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Attorney(S)

Charles J. Nehrbas [ Terence Farley, Edward J. Kenney, Jr., and Frank L. Polk with him on the brief], for the appellants. James E. Kelly, for the respondent Shannon Estate, lessee. Robert H. Elder [ Otho S. Bowling and Michael F. O'Brien with him on the brief], for the respondent landlord.

Judges

JENKS, P.J.:

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Smart Summary

Appellate Division, Second Department — December 24, 1914

Factual and Procedural Background

This appeal arises from the appraisal and award made by condemnation commissioners for property taken for subway construction in the borough of Brooklyn (Flatbush Avenue Extension, Fourth Avenue Subway, Proceeding No. 1). The City of New York and the Public Service Commission for the First District of the State of New York appealed from the commissioners' appraisal and award. Respondents include Patrick H. O'Brien and others (owners and lessee interests).

The commissioners' report allocated specific monetary awards: for the owners, $33,600 for a permanent easement, $14,656 for a temporary easement, and $1,680 for use of the estate; for the lessee, $10,400 total for destruction of the lease and for fixtures (comprised of $5,400 and $5,000 respectively). The Appellate Division (opinion by Presiding Justice Jenks) considered three principal contentions attacking the commissioners' awards and recommended affirmance of the order, with ten dollars costs and disbursements.

Legal Issues Presented

Whether the commissioners erred by failing to deduct from the owners' award the damage found to have been sustained by their tenant (i.e., whether the rule of damages required such a deduction and was properly applied).
Whether the lessee was properly awarded compensation for destruction of fixtures (the contention being that the articles were trade fixtures or personal property and not compensable as part of the realty).
Whether the lessee was entitled to compensation for destruction of the lease given a lease "fire clause" that provided termination on total destruction "by fire or otherwise" (the landlord contending that "or otherwise" covers condemnation and thus bars the tenant's recovery).

Arguments of the Parties

Appellants' Arguments (City of New York and Public Service Commission)

The commissioners failed to apply the established rule of damages by not deducting the tenant's award from the owners' compensation for land damage.
The commissioners adopted the valuation of the appellants' expert (who valued the damage to the permanent easement at $47,656 and the building at $14,656), and the arithmetic of those figures, compared with the reported awards, demonstrates that the tenant's $5,400 award was not deducted.
The items awarded to the lessee for fixtures were trade fixtures/personal property and therefore should not have been compensable as part of the realty.

Respondents' Arguments (Owners / Lessee / Landlord)

