Adams, J.:
The only matter litigated before the referee was that of overvaluation, and consequently the sole question for this court to determine is, whether the learned referee was justified by the facts appearing upon the hearing before him in reducing the relator’s assessment to the extent directed, by the judgment appealed from.
[434]*434As preliminary to a discussion of this question it may be assumed that every presumption in the case is in favor of the correctness- of the assessment; and that the relator, in assailing the judgment of the assessors as to the-value of his property, must establish affirmatively that such judgment was erroneous. (People ex rel. Westchester Fire Ins. Co. v. Davenport, 91 N. Y. 574.)
Having this rule in mind, it becomes of- the utmost importance to determine to what extent these presumptions have been overcome, and with this end in view we proceed to an examination of the case. .
The premises upon which the Powers Block stands are, probably, as desirable for business purposes as any in the city of Rochester. They were purchased by the relator in different parcels between the years 1860 and 1870, and the total cost thereof was the sum of $234,000. The building itself, which is ten stories in height, constructed of iron, stone-and' brick, and said to be tire-proof, is designed for commercial purposes, the ground floor being occupied by a bank, shops and stores, and the remainder of the building by offices. The structure is really the union of four separate buildings which were erected at intervals, covering a period of live or six years, and finally reconstructed and united so as to form one large building, harmonious in its external appearance, and most conve-' niently arranged for the purposes for which it is occupied. Its total cost, which was considerably augmented by reason of the removal of completed work in order to replace the same with new and different work and thereby obtain proper architectural results, was, as the relator' testified, $825,000. So' that the original cost of the entire property was, in round numbers, $1,060,000; and this fact would at first blush seem to fully justify and confirm the valuation placed upon it by the defendants.
The actual cost of a piece of property is often a fact of great potency in determining its real worth; but it is by no means the only one, and in this particular instance it would prove of little value as a guide, for the reason that the lot upon which the building stands has nearly doubled in its market value- since it was purchased by the relator, while the building itself, which was erected at. a period when the materials of which it was constructed cost very much, more than the same materials would cost at the present time, [435]*435is obviously worth, much less than it was when it was first built. This being the case, it is apparent that some other and more satisfactory rule of valuation should, if possible, be employed.
At the time the assessment in question was levied the statutes of this State provided a method by which the valuation of real and personal property should be ascertained for the purposes of taxation, which Avas by estimating it at its full and true value, as the same would be appraised in payment of a just debt due from a solvent debtor (2 R. S. [Banks’ 9th ed.] 1685, § 17); and this we think will prove the most satisfactory rule for our guidance in the present instance. It is to be observed, then, that the primary requisite of this rule is that the defendants are to assess the relator’s property at “ its full and true value,” and such value can best be determined, as we think, by ascertaining its debt-paying quality. This, however, is something which is often impossible of ascertainment with any degree of certainty, by reason of the difficulty which attends any attempt to formulate a rule which will accommodate itself to all cases. If a man possesses a piece of property which has a fixed and certain market value, it is much less difficult to determine Avhat that property is worth in the payment of a debt than Av'ould be the case if its value were fluctuating and uncertain ; and unfortunately the relator’s property belongs to the latter class. It cannot be said to have any market value, for the reason that there is no other property like it in the city, and consequently none has ever been put upon the market. Persons familiar with the value of real estate in that locality could, as was done upon the hearing before the referee, express their opinion as to its real value, but such evidence is, at the best, but the mere expression of an opinion which is not altogether satisfactory, and which in this case was especially confusing, inasmuch as the valuation thus stated ranged all the Avay from $600,000 to $1,000,000. Eliminating, therefore, all consideration of the market value of the property in question, we find that there remain íavo other methods of ascertaining its true and full value, and these are the ones which, as we understand it, were, adopted by'the learned referee. ' They are, first, its earning capacity as an investment, and, second, the probable and natural cost of its reproduction.
It is urged by the learned counsel for the defendants that too much prominence was given, upon the hearing at the Special Term, [436]*436to the first of the two methods just mentioned; but we are inclined to think that the net income of a building constructed for commercial purposes and as an investment is an important element in deter-, mining its assessable value. For, as was said in an analogous case, “ a thing to be worth its cost must be able to pay out of the profits from its use and enjoyment an income bearing some relation to the interest due' from an investment or loan of a sum of money equal to such cost and over and above the loss by wear or waste.” (People ex rel. Ogdensburgh & L. C. R. R. Co. v. Pond, 13 Abb. N. C. 1.)
