author: Simons, J.

text:
    Karen L. Kaufman, Respondent, v Eli Lilly and Company, Appellant, and Abbott Laboratories, Inc., et al., Respondents.
    Argued May 30, 1985;
    decided July 9, 1985

      POINTS OF COUNSEL

      Russel H. Beatie, Jr., Helen E. Hoens and Babette L. D’Amelio for appellant.
    I. Collateral estoppel should not have been granted. (Gilberg v Barbieri, 53 NY2d 285; Parklane Hosiery Co. v Shore, 439 US 322; Read v Sacco, 49 AD2d 471; Koch v Consolidated Edison Co., 62 NY2d 548; Schwartz v Public Administrator, 24 NY2d 65; Payton v Abbott Labs, 512 F Supp 1031; Ryan v Lilly & Co., 514 F Supp 1004; Geisel v Flushing Hosp. & Med. Center, 70 AD2d 927; Parlato v Semmes Motors, 38 AD2d 844; Van Der Harst v Koenig, 249 App Div 235; Wiegand v Fee Bros. Co., 73 AD 139.) II. Lilly’s cross motion to depose the Bichler jurors on the narrow issue of compromise should be granted. (People v De Lucia, 20 NY2d 275; People v Leonti, 262 NY 256; Schrader v Joseph H. Gertner, Jr., Inc., 282 App Div 1064; People ex rel. Nunns v County Ct., 188 App Div 424; McHugh v Jones, 258 App Div 111, 283 NY 534; People v Higgins, 172 Misc 613.) III. Severance of Lilly from the group of defendant manufacturers was error. (Matter of Blank v Becker, 50 AD2d 418; Lauman & Co. v State of New York, 2 Misc 2d 693; Kelly v Yannotti, 4 NY2d 603; Mancuso v Bellerive, 50 AD2d 802; Hoff v State Farm Ins. Co., 48 AD2d 1001; McDavid v Gunnigle, 50 AD2d 737; Giummo v Julab Realty Corp., 48 Misc 2d 419; Bossak v National Sur. Co., 205 App Div 707.)

      Alfred S. Julien, David Jaroslawicz and William D. Fireman for Karen L. Kaufman, respondent.
    I. Collateral estoppel warranting partial summary judgment was appropriate on the factual showing here. (Bichler v Lilly & Co., 55 NY2d 571; Schwartz v Public Administrator, 24 NY2d 65; Koch v Consolidated Edison Co., 62 NY2d 548; Ezagui v Dow Chem. Co., 598 F2d 727; State of Maryland v Capital Airlines, 267 F Supp 298; Capital Tel. Co. v Pattersonville Tel. Co., 56 NY2d 11; Goldstein v Consolidated Edison Co., 93 AD2d 589.) II. Special Term was correct in not permitting Lilly’s counsel to depose the Bichler jurors in an attempt to collaterally attack the Bichler verdict. (Goldstein v Consolidated Edison Co., 93 AD2d 589; Gamell v Mount Sinai Hosp., 40 AD2d 1010; McDonald v Pless, 238 US 264; People v Friedgood, 58 NY2d 467.) III. Special Term properly granted the motion for a severance and a severance is mandated by statute.

      Robert J. Sisk, Joseph B. Valentine and Thomas E. Hastings for Merck & Co., Inc., respondent.
    If partial summary judgment against Lilly is affirmed, then severance of that action is mandated. (Kelly v Yannotti, 4 NY2d 603; Hoff v State Farm Ins. Co., 48 NY2d 1001; Giummo v Julab Realty Corp., 48 Misc 2d 419.)

      Karl E. Seib, Jr., for Abbott Laboratories, respondent, which relies on the brief submitted by Merck & Co., Inc., respondent.

      Thomas J. Maimone for E. R. Squibb & Sons, Inc., respondent.
    I. Severance of appellant from defendants-respondents was a proper exercise of judicial discretion to avoid prejudice to Squibb. (Kelly v Yannotti, 4 NY2d 603; Strauss v Bennett Bros. Corp., 27 AD2d 528; Bichler v Lilly & Co., 55 NY2d 571; People v Jackson, 22 NY2d 446; Bruton v United States, 391 US 123.) II. Appellant’s contentions regarding prejudice to it and judicial economy are insufficient to justify joint trial. (Shanley v Callanan Indus., 54 NY2d 52; Busher Co. v Galbreath-Ruffin Realty Co., 16 AD2d 750.)

      Steven J. Ahmuty, Nancy Ledy Gurren, John J. Bower and Karen L. Hymowitz for The Upjohn Company, respondent.
    I. In the absence of a demonstrable abuse of discretion, the trial court’s order granting severance may not be disturbed. (Kelly v Yannotti, 4 NY2d 603; Marine Midland Bank v Berley, 90 AD2d 646; Schreyer v Village of Tuckahoe, 90 AD2d 828; Strange v Sampson, 73 AD2d 749.) II. The prejudice to Upjohn and the other drug companies resulting from a unitary trial mandates that the trial court’s order granting severance be affirmed. (Kelly v Yannotti, 4 NY2d 603; Hoff v State Farm Ins. Co., 48 AD2d 1001; Mancuso v Bellerive, 50 AD2d 802; Schneph v New York Times Co., 21 AD2d 599; Krieger v Insurance Co. of N. Am., 66 AD2d 1025; Schwartz v Woodner & Co., 40 AD2d 1027;
      Lauman & Co. v State of New York, 2 Misc 2d 693; Sporn v Hudson Tr. Lines, 265 App Div 360; Schwartz v Public Administrator, 24 NY2d 65; Johnson v Gonzalez, 67 AD2d 842.)
    Vale Chemical Company, Endo Laboratories, Inc., and Theodore G. Klumpp, respondents, precluded.
   OPINION OF THE COURT

Simons, J.

This is one of 15 similar actions pending in the First Department seeking to recover from pharmaceutical companies for injuries allegedly sustained by the plaintiff daughters as a result of their mothers’ ingestion of the drug diethylstilbestrol (DES) while pregnant. In 1977 the Assistant Administrative Justice designated the actions as “complex litigation cases” and assigned them to Justice Arnold Fraiman, directing him to handle all matters relating to them. The first of the 15 actions chosen to be tried was Bichler v Lilly & Co. (55 NY2d 571) and the rest were held pending its disposition. The principal issue in this appeal is the collateral estoppel effect to be given to certain jury findings in that action.

After we sustained a jury verdict against Lilly in Bichler, plaintiff moved for partial summary judgment precluding Lilly from relitigating six issues decided by the Bichler jury, a severance of the action against Lilly and an immediate trial on the issues of DES ingestion, causation and damages. Lilly cross-moved to depose two of the jurors in the Bichler case to establish that their verdict was a compromise. The remaining defendants cross-moved for a severance in the event the court granted plaintiff’s motion for collateral estoppel against Lilly. Special Term granted plaintiff’s motion for partial summary judgment, denied Lilly’s cross motion and granted the codefendants’ motions for a severance. A divided Appellate Division affirmed and granted Lilly leave to appeal to this court on a certified question. We now modify the order of the Appellate Division and hold that Lilly may not be collaterally estopped from relitigating the jury’s finding that it acted in concert with other drug manufacturers in testing and marketing DES for use in treating accidents of pregnancy. Our modification is required because the concerted action liability found in Bichler was based on an unresolved question of law which should not be given preclusive effect in this litigation.

I

In early 1954, plaintiff’s mother, then pregnant with her, was prescribed DES to prevent a miscarriage. In July 1973, when plaintiff was 18 years old, it was discovered that plaintiff had cancer of the cervix. A radical hysterectomy was performed and, as a result, plaintiff will be unable to bear children. She instituted this action in 1976 alleging in her amended complaint that her mother’s ingestion of DES while pregnant was the proximate cause of the injuries she sustained. Because she was unable to clearly identify the manufacturer of the DES her mother took, plaintiff joined as defendants nine of the approximately 147 pharmaceutical companies manufacturing and marketing DES for the prevention of miscarriages in pregnant women in 1954. She alleged that the defendants were liable to her, inter alia, on a concerted action theory of liability because they had “combined and conspired to obtain the approval for DES” without adequate testing.

The Bichler action involved a young woman who developed cervical and vaginal cancer at the age of 17. She brought suit against Eli Lilly & Company and others, alleging that her mother’s ingestion of DES in 1953 while she was pregnant with her caused her injuries. Plaintiff’s theory was that DES had been marketed without adequate testing to determine its safety. After the plaintiff was unsuccessful in attempting to prove that Lilly manufactured the DES prescribed for her mother, she submitted her case to the jury on a concerted action theory of liability. In addition to returning a general verdict for plaintiff, the Bichler jury answered seven special interrogatories in her favor as a basis for imposing liability on Lilly. On appeal the Appellate Division and this court affirmed. The courts below gave collateral estoppel effect in this action to six of the Bichler jury’s findings.

Lilly raises three grounds for reversal of the order granting that relief. First, it contends that the decision in Bichler should not be given collateral estoppel effect because (1) the cases do not raise identical issues, (2) there are indications that the Bichler verdict was based on jury compromise, (3) there are adjudications inconsistent with Bichler on each of the issues involved and (4) the Bichler decision is based on an unresolved and novel application of the law of concerted action not expressly adopted in New York. Second, Lilly asserts that if we find its proof of jury compromise in Bichler insufficient as it now exists to defeat the application of collateral estoppel, it should be allowed to depose two named jurors from the Bichler jury to demonstrate further its contention. Finally, Lilly urges that the lower court erred in severing plaintiff’s action against it from actions against the remaining defendants.

II

The doctrine of collateral estoppel precludes a party from relitigating “an issue which has previously been decided against him in a proceeding in which he had a fair opportunity to fully litigate the point” (Gilberg v Barbieri, 53 NY2d 285, 291; see, Schwartz v Public Administrator, 24 NY2d 65, 69). It is a doctrine intended to reduce litigation and conserve the resources of the court and litigants and it is based upon the general notion that it is not fair to permit a party to relitigate an issue that has already been decided against it. There are now but two requirements which must be satisfied before the doctrine is invoked. First, the identical issue necessarily must have been decided in the prior action and be decisive of the present action, and second, the party to be precluded from relitigating the issue must have had a full and fair opportunity to contest the prior determination (Gilberg v Barbieri, supra, at p 291; Schwartz v Public Administrator, supra, at p 71; see, Koch v Consolidated Edison Co., 62 NY2d 548, 554-555, cert denied _ US _, 105 S Ct 1177; Ryan v New York Tel. Co., 62 NY2d 494, 500-501). The party seeking the benefit of collateral estoppel has the burden of demonstrating the identity of the issues in the present litigation and the prior determination, whereas the party attempting to defeat its application has the burden of establishing the absence of a full and fair opportunity to litigate the issue in the prior action (see, Ryan v New York Tel. Co., supra, at p 501; Schwartz v Public Administrator, supra, at p 73). Applying these rules, we hold that collateral estoppel effect should be denied for the Bichler jury’s finding on concerted action but that Lilly should be precluded from relitigating the five remaining issues relevant to this action and decided adversely to it in that trial (see, n 2, at p 455, supra).

