Lakeland Water Dist. v. Onondaga County Water Authority

Citation301 N.Y.S.2d 1,24 N.Y.2d 400,248 N.E.2d 855
Parties, 248 N.E.2d 855 In the Matter of LAKELAND WATER DISTRICT, Respondent, v. ONONDAGA COUNTY WATER AUTHORITY, Appellant. In the Matter of VILLAGE OF SOLVAY, Respondent, v. ONONDAGA COUNTY WATER AUTHORITY, Appellant.
Decision Date16 April 1969
CourtNew York Court of Appeals

George W. Cregg, Syracuse, for appellant.

Joseph T. Romano, Fayetteville, for Village of Solvay.

Daniel F. Mathews, Syracuse, for Lakeland Water District.

Thomas F. Moore, Jr., New York City, John R. Davison and Charles S. Woolsey, Albany, for Power Authority of the State of New York, amicus curiae.

William A. Madison, Donald J. Zoeller, Gerard A. Dupuis and Henry H. Rossbacher, New York City, for Erie County Water Authority, Monroe County Water Authority and Suffolk County Water Authority, amici curiae.

FULD, Chief Judge.

Onondaga County Water Authority (hereafter referred to as the appellant) is a public benefit corporation, with power under the Public Authorities Law, Consol.Laws, c. 43-A, § 1154, subd. 17, to regulate the rates charged by it for the use of water which it supplies to private customers and to water districts, villages and the like. In August of 1966, it increased by 64% The water rates of two of its corporate customers, the petitioner Village of Solvay and the petitioner Lakeland Water District.

Charging that they regarded the increase as 'excessive, arbitrary and capricious,' the petitioners brought these article 78 proceedings in the Supreme Court to set aside the rates fixed and have the appellant 'promulgate' those which are fair and reasonable. They also sought orders (1) for the examination of the appellant's officers, employees and records and (2) for a hearing to review the 'evidence to be submitted' as to the excessiveness of the rates. The appellant submitted an answering affidavit in opposition in which it claimed, among other things, that the Supreme Court lacked jurisdiction of the proceedings.

By a single order Justice PETERSON at Special Term granted each of the petitioners' motions for an examination--'upon five (5) days' notice'--and a hearing--on 'ten days' notice'--and the Appellate Division unanimously affirmed the resulting orders. However, in its decision, which was made a part of its order, the Appellate Division concluded that an article 78 proceeding was not the proper procedure to employ. Nevertheless, it went on to hold that its 'inapplicability * * * is not fatal to the proceeding' and that, by reason of CPLR 103 (subd. (c)), the court, once having obtained jurisdiction over the parties, was authorized to treat the proceeding as an action for a declaratory judgment.

We may quickly dispose of the appellant's contention that the Supreme Court lacks jurisdiction of these proceedings. In the first place, subdivision 1 of section 1154 of the Public Authorities Law provides that it may 'sue and be sued' and does not restrict the judicial forum available to it. In addition, we have often reviewed appeals in cases in which the Supreme Court, in contradistinction to the Court of Claims, has assumed jurisdiction over controversies involving public authorities, such as the present appellant, which provide municipal services in a limited geographical area. (See, e.g., Swan Lake Water Corp. v. Suffolk County Water Auth., 20 N.Y.2d 81, 281 N.Y.S.2d 775, 228 N.E.2d 73, affg. 25 A.D.2d 542, 267 N.Y.S.2d 584; see, also, Town of Amherst v. Niagara Frontier Port Auth., 19 A.D.2d 107, 110--111, 241 N.Y.S.2d 247, 250--252; cf. Benz v. New York State Thruway Auth., 9 N.Y.2d 486, 215 N.Y.S.2d 47, 174 N.E.2d 727, cert. dsmd. 369 U.S. 147, 82 S.Ct. 674, 7 L.Ed.2d 634.) The Thruway Authority, on the other hand--the State agency involved in the Benz case upon which the appellant relies (9 N.Y.2d 486, 215 N.Y.S.2d 47, 174 N.E.2d 727, Supra)--is State-wide in its operations, and section 361--b of the Public Authorities Law confers upon the Court of Claims exclusive jurisdiction over it in tort and specified contract actions. It is, therefore, in a very different class from public authorities such as the appellant.

This brings us to the question of the propriety of an article 78 proceeding to resolve the present controversy. It is to be noted, preliminarily, that the Appellate Division's affirmance of Special Term's orders granting the inspection and hearing did not transform the petitioners' article 78 proceeding into a declaratory judgment action. Since the order is clearly nonfinal, it is properly before us by our permission only as an order in a proceeding brought pursuant to article 78. 1 However, we may properly consider the questions posed by the Appellate Division's decision even if we conclude that an article 78 proceeding is here inappropriate. Having jurisdiction of the appeal by virtue of our grant of leave under CPLR 5602 (subd. (a), par. 2), the court may go further and consider whether the Appellate Division was correct in deciding that, under CPLR 103 (subd. (c)), Special Term should have treated the suit as an action for a declaratory judgment. If we decide that such an action does lie, we may then proceed to consider the further question as to the propriety of the orders for an examination and a hearing.

