text:
    In the Matter of Business Statistics Organization, Inc., Respondent, against Lazarus Joseph, as Comptroller of the City of New York, et al., Appellants.
    Argued May 17, 1949;
    decided July 19, 1949.

      John P. McGrath, Corporation Counsel (Isaac C. Dormer, Solomon Portnow and Janet H. Lewin of counsel), for appellants.
    I. Petitioner’s transactions are sales of tangible personal property and, therefore, taxable under the terms of the city sales tax laws. Petitioner’s publications are not newspapers or periodicals within the exemption provision of those laws. (Matter of Moody’s Investors Service v. McGoldrick, 254 App. Div. 726, 280 N. Y. 581; Smith v. Wilcox, 24 N. Y. 353; People ex rel. Passafume, 22 N. Y. S. 2d 785; People ex rel. Foremost Studio v. Graves, 246 App. Div. 130; People ex rel. Walker Engraving Corp. v. Graves, 268 N. Y. 648; Pagano, Inc., v. City of New York, 295 N. Y. 784; Andersen v. City of New York, 295 N. Y. 782; Hannegan v. Esquire, Inc., 327 U. S. 146; Finnegan v. Buck, 230 N. Y. 512; Williams v. Colwell, 14 App. Div. 26; People ex rel. Utica Sunday Tribune Co. v. Williams, 140 App. Div. 58; Matter of Mounting & Finishing Co. v. McGoldrick, 294 N. Y. 104.) II. The city sales tax as applied to publications other than newspapers and periodicals is constitutional, because it does not discriminate against or hinder the issuance or circulation of such publications and does not impose any undue restraint or burden upon such publications. (Mabee v. White Plains Pub. Co., 327 U. S. 178; Oklahoma Press Pub. Co. v. Walling, 327 U. S. 186; Associated Press v. United States, 326 U. S. 1; Arizona Pub. Co. v. O’Neil, 304 U. S. 543; Giragi v. Moore, 49 Ariz. 74; Associated Press v. National Labor Relations Bd., 301 U. S. 103; Grosjean v. American Press Co., 297 U. S. 233.) III. The assessment for the periods from December 10, 1934, to June 30, 1939, was not barred by the Statute of Limitations. (Matter of Dee v. State Tax Comm., 257 App. Div. 531, 282 N. Y. 617; Isenberg v. Rainier, 70 Misc. 498, 145 App. Div. 256; Lucas v. Pilliod Lumber Co., 281 U. S. 245; Matter of Hewitt v. Bates, 297 N. Y. 239; Commissioner v. Lane-Wells Co., 321 U. S. 219.)

      Earl Q. Kullman, William A. Sheehan and II. Maurice Fridlund for respondent.
    I. Subscriptions to petitioner’s weekly and monthly periodicals are not sales of tangible personal property. Such periodicals are expressly excluded from the operation of the New York City sales tax. (Dun & Bradstreet v. City of New York, 276 N. Y. 198; Booth v. City of New York, 268 App. Div. 502, 296 N. Y. 573; Stampers Arrival of Buyers v. City of New York, 269 App. Div. 741, 296 N. Y. 574; Matter of Good Humor Corp. v. McGoldrick, 289 N. Y. 452; Howitt v. Street & Smith Publications, 276 N. Y. 345.) II. Respondent’s publications have been expressly excluded from the operation of the New York City sales tax law by the provisions of schedule A.
      (Houghton v. Payne, 194 U. S. 88; People ex rel. Mosbacher v. Graves, 254 App. Div. 438, 279 N. Y. 793; Matter of Weiden, 263 N. Y. 107; Matter of Lande, 241 App. Div. 138.) III. Respondent’s publications are vehicles for the dissemination of news and should be classified as “ newspapers ”. (Grosjean v. American Press Co., 297 U. S. 233; Hannegan v. Esquire, Inc., 327 U. S. 146; Smith v. Hitchcock, 226 U. S. 53; Winters v. New York, 333 U. S. 507.) IY. Respondent is entitled to restrict the use of its published material. (People v. Gitlow, 234 N. Y. 132; Merchants’ Nat. Bank v. Hall, 83 N. Y. 338; Lepler v. Palmer, 150 Misc. 546; Dodge Co. v. Construction Information Co., 183 Mass. 62.) Y¡ The Appellate Division properly held that appellants’ determination had the effect of an unlawful attempt at censorship contrary to the Federal and State constitutional guaranties of freedom of speech and freedom of the press. (Grosjean v. American Press Co., 297 U. S. 233; Hannegan v. Esquire, Inc., 327 U. S. 146; People v. Winters, 294 N. Y. 545, affd. sub nom. Winters v. New York, 333 U. S. 507; Takahashi v. Fish & Game Comm., 334 U. S. 410; Railway Express Agency v. New York, 336 U. S. 106; Moore v. Dempsey, 261 U. S. 86; Matter of Gruner v. McNamara, 298 N. Y. 395; Matter of 54 Cafe & Restaurant v. O’Connell, 274 App. Div. 428, 298 N. Y. 883.) YI. The deficiencies for the tax periods from December 10,1934, to June 30,1939, were barred by limitation on July 1, 1943, and should be annulled. (Mack v. Mendels, 249 N. Y. 356; Matter of Russo v. Valentine, 294 N. Y. 338; Taylor v. New York Central R. R. Co., 294 N. Y. 977; Saltser & Weinsier, Inc., v. McGoldrick, 295 N. Y. 499; Olcott v. Tioga R. R. Co., 20 N. Y. 210.)
   Conway, J.

Pursuant to an enabling act (L. 1934, ch. 873), the City of New York adopted a local law which imposes a tax “ upon the amount of the receipts from every sale of tangible personal property sold at retail, except those articles described in schedule 1 A ’ of this section.” Schedule “ A ” lists, among other things, “newspapers and periodicals” (Administrative Code of City of New York, § N41-2.0, subd. a.) “ Tangible personal property ” is defined as “ Corporeal personal property of any nature.” (Administrative Code, § N41-1.0, subd. 6.)

The petitioner-respondent in the instant case (hereinafter called respondent) is engaged in the business of collecting and compiling information and statistics concerning present economic, political and labor conditions affecting commerce, finance and industry, as well as forecasts and predictions of trends and future conditions. This information is disseminated to subscribers in part by mail through the medium of two publications, issued at regular periods, under the titles “ Babson’s Washington Service ” and “ Babson’s Business Service ”.

The comptroller of the City of New York has determined that respondent’s receipts from subscriptions to these publications are receipts from sales of “ tangible personal property ”. The comptroller has further determined that these publications are not excluded from coverage under the sales tax as newspapers or periodicals. Accordingly, since respondent did not charge or collect any sales tax from its subscribers, the comptroller concluded that respondent is liable for the payment of such taxes based on sales in the city of New York from 1935 to 1944. A Final Determination ” assessing a deficiency of $2,606.54 against respondent was then issued. Respondent procured an order referring the matter to the Appellate Division for a review of the comptroller’s determination in accordance with article 78 of the Civil Practice Act. That court, with two Justices dissenting, annulled the determination of the comptroller on the law and ordered the repayment of certain sums previously deposited with the comptroller.

The facts are undisputed. Respondent is a foreign corporation with its principal place of business in Massachusetts where it maintains its offices and prints the two publications above mentioned. Subscribers in New York City receive them by mail. “ Babson’s Washington Service ”, also called ‘1 Babson’s Washington’s Reports ”, contains a subtitle reading “ Confidential Forecasts of Coming Developments ”. It is published weekly and consists of four pages of printed matter.

