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Conflict of Interest

Every municipality, at one time or another, has been faced with the problem of granting some right under its police powers which might increase its liability for payment in a condemnation proceeding, which it was at that time considering instituting.

The typical situation involves an applicant who applies for such things as a subdivision approval, a zoning change, a variance, a gas station permit, a building permit, a street closing or de-mapping, a private sewage treatment plant approval, a conditional use permit, a curb cut permit, etc., when the property which is the subject of the application is being considered, no matter how remotely, to be involved in whole or in part in a proposed condemnation proceeding. If such an application were granted the ultimate cost of the condemnation to that municipality would most surely be increased.

Difficulty of Position

The municipal officials feel themselves involved in a conflict. On one hand the applicant has the absolute right to be judged on the merits of his application as does any other citizen. At the same time the municipality believes it may be subject to criticism, if in granting that application, no matter how meritorious, they have to be paid for the property in the coming condemnation, and for improvements that confer no benefit on the condemnor.

Complicating the situation, most often the date for the proposed condemnation is still unknown, as well as its extent and for all that anyone knows it may never happen. Even were the condemnation a certainty, the problem would remain the same. It may only be properly solved by moving to condemn the property instantly.

Some seek to solve the problem by delaying action until condemnation takes pale, in effect denying it, without stating so. Others deny the application out right, either citing the condemnation as the reason or giving some other reason despite the operative fact being the condemnation proceeding. Still others grant the application as to that part of the property not involved in condemnation, denying it as to the part that is involved. Others seek waivers from the applicant of any increased value in the condemnation by reason of the approval of the application.

Powers to Benefit

No matter the form it takes, the same principle is involved. May a condemnor through its dual roles of legislator and/or executive and condemnor use its powers as one for the benefit of the other. And if it may not but still does what is the right of the affected owner to compensation in the condemnation proceedings.

It is axiomatic that “all that is beneficial in property arises from its use and the fruits of that use, and whatever deprives a person of them, deprives him of all that is desirable or valuable in the title or possession” (Foster v. Scott, 1893, 136 N.Y. 577, 584).

Absent bad faith, owners have a right to improve, sell, lease, mortgage or ordinarily use their property notwithstanding a line of public improvements has been marked out, or even a proceeding instituted, until there is a vesting of title in the condemnor (City of N.Y. v. Mapes, Schermerhorn, 1822, 6 Johnson’s Chauncery Reports 45; Matter of Mayor, 1897, 24 App. Div. 7; Matter of City of N.Y. [Briggs Ave.], 1907, 118 App. Div. 224; matter of City of N.Y. [W. 17 2d St/], 1915, 167 App. Div. 807; In re Southern Boulevard, 1941, 262 App. Div. 263; 58 Misc. 2d 308, modified on other grounds, 36 A. D. 148; Beltrone v. State of N.Y., 1970, 313 N.Y.S. 2d 238, 245; Bitale v. State of N.Y., 1970, 33 A. D. 2d 977; Guptil Holding Corp. V. State of N.Y., 251 N.Y.S. 2d 766, 770).

The direct restraint or interference by a municipality of the free use and enjoyment of property is either invalid or a de facto taking of the property for which compensation must be made (Forster v. Scott, supra; Arverne Bay Const. Co., 1938, v. Thatcher 278 N.Y. 222; J. W. Clement Co. V. City of Buffalo, 1971, 28 N.Y. 2d 241; matter of Keystone Assocs. V. Moerdler, 1966, 19 N.Y. 2d 78 and the refusal to grant a right under the police power to which an owner is ordinarily entitled constitutes such a restraint (In re Public Place, Borough of Manhattan, 1968, 54 Misc. 2d 69, rev’d on other grounds 31 A.D. 2d 530).

Value of Property

When a property is known to be within the scope of a planned project an award in a condemnation proceeding may not recognize any alteration in the value of that property occasioned by that project itself, whether upward or downward (United States v. Miller, 317 U.S. 369; United States v. Reynolds, 397 U.S. 14, 16; J. W. Clement Co. V. City of Buffalo, supra.) A municipality may not validly take direct affirmative action to reduce the value of property because of a condemnation proceeding nor may it reduce its value indirectly without the owner having the right to be compensated in disregard of the value depreciation acts (J. W. Clement v. City of Buffalo, supra; Matter of Keystone Associates v. Moerdler, supra; Niagara Frontier Corp. V. State of N.Y. 33 A. D. 2d 130, aff’d 28 N.Y. 2d 755; City of Buffalo v. George Irish Paper Co., 31 A. D. 2d 470, 475-476; Kessler v. State of N.Y., 1964 21 A.D. 2d 568; Matter of County of Nassau [Old Country Rd.] NYLJ, Aug. 10, 1968 p. 10, cols 3-6 [Sup. Ct., Nassau, Hogan, J.]).

