JAMES S. DENIO, as Guardian of the Person and Property of SARAH J. DENIO, Respondent-Appellant, v STATE OF NEW YORK, Appellant-Respondent.
Court of Appeals of the State of New York
Argued April 27, 2006; decided June 8, 2006
[851 NE2d 1153, 818 NYS2d 802]; 7 NY3d 159
Eliot Spitzer, Attorney General, Albany (Michael S. Buskus, Caitlin J. Halligan, Daniel Smirlock and Peter H. Schiff of counsel), for appellant-respondent. I. Fundamental principles of economics, previously embraced by this Court, require that the “discount rate” used to determine the “present value” of awards also be used as the interest rate for the interval of time for which the awards are discounted to present value. (Matter of Oil Spill by Amoco Cadiz Off Coast of France on Mar. 16, 1978, 954 F2d 1279; Jones & Laughlin Steel Corp. v Pfeifer, 462 US 523; Wetzler v Sisters of Charity Hosp., 17 AD3d 1088; Abellard v New York City Health & Hosps. Corp., 264 AD2d 460; Hollwedel v Duffy-Mott Co., 263 NY 95; Milbrandt v Green Refractories Co., 79 NY2d 26; Pay v State of New York, 87 NY2d 1011.) II. Determination of a proper interest rate should be guided by short-term, risk-free Treasury rates, the maturity dates of which should approximate the interval for which interest is owed. (Rodriguez v New York City Hous. Auth., 91 NY2d 76; Brown v United States, 615 F Supp 391, 790 F2d 199, 479 US 1058; Greenway v Buffalo Hotel, 951 F Supp 1039; Jones & Laughlin Steel Corp. v Pfeifer, 462 US 523; Jafri v Jafri, 176 Misc 2d 246;
Hogan & Willig, PLLC, Amherst (Colleen E. Buonocore of counsel), for respondent-appellant. I. The Court of Claims erred when it apportioned 40% liability to defendant State of New York and 60% liability to Eric Poler. This finding was contrary to the weight of the evidence and to the court‘s own findings. The Appellate Division erred when it affirmed the apportionment. (Noseworthy v City of New York, 298 NY 76; Schechter v Klanfer, 28 NY2d 228; Veit v State of New York, 192 Misc 205; Stern v State of New York, 32 Misc 2d 357; Barrett v State of New York, 22 AD2d 347; Brock v State of New York, 58 AD2d 715.) II. The Court of Claims was correct in awarding a statutory interest rate of 9% in its discretion and the Appellate Division, Fourth Department, correctly affirmed the award. (Standard Trust Co. v New York Cent. & Hudson Riv. R.R. Co., 178 NY 407; Innis v State of New York, 60 NY2d 654; Gittleman v Feltman, 191 NY 205; Rodriguez v New York City Hous. Auth., 91 NY2d 76; People ex rel. Emigrant Indus. Sav. Bank v Sexton, 284 NY 57; Auer v State of New York, 283 AD2d 122; Guido v State of New York, 187 Misc 2d 647; Pay v State of New York, 176 Misc 2d 540; Fisher v State of New York, 292 AD2d 882; Matter of Metropolitan Transp. Auth. v American Pen Corp., 94 NY2d 154.)
Herzfeld & Rubin, P.C., New York City (David B. Hamm of counsel), for New York City Housing Authority, amicus curiae.
Michael A. Cardozo, Corporation Counsel, New York City (Stephen J. McGrath and Cheryl Payer of counsel), for City of New York, amicus curiae. The appropriate rate to use in determining the interest rate on judgments against governmental entities should be that of Treasury securities of the relevant maturity. (Rodriguez v New York City Hous. Auth., 91 NY2d 76; Matter of New York Urban Dev. Corp., 189 Misc 2d 303; Matter of City of New York, 284 NY 48, affd sub nom. A. F. & G. Realty Corp. v City of New York, 313 US 540.)
GRAFFEO, J.
The issue in this personal injury case is whether the Court of Claims erred by applying a nine percent rate—the maximum rate allowed under
In 1992, Sarah J. Denio sustained serious personal injuries in a motor vehicle accident that occurred in Niagara County. Her car was struck by a vehicle driven by Eric B. Poler, who lost control of his automobile on a wet roadway. Denio suffered a traumatic brain injury, as well as multiple facial fractures, two jaw fractures, five pelvic fractures, fractures in both ankles and numerous other injuries requiring years of medical treatment and rehabilitation. Claimant James S. Denio, Sarah‘s father, commenced this action as her guardian against defendant State of New York, alleging that the State‘s negligent maintenance of State Route 31 caused Poler to lose control of his vehicle.
