38 N.Y.2d 545 (1976)

A public authority operating tunnels and bridges can set toll rates to achieve its economic and public policy goals, differentiating among users as long as there is no invidious discrimination or arbitrary action unrelated to legitimate objectives.

Summary

Carey Transportation, a franchised airport bus line, sued the Triborough Bridge and Tunnel Authority, challenging the higher toll rates it was charged compared to “general purpose” buses. The Authority differentiated between general purpose (mass transit) and special purpose (airport, recreation) buses. Carey argued this was discriminatory. The New York Court of Appeals reversed a lower court ruling in favor of Carey, holding that the Authority has broad discretion to set tolls to meet economic and policy goals, including encouraging mass transit, as long as classifications are not invidious or utterly arbitrary. The Court likened the authority to an entrepreneur, not a regulated utility.

Facts

The Triborough Bridge and Tunnel Authority (Authority) operates bridges and tunnels in New York City. Since 1936, the Authority has charged reduced toll rates to certain franchised public carriers. Since 1962, its regulations distinguished between “general purpose” and “special purpose” buses. General purpose buses, engaged in general transportation, qualified for lower rates. Special purpose buses, like Carey’s airport buses and buses to beaches or stadiums, paid higher tolls. Tolls charged to special purpose buses were generally about twice those of general purpose buses.

Procedural History

Carey sued the Authority in Supreme Court, seeking a declaratory judgment and monetary damages, arguing that the differential toll rates were unlawful. The Supreme Court ruled in favor of Carey, awarding damages. The Appellate Division affirmed. The Authority appealed to the New York Court of Appeals.

Issue(s)

Whether the Authority, in setting toll rates for its facilities, can distinguish between general purpose and special purpose franchised bus operations, charging higher tolls for special purpose buses.

Holding

No, because the Authority possesses broad discretion in setting tolls to achieve its economic and public policy goals, including encouraging mass transportation, provided the classifications are not invidious or utterly arbitrary.

Court’s Reasoning

The Court reasoned that the Authority is a governmental enterprise operating on economic principles, similar to a private entrepreneur. Its toll-fixing power is broad, subject only to legislative correction for abuse. Unlike privately owned utilities, publicly owned authorities are not subject to the same rate-fixing standards. The Legislature granted the Authority an unlimited toll-fixing power, even anticipating that surplus funds might subsidize mass transit.

The Court rejected Carey’s argument that tolls must relate solely to the physical use of the facilities. Distinguishing between general and special purpose buses is permissible because special purpose buses are often associated with recreational travel or high-cost interurban travel. These buses serve a “special purpose, most often without periodicity and at separated irregular time intervals” while general purpose buses are a form of mass transportation used daily. While the classification might not be perfect, the Court emphasized, “A definition of class is not required to be so perfect that some members of the class may not depart from its definitional norms”.

The Court noted the City of New York negotiates differential franchise fees with private bus lines, showing differential treatment is acceptable. The Court emphasized that toll is triggered by the *use* of the authority’s facilities, but offers no basis for inferring that the toll is to be cost related to the *physical use*.

Judge Cooke’s concurrence emphasized that the Authority is subject to the Equal Protection Clause, which requires classifications to be relevant to their purpose. He justified the classification based on the need to encourage mass transportation and reduce congestion during peak hours, and lessen disadvantages for commuters.

In conclusion, the court found the issues reduced to misclassifications of the problems addressed and a logomachy over definitions.