State of New York

Supreme Court, Appellate Division

Third Judicial Department

Decided and Entered: March 31, 2016 521430 

________________________________

NIAGARA MOHAWK POWER

CORPORATION, Doing Business

as NATIONAL GRID,

Appellant,

v

ALLIED HEALTHCARE PRODUCTS, MEMORANDUM AND ORDER

INC.,

Respondent,

and

ALBANY ENGINEERING

CORPORATION,

Appellant.

________________________________

Calendar Date: February 11, 2016

Before: Garry, J.P., Egan Jr., Lynch, Devine and Clark, JJ.

__________

Bond, Schoeneck & King, PLLC, Albany (Stuart F. Klein of

counsel), for Niagara Mohawk Power Corporation, appellant.

Hug Law, PLLC, Troy (Matthew C. Hug of counsel), for Albany

Engineering Corporation, appellant.

Whiteman Osterman & Hanna LLP, Albany (Robert T. Schofield

of counsel), for respondent.

__________

Devine, J.

Appeal from an order of the Supreme Court (Platkin, J.),

entered October 2, 2014 in Albany County, which, among other

things, granted a motion by defendant Allied Healthcare Products,
-2- 521430 

Inc. for summary judgment dismissing, among other things, the

second amended complaint against it.

The case before us deals with the continued viability of an

affirmative covenant, dating to the dawn of the 20th century, to

provide free power to manufacturing facilities on property now

owned by defendant Allied Healthcare Products, Inc. (hereinafter

AHP). The power covenant first arose in 1899, when Anna Frisbee

and Charles Frisbee, who owned textile mills on property adjacent

to the Stuyvesant Falls on the Kinderhook Creek, deeded the bulk

of their water rights to the Colonial Trust Company. Colonial

Trust acquired the rights in anticipation of the construction of

a hydroelectric power generation facility that would provide

electricity for a railroad operated by the Albany and Hudson

Railroad Company. Inasmuch as an electric grid did not yet exist

in the area, and the conveyance meant that the Frisbees' mills

could no longer be powered by water from the creek, Colonial

Trust agreed to "furnish[] free of cost all the [water or

electric] power necessary for properly running the mills." The

Frisbees further covenanted to deed up to four acres of land to

Colonial Trust so that it could construct and maintain facilities

needed for the project. The interests conveyed in the 1899 deed

were apparently transferred from Colonial Trust to a power

company associated with the railroad company, and a hydroelectric

facility with supplemental oil-powered turbines was completed in

1900.

Litigation followed and, in 1903, a settlement agreement

was recorded with the Columbia County Clerk that amended the 1899

deed in various respects. The agreement altered the power

covenant to provide that, subject to notice and usage

limitations, the Frisbees "or the survivor of them, their heirs

or assigns shall, at all times hereafter, be furnished free of

costs at the end of a wire or electrical conductor . . . electric

current for running motors . . . in [the] mills, or for other

mechanical or manufacturing purposes on [their] premises." The

agreement also required the Frisbees to fulfill their commitments

in the 1899 deed by conveying an easement to the railroad company

for the purpose of accessing penstocks running across the

Frisbees' property on the eastern bank of the creek, as well as

four acres of land to be detailed by the railroad. The Frisbees
-3- 521430 

conveyed the penstock easement and the four-acre parcel to the

railroad company later in 1903.

AHP now owns the Frisbees' property and manufactures

medical products in the mills. The hydroelectric facility and

associated property interests were owned by plaintiff for many

years but, as a result of plaintiff divesting its interests in

hydroelectric generation plants in the 1990s, those property

interests are no longer under common ownership. Plaintiff

continues to own the four-acre parcel, where it maintains

electricity transmission and distribution lines. Defendant

Albany Engineering Corporation acquired the remaining interests

connected to the hydroelectric power facility in 2008 and, after

a long period of inactivity, brought that facility back into

operation in 2012. Plaintiff purchases whatever electricity is

generated by Albany Engineering at the hydroelectric facility. 

Plaintiff has also historically provided – and, pursuant to a

preliminary injunction issued in this action, continues to

provide – AHP a free allotment of electricity pursuant to the

power covenant.

Plaintiff commenced this action in 2009 and sought, among

other things, a declaration that the power covenant was

unenforceable and that it had no obligation to supply free power

to AHP. Albany Engineering answered and cross-claimed against

AHP, arguing that the power covenant was unenforceable or, in the

alternative, that only plaintiff was bound by it. AHP answered

and asserted counterclaims and cross claims seeking, among other

things, a declaration that the power covenant remains

enforceable. Plaintiff and Albany Engineering thereafter moved

for summary judgment on their claims to have the power covenant

declared unenforceable. AHP, in turn, moved for summary judgment

dismissing the complaint and cross claims against it. Supreme

Court rejected the motions of plaintiff and Albany Engineering,

concluded that the power covenant remained enforceable, and

granted AHP's motion for summary judgment. Plaintiff and Albany

Engineering appeal.