The owners' expert valued the damage to the permanent easement at $53,512 and valued the building at $14,656; under that valuation and deduction of the tenant award, a calculation would produce a figure close to the commissioners' award, which supports affirmance.
The lessee claimed compensation for destruction of the lease and for fixtures; the owners and landlord asserted the permanent and temporary easement awards belong to the owners and stated they did not object to affirmance in general.
The landlord argued the lease's fire clause (terminating the lease on total destruction "by fire or otherwise") operated to terminate the lease upon the taking, such that the tenant could not recover for destruction of the lease; the respondents disputed that interpretation.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Matter of City of New York (Delancey St.), 120 App. Div. 700	Cited for the rule of damages applicable in condemnation (deduction of tenant damage from owner's award).	Referenced to support the proposition that the commissioners should have deducted tenant damage if the rule required it.
Matter of Daly, 29 App. Div. 287	Cited in connection with the established rule of damages in condemnation cases.	Used as authority for the general rule the appellants invoked.
Lewis, Eminent Domain (3d ed.) § 719	Treatise authority discussing the rule of damages in eminent domain proceedings.	Served as secondary authority supporting the appellants' stated rule of damages.
Harlem River P.R.R. Co. v. Reynolds, 50 App. Div. 575	Cited for the proposition that inferences about commissioners' reasoning may be drawn in favor of regularity; supports assuming commissioners applied correct rules.	Invoked to justify assuming commissioners may have adopted the owners' expert valuation rather than the city's, supporting affirmation.
Haight v. Village of Peekskill, 21 Wkly. Dig. 80	Authority cited in context with presuming commissioners applied correct principles.	Used with other authorities to support a presumption that commissioners followed the correct rule.
Matter of Thompson, 14 N.Y. St. Repr. 522; aff'd, 127 N.Y. 685	Authority on presumptions about commissioners' application of law and valuation.	Cited in support of the presumption that commissioners followed the correct rule of damages.
Matter of Town of Guilford, 85 App. Div. 207	Stands for the principle that commissioners are not bound by the testimony of witnesses.	Applied to explain that the commissioners could lawfully reach an award differing from witness testimony.
Matter of New York Elevated R.R. Co. (Westervelt), 35 N.Y. St. Repr. 944	Related to commissioners' viewing of premises and factual determination.	Noted by the court to support deference to commissioners (they reported viewing the premises).
Edmands v. Boston, 108 Mass. 535	Rule that fixtures are part of the realty so long as they remain fixtures and damages for their destruction are recoverable.	Relied upon to sustain the award to the lessee for fixtures as compensable.
Jackson v. State of New York, 213 N.Y. 34	Authority concerning compensation for fixtures and related principles.	Used to support the court's conclusion that fixtures may be compensated as part of the realty.
Lewis, Eminent Domain (3d ed.) § 728	Treatise material cited on fixtures and compensation in eminent domain.	Reinforced the court's view that fixtures can be the subject of compensation when destroyed.
Matter of Willcox, 142 App. Div. 680	Case cited in the context of fixtures/compensation in condemnation proceedings.	Referenced as supporting authority for compensation for fixtures.
Matter of City of New York, 192 N.Y. 295	Related state authority on eminent domain compensation principles.	Referred to in support of the court's treatment of compensable items.
Matter of City of New York (North River Water Front), 118 App. Div. 865; aff'd, 189 N.Y. 508	Authority addressing compensation principles in condemnation contexts.	Used among authorities supporting the court's compensation analysis.
People ex rel. Huber v. Feitner, 71 App. Div. 481	Cited for the rule of statutory/contractual interpretation (ejusdem generis) applied to "or otherwise" in a fire clause.	Applied to interpret the lease clause and to reject the landlord's argument that "or otherwise" encompassed condemnation.
Lewis v. Smith, 9 N.Y. 502	Authority cited on contract interpretation and related principles.	Used in support of the ejusdem generis interpretation of the lease clause.
People v. Elfenbein, 65 Hun 434	Authority on rules of interpretation cited with the ejusdem generis principle.	Relied upon in construing the lease clause.
Suydam v. Jackson, 54 N.Y. 450	Historical discussion of the so-called fire clause in leases and common-law liability of tenants.	Used to inform the court's view of the ordinary meaning and history of such lease clauses.
Johnson v. Oppenheim, 55 N.Y. 280	Shown as part of the historical authorities concerning the fire clause in leases.	Used to support the court's conclusion about the proper interpretation of the lease clause.

Court's Reasoning and Analysis

The court proceeded in a sequential analysis of the principal contentions contained in the appeal.

First (deduction of tenant damage): The court acknowledged that the established rule in condemnation requires deduction of tenant damage from the owner's award where appropriate. The court observed that the commissioners' report lacks a statement of the commissioners' theory or arithmetic process, but it contains explicit itemized award amounts. The appellants' argument that the commissioners failed to deduct the tenant's $5,400 award rests on assuming the commissioners adopted the city's expert valuation (damage to permanent easement $47,656; building $14,656), which arithmetically would leave $33,000 and would show a failure to deduct $5,400 because the commissioners awarded $33,600 to the owners for the permanent easement.

The court rejected that inference as unsupported: there is no proof the commissioners adopted the city's expert figures. Instead, the court permissibly assumed the commissioners might have adopted the owners' expert valuation (damage to permanent easement $53,512). Under that assumption, deducting the building value ($14,656) yields $38,856, and further deducting the tenant's $5,400 gives $33,456 — only $144 less than the commissioners' award of $33,600. The court emphasized that commissioners are not bound by witness testimony, and that they reported viewing the premises. Given these facts, the court concluded there is no proof the commissioners failed to apply the rule of damages.

