author: Desmond, J. Lewis, J.

text:
    In the Matter of Bernice Halpern, as Executrix of Henry Halpern, Deceased, Appellant. Lila L. Lerner, as Guardian of Sandra J. Lerner, Also Known as Sandra J. Siegel, Respondent.
    Submitted April 5, 1951;
    decided July 11, 1951.

      Sigmund Moses for appellant.
    I. The bank deposits in the form of so-called Totten trusts are illusory transfers in fraud of the widow’s rights and as such are entirely void and are part of decedent’s estate. (Newman v. Dore, 275 N. Y. 371; Krause v. Krause, 171 Misc. 355, 285 N. Y. 27; Debold v. Kinscher, 268 App. Div. 786, 294 N. Y. 668; Burns v. Turnbull, 266 App. Div. 779, 294 N. Y. 889.) II. The Appellate Division was in error in sustaining the Totten trusts as to remainder after payment of the widow’s statutory share. (Burns v. Turnbull, 294 N. Y. 889; Matter of Totten, 179 N. Y. 112.) III. The principles of Matter of Totten (179 N. Y. 112) are not applicable herein, since decedent did not die intestate. Therefore, a presumption of irrevocability at time of death could not arise. (Morris v. Sheehan, 234 N. Y. 366.) IV. The tentative trusts created by the savings bank deposits never became absolute or irrevocable. They continued to be the property of decedent and title thereto and control thereof at all times remained in decedent. The presumption that the alleged tentative trusts became absolute and irrevocable at his death was overcome by his acts and conduct, which . clearly constituted disaffirmance of and revocation of said tentative trusts. (Morris v. Sheehan, 234 N. Y. 366; Walsh v. Emigrant Ind. Sav. Bank, 176 N. Y. S. 418, 192 App. Div. 908, 233 N. Y. 512.)

      Herbert Williams and Sydney P. Rappaport for respondent.
    I. The savings bank accounts are valid and bona fide trusts. (Harrington v. Harrington, 290 N. Y. 126.) II. Totten trusts are not invalid testamentary dispositions. (Matter of Totten, 179 N. Y. 112; Matter of Ellis, 178 Misc. 491.) III. The petition fails to put in issue section 18 of the Decedent Estate Law or the widow’s rights thereunder. The widow failed to elect to take against the terms of the will. Petitioner, therefore, cannot now rely on or invoke section 18 of the Decedent Estate Law. (Matter of Paskievitz, 184 Misc. 320; Matter of Zweig, 145 Misc. 839; Matter of Hearn, 158 Misc. 370; Matter of Wurmbrand, 194 Misc. 203; Matter of Vicedomini, 195 Misc. 1057.) IV. In no event is the widow entitled to more than one third of decedent’s estate, that being her intestate share under section 18 of the Decedent Estate Law. (Krause v. Krause, 285 N. Y. 27; Matter of Zweig, 145 Misc. 839; Matter of Topazio, 175 Misc. 132.) V. Petitioner cannot rely on section 18 and also take under the will. (Matter of Cunningham, 20 A. 714 [Pa.]; Matter of Byrnes, 149 Misc. 449; Matter of Curley, 160 Misc. 844.)
   Desmond, J.

Appellant-executrix seeks by this discovery proceeding to bring into the estate of her deceased husband, of whose will she is the sole beneficiary, four savings bank accounts. Each of those accounts was opened by the husband (decedent), fifteen months before his death, in his own name in trust for respondent, his infant grandchild, th^it is, as “ Totten trusts ”. The balances in those four accounts, when he died, totaled about $14,000. His gross estate (other than those bank accounts) was of the value of about $3,300.

Petitioner’s theory is that “the aforesaid purported trust accounts are illusory in that decedent retained full and complete control and exercised full dominion over said accounts at all times ”, and that they are, therefore, assets of the estate. Eespondent’s submission is that the bank accounts, as bona fide Totten trusts, became respondent’s absolute property, at decedent’s death.

The will, naming petitioner wife as executrix and sole beneficiary, was executed in 1939. In 1946, at about the time decedent and appellant ceased living together, these four accounts were opened by decedent in four savings banks. Decedent afterwards made several deposits in one of the accounts and one deposit in another, but made no withdrawals from any of them, and never in any way disaffirmed or revoked any of the trusts. There is testimony that decedent several times told people that he wanted his granddaughter Sandra (respondent) to have his bankbooks. Before his death he turned over one book to Sandra’s mother. The other three books were in his safe-deposit box when he died.

The Surrogate held that the transfers were all illusory, and that the estate owned the entire proceeds thereof. In so ruling, the Surrogate did not find that there was in fact anything unreal or fictitious about the setting up of these deposits, or that decedent had any intent except that his granddaughter should have them at his death. The Surrogate’s opinion was, in essence, this: that under Krause v. Krause (285 N. Y. 27), and Burns v. Turnbull (294 N. Y. 889), a trust by a husband, made for the the purpose of defeating his wife’s expectant interest in his property, is illusory and void.

The Appellate Division modified the Surrogate’s order by directing that there should be paid into the estate not the whole balance of the accounts, but so much only as should be necessary to give the widow her share, as in intestacy (Decedent Estate Law, §§ 18, 83), of the whole property left by her husband, including the bank balances. The Appellate Division, like the Surrogate, concluded that these transfers were illusory, but it is clear again that the appellate court, like the trial court, found them illusory, not on any proof that they lacked actuality or reality, but solely because they were made for the purpose of keeping the widow from collecting that share of her husband’s property allotted to her (under certain circumstances) by the two above-quoted sections of the Decedent Estate Law.

