700 awarded for relocating the fixtures was attributed to the purchase of new equipment.

    Court’s Reasoning

    The Court of Appeals reasoned that the proper measure of damages in a partial taking is the difference between the value of the whole parcel before the taking and the value of the remainder after the taking (citing Diocese of Buffalo v State of New York, 24 NY2d 320, 323). For income-producing property, capitalization of income is a valid method of valuation (citing Ettlinger v Weil, 184 NY 179, 183; Humble Oil & Refining Co. v State of New York, 12 NY2d 861).

    The court found that because the rent was adjusted to reflect the reduced size of the property, the loss of the condemned portion was already reflected in the reduced rental figure used to calculate the $90,000 award. Therefore, additional payments for the taken land and improvements would constitute double compensation.

    However, the court upheld the $12,000 award for restoration costs, finding that these expenditures were necessary to restore the station to working condition and were not factored into the reduced rental income. This constituted an additional loss to the owners.

    Regarding Humble’s appeal, the court agreed that no portion of the award for relocating fixtures was attributed to new equipment, so the full amount fixed by the Supreme Court ($10,700) should be awarded.

  • Yonkers Community Development Agency v. Morris, 37 N.Y.2d 478 (1975): Eminent Domain and Public Use for Urban Renewal

    Yonkers Community Development Agency v. Morris, 37 N.Y.2d 478 (1975)

    Land condemned for urban renewal constitutes a public purpose when it addresses substandard conditions, even if a private entity ultimately benefits from the redevelopment, provided the primary purpose is to eliminate blight.

    Summary

    This case examines the permissible scope of eminent domain for urban renewal, specifically whether condemning land for a private company’s expansion constitutes a valid “public purpose.” The Court of Appeals affirmed the condemnation, holding that if the land is genuinely “substandard,” its taking serves a public purpose, even if a private entity like Otis Elevator Company ultimately benefits. The court emphasized that urban renewal aims to eliminate blight, and private involvement doesn’t invalidate the taking if the primary goal is achieved. However, the court cautioned that agencies must provide sufficient evidence to support their claims of substandard conditions; a mere conclusory statement is insufficient.

    Facts

    The City of Yonkers, through its Community Development Agency, sought to condemn land for redevelopment. The defendants, landowners and tenants in the designated area, challenged the condemnation. The Agency argued the land was “substandard” and part of an urban renewal plan. The defendants countered that the land was being taken to benefit the Otis Elevator Company, a major employer in Yonkers, for its plant expansion.

    Procedural History

    The Supreme Court found no factual issues requiring a trial and ruled in favor of the Agency, relying on *Kaskel v. Impellitteri*. The Appellate Division upheld this decision. The New York Court of Appeals granted leave to appeal to determine whether the taking served a dominantly public purpose.

    Issue(s)

    Whether the City of Yonkers’ condemnation of land, ostensibly for urban renewal but potentially benefiting a private company, Otis Elevator Company, constitutes a valid “public purpose” under the Fifth Amendment of the U.S. Constitution and Article I, Section 7 of the New York Constitution.

    Holding

    Yes, because when land is deemed substandard according to urban renewal standards, taking it via eminent domain is permissible even if it primarily benefits a private entity like Otis Elevator Company, as long as the fundamental aim is eliminating blighted areas and the city provides sufficient evidence to support the substandard designation.

    Court’s Reasoning

    The Court reasoned that urban renewal, historically aimed at eliminating slums, had evolved to include addressing economic underdevelopment and stagnation. Taking substandard land for renewal serves a public purpose, akin to taking land for a park or school. The fact that a private entity redevelops the land doesn’t negate the public purpose, provided the land is indeed substandard. The court emphasized that the agency’s determination of substandard conditions is not self-executing and requires judicial review. Courts must have a basis to determine the existence of substandard conditions. However, in this specific case, the landowners failed to properly raise the issue of the quality of the taken land, focusing instead on the alleged improper benefit to Otis. The Court stated, “Carefully analyzed, it is clear that in such situations, courts are required to be more than rubber stamps in the determination of the existence of substandard conditions in urban renewal condemnation cases. The findings of the agency are not self-executing. A determination of public purpose must be made by the courts themselves and they must have a basis on which to do so.” Because the landowners failed to make this a key point in their defense, they were denied relief. The Court thus affirmed the lower court’s ruling, stating the subordination of a valid issue under an untenable contention means the defendant owners are no longer entitled to relief.

