10 N.Y.3d 385 (2008)

The term “municipality,” when used in a statute without a specific definition, should be interpreted according to its common usage, generally excluding special purpose improvement districts like water districts unless the statute’s object or context indicates otherwise.

Summary

This case concerns whether a water district is exempt from paying its share of the costs of a one-call notification system under General Business Law § 761 (3), which exempts “municipalities” from such costs. The Jericho Water District sought a declaratory judgment that it qualified for the exemption. The Court of Appeals held that the water district was not a “municipality” for the purposes of the statute, applying the common usage of the term and relying on principles of statutory interpretation, including the rule that exemptions should be narrowly construed. The decision clarifies the scope of the term “municipality” in the context of cost allocation for one-call systems, impacting similar special districts.

Facts

The Jericho Water District (Plaintiff) is an improvement district created under Town Law § 190, operating within the Town of Oyster Bay. Its commissioners are independently elected. The Plaintiff operates underground water facilities and serves more than 4,000 customers. The One Call Users Council, Inc. (Defendant) is a one-call notification system. Plaintiff sought a declaratory judgment claiming it was exempt from sharing the costs of the one-call system, based on the “municipality” exemption in General Business Law § 761 (3).

Procedural History

The Supreme Court held that the Plaintiff was not a municipality and granted summary judgment in favor of the Defendant. The Appellate Division reversed, granting summary judgment to the Plaintiff. The Court of Appeals reversed the Appellate Division’s order, reinstating the Supreme Court’s judgment.

Issue(s)

Whether the term “municipality” in General Business Law § 761 (3) includes a water district, thereby exempting the district from contributing to the costs of a one-call notification system.

Holding

No, because the common usage of the term “municipality” does not typically include special purpose improvement districts like water districts, and the statute’s context does not indicate a broader definition was intended. Exceptions to general statutory provisions are also strictly construed.

Court’s Reasoning

The Court reasoned that the term “municipality” is ambiguous, as it can refer narrowly to counties, cities, towns, and villages, or more broadly to include specialized governmental units. Because the General Business Law § 761 (3) does not define “municipality,” the Court turned to common usage and other interpretative aids. The Court cited Kenwell v Lee, 261 NY 113, 116 (1933), stating a water district “is not a municipality within the meaning of article VII, section 7, of the Constitution,” and that it is essentially only a ‘special administrative area.’” The Court found that the narrower definition of “municipality” better aligns with common usage. General Construction Law § 66(2), while defining “municipal corporation” and not “municipality,” further supports the narrower construction; it includes only “a county, city, town, village and school district.” The Court also gave weight to the interpretation of the Department of Public Service (DPS), which drafted the legislation. Finally, the Court invoked the principle that exceptions to generally applicable statutory provisions should be strictly construed, reinforcing its conclusion that the water district was not entitled to the exemption. The Court emphasized that unless the statute’s specific object or context requires a different meaning, the common usage prevails.