KENNETH C. MAYO & others vs. BOSTON RENT CONTROL ADMINISTRATOR & another.

HENNESSEY, J. This is an appeal from a decree of the Housing Court of the City of Boston reversing the action of the Boston Rent Control Administrator granting the appellant (landlord) certificates of eviction against twenty-one tenants of twenty apartments in Long Wharf in the city of Boston (tenants). The landlord's applications for the certificates of eviction assigned as the basis therefor St. 1970, c. 842, Section 9 (a) (10) (act). Each of the tenants filed an opposing statement. A hearing was held before a representative

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of the administrator, at which the landlord and tenants were represented by their respective counsel.

The administrator, in granting the applications, found "that the landlord proved an intention to renovate the units and that the nature of the work required the units to be vacated, and that such renovation was not in conflict with the provisions and purposes of the statute." On a petition for review filed by the tenants pursuant to St. 1970, c. 842, Section 10, the judge of the Housing Court reversed the administrator's decision. In substance he ruled that the landlord's intentions are in conflict with the purposes of the statute. We affirm.

We examine first the nature of the review in the Housing Court. Although St. 1970, c. 842, Section 10, is entitled "Judicial Review" it clearly provides in eviction matters for a de novo court proceeding specifically comparable to a declaratory relief proceeding under G. L. c. 231A. In this proceeding an aggrieved person may challenge the action of a rent control board or administrator. "[E]xclusive original jurisdiction over such proceedings" was lodged in any District Court having territorial jurisdiction over the locus of the controlled rental unit. By G. L. c. 185A, inserted by St. 1971, c. 843, Section 1, however, the Legislature amended the exclusiveness of this grant of jurisdiction, creating the Housing Court of the City of Boston, and endowing it with jurisdiction "concurrent with the district courts and the superior court" under "so much of any . . . general or special law . . . as is concerned with the health, safety or welfare of any occupant of any place used, or intended for use, as a place of human habitation." (Section 3.)

We are thus reviewing the decision of the Housing Court judge on the evidence presented before him. [Note 1] We are not directly concerned with the actions of the administrator.

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Our inquiry is twofold: (1) whether the judge was plainly wrong in any of his findings of fact, and (2) whether the judge correctly applied the law. We concluded that there was no error. As to the first inquiry, the judge made voluntary findings of fact which clearly do not purport to be complete findings. None of these findings was plainly wrong. Indeed they were plainly correct. We have concluded from our own examination of the record, as shown below, that most of the facts of the case are undisputed. Certain further allegations of fact now urged by the landlord are not supported in the record.

Nor was there error in the judge's ruling, in reversing the administrator's decision, that the evictions here were "in conflict with the provisions and purposes of . . . [the] act." St. 1970, c. 842, Section 9 (a) (10).

Most of the facts are undisputed. They are as follows. The twenty units are located in the Custom House Block, which is comprised of a total of fifty-one housing units. The building is located within an area generally controlled by the Boston Redevelopment Authority. Extensive renovation has been accomplished as to the interior and exterior of the building. The thirty-one units with which we are not directly concerned are not subject to rent control. These have been either newly built or substantially renovated under the landlord's plans to rehabilitate the entire building. Substantial work which affects the entire building has already been done, including a new roof, new elevators, a new water main service, new boilers, and a new electrical system. The evidence warrants a conclusion that the extensive renovations planned for the twenty rent-controlled

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units will require, as the administrator found, that the units be vacant during the work.

There are certain disputed assertions of facts. The landlord contends that the Boston Redevelopment Authority threatened to take the building by eminent domain unless the renovations were accomplished. The landlord appears to urge also, although it is not entirely clear, that the proposed renovations have been shown to be necessary for continued occupancy of the twenty units. As shown later in this opinion, we believe that neither of these contentions is supported by the evidence.

Under Section 9 (a) the act sets out nine specific grounds, as shown in the margin, [Note 2] for eviction from a unit subject to rent control. None of these has any application to this case. There is a tenth and more general ground on which the administrator purported to act in this case. This (Section 9 [a][10]) authorizes the granting of certificates of eviction in

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those cases where the landlord has "just cause" and where "his purpose [in evicting the tenant] is not in conflict with the provisions and purposes of . . . [the] act."

