Patterson v. Carey

• Decision Date: 13 June 1975
• Citation: 370 N.Y.S.2d 783,83 Misc.2d 372
• Parties: A. Holly PATTERSON, as President of the Board of the Jones Beach State Parkway Authority, et al., Plaintiffs, v. Hugh CAREY, as Governor of the State of New York, et al., Defendants.
• Court: New York Supreme Court

Page 783

370 N.Y.S.2d 783

83 Misc.2d 372

A. Holly PATTERSON, as President of the Board of the Jones Beach State Parkway Authority, et al., Plaintiffs, v. Hugh CAREY, as Governor of the State of New York, et al., Defendants.

Supreme Court, Albany County.

June 13, 1975.

Meyer, English & Cianciulli, P.C., Mineola (Bernard S. Meyer, New York City, of counsel), for plaintiffs Patterson, Duryea, Pryor, Winthrop, Wruck, Hederman and Farrell.

Dewey, Ballantine, Bushby, Palmer & Wood, New York City (Hugh N. Fryer, New York City, for counsel), for the Chase Manhattan Bank, N.A.

Louis J. Lefkowitz, Atty. Gen. of the State of New York, Albany (Grace K. Banoff, New York City, of counsel), for defendants.

Hawkins, Delafield & Wood, New York City (Charles L. Kades, New York City, of counsel), amicus curiae on behalf of the New York State Thruway.

Kissam & Halpin, New York City (Anthony S. Genovesse, New York City, of counsel), amicus curiae on behalf of the Automobile Club of New York, Inc.

ROBERT C. WILLIAMS, Justice.

Plaintiffs move for an order of summary judgment declaring the provisions of Public Authorities Law Section 153--c to be unconstitutional and void and for an order enjoining the enforcement of said statute.

Plaintiffs consist of the individual members of the Board of the Jones Beach State Parkway Authority (hereinafter referred to as the Authority) and the Chase Manhattan Bank, as Trustee for the bondholders of the bonds of the Authority.

The Authority was created under the legislative enactment of Article 2 Title 3 of the Public Authorities Law. Under Section 153--b(2) of said law the Authority is empowered to reconstruct, operate, and maintain the Southern State Parkway (as well as other parkways). Section 153--b(5) of said statute reads as follows:

5. To charge tolls for the use of the part of Southern state parkway improved by the authority subject to and in accordance with any agreements with bondholders made as hereinafter provided. The toll shall be ten cents unless the revenues from such tolls and the income from the facilities authorized by the foregoing provisions of this section are insufficient to meet all obligations of such agreements and to pay the costs of operating and maintaining the parkways and facilities operated and maintained by the authority pursuant to the foregoing provisions of this section. The revenue from such tolls and the income from such facilities shall be used only to meet such obligations and to pay the cost of constructing, reconstructing, operating and maintaining such parkways and facilities;

Section 158--a(1) of the Public Authorities reads as follows:

' § 158--a. Covenants of the state.

1. The state of New York does pledge to and agree with the holders of any bonds issued pursuant to this act after January first, nineteen hundred thirty-nine that it will not limit or alter the rights hereby vested in the authority to construct, reconstruct, operate and maintain the parkway, bridges and other improvements, or any of them, and to collect revenues therefrom as authorized in this title insofar as such rights may be necessary in order that the authority may fulfill the terms of any agreements made with the holders of such bonds and that it will not in any way impair the rights and remedies of the holders of such bonds until the bonds, together with interest thereon, with interest on any unpaid installments of principal and interest and all costs and expenses in connection with any suits, actions or proceedings by or on behalf of the bondholders are fully met and discharged.'

The Authority authorized and received a study entitled 'Report on Study of Traffic, Tolls, Revenues and Expenses for Southern State Parkway,' dated October 31, 1974, prepared by URS/Madigan-Praeger, Inc., an independent engineering consulting firm with acknowledged expertise in the field.

The Authority, on the basis of this study and other estimates and projections, determined that the toll had to be increased from ten cents to twenty-five cents to provide sufficient additional revenue to meet its obligations under Section 153--b(5). In brief summary, said aforementioned study concluded the twenty-five cents toll was needed if the Authority wished to undertake and complete a long range capital improvement program which consisted in part of widening the parkway in certain sections and making major structural and safety improvements. The report also found that an increase of five cents, thus making the toll fifteen cents, would be sufficient to meet all operating and maintenance costs, including debt service, until 1981.