Babson’s Business Service ”, also called “ Babson’s Reports ”, consists of three parts, the contents of which are indicated by their titles (1) “Business Management — Sales and Wage Forecast ”, (2) “ Business Inventory — Commodity Price Forecast ”, and (3) Confidential Barometer Letter ”, also called “ Timesaver for Corporation Presidents ”. The first two parts of the “ Business Service ” are issued monthly and each contains ten pages. The third part is issued weekly and consists of four pages.

Subscribers to the “ Washington Service ” and the “ Business Service ” may avail themselves at any time of advisory or consultation privileges, i.e., they may obtain from respondent additional and specialized information concerning their particular problems and individual needs. These advisory privileges do not exceed 5% of the total editorial work of respondent’s staff in the case of either publication. All of respondent’s subscription blanks and publicity booklets for the “ Washington Service ” and the “ Business Service ”, as well as the publications themselves, contain, in various forms, recitals to the effect that the material contained in the publications is to be treated “ as confidential ” or “ in strict confidence for the use only by subscribers and by those who secure this material thru authorized sources ”.

For reasons presently to be stated, we think the order of the Appellate Division annulling the determination of the comptroller must be affirmed on the ground that respondent’s publications are “ periodicals ” within the meaning of schedule “ A ” and are thus outside the coverage of the local sales tax law. The two dissenting Justices in the Appellate Division, who voted to confirm the comptroller’s determination, cited and relied upon our decision in Matter of Moody’s Investors Service v. McGoldrick (280 N. Y. 581). That case, however, is not applicable here. There, the publisher, Moody’s, collected and compiled statistical information concerning corporate securities and printed the results in a series of publications, each devoted to a different class of security. The publications took the form of (a) pamphlets issued in most cases twice a week which contained current information concerning dividends, financial reports and other matters of interest to subscribers; and (b) a bound reference book or manual, issued at the end of the year, which integrated the information contained in the pamphlets published during the year. Subscribers contracted to receive the desired pamphlets during the year and Moody’s agreed to give each subscriber at the end of the year a copy of the appropriate integrating manual “ free ”, The publications were copyrighted in the United States Copyright Office as books ”. No personal services were offered or given by Moody’s in connection with the sale of the publications. We there held that the pamphlets issued by Moody’s should be regarded as publications at regular intervals of parts of the reference book or manual furnished to subscribers at the end of the year. Thus, in effect, the transaction was one for the sale of such manuals, and the single subscription price was subject to the city sales tax as a receipt from the sale of tangible personal property. The reference books or manuals were clearly finished products, freely transferrable and having an independent market value in the hands of the purchaser disassociated from any personal and individual services rendered by the seller. These books or manuals were held taxable even though they were the product of services, i.e., specialized and extensive investigation, evaluation and research prior to publication, for the subscriber purchased the finished book and not the services which went into its publication. Moreover, as indicated, the weekly pamphlets in the Moody case (supra) did not come within the category of “ periodicals ”, not subject to the tax, because they were merely publications at regular intervals of component parts of the reference book or manual issued at the end of the year. In short, the Moody case simply sanctioned the taxability of receipts from the sale of such reference books or manuals.

An entirely different situation is presented in the instant case. The publications here involved can not in any sense be regarded as books or parts thereof. They impress us rather as ‘ ‘ periodicals ” within the meaning and intent of that word as used in schedule “ A ” of subdivision a of section N41-2.0 of the Administrative Code. The word “ periodical ” is not defined in the local law here under consideration and we find no such definition in the statutory or decisional law of this State. In that situation, we adopt the test of common understanding. “ A tax law should be interpreted as the ordinary person reading it would interpret it.” (Howitt v. Street & Smith Publications, 276 N. Y. 345, 351.)

Newspapers, magazines and periodicals are all vehicles for the transmission of news, opinions, ideas, information and literature. They have the common elements of periodicity, general availability to the public, and continuity as to title and general nature of content from issue to issue. They do not usually possess a substantial and permanent binding and the writings contained therein are customarily the product of an editorial staff rather than a single author. Exact definition is difficult, but we entertain no doubt that respondent’s publications would commonly be classified, in popular speech, as £< periodicals ”, and that when the phrase ££ newspapers and periodicals ” was used in schedule £< A ”, it was used with the common and popular understanding of the words.

We are referred to certain technical distinctions between newspapers and periodicals on the one hand, and books on the other, which have been found necessary in the administration of our Federal copyright and postal systems, and the attempts at definition which have been made with respect to those fields by statute, regulation and judicial opinion. These expressions, of course, were written in the light of the special problems and needs of those fields, and are not conclusive on the question of what constitutes a periodical within the meaning of the local sales tax law here involved. To some degree, however, these expressions have entered our speech and thought and have influenced the common understanding of the word ££ periodical ”. Accordingly, they shed some light on our present problem.

Respondent’s ££ Washington Service ” and ££ Business Service ” were actually classified in the United States Copyright Office, under subdivision (b) of section 5 of title 17 of the United States Code, as ‘ ‘ periodicals ’ ’. This action was taken despite the fact that the Copyright Office regulations provide that ££ Serial publications which are not clearly £ periodicals ’ should be registered as books ”. (See Code of Fed. Reg., tit. 37, § 201.4, subd. [b], par. [2].) In this connection, the case of Houghton v. Payne (194 U. S. 88) assumes importance in the instant case because the comptroller of the City of New York has adopted a quotation therefrom in his regulations as the definition of a periodical for sales tax purposes. In the Houghton case (supra) the Supreme Court held that the publication of certain novels and collections of short stories in a form which technically complied with the requirements of sections 10 and 14 of the Postal Law (U. S. Code, tit. 39, §§ 224, 226) was nevertheless a patent device by the publishers to secure postal privileges at the periodical rate instead of the book rate, and that the publications were in truth books and not periodicals. In the course of its opinion, the court said (p. 97): £< A periodical, as ordinarily understood, is a publication appearing at stated intervals, each number of which contains a variety of original articles by different authors, devoted either to general literature of some special branch of learning or to a special class of subjects. Ordinarily each number is incomplete in itself, and indicates a relation with prior or subsequent numbers of the same series. It implies a continuity of literary character, a connection between the different numbers of the series in the nature of the articles appearing in them, whether they be successive chapters of the same story or novel or essays upon subjects pertaining to general literature. * # * ” This quotation is now embodied in article 44 of the comptroller’s rules and regulations for the city sales tax. Under-the tests suggested in the quotation, the respondent’s publications are clearly “ periodicals ” especially when it is recalled that the word “ literature ” in this context means “ no more than productions which convey ideas by words, pictures, or drawings.” (Hannegan v. Esquire, Inc., 327 U. S. 146, 153.) Respondent’s publications appear at stated intervals; they contain a variety of original articles by different, though unnamed, authors; they are devoted to a special class of subjects; they are incomplete in themselves and indicate a relation to prior and subsequent issues and they have a continuity of literary character.