A

When Bichler was before this court Lilly challenged the concerted action theory of liability on two grounds. It claimed that it was not an appropriate theory of liability in DES litigation when the identity of the manufacturer is not established and that the court’s charge on the theory was erroneous. Although both of these issues could have been raised by appropriate objection in the trial court, they were not, and because they were not, we did not pass on them. We held only that the evidence was legally sufficient to support the jury’s findings of concerted action and foreseeability based on the charge given and that the trial court did not err in refusing Lilly’s request to charge on its duty to warn (see, Bichler v Lilly & Co., 55 NY2d 571, 584-587, supra). We noted in a footnote that there were several theories upon which similar DES cases were proceeding or it had been suggested they might proceed but we expressed no view in Bichler and, express none now, on which of the proposed theories — concerted action, alternative liability, enterprise liability or market share liability — if any, should be adopted in this or similar DES cases (see, Bichler v Lilly & Co., supra, at p 580, n 5). The question is still an open one in New York.

The point is significant because collateral estoppel effect will only be given to matters “actually litigated and determined” in a prior action (see, Restatement [Second] of Judgments §27, quoted in Koch v Consolidated Edison Co., 62 NY2d 548, 554, n 2; see also, Ryan v New York Tel. Co., 62 NY2d 494, supra). If the issue has not been litigated, there is no identity of issues between the present action and the prior determination. An issue is not actually litigated if, for example, there has been a default, a confession of liability, a failure to place a matter in issue by proper pleading or even because of a stipulation (see, Restatement [Second] of Judgments § 27 comments d, e, at 255-257; see also, Gilberg v Barbieri, 53 NY2d 285, supra). Because Lilly did not challenge the appropriateness of the concerted action theory in Bichler, it was not actually litigated and there is no identity between that issue in Bichler and here. Although it may seem a paradox that we should permit defendant to benefit in this litigation because of its failure to challenge concerted action in the prior litigation, the policy reasons for refusing to do so outweigh the reasons for limiting litigation on the issue. It is of paramount importance that the courts establish and develop the law in this emerging area of mass tort liability, rather than permit it to be fixed, even in this limited number of DES actions, on the basis of the law of the case. The need for uniformity and certainty mandates that in such cases collateral estoppel should be rejected (see, Schwartz v Public Administrator, 24 NY2d 65, 72, supra; Restatement [Second] of Judgments § 28 comment b, at 275-276; see, id. § 29 [7] and comment i, at 292, 297). This is particularly so when the other defendants will be free to claim, against this same plaintiff, that concerted action is not an appropriate theory of liability and thereby cause inconsistent results.

B

The fact that no exception was taken to the charge on concerted action, however, has no bearing on the factual issues resolved by the jury when it answered the remaining interrogatories and Lilly should be precluded from relitigating them. Identity of issues does exist as to them because the legal theory in both actions is the same and because there are no significant factual differences between them. The plaintiff in Bichler, the first of the 15 related cases chosen to be tried, sought to establish Lilly’s negligence in testing and marketing DES. The issues Lilly will be precluded from relitigating in this case relate solely to the facts underlying its negligence in testing, questions found against it by the Bichler jury and questions which are also involved in this case. Moreover, both plaintiffs’ mothers ingested DES in the same time period (1953-1954), both plaintiffs were born in 1954 within seven months of each other and both developed cancer of the cervix and/or vagina at approximately the same age. The issue of proximate cause has been specifically deleted from the Bichler interrogatories by plaintiff’s motion and Lilly will have the opportunity to demonstrate that plaintiff’s injuries were not caused by her mother’s ingestion of DES due to minor differences between the plaintiffs or the circumstances surrounding their mothers’ ingestion of DES. Thus, the appeal fits the example described by Professors James and Hazard of an instance in which there are several similar cases and the first tried is “roughly typical” of the rest. In that situation, the professors noted, it is not unfair to preclude the defendant from retrying the issues previously litigated and decided adversely to it (James & Hazard, Civil Procedure § 11.24, at 581 [2d ed]).

Similarly unpersuasive is Lilly’s assertion that the Bichler verdict is not entitled to collateral estoppel effect because there are indications it was the result of jury compromise. Although indications of jury compromise is one factor properly to be considered in determining whether a party against whom collateral estoppel is sought had a full and fair opportunity to litigate the issues in the prior determination (see, Koch v Consolidated Edison Co., 62 NY2d 548, 555, n 4, supra, quoting Schwartz v Public Administrator, 24 NY2d 65, 72, supra), the evidence offered to defeat application of the doctrine in this case is insufficient. Lilly relies only on inadmissible hearsay allegations contained in an affidavit of its former attorney in which he alleges that he interviewed three Bichler jurors immediately after the verdict and that one of them told him there had been a compromise and on Lilly’s speculation that a compromise resulted because the jury returned its verdict after five days of apparently hopeless deadlock. As we recently emphasized in Koch, evidence of this nature is not sufficient to defeat a motion for partial summary judgment on collateral estoppel grounds (see, Koch v Consolidated Edison Co., supra, at p 557).

Finally, although adjudications on the same issue inconsistent with the one to be given preclusive effect are relevant evidence that the party contesting estoppel did not have a fair opportunity to litigate the prior determination and may be a factor in refusing to apply the doctrine of collateral estoppel (see, id., at p 555, and n 4, quoting Restatement [Second] of Judgments § 29 [4]), the cases relied on by Lilly do not support that result here. Those cited include generally cases in which the jury returned a verdict for Lilly on a failure to warn theory and others in which the court granted Lilly judgment either because concerted action was an inappropriate legal theory for DES litigation or because the evidence was insufficient to raise a factual issue on concerted action.* * Those in the first group are not inconsistent with the Bichler jury’s responses to the interrogatories finding Lilly negligent on a theory of inadequate testing. The second group, cases involving summary judgment and directed verdicts in Lilly’s favor, support Lilly’s contention that it should not be estopped from contesting liability on the theory of concerted action but we have found in its favor on that issue on other grounds. Thus, contrary to its contentions, those cases provide no basis for permitting Lilly to relitigate the remaining issues involving Lilly’s negligence. In only one case cited by Lilly did a jury return a verdict inconsistent with Bichler on the issue of inadequate testing (see, Barros v Squibb & Sons, Civ Act No. 75-1226 [ED Pa 1976]). Lilly relies on that decision and claims the benefit of that jury determination although it was not a party to the litigation. We find no basis to nullify the jury findings in Bichler, the first case tried of the several pending before Justice Fraiman and a case in which Lilly participated fully, on the basis of the Squibb verdict, a case in which it did not participate at all. Lilly can hardly claim that the Squibb determination provides any indication that it lacked a full and fair opportunity to defend against the issues decided adversely to it in Bichler.

in

Two other matters remain for our consideration. Notwithstanding the insufficiency of its evidence to support a finding of a compromise verdict in Bichler, Lilly contends that it should be allowed to depose two Bichler jurors in order to further substantiate its claim. It asserts that our firm rule against impeaching a verdict in the action in which it was rendered is inapplicable here when its attack is not for the purpose of impairing the Bichler verdict but for the purpose of preventing collateral estoppel effect to be given it. The policy reasons behind the rule are to prevent “the posttrial harassing of jurors for statements which might render their verdicts questionable” and to avoid the chaos that a contrary rule would create (People v De Lucia, 20 NY2d 275, 278; see, McDonald v Pless, 238 US 264, 267-268; King v United States, 576 F2d 432, 438 [2d Cir]). They are equally applicable to this case. Moreover, it is not insignificant that the desire to depose the jurors is intended to impair the effect of factual findings made in the first of several related cases selected for trial.

Finally, we cannot find that the trial court abused its discretion as a matter of law in severing plaintiff’s action against Lilly from her action against the other defendants, particularly in light of the obvious prejudice the other defendants would suffer if they were forced to litigate the action with Lilly despite our conclusion that it is precluded from relitigating the findings of negligence as made in Bichler.

Accordingly, the order of the Appellate Division should be modified by denying plaintiff summary judgment as to the collateral estoppel effect of the Bichler jury’s finding that defendant Lilly and other drug manufacturers acted in concert in testing and marketing DES for use in treating accidents in pregnancy (interrogatory No. 7) and, as so modified, the order should be affirmed. The certified question is answered in the negative.

Chief Judge Wachtler and Judges Jasen, Kaye, Titone and Boomer concur; Judges Meyer and Alexander taking no part.

Order modified, without costs, in accordance with the opinion herein and, as so modified, affirmed. Question certified answered in the negative.

      . The interrogatories and the jury’s answers to them were as follows: “(1) Was DES reasonably safe in the treatment of accidents of pregnancy when it was ingested by plaintiff’s mother in 1953? (No)
      “(2) Was DES a proximate cause of plaintiff’s cancer? (Yes)
      “(3) In 1953 when plaintiff’s mother ingested DES, should the defendant, as a reasonably prudent drug manufacturer, have foreseen that DES might cause cancer in the offspring of pregnant women who took it? (Yes)
      “(4) Foreseeing that DES might cause cancer in the offspring of pregnant women who took it, would a reasonably prudent drug manufacturer test it on pregnant mice before marketing it? (Yes)
      “(5) If DES had been tested on pregnant mice, would the tests have shown that DES causes cancer in their offspring? (Yes)
      “(6) Would a reasonably prudent drug manufacturer have marketed DES for use in treating accidents of pregnancy at the time it was ingested by the plaintiff’s mother if it had known that DES causes cancer in the offspring of pregnant mice? (No)
      “(7) Did defendant and the other drug manufacturers act in concert with each other in the testing and marketing of DES for use in treating accidents of pregnancy? (Yes)”. (See, Bichler v Lilly & Co., 55 NY2d 571, 587, n 10, supra.)

        . In her motion for summary judgment, plaintiff deleted the second Bichler interrogatory dealing with proximate cause. There is one other difference between the Bichler interrogatories and the issues on which plaintiff seeks partial summary judgment in this case. In the first, third and sixth Bichler interrogatories, the relevant time period was changed from 1953 (when Mrs. Bichler ingested DES) to 1953-1954 (when plaintiff’s mother ingested the drug). Contrary to Lilly’s claim, these variations in the years do not destroy the identity of issues. That plaintiff’s mother took the drug in 1954 could not mitigate the failure to test found wanting in 1953 or lessen the basis of knowledge upon which a duty to warn cause of action rests.

      . See, Mink v University of Chicago, No. 77-C-1432 (ND 111 Mar. 24,1983); Keil v Lilly & Co., No. 75-70997 (ED Mich 1981); Sardell v Lilly & Co., No. 18268/77 (NY Sup Ct, Kings County, Nov. 24,1982); see also, Miller v Lilly &
        Co., No. CV 80 0047107 S (Conn Super Ct, Feb. 20, 1985 [jury finding of no ingestion or causation]).

