
    In the Matter of Edward Stephen, Inc., Appellant, against Joseph D. McGoldrick, as State Rent Administrator, Respondent.
    Argued June 7, 1956;
    decided July 11, 1956.
    
      
      Jules Chopak for appellant.
    
      Nathan Heller and Edward V. Alfieri for respondent.
   Order affirmed, with costs.

Concur: Conway, Ch. J., Desmond, Dye, Fuld, Fboessel and Bubke, JJ. Van Voobhis, J., dissents in the following opinion.

Van Voorhis, J.

(dissenting). Neither the State Residential Rent Law (L. 1946, ch. 274, as amd.) nor regulations adopted thereunder purport to discourage rehabilitation which puts residential property in better condition than when statutory tenants have taken possession. On the contrary, a “ major capital improvement required for the operation, preservation or maintenance of the structure ’ ’ is expressly recognized by this statute as a basis for adjustment of rent (§4, subd. 4, par. [a], cl. [7]). Where, as here, the old heating system requires to be replaced, the entire cost may not be used as a basis for increased rental, but only so much as constitutes a capital improvement by bettering the premises. The evidence is undisputed that some betterment has occurred. The Legislature did not intend, as I construe this statute, to furnish an incentive to landlords to perpetuate residential properties as substandard by refraining from modernizing obsolete equipment when it wears out, or to encourage the making of only minimal repairs to marginal buildings so as to keep them in a marginal state. The purpose is not to preserve slums as though they were museum pieces. Unless capital betterments furnish a basis for rent adjustment when equipment is modernized that has not only become deteriorated but also obsolete, it puts a premium on shiftlessness. Not only is there no requirement of this nature in the statute, but its language indicates the opposite. It was so held, as it seems to me, in Matter of Trustees of Masonic Hall & Asylum Fund (Liggett Drug Co.) (1 N Y 2d 616), decided herewith.

The order appealed from should be reversed and the matter remitted to the Rent Administrator to determine how much of the modernized heating system represents a capital improvement, and to adjust the rent accordingly. A considerable discretion is allowed to the Rent Administrator in determining how much of the cost of replacement is to be allocated to capital improvements, but under the facts in this case he could not disallow all of it.

Order affirmed.  