The city’s only serious contention in this court upon this point is that respondent’s statement to subscribers that the material contained in its publications should be treated in strict confidence ” or as confidential ” deprives such publications of the character of “ periodicals ” within the meaning of the local sales tax law. Respondent’s publications, of course, were actually intended for general circulation in the sense that any member of the public with the inclination and available funds could subscribe to them. It may be conceded, however, that the word periodical ” commonly implies that the publication so characterized is not only generally available to the public but also contains information of a public character. But we do not think that respondent’s admonition that the information contained in its publications was “ confidential ” was literally effective to forbid the normal use and public expression of such information by individual subscribers. The restriction, in practical effect, seems merely to be a prohibition against competing and contemporaneous publication of the information contained in the reports, i.e., a prohibition against pirating the contents of the reports. It appears to he a precautionary notice to supplement respondent’s copyright protection, and probably was intended to have certain incidental promotional and advertising value in stimulating sales of subscriptions. At any rate, we do not feel that the quoted statement that the material contained in the publications is “ confidential ” deprives them of the character of periodicals within the intent and meaning of the local sales tax law.

Furthermore, it should be noted that if we were to accord to the restriction the literal effectiveness argued for by the city, then cogent argument could be advanced that subscriptions to the publications are not sales of “ tangible personal property ”, for in that event, the publications would have no independent market value in the hands of the subscriber and he would not be able to transfer them nor divulge their contents. Instead of being the subject of a sale of tangible personal property, the actual printed publications would really be an incidental part of a transaction involving the private communication of specialized knowledge to individual clients, accompanied by the rendition of personal and direct services on the part of respondent. In that view, the case would be akin to Dun & Bradstreet v. City of New York (276 N. Y. 198) and Stampers Arrival of Buyers v. City of New York (296 N. Y. 574) cases in which transactions essentially calling for the rendition — in exchange for a stipulated consideration — of personal services were not considered to be sales of tangible personal property merely by reason of the fact that as a necessary incident thereto the subscriber received and retained printed matter of no independent or market value. There is no need to pursue these observations further, however, for, as indicated, we hold that the statement that the published material was “ confidential ” is not sufficient to destroy the character of the publications as periodicals ” within the meaning of schedule “ A ” and accordingly that receipts from their sale are not subject to the city sales tax.

It is also proper to note that we do not believe that the serious constitutional difficulties, mentioned in the opinion of the Appellate Division and strenuously argued by respondent here, are actually present in the case. If we were to construe the local sales tax law as vesting in the comptroller the power to make a determination as to whether a disputed publication was or was not a periodical based upon his conception of the cultural or social value of the contents or purposes of such publications, that might in effect be granting to the comptroller a limited right of censorship and might pose a problem of constitutional law. (Cf. Hannegan v. Esquire, Inc., supra.) Of course, we have not and do not now so construe the local law, and, as the opinion below concedes, the comptroller did not base his determination in the instant case on any such theory. Apart from that possibility, we see no constitutional question here present. Like other businessmen and their products, publishers and their publications may constitutionally be subject to a general tax or regulatory statute which does not purport to censor or to discriminate against them. The case of Grosjean v. American Press Co. (297 U. S. 233) cited by respondent and the court below, involved a tax clearly different from the one at bar. There, as stated in Mabee v. White Plains Pub. Co. (327 U. S. 178, 184) “ * * * the press was singled out for special taxation and the tax was graduated in accordance with volume of circulation.” See, to the same effect, Oklahoma Press Pub. Co. v. Walling (327 U. S. 186, 192-194.) Compare also the express reservation in the Grosjean case (supra, at p. 250), with Giragiy. Moore (49 Ariz. 74, appeal dismissed 301 U. S. 670), and Arizona Pub. Co. v. O’Neil (22 F. Supp. 117, affd. 304 U. S. 543).

The other points argued in the briefs do not warrant extended discussion. In view of our decision that the comptroller’s determination and deficiency assessment were properly annulled, respondent’s contention that a portion of such assessment was barred by a special statute of limitations is of no moment. We also agree with the holding of the Appellate Division that respondent is entitled to the repayment of the sum of $403.96, as against the city’s contention that said sum was paid by respondent voluntarily and without protest. That amount was paid by a check dated January 18,1943, and drawn, at the city’s request, in place of a previous check in the same amount which had been sent by respondent but never cashed by the city. We think that the protest which had accompanied the previous check was sufficient to cover the subsequent check sent in its stead.

The order should be affirmed, with costs,

Loughran, Oh. J., Lewis, Desmond, Dye, Fuxd and Bromley, JJ., concur.

Order affirmed.


source: Caselaw Access Project

author: Conway, J.

license: Public Domain

text:
    In the Matter of the Arbitration between Harold Levinsohn Corp., Respondent, and Joint Board of Cloak, Suit, Skirt and Reefer Makers’ Union et al., Appellants.
    Argued March 2, 1949;
    decided July 19, 1949.

      Morris P. Glushien, Emil Schlesinger and Willard A. Lewis for appellants.
    I. The Appellate Division erred in holding that the union-shop clause was illegal. At the least, the case should have been remanded to Special Term to afford the union an opportunity to present facts relevant to the issue. (Virginia Elec. & Power Co. v. National Labor Relations Bd., 115 F. 2d 414; National Labor Relations Bd. v. McGough Bakeries Corp., 153 F. 2d 420.) II. The agreement must be presumed to be legal until and unless the contrary is shown in a proper proceeding. (Lorillard v. Clyde, 86 N. Y. 384; Shedlinsky v. Budweiser Brewing Co., 163 N. Y. 437; Meyer v. Price, 250 N. Y. 370.) III. Only the National Labor Relations Board, in a proceeding before it, has jurisdiction to determine the issues under subdivision (3) of section 8 upon which petitioner asserts illegality. Until and unless there is such a board proceeding and determination, the agreement is entitled to enforcement in the courts. (National Labor Relations Bd. v. Hearst Publications, 322 U. S. 111; Pittsburgh Plate Glass Co. v. National Labor Relations Bd., 313 U. S. 146; May Dept. Stores Co. v. National Labor Relations Bd., 326 U. S. 376; International Brotherhood of Teamsters v. International Union of United Brewery Workers, 106 F. 2d 871; Stone Logging & C. Co. v. International Woodworkers of America, 171 Ore. 13; Park & Tilford Import Corp. V. International Brotherhood, 155 P. 2d 16.) IV. The Appellate Division erred in holding illegal the clause requiring petitioner to deal only with union contractors for the manufacture of ladies’ garments. At the least, the case should have been remanded to Special Term for further evidence. (Matter of Sun-Ray Cloak Co., 256 App. Div. 620; Weitzberg v. Dubinsky, 173 Misc. 350, 259 App. Div. 1008; Sainer v. Affiliated Dress Manufacturers, 168 Misc. 319; American Cloak & Suit Manufacturers’ Assn. v. Brooklyn Ladies’ Garment Manufacturers’ Assn., 143 Misc. 319; Maisel v. Sigman, 123 Misc. 714; Douds v. Metropolitan Federation of Architects, 75 F. Supp. 672; Goldfinger v. Feintuch, 276 N. Y. 281; Bossert v. Dhuy, 221 N. Y. 342; Exchange Bakery & Restaurant v. Rifkin, 245 N. Y. 260; Apex Hosiery Co. v. Leader, 310 U. S. 469; May’s Furs & Ready-To-Wear v. Bauer, 282 N. Y. 331.)