Second (compensation for fixtures): The court addressed the contention that the lessee's awarded items were trade fixtures or personal property and thus not compensable. Applying established authority, the court held that fixtures are part of the realty so long as they remain fixtures and that damages are recoverable if they are destroyed or injured in value. The court thus concluded that the award to the lessee for fixtures falls within proper compensation.

Third (lease termination clause — "fire clause"): The landlord argued that the lease's clause terminating rent and the lease on "total destruction by fire or otherwise" should be interpreted to include the taking by eminent domain, thereby depriving the tenant of recovery for the lease. The court applied the ejusdem generis canon and related authorities to construe "or otherwise" in the context of the lease. The court concluded that, as between lessor and lessee, the lease was not destroyed "by fire or otherwise" in the ordinary sense, and that the lease was destroyed only upon the exercise of eminent domain. Consequently, the landlord's textual argument failed.

On the whole, the court found no reversible error in the commissioners' awards — both because there is no demonstrable arithmetic or legal failure to deduct tenant damage and because compensation for fixtures and the treatment of the lease clause were properly resolved.

Holding and Implications

Order affirmed.

Implications:

The Appellate Division affirmed the condemnation commissioners' appraisal and awards, including the awards to the owners and to the lessee for destruction of the lease and fixtures.
The court found no proof that the commissioners failed to apply the rule of damages requiring deduction of tenant damage from the owner's award; in light of competing expert valuations and the commissioners' fact-finding (including viewing the premises), the award was sustained.
The court held that fixtures which remain part of the realty are compensable when destroyed in condemnation proceedings.
The court rejected the landlord's broad reading of a lease "fire clause" to include eminent domain takings, applying ejusdem generis; the lease was treated as being terminated by the taking only when the power of eminent domain was exercised.
No broader or novel precedent was announced beyond applying established rules of damages, treatment of fixtures, and contract interpretation to the facts presented; the immediate, direct effect is the affirmance of the award and an award of ten dollars costs and disbursements to the respondents.

Concurring justices: Burr, Thomas, Rich and Putnam, JJ. (per the opinion).

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In the Matter of the Application and Petition of WILLIAM R. WILLCOX and Others, Constituting the Public Service Commission, etc., Relative to Acquiring Underground Rights, etc., for the Construction, etc., of a Rapid Transit Railroad, etc. Flatbush Avenue Extension, Fourth Avenue Subway. Proceeding No. 1. THE CITY OF NEW YORK and THE PUBLIC SERVICE COMMISSION FOR THE FIRST DISTRICT OF THE STATE OF NEW YORK, Appellants; PATRICK H. O'BRIEN and Others, Respondents.

JENKS, P.J.:

The Public Service Commission and the city of New York appeal from the appraisal and award of commissioners in condemnation of certain property taken for subway construction in the borough of Brooklyn. It is insisted, first, that there is error in the application of the rule of damages in that the commissioners failed to deduct from the owners' award the damage which they found was sustained by their tenant. The rule itself is, I think, well settled in accord with the appellants' contention. ( Matter of City of New York [ Delancey St.], 120 App. Div. 700; Matter of Daly, 29 id. 287; Lewis Em. Dom. [3d ed.] § 719, citing cases.)

We have neither opinion nor statement of the commissioners indicating the theory or the process of their awards. But the report contains certain definite amounts awarded respectively for specified property rights. To the owners was awarded for permanent easement $33,600, for temporary easement $14,656, for use of the estate $1,680. To the lessee was awarded for destruction of lease and for fixtures $10,400, composed of the items $5,400 and $5,000 respectively. The able counsel for the appellants concedes that there should have been an award for the damage to land, and that the commissioners added correctly thereto $14,656 for the value of the building. But his proposition is, as I have said, that they should have deducted from the sum of those two items the said damage of $5,400. Proof that this was not done rests admittedly upon the assumption that the commissioners adopted a valuation of the expert witness called by the appellants. That witness testifies that the damage to the permanent easement was $47,656. The counsel deducts therefrom that witness' valuation of the buildings, $14,656, so that the remainder is $33,000, while the compensation as determined by the report is $33,600. As the commissioners awarded $5,400 to the tenant, it is argued that they could not have deducted the $5,400. The difference of $600 between the said $33,000 and $33,600 is explained by the counsel in these words: "It is quite apparent that the commissioners added $600 to the city's testimony as to the damage to the land." But there is no proof that the commissioners made such an addition, or any addition. It is only "apparent" in the sense that if the commissioners adopted the values of the city's witness there was a discrepancy of $600 that must be accounted for in some way.