Thus when the refusal of such an application, otherwise to be granted, because of a pending condemnation proceeding will result in a reduction of the value of the property as well as a denial of its best use it must be deemed invalid and/or disregarded in the condemnation proceeding for the purposes of valuing the property (Westvale Acres, Inc. V. State of N.Y. A.D. 2d-, 329 N.Y.S. 2d 311), and although a condemnation project had been planned, actions to deprive owners of the right to improve their property have either not been recognized by condemnation courts in valuing the property or set aside in actions for that purpose (In re Public Place, Borough of Manhattan, supra; Corrado v. Wolf 37 Misc. 2d 89 and cases cited therein; In re Real Property in Seaford, Town of Hempstead, 1967, 52 Misc. 2d 554 [Sup. Ct., Nassau, Hogan J.]).

Thus where proposed streets are laid out on official maps and owners may not build within the lines of those proposed streets on pain of not recovering the value of what is built pursuant to statutes such as section 35 of the General City Law or sections 239 J or K of the General Municipal Law, they are not deprived of either their right to full compensation for their property including the lands within the lines of that proposed street, or of the right to a reasonable use of their property. In the event the street layout deprives an owner of a reasonable use of his property that statute would be unconstitutional as to

Owner Protected

Even though here the operative facts appear to be to permit planning for future roads without undue cost it cannot be to the material damage of the property owner (Foster v. Scott, supra; Headley v. City of Rochester, 1936, 272 N.Y. 197; Rand v. City of N.Y., 1956, 155 N.Y.S. 2d 753; R. B. I. Enterprises v. City of Rochester, 1965, 25 A.D. 2d 97; Vangellow v. City of Rochester, 1947, 190 Misc. 128; Matter of County of Nassau [Old Country Rd.] N.Y.L.J. Aug. 10, 1968, p. 10, cols. 3-6).

As was stated in R.B.I. Enterprises v. City of Rochester, supra:
“We recognize that the ordinance and statute cannot be used as a substitute for condemnation proceedings to defeat payment of just compensation by depressing values and thus reducing the amount to be paid for the fourteen feet when actually taken.”
Even where the municipality has only taken temporary or stop-gap action to stop the use of property until it was condemned, the attempt was deemed invalid even though the issue is only raised in the condemnation proceeding (Chase v. City of Glen Cove, 1964, 41 Misc. 2d 889, Sup. Ct. Nassau Co., Meyer, J.) Oakwood Island Yacht Club, Inc., v. City of New Rochelle, 1964, 59 Misc. 2d 355, aff’d 320 N.Y.S. 2d 505).

Waivers Unrecognized

And, where the condemnor granted a permit to build but exacted a waiver of the award for that which was built, courts will refuse to recognize the waiver either as an abuse of the police power or as a waiver of a constitutionally protected right (Rockaway Peninsula Corp. V. State of N.Y., 1965, 262 N.Y. S. 2d 670, rev’d on other grounds 29 A. D. 2d 997; U.S. A. V. Certain Properties, 1962, 306 F. 2d 439; Rand v. City of N.Y., supra).

And all of this is as it should be. The police power is predicated upon the preservation of the public health, safety, morals, and welfare. Nowhere is there involved a consideration of saving or costing the public money by reason of the exercise of the police power. It just is not a valid consideration. As was said in DeSena v. Gulde, 1965, 24 A.D. 2d 165:

“The zoning power as limited by the statutory grant must operate in relation to the use of land, and not for the accomplishment of purposes extraneous to that relation.”

Just as governmental functions are not for sale and cannot be validly bought, contract legislation, whether it be contract zoning or otherwise, is illegal in that sense (Church v. Town of Islip, 1960, 8 N.Y. 2d 254). Municipal bodies may not be concerned with the eventual cost to them in a condemnation proceeding by the granting of rights under the police power at the expense of individual taxpayers. It is a matter extraneous to the police power.

Cannot Be Otherwise

If it were different then every permit, zoning, or right granted would contain a provision that in the event of a condemnation proceeding the recipient of that right must waive any enhancement in value to his property in that proceeding growing out of the granting of the right no matter when condemnation was instituted. This the courts of course have not permitted.

If it were different then owners could not compel granting of the approval of subdivision plans, building permits, zoning changes and the like when condemnation is anything from a mere gleam in a condemnor’s eye to an almost certainty. Yet the courts have compelled the granting of such rights.

If it were different then condemnors in an area rezoning could spot-zone the area to be condemned in order not to increase its value in a condemnation proceeding or negatively to rezone it to decrease its value prior to condemnation, the other side of the same coin.

Reprinted with permission from the August 1, 1972 edition of the New York Law Journal © 2010 Incisive Media Properties, Inc. All rights reserved. Further duplication without permission is prohibited.