An article 78 proceeding, it is settled, may not be utilized to review legislative action (see Matter of Southern Dutchess Country Club v. Town Bd. of Town of Fishkill, 18 N.Y.2d 870, 276 N.Y.S.2d 121, 222 N.E.2d 739; Matter of Paliotto v. Cohalan, 8 N.Y.2d 1065, 207 N.Y.S.2d 281, 170 N.E.2d 413; Matter of Neddo v. Schrade, 270 N.Y. 97, 102--103, 200 N.E. 657, 658--659; People ex rel. Trustees v. Board of Supervisors, 131 N.Y. 468, 471, 30 N.E. 488, 489; Matter of Brent v. Hoch, 13 A.D.2d 505, 211 N.Y.S.2d 853), and an order of an administrative agency fixing rates is deemed a legislative act, at least where no provision has been made for notice and a hearing. (See, e.g., Matter of Northwestern Nat. Inc. Co. v. Pink, 288 N.Y. 359, 362, 43 N.E.2d 442, 443; People ex rel. Village of Mamaroneck v. Public Serv. Comm., 28 N.Y. 588, 144 N.E. 903, affg. Matter of Village of Mamaroneck v. Public Serv. Comm., 208 App.Div. 330, 337, 203 N.Y.S. 678, 683; Town Bd. of Town of Poughkeepsie v. City of Poughkeepsie, 22 A.D.2d 270, 275, 255 N.Y.S.2d 549, 554.) Where, however, notice and a hearing are prescribed by statute, the courts have consistently held that rate-making orders, such as those, for instance, of the Public Service Commission, are 'judicial' in the sense that they are reviewable by certiorari or a proceeding in the nature of certiorari. (See People ex rel. Central Park, North & East R.R. Co. v. Willcox, 194 N.Y. 383, 386, 87 N.E. 517; People ex rel. Consolidated Water Co. v. Maltbie 275 N.Y. 357, 369--370, 9 N.E.2d 961, 964--965, app. dsmd. 303 U.S. 158, 58 S.Ct. 506, 82 L.Ed. 724; see, also, Jaffe, Administrative Law (1953), p. 496.) 2

In the present case, the applicable provisions of the Public Authorities Law (§ 1150 et seq.) not only make no provision for notice or hearing but expressly provide that 'Neither the public service commission nor any other board or commission of like character, shall have jurisdiction over the authority in the management and control of its properties or operations or any power over the regulation of rates fixed or charges collected by the authority' (§ 1153, subd. 6). Since, then, there is no provision for a quasi-judicial proceeding to review the appellant's rate-making determination, it must be deemed a legislative act not subject to article 78 review.

The petitioners are not, of course, remediless. They may challenge rate increases made by the Authority on any of the grounds open to judicial review of quasi-legislative decisions, namely, that the appellant acted in disregard of statutory standards, in excess of its grant of authority, in violation of due process or in a discriminating manner. They may also attack the constitutionality of the statute delegating power to act. (See Matter of Guardian Life Ins. Co. v. Bohlinger, 308 N.Y. 174, 183, 124 N.E.2d 110, 113; Matter of Barry v. O'Connell, 303 N.Y. 46, 52, 100 N.E.2d 127, 130; Matter of New York Edison Co. v. Maltbie, 244 App.Div. 685, 687, 281 N.Y.S. 223, 225, affd. 271 N.Y. 103, 2 N.E.2d 277).

Having concluded that an article 78 proceeding is not available, we must decide whether dismissal may be avoided, as the Appellate Division decided, under CPLR 103 (subd. (c)) by treating the proceeding as an action for a declaratory judgment. 3

As indicated above (Supra, pp. 405--406, 301 N.Y.S.2d p. 3, 248 N.E.2d p. 856), there is no doubt that the Supreme Court had jurisdiction of this proceeding and that it is a 'civil judicial proceeding' within the meaning of the statute. (See, e.g., Matter of Phalen v. Theatrical Protective Union, 22 N.Y.2d 34, 41, 290 N.Y.S.2d 881, 886, 238 N.E.2d 295, 299.) This being so, the proceeding should not be dismissed because 'it (was) not brought in the proper form' (CPLR 103, subd. (c); 1 Weinstein-Korn-Miller, N.Y.Civ.Prac., par. 103.08, p. 1--49; see, also, Matter of Phalen v. Theatrical Protective Union, 22 N.Y.2d 34, 41, 290 N.Y.S.2d 881, 886, 238, N.E.2d 295, 299, Supra). A declaratory judgment action is unquestionably a 'proper procedure', to use the phrase employed by Weinstein-Korn-Miller (loc. cit.), to review a quasi-legislative act of an administrative agency such as the present. (See Walsh v. New York State Liq. Auth., 45 Misc.2d 827, 831, 257 N.Y.S.2d 971, 978, revd. on other grounds, 23 A.D.2d 876, 259 N.Y.S.2d 491, affd. 16 N.Y.2d 781, 262 N.Y.S.2d 502, 209 N.E.2d 821; Vernon Park Realty v. City of Mount Vernon, 307 N.Y. 493, 500, 501, 121 N.E.2d 517, 520, 521; see, also, 3 Weinstein-Korn-Miller, N.Y.Civ.Prac., par. 3001.06j, p. 30--24.)

As noted, the petition alleges in part that the 64% Increase in rates imposed was 'excessive, arbitrary and capricious' and the petitioners are now urging, in addition, that the rates...

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