Citation. 41 N.Y.2d 769, 396 N.Y.S.2d 155, 364 N.E.2d 820 (N.Y. 1977)
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Brief Fact Summary.
A city contracted to provide certain towns with a sewage facility. The sewage facility at some point was operating substantially above capacity. An individual attempting to develop certain land into residential homes, applied to the city for permits to extend certain sewage lines.
Synopsis of Rule of Law.
This case does not lend itself to a specific rule, see the held section.
The Defendant is the City of New York (the "Defendant"). The Defendant contracted with the Town of Hunter and the Village of Tannersville to construct a sewage system and extend the sewage lines if future growth and building construction made it necessary. The agreement specifically stated that the city agreed to pay "all costs of construction and subsequent operation, maintenance and repair of said sewerage system with the house connections thereof and said disposal works shall be at the expense". The sewage plant "was operating substantially in excess of design capacity" when this action was originally filed. The Plaintiff, Haines (the "Plaintiff"), was an owner of land who wished to construct 50 homes. The Plaintiff applied to the Defendant for permits to connect the lots to existing sewer lines. The Defendant refused, citing that the plant was already operating at full capacity. The Plaintiff brought suit for declaratory and injunctive relief, and the Town of Hunter and Village of Tannersville serviced by the sewer pipes intervened. Both the trial and the Appellate division ruled in favor of the Plaintiff and found that the "city was bound to construct additional facilities to meet increased demand until such time as the village or town is legally obligated to maintain a sewage disposal system."
Is the Defendant bound to expand the sewage plant or accommodate the Plaintiff's or anyone else's increased demands on the sewage system?
No. The court concluded "that the city is presently obligated to maintain the existing plant but is not required to expand that plant or construct any new facilities to accommodate plaintiff's substantial, or any other, increased demands on the sewage system." The court first discusses the duration of the agreement. The court rejects the contention that the court was perpetually bound by the 1924 agreement, because the agreement did not show that the parties had that intention. The court also rejects the assertion that the contract is terminable at will, just because it does not include a specific duration. The court found that even though the duration was not specified, the court can supply the missing term based on the parties' intent. In construing the parties' intentions, the court determined performance is to continue for a reasonable time.
• The court then held "that it is reasonable to infer from the circumstances of the 1924 agreement that the parties intended the city to maintain the sewage disposal facility until such time as the city no longer needed or desired the water, the purity of which the plant was designed to insure." The court then discussed the scope of the city's obligation. The court recognized that the city obligated itself "to build a specifically described disposal facility and to extend the lines of that facility to meet future increased demand." If more lines were added to the facility the system would become overloaded. The city did not obligate itself to build a new facility or extend the facilities capabilities to areas presently served or being developed if the existing system would become overloaded.
This case offers a good example of how courts determine the duration and scope of a contract if these characteristics are not clear from the words in the contract.