In re the City of New York

106 N.E.2d 897, 304 N.Y. 215, 1952 N.Y. LEXIS 762

Opinions

Froessel, J.

The City of New York brought this proceeding under title E of chapter 15 of the Administrative Code of that city, entitled “ Street Closing Condemnation Procedure ”, pursuant to resolution of the board of estimate, for ascertainment and payment of compensation to owners of property affected or taken by virtue of the closing and discontinuance of Gillen Place, a street in Brooklyn. Claims were filed by Consolidated Edison Company of New York, Inc., and the Brooklyn Union Gas Company for alleged damages to their franchises and to mains and services located in said street.

After the hearing of objections, a final decree was made awarding damages to said claimants measured solely by the cost of relocating claimants’ facilities. As to Brooklyn Union, an award was therefore made only for its twenty-inch main, the relocation cost of which was stipulated, no award being made for its six-inch main, which was abandoned and regarded by the court as antiquated. As to Consolidated Edison, the cost of relocating its facilities was also stipulated. The Appellate Division unanimously affirmed the final decree. Both the city and Brooklyn Union have appealed by our leave.

The basis for Special Term’s finding that the street closing herein was for a proprietary rather than a governmental purpose appears in the official documents pertaining to the closing of Gillen Place, which make it manifest that it was not a highway purpose which inspired the action taken. Thus, the city planning commission stated that the borough president proposed the closing “ in order that the closed street area may be consolidated with abutting Board of Transportation properties.” The layout plans for a proposed bus garage and shop on said property “ indicate that the proposed structure will occupy the bed of Gillen Place.” The report noted that “ Gillen Place is in use and improved but its closing and discontinuance appear to be unobjectionable ”, and stated that the commission had “ determined that the map is an element in the formal process of closing and discontinuing an unnecessary street in order that the street area and the abutting City-owned property may be consolidated to permit expansion of City transit storage and repair facilities.” The property formerly constituting the bed of the street was eventually assigned to the board of transportation, precisely as proposed.

Street closing statutes have as their primary purpose the securing and preservation of the “ regularity and uniformity of the streets ” (Administrative Code of City of New York, § E15-3.0, and its prototype, L. 1895, ch. 1006, as amd. by L. 1923, ch. 752). Such a purpose is governmental, and the act of closing a street is to that extent a sovereign one (Matter of Mayor of City of N. Y. [Deering], 28 App. Div. 143, affd. 157 N. Y. 409). The city contends that this street closing condemnation proceeding is founded on “ public necessity ”, and that the city, as condemnor, is not required to pay claimants any compensation. It is said that the motive for its action is immaterial, so long as the necessary findings are made to support it, i.e., that the street is no longer necessary. Thus, the city points to the resolution of the board of estimate authorizing the closing, which declared the “ public necessity of discontinuing and closing Gillen Place ”. However, that resolution must be read in the light of the above-quoted section E15-3.0 of the Administrative Code, which does not stop with the quoted words “ public necessity ”, but includes them in this context: ‘ ‘ The city may authorize the closing or discontinuance of such streets therein, in whole or in part, as it may be deemed necessary in order to more effectually secure and preserve the regularity and uniformity of the streets therein, or where other public necessity requires the closing or discontinuance of such streets ” (emphasis supplied).

The ‘1 other public necessity ’ ’ mentioned in the statute may well be applied to necessity arising in connection with the transit system which, though operated in the public interest (see Rapid Transit Law, § 33), is nevertheless proprietary in nature and, as we have noted, involves a city purpose, “ like the building of streets or highways ” (Litchfield Constr. Co. v. City of New York, 244 N. Y. 251, 263). In this proceeding, the city claims that its right to close the street has not been challenged, but this is disputed by respondent Brooklyn Union. In any event, in view of the language of the statute, which permits the words “ public necessity ” as used in the resolution of the board of estimate to be interpreted as meaning other than necessities affecting the street system, the courts below were justified in concluding from this record that the purpose for which the street was closed was a proprietary one. In this connection, it should be noted that the only way in which the board of transportation could ever acquire this land would be through a street closing proceeding, for so long as Gillen Place remained a street it had to be held by the city in trust only for street uses (Administrative Code, § B15-38.0).

