Opinion
April 4, 1975
Raphael, Searles, Vischi, Scher, Glover D'Elia (Sidney Z. Searles of counsel), for Columbia University, claimant.
Adrian P. Burke, Corporation Counsel (Dominick Sorrentino of counsel), for City of New York.
In the instant proceeding, the claimant, Columbia University, seeks to increase the prevailing rate of 6% interest paid on condemnation awards to 8%, on the theory that since the date of vesting (October 1, 1971), conditions in the "money" market were such that the prevailing rate of 6% interest is inadequate and thus does not conform to the constitutional requirement of "just compensation".
"It is settled doctrine that a condemnee is constitutionally entitled to `some sum in addition to the bare value of the property at the date of taking for the delay in making payment, so that the compensation may be just' (Matter of City of New York [Bronx Riv. Parkway], 284 N.Y. 48, 54, affd 313 U.S. 540). And since the ascertainment of just compensation is a judicial question (Matter of City of New York, 190 N.Y. 350, 353; Monongahela Nav. Co. v United States, 148 U.S. 312, 327; United States v Commodities Corp., 339 U.S. 121, 124, n 3; and see NY Const, Art I, § 7, subd [b], the specific provision in section 3-a Gen. Mun. of the General Municipal Law does not foreclose consideration of claimants' contentions as to what constitutes just compensation." (Matter of City of New York [Maxwell], 15 A.D.2d 153, 179.)
Examination of Black's Law Dictionary, Fourth Edition, relating to "just compensation" reveals: As regards property taken for public use, the term is comprehensive and includes all elements. Jacobs v US, Ala, 290 U.S. 13, 54 S Ct 26, 78 L Ed 142, 96 ALR 1; Metropolitan Water Dist. of Southern California v Adams, 16 Cal.2d 676, 107 P.2d 618, 621. But does not exceed market value. Sigurd City v State, 105 Utah 278, 142 P.2d 154, 158; U.S. v Waterhouse, CCA Hawaii, 132 F.2d 699, 703. It means a settlement which leaves one no poorer or richer than he was before the property was taken. U.S. ex rel. Tennessee Valley Authority v Indian Creek Marble Co., DC Tenn, 40 F. Supp. 811, 818, 819; adequate compensation, State v Hale, Tex Civ App 96 S.W.2d 135, 141; In re Board of Sup'rs of Chenango County, Co Ct, 6 N.Y.S.2d 732, 739; fair market value, Cameron Development Co. v United States, CCA Fla, 145 F.2d 209, 210, U.S. ex rel. and for Use of Tennessee Valley Authority v Davis, DC Tenn, 41 F. Supp. 595, 597, 598; United States v Certain Parcels of Land in City of Baltimore, Parcel No. 12, DC Md, 43 F. Supp. 687, 689. Full and perfect equivalent of the property taken. Housing Authority of Shreveport v Green, 200 La. 463, 8 So.2d 295, 298; U.S. v 2.4 Acres of Land, More or Less, in Lake County, Ill., CCA Ill, 138 F.2d 295, 297. It is the value of property taken at time of taking. United States v 813.96 Acres of Land in Ouachita County, Ark., DC Ark, 45 F. Supp. 535, 538; Danforth v U.S. Mo, 308 U.S. 271, 60 S Ct 231, 236, 84 L Ed 240; plus compensation for delay in payment. Kieselbach v Commissioner of Internal Revenue, 317 U.S. 399, 63 S Ct 303, 305, 37 L Ed, 358; or consequential damages to the owner. In re Board of Water Supply of City of New York, 277 N.Y. 452, 14 N.E.2d 789; or value of use of property from date of taking possession to date of judgment if possession is taken by condemnor prior to judgment. Los Angeles County Flood Control Dist. v Hansen, 48 Cal.App.2d 314, 119 P.2d 734, 735. It requires that the owner be put in as good position pecuniarily as he would otherwise have been. Kansas City Southern Ry. Co. v Commissioner of Internal Revenue, CCA8, 52 F.2d 372, 379; In re Gratiot Ave., City of Detroit, 294 Mich. 569, 293 N.W. 755, 757; U.S. ex rel. and for Use of Tennessee Valley Authority v Powelson, CCA4, 118 F.2d 79, 87.