We hold that respondent’s legal position is correct, and that these Totten trusts were, on this record, valid, effective and not illusory. It is, perhaps, regrettable that any husband resorts to such transfers to'keep his money from his wife. But Totten trusts, if real and not merely colorable or pretended, are valid transfers with legally fixed effects. Section 18, as this court pointed out in Newman v. Dore (275 N. Y. 371, 379), citing Leonard v. Leonard (181 Mass. 458), gives to a wife, not an absolute right which attaches to all her husband’s property as soon as he acquires it, but “ only an expectant interest in the property of her husband which becomes part of his estate ” (see, to the same effect, Judge Cranp’s statement in Herrmann v. Jorg enson, 263 N. Y. 348, 356). That Newman decision said (and we repeated the same language in Krause v. Krause, supra, p. 31) that the only sound test of the validity of a challenged transfer ” is “ whether the husband has in good faith divested himself of ownership of his property or has made an illusory transfer.” In Krause v. Krause, applying that test, we concluded that, on the unusual facts there established, the weight of evidence favored the holding of the trial court that decedent Krause had never intended that his Totten trust, made in favor of his daughter who lived in a foreign country and from whom he had not heard in years, should have any real effect, or that the money should ever go to the faraway daughter. But there is no evidence in the present record which would justify any such finding. All the proof here is that decedent wanted his granddaughter to have the bank balances, and that he put, and left, the money in the banks so she would get it. Censurable though his motive may have been, he was doing what the law allowed. Unworthiness of motive could not make illusory an otherwise complete transfer. It is true that in all three of the eases cited by the Appellate Division (Newman v. Dore, Krause v. Krause and Burns v. Turnbull, all supra) the attempted trusts (a Totten trust in the Krause case, inter vivas trusts in the others) were held illusory. But in each of those cases the finding of illusoriness was made on a factual showing of unreality, and not solely because the transfers operated to, and were intended to, defeat the widow’s expectancy.

There is nothing illusory about a Totten trust as such. Wo take notice that great numbers of them exist, many in favor of young children. Their legal effect was pronounced long ago (1904) in Matter of Totten (179 N. Y. 112, 126), as follows: “ In case the depositor dies before the beneficiary without revocation, or some decisive act or declaration of disaffirmance, the presumption arises that an absolute trust was created as to the balance on hand at the death of the depositor. ’ ’ That rule must be applied here, in the absence of any proof that these transfers were intended only as a mask for the effective retention by the settlor of the property which in form he had conveyed” (Newman v. Dore, 275 N. Y. 371, 381, supra). Since there was no such evidence here, these Totten-trusts were like all other Totten trusts, and, when the depositor died, they were completely effective (1 Scott on Trusts, § 58.3, p. 360), and had the automatic and immediate consequence of putting absolute ownership in the infant beneficiary. Perhaps it may seem that we are 1 putting the legislative policy of section 18 to rout by use of the - court made (but legislatively recognized, see Banking Law, § 239, subd. 2) rule of the Totten case. But the Legislature has made no effort to interfere with the impact of Totten trusts in this connection, nor has the Legislature, despite the test announced in 1937 in Newman v. Dore, done anything to save a wife from disinheritance by means of an effective trust erected in a husband’s lifetime, for that purpose. It is the simple ’ fact that section 18 does not affect the disposition of property inter vivas (Newman v. Dore, p. 378).

Applicable here is the language and thought of Inda v. Inda (288 N. Y. 315), as to the effect of a joint savings bank account, as against a claim of illusoriness. This court noted, in the Inda opinion (p. 317), that the Banking Law preserves as to joint accounts (just as it does as to Totten trust deposits), “ the form of deposit * * * as a lawful and convenient method for the transmission of property.” This court concluded, in the Inda case, that, whatever may have been the actual intent of the depositor, everything required by law for the creation of a joint tenancy had been done, and, therefore, the settled legal result followed, as of course.

Two other matters should be noticed. First, we point out that this widow, being the sole testamentary beneficiary, had no right to file, and could accomplish nothing by filing, a notice under section 18 (supra) of intention to “ take against the will ”. If, as executrix (see McQuaide v. Perot, 223 N. Y. 75, 79) she had been successful in getting these moneys into the estate, she would have, as beneficiary, gotten the full benefit thereof. That brings us to the second matter. The Appellate Division, reasoning further from its conclusion that these trusts were illusory because destructive of section 18 benefits, decided that only so much thereof should be set aside as was required to put the widow in the section 18 position. Strictly, the correctness of that part of the Appellate Division’s order is not before us, since the infant took no appeal and there is thus no objection, in this court, to that partial award to petitioner. However, the question is important, and if we affirmed without discussing it, we would be thought to be in agreement with the Appellate Division. We see no power in the courts to divide up such a Totten trust and call part of it illusory and the other part good. The only test is that quoted above, from Newman v. Dore (supra) said Krause v. Krause (supra), and the result of its application would necessarily be either total validity or total invalidity, as to any one transfer.

For the reasons given, the order should be affirmed, with costs to all parties appearing separately and filing separate briefs payable out of the estate.

Lewis, J.

