author: Meyer, J.

text:
    Jerome Laufer, Respondent, v Ira Ostrow et al., Appellants.
    Argued February 15, 1982;
    decided March 30, 1982

      POINTS OF COUNSEL

      Paul S. Sibener for appellants.
    Defendants have not engaged in activities in the State of New York sufficient to constitute “doing business” under CPLR 301. (Lamarr v Klein, 35 AD2d 248; Erving v Virginia Squires Basketball Club, 349 F Supp 709; Frummer v Hilton Hotels Int., 19 NY2d 533, 389 US 923; Carbone v Fort Erie Jockey Club, 47 AD2d 337; New England Laminates Co. v Murphy, 79 Misc 2d 1025; Millner Co. v Noudar, Lda., 24 AD2d 326; Fremay, Inc. v Modern Plastic Mach. Corp., 15 AD2d 235; Irgang v Pelton & Crane Co., 42 Misc 2d 70; Meunier v Stebo, Inc., 38 AD2d 590.)

      David I. Rosenberg for respondent.
    Defendants are doing business within the State of New York and are, thus, subject to the jurisdiction of this court pursuant to CPLR 301. (Tauza v Susquehanna Coal Co., 220 NY 259; Traub v Robinson-American Corp., 82 Misc 2d 222; Elman v Belson, 32 AD2d 422; Sterling Novelty Corp. v Frank & Hirsch Distr. Co., 299 NY 208; Grunder v Premier Ind. Corp., 12 AD2d 998, 13 AD2d 717; Frazier v Ornamental Iron Works Co., 18 Misc 2d 338; New England Laminates Co. v Murphy, 79 Misc 2d 1025; Irgang v Pelton & Crane Co., 42 Misc 2d 70.)
   OPINION OF THE COURT

Meyer, J.

A New Jersey corporation, the business of which is limited to sales of a product manufactured by a North Carolina company, which employs several sales representatives to solicit and service New York purchasers, and the president of which calls on such purchasers together with the sales representative handling the account, is doing business in New York and is, therefore, subject under CPLR 301 to the jurisdiction of New York courts in an action for breach of contract, conversion and an accounting brought by one of the New York sales representatives, notwithstanding that the corporation accepts all sales at its New Jersey office and has no office, telephone or bank account in New York and notwithstanding that some of the accounts involved in the action are with purchasers outside New York. The president of the New Jersey corporation is not individually subject to the jurisdiction of New York’s courts, however, there being no evidence that he engaged in any activity in New York other than on behalf of the sales corporation. The order of the Appellate Division should, therefore, be modified, with costs to defendant Ostrow against plaintiff, by granting the motion to dismiss as to him for want of jurisdiction, and as so modified, should be affirmed, with costs to the plaintiff against the corporate defendant.

I

Defendant Mt. Olive Corporation is a New Jersey corporation the sole business of which is acting as sales agent for Pem-Kay Furniture Company, a North Carolina manufacturer. Ira Ostrow is president and chief salesman of Mt. Olive and a principal in Pem-Kay. Mt. Olive is not licensed to do business in New York and maintains no office, telephone or bank account in New York. Plaintiff Laufer, a New York resident, was hired by Ostrow to act as one of several sales representatives for Mt. Olive on a commission basis and was paid for his services by that corporation. The relationship continued for several years, during which plaintiff solicited the business of purchasers both within and outside New York, and serviced the accounts he obtained by following up on the order, attending to complaints, delivering swatches and sales materials, and running clinics for the personnel of the purchasers. Though he was not required by Mt. Olive to do so and was not reimbursed for the expense of doing so, plaintiff maintained an office in his home. Representatives other than plaintiff also solicited and serviced New York accounts as well as accounts outside New York. Ostrow on at least 8 to 10 occasions per year called on New York accounts with plaintiff, as he did also with the other representatives.

Sales orders obtained by Mt. Olive in 1978 approximated $2,000,000 from such New York accounts as Macy’s, Saks Furniture, W&J Sloane and Gertz. All sales were approved by Mt. Olive in New Jersey and forwarded by Mt. Olive to Pem-Kay to be filled. The furniture purchased was shipped by Pem-Kay directly to the purchaser, which made payment either to Pem-Kay or its factors in North Carolina.

Plaintiff’s relationship with Mt. Olive having terminated in 1979 by mutual consent, plaintiff brought an action in New York seeking to recover commissions due, for conversion of moneys due and owing plaintiff and for an accounting. Defendants moved to dismiss pursuant to CPLR 3211 (subd [a], par 8) and plaintiff cross-moved for discovery. The cross motion was granted and after discovery was had the jurisdictional issue was tried by Trial Term. Following that trial the Trial Term Judge denied the motion to dismiss the complaint finding that defendants’ New York contacts were “systematic, regular and continuous” (107 Misc 2d 690, 695), and expressly rejected defendants’ argument that mere solicitation was an insufficient basis for jurisdiction on the ground that the business of Mt. Olive was solicitation.

The Appellate Division, with one dissent, affirmed on the reasoning of Trial Term but granted leave to appeal to our court on a certified question asking whether its order was properly made. The dissenting Justice voted to dismiss the complaint because solicitation did not constitute doing business, even though the sole business of the corporation was soliciting sales. Neither court below differentiated between the individual defendant and corporate defendant. We conclude that the corporate defendant was amenable to jurisdiction because it was doing business in New York, but that the individual defendant, who performed no act in New York for himself, as distinct from the corporation, is not.

II

Under CPLR 301 “the authority of the New York courts [to exercise jurisdiction over a foreign corporation] is based solely upon the fact that the defendant is ‘engaged in such a continuous and systematic course of “doing business” here as to warrant a finding of its “presence” in this jurisdiction’” (McGowan v Smith, 52 NY2d 268, 272, quoting from Simonson v International Bank, 14 NY2d 281, 285; accord Delagi v Volkswagenwerk AG of Wolfsburg, Germany, 29 NY2d 426, 430-431; Frummer v Hilton Hotels Int., 19 NY2d 533, cert den 389 US 923). The test, though not “precise” (Tauza v Susquehanna Coal Co., 220 NY 259, 268), is a “simple pragmatic one” (Bryant v Finnish Nat. Airline, 15 NY2d 426, 432): is the aggregate of the corporation’s activities in the State such that it may be said to be “present” in the State “not occasionally or casually, but with a fair measure of permanence and continuity” (Tauza v Susquehanna Coal Co., 220 NY 259, 267, supra) and is the quality and nature of the corporation’s contacts with the State sufficient to make it reasonable and just according to “ ‘traditional notions of fair play and substantial justice’ ” that it be required to defend the action here (International Shoe Co. v Washington, 326 US 310, 316, 320; see, also, Rush v Sauchuk, 444 US 320, 327; World-Wide Volkswagen Corp. v Woodson, 444 US 286, 292; Frummer v Hilton Hotels Int., 19 NY2d 533, 536, supra).

Solicitation of business alone will not justify a finding of corporate presence in New York with respect to a foreign manufacturer or purveyor of services (Miller v Surf Props., 4 NY2d 475, 480), but when there are activities of substance in addition to solicitation there is presence and, therefore, jurisdiction (Bryant v Finnish Nat. Airline, 15 NY2d 426, 432, supra [office, office staff and bank account in New York]; Elish v St. Louis Southwestern Ry. Co., 305 NY 267, 270 [office, officers, financial transactions and directors meetings in New York]; see, also, Miller v Surf Props., 4 NY2d 475, 481, supra; Aquascutum of London v S.S. American Champion, 426 F2d 205, 211; Dunn v Southern Charter, 506 F Supp 564, 567). Mt. Olive argues from Miller v Surf Props. (supra), and Delagi v Volkswagenwerk AG of Wolfsburg, Germany (29 NY2d 426, supra) that as a matter of law it cannot be found present in New York, its activity here, no matter what the volume of sales concluded, being no more than solicitation. Those cases afford it no protection, however, for they hold simply that a foreign supplier of goods or services for whom an independent agency solicits orders from New York purchasers is not present in New York and may not be sued here, however substantial in amount the resulting orders. In the context of the present case the rules of those cases would, as Trial Term noted, protect Pem-Kay Furniture Company, the North Carolina manufacturer, from suit in New York on the basis of Mt. Olive’s activity here, unless it could be shown additionally that Pem-Kay exercised parent-subsidiary control oyer Mt, Olive (Delagi v Volkswagenwerk AG, supra, at p 432).

At issue here, however, is not jurisdiction over the foreign supplier but over Mt. Olive, the soliciting agency. A corporation, the business of which is limited to the soliciting of orders and servicing of purchasers’ accounts, engages directly in its corporate activity when, by persons in its employ and present in New York, it solicits and services New York accounts on a continuous basis (Grunder v Premier Ind. Corp., 12 AD2d 998, mot for lv to app den 13 AD2d 717; Benware v Acme Chem. Co., 284 App Div 760; see Artcraft Sample Card Co. v Stein, 3 Misc 2d 562). In Benware, Justice Bergan, as he then was, stated for the court that a foreign corporation which had no office, no bank account and no property in New York but employed six full-time sales representatives in the State was doing business here because “sales are a main part of its corporate function, [and] such extensive and persistent corporate activity ought to be treated as carrying out in New York a corporate function on a scale sufficient to be seen, felt, palpitated and máde subject to process” (284 App Div, at p 761).

Solicitation and servicing by a foreign corporate sales agency of New York accounts through sales representatives present in New York, if systematic and continuous, is enough to subject the sales agency corporation to New York jurisdiction. The volume of business thus generated, while not determinative, may have relevance. As noted above, Trial Term found that Mt. Olive’s activities in New York were “systematic, regular and continuous” and that finding, having been affirmed by the Appellate Division, is beyond our review unless there is no support for it in the record. That it is adequately supported cannot be doubted. Mt. Olive employed three sales representatives, each of whom were assigned accounts not only in New York but throughout the country. They not only solicited sales in New York, but ran clinics for the customers, followed up on complaints or difficulties, delivered swatches and sales materials. Moreover, Ostrow, Mt. Olive’s president, worked with the sales representatives in calling on New York accounts, making 8 to 10 such calls in a year with plaintiff alone. Such activity is purposeful and continuing rather than casual and limited in time (compare Reiner & Co. v Schwartz, 41 NY2d 648, with McKee Elec. Co. v Rauland-Borg Corp., 20 NY2d 377). Such sustained and systematic activity in New York by Mt. Olive is sufficient to subject it to suit by one of the salesmen engaged in the solicitation and servicing without regard to the volume of business done, but the volume of Mt. Olive’s New York sales is relevant as to whether there is any unfairness or unreasonableness in allowing the action to be brought against it in New York. That volume being at the rate of $2,000,000 a year, it is evident that there is no unfairness in so doing (cf. Nicholstone Book Bindery v Chelsea House Pub., 621 SW2d 560 [Tenn], cert den 455 US ___, 102 S Ct 1623).

