author: Bellacosa, J. Hancock, Jr., J.

text:
    [623 NE2d 547, 603 NYS2d 420]
    Eric C. Jensen et al., Respondents, v General Electric Company et al., Appellants.
    Argued September 2, 1993;
    decided October 21, 1993

      POINTS OF COUNSEL

      Williams & Connolly (Steven R. Kuney and Mark A. Grannis of counsel, of the District of Columbia Bar, admitted pro hac vicej and Bond, Schoeneck & King, Albany (John M. Freyer and Susan P. Read of counsel), for General Electric Company, appellant.
    Plaintiff Jensen has brought an "action to recover damages for * * * injury to property caused by the latent effects of exposure to any substance”, and therefore this action is time-barred under the provisions of CPLR 214-c (2). (First Bible Baptist Church v Gates-Chili Cent. School Dist., 172 AD2d 1057; State of New York v Glen & Mohawk Milk Assn., 61 NY2d 705; Patrolmen’s Benevolent Assn. v City of New York, 41 NY2d 205; Jay Bee Apparel Stores v 563-565 Main St. Realty Corp., 130 Misc 23, 226 App Div 721; Fourth Ocean Putnam Corp. v Interstate Wrecking Co., 66 NY2d 38; Di Marco v Hudson Val. Blood Servs., 147 AD2d 156; Prego v City

      of New York, 141 Misc 2d 709; 509 Sixth Ave. Corp. v New York City Tr. Auth., 15 NY2d 48; Matter of Steinhardt v Johns-Manville Corp., 54 NY2d 1008; Thornton v Roosevelt Hosp., 47 NY2d 780.)

      Carter, Conboy, Bardwell, Case, Blackmore & Napierski, Albany (Susan DiBella Harvey of counsel), for Albert J. Smaldon, Sr. and Sons, Inc., appellant.
    The Court below erred in reversing the lower court’s dismissal of plaintiffs’ action. (Glod v Morrill Press Div. of Engraph, 168 AD2d 954; Di Marco v Hudson Val. Blood Servs., 147 AD2d 156; Prego v City of New York, 141 Misc 2d 709; Moore v Smith Corona Corp., 175 AD2d 458; Bolin v Cessna Aircraft Co., 759 F Supp 692; 509 Sixth Ave. Corp. v New York City Tr. Auth., 15 NY2d 48; Cranesville Block Co. v Niagara Mohawk Power Corp., 175 AD2d 444; State of New York v Schenectady Chems., 103 AD2d 33; Kearney v Atlantic Cement Co., 33 AD2d 848.)

      Ruberti, Girvin & Ferlazzo, P. C., Albany (Salvatore D. Ferlazzo of counsel), for respondents.
    The Court below properly refused to abrogate and extinguish the long-standing common-law doctrines of continuing nuisance and continuing trespass absent clear legislative intent. (Matter of Astman v Kelly, 2 NY2d 567; Matter of River Brand Rice Mills v Latrobe Brewing Co., 305 NY 36; Arbegast v Board of Educ., 65 NY2d 161; Morone v Morone, 50 NY2d 481; Galway v Metropolitan El. Ry. Co., 128 NY 132; 509 Sixth Ave. Corp. v New York City Tr. Auth., 15 NY2d 48; State of New York v Schenectady Chems., 103 AD2d 33; Kearney v Atlantic Cement Co., 33 AD2d 848; Bly v Edison Elec. Illuminating Co., 172 NY 1; Cranesville Block Co. v Niagara Mohawk Power Corp., 175 AD2d 444.)

      Robert Abrams, Attorney-General, Albany (Jerry Boone, Peter H. Schiff, James A. Sevinsky, Val Washington and Nancy Stearns of counsel), for State of New York, amicus curiae.

    The common-law rule that a new cause of action accrues everyday in cases of continuing torts was not changed by the enactment of CPLR 214-c. (509 Sixth Ave. Corp. v New York City Tr. Auth., 15 NY2d 48; Cranesville Block Co. v Niagara Mohawk Power Corp., 176 AD2d 444; Meruk v City of New York, 223 NY 271; Galway v Metropolitan El. Ry. Co., 128 NY 132; Arbegast v Board of Educ., 65 NY2d 161; Matter of Sullivan Co., 289 NY 110; Transit Commn. v Long Is. R. R. Co., 253 NY 345; Woollcott v Shubert, 217 NY 212; People v Fanshawe, 137 NY 68; Matter of Carnegie Trust Co., 151 App Div 606, 206 NY 390.)

      Wiley, Rein & Fielding (Laura A. Foggan, John E. Barry and John C. Yang of counsel, of the District of Columbia Bar, admitted pro hac vice) and Bower & Gardner, New York City, for American Insurance Association, amicus curiae.

    I. The clear and unambiguous language of CPLR 214-c (2) bars any action to recover damages for injury to property caused by the latent effects of contamination to groundwater brought more than three years after discovery. (Zaldin v Concord Hotel, 48 NY2d 107; People ex rel. New York Cent. & Hudson Riv. R. R. Co. v Woodbury, 208 NY 421; Oneida Sav. Bank v Tese, 108 AD2d 1042; Matter of Best Way Beer & Soda Distribs. v New York State Liq. Auth., 99 AD2d 727; Matter of Washington Post Co. v New York State Ins. Dept., 61 NY2d 557; Eaton v New York City Conciliation & Appeals Bd., 56 NY2d 340; New Amsterdam Cas. Co. v Stecker, 3 NY2d 1.) II. Extrinsic aids to the interpretation of CPLR 214-c confirm that the Court below erred in crafting an exception to the discovery rule. (Snyder v Town Insulation, 81 NY2d 429; Board of Regents v Tomanio, 446 US 478; Guaranty Trust Co. v United States, 304 US 126; Schmidt v Merchants Desp. Transp. Co., 270 NY 287.)

      Oliver & Oliver, Albany (Lewis B. Oliver, Jr., and Harriet B. Oliver of counsel), for Town of Moreau, amicus curiae.

    I. The common-law doctrine of continuing nuisance remains viable in jurisdictions which have a discovery rule including California, Massachusetts, Michigan, Texas, Virginia, Wisconsin, Georgia, New Jersey, Illinois, Ohio, Florida and Pennsylvania. (Gates Rubber Co. v USM Corp., 508 F2d 603; Abramson v Abramson, 772 F Supp 395; Bohus v Beloff, 950 F2d 919; McGowan v University of Scranton, 759 F2d 287; Brunea v Gustin, 775 F Supp 844; Merry v Westinghouse Elec. Corp., 684 F Supp 852.) II. This Court should hold that CPLR 214-c creates a toll in the limitations period without changing the event which triggers accrual of a claim. (509 Sixth Ave. Corp. v New York City Tr. Auth., 15 NY2d 48; Sporn v MCA Records, 58 NY2d 482; Tom Sawyer Motor Inns v County of Chemung, 32 NY2d 775; Boomer v Atlantic Cement Co., 26 NY2d 219; Bly v Edison Elec. Illuminating Co., 172 NY 1; Stowers v Gilbert, 156 NY 600; Uline v New York Cent. & Hudson Riv. R. R. Co., 101 NY 98; Guzzardi v Perry’s Boats, 92 AD2d 250; Ford v Clendenin, 215 NY 10; Pappenheim v Metropolitan El. Ry. Co., 128 NY 436.) III. This Court should affirm the opinion of the Court below that CPLR 214-c has no impact on the common-law continuing injuries doctrine because claims for continuing wrongs reaccrue and are not barred by any Statute of Limitations. (509 Sixth Ave. Corp. v New York City Tr. Auth., 15 NY2d 48; Ford v Clendenin, 215 NY 10; Galway v Metropolitan El. Ry. Co., 128 NY 132; Pappenheim v Metropolitan El. Ry. Co., 128 NY 436.)

      Lydia Rocissano Marola, Albany, for New York State Conference of Mayors and Municipal Officials, amicus curiae.

    I. Application of CPLR 214-c is in the public interest. II. Application of CPLR 214-c furthers the intent of tort reform. (Bernardine v City of New York, 294 NY 361; Matter of Crespo, 123 Misc 2d 862.)
   OPINION OF THE COURT

Bellacosa, J.

The phrase "injury to property” in the date of discovery Statute of Limitations, CPLR 214-c (2), embraces actions for damages ensuing from exposure to any substance, including those characterized as continuing trespass and nuisance. Thus, in this action for compensatory and injunctive relief due to hazardous waste contamination of the plaintiffs’ property, we conclude that the order of the Appellate Division should be modified by reversing so much as reinstated the plaintiffs’ causes of action for damages based on continuing trespass and nuisance.

I.

From 1958 to 1969, defendant General Electric disposed of hazardous waste from its Fort Edward-Hudson Falls plant at the Moreau Site. Defendant Albert J. Smaldone, Sr. and Sons, Inc. purchased the Moreau Site in 1970. In 1980, G.E. entered into a consent order with the New York State Department of Environmental Conservation to investigate environmental impacts and to undertake remediation at seven inactive hazardous waste sites, including the Moreau Site. G.E. entered into a similar consent order with the United States Environmental Protection Agency in 1983.

In 1984, G.E. contacted plaintiff Perkett and obtained her permission to place a cluster of monitoring wells on her nearby property. In November of 1984, G.E. published the "Moreau Site Status Report to the Public” (Moreau Report), which graphically illustrated that the plume of heaviest contamination extended under Perkett’s property. On December 5, 1984, G.E. sent a copy of the Moreau Report to Perkett, with her property outlined in black ink. She was specifically advised in that transmittal that "the western half [of your property] is located within the plume showing concentrations of trichloroethylene (TCE).”

Between 1984 and 1985, G.E. installed a groundwater cutoff or slurry wall to vertically enclose the original disposal pit at the Moreau Site. In 1986, plaintiff Perkett and plaintiff Jensen took title to the affected property as joint tenants. On September 9, 1986, G.E. sent plaintiff Jensen extensive technical data on the affected property and enclosed a map on which plaintiffs’ property was outlined in black ink, and a copy of the December 5, 1984 letter which had been sent to plaintiff Perkett. G.E. also notified plaintiff Jensen that well sites 10 and 22 on his property showed contamination.

