                            State of New York
                     Supreme Court, Appellate Division
                        Third Judicial Department
Decided and Entered: March 31, 2016                      521430
________________________________

NIAGARA MOHAWK POWER
   CORPORATION, Doing Business
   as NATIONAL GRID,
                    Appellant,
      v

ALLIED HEALTHCARE PRODUCTS,                   MEMORANDUM AND ORDER
   INC.,
                    Respondent,
      and

ALBANY ENGINEERING
   CORPORATION,
                    Appellant.
________________________________


Calendar Date:   February 11, 2016

Before:   Garry, J.P., Egan Jr., Lynch, Devine and Clark, JJ.

                               __________


      Bond, Schoeneck & King, PLLC, Albany (Stuart F. Klein of
counsel), for Niagara Mohawk Power Corporation, appellant.

      Hug Law, PLLC, Troy (Matthew C. Hug of counsel), for Albany
Engineering Corporation, appellant.

      Whiteman Osterman & Hanna LLP, Albany (Robert T. Schofield
of counsel), for respondent.

                               __________


Devine, J.

      Appeal from an order of the Supreme Court (Platkin, J.),
entered October 2, 2014 in Albany County, which, among other
things, granted a motion by defendant Allied Healthcare Products,
                              -2-                521430

Inc. for summary judgment dismissing, among other things, the
second amended complaint against it.

      The case before us deals with the continued viability of an
affirmative covenant, dating to the dawn of the 20th century, to
provide free power to manufacturing facilities on property now
owned by defendant Allied Healthcare Products, Inc. (hereinafter
AHP). The power covenant first arose in 1899, when Anna Frisbee
and Charles Frisbee, who owned textile mills on property adjacent
to the Stuyvesant Falls on the Kinderhook Creek, deeded the bulk
of their water rights to the Colonial Trust Company. Colonial
Trust acquired the rights in anticipation of the construction of
a hydroelectric power generation facility that would provide
electricity for a railroad operated by the Albany and Hudson
Railroad Company. Inasmuch as an electric grid did not yet exist
in the area, and the conveyance meant that the Frisbees' mills
could no longer be powered by water from the creek, Colonial
Trust agreed to "furnish[] free of cost all the [water or
electric] power necessary for properly running the mills." The
Frisbees further covenanted to deed up to four acres of land to
Colonial Trust so that it could construct and maintain facilities
needed for the project. The interests conveyed in the 1899 deed
were apparently transferred from Colonial Trust to a power
company associated with the railroad company, and a hydroelectric
facility with supplemental oil-powered turbines was completed in
1900.

      Litigation followed and, in 1903, a settlement agreement
was recorded with the Columbia County Clerk that amended the 1899
deed in various respects. The agreement altered the power
covenant to provide that, subject to notice and usage
limitations, the Frisbees "or the survivor of them, their heirs
or assigns shall, at all times hereafter, be furnished free of
costs at the end of a wire or electrical conductor . . . electric
current for running motors . . . in [the] mills, or for other
mechanical or manufacturing purposes on [their] premises." The
agreement also required the Frisbees to fulfill their commitments
in the 1899 deed by conveying an easement to the railroad company
for the purpose of accessing penstocks running across the
Frisbees' property on the eastern bank of the creek, as well as
four acres of land to be detailed by the railroad. The Frisbees
                              -3-                521430

conveyed the penstock easement and the four-acre parcel to the
railroad company later in 1903.

      AHP now owns the Frisbees' property and manufactures
medical products in the mills. The hydroelectric facility and
associated property interests were owned by plaintiff for many
years but, as a result of plaintiff divesting its interests in
hydroelectric generation plants in the 1990s, those property
interests are no longer under common ownership. Plaintiff
continues to own the four-acre parcel, where it maintains
electricity transmission and distribution lines. Defendant
Albany Engineering Corporation acquired the remaining interests
connected to the hydroelectric power facility in 2008 and, after
a long period of inactivity, brought that facility back into
operation in 2012. Plaintiff purchases whatever electricity is
generated by Albany Engineering at the hydroelectric facility.
Plaintiff has also historically provided – and, pursuant to a
preliminary injunction issued in this action, continues to
provide – AHP a free allotment of electricity pursuant to the
power covenant.

      Plaintiff commenced this action in 2009 and sought, among
other things, a declaration that the power covenant was
unenforceable and that it had no obligation to supply free power
to AHP.   Albany Engineering answered and cross-claimed against
AHP, arguing that the power covenant was unenforceable or, in the
alternative, that only plaintiff was bound by it. AHP answered
and asserted counterclaims and cross claims seeking, among other
things, a declaration that the power covenant remains
enforceable. Plaintiff and Albany Engineering thereafter moved
for summary judgment on their claims to have the power covenant
declared unenforceable. AHP, in turn, moved for summary judgment
dismissing the complaint and cross claims against it. Supreme
Court rejected the motions of plaintiff and Albany Engineering,
concluded that the power covenant remained enforceable, and
granted AHP's motion for summary judgment. Plaintiff and Albany
Engineering appeal.