Nor is there any problem in that jurisdiction is predicated in part upon plaintiff’s aótivities or in that the commissions for which he sues involve both New York and out of New York sales. Though a plaintiff may not for purposes of CPLR 302 jurisdiction rely solely upon his own activity in New York (Haar v Armendaris Corp., 31 NY2d 1040, revg on the dissent below 40 AD2d 769; Parke-Bernet Galleries v Franklyn, 26 NY2d 13, 19, n 2), there are here substantial activities by Ostrow and sales representatives other than plaintiff to sustain jurisdiction. We need not, therefore, consider whether the rule against basing jurisdiction on plaintiff’s activities alone applies in CPLR 301 cases as well (compare Del Bello v Japanese Steak House, 43 AD2d 455, with Traub v Robertson-American Corp., 82 Misc 2d 222, 228).

As concerns the fact that not all of the commissions sought arise out of New York sales, we held in Tauza v Susquehanna Coal Co. (220 NY 259, 268, supra) that jurisdiction predicated upon corporate presence “does not fail because the cause of action sued upon has no relation in its origin to the business here transacted” and the Supreme Court has made several similar rulings (Perkins v Benguet Min. Co., 342 US 437, 446; International Shoe Co. v Washington, 326 US 310, 318, supra; accord Restatement, Conflict of Laws 2d, § 47, subd [2], and Comment e).

The Appellate Division’s order was, therefore, correct in relation to so much of the motion as sought to dismiss the action against Mt. Olive.

Ill

Insofar as that order held defendant Ostrow individually to be subject to New York jurisdiction, however, it was erroneous. We may assume, without deciding, that an individual who is in fact doing business so as to be present within the State is subject to jurisdiction (see Abkco Inds. v Lennon, 52 AD2d 435, affg on this point 85 Misc 2d 465; Restatement, Conflict of Laws 2d, § 35, subd [3], and Comment e; Siegel, New York Practice, § 84, McLaughlin, Supplementary Practice Commentaries, McKinney’s Cons Laws of NY, Book 7B, CPLR 301-500 [1981-1982 Supp], pp 8-9; 1 Weinstein-Korn-Miller, NY Civ Prac, par 301.15). Here, however, although the complaint alleges that Os-trow “is and was * * * doing business in the State of New York”, there was no evidence at the trial to establish that Ostrow as an individual engaged in any activity whatsoever in New York. Ostrow testified without contradiction that in hiring plaintiff, as well as in calling upon accounts in New York with plaintiff, he acted on behalf of Mt. Olive rather than himself. Although a corporation can act only through an employee or agent, the employee or agent being a live rather than a fictional being can act on behalf of himself or his employer or principal. He does not subject himself, individually, to the CPLR 301 jurisdiction of our courts, however, unless he is doing business in our State individually (Escude Cruz v Ortho Pharm. Corp., 619 F2d 902, 906; Lehigh Val. Inds. v Birenbaum, 527 F2d 87, 93; Weller v Cromwell Oil Co., 504 F2d 927; Yardis Corp. v Cirami, 76 Misc 2d 793). Nor does the claimed conversion cause of action furnish any basis for CPLR 302 jurisdiction over Ostrow individually (Fantis Foods v Standard Importing Co., 49 NY2d 317, 326-327).

Accordingly, the order of the Appellate Division should be modified, with "costs to defendant Ostrow against plaintiff, by granting the motion to dismiss as to him, and, as so modified, should be affirmed, with costs to plaintiff against the corporate defendant. The question certified should be answered in the negative.

Chief Judge Cooke and Judges Jasen, Gabrielli, Jones, Wachtler and Fuchsberg concur.

Order modified, with costs to defendant Ostrow against plaintiff, in accordance with the opinion herein and, as so modified, affirmed, with costs to plaintiff against the corporate defendant. Question certified answered in the negative.


source: Caselaw Access Project

author: Chief Judge Cooke.

license: Public Domain

text:
    In the Matter of Peter Pastrana, Appellant, v Edward A. Baker, as County Court Judge of Nassau County, et al., Respondents.
    Argued February 17, 1982;
    decided April 1, 1982

      POINTS OF COUNSEL

      Arnold E. Wallach and Harold Borg for appellant.
    I. To allow another trial would place appellant in double jeopardy. (Matter of Sidewitz v Vaccaro, 51 AD2d 745; United States v Jorn, 400 US 470; Arizona v Washington, 434 US 497; People v Cruciani, 36 NY2d 304; People v Abbamonte, 43 NY2d 74; Matter of Auer v Smith, 77 AD2d 172; Matter of Wiley v Altman, 76 AD2d 701; Jackson v Virginia, 443 US 307; People v Henderson, 41 NY2d 233.) II. Respondent should be collaterally estopped from further prosecution. (Gilberg v Barbieri, 53 NY2d 285; Ashe v Swenson, 397 US 436; Harris v Washington, 404 US 55; Matter of Wiley v Altman, 76 AD2d 701.)

      Denis Dillon, District Attorney (Judith R. Sternberg and Anthony J. Gírese of counsel), for respondents.
    I. The trial court did not abuse its discretion when it discharged the jurors after they had deliberated extensively and had three times declared themselves deadlocked. (People v Michael, 48 NY2d 1; Matter of Sidewitz v Vaccaro, 51 AD2d 745; Arizona v Washington, 434 US 497; Matter of Napoli v Supreme Ct. of State of N. Y., 40 AD2d 159, 33 NY2d 980.) II. The trial court properly scheduled a retrial for that count of the indictment on which the jury had not rendered a verdict. (People v Walsh, 44 NY2d 631; Matter of Oliver v Justices of Supreme Ct. of N. Y. County, 44 AD2d 823, 36 NY2d 53; People v Moorehead, 82 Misc 2d 1064; People v Stanfield, 36 NY2d 467; People v Strong, 37 NY2d 568; Matter of Doolen v Darrigrand, 58 AD2d 1028, 42 NY2d 810.) III. Neither double jeopardy nor collateral estoppel is a bar to appellant’s retrial on the charge on which his first jury was hung. (Burks v United States, 437 US 1; United States v Martin Linen Supply Co., 430 US 564; Sanabria v

      United States, 437 US 54; People v Key, 45 NY2d 111; Arizona v Washington, 434 US 495; United States v Perez, 9 Wheat [22 US] 579; People v Boynton, 67 AD2d 982; People v Mayo, 48 NY2d 245; Ashe v Swenson, 397 US 436; Gramatan Home Investors Corp. v Lopez, 46 NY2d 481.)
   OPINION OF THE COURT

Chief Judge Cooke.

Reprosecution on a charge is not barred by the constitutional protection against double jeopardy when the earlier “acquittal” was based on an erroneous legal ruling not involving any review of the facts. The retrial of a lesser count, on which the jury deadlocked, is not prohibited when, after discharging the jury and without adjudication on the facts, the Judge ordered an acquittal in the mistaken belief that the jury’s acquittal on the greater count required the same result on the lesser. The order of the Appellate Division, therefore, should be affirmed.

Petitioner was charged with assault. Two counts of the indictment were submitted to the jury: count one for assault in the first degree (intentionally causing serious physical injury); and count two for assault in the second degree (recklessly causing serious physical injury). The jury retired to deliberate at 2:00 p.m. on March 17, 1980. Deliberations continued the next day until 9:36 p.m., when the jury -reported itself deadlocked, but agreed as to one unidentified charge. The Judge directed them to return to the deliberations room and prepare their verdict sheet. The jury did so and immediately returned, reporting not guilty on the first count and no verdict on the second count.

Referring to some equivocality in the jury’s note, the Trial Judge again returned the jury to its deliberations. At 10:06 p.m., the jury sent out a message, reiterating its earlier decision of not guilty on count one and a deadlock on count two.

At this point, the court sua sponte discharged the jury without objection by counsel. The Trial Judge then began to schedule the case for a new trial, but instead ordered an acquittal on the second count based on the acquittal on the first count. The prosecutor attempted to object or to obtain an explanation of the ruling. The Trial Judge, however, in haste, gave the prosecutor an inadequate opportunity to elaborate.

Approximately three weeks later, the Trial Judge vacated his order of acquittal upon an oral application by the District Attorney. The Judge cited as the reason for vacatur his misstatement that an acquittal on the first count required an acquittal on the second as well. Petitionér’s counsel had no prior notice of the motion, and extemporaneously argued that the jury’s decision was a compromise verdict.

After a date was set for his retrial on the second count, petitioner commenced this article 78 proceeding in the nature of prohibition to prevent retrial. Petitioner asserted that in light of the court’s “acquittal”, a new trial would subject him to double jeopardy. The Appellate Division dismissed the petition on the merits, holding that the Trial Judge’s order had been a mistake of law and not a determination on the facts.

There is no question that the court erred when it ruled that petitioner could not be retried because the acquittal on count one required an acquittal on count two. Under CPL 310.70 (subd 2), retrial is barred only if inconsistent verdicts would result or there has been a conviction and the remaining counts are those for which consecutive sentences could not be imposed in the event of conviction. Neither situation is present here. Inasmuch as each count involved a different theory of criminal liability and petitioner was found not guilty on count one, retrial was not barred on count two.

The issue to be decided is whether the Trial Judge’s ruling, denominated an “acquittal”, constituted such an order as would foreclose any further prosecution of petitioner on the second count. It is fundamental that both the Federal and State Constitutions’ prohibitions against double jeopardy (US Const, 5th Amdt; NY Const, art I, § 6) preclude retrial after a determination going to factual innocence. Although the term “acquit” evokes the concept of a determination based on factual grounds, the mere use of that word will not preclude a reviewing court from ascertaining the true nature of the decree in light of all the circumstances (see United States v Scott, 437 US 82, 96). A new trial may be held if the dismissal or acquittal does not amount to an adjudication on the facts, even if jeopardy has attached (People v Kurtz, 51 NY2d 380, 386-387; see United States v Scott, supra). The order of dismissal may occur even after the jury has been discharged, without proscribing a new trial.

In the present case, the Trial Judge ordered the acquittal on the second count because he believed it necessary in light of the verdict on count one. The timing of his decision and the reason stated therefor permit no conclusion other than that the court made its ruling as a legal matter. At most, the court attributed to the jury’s acquittal on count one an incorrect legal effect — acquittal on count two. Under no reasonable view can it be said that the Judge ruled for petitioner on the basis of a review of the facts.