      . See, Tidier v Lilly & Co., 95 FED 332 (DDC 1983); Morton v Abbott Labs., 538 F Supp 593 (MD Fla 1982); Ryan v Lilly & Co., 514 F Supp 1004 (DSC 1981); Payton v Abbott Labs, 512 F Supp 1031 (D Mass 1981); Zafft v Lilly & Co., 676 SW2d 241 (Mo 1984); Martin v Abbott Labs., 102 Wn 2d 581, 689 P2d 368 (1984); Collins v Lilly & Co., 116 Wis 2d 166,342 NW2d 37 (1984). Nor is McElhaney v Lilly & Co. (575 F Supp 228 [DSD 1983], affd 739 F2d 340 [8th Cir]) persuasive on this point. In McElhaney, Lilly won a directed verdict when the plaintiff conceded that she could offer no proof that Lilly knew or should have known of the dangerous condition of DES. This admission was fatal to her strict products liability action under section 402A of the Restatement (Second) of Torts. When no similar concession was made in Bichler, the jury found that Lilly should have foreseen that the use of DES in pregnant women would be dangerous. Thus, there is nothing to indicate that a jury in the McElhaney case would have reached an opposite conclusion absent the plaintiff’s concession there. Similarly, the directed verdict for Lilly in McMahon v Lilly & Co. (No. 82 C 2822 [ND 111 1984]) is not inconsistent with Bichler because it was based solely on the plaintiff’s failure to make a prima facie showing that Lilly manufactured the DES that her mother ingested or that Lilly knew or should have known of the risk of preterm labor or prematurity among pregnant DES daughters, a risk not even at issue in either Bichler or this case.

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


source: Caselaw Access Project

author: Alexander, J.

license: Public Domain

text:
    Dina A. Sorichetti, an Infant, by Her Mother and Natural Guardian, Josephine Sorichetti, et al., Respondents, v City of New York, Appellant.
    Argued May 29, 1985;
    decided July 9, 1985

      POINTS OF COUNSEL

      Frederick A. O. Schwarz, Jr., Corporation Counsel (Alfred Weinstein, Leonard Koerner and Francis F. Caputo of counsel), for appellant.
    I. Except for such effect as may be accorded the order of protection, this case is governed by Riss v City of New York which held that absent a “special relationship” there is no duty to take governmental action on behalf of “particular seekers of protection based on specific hazards.” (Riss v City of New York, 22 NY2d 579; O’Connor v City of New York, 58 NY2d 184; Semanchuck v Fifth Ave. & 37th St. Corp., 290 NY 412; People v Hobson, 39 NY2d 479; Steitz v City of Beacon, 295 NY 51; Bernardine v City of New York, 294 NY 361; Baker v Lorillard, 4 NY 257; Matter of Eckart, 39 NY2d 493; Donawitz v Danek, 42 NY2d 138; Bovsun v Sanperi, 61 NY2d 219.) II. While the statute may enlarge the scope of peace officer authority, its clear language establishes that response to a request for enforcement of an order of protection is discretionary, not mandatory. The request establishes no “special relationship”. It was error to permit the jury to predicate liability upon police failure to act. (Baker v City of New York, 25 AD2d 770; Bernardine v City of New York, 294 NY 361; Kurcsics v Merchants Mut. Ins. Co., 49 NY2d 451; Florence v Goldberg, 44 NY2d 189; Schuster v City of New York, 5 NY2d 75; De Long v County of Erie, 60 NY2d 296; Riss v City of New York, 22 NY2d 579.) III. To the extent that the verdict with respect to the order of protection was in favor of plaintiffs it had no support in the evidence. (Palsgraf v Long Is. R. R. Co., 248 NY 339; Ventricelli v Kinney Sys. Rent A Car, 45 NY2d 950; Derdiarian v Felix Contr. Co., 51 NY2d 308; Sheehan v City of New York, 40 NY2d 496.)

      Fred Queller, Martin S. Rothman, Alyne I. Diamond and Jeffrey E. Rothman for respondents.
    I. Independent of the order of protection, a special relationship existed when the City voluntarily assumed a special duty to plaintiffs requiring it to exercise ordinary care in the performance of said duty. Moreover, there was reliance on the City’s representation that it would intervene coupled with assurances of safety. The facts herein are within the ambit of De Long v County of Erie. (De Long v County of Erie, 60 NY2d 296; Florence v Goldberg, 44 NY2d 189; Schuster v City of New York, 5 NY2d 75; Parvi v City of Kingston, 41 NY2d 553; Smullen v City of New York, 28 NY2d 66.) II. The order of protection and the visitation privileges which were an integral part of the order created a special relationship and special duty which was breached on the evening of November 9, 1975 both before and after 6:00 p.m. Said breach was actionable by both Dina and her mother. It was mandatory that the police reasonably and promptly investigate the claimed violation of the order; that Dina be retrieved and, if reasonable cause existed, that Sorichetti be taken into custody. (Baker v City of New York, 25 AD2d 770; Cullen v Naples, 31 NY2d 818; Matter of Malloy, 278 NY 429; People v Gowasky, 244 NY 451; Escoe v Zerbst, 295 US 490; United States v Chavez, 627 F2d 953; Bruno v Codd, 90 Misc 2d 1047, 64 AD2d 582, 47 NY2d 582; Di Santo v Pennsylvania, 273 US 34; Schuster v City of New York, 5 NY2d 75.) III. The verdict was reasonably based on the evidence. (Ferrer v Harris, 55 NY2d 285; Caprara v Chrysler Corp., 52 NY2d 114; Lillie v Thompson, 332 US 459; Kush v City of Buffalo, 59 NY2d 26; Nailon v Helmsley-Spear, Inc., 50 NY2d 507; Loeser v Nathan Hale Gardens, 73 AD2d 187; Sherman v Concourse Realty Corp., 47 AD2d 134; Palsgraf v Long Is. R. R. Co., 248 NY 339; Derdiarian v Felix Contr. Corp., 51 NY2d 308; Parvi v City of Kingston, 41 NY2d 553.) IV. The operational-ministerial failure to provide police protection should be actionable and the general duty-special duty rule should be abolished, (United States v Yellow Cab Co., 340 US 543; Swanson v United States, 229 F Supp 217; Steitz v City of Beacon, 295 NY 51; Motyka v City of Amsterdam, 15 NY2d 134; Evers v Westerberg, 32 NY2d 684; Bernardine v City of New York, 294 NY 361; Buckley v City of New York, 56 NY2d 300; Woods v Lancet, 303 NY 349; Matter of Eckart, 39 NY2d 493; Great N. Ry. Co. v Sunburst Co., 287 US 358.) V. The City’s argument is fallacious wherein it contends that the abolition of sovereign immunity will result in onerous financial consequences. (Schuster v City of New York, 5 NY2d 75; Battalla v State of New York, 10 NY2d 237; O’Connor v City of New York, 58 NY2d 184; Baker v City of New York, 25 AD2d 770; Dalehite v United States, 346 US 15, 347 US 924.)
   OPINION OF THE COURT

Alexander, J.

This action was commenced against the City of New York (City) by Dina Sorichetti, an infant, and her mother, Josephine Sorichetti, to recover damages resulting from injuries inflicted on Dina by her father, Frank Sorichetti. Plaintiffs’ theory of recovery is that the City, through the New York City Police Department, negligently failed to take Frank Sorichetti into custody or otherwise prevent his assault upon his daughter after being informed that he may have violated a Family Court order of protection and that he had threatened to do harm to the infant. Special Term denied a pretrial motion by the City to dismiss the complaint for failure to state a cause of action (95 Mise 2d 451), and the Appellate Division affirmed (70 AD2d 573).

A jury thereafter returned a verdict in plaintiffs’ favor in the amount of $3,000,000 for the infant and $40,000 for the mother. The Appellate Division modified by ordering a new trial on damages unless Dina Sorichetti stipulated to reduce her award to $2,000,000. The infant so stipulated and judgment was entered in the reduced amount. We granted the City’s motion for leave to appeal from the judgment, bringing up for review the prior nonfinal Appellate Division order (CPLR 5501 [a]).

To uphold the award of damages in this case, we must determine whether a special relationship existed between the infant and the municipality by virtue of (1) the issuance of a judicial order of protection directing Frank Sorichetti to refrain from threatening or assaulting his wife and providing that the order constituted authority for a peace officer to arrest a person charged with violating its terms; and (2) the police department’s knowledge of Frank Sorichetti’s history of assaultive and abusive conduct toward his family and his immediate threats of harm to his daughter and its response to Josephine Sorichetti’s pleas for assistance.

Josephine and Frank Sorichetti were married in 1949, and had three children, the youngest being Dina, who was born in 1969. It appears that Frank drank excessively and that the couple’s relationship was quite stormy, with Frank becoming violent and abusive when under the influence of alcohol. In January 1975, Josephine obtained an order of protection in Family Court following a particularly violent incident in which her husband had threatened her and punched her in the chest so forcefully as to send her “flying across the room.” The order recited that Frank was “forbidden to assault, menace, harass, endanger, threaten or act in a disorderly manner toward” Josephine. By June 1975, Frank’s drinking and abusiveness had intensified. Consequently, Josephine moved out of their residence and took her own apartment. Upon her return in early July to obtain her personal belongings, Frank attacked her with a butcher knife, cutting her hand, which required suturing, and threatened to kill her and the children. The police were summoned from the 43rd precinct, but Frank had fled by the time they arrived. A second order of protection was issued by Family Court and a complaint filed in Criminal Court by Josephine. Frank was arrested by detectives from the 43rd precinct, but Josephine subsequently dropped both the Family Court and criminal charges based on Frank’s promise to reform.

Frank’s drinking and violent behavior continued, however, and in September 1975, Josephine served divorce papers on him. Frank became enraged and proceeded to destroy the contents of their apartment. He broke every piece of furniture, cut up clothes belonging to his wife and Dina, threw the food out of the refrigerator and bent every knife and fork. The police from the 43rd precinct were summoned, but they refused to arrest Frank because “he lived there.”

Family Court entered a third order of protection that also ordered Frank Sorichetti to stay away from Josephine’s home. During the ensuing months, Frank continued to harass his wife and daughter, following them in the mornings as they walked to Dina’s school and threatening that they “were Sorichettis” and were going to “die Sorichettis”, and that he was going to “bury them”. Josephine reported these incidents to the 43rd precinct. Additionally, Frank created disturbances at Josephine’s place of employment on a number of occasions with the result that she was discharged. On October 9, 1975, Frank was arrested by officers of the 43rd precinct for driving while intoxicated.

On November 6, 1975, Josephine and Frank appeared in Family Court where the order of protection was made final for one year. Included in the order was a provision granting Frank visitation privileges with his daughter each weekend from 10:00 a.m. Saturday until 6:00 p.m. Sunday. It was agreed that Dina would be picked up and dropped off at the 43rd precinct. As required by Family Court Act § 168, the order also recited that: “[T]he presentation of this Certificate to any Peace Officer shall constitute authority for said Peace Officer to take into custody the person charged with violating the terms of such Order of Protection and bring said person before this Court and otherwise, so far as lies within his power, to aid the Petitioner in securing the protection such Order was intended to afford.”