Four years later, in June of 1990, plaintiffs commenced this action, alleging that the hazardous wastes deposited by G.E. had contaminated, and continued to contaminate, the plaintiffs’ property. Plaintiffs sought compensatory and punitive damages, as well as an injunction "prohibiting the continued release of chemicals into the environment.”

Defendants moved to dismiss- the complaint on the basis that the injury was discovered more than three years before the commencement of the suit and that the action was time-barred by CPLR 214-c (2). Supreme Court granted the motion to dismiss, but the Appellate Division modified and reinstated the causes of action seeking damages and injunctive relief based on the continuing trespass and continuing nuisance theory. The Appellate Division held that these causes of action were not time-barred because "being recurring wrongs they are not subject to any Statute of Limitations because they constantly accrue, thus giving rise to successive causes of action” (Jensen v General Elec. Co., 182 AD2d 903, 904 [emphasis added]). The Appellate Division then granted leave to appeal to our Court on a certified question. We modify the order of the Appellate Division by dismissing the causes of action characterized as continuing trespass and nuisance, insofar as they seek compensatory and punitive damages, on the ground that CPLR 214-c (2) specifically bars that relief.

II.

This case turns on the application and interpretation of New York’s toxic tort remedial Statute of Limitations, CPLR 214-c, enacted in 1986. The pertinent portion provides:

"Notwithstanding the provisions of section 214, the three year period within which an action to recover damages for personal injury or injury to property caused by the latent effects of exposure to any substance or combination of substances, in any form, upon or within the body or upon or within property must be commenced shall be computed from the date of discovery of the injury by the plaintiff or from the date when through the exercise of reasonable diligence such injury should have been discovered by the plaintiff, whichever is earlier” (CPLR 214-c [2] [emphasis added]).

Clarity and certainty of expression control when courts construe statutes. As to the very statute at issue, this Court has stated in another context:

"CPLR 214-c is a remedial statute and such statutes should be liberally construed to effectuate their aims’ * * * [and] must be given a meaning consistent with the words chosen by the Legislature —those words define the scope of the remedy that the Legislature deemed appropriate” (Enright v Lilly & Co., 77 NY2d 377, 385, n 1, cert denied — US —, 112 S Ct 197 [emphasis added]).

By its terms, CPLR 214-c (2) applies to actions for "damages for * * * injury to property caused by the latent effects of exposure to any substance.” The all-encompassing sweep of the "words chosen by the Legislature” leaves no room for judicial insertion of qualification or exceptions by interpretation, especially when the context and evolution of this historic legislation is examined (see, cg., Enright v Lilly & Co., supra, at 385, n 1; see also, Di Marco v Hudson Val. Blood Servs., 147 AD2d 156, 159; accord, Prego v City of New York, 141 Misc 2d 709, 712, affd 147 AD2d 165).

Furthermore, we discern no evidence in explicit words, legislative history or manifest intent that the Legislature chose to exempt continuing nuisance and continuing trespass actions from the comprehensive scope and language of this intensely negotiated legislation. To be sure, this breakthrough legislation was enacted to open otherwise closed courthouse doors and to replace the common-law-developed rule, which was criticized as unfair. Notably, the courts repeatedly importuned the Legislature to make the desired policy change, as a matter more appropriately within its province (see, e.g., Snyder v Town Insulation, 81 NY2d 429, 435-436; Flanagan v Mount Eden Gen. Hosp., 24 NY2d 427, 432-434). It would be ironic for the courts in these circumstances to reformulate the enacted version of this statute in the substantial fashion urged by plaintiffs.

The statute was enacted to "provide relief to injured New Yorkers whose claims would otherwise be dismissed for untimeliness simply because they were unaware of the latent injuries until after the limitation period had expired” (Mem of Senator R. B. Stafford, reprinted in 1986 NY Legis Ann, at 287). As Governor Cuomo emphasized in his Approval Memorandum, attending the signing of this long-awaited legislation:

"[CPLR 214-c (2)] remedies a fundamental injustice in the laws of our State which has deprived persons suffering from exposure to toxic or harmful substances from having an opportunity to present their case in court. That injustice results from an archaic rule which commences the three year time period for suit on the date that an exposure occurs. The rule fails to recognize that the adverse effects of many of these toxic substances do not manifest themselves until many years after the exposure takes place * * * This bill * * * repeals that archaic rule and replaces it with a fair and simple rule which permits a person to discover his or her injury before the statutory time period for suit begins to run” (1986 NY Legis Ann, at 288 [emphasis added]).

The Bill Jacket provides this additional contemporaneous perspective from the Attorney-General:

"[The statute] makes several significant changes in the law applicable to personal injury, property damage and wrongful death actions [by creating] a discovery rule for New York’s statute of limitations in such cases where the injury, damage or death is caused by the latent effects of exposure to substances” (Mem to Governor, in Governor’s Bill Jacket to L 1986, ch 682 [emphasis added]).

This perspective helps to buttress the view that the Legislature knew that it was altering the accrual date for all property damage actions caused by all substances, including those emanating from a continuing trespass and continuing nuisance condition, and intended that alteration.

A bit of history may also help to put matters in better perspective and clearer light. Prior to the enactment of CPLR 214-c (2), the Statute of Limitations began to run as of the date of exposure, regardless of the date on which the injury was discovered (see, e.g., Snyder v Town Insulation, 81 NY2d 429, supra; Matter of Steinhardt v Johns-Manville Corp., 54 NY2d 1008; Thornton v Roosevelt Hosp., 47 NY2d 780; Schwartz v Heyden Newport Chem. Corp., 12 NY2d 212; Schmidt v Merchants Desp. Transp. Co., 270 NY 287). A narrow common-law exception evolved to ameliorate the harshness of this accrual rule with respect to some particular continuous wrongs. Thus, in contrast to a permanent trespass or nuisance, one commentator described the rule for cases where a continuing wrong was alleged as:

"[T]he invasion would be seen as a series of invasions, each one giving rise to a new claim or cause of action. Res judicata doctrines might require the plaintiff to sue on all those accrued when suit is brought or to be barred, but as to damages occurred after suit or judgment, new claims could be brought up until such time as the new harms became permanent. And, in parallel reasoning, the statute of limitations might have run on claims that accrue [three] years earlier, but not on claims accruing within the last [three] years. The fact that a nuisance or trespass continues over a period of time does not prevent the application of these 'continuing trespass’ rules, so long as the invasion is not a permanent one” (1 Dobbs, Remedies § 5.11 [1], at 822 [2d ed 1993]).

Thus, it was a "well-settled principle * * * that continuous injuries to real estate caused by the maintenance of a nuisance * * * create separate causes of action barred only by the running of the statute against the successive trespasses” (Galway v Metropolitan El. Ry. Co., 128 NY 132, 143; see also, 509 Sixth Ave. Corp. v New York City Tr. Auth., 15 NY2d 48, 52).

We respectfully disagree with the views in the two dissenting opinions that accept plaintiffs’ plea that this rule and its common-law rationale are somehow unaffected by CPLR 214-c (2) (dissenting opn, Smith, J., at 94; dissenting opn, Hancock, Jr., J., seriatim). "The Legislature is * * * presumed to be aware of the decisional and statute law in existence at the time of an enactment” (Arbegast v Board of Educ., 65 NY2d 161, 169). The Legislature knew the rules of accrual in continuing nuisance and continuing trespass actions and knew that some nuisance and trespass cases involving damage from toxic or chemical contamination have been traditionally treated as continuing wrongs. If no Statute of Limitations at all was to apply, as the Appellate Division found, then the provision for a three-year period from discovery of the act of wrongdoing would be rendered a theoretical and superfluous appendage to the statute with no practical vitality. Statutory construction of that nature is insupportable.

The Legislature presumably also understood that its dramatic new rule of accrual, expressed as governing property damage actions due to the latent effects of exposure from any substance, was displacing the rationale for the common-law exception. It expressed no exception or qualification for continuing wrongs because none was necessary or intended. To have done so might also have required a fuller list to avoid the statutory construction maxim that the inclusion of one item is the exclusion of others. We therefore respectfully disagree with the dissent that the Legislature’s failure to explicitly recite continuing wrongs as within the general language of this statute is somehow fatal to the general sweep of the enactment (dissenting opn, Smith, J., at 93; see, McKinney’s Cons Laws of NY, Book 1, Statutes § 114 ["(W)here the Legislature in enacting a statute utilized general terms, and did not, either expressly or by implication, limit their operation, the courts will not impose any limitation”]). We also find some beneficial instruction in the statutory construction axiom that teaches:

" ’[A] general law may, and frequently does, originate in some particular case or class of cases which is in the mind of the legislature at the time, but, so long as it is expressed in general language, the courts cannot, in the absence of express restrictions, limit its application to those cases, but must apply it to all cases that come within its terms and its general purpose and policy’ ” (Matter of Di Brizzi, 303 NY 206, 214; People ex rel. McClelland v Roberts, 148 NY 360, 368; McKinnev’s Cons Laws of NY, Book 1, Statutes § 114, at 239).

The comprehensive, balanced, new rule gave injured parties three years from discovery to bring suit for injuries — three years that they never before had. Although under the common-law rule in the prediscovery statute era such actions continued to accrue each day, that portion of damages for injuries sustained more than three years prior also became continuously barred each day. The discovery rule, applied to continuing wrongs, allows plaintiffs who do not sit on their newly granted rights to sue for all damages incurred since the wrong began. Without the statutory discovery remedy, plaintiffs would have been left to damages actually incurred within three years of the plaintiffs’ action. The discovery rule, thus, provides enhanced protections for plaintiffs by allowing them —if they act timely — to recover for all injuries regardless of the lapse of time between the exposure and the discovery. Defendants’ and societal interests are also protected, since defendants are not left potentially liable in perpetuity. The statute thus serves a substantial public policy that traditionally benefits all society by creating some measure of repose (see generally, e.g., CPLR 211, 212, 213, 213-a, 214, 214-a, 214-b, 214-c, 215). This approach is neither harsh nor unfair. It is well balanced. This Court has only recently stated in a case rejecting a plaintiff’s claim with a consequence not unlike the one urged here:

"Determining when limitations begin to run requires a balancing of policy considerations * * * On one side of the scale are the interests of injured parties. Unquestionably, a Statute of Limitations can have a severe impact on their rights when, for instance, an injury is not discovered until years later. The Legislature has acted to ameliorate the rule in such cases in recent years (see, CPLR 214-c). Conversely, defendants are entitled to a fair opportunity to defend claims against them before their ability to do so has deteriorated * * * But under the rule proposed by plaintiffs in this case, a plaintiff would have the power to put off the running of the Statute of Limitations indefinitely” (Snyder v Town Insulation, 81 NY2d, at 435, supra [citations omitted]).