We need not consider to what extent, if any, the judge may exercise discretion as to what constitutes "just cause" under this section. We hold that, as a matter of law, the purpose of the eviction here is not consistent with the provisions and purposes of the act. We reach this conclusion on evidence in the record, summarized above, which is undisputed and may fairly be said to be binding on the landlord.

The declaration of emergency in Section 1 of the act is an appropriate place for us to look for legislative purpose (see Marshal House, Inc. v. Rent Control Bd. of Brookline, 358 Mass. 686 [1971]), and we find that section is informative in this instance. It declares, as shown in full in the margin, [Note 3] that there is a serious housing emergency, particularly in urban areas, and that the emergency has resulted in a "substantial and increasing shortage of rental housing accommodations for families of low and moderate income" (emphasis supplied). The tenants point out that the language in the declaration of emergency with respect to housing for families of low and moderate income does not appear in the original Boston rent control enabling act, St. 1969, c. 797. From this, they argue, correctly we think, that it can be inferred that in accepting the act in 1970 the city council and the mayor were adding to the expressed purposes of rent control in Boston by incorporating in the

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new rent control scheme for the city the specific reference to low and moderate income housing which had not been included in the 1969 law. [Note 4]

From the plain language of Section 1 it is clear that one of the principal purposes of the act is to preserve and expand the supply of housing for families of low and moderate income. The record establishes that the twenty units presently carry rents from $145 to $315 a month. If the proposed renovation takes place, rents on the units will increase by at least $120 to $125 a month. Both parties have clearly assumed in their briefs and arguments that this will remove the apartments from the low and moderate rental market. Presumably, this change will be permanent. This result would be in conflict with what is clearly a central purpose of the act. Nor would the proposed rehabilitation meet the spirit and intent of the act in any way calculated to mitigate the loss to the market of twenty low and moderate rental units. The total number of available units, at any and all rental levels, would not be increased by the rehabilitation; the net effect would be to convert twenty low and moderate rental units into twenty high-rent units. Clearly the administrator could not validly permit evictions in these circumstances, as the trial judge ruled.

We cannot accept the landlord's argument that the rehabilitation is required by reason of the units' deterioration. The landlord emphasizes evidence which he presented before the administrator and which was incorporated in the Housing Court record showing that the apartments, which were constructed in the 1940's, have plumbing which needs modern replacements and have unsafe firewalls. However, there is no evidence whatsoever that public authorities have directed that any changes must be made

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in the interests of health or safety. All of the evidence presented before the Housing Court is consistent with the obvious purpose of the intended evictions, viz.: to rid the units of tenants in order that, after rehabilitation, the units will bring substantially higher rents. The evidence does not warrant a conclusion that the units will be unsuited for occupation, as at present, unless rehabilitated. Thus, in all the circumstances shown in the record we consider it fair to treat this as a case which presents the single issue of whether evictions may be ordered, not for necessary maintenance, but for optional upgrading of the apartments. Our conclusion is that evictions may not be ordered for that purpose.

It does not follow, as the landlord argues, that it is left with the option of either demolishing the units or allowing them to deteriorate for lack of repair. For all that appears, necessary repairs may be done without evictions. Also, Section 7 (a) of the act guarantees a "fair net operating income" to the landlord, and this must necessarily provide for essential repairs.

Other arguments of the landlord are not convincing. He contends that in some manner the rehabilitation of the twenty units was ordered by the Boston Redevelopment Authority under threat of a land taking. This is not shown in the record; correspondence from the Authority to the landlord at best extended praise for the rehabilitation. The landlord also argues that the units not subject to rent control have already been renovated at great cost, and that it would be incongruous to deny similar treatment to the remaining twenty units. The short answer to this is that the work on the other units was commenced without prior guaranties as to rent control by any public official and that the functions of the administrator and the court cannot thus be foreclosed in advance.

We recognize that the act probably has the effect in this instance, and others, of preventing the earning by the landlord of the maximum profit which these twenty units might yield in an uncontrolled market. It is not for this court to consider any argument addressed to the desirability of the statute. The parties are of course entitled to

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full protection of their rights under such a law. Additionally we must, with full regard for the acute conditions which necessitated the act, give most careful consideration to the effect of our decision on the shortage of low and moderate income housing. Cf Post v. Cashin, 323 Mass. 316, 318 (1948); Russell v. Treasurer & Recr. Gen. 331 Mass. 501, 509 (1954).

