New York University v. Temporary State Housing Rent Commission

Desmond, J. Petitioner-respondent, New York University, sought from the Local Rent Administrator certificates of eviction against tenants of apartments in building adjoining the University’s new Law Center. The University proposes to use the premises as dormitories for faculty and students. The Local Rent Administrator denied the University’s application and the University filed a protest with appellant State Rent Administrator. The State Rent Administrator considered the application de nova, and denied the protest without prejudice: (1) to the University’s refiling applications for certificates of eviction to obtain housing accommodations for members of its staff, and (2) renewal of the application after efforts made to relocate the present tenants. The University then brought this article 78 of the Civil Practice Act proceeding in the Supreme [127] Court, New York County, to review the determination of the State Rent Administrator. The Special Term Justice held that the University had a right to the issuance of unconditional certificates of eviction, and made an order directing issuance of such certificates. The Appellate Division affirmed, two Justices dissenting, and the tenants and the Temporary State Housing Rent Commission appealed to this court. The Appellate Division majority wrote no opinion, but the dissent stated that the commission’s requirement that petitioner relocate the twenty-four tenants was fair and reasonable, that there was no compelling necessity for petitioner’s proposed use of the property as compared to the hardship tó the families which would be evicted, and that the granting of the petition would be inconsistent with the purpose of the act, citing Loab Estates v. Druhe (300 N. Y. 176, 179). The Appellate Division dissent stated, too, that the commission’s relocation requirement was appropriate, but it is to be noted that the New York City Administrative Code, applicable in the Loab Estates case (supra), specifically made relocation of tenants a requisite for eviction, a provision which is not found in the State act or in the commission’s regulations promulgated thereunder. The Special Term held that what petitioner is trying to accomplish is a lawful “ withdrawal of the housing accommodations from the rental market ”, as permitted by subdivision 4 of section 10 of the State Residential Rent Law (L. 1946, ch. 274, as amd. by L. 1951, ch. 443, otherwise cited as McKinney’s Unconsol. Laws, § 8590, subd. 4). It pointed out that the phrase of that statute: “ Nothing in this act shall be construed to require any person to offer any housing accommodations for rent ”, was taken almost verbatim from the former Federal Price Control Act, and that, under the Federal act, the Supreme Court had suggested (Bowles v. Willingham, 321 U. S. 503, 517) that there was an absolute right in an owner to evict tenants so as to use his property for uses not covered by the act. It is undisputed here that the use proposed by this petitioner, that is, for dormitories for students and faculty, is specifically excluded (see State Residential Rent Law, § 2, subd. 2, par. [a]; McKinney’s Unconsol. Laws, § 8582, subd. 2, par. [a]) from the definition of “ housing accommodations ” in the State act (and, incidentally, this court has held in People ex rel. Clarkson Memorial Coll. v. Haggett, 300 N. Y. 595, that college-owned [128] buildings rented by the college to faculty members are exempt from realty taxation as being ‘ ‘ used exclusively for carrying out ” one of the purposes of the owning corporation [Tax Law, § 4, subd. 6]). Referring to a regulation of the State commission, which we will quote hereafter, Special Term held that this record shows that petitioner is in immediate need of these dormitory facilities and that its educational program will be seriously jeopardized without them. The final conclusion of that court, confirmed by the Appellate Division, was that the determinations of the commission were arbitrary and capricious, and that they must be set aside and the commission directed to issue the eviction certificates. The facts are not in dispute. The University, in 1948, acquired, for future use as a dormitory in connection with the Law School, these three dwellings, across the street from its new Law Center building recently completed. It is not disputed that the University, in good faith, has immediate need for dwelling accommodations for about two hundred nonresident instructors, fellows and students in its School of Law, who are to participate in new or expanded courses in the school. The premises contain thirty-two small apartments. At the time these proceedings were commenced twenty-four apartments only were occupied by tenants. Twenty-one of those tenants are appellants here, and the Temporary State Housing Rent Commission is the other appellant. As pointed out above, subdivision 4 of section 10 of the act (McKinney’s Unconsol. Laws, § 8590) says: “ 4. Nothing in this act shall be construed to require any person to offer any housing accommodations for rent, but housing accommodations already on the rental