Thus, contrary to one of the dissent’s viewpoints (dissenting opn, Hancock, Jr., J., at 97), the majority suffers no "obvious difficulties” in pursuing a correct, precedentially supported holding and analysis that respect the nuanced and competing rights of all the parties under the new statute, a process that reflects the rigor and strain of the exercise of judicial responsibility.

The majority, of course, agrees with the dissents that the statute is remedial. However, the generalization of the statute’s motivating thrust surely does not proclaim an all-or-nothing victory for one side only, of a long-standing, complex, societal-jurisprudential imbalance. A remedial banner does not decide the case and precise issue before us, because the devil is, as always, in the details. The Court’s obligation is to be guided by the detailed words of the statute, and despite the disquisition in Judge Hancock’s dissenting articulation, no one should be sidetracked by its mischaracterizations of the central analysis by which the case is decided.

We conclude, therefore, that the reasonable interpretation of the present statute, from the Legislature’s words and actions, is that it intended no continuing-wrong exception to its new comprehensive, across-the-board rules. As Professor Siegel commented with respect to Glod v Morrill Press Div. of Engraph (168 AD2d 954), "CPLR 214-c [2] is not an alternative in exposure cases, but a superseding rule. It offers only one world, not the best of two, and the one offered may be a good place for an exposure plaintiff most times, but not all” (Siegel, 365 New York State Law Digest, at 4 [May 1990]). Another commentator, Professor Alexander, relied on by one of the dissenters (dissenting opn, Hancock, Jr., J., at 97), appears to misgauge the implications of our outcome, as restricting " 'an injured party’s ability to take advantage of available substantive rights’ ” (Alexander, Supp Practice Commentaries, McKinney’s Cons Laws of NY, Book 7B, CPLR C214-c:2, 1993 Pocket Part, at 69); rather, our view enhances that ability since, as noted, injured parties who timely commence actions, within three years after discovery of their injuries and rights, may recover for all their proven damages.

Notably, this Court’s decision in 509 Sixth Ave. Corp. v New York City Tr. Auth. (15 NY2d 48, supra) — the judicially en-grafted exception to the Statute of Limitations for continuing wrongs — grew out of a jurisprudential climate and landscape where there was no discovery rule (compare and analogize, Flanagan v Mount Eden Gen. Hosp., 24 NY2d 427, supra [Court created a discovery rule in 1969], and related cases, with CPLR 214-a [statutory discovery rule for foreign object medical malpractice situations, enacted in 1975]). The rationale that drove 509 Sixth Ave. evaporates with the enactment of a parallel discovery triggering mechanism in CPLR 214-c (2) and by "the clear import of the language used in the statute” abrogates the common law (Arbegast v Board of Educ., 65 NY2d 161, 169, supra). To rule otherwise would significantly undermine the new statute. Indeed, the sweeping exception urged by plaintiffs and adopted by the dissent would swallow the postdiscovery three-year repose allowed by the statutory formula. The net practical result in countless cases, as the Appellate Division in this very case observed, would be that there would be no Statute of Limitations, and never any repose even against parties who choose to sit interminably on known rights before bringing suit. The Legislature could not have intended or effected such a substantial, self-defeating and self-contradictory exercise that functionally excises the three-year period from the statute.

It is undisputed that the plaintiffs were aware of the injury to their property as early as 1986, four years before the commencement of this action. Thus, their causes of action for damages stemming from continuing trespass and continuing nuisance could have been and should have been timely brought. Since they were not, they are time-barred by CPLR 214-c (2).

It should not be overlooked that this conclusion, will encourage timely action with ample time allowances by injured parties with knowledge of their injuries. This inducement is fair to everyone and benefits everyone proportionately. It discourages people from sitting on their rights and inhibiting early intervention and remediation, factors neutralizing or displacing the concern about some occasional anticipatory estimation of damages (see, dissenting opn, Smith, J., at 96). Finally, distinctions between the originating wrongful act and the continuing, perhaps perpetual, adverse consequences of the wrongful act add weight to our construction of the statute at issue as having an opener keyed to discovery and a complementary three-year-closer to provide some repose as part of its legislatively balanced equation (Snyder v Town Insulation, 81 NY2d 429, 435, supra).

III.

By like plain language, CPLR 214-c (2) applies by its terms only to actions "to recover damages.” It does not then affect or purport to affect the availability to a party of seeking injunctive equitable relief. Law and equity have long been merged. Thus, dealing with available remedies under a new statute and pinpointing precise legal recourse makes good sense and sound law here.

Again, some history, albeit quite antiquated, may help. The doctrine of continuing wrongs originated in the English Equity Courts. The obscurity of the origin of equity jurisdiction in the Court of Chancery, from which American equity jurisdiction emanates, highlights the troubled history of the continuing wrongs theory (1 Story, Commentaries on Equity Jurisprudence as Administered in England and America §§ 38, 39, 41, 44, 45, at 42, 45-46, 49-50 [Lyon 14th ed 1918]). History and origin aside, however, we have been well taught that equity jurisdiction, was the judicial response to the "rigidity of the Common Law and its defective state” (Potter, History of Equity and Its Courts, at 40 [1931]). Thus, the "injunctive remedy is [ ] justified upon the ground that the remedy at law is inadequate” (Fiera, Particular Actions and Proceedings: Equitable Actions, at 168 [1929]). The long lesson of history thus reaches and serves the modern dilemma of this case, where causes of action for damages at law are placed in repose under CPLR 214-c (2) after three years from discovery, but appropriate injunction relief is preserved in the traditional equity form.

It is well settled that "[i]f the trespass is of a continuous or constantly recurring nature, a proper case for the granting of an injunction is shown” (Fiera, op. cit., at 168). Furthermore, it has long been recognized that:

"The most fertile field in tort for the injunction is nuisance. It is first necessary to remind ourselves that this jurisdiction is concurrent, not exclusive; equity comes to the help of the law in cases where the law would ultimately have to award damages, but that remedy would be inadequate. It does not, however, call an act a nuisance which would not receive this appellation from law; there is, as Kindersley, V.C., put it in Soltau v DeHeld, 'no such thing as an equitable nuisance’ ” (Hanbury, Modern Equity, at 604 [4th ed 1946] [emphasis in original]).

Since by its terms the discovery rule of CPLR 214-c (2) applies only to actions for damages and not to injunctive relief, the common-law accrual method is applicable. Therefore, equitable injunctive relief may be available and should be scrutinized under the usual array of considerations for such matters.

Accordingly, the order of the Appellate Division should be modified, with costs to defendants, by reversing that part of the order which reinstated the plaintiffs’ causes of action for property damages stemming from conduct characterized for the purposes of the pleading and appeal as continuing trespass and continuing nuisance; as so modified the order should be affirmed, the case remitted to Supreme Court for such further proceedings as may be appropriate and the certified question answered in the affirmative.

Smith, J. (dissenting). The sole issue before this Court is whether CPLR 214-c (2) applies to actions for continuing trespass or continuing nuisance to property. Contrary to the opinion of the majority, nothing in the plain language of that statute, or its legislative history, indicates that the Legislature "intended no continuing-wrong exception to [CPLR 214-c (2)]” (majority opn, at 88). Thus, I dissent, vote to affirm the order of the Appellate Division and answer the certified question in the negative.

I

Plaintiffs commenced this action to recover damages and injunctive relief due to the alleged permanent hazardous waste contamination of their property. They base their claims on the following undisputed facts. From 1958 to 1969, the Fort Edward-Hudson Falls plant of defendant General Electric (GE) disposed of wastes by dumping them at a location designated as the Moreau site. In 1970, defendant Albert J. Smaldone, Sr. and Sons, Inc. purchased the site. In September 1980, GE entered into a consent order with the New York State Department of Environmental Conservation to investigate and undertake remedial action at seven inactive hazardous waste disposal sites. In 1983, pursuant to that consent order, GE began constructing a containment system, consisting of a containment wall that extended approximately 100 feet below the ground, at the Moreau site. Before the containment system was completed, investigations revealed that contaminants from the site were migrating southward. In November 1983, pursuant to an administrative order of the Federal Environmental Protection Agency, GE agreed to conduct further investigations to determine the extent of contamination beyond the boundaries of the Moreau site. GE completed remedial measures at that site in 1986.

Plaintiff Edith Perkett owned property near the Moreau site. During the contamination investigation, plaintiff permitted GE to install monitoring wells on her property. In December 1984, GE advised plaintiff that her property was contaminated. On July 21, 1986, Perkett and her son, plaintiff Eric Jensen, took title to the property as joint tenants with right of survivorship. In September 1986, GE informed Jensen that their property was contaminated.

Plaintiffs brought this action in June 1990, seeking compensatory damages because of the continuing contamination of their property. Plaintiffs sought also to enjoin defendants from continuing to release chemicals into the environment surrounding their property. GE moved and Smaldone cross-moved to dismiss the action on the ground that it was barred by the three-year Statute of Limitations set forth in CPLR 214-c (2). Defendants asserted that the limitations period began to run on the date plaintiffs discovered the contamination.

