Wein v. City of New York

• Decision Date: 17 April 1975
• Citation: 47 A.D.2d 367,366 N.Y.S.2d 885
• Parties: Leon Edward WEIN, Plaintiff-Respondent-Appellant, v. The CITY OF NEW YORK et al., Defendants-Appellants-Respondents.
• Court: New York Supreme Court — Appellate Division

Page 885

366 N.Y.S.2d 885

47 A.D.2d 367

Leon Edward WEIN, Plaintiff-Respondent-Appellant, v. The CITY OF NEW YORK et al., Defendants-Appellants-Respondents.

Supreme Court, Appellate Division, First Department.

April 17, 1975.

Leon Edward Wein (William J. Quirk, Brooklyn, with him on the brief) pro se.

W. Bernard Richland, Corp. Counsel, New York City (James G. Greilsheimer, New York City, Leonard Bernikow, Kew Gardens, and Kenneth F. Hartman, Riverdale, with him on the brief) for defendants-appellants-respondents.

White & Case, New York City (Orison S. Marden, Willis McDonald, IV, Marion Jay Epley, III, Robert L. Clair, III, and Cleary, Gottlieb, Steen & Hamilton, by Evan A. Davis, New York City, of counsel), attorneys for amicus curiae the Financial Community Liaison Group.

Before STEVENS, P.J., and MARKEWICH, KUPFERMAN, LUPIANO and NUNEZ, JJ.

LUPIANO, Justice.

This is an action brought by a taxpayer pursuant to General Municipal Law § 51 for declaratory and injunctive relief. Special Term (Korn, J.) granted defendants' motion for accelerated judgment and declared that although plaintiff had standing to maintain this action, the underlying legislation under attack in the complaint is constitutional and the proposed bond issue valid.

The Stabilization Reserve Corporation Act (Public Authorities Law § 2530 et seq.) establishes an independent public benefit corporation to succor the City of New York in a time of unprecedented fiscal crisis. The legislature found and declared that the creation of such corporation is necessary to assist the City to enable it to provide essential services during the 1973--75 fiscal years on a sound financial basis (Public Authorities Law § 2533). Upon appropriate certification by the Mayor of the need for funds to provide essential services, the Stabilization Reserve Corporation is authorized to issue and sell bonds and notes having an aggregate amount not exceeding five hundred twenty million dollars. Proceeds of the sale would be paid to the Comptroller with repayment generated from the Corporation's revenue. These revenues include the establishment of a capital reserve fund into which the City is to deposit on or before the first day of December, in each year, 'such amount, if any, needed for the purpose of maintaining the capital reserve fund at the capital reserve fund requirement as shall be certified by the chairman of the corporation to the mayor and the director of the budget on or before the fifteenth day of February next preceding; provided that any such amount shall have been first appropriated by or on behalf of the city for such purpose or shall have been otherwise made available' (Public Authorities Law § 2537). It is also provided that '(t)he notes, bonds or other obligations of the corporation shall not be a debt of either the state or the city, and neither the state nor the city shall be liable thereon, nor shall they be payable out of any funds other than those of the corporation; and such notes and bonds shall contain on the face thereof a statement to such effect' (Public Authorities Law § 2542).

It is alleged in the complaint that plaintiff is a City real property taxpayer assessed in excess of $1,000 and is thus entitled pursuant to General Municipal Law § 51 to bring this action. The Stabilization Reserve Corporation Act is attacked as being violative of certain provisions of the New York State Constitution, to wit, that the debt proposed to be incurred by the corporation constitutes debts of the City of New York in excess of its constitutional debt limit (Constitution, Article VIII); a violation of the proscription in Article VIII, Section 2, against the City contracting indebtedness without pledging its faith and credit for repayment; and a violation of Article VIII, Section 1, prohibiting the City from giving or loaning its credit in aid of any public or private corporation. Before service of an answer, defendants moved for judgment dismissing the complaint on the grounds that plaintiff has not legal capacity to sue (CPLR 3211(a)(3)) and that the complaint fails to state a cause of action (CPLR 3211(a)(7)). In this context, the threshold issue is whether plaintiff has standing.