. To illustrate, no one would ever think of purchasing the “ Powers Block ” for any other reason than because it was a revenue-producing investment, and consequently its net income must necessarily bear a ratio to, and determine, its true value. The relator testified that the • average net annual income derived from his building for the past fifteen years was $21,348.64, which when capitalized would be equivalent to less than three per cent upon $800,000. The correctness of this statement is, however, challenged by the defendants, and it is claimed that the relator, in order to reduce the net income of the property, has charged certain items to the expense account thereof which do not properly belong there. To meet this evidence, therefore, two expert witnesses were called, one of whom, Mr. Bower, made a thorough examination of the relator’s books and vouchers for the year 1895, and stated as the result of such examination that, he found the net income for. that year to be $26,017.35. To reach this result, however, he disallowed the sum of $3,500, which the relator was compelled to pay as his share of the cost of paving West Main street, which we think was quite as much an expense as any other tax; but even with this item thrown out, the income for the ■ year 1895, as estimated' by this witness, would yield but a trifle: over three per cent.upon a capital of $800,000. The' other expert: made the net income for 1895 a little more than Mr. Bower’s estimate, but not enough more to appreciably increase its percentage.
It is apparent, therefore, that as a source of revenue the relator's-property during the year 1895, when it is not denied that it was.
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Adams, J.:
The only matter litigated before the referee was that of overvaluation, and consequently the sole question for this court to determine is, whether the learned referee was justified by the facts appearing upon the hearing before him in reducing the relator’s assessment to the extent directed, by the judgment appealed from.
[434]*434As preliminary to a discussion of this question it may be assumed that every presumption in the case is in favor of the correctness- of the assessment; and that the relator, in assailing the judgment of the assessors as to the-value of his property, must establish affirmatively that such judgment was erroneous. (People ex rel. Westchester Fire Ins. Co. v. Davenport, 91 N. Y. 574.)
Having this rule in mind, it becomes of- the utmost importance to determine to what extent these presumptions have been overcome, and with this end in view we proceed to an examination of the case. .
The premises upon which the Powers Block stands are, probably, as desirable for business purposes as any in the city of Rochester. They were purchased by the relator in different parcels between the years 1860 and 1870, and the total cost thereof was the sum of $234,000. The building itself, which is ten stories in height, constructed of iron, stone-and' brick, and said to be tire-proof, is designed for commercial purposes, the ground floor being occupied by a bank, shops and stores, and the remainder of the building by offices. The structure is really the union of four separate buildings which were erected at intervals, covering a period of live or six years, and finally reconstructed and united so as to form one large building, harmonious in its external appearance, and most conve-' niently arranged for the purposes for which it is occupied. Its total cost, which was considerably augmented by reason of the removal of completed work in order to replace the same with new and different work and thereby obtain proper architectural results, was, as the relator' testified, $825,000. So' that the original cost of the entire property was, in round numbers, $1,060,000; and this fact would at first blush seem to fully justify and confirm the valuation placed upon it by the defendants.
The actual cost of a piece of property is often a fact of great potency in determining its real worth; but it is by no means the only one, and in this particular instance it would prove of little value as a guide, for the reason that the lot upon which the building stands has nearly doubled in its market value- since it was purchased by the relator, while the building itself, which was erected at. a period when the materials of which it was constructed cost very much, more than the same materials would cost at the present time, [435]*435is obviously worth, much less than it was when it was first built. This being the case, it is apparent that some other and more satisfactory rule of valuation should, if possible, be employed.
At the time the assessment in question was levied the statutes of this State provided a method by which the valuation of real and personal property should be ascertained for the purposes of taxation, which Avas by estimating it at its full and true value, as the same would be appraised in payment of a just debt due from a solvent debtor (2 R. S. [Banks’ 9th ed.] 1685, § 17); and this we think will prove the most satisfactory rule for our guidance in the present instance. It is to be observed, then, that the primary requisite of this rule is that the defendants are to assess the relator’s property at “ its full and true value,” and such value can best be determined, as we think, by ascertaining its debt-paying quality. This, however, is something which is often impossible of ascertainment with any degree of certainty, by reason of the difficulty which attends any attempt to formulate a rule which will accommodate itself to all cases. If a man possesses a piece of property which has a fixed and certain market value, it is much less difficult to determine Avhat that property is worth in the payment of a debt than Av'ould be the case if its value were fluctuating and uncertain ; and unfortunately the relator’s property belongs to the latter class. It cannot be said to have any market value, for the reason that there is no other property like it in the city, and consequently none has ever been put upon the market. Persons familiar with the value of real estate in that locality could, as was done upon the hearing before the referee, express their opinion as to its real value, but such evidence is, at the best, but the mere expression of an opinion which is not altogether satisfactory, and which in this case was especially confusing, inasmuch as the valuation thus stated ranged all the Avay from $600,000 to $1,000,000. Eliminating, therefore, all consideration of the market value of the property in question, we find that there remain íavo other methods of ascertaining its true and full value, and these are the ones which, as we understand it, were, adopted by'the learned referee. ' They are, first, its earning capacity as an investment, and, second, the probable and natural cost of its reproduction.
