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NEW YORK STATE THRUWAY AUTHORITY v. STATE NEW YORK (07/02/68)

COURT OF APPEALS OF NEW YORK Claim No. 43807 1968.NY.42492 <http://www.versuslaw.com>; 239 N.E.2d 904; 22 N.Y.2d 509 decided: July 2, 1968. NEW YORK STATE THRUWAY AUTHORITY, RESPONDENT,v.STATE OF NEW YORK, APPELLANT New York State Thruway Auth. v. State of New York, 28 A.D.2d 607, modified. Counsel Louis J. Lefkowitz, Attorney-General (Julius L. Sackman and Ruth Kessler Toch of counsel), for appellant. John R. Davison and Charles S. Woolsey for respondent. Jasen, J. Chief Judge Fuld and Judges Burke, Scileppi, Bergan, Keating and Breitel concur. Author: Jasen


New York State Thruway Auth. v. State of New York, 28 A.D.2d 607, modified.

Jasen, J. Chief Judge Fuld and Judges Burke, Scileppi, Bergan, Keating and Breitel concur.

Author: Jasen

 This appeal presents for our determination the construction of an Enabling Act (L. 1964, ch. 669) which confers jurisdiction upon the Court of Claims to determine claims of the respondent New York State Thruway Authority for expenditures charged to the Authority for improvements to State facilities made by or at the direction or request of any department or agency of the State "for the sole benefit of the state and not required for thruway purposes".

Pursuant to chapter 669, the Authority filed a claim for improvements and additions to the State highway, parkway and canal systems and other State facilities involving 133 sites. One hundred nine of these sites involved grade separation structures which were, at State request, constructed wider and/or longer than required by then current engineering criteria at substantial expense to the Authority. The remaining portion of the claim involved improvements to the State Barge Canal, and the construction of new highways, spurs, intersections and arterial connections. The Court of Claims (Foster, J.), with the consent of the parties, appointed two eminent engineers and a distinguished former jurist to act as Referees.*fn1 (Cf. CPLR 4001; 4212; 4311; 4312, subd. 1; Court of Claims Act, § 9, subd. 9.) Seventy-eight days of trial ensued and a vast number of exhibits were received as evidence. The Referees found that the Authority was charged substantial sums for work done prior to creation of the Authority (1950) which had no Thruway purpose and solely improved State facilities. Similar expenditures were found to have been made out of Authority funds or out of State funds charged to the Authority after the Authority was created in 1950, pursuant to an agreement between State officers and the Authority. This agreement contemplated a final accounting at the completion of construction at which time the Authority would be reimbursed for the cost of State betterments having no Authority purpose by means of a credit against the Authority's debt to the State. The Referees found that the total amounts expended for State betterments having no Authority purpose, but charged to the Authority at the request of the State, was $30,842,427. The Referees further found that the amount of the Authority's debt to the State for advances was $24,668,713.54.*fn2

The Court of Claims confirmed the Referees' report and the Appellate Division, Third Department, unanimously affirmed.

Initially, it must be noted that the Authority's claim relates only to the additional expense incurred in upgrading State facilities. The Authority concedes its responsibility to construct grade separation structures and other facilities considered adequate by standard engineering criteria to restore highways and other facilities disrupted by construction of the Thruway.

The State contends that the applicable statutes require the Thruway Authority to bear the entire cost of all grade separation facilities; that the allowance of costs in excess of physical reproduction in kind of existing highways is erroneous; and that all the claimed benefits were required for Thruway purposes and were not for the sole benefit of the State.

It is concluded that the history of the Enabling Act (L. 1964, ch. 669) and the relevant statutory pattern support the Authority's claim that the Legislature approved an apportionment of costs between the Authority and the State -- the State being liable for that portion of the cost which was for the sole benefit of the State and was not required for Thruway purposes.