(concurring). By this discovery proceeding — instituted pursuant to section 205 of the Surrogate’s Court Act — Bernice Halpern, as executrix of the will of her deceased husband,- would have four bank accounts in four separate savings banks in trust for Sandra Jean Lerner declared to be the property of the decedent’s estate and demands that all moneys in those accounts be delivered to her as executrix. The beneficiary of the trusts, Sandra Jean Lerner, is a granddaughter of decedent and a respondent in this proceeding.

After a trial the Surrogate of Bronx County held that the four savings bank trusts (Totten trusts) were illusory in their entirety; that the moneys therein were the property of the estate and should be paid over to petitioner. (197 Misc. 502.) At the Appellate Division the decree of Surrogate’s Court was modified on the law and facts, it being the view of that court that the trusts were illusory only to the extent that they encroached upon the share to which the widow was entitled under sections 18 and 83 of the Decedent Estate Law. (277 App. Div. 525.) The executrix appeals to this court as of right from the Appellate Division’s order of modification.

On January 23, 1948, Henry Halpern died leaving a will, executed January 5, 1939, by the terms of which he named his wife, Bernice Halpern — the petitioner herein — as sole legatee and executrix. It appears, however, that in November, 1946, decedent and his wife separated and were living apart at the time of his death. - -

After decedent’s death his executrix found in his safe-deposit box three savings bankbooks issued by Lincoln Savings Bank of Brooklyn, The Greater New York Savings Bank and Flatbush Savings Bank. The legend inscribed on each of those books shows an account of Henry Halpern in trust for Sandra Jean Siegel ”, who, as already noted, is a granddaughter of decedent. A fourth bankbook, issued by Broadway Savings Bank, was found among decedent’s possessions, after his death, by his daughter Lila Libbe Lerner — mother of Sandra Jean. This book which bore the inscription “ Henry Halpern” was subsequently turned over to the petitioner by Lila Libbe Lerner. When the petitioner attempted to withdraw money from that account in the Broadway Savings Bank, she was informed that, according to the bank records, the account was in the name of “ Henry Halpern, in trust for Sandra Jean Siegel.”

The decedent’s last will and testament was admitted to probate and letters testamentary were issued on May 22, 1948, to the petitioner, the named executrix. However, the bankbooks and the four deposits totaling $13,934.51 were not included as part of the decedent’s estate in the petition for probate.

It is conceded that the petitioner did not at any time file as decedent’s widow a notice of election under section 18 of the Decedent Estate Law. It also appears that — as provided by the will — she has received all of decedent’s estate totaling $3,290.94 not including, however, any of the funds in the four savings bank accounts.

About August 22, 1949 — one year and three months after the will was probated — the petitioner instituted this proceeding, her claim being that the four savings bank accounts are the property of the decedent’s estate and that the funds therein should be turned over to her as executrix. In support of t.hut claim the petitioner argues: (1) that the Totten trusts — constituting testamentary transfers of property — are void in violation of section 21 of the Decedent Estate Law; (2) that these particular Totten trusts were revoked by the testator’s acts and conduct; and (3) that in any event these Totten trusts are illusory and must be declared void since they violate sections 18 and 83 of the Decedent Estate Law.

We find no merit in plaintiff’s first argument that Totten trusts are invalid as testamentary transfers. The rule as to that type of bank account was established long ago in Matter of Totten (179 N. Y. 112, 125-126), where it was stated: “ A deposit by one person of his own money, in his own name as trustee for another, standing alone, does not establish an irrevocable trust during the lifetime of the depositor. It is a tentative trust merely, revocable at will, until the depositor dies or completes the gift in his lifetime by some unequivocal act or declaration, such as delivery of the pass book or notice to the beneficiary. In case the depositor dies before the beneficiary without revocation, or [there has been] some decisive act or declaration of disaffirmance, the presumption arises that an absolute trust was created as to the balance on hand at the death of the depositor.” (And see 1 Scott on Trusts, pp. 359, 360.)

The petitioner’s second argument — that the four Totten trusts were revoked by testator’s acts and conduct — is also, in our view, without merit. We have seen that three of the four bankbooks were found by petitioner in decedent’s safe-deposit box at the time of his death, and that thereafter the fourth bankbook was found by his daughter among his personal belongings. On this branch of the case there was testimony by the decedent’s daughter that just prior to his death he had stated to her — “ 1 I have a few bank books for the child ’ ’ ’ and “ ‘ * * * when I go, I want it to go to the baby, Tanda [Sandra Jean]. ’ ” Upon evidence of record before us we conclude the courts below correctly ruled that during his lifetime the decedent in no way revoked or disaffirmed the four Totten trusts.

We come then to petitioner’s third argument, viz., that the four Totten trusts are illusory and, therefore, under the decisions in Newman v. Dore (275 N. Y. 371), Krause v. Krause (285 N. Y. 27), and Burns v. Turnbull (294 N. Y. 889), the savings bank accounts were the property of the estate of the decedent, disposition of which should be governed by the terms of his will.

Although each of the fact-finding courts — the Surrogate and the Appellate Division — have held that the Totten trusts here involved were illusory, they disagreed as to the legal effect of this type of an illusory transfer. Belying chiefly on the rule of Burns v. Turnbull (supra), the Surrogate agreed with the petitioner’s contention, found the trusts to he entirely illusory and decreed that they were the property of the decedent’s estate to the exclusion of the named beneficiary of each trust.

