Hutchins v. McGoldrick

Lewis, Ch. J. The double caption which prefaces this opinion entitles two rent law cases which were argued together and present the following question: Were conversions made between February 1, 1947, and May 1, 1950 — resulting in additional housing accommodations — decontrolled by the State Residential Rent Law (L. 1946, ch. 274, as amd. by L. 1950, eh. 250). In the first proceeding captioned above — an article 78 proceeding instituted by the petitioner-respondent Hutchins against the State Rent Administrator — the appeal, by our permission, is by the Rent Administrator from an Appellate Division order — 83 — which unanimously affirmed an order of Special Term setting aside orders of the Rent Administrator determining that converted apartments, owned by the petitioner and converted after February 1, 1947, but before May 1, 1950, were subject to rent control, and fixing maximum rentals therefor. Briefly, as to facts: In November, 1949, the petitioner Hutchins became the owner of a one-family dwelling of sixteen rooms located at 171 New York Avenue in Brooklyn. At that time the building was “ boarded up.” Thereafter, and prior to May 1, 1950, alterations were made which resulted in the creation of ten separate dwelling units of two or three rooms each. However, except as to one apartment, none of the new units included a private bathroom. It is not disputed that the alterations which resulted in the creation of the new units were structural changes, substantial in character; that such alterations resulted in additional housing units and were completed between February 1,1947, and May 1,1950. Between those two dates there had developed in urban districts of the State a critical shortage of housing accommodations amounting to a public emergency which led to the intervention of Federal, State and local governments and the adoption of measures to curb and control mounting housing rentals. Among remedial measures enacted by the Legislature — prompted in part by a purpose to promote the creating of additional housing accommodations— was the State Residential Rent Law (as amd. by L. 1950, eh. 250) which, by the exclusory provisions of section 2 (subd. 2, pars. [a]-[g] inclusive), served to exclude — and thus to decontrol — certain types of housing from the definition of “ Housing accommodation.” The problem presented by the Hutchins proceeding requires us to determine whether the new additional rental units, created by the conversion of the Hutchins property and accomplished between February 1, 1947, and May 1, 1950, were decontrolled by section 2 (subd. 2, par. [g], cl. [2]) of the statute last mentioned above. That clause of the statute prescribes that among types of property excluded from the definition of “ Housing accommodation ’ ’ — and thus decontrolled — are: ‘ ‘ additional housing accommodations created by conversion on or after February first, nineteen hundred forty-seven * * — 84 — After thus excluding from rent control housing accommodations resulting from “ conversion ” which took place on or after February 1, 1947, there follows immediately in the text of the statute the provision that as to additional housing units created by conversion after the effective date of the enactment — May 1, 1950 — certain requirements in addition to “ conversion ” shall be fulfilled. To that end the continuing text prescribes : “ * * * provided, however, that any housing accommodations resulting from any conversion created on or after the effective date of this act (May 1, 1950) shall continue to be subject to rent control as provided for herein unless the commission issues an order decontrolling them which it shall do if the conversion resulted in additional, self-contained family units as defined by regulations issued by the commission (Emphasis and parenthetical insertion supplied.)* Indicative of the Legislature’s intent to differentiate factors incident to “ conversion ” which effected decontrol before May 1, 1950, from those factors which served to bring about decontrol after May 1, 1950, is the following amendment to the same statute — 'enacted by the Legislature in 1951 (§ 2, subd. 2, par. [g], cl. [2], as amd. by L. 1951, ch. 443) —which provides that the following accommodations shall not be subject to rent control: “ * * * (2) additional housing accommodations created by conversion on or after February first, nineteen hundred forty-seven; provided, however, that any housing accommodations created as a result of any conversion of housing accommodations on or after May first, nineteen hundred fifty, shall continue to be subject to rent control as provided for herein unless the commission issues an order decontrolling them which it shall do if there has been a structural change involving substantial alterations or remodeling; and such change has resulted in additional housing accommodations consisting of self-contained family units as defined by regulations issued by the commission * * *.” (New and rephrased matter emphasized.) — 85 — The statute of 1951 — like its immediate predecessor — thus clearly distinguishes between conversions made prior to May 1, 1950, and those made thereafter. As to conversions made prior to 1950 — such as the conversion of the petitioner Hutchins’ property — freedom from rent control was not a privilege; it was a statutory right. In that connection it will be noted that the 1951 Legislature made no change in the provision governing conversions made between 1947 and 1950 which we now review. It did no more than amplify the requirements which a building converted after May 1, 1950, must meet before it may be decontrolled. Thus, as to the period prior to May 1, 1950, all that is required before the new accommodations are decontrolled is that additional housing accommodations be created by conversion. However, as to conversions effected under the 1951 act after May 1,1950, in addition to requirements referred to above which prevail as to pre-1950 conversions, the following elements are necessary: (1) proof of structural change, involving (2) substantial alteration or remodeling, which create (3) self-contained family units and, lastly, an order of the commission decontrolling the accommodations. For this conclusion we find support in the State Bent and Eviction Regulations promulgated by the Temporary State Housing Rent Commission. Under section 9 of those regulations— the caption of which is “ Housing accommodations not subject to rent control ” — it is provided by subdivision 5 that the rent regulations contained therein shall not apply to “ Additional housing accommodations created by conversion, consisting of a structural change in housing accommodations involving substantial alterations and remodeling, on or after February 1, 1947 and prior to May 1, 1950.” Nothing in that regulation contains the further requirement that the rental unit — to be decontrolled — must also be a self-contained family unit, i.e., contain a private bathroom. It is also significant that section 11 of the regulations, bearing the title “ Conversions after May 1, 1950 ”, is the regulation which defines a “ self-contained family unit ”, thus indicating that even the