Brooklyn Eastern Dist. Terminal v. City of New York

• Decision Date: 06 January 1944
• Docket Number: No. 140.,140.
• Citation: 152 ALR 296,139 F.2d 1007
• Parties: BROOKLYN EASTERN DIST. TERMINAL v. CITY OF NEW YORK.
• Court: U.S. Court of Appeals — Second Circuit

152 ALR 296, 139 F.2d 1007 (1944)

BROOKLYN EASTERN DIST. TERMINAL v. CITY OF NEW YORK.

No. 140.

Circuit Court of Appeals, Second Circuit.

January 6, 1944.

Henry Herz, of New York City (Parsons, Closson & McIlvaine, William M. Sperry, 2d, Clinton T. Roe, and Charles P. Kramer, all of New York City, on the brief), for petitioner-appellant.

Leo Brown, of New York City (Ignatius M. Wilkinson, Corp. Counsel, Julius Isaacs, Louis M. Weintraub, and Benjamin Offner, all of New York City, on the brief), for respondent-appellee.

Before AUGUSTUS N. HAND, CHASE, and CLARK, Circuit Judges.

CLARK, Circuit Judge.

This appeal raises the question whether Brooklyn Eastern District Terminal has an interest in land by virtue of an agreement it has with the City of New York for supplying freight terminal facilities to the City's Wallabout Market of the kind and to the extent that it may share in the award made to the City upon the condemnation of the Market by the United States of America. The United States paid into the court the sum of $4,000,000 for the land it condemned, cf. United States v. 53¼ Acres of Land, 2 Cir., Dec. 9, 1943, 139 F.2d 244; and out of this sum petitioner claims $700,000 or "such other amount as to the Court shall seem just and proper." The court first ordered a hearing to consider the nature of the interest created by the agreement, 42 F.Supp. 746, and later, after taking testimony on the preliminary issues thus created, determined that petitioner had no interest in the land, but only a contract with the City, which was frustrated by higher authority. 47 F.Supp. 887. Hence it entered the judgment appealed from, disallowing the petitioner's claim in full.

The Wallabout property was deeded in 1894 to the City of Brooklyn, to whom respondent has succeeded, in trust for use as market property. Cf. Grill v. City of New York, 282 N.Y. 471, 481-483, 27 N.E.2d 14; Bird v. Grout, 106 App.Div. 159, 94 N.Y.S. 127. The issue here turns upon the meaning and effect of an agreement between petitioner and respondent of November 16, 1935. The heart of this long and formal covenant, duly acknowledged by the parties and made binding also upon their successors and assigns, is in paragraph (1), viz.: "The City agrees: (1) The City will and hereby does grant for a term of ten years from the date hereof, except as hereinafter provided, to the Terminal, for the purposes of a freight terminal for market purposes, the right and privilege to construct, erect, maintain and operate a float bridge, float bridge protector-rack, float bridge dock approach and tracks, with the necessary railroad structures, appurtenances and equipment, in Wallabout Market in the Borough of Brooklyn, City of New York, in accordance with the map or plan hereto attached." And included in the same paragraph was a grant to the Terminal of "the right of renewal for a further term of ten years on the terms and conditions herein set forth" upon notice to be given to the City not more than eighteen nor less than twelve months prior to the expiration of the original term.

The map or plan referred to in this paragraph had already been described by title and "made part of this agreement" by "whereas" clauses which referred to the City's desire to have the market "served by a freight terminal equipped with team track and other facilities for the receipt, delivery, handling and transportation of carload freight, at or upon said premises" and the Terminal's willingness "to build, provide and maintain the necessary float bridge, tracks and track appurtenances to properly equip the Wallabout Market with a freight terminal in accordance with" this map. And the attached map is important, for it contains an exact and detailed layout, in place, of the facilities involved, including team track, private track, storage track, float bridge, float bridge protector-rack, and float bridge dock.