For purposes of analysis, the Authority's claim should be divided into two parts. The first category of items is for moneys claimed by the State to have been spent by it for the construction of portions of the Thruway system prior to the creation of the Thruway Authority in 1950. Approximately 8 miles of the Thruway had been constructed by the State and another 29 miles were under construction. At this time, the Thruway was part of the State highway system and funded from moneys specifically appropriated for this purpose. (Highway Law, § 348.) Section 346 of the Highway Law directed that intersecting highways cross the Thruway on structures determined adequate for this purpose by the Superintendent of Public Works. The entire cost of these structures was to be included in the cost of the Thruway. (Highway Law, § 346.)

The Thruway Authority was created in 1950 by section 352 of the Public Authorities Law (L. 1950, ch. 143; Public Authorities Law [New York State Thruway Authority Act], § 350 et seq.; cf., also, L. 1951, ch. 776). The Authority was declared a public corporation, the board of which was to consist of three members appointed by the Governor with the advice and consent of the Senate. Dr. Bertram D. Tallamy, the Superintendent of Public Works, was appointed Chairman of the Authority, and served in this dual capacity until 1955.

The Thruway Authority was authorized by its charter to adopt resolutions assuming jurisdiction for its corporate purposes of those Thruway sections or connections (completed by the State) which it might deem advisable (Public Authorities Law, § 356). Upon assumption of such jurisdiction, it became indebted to the State "in an amount equal to the cost of construction by the state of thruway improvements" (Public Authorities Law, § 357, subd. 2*fn3). Subdivision 2 of section 357 further provided that the Authority's indebtedness upon assuming jurisdiction of these sections shall be paid at such time and in such manner as shall be agreed upon by the Authority and State Director of the Budget.

The second portion of the claim relates to construction subsequent to the creation of the Thruway Authority. This construction was financed with Authority funds and also by moneys advanced by the State for Thruway construction. The Authority was authorized by its charter to issue bonds and notes in an aggregate amount not to exceed $500,000,000 to finance construction of the Thruway.*fn4 The State guaranteed payment of these bonds, but two years were required for a constitutional amendment to effectuate that purpose. (Cf. N. Y. Const., art. X, § 6.)

In the meantime, the Legislature appropriated the sum of $80,000,000 from the Capital Construction Fund in the Supplemental Budget Act of 1951 (L. 1951, ch. 210, § 12; L. 1951, ch. 44, § 6) as an advance for Thruway construction and payment of Thruway liabilities incurred prior to April 1, 1951. These moneys were not advanced directly as a loan to the Authority, but were appropriated to the Department of Public Works to be disbursed on vouchers approved by the Superintendent of Public Works for contracts let by him. The Supplemental Budget Act restricted expenditures from the appropriation to expenses of necessary Thruway construction. Any expenditures made from this appropriation were to be repaid to the State in the manner provided by subdivision 2 of section 357 of the Public Authorities Law. The authority to determine the number, dimensions and design of structures necessary to eliminate highway grade crossings, formerly granted to the Superintendent of Public Works by section 346 of the Highway Law, was transferred to the newly created Thruway Authority which was also empowered to approve or reject the plans proposed by the Department of Public Works. (Public Authorities Law, § 359, subd. 3.) However, subdivision 1 of section 359 of the Public Authorities Law required that all engineering and design work be performed by the Department of Public Works, and in practice that department had complete control of the design and construction of the Thruway facilities and approaches until 1954. (L. 1954, ch. 517.) The major portion of the construction on the main line of the Thruway had been completed by that time.

This power to determine the dimensions, design and number of structures necessary to eliminate grade intersections represents the crux of the Authority's case. The Department of Public Works, in designing and constructing Thruway facilities, adopted criteria designed to meet the anticipated needs of future traffic on State highways or for the benefit of the State in other respects. However, the Authority desired to keep the design and construction of grade crossing structures down to a size which was adequate under standard and accepted engineering criteria. An understanding was reached early in 1952 between the Authority and State officials that the Authority would make no determinations under section 359 of the Public Authorities Law as to what structures and facilities were necessary to be built, but would allow improvements to State highways and facilities to be included in the contracts for construction of the Thruway subject to a later accounting upon completion of the Thruway at which time the Authority would ...


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