      Charles Rembar for respondent.
    I. The union-shop provision was and is violative of the National Labor Relations Act, the New York State Constitution and the New York State Labor Eelations Act and contrary to the policies therein expressed. (International Assn. of Machinists v. National Labor Relations Bd., 110 F. 2d 29; National Labor Relations Bd. v. Mason Mfg. Co., 126 F. 2d 810.) II. The courts of New York, in the present circumstances, should recognize the invalidity of the union-shop provision in the alleged agreement between appellants and respondent. (Amazon Cotton Mill Co. v. Textile Workers Union, 167 F. 2d 183; Amalgamated Assn. v. Dixie Motor Coach Corp., 170 F. 2d 902.) III. The union-shop provision being invalid, the entire alleged contract is unenforcible, including the arbitration provisions and the provision that the employer shall deal only with submanufacturers who maintain union shops. (Reiner v. North Amer. Newspaper Alliance, 259 N. Y. 250; Carmine v. Murphy, 285 N. Y. 413; Matter of Kramer & Uchitelle, 288 N. Y. 467; Association of Plumbing & Heating Contractors v. Merten, 261 App. Div. 543, 288 N. Y. 555; Sanders v. Lowenstein & Sons, 264 App. Div. 367, 289 N. Y. 702; International Spangles Corp. v. Marrow Mfg. Corp., 294 N. Y. 295; Angresani v. Tozzi, 217 App. Div. 642, 245 N. Y. 558; Foley v. Speir, 100 N. Y. 552; Parthey v. Beyer, 228 App. Div. 308.) IV. The fact that the contravention of the public policy embodied in the labor acts was not called to the attention of Special Term did not make the Appellate Division’s consideration of the point erroneous. (Doucet v. Massachusetts Bonding & Ins. Co., 180 App. Div. 599; O’Mar a v. Dentinger, 271 App. Div. 22; Westchester Trust Co. v. Harrison, 249 App. Div. 828, 274 N. Y. 588; Equity Service Corp. v. Agull, 250 App. Div. 96; Sprague v. Webb, 168 App. Div. 292; Barry v. Mulhall, 162 App. Div. 749; Dunham v. Hastings Pavement Co., 56 App. Div. 244; Massachusetts Nat. Bank v. Shinn, 163 N. Y. 360.)
   Conway, J.

The petitioner, Harold Levinsohn Corp. (hereinafter called petitioner or Levinsohn) seeks an order staying the arbitration of alleged violations of ah agreement entered into by it on February 23, 1946. The petition in support of the motion for the stay contains the following allegations:

Prior and subsequent to February of 1946, petitioner was engaged in the manufacture and sale of ladies’ and men’s suits and maintained a factory in New York City at which it received fabrics, which were there cut and prepared for sewing. During this period, petitioner was “ in contractual relations ” with Amalgamated Clothing Workers of America (hereinafter called Amalgamated) and “ employed workers who were members of said union.” Petitioner sent its cut fabrics to nine separate contractors in New York City who employed the necessary labor to sew and complete the garments. Each of these contractors was also “ in contractual relations ” with Amalgamated and “ employed workers who were members ” of that union. One such contractor was Stauber Bros. Clothing, Inc. (hereinafter called Stauber).

In February of 1946, at the height of petitioner’s “ spring season ”, the Joint Board of Cloak, Suit, Skirt and Reefer Makers’ Union declared a strike against Stauber, preventing Stauber from completing work on $50,000 worth of garments belonging to petitioner. On the 23d of that month, an agreement was executed by and between petitioner and Stauber, and the Joint Board of Cloak, Suit, Skirt and Reefer Makers’ Union (hereinafter called Union). One Harold Levinsohn, who was the president of both petitioner and Stauber, signed the agreement on their behalf. The agreement contained recitals that the “ Employers ” (petitioner and Stauber) were engaged in manufacturing “ ladies’ suits ”, that Union was composed of workers in the several branches of manufacture of such garments, that the workers in the employers’ factories had stopped work and that Union was desirous that they return to work. The agreement then provided as follows: First, the employers agreed that they would become bound under the provisions of “ the collective agreement existing in the coat and suit industry in the City of New York entered into between the Association of manufacturers and the Union ”, and that a “copy of the collective agreement referred to is hereunto annexed, make [sic] part hereof, and all of the provisions thereof are deemed incorporated herein ” and that whenever the word “ Association ” appeared in the “ annexed agreement ” the word “ Employer ” should be substituted therefor. It was agreed that all complaints should be filed directly with the “ Impartial Chairman and Arbitrator ” acting under the said collective bargaining agreement. Second, the employers agreed that not later than May 31, 1946, they would join and become members of one of the. employer’s associations of manufacturers in the coat and suit industry in New York City in contractual relations with Union. The employers agreed that they would not give any work to contractors except those in contractual relationship with Union. Thirdl, Union agreed that the workers would return to work and the employers’ production would continue uninterruptedly. Fourth, it was agreed that the employers’ workers should receive a $4 weekly wage increase.

Petitioner has not made Amalgamated a party herein. It is not disputed that the workers returned to work and petitioner’s garments were completed.

The petition alleged that although the contract of February 23, 1946 referred to an “ alleged ‘ industry ’ agreement as being annexed thereto, no such industry ’ agreement was in fact annexed that none of petitioner’s employees and none of the employees of the other eight contractors were or became members of Union;. and ' that petitioner continued to deal with Amalgamated contractors under its original collective bargaining agreement with Amalgamated which antedated the February 23d agreement.

The petition further alleged that in June and July, 1946, conferences were held between petitioner and Union concerning petitioner’s noncompliance with the agreement and its obligation to send work to Union contractors rather than to Amalgamated contractors.” After considerable discussion, during which petitioner stated that it was required to send work to Amalgamated contractors, Union suggested that it send some of its garments to shops employing Union members and petitioner “ in the interests of peace ” agreed to send some work to Union’s shops, if Amalgamated did not object thereto. Thereafter petitioner sent work to the Amalgamated contractors and to several Union contractors.

Petitioner alleged that in December, 1946, it opened a factory in Eed Bank, N. J., and its employees were members of Amalgamated and their terms and conditions of employment were fixed in a collective agreement between petitioner and Amalgamated, and that Union did not represent petitioner’s employees either in the New York cutting room or in the New Jersey factory.

The petition then alleged that during the summer and fall of 1947, Union ■ again requested that some work be sent to Union’s contractors and petitioner refused. Accordingly on November 27, 1947, petitioner received a notice of hearing for arbitration of the controversy to be held before Sol A. Rosenblatt, as “ Impartial Chairman ”. The issues which Union sought to have arbitrated and for which it sought liquidated damages were (a) the alleged violation of the February 23,1946, agreement by petitioner in dealing with nine nonunion contractors and (b) operating a nonunion factory in Red Bank, N. J.

After alleging the above facts concerning the background of the agreement the petition then prayed that the arbitration proceeding be permanently stayed on the following three grounds:

I. That no valid agreement was ever made between the parties because (a) petitioner was not a member of any of the four manufacturers’ associations under contract with Union; that no manufacturers ’ association was named in the agreement by whose contract petitioner was to be bound, and no copy of any such “ industry ” contract was attached to the agreement, and (b) even if annexed, the agreement was too vague and indefinite.
II. That Sol A. Rosenblatt was not the duly authorized arbitrator to hear and determine the controversy.
III. That Union had not complied with the provisions of the alleged agreement required of it as preliminary steps and conditions to arbitration.

