New York Law Review

Tag: governmental function

  • New York Telephone Co. v. City of Binghamton, 18 N.Y.2d 152 (1966): Utility’s Duty to Relocate Facilities at Own Expense

    New York Telephone Co. v. City of Binghamton, 18 N.Y.2d 152 (1966)

    A utility company must bear the cost of relocating its facilities in public streets when changes are required by public necessity, and slum clearance qualifies as such a necessity even if the land is ultimately redeveloped by private entities.

    Summary

    New York Telephone Company sought reimbursement from the City of Binghamton for relocating its telephone lines due to the city’s street closure for a middle-income housing project. The city conveyed the land to a private corporation for development. The Court of Appeals reversed the Appellate Division’s decision, holding that the telephone company was not entitled to reimbursement. The court reasoned that slum clearance is a governmental function, and utility companies must bear the cost of relocation when required by public necessity, a common-law principle the court was unwilling to overturn.

    Facts

    The City of Binghamton undertook studies and determined an area to be substandard, insanitary, and blighted. The city closed part of a public street as part of an urban renewal project under the General Municipal Law and the National Housing Act of 1949. The city acquired about 29 acres of land, including the street and adjacent properties, and conveyed them to Chenango Court, Inc., a limited dividend corporation, for development as a middle-income housing project. New York Telephone Company had telephone lines and facilities in the closed street and incurred expenses to relocate them.

    Procedural History

    The case was submitted to the Appellate Division on an agreed statement of facts. The Appellate Division ruled in favor of the telephone company, finding the city acted in a proprietary capacity. The City of Binghamton appealed to the New York Court of Appeals.

    Issue(s)

    Whether the telephone company is entitled to reimbursement from the city for the expense of relocating its facilities, necessitated by the city’s closing of a street for an urban renewal project that involved conveying the land to a private corporation for development?

    Holding

    No, because the city’s actions constituted a governmental function of slum clearance, and utility companies must bear the cost of relocation when required by public necessity under the common law.

    Court’s Reasoning

    The court emphasized the common-law rule that utility companies must relocate their facilities at their own expense when public necessity requires it. The court stated, “The ‘fundamental common law right applicable to franchises in streets’ is that a utility company must relocate its facilities in the public streets when changes are required by public necessity.” Citing New Rochelle Water Co. v. State of New York, the court reiterated that there was no common law obligation for the state to pay for relocation. The court found slum clearance to be a governmental function, even if the cleared land is ultimately redeveloped by private developers. It cited Matter of Murray v. La Guardia, Kaskel v. Impellitteri, and Cannata v. City of New York to support the notion that taking substandard real estate for redevelopment is a public use. The court distinguished cases where the city operated as a “public utility” business, noting that the city was not “going into business” for itself here. The court dismissed the argument that the cost of relocation would become part of the slum clearance cost, of which the city only paid a fraction, and that other landowners received full compensation, noting the telephone company only possessed a privilege or permit to use the street, subject to the common-law rule.

  • City of New Rochelle v. State, 14 N.Y.2d 559 (1964): Compensation for Municipal Property Taken for State Purposes

    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).