On the following weekend, Josephine delivered Dina to her husband in front of the 43rd precinct at the appointed time. As he walked away with the child, Frank turned to Josephine and shouted, “You, I’m going to kill you.” Pointing to his daughter, he said, “You see Dina; you better do the sign of the cross before this weekend is up.” He then made the sign of the cross on himself. Josephine understood her husband’s statements and actions to be a death threat, and she immediately entered the police station and reported the incident to the officer at the desk. She showed him the order of protection and reported that her husband had just threatened her and her child. She requested that the officer “pick up Dina and arrest Frank.” She also reported the past history of violence inflicted by Frank. The officer told Josephine that because her husband had not “hurt her bodily — did not touch her” there was nothing the police could do. Josephine then returned home.

At 5:30 p.m. the following day, Sunday, Josephine returned to the station house. She was distraught, agitated and crying. She approached the officer at the front desk and demanded that the police pick up Dina and arrest her husband who was then living with his sister some five minutes from the precinct. She showed the officer the order of protection and related the threats made the previous morning as well as the prior incidents and Frank’s history of drinking and abusive behavior. The officer testified that he told Josephine that if “he didn’t drop her off in a reasonable time, we would send a radio car out.”

The officer referred Josephine to Lieutenant Leon Granello, to whom she detailed the prior events. He dismissed the protective order as “only a piece of paper” that “means nothing” and told Josephine to wait outside until 6:00. At 6:00 p.m., Josephine returned to the Lieutenant who told her, “why don’t you wait a few minutes * * * Maybe he took her to a movie. He’ll be back. Don’t worry about it.” Josephine made several similar requests, but each time was told “to just wait. We’ll just wait.” In the meantime, at about 5:20 or 5:30, Officer John Hobbie arrived at the station house. He recognized Josephine, who by then was hysterical, from prior incidents involving the Sorichettis. Specifically, just a few months previously, on June 28, 1975, Hobbie had intervened in an altercation in which Frank, while intoxicated and being abusive, had tried to pull Dina away from a babysitter, cursing and saying, “if I don’t have her, the mother shouldn’t have her.” Hobbie had taken Frank, Dina and the babysitter to the 43rd precinct, where a decision was made not to let Frank have the child. Frank had started cursing and became loud and abusive. He calmed down somewhat when threatened with removal from the station house, and left when told that the police were holding the child until her mother arrived. In a second incident on October 9, 1975. Officer Hobbie transferred Frank to a hospital for detoxification following Frank’s arrest by officer’s of the 43rd precinct for driving while intoxicated.

After speaking with Josephine on November 9, 1975, Officer Hobbie informed Lieutenant Granello of his prior experiences with Frank. He told the Lieutenant that Sorichetti was a “very violent man” and that Dina was “petrified” of him. Officer Hobbie recommended that a patrol car be sent to Sorichetti’s home. Lieutenant Granello rejected this suggestion, contending initially that no patrol cars were available and later that “not enough time ha[d] gone by.”

At 6:30, Lieutenant Granello suggested that Josephine call home to see if Dina had been dropped off there. She did so and was informed that the child was not there. She continued to plead that the officer take immediate action. The Lieutenant again told Josephine “Let’s just wait”. At 7:00, the Lieutenant told Josephine to leave her phone number and to go home, and that he would call her if Sorichetti showed up. She did as suggested.

At about the same time, Frank Sorichetti’s sister entered her apartment and found him passed out on the floor with an empty whiskey bottle and pill bottle nearby. The woman also found Dina, who was severely injured. Between 6:55 and 7:00 p.m., Sorichetti had attacked the infant repeatedly with a fork, a knife and a screwdriver and had attempted to saw off her leg. Police from the 43rd precinct, responding to a 911 call, arrived within five minutes and rushed the child, who was in a coma, to the hospital. The infant plaintiff was hospitalized for 40 days and remains permanently disabled. Frank Sorichetti was convicted of attempted murder, and is currently serving a prison sentence.

The infant and her mother commenced this action against the City to recover damages for Dina’s injuries and for the mother’s loss of services. Special Term denied a motion to dismiss the complaint, reasoning that the City could be held liable to a third person for breach of a special duty of care that the court found owing to the holder of an order of protection (citing Baker v City of New York, 25 AD2d 770). The court also held that regardless of whether the protective order created a duty vis-á-vis Dina, an issue of fact existed as to whether the police were negligent in failing to protect the infant in light of their knowledge of Frank Sorichetti’s prior threats and acts of violence.

At the close of evidence at trial, the jury was instructed that, pursuant to Family Court Act § 168 (l), the City owed a special duty of protection to Josephine, which ran also to Dina. This duty arose, the court charged, upon presentment of the order of protection to the police along with an allegation that it had been violated. To satisfy this duty of care, the jury was instructed that the police had to act in a reasonable manner in investigating the claimed violation. Apart from the order of protection, the court instructed the jury to consider whether the City breached a duty of care in failing to protect the infant plaintiff in light of its knowledge of Frank Sorichetti’s history and prior conduct.

The jury returned a verdict in plaintiffs’ favor. It found specifically that the City had not breached its duty under the order of protection by its actions of Saturday morning, November 8th; that the City had breached its duty under the order of protection on Sunday evening, November 9th; and that the City had knowledge of Frank Sorichetti’s past history and conduct, and, in light of this knowledge, breached a duty to protect Dina.

A municipality cannot be held liable for injuries resulting from a failure to provide adequate police protection absent a special relationship existing between the municipality and the injured party (De Long v County of Erie, 60 NY2d 296; Weiner v Metropolitan Transp. Auth., 55 NY2d 175; Riss v City of New York, 22 NY2d 579). Indeed, where there is no special relationship, a municipality does not owe a duty to its citizens in the performance of governmental functions, and thus courts will not examine the “reasonableness” of the municipality’s actions (see, eg., O’Connor v City of New York, 58 NY2d 184; Garrett v Holiday Inns, 58 NY2d 253; Florence v Goldberg, 44 NY2d 189). In the context of police protection, a different rule “could and would inevitably determine how the limited police resources of the community should be allocated and without predictable limits” (Riss v City of New York, 22 NY2d, at p 582, supra).

In several extraordinary instances, a special relationship has been found which imposes a duty on a municipality to provide reasonable police protection to an individual. For example, in Schuster v City of New York (5 NY2d 75), the City was held liable when a citizen collaborated with the police in the arrest of a dangerous fugitive and was thereafter denied protection after he received death threats, which were successfully carried out. Similarly, in De Long v County of Erie (60 NY2d 296, supra), we imposed a special duty of care on a municipality toward a woman who called 911 for police assistance, was told that assistance would be forthcoming, and in reliance on this assurance exposed herself to danger that resulted in her death.

A key element in each of these cases, as well as in those cases that have found a special duty of reasonable care in the performance of other governmental functions (see, e.g., Garrett v Holiday Inns, 58 NY2d 253, supra; Florence v Goldberg, 44 NY2d 189, supra), is some direct contact between agents of the municipality and the injured party.

In the present case, we hold that a special relationship existed between the City and Dina Sorichetti which arose out of (1) the order of protection; (2) the police department’s knowledge of Frank Sorichetti’s violent history, gained through and verified both by its actual dealings with him, the existence of the order of protection, and its knowledge of the specific situation in which the infant had been placed; (3) its response to Josephine Sorichetti’s pleas for assistance on the day of the assault; and (4) Mrs. Sorichetti’s reasonable expectation of police protection.

In enacting Family Court Act § 168, the Legislature intended to encourage police involvement in domestic matters, an area in which the police traditionally have exhibited a reluctance to intervene (see, e.g., Bruno v Codd, 47 NY2d 582, 590; Besharov, Practice Commentary, McKinney’s Cons Laws of NY, Book 29 A, Family Ct Act § 168, pp 131-132). The statute does not evince a legislative determination that the scope of municipal tort liability attendant upon traditional governmental activities, such as police protection, should be extended to an entire class (see, Riss v City of New York, 22 NY2d, at p 582, supra). By its terms, section 168 provides that a certificate of protection “shall constitute authority” for a peace officer to take into custody one who reasonably appears to have violated the order. As such, it “broadens the circumstances under which a peace officer may take a person into custody beyond those enumerated in Article 140 of the Criminal Procedure Law” (Besharov, Practice Commentary, supra, at p 131). When presented with an order of protection, a police officer is not mandated to make an arrest. Nonetheless, such presentation along with an allegation that the order has been violated, obligates the officer to investigate and take appropriate action.

The issuance of a protective order creates a situation quite unlike that presented in Riss (22 NY2d 579, supra) in several respects. The order evinces a preincident legislative and judicial determination that its holder should be accorded a reasonable degree of protection from a particular individual. It is presumptive evidence that the individual whose conduct is proscribed has already been found by a court to be a dangerous or violent person and that violations of the order’s terms should be treated seriously. Significantly, the class of potential victims to whom a duty to investigate might arise is necessarily limited by the terms of the order.

In an unrelated case that arose after the incident in this case, the New York City Police Department conceded its obligation “to respond to every request for assistance or protection” when presented with an order of protection and an allegation of its violation (Bruno v Codd, 47 NY2d 582, supra).

The fact that an injury occurs because of a violation of an order of protection does not in itself create municipal liability. An arrest may not be warranted in each case, and the failure of the police to take such action will not alone be determinative of the reasonableness of their conduct. But when the police are made aware of a possible violation, they are obligated to respond and investigate, and their actions will be subject to a “reasonableness” review in a negligence action.

As the jury in this case found, the 43rd precinct police had particular knowledge of Frank Sorichetti’s abusiveness, assaultiveness and chronic alcoholism. This knowledge was obtained by direct experience emanating from Sorichetti’s past arrests and the numerous instances in which they had intervened in disturbances caused by Sorichetti. Indeed, on the day of the assault, the precinct’s supervising officer, Lieutenant Granello, was specifically and emphatically informed by one of his officers that Sorichetti was a “very violent man” whose threats should not be taken lightly, and was given information relating to Sorichetti’s past violence. In addition, the certificate of protection represented a judicial affirmation of the seriousness of Sorichetti’s past conduct. These circumstances are significantly different from those in Riss (22 NY2d 579, supra) wherein the assailant, who was unknown to the police, was seemingly a citizen in good standing who, up until the attack, had done nothing to indicate a likelihood that he would make good on his threats. Sorichetti, by contrast, was no mere “unfavored swain” who apparently would be satisfied by voicing hollow “predictions of dire results to the object of [his] attentions” (Riss, 27 AD2d 217, 218-219, affd 22 NY2d 579, supra).

