Case Name: In the Matter of the Application of The Board of Rapid Transit Railroad Commissioners for the City of New York for the Confirmation of the Report of the Commissioners upon the Proposed Third Avenue Route and Eighteen Other Routes
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1906-07-12
Citations: 114 A.D. 379
Docket Number: 
Parties: In the Matter of the Application of The Board of Rapid Transit Railroad Commissioners for the City of New York for the Confirmation of the Report of the Commissioners upon the Proposed Third Avenue Route and Eighteen Other Routes.
Judges: 
Reporter: Appellate Division Reports
Volume: 114
Pages: 379–387

Head Matter:
In the Matter of the Application of The Board of Rapid Transit Railroad Commissioners for the City of New York for the Confirmation of the Report of the Commissioners upon the Proposed Third Avenue Route and Eighteen Other Routes.
First Department,
July 12, 1906.
Municipal corporation — motion for approval of plans for subways in city of New York-—public welfare considered by.the court—plans which shall be contracted for within two years approved.
The Appellate Division, on a motion to confirm the reports of the rapid transit commissioners of the city of New York as to whether the plans of subway routes should he approved against the consent of property owners, will take into consideration the financial ability of the city to carry out the proposed plans in the near future, the financial needs of other municipal works, the probability of better methods of rapid transit developing in the future, and the fact that the approval of plans which may not be carried out for years to come may impede the development of private property along the proposed routes.
When the plans submitted for approval include nineteen lines of subway at a total cost of 8450,000,000, while the total present yearly borrowing margin of the city under the Constitution is at most 8110,000,000, and there is no probability that all the lines can he built in the near future, and the effect of an unconditional approval of the plans will be to estop the court for all time from exercising its duty to protect the complex and changing interests of the city, the court will refuse an unconditional approval.
On the foregoing considerations the court approves all the plans upon the condition that the rapid transit commissioners decide within two years which of the lines they will construct, the approval to be null and void as to all lines not selected and contracted for within two years, with the right in the commissioners at a future time to renew the application for approval of other lines if able to construct them.
The court will not annex as a condition to such approval that the commissioners file a stipulation to incorporate into the contract for construction a clause making the contractor and his sureties liable for damages to foundations, etc., as the statute provides for a public hearing as to the terms and conditions of the contract, and for the consent of the board of estimate and apportionment thereto.
Motions to confirm reports of commissioners under the Rapid Transit Act (Laws of 1891, chap. 4, as amd.).
George L. Rives and Albert B. Boardman, for the motion.
Martin W. Littleton and William Byrd, for certain property owners, opposed.

Opinion:
O'Brien, P. J.:
The rapid transit commission, under the law, has laid out the general plan of subway routes which have received.the approval of the board of estimate and apportionment, but for which the consent of the property owners along the proposed routes could not be obtained.
It is provided by law that upon the refusal by property owners to consent, application may be made to this court for the appointment of commissioners whose duty it shall be to pass upon and determine1 whether or not such consent should be given, and their report when favorable, if confirmed by this court, is equivalent to the consent of those owning property along the lines of the proposed route.
In;all, nineteen applications relating to nineteen different routes were made, and commissioners were appointed, and we have now before us some eleven routes in which the commissioners have made favorable reports, and we are asked to confirm them. The function, duty and powers of the court in these proceedings have been the subject of judicial construction, and we deem it unnecessary to add to the views expressed by this court in Matter of Rapid Transit R. R. Comrs. (5 App. Div. 290); Matter of Rapid Transit Comrs. (23 id. 472) and Sun Publishing Assn. v. Mayor (8 id. 230). These sufficiently indicate that our function is not merely perfunc tory or formal, but that a grave responsibility rests upon the court in passing its judgment upon what is the most stupendous scheme of municipal improvement and expenditure ever undertaken, and without a parallel in its ultimate bearing upon the destiny of the people of what we have reason for thinking will be the greatest city of the world.
It is agreed on all hands that transit facilities should be furnished as speedily as possible, and that the extent of the facilities to be furnished should in some degree be proportionate to the rapid growth of our population throughout the greater city. Upon the question of the present necessity for all of the routes proposed, we find no grounds for differing from the conclusions reached by the rapid transit commissioners; and were there no other questions involved our duty would be simple and plain.
There is, however, involvetl another and very'serious feature, and it relates to the financial ability of the city to undertake the proposed construction. It is shown by the record before us in the Third avenue case that the nineteen routes of subway will cost §300,000,000 for construction, and §150,000,000 for equipment, or a total of §450,000,000. Under the restriction imposed by section 10 of article 8 of the Constitution, as amended (Laws of 1903, vol. 2, p. 1456 ; Leg. Manual, 1906, p. 197), the total borrowing margin of the city, most favorably viewed, did not exceed on January 1, 1906, §61,000,000. If we can look at the future, there is a likelihood, in view of the increased values of property, that the city will have a debt-incurring capacity between the 1st of July, 1906, and the 1st of January, 1907, of something like §410,000,000. And if all of it were appropriated for rapid transit construction, there would be nothing left for the other departments of the city government, which in expense and importance are increasing and expanding from year to year.
