New York State Bankers Ass'n, Inc. v. Wetzler

• Decision Date: 01 April 1993
• Citation: 81 N.Y.2d 98,595 N.Y.S.2d 936,612 N.E.2d 294
• Parties: , 612 N.E.2d 294 NEW YORK STATE BANKERS ASSOCIATION, INC., et al., Respondents, v. James W. WETZLER, as Commissioner of the Department of Taxation and Finance of the State of New York, Appellant.
• Court: New York Court of Appeals Court of Appeals

Page 936

595 N.Y.S.2d 936

81 N.Y.2d 98, 612 N.E.2d 294

NEW YORK STATE BANKERS ASSOCIATION, INC., et al., Respondents, v. James W. WETZLER, as Commissioner of the Department of Taxation and Finance of the State of New York, Appellant.

Court of Appeals of New York.

April 1, 1993.

[81 N.Y.2d 99] Robert Abrams, Atty. Gen., Albany (Peter G. Crary, Jerry Boone and Peter H. Schiff, of counsel), for appellant.

[81 N.Y.2d 100] Sullivan & Cromwell, New York City (Michael A. Cooper, Eulalia M. Mack and David L. Glass, of counsel), for respondents.

OPINION OF THE COURT

HANCOCK, Judge.

This appeal concerns the validity of the Legislature's enactment of the Audit Fee Provision as part of the 1990-1991 State Operations Budget Bill. The Audit Fee Provision--which authorizes defendant Commissioner to assess fees against banking corporations audited for taxes due under article 32 of the Tax Law for the cost of conducting such audits--was added as a legislative amendment to the Budget Bill after its submission to the Legislature by the Governor.

In this action, the Supreme Court and the Appellate Division have declared the Audit Fee Provision null and void as an alteration of an appropriations bill which violates article VII, § 4 of the New York State Constitution because--contrary to the specific mandate of that section--it neither strikes out nor reduces an appropriated item, nor adds a separately stated item of appropriation. ¹ We have granted leave to appeal to the Commissioner to address his contentions that plaintiffs' declaratory judgment action should be dismissed as involving a claim which is not justiciable or, failing that, that the Audit Fee Provision should be declared valid notwithstanding its contravention of article VII, § 4. For reasons to be explained, we are not persuaded by either contention. There should, therefore, be an affirmance.

I

On June 6, 1990 the Legislature enacted the 702-page 1990-1991 State Operations Budget Bill, which contained a $2,997,800 account for expenses incurred in conducting tax audits of banking corporations and bank holding companies subject to tax under article 32 of the Tax Law. Added to this appropriation item on page 441 of the Budget Bill is the Audit Fee Provision ² which authorizes the assessment of fees against article 32 taxpayers for the cost of their own tax audits. The Audit Fee Provision was enacted in its entirety by the Legislature; it was not a part of the Budget Bill originally submitted by the Governor. The Governor, nevertheless, signed the Budget Bill into law without deleting it (L.1990, ch. 50).

In July 1990, acting pursuant to the Audit Fee Provision, the Commissioner began to issue invoices to bank taxpayers, including plaintiff Cayuga Lake National Bank. Cayuga National, joined by the New York State Bankers Association representing the commercial banking industry, commenced this action seeking declaratory and injunctive relief. Supreme Court granted summary judgment to plaintiffs declaring the Audit Fee Provision as well as its implementing regulations null and void as violative of article VII, § 4 of the State Constitution and also enjoined their enforcement. 151 Misc.2d 684, 573 N.Y.S.2d 816. The Appellate Division affirmed, finding no merit to defendant's additional contention that plaintiffs' challenge to the Audit Fee Provision did not present a justiciable controversy. 184 A.D.2d 1077, 586 N.Y.S.2d 779.

II

The essence of defendant's nonjusticiability argument is that plaintiffs' challenge to the enactment of the Audit Fee Provision amounts to a judicial invasion of the budgetary process, the exclusive domain of the executive and legislative branches of government. Defendant relies on Saxton v. Carey, 44 N.Y.2d 545, 406 N.Y.S.2d 732, 378 N.E.2d 95, in which the plaintiffs sought to nullify the entire 1978-1979 State budget because it was insufficiently itemized to meet constitutional requirements (see, N.Y. Const., art. VII, §§ 1-7; People v. Tremaine, 281 N.Y. 1, 21 N.E.2d 891). In Saxton, we agreed with defendant that the degree of budget itemization was a matter calling for the exercise of judgment and discretion by the Governor and Legislature in implementing the budgetary process and that, as such, it was beyond the courts' power of review. Although we concluded that the complaint was properly dismissed as nonjusticiable, we cautioned that the budgetary process is not always beyond the realm of judicial consideration and that the "courts will always be available to resolve disputes concerning the scope of that authority which is granted by the Constitution to the other two branches of the government" (Saxton, supra, 44 N.Y.2d at 551, 406 N.Y.S.2d 732, 378 N.E.2d 95 [emphasis added].

It is basic that an "act of the legislature is the voice of the People speaking through their representatives. The authority of the representatives in the legislature is a delegated authority and it is wholly derived from and dependent upon the Constitution" (Matter of Sherrill v. O'Brien, 188 N.Y. 185, 199, 81 N.E. 124). The sole ground of plaintiffs' challenge to the Audit Fee Provision is that in adopting the measure as an amendment to the Budget Bill, the Legislature acted beyond its delegated authority by altering the bill in a way that is expressly prohibited by article VII, § 4. Plaintiffs do not ask the courts to pass on the merit of the measure or to review the discretion of the executive or legislative branches in including it as part of the approved budget. The question concerns not what was enacted or its effect on the budgetary process, but whether there was authority to enact the provision at all. Our precedents clearly compel the conclusion that the controversy is justiciable (see, e.g., Matter of Korn v. Gulotta, 72 N.Y.2d 363, 369-370, 534 N.Y.S.2d 108, 530 N.E.2d 816; Saxton, supra, 44 N.Y.2d at 548-551, 406 N.Y.S.2d 732, 378 N.E.2d 95).

Nevertheless, as a further ground for seeking a dismissal for nonjusticiability, defendant argues that the courts' invocation of article VII, § 4 is an unwarranted judicial interference in the budgetary process because it amounts to a "purely technical judicial roadblock into the consensual budget process" and because where "the Governor and Legislature are in agreement on the necessity of a change in a budget bill, it makes absolutely no sense to apply section 4 to forbid the change simply because it may technically have been added by the Legislature". In short, the argument goes, the requirements of the Constitution, as applied here, are of no moment and a claim that there has been noncompliance should be summarily rejected for nonjusticiability as calling for purposeless judicial meddling in the executive and legislative process. But the very point of plaintiffs' argument on the merits (see, Part III, infra ) is that the constitutional violation is a matter of substance which cannot be ignored as trivial. We have found no authority for forestalling a determination on the merits of a constitutional question by dismissing it as nonjusticiable for reasons of alleged triviality. Defendant cites no support for this novel proposition.

III

We turn to the merits. Defendant contends first that the Audit Fee Provision should be upheld because its enactment as part of the Budget Bill substantially complies with the dictates of article VII, § 4. As authority, defendant cites Matter of Schneider v. Rockefeller, 31 N.Y.2d 420, 340 N.Y.S.2d 889, 293 N.E.2d 67 in which legislation was challenged because of an alleged violation of the constitutional requirement that a bill lie on the desks of the Legislature for three...