Schulz v. New York State Executive

• Decision Date: 17 July 1997
• Citation: 660 N.Y.S.2d 881,233 A.D.2d 43
• Parties: In the Matter of Robert L. SCHULZ et al., Appellants, v. NEW YORK STATE EXECUTIVE et al., Respondents.
• Court: New York Supreme Court — Appellate Division

Page 881

660 N.Y.S.2d 881

233 A.D.2d 43

In the Matter of Robert L. SCHULZ et al., Appellants, v. NEW YORK STATE EXECUTIVE et al., Respondents.

Supreme Court, Appellate Division,

Third Department.

July 17, 1997.

Robert L. Schulz, Queensbury, and John Salvador Jr., Lake George, in person.

Dennis C. Vacco, Attorney General (Denise A. Hartman, of counsel), Albany, for New York State Executive, respondent.

Cravath, Swaine & Moore (Michael R. Siebecker, of counsel), New York City, for Michael C. Finnegan and another, respondents.

Patricia L. Murray and Peter S. Kosinski, State Board of Elections, Albany, for New York State Board of Elections, respondent.

Before CARDONA, P.J., and MERCURE, WHITE, CASEY and CARPINELLO, JJ.

MERCURE, Justice.

Appeal from that part of a judgment of the Supreme Court (Harris, J.), entered November 8, 1996 in Albany County, which, in a combined proceeding pursuant to CPLR article 78 and action for declaratory judgment, held that the Laws of 1996 (ch. 412) was constitutional.

In July 1996, the Legislature passed the Laws of 1996 (ch. 412), which authorized the State to incur indebtedness not exceeding $1.75 billion for the purpose of preserving the environment. That law, known as the "Clean Water/Clean Air Bond Act of 1996" (L.1996, ch. 412, § 1; hereinafter the Bond Act), was signed by respondent Governor and approved by the voters at the November 1996 general election. The stated "single purpose" of the Bond Act was:

* * * preserving, enhancing, restoring, and improving the quality of the state's environment by the accomplishment of projects and the funding of activities by state agencies, public authorities and public benefit corporations, municipalities, and other governmental entities and not-for-profit corporations for and related to protecting, improving, and enhancing the quality of drinking water and enhancement of water bodies; by providing funds for open space, and for parks, historic preservation, and heritage area improvements; by providing funds for solid waste projects; by providing funds for the restoration of contaminated properties, and by providing funds for air quality projects (Bond Act § 2).

Simultaneously, the Laws of 1996 (ch. 413) was enacted for the purpose of implementing the Bond Act within the separate categories of safe drinking water projects, clean water projects, solid waste projects, environmental restoration projects and air quality projects.

Petitioners commenced this combined proceeding and action seeking, inter alia, a declaration that the Bond Act was unconstitutional as violative of N.Y. Constitution, article VII, § 11 ¹ and article III, § 16. ² In lieu of serving an answer, respondents moved to dismiss the petition/complaint; petitioners responded with a motion for summary judgment. Supreme Court denied petitioners' summary judgment motion as premature and, addressing respondents' motion, determined that petitioners lacked standing and that the Bond Act violated neither of the identified constitutional provisions. Petitioners appealed to the Court of Appeals from so much of Supreme Court's order as declared that the Bond Act was not violative of N.Y. Constitution, article VII, § 11 or article III, § 16. The Court of Appeals sua sponte transferred the appeal to this court, and we denied petitioners' subsequent motion to enlarge the issues on appeal.

Addressing first the issue of standing, we agree with respondents that petitioners lack citizen-taxpayer standing to mount either of the challenges at issue here. As shall be discussed in some detail, because State Finance Law § 123-b (1) specifically excepts from its application "the authorization, sale, execution or delivery of a bond issue or notes issued in anticipation thereof by the state or any agency, instrumentality or subdivision thereof or by any public corporation or public benefit corporation", a taxpayer has neither common-law nor statutory standing to challenge the issuance of State bonds or bond anticipation notes (see, Wein v. Comptroller of State of N.Y., 46 N.Y.2d 394, 399-400, 413 N.Y.S.2d 633, 386 N.E.2d 242; Schulz v. State of New York [hereinafter Schulz I ], 193 A.D.2d 171, 177, 606 N.Y.S.2d 916, affd. 84 N.Y.2d 231, 616 N.Y.S.2d 343, 639 N.E.2d 1140, cert. denied 513 U.S. 1127, 115 S.Ct. 936, 130 L.Ed.2d 881; Schulz v. State of New York [hereinafter Schulz II ], 185 A.D.2d 596, 597, 586 N.Y.S.2d 428, appeal dismissed 81 N.Y.2d 336, 599 N.Y.S.2d 469, 615 N.E.2d 953). Petitioners' challenge to the constitutionality of State Finance Law § 123-b (1), raised for the first time in their reply brief, is not properly before us (see, Fishman v. Beach, 237 A.D.2d 705, 706, 654 N.Y.S.2d 854, 855; O'Sullivan v. O'Sullivan, 206 A.D.2d 960, 614 N.Y.S.2d 828) and lacks merit in any event (see, Schulz II, supra, at 597, 586 N.Y.S.2d 428). We also agree with respondents that petitioners lack constitutional voter standing with regard to so much of the proceeding as is predicated on N.Y. Constitution, article III, § 16, as that provision is not "linked to any voting rights" (Schulz I, supra, at 177, 606 N.Y.S.2d 916; see, Matter of Schulz v. State of New York, 81 N.Y.2d 336, 344-347, 599 N.Y.S.2d 469, 615 N.E.2d 953).

