New York University, Respondent, v. American Book Company, Appellant

New York University, Respondent, v. American Book Company, Appellant. First Department, June 4, 1909. Municipal corporations — water rates, city of Mew York — liability as between landlord and tenant — water rate not tax. Where a tenant in the city of Mew York, who has consumed'water furnished, under the meter system refuses to pay therefor, and the landlord pays the, sum due in order to free the premises from a lien for unpaid water rates, he may recover the sum paid, together with interest and additional charges for a‘ failure to make prompt payment, from the tenant, if there is no provision in - the lease requiring the landlord to pay water rates. Such charges for the use of water rest on contract and are not taxes;, hence, .as'between landlord and tenant, in the absence of any agreement to the contrary,., the latter must pay for water used hy him where the landlord received no " benefit therefrom. The obligation to 'pay for water "furnished on the meter system in the city of Mew York is based upon an expressed contract between the city and the person .using the water, and if the tenant fails to pay for water used by him, the landlord, on paying the amount due, is subrogated to the rights of the city. Appeal by "the 'defendant, the American Boole Company* from an interlocutory judgment of the Supreme Court it! favor of the plaintiff, entered in the office of the clerk of the county of Hew York on .the 16th day of January, 1909, upon the decision of the court, rendered after a trial at the Hew York Special Term, overruling the defendant’s demurrer to the complaint. The opinion of the Special Term is reported in New York University v. American Book Co. (62 Misc. Rep. 122). Franklin Pierce [Frank A. Clary with him on the brief], for the appellant. George A. Strong, for the respondent. [MAJORITY — Laughlin, J. :] Laughlin, J. : The demurrer is upon the ground that the complaint fails to state facts sufficient to constitute a cause, of action against the defendant. On the 9th day of March, 1894, the plaintiff made a contract with the American Book Company, a Hew Jersey corporation, by which the plaintiff obligated itself to erect a ten-story building with basement and sub-basement on premises owned by it fronting on University place in the city of Hew York, and by which said Ainerican Book Company agreed to lease the entire building below the eighth ■floor for a period of twenty-five years, for the purpose of conducting its business of printing, binding, manufacturing and publishing books, at an annual rental of $40,000. The plaintiff erected the building and thereafter and on the 17th day of January, 1896, made a lease with said American Book Company in accordance with the contract'therefor. The plaintiff alleges that thereafter the defendant, was incorporated under the laws of the State of. Hew York, bearing the same name as the Hew Jersey company, and took an assignment and transfer of all the assets of the Hew Jersey corporation and assumed and agreed, in part consideration- therefor, “to pay and discharge all and every the debts and liabilities of the said Hew Jersey corporation ; ” that-the Hew Jersey coiporation took possession of the leased premises and conducted thereon the business of manufacturing books and other printed publications, and in the course of said business, during the years 1896, 1897, 1898, 1899 and 1900, consumed water supplied by the city of Hew York through meters registering the quantity thereof, for which, by virtue of the provisions of the charter of the city of Hew York, bills were required to be rendered to the consumer of the water, based upon the amount of water passing through the meters; that the Hew Jersey corporation failed to pay any of the amount charged for the water thus consumed by it; that by virtue of the provisions of the charter of the city of Hew York the charges and penalties imposed for the nonpayment thereof became a lien upon the premises; that the plaintiff made repeated demands on the Hew Jersey corporation to pay the charges made by the city for the use. of water by it and has made similar demands bn the defendant since it assumed the obliga.tionsof the Hew Jersey corporation; that through the failure of the Hew Jersey corporation and of the defendant to pay said water V charges, the plaintiff has been compelled to pay the same, together with the penalties attached thereto^ in order to- discharge the- lien thereof upon its premises and to prevent a sale of its premises for the non-payment thereof; that on the 1st day of September, 1903, plaintiff paid the sum of $785, the. charges for the use of water for the year 1896, together with interest thereon and the expense of advertising the property for sale, aggregating with the charges for the consumption of water the sum of $1,111.56and on the 10th day of June, 1905, paid, the sum of $1,546.40, the charges for the use of' water for the year 1897, together with interest and advertising, aggregating with the' charges for consumption of water the sum of $2,272,19; arid on the l'2th day of- June, 1905, paid the sum of $1,923.30, the water charges for the year 1898, and the sum of $744.50, the water .charges for the. year 1899>, and the sum of $2,226.30, the.water charges for the year 1900, together