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NEW YORK THRUWAY AUTHORITY v. STATE NEW YORK (07/02/69)

COURT OF APPEALS OF NEW YORK 1969.NY.42426 <http://www.versuslaw.com>; 250 N.E.2d 469; 25 N.Y.2d 210 decided: July 2, 1969. NEW YORK THRUWAY AUTHORITY, RESPONDENT,v.STATE OF NEW YORK, APPELLANT New York Thruway Auth. v. State of New York, 31 A.D.2d 998, reversed. 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 and Breitel concur. Author: Jasen


New York Thruway Auth. v. State of New York, Jasen, J. Chief Judge Fuld and Judges Burke, Scileppi, Bergan and Breitel concur.

Author: Jasen

 This appeal raises for our review the question of the correctness of the judgment of the Court of Claims entered upon the remittitur of this court.

During construction of the Thruway, improvements to State highways and facilities were included in the contracts for construction of the Thruway pursuant to an "understanding" between various State officials and the Thruway Authority that the Authority would be reimbursed for the cost of such improvements having no Thruway purpose. After completion of the Thruway, a dispute arose concerning the apportionment of various costs between the State and the Thruway Authority, and the Legislature enacted an Enabling Act (L. 1964, ch. 669) which conferred jurisdiction upon the Court of Claims to determine claims asserted by the Authority against the State for improvements and additions to State highways and other facilities made at the direction or request of the State for the "sole benefit of the state and not required for thruway purposes". (L. 1964, ch. 669, § 1.) The Enabling Act also provided that any award thereunder "must be without interest and shall be applied as a credit upon, and may not exceed, the amount of the balance due under the advances made by the state for thruway purposes." (L. 1964, ch. 669, § 5.) The unpaid balance of the advances made by the State for the Authority's benefit was found by the Court of Claims to be $24,668,713.54.*fn1

The trial resulted in an award of $30,842,427 (50 Misc. 2d 957) and the resulting judgment, entered without interest, was affirmed by the Appellate Division (28 A.D.2d 607). This court modified the order of the Appellate Division to eliminate credits for the depreciated value of highway pavement (pavement restoration credits) and for certain construction and grading at the intersection of the Thruway with the Palisades Interstate Parkway. In all other respects, the order appealed from was affirmed (22 N.Y.2d 509, mot. for rearg. den. 22 N.Y.2d 938).

Upon the Authority's motion for entry of judgment in accordance with the remittitur of this court, the Court of Claims modified the original judgment by disallowing credits aggregating $9,337,560, and directed that judgment be entered for the Authority in the amount of $21,504,867, without interest. The credits disallowed by the Court of Claims include $1,397,054 originally allowed for certain construction and grading at the intersection of the Thruway with the Palisades Interstate Parkway, and $5,030,873 originally allowed for pavement restoration costs at 75 so-called "I" sites*fn2 where State highways were carried over the Thruway on bridges. Also disallowed were credits of $503,083 representing administrative and engineering costs allocable to pavement restoration at the "I" sites. The Appellate Division affirmed the judgment of the Court of Claims concerning these credits, and the respondent Authority does not dispute the disallowance of these credits in this court.

The Court of Claims also disallowed credits of $2,406,550 originally allowed for pavement restoration at 17 so-called "J" sites where the Thruway passes over State highways on bridges, and at 4 so-called special or "K" and "L" sites where State highways were allegedly relocated to avoid intersecting the Thruway and its related construction. Concerning these 21 construction sites, the Appellate Division held that it was "reasonably clear" that the Court of Claims in acting upon the remittitur of this court" did not examine the proof as to each site involved or make independent determinations of necessity [for replacing highway pavement] with respect to each," and remitted the case for appropriate findings by the Court of Claims. The Appellate Division majority noted that the rationale of the Court of Claims in denying interest on the judgment was "unconvincing", but that determination of the problem was premature. Justice Herlihy wrote in a concurring and dissenting memorandum that an analysis of the Enabling Act demonstrated that the Legislature intended to preclude interest on the judgment.

Two issues are presented upon this appeal -- whether the Appellate Division properly remitted the case to the Court of Claims for further factual findings concerning the necessity of replacing the pavement of State highways at the 17 "J" sites and 4 special sites, and whether the Authority is entitled to interest on the judgment.