There is no proof that the commissioners did not deduct the $5,400, and the conclusion that they did not do so rests upon the proposition that the commissioners adopted the city's witness' said valuation of $47,656. Why should we assume that the commissioners followed the figures of the city's expert witness? We have as much right to assume that they adopted the figures of the owners' expert witness. Nay, if it appear that upon such assumption the commissioners could have applied the correct rule, the assumption is justified in that it is harmonious with the presumption that they did so. ( Harlem River P.R.R. Co. v. Reynolds, 50 App. Div. 575; Haight v. Village of Peekskill, 21 Wkly. Dig. 80; Matter of Thompson, 14 N.Y. St. Repr. 522; affd., 127 N.Y. 685.) The owners' expert witness testifies that the damage to the permanent easement was $53,512. If we deduct therefrom his valuation of the building (which agrees exactly with that of the city's witness and that found in the report), $14,656, the remainder is $38,856. If from this sum, in obedience to the rule, there is deduction of the tenant's $5,400, the result is $33,456, which is but $144 less than the said award by the commissioners of $33,600. The counsel comments that the award exceeds the total damage estimated by the owners' expert witness by $144. But it is a familiar principle that the commissioners are not bound by the testimony of witnesses. ( Matter of Town of Guilford, 85 App. Div. 207, and authorities cited.) The commissioners report that they viewed the premises. (See Matter of New York Elevated R.R. Co. [ Westervelt], 35 N.Y. St. Repr. 944.)

It is insisted, second, that no award should have been made to the tenant for the destruction of fixtures. For it is contended that "These articles were all `trade fixtures' and were personal property." I think that these articles were within the scope of the compensation to be made. They are "a part of the realty, so long as they remain fixtures; and damages are recoverable if they are destroyed or injured in value." ( Edmands v. Boston, 108 Mass. 535. See Jackson v. State of New York, 213 N.Y. 34; Lewis Em. Dom. [3d ed.] § 728, citing authorities; and see Matter of Willcox, 142 App. Div. 680; Matter of City of New York, 192 N.Y. 295; Matter of City of New York [ North River Water Front], 118 App. Div. 865; affd., 189 N.Y. 508.)

The owners (and landlord) contend that the award for permanent and temporary easements should be paid to them, but assert that "They have no interest whether the two awards should be paid to the tenant or not." Our disposition of the case upon the lines of the present opinion for affirmance would seem to satisfy them, inasmuch as they pray that the order be affirmed. The point of the landlord, that the tenant was not entitled to any compensation for the lease, is not well made. The proposition is that the lease contained a fire clause, providing that if the premises should be partially destroyed by fire there should be repair, etc. "But, in case of the total destruction of the premises, by fire or otherwise, the rent shall be paid up to the time of such destruction, and then and from thenceforth this lease shall cease and come to an end," etc., and that the words "or otherwise" covered this exercise of the right of eminent domain. But I think that the words "or otherwise" must receive an ejusdem generis interpretation. (See the rule stated in People ex rel. Huber v. Feitner, 71 App. Div. 481, citing authorities. See, too, Lewis v. Smith, 9 N.Y. 502; People v. Elfenbein, 65 Hun, 434.) This is also evident from the history of the so-called fire clause in leases in this State. (See Suydam v. Jackson, 54 N.Y. 450; Johnson v. Oppenheim, 55 id. 280.) Curiously enough, EARL, C., in describing the common-law liability of the tenant in the first case cited, uses the word "otherwise" as I think it is used in the said clause of the lease (p. 453). The lease, as between the lessor and lessee, was not destroyed "by fire or otherwise." Of course, it was destroyed when the exercise of the power of eminent domain was made, but only then.

I recommend affirmance, with ten dollars costs and disbursements.

BURR, THOMAS, RICH and PUTNAM, JJ., concurred.

Order affirmed, with ten dollars costs and disbursements.

MATTER OF WILLCOX