General Municipal Law § 51 authorizes actions against public officials 'to prevent any illegal official act . . . or to prevent waste or injury to, or to restore and make good, any property, funds or estate (of the City)'. The action may be maintained by a person whose real property assessment amounts to $1000 or more and who is liable to pay the taxes on such assessment. In Rogers v. Board of Supervisors, 77 App.Div. 501, 502, 78 N.Y.S. 1081, 1082 (2nd Dept., 1902), which concerned a taxpayers' action, it was aptly observed that the plaintiff therein had 'all of the rights which any other citizen has whose property is About to be taken without due process of law. In such an action as the present one the plaintiff is not bound to show that he will suffer peculiar injury. He is appearing in behalf of himself and all other taxpayers, and It is enough for him to show that he has the status as a taxpayer which the statute prescribes, and that the act of the defendant is one which the law forbids' (Emphasis supplied). The criteria of taxpayer status and allegation of illegal official acts which will produce public inquiry were again enunciated in Bloom v. Mayor of City of New York, 35 A.D.2d 92, 312 N.Y.S.2d 912 (2nd Dept., 1970), aff'd 28 N.Y.2d 952, 323 N.Y.S.2d 436, 271 N.E.2d 919 (1971), as satisfying the statutory requirements of General Municipal Law § 51. The Appellate Division unequivocally stated that '(t)he plaintiffs, though not required to show a direct injury to themselves (Rogers v. Board of Supervisors of Westchester County (supra)), allege illegal official acts which will produce public injury (cf. DiPaola v. City of Glen Cove, 21 A.D.2d 678, 250 N.Y.S.2d 229). Indeed, a taxpayers' action has been said to be the proper vehicle to test the legality of local proceedings claimed to infringe the constitutional debt limit or the statutory machinery for the issuance of bonds . . ..' (Bloom v. Mayor of City of New York, Supra, at p. 95, 312 N.Y.S.2d at p. 915). The Court of Appeals patently approved of this observation when it declared that '(t)he opinion at the Appellate Division adequately and incisively treats of the issues involved' (Bloom v. Mayor of City of New York, 28 N.Y.2d 952, 953, 323 N.Y.S.2d 436, 437, 271 N.E.2d 919, 920).

It is well recognized that with respect to declaratory judgment, the party who seeks same must have a 'standing to sue'. In determining whether there is such standing, it must be shown that the plaintiff's personal or property rights will be directly and specifically affected. 'Thus, a private citizen who does not show any special rights or interests in the matter in controversy, other than those common to all taxpaye and citizens, has no standing to sue' (24 Carmody-Wait 2d Section 147:28). However, a taxpayers' action for declaratory judgment is governed by General Municipal Law § 51 and is a separate and distinct remedy. 'Under the statutes, it is the status of the plaintiff as a taxpayer, not a special injury to the particular plaintiff, that gives him the right to sue as a taxpayer' (21 Carmody-Wait 2d Section 128:1; see Carmody-Wait 2d Section 128:38). On this basis it is held that plaintiff has standing to bring this action against the City and its officials. No question is raised concerning the maintenance of a taxpayers' action against a State body.

As to the merits, the statutory provisions of the Stabilization Reserve Corporation Act are self-evident. It is plaintiff's conclusory assertions that such provisions are unconstitutional which give the complaint surface appeal insofar as the issue of whether the complaint states a cause of action is concerned. In the context of CPLR 3211(c), although the motion to dismiss pursuant to CPLR 3211(a)(7) may not be considered as one for summary judgment because of the absence of notice, the present record containing evidence that could be considered on a motion for summary judgment, warrants concluding that plaintiff has failed to state a cause of action. Initially, it is noted that the Act clearly provides that the Corporation's notes shall not be City debt (Public Authorities Law § 2543). The Official Statement and Notice of Sale of the notes provides: 'The Corporation has no taxing power. Neither the City nor the State is liable on the Notes or bonds, and the Notes and bonds are not a debt of the City or the State'. Not being obligations of the City, the bonds and notes do not transgress Article 8 of the State Constitution. Examination of other pertinent provisions of the Stabilization Reserve Corporation Act discloses that the Stabilization Reserve Corporation is authorized to pledge its revenues to the payment of its notes and bonds. The revenues of the Corporation which come from the City are payments by the City to the Capital Reserve Fund of the Corporation pursuant to Public Authorities Law § 2537(1)(c) and payment for the expense of the establishment and continued operation of the Corporation pursuant to Public Authorities Law § 2540. However, the City is Not required to make such payments unless they are appropriated. In the event of failure by the City to pay over to the Corporation the amount required to replenish the Capital Reserve Fund, it is provided that the State Comptroller shall pay such deficiency from (a) moneys appropriated to the Stock Transfer Tax Fund for payment to the City, or (b) if such Fund is insufficient to pay such amount, unallocated per capita State aid apportioned to the City...