"Regardless of the express recital in a deed that a

covenant will run with the land, a promise to do an affirmative

act contained in a deed is generally not binding upon subsequent
-4- 521430 

grantees of the promisor unless certain well-defined and

long-established legal requisities [sic] are satisfied" (Eagle

Enters. v Gross, 39 NY2d 505, 507 [1976] [citations omitted]; see

Nicholson v 300 Broadway Realty Corp., 7 NY2d 240, 244 [1959]). 

For such a covenant to run with the land, it is necessary to show

"that (1) the original covenantor and covenantee intended such a

result; (2) there has been a continuous succession of conveyances

between the original covenantor and the party now sought to be

burdened; and (3) the covenant touches or concerns the land to a

substantial degree" (Nicholson v 300 Broadway Realty Corp., 7

NY2d at 245; see Orange & Rockland Util. v Philwold Estates, 52

NY2d 253, 262 [1981]; O'Neill v Pinkowski, 92 AD3d 1063, 1064

[2012]). 

"In ascertaining intent at the time that the covenant was

created, we turn first to the language of the deed" and, contrary

to the contentions of plaintiff and Albany Engineering, that

language leaves no doubt as to the parties' intent (Harrison v

Westview Partners, LLC, 79 AD3d 1198, 1201 [2010] [citations

omitted]). As modified by the 1903 settlement agreement, the

language in the 1899 deed was not a vague reference to bind the

"heirs and assigns" of the purchasers, but specifically stated

that the power covenant "was intended by the parties . . to be

and has, at all times, been a covenant running with the lands,

water rights, and privileges hereby granted, and binding upon the

persons or corporations who should from time to time, be the

owners thereof" (see 328 Owners Corp. v 330 W. 86 Oaks Corp., 8

NY3d 372, 383 [2007]; Pepe v Antlers of Raquette Lake, Inc., 87

AD3d 785, 787 [2011]; cf. Kingston Model R.R. Club, Inc. v Eleven

Main Group, LLC, 123 AD3d 1193, 1194 [2014]). The omission of

the word "successors" from this clear statement of intent is, at

worst, a technical failing that in no way muddies its meaning

(see Orange & Rockland Util. v Philwold Estates, 52 NY2d at 262;

Harrison v Westview Partners, LLC, 79 AD3d at 1201; Tarantelli v

Tripp Lake Estates, 23 AD2d 905, 907 [1965]). As for the

question of privity, the power covenant is not recited in the

1903 deed conveying the four-acre parcel that now belongs to

plaintiff and the penstock easement now held by Albany

Engineering, but such is not dispositive. The Frisbees first

promised to convey those interests in the 1899 deed and, as

amended by the 1903 settlement agreement, that deed states that
-5- 521430 

the specific conveyances to follow were "in consideration as

aforesaid, stipulated and agreed by and between the parties." 

Accordingly, the power covenant was intended to run with the

lands and property interests now held by plaintiff and Albany

Engineering (see Witter v Taggart, 78 NY2d 234, 238 [1991]; Pepe

v Antlers of Raquette Lake, Inc., 87 AD3d at 787).

The question of whether the power covenant touches and

concerns the land "is one of degree, dependent on the particular

circumstances of a case" (Eagle Enters. v Gross, 39 NY2d at 510),

and depends upon whether the power covenant can be said to

substantially alter "the legal rights which otherwise would flow

from ownership of land and which are connected with the land"

(Neponsit Prop. Owners' Assn. v Emigrant Indus. Sav. Bank, 278 NY

248, 258 [1938]; accord Nicholson v 300 Broadway Realty Corp., 7

NY2d at 245). The power covenant was part of the consideration

afforded the Frisbees for giving up their right to power their

mills with water from Kinderhook Creek and granting other

property interests to the owner or owners of the hydroelectric

facility, and required that those owners would divert electricity

generated at the facility for the benefit of the mills.1 The

Frisbees therefore obtained "a right, not possessed by other

landowners, of having" electricity generated at the hydroelectric

facility supplied to power the manufacturing occurring at the

mills (see Nicholson v 300 Broadway Realty Corp., 7 NY2d at 246). 

