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EVIDENCE NECESSARY Reasonable rent depends, of course, upon the evidence produced in the particular case in which it is to be determined.
It is well to bear in mind that there must be evidence in the case justifying the action of the court in every case where a default is not suffered. “While a certain amount of informality may probably be unavoidable in cases of this kind, nevertheless it is a judicial proceeding, and no action not warranted by the testimony can be taken by the court.” 52 What is a reasonable rent is a question of fact to be determined in each case. Where a jury is the arbiter of this fact, its verdict should not be set aside unless it is clearly demonstrated that the verdict was the result of mistake, passion, prejudice or bias. 53
DUTY IN REGARD TO PROOF AT TRIAL The duty of bringing forward the evidence of reasonable rent” is in almost every instance upon the landlord. If the action is brought to recover the reasonable rental value for use and occupation of premises, the burden, irrespective of any statute, is upon the landlord to prove his case, and as part thereof it is incumbent upon him to establish what is the reasonable rental value. If the action is to recover rent as fixed by a contract either express or implied, and the tenant pleads the statutory defense that the rent is un
62 Starzer Realty Corp. v. Goodman, 189 N. Y. Supp. 126 (App. Term, 1st Dept.). See also Shuck v. McCarthy, 189 N. Y. Supp. 195 (App. Term, 1st Dept.).
53 Jash-Lap Realty Co., Inc., v. Fishman (Mun. Ct., City of N. Y., Robitzek, J.), 115 Misc. 485, 190 N. Y. Supp. 117, citing Berkowitz v. Cons. Gas Co., 134 App. Div. 389–391; Kingsley v. Finch, Pruyn & Co., 54 Misc. 317; Dambmann v. Metropolitan St. R. Co., 55 id. 60; Dallin v. Mayer, 122 App. Div. 676, 677; Wagner v. H. Herrmann Lumber Co., 121 N. Y. Supp. 607; McCann v. New York & Queens Co. R. Co., 73 App. Div. 305; Layman v. Anderson & Co., 4 id. 124.
just and unreasonable and the agreement oppressive and establishes the fact of the increase as provided in subsection 3 of the act, 54 then, as we have seen in the consideration of the presumption arising by virtue of that provision, 55 the landlord must go forward with evidence to overcome the tenant's prima facie case established by operation of that presumption, and by such evidence establish the "reasonable rent."
HOW REASONABLE RENT ESTABLISHED
The "reasonable rent" may be established in one of two ways:First, it may be established by the opinion testimony of one or more competent and duly qualified real estate experts; 56 second, it may be established by proof of the facts concerning the property involved in the litigation, the income and expenditure and the net return produced to the landlord.
According to the view of the Appellate Term of the Supreme Term for the First Department, 57 "proof presented of the actual facts and figures as contained in a bill of particulars prepared in accordance with the direction of the statute is far more reliable than the opinion of an expert as to the reasonable rental value of the premises."
As to the “first” method, it may be said that it is the more expeditious method and the simpler one to use. Much, of course, depends upon the character and standing of the pert" called to give his opinion and his familiarity with the property and property similar in character to that involved in the litigation.
64 Chap. 944, Laws of 1920, as amended Chap. 434, Laws 1921. 66 Supra, page 190.
66 Graeber v. Nichols, 190 N. Y. Supp. 158. Hirsch v. Weiner (App. Term, 2nd Dept.), 190 N. Y. Supp. 111,
67 Miller v. Avon, 188 N. Y. Supp. 457.
"The witness must possess the special skill or knowledge necessary to make his formation of a judgment a fact of probative value, although it is not necessary that he should have all the knowledge available in his particular line, and indeed no standard exists by which to determine the qualification of such a witness.
“The competency of the witness, with respect to knowledge, and also with respect to special skill or experience, where this is required, is a preliminary question to be passed upon by a court before the testimony is received, at least where objection is raised to the competency of the witness. The qualifications of the witness must be affirmatively shown by the proponent of the evidence to the reasonable satisfaction of the trial court. The necessary qualification may be shown by an examination of the witness himself, which should not be limited by narrow and stringent rules, or may be shown by other evidence. Cross-examination of the witness as to his qualifications is usually permitted.. A decision that an expert or skilled witness is competent involves no adjudication as to his credibility, but the weight of his statement, no matter what his skill, remains for the jury."
Testimony of this nature is of course likewise available to the tenant, if he chooses to meet the landlord's evidence, no matter of what nature, in this manner. He may show by expert witnesses that the landlord's demands are unreasonable and may show what would be a "reasonable rent.”
а Passing to the second method of proof of reasonable rental referred to above, it may be stated, to begin with, as a proposition which will find general acceptance, that uniformity in the administration of the law such as will lead to the fixing of similar rentals for similar property is, if possible to attain, highly desirable.
68 The above quotation is a well-prepared statement of the law on the subject of expert witnesses and is taken from “Corpus Juris," vol. 22, pages 522 to 526, where many citations of authority in support of each proposition quoted will be found.
If there are in the same house two identical apartments, the reasonable rental value of each should be the same amount. Yet all who have dealt with the emergency law in its administration know that there is no assurance in court proceedings thereunder that such a result will be attained. If the cases are tried by two different juries, the verdicts are not merely likely to differ: the strong probability is that they will. The human equation will enter to prevent two separate juries of six or twelve men each from rendering identical verdicts, even if we assume the evidence in each case to be precisely the same. This human equation it seems impossible to eliminate so long as jury trials are to be had for the asking.
It has been held competent for the landlord to produce evidence of the rents of apartments in the same building other than one occupied by the tenant whose case is being litigated. 59 If a judge alone, without a jury, tries a case subsequent to one previously adjudicated, he is likely to follow the decision in the earlier case, unless good reason for not doing so is shown; but there is, of course, no compulsion upon him to do so.
If instead of two identical apartments in the same building, we have similar apartments in similar buildings in the same neighborhood, it is, again, desirable that the rents should be determined by some uniform measure. Otherwise, it is easy to see that injustice will necessarily be done, either to the tenants or to the landlord.
GENERAL PRINCIPLES FOR ASCERTAINING REASONABLE RENT
The Appellate Term of the Supreme Court in the Second Department, in the decision previously referred to, 60 has been
69 George L. Walker Co. v. Matthews (App. Term, 1st Dept.), 188 N. Y, Supp. 752.
80 Hirsch v. Weiner, 190 N, Y. Supp. 111.
the first appellate tribunal to attempt to lay down some general principles for the guidance of the lower courts, so that somewhat uniform results may be reached in litigations involving reasonable rents. “We think,” states this court, “that the sensible way to determine these questions is as follows,” and it proceeds to lay down the following five rules:
1. Determine the present fair market value of the premises. This may be done by offering opinion evidence as to both fee and rental value, 61 or by introducing other competent evidence.
2. Determine the gross rentals demanded by the landlord.
3. Determine the allowable operating expenses for the past year.
4. Deduct from the gross rentals the operating expenses and this will give the net rental.
5. If this net rental does not exceed 10 per cent of the present value of the property, then the rent demanded is not unreasonable.
These so-called rules furnish a convenient method for the consideration of this subject and we shall consider them in the order stated.
BASIS OF COMPUTATION OF REASONABLE RENT
First, then, we shall take up for consideration the basis upon which the computation of "reasonable rent” shall be made. The Appellate Term in the Second Department states it is the "present fair market value of the premises." On this most important subject, the court says:
“We know no other logical method for determining rental value than to take the present market value of the property regardless of its incumbrances as one of the factors. What the owner paid
01 Citing Graeber v. Nichols, 190 N. Y. Supp. 198,