Miller v. Port of N.Y. Auth.

• Decision Date: 20 November 1939
• Parties: MILLER et al. v. PORT OF NEW YORK AUTHORITY et al.
• Court: New Jersey Supreme Court

15 A.2d 262

18 N.J.Misc. 601

MILLER et al.

v. PORT OF NEW YORK AUTHORITY et al.

Supreme Court of New Jersey, Hudson County.

Nov. 20, 1939.

[Copyrighted material omitted.]

Action by Doris N. Miller and others against the Port of New York Authority, a body corporate and politic, and others, to recover compensation for property taken in the construction of a tunnel and for damages resulting from operations in the construction of the tunnel. On named defendant's motion to set aside the service of summons and complaint.

Motion granted.

S. K. Sullivan, Jr., of Hoboken, for plaintiffs.

Russell E. Watson, of New Brunswick, for defendant The Port of New York Authority.

James J. Carroll, of Newark, for defendant Underpinning & Foundation Co.

Vanderbach & Vanderbach, of Guttenberg, for defendant Mason & Hanger Co., Inc.

Carey & Lane, of Jersey City, for defendants George M. Brewster & Son, Inc., Joseph L. Sigretto & Sons, Inc., and L. P. O'Connor, Inc.

ACKERSON, Supreme Court Commissioner.

The fourteen plaintiffs (husband and wives being joined in several instances) represent ten different ownership interests in ten separate and distinct pieces of real property adjacent to the Midtown Tunnel in Hudson County, also known as the Lincoln Tunnel. These owners have brought this action against the Port of New York Authority (hereinafter called the "Authority"), under whose power said tunnel was constructed, as well as against several contractors who were instrumental in its construction under agreements with the Authority.

The complaint, consisting of three counts, is based upon two theories. The first count is against the Authority alone upon the theory that in proceeding with the construction of the tunnel this defendant took plaintiffs' said properties in whole or part, or the diminution of their values, contrary to our State Constitution without paying just compensation therefor. In effect the charge is a taking of private property for a public use without just compensation, since it is not alleged that said defendant was not authorized to build the tunnel or take the properties for that purpose.

The second and third counts are against all of the defendants (including the Authority), and are rested upon the theory of negligence with respect to blasting operations in connection with the construction of the tunnel.

It is to be noted, however, that two of the plaintiffs, Stephen K. and Catherine D. Sullivan, ask no recovery against the Authority, although seeking it against the other defendants.

The Authority now moves to set aside the service of the summons and complaint as to it, primarily upon the basic ground that it acted in the premises as the alter ego of the states of New Jersey and New York and is, therefore, clothed with the sovereign immunity of each of said states from suits in their own courts; that such immunity has not been waived nor has consent been authorized or given to a suit such as this, and that this defendant in such capacity is not liable for torts arising out of the performance of its functions.

It is, of course, fundamental that sovereign states cannot, without their consent, be sued in their own courts, where no provision to the contrary exists in their constitutions or by special enactment. American Dock, etc., Co. v. Trustees of Public Schools, 32 N.J.Eq. 428, affirmed 35 N.J.Eq. 181, at page 252; Curtis & Hill Gravel & Sand Co. v. State Highway Comm., 91 N.J.Eq. 421, 111 A. 16; De Santis et ux. v. D., L. & W. R. Co., 165 A. 119, 11 N.J.Misc. 22, 25, 26; Lodor v. Baker, 39 N.J.L. 49; State v. Kirby, 5 N.J.L. 835; Locke v. State, 140 N.Y. 480, 35 N.E. 1076; 25 R.C.L. p. 412; sec. 49; 42 A.L.R. 1465.

It becomes necessary, therefore, in determining the problems thus presented, to decide in the first place whether the Authority is a direct state agency, i. e., the alter ego of the state, or whether it is a private or quasi public corporation, such as a railroad, telegraph, telephone, canal or bridge company, endowed with the state's prerogative of eminent domain, but not clothed with the state's immunity from suit.

The construction, maintenance and operation of highways, bridges and tunnels is one of the primary governmental functions of the states. Atkin v. Kansas, 191 U.S. 207, 221, 222, 24 S.Ct. 124, 48 L. Ed. 148; Dodge County Com'rs v. Chandler, 96 U.S. 205, 24 L.Ed. 625; Sherman v. United States, 282 U.S. 25, 29, 51 S.Ct. 41, 75 L.Ed. 143. A state may create an agency for the purpose of carrying out a state duty or function. Curtis & Hill Gravel & Sand Co. v. State Highway Comm., supra; approved by the Court of Errors and Appeals in Strobel Steel Const. Co. v. State Highway Comm., 120 N.J.L. 298, 198 A. 744; State Highway Comm. v. Elizabeth, 102 N.J.Eq. 221, 227, 140 A. 335, affirmed 103 N.J.Eq. 376, 143 A. 916; New Jersey Interstate Bridge & Tunnel Comm. v. Jersey City, 93 N.J.Eq. 550, 118 A. 264; Gaynor v. Marohn, 268 N.Y. 417, 198 N.E. 13. A suit against such a state agency cannot be maintained if the effect of such action is a suit against the state—unless, of course, the state has consented. Strobel Steel Const. Co. v. State Highway Comm., supra.