  • Dann v. State, 36 N.Y.2d 860 (1975): Valuing Property in Transition During Eminent Domain

    Dann v. State, 36 N.Y.2d 860 (1975)

    When valuing property taken by eminent domain that is in transition between two uses, the court must consider the potential future use while also accounting for the remaining economic value of the current use.

    Summary

    This case concerns the valuation of land taken by the State for eminent domain. The property was a commercial dairy farm in transition to commercial, industrial, and residential development. The key issue was determining the fair market value of the land and improvements, considering the property’s transitional state. The Court of Appeals held that the trial court properly considered the property’s transitional state, discounting the potential future value of the land while also assigning value to the remaining economic life of the dairy improvements. The court found no inconsistency in this approach, emphasizing that the highest and best use must be evaluated in light of the specific characteristics and transitional state of the property at the time of the taking.

    Facts

    The claimants owned a tract of land used primarily as a commercial dairy farm. The surrounding area was experiencing increasing demand for commercial, industrial, and residential development. The State took a portion of the property through eminent domain. The property’s location had an “immediate demand for commercial, industrial, and residential real property.” However, the dairy plant on the property had “some remaining economic life,” which the trial court found depressed the land value.

    Procedural History

    The Court of Claims initially determined the value of the property. The Appellate Division reversed, finding the trial court inconsistent in awarding full value for farm buildings while valuing the land for a higher, non-dairy use. The case was remanded for a retrial. On retrial, the Court of Claims adjusted its valuation to account for the property’s transitional state. The Appellate Division again reversed. The Court of Appeals then reviewed the Appellate Division’s decision.

    Issue(s)

    Whether the trial court erred in its valuation of property taken by eminent domain by considering both the potential for future commercial, industrial, and residential development and the remaining economic value of existing dairy farm improvements.

    Holding

    Yes, because the trial court properly accommodated its estimate of value to the offsetting forces affecting this property in transition. The trial court discounted the potential value of the land, but at the same time assigned some value to the dairy improvements which still served an economic purpose until all of the main unit would realize its potential for the future higher use.

    Court’s Reasoning

    The Court of Appeals reasoned that the trial court did not err in its valuation because it recognized the property was in transition between its current use as a dairy farm and its potential future use for commercial, industrial, and residential development. The court emphasized that the trial court found the commercial dairy plant was not yet obsolete, retaining some economic value, even if diminished by the potential for higher uses. The court highlighted that portions of the property had already been sold for commercial use, indicating immediate demand for such development. The court stated, “[T]he dairy plant had some remaining economic life and that its value and continued operation in effect depressed the value of the land.” Therefore, the trial court appropriately balanced these factors in determining the property’s fair market value.

    The court distinguished this case from Acme Theatres v State of New York, noting that in Acme Theatres, the improvements were rendered entirely obsolete by a higher use, disentitling the claimant to damages for those improvements. Here, the dairy improvements still had some economic value. The court emphasized that valuing property in transition requires considering both the potential for future use and the remaining value of the current use, adjusting values accordingly. The court noted that the State’s appraiser also found varying highest uses for different parts of the property and related some of the varying uses to the lag in time before “the demand for commercial use becomes great enough to offset the building values.”