with interest thereon,- aggregating with the charges for consumption of water the sum of $6,479.78, mating in all the sum of $9,863.53, for which judgment is demanded, together with interest on the respective, amounts from the respective dates of payment thereof and -the costs of the action. The contract and lease contained no provision with respect1 to the use. of water or the payment of water rates or charges. The action is brought upon the theory that the defendant is liable to the plaintiff for money had and received on the ground that the water rates were fixed by the city and tile water was consumed by the defendant and its predecessor in business, whose Obligations it has. assumed-, and that as between the plaintiff and the defendant' it was the duty of the latter to pay the same. The learned .counsel for -the defendant contends, in favor of the demurrer, that'no- duty rested upon the defendant or on the Hew Jersey corporation to pay the city’s charges for the water consumed. He does hot contend,, arid he cites, no authority' sustaining, the' proposition, that as between the parties the landlord was- under any obligation to furnish water for the use of the tenant. He relies upon the case of Moffat v, Henderson (50 N. Y. Super. Ct. 211) and cases cited and following the-rule there laid down, and text books based upon those decisions, as authority for this proposition. It tnust be conceded that- those authorities tend to sustain his contention.. They-are, however, all based upon the theory, since declared by the Court of Appeals to be erroneous, that water rates are taxes and that, therefore, the tenant, in the abserice of an express agreement, which it is claimed is usual and customary, is no more liable, for taxes for the use of water than for other taxes and assessments levied against the premises. There is manifestly a broad distinction between taxes and assessments levied against premises for the maintenance of the State or the city government or for local improvements, for which the tenant receives no benefit except as he uses the premises and for which use he gives return in rent,' and charges for the consumption of water by the tenant; for which the landlord receives no benefit, but for which he is liable to the municipality on account of having his premises fitted up for the use of the water and having the same connected with the- lateral pipes and thus with the mains through which the city furnishes water to its inhabitants arid the charges for which it has been provided by the Legislature, in order to insure the payment thereof to the city, shall, if not paid, ultimately become alien upon the property, and enforcible against it. In Silkman v. Water Commissioners (152 N. Y. 327) the Court of Appeals decided that water rates or-rents are not taxes and that the owner of premises becomes liable for the same by virtue of an implied contract created by his having his building connected with the water supply, so that the water furnished by the municipality or other corporation authorized to supply water to the inhabitants may be used therein, and that it is part of the implied contract, made so by virtue of the provisions of ' the statute, that if the water rates or rents are not paid within a prescribed time, they may be enforced by a sale of the premises. (See, also, City of East Grand Forks v. Luck, [97 Minn. 373 ; 6 L. R. A. [N. S.] 198; Wagner v. City of Rock Island, 146 Ill. 139 ; Provident Institution v. Jersey City, 113 U. S. 506; Powell v. City of Duluth, 91 Minn. 53, and Hennessey v. Volkening, 30 Abb. N. C. 100.) We are not now concerned with the constitutionality of legislation purporting to authorize a charge for water rates against vacant land, or against improved land where no water is used, nor are we required to examine whether the rule which has been laid down by the learned trial justice and which we are about to approve, is necessarily the same with respect to water rates or rents based on the facilities and opportunity afforded., for using water without a meter, and, therefore, without regard to the quantity of water actually consumed. It is alleged that the city placed and maintained water meters in plaintiff’s building. In such case it has long been the law in the city of Mew York that no charges could be made against the; premises excepting, for water actually consumed, as shown by-.a, meter. (Consol. Act [Laws of 1882, chap. 410], §§ 350, 352,, as amd. by Laws of 1887, chap; 559; Greater N. Y. Charter [Laws of 1897, chap. 378], §§ 473, 475, as amd. by Laws of 1901, chap. 466.) This- court has held -that in. such case the registrations of the meter offered the only basis of charges for water consumed on the. premises and that, it- is- binding alike on the consumer and on ¡the city. (Healy v. City of New York, 90 App. Div. 170.) These- charter provisions also required that the hills, for the water consumed should be made out to the consumer, and although: it was therein declared that they should he liens upon the property,, no-pro vision was made to . enforce the lien until many months- thereafter, when by virtue of the- provisions of section 353 of the Consolidation Act- and section 476 -of the Greater Mew York' charter additional charges- were made- thereon- of five, per cent for hon-payment before the- first day of August in. each