At the Appellate Division, where the Surrogate’s decree was modified, the Totten trusts were held to be illusory but were set aside only to the extent that they encroached upon the widow’s share in the decedent’s estate as provided under sections 18 and 83 of the Decedent Estate Law. It is the position of the respondent as beneficiary of these savings bank trusts that petitioner’s only right to share therein is by virtue of section 18 of the Decedent Estate Law and that, since she has failed to file an election to take against the terms of the will as the statute requires, she may not rely upon, nor may she invoke that section for the purpose of setting aside the trusts. Bespondent further argues that at best the trusts should be set aside only to the extent necessary to guarantee the widow her intestate share and that they are not wholly invalid.

The legal effect of an illusory transfer which is in conflict with statutory rights to which a surviving spouse may be entitled under sections 18 and 83 of the Decedent Estate Law was considered in Newman v. Dore (275 N. Y. 371, supra). In that case — which did not involve a Totten trust — the court ivas concerned with whether a trust set up by a husband during his life could under any circumstances constitute an unlawful invasion of the expectant interest of his wife. There the decedent had left a will which created a trust of one third of his property for his wife. Just prior to his death, however, he had established an inter vivas trust of all his property — naming as beneficiaries persons other than his wife. Under that trust agreement the decedent as settlor had retained almost complete control of the trust property. In an action by the beneficiary to compel the trustee to carry out the terms of the trust it was held that the trust was illusory and therefore could not be used as a means of defeating the expectant interest of the wife in her husband’s estate. In the opinion of this court per Lehman, J., it was said (p. 379): “ Since the law gives the wife only an expectant interest in the property of her husband which becomes part of his estate, and since the law does not restrict transfers of property by the husband during his life, it would seem that the only sound test of the validity of a challenged transfer is whether it is real or illusory. * ° * The test has been formulated in different ways, but in most jurisdictions the test applied is essentially the test of whether the husband has in good faith divested himself of ownership of his property or has made an illusory transfer. ’ ’ After referring to the rule in other jurisdictions where the problem had been considered, the opinion continues (p. 380): In no jurisdiction has a transfer in trust been upheld where the conveyance is intended only to cover up the fact that the husband is retaining full control of the property though in form he has parted with it. Though a person may use means lawfully available to him to keep outside of the scope of a statute, a false appearance of legality, however attained, will not avail him. Reality, not appearance should determine legal rights.” From that opinion it is apparent that the court was chiefly concerned with its ruling that by means of an illusory trust a spouse may not be deprived of statutory rights to which he or she is entitled. (Cf. Krause v. Krause, 285 N. Y. 27, supra; Burns v. Turnbull, 294 N. Y. 889, supra.)

The decision in none of the three cases to which reference is last made above deals with the question presented by the order of the Appellate Division, viz., whether the four Totten trusts here involved should be set aside in their entirety or only to the extent necessary to guarantee the widow her intestate share thereof under section 18 of the Decedent Estate Law. For reasons presently to be stated that question is not a factor in the determination of this appeal.

The order of the Appellate Division, as we have seen, determines that the four Totten trusts are illusory to the extent that they encroach upon the widow’s share in the decedent’s estate “ guaranteed under sections 18 and 83 of the Decedent Estate Law”. The four trusts are sustained by the Appellate Division order with respect to what remains after the widow shall have received under the will the equivalent of the share ‘ ‘ guaranteed to her by sections 18 and 83 of the Decedent Estate Law ” computed as though the balance in said accounts had been part of the decedent’s estate at the time of his death. Such a dispositian of the case — which would entitle the widow to take her intestate share in bank deposits comprising the four Totten trusts — manifestly has as its basis an assumed legal right in the petitioner to invoke the benefits to which she is entitled as a widow under section 18. Such an assumption disregards the fact that in that statute there is no unconditional guarantee that a surviving wife will receive her intestate share of her deceased husband’s estate. Where there is a will the statute requires an election by a spouse within a prescribed time to take his or her share of the estate as in intestacy “ * * * subject to the limitations, conditions and exceptions contained in this section.” One of those conditions is that “ an election * * * must be made within six months from the date of the issuance of letters testamentary * * (§ 18, subd. 7.) As was stated in Beechler on Elections Against Wills at page 358 : “ * * * Section 18 controls in the event that the deceased spouse dies testate, and the rights thereby granted are granted on condition that the surviving spouse perform the acts specified in the statute. Thus the survivor has the right to abide by the terms of the will, whether the will contains sufficient provisions, or inadequate provisions, or no provisions at all, for such survivor. If such survivor does not desire to abide by the terms of the will, then he or she must perfect a notice of the election, to take against the will, as provided by subdivision 7 of section 18.” (Emphasis supplied.)

Here, concededly, the petitioner has never filed a -notice of election to take against the terms of her husband’s will. Accordingly she cannot take advantage of benefits afforded by section 18; nor can she avoid the legal consequences of her failure to comply with the conditions contained in that section.

Moreover, the present discovery proceeding has been instituted by the petitioner as executrix of the decedent’s will, not by her individually, as widow, to enforce her rights, if any, under section 18. Whatever personal rights the petitioner, as widow, may have in the estate of her husband, may not be enforced in a proceeding, such as the one before us, brought by her as executrix. “ It has been repeatedly held that persons suing or being sued in their official or representative capacity are, in contemplation of law, distinct persons, and strangers to any right or liability as an individual * * *." (Leonard v. Pierce, 182 N. Y. 431, 432; Collins v. Hydorn, 135 N. Y. 320, 324; Boyd v. United States Mtge. & Trust Co., 187 N. Y. 262, 272; and see Matter of Sullivan, 264 App. Div. 65, 68.)