Inasmuch as the “acquittal” was erroneously entered and it was not founded on an adjudication of the facts, there is no bar to vacating that order and retrying petitioner on the second count. In doing so, petitioner will not be subjected to double jeopardy.

Petitioner’s other points are either unpreserved or without merit.

Accordingly, the judgment of the Appellate Division should be affirmed, without costs.

Judges Jasen, Gabrielli, Jones, Wachtler, Fuchsberg and Meyer concur.

Judgment affirmed.

       The following colloquy ensued at the end of the trial:
      “the court: This case is set down for a new trial for April 28, 1980 on the second charge. Wait a minute, no way, an acquittal on the first charge is an acquittal of both charges.
      “defense counsel: That’s right.
      “the court: The defendant is discharged. Bail is exonerated.
      “defense counsel: Thank you, Your Honor.
      “prosecutor: How is that, Judge?
      “the court: Vaya con Dios. That’s the way it is.
      “prosecutor: How so, Judge? How is an acquittal on —
      “the court: It is inclusive.
      “defense counsel: That’s the law. It’s inclusive.
      “prosecutor: It’s inclusive? He was found not guilty of one count of the indictment.
      “defense counsel: That’s all inclusive. My motion was going to be made.
      “the court: Motion granted. Good night.”


author: Jones, J.

text:
    In the Matter of Public Service Commission of the State of New York, Respondent, v Rochester Telephone Corporation et al., Appellants.
    Argued February 11, 1982;
    decided April 1, 1982

      POINTS OF COUNSEL

      Michael T. Tomaino, Roger H. Kessel and Robert B. Stiles for appellants.
    I. The condition in the Commission’s January 24, 1979 order requiring approval prior to “any further investing in Rotelcom” by Rochester cannot properly be applied to nonutility revenues and was never so intended. (Matter of Village of Boonville v Maltbie, 272 NY 40; Matter of National Merchandising Corp. v Public Serv. Comm. of State of N. Y., 5 NY2d 485; Matter of City of New York v Public Serv. Comm. of State of N. Y., 53 AD2d 164, 42 NY2d 916; People ex rel. Iroquois Gas Corp. v Public Serv. Comm. of State of N. Y., 264 NY 17; Matter of

      Rochester Gas & Elec. Corp. v Maltbie, 273 App Div 114, 298 NY 867; Matter of Lockport Light, Heat & Power Co. v Maltbie, 257 App Div 11; United States v Chicago R.R. Co., 282 US 311; Atwell v Power Auth. of State of N. Y., 67 AD2d 365; Collard v Incorporated Vil. of Flower Hill, 52 NY2d 594.) II. Dividends received by Rochester from Highland and Sylvan do not constitute revenue received from the rendition of public service within the meaning of section 107 of the Public Service Law. (Public Serv. Comm. v Taconic Tel. Corp., 109 Misc 2d 807.) III. The Commission’s attempt to assert jurisdiction over the dividend income received by Rochester contravenes section 110 of the Public Service Law and the Commission’s own rules.

      NanCy A. Spiegel and David E. Blabey for respondent.
    I. Dividends received by Rochester from Sylvan Lake and Highland are “revenues received from the rendition of public service” within the meaning of section 107 of the Public Service Law. II. The investments by Rochester in Rotelcom were not derived from dividends received from Highland and Sylvan Lake. III. Rochester is bound by the terms of the Commission order of January 24, 1979. (City of Utica v Hanna, 249 NY 26; Callanan Rd. Co. v United States, 345 US 507.)
   OPINION OF THE COURT

Jones, J.

In a proceeding brought to enforce compliance by a public utility with a condition contained in an order of the governmental regulating agency, the utility may not challenge the authority of the agency to impose the condition when the utility has failed to assert such challenge by a timely proceeding under CPLR article 78.

Rotelcom, Inc., a nonregulated corporation engaged in marketing and distribution of telecommunications systems and equipment, is a wholly owned subsidiary of Rochester Telephone Corporation, a public utility subject to the jurisdiction of the New York State Public Service Commission (Commission). Following an application by Rochester Telephone pursuant to section 107 of the Public Service Law for permission to use a portion of its revenues for financing divisions of Rotelcom, on January 24, 1979 the Commission granted an order authorizing such use by Rochester Telephone of revenues in amounts aggregating not more than $2,200,000. The order further provided that “the authority granted by this order is upon the express condition that prior to any further investing in Rotelcom, Inc., in excess of $2,200,000, Commission approval will first be sought and received”.

Thereafter it was discovered by an accountant of the Public Service Commission assigned to review Rochester Telephone’s books and records that, following issuance of the above order and up to July 7, 1980, Rochester Telephone had from time to time invested in Rotelcom, in addition to the $2,200,000 authorized by the order, approximately $5,400,000, the amount of quarterly dividends received by the utility from two wholly owned subsidiary local telephone companies. On July 9, 1980 the Commission instituted this proceeding pursuant to then section 103 (now section 26) of the Public Service Law, alleging that the latter investments, made without prior Commission approval, were in violation both of section 107 of the Public Service Law and of the condition of the order of January 24, 1979. The petition sought a judgment directing Rotelcom to restore the unauthorized investments to Rochester Telephone and prohibiting any further investments by Rochester Telephone in Rotelcom without consent having first been obtained from the Commission. Respondents’ answer denied that Rochester Telephone’s investments of dividend income received from its two wholly owned subsidiaries required prior consent by the Commission, either by reason of section 107 of the statute or of the condition in the Commission’s earlier order, asserting that the income was not revenue attributable to the rendition of public service.

Supreme Court dismissed the petition on the ground that income derived by Rochester Telephone from ownership of stock in local telephone companies did not constitute “revenues received from the rendition of public service” and was therefore not subject to prior Commission approval under section 107 of the Public Service Law with respect to its use. That court made no express determination as to the effect of the condition contained in the Commission’s order of January 24, 1979. The Appellate Division, however, reversing Supreme Court and awarding the relief requested in the petition, determined that the petition should have been granted without consideration of the issue whether the phrase “revenues received from the rendition of public service” used in section 107 includes dividends from ownership interests in regulated utilities because Rochester Telephone had made no timely challenge to the bar in the Commission’s order against any further investments by it in Rotelcom without prior Commission approval, which bar had been violated.

We now affirm the Appellate Division’s disposition. In so doing, we express no view as to the reach of the language employed in section 107 of the Public Service Law or as to the statements with respect thereto set out in the opinion of that court. The language of the condition contained in the Commission’s order of January 24, 1979 is explicit and unmistakable — it prohibits “any further investing in Rotelcom, Inc.” without prior Commission approval, The transfer to Rotelcom by Rochester Telephone, between the date of the order and the institution of this proceeding, of $5,400,000 (the amount of the dividends received from the investor’s subsidiaries) was a patent violation of that clear injunction.

Rochester Telephone’s assertion that the Commission itself understood its condition as a limitation not on any further investments (as the order explicitly provides) but only on future investments of revenues generated by rendition of public service, and its reliance on a letter by the Commission’s chairman to a competitor of Rotelcom dated June 19, 1979 as the predicate for that assertion, are ill-founded. The letter simply recites the position taken by Rochester Telephone with respect to the legality of its Rotelcom investments already made in excess of the sum authorized; it makes no reference to the 1979 order and includes no statement that nonutility revenues are outside the scope of the condition which it contained. Moreover, if it had been the Commission’s intention to rely only on its regulatory authority under section 107 there would have been no occasion to include any condition in the order.

The utility’s second, principal argument — that the provision in the Commission’s order barring unapproved, additional investments in Rotelcom must necessarily be limited only to investments of public service generated revenue because it is only over such revenue that the Public Service Commission has regulatory power under section 107 of the statute, and that the agency has only the authority expressly conferred on it by statute and cannot, by the device of including a condition in its order, expand such authority — addresses the legitimacy of the condition contained in the order and thus comes too late in this proceeding. The cases which Rochester Telephone cites and on which it relies for such substantive propositions are accordingly inapposite in the present proceeding. Any claim that the restriction on future investments, extending to “any further investing”, was overbroad and beyond the authority of the Commission would properly have been the subject of a proceeding under CPLR article 78 to review the Commission’s order. The utility, having failed to avail itself of that procedure — designed for challenges of just the sort it now seeks to raise and carrying a four-month period of limitation — may not in this Commission’s enforcement proceeding, instituted 17 months after issuance of the order and after the utility has taken full advantage of the permission therein granted to it to invest $2,200,000 in Rotelcom, mount an attack on the condition in the order as an excessive exercise of the Commission’s power. As the Appellate Division aptly observed, “the time for such a challenge is now long past” (81 AD2d, p 202).

No authority for permitting this tardy assault on what was presumably a material component of the order granted on Rochester Telephone’s application has been tendered by the utility. Matter of Lockport Light, Heat & Power Co. v Maltbie (257 App Div 11), an earlier case from the Third Department, did not consider the availability of another remedy with a shorter Statute of Limitations for a chailenge to a condition imposed in a prior order of the Public Service Commission; to the extent that the result in that case may be viewed as contrary to that in the present case, decided by the same court, it must be regarded as having been superseded in that department. United States v Chicago R.R. Co. (282 US 311) and Public Serv. Comm. v Montana-Dakota Utilities Co. (100 NW2d 140 [ND]) involved judicial proceedings instituted by the public utility or public carrier directly to challenge conditions of agency orders. While People ex rel. Utilities Comm. v City of Loveland (76 Col 188) did allow a collateral attack on an order of the regulatory agency, the attack was there sustained on jurisdictional grounds. In that case the Colorado Public Utilities Commission brought a proceeding to enforce an order denying the application of the City of Love-land for permission to construct a municipal electric light and power plant and to enjoin its construction. The city challenged the authority of the commission to deny its application. The commission’s contention that, inasmuch as the city had failed to challenge its order by a timely writ of review, the city was barred from raising the challenge in the enforcement proceeding was rejected. Because the city’s challenge, based on an express prohibition in the Colorado Constitution against commission interference with municipal improvements, went to the jurisdiction of the commission, the court held that the city was not precluded by its failure to have sought a writ of review. In the case now before us there can be no assertion of lack of jurisdiction, Rochester Telephone (a regulated public utility) being subject to the supervision of the agency and the order of January 24, 1979 being one of a kind which the Commission was empowered to issue under section 107 of the Public Service Law; at most, the inclusion of the challenged condition would represent only an excessive exercise of the authority vested in the Commission.