From the cases cited above, it is clear that our courts have consistently held that in eminent domain proceedings a claimant is entitled to receive "just compensation" for the property taken and that "just compensation" includes an amount for interest on the award and that the amount of interest to be paid is a matter for judicial interpretation to be guided by but not bound to the applicable statutes and surrounding circumstances. It is my interpretation that "just compensation" means "fair" and does not mean the maximum possible return on the fund if invested in some speculative, specific, or unusual manner.
In accordance with the procedure suggested by the late Mr. Justice GELLER in Matter of City of New York (Mun Bldg) ( 57 Misc.2d 156, affd sub nom., Matter of City of New York (Manhattan Civic Center Area), 32 A.D.2d 530, affd 27 N.Y.2d 518), a separate hearing was held and testimony taken with regard to the conditions of the money market, as well as the mortgage and securities market at the date of vesting (October 1, 1971) and thereafter.
Claimant, Columbia University, and the City of New York each produced expert witnesses affiliated with two of our largest and most respected financial institutions as well as economists of equal expertise and repute. The record contains substantial testimony relating to the conditions in the "money" market as well as the mortgage and securities market from the date of vesting and for several years thereafter.
In addition, the court has taken judicial notice of the published reports of the "money" market as it relates to the prime rate since the taking of the testimony to the date of this opinion. The vicissitudes of the highly volatile money and securities markets are best demonstrated by the fact that the "prime rate" which is the interest rate paid for loans by the most financially reputable borrowers has fluctuated from a high of 12 3/4% to 7 1/2% over the past four months, more than a one-third break in price on the "down side." The testimony also demonstrated that during the pendency of this proceeding our economy was in what was referred to as an inflationary rampage. Despite the double-digit inflation with its high prices, the stock market however, was depressed and holders of equities over the period in question suffered substantial losses. Seemingly as the equity market sank the price of "money" as represented by interest rates to be paid by borrowers from 1973 until the latter part of 1974 rose to a high of 12 3/4% at which point the upward trend reversed and steadily declined to the present 7 1/2% rate.
While it is true that during the period in question the money market, the mortgage market and bond market were experiencing wide price fluctuations on the "up side", the interest rate paid by savings banks on regular accounts remained constant at 5 1/4%. Moreover, it was conceded by both the claimant's expert and City's expert that from the date of vesting and until 1973, a period of two years, the rate of 6% interest paid on condemnation awards compared favorably with all other comparable economic indicators.
No real evidence was offered as to what Columbia University did with that portion of the fund in question which they actually received as an advance payment an amount in excess of one million dollars. From the proof offered, a purchase of long-term bonds on vesting date would have resulted in slightly less than 6% return on investment; short-term government paper with constant roll-overs concededly could have benefited from the spiralling higher interest rates which began two years after the vesting. On the other hand, an equity investment in so-called gilt-edge securities would have resulted in substantial loss to the principal. This of course is all conjecture and speculative.
In the case primarily relied upon by claimant (Matter of City of New York [Mun Bldg], supra), the court took testimony relating to all of the economic indicators and then predicated its decision on a constitutional issue, that as the United States government, and New York State government were paying 6% interest on condemnation awards, that the statutory 4% to be paid on similar awards of the City of New York pursuant to its applicable statute was arbitrary and constituted unequal protection under the Federal and State Constitutions. No such issue is presented by the case at bar. The Federal government, State and city, are all paying a uniform rate of 6% interest on condemnation awards.
The only issue then before this court is whether or not the statutory rate of 6% interest is "just" and after reviewing all of the evidence I am of the opinion that the statutory rate of 6% interest presently being paid on condemnation awards is "fair" under all the circumstances and as such is within the ambit of "just compensation" and should not be changed.
Accordingly, the application is denied.