Case Name: In re Board of Rapid-Transit Com'rs
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1897-12-17
Citations: 49 N.Y.S. 60
Docket Number: 
Parties: In re BOARD OF RAPID-TRANSIT COM’RS.
Judges: 
Reporter: West's New York Supplement
Volume: 49
Pages: 60–78

Head Matter:
(23 App. Div. 472.)
In re BOARD OF RAPID-TRANSIT COM’RS.
(Supreme Court, Appellate Division, First Department.
December 17, 1897.)
1. Rapid-Transit Commission—Confirmation of Report.
Inasmuch as the report of the commissioners appointed by the supreme court to pass upon the proposed rapid-transit plans establishes with reasonable accuracy the cost of construction, and shows the ability to meet such cost, provided the position of those commissioners and the rapid-transit commissioners in respect to what constitutes the indebtedness of the city under the constitution finally prevails, the report should be confirmed, leaving these legal questions to be settled in future.
2. Same—Bond.
In view of the magnitude of the undertaking and the vital interest of the city in the prompt completion of the road and its effective equipment, maintenance, and operation, a stipulation should he filed by the rapid-transit commissioners that the penalty of the bond specified in section 34 of the rapid-transit act will be fixed at not less than $15,000,000.
Ingraham, J., dissenting.
In the matter of the application of the board of rapid-transit commissioners. Motion to confirm report.
Granted.
Argued before VAN BRUNT, P. J., and RUMSEY, WILLIAMS, PATTERSON, and INGRAHAM, JJ.
A. B. Boardman and E. M. Shepard, for the motion.
George Zabriskie and Cephas Brainard, opposed.

Opinion:
VAN BRUNT, P. J.
The imperious necessity of improved means of transit in the city of New York has long been recognized. It had become so evident that in the year 1893 the people determined that, as there seemed to be no other means for its accomplishment, it should be brought into existence even by the pledge of the credit of the city. This necessity seems to have addressed itself so strongly to the people that they considered that the accomplishment of this end should be attained though the ability of the city to carry on contemplated improvements might be thereby curtailed. It has been said that the people have not, by their vote, approved of the plan now presented to the court, but that it was-another scheme, which differed in many of its characteristics from the plan now under consideration. I think, however, that a reference to the history of the rapid-transit enterprise will show that the people did not give their vote to any particular detail by which rapid transit was to be obtained, but rather in favor of a result to be reached in any manner which might be found to be practicable.
The presentation of the plan now before the court, and the proofs and developments surrounding it, constitute striking evidence of the correctness of the conclusion of this court in condemnation of the previous scheme which was submitted to it. This plan, however, calling, as it does; for an expenditure of from twenty to forty millions less than the scheme presented to the court before, still involves grave questions of law as to the possibility of its completion. The report of the supreme court commissioners concedes, and the arguments of counsel in favor of the application seem to admit, that, if the total cost of the building of the proposed rapid-transit road is to be deemed as incurred by the city at the time of the making of the contract, and that, added to this, is all the indebtedness of the city of New York then existing, whether funded or contingent, and its obligation to assume on the 1st of January of the coming year the indebtedness of the adjacent cities and counties as provided by the new charter, the limit of indebtedness will be exceeded. Whether any of these elements can be excluded in determining as to the legality of any contract which the rapid-transit commissioners might make or propose to make for the building of this road, present serious questions of law, which, in my judgment, ought not to be determined upon this application, for the reason that, if the court on this application should come to a conclusion upon these questions adverse to the legality of such proposed contract, no review could be had of its determination, although involving only questions of law. It is stated in the report of the supreme court commissioners that the suggestion that no contract for the construction of the road can be made without ipso facto creating a debt to the full extent of its estimated cost is not reasonable. The question of the reasonableness of a constitutional inhibition is not open to discussion, and an examination of the authorities in this state upon the question of what constitutes indebtedness or debts due may show that this unreasonable proposition has very respectable authority, viz. our court of appeals.
It cannot for a moment be assumed, in considering these questions, that independent and separate contracts of construction with different contractors could, from time to time, be entered into, for the reason that every contract of construction must necessarily embrace a contract for the operation of the line by the constructing contractor, and to have the operation of the rapid-transit system controlled by divers and various operators would, of itself, necessarily, absolutely condemn the scheme. It would seem, therefore, that the contract initiating the worli must also contain provisions for its completion and final operation. It is proposed by deferring construction and payment to throw (as it is stated) the indebtedness into future years, and thus obviate the constitutional objection. It is further urged that a considerable amount of the apparent indebtedness of the city of New York is only imaginary, and not real; that, for example, assessment bonds are outstanding, which it is anticipated will in the future he paid by the receipt of assessments for benefit levied upon neighboring property; that lands acquired for Croton aqueduct purposes, which are to be used only for subsurface constructions, may be sold for nearly what was paid for them, and that indebtedness thus reduced; and that the excess of indebtedness of the adjacent cities and counties over the limit provided by the constitution is not to be charged against the city at this time, because the actual assumption has not taken place, although the obligation to assume at present exists. Whether these devices in respect to the contract, and these theories as to the existing indebtedness of the city, will finally obtain, ought to depend upon the decision of our .court of last resort, and should not be determined, as has been already stated,, in this proceeding, where they cannot be reviewed.
There are other questions in regard to other species of indebtedness. We know, for instance, little, if anything, from the evidence before us, of the floating indebtedness of the territory which the city of New York is bound to assume on the 1st of January next. These uncertainties may, upon some application in reference to-the contract, be cleared up, so that the exact truth in respect thereto may be known. Upon the whole, although it is evident that beyond peradventure the entrance by the city into this enterprise will materially cripple its power to carry on other contemplated improvements (unless the money therefor is produced by immediate taxation), and, although weighty questions of law must necessarily arise as to the legality of any contract which may be entered into for the construction of this road, I think that, as the cost of construction is established with reasonable accuracy, and the ability to meet such cost is shown, provided the position of the supreme court commissioners and the rapid-transit commissioners in respect to what constitutes the indebtedness of the city under the constitution finally prevails, whatever may be our opinion upon those subjects, we should confirm the report of the supreme court commissioners, and allow these legal questions to be settled in the future, particularly as, if it should be determined that the debt limit was exceeded by any contract which the commissioners might make, no liability could possibly be imposed upon the city. Litchfield v. Ballou, 114 U. S. 190, 5 Sup. Ct. 820.
In view of the magnitude of the undertaking which we are asked to approve, and the vital interest which the city has in the prompt completion of the contract for the building of the road when entered into, and its effective equipment, maintenance, and operation, we think that we should, before consummating our confirmation of the report of the supreme court commissioners by the entry of an order to that effect,' have some assurance that the powers of the rapid-transit commissioners in respect to security, provided by section 34 of the rapid-transit act for the payment of the rental specified in the contract, and for the faithful performance of all the conditions, covenants, and requirements provided for in the contract, should be exercised so as to protect the interests of the city in a substantial manner; and to that end a stipulation should be filed by the rapid-transit commissioners that the penalty of the bond specified in section 34 of the rapid-transit act will be fixed at not less than $15,000,000. This amount, in view of the large interests of the city involved in its advances of credit for the work as it progresses, is not more than sufficient security to the city in the event of the failure of the contractor to perform his or its contract, and to enable it to carry the road to completion in case the enterprise is thrown on its hands by the default or forfeiture of the contractor.
Upon the filing of the stipulation referred to in the foregoing opinion, an order will be entered upon the usual notice confirming the report of the supreme court commissioners."
RTJMSEY, WILLIAMS, and PATTERSON, JJ., concur.