Courtesy Sandwich Shop, Inc. v. Port of New York Authority

Breitel, J. (dissenting).

The States of New York and New Jersey, by concurrent legislation, have granted to the Port of New York Authority extraordinary powers to assist in an extraordinary task—nothing less than maintenance of the hegemony of the Port of New York in the western hemisphere. The vastness of the concept for such maintenance and the unusualness of the proposed implementation do not suggest constitutional invalidity, although one may require acclimatization.

The so-called “ world trade center ” concept is simply the development under government aegis of a physical centraliza*601tion of government and private enterprises serving and regulating foreign commerce at a port of entry. To do this, there is required the assembly of land and erection of structures to house and service the many enterprises and their personnel, as well as those who will come to the center to engage in foreign commerce. This, indeed, is nothing more than a great public market or zone, but instead of serving merely a provincial or even urban region, it must serve the needs of traders on the seven seas at the greatest port in this part of the world. As in a public market, it is private enterprisers who will buy and sell wares and services, but the land and the stalls will be provided by a public corporation on a rental basis. Also, as in a public market, there will have to be auxiliary services available to those who work in, use, and trade in the center—from restaurants to automobile parking areas. These should pay their way and provide revenue to the government designated and created sponsor of the center.

Such a center is not a private purpose, but a public purpose, so long as it is reasonably considered essential to the life of the port. It is no more a “ real estate project ”, as appellants would characterize it, than is a State fair or a municipal public market. Each involves the use of land, structures, the leasing to private enterprisers, and the expectation of revenue from public uses, leasing, and auxiliary services. (See, e.g., Matter of Cooper, 28 Hun 515, appeal dismissed 93 N. Y. 507, for authorities cited, involving public markets; Matter of Mayor, 135 N. Y. 253, 263, involving piers.)

Thus far, the entire court is in agreement. It is feared, however, that the statutory provisions conferring powers on the Port Authority do not confine it to public purposes.

The answer must be found in one paragraph of the statute in which the definitions are found (L. 1962, ch. 209, § 2; McKinney’s Unconsol. Laws, § 6602). This is because all the implementing sections of the statute, including that which provides for eminent domain, are related only to the general purposes of the project (ibid., § 14; § 6614).

The key definitional paragraph reads: “1 World trade center ’ shall mean that portion of the port development project constituting a facility of commerce consisting of one or more buildings, structures, improvements and areas necessary, convenient or desirable in the opinion of the port authority for the centralized accommodation of functions, activities and services for or incidental to the transportation of persons, the exchange, buying, selling and transportation of commodities and other property in world trade and commerce, the promotion and protection of such trade and commerce, governmental services *602related to the foregoing and other governmental services, including but not limited to custom houses, customs stores, inspection and appraisal facilities, foreign trade zones, terminal and transportation facilities, parking areas, commodity and security exchanges, offices, storage, warehouse, marketing and exhibition facilities and other facilities and accommodations for persons and property and, in the case of buildings, structures, improvements and areas in which such accommodation is afforded, shall include all of such buildings, structures, improvements and areas other than portions devoted primarily to railroad functions, activities or services or to functions, activities or services for railroad passengers, notwithstanding that other portions of such buildings, structures, improvements and areas may not be devoted to purposes of the port development project other than the production of incidental revenue available for the expenses of all or part of the port development project.”

It is immediately evident that this one-sentence definition was inspired with the drafting caution which requires synonyms, nuance word variations, provisos to the third degree, and other impedimenta, to make sure that nothing essential is omitted. This, of course, has the effect of obscuring the otherwise simple structure of the definition, and, what is worse, may suggest that potent clauses are hidden in the thickets.

It is only because of this provision that the majority holds that the statute must be struck down as unconstitutional. In light of the nature of the attack on this provision there is no alternative to parsing it out.

The center is described as a commercial facility. It, therefore, requires space and buildings. Its purpose is then stated to be the centralized accommodation of those involved in world trade, that is, foreign commerce. Included in the listing of accommodations to be provided are offices and even security and commodity exchanges, but all of this listing follows and is circumscribed by reference to the principal purpose of accommodating centrally those engaged in world trade.

Finally, after excluding the railroad properties (the Hudson and Manhattan Tubes project) which are broadly defined elsewhere in the same section, the paragraph permits the use of portions of structures and areas for the “production of incidental revenue available for the expenses of all or part of the port development project.” But this follows only after it is forbidden to use the property for other than port development; thus, special emphasis is given to the limitation “incidental” in reference to the revenue use of “ portions ” of the structures and areas.

*603Interestingly, the exact language is found in parallel form in the definition of related railroad property also contained in section 2 of the statute.

