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Keator v. State - 23 N.Y.2d 337 (N.Y. 1968)

Rule:

"Just compensation" is to be determined by reference to the fair market value of the property at the date of taking, and the fair market value is the price for which the property would sell if there was a willing buyer who was under no compulsion to buy and a willing seller under no compulsion to sell. In the determination of the fair market value, the condemnee is entitled to have the appraisal based on the highest and best available use of the property irrespective of whether he is so using it.

Facts:

Claimants Lee Keator and others owned two parcel of land that ran a long a river. On the premises was a wood-frame clubhouse containing a meeting and dining room, kitchen and sanitation facilities. The premises were used for meetings and social events sponsored by the claimants' organization that was formed for "educational and conservation" purposes. The State appropriated the land. Claimants initiated proceedings in the state court of claims to determine just compensation for the land. The court of claims awarded $ 15,900 to claimants. On the State's appeal, the appellate division reduced the award to $ 12,000 holding that, in arriving at damages so greatly in excess of the State's proof, the court of claims necessarily relied to a great extent on the proof adduced from claimants' expert, which incorrectly added building reproduction costs to land value, without any suggestion that the property was either unique or a specialty. Claimants appealed.

Issue:

Was it proper to determine the amount of just compensation by relying on the assessment of claimant’s expert witness?

Answer:

Yes.

Conclusion:

The Court of Appeals of New York reinstated the court of claims' determination and upheld its reliance to complainants' expert. The court noted that in the determination of the fair market value in condemnation proceedings, the condemnee was entitled to have the appraisal based on the highest and best available use of the property irrespective of whether he was so using it. The court held, however, that the experts' testimony clearly indicated that the highest and best use of claimants' property was for the purpose to which it was being used as a clubhouse and recreational area, which the court found was a specialty. Because the property's character was such as not to be susceptible to the rule of fair market value, an award based on the actual or intrinsic value was more appropriate.

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