Despite the foregoing considerations, which are set forth to indicate wherein we are not in agreement with the rationale of the Appellate Division order, we are constrained to affirm that order by reason of the fact that no appeal therefrom was taken in behalf of the infant beneficiary of the Totten trusts. (See Ginsberg v. City of Long Beach, 286 N. Y. 400, 403).

The order should be affirmed, with costs to all parties payable out of the estate.

Loughran, Ch. J., Dye and Fuld, JJ., concur with Desmond, J.; Lewis, J., concurs in result in separate opinion in which Conway and Froessel, JJ., concur.

Order affirmed.

        Matter of Totten (179 N. Y. 112).


source: Caselaw Access Project

author:
Lewis, J. Fuld, J.
      Desmond, J.

license: Public Domain

text:
    In the Matter of Michael J. Barry, Appellant, against John F. O’Connell et al., Individually and as Members of the State Liquor Authority, Respondents.
    Argued April 3, 1951;
    decided July 11, 1951.

      Monroe I. Katcher, II, and Jerome S. Heller for appellant.
    I. Respondents’ finding No. 1 states a mere conclusion without specific factual basis and has been tacitly abandoned by respondents as a reason for license disapproval. (Securities & Exch. Comm. v. Chenery Corp., 332 U. S. 194; Heitmeyer v. Federal Communications Comm., 95 F. 2d 91; Matter of Pollock v. Board of Regents, 266 App. Div. 696, 291 N. Y. 720; Matter of Muoio v. O’Connell, 276 App. Div. 1050.) II. Respondents’ disapproval herein is based upon a ground which, under section 2 of the Alcoholic Beverage Control Law, respondents may not consider. Respondents possess statutory discretion to determine public “ convenience ” and “ advantage ”, but possess no discretion whatever to legislate and apply a nonstatutory standard of public “ need ”. (Matter of Yacht Club Catering v. Bruckman, 276 N. Y. 44; Matter of Levine v. O’Connell, 275 App. Div. 217, 300 N. Y. 658; Matter of Picone v. Commissioner of Licenses, 241 N. Y. 157; Matter of Smith v. Morgan, 253 App. Div. 239; Tru-Blu Beverage Co. v. Doran, 32 F. 2d 971; Lord v. Delaware Liq. Comm., 17 A. 2d 230 [Del.].)

      Alvin McKinley Sylvester for respondents.
    I. The material facts relating to the location of other liquor stores, population, character of the neighborhood and the proposed operation of the confectionery and liquor stores as a joint enterprise were undisputed. Only a question of law was involved and the granting of a jury trial by Special Term was erroneous. (Matter of Snetlage v. O’Connell, 271 App. Div. 1015, 297 N. Y. 707; Matter of Pichacz v. O’Connell, 272 App. Div. 755, 297 N. Y. 981; Matter of Glintenkamp v. O’Connell, 271 App. Div. 795, 296 N. Y. 806.) II. Proximity of appellant’s premises to similarly licensed liquor stores, and the fact that it was proposed to operate a confectionery store in the same building and in conjunction with the liquor store, constituted ample basis for the reasonable exercise of discretion by the Authority in refusing to issue this license. (Matter of Snetlage v. O’Connell, 271 App. Div. 1015, 297 N. Y. 707; Matter of Glintenkamp v. O’Connell, 271 App. Div. 795, 296 N. Y. 806; Matter of Pichacz v. O’Connell, 272 App. Div. 755, 297 N. Y. 981; Matter of Larkin Co. v. Schwab, 242 N. Y. 330; Handler v. Doelger Brewing Corp., 173 Misc. 173, 259 App. Div. 846; Matter of Roccaforte v. O’Connell, 271 App. Div. 831, 296 N. Y. 938; Matter of Finn v. O’Connell, 271 App. Div. 896, 297 N. Y. 607.)
   Lewis, J.

This is a proceeding under article 78 of the Civil Practice Act to review a determination of the State Liquor Authority which disapproved an application by the petitioner-appellant for a license to sell liquor for off-premises consumption at a site in the hamlet of Verplanck, Westchester County, New York.

Although Verplanck has a population of between 2,100 and 2,350, which increases to 5,000 in the summer season, there is in that unincorporated community no licensed store for the sale of liquor for off-premises consumption. The nearest stores of that character are in Buchanan — a village one and one-half miles distant having a population of 1,600, where two licensed stores are located — and Peekskill, four miles distant where there are eight licensed liquor stores.

Upon a petition for a retail liquor license filed by the present appellant with the Westchester County Alcoholic Beverage Control Board, that board, after a full investigation, determined that public convenience and advantage in Verplanck would be served by the issuance of the license for which the petitioner had applied. After noting its approval thereupon, the local board forwarded the petition to the State Liquor Authority with a report of its investigation, a digest of its findings and other related data submitted in connection therewith. Thereafter, following a hearing, the Authority disapproved the application by sending to the petitioner the following written notice:

Notice of Disapproval
Please take notice that your application for a retail license is hereby disapproved by the State Liquor Authority for the following reasons:
1. Under all the circumstances in this case it is not conducive to the proper regulation and control of the distribution and sale of alcoholic beverages to issue this license.
“2. In view of the type of neighborhood, there is no need for a package store at the location applied for.
“ A request will be forwarded to the Comptroller to have refunded to you the license fee deposited at the time of filing your application. As prescribed by the Alcoholic Beverage Control Law, this refund is subject to a deduction of $15.00 (135.00).
By order of
State Liquor Authority
John P. O’Connell
Chairman.”

