Case Name: City of New York, Respondent, v. Long Island Airports Limousine Service Corporation et al., Appellants
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1983-08-18
Citations: 96 A.D.2d 998
Docket Number: 
Parties: City of New York, Respondent, v Long Island Airports Limousine Service Corporation et al., Appellants.
Judges: 
Reporter: Appellate Division Reports
Volume: 96
Pages: 998–1001

Head Matter:
City of New York, Respondent, v Long Island Airports Limousine Service Corporation et al., Appellants.

Opinion:
— Reargument of a decision of this court, dated January 27, 1983, which affirmed that part of an order of the Supreme Court at Special Term (Kahn, J.), entered September 21, 1981 in Albany County, which granted plaintiff City of New York's motion for summary judgment on its fifth cause of action seeking recovery of payments allegedly due under a franchise contract with defendant Long Island Airports Limousine Service Corporation. Defendant Long Island Airports Limousine Service Corporation (hereinafter LIALS) is the operator of an omnibus route from points in Nassau and Suffolk Counties to Kennedy and La Guardia Airports in plaintiff City of New York (hereinafter city). In 1977, a dispute developed between LIALS and the city regarding LIALS' continued operation of its omnibus route in the city after its franchise was canceled by the city's board of estimate on May 26, 1977 and its franchise contract expired on December 31,1977. The pertinent underlying facts of the controversy are fully set forth in our earlier decision in this matter (City of New York v Long Is. Airports Limousine Serv. Corp., 91 AD2d 1149). In that decision we held that, pursuant to sections 66 and 67 of the Transportation Corporations Law, as amended in 1972, the city's consent was no longer required for LIALS to operate its omnibus route in the city and, consequently, we reversed Special Term and granted summary judgment to LIALS on the injunction issue presented. As to the city's fifth cause of action for continued compensation under its franchise contract with LIALS, however, we ruled in favor of the city. The pertinent language of the contract, contained in section 4.7 thereof, provides that: "[I]n the event the Company continues the operation of the authorized routes, or any portion of the authorized routes after and in spite of termination, cancellation or expiration of the franchise hereby granted, the Company agrees to pay the City the compensation and charges set forth in this contract which were in effect immediately prior to such termination or expiration and in the manner as set forth herein, together with all taxes it would have been required to pay had its operation been duly authorized. If the Company shall fail to pay such compensation or taxes, the Comptroller of the City may withdraw the amounts thereof from the security fund if such fund shall not have already become the property of the City as in this contract provided." Even though LIALS' franchise term expired on December 31,1977, we earlier found that the city was entitled to continue receiving compensation under this section of the contract. Having now granted LIALS' motion to reargue as to the fifth cause of action, we conclude upon further reflection that it is unwarranted to allow the city to continue receiving the subject compensation. The only possible reason for the franchise contract between LIALS and the city was that the city's consent was required by statute before LIALS was entitled to operate on the city's streets. Consequently, LIALS entered into a contract with the city to secure such consent, and the consideration for LIALS' payments to the city under the contract was the grant by the city to LIALS of a franchise to operate its omnibus route. This court has now held that statutory amendments have stripped the city of its power to deny LIALS a franchise. That being so, the statutory changes have made the contract worthless to LIALS and also made performance of the contract vastly different from what could reasonably have been within the contemplation of the parties when the contract was made. Given these altered circumstances, it is clear that reasonable men would not have made the subject contract (see City of New York v Local 333, Mar. Div. Int. Longshoremen's Assn., 79 AD2d 410, affd 55 NY2d 898), and that the contract has been rendered worthless to LIALS. Therefore, the consideration supporting the contract has failed, and LIALS' performance thereof is excused (see United States v General Douglas MacArthur Senior Vil., 508 F2d 377; Ewing Co. v New York State Teachers' Retirement System, 14 AD2d 113, affd 11 NY2d 749). Accordingly, the entire complaint should now be dismissed. Order reversed, on the law, without costs, plaintiff's motion for summary judgment denied, and summary judgment dismissing the complaint granted to defendants. Mahoney, P. J., Sweeney and Main, JJ., concur.