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January 6, 1954


The opinion of the court was delivered by: BYERS

The court is confronted here with the duty of fixing the fair value to be paid by the United States in this condemnation proceeding for the land and buildings at the southwest corner of 35th Avenue and 37th Street in Long Island City, having a frontage of 100.1 feet on 35th Avenue and 165.16 feet on 37th Street, the land area comprising 16,532 square feet.

Title vested in the plaintiff on December 31, 1952. There are two buildings on the property, of which the main one was finished in 1920 -- a three-floor reinforced concrete structure having a gross floor area of 26,055 square feet. There is also an extension one-story building annex, built in 1927, containing a floor area of 3,098 square feet, and a one-story pump room containing 272 square feet, a like pump turbine shed of about 56 square feet, and a paint shed of about 108 square feet. Thus the total area of all structures is about 29,589 square feet. The entire plot is not so covered, for there is a yard area on the 37th Street side.

 The property was purchased by the present owner, Mylsher Realty Co., Inc., in 1946 for the sum of $ 120,000 subject to an existing lease to the plaintiff which had been entered into in 1942, for use as a 'Signal Corps Photographic Center'; the annual gross rent was $ 17,000, payable monthly. That lease was indefinite in term, and was subject to termination by the Government on sixty days' written notice. It contains this provision:

 '13. The Government shall maintain the said premises in good and tenantable condition during the continuance of this lease or renewal thereof and shall make all repairs, except structural repairs, which the Lessor agrees to make at its sole expense * * *.'

 The defendant's witness Morrell testified that he had not considered that or any other lease in stating his opinion as to the value of the property.

 The buildings other than the sheds are entirely occupied by the plaintiff for the storage and projection of photographic films, and the storage of suitable material and equipment; whether distribution of films is also made from the premises is not clearly shown.

 The property was fully inspected by the undersigned on May 29, 1953 in the presence of the attorneys for both parties and the respective representatives of the latter; at the hearings on October 5th and 6th, the court had the benefit of the testimony of the following witnesses:

 John H. Eisele and Frank B. Morrell, called by the defendant; and

 John A. Bingham and George S. Potter, called by the plaintiff.

 The qualifications of all of these were well attested and their testimony impressed the court as that of well informed and candid gentlemen.

 The defendant's claim for compensation is based upon the theory that since the buildings were erected for the special purposes above stated and have been continuously so maintained and operated, the only true test of fair value on the critical date, results from applying the so-called summation method of computing the reproduction cost of the structures, less depreciation, and adding to that the value of the land as appraised. The figures so arrived at are $ 233,367 for the buildings and $ 50,000 for the land, making a total figure of $ 283,367.

 As an alternative, the defendant suggests the capitalization of the conjectural rental value, which the witness Morrell estimates at $ 22,201.50, and which he would capitalize so as to produce a valuation of $ 277,518. In that connection it is to be noted that he first testified that he had not consulted any leases in making his appraisal, because he knew of no comparable property; thus his reasoning in this connection is entirely the product of conjecture.

 The Government urges that the summation method is inapplicable since these buildings together do not constitute a unit which is so unique and unusual in its design and structure as to justify this forced and artificial theory of valuation; but that the true method of appraisal is shown by the considerations paid in sales of comparable properties in the vicinity, close enough in point of time to be truly indicative of market value; also that a capitalization of rental as shown by leases which are informative because of the nature of the property to which they refer is of only secondary and dilute importance.

 Based upon the court's inspection and observation of the property, the conflicting testimony of the witnesses as to values and applicable theories of appraisal, and the physical evidence of structural deterioration which is revealed in the photographic ...

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