Aside from their awareness of the threatmaker’s violent propensity, a critical factor in the creation of a special duty of protection herein is the police officers’ conduct toward Josephine on the evening of November 9th. When she first approached the front-desk officer at 5:30, Josephine was told that if Sorichetti did not arrive within a reasonable time the police would send a patrol car out. Thereafter, the Lieutenant told Josephine to “wait outside” until 6:00, creating the clear impression that at that time, when Sorichetti’s failure to return would be a viola-, tion of the order of protection, some action would be taken. From this point on, the police repeatedly told Josephine to “wait awhile longer”, never dispelling the notion that they would provide assistance at some reasonable time, until she was finally told at 7:00 to “go home”. Josephine, in her helpless and distraught state, had no alternative but to seek the assistance of the police to assure her daughter’s safety (cf. De Long v County of Erie, 60 NY2d, at p 305, supra). The passage of time was critical inasmuch as the assault did not take place until approximately 6:55.

Thus, in this respect also, this case is unlike Riss (22 NY2d 579, supra) wherein the police made clear to the victim that they would provide no assistance based on the assailant’s threats alone. Under the circumstances presented on this appeal, we hold that a special relationship existed between the police and Josephine and her six-year-old daughter such that the jury could properly consider whether the police conduct satisfied the duty of care owing to Dina.

We reject the City’s contention that there was insufficient evidence to support the jury’s findings that the City breached its duty of care and that the breach was a proximate cause of Dina’s injuries.

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

Chief Judge Wachtler and Judges Jasen, Meyer, Simons, Kaye and Titone concur.

Order affirmed, with costs.

      . Family Court Act § 168 (1) provides: “In any case in which an order of protection or temporary order of protection has been made by the family court, the clerk of the court shall issue a copy of such order to the petitioner and respondent and to any other person affected by the order. The presentation of a copy of an order of protection or temporary order of protection or a warrant or a certificate of warrant to any peace officer, acting pursuant to his special duties, or police officer shall constitute authority for him to arrest a person charged with violating the terms of such order of protection or temporary order of protection and bring such person before the court and, otherwise, so far as lies within his power, to aid in securing the protection such order was intended to afford”.

      . The City points to the trial court’s charge as reversible error. A fair reading of the charge in its entirety, together with the jury’s responses to special interrogatories, makes clear that the jury was properly instructed that the special duty was not to be based on the order of protection in isolation, but rather, in combination with the police’s knowledge of Frank Sorichetti’s violent propensity and their response to the claimed violation of the order in this particular factual situation (see, Davis v Caldwell, 54 NY2d 176).


text:
    In the Matter of Brooklyn Union Gas Company, Respondent, v State Board of Equalization and Assessment, Appellant, and City of New York, Intervenor-Appellant. In the Matter of National Fuel Gas Distribution Corporation et al., Respondents, v State Board of Equalization and Assessment, Appellant, and Niagara-Wheatfield Central School District, Intervenor. (And Nine Other Proceedings.)
    Argued June 4, 1985;
    decided July 9, 1985

      POINTS OF COUNSEL

      Robert Abrams, Attorney-General (Peter H. Schiff, Robert Hermann and Maurice K. Peaslee of counsel), for appellant in the first above-entitled proceeding.
    I. The proper method of valuing tangible special franchise property is reproduction-cost-new-less-depreciation. (People ex rel. Metropolitan St. Ry. Co. v State Bd. of Tax Commrs., 174 NY 417, 199 US 1; People ex rel. Delaware, Lackawanna & W. R. R. Co. v Clapp, 152 NY 490; People ex rel. Jamaica Water Supply Co. v State Bd. of Tax Commrs., 196 NY 39; Matter of Tenneco, Inc.-Tennessee Gas Pipeline Div. v Town of Cazenovia, 104 AD2d 511; People ex rel. Manhattan Ry. Co. v Woodbury, 203 NY 231; People ex rel. New York Cent. & Hudson Riv. R. R. Co. v Woodbury, 167 App Div 428, 218 NY 635; Matter of Onondaga County Water Dist. v Board of Assessors, 39 NY2d 601; Long Is. Light. Co. v State of New York, 28 AD2d 1014.) II. Capitalization of net income is not a proper method of valuing tangible special franchise property. (People ex rel. Delaware, Lackawanna & W. R. R. Co. v Clapp, 152 NY 490; Matter of Tenneco, Inc.-Tennessee Gas Pipeline Div. v Town of Cazenovia, 104 AD2d 511; Matter of Barnum v Srogi, 54 NY2d 896; Matter of Great Atl. & Pac. Tea Co. v Kiernan, 42 NY2d .236; Matter of County of Nassau [Colony Beach Club], 43 AD2d 45; Mid-Town Tennis Club v Wagner, 57 AD2d 1066; People ex rel. New York, Ontario & W. Ry. Co. v Rosenshein, 300 NY 74; People ex rel. Lyford v Allen, 286 App Div 621; People ex rel. Brooklyn Union Gas Co. v Chambers, 7 Misc 2d 601; Matter

      of Food, Fair v Board of Assessment Review, 78 AD2d 335.) III. Original cost less depreciation is not a proper method of valuing tangible special franchise property. (Matter of Staten Is. Edison Corp. v Moore, 6 AD2d 369, 15 AD2d 983, 12 NY2d 846; People ex rel. Brooklyn Union Gas Co. v Chambers, 7 Misc 2d 601; Matter of Tenneco, Inc.-Tennessee Gas Pipeline Div. v Town of Cazenovia, 104 AD2d 511; Matter of Port Auth. Trans-Hudson Corp. [Hudson Rapid Tubes Corp.], 20 NY2d 457, 390 US 1002; Matter of Onondaga County Water Dist. v Board of Assessors, 39 NY2d 601.) IV. Some value must be assigned to the intangible portion of petitioner’s special franchises. (Matter of Tenneco, Inc.-Tennessee Gas Pipeline Div. v Town of Cazenovia, 104 AD2d 511; People ex rel. Barron v Knapp, 208 App Div 127, 239 NY 581; People ex rel. Jamaica Water Supply Co. v State Bd. of Tax Commrs., 196 NY 39; Matter of Staten Is. Edison Corp. v Moore, 6 AD2d 369.) V. The methods of appraisal used by petitioner’s appraisers were improperly employed. There is no proper evidence in the record to support a reduction of the SBEA’s assessed value of petitioner’s special franchises. (Matter of Long Is. Land Dev. Corp. v Tax Commn., 49 AD2d 765; Matter of Gladlee Estates v Tax Commn., 42 AD2d 606; People ex rel. Central Hudson Gas & Elec. Co. v State Tax Commn., 218 App Div 44, 219 App Div 227, 247 NY 281; Matter of Onondaga County Water Dist. v Board of Assessors, 67 Misc 2d 797, 45 AD2d 258, 47 AD2d 707, 39 NY2d 601; People ex rel. City of New York v Keeler, 205 App Div 467, 237 NY 332; Barber & Bennett v State of New York, 34 AD2d 303, 27 NY2d 738; Congregation of Sons of Israel v State of New York, 54 AD2d 794; Matter of Tenneco, Inc.-Tennessee Gas Pipeline Div. v Town of Cazenovia, 104 AD2d 511.)

      Frederick A. O. Schwarz, Jr., Corporation Counsel (John P. MacArthur, Edith I. Spivack and Gary Schuller of counsel), for intervenor-appellant in the first above-entitled proceeding.
    I. Petitioner’s property is specialty property and the tangible component must accordingly be valued by reproduction-cost-new-less-depreciation. (People ex rel. Metropolitan St. Ry. Co. v State Bd. of Tax Commrs., 174 NY 417, 199 US 1; People ex rel. Jamaica Water Supply Co. v State Bd. of Tax Commrs., 196 NY 39; People ex rel. Brooklyn Hgts. R. R. Co. v State Bd. of Tax Commrs., 146 App Div 372, 204 NY 648; People ex rel. Manhattan Ry. Co. v Woodbury, 203 NY 231; People ex rel. Third Ave. R. R. Co. v State Bd. of Tax Commrs., 212 NY 472; Matter of Onondaga County Water Dist. v Board of Assessors, 39 NY2d 601; Matter of Semple School for Girls v Boyland, 308 NY 382;
      Consolidated Edison Co. v State Bd. of Equalization & Assessment, 101 Misc 2d 910; Matter of County of Suffolk [C.J. Van Bourgondien, Inc.], 47 NY2d 507; People ex rel. New York Cent. R. R. Co. v State Tax Commn., 206 App Div 558; People ex rel. Central Hudson Gas & Elec. Co. v State Tax Commn., 247 NY 281.) II. Assuming, arguendo, that income capitalization is at all relevant, the evidence offered by petitioner was defective and failed to satisfy its burden of proof. Moreover, by accepting this evidence, the court below adopted a hybrid capitalization method which ignores the unique characteristics of petitioner’s special franchise property and the different criteria of value relevant for tax and rate-making purposes. (People ex rel. Jamaica Water Supply Co. v State Bd. of Tax Commrs., 196 NY 39; Matter of Gladlee Estates v Tax Commn., 42 AD2d 606; Matter of Long Is. Land Dev. Corp. v Tax Commn., 49 AD2d 765; People ex rel. Third Ave. R. R. Co. v State Bd. of Tax Commrs., 212 NY 472; People ex rel. Wallington Apts. v Miller, 288 NY 31; People ex rel. Westchester Fire Ins. Co. v Davenport, 91 NY 574.)

      F. Peter O’Hara, Lewis Orgel and Herman Meltzer for respondent in the first above-entitled proceeding.
    I. Petitioner’s proof was the only credible evidence to aid the trial court in determining value. The trial court’s findings and the court below’s unanimous affirmance are fully supported by the evidence and were arrived at by the application of well-established and correct principles of law. (Montana Power Co. v Federal Energy Regulatory Commn., 599 F2d 295; Matter of Port Auth. Trans-Hudson Corp. [Hudson Rapid Tubes Corp.], 20 NY2d 457; United States v Brooklyn Union Gas Co., 168 F2d 391; United States v City of New York, 168 F2d 387; Matter of Food Fair v Board of Assessment Review, 78 AD2d 335; Matter of Niagara Mohawk Power Corp. v Public Serv. Commn., 52 AD2d 388, 40 NY2d 844; People ex rel. Delaware, Lackawanna & W. R. R. Co. v Clapp, 152 NY 490; Matter of Tenneco, Inc.-Tennessee Gas Pipeline Div. v Town of Cazenovia, 104 AD2d 511; Adams Express Co. v Ohio State Auditor, 166 US 185; Atchison, Topeka & Santa Fe Ry. Co. v Collins, 267 US 609.) II. The reproduction or replacement cost appraisal is not the sole method to determine market value and properly used it must reflect all elements of depreciation. Moreover, the trial and the court below correctly rejected such an approach because there was no possibility — legal, economic or engineering — of reproducing the property in its existing form. (Matter of Merrick Holding Corp. v Board of Assessors, 45 NY2d 538; G.R.F., Inc. v Board of Assessors, 41 NY2d 512; People ex rel. Jamaica Water Supply Co. v State Bd. of Tax Commrs., 196 NY 39; Matter of Staten Is. Edison Corp. v Moore, 6 AD2d 369;
      Matter of Great Atl. & Pac. Tea Co. v Kiernan, 42 NY2d 236; People ex rel. New York, Ontario & W. Ry. Co. v Rosenshein, 300 NY 74; People ex rel. Lehigh Val. Ry. Co. v Harris, 168 Misc 685, 257 App Div 912, 281 NY 786; Power Commn. v Hope Gas Co., 320 US 591; Spitzer v Stichman, 278 F2d 402.) III. The courts below properly refused to give any weight to appellant’s appraisal. (Matter of Semple School for Girls v Boyland, 308 NY 382; McCardle v Indianapolis Water Co., 272 US 400; Coates v Peterson & Sons, 48 AD2d 890; Felt v Olson, 74 AD2d 772, 51 NY2d 977; United States v 6,162.78 Acres of Land, 680 F2d 396; United States v 7, 216.50 Acres of Land, 507 F Supp 228.) IV. The fears of opposing amici that the decisions below will necessarily adversely affect them are ill-founded. V. Appellants have failed to provide a jurisdictional base for consideration of this appeal and none exists. (Patrician Plastic Corp. v Bernadel Realty Corp., 25 NY2d 599; Matter of City of New York [Coogan], 20 NY2d 618; People ex rel. Parklin Operating Corp. v Miller, 287 NY 126; Grant Co. v Srogi, 52 NY2d 496.)