It is true, of course, that street closings usually result in the ultimate appropriation of the land to private ownership, but there is a great difference where, as here found, the very purpose of the closing is to accomplish the devotion of the land to a use by the city which, although in the interest of the public, is nevertheless proprietary. The plain facts are that claimants have been forced to abandon their installations in Gillen Place and reconstruct them elsewhere and for a much greater distance in order to make room for the bus garage and shop, and in such circumstances they are entitled to be compensated for their loss (City of New York v. New York Tel. Co., 278 N. Y. 9; Los Angeles v. Los Angeles Gas Corp., 251 U. S. 32; Matter of Board of R. T. R. R. Comrs. of City of N. Y., 197 N. Y. 81, 96-97; Litchfield Constr. Co. v. City of New York, supra; Postal Tel.-Cable Co. v. Depew & Lancaster Light, Power & Conduit Co., 251 N. Y. 562; New York & Queens Elec. Light & Power Co. v. City of New York, 221 App. Div. 544). As we said in Transit Comm. v. Long Island R. R. Co. (253 N. Y. 345, 352) “ when the change is required in behalf of other public service corporations or in behalf of municipalities exercising a proprietary instead of a governmental function ”, the common-law rule that utilities maintain their installations in public streets subject to the risk of relocating them at their own expense when public necessity so requires, does not apply.

Assuming, however, that the street closing proceeding was instituted to secure uniformity of the city street system, in the exercise of governmental power, still by reason of the statute claimants are not bound by the common-law rule as reasserted in such cases as Consolidated Edison Co. v. State of New York (302 N. Y. 711); New York City Tunnel Authority v. Consolidated Edison Co. (295 N. Y. 467); Matter of Town of Cheektowaga Grade Crossings (283 N. Y. 687); Transit Comm. v. Long Island R. R. Co. (253 N. Y. 345, supra); Matter of Deering (93 N. Y. 361). In the first place, it should be noted that the applicable statute designates this as a condemnation proceeding. This is quite different from mere regulation. Moreover, the city’s street closing statute expressly provides for “ Compensation and recompense * * * to the respective owners of the real property affected or damaged by reason of any such closing ” (Administrative Code, § E15-3.0); it then defines real property as including: “ all surface and subsurface structures within closed streets and all easements and hereditaments, corporeal or incorporeal, and every estate, interest and right, legal and equitable, in lands, and every right, interest, privilege, easement and franchise relating to the same, including terms for years and liens by way of judgment, mortgage or otherwise ” (Administrative Code, § E15-1.0, subd. 5; emphasis supplied). It is obvious that this definition embraces the situation before us. Not only does it include incorporeal hereditaments, privileges, easements and franchises, but it also expressly refers to subsurface structures. It may be noted that by chapter 752 of the Laws of 1923, the 1895 street closing statute (L. 1895, ch. 1006) was amended, among other respects, to include specifically surface and subsurface structures and franchises. The predominant subsurface structures in the streets of New York City are of course these very utility installations, which increased in large measure in importance and value in the years before the present definition was added (see Ghee v. Northern Union Gas Co., 158 N. Y. 510, 514 [1899]). The word “ structure ” is a general word depending upon context for its meaning (Caddy v. Interborough R. T. Co., 195 N. Y. 415, 420) and aptly describes these installations. Moreover, it is interesting to note that when used in relation to the city of New York in subdivision 23 of section 2 of the Rapid Transit Law, the Legislature defined “ Sub-surface structures ” in such a way as to limit its meaning almost exclusively to pipes, mains and conduits.

In thus defining claimants’ subsurface structures, consisting of mains and conduits, and the franchises under which they were laid, as real property, for which compensation must be made if affected or damaged by the street closing, the statute merely follows the common law. In this State, it is settled that both the tangible property and the intangible right together constitute the estate created by special franchise (New York, Tel. Co. v. State of New York, 169 App. Div. 310, 318, 321, affd. 218 N. Y. 738; People ex rel. Barron v. Knapp, 208 App. Div. 127, 130, affd. 239 N. Y. 581; People ex rel. Metropolitan St. Ry. Co. v. State Bd. of Tax Comrs., 174 N. Y. 417, 441; Syracuse Water Co. v. City of Syracuse, 116 N. Y. 167). Such estate is an incorporeal hereditament, in the nature of an easement in the street wherein the installation is made (Levy v. McClellan, 196 N. Y. 178, 193-194; Ghee v. Northern Union Gas Co., supra; United States v. 25.4 Acres of Land, 65 F. Supp. 333, 71 F. Supp. 248, revd. on other grounds sub nom. United States v. Brooklyn Union Gas Co., 168 F. 2d 391). This incorporeal hereditament is of course an interest in land constituting real property (Real Property Law, § 2; General Construction Law, § 40). We recognized these principles in Ghee v. Northern Union Gas Co. (supra) where we pointed out (p. 513) that the special franchise granted by the municipality vests in the recipient u a perpetual and indefeasible interest in the land constituting the streets ”, and in Levy v. McClellan (supra) where we said (pp. 193-194):

“ In. the nature of incorporeal hereditaments, at common law, franchises partook of the nature of realty and these special franchises are inseparable from real property in their enjoyment. They fall, necessarily, into that one of the two general divisions of property made by the statute, which is described as real estate [referring to what is now Real Property Law, § 2] * * *

“ These franchises could never be classified as personal property ”.

