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Thus, at the time that Con Ed agreed to build the Substation, it agreed that
the Port Authority had the right to build a commercial tower over its substation and that
any damage resulting from the Port Authority's exercise of its rights could not give rise
to a suit for damages, but only for reimbursement of expenses incurred in "maintaining,
replacing, or rebuilding the Substation." (Con Ed Lease § 16.)
In addition to sections 8 and 16 which set forth the rights and obligations
of the Port Authority and Con Ed as to the construction of a commercial tower, the Con
Ed Lease also provided that the Port Authority, at Con Ed's expense, would secure a fire
insurance policy with proceeds of the policy to be "adjusted with and payable to" the Port
Authority. Section 17(a) and (d) provides:
During the term of this Agreement, the Port Authority, at the Lessee's
expense, shall insure and keep insured the Substation Building[.] ... All
such policies of insurance and renewals thereof shall be taken out in the
name of the Port Authority and shall provide that the loss, if any, shall be
adjusted with and payable to the Port Authority. (emphasis added)
* * *
The policies of insurance under this paragraph (d) and renewals thereof
shall insure the Port Authority and the Lessee as their interests may
appear, and shall provide that the loss, if any, shall be adjusted with and
payable to the Port Authority.
(The Con Ed Lease, § 17(a), (d).) Thus, under the terms of the Con Ed Lease, the Port
Authority, in its own name but at the expense of Con Ed, was to obtain fire insurance on
the substation building. In the event that the substation sustained fire damage covered by
the policy, the proceeds of the policy would be paid to the Port Authority, as the named
insured.