Exercising the right given by subdivision 1 of section 121 of the Alcoholic Beverage Control Law (hereinafter referred to as the “A. B. C. Law ”) the petitioner instituted the present proceeding to review the adverse determination by the Authority. At Special Term the petitioner’s application was granted to the extent of directing a jury trial in accord with section 1295 of the Civil Practice Act and the court denied the Authority’s motion to strike from the petition and reply certain exhibits annexed thereto. At the Appellate Division the order of Special Term was reversed on the law and the proceeding was dismissed.

Mindful that, by its enactment of the A. B. C. Law, the Legislature declared its purpose to be to provide for the location of off-premises liquor stores in neighborhood communities where they will most effectively serve “ public convenience and advantage ” (§ 101-c, subd. 1, id., emphasis supplied), and that the statute * * * shall be so construed as to assure that the policy of the state and the intent and purpose thereof will be carried out ” (§ 150 id.), we do not regard the ruling by the respondent Authority — comprised, as it is within the “ Notice of Disapproval ’’.quoted above — to be a compliance with the declared legislative “ intent and purpose ” which prompted the enactment. (See A. B. C. Law, § 101-c, subd. 1.)

Nor is it" a compliance with what we believe to have been the Legislature’s ‘ ‘ intent and purpose ’ ’ when — anticipating a problem such as that with which we are now concerned— it made the following mandatory provision: “ * * * In the event that the liquor authority refuses to issue such license it shall state and file in its office its reasons therefor * * * ” (§ 54, subd. 2 id.). We assume, as we must, that the “ reasons ” stated by the Authority to the petitioner as the basis of its action are those reasons ” which, pursuant to statute, were filed in its office.

Accordingly, as the “ Notice of Disapproval ”, quoted in full above, constitutes the only formal notice sent to advise the applicant of action by the Authority that his application for a license had been denied, our inquiry, as a court of review, goes to the legal ■ adequacy of that determination and the stated ‘ ‘ reasons therefor ’ ’. To that end the Legislature, in framing the statute with which we are concerned, was careful to make the following provision (A. B. C. Law, § 121, subd. 1):

“ Review by courts. The following actions by the liquor authority shall be subject to review by the supreme court in the manner provided in article seventy-eight of the civil practice act "or by any other appropriate remedy * * *:
“ 1. Refusal by the liquor authority to issue a license or a permit. * * * ”

In the course of performing our function as a court of review we have had in mind a statement made by high authority in its consideration of a kindred problem: “ * * * a reviewing court, in dealing with a determination * * * which an administrative agency alone is authorized to make, must judge the propriety of such action solely by the grounds invoked by the agency. If those grounds are inadequate or improper, the court is powerless to affirm the administrative action by substituting what it considers to be a more adequate or proper basis.” ( Securities & Exch. Comm. v. Chenery Corp., 332 U. S. 194, 196.)

Concluding, as we do, that the grounds for the Authority’s action, as stated in its “ Notice of Disapproval ”, are inadequate in that they do not meet the requirement of subdivision 2 of section 54 (quoted above), we note first that the two “ reasons ” given by the Authority are conclusory in character and entirely lacking in a statement of the factual considerations which led to those conclusions. Standing alone those conclusions, in our view, are not the “ reasons therefor ” mandated by the statute. They do not “ * * * enable the parties and any appellate court intelligently to determine whether the decision follows as a matter of law from the facts stated as its basis and whether the findings of fact have any substantial support in the evidence.” (Matter of New York Water Service Corp. v. Water Power & Control Comm., 283 N. Y. 23, 30; and see Matter of Elite Dairy Products v. Ten Eyck, 271 N. Y. 488, 498; Matter of Collins v. Behan, 285 N. Y. 187, 188.)

That infirmity — the lack of a statement of facts upon which the determination rests — accentuates the prejudice to the applicant’s position in this proceeding resulting from the Authority’s failure to state, as findings of fact, what are “ all the circumstances ” which led to the determination that “it is not conducive to the proper regulation and control of the distribution and sale of alcoholic beverages to issue this license and what is the “ type of neighborhood ” in Verplanck which prompted the decision that “ there is no need for a package store at the location applied for ” (emphasis supplied) — despite the fact of record herein that more than 400 residents of that hamlet signed petitions in support of the granting of a liquor license for off-premises consumption as “a public convenience to hundreds of people.”

It is thus made clear that where, as in this case, an unsuccessful applicant for a license invokes the statutory right to review the action of the Authority, the lack of a statement of the factual basis for the determination not only burdens the applicant in preparing his challenge to the determination, but also impedes the court in its review of that determination. ‘ ‘ If the administrative action is to be tested by the basis upon which it purports to rest, that basis must be set forth with such clarity as to be understandable. It will not do for a court to be compelled to guess at the theory underlying the agency’s action; nor can a court be expected to chisel that which must be precise from what the agency has left vague and indecisive. In other words, ‘ We must know what a decision means before the duty becomes ours to say whether it is right or wrong.’ ” (Securities & Exch. Comm. v. Chenery Corp., supra, pp. 196-197.)