In opposition to the motion Union submitted an affidavit of its general manager which treated the allegations of the petition concerning the circumstances surrounding the making of the agreement as surplusage. Accordingly the allegations of his affidavit were limited to answering the three grounds which petitioner specifically urged for a stay of the arbitration proceedings. It set forth facts to show: (1) that the “ industry ” contract was in fact annexed to the February 23d agreement, viz., the industry ” contract between Union and the Merchants’ Ladies’ Garment Association, Inc., and that the agreement between the parties was not too vague; (2) that Sol A. Rosenblatt was the duly constituted arbitrator and (3) that there was no default in conditions preliminary to the arbitration.

In a reply affidavit, while briefly stating that it was sending work to nine contractors including Stauber, all of whom were under contract ” with Amalgamated, and alleging that Union could not lawfully enter into this agreement with petitioner, petitioner reiterated the same grounds for a stay of arbitration that it urged in the petition.

Special Term rejected each of petitioner’s three contentions and denied the motion for a stay. The question of the legality of the contract of February 23, 1946, was not argued or considered.

On appeal to the Appellate Division the order of Special Term was reversed and the stay granted on the ground that the contract was illegal under the National Labor Relations Act (U. S. Code, tit. 29, § 151 et seq.). The court assumed that Special Term’s findings in upholding Union’s contentions on the three issues presented by petitioner were correct and did not reach, pass on or reverse them. The order of the Appellate Division states that the reversal is 1 ‘ upon the law, the findings of fact below not having been considered ”, and that the court “ makes the findings of fact and conclusions of law as contained in the opinion of the Court”. That form of reversal is one on the law alone. (Civ. Prac. Act, § 602.)

In its opinion the Appellate Division accepted the following allegations of the petition and found them as facts upon which it based its decision: Petitioner was a manufacturer of “ men’s and ladies’ suits It cut its own fabrics and sent them to nine contractors to be sewn into garments. Petitioner and its contractors had “ previously been organized by a rival union, the Amalgamated ”. One of the nine contractors was Stauber. In February, 1946, Union, which was affiliated with International Ladies’ Garment Workers’ Union, declared a strike against Stauber, thereby preventing the completion of $50,000 worth of petitioner’s garments. The strike was settled by the execution of the February 23d agreement, the workers returned to work with increased salaries and petitioner’s garments were completed. Neither on February 23, 1946, when the contract was entered into, nor at any other time, did Union represent petitioner’s employees who were represented by Amalgamated. The court thereupon concluded that the effect of the contract, if carried out, would be to compel * * * [petitioner Levinsohn] to discharge its employees unless they became connected with the International Ladies ’ Garment Workers Union. (273 App. Div. 469, 473.)

The court referred to section 8, subdivision (3), of the National Labor Relations Act (the Wagner Act, applicable here), (49 U. S. Stat. 452; U. S. Code, tit. 29, § 158, subd. [3]), which provided:

‘‘ Sec. 8. It shall be an unfair labor practice for an employer * * * (3) By discrimination in regard to hire or tenure of employment or any term or condition of employment to encourage or discourage membership in any labor organization: Provided, That nothing in this Act * * * or in any other statute of the United States, shall preclude an employer from making an agreement with a labor organization * * * to require as a condition of employment membership therein, if such labor organization is the representative of the employees as provided in section 9 (a), in the appropriate collective bargaining unit covered by such agreement when made.” (Emphasis supplied.)

Section 9 provided (49 U. S. Stat. 453; U. S. Code, tit. 29, § 159): Sec. 9. (a) Representatives designated or selected for the purposes of collective bargaining by the majority of the employees in a unit appropriate for such purposes, shall be the exclusive representatives of all the employees in such unit for the purposes of collective bargaining in respect to rates of pay, wages, hours of employment, or other conditions of employment; Provided, That any individual employee or a group of employees shall have the right at any time to present grievances to their employer.

(h) The Board shall decide in each case whether, in order to insure to employees the full benefit of their right to self-organization and to collective bargaining, and otherwise to effectuate the policies of this Act, the unit appropriate for the purposes of collective bargaining shall be the employer unit, craft unit, plant unit, or subdivision thereof.” (Emphasis supplied.)

The court then held that the union or closed shop provision of the agreement was illegal as an unfair labor practice under the act because Union did not show that a majority of petitioner’s employees had authorized it to represent them through an appropriate board designated bargaining unit. The reasoning of the court was that all union or closed shop clauses' are prima facie invalid, and the burden was upon the Union to show that authorization was given to it by a majority of petitioner’s employees in a board established appropriate unit before petitioner could legally require membership in Union as a condition of employment. Stated another way, the court held that the Union shop clause was necessarily illegal until Union showed that the National Labor Relations Board had previously established the appropriate bargaining unit and that it represented a majority of petitioner’s employees in the board established unit.

The court also held illegal the provision of the agreement which required petitioner to send its work to contractors employing Union members, on the ground that the provision was similar in nature and closely allied ” to the union or closed shop provision, and its object was to compel petitioner to break its relations with its contractors who had been organized by Amalgamated, unless they coerced their employees into changing their union affiliation.

The Appellate Division concluded that because the union or closed shop ” and the “ union contractor ” clauses were illegal, the arbitration proceedings based on those two clauses must be stayed, irrespective of other provisions of the agreement which might be valid and arbitrable.

If any presumption is to be indulged in where a formal collective bargaining agreement has been entered into, it is the ordinary presumption of legality. Nothing in the act and no authority or rule of law is called to our attention which requires us to presume that all union or closed shop provisions are prima facie illegal, so that as a condition precedent to arbitration under a collective bargaining contract, the union must show that the National Labor Relations Board has previously established the appropriate collective bargaining unit and that the union is the majority representative in such board established unit.

On the contrary, Union has presented statistics which petitioner does not dispute, indicating that there are many thousands of collective bargaining agreements containing union shop provisions and in only a small fraction has the National Labor Relations Board established the appropriate collective bargaining unit. If the interpretation below is correct, then the union and closed shop provisions in those contracts which affect countless employees are open to attack on the ground of illegality. However, the Federal courts have sustained the validity of union and closed shop clauses in many cases where a collective bargaining contract was entered into without the establishment by the board of an appropriate unit. (See Virginia Elec. & Power Co. v. National Labor Relations Bd., 115 F. 2d 414, 419-421, revd. and remanded on other grounds sub nom. National Labor Relations Bd. v. Virginia Elec. & Power Co., 314 U. S. 469; National Labor Relations Bd. v. McGough Bakeries Corp., 153 F. 2d 420, 423-425; Peninsular & Occidental S. S. Co. v. National Labor Relations Bd., 98 F. 2d 411, 412, 414, certiorari denied 305 U. S. 653; National Labor Relations Bd. v. Electric Vacuum Cleaner Co., 120 F. 2d 611, 615-616, revd. but the Supreme Court held the original 1936 agreement valid, 315 U. S. 685, 696; Jefferson Elec. Co. v. National Labor Relations Bd., 102 F. 2d 949, 953, 957; M & M Wood Working Co. v. National Labor Relations Bd., 101 F. 2d 938.)