Decree affirmed.

TAURO, C.J. (dissenting). I am cognizant of the skill and scholarship apparent in the majority opinion, but I must respectfully dissent. Only recently we reaffirmed the fundamental canon of statutory construction that "[w]e must construe . . . [a] statute, `if fairly possible, so as to avoid not only the conclusion that it is unconstitutional but also grave doubts upon that score.'" Commonwealth v. Lamb, ante, 265, 269 (1974). The majority have adopted the Housing Court's interpretation of the "just cause" provision of the act (St. 1970, c. 842, Section 9 [a] [10]). In my opinion, that interpretation, as applied to the facts in this case, raises a serious question whether constitutional prohibitions against the taking of private property without compensation have been violated. I would follow the administrator's interpretation, for it avoids constitutional doubts. Yet it is reasonable and consistent with the provisions and purposes of the act.

I am aware of the consistency with which State rent control statutes have been upheld as proper exercises of police power in times of public emergencies. Block v. Hirsh, 256 U.S. 135 (1921). Marcus Brown Holding Co. Inc. v. Feldman, 256 U.S. 170 (1921). Edgar A. Levy Leasing Co. Inc. v. Siegel, 258 U.S. 242 (1922). Eisen v. Eastman, 421 F. 2d 560 (2d Cir. 1969). Israel v. City Rent & Rehabilitation Admn. of the City of New York, 285 F. Supp. 908 (S. D. N. Y. 1968). Indeed, we have upheld against constitutional assaults the 1953 rent control statute (St. 1953, c. 434) and the 1970 rent control statute applicable to this case. Russell v. Treasurer & Recr. Gen. 331 Mass. 501, 507 (1954). Marshal House, Inc. v. Rent Control Bd. of Brookline,

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358 Mass. 686 (1971). However, we are not thereby foreclosed from declaring unconstitutional any action taken or contemplated under the act on a particular set of facts. Barney & Carey Co. v. Milton, 324 Mass. 440, 444-445 (1949). Grosso v. Board of Adjustment of Millburn, 137 N.J.L. 630 (1948).

The only justification for governmental interference with the private relationship between landlord and tenant through control of rents and evictions is that a public emergency exists. In view of the legislative declaration of such emergency, I do not question its existence. St. 1970, c. 842, Section 1. But even in so grave an emergency as the extensive housing shortage caused during World War II by the reduction of residential construction and the massive demobilization of veterans, individual constitutional rights were recognized to exist. Bowles v. Willingham, 321 U.S. 503, 519, 521 (1944). Woods v. Cloyd W. Miller Co. 333 U.S. 138. [Note Dissent-1]

It is imperative that so basic a constitutional right as the right of an individual to use and enjoy his own property [Note Dissent-2] must be protected vigilantly against unconstitutional erosion from zealous exercises of the police power by a Legislature determined to solve a difficult public problem. That protection extends to an unconstitutional interpretation of a statute. Although it cannot now be doubted

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that the State has the power to control rent and evictions during a public emergency, that power is subject to important constitutional limitations. The Supreme Court of the United States recognized these limitations in the Block case, cited above, in which the court upheld the validity of the rent control law applicable to the District of Columbia. Writing for the court, Mr. Justice Holmes stated: "[A] public exigency will justify the legislature in restricting property rights in land to a certain extent without compensation . . . . Housing is a necessary of life. All the elements of a public interest justifying some degree of public control are present. The only matter that seems to us open to debate is whether the statute goes too far. For just as there comes a point at which the police power ceases and leaves only that of eminent domain, it may be conceded that regulations of the present sort pressed to a certain height might amount to a taking without due process of law" (emphasis supplied). Id. at 156.