    The court found no inconsistency in the trial court’s second decision, stating that the trial court had adjusted the land values because the commercial and related higher uses were not yet realizable, and also discounted the building values, noting a 15- to 20-year continuing use to the commercial dairy at the time of the taking until the higher potential of the land would be attained. The confusion in the case was caused by the diversity of the main unit and the transitional condition of the property with respect to its highest use. Thus, both land value for the future highest use and the building values for a use that was obsolescent, but not yet obsolete, had to be adjusted.

  • La Briola v. State of New York, 36 N.Y.2d 328 (1975): Consequential Damages and Highway Relocation

    36 N.Y.2d 328 (1975)

    An owner is not entitled to consequential damages for loss of property value resulting from highway relocation and traffic diversion if suitable access remains for the property’s next best use, even if its prior highest and best use, contingent on highway contiguity, is eliminated.

    Summary

    La Briola owned land zoned for retail business with frontage on Route 22. The State relocated the highway, taking a small portion of La Briola’s land but eliminating direct highway access. The property’s highest and best use was reduced to light industrial due to the highway relocation and traffic diversion. The Court of Claims awarded damages only for the land taken, but the Appellate Division added consequential damages for the unsuitable access. The Court of Appeals reversed, holding that the State could relocate the highway without compensating for lost frontage or traffic, provided suitable access remained for the property’s new highest and best use. The access was deemed sufficient for light industrial use, so no additional compensation was required.

    Facts

    La Briola owned 23.565 acres with 1,100 feet of frontage on Route 22, zoned for retail business (front 300 feet), light industrial (middle), and residential (rear). The property was used as a nursery. In 1967, the State relocated Route 22 approximately 150 feet south, constructing a chain-link fence along 941 feet of the old roadbed in front of La Briola’s property. A 165-foot section of the old road remained, with a new access ramp connecting it to the relocated Route 22. After the relocation, the property retained some frontage on the old road and had access to the new highway, but the highest and best use was reduced to light industrial.

    Procedural History

    La Briola filed a claim in the Court of Claims seeking compensation for the taking and consequential damages. The Court of Claims awarded $50,859 for the land taken. The Appellate Division modified the judgment, awarding an additional $236,015 in consequential damages. The State appealed to the Court of Appeals.

    Issue(s)

    Whether the diminution in the economic value of the remaining property was caused by a compensable loss of suitable access or by a non-compensable diversion of highway traffic due to highway relocation?

    Holding

    No, the diminution was caused by the non-compensable highway relocation and diversion of traffic, because the State left suitable ingress and egress for the property’s new highest and best use (light industrial).

    Court’s Reasoning

    The court emphasized that an owner has no vested right to the continuance of a highway or its traffic. The State can discontinue a highway and divert traffic without compensating abutting property owners for diminished value, as long as suitable access remains. “The highway and its traffic rise from a function of the State and are not a product or utility of the property.” The court distinguished this case from *Priestly v. State of New York*, 23 N.Y.2d 152 (1968), where consequential damages were awarded because the access after the taking was unsuitable for the property’s prior highest and best use. In this case, the reduction in highest and best use was due to the highway relocation, not the loss of suitable access for the property’s *new* highest and best use (light industrial). “In the case of highway relocation…the pertinent highest use in assessing suitability of access is that which survives the highway relocation.” Because the access was suitable for light industrial use, no consequential damages were owed. The court also cited *Bopp v. State of New York*, 19 N.Y.2d 368 (1967), where the loss of property value from highway relocation and traffic diversion was deemed non-compensable. The dissent argued that the elimination of normal access rendered the property unsuitable for its former highest and best use, entitling the owner to consequential damages, citing *Priestly*. The dissent emphasized that the Appellate Division found that the change in highest and best use was due to the remaining access being unsuitable, not simply the diversion of traffic.

  • In the Matter of the City of New York, 34 N.Y.2d 800 (1974): Impermissibility of Projected Stream-of-Income Theory in Valuation

    34 N.Y.2d 800 (1974)

    The projected stream-of-income theory of valuation is impermissible when determining the value of real property in condemnation proceedings.

