The ground for the denial of injunction, notwithstanding the finding both that there is a nuisance and that plaintiffs have been damaged substantially, is the large disparity in economic consequences of the nuisance and of the injunction. This theory cannot, however, be sustained without overruling a doctrine which has been consistently reaffirmed in several leading cases in this court and which has never been disavowed here, namely that were a nuisance has been found and where there has been any substantial damage shown by the party complaining an injunction will be granted.
On the other hand, to grant the injunction unless defendant pays plaintiffs such permanent damages as may be fixed by the court seems to do justice between the contending parties. ..." (Bergan, J. in Boomer v. Atlantic Cement Co., Court of Appeals of New York (1970) 26 N.Y. 2d 219, 309 N.Y.S.2d 312, 257 N.E.2d 870.)
For a case where the court granted an injunction even though the cost of preventing the injury was enormously greater than the amount of the injury, see Whalen v. Union Bag & Paper Co., 208 N.Y. 1, 101 N.E. 805.
Kurtz and Hovenkamp summarize the legal history in terms of the choice between a property rule and a liability rule in this context:
"By reasoning that the right to injure the land of neighbors operates as a servitude upon the neighbors' land, and that the power to take a servitude belongs only to the government, courts from the eighteenth century to the Civil War generally decided that an injunction rather than damages was the only appropriate remedy, regardless of the social utility of the defendant's conduct. In the 1860's, however, several American courts began to deviate from the rule, largely in order to accommodate growing American industry. Under the literal requirements of property rule virtually any industrial activity that caused measurable injury could be enjoined. See, e.g.,,American Smelting & Refining Co. v. Godfrey 158 F. 225 (98th Cir.), cert. denied, 207 U.S. 597 (1907),
which recognized an exception to the injunction rule only for trivial injuries.
A liability rule, on the other hand, permits the defendant's activity but reuqires the defendant to compensate the plaintiff. See, e.g., Richard's Appeal, 57 Pa. 105 (1868), in which the Pennsyvania Supreme Court refused an injunction against the defendant's operation of its air-polluting iron works furnaces, but suggested that an action for damages would lie. ... Today ... many courts hold that the ordinary remedy in cases involving a continuing nuisance is "permanent" damages, provided that the activity is socially valuable and cannot reasonably be performed in a less harmful way." (Kurtz and Hovenkamp, pp. 769-70).
Current doctrine holds:
Second Restatement: Section 826
An intentional invasion of another's interest in the use and enjoyment of land is unreasonable if
(a) the gravity of the harm outweights the utility of the actor's conduct, or
(b) the harm caused by the conduct is serious and the financial burden of compensating for this and similar harm to others would not make the continuation of the conduct not feasible.
"The present version of 826, unlike its counterpart in the First Restatement, recognizes that liability for damages caused by a nuisance may exist regardless of whether the utility of the offending activity exceeds the gravity of the harm it has created. This fundamental proposition now permeates the entire Second Restatement."
(Johnson, Salsich, ... Property Law: Cases Materials and Problems)