The implicit warning in the Block case, that State police power must be exercised cautiously, was brought home emphatically in Pennsylvania Coal Co. v. Mahon, 260 U.S. 393 (1922). There the court declared unconstitutional a Pennsylvania statute forbidding the mining of anthracite coal in such a way as to cause subsidence of a dwelling. Again writing for the court, Mr. Justice Holmes declared that the Block, Marcus Brown Holding Co. and Levy Leasing Co. cases, upholding the validity of local rent control acts, had gone "to the verge of the law." Id. at 416. In forceful language, he pointed out the danger of private property rights being consumed by the police power: "[T]he Fifth Amendment presupposes that . . . [private property] is wanted for public use, but provides that it shall not be taken for such use without compensation . . . . When this seemingly absolute protection is found to be qualified by the police power, the natural tendency of human nature is to extend the qualification more and more until at last private property disappears. But that cannot be accomplished in this way under the Constitution of the United States. The general rule at least is, . . . if regulation goes too

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far it will be recognized as a taking." Id. at 415. Whether governmental action restricting the use of land and diminishing its value "goes too far" is a matter of degree and depends on the particular facts of the case. Pennsylvania Coal Co. v. Mahon, supra, at 416. United States v. Causby, 328 U.S. 256, 262 (1946). United States v. Central Eureka Mining Co. 357 U.S. 155, 168 (1958). Aronson v. Sharon, 346 Mass. 598, 603 (1964). State v. Johnson, 265 Atl. 2d 711, 714-715 (Maine 1970). Grosso v. Board of Adjustment of Millburn, 137 N. J. L. 630, 633 (1948). Miller v. Beaver Falls, 368 Pa. 189, 194, 196-197 (1951).

Examination of the facts and circumstances of the instant case establishes that the denial of certificates of eviction so severely restricts the landlord's use and enjoyment of his property as to constitute a pro tanto taking for which he is entitled to be compensated. Under the act the landlord can use his property only in the following ways: he can devote it to "use and occupancy of himself or his family (Section 9 [a] [8]), use it for some nonhousing purpose (Section 9 [a] [9]), demolish it (Section 9 [a] [9]), or continue to rent the twenty units. While these options may realistically exist in other instances, they are illusory here. Obviously, the landlord or his family could not occupy all twenty rental units. It is unrealistic to assume that the twenty units could be converted to a nonhousing use. Aside from the enormous expense involved in such an undertaking, the probable adverse effect such a radical alteration would have on the residential environment would probably reduce the rental value of the other thirty-one units in the building. The option to demolish the property is no option at all. The practical effect of denying the certificates of eviction in this case is to compel the landlord to dedicate his property indefinitely [Note Dissent-3] to tenants of low and moderate income. For the time being, the landlord's twenty rental units have, in

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effect, been converted from private to public housing. This amounts to a pro tanto taking for which the landlord is entitled to compensation. Rivera v. R. Cobian Chinea & Co. Inc. 181 F. 2d 974, 978 (1st Cir. 1950).

I do not, of course, question the need for rental accommodations for persons of low or moderate income. But I fear that important constitutionally protected individual rights are being sacrificed here to meet a public need. Such a sacrifice on the part of an individual is too great to demand no matter how urgent the public need. When private property rights are so stringently restricted, as here, the Constitution of the United States and our Constitution require that the government must pay for the use of the property. Pennsylvania Coal Co. v. Mahon, supra, at 416. Campbell v. Boston, 290 Mass. 427, 431 (1935). Aronson v. Sharon, 346 Mass. 598, 604 (1964).

The grave constitutional question raised by the majority's construction of the "just cause" provision can be avoided by a construction which supports the administrator's decision. He concluded from the evidence presented to him that "the landlord proved an intention to renovate the units and that the nature of the work required the units to be vacated, and that such renovation was not in conflict with the provisions and purposes of the statute and . . . [that] the eviction . . . [was not] retaliatory." By granting the certificates of eviction, the administrator determined that there was "just cause" for the landlord to recover possession and that his purpose did not conflict with "the provisions and purposes of . . . [the] act." St. 1970, c. 842, Section 9 (a) (10). This determination is fully supported by evidence that the twenty units are in an ancient, historic and unique building in which substantial funds ($1,500,000) already have been invested to renovate