Supreme Court granted the motion and cross motion to dismiss, finding that plaintiffs’ action was time-barred because they discovered the injury to their property more than three years before they commenced the action. The Appellate Division modified, on the law, by reversing so much of Supreme Court’s order as granted the motions to dismiss the causes of action in continuing trespass and continuing nuisance, denied the motions regarding said causes of action, and, as so modified, affirmed (182 AD2d 903). The Court concluded that the injuries for which plaintiffs sought to recover were recurring wrongs which are unaffected by the enactment of CPLR 214-c (2), and, thus, continue, as at common law, to accrue so long as the alleged trespass and nuisance continue (id.). The Appellate Division granted leave to appeal and certified the following question:

"Did this court err as a matter of law in modifying the order of the Supreme Court by reversing so much thereof as granted the motions to dismiss the causes of action in continuing trespass and continuing nuisance, denying the motions regarding said causes of action and, as so modified, affirming the order?”

II

Pursuant to CPLR 214-c (2), actions to recover damages for personal injury or property damage caused by the latent effects of exposure to a substance must be commenced within three years from the date on which the plaintiff discovered the injury. Section 214-c (2) provides:

"Notwithstanding the provisions of section 214, the three year period within which an action to recover damages for personal injury or injury to property caused by the latent effects of exposure to any substance or combination of substances, in any form, upon or within the body or upon or within property must be commenced shall be computed from the date of discovery of the injury by the plaintiff or from the date when through the exercise of reasonable diligence such injury should have been discovered by the plaintiff, whichever is earlier.”

The plain language of CPLR 214-c (2) makes no reference to actions for continuing trespass or continuing nuisance, but refers only generally to actions for "injury to property caused by the latent effects of exposure to any substance or combination of substances.” The majority would construe these words to be "all-encompassing” and to include continuing nuisance and continuing trespass actions (majority opn, at 83). However, a review of the relevant case law from this Court, the legislative history of CPLR 214-c (2), and the potential adverse impact upon property rights of such a construction, reveals that a contrary result is warranted.

Generally, with respect to latent personal injury or property damage, a judicially created "accrual” or "last exposure” rule applies to preclude plaintiffs who suffer those injuries from commencing actions after the running of the applicable Statute of Limitations. Pursuant to that rule, the date of accrual of latent injury tort actions, which commences the running of the three-year Statute of Limitations (CPLR 203, 214), is governed by the date of exposure to the offending agent or condition that caused the injury. This doctrine is based upon the principle that, unless otherwise provided by the Legislaturc, an action accrues "when the forces wrongfully put in motion produce injury,” and that an injury occurs "when there is a wrongful invasion of personal or property rights” (Schmidt v Merchants Desp. Transp. Co., 270 NY 287, 300; see also, Matter of Steinhardt v Johns-Manville Corp., 54 NY2d 1008, 1010-1011; Schwartz v Heyden Newport Chem. Corp., 12 NY2d 212, 216-219), regardless of when the injury became apparent (see, e.g., Thornton v Roosevelt Hosp., 47 NY2d 780).

A common-law exception to the last exposure rule permits plaintiffs who suffer continuous personal injury or property damage to commence successive causes of action reflecting each wrong. Under this common-law principle, "trespassers upon real property effected [sic] by an unlawful structure or nuisance, are continuous in their nature and give successive causes of action from time to time, as the injuries are perpetrated” (Galway v Metropolitan El. Ry. Co., 128 NY 132, 143). This rule is based on the principles that "continuous injuries to real estate caused by the maintenance of a nuisance * * * create separate causes of action barred only by the running of the statute against the successive trespasses, and * * * that no lapse of time or inaction merely on the part of the plaintiff * * * is sufficient to defeat the right of the owner to damages” (id., at 143). Thus, the potentially harsh results as to actions for latent personal injuries were avoided where such injuries to property constituted a continuing trespass or continuing nuisance, giving rise to successive actions (see, 509 Sixth Ave. Corp. v New York City Tr. Auth., 15 NY2d 48).

It is settled that the rules of "common law [are] never abrogated by implication * * *[, but, rather,] must be held no further changed than the clear import of the language used in a statute absolutely requires” (McKinney’s Cons Laws of NY, Book 1, Statutes § 301 [b]). Thus, absent an unequivocal expression of the will of the Legislature to abrogate the common-law actions for continuing trespass and continuing nuisance, there is no sound basis for concluding that "the reasonable interpretation of [CPLR 214-c (2)] * * * is that [the Legislature] intended no continuing-wrong exception” (majority opn, at 88).

The legislative history of CPLR 214-c (2) unequivocally reveals that the Legislature enacted that statute in 1986 to redress the wrongs flowing from the accrual or last exposure rule, not to abrogate the common-law rule pertaining to actions in continuing trespass and continuing nuisance. Specifically, the July 28, 1986 memorandum from the New York State Department of Commerce to Counsel to the Governor stated that "[t]he bill corrects this inequity [having the Statute of Limitations run from the date of exposure rather than the date of discovery] prospectively.” (Bill Jacket to L 1986, ch 682.) Comments from the New York State Department of Health, dated July 30, 1986, included, "[The bill] provides needed redress to those individuals whose latent injury from exposure to substances is neither discovered or discoverable with reasonable diligence until after a cause of action for personal injury has been barred by the statute of limitations” (Bill Jacket, op. cit.). Additionally, the Attorney-General, in a memorandum to the Governor dated July 21, 1986, concluded that "the changes proposed in this bill will lead to greater fairness in New York’s tort law and, most significantly, will correct a terrible injustice that has been done to thousands of this State’s citizens” (Bill Jacket, op. cit.). The New York State Nurses Association and the New York State AFL-CIO submitted similar comments. Nowhere in the legislative history is there any reference to the bill adversely affecting preexisting legal rights under the common law. Ameliorative legislation was not necessary with respect to actions involving a continuing injury to property. Indeed, the statute and the legislative history are silent as to those situations.

In Arbegast v Board of Educ. (65 NY2d 161, 169), we stated, "The Legislature is, however, presumed to be aware of the decisional and statute law in existence at the time of an enactment * * * and to have abrogated the common law only to the extent that the clear import of the language used in the statute requires [citations omitted].” The issue in that case was whether the Legislature intended to include express assumption of the risk, as differentiated in the common law from implied assumption of the risk, when it enacted CPLR article 14-A, wherein the culpable conduct of a plaintiff would diminish, instead of bar, recovery. The statute did not define the term "assumption of the risk”, and it was unclear from the legislative history whether express assumption of the risk was included. This Court acknowledged that it was established in the law that in some instances it did not violate public policy to limit liability for negligence by contract, and held that the article included only the implied assumption of the risk as a bar to recovery (id., at 169-170).

Applying the same analysis to this case compels the conclusion that actions based upon continuing trespass and continuing nuisance have not been abrogated. To conclude otherwise would render a law, created expressly to alleviate injustices under the common law, an instrument for the diminution of common-law rights.

Ill

The declaration by the majority that CPLR 214-c (2) applies to actions for continuing trespass and continuing nuisance compels plaintiffs, who have discovered an injury to their property due to the latent effects of exposure, to speculate as to the economic loss they will suffer 5, 10, 20 or more years later and then to persuade the trier of fact on that point. As this Court noted in Victorson v Bock Laundry Mach. Co. (37 NY2d 395, 403), " '[i]t is all but unthinkable that a person should be time-barred from prosecuting a cause of action before he ever had one.’ ” The tremendous potential for an unjust result under such circumstances is readily apparent, a result which the common-law rule avoids.

The nature of the relief accorded by the statute — i.e., the cause of action commencing with discovery of the injury no matter how far removed from the date when the wrong was initially inflicted — demonstrates that the Legislature’s overriding intention was to afford a remedy for the injury irrespective of the length of time that has elapsed from the initial wrong and, in that context, concerns with "repose” are at variance with the legislative intent in enacting CPLR 214-c. It may be noted that had the property here involved been sold to an unknowing third party in 1988 or 1989, that party would have a cause of action under the statute even if discovery of the injury did not occur until some 5 or 10 years thereafter. Contrary to the position taken by the majority, the statute is not concerned with "repose” but rather provides for liability depending only upon the date when the injury is discovered or should reasonably have been discovered.

In the absence of an unequivocal expression of the legislative will to cause this result, we should hold that the common-law actions for continuing trespass and continuing nuisance have been unaltered by CPLR 214-c (2).

Hancock, Jr., J.

(dissenting). I join in Judge Smith’s dissenting opinion and would affirm the unanimous decision of the Appellate Division, Third Department (see, Jensen v General Elec. Co., 182 AD2d 903). I write separately to underscore these additional points.

The words of CPLR 214-c, the sense of the statute and its well-documented legislative history leave no doubt that the only purpose of adopting the statute was to remedy the fundamental injustice in the existing "last exposure” rule by replacing it "with a fair and simple rule which permits a person to discover his or her injury before the statutory time period for suit begins to run” (Governor Cuomo’s Approval Mem, 1986 McKinney’s Session Laws of NY, at 3182, 3183; see, Enright v Lilly & Co., 77 NY2d 377, 382-383 [CPLR 214-c applied to remove bar to damage lawsuits for past undiscovered injuries resulting from ingestion of DES]; Hymowitz v Lilly & Co., 73 NY2d 487, 503-504, 507, 514). The majority today, in a remarkable inversion of the statute’s remedial purpose, applies the discovery rule of CPLR 214-c to bar an action based on a constantly recurring wrong in the nature of continuing trespass or nuisance. It thus uses the statute not to revive rights that would otherwise be barred (see, e.g., Enright, supra) but to cut off established common-law rights that are not barred under existing law. Thus, the majority’s application of the statute is directly contrary to the statute’s "obvious purpose * * * to expand an injured party’s ability to take advantage of available substantive rights, not to restrict it (Alexander, Supp Practice Commentaries, McKinney’s Cons Laws of NY, Book 7B, CPLR C214-c:2, 1993 Pocket Part, at 69 [emphasis added]).

That the Legislature could not have contemplated that CPLR 214-c would ever be applied to a continuing wrong of the type alleged here — which tf fcreate[s] separate causes of action barred only by the running of the statute against the successive trespasses’ ” (majority opn, at 85 [emphasis added]) —is demonstrated conclusively, in my opinion, by the obvious difficulties that the majority encounters in interpreting CPLR 214-c so as to make it fit the case.