After a trial on liability issues, the Court of Claims in February 1999 found both the State and Poler negligent, apportioning 40% of the liability for Sarah‘s injuries to the State and 60% to Poler. The court determined that the State had notice of a preexisting dangerous roadway condition “in the form of three-quarter inch wheel path rutting along with inadequate superelevation/banking on the curve,” and that the State‘s failure to take reasonable measures to correct the defect was a proximate cause of the accident. The court further concluded that Poler‘s negligence was “the main cause” of the collision based on his vehicle‘s three bald tires and expert testimony that he was speeding and did not react properly.
Following a bifurcated trial on damages, the Court of Claims awarded claimant $4,248,879.33. Before judgment was entered, the parties stipulated to
The Appellate Division modified the award by increasing the damages recovery to more than $5 million, but otherwise affirmed the judgment and remitted the case to the Court of Claims for further
The State contends that the Court of Claims erred in applying a nine percent interest rate for prejudgment and postjudgment purposes because the court improperly relied on evidence of stock market rates of return in determining a reasonable rate. Instead, the State submits that trial courts applying “ceiling” rate statutes, such as
A successful plaintiff in a personal injury action is entitled to interest “from the date the verdict was rendered or the report or decision was made to the date of entry of final judgment” (
In Rodriguez v New York City Hous. Auth. (91 NY2d 76 [1997]), we addressed
First, we noted that prior to 1972,
In the years following the adoption of this amendment, interest rates increased dramatically, making it more attractive for defendants to use funds that would otherwise have been paid to plaintiffs rather than borrow monies. As a result of this development, the Advisory Committee on Civil Practice issued a report in 1981 in support of a rate increase from six percent to nine percent. The report pointed out that the use of delaying tactics permitted defendants to take advantage of the economic situation:
“The Committee has had reported to it many examples of a party‘s litigation conduct apparently motivated by the low interest rate contained in
CPLR 5004 . When the sums involved in the case are large, it is self-evident that the longer the defendant delays the case—assuming that the plaintiff will ultimately prevail—the longer the defendant will be able to keep money at a six percent rate that hewould have to pay two, three or even four times more for on the money market. Instances have been reported to us of patently unmeritorious appeals taken in commercial cases merely to obtain the delay, and of tort appeals, where possible in bifurcated trials, of liability findings just to postpone the trial of the damages issue” (1981 McKinney‘s Session Laws of NY, at 2658).
The Legislature adopted the recommendation and adjusted
In 1982, the Legislature decided to increase the ceiling limit for interest relating to certain governmental entities in order to parallel the
“[t]he current rate of interest on claims paid by public owners in this state ranges from 3% for local governments, to 4% for various public corporations to 6% by the State. Since the mid-1970‘s the rate of interest in the private marketplace has exceeded these amounts often to a substantial degree” (Senate Introducer Mem in Support, Bill Jacket, L 1982, ch 681).
It was further recognized that the low statutory interest rates gave public entities “no incentive whatsoever to enter into reasonable negotiations” aimed at settlement (id.). Significantly, however, the Legislature chose to leave in place the “shall not exceed” qualifying language when it amended
Against this backdrop of legislative history, in Rodriguez we interpreted
Since Rodriguez, appellate courts addressing “shall not exceed” interest rate statutes have uniformly held that trial judges should examine “all reasonable investment possibilities during the relevant time period,” including both private and public securities, in determining whether to apply a rate less than the ceiling rate (Auer v State of New York, 283 AD2d 122, 126 [3d Dept 2001]; see also Abiele Contr. v New York City School Constr. Auth., 6 AD3d 366, 367 [2d Dept 2004]; Matter of New York State Urban Dev. Corp. [Alphonse Hotel Corp.], 293 AD2d 354, 355 [1st Dept 2002]).3 Recognizing that Rodriguez rejected the exclusive use of US Treasury rates as a benchmark, all four Departments have concluded that it would be illogical and unfair to focus exclusively on the lowest-returning investments in deciding whether to assign a lower interest rate.
