NEW YORK COURT OF APPEALS REVERSES SCRAP VALUATION OF RAPID TRANSIT PROPERTY AND AWARDS DEPRECIATED ORIGINAL COST VALUE WHERE CITY INTENDED TO CONTINUE IDENTICAL USE OF THE PROPERTY

THE CASE (PORT AUTHORITY TRANS-HUDSON CORP. V. HUDSON RAPID TUBES CORP. 20 N.Y. 2D 457, 231 N.E. 2D 734 (1968)) REPRESENTS A UNIQUE APPROACH TO THE DIFFICULT PROBLEM OF VALUING A SPECIAL PROPERTY WHERE THERE IS NO COMPARABLE PROPERTY AGAINST WHICH TO MAKE A RELATIVE VALUATION. CONTINUED DEFICIT OPERATION OF THE RAPID TUNNEL SYSTEM CONNECTING NEW YORK CITY AND THE NEW JERSEY SUBURBS CAUSED THE PORT AUTHORITY TRANS-HUDSON CORPORATION TO EXERCISE ITS POWER OF CONDEMNATION OVER THE TUNNEL PROPERTY OF THE HUDSON RAPID TUBES CORPORATION AND THE NON-TUNNEL FACILITIES OF THE HUDSON AND MANHATTAN CORPORATION. THE NEW YORK SUPREME COURT, SPECIAL TERM, ASCERTAINED THE VALUATION AS A RETURN OF ORIGINAL INVESTMENT IN PROPERTY MINUS THE DEPRECIATION ALREADY TAKEN OUT. FINDING A 'GOING CONCERN' VALUE WAS DEEMED JUSTIFIED DUE TO THE CITY CONTINUING THE OPERATION. THE SUPREME COURT, APPELLATE DIVISION, MODIFIED THE AWARD OF THE LOWER COURT USING SCRAP VALUATION AS THE BASIS FOR DETERMINATION. THE COURT OF APPEALS USED REPLACEMENT VALUE FOR RAISING THE CONDEMNATION AWARD BUT DID NOT USE REPLACEMENT COST AS THE MEASURE OF THE AWARD BUT SIMPLY AS AN INDICATION THAT SCRAP VALUATION WAS INADEQUATE. A POINT OF PARTICULAR INTEREST IS THE APPARENT CONCLUSION OF THE COURT THAT WHERE THERE IS CURRENT DEMAND FOR SERVICES PROVIDED BY A FACILITY EVEN THOUGH THERE IS NO MARKET DEMAND FOR THE FACILITY ITSELF, SUCH A DEMAND WILL WARRANT SOME CONSIDERATION OF REPLACEMENT COST AND GOING CONCERN VALUE.

  • Supplemental Notes:
    • No 89, pp 1-3
  • Publication Date: 1968-12

Media Info

Subject/Index Terms

Filing Info

  • Accession Number: 00238624
  • Record Type: Publication
  • Files: TRIS
  • Created Date: Feb 10 1994 12:00AM