Case Name: In the Matter of Supplementary Proceedings for the Collection of a Tax of Beauty Spring Water Company. Frank H. Talcott, as President of the Village of Lyons Falls, Appellant, v. Beauty Spring Water Company, Respondent.
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1909-07-06
Citations: 134 A.D. 17
Docket Number: 
Parties: In the Matter of Supplementary Proceedings for the Collection of a Tax of Beauty Spring Water Company. Frank H. Talcott, as President of the Village of Lyons Falls, Appellant, v. Beauty Spring Water Company, Respondent.
Judges: 
Reporter: Appellate Division Reports
Volume: 134
Pages: 17–22

Head Matter:
In the Matter of Supplementary Proceedings for the Collection of a Tax of Beauty Spring Water Company. Frank H. Talcott, as President of the Village of Lyons Falls, Appellant, v. Beauty Spring Water Company, Respondent.
Fourth Department,
July 6, 1909.
Municipal corporation — tax—liability of independent water company.
An incorporated water company authorized to supply water to the inhabitants of a certain town cannot after said town, together with another town has been incorporated under the General Village Law and a municipal water works has been established, refuse to pay a portion of the village tax on the ground that it goes to the maintenance of the municipal water works competing with its own, especially where the water supplied by it is inadequate to the needs of the entire village.
This is so, although the State Water Commission in approving the plans for the municipal water works made it a condition that the village acquire the plant of the existing water company which it failed to do owing to the fact that the proposition to acquire the plant was not approved by the voters.
Even though such water company has been wronged and the entire tax should not have been levied against it, it cannot resist the payment thereof in supplementary proceedings for the collection of a tax otherwise valid.
McLennan, P. J., and Williams, J., dissented.
Appeal by the plaintiff, Frank H. Talcott, as president, etc., from, an order of the County Court of Lewis county, entered in the office of the clerk of said county on the 5th day of February, 1909, vacating an order granted on the 28th day of .August, 1908, for the examination of the officers of the Beauty Spring Water Company.
Harry W. Cox, for the appellant.
C. S. Mereness, for the respondent.

Opinion:
Kruse, J.:
The respondent, the Beauty Spring Water Company, a domestic corporation organized to supply water to the inhabitants of the town of West Turin, a part of which town forms the village of Lyons Falls, resists the payment of seventeen dollars and sixty-six cents of the tax levied against it by the village in 1908, upon the ground that it is for the maintenance of a municipal water system in the village in competition with the respondent water company, which is now supplying water in said village.
That the respondent is taxable in the village is not questioned ; neither is it claimed that any of the proceedings relating to the assessment and levying of the tax are invalid, save in one respect. The precise point is this: The entire tax levy of the village of Lyons Falls for 1908 is $4,141.15. Of that amount $1,900 is for maintenance of the municipal water system, ánd the respondent contends that no part of the $1,900 should be levied against it The total tax levy against the water company is $37.79. It offered to pay $20.13, but refused to pay the remaining $1'7.66 for the reason stated. Thereupon the president of the village, pursuant to section 259 of .the Tax Law (Laws of 1896, chap. 908), made application to the County Court of Lewis county for an order, upon a proper affidavit," to examine the tax debtor, the respondent water company, which was granted. Thereafter, upon motion of the water company, said order was vacated and set aside upon the ground, as appears by the opinion of the county judge, that the tax was a violation of the contract rights of the company, and was illegal. The appeal is from the order vacating and setting aside the order to examine the water company.
The village of Lyons Falls was incorporated in 1899, under the General Village Law (Laws of 1897, chap, til), its incorporation proceedings being confirmed by chapter 700 of the Laws of 1900. Territorially, it includes parts of the towns of West Turin and Lyonsdale. The water company was organized about three years before the incorporation of the village. By the terms of its certificate of incorporation, its object is to supply water to the inhabitants of the town of West Turin in the county of Lewis, in this State Its capital stock was stated to be $3,000, and its corporate existence fifty years. The certificate of incorporation was filed in the county clerk's office of Lewis county June 23, 1896, together with the certificate of a majority of the town board of the town of West Turin, granting the application to organize a water works company to supply water to the inhabitants of the village of Lyons Falls and of the town of West Turin. Presumably, the persons making the application were the incorporators of the water company.
Since its incorporation the water company has furnished water to a la,rge part of the residents and property owners of the village, and to some customers outside; so it is stated in the affidavit of the president of the water company.