The occasion for statutory language authorizing incidental uses and revenues from surplus space and property otherwise held for a public use occurs often enough (e.g., Public Authorities Law, § 1005, subd. 5; cf., id., § 879; L. 1946, ch. 443, § 4; McKinney’s Unconsol. Laws, § 6704; see, especially, General Municipal Law, § 72-j, subd. 3).

It is not necessary to range afar. Section 72-j of the General Municipal Law, which authorizes the municipal development of public garages, contains a strikingly relevant provision which has been treated in the courts. Subdivision 3 permits disposition of real property taken in condemnation under arrangements whereby “ the use of such portion of the property for other commercial purposes as may be necessary to provide revenue adequate to permit the operation of the principal portion of the property for public parking garages and public parking space or public off-street loading facilities. ’ ’ This provision, of course, goes much further than the one involved in this case.

In Denihan Enterprises v. O’Dwyer (277 App. Div. 407, affd. 302 N. Y. 451) an action was brought to restrain the City of New York from condemning land under section 72-j. Among the undisputed facts was that the land was to be taken in order to provide parking facilities, in major part for tenants of the New York Life Insurance Company, owner of the huge apartment building across the street. The garage building was not to exceed two stories in height and the roof was to be covered with four feet of earth and be improved with landscaping. Part of the roof was to be developed as a park. In the Appellate Division it was commented that these terms suggested a purpose to provide a private park and pleasant vista, as well as parking facilities, for the tenants of the apartment house. But most significantly, the life insurance company or other successful bidder for the lease would be permitted to rent 30% of the ground floor and first basement space for commercial purposes not connected with garaging or parking.

With respect to the legal effect of these uses for other than garaging or parking the Appellate Division had this to say (p. 410): “ The plaintiff places considerable emphasis upon the fact that the contract permits the lessee to rent 30% of the ground floor and first basement space for commercial purposes not connected with garaging or parking. This gives the lessee the private allocation and disposition of a substantial portion of the building. Something of the kind is contemplated by the *604statute, with a view to allowing the more profitable use of some of the space for nongarage purposes to produce an income that will permit lower rates for the garage space than would otherwise be possible. We do not question the legality of this concept or its proper application, but think that there may be a question of proper proportion in this case in view of the limited size of the structure and the proportion of the space which is reserved for nongarage and nonpublic purposes.” (Emphasis supplied.)

When the case reached the Court of Appeals the court, per Feoessel, J., said, in sustaining the pleading but holding that a trial was required (pp. 458-459): “Without setting out the detailed allegations of plaintiff’s complaint, sufficient facts are alleged purporting to show that the public use here may be only incidental and in large measure subordinate to the private benefit to be conferred on the Company, and not for the purposes authorized by the statute. Of course an incidental private benefit, such as a reasonable proportion of commercial space, is not enough to invalidate a project which has for its primary object a public purpose [citing cases], but the use is not public where the public benefit is only incidental to the private [citing case]. Moreover, the validity of a statute upon one set of facts is immaterial if in its application to another situation it results in invalidity [citing cases].”

The Denihan case goes well beyond the requirements here. Under this statute the primary public purpose can never be avoided except by illegal subversion. Moreover, the Denihan case is equally significant in recognizing that if there was any invalidity involved it was in the particular action then being proposed rather than in the statute which authorized the action. It is difficult to see how, in the light of the Denihan case, the statute here can be criticized.

In short, the Port Authority under its statute may not build to provide “incidental revenue ” (a contradictory use of the word incidental in the statutory context), but if building for proper project purposes, it may use portions of such construction for incidental revenue. In case the word “ areas ” seems to carry a large connotation, the word in earlier portions of the definition is modified by the participle “ parking ”, is contrasted with and is not inclusive of buildings, structures and improvements, and is tied to necessity, convenience or desirability in effecting the centralized accommodation discussed earlier. If the Authority might build only because of ‘ ‘ incidental revenue ’ ’, then, of course, it would be building “ primarily for revenue ”, and such use might not be a public use; but whether such use would be a public use or not, it is not a use permitted by this *605statute. Instead, the Authority is restricted to using only portions of structures or areas for incidental revenue.

This brings one to the critical distinction made by the court in Bush Term. Co. v. City of New York (282 N. Y. 306), namely, construction primarily for revenue as distinguished from deriving revenue incidentally from a project with a public purpose. The case involved tax exemption from local real estate taxes, but the majority seems to rely on it. Nevertheless, it was held that the property in question was entitled to full tax exemption.

