Barber & Bennett, Inc. v. State

34 A.D.2d 303, 311 N.Y.S.2d 203, 1970 N.Y. App. Div. LEXIS 4615
CourtAppellate Division of the Supreme Court of the State of New York
DecidedJune 2, 1970
DocketClaim No. 45699
StatusPublished
Cited by4 cases

This text of 34 A.D.2d 303 (Barber & Bennett, Inc. v. State) is published on Counsel Stack Legal Research, covering Appellate Division of the Supreme Court of the State of New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Barber & Bennett, Inc. v. State, 34 A.D.2d 303, 311 N.Y.S.2d 203, 1970 N.Y. App. Div. LEXIS 4615 (N.Y. Ct. App. 1970).

Opinion

Herlihy, P. J.

The parties appeal from a judgment awarding $1,014,096.81 plus interest as damages for a partial taking of claimant’s property for highway purposes.

The claimant operated a feed mill business upon the premises with which we are here concerned. The improvements consisted of a three-story brick and frame warehouse erected in 1903 and subsequently adapted by the claimant to its business, and a complex of eight concrete silos with wooden storage cribs, added in 1956. In 1965, the State appropriated about one half of the claimant’s land in fee, and took a temporary easement over the remaining 12,589 square feet for the purpose of razing the structures thereon. The taking included the structures and any salvage therefrom ”.

The subject premises were considered by both parties to be an integrated feed mill facility and were therefore valued by the cost approach as a specialty, and no question is raised on this appeal as to the correctness of the finding by the trial court that the premises were a specialty.

OBSOLESOENOE

The primary question upon this appeal is whether or not the trial court erred in its finding that the subject premises were not subject to additional depreciation based on functional and economic obsolescence.

[305]*305In eminent domain proceedings the over-all consideration is to award just compensation to a claimant and the approach of a court is limited to such relevant and probative evidence as is introduced in each particular case. In the present case it was agreed by the parties that the property was a specialty and that the proper method of evaluation was land value plus the reproduction costs of the improvements and fixtures less physical depreciation. Beyond this area of agreement, however, the State seeks to deduct from the depreciated value of the improvements and fixtures the further sum of 22% as and for functional ” obsolescence.

The trial court found that there was no functional obsolescence. The proof on behalf of the State on this issue was limited primarily to a showing of matters which in a new building would permit further mechanization of the handling of grains and would result in a saving on labor costs and/or would permit the more efficient handling of grains. The expert testimony on behalf of the State as to obsolescence was to some extent speculative because its expert relied upon a proposed hypothetical ideal plant instead of relating specifically to existing feed grain mills.

It is relatively certain that if the claimant had discontinued business at the subject premises for any reason other than condemnation, he would not have reproduced the same type of building and equipment complex for the conduct of his business at a new location. The State urges that as a matter of law the improvements and fixtures are subject to functional obsolescence upon a showing that a claimant would not faithfully reproduce them upon moving his site of business. The fact that a claimant would not reproduce his present business complex undoubtedly supports the factual inference that his present buildings and equipment are to some extent obsolete and/or inadequate. However,, it appears that as a financial proposition, the question of functional obsolescence is dependent upon the extent to which the existing improvements are adapted to the needs of the business being carried on at the premises and the extent to which the business itself is adapted to profitably serving a public need.

It is perceived that the forms of obsolescence may vary so as to relate to technological and inventive advances which lessen the value of older machines and equipment or to merely a new and more efficient way of aligning the processing of raw materials into finished goods thereby lessening the value of limited space buildings and production line equipment. The present case does not establish either of the foregoing situations.

[306]*306Obsolescence might appear in the form of superadequate buildings and/or equipment and that certainly does not apply to .tib^e present case. (See United Traction Co. v. State of New York, 33 A D 2d 1063, mot. for lv. to app. den. 26 N Y 2d 613; Matter of City of New York [Lincoln Sq. Slum Clearance Project], 15 A D 2d 153, 178, affd. 12 N Y 2d 1086; Matter of City of New York [Harlem Riv. Houses-New Colonial Ice Co.] 22 A D 2d 882, 883.) The subject matter has been defined as follows: ‘ ‘ Functional depreciation is caused by the inadequacy or obsolescence of the facility due to developments which have made it incompetent to perform its function properly or economically even before its natural life has run. While physical depreciation is inevitable, functional depreciation may or may not happen.” (See 5 Nichols, Eminent Domain,. § 20.5[4].) The record does not indicate that the subject property was in any way depressed because of such economic conditions as a declining market for its products or a generally depressed local geographic market for such products. In essence, the type of functional obsolescence urged by the State is not directed toward showing that the premises or any part thereof were not being utilized or could not be utilized and were not necessary for the feed mill business, but instead its proof was directed toward the question of the profitable utilization of the premises for the feed mill business.

In opposition to the adverse profit conditions urged by the State, the record clearly establishes a profitable operation at the subject premises, with no indication that the business could not so continue to operate in the foreseeable future, and that as a practical matter the premises were well adapted to the claimant’s business. The facts that the building as designed and the premises as situated precluded certain innovative production economies do not appear to be conclusive on the primarily factual question of functional obsolescence.

The record establishes that at its new location the claimant erected a building complex substantially different from that utilized at the subject premises with the result of greater production capacities and a more thoroughly mechanized operation. It is fair to conclude that the claimant would not have reproduced the complex appropriated by the State and that therefrom the inference may be drawn that the subject premises were in fact obsolete. However, it does not appear that the construction of premises so as to have increased production and sales capacity or the incorporation of mechanical devices to save on labor costs is so directly related to the question of adequacy of the subject premises for the nature and extent of the business carried on thereat as to require a finding of obsoles[307]*307cence as a matter of law. The facts of increased production capacity and perhaps a greater market or marketability of the claimant’s product are new elements which might well not have had any bearing that would have reduced the value of the facilities at the subject premises beyond ordinary physical depreciation.

The State has shown that the improvements and fixtures could have produced or resulted in greater profits in a new building, but that does not show that a prospective purchaser would have discounted the value of the subject premises beyond physical depreciation upon the ground of functional or economic obsolescence.

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Cite This Page — Counsel Stack

Bluebook (online)
34 A.D.2d 303, 311 N.Y.S.2d 203, 1970 N.Y. App. Div. LEXIS 4615, Counsel Stack Legal Research, https://law.counselstack.com/opinion/barber-bennett-inc-v-state-nyappdiv-1970.