We take a different view, however, on the question of petitioners' voter standing to prosecute the claim of violation of N.Y. Constitution, article VII, § 11. In Matter of Schulz v. State of New York (supra ), the Court of Appeals traced the evolution of standing principles as related to "public financing challenges", ultimately addressing the question of whether the Executive and Legislative Branches should "be allowed to erect 'an impenetrable barrier to any judicial scrutiny of legislative action[s]' " (id., at 345, 599 N.Y.S.2d 469, 615 N.E.2d 953, quoting Boryszewski v. Brydges, 37 N.Y.2d 361, 364, 372 N.Y.S.2d 623, 334 N.E.2d 579) and giving a negative response. As noted by that court, its 1975 decision in Boryszewski v. Brydges (supra ) marked a significant departure from the established position that " ' * * * the constitutionality of a State statute may be tested only by one personally aggrieved thereby * * * ' " (Matter of Schulz v. State of New York, supra, at 344, 599 N.Y.S.2d 469, 615 N.E.2d 953, quoting St. Clair v. Yonkers Raceway, 13 N.Y.2d 72, 76, 242 N.Y.S.2d 43, 192 N.E.2d 15, cert. denied 375 U.S. 970, 84 S.Ct. 488, 11 L.Ed.2d 417), heralding a new era of governmental accountability to taxpayers challenging "enactments of our State Legislature as contrary to the mandates of our State Constitution" (Boryszewski v. Brydges, supra, at 362, 372 N.Y.S.2d 623, 334 N.E.2d 579). However, the Legislature's nearly simultaneous enactment of State Finance Law article 7-A, and particularly State Finance Law § 123-b (1), with its grant of statutory standing to citizen taxpayers but concomitant denial of standing in cases involving "the authorization, sale, execution or delivery of a bond issue or notes issued in anticipation thereof", greatly forestalled that effort. Ultimately, in Wein v. Comptroller of State of N.Y. (supra ), the Court of Appeals was constrained to the conclusion that the effect of the "exception" contained in State Finance Law § 123-b (1) was to deny both statutory and common-law standing to those challenging the issuance of State bonds or bond anticipation notes (id., at 399-400, 413 N.Y.S.2d 633, 386 N.E.2d 242; see, New York State Coalition for Criminal Justice v. Coughlin, 64 N.Y.2d 660, 485 N.Y.S.2d 247, 474 N.E.2d 607).

However, in Matter of Schulz v. State of New York (supra ) the Court of Appeals again signaled its "disposition to expand rather than to contract the doctrine [of standing]" (Boryszewski v. Brydges, supra, at 363, 372 N.Y.S.2d 623, 334 N.E.2d 579) by recognizing an individual's right to enforce voting rights under N.Y. Constitution, article VII, § 11 (Matter of Schulz v. State of New York, supra, at 346-347, 599 N.Y.S.2d 469, 615 N.E.2d 953). Citing to the public's skepticism for public indebtedness and particularly "borrowing by long-term debt to pay ordinary operating expenses of the government" (id., at 346, 599 N.Y.S.2d 469, 615 N.E.2d 953), the court recognized that it is the electorate itself, exercising the "constitutional prerequisite of a public referendum", that represents the "ultimate, prudent check-and-balance" (id., at 346, 599 N.Y.S.2d 469, 615 N.E.2d 953). Under the circumstances, "[s]erious concerns accompany a complete cloak of immunity that would preclude access to judicial review of challenged public financing schemes" (id., at 346, 599 N.Y.S.2d 469, 615 N.E.2d 953). Therefore, the Court of Appeals announced the existence of "separate and independent * * * voter standing to sue on financing schemes subject to voter referendum approval" (id., at 347, 599 N.Y.S.2d 469, 615 N.E.2d 953 [citations omitted] ) and directed that, to the extent they have been read as a total ban on standing in such cases, Wein v. Comptroller of the State of N.Y. (supra ), New York State Coalition for Criminal Justice v. Coughlin (supra ) and State Finance Law § 123-b should not be followed (see, Matter of Schulz v. State of New York, supra, at 347, 599 N.Y.S.2d 469, 615 N.E.2d 953).

Contesting none of the foregoing, respondents nonetheless contend that the Court of Appeals' decision in Matter of Schulz v. State of New York (supra ) should be limited to its particular factual setting, i.e., "the narrow circumstance where plaintiffs seek to enforce the voter referendum requirement of [NY Constitution, article VII, § 11]". We are very much bothered by this position, predicated as it is on the assumption that the Executive and Legislative Branches of our State government may safely ignore the constitutional dictates concerning public financing laws so long as they are successful in exhorting the electorate to rubber-stamp their actions. It is worthy of some note that this court 20 years ago recognized that an important...