The State contends that disallowance of the credits originally allowed for pavement restoration at the 17 "J" sites and 4 special or "K" and "L" sites in the aggregate amount of $2,187,774, plus related administrative and engineering costs of $218,776, was mandated as a matter of law by the remittitur of this court.

The so-called "J" sites involve grade separation structures where either the State highway was reconstructed under the Thruway or the Thruway was constructed over a State highway. The Authority claimed construction for the benefit of the State at some 34 "J" sites,but credits for pavement restoration were awarded at only 17 "J" sites (presumably the pavement was not replaced at the other 17 "J" sites). The 2 special "K" sites involve relocation of and improvements to State highways in the vicinity of certain Thruway interchanges. The 2 special "L" sites involve State highways which were relocated to avoid intersecting the Thruway.

The disputed credits for pavement restoration represent the additional service life added to State highways in replacing old pavement with new pavement. The credits were calculated by first determining the cost of replacing the original pavement by percentage formulae (width of the original pavement/width of replacement pavement) from the cost of the highway pavement actually laid. The replacement cost of the original pavement as thus determined was depreciated based upon a finding of a 20-year service life for highway pavement. The amount of this depreciation was allowed as a credit to offset the Authority's debt to the State. The Referees allowed the credits for pavement restoration at the 21 disputed sites upon the belief that the Authority's obligation to replace pavement where necessary was limited to replacement of pavement, in kind, of equal service value to the old. The Referees reasoned, therefore, that the additional service value of new pavement was for the sole benefit of the State. The Authority was awarded the entire cost of that portion of the new pavement which exceeded the dimensions of the original pavement replaced. The Referees' report was confirmed by the Court of Claims, which was affirmed by the Appellate Division.

The decision of this court on the original appeal set aside the factual findings of sole benefit relating to pavement restoration as based upon an erroneous conclusion of law. This court disallowed the credits for pavement restoration*fn3 upon the ground that the replacement of highway pavement to eliminate potential grade crossings with the Thruway or its related construction (interchanges, etc.), or to otherwise further Thruway construction, was not reimbursable under the Enabling Act because the Authority was obligated to eliminate potential grade crossings and restore disrupted State highways and facilities.*fn4 The Court of Claims, therefore, correctly read our opinion as requiring, as a matter of law, disallowance of the credits for pavement restoration at all 21 disputed sites. For this reason, the Court of Claims properly disallowed the disputed credits originally allowed for pavement restoration. It follows, therefore, that there is no need for additional factual findings by the Court of Claims.

Engineering and administrative costs were calculated by the Referees as 10% of the cost of labor and materials required to restore the highway pavement. Logically, these administrative and engineering costs are part of the total cost of pavement restoration and must also be disallowed. The Court of Claims, therefore, properly denied the engineering and administrative credits pertaining to pavement restoration at the 21 disputed sites.

Both parties request that this court pass on the issue of whether interest is payable on the judgment of the Court of Claims entered on the remittitur of this court. The Appellate Division held that the interest question was premature, but stated that it found the reasoning of the Court of Claims in disallowing interest on the judgment to be "unconvincing". We find the interest question ripe for our determination, however, since the present judgment ($21,504,867) is less than the outstanding balance of the State advances to the Authority ($24,668,713.54). Thus, interest, if payable, could be credited up to the amount of $3,163,846.54, the balance of the advances the Authority owes to the State given the present judgment. Nor does the fact that the Authority did not cross-appeal from the original judgment which was payable "without interest" preclude our review of this issue. The words "without interest" as used in the original judgment preclude only interest payable prior to entry of judgment. The Authority did not have occasion to raise the interest issue on the original appeal since the Enabling Act proscribed payment of interest "on the award". The question of interest on the judgment, therefore, did not arise until entry of judgment upon the remittitur of this court, and was timely raised by the Authority at that time.

The Authority requests interest on the judgment from August 1, 1966, the date of entry of the original judgment of the Court of Claims. At issue is some $2,500,000 in interest. The Authority distinguishes interest on an award (Van Bel Co. v. Board of Educ., 241 App. Div. 609; CPLR 5001, 5002) upon which payment of interest is proscribed by the Enabling Act from interest on a judgment (CPLR 5003), and contends that subdivision 7 of section 20 of the Court of Claims Act provides for interest upon all judgments of the Court of Claims. Since the Enabling Act does not expressly prohibit interest ...


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