Opinion
Argued February 4, 1965
Decided April 22, 1965
Appeal from the Appellate Division of the Supreme Court in the First Judicial Department, WILLIAM C. HECHT, JR., J.
Robert S. Fougner for appellant.
Florence R. Zimmerman and Beatrice Shainswit for City Rent and Rehabilitation Administrator, respondent.
MEMORANDUM: The order of the Appellate Division should be reversed and the order of Special Term reinstated, with costs of this proceeding in this court and in the Appellate Division.
The law in effect at the time of the Local Rent Administrator's order which the protest and court remit proceedings are designed to review should have been applied. (See Matter of Schreiber v. McGoldrick, 283 App. Div. 779, affd. 307 N.Y. 650; Levy v. 1165 Park Ave. Corp., 305 N.Y. 607; Matter of Neulist v. Weaver, 2 A.D.2d 530, affd. 2 N.Y.2d 889; Matter of Garden Bay Manor [ Sills] v. Herman [ Gaynor], N.Y.L.J., June 21, 1962, p. 11, col. 1 [Spec. Term, N.Y. County, MARKOWITZ, J.], affd. 23 A.D.2d 537, mot. for lv. to app. den. 15 N.Y.2d 486; 850 Corp. v. Schwartz, 15 N.Y.2d 899; Matter of East 19th St. Co. v. Gabel, 39 Misc.2d 218, affd. 19 A.D.2d 590, mot. for lv. to app. den. 13 N.Y.2d 595; 1 N.Y. Jur., Administrative Law, §§ 18, 93.)
The cash paid in connection with the sale amounted to 18.5% which was substantially in excess of the standard of 15% cash equity used as one of the tests of normal financing by the State Rent Administrator under the law in effect when the Local Rent Administrator's determination was made. (See Matter of Wadsworth Props. Corp. v. Weaver, 8 A.D.2d 705, Administrator's Wadsworth Brief, pp. 12-13; Matter of Simon v. Herman, 15 A.D.2d 650, Opinion of State Administrator Herman; Matter of Hoyt v. Herman, N.Y.L.J., March 25, 1963, p. 16, col. 8, Docket No. AO. 81137 State Rent Administrator's Decision.) Under State law purchase prices far above the assessed valuation with the sum total of mortgages in excess of the equalized assessed valuation, and with less than 20% cash, were approved. (Cf. Matter of Edward v. Herman, 17 A.D.2d 185 [1st dept.]; cf. Matter of R. S. Realty Co. v. Herman, 16 A.D.2d 954, affd. 13 N.Y.2d 679; see, also, Matter of Shafer v. Gabel, 16 N.Y.2d 513, decided herewith.)
The "law in effect" in 1960 when the petitioners' application was made to the former State Administrator (L. 1959, ch. 695) did not provide that a cash ratio to purchase price of 15% met the test of "normal financing terms" which that statute prescribed. Neither the "law in effect" in 1960 nor the "law in effect" in 1963 when respondent made her determination defined what normal financing terms were. The guidelines to normal financing in the 1961 and subsequent statutes were in aid of the Administrator and not prescriptions.
There is no reported case under the present statute or its predecessors in which a court directed that 15% cash was the proper and controlling ratio to purchase price upon which to determine normal financing terms where the Administrator was of the opinion some higher or other percentage should be applied.
Nor is there anything so final or conclusive about one Administrator's opinion of what are "normal financing terms", in the absence of statutory prescription, that another or succeeding Administrator is required as a matter of law to take the same view.
The cases cited in the court's memorandum to sustain the view that the "law in effect" at the time of the protest must be applied do not sustain this view, especially when the change in the "law" is merely a change in judgments or evaluations of administrative officers given the power to make fair determinations of what is "value". It seems clear that the law is quite the other way.
The decision in Matter of Neulist v. Weaver ( 2 A.D.2d 530, affd. 2 N.Y.2d 889), for example, turned on a statutory direction that no increase or decrease of rent should "be effective prior to the date" the order was issued. The decision is wholly irrelevant to the present case. The decision in Levy v. 1165 Park Ave. Corp. ( 280 App. Div. 912, affd. 305 N.Y. 607) passed upon the time at which a rent increase order took effect in litigation between landlord and tenant.
In Matter of Schreiber v. McGoldrick ( 283 App. Div. 779, affd. 307 N.Y. 650) there was an actual change in the statutory percentage itself by which the rate of return was calculated during the process of review, and this, of course, presented an entirely different question.
The order should be affirmed.
Judges FULD, VAN VOORHIS, BURKE and SCILEPPI concur in MEMORANDUM; Judge BERGAN dissents and votes to affirm in an opinion in which Chief Judge DESMOND and Judge DYE concur.
Order of the Appellate Division reversed and that of Special Term reinstated, with costs in this court and in the Appellate Division, in a memorandum.