    Summary

    This case concerns the valuation of real property acquired by the City of New York for a school and recreational site. The appellant, Chestnut Properties Co., argued that the Special Term improperly relied on the projected stream-of-income theory to determine the property’s value. The Appellate Division agreed and modified the judgment based on its own finding of value. The Court of Appeals affirmed, holding that the projected stream-of-income theory was impermissible in this situation and that the Appellate Division’s determination of value should not be disturbed. The court emphasized the importance of adhering to established valuation methods and cautioned against speculative future income projections.

    Facts

    The City of New York initiated condemnation proceedings to acquire real property owned by Chestnut Properties Co. for the construction of a high school and recreational facilities. The primary dispute centered on the fair market value of the property. The appellant presented evidence based on a projected stream-of-income theory, estimating future income from potential development on the site. The Special Term seemingly relied on this theory to determine the property value.

    Procedural History

    The Special Term initially determined the value of the property. Chestnut Properties Co. appealed to the Appellate Division, arguing that the Special Term erroneously relied on the projected stream-of-income theory of valuation. The Appellate Division agreed, finding the theory impermissible, and modified the judgment by making its own determination of value. Chestnut Properties Co. then appealed to the New York Court of Appeals.

    Issue(s)

    Whether the Appellate Division erred in determining that the Special Term improperly relied on the projected stream-of-income theory of valuation, and whether the Appellate Division’s subsequent determination of value should be upheld.

    Holding

    Yes, because the projected stream-of-income theory of valuation is impermissible in this situation, and the Appellate Division’s determination of value should not be disturbed as it corrected the error below and made its own finding.

    Court’s Reasoning

    The Court of Appeals affirmed the Appellate Division’s decision, concurring that the projected stream-of-income theory of valuation was impermissible. The court cited previous cases, including Matter of City of New York [Atlantic Improvement Corp.] and Arlen of Nanuet v. State of New York, to support this principle. The court emphasized that such a theory played a significant, if not controlling, part in the Special Term’s determination of value. Because the Appellate Division identified this error and proceeded to make its own finding of value, the Court of Appeals saw no sufficient reason to disturb that determination.

  • Smith v. State, 35 N.Y.2d 453 (1974): Interpreting ‘Farm Crossing’ for Potential Land Use

    Smith v. State, 35 N.Y.2d 453 (1974)

    When a railroad right-of-way has been appropriated by the state, the potential use of adjacent land should be considered in determining its value if there is a reasonable probability that access could be obtained, even if the potential use extends beyond traditional agricultural purposes.

    Summary

    This case concerns the interpretation of “farm crossing” in the context of land appropriation by the state. The claimants owned landlocked properties due to a former railroad right-of-way. The central issue was whether the “farm crossing” access could be expanded to include potential industrial use when assessing the land’s value after the state’s appropriation of the right-of-way. The Court of Appeals held that if there was a reasonable probability the claimants could have obtained unrestricted access for industrial development, the land’s potential for such use should be considered when determining its value.

    Facts

    The claimants owned adjacent properties bounded by a former railroad right-of-way. Access to their properties was provided by two farm crossings, one by deed reservation and the other by statute. The railroad ceased operations in 1958, and the tracks were removed in 1962. On December 21, 1962, the State appropriated the right-of-way, effectively landlocking the claimants’ properties. Appropriation maps were filed later, but the compensation was stipulated to be determined as of the date of the de facto appropriation.

    Procedural History

    The Court of Claims determined that the claimants had a reasonable likelihood of purchasing the right-of-way from the railroad for access. Therefore, they valued the properties as acreage with industrial potential and added an increment to the fair market value. The Appellate Division affirmed, stating that a farm crossing should include any crossing useful to the landowner and that the railroad would have been compelled to provide a crossing suitable for industrial purposes if the properties had been developed that way.