The case of National Labor Relations Bd. v. Mason Mfg. Co. (126 F. 2d 810) is not to the contrary. There the National Labor Relations Board sought a decree confirming its findings that the employer had committed an unfair labor practice within section 8, subdivision (1), and section 8, subdivision (3) of the act in discharging a number of its employees who had formerly belonged to an A.F. of L. affiliate and discouraging their membership in a C.I.O. affiliate. The employer admitted discharging the workers because they were not members of the A.F. of L. union but claimed that it was compelled to do so under a valid closed shop agreement with the A.F. of L. union. The question before the court was the existence of the closed shop contract and in that connection, it said that “ in proceedings before the Board the party having the burden of proof of a closed shop agreement must show ” designation by a majority of employees in an appropriate unit. (P. 813, emphasis supplied.) There can be no doubt that in proceedings before the board — the agency authorized by the statute to pass upon the question of appropriate unit — a party who relies on a closed shop provision must prove to the board’s satisfaction that when the contract was entered into it properly represented a majority of the employees in an appropriate unit. It is quite a different thing to say that all contracts for union or closed shops are prima facie void and can only be legal if the board has passed upon and established the appropriateness of the unit. It is not authority for the proposition that in a proceeding such as this, to stay arbitration under a formal contract providing for a union shop, that the union must show that the board has established an appropriate unit and that it represents a majority of the employees therein. Here there is no allegation that any employees enrolled in Amalgamated have been discharged, nor that .their discharge has been requested, nor that Amalgamated is the selected representative of the employees as bargaining agent in an appropriate unit designated by National Labor Relations Board. The only complaint is by an employer who claims to have entered into contracts with two unions, and now wishes to avoid the second of those contracts. Whether there was a contract with Amalgamated entered into by petitioner is not shown by this record nor what it provided nor whether, if made, it affected workers on women’s garments as distinguished from men’s garments. The first two recitals of the contract of February 23, 1946, involved here read:

“ Whereas, the Employers are engaged in manufacturing ladies’ suits, and
Whereas, the Union is composed of workers in the several branches of the manufacture of such garments * * If, as urged by Union, Amalgamated functions in the men’s garment industry and Union in the women’s garment industry, there is no conflict between the two contracts. Thus it cannot be said as a matter of law that Union’s contract required petitioner’s workers “ to resign from Amalgamated ” or that petitioner was compelled “ to discharge ” them.

The agreement, therefore, must be presumed to be legal until and unless the contrary is shown in a proper proceeding and such proper proceeding can be brought only before the National Labor Relations Board which has exclusive jurisdiction to decide the underlying questions of unit and majority representation. Section 9, subdivision (b), of the act, quoted (supra) grants exclusive jurisdiction to the National Labor Eelations Board to decide which combination of employees constitutes an appropriate unit. In International Assn. of Machinists v. National Labor Relations Bd. (110 F. 2d 29, 34) the court referred to that section of the act and said: “ The power to determine appropriateness of the unit is vested in the Board, not in the employees, the trial examiner or the courts.” The Federal courts have uniformly recognized that because of the complexity and difficulty of the problem of designating the appropriate unit, the power to make the decision has been delegated exclusively to the expert judgment of the board which has wide discretion in making the determination. (See National Labor Relations Bd. v. Hearst Publications, 322 U. S. 111, 134; Pittsburgh Plate Glass Co. v. National Labor Relations Bd., 313 U. S. 146, 152-153; May Dept. Stores Co. v. National Labor Relations Bd., 326 U. S. 376, 380; Packard Motor Car Co. v. National Labor Relations Bd., 330 U. S. 485, 491-492; National Labor Relations Bd. v. Botany Worsted Mills, 133 F. 2d 876, 880; International Assn. of Machinists v. National Labor Relations Bd., supra, p. 46; La Crosse Tel. Corp. v. Wisconsin Employment Relations Bd., 336 U. S. 18.)

The board’s exclusive jurisdiction to determine whether a union represents a majority of employees in an appropriate unit has likewise been recognized. (See Fur Workers Union, Local No. 72 v. Fur Workers Union, 105 F. 2d 1, 32; International Brotherhood of Teamsters v. International Union of United Brewery Workers, 106 F. 2d 871.) It follows that even where it is reasonably clear how the board will determine the issues of majority and appropriate unit that the courts are precluded from passing upon those issues because of the board’s exclusive initial jurisdiction. (International Brotherhood of Teamsters v. International Union of United Brewery Workers, supra, p. 876.) Thus there is no validity in petitioner’s argument that “ there is not even a colorable question in the present case with respect to the appropriate bargaining unit that the unit is obviously the normal unit consisting of * * * [Levinsohn’s] employees ”; that the board “ has gone beyond the employees of a single employer very rarely ”; and that there is not the remotest possibility that the National Labor Eolations Board could arrive at a conclusion different from that of the court "below.”

It may be noted that there is more than a “ colorable question ” in the present case with respect to whether Union represents a majority of employees in the appropriate unit. Petitioner Levinsohn in signing the contract as an “ Employer ” may be deemed to have conceded, at least so far as the instant proceeding is concerned, that Union was the bargaining agent of its employees and was signing the contract on their behalf. If that were not so, then there was no purpose in petitioner’s being a party to the agreement as an ‘1 Employer ” and in agreeing in the contract to grant a $4 weekly wage increase to its employees.

With respect to the appropriateness of the unit Union points out that petitioner and Stauber are affiliated corporations, as evidenced by the fact that Harold Levinsohn is president of each and that he signed the agreement on behalf of both corporations. Petitioner and Stauber ivere collectively designated in the agreement as Employers ” and both were stated to be engaged in manufacturing “ ladies’ suits Also, it was agreed that “ the Employers’ production ” would continue uninterruptedly. That production was an entirety to which the employees of petitioner Levinsohn and Stauber by their complementary efforts contributed and made the whole. The agreement likewise grouped the workers together in stating that “ the workers in the Employers’ factories have stopped work ”, and that the workers of both employers were to receive a $4 weekly wage increase on their return to work. There is therefore in the record the basis for the contention by Union, and upon which it could no doubt make a fuller record in a proper proceeding before the board, that the appropriate unit consisted of all the employees covered by the February 23d agreement, i.c., petitioner’s employees plus Stauber’s employees, all of whom contributed work on the “ ladies’ garments ”. It may be said both as a matter of fact and of law on this record that the Stauber employees chose Union as their bargaining representative, since the strike was settled as a result of the agreement. A fuller record may show, as Union contends, that if these shops run true to the pattern of other shops in the “ ladies’ garment industry ”, the sewers in Stauber’s factory greatly outnumbered the cutters in petitioner’s New York City shop. (Petitioner’s New Jérsey factory was not opened until December, 1946, about ten months after the agreement was signed.) Thus, even if Union did not represent petitioner Levinsohn’s own employees, as the .Appellate Division has found,— and which Union denies — and the appropriate unit is held by the board to be the larger unit consisting of the employees of the factories of petitioner and Stauber, i.e., the employees of the employers who signed the contract, then the contract is legal, for in that unit Union may well have a majority.

Union also suggests that the board may find an association-wide unit to be appropriate, because petitioner agreed to join an industry association under contract with the Union, and it may not rely on its own breach of contract in failing to join the association as an excuse for attacking such a unit.

We need not examine further as to the possible appropriate units in which Union may have a majority. It is sufficient to point out that on this record several choices are open to the board which would result in the legality of the agreement. Until and unless the board, which has exclusive jurisdiction to make the determination, invalidates the agreement, the normal presumption of legality must prevail and the order beloAv must be reversed.