Nor does Rochester Telephone advance any policy consideration for permitting a challenge at this late date to the propriety of the condition attached to the Commission’s order which authorized an investment of more than two million dollars in Rotelcom by Rochester Telephone. Indeed, policy considerations militate against such permission. We have recognized that, when financial planning on a significant scale is involved, the prompt assertion and resolution of challenges to governmental agency actions and directives are mutually beneficial (Solnick v Whalen, 49 NY2d 224, 232-233). This would certainly have been so in the present case. The utility would have known whether to predicate its financial planning on the necessity to obtain Commission approval of all further investment in Rotelcom or only of further investment of revenues received from the rendition of public service. The Commission for its part, would have been in a position to decide whether to grant unconditional approval of the initial investment of $2,200,000 in reliance on its continuing regulatory authority under section 107 as to future investments or to withdraw its approval of the initial investment.

Because Rochester Telephone is now precluded from contesting the restriction against the investments of $5,400,000 made in Rotelcom and because those investments were made without prior approval of the Commission in contravention of the order of January 24,1979, the Commission was entitled to the relief which has been awarded to it by the Appellate Division’s order. Accordingly, that order should be affirmed, with costs.

Chief Judge Cooke and Judges Jasen, Wachtler, Fuchsberg and Meyer concur; Judge Gabrielli taking no part.

Order affirmed.

       Public Service Law, § 107 provides:
      "§ 107. Approval of the use of revenues

        “Except with the consent and approval of the public service commission first had and obtained, no public utility shall use revenues received from the rendition of public service within the state for any purpose other than its operating, maintenance and depreciation expenses, the construction, extension, improvement or maintenance of its facilities and service, the payment of its indebtedness and interest thereon, and the payment of dividends to its stockholders.”


author: Gabrielli, J.

text:
    In the Matter of New York Botanical Garden, Respondent, v Assessors of the Town of Washington et al., Appellants.
    Argued February 16, 1982;
    decided April 1, 1982

      POINTS OF COUNSEL

      John K. Gifford and James E. Nelson for appellants.
    I. The burden of proof in cases concerning section 420 is on the nonprofit organization seeking exempt status. (Matter of City of Lackawanna v State Bd. of Equalization & Assessment of State of N. Y., 16 NY2d 222; County of Herkimer v Village of Herkimer, 251 App Div 126, 279 NY 560; Matter of Association of Bar of City of N. Y. v Lewisohn, 34 NY2d 143; People ex rel. Watchtower Bible & Tract Soc. v Haring, 8 NY2d 350; Mohonk Trust v Board of Assessors of Town of Gardiner, 47 NY2d 476; Matter of St. Joseph’s Health Center Props. v Srogi, 51 NY2d 127; Matter of Grace v New York State Tax Comm., 37 NY2d 193; Matter of Holy Spirit Assn. for Unification of World Christianity v Tax Comm. of City of N. Y., 81 AD2d 64; Matter of F.O.R. Holding Co. v Board of Assessors of Town of Clarkstown, 45 AD2d 875; Matter of Holy Spirit Assn. for Unification of World Christianity v Tax Comm. of City of N. Y., 62 AD2d 188.) II. Petitioner is not primarily an environmental and conservation organization and does not use its arboretum primarily for those purposes. (Mohonk Trust v Board of Assessors of Town of Gardiner, 47 NY2d 476; Matter of Association of Bar of City of N. Y. v Lewisohn, 34 NY2d 143; Matter of De Peyster, 210 NY 216; Matter of Francis, 121 App Div 129; Matter of North Manursing Wildlife Sanctuary [City of Rye], 48 NY2d 135; Matter of Stuyvesant Sq. Thrift Shop v Tax Comm. of City of N. Y., 54 NY2d 735.) III. Petitioner is not organized exclusively for an exempt purpose. (Matter of Swedenborg Foundation v Lewisohn, 40 NY2d 87; Matter of Explorer’s Club v Lewisohn, 34 NY2d 143; Matter of Mergentime, 129 App Div 367, 195 NY 572; Matter of Trustees of Columbia Univ. in City of N. Y. v Town of Orangetown, 93 Misc 2d 261, 60 AD2d 582; Matter of Watchtower Bible & Tract Soc. of N. Y. v Lewisohn, 35 NY2d 92; Matter of Stuyvesant Sq. Thrift Shop v Tax Comm. of City of N. Y., 54 NY2d 735; Matter of MacDowell, 217 NY 454; Matter of Frasch, 245 NY 174; Matter of Francis, 121 App Div 129; Matter of Grace v New York State Tax Comm., 37 NY2d 193.) IV. The arboretum is not used exclusively for exempt purposes. (Matter of Chautauqua Inst. v Town of Chautauqua, 35 AD2d 1.) V. Even if petitioner were held to be an environmental and conservation organization or an educational organization, this case would be a proper one for apportionment. (Matter of St. Luke’s Hosp. v Boyland, 12 NY2d 135; Matter of Sailors’ Snug Harbor in City of N. Y. v Tax Comm. of City of N. Y., 26 NY2d 444; Matter of Board of Foreign Missions of M.E. Church v Board of Assessors of City of Yonkers, 244 NY 42; Matter of Genesee Hosp. v Wagner, 47 AD2d 37, 39 NY2d 863; Matter of Community-General Hosp. of Greater Syracuse v Town of Onondaga, 80 Misc 2d 96.)

      John J. Loflin, J. Joseph McGowan, Henry deF. Baldwin and Gail A. Schneider for respondent.
    I. The garden is organized and conducted and uses its property for exempt purposes within the meaning of section 420 (subd 1, par [a]) of the Real Property Tax Law. (Matter of Association of Bar of City of N. Y. v Lewisohn, 34 NY2d 143; People ex rel. Watchtower Bible & Tract Soc. v Haring, 8 NY2d 350; Mohonk Trust v Board of Assessors of Town of Gardiner, 47 NY2d 476; Matter of Watchtower Bible & Tract Soc. of N. Y. v Lewisohn, 35 NY2d 92; Matter of North Manursing Wildlife Sanctuary [City of Rye], 48 NY2d 135; People ex rel. Untermeyer v McGregor, 295 NY 237; Matter of MacDowell, 217 NY 454; Matter of Rockefeller, 177 App Div 786; Matter of Church Home of Prot. Episcopal Church in City of Rochester v Wagner, 58 AD2d 972.) II. Research conducted by the garden is a charitable and educational activity. (Matter of Frasch, 245 NY 174; Matter of Trustees of Columbia Univ. in City of N. Y. v Town of Orangetown, 93 Misc 2d 261, 60 AD2d 582; Mohonk Trust v Board of Assessors of Town of Gardiner, 47 NY2d 476.) III. The record in this case supports the garden’s claim that the arboretum is tax exempt. (Matter of Trustees of Columbia Univ. in City of N. Y. v Town of Orangetown, 93 Misc 2d 261, 60 AD2d 582.) IV. The garden uses the arboretum property primarily for the exempt purposes for which it is organized and conducted and, therefore, this is not a proper case for apportionment. (Matter of St. Luke’s Hosp. v Boyland, 12 NY2d 135; People ex rel. Watchtower Bible & Tract Soc. v Haring, 8 NY2d 350; Matter of American Mgt. Assns. v Assessor of Town of Madison, 63 AD2d 1102, 47 NY2d 841; Matter of Genesee Hosp. v Wagner, 47 AD2d 37, 39 NY2d 863; St. Barbara’s R. C. Church v City of New York, 243 App Div 371; Matter of Syracuse Univ., 124 Misc 788, 214 App Div 375; Telaro v Telaro, 25 NY2d 433; Flagg v Nichols, 307 NY 96.)
   OPINION OF THE COURT

Gabrielli, J.

In this proceeding, petitioner seeks to have certain of its real property declared tax exempt. We agree with the Appellate Division that the taxing authority has failed to prove that petitioner is not organized or conducted primarily for exempt purposes or that the subject property is not used primarily for exempt purposes. We therefore hold that petitioner is entitled to the real property tax exemption sought for this property.

I

Petitioner, the New York Botanical Garden, was organized by a special act of the Legislature (L 1891, ch 285). Its charter states that it was organized “for the purpose of establishing and maintaining a botanical garden and museum and arboretum * * * for the collection and culture of plants, flowers, shrubs, and trees, the advancement of botanical science and knowledge and the prosecution of original researches therein and in kindred subjects, for affording instruction in the same, for the prosecution and exhibition of ornamental and decorative horticulture and gardening, and for the entertainment, recreation, and instruction of the people”.

Petitioner carries out these purposes at both the Bronx Botanical Garden (located in Bronx Park) and the Cary Arboretum (located primarily in the Town of Washington in Dutchess County). The tax exempt status of so much of the land constituting the Cary Arboretum as is located in the Town of Washington is the basis for the present controversy.

The Bronx Botanical Garden is located on property owned by New York City, although petitioner has constructed some of the buildings and bears a large part of the cost of maintaining them. Activities conducted at Bronx Park by petitioner include the display of a large horticultural collection for public viewing, tours, informal lectures, maintenance of a plant specimen museum and a botanical and horticultural library. In addition, a variety of educational programs are carried out, including continuing education courses for adults, vocational training, a formal two-year horticultural training program, as well as college level courses and seminars, for which credit is available from cooperating universities. Research is also performed at the Bronx Garden, largely pursuant to Federal grants, the results of which are made available to the public.

The Cary Arboretum consists of 1,900 acres of real property, 1,640 of which are located in the Town of Washington. Most of this property was deeded to petitioner by the trustees of the Mary Flagler Cary Charitable Trust, under a will provision permitting the trustees to convey the property to any “charitable organizatioii which shall be engaged in the conservation, maintenance and preservation of natural resources”. Petitioner is required, by the terms of the deed, to use this property as an arboretum, defined as a facility devoted to, inter alia: the growing of a collection of woody plants; testing and introducing new species to the area; promoting research in ecology and other fields; breeding new strains; conserving native plant life of the area and providing instruction and information concerning plants and their importance.

Approximately 800-900 acres of the real property are used for the planting and monitoring of a collection of trees and shrubs, many of which are not indigenous to the area. This area is open to the public, subject to supervision and regulation deemed necessary to protect and preserve its character. Another 900 acres are being kept in a natural state to facilitate ecological studies. This area contains three nature trails, open to the public during daylight hours, subject only to the requirement of registering for such use. The remainder of the property is used for a display of the arboretum’s collection, and is open to the public on a daily basis.

In addition to the general instructional and recreational uses of the property, a library and plant science museum are located on the grounds, both of which are accessible to the public. Numerous educational programs have been established in collaboration with high schools, colleges and universities. Persons enrolled in the petitioner’s School of Horticulture receive about half of their instruction at the arboretum. Research activities are also conducted at the arboretum facilities.

