Rust v. Heavey

MARTIN, Acting Associate Justice. This appeal challenges a decision of the rent commission of the District of Columbia, which determined the rental for apartment 24 in The Altamont, 1901 Wyoming Avenue, North West, in the city of Washington. The landlord demanded $212 per month as rent, which the tenant claimed to be unfair and unreasonable. Accordingly the dispute was submitted to the rent commission for decision. On September 24, 1920, the commission held against the claim of the landlord, and determined that $158 was a just and reasonable rent for the apartment. Afterwards, to wit, on October 3, 1921, the landlord applied to the commission for a rehearing of the . question, which was had; but upon consideration the commission approved its former ruling, and again held that $158 per month was the just and reasonable rental for the premises. The landlord appealed from the decision. It appears from the record that the Altamont Apartment was erected prior to January, 1917, at a cost exceeding $300,000, exclusive of the land. It is testified that the land alone was worth about $100,000. In December, 1919, the present owner purchased the property at the price of $345,000, from the trustees in insolvency of the former owner. The architect of the building testified that at the time of the hearing it would cost $606,561 to reproduce the building. A real estate expert testified that the fair market value of the property was $500,000. No other testimony concerning the cost or market value of the property was taken at the trial. The building contains 29 apartments and a dining room. It was opened for occupancy in January, 1917, at which time a schedule of rents was adopted covering all of the apartments. According to the schedule the rent for this apartment was fixed at $141.66, and the total rent for all the apartments was»$41,139.84. It does not appear that the net in [784] come from the dining room would substantially affect the calculation. On October 1, 1920, however, the present owner increased the rent for this apartment to $212, and the total rent of all the apartments to $64,149. There is no reason apparent upon the record to doubt that in each instance the total1 rent of the building was fairly distributed among the several apartments in proportion to their desirability and rental value. In the present proceedings, however, so far as the record discloses, only one of the 29 apartments was protested, and the commission expressed no finding whatever concerning the other 28 apartments, nor did it report any finding as to the total value of the property. The appellant complains that, if the rate fixed by the commission in this case be applied to the schedule as a whole, the gross return from the building would be reduced to $45,676.62. The record shows that the actual1 operating expenses for the year 1920 were $25,201.13. Accordingly, if the value of the property be estimated at $345,000, which the present owner paid for it at a forced sale, and if 2 per cent, per annum be allowed for depreciation, it will be found that the gross income aforesaid, less the expenses, would produce a net return of about 4 per cent, per annum upon the investment. But such a calculation would be unfair toward the owner, for the testimony shows that the actual market value of the property greatly exceeds $345,000, and that the operating expenses have substantially increased since 1920. Therefore, upon the basis of the foregoing calculation, it appears that the determination of the commission is confiscatory. If it be claimed, however, that the commission’s decision applies to apartment 24 only, and does not require nor imply that the entire . schedule of rents should be reduced, the answer must be that such a claim is totally inconsistent with the fair import of the present record. For it may reasonably be concluded therefrom that the rent for apartment 24, as demanded by the owner, was consistent with the rates fixed • for the other apartments also, and accordingly that a determination of any one of the rates should necessarily affect the entire schedule. This view does not seem to have been regarded by the commission, and accordingly its decision is subject to the disapproval expressed in a like instance bv this court in Karrick v. Cantrill, 277 Fed. 578, 51 App. D. C. 176, 179. The decision is consequently reversed, at the costs of the appellee, and the cause remanded to the commission, for such further proceedings as may be consistent with this opinion.