    Issue(s)

    Whether the Appellate Division erred in affirming the increment allowance by deciding that the “farm crossing” could be expanded to include access for potential industrial use when determining the value of the land after appropriation.

    Holding

    Yes, because where a railroad has ceased operating and the right-of-way has been appropriated by the State, the potential use of the land should be considered in determining value if a reasonable probability of adequate access is established by competent proof.

    Court’s Reasoning

    The court reasoned that a strict interpretation of “farm crossing” as solely for agricultural purposes would unduly restrict the use of adjoining land, especially when the railroad has ceased operations. While early cases and the Railroad Law focused on agricultural needs, the court acknowledged that the statute intended to protect landowners’ rights to use their land profitably. The court cited Buffalo Stone & Cement Co. v. Delaware, Lackawanna & Western R. R. Co., 130 N.Y. 152, 159, stating, “The statute does not limit the right of adjoining owners to crossings solely for agricultural purposes, but they may be ordered to enable owners to remove the natural products of the land, like stone and minerals.” The court emphasized the language “whenever and wherever reasonably necessary for the use of the owners and occupants of the adjoining lands.” It held that if a reasonable probability exists that claimants might have purchased and the railroad would have sold a crossing adequate for industrial development, then the potential for industrial use should be considered when valuing the land. The court emphasized that this determination was fact-specific, based on the evidence presented by the claimants. The court affirmed the lower courts’ findings that such a reasonable probability existed in this case, justifying the increment for potential industrial use. The court also noted Syracuse Ready-Mix Concrete Co. v. State of New York (43 A D 2d 800) where it was held that the term farm crossing should be construed as including any crossing useful to the adjoining owner.

  • Broadway Cary Corp. v. City of New York, 34 N.Y.2d 535 (1974): Evidence Required to Prove Highest and Best Use in Eminent Domain

    34 N.Y.2d 535 (1974)

    In eminent domain proceedings, a property owner seeking compensation based on a proposed highest and best use of the property must demonstrate a reasonable probability that the asserted use could or would have been made in the reasonably near future, not merely a speculative or hypothetical possibility.

    Summary

    The City of New York condemned property owned by Broadway Cary Corp. for park purposes. Broadway Cary Corp. argued that the highest and best use of the land, which was zoned for light manufacturing, was for a community shopping center and sought compensation based on that use. The Court of Appeals held that Broadway Cary Corp. failed to substantiate this claim because they presented evidence of physical feasibility but not economic feasibility. The court emphasized the need to demonstrate a reasonable probability that the proposed use would occur in the reasonably near future, considering factors like financing, construction costs, and potential profits.

    Facts

    The City of New York initiated condemnation proceedings to acquire real property owned by Broadway Cary Corp. The property was zoned for light manufacturing. Broadway Cary Corp. contended the highest and best use of the property was for a community shopping center. The City presented evidence of value based on comparable sales of adjacent parcels. Broadway Cary Corp. presented evidence only on the physical possibility of erecting a shopping center.

    Procedural History

    The case reached the Court of Appeals after Broadway Cary Corp. sought compensation based on the proposed shopping center use. The lower courts apparently sided with the city’s valuation based on current zoning and comparable sales. The Court of Appeals affirmed the lower court’s determination.

    Issue(s)

    Whether a property owner in an eminent domain proceeding, seeking compensation based on a proposed highest and best use of the property, must demonstrate a reasonable probability that the asserted use could or would have been made in the reasonably near future, or whether evidence of physical feasibility alone is sufficient.

    Holding

    No, because a property owner must show a reasonable probability that the asserted use could or would have been made in the reasonably near future, supported by evidence beyond mere physical feasibility, to justify compensation based on that proposed use in an eminent domain proceeding.