The history of the creation of the Authority with a statement of the several legislative enactments in furtherance of the objects thereof, and of the powers conferred by these enactments and by the compact of April 30, 1921, between New York and New Jersey, will be found in Helvering v. Gerhardt, 304 U.S. 405, 58 S.Ct. 969, 82 L.Ed. 1427, from which it appears that the Authority is a bi-state corporation, created by compact between the two states, which directed the Authority to recommend a comprehensive plan for improving the port of New York and facilitating its use, by the construction and operation of bridges, tunnels, terminals and other facilities. Pursuant to further legislation of the two states, the Authority has constructed interstate tunnels and bridges financed in large part by funds advanced by the two states and by the Authority's issuance and sale of its bonds. It collects tolls for the use of such facilities, but it has no stock or stockholders and is owned by no private persons or corporations. Its projects are operated in behalf of the two states and in the interest of the public and none of its profits enure to the benefit of private persons. Its property and the bonds and other securities issued by it are exempt by statute from state taxation. The statutes relating to its projects declare that they are all for the benefit of the people of the two states, for the increase of their commerce and prosperity, and for the improvement of their health and living conditions, and that the Authority shall be regarded as performing a governmental function with reference to said projects and shall be required to pay no taxes or assessments upon any property acquired by it for the purposes of its creation. Furthermore, by statute (Chap. 5, P. L.N.J.1931, N.J.S.A. 32:1-141 to 32:1-143; chap. 48, P.L.N.Y.1931), the Authority surplus revenues are subject to disposition by the states. It is to be noted also that the treaty of 1921, N.J.S.A. 32:1-1 et seq., which created the Authority, does not provide that it shall be subject to suit.

If the construction of the Lincoln Tunnel had been intrusted to one of the conventional administrative agencies of the state, such as the State Highway Commission, there is no doubt that the state itself would be regarded as the operative agency. Curtis & Hill Gravel & Sand Co. v. State Highway Comm., supra; State Highway Comm. v. Elizabeth, supra; New Jersey Interstate Bridge & Tunnel Comm. v. Jersey City, supra; Stephens v. Com'rs of Palisades Interstate Park, 93 N.J.L. 500, 108 A. 645; Sherman v. United States, supra; The Onteora, D.C., 298 F. 553; State Highway Comm. of Wyoming v. Utah Const. Co., 278 U.S. 194, 49 S.Ct. 104, 73 L.Ed. 262; People ex rel. Bridge Authority v. Davis, 277 N.Y. 292, 299, 14 N.E.2d 74. It is equally clear that if the state had done so its mantle of immunity would cover such agency, for in the case of a state instrumentality as distinguished from that of a public sub-division of a state, the question whether the particular functions exercised are governmental or proprietary is an irrelevant one. For when the question of immunity of a state, considered as a sovereign, arises, the nature of the particular activity cannot be inquired into. Ex parte State of New York, No. 1, 256 U.S. 490, 41 S.Ct. 588, 65 L.Ed. 1057; Ex parte State of New York, No. 2, 256 U.S. 503, 41 S.Ct. 592, 65 L.Ed. 1063; Murray v. Wilson Distilling Co., 213 U.S. 151, 29 S.Ct. 458, 53 L.Ed. 742; The Onteora, supra.

Since, had the undertaking been carried on by one state or the other, either directly, or through an established state agency, the immunity of sovereignty could be invoked, the result must be the same where both states jointly undertake the work by means of a distinct entity acting in behalf of both sovereign states. Plainly the development of the port of New York could not have been adequately dealt with excepting through the co-ordinated efforts of New Jersey, New York, and the United States. Of necessity a body external to the two sovereign states had to be created—in no other way could the two act in complete concert—and it is unimportant whether it is denominated a corporation or an authority or a commission. People ex rel. Bridge Authority v. Davis, supra; New Jersey Interstate Bridge & Tunnel Comm. v. Jersey City, supra, 93 N.J.Eq. at page 552, 118 A. 264, 265. In the latter case, involving the construction of the Holland Tunnel by a similar state agency, with which the Authority is now merged, the court said, concerning the status of such agency: "This great work of constructing tunnels under the Hudson river is the work of the state itself, for the state, wherever it prosecutes any great governmental purpose, either in its own name or by and in the name of its...