The wording of the statute and the legislative history clearly show that in the phrase "an action to recover damages” (CPLR 214-c [2]) the Legislature had in mind the typical action at law for damages resulting from a specific injury which had become outlawed such as the DES claims in Hymowitz and Enright. But an action based on a continuing wrong is not such an action at law for damages. The relief sought is equitable in nature, enjoining a continuance of the injurious conduct; to be sure, damages are sought as part of the total relief but the essence of an action against a continuing wrong is equitable (see, e.g., Lynch v Metropolitan El. Ry. Co., 129 NY 274, 279-280; Galway v Metropolitan El. Ry. Co., 128 NY 132, 146-147; see generally, 1 Pomeroy, Equity Jurisprudence § 237 [5th ed], and cases cited therein). Thus, the action does not fit what would ordinarily be taken as the sense of the phrase "action to recover damages” (CPLR 214-c [2]). The majority, however, meets this problem head on. It simply employs the Procrustean technique of lopping off the part of the relief that does not fit. It holds that only the damages portion of the relief is time-barred, not the equitable relief. For this reason, it does not dismiss plaintiffs’ action. But this, in my view, only compounds the problems.

Excising the prayer for damages and treating it separately from the equitable relief, of course, cannot transform an action in equity into a law "action to recover damages” of the sort contemplated by CPLR 214-c (2). The essential nature of the action as one in equity calling on the court for relief from a continuing wrong remains unchanged (see, e.g., Lynch, supra, at 279 [holding that a demand for past damages as part of an equity action to enjoin a continuing trespass does not constitute an independent cause of action at law for damages]). It is the underlying nature of the action, not the relief demanded that causes the incompatibility with the statute. Beyond that, however, lies an even more fundamental problem with the majority’s solution.

By not dismissing the complaint, the majority affirms that plaintiffs have a viable cause of action for relief based on the alleged wrongful conduct. Plaintiffs, the majority agrees, may ask an equity court to grant an injunction or to abate the nuisance. But the court sitting in equity is precluded from granting whatever ancillary damages are necessary in order to give the complete relief that equity may require. This curtailment of the power of an equity court conflicts directly with the time-honored maxim that once "a court of equity has jurisdiction of a cause it has the power to dispose of all the matters at issue and grant complete relief’ (Ferguson v Village of Hamburg, 272 NY 234, 239; see, People v Lexington Sixty-First Assocs., 38 NY2d 588, 599; Lynch, supra, at 279-280; 55 NY Jur 2d, Equity, § 38). It ignores case law applying this principle in actions for injunctions against continuing trespasses (see, e.g., Lynch, supra, at 279-280; Boomer v Atlantic Cement Co., 26 NY2d 219, 227-228; 1 Pomeroy, Equity Jurisprudence § 237 [5th ed], and cases cited therein).

The majority’s decision to truncate the prayer for relief and thereby limit the equity court’s power necessarily attributes to the Legislature in its enactment of CPLR 214-c the intention of abrogating by implication a basic and unquestioned principle of equity jurisprudence — that once an equity court has acquired jurisdiction it may retain the cause for all purposes and proceed to a final determination including an award of complete relief. But, here again (see, dissenting opn, Smith, J., at 95-96 [pertaining to implied abrogation of established right to obtain relief in actions for continuing trespass and nuisance]) the majority’s construction of CPLR 214-c runs afoul of the accepted rule that the common law is never presumed to have been abrogated by implication (see, McKinney’s Cons Laws of NY, Book 1, Statutes § 301 [b]; Arbegast v Board of Educ., 65 NY2d 161, 169).

There are other difficulties with the majority’s holding that CPLR 214-c (2) should be applied so as to dismiss entirely the severed and separately treated cause of action for damages. The holding leaves some obvious questions unanswered. The majority concludes that the "comprehensive, balanced, new rule [gives] injured parties three years from discovery to bring suit for injuries” (majority opn, at 87 [emphasis added]). A continuing trespass — it is agreed (see, majority opn, at 85, 87)— creates separate causes of action for the individual trespasses which arise successively each day that the trespass continues (see, 509 Sixth Ave. Corp. v New York City Tr. Auth., 15 NY2d 48, 52). Assuming that each of these successive trespasses is discovered on the day it occurs and the separate, new cause of action accrues, under the majority’s application of CPLR 214-c (2) the plaintiff should have three years from the date of discovery of each new injury to bring suit. The majority does not explain how plaintiffs — even adopting the majority’s application of CPLR 214-c (2) — can be deprived of their right to recover damages for the successive trespasses that have occurred within the three-year period before commencement of the action.

There is, moreover, another problem. If plaintiffs should prevail in their equity action, does the majority’s construction of CPLR 214-c (2) preclude the recovery of such damages as may have accrued during the period from and after the commencement of plaintiffs’ action until the date of the court’s decree? The majority opinion does not tell us.

For the reasons stated in Judge Smith’s dissenting opinion and in view of the several complications and unanswered questions resulting from what, at the very least, is a labored construction of CPLR 214-c, I cannot believe that the Legislature ever intended this outcome.

Chief Judge Kaye and Judges Titone and Sullivan* concur with Judge Bellacosa; Judge Smith dissents in part and votes to affirm in an opinion in which Judges Hancock, Jr., and Ellerin concur; Judge Hancock, Jr., dissents in a separate opinion in which Judge Ellerin also concurs; Judges Simons and Levine taking no part.

Order modified, with costs to defendants, and case remitted to Supreme Court, Saratoga County, for further proceedings in accordance with the opinion herein and, as so modified, affirmed, and certified question answered in the affirmative.

       Plaintiff Perkett is now deceased.

       Designated pursuant to NY Constitution, article VI, § 2.


source: Caselaw Access Project

author: Per Curiam. Titone, J.

license: Public Domain

text:
    [623 NE2d 1140, 603 NYS2d 790]
    In the Matter of Brooklyn Heights Association, Inc., et al., Respondents, v Frank J. Macchiarola et al., as Members of the New York City Districting Commission, et al., Appellants.
    Argued August 25, 1993;
    decided September 7, 1993

      POINTS OF COUNSEL

      O. Peter Sherwood, Corporation Counsel of New York City (Joel Berger, Fred Kolikoff and David Drueding of counsel), for appellants.
    I. The order below violates this Court’s recent decision in Matter of Wolpoff v Cuomo (80 NY2d 70 [1992]) by second-guessing the Districting Commission’s judgment on such matters as the appropriate definition of neighborhood boundaries and the policy of not splitting the City’s 33,559 census tabulation blocks into smaller subdivisions. (Matter of Johnson v Joy, 48 NY2d 689; Matter of Fineway Supermarkets v State Liq. Auth., 48 NY2d 464; Matter of Howard v Wyman, 28 NY2d 434, 29 NY2d 749; Matter of Barklee Realty Co. v New York State Div. of Hous. & Community Renewal, 159 AD2d 416, 76 NY2d 709, 844; Matter of Plaza Realty Investors & Queens Blvd. Props. Co. v New York City Conciliation & Appeals Bd., 111 AD2d 395; Seaman v Fedourich, 16 NY2d 94; Honig v Rensselaer County Legislature, 37 AD2d 658, 29 NY2d 630; Thayer v Garraghan, 28 AD2d 584, 21 NY2d 881; Reynolds v Sims, 377 US 533.) II. Even assuming, arguendo, that the Districting Commission erred as a matter of law in its determinations not to split the City’s 33,559 census blocks into smaller subdivisions, and to interpret the word "neighborhood” for districting purposes as referring to voters and people, the majority below should have remanded to the Commission for reconsideration in light of that holding rather than proceeding to redraw district lines itself. (Incorporated Vil. of Great Neck Plaza v Nassau County Rent Guidelines Bd., 60 AD2d 593; Burke’s Auto Body v Ameruso, 113 AD2d 198; Matter of Association of Secretaries to Justices v Office of

      Ct. Admin., 75 NY2d 460; Robb Tess Rest. Corp. v New York State Liq. Auth., 49 NY2d 874; Matter of Ahsaf v Nyquist, 37 NY2d 182; Matter of Berger v Walsh, 291 NY 220; Harradine v Board of Supervisors, 68 AD2d 298; Matter of Pell v Board of Educ., 34 NY2d 222.) III. The majority below erred in holding that any change in district lines ordered by a State court is exempt from the preclearance requirements of the Federal Voting Rights Act. (McDaniel v Sanchez, 452 US 130; Hathorn v Lovorn, 457 US 255; Pleasant Grove v United States, 479 US 462.)

      Cravath, Swaine & Moore, New York City (Francis P. Barron and David M. Kroeger of counsel), for respondents.
    I. The court below properly affirmed the trial court’s determination that the division of the Brooklyn Heights neighborhood was unlawful. (Matter of Allstate Ins. Co. v Carlough, 132 AD2d 554, 70 NY2d 912; SEC v Sloan, 436 US 103; Matter of Capital Newspapers v Whalen, 69 NY2d 246; Matter of Trump-Equit. Fifth Ave. Co. v Gliedman, 57 NY2d 588; Matter of Wolpoff v Cuomo, 80 NY2d 70; Matter of Heimbach v Metropolitan Transp. Auth., 75 NY2d 387; Marbury v Madison, 1 Crunch [5 US] 137; Farnum v Burns, 561 F Supp 83; Matter of Consolidated Edison Co. v Public Serv. Commn., 63 NY2d 424.) II. The court below properly determined that remand to the Commission was neither necessary nor practical. (Arnold v New City Condominiums Corp., 88 AD2d 578.) III. The court below properly affirmed the trial court’s determination that its order is not subject to preclearance under section 5 of the Voting Rights Act. (Pleasant Grove v United States, 479 US 462; Hathorn v Lovorn, 457 US 255; Connor v Johnson, 402 US 690; East Carroll Parish School Bd. v Marshall, 424 US 636.) IV. The political empowerment argument raised by Council Member McCabe, and vaguely by respondents as well, cannot warrant reversal of the lower courts.

      Wolfson & Carroll, New York City (John W. Carroll of counsel), for City Council Member Joan Griffin McCabe, amicus curiae.

