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DIOCESE BUFFALO v. STATE NEW YORK (04/10/69)

COURT OF APPEALS OF NEW YORK Claim Nos. 43266, 44079, 43964 1969.NY.41096 <http://www.versuslaw.com>; 248 N.E.2d 155; 24 N.Y.2d 320 decided: April 10, 1969. DIOCESE OF BUFFALO, NEW YORK, RESPONDENT-APPELLANT,v.STATE OF NEW YORK, APPELLANT-RESPONDENT; BUFFALO BURIAL PARK ASSOCIATION, RESPONDENT-APPELLANT, V. STATE OF NEW YORK, APPELLANT-RESPONDENT; ST. STANISLAUS ROMAN CATHOLIC CHURCH SOCIETY, RESPONDENT-APPELLANT, V. STATE OF NEW YORK, APPELLANT-RESPONDENT Diocese of Buffalo v. State of New York, 29 A.D.2d 916, reversed. Buffalo Burial Park Assn. v. State of New York, 29 A.D.2d 916, reversed. St. Stanislaus R. C. Church Soc. v. State of New York, 29 A.D.2d 918, reversed. Counsel Louis J. Lefkowitz, Attorney-General (Julius L. Sackman and Ruth Kessler Toch of counsel), for appellant-respondent in each above-entitled action. Kevin Kennedy for respondent-appellant in the first above-entitled action. Counsel John E. Leach, F. Paul Norton and Franklin R. Brown for respondent-appellant in the second above-entitled action. Counsel Kevin Kennedy and Leonard Lipowicz for respondent-appellant in the third above-entitled action. Judges Bergan, Breitel and Jasen concur with Chief Judge Fuld; Judge Burke dissents and votes to affirm in an opinion in which Judges Scillepi and Keating concur. Judges Bergan, Breitel and Jasen concur with Chief Judge Fuld; Judge Burke dissents and votes to modify in an opinion in which Judges Scileppi and Keating concur. Author: Fuld


Diocese of Buffalo v. State of New York, Judges Bergan, Breitel and Jasen concur with Chief Judge Fuld; Judge Burke dissents and votes to affirm in an opinion in which Judges Scillepi and Keating concur. Judges Bergan, Breitel and Jasen concur with Chief Judge Fuld; Judge Burke dissents and votes to modify in an opinion in which Judges Scileppi and Keating concur.

Author: Fuld

 In each of these three condemnation proceedings, we are called primarily upon to decide the method to be employed in computing a claimant's damages where there has been a partial taking of cemetery lands. Since this question of law is applicable to all three appeals, it may be helpful to discuss it before undertaking a more detailed consideration of each of the several appeals themselves.

It is settled that, as a general proposition, the measure of damages in partial taking cases is the difference between the value of the whole before the taking and the value of the remainder after the taking. (See Matter of City of New York [ Fourth Ave.], 255 N. Y. 25; see, also, 1 Orgel, Valuation Under Eminent Domain [2d ed.], ยง 64, p. 290 et seq.) Consequently, the decision on each of these appeals turns on whether that rule should have been applied in these cemetery cases.

Our decision in St. Agnes Cemetery v. State of New York (3 N.Y.2d 37) pointed the method of valuing cemetery lands in condemnation proceedings. (See, also, Diocese of Buffalo v. State of New York, 18 N.Y.2d 41; Mount Hope Cemetery Assn. v. State of New York, 10 N.Y.2d 752.) After first observing that these lands were to be appraised on the basis of their value for their highest and best use -- in that case, for continued cemetery use -- the court went on to hold that such value is to be ascertained by first arriving at a probable sale price of the land as cemetery plots or graves, based on the "average" price which the cemetery obtained for the sale of burial plots located in adjoining sections (3 N.Y.2d, at p. 40). After the cost of making such future sales is deducted, an estimate is made of the number of years it would take to sell off all the plots in the cemetery as it existed prior to the condemnation. The amount of net income expected annually over the projected number of years is treated as if it were an annuity whose present value, determined by reference to annuity tables, is regarded as the fair market value of the cemetery's undeveloped grave sites. In other words, the value of the land is equivalent to the present worth of future net income to be derived from the steady sale of a continuously diminishing inventory of cemetery plots, year by year, until the supply of land is depleted.

On the appeals before us, the claimants as well as the State accept the formula adopted in St. Agnes as the method to be followed in determining the valuation of a cemetery. More, the State acknowledges that the courts below correctly applied that formula to find the value of the entire area of unsold plots or graves before the taking. However, contends the State, the courts below erred in failing to use the formula in order to ascertain the value of the property retained by the claimants after such taking; indeed, they made no attempt whatsoever to find that vitally significant figure, the value of the land retained after the taking. Instead of employing the "before and after" measure of damages rule, the trial court averaged the value of all the unsold graves before the taking -- according to the St. Agnes formula -- and, then, simply multiplied the average unit plot value by the number of unsold plots which had been taken in condemnation.