Thus, Chief Judge Lehman, speaking for the court, said (p. 315): “ In this case the evidence clearly establishes that the Legislature contemplated that in constructing inland terminals the Port Authority might erect buildings which would include additional space for rental, from which revenue might be derived and that the Legislature intended to confer upon the Port Authority power to construct such buildings. ’ ’

It was after making this statement that the court pointed out how the Port Authority might, in violation of the statute under which it was empowered to act, exceed the powers granted to it and how this was different from finding an infirmity in the statute giving it the power (p. 316). The case also gives light on the limiting significance of the phrase “ incidental revenue ”. Speaking of the claimed tax exemption, the real issue in the case, the Chief Judge said (p. 321): Property held by an agency of the State is ordinarily immune from taxation only while it is used for a public purpose. Property used primarily to obtain revenue or profit is not held for a public use and is not ordinarily immune from taxation, but property held by a State agency primarily for a public use does not lose immunity because the State agency incidentally derives income from the property. [Citing authorities.] Here the evidence and the findings and conclusions of the court at Special Term establish beyond possibility of successful challenge that the use of the building above the terminal for purposes of revenue is purely incidental to the purpose of the Port Authority to operate a terminal facility at a charge which the consumer can pay. There is here no purpose to make a profit and without the use of the upper stories of the building for revenue the public purpose could not be carried out.”

True, the Bush Term, case was also concerned with revenue from the public use as distinguished from revenue only from so much of a property as is not directly involved in the public use, but the emphasis was on the revenue derived from the nonpublic use upper stories of the building. Its analysis is par-' ticularly helpful in disclosing the restrictive effect of the word *606incidental ” and that one must be careful to distinguish authority granted by a statute from an opportunity thereby created to disobey its restrictions or even to violate constitutional limitations.

It is also urged that the reference in the definition to commodities in world trade is so broad that it would be all-inclusive of commodity exchange. Of course, words may be read in different ways, and the devil of literalism can create havoc. But certainly no ordinary or legislative usage would suggest that a retailer who merely imported merchandise is engaged in foreign commerce. Even under the Commerce Clause in the Federal Constitution the Supreme Court has had no difficulty in finding that goods in interstate commerce do come to rest (e.g., Dalton Adding Mach. Co. v. Virginia, 246 U. S. 498; Schechter Corp. v. United States, 295 U. S. 495, 542-543).

Some concern has been expressed about piecemeal ” taking of property and how those whose property might be taken would not be in a position to resist the taking, for lack of knowledge of the master plan or assurance that it will be carried out. In the first place, this is a problem in any condemnation. The city may take for a school, abandon the idea, and sell off the property to a private builder. In the second place, it assumes a violation of the statute by the Authority, and that the two States which control the Authority will permit the Authority to transgress with impunity, or that the courts would, when the fact of violation becomes apparent. Lastly, the discussion is irrelevant: the validity of a condemnation is determined by the public purpose it appears to serve now and in the future, and not by what actually happens thereafter.

There is another fact of significance. Insofar as the railroad properties are concerned there is no piecemeal taking. All are being taken in one proceeding. It is only with reference to the world trade center project that there is such a fear. But there is no taking for the world trade center project at this time, nor is there any indication how that taking will be or may be accomplished, namely, in one or more takings. When, if ever, that is projected, it will be time enough to determine the legal effect.

Moreover, the only reason the question is reached is the legislative determination that the two proposals for port development be considered a unified project. The most this requires is that the courts determine that the statutory authority for the world trade center project is not prima facie unconstitutional. The courts can determine no more. And had the Legislature wished, even this would not be required. Moreover, it is the Legislature which has, by this statute, permitted the railroad *607project to proceed while the world trade center is still being planned. That is no concern of the court. Hence, if there are separate takings, and if that were relevant, it is only between the two projects, and the Legislature has determined that that is the way it is to be. In this there is surely no constitutional problem since the Legislature could have wholly separated the two to begin with. True, it joined them, but not so much as to require parallel and synchronized development—an impractical device in view of the urgent situation with respect to the bankrupt railroad properties.

Consequently, this statute does not raise the thorny problems envisaged, if only its language is read in entirety and the qualifying restrictions are not ignored. Indeed, this statute does not present the need to call upon all the common presumptions of constitutionality, regularity, and validity of legislative purpose, or the conclusiveness of legislative determinations in the area of policy, once it is agreed that a centralized foreign commerce mart or zone is a valid constitutional purpose for a public agency and is a public use. Indeed, the implementing provisions could contain no less (although perhaps, with simpler syntax) if the purpose is to be fulfilled on the grand scale contemplated.

Accordingly, I dissent and vote to affirm the orders denying the motion for a temporary injunction and granting the applications in the condemnation proceeding.

Stevens, J., concurs with Babin, J.; Steueb, J., concurs in opinion in which Stevens and Babin, JJ., concur; Bbeitel, J., dissents in opinion in which Botein, P. J., concurs.

Orders, entered on July 26, 1962 and July 17, 1962 reversed, on the law, with $20 costs and disbursements to the appellants. A temporary injunction restraining the condemnation of the tube and tube properties should issue; the Port Authority may not be permitted to condemn or be given possession of the properties involved, and the cross motion of the petitioners to dismiss the condemnation proceedings granted.

Settle order on notice.