    I. The subject matter of this lawsuit is a vital part of the 38th Council District. II. Council Member McCabe is sensitive to the importance of proper development for Piers 1 through 6.
   OPINION OF THE COURT

Per Curiam.

In 1989, the structure of the New York City Board of Estimate was declared unconstitutional because it violated the Equal Protection guarantee of "one person, one vote” (New York City Bd. of Estimate v Morris, 489 US 688). Consequently, the Board of Estimate was abolished and some of its powers, by vote of the electorate of New York City, were transferred to the City Council, which in 1991 was expanded from 35 to 51 members (NY City Charter § 22). The task of redrawing the Council districts was assigned under the referendum to the bipartisan City Districting Commission, appointed by the Council and the Mayor (Charter § 50).

The Charter set forth a number of requirements for the districting plan. Each district, for example, was to "be contiguous” (Charter § 52 [2]), and the Commission was required to use the "final count results” of the 1990 census (Charter § 1152 [d] [11] [b]).

The Charter additionally set forth seven criteria which were to be applied "to the maximum extent practicable” and given "priority in the order in which they are listed” (Charter § 52 [1]). Two of these are particularly relevant here — the second-ranked priority mandating "fair and effective” representation of minorities, and the third requiring that "[district lines shall keep intact neighborhoods and communities with established ties of common interest and association, whether historical, racial, economic, ethnic, religious or other.” (Charter § 52 [1] [b], M.)

For census purposes, the United States Census Bureau divided the City into 33,559 tabulation blocks, which are the smallest geographic units for which official census counts are available. As a result, the Commission adopted two policiés: it would create districts by grouping together tabulation blocks, and it would not divide any tabulation blocks.

The focus of this litigation is tabulation block 105 in Brooklyn, which runs more than one mile along the waterfront, from the Brooklyn Battery Tunnel to Old Fulton Street. Block 105 consists primarily of warehouses and industrial buildings, and official 1990 census data — which the Commission was bound to accept (Charter § 1152 [d] [11] [b]) — reported 47 residents. Extending from block 105 into the East River are 10 unpopulated piers, each its own tabulation block.

In pursuit of the second-ranked priority of ensuring fair and effective minority representation (Charter § 52 [1] [b]), the Commission chose to make District 38, which included the Sunset Park and Red Hook areas, a Latino-majority district. To do so, however, it was necessary to annex a noncontiguous area of Latinos living along Atlantic Avenue. Accordingly, a "land bridge” of 11 tabulation blocks — including block 105— was created to link the noncontiguous area with the rest of the district. By virtue of the Commission’s policy of not splitting tabulation blocks, however, the lengthy waterfront also became a part of District 38, though it was not geographically necessary to include the entire waterfront as part of the land bridge. The piers adjacent to block 105 were placed in District 1 in Manhattan — the border between Manhattan and Brooklyn being "the low-water mark on the shore of Long Island” (Administrative Code of City of NY § 2-202 [1]; see also, § 2-202 [3]; Charter § 52 [1] [e] [fifth-ranked criteria is that a "district shall not cross borough or county boundaries”]).

Residents and civic groups in Brooklyn Heights, a neighborhood in District 33, objected to the districting plan because, in their view, the part of tabulation block 105 north of Atlantic Avenue and the adjacent five piers historically have been a part of Brooklyn Heights and thus should have been placed in District 33. Arguing that the plan violated the intact-neighborhoods requirement of Charter § 52 (1) (c), they commenced a CPLR article 78 proceeding seeking to have the district lines redrawn to include this territory within their Council district.

Supreme Court granted the petition, finding an "historic and unique relationship” between Brooklyn Heights and the waterfront, and concluding that the Commission’s refusal to split block 105 was arbitrary and capricious. The Appellate Division, with two Justices dissenting, affirmed, noting that "petitioners’ proof clearly established that the relevant portion of census tabulation block 105 has historically been considered a part of the Brooklyn Heights neighborhood” and that under these facts, the Commission’s decision not to divide block 105 "served no real purpose.” (192 AD2d 22, 27, 28.) The dissent opined that ever since the construction of the Brooklyn-Queens Expressway (BQE) in the 1950s, Brooklyn Heights has been effectively separated from the waterfront and thus the intact-neighborhoods requirement is not implicated here, and that in any event, the Commission’s policy of not dividing tabulation blocks was not arbitrary or capricious. The City appealed to this Court as of right (CPLR 5601 [a]).

Although the City contends that a "neighborhood” within the meaning of Charter § 52 (1) (c) can consist only of people, not unpopulated parcels of land, and thus residents of Brooklyn Heights cannot claim that the waterfront is part of their neighborhood, we need not resolve that issue today. Even assuming for purposes of this appeal that the disputed portion of the waterfront is part of the Brooklyn Heights neighborhood, we conclude that the petition should be dismissed.

The Commission was required to use the "final count results” of the 1990 census (Charter § 1152 [d] [11] [b]), and determined that it could best effectuate this mandate by building districts from tabulation blocks, the smallest geographical units for which census data was available. The Commission’s policy choice not to split tabulation blocks implemented the Charter’s requirement that census data be used in creating districts. Indeed, even the dissent acknowledges that "in most instances” the Commission cannot be asked to split a tabulation block (dissenting opn, at 110). It is not our role to second-guess the Commission’s reasonable policy choice related to implementing the technical requirements of districting (see, Matter of Wolpoff v Cuomo, 80 NY2d 70, 79).

By contrast to the unequivocal mandate that census "final count results” be used, the Charter did not impose strict adherence to the seven ranked criteria, instead requiring only that the criteria be applied "to the maximum extent practicable” (Charter § 52 [1]; emphasis added). Thus, the Charter contemplated the need for flexibility in the Commission’s execution of what the United States Department of Justice described as "a job of staggering proportions” and "an enormous task [that] necessarily involved many compromises and difficult choices.” Since we are satisfied that the Commission’s policy was not arbitrary and capricious (CPLR 7803 [3]), but was directly and reasonably related to implementing the census requirement, our review is at an end (contrast, Matter of Wolpoff v Cuomo, 80 NY2d, at 80 [constitutional challenge to legislative action]).

In view of our conclusion with regard to block 105, it is unnecessary to consider the disposition of the five disputed piers, because they would not be contiguous to District 33 in any event (see, Charter § 52 [2]).

Accordingly, the order of the Appellate Division should be reversed, without costs, and the petition dismissed.

Titone, J.

(dissenting). In upholding the final City Council redistricting plan adopted by the New York City Districting Commission, the majority has deferred to what it deems the Commission’s "reasonable policy choice” of maintaining the integrity of census tabulation blocks. In so ruling, the Court has discounted the importance of preserving neighborhood integrity and has, in effect, rewritten the New York City Charter provisions governing redistricting. Since, in my view, the challenged portion of the redistricting plan was not drafted in accordance with those Charter provisions, I dissent from the Court’s holding.

Section 52 of the City Charter establishes the criteria to be followed in creating new districts for the recently expanded City Council. The primary goal declared in the statute is equalization of the population encompassed within each district (NY City Charter § 52 [1] [a]). Deviations beyond a certain permissible range are permitted only when "justified by the other criteria set forth in [the statute]” (id.). Those criteria are, in turn, set forth in the order of their importance, and they are specifically required to "be applied and given priority in the order in which they are listed” "to the maximum extent practicable” (id., § 52 [1]).

This dispute concerns the first two of the latter class of criteria. Section 52 (1) (b) requires that the plan "be established in a manner that ensures the fair and effective representation of the racial and language minority groups in New York city which are protected by the United States [Vjoting [R]ights [A]ct of [1965].” Section 52 (1) (c) requires that the district lines "keep intact neighborhoods and communities with established ties of common interests and association, whether historical, racial, economic, ethnic, religious or other.” In other words, assuming that the population deviations are kept within the permissible range, the Commission is directed first to consider the goal of ensuring fair and effective minority representation and then, "to the maximum extent practicable,” to draw district lines in such a way as to preserve the integrity of established neighborhoods and communities.

There is no dispute here that the goal of ensuring fair and effective minority representation was considered and implemented. The Commission combined Sunset Park and Red Hook, two Brooklyn neighborhoods with high Latino populations, so that the resulting district would have enough members of that group to form a voting majority. Indeed, the Commission even went so far as to create a "land bridge” joining the two communities in order to advance the minority-representation goal without violating the independent statutory requirement of contiguity (see, id., § 52 [2]). Again, neither the creation nor the siting of this "land bridge” are challenged in this proceeding.

Petitioners’ only quarrel with the Commission’s plan in regard to the Sunset Park-Red Hook district is its decision to include in the connecting "land bridge” the entirety of the geographical entity known as census tabulation block 105, which runs along the Brooklyn waterfront from the Battery Tunnel to Old Fulton Street. According to petitioners, a portion of this block, along with the adjacent six Port Authority piers (Piers 1 through 6) that were included in Manhattan’s District 1, are contained within the area that has historically been considered part of the Brooklyn Heights neighborhood. Inasmuch as there was no sound reason for excising this small zone from the Council district that encompasses Brooklyn Heights, petitioners contend, the statutory criteria, specifically section 52 (1) (c)’s neighborhood-integrity provision, were not properly observed and the redistricting plan is, consequently, defective.

Respondents’ initial contention that census tabulation block 105 and the adjacent piers are not part of the Brooklyn Heights neighborhood lacks merit and need not be discussed at great length. The main thrust of the present dispute is respondents’ alternative contention that the Districting Commission was not required to give controlling weight to section 52 (1) (c)’s neighborhood-integrity criterion in this instance because of the overriding importance of maintaining the integrity of census tabulation blocks as the basic geographic units for designing City Council districts. Respondents stress that the use of these census tabulation blocks, which are the smallest geographical units for which United States Census Bureau population figures are available, is the only feasible method of determining the population in a given area. And, according to respondents, a strict rule keeping these blocks inviolate is essential for ensuring compliance with the Charter provision requiring that the Commission "utilize the final count results of the [1990] census” in determining the new Council district lines (NY City Charter § 1152 [d] [11] [b]; see also, Seaman v Fedourich, 16 NY2d 94, 104).

