Court Opinion

ID: 5795885
Source: CourtListenerOpinion
Date Created: 2022-01-12 18:18:17.847643+00
Date Added: 2024-06-11T08:42:25.156023
License: Public Domain

Herlihy, P. J.
(concurring in part and dissenting in part). The record clearly establishes that the grant of a discount to cities and villages not having acquired any pre-1910 contractual rights to such discounts while refusing to grant the same consideration to other governmental subdivisions falling within the classification of municipalities constitutes discrimination. The conclusion of the Public iService Commission (hereinafter PSC) that such discrimination was prohibited by the provisions of subdivision 3 of section 91 of the Public Service Law appears to be a reasonable construction of the said statute and, accordingly, the PSC correctly held that such discrimination must be terminated.
In its wisdom and apparently because of the rising burden upon consumers generally in regard to increased rates which would be required to finance the grant of discounted rates to towns, the PSC determined that appropriate relief would be the denial of further discounts except for an interim period of adjustment to all cities and villages which had not acquired pre-1910 contractual rights to the discounts. While the method of equalization chosen by the PSC seems somewhat contrary to the public policy of this State in regard to a preference for reduced rates to municipalities as set forth in subdivision 3 of section 92 of the Public Service Law, the requirement of equality amongst the class can reasonably be construed as granting the PSC power to overcome the otherwise specific provisions of said subdivision 3 of section 92. Accordingly, we concur in the majority’s determination insofar as relief is being denied to the Town of Oyster Bay and implicitly as to all municipalities not parties hereto and not having any pre-1910 contractual basis for discounted or reduced rates.
The City of New York has approached the proceedings herein in somewhat of a simplistic manner by insisting that the PSC did not have jurisdiction to determine whether or not the city had received its discounted or reduced rate pursuant to a contractual relationship entered into prior to 1910. In this regard, the position of the city is without any merit as is demonstrated in the majority opinion. Upon this proceeding the city appears to contend that it was denied a fair hearing because the PSC did not require a further and more extensive search of the records of the New York Telephone Company to determine whether or not there was a contractual relationship. In support of its desire for a remittal for the purpose of such a further search, the city concedes that the present record does not contain proof of a contractual right to the reduced rate. The limitation imposed *99by the context in which the concession is made is apparently recognized by the majority opinion since it is found therein that the record does not contain proof of a pre-1910 contractual right to the reduced rate.
The substantial public interest involved in the city’s right to a continuance of its reduced rate requires that the court disregard the seeming concession by the city and, in any event, the requirement that the PSC act in the public interest would require a review of the city’s position upon the merits in regard to the existence of a pre-1910 contract.
It is academic that contracts may either be written or oral and may be expressed or implied in fact.
The present record does not establish any expression in words of agreement or promises by the city and the New York Telephone Company (hereinafter referred to as the Utility) in regard to a reduced rate for services, and thus we have no express agreement or contract either written or oral. However, the record establishes a contractual relationship between the city and the Utility. A contract is generally understood to be made up of an offer by one person to do something for either money or some other performance by another person and which is accepted by ¡such other person. The record also establishes that prior to 1910 the city had telephone service provided by the Utility at a reduced rate of 25% and that such service has continued with the same reduction in general rate for nearly 50 years. Such facts establish a contract by implication arising from the conduct of the parties. (See, generally, Allegheny Coll. v. National Chautauqua County Bank, 246 N. Y. 369.) The evidence in this record tends to indicate that from the inception of the service provided by the Utility, it was the Utility that offered to provide the service at the reduced rate and the city accepted the service upon such terms. It is established that there was an offer by the Utility to provide services for a good and valid consideration which was accepted and thus the sole interpretation of the relationship is one of contract. The record establishes that the parties to this proceeding, including the PSC, have proceeded from the narrow point of view that unless it could be established that the city gave a franchise expressly upon the consideration of a reduced rate, there was no contract.
The Public Service Law does not in any way so restrict the search for a pre-1910 contract. Assuming, however, that it is important to find that the reduced rate was actually given in consideration of a franchise or governmental action on the part of the City of New York, the opinion of the Court of Appeals in *100the case of New York Tel. Co. v. Siegel-Cooper Co. (202 N. Y. 502, 510) notes that the Utility in that case had stipulated “that the discount to the city of New York was allowed on account of its intimate relation to the plaintiff [Utility] through its control of streets and its power of regulation, ‘ as a contribution to the expense and cost to the government of the city of New York. ’ ” In the Siegel-Gooper case the court went on to note that the Utility had received a franchise of immense value from the city for a small consideration. In the Siegel-Gooper case the court was not concerned with whether or not a contract actually existed between the Utility and the city for the reduced rate; however, the elements described therein clearly give rise to an implied contract arising from their conduct and which has now continued nearly 50 years. The present record tends to establish that the Utility was never under a legal obligation to either accept governmental services and a franchise or to grant a reduced rate. Obviously, it could have refused a franchise and, further, it could have refused to grant a reduced rate. However, the Utility did not choose to exercise the options of refusal, assuming such a demand had been made, but instead freely granted a reduced rate. Of necessity, it would appear that the Utility having appliances embedded in city streets and/or in city property which require services in the nature of traffic control while opening city streets or areas would be as much a burden upon the city today as it was in 1905 or at any time prior to 1910. The considerations then which essentially prompted the offer of a reduced rate are still being given by the city and the reduced rate was still being given by the Utility. While it can be argued that the city was duty bound to provide the services regardless of any reduced rate, it must be assumed that the reduced rate does provide an incentive to the city to promptly assist the Utility. Inasmuch as reduced rates for cities or municipalities were favored by the common law (see New York Tel. Co. v. Siegel-Cooper Co., supra, pp. 511-514) and are expressly permitted in subdivision 3 of section 92 of the Public Service Law, the currying of favor by grant of a reduced rate was not illegal or contrary to public policy.
For the foregoing reasons we conclude that the record establishes a contract between the city and the Utility consisting of an offer and acceptance based upon valid considerations on the part of both parties and which consideration was still being furnished by the city as of the time of the hearings in this proceeding. Additionally, the record establishes a pre-1910 contract by custom and usage. Accordingly, so much of the decision of *101the PSC as finds that there was not a pre-1910 contractual relationship between the city and the Utility which could exempt the city’s rate from the jurisdiction of the PSC is erroneous as a matter of law and fact.
The determination of the Public Service Commission should be annulled insofar as it found that the City of New York did not have a pre-1910 contract with the New York Telephone Company for a reduced rate.
Kane and Main, JJ., concur with Sweeney, J.; Heblihy, P. J., and Labkin, J., concur in part and dissent in part in an opinion by Heblihy, P. J.
Determination confirmed, and petitions dismissed, without costs.