    Court’s Reasoning

    The court emphasized that while it’s not essential to demonstrate that the property had been used as its projected highest and best use or that there had been an ante litem plan for such use, it is necessary to show a reasonable probability that the asserted use could or would have been made within the reasonably near future. The court distinguished between a speculative or hypothetical arrangement in the claimant’s mind and a use that has a reasonable probability of occurring. The court cited Matter of City of New York [Shorefront High School — Rudnick], 25 N.Y.2d 146, 149, noting that an expert would likely consider factors like the availability of financing, costs of construction, taxes, and possible profits in determining the highest and best use and probable market price. Broadway Cary Corp.’s evidence only addressed physical feasibility, failing to meet the usual criteria for establishing a reasonable probability of the proposed use. The court effectively requires that evidence of economic feasibility accompany evidence of physical feasibility to support a claim for compensation based on a property’s potential highest and best use.

  • Wilmot v. State, 32 N.Y.2d 164 (1973): Mitigating Damages in Eminent Domain and ‘Highest and Best Use’

    Wilmot v. State of New York, 32 N.Y.2d 164 (1973)

    A property owner’s good-faith actions to mitigate damages in the face of imminent condemnation should not prejudice their compensation claim; the highest and best use of the property is determined as of the date of the appropriation, considering the character of the property immediately before the taking and any appropriation-related sales.

    Summary

    Wilmot owned 49 acres intended for a regional shopping center. When the state announced plans to bisect the property with an expressway, Wilmot sold 24 acres of the tract, conditional on the buyer’s ability to develop a shopping center. After the state appropriated 11 acres, Wilmot sought damages for the taking and consequential damages to the remaining 14 acres. The Court of Claims valued the land based on its potential as a regional shopping center. The Court of Appeals affirmed, holding that Wilmot’s mitigation efforts shouldn’t reduce compensation, because the sale was directly related to the state’s appropriation.

    Facts

    In 1958, Wilmot purchased 49 acres near Rochester, NY, intending to develop a regional shopping center.

    In 1967, the State announced that the Genesee Expressway would bisect Wilmot’s property, making it unsuitable for a regional shopping center.

    Prior to the State’s taking, Wilmot entered an option agreement to sell 24 acres of the tract to Lenrich Associates, contingent on Lenrich’s ability to develop a shopping center on the parcel.

    The State appropriated 11 acres on June 13, 1967, leaving Wilmot with two noncontiguous parcels.

    Lenrich exercised its option, and the sale closed on October 12, 1967.

    Wilmot then sued the State for damages related to the 11-acre taking and consequential damages to the remaining 14 acres.

    Procedural History

    Wilmot sued the State in the Court of Claims.

    The Court of Claims determined the highest and best use of the property was as a regional shopping center and awarded damages accordingly.

    The Appellate Division sustained the award.

    The State appealed to the Court of Appeals.

    Issue(s)

    Whether the claimant’s pre-appropriation sale of a portion of the property, undertaken to mitigate damages, should prevent the court from valuing the appropriated land based on the highest and best use of the original, larger tract.

    Holding

    No, because the claimant took reasonable steps to mitigate damages in anticipation of the imminent appropriation, and these actions should not prejudice their claim for just compensation.

    Court’s Reasoning

    The court reasoned that Wilmot acted prudently to mitigate damages by selling the 24-acre parcel, relieving the State of potential claims related to that portion of the land. The Court emphasized the principle that a party seeking damages has a duty to make reasonable efforts to minimize their losses, quoting Mayes Co. v. State of New York, 18 N.Y.2d 549, 554: “No recovery may be had for losses which the person injured might have prevented by reasonable efforts and expenditures.”

    The court stated that had Wilmot not sold the parcel, the highest and best use would have been predicated on the original 49-acre parcel. It further explained, “The constitutional requirement of just compensation requires that the property owner be indemnified so that he may be put in the same relative position, insofar as this is possible, as if the taking had not occurred” (quoting City of Buffalo v. Clement Co., 28 N.Y.2d 241, 258).

    Because the sale was so closely linked to the appropriation, the Court concluded that it was appropriate to calculate compensation based on the property’s character immediately before the appropriation and the related sale.