      Melvin H. Osterman, Jr., Michael Whiteman and Jonathan P. Nye for the New York State School Boards Association, amicus curiae in the first above-entitled proceeding.
    This court should not abandon the traditional rule that special franchise property is specialty property, to be valued by reproduction-cost-new-less-depreciation. (People ex rel. Metropolitan St. Ry. Co. v State Bd. of Tax Commrs., 174 NY 417, 199 US 1; People ex rel. Jamaica Water Supply Co. v State Bd. of Tax Commrs., 196 NY 39; Matter of Onondaga County Water Dist. v Board of Assessors, 45 AD2d 258, 47 AD2d 707, 39 NY2d 601; Long Is. Light. Co. v State of New York, 28 AD2d 1014; Matter of Tenneco, Inc.-Tennessee Gas Pipeline Div. v Town of Cazenovia, 104 AD2d 511; Matter of Staten Is. Edison Corp. v Moore, 6 Misc 2d 1031, 6 AD2d 369, 37 Misc 2d 198,15 AD2d 983, 12 NY2d 846; Matter of Consolidated Edison Co. v State Bd. of Equalization & Assessment, 83 AD2d 355, 58 NY2d 710; Matter of County of Suffolk [C. J. Van Bourgondien, Inc.], 47 NY2d 507; Levittown Union Free School Dist. v Nyquist, 57 NY2d 27,459 US 1139; Matter of Hellerstein v Assessor of Town of Islip, 37 NY2d 1.)

      David E. Blabey and Lawrence G. Malone for the New York State Public Service Commission, amicus curiae in the first above-entitled proceeding.
    I. For rate-making purposes, the most objective and least controversial method for valuating utility plant is original cost, less depreciation. (Bluefield Co. v Public Serv. Commn., 262 US 679; Driscoll v Edison Co., 307 US 104; Matter of St. Lawrence Gas Co. v Public Serv. Commn., 42 NY2d 461.) II. The commission would flow through to ratepayers the lion’s share of any tax refunds received by Brooklyn Union. (Matter of Orange & Rockland Utils. v Public Serv. Commn., 86 AD2d 912; Matter of Rochester Tel. Corp. v Public Serv. Commn., 58 NY2d 874.)

      Henry J. Logan, County Attorney (Edwin G. Michaelian, Kenneth E. Powell and Andrea L. McArdle of counsel), for Westchester County, amicus curiae in the first above-entitled proceeding.
    The court below erred in formulating a valuation rule of potentially broad applicability on the basis of the limited record below. (Matter of County of Suffolk [C.J. Van Bourgondien, Inc.], 47 NY2d 507; Matter of Onondaga County Water Dist. v Board of Assessors, 39 NY2d 601; People ex rel. Metropolitan St. Ry. Co. v State Bd. of Tax Commrs., 174 NY 417, 199 US 1; Matter of Xerox Corp. v Ross, 71 AD2d 84, 49 NY2d 702; Consolidated Edison Co. v State Bd. of Equalization & Assessment, 101 Misc 2d 910, 83 AD2d 355, 58 NY2d 710; Matter of Tenneco, Inc.-Tennessee Gas Pipeline Div. v Town of Cazenovia, 104 AD2d 511; Public Affairs Press v Rickover, 369 US 111; Minnick v California Dept. of Corrections, 452 US 105; Kleppe v New Mexico, 426 US 529; Rescue Army v Municipal Ct., 331 US 549.)

      Edward G. McCabe, County Attorney (Robert T. Bloom of counsel), for Nassau County, amicus curiae in the first above-entitled proceeding.
    I. The averaging of a cost approach and a business income approach fails, as a matter of law, to produce the full combined value of the tangible and intangible property subject to special franchise assessment. (People ex rel. Jamaica Water Supply Co. v State Bd. of Tax Commrs., 128 App Div 13, 196 NY 39; People ex rel. Third Ave. R. R. Co. v State Bd. of Tax Commrs., 136 App Div 155, 198 NY 608; People ex rel. Hudson & Manhattan R. R. Co. v State Bd. of Tax Commrs., 203 NY 119; People ex rel. Manhattan Ry. Co. v Woodbury, 203 NY 231; People ex rel. Third Ave. R. R. Co. v State Bd. of Tax Commrs., 157 App Div 731, 212 NY 472; People ex rel. Central Hudson Gas & Elec. Co. v State Tax Commn., 218 App Div 44, 247 NY 281; Matter of Staten Is. Edison Corp. v Moore, 6 Misc 2d 1031, 6 AD2d 369, 15 AD2d 983, 12 NY2d 846; Matter of Onondaga County Water Dist. v Board of Assessors, 39 NY2d 601.) II. The averaging or addition of business related elements fails to account for the full real estate value of the tangible special franchise assessment component. (Matter of Staten Is. Edison Corp. v Moore, 6 Misc 2d 1031, 6 AD2d 369, 15 AD2d 983, 12 NY2d 846; People ex rel. Hotel Paramount Corp. v Chambers,
      298 NY 372; Matter of Onondaga County Water Dist. v Board of Assessors, 39 NY2d 601; Westbury Drive-In v Board of Assessors, 70 Misc 2d 1077.) III. The court-adopted appraisal methodology is not supported by the condition of the tangible component or the cases cited by the courts below. (People ex rel. Jamaica Water Supply v State Bd. of Tax Commrs., 128 App Div 13,196 NY 39; Matter of Food Fair v Board of Assessment Review, 78 AD2d 335; Matter of Niagara Mohawk Power Corp. v Public Serv. Commn., 52 AD2d 388; People ex rel. Central Hudson Gas & Elec. Co. v State Tax Commn., 218 App Div 44, 247 NY 281; Barber & Bennett v State of New York, 34 AD2d 303; Matter of County of Suffolk [C. J. Van Bourgondien, Inc.], 47 NY2d 507; Matter of County of Nassau [Colony Beach Club], 43 AD2d 45, 39 NY2d 958.) IV. The court-adopted appraisal methodology, if upheld, should only be applied prospectively to post Brooklyn Union Gas case special franchise assessments. (Matter of Hellerstein v Assessor of Town of Islip, 37 NY2d 1; C. H. O. B. Assoc. v Board of Assessors, 45 Misc 2d 184, 22 AD2d 1015, 16 NY2d 779.)

      Melvin H. Osterman, Jr., Michael Whiteman and Jonathan P. Nye for Westchester Municipalities, amicus curiae in the first above-entitled proceeding.
    I. Petitioner has the burden to establish conclusively that the methodology and assessment determined by the State Board were incorrect. (People ex rel. Jamaica Water Supply Co. v State Bd. of Tax Commrs., 196 NY 39; Matter of Consolidated Edison Co. v State Bd. of Equalization & Assessment, 83 AD2d 355, 58 NY2d 710.) II. The decisions of the Appellate Division in Brooklyn Union Gas, National Fuel Gas and Tenneco cannot be reconciled. (Matter of County of Suffolk [C.J. Van Bourgondien, Inc.], 47 NY2d 507; Colonie Hill v Boncore, 87 AD2d 581, 57 NY2d 608; Chiloway Charcoal v State of New York, 33 AD2d 712, 28 NY2d 914; People ex rel. Jamaica Water Supply Co. v State Bd. of Tax Commrs., 196 NY 39.) III. A special franchise is a specialty to be valued by RCNLD. (People ex rel. Metropolitan St. Ry. Co. v State Bd. of Tax Commrs., 174 NY 417,199 US 1; Matter of Consolidated Edison Co. v State Bd. of Equalization & Assessment, 103 AD2d 453; Matter of Hellerstein v Assessor of Town of Islip, 37 NY2d 1; Matter of Tenneco, Inc.-Tennessee Gas Pipeline Div. v Town of Cazenovia, 104 AD2d 511; Matter of Onondaga Water Dist. v Board of Assessors, 45 AD2d 258, 47 AD2d 707, 39 NY2d 601; Long Is. Light. Co. v State of New York, 28 AD2d 1014; Matter of Staten Is. Edison Corp. v Moore, 6 Misc 2d 1031, 6 AD2d 369, 37 Misc 2d 198, 15 AD2d 983,12 NY2d 846; Onondaga County Water Auth. v New York Water Serv. Corp., 285 App Div 655; New York Yankees v

      Tax Commn., 74 Misc 2d 752; People ex rel. Hotel Paramount Corp. v Chambers, 298 NY 372.)