Xo doubt, in the future, with the growth of values, the assessments on property can he considerably increased, and thus the borrowing capacity of the city can be enlarged; but a policy which would seek to unduly add to the burdens of the taxpayer, or which would seek artificially to create values, would be more fatal, in our judgment, to the true and right development of our city than the failure to provide transit facilities.
The vote of the People in 1894 that subways should be constructed with public funds, and the recent legislation limiting the terms of the lease which it is in the power of the commissioners to make, render it problematical as to what extent private capital will be attracted to undertake the construction of future subways, if permissible by law, upon which cpiestion, because not before us, we express no opinion.
In the subway built, the city advanced for construction more, as the event proved, than was absolutely necessary for construction proper, and this excess was available to the contractors, who were bound and from their own funds agreed to advance the moneys needed for the equipment and operation of the road. The feature, however, that was undoubtedly most attractive to bidders, was the lease obtained for a period of fifty years. Under the Elsberg hill, the lease of subways is limited to twenty years; and although there is a provision that the city can lease it for a further term of twenty years, it is upon condition that the city can agree upon the terms of the second lease, which leaves it practically optional with the city and gives the first lessee no assurance of more than a single term of twenty years. IIow far this may affect the intervention of private parties in the enterprise, we need not at present inquire, because as the law now stands the commissioners must look to the city for the funds needed to undertake the construction of these subways.
We are thus brought back to a consideration of the most serious question as to the financial ability of the city and its bearing upon the approval which is sought from the court. Upon the record before us, it appears beyond the possibility of doubt that the city has not the financial ability at the present time "to undertake the building of all of the routes proposed, and the only effect of our approval will be practically to completely appropriate and tie up every thoroughfare leading into and through Manhattan borough.
There is force, therefore, in the contention made by the counsel for the taxpayer who opposes the confirmation, that " if the Court at this time appro ve's and confirms the proposed rqutes, it concludes and estops for all time to come its opportunity, nay, its duty, to protect, oversee and supervise the complex interests of the people inhabiting this greater city7, as well as posterity. That the court should weigh the ultimate effect of the action prayed for can well be appreciated when we realize the powerful and unlimited opportunities the rapid transit commission have for foreclosing the rights, privileges, needs, demands and necessities, co-ordinate, to say the least, in every phase and from every7 standpoint, of all the various governmental agencies and requirements of this municipality7. It is well known that at this time a percentage of the children of this city are denied proper schooling by reason of the limited facilities. What may be said of the limitations that may be entailed upon future generations if by the supposed necessities of rapid transit the credit of the city should be so impaired as to make it impossible for proper provision 'to be made for .schools, and the other varied municipal needs, such as proper policing, fire service, paving, etc. ? Again, by the adoption of the proposed plan, and the practical monopolizing of all the city's streets, wedded to a single scheme or idea of transit construction or management, the people are practically forever concluded from asserting and exercising a right which has much of reason and argument in its support, to wit, to own and operate their own municipal subway's. It may be that in a year or a few years the vast majority of the people of this greater city7, in their enlightened judgment, will demand the construction and operation of their own transportation facilities."
" If the Court approves the applications now pending, the territory may be so despoiled as to absolutely destroy all possibility for future construction that would in any way7 become approximately competitive to the interests now in command of the city's transit facilities. The present plans distinctly disclaim any purpose or desire to definitely fix any one of the proposed routes as final, but seek to commit this Court and to estop it for all time from interference, no matter what the intervening interests may be, So that there may be no opportunity for this Court to protect the people in the evolution of their municipal development." " If it be argued that the Bapid Transit Commission will not undertake to construct all of the proposed routes simultaneously, then it may safely be said that this Court -should not release its power to guide and direct the' subway construction so that the City may have the benefit of competitive lines."
To these might be added another suggestion which is important to property owners, who, if any of the routes were to be immediately built, would, as an offset against the consequential damages that would result during the period of construction, finally have the benefit of the road when constructed. But to have their property affected by the approval of a route which might never be built, .acting as it would as a notice to all that the street was appropriated for railroad purposes, would impede the development and improvement of property along its line, which would be an in jury with no resulting good. It is frankly conceded by counsel for the rapid transit commissioners that there is no purpose immediately to build all the proposed routes, but that it is necessary that they should all be approved, to the end that the city may be enabled to undertake such as it can find the means to build. This necessarily involves the further concession that the rapid-transit commissioners have not finally determined upon the routes to be selected, but they wish the whole subject to be in such shape that as the opportunity presents itself they may take advantage of it. This would appropriate all the streets involved in the proposed routes for an indefinite period, and in view of the ever-changing conditions in transit facilities and the probable further progress and development of engineering skill and ingenuity, it is not an improbability to assume the likelihood that a city, which has seen in a few years a change from horse cars to cable and then to electric motive power, and to which has been added elevated railroads and, lastly, subway transportation, may have in store a system of transit which may be as great an advance as elevated roads and subways are over surface horse railways. This is 'but expressing the view that if we are now to appropriate all our streets irrevocably under the present plans, it is possible that when the city has "the financial ability to construct in accordance with those plans, they may then be antiquated and no longer desirable. While the chance or even the prospect of future improved methods would not, standing alone, be a reason for withholding approval of routes actually determined to be constructed immediately, it is entitled to consideration before approving of plans irrevocably to be adhered to for routes which, owing to the financial resources of the city, cannot all be initiated or carried out for many years to come.