From 1973, when the arboretum lands were acquired by petitioner, until 1977, the property was treated as exempt from real property taxation, pursuant to the provisions of subdivision 1 of then section 421 of the Real Property Tax Law (renum § 420 by L 1981, ch 105). Under this statutory scheme, an exemption afforded the real property of a nonprofit organization might be either absolute or qualified. An absolute exemption is granted for property owned by a corporation or association organized exclusively for religious, charitable, hospital, educational, moral or mental improvement or cemetery purposes or more than one such purpose, where the property is used for one or more of the listed purposes (Real Property Tax Law, § 420, subd 1, par [a]). A qualified exemption is granted for property owned by a corporation or association organized exclusively for, inter alia, a scientific purpose, where the property is used exclusively for that purpose (Real Property Tax Law, § 420, subd 1, par [b]). Property that is entitled to a qualified exemption may nevertheless be rendered taxable by local law, ordinance or resolution so providing.

In 1977, the Town of Washington enacted Local Law No. 3, which, to the extent here relevant, exercises its power under the Real Property Tax Law to tax property used for scientific purposes. Acting under this local law, the arboretum property was restored to the tax roll, as the town assessors determined that the primary purpose of petitioner and the primary use of the arboretum were scientific and research-oriented.

Petitioner commenced this article 78 proceeding to have the arboretum property declared tax exempt. Special Term held that petitioner had not demonstrated its entitlement to a tax exemption and dismissed the petition. The Appellate Division, taking a different view of which party had the burden of proof, reversed and held that the town had failed to prove both that petitioner is organized for scientific purposes and that the arboretum was used for such purposes. We agree that the burden of proof was on the town and that it failed to sustain that burden in this proceeding. We therefore affirm the order of the Appellate Division granting the petition.

II

Generally, the burden of proof lies with the taxpayer who is seeking to have real property declared tax exempt (see People ex rel. Watchtower Bible & Tract Soc. v Haring, 8 NY2d 350; Matter of Pace Coll. v Boyland, 11 Misc 2d 387, affd 4 AD2d 855, revd on other grounds 4 NY2d 528). However, under the circumstances presented here, in which the municipality, pursuant to its power under section 420 (subd 1, par [b]), is seeking to withdraw a previously granted tax exemption, the municipality bears the burden of proving that the real property is subject to taxation. Thus, the taxing authority must prove that the corporation or association is organized for a purpose only qualifiedly exempt (in this case, a scientific purpose) and that the property is used for such a purpose (Matter of Watchtower Bible & Tract Soc. of N. Y. v Lewisohn, 35 NY2d 92).

Proceeding to the merits, we are required to first determine the primary purposes for which petitioner is organized or conducted. Its charter describes several purposes, including the maintenance of a botanical garden and museum, the advancement of botanical science and knowledge, the exhibition of horticulture and gardening, and the entertainment, recreation and instruction of the people. In pursuit of these objectives, petitioner conducts many educational programs through which it offers instruction in the botanical, horticultural and related fields. Its museums, libraries and gardens all promote the purpose of informing and instructing the public regarding the importance of plant life. Research activities are performed with a view toward resolving problems related to the environment, ecology and conservation. Given the wide range of purposes for which petitioner is organized, we cannot say that the town has sustained its burden of proving that a scientific purpose predominates, notwithstanding petitioner’s own declarations of its scientific, among other, purposes.

In Mohonk Trust v Board of Assessors of Town of Gardiner (47 NY2d 476), we held that the Mohonk Trust was organized primarily for purposes entitling it to absolute exemption under then section 421 (subd 1, par [a]) of the Real Property Tax Law. In so doing, we examined both the trust’s stated purposes, as well as its activities, which were considered indicative of its primary purpose. The trust’s actual primary purpose was held to be the preservation of wilderness area for the public benefit; subsidiary activities included numerous endeavors of a scientific and educational nature. We recognized that the trust’s primary purpose was an assortment of charitable, educational and moral improvement purposes, and concluded that environmental and conservation purposes are also encompassed within the broader categories for which exemption is afforded absolutely. On the basis of our decision in Mohonk Trust, we held, in Matter of North Manursing Wildlife Sanctuary (City of Rye) (48 NY2d 135), that a wildlife sanctuary would qualify for a tax exemption if genuinely operated for the public benefit. The stated purposes of the corporation were to hold and develop land as a sanctuary for wild birds and animals, to preserve those species native to the area, to study and introduce new species and to disseminate information concerning new species.

In the present case, the petitioner’s purposes are strikingly similar to those of both the Mohonk Trust and the North Manursing Wildlife Sanctuary, and there is no doubt that it is being operated in accord with the statéd purposes. Its emphasis upon preservation and environmental concerns affords a sufficient basis for finding its primary purpose to be of a character that is absolutely exempt. Thus, particularly in light of the similarities between petitioner’s purposes and those of the organizations previously discussed, the town has failed to prove that petitioner is not entitled to tax exemption on this basis.

This, of course, does not end our inquiry, as it may be possible that the particular property in issue is used for a purpose only qualifiedly exempt. The acreage that comprises the Cary Arboretum is dedicated to a number of general activities, the most predominant of which are conservation, preservation, instruction, recreation and ecological study. Again, as in Mohonk Trust and North Manursing, the use to which this particular parcel is put accomplishes several exempt purposes, including educational, charitable and moral improvement purposes. We see no reason to depart from our prior holdings that lands used for such a combination of purposes should be deemed to fall within the broader categories of absolutely exempt uses.

In attempting to show that the Cary Arboretum i¿ not used for absolutely exempt purposes, the town points to restrictions on public access to the property. While we agree that to qualify for tax exemption, the arboretum must be “necessary to the public good” and “open to and enjoyed by the public” (Mohonk Trust v Board of Assessors of Town of Gardiner, 47 NY2d 476, 484, supra; see Matter of North Manursing Wildlife Sanctuary [City of Rye], 48 NY2d 135, 140, supra), we are not convinced that the limitations placed on use of the arboretum lands deprive them of a public purpose. Rather, the restricted access imposed here is entirely consistent with the purposes for which the land is being used.

Accordingly, the order of the Appellate Division should be affirmed, with costs.

Chief Judge Cooke and Judges Jasen, Jones, Wachtler, Fuchsberg and Meyer concur.

Order affirmed.

       We also note that the will provision under which the arboretum property was deeded to petitioner permits such a grant only to “a charitable organization”.


author: Jasen, J.

text:
    In the Matter of Hartley W. Barclay, Jr., as Personnel Officer of the County of Westchester, Respondent, v Victor S. Bahou, as President of the Civil Service Commission of the State of New York, et al., Appellants.
    Argued February 17, 1982;
    decided March 30, 1982

      POINTS OF COUNSEL

      Robert Abrams, Attorney-General {John Q. Driscoll and Shirley Adelson Siegel of counsel), for appellants.
    I. Appellants’ directive to municipal civil service officers that they collect and remit application fees to the State is a valid and reasonable incident of their authority and obligation to render limited examination services to local governments and to receive fees for "examining local candidates. (People v Ryan, 274 NY 149.) II. The position of respondent respecting test fees is contrary to the scheme of the Civil Service Law. III. Application fees are mandated by law and provide fiscal benefits to both State and county. ■

      Samuel S. Yasgur, County Attorney of Westchester County {Peter J. Holmes, Jonathan Lovett and Jane Bilus Gould of counsel), for respondent.
    Westchester County properly refused to collect State imposed civil service examination fees. (Patrolmen’s Benevolent Assn. of City of N. Y. v City of New York, 41 NY2d 205.)

      Edward G. McCabe, County Attorney of Nassau County {Robert O. Boyhan of counsel), for Nassau County Civil Service Commission, amicus curiae.

    I. The court below properly found that appellants could not direct respondent to collect and process their fees, nor could they refuse to provide services to respondent. II. To reverse the order herein would be to create a gross and unjustified hardship upon local civil service commissions.
   OPINION OF THE COURT

Jasen, J.

The issue raised by this appeal is whether the State Civil Service Commission may require local civil service commissions to collect State imposed application fees from persons registering to take civil service examinations.

Both the State Civil Service Commission and municipal civil service commissions are authorized by section 50 of the Civil Service Law to impose application fees on persons applying to take civil service examinations. Fees collected by the State Civil Service Commission are to be paid into the State treasury (Civil Service Law, § 50, subd 5, par [c]) and fees collected by the municipal civil service commissions are to be “paid into the general fund of the municipality” (Ciyil Service Law, § 50, subd 5, par [d]). Section 50 (subd 5, par [b]) allows both the State and the local commissions to waive these application fees.

For many years, the State Civil Service Commission waived its right to any application fees. In late 1979, the State Commission changed that policy and began imposing fees on applicants registering to take examinations conducted by the State Commission. The policy of imposing application fees was extended, effective April 1, 1980, by directive of the President of the State Civil Service Commission to those applicants registering to take local examinations which were provided to the various municipal civil service commissions by the State Commission. The directive further required the municipal commissions to collect the fee, to complete monthly reports and to forward to the State Commission, on a monthly basis, a check in the amount of the fees collected.

Westchester County had used civil service examinations provided by the State Civil Service Department for many years. Applicants registering to take a civil service examination in Westchester County after April 1,1980 were thus required to pay the State imposed fee. The Personnel Officer of Westchester County, however, objected to the State Commission requiring the local commission to process the State imposed fee. He notified the State Civil Service Commission that pursuant to section 23 of the Civil Service Law, Westchester County would continue to use State-provided support services including State-provided examinations, but that because there was no authorization to require the municipal commissions to collect the State fee, all future applicants would be advised to forward their applications and fees directly to the State Commission.

The president of the State Commission responded that the State Commission was not required to collect the fees, that it would not do so, and that if the local commission did not collect the fees and process the applications, the State Commission would not continue to provide civil service examinations.

This article 78 proceeding was then commenced by the Personnel Officer of Westchester County seeking declarations that the State Civil Service Commission is obligated by section 23 of the Civil Service Law to collect the fees, review applications, and provide civil service examinations. Section 23 provides, in pertinent part, that: “The state civil service department without charge, upon the request of any such municipal commission, shall render service relative to the announcement, review of applications, preparations, construction, and rating of examinations, and establishment and certification of eligible lists for positions in the classified service * * * The fees required to be paid by applicants pursuant to section fifty of this chapter, shall be paid to the state civil service department for all examinations prepared and rated by such department.”

