## Facts

- Joseph E. Seagram & Sons, Inc. owned the Seagram Building at 375 Park Avenue in Manhattan, using part as its headquarters and leasing the remainder to tenants.
- The building was architecturally distinctive, employed high-cost materials and design features, and included a setback and open plaza that reduced rentable area below zoning capacity.
- The project cost was approximately $36 million, and the building carried significant corporate-image and prestige value associated with Seagram’s self-use.
- For New York City real property tax purposes, the Tax Commission assessed the building at a value Seagram claimed was excessive.
- Seagram asserted that the proper valuation method for an income-producing office building was capitalization of net income, which (on Seagram’s figures) indicated a value of about $17.8 million.
- The Commission discounted the income approach and relied heavily on reproduction/construction cost and the building’s unusual character and non-income benefits.

## Issues

1. Whether an assessor must value an income-producing office building primarily by capitalizing net income for property-tax assessment purposes.
2. Whether a distinctive, prestige-oriented office building may be treated as unique or special-purpose so that reproduction/construction cost and related factors may outweigh income evidence.
3. Whether the challenged assessment was illegal, arbitrary, or excessively high under the applicable standard of judicial review.

## Decision

- The Court of Appeals affirmed the judgment sustaining the assessment.
- The court held the Commission was not required to accept income capitalization as controlling, even for an income-producing building.
- The court approved giving substantial weight to reproduction/construction cost and other factors where rental income did not capture the property’s full economic value.
- Seagram failed to show the assessment was illegal, arbitrary, or excessive as a matter of law.

## Legal Principles

- Real property for tax assessment is valued at full (market) value; no single valuation method is mandatory in all cases.
- Recognized appraisal approaches include comparable sales, capitalization of income, and reproduction cost less depreciation; assessors may consider any combination supported by the record.
- Income-capitalization evidence is important for income properties but is not conclusive, and its weight depends on the property and the reliability of assumptions used.
- For unusual or unique properties—especially those providing significant owner-specific benefits such as corporate prestige or self-use advantages—rental income may understate value, and cost-based approaches may be given greater weight.
- Courts review assessments deferentially and will not disturb them absent proof of illegality, arbitrariness, or gross excess.

## Conclusion

The court sustained New York City’s assessment of the Seagram Building, ruling that a distinctive, prestige-driven office building could be valued with substantial reliance on reproduction/construction cost rather than being constrained by an income-capitalization figure that did not reflect the property’s owner-specific economic benefits.


Joseph E. Seagram & Sons, Inc. v. Tax Comm’n of the City of New York, 14 N.Y.2d 314, 200 N.E.2d 447 (1964)