14 N.Y.2d 559 (1964)

When the State takes property held by a municipality for state purposes, the municipality may not be constitutionally entitled to compensation if the property was held in a governmental capacity, unless a specific statute dictates otherwise.

Summary

The City of New Rochelle sought compensation from the State of New York for the appropriation of city-owned property for the construction of the New York State Thruway. The city argued that it should be compensated for the taking, even though the property was used for governmental functions (sewage and drainage), because the Thruway Authority was a separate entity from the state. The Court of Appeals affirmed the lower court’s decision denying compensation, holding that the governmental-proprietary distinction applied, and absent a specific statutory provision, the city was not entitled to compensation when the state takes governmentally-held municipal property for state purposes.

Facts

The City of New Rochelle owned property used for sewage and drainage purposes, essential governmental functions. The State of New York appropriated this property for the construction of the New York State Thruway. The city filed a claim seeking compensation for the taking.

Procedural History

The lower court denied compensation to the City of New Rochelle. The City appealed to the Court of Appeals of the State of New York.

Issue(s)

Whether the City of New Rochelle is entitled to compensation from the State of New York for the appropriation of city-owned property used for governmental functions when the property is taken for the construction of the New York State Thruway.

Holding

No, because the governmental-proprietary distinction applies, meaning the state need not compensate a municipality when it takes governmentally-held property for a state purpose, unless a specific statute requires such compensation.

Court’s Reasoning

The Court reasoned that municipalities hold certain properties as agents of the state, and for purposes proper to the state. Therefore, the state is not constitutionally required to compensate its own creature (the municipality) when it reclaims such governmentally-held property for another public purpose. The Court emphasized that, in this case, no statutory provision mandated compensation.

The dissenting judge argued that the Thruway Authority is a distinct entity from the state, especially economically, as highlighted in Matter of Plumbing Assn. v. New York State Thruway Auth., 5 Y 2d 420. The dissent emphasized that the Thruway’s expenses are to be borne by users through tolls, not the state treasury, making it illogical to require the municipality to donate the property without compensation. The dissent cited a report from the Temporary State Commission on the Co-ordination of State Activities, noting that public authorities are created to finance improvements without state appropriations. The dissent concluded that forcing the municipality to donate property contradicts the Thruway Act’s purpose. The dissent advocated for compensation, to be reimbursed to the state by the Thruway Authority under Public Authorities Law § 357(2).