HOLDING INC v. CITY OF SYRACUSE (1999)

Petitioner has been operating an airport valet parking and rental car business without permits required by Syracuse City Ordinances 123-1995 and 124-1995.   Those ordinances condition issuance of the annual permits upon the execution of an agreement to pay access fees for that year.   In February 1997 respondent demanded compliance with the ordinances and refused to issue the necessary permits without agreements to pay past and present access fees.   Pursuant to a Memorandum of Understanding signed by the parties in May 1997, petitioner paid the past fees under protest and entered into prospective permit agreements so that it could remain in operation.   Petitioner then commenced a CPLR article 78 proceeding challenging the legality of the payments and permit agreements and seeking declaratory relief.   That proceeding was converted by Supreme Court into a declaratory judgment action.

 The court properly granted petitioner judgment for the access fees that it paid under protest for the years 1995 and 1996.   Respondent's sole contention is that petitioner should be estopped by its actions from recovering those monies.   That argument is without merit because, pursuant to the Memorandum of Understanding, respondent agreed that petitioner “will have the right to litigate in Supreme Court all issues related to the payment of this money”.

 The court erred, however, in declaring the 1997 permit agreements null and void and in requiring the return of any money paid pursuant to them.   The Memorandum of Understanding does not reserve to petitioner the right to litigate the validity of the current permit agreements negotiated by respondent in good faith and signed by petitioner in order to continue its operations.   Petitioner does not question the validity of the subject ordinances or respondent's authority to enforce them.  “Parties cannot accept benefits under a contract fairly made and at the same time question its validity” (Svenska Taendsticks Fabrik Aktiebolaget v. Bankers Trust Co., 268 N.Y. 73, 81, 196 N.E. 748).   Petitioner is estopped from challenging the validity of the permit agreements under which it has continued its operations since May 1997 (see, Lordi v. County of Nassau, 20 A.D.2d 658, 660, 246 N.Y.S.2d 502, affd. 14 N.Y.2d 699, 250 N.Y.S.2d 54, 199 N.E.2d 155;  see generally, 57 N.Y. Jur. 2d, Estoppel, Ratification, and Waiver, § 34, at 50-54).   We therefore modify the judgment by vacating the second decretal paragraph and by granting judgment in favor of respondent declaring that petitioner is estopped from challenging the validity of the 1997 permit agreements under which it has continued its operations since May 1997.

Judgment unanimously modified on the law and as modified affirmed without costs and judgment granted.

MEMORANDUM: