Western New York Water Co. v. City of Buffalo ( 1926 )

This action is brought by plaintiff as a taxpayer of the city of Buffalo under the provisions of section 51 of the General Municipal Law to restrain that municipality from selling water to the defendants, Iroquois Natural Gas Corporation and Isbell-Porter Company. It is also the holder of a bond issued by the municipality to raise funds for the purpose of extending the supply of water to the city and its inhabitants. The findings, which have been unanimously affirmed and which, therefore, are controlling upon us, disclose the following facts:

The plaintiff is engaged in the business of selling water and is a taxpayer of the city of Buffalo. The Gas Corporation is a public service corporation originally engaged in producing natural gas, almost all of which was supplied to the city of Buffalo and its residents. Some time since it was required by the Public Service Commission to manufacture gas which could be added to the natural supply and thereby a sufficient amount of gas insured for the use of the municipality and its inhabitants. For the purpose of carrying out this requirement it purchased a considerable tract of land just outside of the municipality and also a small parcel which was located within the boundaries of the city. While it may be inferred that the location of the greater parcel of this land outside of the municipality was for the purpose amongst other things of securing lower taxation it also appears that it was advantageous in its proximity to railroad facilities. The Gas Corporation through the Isbell-Porter Company as contractor commenced the erection of a large factory upon the parcel outside of the city and in connection with the erection and use of this factory it arranged with the city of Buffalo to deliver a large amount of water to it on the parcel located within the city and which supply was then by an extension of pipes conducted to the outside parcel. While this extension of mains and water supply was made without the consent of the deputy water commissioner as required by the ordinances of the city, it involved no feature of concealment but apparently was in pursuance of a perfectly well-defined plan on the part of the municipality to sell and deliver water for use by these defendant corporations outside the city limits.

The city of Buffalo pumps its water from Lake Erie and there is no finding that it is supplying water to defendants at less than cost, that such sale impairs in any way its capacity to furnish an adequate supply for municipal purposes and to its inhabitants or that the supply to these defendants is part of a general plan upon which the city has embarked of selling water to persons outside its boundaries under such circumstances as might constitute a speculative enterprise liable to be productive of injury to the city and its taxpayers. On the contrary, it has been found "that there is no proof * * * that the conduct of the defendant city of Buffalo, in supplying water to the defendant Iroquois Gas Corporation, and delivering it to said Iroquois Gas Corporation's land within the city of Buffalo; or that the conduct of the said Iroquois Gas Corporation in receiving said water upon its said land within said city, and conducting it to its said plant in the town of West Seneca, and using it there, results or has resulted in any waste of or injury to the property, estate or funds of said city of Buffalo."

The question is the one whether, on these facts, the plaintiff can maintain this action as a taxpayer, for I do not see that its position is strengthened any by its ownership of the bond referred to.

We shall assume, without deciding, that it is illegal for the city of Buffalo to deliver water to the Gas Corporation within the city with the knowledge and intention that it will and shall be then conducted by said Gas Corporation to its premises outside the city for use thereon. But the fact that the municipality is thus engaged in effect in selling and delivering water to a corporation outside of the city and that this act may be illegal is not in our opinion enough to enable plaintiff to maintain this action. Under the provisions of the Municipal Law the action may be maintained for the purpose of preventing any illegal act or for preventing waste or injury to any property, funds or estate of the municipality. As we have pointed out, there are no findings which support it upon the latter ground and the plaintiff must rely upon the first ground of illegality.

Mere illegality is not enough. The very nature and purpose of a taxpayer's action like the present one presume that there will be more than illegality in order to enable him to intervene. The basic theory of such an action is that the illegal action is in some way injurious to municipal and public interests and that if permitted to continue it will in some manner result in increased burdens upon and dangers and disadvantages to the municipality and to the interests represented by it and so to those who are taxpayers. It was not the intention of the statute that a taxpayer shall be allowed to intervene and bring to the decision of the courts every act of a municipal officer which may be claimed to be illegal although concededly it is entirely innocuous. There are other penalties than a taxpayer's action for those municipal officers who disregard their responsibilities and transgress their limitations. This rule limiting such a right of action is firmly established and was so recently and fully stated by this court in the case of Altschul v. Ludwig (216 N.Y. 459) that it seems unnecessary to repeat or attempt to amplify it at any great length. It was there said: "The mere illegality of the official act in and of itself does not justify injunctive relief at the request of the taxpayer. To be entitled to this relief, when waste or injury is not involved, it must appear that in addition to being an illegal official act the threatened act is such as to imperil the public interests or calculated to work public injury or produce some public mischief." The difference between that case and this significantly illustrates the limitations upon this kind of an action. There the action was upheld because there was danger that the proposed illegal acts of the officials would result in the erection of a theatre not properly safeguarded against fire risks and with the resulting possibility that there might be a lamentable destruction of human life. In this case nothing of that kind appears; there is no suggestion in the findings of possible detriment to the interests of the municipality, the public or the taxpayer.

The case of Simson v. Parker (190 N.Y. 19), relied on by respondent, is not at all in conflict with the preceding case; in fact it emphasizes the conditions under which such an action as the present one may be maintained by a taxpayer. In that case it appeared that the city being authorized to sell water to corporations or individuals outside of the city, provided such sale would not impair the supply for the city and its inhabitants, made a contract for a long term of years to furnish a fixed quantity of water to a manufacturing concern with the provision that in case it did not deliver the water it should be liable for damages. It is easy to see that the court was entirely justified in holding that a taxpayer's action could be maintained to restrain such a contract on the part of the city within the principles of the Altschul case. The contract was not only illegal but it furnished the possibility of injury to the city and to its taxpayers either through impairment of the supply of water necessary for them or through a liability for damages in case the contract was not complied with.

The judgments appealed from should be reversed and the complaint dismissed, with costs in all courts.

CARDOZO, POUND, McLAUGHLIN, CRANE and LEHMAN, JJ., concur; ANDREWS, J., dissents.

Judgments reversed, etc.