We endorse the reasoning of these decisions. Interest is designed to compensate for the loss that results when a claimant is “deprived of the use of money to which he or she was entitled from the moment that liability was determined” (Love v State of New York, 78 NY2d 540, 545 [1991]). If a successful claimant was able to access a monetary award immediately, the claimant could invest those proceeds in a wide range of prudent investment choices, including money market funds, corporate bonds or reasonably-risked equity funds. Hence, it makes sense to consider a full spectrum of investments—both public and private—in determining an appropriate rate of interest. It follows that the most logical approach when attempting to persuade a trial court to apply a lower rate would be to demonstrate that an array of reasonable and balanced investment alternatives produces a return lower than nine percent.4
To rebut the presumption of reasonableness accorded
When faced with opposing parties’ interest rate evidence, a trial court must weigh the evidence to determine an appropriate rate in the exercise of its discretion. Ordinarily, in weighing the evidence, the court may find a range of reasonable rates and as long as the rate selected is supported by a rational view of the evidence, no abuse of discretion will occur. As we stated in Rodriguez, “[t]he fact that another interest computation may also be ‘reasonable’ does not mandate the selection of that rate in an exercise of discretion” (Rodriguez, 91 NY2d at 81). Only where the State goes so far as to establish that the ceiling rate is unreasonable would the selection of that rate amount to an abuse
In this case, the State sought the application of an interest rate lower than nine percent. Through an economist, the State advocated the use of “benchmark” rates derived from US Treasury securities, whose maturity coincided with the length of time the verdict remained unpaid. The State‘s expert opined that a prejudgment interest rate of 5.35% was appropriate based on the interest rate for a US government security purchased in March 1999 with a maturity date in late 2002. He further recommended a postjudgment interest rate ranging from 1.76% to 2.13% premised on US government securities with one- and two-year maturity dates. The State also submitted evidence of interest rates associated with other low-risk financial instruments, including longer term US government securities and short-term money market instruments. Relying on Federal Reserve statistics, the State‘s economist calculated the monthly interest rates on five such instruments: “3 Year Treasury notes, 4.97%; 10 Year Treasury bonds, 5.47%; 30 Year Treasury bonds, 5.76%; Aaa rated bonds, 7.17% and state and local bonds, 5.39%.” Although maintaining that stock market performance was irrelevant, the State nonetheless presented proof indicating that stock market rates of return were also below nine percent for the relevant time period. For example, the State submitted a portfolio composed of “60% equity exposure and 40% fixed income with a portion maintained in liquid short-term investments” that would have yielded a rate of return of negative 1.93%.7
In opposing a lower rate, claimant argued that the State‘s proposed rates were too restrictive and failed to consider other safe investment vehicles historically yielding higher rates. In support of his position that the nine percent rate should be used, claimant offered a sampling of investment portfolios achieving rates of return ranging from 9.03% to 12.96%. The
Based on the foregoing, the State presented substantial evidence that both private and public reasonable investments could have resulted in rates of return less than nine percent during the relevant time period. The State therefore rebutted the presumption that nine percent should be applied. In response, claimant came forward with evidence to support application of the statutory maximum rate. It is clear that the Court of Claims then weighed the conflicting evidence in making its determination to apply the nine percent rate for both prejudgment and postjudgment interest.8 The Appellate Division affirmed, although it was, of course, free to exercise its own discretion in reviewing the evidence underlying the Court of Claims’ chosen rate.
When we are presented “with affirmed findings of fact, tending to show that the rate of interest was not unreasonable, and [where] these findings are supported by substantial evidence, we are jurisdictionally precluded from reviewing the same” (City of Buffalo v Clement Co., 28 NY2d 241, 266 [1971]; see also Humphrey v State of New York, 60 NY2d 742, 743-744 [1983]). Here, claimant submitted, in relevant part, evidence that a portfolio allocating 75% to equities—as measured by three well-known stock indices—and 25% to debentures achieved a
Finally, we note that New York‘s pre-1972 method of indexing an interest rate was somewhat akin to the floating interest index used by the federal courts. Since 1982, federal law requires the calculation of rates for postjudgment interest based on US Treasury securities (see
On the cross appeal, the affirmed findings of fact with respect to the apportionment of liability are supported by the record. Therefore, this matter is beyond our review (see Scheemaker v State of New York, 70 NY2d 985, 986 [1988]; Humphrey, 60 NY2d at 743-744).