In view of our conclusion that the union or closed shop provision on this record is not presumptively illegal, it follows for the same reasons that the “ union contractor ” clause is not presumptively illegal, and it becomes unnecessary to consider the additional grounds urged by Union for a reversal of the order below insofar as it concerns that provision.

The order of the Appellate Division should be reversed and the matter remitted to the Appellate Division for a ‘1 determination upon the questions of fact raised in that court ” (Civ. Prac. Act, § 606), Avith costs in this court and in the Appellate Division to the appellants.

Lotjghran, Ch. J., Lewis, Desmond, Date, Fuld and Bromley, JJ., concur.

Order reversed, etc.

       The collective bargaining agreement uses the term “ union shop ”, although it defines the term as a shop which “ employs none but members in good standing of the Union ”. That definition appears to describe what is generally known as a “ closed shop ”. However, whether the provision was for a “ union shop ” or a “ closed shop ” does not affect the result here.


author: Bromley, J.

text:
    In the Matter of Lee R. Tompkins, Respondent, against Board of Regents of the University of the State of New York, Appellant.
    Argued April 7, 1949;
    decided July 19, 1949.

      Nathaniel L. Goldstein, Attorney-General (Henry S. Manley and Wendell P. Brown of counsel), for appellant.
    I. The proofs show “ fraud or deceit ” within the meaning of paragraph (a) of subdivision 2 of section 6514 of the Education Law. (Matter of Kasha v. Board of Regents of Univ. of State of N. Y., 264 App. Div. 925; Matter of Mester v. Board of Regents of Univ. of State of N. Y., 259 App. Div. 776; Matter of Hutschnecker v. Board of Regents of Univ. of State of N. Y., 269 App. Div. 891; Matter of Gilbert [Cole], 266 App. Div. 894; Buhl v. University of State of N. Y., 268 App. Div. 530; Matter of Siegal v. Board of Regents of Univ. of State of N. Y., 270 App. Div. 783; Matter of O’Neill v. Board of Regents of Univ. of State of N. Y., 272 App. Div. 1086.) II. The present charges are not tied to the Harrison Act but to article 22 of the Public Health Law. III. There is no lack of support for the findings of the medical grievance committee to the effect that Dr. Tompkins’ prescriptions for Stevens and Sueco were excessive by medical standards. (Ferguson v. Hubbell, 97 N. Y. 507; People v. Tassell, 272 App. Div. 710; Matter of Struble v. Vacuum Oil Co., 210 App. Div. 344, 217 App. Div. 411; Matter of Summers v. Mohawk Valley Roofing Corp., 245 App. Div. 432; Chicago, Burlington & Quincy Ry. Co. v. Babcock, 204 U. S. 585; People v. Mancuso, 255 N. Y. 463; People v. Grogan, 260 N. Y. 138; United States v. Behrman, 258 U. S. 280; Boyd v. United States, 271 U. S. 104.)

      F. Walter Bliss and Albert T. Decker for respondent.
    I. The proof fails to show that Dr. Tompkins was guilty of any fraud or deceit in the practice of his profession. (Matter of Cowles v. Board of Regents of Univ. of State of N. Y., 266 App. Div. 629, 292 N. Y. 650; Waggoner v. Jageacks, 241 App. Div. 324; Finsilver v. Still, 240 App. Div. 87; Forker v. Brown, 10 Misc. 161, 159 N. Y. 540; Urtz v. New York Central & Hudson Riv. R. R. Co., 202 N. Y. 170; Adams v. Clark, 239 N. Y. 403; Dung v. Parker, 52 N. Y. 494; Webb v. United States, 249 U. S. 96; Linder v. United States, 268 U. S. 5.) II. Dr. Tompkins did not violate article 22 of the Public Health Law of the State of New York. III. It is not morally or inherently wrong for a physician to prescribe narcotics for addicts. IV. “ Fraud or deceit ” within the meaning of paragraph (a) of subdivision 2 of section 6514 of the Education Law is not the same as ‘ ‘ unprofessional conduct. ’ ’ (Matter of Cherry v. Board of Regents of Univ. of State of N. Y., 289 N. Y. 148.) V. Dr. Tompkins’ prescriptions were not only within the law, but also within the bounds of proper medical practice in each instance and there is no evidence that they exceeded the limits of correct treatment as judged by medical standards. (Matter of Carrol v. Knickerbocker Ice Co., 218 N. Y. 435; McKay v. State Board, 103 Col. 307.)
   Bromley, J.

This appeal presents the question as to whether a doctor who prescribes narcotic drugs for an addict, with the sole purpose of satisfying the addiction and without a legitimate medical end, is thereby guilty of fraud or deceit in the practice of medicine ” (Education Law, § 6514, subd. 2, par. [a]) and subject to discipline by the Board of Regents.

After a proceeding pursuant to section 6515 of the Education Law the board had determined that respondent was guilty of “ fraud or deceit” under the statute and ordered the suspension of his license for six months. In reversing that determination “ on the law and facts ” the Appellate Division has posed another question as to the scope of review of the evidence in proceedings under article 78 of the Civil Practice Act.

Respondent was a general practitioner. During the summer and fall of 1944, he was treating Harry Stevens, who had come to him as a patient in July. Stevens then had told the doctor of suffering for seven years from bronchitis and pulmonary tuberculosis, and that other physicians had prescribed for him morphine and dilaudid (a similar narcotic). During the period from July to December, respondent issued to Stevens forty-six prescriptions at intervals of two to twelve days for a total of 12.5 grains of dilaudid and 582.5 grains of morphine sulphate. Upon eleven occasions Stevens received two prescriptions for morphine sulphate on the same day; and on October 25th he received three. By November, the doctor was aware that Stevens was a morphine addict, yet continued to prescribe the drug for him without consideration of that fact.

During August and September, 1944, respondent issued three prescriptions for morphine sulphate to a man named Zisk who had come to him claiming to be in severe pain from a kidney ailment. He refused Zisk further prescriptions after recognizing that his story was false. Zisk, a known addict, informed the Federal Bureau of Narcotics that he had purchased prescriptions for narcotics from the doctor. The bureau undertook an investigation and John Cross, an agent, visited the village in which respondent practiced to check the prescriptions filed in the local drugstores. On November 6th, James Sueco, an addict who was employed as an informer by the bureau, was brought to the village and visited the doctor. He told respondent that he was a merchant seaman whose ship had been sunk in a North Atlantic convoy; that a wound on his face had been received in an automobile accident; that he was a narcotic addict and desired a prescription for morphine. Sueco received a prescription, for which he paid $5, and upon six other occasions he was sold a prescription for 100 quarter grains each. About a week after the last prescription the doctor told Sueco that he could have no more. In explaining those prescriptions respondent said that Sueco had attributed his addiction to war injuries and that, moved by patriotic sympathy, he had given the prescriptions and had urged Sueco to take smaller amounts in each dose.

On December, 5th Sueco brought to the doctor’s office Schlossberg, an agent of the bureau, whom he introduced as a friend who desired morphine. Schlossberg told the doctor his name was ‘ Salsbury ’ ’ and that he was an addict. After pointing out that his own supply of narcotics was limited and that frequent prescriptions might arouse the Federal authorities, respondent sold Schlossberg a prescription. Schlossberg later obtained two more prescriptions. The doctor did not examine Schlossberg, and explained that Sueco’s introduction of the man as a fellow seaman led him to assume that the two were similar cases.

