Haines v. City of New York – Case Brief
Haines v. City of New York, 41 N.Y.2d 769, 396 N.Y.S.2d 155 (1977).
Facts: New York City (D) contracted with a town for the construction of a sewage system and was to bear all costs of construction and subsequent operations. D was also required to extend the sewer lines when necessary to accommodate future growth. Fifty years later Haines (P) sought to develop his property in that town into a subdivision and D refused because the sewage plant was operating at capacity.
Haines filed suit seeking declaratory and injunctive relief, asserting that D’s obligation under the contract to expand the sewage capacity of the town as needed was perpetual, and D was required to construct additional plants if required. The trial court entered judgment for P and the appellate division affirmed. D appealed.
Issue: What is the duration of a contract that does not specify its duration?
Holding and Rule: If no duration for performance under a contract is specified, the court may determine the duration of the contract by looking to the intent of the parties at the time of contract.
The court held that D was not bound perpetually under the agreement. However, the court rejected D’s assertion that the contract was terminable at will due to the absence of any specified duration.
When no duration is specified it will be presumed that the parties intended the contract to continue for a reasonable time. If duration can be determined by implication the contract will not be terminable at will. The intent of the parties may be used to determine the duration and such intent and duration may be fairly and reasonably fixed by the surrounding circumstances.
The court held that in this case the parties intended D to maintain the facility until the town became legally obliged to maintain its own system and no longer needed the water. D obliged itself to build one plant and to expand it for future needs. The court rejected P’s assertion that D must build additional plants.
The contract did not require D to build additional plants or to reduce the water purity requirement to accommodate increased demand.
Disposition: Reversed with respect to the part of the judgment requiring D to build additional plants; Judgment for D.
Notes: The contract was still in force and D was required to continue to maintain the plant but was not required to build additional plants.