      "Regardless of the express recital in a deed that a
covenant will run with the land, a promise to do an affirmative
act contained in a deed is generally not binding upon subsequent
                              -4-                521430

grantees of the promisor unless certain well-defined and
long-established legal requisities [sic] are satisfied" (Eagle
Enters. v Gross, 39 NY2d 505, 507 [1976] [citations omitted]; see
Nicholson v 300 Broadway Realty Corp., 7 NY2d 240, 244 [1959]).
For such a covenant to run with the land, it is necessary to show
"that (1) the original covenantor and covenantee intended such a
result; (2) there has been a continuous succession of conveyances
between the original covenantor and the party now sought to be
burdened; and (3) the covenant touches or concerns the land to a
substantial degree" (Nicholson v 300 Broadway Realty Corp., 7
NY2d at 245; see Orange & Rockland Util. v Philwold Estates, 52
NY2d 253, 262 [1981]; O'Neill v Pinkowski, 92 AD3d 1063, 1064
[2012]).

      "In ascertaining intent at the time that the covenant was
created, we turn first to the language of the deed" and, contrary
to the contentions of plaintiff and Albany Engineering, that
language leaves no doubt as to the parties' intent (Harrison v
Westview Partners, LLC, 79 AD3d 1198, 1201 [2010] [citations
omitted]). As modified by the 1903 settlement agreement, the
language in the 1899 deed was not a vague reference to bind the
"heirs and assigns" of the purchasers, but specifically stated
that the power covenant "was intended by the parties . . to be
and has, at all times, been a covenant running with the lands,
water rights, and privileges hereby granted, and binding upon the
persons or corporations who should from time to time, be the
owners thereof" (see 328 Owners Corp. v 330 W. 86 Oaks Corp., 8
NY3d 372, 383 [2007]; Pepe v Antlers of Raquette Lake, Inc., 87
AD3d 785, 787 [2011]; cf. Kingston Model R.R. Club, Inc. v Eleven
Main Group, LLC, 123 AD3d 1193, 1194 [2014]). The omission of
the word "successors" from this clear statement of intent is, at
worst, a technical failing that in no way muddies its meaning
(see Orange & Rockland Util. v Philwold Estates, 52 NY2d at 262;
Harrison v Westview Partners, LLC, 79 AD3d at 1201; Tarantelli v
Tripp Lake Estates, 23 AD2d 905, 907 [1965]). As for the
question of privity, the power covenant is not recited in the
1903 deed conveying the four-acre parcel that now belongs to
plaintiff and the penstock easement now held by Albany
Engineering, but such is not dispositive. The Frisbees first
promised to convey those interests in the 1899 deed and, as
amended by the 1903 settlement agreement, that deed states that
                              -5-                521430

the specific conveyances to follow were "in consideration as
aforesaid, stipulated and agreed by and between the parties."
Accordingly, the power covenant was intended to run with the
lands and property interests now held by plaintiff and Albany
Engineering (see Witter v Taggart, 78 NY2d 234, 238 [1991]; Pepe
v Antlers of Raquette Lake, Inc., 87 AD3d at 787).

      The question of whether the power covenant touches and
concerns the land "is one of degree, dependent on the particular
circumstances of a case" (Eagle Enters. v Gross, 39 NY2d at 510),
and depends upon whether the power covenant can be said to
substantially alter "the legal rights which otherwise would flow
from ownership of land and which are connected with the land"
(Neponsit Prop. Owners' Assn. v Emigrant Indus. Sav. Bank, 278 NY
248, 258 [1938]; accord Nicholson v 300 Broadway Realty Corp., 7
NY2d at 245). The power covenant was part of the consideration
afforded the Frisbees for giving up their right to power their
mills with water from Kinderhook Creek and granting other
property interests to the owner or owners of the hydroelectric
facility, and required that those owners would divert electricity
generated at the facility for the benefit of the mills.1 The
Frisbees therefore obtained "a right, not possessed by other
landowners, of having" electricity generated at the hydroelectric
facility supplied to power the manufacturing occurring at the
mills (see Nicholson v 300 Broadway Realty Corp., 7 NY2d at 246).
The power covenant accordingly touches and concerns the land (see
328 Owners Corp. v 330 W. 86 Oaks Corp., 8 NY3d at 384; Nicholson
v 300 Broadway Realty Corp., 7 NY2d at 246; Miller v Clary, 210


    1
        The power covenant did not specifically require that the
supplied electricity come from the hydroelectric facility. "The
[covenant] must be considered in the light of the circumstances
existing at the time of its execution," however, and the
president of Albany Engineering, a licensed professional
engineer, testified that electric transmission lines were not in
general use from 1899 to 1903 (S & S Media v Vango Media, 84 AD2d
356, 358 [1982]). He further averred that his review of the
available technical documents revealed that all of the
electricity initially provided under the terms of the power
covenant came from the hydroelectric facility.
                              -6-                521430

NY 127, 131 [1913]).