On December 13, 1974, the Authority adopted a resolution raising the toll to twenty-five cents effective January 1, 1975. Said resolution was upheld as not being ultra vires in Russell v. Jones Beach State Parkway Authority, 80 Misc.2d 698, 363 N.Y.S.2d 448. Mention is made of said decision for two reasons. Firstly, this Court agrees with the court in Russell that the Authority had the power to adopt said toll increase because the Authority was clothed 'with the power and authority to exercise judgment and discretion not only as to carrying out the physical improvement program, but also as to all details of the toll charge provided for financing the very extensive improvement program, including the time for putting the charge into effect.' Secondly, and more pertinently, the issue of whether this toll raising act was ultra vires is not relevant to the case at bar. The case at bar is concerned solely with the unconstitutionality of Section 153--c of the Public Authorities Law, and despite defendants attempts to inject the ultra vires issue into this case, its proper venue remains in an Article 78 proceeding.

On February 21, 1975, the office of the State Comptroller issued a report entitled 'Special Report on the Jones Beach State Parkway Authority Relative to its Toll Structure on the Southern State Parkway.' Said Comptroller's report concurred with the aforementioned URS/Madigan study that only a five cents increase would be sufficient to cover revenue needs for debt service, operation and maintenance until 1981. Said Comptroller's report concluded that any major capital improvement program should be deferred until such time as new studies are made taking into consideration the effects on traffic flow of the energy crisis plus numerous other contingencies affecting the Long Island transportation picture.

On March 11, 1975, Governor Hugh Carey signed into law Public Authorities Law § 153--c. Said Section 153--c rolled back the toll on the Southern State Parkway to ten cents. The other provisions of Section 153--c established procedures to be followed by the Authority prior to any future toll increase. Basically these procedures are: 1. The submission to the Comptroller of a detailed report explaining the need for such proposed increase. Said report is to be submitted not less than 120 days prior to the effective date of such proposed increase. 2. The Comptroller is to make public his recommendations concerning the proposed increase within 60 days. 3.T Authority shall hold a public hearing upon such proposed toll increase not less than 15 days prior to the effective date of such increase. After said public hearing the Authority shall reconsider the proposed increase and then may take such action on a toll increase as it then deems necessary and advisable. Plaintiffs now move for summary judgment declaring Section 153--c unconstitutional.

Before moving to the merits of the main controversy the Court will pass on some minor collateral issues which have been raised by the pleadings herein.

Governor Hugh Carey and Comptroller Arthur Levitt are not proper party defendants herein and the complaint as to them is hereby dismissed. Glen v. Rockefeller, 61 Misc.2d 942, 943, 307 N.Y.S.2d 46, 47--48, affd., 34 A.D.2d 930, 313 N.Y.S.2d 938.

The individual plaintiffs as members of the Authority have the requisite standing to obtain a declaratory judgment concerning the constitutionality of Section 153--c. Board of Education of Central School District No. 1 v. Allen, 20 N.Y.2d 109, 281 N.Y.S.2d 799, 228 N.E.2d 791, affd., 392 U.S. 236, 88 S.Ct. 1923, 20 L.Ed.2d 1060. There can be no doubt that plaintiffs have a 'personal stake in the outcome' of this litigation. Baker v. Carr, 369 U.S. 186, 82 S.Ct. 691, 7 L.Ed.2d 663.

The Court notes that it has granted leave to the Automobile Club of New York, Inc. to intervene as amicus curiae in support of the constitutionality of Section 153--c. Leave to intervene as amicus curiae has also been granted to the New York State Thruway Authority whose position supports the unconstitutionality of said statute. Said intervention of both amicus curiae was on consent of all parties herein.

The Court now turns to the merits.

Plaintiffs contend Section 153--c violates the provisions of Article 1, Section 10, Clause I of the United States Constitution that 'No state shall . . . pass any . . . Law impairing the obligation of contracts. It is plaintiffs' position that the state's pledge to the bondholders contained in Section 158--a(1) constitutes a contract between the state and the bondholders that the State of New York 'will not limit or alter the rights hereby vested in the Authority to construct . . . and to collect revenues therefrom . . . in order that the Authority may fulfill the terms of any agreements made with the holders of such bonds and that it will not in any way impair the rights and remedies of the holders of such bonds . . .'. Thus, plaintiffs contend the Section 153--c is an unconstitutional impairment of the state's contract obligation with the bondholders in that its toll rollback and 120 day waiting period provisions limit the Authority's right to collect revenues and that the provisions requiring the submission of a report to the State Comptroller and the subsequent public hearing have the effect of limiting or altering the...