Carton, Crahay and Handler. The opinion of the court was delivered by Crahay, J.A.D.
[138 NJSuper Page 481] In this condemnation case involving the taking of property housing an on-going restaurant business the parties stipulated the value of the realty, leaving in issue whether a variety of pieces of restaurant equipment and fixtures were compensable and, if so, their fair value as just compensation to the condemnee.
The trial judge heard the matter without a jury. In a reported opinion, 131 N.J. Super. 243 (Law Div. 1974), it was held that all of the property including "a neon sign, counters, stools, cash register, glass display case, workbench with dishwasher and sink, refrigerator, exhaust fan, broiler and grill, steam table, toaster, three-ton air conditioner, slicing machine, freezer, tables and chairs, plates, knives and forks," were compensable and fixed their fair value at $8,421 -- the "sound value" of those assets as testified to by the property owner's expert.
The condemning authority, the Town of Montclair by its Redevelopment Agency (Agency), appeals, essentially arguing that some of the items for which compensation was allowed were not within the "functional unit rule," State v. Gallant , 42 N.J. 583 (1964); Eminent Domain Act of 1971, N.J.S.A. 20:3-1 et seq (the 1971 act). It is also argued, although not meaningfully raised below, that full compensation should not be awarded since respondent may be entitled to benefits under the Relocation Assistance Act, N.J.S.A. 20:4-1 et seq.
Our review of the record satisfies us that it does not support a finding of compensability as to all of the personalty on the condemned premises and we reverse.
We are in substantial accord with the trial judge's view that the "functional unit rule," as articulated in Gallant in 1964, continues as a viable measure of damages in eminent domain matters as a consequence of the provisions of the 1971 act. We, however, cannot join with his apparent holding that the "rule" is applicable, across the board, to personalty in condemned commercial and industrial properties, with the seeming proviso that where "items of equipment were capable of being used elsewhere and that its value would be substantially diminished if it were to be sold as secondhand equipment." Additionally, we are unable to find sufficient record support for the court's factual conclusion that all of the personalty would undergo "substantial" value diminution, thereby resulting in something
less than full and fair compensation to the property owner if not included within the property taken.
The trial judge held all the personalty to have been condemned under the functional unit rule, noting that the appellant's expert, Cohen, found "sound value" to be $8,017, and the condemnee's expert, Glander, $8,421 -- a difference of about 5%. As noted, the judge assessed damages in the amount of $8,421, finding both experts qualified but giving greater weight to Glander's testimony and "the basis used by him for his evaluation".
The testimonial record is very brief. Cohen and Glander were the only witnesses and, except for their qualifications, their testimony treated of written appraisals earlier prepared. In his appraisal Cohen, on appellant's behalf, separated the personal property into two categories -- (1) "if compensable" and (2) "compensable." Each item was then given a replacement cost (new) and a "sound value." The examination and cross-examination of the witness on the various items may at best be termed "general." In the "if compensable" category (noncompensable) Cohen included, illustratively, neon sign, counter stools, cash register, glass displays, a variety of refrigerators, broiler and grill, steam table, toaster, slicing machine, dehumidifier and tables and chairs. As examples of compensable items we find sign wiring, a large counter, shelves and shelving, metal hoods and duct work, plumbing installation for various appliances, cabinets and a hat and coat rack.
As noted, Cohen was not examined specifically as to the various items. Compensable articles were those which in his opinion, "could not be removed from the * * * premises without either damage to themselves or to where they were placed."
By his definition Cohen termed "if" (non) compensable items as those "of such a nature that * * * could be readily removed from the freehold without either damage to themselves or to where they were placed and could be used at another ...