Passing from a consideration of that portion of the Authority’s Notice oe Disapproval ”, which lacks a recital of those facts upon which the eonclusory statements therein are based, we refer to the decisive use to which the word “ need ” is put, which, in our view, invalidates the determination.

Although the standard fixed by the Legislature for locating ‘ ‘ off premises liquor and wine stores in neighborhood communities ’ ’ is required to be a location ‘ which most effectively serves public convenience and advantage ” (A. B. C. Law, § 101-c, subd. 1, emphasis supplied), the Authority, in its second reason — already noted — for disapproving the petitioner’s application, stated its conclusion to be 11 In view of the type of neighborhood, there is no need for a package store at the location applied for.” (Emphasis supplied.)

The word “ need ”, chosen by the Authority, is not synonymous with either ‘ ‘ convenience ” or ‘‘ advantage ’ ’ — chosen by the Legislature to define the standard it intended to fix. Bather do we think — and indeed it is significant to our problem — that the word ‘ ‘ need ’ ’ connotes a degree of urgency or imperativeness which the statutory phrase “ convenience and advantage ” does not import. True it is that, as a reviewing court, we owe deference to the Authority — an administrative board — in the exercise of its discretion within the law. That discretion, however, cannot be invoked outside the law. It is for the courts, not for administrative boards, to determine what action is within, or without the law. Upon that subject this court, in the consideration of a similar problem, has said per Pound, J.: “ Laws are made by the law-making power and not by administrative officers acting solely on their own ideas of sound public policy, however excellent such ideas may be.” (Matter of Picone v. Commissioner of Licenses, 241 N. Y. 157, 162.)

Within that rule we think that, when the Authority denied the petitioner’s application for a license, by choosing and considering “ need ” as the standard for locating an oil-premises liquor store in the hamlet of Verplanck, instead of employing to that end the statutory standard of “ convenience and advantage ”, the Authority disregarded the standard fixed by the Legislature and arrogated to itself power in excess of that which it possesses as an administrative board.

Accordingly, the order of the Appellate Division should be reversed, and the determination of the State Liquor Authority annulled, with costs to the petitioner-appellant in this court and in the Appellate Division and the matter remitted to the Authority for further proceedings not inconsistent with the decision herein.

Fuld, J.

(concurring). In a case such as this, where the local Alcoholic Beverage Control Board approved the application for a license, the State Liquor Authority is not required by statute to grant a hearing to the applicant. (Alcoholic Beverage Control Law, § 63, subd. 2; § 54, subds. 2, 3; see, also, Matter of Glenram Wine & Liq. Corp. v. O’Connell, 295 N. Y. 336, 342.) That being so, I do not believe that the Authority is under the necessity of making specific or formal findings of fact even though the Authority may, as a matter of grace, grant a hearing. (Cf. 1 Benjamin, Administrative Adjudication in the State of New York, p. 253, fn. 3.) I concur for reversal, however, on the limited ground that, so far as appears from the record before us, the Authority, in refusing a license to petitioner for the reason that there was no “ need ” for a retail liquor store, employed a standard different from that fixed by the Legislature (Alcoholic Beverage Control Law, § 2). Until a proper standard is applied by the Authority, there is no necessity to consider or pass upon the validity of the determination.

The order of the Appellate Division should be reversed, the determination of the State Liquor Authority annulled and the proceeding remitted to the Authority for further consideration on the basis of the standards prescribed by the statute.

Desmond, J.

(dissenting). In this mandamus type proceeding under article 78 of the Civil Practice Act, petitioner-appellant asks the courts to overrule a determination of the State Liquor Authority and command that body to issue to petitioner a license to sell alcoholic beverages, for off-premises consumption, in a building owned by him in the hamlet or unincorporated village of Verplanck, Westchester County. The petition, alleging among other things that there is at present no such licensed “ package store ” in Verplanck, which, petitioner says, has an all-year population of 2,300 and a summer population of 5,000 persons, charges that the Authority’s denial of his application was arbitrary, unreasonable and capricious. The Authority’s answer denies any arbitrary action or attitude and points out that there are two licensed retail liquor stores in the village of Buchanan, one and a half miles from petitioner’s premises, and eight such shops in the city of Peekskill, four miles distant from Verplanck (it appears elsewhere in the record that there are three others in another community two miles away from Verplanck in another direction). Annexed to the answer is considerable written material embodying the results of an investigation of this application (there was no formal hearing and none is required by statute). Annexed also is the “ Notice of Disapproval ” sent by the Authority to petitioner and which sets forth these reasons:

1. Under all the circumstances in this case it is not conducive to the proper regulation and control of the distribution and sale of alcoholic beverages to issue this license.
‘1 2. In view of the type of neighborhood, there is no need for a package store at the location applied for.”

The first of those reasons is, we agree, so general in terms as not to amount to a factual finding. The second listed reason, however, is a plain statement that there is no need ’ ’ for a package store in the particular neighborhood. Besides its answer, the Authority put in an answering affidavit, by its chairman, in which he alleged, as an additional reason for denial, that petitioner operated a candy store largely patronized by children, in another part of the same building, and that the Authority felt that such proximity was not conducive to proper regulation of the sale of alcoholic beverages. Petitioner complains that this alleged additional reason was never brought to his attention until he was served with the chairman’s answering affidavit in this proceeding. Petitioner says he is quite ready to give up the candy store business, if necessary. We will treat the case as if the candy store matter had never been brought up at all.