We have considered the parties’ remaining arguments and find them to be without merit.
Accordingly, the judgment of the Court of Claims appealed from and the order of the Appellate Division brought up for review should be affirmed, without costs.
Secondly, the majority‘s injection of equity rates of return into interest calculations has disturbing implications for the law of condemnation—an area in which, as the Constitution requires, interest rates are determined without a strict 9% maximum. If the logic of the majority opinion is applied in condemnation cases, condemnees may seek enormous interest rates when the stock market is booming, and condemnors may seek to use the majority opinion in reverse, with unpredictable results.
Finally, the majority opinion is wrong on its own terms. Even if it is correct to use equity rates of return as part of an interest calculation, the record here does not justify the decisions of the courts below, which the majority affirms. The Court should, at a minimum, remit this case to the Court of Claims for determination of a “reasonable” interest rate.
I
What the statute provides for is a “rate of interest.” In deciding what rate is reasonable it is important to remember what
Claimant‘s involuntary loan, an obligation of the State, was virtually risk free. The interest rate on three-year Treasury bonds—risk-free instruments comparable in duration to the loan at issue here—was roughly 5% or 6% throughout the time in question. We do not imply that the interest rate in a case like this must always be identical to the rate on corresponding Treasury obligations. But it is clear here that the State‘s proposed prejudgment interest rate of 5.35% was within the range of reasonable choices, and that 9% was not.
Claimant‘s argument for the 9% rate, which the majority accepts, is essentially that she was entitled to more than interest on her money. She did not, she points out, choose to make a loan to the State; if she had had the money she might have invested part or all of it in the stock market, and earned a better return. The short answer is that the Legislature has not said she is entitled to the return on investment she might have earned elsewhere; it has said she is entitled to “interest.” No court outside New York, as far as we know, has ever held that “interest” may be calculated on the basis of stock market returns.
The majority seems to have accepted, as did the courts below, claimant‘s argument that it is unfair to limit her to a reasonable interest rate on a risk-free loan. Of course, courts are not free to revise the Legislature‘s enactments to achieve greater fairness (Matter of Bello v Roswell Park Cancer Inst., 5 NY3d 170, 173 [2005]). But apart from that, the majority‘s quest for a truly “fair” rate of return cannot succeed. No one can know what rate of return claimant would have earned if she had had the money to invest as she chose, because no one can know whether she would have been wise or unwise, lucky or unlucky. Implicit in the majority‘s decision is that this problem may be solved by assuming claimant to be a typical prudent investor, but that assumption has its own problems, because there are times—and the 1999-2002 period considered in this case was one such time—when, because the stock market is in decline,
Thus the approach of assuming the claimant to be a typical prudent investor can lead, in this and in some other cases, to awarding less than a risk-free rate; in strict logic, it could lead to awarding no interest, and even to awarding less than 100% of the principal. These results are obviously unacceptable, and it is probably for that reason that the Appellate Division in Auer v State of New York (283 AD2d 122 [3d Dept 2001]) adopted a “heads I win, tails you lose” variation on the “prudent investor” approach. Auer holds, in substance, that a 9% rate of return will be held “reasonable” unless the evidence shows that no prudent investor could possibly have hit that target: “[T]he defendant must show that all reasonable investment possibilities during the relevant time period demonstrate that the [9%] statutory rate is unreasonably high . . . ” (id. at 126 [emphasis added]; accord, Matter of New York State Urban Dev. Corp. [Alphonse Hotel Corp.], 293 AD2d 354, 355 [1st Dept 2002]). This will probably never happen; there will always be some “reasonable” portfolio, chosen with the benefit of hindsight, that can produce a 9% return. The evidence in this case, which we analyze in detail below (infra at 178-179), illustrates the point: in a low interest rate environment, with the stock market going steeply down, claimant came up with a “reasonable” combination of investments that yielded, miraculously, 9.03%.
The Auer approach is unfair to the State, and it completely frustrates the direction of the Legislature, confirmed by our holding in Rodriguez, that a rate below 9% is sometimes appropriate. The Appellate Division relied on Auer in this case. The majority affirms the Appellate Division‘s order and says that it “endorse[s]” the reasoning of Auer (majority op at 167), but it seems to reject, in a footnote, Auer‘s key element—its virtually irrebuttable presumption in favor of 9% (majority op at 169 n 6).
