Redevelopment Authority v. Stepanik , 479 Pa. 199 ( 1978 )

OPINION OF THE COURT

ROBERTS, Justice.

Appellant Mary Stepanik owned, but did not occupy, a residential apartment building renting living space to others. A board of viewers awarded appellant general damages of $23,000 under the Eminent Domain Code¹ for the taking of the building by appellee Redevelopment Authority of Allegheny County. The board of viewers also awarded appellant $10,000 of additional, special dislocation damages under Section 601 — A(b)(3) of the Code, 26 P.S. § l-601A(b)(3). Appellee appealed the board’s award of $10,000 to the Court of Common Pleas of Allegheny County, contending that the award violated a regulation of the Attorney General of Pennsylvania limiting the award of special dislocation damages to businesses conducted for the lease or rental of real property.² The court of common pleas affirmed the viewer’s award of special dislocation damages and the Commonwealth Court reversed. We granted appellant’s petition for allowance of appeal and affirm.³

Section 201(8) of the Code, 26 P.S. § 1-201(8), defines “Displaced persons:”

“ ‘Displaced person’ means any condemnee or other person not illegally in occupancy of real property who moves or moves his personal property as a result of the acquisition

Section 601-A(b)(3), 26 P.S. § l-601A(b)(3), permits a displaced person “displaced from his place of business” to recover moving expenses and expenses of “removal, transportation, and reinstallation of personal property,” § 601-A(a), 26 P.S. § l-601A(a), and damages for losses of personal property, § 601-A(b), 26 P.S. § l-601A(b).

“Displaced persons” may also recover special dislocation damages under Section 601-A(b)(3). These damages are calculated in one of two manners. “Owner-qccupants” are entitled to the greater of forty times “fair monthly rental value” and average annual net earnings, in a sum no less that $2500 but no more than $10,000. “Tenants” may also recover these damages based upon actual monthly rent instead of “fair monthly rental value.” Owner-occupants and tenants may recover this additional sum “only if the business (i) cannot be relocated without a substantial loss of its existing patronage, and (ii) is not part of a commercial enterprise having at least one other establishment not being acquired by the acquiring agency, which is engaged in the same or similar business.” § 601 — A(b)(3), 26 P.S. § 1— 601A(b)(3).

Thus, special dislocation damages sought here are part of a cluster of benefits, including moving expenses and damages for lost personal property. They provide temporary income for a displaced commercial enterprise unable to absorb, through increased sales at another business location, losses caused by condemnation.

Appellant contends that she is an “owner-occupant” within the meaning of Section 601-A(b)(3) entitled to this temporary income. Thus, she argues that the Attorney General’s regulation, denying businesses conducted for lease or rental of real property an award based on fair monthly rental value, is invalid.⁴ The Legislature did not intend a condemnee such as appellant to receive special dislocation damages and therefore we reject appellant’s theory for invalidating the regulation.

The $23,000 award of general damages fully compensates appellant for the taking of her property and the lost income Section 601-A(b)(3) provides. The Eminent Domain Code, § 602(a), 26 P.S. § l-602(a), fixes damages for property taken at the difference between “fair market value” before and after taking. “Fair market value” is defined as the “price which would be agreed to by a willing and informed seller and buyer.” § 603, 26 P.S. § 1-603. As is true of all buildings, the “price” of an apartment building renting living space to others is its fair market value. One method of determining fair market value is to calculate the present value of future rental income. See In re Condemnation of 10.09 Acres in Lower Swatara Twp., 92 Dauph. 314 (1970) (capitalization of net rents employed to determine fair market value); accord, United States v. 3,698.63 Acres of Land, 416 F.2d 65 (8th Cir. 1969); see 1 Orgel, Valuation Under Eminent Domain § 179 (2d ed. 1953); Annotation, “Income As An Element In Determining Value of Property Taken In Eminent Domain,” 65 A.L.R. 455 (1930). Thus, “fair market value” of a rental enterprise such as appellant’s would include rental income lost while the owner searches for a new location. Because appellant has already received compensation for rental income through the award of general damages, an award of special dislocation damages would grant appellant an unintended double recovery.

The Legislature’s careful limitation of eligible recipients to “person[s] . . . displaced from [their] place of businesses” reveals its intent to deny special dislocation damages to landlords such as appellant not physically occupying the premises condemned. Neither appellant nor her business physically occupied the premises. Hence, neither she nor her business was displaced from the premises in the common, everyday sense of those terms as used in Section 601-A(b)(3). See 1 Pa.C.S.A. § 1903(a) (Supp. 1977) (directing that statutory language be given plain and ordinary meaning). Because the taking did not displace appellant, this section of the Code precludes her recovery of special dislocation damages.

Order of the Commonwealth Court affirmed.

PACKEL, former Justice, did not participate in the consideration or decision of this case. NIX, J., concurs in the result. MANDERINO, J., filed a dissenting opinion.

1 . Act of June 22, 1964, P.L. 84, §§ 601-603, 26 P.S. §§ 1-601-1-603 (Supp. 1977).

2 . Regulations of the Attorney General on Uniform Relocation Assistance, Reg. 103.4(d), 2 Pa.B. 1335. See infra note 4. The parties have stipulated that if appellant prevails in invalidating the regulation, she is entitled to $10,000; if not, $2500.

3 . We hear this appeal pursuant to the Appellate Court Jurisdiction Act of 1970, Act of July 31, 1970, P.L. 673, art. II, § 204(a), 17 P.S. § 211.204(a) (Supp. 1977). This case was reassigned to the writer on April 26, 1978.

4 . Regulation 103.4(d) provides:

“In the case of a business conducted for the lease or rental of real property, payment under the Code subsection (b)(3) shall be limited to the average net earnings (subparagraph (ii)).”

The Attorney General has subsequently amended the regulation. 37 Pa.Code § 151.4(4)(iv).