market may be withdrawn only after prior written approval of the state rent commission, if such withdrawal requires that a tenant be evicted from such accommodations.” The commission’s regulations include a section 59 which says, in effect, that an eviction certificate shall be issued where the landlord establishes that he seeks in good faith permanently to withdraw occupied housing accommodations from the rental market. As we read the record and the contentions of the parties, it is agreed that petitioner here meets those particular requirements. However, that same section 59 of the regulations goes on to say that such an eviction certificate shall not [129] be issued unless the landlord establishes that he is seeking to recover possession because of an immediate and compelling necessity and exceptional circumstances, that the continued operation of the housing accommodations will impose undue hardship on him, and that the granting of the eviction certificate is not inconsistent with the purposes of the act. It is really on that second part of section 59 of its regulations that the commission relies here, its finding being, in effect, that the granting of eviction certificates here would be inconsistent with the purposes of the act. Respondent points out that the Legislature, by section 2 of chapter 443 of the Laws of 1951 (McKinney’s Unconsol. Laws, § 8584, n.), validated the commission’s regulations, but only insofar as not inconsistent with the act itself, but that particular statute does not help us decide this case. We thus have a situation where the statute says that no one shall be required to offer housing accommodations for rent, and that housing accommodations may be withdrawn from the rental market only after prior written approval of the commission. Then there is a regulation which says that a certificate of eviction is to be granted in such a situation only where the landlord shows immediate and compelling necessity, exceptional circumstances, undue hardship, and consistency with the purposes of the act. There is nothing whatever, either in the statute or the regulations, which authorizes the commission to impose as a condition that the landlord relocate the evicted tenants, and the imposition of such a condition may well, therefore, be unlawful and a nullity. As to the requirements of the regulation, that it be shown that the granting of the eviction certificate is consistent with the purposes of the act itself, we think that condition was reasonably met here since the primary purpose of the act is to prevent undue rent increases, and since the act specifically excludes college dormitories from its coverage, and makes it plain that the landlord has a right to withdraw his property from the rental market, that is, to convert it into nonrental uses. As to the regulation’s requirement that undue hardship, immediate necessity, etc., be shown, the problem is, perhaps, a little more difficult. There may be doubt that the commission had power to impose such a regulation, in view of the statutory language and policy which gives a landlord a right to withdraw [130] the accommodations. To allow the commission to impose further requirements of hardship, necessity, etc., would seem, not only to be inconsistent with the statute itself but to be of doubtful constitutionality, as prohibiting a landlord from turning his own property into a nonrental use. However, we need not, in this case, pass on the validity of so much of section 59 as requires a showing of hardship, special circumstances, etc. Special Term, as noted above, held that exceptional circumstances were shown. The Appellate Division, apparently, agreed, and that conclusion was well founded on this record. As we read the commission’s order and opinion, it really made no definite finding of its own on this hardship matter, but held: first, that the proposed use is not exempt from the act; second, that eviction would be inconsistent with the statute; and, third, that no certificate should be granted unless relocation be provided by petitioner. A finding by the commission, as to lack of undue hardship, can be spelled out, we suppose, from the incorporation, into the commission’s opinion, of a report by its examiner. That examiner’s report says that the University’s need for housing for its scholars is not such a hardship as is contemplated under section 59, that hardship means financial loss or illness preventing continued operation of the premises, and that “ removal of accommodations from the rental market ” means boarding them up or keeping them vacant for the reason that occupancy would violate other laws, and removal of those other violations would be too expensive. We think that construction by the examiner, of section 59, is an arbitrary one. But, for present purposes, we can content ourselves with holding that, even assuming the validity of the whole of section 59, petitioner did show hardship and compelling necessity by its undisputed proof that it needs these buildings for its own University purposes, and that without them its educational program will be seriously interfered with. The order should be affirmed, with costs.