The majority‘s approach, as we understand it, is that the trial court is free to pick any “reasonable” rate of return. It does not say how the court is to choose, nor whether there is any floor; may the court choose a return below the risk-free rate, or even a negative return, if that is “reasonable“? Nor does the major-
The likely practical effect of the majority‘s decision, despite its disclaimer, will be to drive all decisions into the 9% safe harbor that Auer created. It would be better, we think, to follow the statute, and Rodriguez, by requiring courts to award a reasonable “rate of interest.”
II
The majority decision also has the untoward side effect of unsettling our established condemnation jurisprudence. Before today, this Court required a condemnee challenging the fairness and reasonableness of the presumptively reasonable statutory rate to do so by comparing it to prevailing market rates of interest (see e.g. Matter of City of New York [Brookfield Refrig. Corp.—Zoloto], 58 NY2d 532, 536-537 [1983]; Matter of County of Nassau [Eveandra Enters.], 42 NY2d 849 [1977]; Adventurers Whitestone Corp. v City of New York, 65 NY2d 83 [1985]). The Court never considered rates of return on “reasonably-risked equity funds” (majority op at 167) to be relevant. Indeed, the idea of doing so is sufficiently fanciful that the California Supreme Court dismissed it in a footnote 21 years ago (see Redevelopment Agency v Gilmore, 38 Cal 3d 790, 806 n 17, 700 P2d 794, 806 n 17 [1985] [“(S)ince interest is at issue, only the rates of return on interest-bearing obligations are relevant. No case has suggested that the Constitution contemplates a ‘prudent investor’ in stocks or other equity securities“], citing City of New York; see also Liberty Sq. Dev. Trust v City of Worcester, 441 Mass 605, 808 NE2d 245 [2004] [holding that an adequate rate of prejudgment interest for a taking reflects what a prudent investor would earn in the usual interest markets], citing Redevelopment Agency and City of New York).
But now the majority has held that the rate of return on reasonably-risked equity funds, selected in hindsight, is indeed relevant to the judicial determination of fair and reasonable prejudgment interest in New York. The implications and consequences of this for condemnees and condemnors are unclear.
Can a condemnee now rebut the presumption that 9% is reasonable by presenting hypothetical portfolios of stocks and bonds with a rate of return in excess of 9% for the period of delay between the taking and payment? This would be an easy hurdle to clear when the period of delay coincides generally
III
The majority concludes that the State has rebutted the statutory presumption, but then opines that “[i]t is clear that the Court of Claims then weighed the conflicting evidence [presented by the State and claimant] in making its determination to apply the nine percent rate for both prejudgment and postjudgment interest“; and that this determination is beyond review in this Court because it is supported by affirmed findings of fact (majority op at 170). The record supporting these affirmed findings—which the majority concedes dwells at “the outer limits of sufficiency“—consists of a single hypothetical portfolio, allocated 75% to equities and 25% to bonds, which exhibited an annual average rate of return of 9.03% during the relevant time period (majority op at 171). In fact, however, there is no basis for the majority to conclude that the trial judge ever weighed the parties’ conflicting evidence, much less made findings of fact related to the conflicting evidence.
“The court has reviewed all of the arguments presented by both claimant and defendant and their experts on the pre-judgment and post-judgment interest rate issue, and finds the position of the claimant more persuasive. The court does not believe the defendant has overcome the presumption of reasonableness and fairness attributed to the statutory interest rate of 9%. Consequently, the court finds the rate of interest payable will be 9% for the period from the date of the liability decision to the date of entry of final judgment herein, and 9% for the period from the date of entry of final judgment to the date of payment or delivery of the annuity contract, whichever is appropriate” (emphasis added).
While the majority states that “[i]t is clear that the Court of Claims . . . weighed the conflicting evidence” (majority op at 170 [emphasis added]) and “[a]fter reviewing the proof presented by the parties, the Court of Claims found claimant‘s position ‘more persuasive’ and ordered the application of a nine percent rate” (majority op at 164 [emphasis added]), the trial judge did not mention weighing “evidence” or reviewing “proof.” Instead, he stated that after reviewing the parties’ arguments—hardly the same thing as proof or evidence—he found the claimant‘s position—again, not proof or evidence—“more persuasive.”
