Sulzer v. Bellevue Inc.

68 A.2d 407, 1949 D.C. App. LEXIS 237
CourtDistrict of Columbia Court of Appeals
DecidedSeptember 1, 1949
DocketNo. 834
StatusPublished

This text of 68 A.2d 407 (Sulzer v. Bellevue Inc.) is published on Counsel Stack Legal Research, covering District of Columbia Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Sulzer v. Bellevue Inc., 68 A.2d 407, 1949 D.C. App. LEXIS 237 (D.C. 1949).

Opinion

CLAGETT, Associate Judge.

This is an appeal from an order of the District of Columbia Rent Administrator increasing the rents on rooms occupied by nontransient tenants in the Bellevue Hotel. The Administrator, acting under, authority of the local Emergency Rent Act, Code 1940, Supp. VI, 45 — 1604(b), approved an order of one of his examiners allowing a flat increase of $5 per room to compensate for a substantial rise, which he found to have occurred since January 1, 1941, in taxes and other maintenance and operating costs. The principal objection to the order is raised by certain of the tenants and is that the increase should have been upon a percentage rather than upon a flat rate basis.

The Bellevue Hotel, located at 15 E Street,- N. W., near the Union Station and U. S. Capitol, and occupied in part by present and retired government employees, [408]*408has some cooperative features, although it is not a true cooperative of the type involved in suits before the local courts in recent years.1 Of the 280 rooms over one-half are occupied by transients who pay regular hotel rates on a daily basis. These rooms have not been subject to rent control since April 29, 1948,2 and the rates on them have been changed- from time to time. The remainder of the rooms are occupied on a monthly basis and are still subject to rent control. As to such rooms there has been no rent increase since 1929, a most unusual circumstance.3 The property is owned by a Delaware business corporation, having about 700 shares of 6% cumulative preferred stock and 205 shares of nonpar value common stock. Dividends on the preferred stock are current or approximately so. Ten shares of the common stock are held in the Treasury and 195 shares are outstanding, of which 90 shares, or nearly one-half, are owned by persons living in the hotel. The so-called cooperative features are first that a common stockholder, after notice, has the right to occupy a room at the lowest rate possible for the maintenance of the building and second that such stockholders are charged less than nonstockholders would pay for the same accommodations. Apparently there is no constant relationship, either percentagewise or in terms of dollars, between the existing rates for stockholder and nonstockholder occupants of different rooms even when there - is taken into consideration the fact that some rooms have private baths whereas in other cases the occupants of two rooms share the use of a bath. For example, one room which rents-for $25 a month to a stockholder has a nonstockholder rate of $38.50, a difference of $13.50, whereas another room with a stockholder rate of $25 has a nonstockholder rate of $35, a difference of $10. There are other similar differentials. The spread between stockholder and nonstockholder rates ranges from a minimum of $5 per room per month to a maximum of $13.50 per room per month.

The Administrator’s order now under attack affected 124 rooms, 90 of which are occupied by stockholders and 34 by non-stockholders.4 Certain of the tenants affected by the order consented to it but 52 protested. Some of those who protested to the Administrator did not appeal. Thirty-two tenants are represented in the present proceedings, leaving 92 of the original 124 as to whom the order of the Administrator has become final either by acquiescence in the petition of the landlord, failure to protest to the Administrator, or failure to join in the present appeal.5 Of the 32 tenants here on appeal 26 are stockholders and 6 are nonstockholders.

On the issue of whether any increase should be granted, the examiner who heard the case made written findings of fact, general in nature, of the character previously criticized by this court.6 As we read [409]*409the record, however, we do not consider this point an issue in the present case. The examiner also found that occupants paying on a monthly basis, stockholders and nonstockholders alike, received regular hotel service except that there was a change of bed linens but once a week and a change of towels only three times a week.7 The examiner then made the finding upon which this appeal is based: “4. It is found that the adjustment sought is within the expenses, was proved by proper testimony and while ordinarily an increase is granted percentagewise no useful purpose will be attained by changing the request as made.’ (Emphasis supplied.)

Discussing the protest against the $5 per room increase, the Administrator in his statement affirming the examiner's order said: “Counsel for respondents lays considerable stress on the alleged arbitrary adjustments which vary from ten to twenty percent in the individual accommodations affected. At first glance, a rent increase of twenty percent might carry the implication that this rental adjustment resulted in the collection of an exhorbitant rent. This impression disappears, however, when there is taken into consideration the fact that many of the rooms involved in the twenty percent adjustment are rooms in a recognized hotel, carefully conducted and supervised, and for which the tenant pays $25.00 per month including maid service, or an approximate rental of 85 cents per day. Reduced to its last analysis, the adjustment results in the tenant being called upon to pay $1.00 per day for the rooms instead of approximately 83% cents per day. In view of the foregoing consideration of the record, the Administrator adopts the findings of the Examiner in each of the cases involved herein and further finds that the action of the Examiner in granting the increases complained of was not arbitrary and was, on the contrary, the most equitable manner in which to adjust the rental ceilings applicable to all of the housing accommodations involved in this case which is unique in that it is the only hotel in Washington owned and operated under a cooperative ownership.”

The statute, Code 1940, Supp. VI, 45 — 1604(b), provides that upon the filing of a petition for a rent increase upon the ground of an increase in taxes or operating expenses since January 1, 1941, “ * * * the Administrator may by order adjust such maximum-rent ceiling * * * in such manner or amount as he deems proper to compensate therefor, in whole or in part, if he finds such adjustment necessary or appropriate to carry out the purposes of this chapter.” The part of the statute relating to review by this court of orders of the Administrator, Code 1940, Supp. VI, 45 — 1609(b), as amended, provides that, “No order shall be set aside or remanded unless the petitioner shall establish to the satisfaction of the court that the order is not in accordance with law, or is not supported by substantial evidence.”

As was indicated in the quoted finding of the rent examiner, the method customarily followed by the local Rent Administration in allowing increases has been to determine, through one method or another, the total amount in dollars of the increase to be granted, compare such amount with the rents previously collected and thus determine on a percentage basis the increase attributable to each unit. The use of such method results, obviously, in allowing a smaller dollar increase on the lower priced accommodations than on the higher priced ones. In his brief the Administrator states: “It is the custom to raise room rates on a flat dollarwise basis.” He points out further that in Winkler v. Ballard, supra, and companion cases where increases were granted on a percentage basis, the units involved were apartments, not rooms. He states also

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Bluebook (online)
68 A.2d 407, 1949 D.C. App. LEXIS 237, Counsel Stack Legal Research, https://law.counselstack.com/opinion/sulzer-v-bellevue-inc-dc-1949.