N.Y. Rapid Transit Law § 42: Contract for construction or operation

§ 42. Contract for construction or operation. a. Every contract for

the construction or operation of such road shall provide by proper

stipulations and covenants on the part of the city, that the city shall

secure and assure to the contractor, so long as the contractor shall

perform the stipulations of the contract, the right to construct or to

operate the road as prescribed in the contract, free of all right, claim

or other interference, whether by injunction, suit for damages or

otherwise, on the part of the owner, abutting owner, or other person.

The person bidding or contracting for the construction, equipment,

maintenance or operation of the railroad included in any such contract

shall make such deposit of cash or securities and shall give a bond to

such city, in such amount as the board of transportation shall require,

and with sureties to be approved by such board, who shall justify each

in double the amount of his liability upon such bond. Such bond shall

be a continuing security, and shall provide for the prompt payment by

such contractor, of the amount of annual rental, if any, specified in

the aforesaid contract, and also for the faithful performance by such

contractor of all the conditions, covenants and requirements specified

and provided for in such contract. In lieu of such continuing bond such

contractor, upon the approval of the board of transportation, may

deposit with the comptroller cash equal in amount to the entire amount

of such bond or securities which are lawful for the investment of the

funds of savings banks within this state and are worth not less than the

entire amount of such bond. If such bond shall have been given then

after the deposit of cash and securities in lieu thereof as aforesaid,

and the approval thereof by such board, such bond shall be surrendered

by the city to the contractor duly canceled by the comptroller. In the

event of the deposit of cash or securities as aforesaid, the contract

may provide for the payment to the contractor of the income of such

securities or of interest upon such moneys at a rate not higher than the

highest rate received by the city upon the deposit of its funds with

banks, and may also provide for withdrawal of securities so deposited

upon deposit of cash or securities of the same value, provided that all

such securities shall be such as are so lawful for the investment of the

funds of savings banks. The board of transportation, in or by any such

contract and in its discretion, may require, and the rapid transit act

shall be deemed to have authorized the board of transportation or any of

its predecessors to have required, prior to the sixteenth day of May,

nineteen hundred six, any other security upon any such contract.

b. No contract entered into under authority of this chapter shall be

assigned without the written consent of the board of transportation.

Such contractor, with such written consent and upon such terms and

conditions as such board shall prescribe, may either assign the whole of

such contract or separately the right or obligation to maintain and

operate such road for the remainder of the term of years specified in

such contract and all rights with respect to such maintenance and

operation, or included in the leasing provisions of such contract, but

subject to all the terms and conditions therein stated. The assignee, in

and by such assignment, shall assume all of the obligations of the

original contractor under or with respect to such leasing provisions and

all obligations which relate in any way to such operation and

maintenance. Such board before giving its consent shall be satisfied

that the pecuniary responsibility of the assignee shall be no less than

that of such original contractor. All of the security or securities

which the city shall have received for the performance by the original

contractor of such leasing provisions and of all provisions of the

contract with respect to such operation and maintenance shall continue

in full force as provided in such contract or any modification thereof,

as security for the performance by such assignee of all obligations of

the contractor under or with respect to such leasing provisions and such

maintenance or operation.

c. It shall be deemed to be part of every such contract that, in case

the board of transportation shall cease to exist, the legislature may

provide what public officer of the city shall exercise the powers and

duties belonging to such board under or by virtue of any such contract,

and that in default of such provision, such powers and duties shall be

deemed to be vested in the mayor of the city. Every such contract shall

contain appropriate terms, conditions and provisions for safeguarding

the interests of the city in the event of the failure or neglect of such

contractor to construct, equip, maintain or operate the railroad

according to the terms of the contract, and such board may bring such

action in the name and in behalf of the city as may be necessary for the

sufficient and just protection of the rights of the city, or upon such

terms as seem just to it, and with such person as to such board may seem

proper, may make another operating contract and lease of such road for

the residue of the term of the contractor in default. Such board may

bring action in the name and on behalf of the city to recover from the

contractor the amount due from the contractor, less the amount which

shall have been received by the city, under or by virtue of such new

contract, and for all other damages sustained by the city by reason of

such default.