Supreme Court, Westchester County, held that the provisions of section 23 require the State Commission to “provide petitioner with civil service examinations and various specified services relative to said examinations.” Furthermore, the court found that although the State Commission had the authority to require applicants to pay a fee, “there [was] no authority * * * to require that petitioners process civil service applications and collect the application fee for [the State Commission].” The Appellate Division affirmed. We agree.

The clear wording of section 23 of the Civil Service Law indicates that the Legislature intended the State Civil Service Commission to provide support services to the municipal civil service commissions. These services specifically include providing examinations, and reviewing applications. As compensation for these services, the State Commission is authorized to impose application fees as provided for by section 50. Fees thus imposed are required to be paid to the State treasury. Under the directive of section 50, fees to be paid into the State treasury are to be “collected * * * by the state civil service department”. There is no authorization in either section 23 or section 50 for the State Commission to shift this responsibility to the local commissions.

It is equally clear from the wording of section 23 that the Legislature intended these support services be provided to the municipal commissions without charge. We interpret this to mean not only that these services are provided without assessing any charge against the municipal commission, but also that they are provided without appropriating time, supplies or resources from any local commission. Requiring local commissions to administer the collection of these fees is the economic equivalent of charging the municipal commissions for the use of the State examinations. A charge exacted in the form of services is no less a charge than one assessed in dollars and cents.

The clear mandate of section 23 of the Civil Service Law, therefore, is that the State Civil Service Department must provide the enumerated services to the municipal civil service commissions and must do so without any type of charge. This mandate reflects the Legislature’s reasonable belief that the State Civil Service Department has the facilities and expertise available to aid the municipal commissions in handling the complexities of administering civil service examinations.

While the State Commission’s request for administrative assistance from the local commissions is not unreasonable, the State Commission is not authorized to make such a request or to require such aid in exchange for providing civil service examinations. Indeed, the entire structure of the statutory scheme is for the State Commission to render aid to the local commissions. If the Legislature had intended to require the municipal commissions to provide administrative support services to the State Commission in exchange for the services providedfiy the State Commission, it could have so provided. Given the present statutory language, we find no basis on which to require local civil service commissions to collect or process fees imposed by the State Civil Service Commission.

Accordingly, the order of the Appellate Division should be affirmed, without costs.

Chief Judge Cooke and Judges Gabrielli, Jones, Wachtler, Fuchsberg and Meyer concur.

Order affirmed.


text:
    In the Matter of City of New York, Appellant, Relative to Acquiring Title to Real Property for a Project Known as College Point Industrial Park Urban Renewal Project II, Stage II in the Borough of Queens. Harold Glantz et al., Doing Business as H.G.V. Associates, et al., Respondents.
    Argued February 9, 1982;
    decided April 1, 1982

      POINTS OF COUNSEL

      Frederick A. O. Schwarz, Jr., Corporation Counsel (Morris Einhorn and Leonard Koerner of counsel), for appellant.
    I. The valuation methods adopted and applied by the courts below are reviewable in this court. (Matter of Duchnowski, 31 NY2d 991; Matter of Rochester Urban Renewal [Patchen Post], 45 NY2d 1; Latham Holding Co. v State of New York, 16 NY2d 41; St. Agnes Cemetery v State of New York, 3 NY2d 37; Matter of City of New York [Atlantic Improve

      ment Corp.], 28 NY2d 465; Matter of City of New York [Shorefront High School — Rudnick], 25 NY2d 146; Matter of City of New York [Fifth Ave. Coach Lines], 22 NY2d 613.) II. The fee award herein is based upon erroneous appraisal principles. III. It was error of law to base a fee award upon the value of income from an amusement park business. (Matter of County of Nassau [Colony Beach Club of Lido], 43 AD2d 45, 39 NY2d 958; Banner Milling Co. v State of New York, 240 NY 533, 269 US 582; Mitchell v United States, 267 US 341; Matter of City of Rochester [Smith St. Bridge Widening], 234 App Div 583; Matter of Gilroy, 26 App Div 314; City of Syracuse v Stacey, 45 App Div 249; Brainerd v State of New York, 74 Misc 100; Frontier Town Props. v State of New York, 58 Misc 2d 388; Matter of Cave v Zoning Bd. of Appeals of Vil. of Fredonia, 49 AD2d 228; Matter of Fairmeadows Mobile Vil. v Shaw, 16 AD2d 137.) IV. Erroneous reliance upon the value of amusement park earnings is not cured by combining it with a value dependent on sales of small lots in an ocean resort 20 miles away. (Matter of City of New York [Atlantic Improvement Corp.], 28 NY2d 465; Wheatfield Props. Co. v State of New York, 55 AD2d 1040; Matter of Port Auth. Trans-Hudson Corp. [Hudson Tubes Purposes], 48 Misc 2d 485, 27 AD2d 32, 20 NY2d 457; People ex rel. Lehigh Val. Ry. Co. v Burke, 247 NY 227; Matter of County of Westchester v P. & M. Materials Corp., 38 Misc 2d 734, 20 AD2d 431; Matter of County of Nassau [Cohen], 39 NY2d 574; Matter of County of Suffolk [Firester], 37 NY2d 649; Matter of Port of N. Y. Auth. [Lincoln Tunnel — 450 W. 34th St. Corp.], 2 NY2d 296; Matter of City of New York [Fifth Ave. Coach Lines], 22 NY2d 613.) V. It was error of law to award sound value for a restaurant building concededly a nonspecialty. (Matter of Great Atlantic & Pacific Tea Co. v Kiernan, 42 NY2d 236; Matter of Rochester Urban Renewal Agency [Willsea Works], 48 NY2d 694; Matter of City of New York [Maxwell — Hand], 15 AD2d 153, 16 NY2d 497; Matter of City of New York [First Elephant Estates — La Hermosa Church], 17 AD2d 317; Matter of City of New York [De Nigris — De Nigris Realty Corp.], 20 AD2d 42; City of Buffalo v Clement Co., 41 AD2d 41; Chiloway Charcoal v State of New York, 33 AD2d 712, 28 NY2d 914; Matter of City of New York

      [White Castle Systems], 28 NY2d 812.) VI. The court below erroneously held the City’s title to land formerly in the bed of tidal creeks defeasible herein. (Matter of City of New York [Mileau Corp.], 72 AD2d 745.) VII. There was no basis in law for any severance damages here. (Clement Co. v City of Buffalo, 46 AD2d 994, 38 NY2d 859; Matter of City of New York [Harlem Riv. Dr.], 202 Misc 540; Erly Realty Dev. v State of New York, 43 AD2d 301, 34 NY2d 515; United States v Miller, 317 US 369; United States v Grizzard, 219 US 180; Sharp v United States, 191 US 341; United States v Honolulu Plantation Co., 182 F2d 172, 340 US 820; Matter of City of New York [Allied Stores of N. Y.], 44 NY2d 965; Di Bacco v State of New York, 46 AD2d 461; Henner v State of New York, 32 Misc 2d 333; South Path Realty Corp. v State of New York, 35 AD2d 896.) VIII. The court below erred in restricting the rule in Rose to partial takings. (Rose v State of New York, 24 NY2d 80; Matter of City of New York [Allen St.], 256 NY 236; City of Buffalo v Clement Co., 28 NY2d 241; Matter of City of New York [Whitlock Ave.], 278 NY 276; Cosgrove v Troescher, 62 App Div 123; Matter of City of New York [Triborough Bridge], 249 App Div 579, 274 NY 581.)

      M. Robert Goldstein for Harold Glantz and others, respondents.
    I. The real estate award is supported by substantial evidence. The City states no valid issue of law, its supposed issues being based upon facts contrary to the affirmed findings of fact below, themselves supported by substantial evidence. (Sunnybrook Realty Co. v State of New York, 11 AD2d 888; Katz v State of New York, 10 AD2d 164; Kozecke v State of New York, 34 AD2d 599; Culver v State of New York, 35 AD2d 866; Matter of City of New York [Tompkins Sq. Urban Renewal Project — Fassler], 27 AD2d 810; Mobil Oil Corp. v State of New York, 55 AD2d 821; Matter of White Plains Props. Corp. v Tax Assessor of City of White Plains, 50 NY2d 839; Matter of Adcor Realty Corp. v Srogi, 54 AD2d 1096, 41 NY2d 806; Matter of Sears, Roebuck & Co. v Derderian, 66 AD2d 777, 46 NY2d 712; Matter of City of New York [Maxwell — Hand], 15 AD2d 153, 12 NY2d 1086, 16 NY2d 497.) II. The City’s appeal as to the amusement park fixtures, based upon an issue not properly raised below, is limited to the recovery for damages to property not directly taken and thus consequentially damaged, affecting only 6 of the 15 respondents herein with fixture awards. There was no error of law in making those awards. (Matter of City of New York [East Riv. Dr.], 159 Misc 741, 259 App Div 1007, 284 NY 818; Matter of City of New York [Triborough Bridge], 159 Misc 617; Matter of Incorporated Vil. of Hempstead [Fichter — Hofstra Coll.], 280 App Div 801, 894, 304 NY 870; Rose v State of New York, 24 NY2d 80; Cooney Bros. v State of New York, 24 NY2d 387; Queensboro Farm Prods. v State of New York, 6 Misc 2d 445, 5 AD2d 967, 5 NY2d 977; Matter of City of New York [Allied Stores of N. Y.], 44 NY2d 965; Erly Realty Dev. v State of New York, 43 AD2d 301, 34 NY2d 515; Alcape Realty Co. v State of New York, 55 AD2d 1045.) III. Should the court sustain the trial court’s decision in the 1972 taking then there are issues to be determined, not reached by the court below.

      Herman Itskowitz and Alfred D. Jahr for Adventurers Whitestone Corp., respondent.
    The fixture award made by the trial court to lessee respondent Adventurers White-stone Corp. in the sum of $195,750 was erroneous on its face and the court below, properly and pursuant to law and the record below, increased the said award by the sum of $44,100. (Matter of City of New York [Merrimaker Corp.], 51 AD2d 147, 39 NY2d 710; McRea v Central Nat. Bank of Troy, 66 NY2d 489; Rose v State of New York, 24 NY2d 80; Jackson v State of New York, 213 NY 34.)
   OPINION OF THE COURT

Jasen, J.

On this appeal, the City of New York (City) challenges the validity of various awards made to claimants for property condemned by the City as part of the College Point Industrial Park Urban Renewal Project.

Claimant, H.G.V. Associates, owned and operated an amusement park in Queens County; other claimants operated amusement rides at the park; and claimant, Adventurers Whitestone Corp., leased and ran a restaurant located at the amusement park. The property was condemned by the City of New York and title vested with the City on April 4, 1974. Pursuant to the order of condemnation, a proceeding was commenced in Supreme Court, Queens County, to determine the ownership of the property and the proper compensation to be awarded for the condemned property. The Appellate Division modified only as to two awards and affirmed as to the rest on the basis of the opinion at Supreme Court. The order of the Appellate Division should be affirmed.