year and ten- per cent .in ■addition if not paid before, the, first, day of Movember tlierer after,, and by virtue of the- provisions, of sections 921, 922, and 923 of the, Consolidation Act (as, amd. by Laws of 1887, chap. 559) and sections 1022,1023,1024 and 1031 of the Greater New York charter provision was. made for adding them to- the yearly assessment rolls and’ for including them- in the tax sales of the premises. Moreover, it is alleged in the complaint that the water charges, rates or rents which the plaintiff seeks to recover are for water actually used by the defendant and its- .predecessor - according to the rates lawfully prescribed therefor. It having been authoritatively decided that, such charges for the use of water rest on contract and are not taxes, it would seem- to follow- on principle that as between the, landlord- and tenant,, in-the absence of any agreement to the contrary, the duty would devolve on- the- latter to pay for the: water which he uses for his, own purposes and which- in no' manner results to the. benefit or advantage of. the landlord.; If, as seems manifest and is- not. controverted-,, the landlord would- have had the right to have the water turned off before the tenant took possession and was under no obligation to furnish the water to the tenant, then it could not be successfully maintained that the tenant could turn on the water or have it turned on without the consent of the landlord and thus subject the landlord to a liability which lie would ultimately be obliged to pay in order to prevent a sale of his property without being liable over to the landlord therefor. I see no difference in principle between that case and this. The tenant had no more right to turn the faucets and use the water at the expense of the landlord than it would have had to turn on the connection between the water pipes in the house and the lateral pipe running to the street and thereby enable itself to use the water at the expense of its landlord. It is quite like using cqal or other fuel left on the premises. The tenant was under no obligation to use the water. When it used water which belonged to the city the primary duty rested upon it to pay therefor. There is no law that required water to be used on the premises, although certain uses of the premises without the use of water would doubtless be unlawful. The water was' used solely for the benefit of the tenant, and it being no part of the landlord’s duty to furnish it, and the tenant being under no legal obligation to use it, it is, I think, quite clear on principle that the tenant is liable to the landlord as for money had and received for the water rents or rates from the time they became due and payable, together with interest thereon and the additional charges or failure to pay promptly. That being so, the complaint is good as against the demurrer. It follows, therefore, that the interlocutory judgment should be ■affirmed, with costs, witli leave to the defendant to withdraw .the demurrer and plead over on payment of costs of the appeal and of the demurrer. McLaughlin, Houghton and Scott, JJ., concurred. Since amd. by Laws of 1902, chap. 509; Laws of 1904, chap. 600; and Laws of 1908, chap. 382:— [Rep. See, also, Laws of 1908, chap. 490.— [Rep. [CONCURRENCE — Ingraham, J. (concurring):] Ingraham, J. (concurring): I concur with Mr. Justice Laughlin, upon the ground that there is a plain distinction between a tax imposed on real property for the privilege to use water supplied by a municipality and a liability based upon the amount of water actually used by an oceupant of real - property. In Silkman v. Water Commissioners (152 N. Y. 327) this distinction is recognized and applied. The question there before the court arose in "a case where the defendant had' established a scale of-rents' to be charged to person's -using the water, which was governed by the quantity of water-consumed. It was-held under such- circumstances that'the. charge'for the water consumed was not a tax ; that there was a distinction -between rent paid for water actually furnished by. a 'municipal-corporation and used by an individual* and the payment of a'snm in, the-nature 'Of "a-tax for an anticipated benefit arising from the. presence of 'water in the city; that where water is furnished by - a municipal corporation and a charge made based1 upon the amount actually ‘used, it was not a -tax but a liability to pay--for.the-water u?ed upon an express contract that- the person using the water would pay for it át the rates established. Applying this principle- to this case, the obligation to- pay for - -the water used was based upon an express contract between filie city of Hew York and the person using the water (the defendant) by which the defendant became obligated to pay to the city the amount charged, for the water actually used-.; and the plaintiff having been compelled-to pay that charge to. discharge the lien imposed upon its property by the failure of the defendant to pay the amount due-under- its contract with the city,'became; subrogated to- the ■right of the city to collect the amount -due, and. a ' cause of action was, therefore, alleged. ’ McLaughlin, Laughlin, Houghton and Scott, JJ., concurred. : Judgment affirmed," with costs, with- leave to defendant to withdraw demurrer and to answer on payment of costs.-.;