Hudson Valley Sand & Stone Co. v. State

Greenblott, J. P. Claimant, the owner of a building in the City of Mechanicville, New York, leased said premises to one Conerty for a five-year period ending September 30, 1971. On April 26, 1971, the State Tax Commission issued a tax warrant in the amount of $30,639.42 against Conerty, individually and as president of Conerty Pontiac-Buick, Inc., the business operated on the premises. To enforce the warrant, the commission placed padlocks on the door of the leased premises and posted signs proclaiming the seizure. Thereafter, pursuant to an agreement between the commission and Conerty, the business was allowed to reopen temporarily but upon Conerty’s default on August 15, 1971, the establishment was again locked. Subsequently, before a public auction could be held, the Marine Midland Bank obtained a temporary restraining order enjoining Conerty and the commission from "making any transfer or disposition of’ the personal property of the business located on claimant’s premises, and on March 20, 1973 Special Term granted the bank’s motion for a stay of the sale and continued in effect the previously issued temporary restraining order. Ultimately, on March 28, 1974, Special Term ruled that the bank’s security interest in the taxpayer’s personal property had priority over the State’s tax lien and ordered the commission to release all of the property to the bank (Marine Midland Bank-Eastern Nat. Assn. v Conerty Pontiac-Buick, 77 Misc 2d 311). As a result, on April 25, 1974, the commission removed its padlocks from the building and delivered the property to the bank. Claimant then filed the instant claim against the State wherein it sought to recover, for the period from April 26, [346] 1971 to April 25, 1974, the fair and reasonable rent of the premises leased to Conerty. The Court of Claims ruled in favor of the claimant, holding that a de facto taking of claimant’s property was established, and determined that the State was liable to claimant for the period subsequent to the expiration of the Conerty lease, i.e., September 30, 1971 to April 25, 1974. Accepting the leased monthly rent of $334.07 as the fair and reasonable rental value of the premises, the Court of Claims awarded claimant $10,356.17 plus interest. Both parties appealed, claimant contending that it should have recovered for the period from April 26, 1971 to September 30, 1971, and the State arguing that no taking was proven. We find no merit in claimant’s cross appeal since Conerty’s lease remained in full force and eifect until September 30, 1971, with the result that claimant had no possessory interest in the leasehold under any possible construction until that date (Roxfort Holding Co. v United States, 176 F Supp 587; Marrano v State of New York, 80 Misc 2d 768). Passing then to the State’s appeal, we are constrained to reverse the judgment of the Court of Claims and dismiss the claim. Since the initial act of the State in padlocking the Conerty premises was an act directed solely against tenant Conerty and gave no possessory right to the landlord claimant, there obviously was no de facto appropriation of claimant’s property. When the lease between Conerty and the claimant expired on September 30, 1971, and the tenant failed to vacate the demised premises, the landlord was entitled to proceed under the provisions of section 232-c of the Real Property Law. At that time, the claimant was empowered to proceed "in any manner permitted by law” to remove the tenant. This the claimant failed to do, taking no action and sleeping on its rights until the padlock was voluntarily removed by the State. It is not even contended that claimant demanded rent from the State (see Preston v Hawley, 101 NY 586; Marrano v State of New York, 80 Misc 2d 768, supra). Furthermore, we note that the possession and control which constituted the alleged de facto appropriation were not in fact exclusively in the State Tax Commission but were under court control during a portion of the period of time herein involved. Injunctions were in eifect from August 27, 1971 through March 28, 1974, which enjoined and restrained the State Tax Commission from transferring or disposing of Conerty’s assets. [347] The judgment should be reversed, on the law and the facts, and the claim dismissed, without costs.