Although it does not suggest that unflagging adherence to the census tabulation block units is necessary or required, the majority has upheld the Commission’s actions on the theory that the Commission’s insistence on the inviolability of census tabulation blocks is a "reasonable” and nonarbitrary policy choice made to implement the requirement that census data be used as the statistical basis for redistricting. Concluding that "[i]t is not our role to second-guess the Commission’s reasonable policy choice related to implementing the technical requirements of districting” (majority opn, at 106), the majority holds that the courts have no further duty or responsibility to interfere with the Commission’s decision. In my view, however, this analysis represents a misreading of the statutory mandate.

Under that mandate, the Commission is clearly not free to make its own policy choices regarding such values as minority representation and preserving neighborhood integrity. Moreover, in view of the clear language of the Charter provisions, the Commission cannot be deemed to have been given unfettered discretion to employ any methodology it wishes to implement the Charter’s technical requirements, regardless of that methodology’s impact on the realization of those values. To the contrary, when the Legislature mandated that the criteria delineated in section 52 (1) be considered and applied "to the maximum extent practicable,” it limited the Commission’s freedom to choose among the various "reasonable” methods of implementing the "technical” aspects of redistricting and, in effect, directed that, wherever possible, those methods must be harmonized with the Charter provision’s substantive goals.

Thus, unlike the majority, I would not read the "technical” requirements of the Charter such as section 1152 (d) (11) (b) to be free-standing standards that exist and may be "implemented” independently and without regard to the values expressed in section 52 (1). Accordingly, contrary to the majority’s view, I would conclude that the courts cannot simply defer to the Commission’s policy choices with regard to technical implementation after examining them for rationality. Regardless of whether those policy choices are "reasonable” or otherwise, the courts are responsible for ensuring that the Commission adheres to its statutory mandate by adopting policies that promote the legislatively declared criteria or at least do not unnecessarily undermine them.

Viewed in that light and under the circumstances presented in this case, the Commission’s insistence on keeping census tabulation blocks intact cannot be upheld. It is true that, in most instances, the Commission cannot be asked to split census tabulation blocks because there would then be no realistic way of determining the population within the subdivided geographical entities. In those situations, the value of preserving neighborhood integrity must give way, since adherence to it would not be "practicable.”

In this case, however, the entire tabulation block in dispute has, at most, only 47 souls residing within its borders. Respondents cannot — and do not — seriously contend that so small a population could have any legally or politically significant impact on the size or ethnic character of a Council district, regardless of how it is distributed. Thus, apart from the abstract theoretical value of keeping census tabulation blocks inviolate, there is no real reason why census tabulation block 105 in particular could not be subdivided in the interest of preserving the integrity of the Brooklyn Heights neighborhood.

Manifestly, the goal of preserving the natural boundaries of that community is not rendered “impracticable” because of the abstract benefit the Commission perceives in keeping all tabulation blocks intact and undivided. The Commission certainly could have subdivided tabulation block 105 so as to keep the small area between the Battery Tunnel and Old Fulton Street within the district covering Brooklyn Heights without either disturbing the Latino majority in the newly drawn Sunset Park-Red Hook district or creating a meaningful risk of population imbalance.

Thus, contrary to the majority’s suggestion, the negative impact of the Commission’s effort to satisfy section 52 (1) (b) on the “lower priority” goal of neighborhood integrity was not “incidental.” Rather, it was, at best, gratuitous, perhaps even arbitrary. Certainly, in light of the relatively trivial, and indeed barely articulable, value to be served by preserving the inviolability of census tabulation block 105, it cannot be said that the Commission acted to "keep intact” the Brooklyn Heights community "to the maximum extent practicable.” Accordingly, the mandate of the City Charter was not obeyed and the Commission’s districts were properly modified. For that reason, I dissent and vote to affirm the order of the Court below.

Chief Judge Kaye and Judges Simons, Hancock, Jr., Bellacosa and Smith concur in Per Curiam opinion; Judge Titone dissents and votes to affirm in a separate opinion.

Order reversed, etc.

      . The focus of the parties’ arguments, as well as of the decisions below, is the placement of the disputed section of census tabulation block 105. For that reason, both the majority opinion and this dissent are primarily concerned with that question. I would note, however, that respondents have offered no real justification at all for including the piers adjacent to census tabulation block 105 in a Council district that covers an area in lower Manhattan. The only explanation for this seeming anomaly that respondents have offered is the fact that the border of New York County is technically represented by the low water mark at the Brooklyn side of New York Harbor and, as a result, the computer program used to assist in the redistricting process annexed the adjoining pier area to the nearest district in New York County. In my view, that explanation does not furnish an adequate basis for removing the piers from the Council district covering Brooklyn Heights, the neighborhood of which they are a part.

      . As the lower courts concluded, the considerable evidence adduced by petitioner supports the position that the disputed waterfront area was historically considered part of the Brooklyn Heights neighborhood. Inasmuch as a "historic” connection with the neighborhood is sufficient under Charter § 52 (1) (c), the fact that the waterfront may have been separated from the other sections of the neighborhood as a result of the construction of an intersecting highway is not dispositive. Similarly unpersuasive is respondents’ contention that the largely uninhabited waterfront strip cannot be part of the "neighborhood” because, as used in Charter § 52 (1) (c), that term denotes groupings of people, not places. A neighborhood consists not only of the people who reside therein, but also of the physical features— its churches, parks, libraries and geographical landmarks, that give it its character (see, Websters Deluxe Unabridged Dictionary 1203 [2d ed 1983]). There is no basis for assuming that the drafters of the City Charter intended to suggest a more limited meaning when they used the term "neighborhood” in section 52 (1) (c).


author: Bellacosa, J.

text:
    [623 NE2d 1145, 603 NYS2d 795]
    In the Matter of Reuters Limited, Appellant, v Tax Appeals Tribunal et al., Respondents.
    Argued September 8, 1993;
    decided October 12, 1993

      POINTS OF COUNSEL

      Weil, Gotshal & Manges, New York City (Steven Alan Reiss, Philip T. Kaplan and David J. Healey of counsel), and Stuart H. Simon, for appellant.
    I. The Treaty bars discriminatory taxation that handicaps foreign taxpayers in local competition. (Nielsen v Johnson, 279 US 47; United States v Burbank & Co., 525 F2d 9, 426 US 934.) II. The Court below’s decision is contrary to the Treaty’s language, its interpretation by the parties, and the interpretation of identical Treaty provisions by courts in other countries. (Kolovrat v Oregon, 366 US 187.) III. The extraordinary burden of tax compliance also unfairly discriminates against Reuters in violation of the Treaty. IV. The New York franchise tax violates the Foreign Commerce Clause. (Boston Stock Exch. v State Tax Commn., 429 US 318; Japan Line v County of Los Angeles, 441 US 434; Michelin Tire Corp. v Wages, 423 US 276; Complete Auto Tr. v Brady, 430 US 274; Bibb v Navajo Frgt. Lines, 359 US 520; Raymond Motor Transp. v Rice, 434 US 429; Bass, Ratcliff & Gretton v Tax Commn., 266 US 271.) V. Existing tax regulations permit the Tax Department to cure the Treaty and constitutional violations. (Matter of Zurich Ins. Co. v New York State Tax Commn., 144 AD2d 202.)

      Robert Abrams, Attorney-General, Albany (Daniel Smirlock, Jerry Boone and Peter H. Schiff of counsel), for Commissioner of Taxation and Finance, respondent.
    I. The use of an alien corporation’s worldwide net income as the basis upon which corporate franchise tax is calculated does not violate the United States-United Kingdom Tax Treaty. (Chan v Korean Air Lines, 490 US 122; Sumitomo Shoji Am. v Avagliano, 457 US 176; Maximov v United States, 373 US 49.) II. The New York franchise tax does not violate the Foreign Commerce Clause. (Bass, Ratcliff & Gretton v Tax Commn., 266 US 271; Mobil Oil Corp. v Commissioner of Taxes, 445 US 425; Bibb v Navajo Frgt. Lines, 359 US 520.)
   OPINION OF THE COURT

Bellacosa, J.

In this CPLR article 78 proceeding, petitioner-appellant Reuters Limited challenges a corporate franchise tax deftciency assessment. At issue is whether New York State’s calculation of petitioner’s franchise tax on the basis of the worldwide net income apportionment method violates the nondiscrimination clause of the United States-United Kingdom Tax Treaty (Convention Between United States and United Kingdom for Avoidance of Double Taxation, Dec. 31, 1975, 31 UST 5668). We agree with the conclusion of the Appellate Division that application of New York’s apportionment formula to the worldwide net income of a single multijurisdictional business enterprise, operating internationally, does not violate the Treaty’s nondiscrimination clause. The Appellate Division judgment, confirming the determination of the Tax Appeals Tribunal and the Commissioner of Taxation and Finance, should be affirmed.

Reuters Limited, a corporation organized in the United Kingdom, does business in approximately 80 countries. During taxable years 1977 through 1979, it maintained a branch office in New York City, which served as its principal United States office. Although Reuters earned profits abroad during the tax years in question, its New York branch incurred losses. Reuters computed its corporate franchise taxes for the tax years 1977 through 1979 on the basis of United States income only, and paid no franchise tax for those years because it also claimed losses on its United States operations. In 1983, the Department of Taxation and Finance performed an audit using the worldwide net income apportionment method and issued notices of deficiency totalling $1,280,000 for the tax years 1977 through 1979. The parties eventually compromised the deficiency amount down to $96,168.

Irrespective of the modification as to the amount owed, Reuters filed an administrative petition challenging the deficiency itself. An Administrative Law Judge sustained the notices of deficiency. After the Tax Appeals Tribunal affirmed the Administrative Law Judge’s determination, Reuters commenced this article 78 proceeding seeking to annul the determination of deficiency. The Appellate Division unanimously confirmed the determination and dismissed the petition in a well-reasoned opinion by Justice Paul Yesawich, Jr. After this Court dismissed an appeal taken as of right on the ground that no substantial constitutional question was directly involved (80 NY2d 971), we granted Reuters leave to appeal.

