Court Opinion

ID: 5483563
Source: CourtListenerOpinion
Date Created: 2022-01-10 02:02:53.28298+00
Date Added: 2024-06-11T08:33:39.307862
License: Public Domain

Fuld, J.
(dissenting). Section 1493 of the Public Authorities Law in the most unequivocal of language provides that bonds issued by a parking authority shall not be payable out of city funds:
“ The bonds and other obligations of the authority shall not be a debt of the state of New York or of the city, and neither the state nor the city shall be liable thereon, nor shall they be payable out of any funds other than those of the authority.”
In the face of that explicit prohibition, I find it impossible to uphold as permissible the city’s contract with the Elmira Parking Authority that it will make good any deficit, up to $25,000 a year — if the Authority is unable in any year to meet payments due on its bonds — by paying the amount of said deficit *256out of the net revenue realized from the city’s own parking-meters. I see no escape from the conclusion that such an agreement plainly contravenes the statutory provision that the bonds of the Authority shall not be a debt of the city or be payable out of any funds other than those of the Authority.
Whatever force the local law — to which Judge Desmond refers (opinion, pp. 251-252) —may otherwise have, it certainly cannot override or affect the express prohibition of section 1493: section 1501, in so many words, provides that, “In so far as the provisions of this title are inconsistent with the provisions * * * of any local law of the city, the provisions of this title shall be controlling. ’ ’
To suggest that the contract is valid, because section 1487 “ empowers the city to convey to the authority for the latter’s purposes any real or personal property owned by the city ” (opinion, p. 252), leaves out of account the statute’s limiting provisions that the city may make such a conveyance only of property owned by it and only ‘‘ for use by the authority as a project or projects or a part thereof ” (Public Authorities Law, § 1487, subd. 1), the term “ project ” being defined as “ any area or place operated or to be operated by the authority for the parking or storing of motor and other vehicles ” (§ 1483, subd. 6). The meaning of the statute is clear. It authorizes a present conveyance of property owned by the city to the authority, but it is essential that such property be used in the operation of a parking lot. The agreement before us makes no present conveyance of anything now owned by the city, and, beyond that, the moneys to be turned over to the Authority by the city are manifestly not designed for use in the operation, or in the construction or maintenance, of any parking lot.1 The sole purpose underlying the contract provision in question is to bind the city for the *257future so as to assure payment, out of city funds, to holders of the Authority’s bonds after a deficit has occurred in the latter’s own funds. This is made abundantly clear by section 8 of the agreement which provides that it shall be construed to be not only for the benefit of the parties, “ but also for the benefit of the holders of any of the aforesaid bonds of the Authority.” Quite obviously, the bonds of the Authority are, contrary to the proscription contained in section 1493, made payable, at least to the extent of $25,000 a year, out of funds other than those of the Authority.
Although I could, therefore, rest my dissent solely on the ground that the agreement is not authorized by the statute, I would go further and add that, in my view, the agreement also offends against section 1 of article "VTII of this state’s Constitution.
That constitutional provision, this court was careful to point out in Union Free School Dist. v. Town of Rye (280 N. Y. 469) draws “ a clear distinction ” between “ a gift or loan of the money or property ” of a unit of local government “ and a gift or loan of its credit ” (p. 474; see, also, Western N. Y. Water Co. v. Erie Co. Water Auth., 279 App. Div. 1132, affd. 305 N. Y. 758). In this case, as already appears, Elmira agreed to guarantee the payment of the Authority’s bonds, up to $25,000 a year, out of revenues to be realized by the city from its own parking meters. It is quite evident that the contract provided, not for any gift or loan of money or property on hand, but rather for a gift or loan of the city’s credit, for an obligation and purpose not its own. The city’s promise is, in essence, to make good, for an unspecified and indeterminate period and out of funds not in existence, an indebtedness incurred by the Authority. The circumstance that that promise is conditional in nature does not alter the fact that the contract calls upon the city to answer for the default of another. The vice of the arrangement is that it mortgages, for the use of others, future general funds of the city which it would otherwise have available for its own purposes, and opens the door to wholesale evasions of the applicable constitutional debt and taxing limitations. It was just this sort of situation at which the constitutional provision was directed. “ The entire machinery of local government may break down,” the court wrote in the *258Union Free School Dist. case (supra, 280 N. Y. 469, 474), “ if the credit of the units of local government required to carry out their governmental functions is impaired, and there may be danger of such impairment if a local unit is permitted to give or loan its credit or to borrow money in aid of undertakings outside of its own field. To safeguard that credit the Constitution permits the use of its credit by a local unit only for the purposes of that unit, and prohibits it from giving or loaning its credit to or in aid of any ‘ public or private corporation. ’ ” And, added the court (p. 480), “ Within its defined limits the constitutional restriction must be rigidly enforced according to its letter and its spirit. Every obligation of a governmental unit must rest upon its own credit and no governmental unit may give or loan its credit except for the purpose of meeting its own obligations incurred in the performance of a governmental function or duty which the State may entrust to it.”
Nor is there any basis for the fear that “ the problems of a modern city can never be solved ” unless we uphold “ arrangements like these ” (opinion, p. 254). Section 72-j of the General Municipal Law provides explicit warrant for a city itself to construct and operate a parking project without the intervention of a parking authority. However, when an authority is set up, any contract entered into between the authority and the city, any arrangements made between them, must comply with the operative provisions of constitution and statute — and that is so no matter how desirable the end in view may appear to be.
The complaint states a cause of action; the Appellate Division’s order of dismissal should be reversed.

. Nor does subdivision 12 of section 1485 — mentioned by Judge Fkoessel (concurring opinion, p. 255) —furnish support for respondents’ position. That provision does no more than empower the authority to " accept grants, loans or contributions from the United States, the state of New York * * * or the city, or an individual, by bequest or otherwise, and to expend the proceeds for any purposes of the authority.” This specification of ordinary powers accorded the authority cannot possibly be read or regarded as an implied grant of a power to the city (to pay bonds of the authority out of its own funds), in the face of section 1493’s express prohibition to the contrary.