In the next four paragraphs the City provides for the closing of all but a strip of "Apple Avenue," and the blocking or closing of other streets "as may be reasonably necessary to facilitate the construction" of the freight terminal, for the granting of necessary construction permits, the providing of lights, the making and enforcing of rules preventing the peddling from freight cars and other obstruction of the driveways and tracks upon the premises. Then the Terminal agrees: "(6) That it will, at its own expense, construct the float bridge, float bridge protector-rack and float bridge dock approach and tracks substantially as shown on the map or diagram attached hereto and hereinbefore referred to, with the necessary railroad structures, appurtenances and equipment, and maintain the same at all times in good working order and condition, under the supervision of the Department."

Thereafter follow fourteen paragraphs (numbered 7 through 20) of further particular agreements by the Terminal, covering the construction of the float bridge, the tracks, the freight terminal, and the other facilities, the repair of the tracks and the area between the tracks and the rails, and for the transport of cars of freight by car floats or other means to the freight station from the terminals of various listed railroads, and with the further covenant that "the rights and privileges herein granted shall not be leased, sublet or mortgaged in any manner nor shall they be transferred or assigned" without the consent of the City by instrument under seal.

Next are eight paragraphs of mutual covenants and agreements (numbered 21 through 28), of which the first is important here: "(21) That the float bridge, float bridge protector-rack, float bridge dock approach and tracks, with the necessary railroad structures and appurtenances and other buildings or structures erected pursuant hereto shall upon the expiration or sooner termination of the within right and privilege, revert to and become the property of the City of New York, without compensation to the Terminal." Then by paragraph (25), provision was made for termination of the agreement upon default of the Terminal after certain specified notice by the City Department of Public Markets, Weights and Measures; while paragraph (26) gave the City power to terminate the rights and privileges thus granted the Terminal at any time after the expiration of ten years, provided that "not less than one year's prior written notice shall have been given to the Terminal specifying the date of termination," and thus to acquire the float bridge and other structures specified, paying therefor a part of their cost of construction proportional to that portion of the contemplated total term of twenty years thus cut off.

This agreement was made to supersede an earlier agreement of July 11, 1935, which had called for the approval of the Public Service Commission of the State of New York. That Commission, however, refused to issue a certificate on the ground that the so-called streets on Wallabout Market were not public streets or highways and that hence the Commission did not have jurisdiction. A similar application to the Transit Commission was denied on the same ground. Hence the November agreement specifically recited that the proposed plan of construction involved construction in market ways, but not in any public streets, and that the references thereafter to certain avenues, including Apple Avenue, were to the market ways so called and so shown on the attached plan. The November agreement also provided that the City would impose a market price of at least $1 per car per day for the first day, and $3 for subsequent days, to be paid by the consignee and collected for the City by the Terminal. By supplemental agreement of April 18, 1936, this paragraph was modified to provide in substance that the Terminal would make the payments for the cars (with certain limited exceptions) at the rate of $1 per loaded car received.

It is to be noted, therefore, that the agreement, particularly as made specific by the map and plan incorporated in it, conveys rights to petitioner for the covenanted period which are at least as extensive as railroad rights of way and in some aspects are more extensive. In fact, the building and occupation of terminal facilities as specified make the interest more in the nature of a railroad freight station and terminal, hence of a greater degree of occupancy and possession, than of merely the use of tracks as in the ordinary railroad right of way. The only sense in which the interest here is less is that the period involved is a term of years, at the end of which the facilities used by the tenant become the property of the fee owner. But this in no way limits the extent of possession granted during the period, and the fact that title to the facilities does not pass to respondent until the end of the period serves to emphasize petitioner's ownership and possession until that time.

Petitioner also shows, and respondent does not deny, that petitioner proceeded to make the construction agreed upon at a cost price, adjusted with respondent, in excess of $100,000, with further expenditures for car floats, and that the land thus involved consists of identified parcels as shown on the Damage Map attached to the Government's condemnation petition, to wit, Damage Parcels 1-3, 46, 188-194, 198, and 201, constituting a strip on the western edge of the condemned track between the United States Navy Yard and the Wallabout Basin. Petitioner also produced evidence of constantly increasing net profits from its operations of these facilities, so that when the property was taken April 1, 1941, they substantially exceeded $100,000 a year.

The statute which defines the procedure for condemnation, 40 U.S.C.A. § 258a, provides for the acquisition "of any land or easement or right of way in land for the public use" and requires the declaration of taking to contain "a statement of the estate or interest in said lands taken for said public use." It is clear that unless p...