The power covenant accordingly touches and concerns the land (see

328 Owners Corp. v 330 W. 86 Oaks Corp., 8 NY3d at 384; Nicholson

v 300 Broadway Realty Corp., 7 NY2d at 246; Miller v Clary, 210

1 The power covenant did not specifically require that the

supplied electricity come from the hydroelectric facility. "The

[covenant] must be considered in the light of the circumstances

existing at the time of its execution," however, and the

president of Albany Engineering, a licensed professional

engineer, testified that electric transmission lines were not in

general use from 1899 to 1903 (S & S Media v Vango Media, 84 AD2d

356, 358 [1982]). He further averred that his review of the

available technical documents revealed that all of the

electricity initially provided under the terms of the power

covenant came from the hydroelectric facility.
-6- 521430 

NY 127, 131 [1913]).

While the general requisites of an affirmative covenant

running with the land have been met, that does not end the

matter. "The affirmative covenant is disfavored in the law

because of the fear that this type of obligation imposes an

'undue restriction on alienation or an onerous burden in

perpetuity'" (Eagle Enters. v Gross, 39 NY2d at 510, quoting

Nicholson v 300 Broadway Realty Corp., 7 NY2d at 246). The power

covenant has no express limitation on its duration, and "it may

'fall[] prey to the criticism that it creates a burden in

perpetuity, and purports to bind all future owners, regardless of

the use to which the land is put'" (Harrison v Westview Partners,

LLC, 79 AD3d at 1201-1202, quoting Eagle Enters. v Gross, 39 NY2d

at 510; see Nicholson v 300 Broadway Realty Corp., 7 NY2d at

246). AHP rightly points out that the power covenant may be

implicitly "conditioned upon the continued existence of" a

hydroelectric facility capable of supplying the required power to

ongoing manufacturing at the mills (Eagle Enters. v Gross, 39

NY2d at 510; see Nicholson v 300 Broadway Realty Corp., 7 NY2d at

246). Suffice it to say, those conditions have only been

intermittently met as historical matter and are not met now. The

hydroelectric power facility was not in operation from 1994 to

2012 and, while AHP attempts to minimize the fact, there was not

constant manufacturing activity at the mills over the course of

the last century. The record further shows that the

hydroelectric facility, for both technical and legal reasons,

cannot supply consistent or usable electricity directly to the

mills. To find that the power covenant remains enforceable

under these circumstances would render it an "onerous burden in

perpetuity" disfavored by the law, as it would reach beyond any

implied durational requirements and overlook the very real

changes in the hydroelectric facility and the manner for

distributing electricity that defeat the original purpose of the

power covenant (Nicholson v 300 Broadway Realty Corp., 7 NY2d at

246; see Miller v Clary, 210 NY at 135-136). This result cannot

be countenanced and, as such, the power covenant is

unenforceable.

AHP's alternative argument, that plaintiff and Albany

Engineering are equitably estopped from challenging the power
-7- 521430 

covenant given their acquiescence in its continued viability, is

unpersuasive. Equitable estoppel as a doctrine exists "to

prevent the infliction of unconscionable injury and loss upon one

who has relied on the promise of another" (American Bartenders

School v 105 Madison Co., 59 NY2d 716, 718 [1983]; see

Fundamental Portfolio Advisors, Inc. v Tocqueville Asset Mgt.,

L.P., 7 NY3d 96, 106 [2006]). The continued manufacturing

presence of AHP at the mills is not due to it being lulled into a

false sense of security by the continued provision of free

electricity; indeed, after a lengthy hiatus in the 2000s, AHP

elected to refit the mills and resume manufacturing despite being

aware that questions existed as to whether the power covenant

remained in force (see Provident Loan Socy. of N.Y. v 190 E. 72nd

St. Corp., 78 AD3d 501, 502-503 [2010]). As for the question of

injury, one of AHP's vice-presidents testified that requiring

payment for the electricity used by it would not materially

affect the company in general and would be unlikely to affect the

manufacturing operations at the mills. Given that the terms of

the 1899 deed as amended by the 1903 settlement agreement "fixed

the rights of the parties, and mere failure to assert same by

either side would not create an estoppel," one will not lie here

(La Mont Corp. v La Mont., 255 App Div 394, 395 [1938]; cf. Gould

v Partridge, 52 App Div 40, 45-46 [1900]). Thus, the summary

judgment motions of plaintiff and Albany Engineering should have

been granted.

The remaining arguments advanced by the parties, to the

extent that they are not rendered academic in light of the

foregoing, have been examined and rejected.

Garry, J.P., Egan Jr., Lynch and Clark, JJ., concur.
-8- 521430 

ORDERED that the order is reversed, on the law, without

costs, motion of defendant Allied Healthcare Products, Inc.

denied, motions of plaintiff and defendant Albany Engineering

Corporation granted, summary judgment awarded to plaintiff and

defendant Albany Engineering Corporation, and it is declared that

the power covenant at issue is unenforceable.

ENTER:

Robert D. Mayberger

Clerk of the Court