Herkimer County Industrial Development Agency v. Village of Herkimer

State of New York                                             MEMORANDUM
Court of Appeals                                         This memorandum is uncorrected and subject to
                                                       revision before publication in the New York Reports.

 No. 14
 Herkimer County Industrial
 Development Agency,
 Village of Herkimer,
 et al.,

 Charles W. Malcomb, for appellant.
 Michael J. Longstreet, for respondent.


        The order of the Appellate Division, insofar as appealed from, should be reversed,

 with costs, judgment granted in plaintiff’s favor in accordance with this memorandum, and

 the certified question answered in the negative.
                                            -2-                                       No. 14

       In this declaratory judgment action, brought by Herkimer County Industrial

Development Agency (plaintiff), the Village of Herkimer, through a counterclaim, seeks a

judgment declaring that plaintiff is personally liable to the Village for certain unpaid water

rents. The bills were incurred by a manufacturer that was plaintiff’s tenant pursuant to

bond financing sale-and-leaseback transactions.          Plaintiff seeks dismissal of the

counterclaim and a declaration that it is not personally liable for the water rents. Judgment

should be granted in plaintiff’s favor.

       The Water Department Rules and Regulations of the Village of Herkimer, on which

the Village relies, do not authorize a claim against plaintiff for personal liability upon

nonpayment of water rents. To the extent the Rules and Regulations determine the

Village’s remedies for unpaid water bills, they refer to “a lien on the premises where the

water is used” (Rule No. 8; see also Village Law § 11-1118 [providing that unpaid water

rents constitute a lien on real property]) and to shutting off water supply, upon notice (see

Rule No. 9; see also Village Law § 11-1116 [providing that a village may enforce

observance of its water use rules and regulations by cutting off water supply]). The Village

points in particular to Rule No. 22, but that provision, which is contained in a section

regulating how water meters are used to register consumption, does not impose an

additional remedy for nonpayment.

       The Village’s reliance on Dunbar v City of New York (177 App Div 647 [1st Dept

1917], affd 223 NY 597 [1918], affd 

251 U.S. 516

[1920]) is misplaced. Dunbar held that

a landowner’s consent to the supply of water to a tenant “must be deemed to be made with

a view to the existing law” (id. at 649). Here, the law applicable to the subject property

                                             -3-                                           No. 14

provided for a lien upon the real property, and not personal liability by the owner. Dunbar,

therefore, does not support the Village’s assertion that plaintiff is personally liable.

       For these reasons, we conclude that plaintiff is not liable for the unpaid water rents.

We need not reach, and take no position on, plaintiff’s alternative argument that it

possessed only a nominal, non-beneficial ownership interest in the property that was so

limited as to defeat any claim of personal liability for the water rents.

Order insofar as appealed from reversed, with costs, judgment granted in plaintiff's favor
in accordance with the memorandum herein and certified question answered in the
negative. Chief Judge DiFiore and Judges Rivera, Stein, Fahey, Garcia and Wilson concur.

Decided March 25, 2021


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