Secondly, the trial judge erroneously decided that the State had not “overcome the presumption of reasonableness and fairness attributed to the statutory interest rate of 9%.” After concluding (albeit incorrectly) that the State had not rebutted the presumption and “[c]onsequently” awarding claimant interest at 9%, the judge had no reason to weigh the parties’ conflicting evidence, and the majority has no basis for assuming that he nonetheless took this unnecessary step. Certainly, there is no indication on the face of the judge‘s opinion that he did so. There are no findings of fact stated in his opinion, or discussions of the proof, which in and of itself constitutes reversible error by forestalling meaningful appellate review. The absence of any explanation (assuming the trial judge, in fact, weighed the parties’ conflicting evidence) is particularly worrisome in this case because claimant‘s proof is, as the majority charitably labels it, “admittedly slim” (majority op at 171).
The three hypothetical portfolios were attachments to claimant‘s attorney‘s affidavit. He stated that he secured them from UBS/PaineWebber and that each was “tied to well known market indices” for various time periods. There is no explanation or justification in the record as to why UBS/PaineWebber allocated 75% of each of these three hypothetical portfolios to equities and 25% to bonds. Claimant‘s attorney submitted only a chart captioned “Performance Results Based on Various Portfolio Asset Allocations.” There is no indication who prepared this chart, which identifies a 75% equity/25% fixed income portfolio as a “growth” portfolio, not a “balanced” portfolio. The majority, by contrast, says that a claimant “must . . . proffer balanced investment alternatives . . . , which may include government securities, reasonably-risked corporate bond indices, money market vehicles and recognized indices for low-to-moderately-risked securities” (majority op at 168 n 5 [emphasis added]).
Next, the State submitted its expert‘s affidavit. Although the State‘s expert opined that returns on equities were not a proper benchmark for setting a prejudgment interest rate, he nonetheless looked at the rate of return that a hypothetical “prudent investor” would have received over the relevant time period, assuming 60% invested in equities (measured by the S & P 500) and 40% invested in fixed income securities with a portion maintained in liquid short-term investments (measured by the Lehman Brothers Intermediate Government/Corporate Index). The rate of return was a negative 1.93%.
In reply, claimant finally presented the affidavit of her expert, who likewise “recommend[ed] the 60%/40% balanced investment approach [which] represents a prudent investment“; and
In short, the State disputed both claimant‘s investment portfolio choices and her unexplained 75%/25% allocation formula. Critically, claimant‘s expert opined that a prudent investor would have invested 60% in equities and 40% in bonds, yet claimant presented no evidence showing what such an investment would have returned over the relevant time period; the only competent evidence in the record for such a hypothetical portfolio, which was provided by the State‘s expert, concededly showed a negative return. As a result, we would hold that, as a matter of law, the State has established by a preponderance of the evidence that the 9% statutory rate of interest is unreasonably high for the time period at issue, and would remit this matter for the Court of Claims to set an interest rate below 9% within the range of the State‘s proof. Even if the majority is not willing to go so far, it should—having held that the State rebutted the presumption that the 9% statutory rate of interest is fair and reasonable in this case—remit to the Court of Claims for it to weigh the parties’ conflicting evidence, exercise its discretion, and award interest accordingly.
In sum, the majority decision suffers from a confusion—apparently unique to New York‘s state courts—between interest and equity rates of return. This confusion has cost the taxpayers an additional $1 million in this case alone, and threatens to disrupt the State‘s condemnation jurisprudence. Even assuming that equity rates of return are relevant, the majority has taken the astonishing position that the Court has no choice but to affirm here because the trial judge must have made certain findings of fact that he had no reason to believe he needed to make, and does not say he made. And the only possible record support for these supposed findings of fact—a single hypothetical portfolio allocating 75% to equities and 25% to bonds and yielding 9.03%—was not endorsed by claimant‘s own expert, who instead “recommend[ed] the 60%/40% balanced investment ap-
Chief Judge KAYE and Judges G.B. SMITH, CIPARICK and ROSENBLATT concur with Judge GRAFFEO; Judges READ and R.S. SMITH dissent in part in a separate opinion.
Judgment appealed from and order of the Appellate Division brought up for review affirmed, without costs.