Schulz v. State, 55 N.Y.2d 657 (1981)

A taxpayer lacks standing to challenge the constitutionality of a state bond issue when a statute expressly prevents taxpayer challenges related to bond issues or notes issued in anticipation thereof.

Summary

This case addresses the issue of taxpayer standing to challenge the constitutionality of a state bond issue. The Court of Appeals held that the taxpayers lacked standing due to a statutory exception that prevents taxpayer challenges regarding state bond issues or notes issued in anticipation thereof. The court reasoned that allowing the suit would render the statutory exception meaningless and disregard expressed legislative policy. This decision clarifies the limits of taxpayer standing established in earlier cases like Boryszewski v. Brydges, especially concerning state financial instruments.

Facts

Taxpayers brought a suit challenging the constitutionality of a state bond issue. The specific details of the bond issue itself are not extensively detailed in the opinion, but the crucial fact is that the challenge concerned the issuance of state bonds.

Procedural History

The trial court held that the petitioners lacked standing. The Appellate Division’s order was affirmed by the Court of Appeals based on the lack of standing.

Issue(s)

Whether taxpayers have standing to challenge the constitutionality of a state bond issue, given the statutory exception in Section 123-b of the State Finance Law that prevents taxpayer challenges to bond issues or notes issued in anticipation thereof.

Holding

No, because the statutory exception in Section 123-b of the State Finance Law demonstrates a clear legislative intent to prevent taxpayer challenges to state bond issues or notes issued in anticipation thereof. Allowing such a suit would nullify the statutory exception.

Court’s Reasoning

The Court relied on its prior decision in Wein v. Comptroller of State of N.Y., which addressed a similar issue involving bond anticipation notes. The Court reasoned that the statutory exception in State Finance Law § 123-b(1) indicated a legislative intent to prevent taxpayer challenges related to state bond issues and related notes. Even though Wein involved bond anticipation notes and the present case involved the bond issue itself, the Court found this distinction irrelevant because the statute explicitly included both. To allow standing in this case would contradict the legislative policy and effectively nullify the statutory exception. The court stated, “[T]he statutory ‘exception’ does indicate a reasonably clear legislative intent to prevent taxpayer challenges with respect to a State ‘bond issue or notes issued in anticipation thereof’ (State Finance Law, § 123-b, subd 1). Under this circumstance it would be inappropriate for the courts to confer standing in these cases since such a determination would, in effect, render the statutory ‘exception’ a nullity and ignore the expressed legislative policy to the contrary”. The Court also noted that the plaintiffs’ alternative argument regarding voter standing was not properly raised in the lower court and could not be considered on appeal. The decision effectively carves out an exception to the broad taxpayer standing articulated in Boryszewski v. Brydges.