commission understood that term to apply only to conversions after May 1, 1950. The further fact should be noted, however, that the references in the regulation last quoted above to “ structural change ” — 86 — and ‘ ‘ substantial alterations and remodeling ’ ’ have no place in regulations concerning the period between 1947 and 1950, because — as we have seen — those words were not in the 1950 statute (L. 1950, ch. 250); they were inserted into the 1951 statute (L. 1951, ch. 443) only as to housing converted after May 1, 1950. It is significant in this connection that the original regulation (§ 9) read as follows: “ Housing accommodations not subject to rent control. * * * 5. Additional housing accommodations created by conversion on or after February 1, 1947, and prior to May 1, 1950 * * It will be noted that the original regulation conformed to the wording and content of the statute, and did not contain the disputed words. The administrator, as appellant before us, asserts that the conversion of the Hutchins property was completed at a time early in 1950 when Federal rent control laws governed. It is argued that by the standards prescribed in the Federal laws the housing units here involved could not have qualified for decontrol, the claim of the administrator being that it is unreasonable to assume the Legislature intended thus to reward housing which failed to meet the minimum standards of the only two statutes which govern the conversion. Concerning what the administrator suggests are “ the only two statutes which govern ”, it appears that as to one of those statutes — the Federal law — we are not here concerned; and the State law — complete in itself — makes no reference to the Federal act in this connection which would prompt us to look in that direction for aid in our search for indications of legislative intent. Turning then to the State legislation, we have seen that it clearly indicates that the requirements for structural change, for substantial alteration and for “ self-contained family units ” apply only to housing accommodations converted after May 1, 1950. The State legislation is equally clear that, as to conversions which occurred after February 1, 1947, and prior to May 1, 1950, the only requirement for decontrol is that there be “ additional housing accommodations created by conversion ”. Subdivision (c) of section 36 of the State Bent and Eviction Begulations provides that where, as in the present case, no registration statement has been filed as required by those regulations or by the Federal act, the administrator, upon written — 87 — request of either party or on his own initiative, may at any time issue an order fixing a maximum rent. The administrator implies that this is a blanket authorization to him to fix maximum rentals in all eases where no registration has been filed, whether or not the premises are decontrolled. As the Appellate Division has noted herein (282 App. Div. 945, 946), this would make the regulations inconsistent with the statute, which authorizes decontrol of certain premises. However that may be, section 9 of the regulations — as we have seen — clearly states that “ These Regulations shall not apply to * * * Additional housing accommodations created by conversion * * * on or after February 1, 1947 and prior to May 1, 1950.” Thus it would seem that subdivision (c) of section 36 of the State Bent and Eviction Regulations does not apply to the present case in any event. The administrator further contends that the petitioner herein did not commence this proceeding to review the administrator’s order within thirty days after the issuance thereof as required by the State Residential Bent Law (§ 9; L. 1951, ch. 443). In support of that position the administrator argues that the provisions for commencing a review of the administrator’s order do not prescribe that a copy of the order must be received by the parties in order to make effective the period of limitation. Such an interpretation might mean that if the administrator made a determination and failed within thirty days to give notice thereof, a review of such determination could be precluded as untimely. Such we think is not the law (see Matter of R. E. Associates v. McGoldrick, 278 App. Div. 347, 348). As to whether notice of the administrator’s determination herein was mailed to or received by the petitioner, the finding of fact made at Special Term and affirmed at the Appellate Division — to the effect that the notice was either not mailed or not received — is conclusive upon us. Accordingly, in the Hutchins proceeding, we conclude that under provisions of the State Residential Bent Law, it is clear that the additional housing accommodations created by conversion on or after February 1, 1947, and before May 1, 1950, were decontrolled. — 88 — Passing then to the Ransom proceeding, in which the petitioner has taken an appeal as of right from an order of the Appellate Division which reversed — two Justices dissenting — an order of Special Term holding that the administrator exceeded his jurisdiction in fixing a maximum rent for the petitioner’s premises: The Ransom proceeding differs from the foregoing (Hutchins) proceeding in that in Ransom the administrator contends there was no structural change involving substantial alterations, and therefore the premises thus converted were not decontrolled. It is not disputed — and this is significant— that an additional housing accommodation was created as a result of conversion, albeit the alteration involved only-minor changes to create the additional accommodation. The statute enacted by the Legislature (L. 1950, ch. 250, as amd.) —as was disclosed in the Hutchins case — provides simply, as to conversions created between the appropriate dates in 1947 and 1950, that “ additional housing accommodations created by conversion * * * ” shall be decontrolled. The only statutory test is whether, between the crucial dates, any additional accommodations were created by conversion. In our view there is no doubt that the present case meets these requirements. That the conversion was easily established is not a bar to decontrol under the standard set by the Legislature. Requirements such as “ structural change ”, “ substantial alteration ” and “ self-contained family unit ” apply only to conversions effected after May 1, 1950, and we are not concerned therewith upon these appeals. The conclusion thus reached by us in the Ransom proceeding is in accord with the view expressed by the minority in the Appellate Division and by the Justice at Special Term (282 App. Div. 566, 569). In Matter of Hutchins v. McGoldrick, the order of the Appellate Division should be affirmed, with costs. In Matter of Ransom v. McGoldrick, the order of the Appellate Division should be reversed and the determination of the Temporary State Housing Rent Commission annulled, with costs in this court and in the Appellate Division. Footnotes [*] State Rent and Eviction Regulations, § 11, define “ self-contained family unit” as “a housing accommodation with private access, containing one or more rooms in addition to a kitchen (including kitchenette or pullman kitchen) and a private bathroom.”