The departure from the "before and after" rule resulted in error. The court's decision in the St. Agnes case was premised on the dual assumption that cemetery land is valuable as an inventory of individual grave sites which may properly be treated as fungible and that sales will continue at a constant rate until they are all sold. On this premise, any particular undeveloped cemetery plot could be substituted for any other, and the only direct effect of a partial taking is to reduce the economic life of a cemetery. In other words, since the sales will presumably continue at the same rate, the condemnation taking will merely decrease the period of time during which the supply will be available. This economic assumption -- that the only effect of a partial taking is to reduce the economic life of the cemetery -- underlies the "before and after" approach urged by the State, a contention which relates to the measure of damages in these cases. This particular question, critical to decision herein, was not raised by the parties nor considered by the court in St. Agnes. In that case and in the others which followed it, we were concerned only with the method of valuation, not with the measure of damages. No reason exists for not applying the "before and after" rule in cases involving a partial taking of cemetery lands. What the owner has lost is, after all, the ultimate measure of damages. (See, e.g., Rose v. State of New York, 24 N.Y.2d 80, 87; St. Agnes Cemetery v. State of New York, 3 N.Y.2d 37, 41, supra ; Boston Chamber of Commerce v. Boston, 217 U.S. 189, 195.) In the main, uncomplicated by any claim or issue of consequential damages or benefits to the retained property (but see discussion in Buffalo Park case, infra, pp. 328-329), the only effect of the taking has been to reduce the size of each cemetery, just as would a street widening, if the cemeteries had fronted on city streets. The remaining property still retains its essential characteristics after the taking, is still just as useful for cemetery purposes, as it was before the taking.

This being so, there is no reason why the St. Agnes method of valuation should not be used to determine the value of the retained land after the taking in precisely the same way as it was used by the courts below to determine the value of the entire cemetery before the taking. Indeed, our decision in Matter of City of New York (Fourth Ave.) (255 N. Y. 25, supra) furnishes strong authority for this conclusion. In that case, the claimant owned an entire square block (then undeveloped) in Manhattan, from Park (Fourth) to Lexington Avenue and from 32nd to 33rd Streets. The city took a 20-foot strip along the entire Park Avenue frontage for a widening of that thoroughfare. The court rejected the claimant's contention -- very similar to that made by the cemeteries on these appeals -- that it should look solely to the land taken (the Park Avenue frontage), viewed as an independent parcel, as the measure of the award to be made. Instead, it recognized that, in reality, the claimant still had a square block fronting on Park Avenue and that it was damaged only to the extent that the block was 20 feet shorter from east to west.

Just as in the Fourth Avenue case, so in the cases before us, we can only make our determination on the basis of a realistic view of what the claimant lost, and that was to be measured by valuing the property retained by the claimant after the taking. In the Diocese of Buffalo case, for example, the only effect of the taking was to reduce that claimant's supply of unsold graves from 65,450 to 61,950. So visualized and regarded, the measure of damages should be, to quote from our opinion in the Fourth Avenue case (255 N. Y. 25, 29, supra), "the difference between the fair market value of the whole before the taking and the fair market value of what remains."

There is, of course, a difference between the methods of valuation in a cemetery case and a case such as Fourth Avenue. Cemetery land is to be valued -- St. Agnes teaches -- by reference to a projected annual net income from sales over a period of years while in the other case the land is to be appraised by using the more common method of estimating square foot or unit lot values by reference to sales of neighboring and similar property. The distinction should not, however, affect the conclusion that the damages are to be measured by considering the impact of the appropriation on the property retained by the claimant. Since, as already indicated, the only effect of a partial taking of a cemetery is to shorten its economic life, a claimant -- to borrow the figures from the Diocese of Buffalo case -- who sells 1,190 graves a year and who has lost 3,500 grave sites is in the same economic situation as a person left with an annuity smaller by three years.

A leading manual, dealing with partial taking cases, describes the "before and after" method as "decidedly the best one in all cases". (McMichael's Appraising Manual [4th ed.], pp. 442-443.) The author emphasizes -- what is, indeed, self-evident where the highest and best use of the property has not been affected by the taking -- that the "before and after" method "involves two calculations" and that both calculations (i.e., appraisals) must be made by identical methods. The courts below, having used the St. Agnes formula to determine the "before" values, should likewise have made "after" value determinations and, of course, in doing so, would have been required to employ the same method. Their failure to do so resulted in error, the extent of which will become evident when we approximate the findings which would result from application of the correct rule in each of the cases to which we now turn and compare them with the findings actually made.

Diocese of Buffalo v. State

In this case, the Court of Claims found that it would have taken 55 years to sell off the grave sites as the cemetery stood before the taking. The claimant owned 65,450 grave sites which would have been sold at the rate of 1,190 a year. And, since the parcel taken involved 3,500 graves, the effect of the appropriation was simply to reduce the life of the annuity by three years, the length of time during which they would have been sold. The court found the "before" value -- i.e., the value of the income from the sale of 1,190 plots a year over a 55-year period -- to be $1,870,462.33 but made no finding as to the "after" value -- i.e., the value of the income from the annual sale of those 1,190 plots over a period of 52 years -- and there must, therefore, be a new trial.*fn1

The court made an award of $100,030; it arrived at this figure by (1) taking the "before" value of the entire property -- $1,870,462 for the 65,450 graves -- (2) finding the average value of each grave to be $28.58 and, then, (3) multiplying that figure by the total number of graves appropriated, 3,500. Quite obviously, if, as the State maintains, the value of the property retained after the appropriation is $1,855,354.77 (see n. 1, supra), an award of $100,030 for the land taken would leave the claimant with property worth their combined sum -- $1,955,384 -- an amount far in excess of $1,870,462 which the trial court found to be the value of its property before the taking. Simply put, the "averaging" procedure adopted below resulted in a windfall to the claimant.

There was a flaw in the reasoning of the courts below which led to such a result. The present value of a grave site depends, to a great extent, on the time when it will be sold. Thus, in this particular case, plots which were to be sold immediately were found to be worth over $130 each, while those which would not yield any income for 55 years were only worth about $5. The figure used by the Court of Claims -- $28.58 per grave -- represented an "average value" which would apply only to those graves sold toward the middle of the cemetery's life. However, as we have already stated, the claimant's sales will presumably continue at an undiminished rate of 1,190 a year throughout its life, in consequence of which the claimant will experience no loss until 52 years have elapsed and it is forced to terminate its sales three years earlier than had there ...


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