The award for the value of claimant’s fee interest was properly formulated by the trial court. As the Appellate Division found, however, H.G.V. Associates is entitled to compensation for those damage parcels located on the former site of Mill Creek and Old Creek. The City did not enter any proof that these damage parcels were part of the creekbeds at the time the City acquired title to the creek as successor in interest to the Town of Flushing. There is, however, ample evidence that these tidal creeks frequently meandered. It would thus be improper to conclude that the creekbed is located on the same property today as when it was originally conveyed to the Town of Flushing pursuant to three colonial patents.

Moreover, the enactment of section D51-48.1 of the Administrative Code of the City of New York in 1956 made this property alienable. (Matter of City of New York [Mileau Corp.], 72 AD2d 745.) Property owned by the City in its proprietary capacity which is alienable can be conveyed and the City must, when it condemns such property, provide appropriate compensation.

In this case, the claimants produced a deed covering this land. Of course, a deed alone would be insufficient to establish title if the property was, in fact, inalienable because the City held it pursuant to its governmental capacity. Such, however, is not the case here. Pursuant to the enactment of section D51-48.1, the City determined that the property was no longer necessary to the City’s governmental function of controlling tidal waters. Since the property was held by the City in its proprietary capacity, it could be and was declared alienable. As alienable property, it was possible that this land would be conveyed to a private citizen. Claimants having presented a deed to this property, and the City having raised no other objection to the validity of that deed, it was proper for the Appellate Division to award compensation for those damage parcels located in the dry creekbeds.

Similarly, the Appellate Division correctly modified the decree by increasing the fixture award to Adventurers Whitestone Corporation. The trial court had mistakenly applied this court’s holding in Rose v State of New York (24 NY2d 80) and limited the award to reasonable moving expenses. The proper award was the sound value of the fixtures situated on the property condemned by the City. (Matter of City of New York [Allen St.], 256 NY 236.) It is constitutionally mandated that the sovereign will pay just compensation for property it takes by its powers of eminent domain. “Just compensation is properly measured by determining what the owner has lost.” (Rose v State of New York, 24 NY2d 80, 87, supra.) Thus, a tenant in possession at the time of condemnation is entitled to compensation “for his interest in any annexations to the real property which but for the fact that the real property has been taken, he would have had the right to remove at the end of the lease.” (Matter of City of New York [Allen St.], 256 NY 236, 243, supra.) However, if the tenant chooses to remove the fixtures for use in a new location and properly notifies the condemnor of his intention to remove the fixtures, he is only entitled to an award in the amount of either the difference between salvage value and the present value in place or the cost of removal, whichever is the lesser. (Rose v State of New York, 24 NY2d 80, 88, supra.) Since this tenant did not opt to remove these trade fixtures, he is entitled to compensation in the amount of the sound value of the property condemned by the State. (Schoschinski, American Law of Landlord and Tenant, § 5.33; Matter of City of New York [Allen St.], supra; Matter of City of New York [Whitlock Ave.], 278 NY 276; United States v General Motors Corp., 323 US 373; Matter of City of New York [G & C Amusements], 55 NY2d 353 [decided herewith]; 2 Nichols, Eminent Domain [3d ed], § 5.83 [2].)

Accordingly, the order of the Appellate Division should be affirmed, with costs.

Chief Judge Cooke and Judges Gabrielli, Jones, Wachtler, Fuchsberg and Meyer concur.

Order affirmed.


text:
    In the Matter of the City of New York, Appellant, Relative to Acquiring Title to Real Property for a Project Known as College Point Industrial Park Urban Renewal Project II in the Borough of Queens. G & C Amusements, Inc., et al., Respondents.
    Argued February 9, 1982;
    decided April 1, 1982

      POINTS OF COUNSEL

      Frederick A. O. Schwarz, Jr., Corporation Counsel (Morris E inhorn and Leonard Koerner oí counsel), for appellant.
    Having acquired fee title in 1955 and expressly excluded all City-owned land from its petition to condemn in 1972, the City did not “take” or extinguish title to its own land in that condemnation proceeding and thereby destroy any leasehold interest therein. Even if that exclusion be ignored, it is recognized that a condemnor’s “taking” of title to its own land merely seeks adjudication of any adverse claims thereto. In any case, the monthly lease expressly provided that all improvements were to belong to the City and all tenant’s property removed at tenant’s expense. And a landlord-condemnor who has expressly thus contracted in a monthly lease of vacant land, granted pending its development thereof, is not liable for the value of trade fixtures. (Talbot v Cruger, 151 NY 117; Bedlow v New York Floating Dry Dock Co., 112 NY 263; Shiels v Byrd, 168 App Div 112; Congregation Anshe Sefard of Keap St. v Title Guar. & Trust Co., 291 NY 35; Massachusetts Nat. Bank v Shinn, 18 App Div 276, 163 NY 360; Lewis v Ocean Nav. & Pier Co., 125 NY 341; Ombony & Dain v Jones, 19 NY 234; Fasciani v Village of Ossining, 58 AD2d 497, 43 NY2d 645; Matter of City of New York (Harlem Riv. Dr.], 202 Misc 540; Georgia-Pacific Corp. v United States, 568 F2d 1316.)

      M. Robert Goldstein for respondents.
    I. The order of condemnation acquired claimants’ leasehold interest, rights of possession and trade fixtures, all recognizable interests in real property, giving rise to claimants’ fixture claims. The lease provisions did not forfeit claimants’ trade fixtures to the City, as landlord. (Horn v Bennett, 253 App Div 630; Wolfe v State of New York, 22 NY2d 292; New York State Urban Dev. Corp. v Vanderlex Mdse. Co., 98 Misc 2d 264; Matter of City of New York (Allen St.], 256 NY 236; Matter of City of New York (East Riv. Dr.], 159 Misc 741, 259 App Div 1007, 284 NY 818; Ringsland v Mayor, Aldermen & Commonalty of City of N. Y., 110 NY 569; United States of Amer. v Certain Lands Located in Borough of Manhattan, City, County & State of N. Y., 306 F2d 439; Matter of Mount Holly Paper Co., 110 F2d 220; Ombony & Dain v Jones, 19 NY 234; Matter of City of New York (339 Grand St. Corp. — Garlick Parkside Mem. Chapels], 10 AD2d 498.) II. There is no basis in law for Judge Castaldi’s “gamble” theory in denying compensation for what are otherwise deemed trade fixtures in condemnation proceedings. (Rose v State of New York, 24 NY2d 80; Matter of City of New York (Tompkins Sq. Urban Renewal Project — Fassler], 27 AD2d 810; Matter of City of New York (Merrimaker Corp.], 51 AD2d 147; Matter of City of New York (Krischer Metal Prods. Co.], 53 AD2d 861, 40 NY2d 809; Wright v State of New York, 45 AD2d 919; Matter of City of New York (Briggs Ave.], 118 App Div 224, 196 NY 255; Matter of City of New York (Northern Blvd.], 258 NY 136; People ex rel. Bennett v Dickey, 148 App Div 662; Barnes v Southfield

      Beach R.R. Co., 65 Misc 600, 136 App Div 869; Headley v City of Rochester, 247 App Div 562.) III. The “gamble” theory was a nonissue in the litigation and improperly raised by the trial court sua sponte. (Matter of County of Suffolk [Griffith], 41 NY2d 1058; Cullen v Naples, 31 NY2d 818; Matter of Board of Manager of Kemey’s Cove Condominium v Board of Assessors of Vil. of Ossining, 73 AD2d 621.) IV. The “gamble” theory cannot apply to any of the other claimants, even if it could apply to Glantz. V. There was no factual basis upon which to find that having installed their fixtures with knowledge of condemnation “claimants gambled that ‘they would be permitted to retain their rides as part of the over-all development of the industrial park’, and they also gambled that when condemnation occurred they would be able to relocate the rides. Claimants lost the gamble.” (Matter of City of New York [Sixth Ave.], 256 NY 598; Matter of Bruckner Expressway [Chelsea Mgt. Corp.], 37 AD2d 541; City of Buffalo v Michael, 16 NY2d 88; Matter of City of New York [Lincoln Sq. Slum Clearance Project], 24 Misc 2d 190, 15 AD2d 153, 12 NY2d 1086; United States v Certain Prop., Borough of Manhattan, City, County & State of N. Y., 388 F2d 596.)
   OPINION OF THE COURT

Jasen, J.

The issue raised by this appeal is whether the claimants, tenants pursuant to a short-term lease on land owned by the City of New York (City), are entitled to compensation for trade fixtures annexed thereto when the property is subsequently condemned by the City.

Claimants operated an amusement park on land located in Queens County which the Board of Estimate of the City of New York determined should be taken by the City as part of the College Point Industrial Park Urban Renewal Project. (Matter of City of New York [Glantz], 55 NY2d 345 [decided herewith].) The amusement park was bordered on the north by City-owned land: a dry creekbed and property acquired in a 1955 tax foreclosure proceeding. To the east lay the Whitestone Expressway; and to the south and west there was residential property. Patrons of the amusement park used those nearby residential streets for parking, causing some traffic problems. In order to alleviate these parking problems, claimant MHG Corporation negotiated with the City of New York to lease the City-owned land north of the amusement park.

The lease specified that the land be used for “no charge parking” and that it be left in the same condition at the end of the lease as whén the tenant took possession. The term of the lease was 30 days, but it was provided that it would renew automatically until one of the parties gave 30 days notice. By the terms of the lease MHG Corporation agreed not to “[m]ake any improvements or alterations without the prior written consent of [the] landlord” and agreed that “[a]ll improvements [made would] become the property of the [landlord on annexation.” Furthermore, MHG Corporation agreed not to sublet the whole or any part of the leased property. There was also a condemnation clause in the lease by which the tenant agreed that the landlord could recover possession pursuant to a condemnation proceeding.

In November, 1972, the City of New York, pursuant to its powers of eminent, domain (New York City Charter, §§ 8, 228, 381) petitioned in Supreme Court, Queens County, to condemn “all the real property (not presently owned by the City) in the * * * area” designated by the Board of Estimate for the College Point Industrial Park. The petition, which was granted December 1, 1972, gave detailed descriptions of the property condemned. According to those descriptions, the City-owned property which was leased at this time to MHG Corporation was condemned in this proceeding. Both courts below found that the claimants were tenants in possession pursuant to a valid lease when title vested with the City on December 1,1972; thus,, the question of the claimant’s status is not before this court for review. (Cohen and Karger, Powers of the New York Court of Appeals, §§ 109-113.) Pursuant to the order granting the condemnation petition, Supreme Court retained jurisdiction to determine the compensation to be paid to the owners of the property condemned.