We have not overlooked the fact that the city's limit of debt- incurring capacity is constantly changing. Bor are we unmindful that, unless the growth of the city is to be seriously retarded, new rapid transit facilities must be furnished in the near future. But while it is evident that these facilities must be furnished by the construction of subways and tunnels, the city has other demands upon its treasury of a very pressing nature, including the construction of new sehoolhouses and docks, and the opening of new parks, bridges, etc., which will necessarily prevent the exhaustion of its entire borrowing capacity in rapid transit construction. Probably no prudent city administration would deem it wise, in the present condition of its financial affairs, to commit it in the near future to an expenditure for rapid transit exceeding $50,000,000. It, therefore, follows that if construction is to be begun upon all of the romes which have been approved by the local authorities, about eight-ninths of the cost must be provided by private capital.
Much difference of opinion exists about the effect of the recent amendment to the Rapid Transit Act upon the probability of enlisting private capital in new rapid transit construction, but it is plain that the rapid transit commission cannot offer as attractive terms to bidders under the new law as it was able to offer under the old law. A lease for twenty years, with a possible renewal for twenty more upon terms to be fixed at the expiration of the first period, must be far less attractive to bidders than a lease for fifty years, with a renewal of twenty-five years upon terms made in advance, making the term offered to bidders practically a seventy-five-year term. Whether private capital can be obtained to any considerable extent under the present law is a question which time only can solve. But it is plainly the duty of the court, under the circumstances, to consider the possibility that an attempt to do so will result in failure. -Therefore, it becomes the duty of the court to consider, in the interest of the abutting property ownei-s who are represented in this proceeding, as well as in the general interest of the city, whether all the routes presented to the court for approval should be approved, irrespective of the possibility of commencing construction thereon in the near future. If it were possible for the court to determine in advance which routes have the right of way, or, in 'other words, which routes are the most urgently needed and are most likely to attract private capital, the court might approve of these routes and reject the rest, without prejudice to another application under changed conditions. The difficulty is that there is nothing before us to show a greater need for one route than another, or a greater probability of construction on one route than on another. During recent years the usefulness and value of vaults and other sub-surface structures in streets have greatly increased. In most cases, these privileges are held at the pleasure of the city authorities, and the abutting owners must be content to vacate where the city needs the space occupied by them for other and more important uses. But it is one thing to ask them to vacate to make way for a road which is building, and it is another thing to permit an important street to be preempted for a road which may not be built during the life of the present generation.
Regard being had, therefore, to these different and conflicting interests, we think the right solution, so far as it rests with this court, will be to approve all of the routes conditionally, upon the rapid transit commissioners deciding within two years which of them they have finally concluded to construct. This will enable them, within the period named, in view of the then exisisting condition of the city's finances, to determine just what routes should be built; and after that time they should be required, if able to construct other routes, to renew their application to this court. This will render null and void our approval of all routes not selected and contracted for within said two years.
The suggestion made by a taxpayer in the Third avenue proceeding, that the court should not confirm the report of the commissioners unless the board of rapid transit commissioners file a stipulation to incorporate in the contract for the construction of the proposed subway a clause making the contractor and his sureties liable for all damages to the walls, foundations or other parts of adjacent buildings or structures, is answered by the fact that the insertion of such a condition at the present time would be premature and is unnecessary for the protection of property owners. It will be noticed by reference to chapter 607 of the Laws of 3906, that section 37 of the Rapid Transit Act (Laws of 1893, chap. 4, added by Laws of 1894, chap. 782, and amd. by Laws of 1895, chap. 519, and Laws of 1904, chap. 562) is amended so that a public hear ing is to be had as to the terms and conditions of the contract, at which citizens shall be entitled to appear and be heard, and by other provisions in that section no contract can be made until the board of estimate and apportionment shall have consented thereto. So that, even if the rapid transit board should insert provisions for the protection of property owners which they may deem unsatisfactory, they will have a further opportunity to be heard before the board of estimate and apportionment. As the act, therefore, seemingly leaves this question as to the terms and conditions of the contract with the proper city authorities, the court should not undertake, in advance of the time when it becomes necessary to make the contract, to impose conditions which might or might not be embarrassing.
There are other objections that have been presented and arguments urged against our approval of the reports; but for the reasons stated, we think that the reports should be confirmed, subject to the condition and limitation suggested.
McLaughlin, Laughlin, Clabice and Houghton, JJ., concurred.
Reports of commissioners confirmed, subject to the conditions and limitations indicated in opinion. Settle orders on notice.
See Laws of 1891, chap. 4, § 84a, added by Laws of 1906, chap. 473.— [Rep.