It is urged by the learned counsel for the defendants that too much prominence was given, upon the hearing at the Special Term, [436]*436to the first of the two methods just mentioned; but we are inclined to think that the net income of a building constructed for commercial purposes and as an investment is an important element in deter-, mining its assessable value. For, as was said in an analogous case, “ a thing to be worth its cost must be able to pay out of the profits from its use and enjoyment an income bearing some relation to the interest due' from an investment or loan of a sum of money equal to such cost and over and above the loss by wear or waste.” (People ex rel. Ogdensburgh & L. C. R. R. Co. v. Pond, 13 Abb. N. C. 1.)
. To illustrate, no one would ever think of purchasing the “ Powers Block ” for any other reason than because it was a revenue-producing investment, and consequently its net income must necessarily bear a ratio to, and determine, its true value. The relator testified that the • average net annual income derived from his building for the past fifteen years was $21,348.64, which when capitalized would be equivalent to less than three per cent upon $800,000. The correctness of this statement is, however, challenged by the defendants, and it is claimed that the relator, in order to reduce the net income of the property, has charged certain items to the expense account thereof which do not properly belong there. To meet this evidence, therefore, two expert witnesses were called, one of whom, Mr. Bower, made a thorough examination of the relator’s books and vouchers for the year 1895, and stated as the result of such examination that, he found the net income for. that year to be $26,017.35. To reach this result, however, he disallowed the sum of $3,500, which the relator was compelled to pay as his share of the cost of paving West Main street, which we think was quite as much an expense as any other tax; but even with this item thrown out, the income for the ■ year 1895, as estimated' by this witness, would yield but a trifle: over three per cent.upon a capital of $800,000. The' other expert: made the net income for 1895 a little more than Mr. Bower’s estimate, but not enough more to appreciably increase its percentage.
It is apparent, therefore, that as a source of revenue the relator's-property during the year 1895, when it is not denied that it was. developed to its fullest earning capacity, did not yield to exceed two. and six-tenths per cent upon the amount for which it was assessed, and not quite four per =cent upon the valuation as found by the; [437]*437referee. This, we think, amounts to a demonstration that the full and time debt-paying valuation of the property was considerably less tiran the amount fixed upon by the defendants.
But when we come to apply the other test, namely, the cost of . reproduction, it will be seen that the conclusion of the learned referee is established with equal certainty. Upon the trial twenty-five witnesses were called to express their opinions as to the fair market value of the relator’s land, independent of the building standing thereon. Twelve of these witnesses, who were sworn in behalf of the relator, estimated its value at from $233,000 to $333,000, while the thirteen who testified for the defendants gave estimates ranging from $500,000 to $650,000, the average valuation of the twenty-five witnesses being $426,880.
The architect who planned and the two contractors who constructed the block expressed the opinion that the' building could be replaced, or that a similar building, and one as good in all inspects, could be built at the present time for $400,000, at the outside. And upon this basis it will be seen that the true and actual value of the entire property does not exceed the sum of $826,880, or just about the valuation fixed by the learned referee.
It is true that three gentlemen of large experience as contractors and builders, who were called to meet the evidence just adverted to, testified that in their opinion it would cost $600,000 to replace the building, but they were obliged to concede that they knew little or nothing of the plan upon which the building was constructed or of the character and quality of material used in its construction, and that their opinions were the result of mere casual observation.
It should be noted in this connection that the great discrepancy between the cost of the building and the estimated cost of its reproduction was accounted for in a large measure by the reduction in the cost of materials, Mr. Grorsline, the contractor who built the block, testifying that such reduction, in his opinion, would be equal to three-fifths of the original cost, and by way of illustration he stated that cast iron, which cost seventy-five dollars per ton when the building was erected, can now be purchased for from eighteen to twenty dollars per ton. But without entering further into the details of the cost of the block, it only remains for ns to say that, when the defendants’ determination as to the value [438]*438of the relator’s property is subjected to either of the tests which we have applied, every presumption as to its correctness is overcome, and it is made clear that it does not conform to the standard which was furnished by the statute law of this State at the time when it was made; while, upon the other hand, an application of the same tests makes it equally obvious that the conclusion arrived at by. the learned referee is fully sustained.
The judgment and order appealed from should, therefore, be affirmed, with costs as of an appeal from an order. (Laws of 1896, chap. 908, § 255 ; People ex rel. Oak Hill Cem. Assn. v. Pratt, 66 Hun, 518; affd. 188 N. Y. 655.)
All concurred.
judgment and order affirmed, with ten dollars costs and disbursements.
Let the judgment and order of this court be entered nunc pro tunc as of the 8th of December, 1897.