It should also be noted that the statutes provide that, upon the opening of a street, land taken which is subject to an easement of this nature in favor of a utility company, such as are claimants here, must be taken subject to such easement (Administrative Code, § B15-39. 0). In this we find clear legislative recognition that the property in suit is an easement burdening the bed of the street, for how can the right be different in nature merely because it arose by contract with the city, rather than with the city’s predecessor in title?

While there are cases which seem to hold that this class of property should not be treated as real property, they dealt with special situations under the tax law, where the statute has always been regarded as special and specific in its definitions. Thus, in People ex rel. Citizens’ Gas-Light Co. of Brooklyn v. Board of Assessors of City of Brooklyn (39 N. Y. 81, 87) we emphasized that “We must look to the statute instead of the common law, in determining whether these iron mains which run under the streets of the city are to be regarded for the purposes of taxation as real estate or not, as it is a matter of statute regulation entirely.” It was then noted that the definition of real property contained in the statute was very limited, and did not (as here) include incorporeal hereditaments, or structures such as the main (cf. present Tax Law, § 2, subd. 6.)

From the foregoing, it follows that the formal closing of a street extinguishes the interest therein which inheres in the special franchise. That this is so appears from the fact that since 1895 such proceedings have been intended to extinguish all easements, both public and private (Stirnweis v. Cacioppo, 258 N. Y. 68; Matter of City of New York [Newton Ave.], 219 N. Y. 399, 406; Barber v. Woolf, 216 N. Y. 7; Matter of City of New York [Grand Blvd.], 212 N. Y. 538).

Even at common law, then, it would seem that the closing of a street would work a pro tanto destruction of claimants’ easements and franchise rights for which compensation should be made (New York Tel. Co. v. State of New York, supra; Rochester & Lake Ontario Water Co. v. City of Richester, 176 N. Y. 36, 50; Eighth Ave. Coach Corp. v. City of New York, 286 N. Y. 84; Matter of City of New York [E. 42nd St. Elev. R. R.], 265 N. Y. 170; see, also, New York City Charter, § 363).

The rule as to relocation, referred to in such cases as New York City Tunnel Authority v. Consolidated Edison Co. (supra), has been applied in the past only to situations where there was truly regulation, rather than a taking by condemnation. In each such case the utility was required to relocate, but its rights in the particular street remained in being, the relocation therein being merely to accommodate some street improvement. When a street is closed, however, all rights therein are extinguished; “ When regulation becomes destruction, it ceases to be regulation ” (Eighth Ave. Coach Corp. v. City of New York, supra, p. 94).

In any event, under the controlling statute, claimants are entitled to be compensated for their loss, and cases cited from other jurisdictions are not helpful here. Such loss has been properly measured not merely by the intrinsic value of the pipes and conduits in the soil, but by the actual loss to claimants of the right to unobstructed passage through the street in question. As we said in People ex rel. Metropolitan St. Ry. Co. v. State Bd. of Tax Comrs. (174 N. Y. 417, 441, supra), “ Separate [the items of tangible property] from the franchise by taking away the street privilege, and they are destroyed.”

For the foregoing reasons, we conclude that compensation has been properly granted to claimants (City of Little Falls v. State of New York, 198 App. Div. 488; City of New York v. New York Tel. Co., 278 N. Y. 9, supra; United States v. 25.4 Acres of Land, 71 F. Supp. 255, 258, affd. sub nom. United States v. City of New York, 168 F. 2d 387), and upon this record no serious question is presented as to the amount.

As to Brooklyn Union’s appeal from the order of the Appellate Division insofar as it affirms that part of the final decree which failed to make an award for the six-inch main and its appurtenances not relocated, we are also of the opinion that upon this record the courts below must be affirmed. Brooklyn Union did not ask for any compensation for' the twenty-inch main that was left in the street, but only for reconstruction costs, which were allowed. This reconstruction, it would appear, fulfilled all the requirements by way of replacement of its installations in Grillen Place. The trial court had the right to deem the six-inch main “ antiquated ” and abandoned and of no value, and, since it was not relocated, its failure to make an award cannot be said to have been unjustified.

The order should be affirmed, with costs to respondent Consolidated Edison Company of New York, Inc., against the City of New York.