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the building, and that the alterations sought to be made in those units would be consistent with the remodeling done in the other thirty-one rental units. The decision of the administrator, charged with the responsibility of administering the act (Section 5 [c]), should not be disturbed unless he has made a material error of law. I do not think he has. The administrator is in a far better position than a court to evaluate the overall housing situation in Boston and to decide whether substantial renovation of rental units, resulting in the conversion of low and moderate income units to luxury units, is consistent with the provisions and purposes of the act. Snitkoff v. Temporary State Housing Rent Commn. 31 Misc. 2d (N. Y.) 687, 688-689 (1961). I realize that the act, unlike the New York and the earlier Massachusetts rent control laws, does not in terms authorize eviction for substantial alterations or remodeling. 65 McKinney's Consol. Laws of N. Y. Anno. Section 8585, 2 (C) (1961). St. 1953, c. 434, Section 10 (d). But I find it significant that, unlike the present act, neither of the other rent control laws permitted eviction on the broad ground of "just cause." It is plain to me that the intent of the Legislature was to delegate to the administrator broad discretionary authority to grant certificates of eviction so long as the landlord's purpose did not conflict with the provisions or purposes of the act. [Note Dissent-4]

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The landlord's purpose is, as the majority note, to upgrade the apartments. Neither the majority nor the judge of the Housing Court point to any specific prohibition in Section 9 with which the landlord's purpose conflicts. The majority find a conflict between the landlord's purpose and one of the purposes of the act, i.e., to relieve the "shortage of rental housing accommodations for families of low and moderate income." St. 1970, c. 842, Section 1. Undoubtedly, this is an important purpose. But we cannot ignore the conditions that led to the housing shortage: "housing demolition, deterioration of a substantial portion of the existing housing stock, insufficient new housing construction, increased costs of construction and finance, inflation and the effects of the Vietnam war." St. 1970, c. 842, Section 1. The administrator may well have reasoned that denial of the certificates would have aggravated the very conditions that caused the shortage, for the landlord's alternatives would be to destroy the units or to convert them to a nonhousing use (thus reducing the number of rental units available) or to allow the property to deteriorate. See Marshal House, Inc. v. Rent Control Bd. of Brookline, 358 Mass. 686, 695 (1971).

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Furthermore, the administrator may have determined that if the landlord did not renovate when he desired to, inflation would cause the cost of such renovation to increase so greatly by the time the rent control restrictions ended that he would not be able to afford such extensive alterations. It should also be borne in mind that there is nothing in the act indicating an intention to restrict the expansion of the higher income housing market. [Note Dissent-5] Hence, the administrator's conclusion that the landlord's purpose was not in conflict with the purposes of the act was correct. This is not to say that, absent constitutional considerations, the ruling of the judge of the Housing Court that the landlord's intentions conflicted with the purposes of the act was incorrect as matter of law. However, in view of the availability of the reasonable alternative construction of the act by the administrator, which avoids the serious constitutional issue discussed above, I accept his interpretation rather than that of the Housing Court judge. I believe it is most difficult to rationalize a position that no constitutional issue is raised by the majority view.

As I have said, I do not question the necessity that housing be made available to persons of low and moderate income. But tenants who inhabit rent controlled units do not, by virtue of the provisions in the rent control act, acquire vested rights in such units. See Nayor v. Rent Bd. of Brookline, 334 Mass. 132, 135 (1956). Yet the majority opinion here, in effect, allows the tenants to take from the landlord a substantial property interest, namely, the right to make substantial alterations on his property and to obtain correspondingly higher rents. In the face of a public

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emergency in the area of housing, the fundamental question is on whom the burden of meeting the exigency should fall. Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 416 (1922). In my view the landlord here is being told to shoulder an unfair share of the burden. When considering the question of the extent to which public needs should be permitted to encroach on private property rights, we should keep before us constantly the admonition of Mr. Justice Holmes: "We are in danger of forgetting that a strong public desire to improve the public condition is not enough to warrant achieving the desire by a shorter cut than the constitutional way of paying for the change." Pennsylvania Coal Co. v. Mahon, supra, at 416.

Because of the narrow construction of the "just cause" provision adopted by the Housing Court judge and followed by the majority, the landlord is being required to dedicate substantial property interests to a public use without compensation. Since the broader interpretation of the provision adopted by the administrator is available and would avoid the serious constitutional question raised, I would reverse the decision of the Housing Court and reinstate the decision of the administrator.