Young Men's Christian Ass'n v. Rochester Pure Waters Dist.

• Decision Date: 02 July 1975
• Citation: 372 N.Y.S.2d 633,37 N.Y.2d 371,334 N.E.2d 586
• Parties: , 334 N.E.2d 586 YOUNG MEN'S CHRISTIAN ASSOCIATION, Appellant, v. ROCHESTER PURE WATERS DISTRICT, Respondent.
• Court: New York Court of Appeals Court of Appeals

Page 633

372 N.Y.S.2d 633

37 N.Y.2d 371, 334 N.E.2d 586

YOUNG MEN'S CHRISTIAN ASSOCIATION, Appellant, v. ROCHESTER PURE WATERS DISTRICT, Respondent.

Court of Appeals of New York.

July 2, 1975.

J. William Ernstrom and Nicholas E. Brown, Rochester, for appellant.

William J. Stevens, County Atty. (Sergeant W. Wise, Rochester, of counsel), for respondent.

GABRIELLI, Judge.

The principal issue is whether petitioner having failed to exercise its right to appeal to the board of supervisors, as provided by statute, from respondent Rochester Pure Waters District's administrative determination fixing water pollution control charges, may now properly contend for the first time, that, by reason of claimed Real Property Tax Law exemptions afforded charitable organizations, it is immune from certain of the charges levied by respondent pursua to section 266 of the County Law. This section provides, in pertinent part, as follows: '1. Subject to confirmation by the board of supervisors the administrative head or body: (a) may establish, from time to time, * * * a scale of charges for the collection, conveyance, treatment and disposal of sewage * * * from, public corporations, improvement districts, commercial and industrial users and individuals to be determined on any equitable basis including but not limited to a system of classification which, for purposes of establishing differential * * * charges * * * may allocate among areas within the district designated by the administrative head or body, the costs of establishment of the district, the furnishing of improvements therein and operation and maintenance of district facilities or any combination thereof * * *. Before any such schedules are finally established, the administrative head or body shall hold at least one public hearing thereon. Appeals may be taken from any rate fixing determination of the administrative head or body to the board of supervisors.'

The facts are undisputed and may be briefly stated. On April 6, 1971 the Monroe County Legislature established respondent as a county sewer district, pursuant to article 5--A of the County Law (which encompasses section 266) and, after a public hearing, approved respondent's plan to lease the sewage system of the City of Rochester and to construct improvements of existing district facilities. On December 20, 1971 respondent, pursuant to section 266, established two separate rate charges, effective retroactively to July 1, 1971. One charge, for removal of sanitary sewage, is based upon cubic feet of water consumed by users. The other charge, denominated a 'combined sewage charge', is for the removal of storm water entering the sewage system through the combined storm and sanitary sewers, and is based upon the assessed valuation of real property owned by urers. On December 28, 1971 the County Legislature confirmed the charges.

Shortly thereafter, petitioner received its water pollution control bill for the period July 1, 1971 to October 15, 1971. The bill, totaling $2,738.58, reflected a combined sewage charge of $1,827.98 and a sanitary sewage charge of $910.60. Petitioner remitted $1,930.54 to respondent and refused to pay the balance of $808.04 claiming that the latter amount represented the sum unreasonably and arbitrarily assessed in contravention of the Real Property Tax Law. Subsequently, and without pursuing its right to appeal the rate fixing determination of respondent as provided in section 266, petitioner commenced this article 78 proceeding seeking a judgment prohibiting respondent from collecting certain water pollution control charges from it and declaring its property exempt from such charges.

Treating the proceeding as an action for a declaratory judgment (see CPLR 103, subd. (c)), Special Term entered judgment in favor of respondent. The Appellate Division affirmed holding that the Real Property Tax Law did not insulate petitioner from the water pollution control charges levied by respondent. The court expressly refrained from passing on the question of whether the charges levied were reasonably computed (44 A.D.2d 219, 224, 354 N.Y.S.2d 201, 206). We reach the same result.

The doctrine of exhaustion of administrative remedies requires 'litigants to address their complaints initially to administrative tribunals, rather than to the courts, and * * * to exhaust all possibilities of obtaining relief through administrative channels before appealing to the courts' (2 Cooper, State Administrative Law, p. 561). It is bottomed on the principle that '(a) reviewing court usurps the agency's function when it sets aside the administrative determination upon a ground not theretofore presented and deprives the Commission of an opportunity to consider the matter, make its ruling, and state the reasons for its action' (Unemployment Comm. v. Aragon, 329 U.S. 143, 155, 67 S.Ct. 245, 251, 91 L.Ed. 136; see, also, 3 Davis, Administrative Law, § 20.06). Thus, Professor Jaffe comments that '(a) line of California cases will not permit a taxpayer to seek judicial redetermination of his tax where he has not sought administrative redetermination, though it allows an exception where 'the attempted assessment is a nullity because the property is either tax exempt or outside the jurisdiction.' In tax cases there is a traditional emphasis on strict compliance with procedures devised to maximize efficient enforcement.' (Jaffe, Judicial Control of Administrative Action, p. 454.)

New York is in accord with these authorities. Thus, in Lyons & Co. v. Corsi, 3 N.Y.2d 60, 163 N.Y.S.2d 677, 143 N.E.2d 392, app. Dsmd. 355 U.S. 284, 78 S.Ct. 342, 2 L.Ed.2d 271, we held that although the Constitutionality of then section 663--a of the Labor Law could be raised in the first instance in a judicial proceeding (see, also, Matter of Diocese of Rochester v. Planning Bd. of Town of Brighton, 1 N.Y.2d 508, 519--520, 154 N.Y.S.2d 849, 855, 136 N.E.2d 827, 832; Buffalo Hebrew Christian Mission v. City of Syracuse, 33 A.D.2d 152, 306 N.Y.S.2d 963), a claim that the statute was being unreasonably interpret 'must be raised first by administrative review before the Board of Standards and Appeals' (Lyons & Co. v. Corsi, supra, 3 N.Y.2d p. 67, 163 N.Y.S.2d p. 682, 143 N.E.2d p. 396; and cases cited therein; see, also, 1 N.Y.Jur., Administrative Law, § 171).

Turning, then, to the substance of the claim before us, upon this record we find no merit in petitioner's contention that the Real Property Tax Law operates to exempt it from certain portions of its water pollution bill. Subdivision 8 of section 421 of the Real Property Tax Law ¹ provides that the real property of charitable organizations is exempt from special Ad valorem levies and special assessments to the extent provided in section 490 of that law, which in turn provides that the exemption...