    The dissenting judge argued that damages should be assessed at the time of the taking and that the sale to Lenrich increased the value of the parcel. The dissent argued the method of computing damages resulted in an award in excess of claimant’s actual loss.

  • City of Albany v. State, 28 N.Y.2d 352 (1971): Municipal Grantor Exception to the Center-Line Presumption

    City of Albany v. State of New York, 28 N.Y.2d 352 (1971)

    When a municipality conveys land abutting a street, there’s a presumption that the municipality intended to retain ownership and control of the street for public benefit, rebutting the general rule that a conveyance of land abutting a street extends to the street’s center line.

    Summary

    The City of Albany sought compensation after the State of New York took 8.5 acres, representing a paper street called Lydius Street, for the State University campus. The City had previously conveyed “Great Lots” abutting Lydius Street in 1818. The lower courts denied the City’s claim, holding it had divested itself of title to the street when it conveyed the lots. The Court of Appeals reversed, holding that when a municipality is the grantor, there is a presumption that it intended to retain ownership and control of the street for public benefit unless there is a clear indication to the contrary in the deed. The matter was remanded to the Court of Claims for assessment of damages.

    Facts

    In 1817, the City of Albany planned to sell some of its property and created the Van Alen map, which designated “Great Lots” bordering Lydius Street (now Madison Avenue), a street that was never developed. In 1818, the City conveyed the “Great Lots” to various grantees, with deeds referencing the Van Alen map and stating the lots were bounded by Lydius Street. By 1900, the Albany Country Club acquired the lots and integrated the bed of Lydius Street into its golf course. In 1961, the State took the Country Club property, including the land comprising Lydius Street, for the State University campus. The Country Club conceded it did not own Lydius Street in the original condemnation proceeding.

    Procedural History

    The City of Albany filed a claim seeking compensation for the 8.5 acres constituting Lydius Street. The Court of Claims denied the claim, holding the city divested itself of title. The Appellate Division affirmed. The City appealed to the New York Court of Appeals.

    Issue(s)

    Whether the City of Albany retained title to Lydius Street when it conveyed the abutting “Great Lots,” or whether the conveyances transferred title to the center line of the street to the grantees.

    Holding

    Yes, the City of Albany retained title to Lydius Street because when a municipality conveys land abutting a street, there’s a presumption that the municipality intended to retain ownership and control of the street for public benefit, rebutting the general rule that a conveyance of land abutting a street extends to the street’s center line.

    Court’s Reasoning

    The Court of Appeals recognized the general rule that a conveyance of land abutting a street is deemed to pass the fee to the street’s center line, citing Bissell v. New York Cent. R.R. Co., 23 N.Y. 61. However, the Court emphasized that this rule is one of construction and yields to a contrary intent expressed in the deed. The Court distinguished this case from others where the deed described the grant as starting at a corner of an intersection and running along the street, limiting the grant to the street’s exterior line.

    The Court relied heavily on Graham v. Stern, 168 N.Y. 517, which established a “material distinction” between conveyances by individuals and those by municipal authorities. The Court quoted Graham: “There is an obvious and a material distinction between the case of a conveyance by an individual of lands bounded upon, or by, a street and that of a similar conveyance by municipal authorities… [T]he municipality would not part with the ownership and control of a public street once vested in it for the public benefit.”

    The Court reasoned that a municipality holds the street in trust for the public and has a continuing interest in maintaining control for public purposes. This trust relationship is not extinguished simply because the street was never developed. The Court distinguished Geddes Coarse Salt Co. v. Niagara, Lockport & Ontario Power Co., 207 N.Y. 500, because Geddes involved a grant by the State, not a municipality. The Court also cited Section 3 of the General Municipal Law, which mandates just compensation when municipal property is taken for a substantially different purpose, as was the case here with the State University campus. The Court remanded for a determination of just compensation, treating the land as if it were private property.