      Robert Abrams, Attorney-General (Peter H. Schiff, Robert Hermann and Maurice K. Peaslee of counsel), for appellant in the second above-entitled proceeding.
    I. The proper method of valuing tangible special franchise property is reproduction-cost-new-less-depreciation. (Matter of City of New York [Atlantic Improvement Corp.], 28 NY2d 465; Matter of Farone & Son v Srogi, 96 AD2d 711, 60 NY2d 556; Matter of Metropolitan Life Ins. Co. v Tax Commn., 85 AD2d 525, 57 NY2d 964; Matter of Xerox Corp. v Ross, 71 AD2d 84, 49 NY2d 702; People ex rel. Jamaica Water Supply Co. v State Bd. of Tax Commrs., 196 NY 39; People ex rel. Metropolitan St. Ry. Co. v State Bd. of Tax Commrs., 174 NY 417,199 US 1; People ex rel. Delaware, Lackawanna & W. R. R. Co. v Clapp, 152 NY 490; People ex rel. Manhattan Ry. Co. v Woodbury, 203 NY 231; People ex rel. New York Cent. & Hudson Riv. R. R. Co. v Woodbury, 167 App Div 428,218 NY 635; Matter of Staten Is. Edison Corp. v Moore, 6 Misc 2d 1031, 6 AD2d 369, 15 AD2d 983, 12 NY2d 846.) II. Capitalization of net income is not a proper method of valuing tangible special franchise property. (People ex rel. Delaware, Lackawanna & W. R. R. Co. v Clapp, 152 NY 490; Matter of Tenneco, Inc.-Tennessee Gas Pipeline Div. v Town of Cazenovia, 104 AD2d 511; Matter of Barnum v Srogi, 54 NY2d 896; Matter of Great Alt. & Pac. Tea Co. v Kiernan, 42 NY2d 236; Matter of County of Nassau [Colony Beach Club], 43 AD2d 45; Mid-Town Tennis Club v Wagner, 57 AD2d 1066; People ex rel. New York, Ontario & W. Ry. Co. v Rosenshein, 300 NY 74; People ex rel. Lyford v Allen, 286 App Div 621; People ex rel. Brooklyn Union Gas Co. v Chambers, 7 Misc 2d 601; Matter of Food Fair v Board of Assessment Review, 78 AD2d 335.) III. All methods of appraisal used by petitioners’ appraisers were improper methods for valuing special franchises and/or were improperly applied by the appraisers. Since petitioners failed to overcome the presumption of validity of the SBEA’s assessments, the Supreme Court judgment dismissing their petitions should be reinstated. (Matter of Xerox Corp. v Ross, 71 AD2d 84; Matter of Long Is. Land Dev. Corp. v Tax Commn., 49 AD2d 765; Matter of Gladlee Estates v Tax Commn., 42 AD2d 606; Matter of Staten Is. Edison Corp. v Moore, 6 AD2d 369, 15 AD2d 983, 12 NY2d 846; People ex rel. Brooklyn Union Gas Co. v Chambers, 7 Misc 2d 601; Matter of Port Auth. Trans-Hudson Corp. [Hudson Rapid Tubes Corp.], 20 NY2d 457, 390 US 1002; Barber & Bennett v State of New York, 34 AD2d 303; Congregation of Sons of Israel v State of New York, 54 AD2d 794;
      Matter of Tenneco, Inc.-Tennessee Gas Pipeline Div. v Town of Cazenovia, 104 AD2d 511.)

      David M. Lascell, G. Robert Witmer, Jr., and Allan E. Floro for respondents in the second above-entitled proceeding.
    I. SBEA’s contention that the law requires application of only its own illogical and unreasonable appraisal methodology must be rejected. (People ex rel. Metropolitan St. Ry. Co. v State Bd. of Tax Commrs., 174 NY 417, 199 US 1; People ex rel. Jamaica Water Supply Co. v State Bd. of Tax Commrs., 196 NY 39; Consolidated Edison Co. v State Bd. of Equalization & Assessment, 101 Misc 2d 910, 83 AD2d 355, 58 NY2d 710; Matter of County of Suffolk [C.J. Bourgondien, Inc.], 47 NY2d 507; Chiloway Charcoal v State of New York, 33 AD2d 712, 28 NY2d 914; Matter of Great Atl. & Pac. Tea Co. v Kiernan, 42 NY2d 236; G.R.F, Inc. v Board of Assessors, 41 NY2d 512; Matter of Merrick Holding Corp. v Board of Assessors, 45 NY2d 538; Matter of Food Fair v Board of Assessment Review, 78 AD2d 335.) II. Petitioners overcame any presumption of validity accorded SBEA’s assessments and carried their burden of proving that SBEA’s assessments were erroneous. (People ex rel. Jamaica Water Supply Co. v State Bd. of Tax Commrs., 196 NY 39; Matter of Consolidated Edison Co. v State Bd. of Equalization & Assessment, 83 AD2d 355; Matter of Metropolitan Life Ins. Co. v Tax Commn., 85 AD2d 525, 57 NY2d 964; Matter of General Motors Corp. v Finance Administrator, 70 AD2d 843; People ex rel. Beardsley v Barber, 266 App Div 371, 293 NY 706; People ex rel. WallingtonApts. v Miller, 288 NY 31; Matter of Property Portfolio, 182 Corp. v Tax Commn., 58 AD2d 650; Matter of Katz Buffalo Realty v Anderson, 25 AD2d 809; People ex rel. City of New York v Keeler, 237 NY 332; Matter of Xerox Corp. v Ross, 71 AD2d 84.) III. Upon annulling SBEA’s assessments, as a matter of law, the court below should have determined the full value of petitioners’ special franchises. (People ex rel. Wallington Apts. v Miller, 288 NY 31; Matter of Great Atl. & Pac. Tea Co. v Kiernan, 42 NY2d 236; Lawyers Co-op. Pub. Co. v State of New York, 47 AD2d 122, 39 NY2d 760; Clearwater v State of New York, 30 AD2d 883, 23 NY2d 1006; Matter of Xerox Corp. v Ross, 71 AD2d 84, 49 NY2d 702.)

      Melvin H. Osterman, Jr., Michael Whiteman and Jonathan P. Nye for Westchester Municipalities, amicus curiae in the second above-entitled proceeding.
    I. Petitioners have not met their burden to establish conclusively that the methodology and assessment determined by the State Board were incorrect. (People ex rel. Jamaica Water Supply Co. v State Bd. of Tax Commrs., 196 NY 39; Matter of Consolidated Edison Co. v State Bd. of

      Equalization & Assessment, 83 AD2d 355, 58 NY2d 710.) II. A special franchise is a specialty to be valued by RCNLD. (People ex rel. Metropolitan St. Ry. Co. v State Bd. of Tax Commrs., 174 NY 417,199 US 1; Matter of Consolidated Edison Co. v State Bd. of Equalization & Assessment, 103 AD2d 453; Matter of Hellerstein v Assessor of Town of Islip, 37 NY2d 1; Matter of Tenneco, Inc.-Tennessee Gas Pipeline Div. v Town of Cazenovia, 104 AD2d 511; Matter of Onondaga County Water Dist. v Board of Assessors, 45 AD2d 258, 47 AD2d 707, 39 NY2d 601; Long Is. Light. Co. v State of New York, 28 AD2d 1014; Matter of Staten Is. Edison Corp. v Moore, 6 Misc 2d 1031, 6 AD2d 369, 37 Misc 2d 198, 15 AD2d 983, 12 NY2d 846; Matter of County of Suffolk [C. J. Bourgondien, Inc.], 47 NY2d 507; Onondaga County Water Auth. v New York Water Serv. Co., 285 App Div 655; Colonie Hill v Boncore, 87 AD2d 581, 57 NY2d 608.)
   OPINION OF THE COURT

Alexander, J.

The issue presented on these appeals is whether the special franchise properties of the Brooklyn Union Gas Company, and those of National Fuel Gas Distribution Corporation and National Fuel Gas Supply Corporation, are specialty property, to be valued for special franchise assessment and taxation purposes by the reproduction-cost-new-less-depreciation (RCNLD) method, or whether a capitalization-of-income method of valuation is an acceptable method of valuation of such property. The Appellate Division, in both cases, has held that the petitioners’ special franchise properties are not “specialty properties” and therefore that the capitalization-of-income method is an acceptable method of assessing the value of special franchise property in New York State. We disagree and therefore reverse the Appellate Division orders áppealed from.

I

Brooklyn Union Gas Company (Brooklyn Union) is a distributor of natural gas, servicing customers in Kings County, Queens County and half of Richmond County. It operates its gas distribution business through a system of underground mains, services and related measuring and regulatory equipment that is placed in public streets and thoroughfares. This property, by statutory definition, constitutes a “special franchise”.

Brooklyn Union’s distribution system of mains is primarily located under public streets, and is composed of 63% cast iron mains with joints that operate at 15 pounds of pressure and require frequent repair. No new cast iron pipes have been installed since the mid-1950’s, and none can now be installed because of the prohibitions of Public Service Commission rules. The mains are also composed of steel (34.25%) and plastic (.75%) and 2% of the system of mains belongs to New York Facilities, a joint operation of Brooklyn Union, Consolidated Edison and Long Island Lighting Company. Special Term found that the system would not be reproduced today in its present form.

Distribution’s pipelines in New York are composed 9% plastic, 25% coated steel, 63% bare steel and 4% cast iron. Special Term found that Distribution’s system would not be exactly reproduced in its present form, but would be reasonably expected to be replaced.

Special franchise property is defined as real property by Real Property Tax Law (RPTL) § 102 (12). It is subject to annual assessment by the State Board of Equalization and Assessment (RPTL 600) and all taxes and special ad valorem levies for county, city, town, village, school or special district purposes are imposed on the final assessment of each special franchise (RPTL 622). Both the tangible real property and the intangible right to use the streets and thoroughfares (the intangible franchise) are components of a special franchise, and the values of each must be added to determine the value of the entire special franchise.

In April 1980, the State Board of Equalization and Assessment (SBEA) made tentative equalized valuations for the 1980-1981 tax year of the special franchise properties belonging to Brooklyn Union, Distribution and Supply. Each challenged the tentative assessment, contending that it was erroneous by reason of overvaluation, inequality and illegality. Distribution and Supply’s challenge was rejected and they instituted proceedings against SBEA pursuant to RPTL article 7 contesting these final valuations.

Brooklyn Union’s challenge to its valuation was also rejected by SBEA and instead of being reduced its final equalized valuation was increased because of a revised city-wide equalization rate. Brooklyn Union also instituted an article 7 proceeding against SBEA charging overvaluation, illegality and inequality.

At the trial of the Brooklyn Union proceeding, SBEA did not file an appraisal report or offer any testimony through its personnel as to the valuation method employed. Rather, it relied on the appraisal report and testimony of an expert employed by the City of New York (the city had been granted leave to intervene). The trial court rejected his testimony, finding that he lacked sufficient background and experience to qualify as an expert appraiser of special franchise property. The court also rejected his appraisal report because it failed to comply with the rules of the Appellate Division as to form and content. The court concluded that the record was barren of any evidence of the appraisal method employed by SBEA in arriving at its valuations. The court noted that the city’s expert used the RCNLD method, but that the value he arrived at was more than $100,000,000 higher than that arrived at by SBEA. The court concluded that he did not perform the assessments for SBEA.

The court accepted the expert opinions of the petitioner’s witnesses and their valuation of the special franchise property, which appraisals and valuations were arrived at through capitalization-of-income and original-cost-less-depreciation (rate base) appraisal methods. The court accepted the capitalization-of-income method of valuation as “a legitimate method for valuing a special franchise * * * especially when the only evidence in the record is that the system, if reproduced, would not be reproduced in its present form.” The court determined the final equalized values of Brooklyn Union’s special franchise property, located in Kings, Queens and Richmond Counties, for the tax year 1980-1981, to be $83,336,183, $45,511,625 and $25,990,355 respectively. These valuations were significantly lower than the final assessments of SBEA.

The Appellate Division affirmed, concluding that the “capitalization of income method used [by petitioner’s experts] herein provides the most accurate method of determining value”, and that rejection of the RCNLD method of appraisal was proper since “the system would never be reproduced in its present form but would be replaced with a new completely modern system”. The court found that, in the parlance of an expert real estate appraiser, “[Reproduction means replacement with an exact model” which “[i]n this case * * * is totally unrealistic”. Thus, the court held that Brooklyn Union’s franchise property “could not be considered a specialty since it is unreasonable to conclude that the facility could be replaced on an economic basis.” The court noted, moreover, that it would “reach the same result even if the facility were considered a specialty” (101 AD2d 414, 416-417).