I.

When computing the corporate franchise tax of a multijurisdictional international entity doing business in New York, an apportionment formula is used to determine the aliquot share of the corporation’s worldwide net income attributable to New York. The first step is to calculate a "business allocation percentage”, which is ascertained by comparing the value which the corporation’s real and tangible personal property within New York bears to the worldwide value of the same factors (Tax Law § 210 [3] [a] [1]). The corporation’s worldwide business income is then multiplied by the business allocation percentage to arrive at the entire net income base, i.e., the portion of the taxpayer’s entire net income allocable to and taxable by New York (id., § 210 [3] [a]; [1] [a]). New York’s corporate franchise tax is computed at the rate of 9% of the taxpayer’s entire net income base (id., § 210 [1] [a]).

Article 24 (2) of the U.S.-U.K. Tax Treaty, the antidiscrimination tax clause at the heart of this dispute, provides:

"The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be less favourably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities” (31 UST 5668, 5687 [emphasis added]).

Article 24 (2) is made applicable to the political subdivisions of the Contracting States through article 2 (4).

Initially, we are in agreement with the Appellate Division’s observation that the language of the antidiscrimination clause is ambiguous. Specifically, it is unclear whether the truncated phrase "carrying on the same activities” requires that the foreign subject of comparison for assessing discrimination be the permanent establishment (branch) or the corporate enterprise of which the permanent establishment is a part. Reuters would have the courts construe article 24 (2) as requiring that claims of discriminatory treatment be analyzed by comparing the taxation levied on its New York branch (permanent establishment) with the taxation levied on a hypothetical New York corporation (enterprise of that other State) carrying on business only in New York and conducting activities similar to those carried on by Reuters at its New York branch. Reuters further contends that the Treaty test for discrimination requires that its New York branch be treated for tax purposes as an enterprise discrete from the corporate parent in the United Kingdom. Under Reuters’ construction of the critical clause, a hypothetical New York corporation that earned no income outside this State would not be subject to the worldwide net income apportionment method. Thus, Reuters argues that its New York branch has been treated "less favourably” than required by article 24 (2) of the Treaty.

The syllogism fails. Reuters-New York, as a branch of the United Kingdom enterprise, is not juridically equivalent to a free-standing entity as proposed in its hypothetical analogy. Reuters-New York cannot be lifted out of and placed in the isolation of its own legal universe, for the tax and juridical realities under the antidiscrimination clause are otherwise. As the Appellate Division aptly noted, a branch office "has no corporate or jurai identity separate from the corporation of which it is a part” (Matter of Reuters Ltd. v Tax Appeals Tribunal, 180 AD2d 270, 272). Moreover, the purpose of the nondiscrimination clause is to protect foreign taxpayers against local economic discrimination derived from disparate tax treatment. The ultimate taxpayer here is the corporate entity, Reuters-United Kingdom, not its branch affiliate. Thus, to measure the potential discriminatory effect of New York’s franchise tax, by reference to Reuters’ New York branch as an enterprise discrete from its juridical parent, is not supportable under the language or purpose of the nondiscrimination clause. We conclude that Reuters-United Kingdom (enterprise) and its New York branch office (permanent establishment) are a single, inseparable business enterprise for franchise tax purposes.

Reuters’ contention that Treaty article 24 (2) requires that its New York business activities be considered in isolation also amounts to a flank attack on the "unitary business” principle. The United States Supreme Court, however, has upheld and described that principle as "the linchpin of apportionability in the field of state income taxation” (Mobil Oil Corp. v Commissioner of Taxes, 445 US 425, 439). Due to the increasingly intricate integration of national and international multijurisdictional corporations, the task of territorially tracking business income to discrete and remote sources has become an elusive endeavor. States have justifiably adopted formulary income apportionment methods to ascertain the income actually earned in a taxing jurisdiction by an integrated business enterprise operating multijurisdictionally. As a counterbalance to the insatiable and inventive quest for revenues, however, the measures undertaken must, of course, satisfy constitutional and organic law safeguards, and courts must factor in such concerns when resolving challenges to and disputes arising out of the various methodologies (see, Container Corp. v Franchise Tax Bd., 463 US 159, 164-166).

We are unable to accept Reuters’ contention that a New York corporation carrying on business solely in New York is the equivalent domestic subject of comparison (enterprises of another State) for measuring discrimination under the Treaty. An "enterprise” is defined in article 3 (1) (d) of the Treaty as "an industrial or commercial undertaking carried on by a resident of a Contracting State” (31 UST 5671). A "resident of a Contracting State” is in turn defined as a United States or United Kingdom corporation (art 3 [1] [i]; art 4 [1] [31 UST 5672-5673]). Making use of the appropriate Treaty definitions, we conclude that the domestic subject of comparison under the Treaty is an industrial or commercial undertaking carried on by a United States corporation. When the commercial undertaking is the branch office of a United States corporation, we reiterate that the branch and the corporation are a single business enterprise for franchise tax purposes. That analysis provides the correct comparability for the controversy at hand.

In sum, our analysis leads us to agree with the Appellate Division that "the nondiscrimination clause requires a comparison * * * between the taxation of [Reuters’] United States branch located in New York and the taxation of a United States corporation having a branch in New York and conducting international business through branch offices in other countries” (Reuters, 180 AD2d, at 273-274, supra). Employing this comparison, we note that New York’s calculation of Reuters’ franchise tax on the basis of worldwide net income apportionment results in nondiscriminatory tax treatment. Accordingly, we hold that article 24 (2)’s requirement of no less favorable treatment has been satisfied.

The Treaty’s legislative history also buttresses this conclusion. Article 9 (4) of the Treaty, which the Senate ultimately refused to ratify, originally prohibited States from employing the California-type worldwide combined reporting methodology. That practice involves application of an apportionment formula to the combined worldwide income of related corporate affiliates and subsidiaries. The legislative history surrounding article 9 (4) discloses that State use of worldwide formulary apportionment methods as applied to a single business enterprise would remain unaffected by the proposed Treaty restriction. The Senate Foreign Relations Committee’s Report on the Treaty states:

"[I]f a U.S. branch of a British corporation does business in a state, that state cannot apply [California’s] unitary method to combine the income * * * of any related foreign enterprises * * * with those of that British corporation in determining the income of its U.S. branch which is taxable by that state. However, that state may take into account the income and assets of any other branches of that corporation, wherever located, because a corporation is considered to be a single enterprise regardless of how many separate branches or businesses it has” (Senate Executive Report No. 95-18, 1980-1 CB 411, 420 [emphasis added]).

The Treasury Department’s technical explanation of the Treaty also reflects the view that article 9 (4)’s prohibition on State taxation was not to extend to the single enterprise modus operandi:

"Because a corporation is considered a single enterprise regardless of how many branches it has, a State may take into account the income and assets of all branches of that corporation, wherever located” (Treasury Department Technical Explanation, 1980-1 CB 455, 462).

While we do not presume to review or pass on the validity of any other tax schemes, the argument that the Treaty’s drafters intended article 24 (2) as an indirect curtailment on the open and widespread use of worldwide income apportionment methods strains credulity and proper interpretation. Forty-one States, including New York, currently apply an apportionment formula to the worldwide net income of a single business enterprise operating multijurisdictionally (see, Note, Desperate for Revenue: The States’ Unconstitutional Use of the Unitary Method to Apportion the Taxable Income of Foreign Parent Corporations, 19 Hastings Const LQ 1077, 1080-1081). Four other States, including California, apply an apportionment formula to the combined worldwide income of related corporations operating multijurisdictionally (id.). In fact, the Treaty expressly denies the Federal Government the power to use formulary apportionment in article 7 (2) and is tellingly silent in that regard with respect to the States’ longstanding power and their varied implementation.

II.

In a separate argument, Reuters claims that New York’s use of worldwide net income apportionment violates the Foreign Commerce Clause (US Const, art I, § 8). In Bass, Ratcliff & Gretton v Tax Commn. (266 US 271), the Supreme Court of the United States rejected a Foreign Commerce Clause challenge to the validity of New York’s apportionment methodology on similar facts. Bass, a British corporation with worldwide net income exceeding $2,000,000 for the tax year in question, maintained a branch office in New York that had no net income for the same period. The New York Tax Commission allocated a share of Bass’s worldwide income to New York and assessed a franchise tax on the allocated amount. The United States Supreme Court held that New York’s use of worldwide income apportionment did not burden foreign commerce (id., at 282-283). The Supreme Court noted that Bass was carrying on a unitary business "in which its profits were earned by a series of transactions beginning with the manufacture in England and ending in sales in New York and other places” (id., at 282). The Court ruled that New York was justified in attributing to itself "a just proportion of the profits earned by the Company from such unitary business” (id.). Bass has been reaffirmed by modern Supreme Court tax jurisprudence (see, Mobil Oil Corp. v Commissioner of Taxes, 445 US 425, 438-439, supra).

In this respect, we also observe that Reuters argues that New York’s statutory income apportionment technique imposes unconstitutionally discriminatory compliance costs on foreign commerce. The Appellate Division basically rejected Reuters’ argument on this issue for failure of sufficient factual showing: "[T]he averment * * * that the cost of compliance would be nearly $1 million per year is sorely undermined by the fact that [Reuters] was able to promptly supply information to the Tribunal to reduce the deficiencies initially indicated” (Reuters, 180 AD2d, at 275, supra). Thus, we cannot and need not speculate on whether the cost of complying with New York’s tax methodology unconstitutionally burdens foreign commerce (but see, Bibb v Navajo Frgt. Lines, 359 US 520, 526).

Because the constitutional challenge in this case runs into such relevant stare decisis barriers and falters also on an essentially unsatisfied fact-qualifying threshold, this Court need not discuss further the merits of the constitutional objection. We note, also, that we previously dismissed the appeal taken as of right by Reuters on constitutional grounds, which we found jurisdictionally wanting.

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

Chief Judge Kaye and Judges Simons, Titone, Hancock, Jr., and Smith concur; Judge Levine taking no part.

Judgment affirmed, with costs.