Cross visited respondent on November 16th, said that he had become a narcotics addict while working in a carnival and desired some morphine. He testified to the following colloquy between the doctor and himself: 1 He said, * What is the matter with you? ’ I said, ‘ Nothing, I am addicted.’ He said, I will have to treat you for something, kidney colic.’ I said, There is nothing wrong, I am addicted.’ He said, If the federal men come around they will pick me up and I can show I treated you for something.’ ” Cross then received a prescription for 60 quarter grains of morphine sulphate, and another for 100 quarter grains on December 7th.

The doctor, admitting that he believed Cross to be an addict, explained those prescriptions by the fact that the latter appeared to be a gentleman.

On each of the five prescriptions for Schlossberg and Cross the doctor wrote Diag: Renal Colic,” although he had examined neither of these men. In explanation he testified that a druggist had told him a diagnosis was required on prescriptions for narcotics, and that renal colic was the first thing that had occurred to him, perhaps because it indicates extreme pain.

In the disciplinary proceedings here under review respondent was charged with fraud or deceit in the practice of medicine ”, an offense for which the Board of Regents may revoke or suspend his license or impose other discipline (Education Law, § 6514, subd. 2). The order of suspension rests upon findings that the prescriptions for Stevens, Sueco, Sehlossberg and Cross were issued without justifiable medical purpose and with the intent to satisfy their addiction, and were not written “ in good faith and in the course of his regular professional practice ”. The charges relating to the Zisk prescriptions were dismissed.

Insofar as the court below has reversed the determination of the board upon the facts, its action is inconsistent with the well-settled principle that the courts may review such decisions for errors of law alone (Matter of Friedel v. Board of Regents, 296 N. Y. 347; Matter of Weinstein v. Board of Regents, 292 N. Y. 682; Education Law, § 6515, subd. 5; Civ. Prac. Act, § 1296, subd. 7). Properly stated, the question before that court was not whether the record would “ convince ” one of the facts found by the board, as indicated in the opinion, but whether a reasonable man might so find. (See Matter of Stork Restaurant v. Boland, 282 N. Y. 256, 274.)

So considered, we cannot say that the record does not contain substantial evidence in support of the findings adopted by the board. Respondent conceded that he believed all four men to be addicts, and admitted that he never examined Sehlossberg or Cross. After learning of Stevens’ addiction the doctor “ prescribed to get rid of him ” and not to relieve the physical effects of his habit. Clearest indication of conscious wrongdoing, and of intent to conceal it, appears from the inscription renal colic ” upon the five prescriptions for Sehlossberg and Cross.

Can we say that issuance of prescriptions for narcotics under such circumstances constitutes “ fraud or deceit ” within the meaning of section 6514? That question has been complicated in this case by two other statutes to which the parties have referred. The first is the Harrison Narcotic Act (U. S. Code, tit. 26, §§ 2550 et seq.), which imposes a Federal tax upon certain drugs, including morphine, produced, imported or sold in the United States. To insure compliance, the statute provides that a. domestic sale or transfer of any such drug is unlawful unless made upon a special order form, or upon the prescription of a physician (U. S. Code, tit. 26, § 2554). It has been held that a physician violates the statute in prescribing narcotics merely to satisfy addiction (Webb v. United States, 249 U. S. 96), and that no offense is committed by prescribing a moderate amount of drugs to relieve the physical consequences of addiction (Linder v. United States, 268 U. S. 5).

The second statute is the Uniform Narcotic Drug Act (Public Health Law, §§ 420-448). It provides that a physician may prescribe narcotics only “ in good faith and in the course of his professional practice ” (§ 427). To obtain such drugs through fraud or subterfuge, and to “ make or utter any false or forged prescription ”, are violations of the act (§ 438, subds. 1, 5) punishable as misdemeanors (Penal Law, § 1751-a). Under both State and Federal law pharmacists are required to keep prescriptions for narcotics on file for two years, readily available for law enforcement officers (Public Health Law, § 429, subds. 3, 5; U. S. Code, tit. 26, § 2554, subd. [c], par. [2]).

Throughout this proceeding respondent has contended that the charges against him in effect alleged a violation of the Harrison Act. The board has maintained that the, charges reflect offenses under sections 427 and 438 of the Public Health Law, insofar as any statute is involved other than section 6514. On this head we agree with the Appellate Division that our consideration must be restricted to the charge of fraud or deceit ” under section 6514 and the scope of that provision.

With respect to those terms respondent apparently contends that they import the material elements of the analogous tort concept, whereby liability for fraud is predicated upon willful and conscious misrepresentation which misleads another to his detriment (see Eaton, Cole & Burnham Co. v. Avery, 83 N. Y. 31). In that sense it is urged that there is no proof of respondent’s intent to defraud anyone. The board insists that the terms fraud or deceit in the practice of medicine ” are equivalent in meaning to “ unprofessional conduct ”, which is a ground for discipline in other professions than medicine (e.g., Judiciary Law, § 90, subd. 2 [attorneys]; Education Law, § 6613 [dentists]).

Both contentions are wide of the mark. The words fraud or deceit ” must be read in light of their traditional meaning-in the law (Matter of Cowles v. Board of Regents, 266 App. Div. 629, 633, affd. 292 N. Y. 650) and cannot be synonymous with unprofessional conduct ”— a term which may signify activity quite unlike fraud in the customary sense. (Cf. Matter of Bell v. Board of Regents, 295 N. Y. 101.)

The decisions under paragraph (a) of subdivision 2 of section 6514 have not expressly considered the meaning of the terms, but all of the cases disclose behavior which maybe characterized as intentional misrepresentation or concealment of fact (e.g., Matter of O’Neill v. Board of Regents, 272 App. Div. 1086; Matter of Siegal v. Board of Regents, 270 App. Div. 783; Matter of Hutschnecker v. Board of Regents, 269 App. Div. 891, affd. 295 N. Y. 558; Matter of Gilbert [Cole], 266 App. Div. 894). Since the statute is not concerned with private rights, it should not be construed to require that anyone actually has been misled, so long as the intent is present. Thus, in Matter of Gilbert (supra), a doctor had made a clandestine operation and surreptitiously dismembered a corpse in order to conceal a crime. His offense was complete when those acts had been done for an obvious purpose.

The issuance of a prescription for narcotic drugs to an addict without proper medical basis is clearly an act which is calculated to deceive those whose legitimate concern is the enforcement of the laws controlling trade in and consumption of narcotics. Such a prescription is more than a direction to the pharmacist. It plays an integral part in the system of control and, if not a true prescription, may throw that system awry. It is clear that respondent was conscious of those facts, and therefore we must hold that his conduct constituted “ fraud or deceit ” under section 6514.

The doctor’s hitherto unblemished record, his generous contributions to public service, and his excellent reputation in the community, are persuasively set forth by the court below. Although those factors cannot outweigh the clear indication that he knew the nature of his acts, they should be significant to the board in exercising its broad discretion to frame the appropriate discipline, for the offense and for the offender. While exercise of that discretion is beyond our power to review, those considerations will be open to the board upon remittitur.

The order of the Appellate Division should be reversed, the determination of the Board of Regents annulled, and the matter remitted to the Board of Regents for further proceedings not inconsistent with the opinion herein, with costs in this court and in the Appellate Division to the appellant.

Loughran, Ch. J., Lewis, Conwat, Desmond, Dye and Ftjld, JJ., concur.

Order reversed, etc.