National Fuel Gas Distribution Corporation (Distribution) and National Fuel Gas Supply Corporation (Supply) are subsidiaries of National Fuel Gas Company. Distribution is a multistate retailer of natural gas serving customers in New York, Pennsylvania and Ohio. Supply accumulates and sells natural gas at the wholesale level, serving essentially the same geographic area as Distribution. The area served by Distribution and Supply in New York State comprises 12 counties in western New York. They operate this portion of their systems through pipes, mains, conduits and other tangible personal property located in public streets and thoroughfares. This property too is a “special franchise.”

Distribution and Supply commenced 10 separate proceedings challenging the SBEA assessments alleging overvaluation, inequality and illegality. The proceedings were consolidated for trial and Niagara-Wheatfield Central School District was permitted to intervene. SBEA appraisal reports, received in evidence, showed that Distribution and Supply’s special franchises for 1980 were assessed by computing the reconstruction cost new of all their tangible special franchise property in New York and deducting appropriate figures for depreciation from all causes. SBEA added 5% of the value of the tangible property as the value of the intangible franchises. The total full value assessments for Distribution and Supply were then allocated to the individual taxing jurisdictions by applying a ratio of surviving original cost in each jurisdiction to total surviving original cost for each company. Appropriate equalization rates were applied. These computations produced final total equalized special franchise assessments of $65,071,328 for Distribution and $813,694 for Supply.

Petitioners’ experts arrived at full market values of the special franchise properties of Distribution and Supply by using capitalization-of-income under the “unit” method of accounting, with petitioners’ operating multistate systems as the “unit”. They allocated a proportionate value to those portions of the “unit” located within New York State. They also used the original-cost-less-depreciation method, apparently taking as original cost figures and depreciation rates those used in determining petitioners’ “rate bases” by the Public Service Commission and the Federal Energy Regulatory Commission.

Trial Term rejected the valuations of petitioners’ experts, finding that capitalization-of-income was an inappropriate method for determining the value of a special franchise such as that under consideration here because, inter alia “[t]he basic premise of the income method is that property is worth a certain capitalization of the income it produces. While this system is a complex system with each part necessarily relying upon other parts, the uniform allocation of earning power based upon original cost is risky, at best. Some parts of the system may very well throw off earnings at a greater percentage of cost than a corresponding and physically equal part.”

Trial Term concluded, as a matter of law, that “[t]he subject special franchise property is specialty property within the definition set forth in [.Matter of County of ] Suffolk (Van Bourgondieri) [47 NY2d 507]”, and that “[petitioners failed to demonstrate that the method by which [SBEA] arrived at the 1980 assessments was incorrect.” Accordingly, the petitions were dismissed.

The Appellate Division reversed, granted the petitions to the extent of annulling the final 1980 assessments and remitted the matter to SBEA for “reconsideration in light of the fact that the capitalization of income method is an acceptable method for assessing the value of the property at issue” (103 AD2d 187, 189). Citing Brooklyn Union, where it had held that property similar to that which is the subject of these appeals is not specialty property and that the capitalization-of-income method would therefore be permissible as a means of valuation, the court concluded that this record “demonstrates no reason to treat the property involved here differently * * * for the purpose of determining that it is not specialty property” (id.).

II

The courts of this State have uniformly held that the appropriate method of valuing the tangible component of special franchise property is by the reproduction-cost-new-less-depreciation method (People ex rel. Delaware, Lackawanna & W. R. R. Co. v Clapp, 152 NY 490; People ex rel. Jamaica Water Supply Co. v State Bd. of Tax Commrs., 196 NY 39; Matter of Onondaga County Water Dist. v Board of Assessors, 39 NY2d 601; Matter of Consolidated Edison Co. v State Bd. of Equalization & Assessment, 101 Misc 2d 910, mod on other grounds 83 AD2d 355, affd 58 NY2d 710). This is because such property is considered to be “specialty property” property designed for “unique” purposes or is “uniquely adapted” to the business conducted upon it or use made of it, for which there is no market, and which cannot be converted to other uses without the expenditure of substantial sums of money (Consolidated Edison, 101 Misc 2d, at pp 913-914, supra).

In Matter of County of Suffolk (C.J. Van Bourgondien, Inc.) (47 NY2d 507, 512), we reaffirmed that a property is a “specialty” when it meets the four criteria enunciated by the Appellate Division in Matter of County of Nassau (Colony Beach Club) (43 AD2d 45, affd 39 NY2d 958): “(a) [t]he improvement must be unique and must be specially built for the specific purpose for which it is designed; (b) [t]here must be a special use for which the improvement is designed and the improvement must be so specially used; (c) [t]here must be no market for the type of property * * * and no sales of property for such use; and (d) [t]he improvement must be an appropriate improvement at the time of the taking and its use must be economically feasible and reasonably expected to be replaced” (43 AD2d, at p 49 [emphasis in original]).

There can be no doubt that the special franchise properties of Brooklyn Union, Distribution and Supply fully satisfy the first three criteria for “specialty property” set forth above.

The evidence in both cases establishes conclusively that the underground mains, pipes, services and related measuring and regulatory equipment that comprise the tangible special franchise property placed in the public streets and thoroughfares for the transmission of natural gas are “unique” and “specially built for the specific purpose for which [they were] designed”. This equipment was designed for the “special use” of distribution of natural gas and is being “specially used” for that purpose. It is “uniquely adapted to the business conducted upon it or use made of it and cannot be converted to other uses without the expenditure of substantial sums of money” (Matter of Great Atl. & Pac. Tea Co. v Kiernan, 42 NY2d 236, 240). Clearly, there is no market for this specially designed property, nor is there any evidence that there have been any sales of similar such property for such use.

Nonetheless, the trial court in Brooklyn Union found that the system “would not be reproduced in its present form”. The Appellate Division agreed and held that because it is “unreasonable to conclude that the facility could be replaced on an economic basis”, the property “c[an] not be considered a specialty.” This view misperceives the meaning of the requirement that in order for a property to qualify as “specialty” property “the improvement must be an appropriate improvement — and its use must be economically feasible and reasonably expected to be replaced”. This requirement relates to the use or function of the property and means that use or function must reasonably expected to be replaced. As we pointed out in Matter of County of Suffolk (C. J. Van Bourgondien, Inc.) (supra), “[t]he last requirement is that at the time of the taking the improvement be appropriate both physically and economically * * * Economic appropriateness means simply that the use must be economically feasible and reasonably expected to be replaced” (id., at p 513 [emphasis added]). It is manifest that the use or function to which the tangible special franchise property of these utilities is put would be replaced or reproduced. Indeed, in Brooklyn Union, the Appellate Division found that “the system * * * would be replaced with a new completely modern system” (101 AD2d, at p 416). However, it is not necessary in order for a property to qualify as a “specialty” that the material of which it is originally composed be available or replicated. Significantly, while both courts in Brooklyn Union found that the system would not reasonably be expected to be replaced, the trial court in Distribution and Supply concluded just the opposite. Yet without discussion or explanation, the Appellate Division in the latter case apparently deemed its decision in Brooklyn Union to be controlling, and thus rejected the RCNLD valuation. Nonetheless, the Appellate Division observed in Matter of Tenneco, Inc.-Tennessee Gas Pipeline Div. v Town of Cazenovia, 104 AD2d 511), decided the same day as Distribution and Supply and likewise involving the assessment of natural gas transmission lines, that the trial court in that case properly found the pipeline property to be a specialty. The Tenneco court stated that: “The subject property meets the requirements for such treatment set forth by the Court of Appeals in Matter of County of Suffolk (C. J. Van Bourgondien, Inc.) (47 NY2d 507, 512). The pipeline is unique and specially built for the purpose of transporting natural gas and is used for that purpose. There is no market for the type of property and there are no sales of property for such use. It could not be converted without substantial expenditures and it is an appropriate improvement, which if destroyed, would be reasonably expected to be replaced or reproduced (cf. Matter of Brooklyn Union Gas Co. v State Bd., 101 AD2d 414).” (104 AD2d 511, 512, supra) The Tenneco court further observed that, “[petitioner’s reliance upon cases applying the net earnings rule to value special franchises for the proposition that income capitalization based on earnings is an appropriate method is misplaced. The leading case of People ex rel. Jamaica Water Supply Co. v State Bd. (196 NY 39) illustrates that the net earnings method, which capitalizes the net earnings of the taxpayer, is used to value the intangible franchise for special franchise tax purposes. There the value of the tangible real property was determined on a cost basis” (id., at pp 512-513).

So too, in these cases, the value of the tangible property properly should be determined on a cost basis. Although there is a difference between valuing property by means of the reproduction cost as opposed to using the replacement cost, this fact does not deny to special franchise property the status of “specialty” property, to be valued as such where replacement cost is used rather than reproduction cost, nor does it warrant utilizing the capitalization-of-income method of valuation with respect to petitioners’ tangible property.

We hold, therefore, that the special franchise properties of Brooklyn Union, Distribution and Supply are “specialty properties” and that the proper method of valuing their tangible property is by RCNLD, to which should be added, in order to determine the full value, the value of the intangible franchise (the right to use the public streets and thoroughfares for the placement of their tangible property), arrived at by capitalization-of-income, where there exists excess income, or by adding 5% of the value of the tangible real property where there is no excess income.

Accordingly, the order of the Appellate Division in Matter of National Fuel Gas Distrib. Corp. should be reversed and the judgments of the Supreme Court dismissing the petitions reinstated. The order of the Appellate Division in Brooklyn Union Gas Co. should be reversed, the petition dismissed and SBEA’s determination reinstated.

Chief Judge Wachtler and Judges Jasen, Meyer, Simons, Kaye and Titone concur.

In Matter of Brooklyn Union Gas Co. v State Bd.: Order reversed, with costs, petition dismissed, and the determination of the State Board of Equalization and Assessment reinstated.

In Matter of National Fuel Gas Distrib. Corp. v State Bd.: Order reversed, with costs, and the judgments of Supreme Court, Albany County, reinstated.

      . Real Property Tax Law § 102 (17) provides: “ ‘Special franchise’ means the franchise, right, authority or permission to construct, maintain or operate in, under, above, upon or through any public street, highway, water or other public place mains, pipes, tanks, conduits, wires or transformers, with their appurtenances, for conducting water, steam, light, power, electricity, gas or other substance. For purposes of assessment and taxation a special franchise shall include the value of the tangible property situated in, under, above, upon or through any public street, highway, water or other public place in connection therewith.”

        . The court noted in Tenneco, without elucidation as to the relevant distinction, that the “instant proceeding involves a real property tax assessment as opposed to a special franchise tax assessment.” That to attain the full value of a special franchise, the intangible component must be valued and added to the value of the tangible property does not preclude the tangible property component being considered a “specialty” to be valuated by RCNLD, especially since a special franchise, is by definition, considered to be “real property” (RPTL 102 [17]).