MHG Corporation and various other parties to whom MHG Corporation had sublet portions of the leased property sought compensation for trade fixtures installed on the leased property. The trade fixtures claimants sought compensation for were amusement rides installed on the leased property as part of an expansion of the adjacent amusement park. There is an affirmed finding of fact that these rides were permanently annexed to the leased property and that they did constitute trade fixtures. (McRea v Central Nat. Bank of Troy, 66 NY 489.) Thus, the legal question raised by this appeal is limited to whether or not claimants who annexed these trade fixtures to leased land are entitled to compensation when the City exercises its power of eminent domain over the existing property interests.

Supreme Court, despite its factual determinations, awarded no compensation to the claimants. Instead, it held that “claimants took a calculated risk when they installed their rides with knowledge of the impending condemnation and that their monthly tenancy was subject to cancellation on 30 days notice. Claimants gambled that they would be permitted to retain their rides as part of the over-all development of the Industrial Park * * * Claimants lost the gamble.” The Trial Judge did, however, determine the sound value of the fixtures in the event the Appellate Division held that compensation was required.

Claimants appealed from so much of the partial final decree of Supreme Court as denied them compensation for their fixtures. The Appellate Division ordered the decree modified to allow claimants an award for their trade fixtures in the amounts determined by the Trial Judge. In so deciding, the Appellate Division stated that “the ‘gamble theory’ upon which Mr. Justice Castaldi predicated his denial of compensation for fixtures has no basis in law.” In the opinion of the Appellate Division, these rides were “trade fixtures duly installed and utilized upon the city-owned land pursuant to a valid lease and that any impropriety in such use was either expressly approved of by the city or silently and knowledgeably acquiesced in. As trade fixtures installed upon land duly condemned, they became the property of the City of New York on the date of vesting. Accordingly, the claimants must be compensated for their losses”. (82 AD2d 829.)

We now reverse the order of the Appellate Division insofar as appealed from and reinstate the first decretal paragraph of the second, separate and partial final decree of the Supreme Court, Queens County, which awarded claimants no compensation for the trade fixtures installed on the described property. We do so, however, on the basis of a different rationale from that stated in the opinion at Supreme Court.

The general rule is “when leased realty is taken under eminent domain, the tenant is entitled to compensation for fixtures which he has attached if they are condemned with the realty, as long as he otherwise would have been entitled to remove such fixtures at the end of the tenancy.” (Schoschinski, American Law of Landlord and Tenant, § 5:33; see, e.g., Matter of City of New York [Allen St.], 256 NY 236; Matter of City of New York [Whitlock Ave.], 278 NY 276, 281; United States v 1.357 Acres of Land, 308 F2d 200; 2 Nichols, Eminent Domain [3d ed], § 5.83 [2].)

The law of fixtures in eminent domain proceedings “was evolved by the judiciary in order to ameliorate the harsh result to those who substantially improved property but who had less than a fee interest.” (Rose v State of New York, 24 NY2d 80, 85.) This rule is not unique to New York State. (Matter of City of New York, 192 NY 295.) The Supreme Cout has similarly held that a “tenant whose occupancy is taken [by the sovereign] is entitled to compensation for destruction, damage or depreciation in value” including compensation for trade fixtures installed on that property. (United States v. General Motors Corp., 323 US 373, 384.)

A tenant’s right to compensation for fixtures installed on the leasehold exists despite provisions in the lease which terminate the lease in the event of a condemnation. Such provisions have been interpreted as “an agreement between landlord and tenant that the tenant shall receive out of the award no compensation for his leasehold interest. Even so, the tenant retains the right to compensation for his interest in any annexation to the real property which but for the fact that the real property has been taken, he would have had the right to remove at the end of his lease.” (Matter of City of New York [Allen St.], 256 NY 236, 243, supra.)

Similarly, lease provisions which give the tenant the right to remove all annexations at the expiration of the. lease do not affect the tenant’s right to compensation for trade fixtures. Such provisions indicate only that as between landlord and tenant the trade fixtures remain personalty; those provisions do not govern the status of the trade fixtures in relation to the sovereign. (Poillon v Gerry, 179 NY 14; Matter of City of New York [Allen St.], 256 NY 236, supra; United States v General Motors Corp., 323 US 373, supra.) The court, in determining the appropriate compensation for the taking, looks only to the status of the property when it is taken by the sovereign. Thus, the sovereign must compensate the owner of the trade fixtures when as a result of the condemnation it “has taken the real property together with the annexations to this property * * * The city must pay the value of what it takes. To the extent that the value of the real property as a whole is enhanced by fixtures annexed thereto, the value of the fixtures must be included in what the city pays, and the tenant is entitled to part of the award, not because the fixtures added to the value of the leasehold, but because they belonged to him and their value enters into the value of what the city has taken.” (Matter of City of New York [Allen St.], 256 NY 236, 249, supra.)

In Matter of City of New York (Allen St.), the court thus awarded compensation to the tenant for trade fixtures he had installed even though at the termination of the lease he would have been entitled to remove those fixtures and even though the lease would have expired within a few months of the condemnation. The court in so holding noted that to consider whether the parties would have renewed the lease or whether the tenant would have exercised his right to removal was pure speculation which did not concern the court. Rather, the court’s only concern was as to the character of the property at the time of taking — that is, what property interests existed and who held title to such interests.

In the present case, the real property condemned-was owned by the City of New York and leased to the claimants. A leasehold interest is, however, considered real property for the purpose of condemnation under the provisions of the Administrative Code of the City of New York. (§ B15-1.0.) Thus, at the time of taking, an owner of a leasehold interest is entitled to compensation for the value of his leasehold and an owner of trade fixtures installed on the property subject to the leasehold is entitled to compensation for the value of those fixtures. This rule of law applies regardless of whether or not the owner of the fixtures is also the owner of the fee.

The owner of the trade fixtures in question at the date title vested with the City was the City of New York. By the terms of the lease, “[a]ll improvements [made would] become the property of the landlord [City] on annexation.” Both courts below found that the trade fixtures claimants seek to be compensated for were permanently annexed to this property and were installed prior to the date of condemnation. Thus, under the terms of the lease, there can be no question but that as of the date title vested with the City pursuant to the condemnation petition the fixtures were the property of the landlord. Claimants are thus not entitled to any compensation for these trade fixtures.

It should be noted that this case differs from Matter of City of New York (Allen St.) (256 NY 236, supra) solely because of the terms of the lease. In the Allen St. case, the tenant was the owner of the fixtures at least until the end of the. lease when it would be clear whether or not he removed those fixtures. Since the condemnation occurred prior to the expiration of the lease in that case, the tenant was the owner of the fixtures at the time title vested with the condemnor. In this case, by the terms of the lease, the City, as landlord, became the owner of the fixtures at the time the fixtures were annexed to the leasehold. Since the condemnation occurred subsequently to the annexation of the fixtures, the City was the owner of the fixtures on the date title vested with the condemnor. As held in Matter of City of New York (Allen St.) (supra), it is the owner of the fixtures on the title vesting date who is entitled to compensation for those fixtures. In the Allen St. case, that party was the tenant; in this case, pursuant to the terms of the lease, it is the landlord.

Furthermore, we find nothing unconscionable about these lease provisions. (United States v Certain Props., 306 F2d 439, 451-453.) This lease was negotiated at arm’s length. The tenant professed a desire to rent the property solely to resolve a parking problem and the lease clearly limited the use of the property to no-charge parking. The City cannot be faulted for using this land by leasing it to the claimants. By leasing it, the City alleviated a hazard in the neighborhood, helped an adjacent landowner and made the property somewhat productive pending the development of the College Point Industrial Park. Since the City was formulating plans to develop the Industrial Park on this site, it was not unreasonable to include such restrictions in the lease in anticipation of future condemnation proceedings.

Claimants do not allege that the terms of the lease were ever changed or that the City ever gave its written permission as required by the lease for the expansion of the amusement park. Instead, they argue that because the City was aware of the unauthorized expansion of the amusement park, it is now estopped from relying on the terms of the lease. We find this argument to be without merit. No proof was entered that the terms of the lease were changed or that the City agreed to the expansion of the amusement park.

It cannot be said that the conduct of the City was such as to now estop it from relying on the terms of the lease. (Matter of Hamptons Hosp. & Med. Center v Moore, 52 NY2d 88.) Even the City’s action in increasing the rent after it was discovered that amusement rides had been installed cannot be construed as anything more than a reflection of the increased value of the land. The value was increased precisely because the City, as landlord, pursuant to the terms of this lease, was entitled to retain the property as improved. In no way can the rental advice form which adjusted the rental provision of the lease be read to affect any of the other provisions of the lease.

Similarly, it cannot be said that by granting the expanded park a license to operate, albeit pursuant to court order, the City altered the terms of the lease. The license merely certified that the rides, as installed, were safe. By granting the license, the City did not agree to any change in the terms of the lease, particularly as to ownership of the property annexed to the leasehold.

Claimants having freely agreed to the restrictions of the lease cannot now be heard to complain because their violation of the lease did not inure to their profit. “[I]t is the duty of the State, in the conduct of the inquest by which the compensation is ascertained, to see that it is just, not merely to the individual whose property is taken, but to the public which is to pay for it.” (Searl v School Dist., Lake County, 133 US 553, 562.) We would be remiss in our duty to the public were we to ignore the clear terms of the lease and award claimants compensation for fixtures not owned by them at the time of condemnation.

Accordingly, the order of the Appellate Division, insofar as appealed from, should be reversed and the first decretal paragraph of the second separate and partial final decree of the Supreme Court, Queens County, dated October 25, 1976, should be reinstated.

Chief Judge Cooke and Judges Gabrielli, Jones, Wachtler, Fuchsberg and Meyer concur.

Order, insofar as appealed from, reversed, with costs, and the first decretal paragraph of the second separate and partial final decree of Supreme Court, Queens County, reinstated.

      . The City indicates only that it included property it owned in the condemnation petition in order to clear title to that property. There is no explanation offered as to why the general language of the petition excludes land already owned by the City, while the specific language of the petition includes the property owned by the City.

      . It would, of course, have been possible for the City to terminate the lease on 30 days’ notice and to have required the tenants to have removed all the fixtures. The City offers no explanation why it did not do so, except for stating that the condemnation proceeding cleared title to the property. Had the City taken this simple step of terminating the lease, it is conceivable that this entire litigation could have been avoided.