It is claimed on the part of the village that the water company has no legal right or privilege to furnish any water in that part of the village of Lyons Falls situate in the town of Lyonsdale, and according to the affidavit of the president of the village, the water company's system is inadequate; does not furnish sufficient fire protection ; has only five hydrants in all in the various parts of the village, which afford practically no fire protection; and prior to the installation of the village water works, the water supply furnished by the water company was often inadequate for domestic purposes, and sometimes there would be no flow of water at all on the higher ground in the village; and since the village water works system has been installed, the village has increased in size.
The municipal water works of the village have been in operation since about November, 1906. Before installing the system, application was made to the State Water Supply Commission by the village authorities for approval of the plans, maps, profiles and surveys of the proposed municipal water works system for the village, and it was stated in the application that the village authorities were willing to acquire by purchase at a fair price the system of water supply of the water company. The approval was given and the necessary certificate made by the State board, and thereafter and in May, 1906, the proposition to acquire the system of water works of the water company was voted upon by the voters of the village and lost.
It is not contended by the water company that it has an exclusive franchise, or that another water company may not be organized to supply water for the same territory, or that the village may not itself do that; but it claims that the village may not tax the company to maintain a system of water works in competition with its own. The case of Skaneateles Water Works Company v. Village of Skaneateles (161 N. Y. 154) is relied upon to sustain that claim. The plaintiff there sought to enjoin the village from constructing its own water system in competition with that of the water company (the plaintiff), but the injunction was refused, the court holding that the water company did not have an exclusive franchise and that the village had the right to construct its own water works system. That decision was affirmed in the Federal Supreme Court (Skaneateles Water Works Company v. Skaneateles, 184 U. S. 354). The act under which the village system was constructed, in that case, was attacked by the water company as unconstitutional, because it taxed the water company for the municipal system, in competition with its own, and otherwise discriminated against it. The Court of Appeals held that while the village had the right to construct its own system of water works, the provisions of the act for taxing the water company therefor, and authorizing a discriminating tax against its- patrons, were unconstitutional, and the Federal Supreme Court so understood the holding of the Court of Appeals.
But giving full force and effect to all that was said and decided in that case, we think it is not decisive of the question presented here. There, the water company had a franchise for the entire village; it was furnishing an adequate supply of pure and wholesome water. The village refused to buy the water system of the water company or to take it by condemnation, although Skaneateles lake, from which the water company was receiving its supply, was the only available place where an adequate supply could be obtained for the village.
Here, at best, the water company has only a right to supply a portion of the village. Very likely the incorporation of the village did not impair the previous right of the water company to furnish water in the town of West Turin. (Matter of City of Brooklyn, 143 N. Y. 596.) Neither did it extend the water company's right to supply the entire village. There is nothing in the record before us to show what part of the village is in the town of West Turin, nor how its population is distributed, nor to what extent water is being furnished to that part of the village within the town of West Turin. As already stated, the affidavit of the president of the water company states that water is being furnished to a large part of the residents of the village, and to some customers outside.
But if the facts are correctly stated in the affidavit of the president of the village, and the supply has been inadequate and in some parts of the village entirely failed, and until the municipal system was installed the village was practically without fire protection, I do not see how the water company can reasonably complain of the construction of the municipal water works, or now resist the payment of taxes therefor, levied upon its taxable property within the village. If it is true, as claimed on the part of the village, that the water company's water supply is inadequate, that may furnish a possible explanation for not acquiring the plant.
But it is said that the State Water Supply Commission in approving the plans and granting the certificate to the village, made it a condition that the village acquire the water system of the water company, and that the village has been guilty of bad faith in not doing so. Assuming that to be true, I fail to see how it furnishes sufficient ground for the failure of the water company to pay the tax. In the first place it is not clear that the State Water Supply Commission had the authority to impose any such condition (Village of Waverly v. Waverly Water Co., 117 App. Div. 336; affd., 189 N. Y. 555), and in the next place, if the water company has any legal grievance arising out of the construction of the municipal system of water works without acquiring the plant of the water company, I think its remedy is not by resisting payment of the tax, but by direct action for that purpose.
It may be that the water company has been wronged, and that in a proper proceeding it may be made to appear that some part, if not all, of this water tax should not be levied against it, or that it is entitled to legal redress or equitable relief, arising out of the construction of the village water system; but we think that should not be determined in this summary manner, on a motion to set aside the order in aid of the collection of the tax. (Matter of White, 122 App. Div. 93.) The village authorities had jurisdiction of the tax debtor and of its property, and we think it has not been shown that the tax is void.
The order should be reversed, with ten dollars costs and disbursements, and the motion denied, with ten dollars costs.
All concurred, except McLennan, P. J., and Williams, J., who dissented upon the opinion of Emerson, County Judge.
Order reversed, with ten dollars costs and disbursements, and motion denied, with ten dollars costs.