      While the general requisites of an affirmative covenant
running with the land have been met, that does not end the
matter. "The affirmative covenant is disfavored in the law
because of the fear that this type of obligation imposes an
'undue restriction on alienation or an onerous burden in
perpetuity'" (Eagle Enters. v Gross, 39 NY2d at 510, quoting
Nicholson v 300 Broadway Realty Corp., 7 NY2d at 246). The power
covenant has no express limitation on its duration, and "it may
'fall[] prey to the criticism that it creates a burden in
perpetuity, and purports to bind all future owners, regardless of
the use to which the land is put'" (Harrison v Westview Partners,
LLC, 79 AD3d at 1201-1202, quoting Eagle Enters. v Gross, 39 NY2d
at 510; see Nicholson v 300 Broadway Realty Corp., 7 NY2d at
246). AHP rightly points out that the power covenant may be
implicitly "conditioned upon the continued existence of" a
hydroelectric facility capable of supplying the required power to
ongoing manufacturing at the mills (Eagle Enters. v Gross, 39
NY2d at 510; see Nicholson v 300 Broadway Realty Corp., 7 NY2d at
246). Suffice it to say, those conditions have only been
intermittently met as historical matter and are not met now. The
hydroelectric power facility was not in operation from 1994 to
2012 and, while AHP attempts to minimize the fact, there was not
constant manufacturing activity at the mills over the course of
the last century. The record further shows that the
hydroelectric facility, for both technical and legal reasons,
cannot supply consistent or usable electricity directly to the
mills.   To find that the power covenant remains enforceable
under these circumstances would render it an "onerous burden in
perpetuity" disfavored by the law, as it would reach beyond any
implied durational requirements and overlook the very real
changes in the hydroelectric facility and the manner for
distributing electricity that defeat the original purpose of the
power covenant (Nicholson v 300 Broadway Realty Corp., 7 NY2d at
246; see Miller v Clary, 210 NY at 135-136). This result cannot
be countenanced and, as such, the power covenant is
unenforceable.

      AHP's alternative argument, that plaintiff and Albany
Engineering are equitably estopped from challenging the power
                              -7-                521430

covenant given their acquiescence in its continued viability, is
unpersuasive. Equitable estoppel as a doctrine exists "to
prevent the infliction of unconscionable injury and loss upon one
who has relied on the promise of another" (American Bartenders
School v 105 Madison Co., 59 NY2d 716, 718 [1983]; see
Fundamental Portfolio Advisors, Inc. v Tocqueville Asset Mgt.,
L.P., 7 NY3d 96, 106 [2006]). The continued manufacturing
presence of AHP at the mills is not due to it being lulled into a
false sense of security by the continued provision of free
electricity; indeed, after a lengthy hiatus in the 2000s, AHP
elected to refit the mills and resume manufacturing despite being
aware that questions existed as to whether the power covenant
remained in force (see Provident Loan Socy. of N.Y. v 190 E. 72nd
St. Corp., 78 AD3d 501, 502-503 [2010]). As for the question of
injury, one of AHP's vice-presidents testified that requiring
payment for the electricity used by it would not materially
affect the company in general and would be unlikely to affect the
manufacturing operations at the mills. Given that the terms of
the 1899 deed as amended by the 1903 settlement agreement "fixed
the rights of the parties, and mere failure to assert same by
either side would not create an estoppel," one will not lie here
(La Mont Corp. v La Mont., 255 App Div 394, 395 [1938]; cf. Gould
v Partridge, 52 App Div 40, 45-46 [1900]). Thus, the summary
judgment motions of plaintiff and Albany Engineering should have
been granted.

      The remaining arguments advanced by the parties, to the
extent that they are not rendered academic in light of the
foregoing, have been examined and rejected.


     Garry, J.P., Egan Jr., Lynch and Clark, JJ., concur.
                              -8-                  521430

      ORDERED that the order is reversed, on the law, without
costs, motion of defendant Allied Healthcare Products, Inc.
denied, motions of plaintiff and defendant Albany Engineering
Corporation granted, summary judgment awarded to plaintiff and
defendant Albany Engineering Corporation, and it is declared that
the power covenant at issue is unenforceable.




                             ENTER:




                             Robert D. Mayberger
                             Clerk of the Court