Special Term, pointing out, among other things, that the Westchester County local board had approved the application, only to have it denied later by the State Authority, and that some 400 residents of Verplanck had signed a petition asking that the license be issued, ordered a jury trial of the charges of unreasonableness and arbitrariness. On appeal by the Authority, the Appellate Division, however, unanimously reversed the lower court’s order and dismissed this proceeding, noting that the facts were all undisputed, and holding that there was no basis upon which either a court or jury could decide that the State Liquor Authority acted arbitrarily or capriciously.” (277 App. Div. 882.) With that conclusion we agree.

The Legislature, in our present Alcoholic Beverage Control Law, has in the plainest, strongest language delegated to the Authority the State’s own undoubted power (Metropolitan Bd. of Excise v. Barrie, 34 N. Y. 657, 662 et seq.; Bertholf v. O’Reilly, 74 N. Y. 509, 521), to fix and limit the number of licensed liquor dealers. That delegation (unquestionably valid, see People ex rel. Doscher v. Sisson, 222 N. Y. 387; Freund on Police Power, § 652, quoted by Rodenbeck, J., in People ex rel. Reuther v. Sisson, 101 Misc. 429, 434) is found in sections 2 and 17 of the act. Section 2 declares it to be the State policy that it is necessary to regulate and control the manufacture and sale of alcoholic beverages, for the purpose of fostering temperance and obedience to law. There follows the legislative declaration “ that such policy will best be carried out by empowering the liquor authority of the state to determine whether public convenience and advantage will be promoted by the issuance of licenses to traffic in alcoholic beverages, the increase or decrease in the number thereof and the location of premises licensed thereby, subject only to the right of judicial review hereinafter provided for ” (italics supplied). Subdivision 2 of section 17 of the act empowers the Authority to limit in its discretion the number of licenses of each class to be issued within the state or any political subdivision thereof, and in connection therewith to prohibit the acceptance of applications for such class or classes of licenses which have been so limited.” It is significant that, by subdivision 2, the limiting of the number of licenses is specifically confided to the Authority’s “ discretion ”, while, in the very next subdivision (3), the power to revoke, cancel or suspend licenses is to be exercised for cause ” only. Certain causes for revocation, suspension or cancellation are set forth by the Legislature in careful detail in section 118, but as to original issuance, the whole matter is left, at large, to the Authority’s discretion. The legislative intent must have been this: that, within the framework of State policy as announced in section 2, the Authority was to have the broadest discretion to use its unfettered judgment in deciding whether or not to issue licenses in a particular place, even to the extreme of suspending the taking of applications in any particular locality or throughout the whole State. The reasons for this large grant of power are easy to see. They inhere in the liquor business itself, and are written large in the history of the attempts, in this State and elsewhere, to bring the traffic under regulation for its own good as well as for the public good (see Bertholf v. O’Reilly, supra; Cronin v. Adams, 192 U. S. 108). How many licensed taverns and package stores there should be is a question, not of law or even of demonstrable fact, but of judgment and informed opinion.

The Legislature in fairness recognized that, once such a license had been issued and the licensee had invested his money and his efforts in the business, the license should not be taken from him except for substantial cause, and the Legislature defined and listed such causes. But no one initially has a right to such a license. The decision as to how many, if any, there should be, in a locality was committed by the Legislature not to a referendum vote by citizens, or to a jury, or to the courts of original or appellate jurisdiction, but to the State Liquor Authority. Of course that grant was, by section 2, made “ subject only to the right of judicial review hereinafter provided for ” and subdivision 1 of section 121 authorizes a judicial review, in the manner provided by article 78 of the Civil Practice Act, of a “ refusal by the liquor authority to issue a license or a permit.” But that apparatus for judicial review does not limit the Authority’s express powers. It is a means for judicial investigation of questions as to whether the Authority has failed to act at all, or has exceeded or grossly misused its powers. No rational Legislature, having set up a bipartisan State Authority, appointed by the Governor and obviously intended as a powerful and distinguished organ of government, could have intended that the Authority’s discretionary decisions, in matters of pure judgment, should be overhauled by the courts. And I am unable to see how this or any other court could go about the business of determining whether or not there should be a liquor store in the hamlet of Verplanck. (Incidentally, a totaling up of figures in a table put into this record by petitioner shows that in 46 Westchester County communities with a combined population of 525,000, there are already 276 package stores, which number might, not unreasonably, be thought to be enough.)

Petitioner-appellant, recognizing all this, does not argue to us that the Authority’s ruling was without basis, on the facts before it. His attack is on the Authority’s findings as such. Analyzing the reasons assigned by the Authority for the refusal of his application, petitioner rejects the first assigned cause as being too general and vague to amount to a statement of a reason, and with that position of petitioner we agree. Then petitioner turns to the Authority’s second reason, viz.: that “ in view of the type of neighborhood, there is no need for a package store at the location applied for.” Petitioner nowhere argues that this does not amount to a definite statement of fact, but says that the Authority, in thus assuming to pass on the “ need ” for a store in Verplanck, was standing on a ground which it had no right to consider, under the statute. Pointing to the phrase “ public convenience and advantage ” in the policy declarations (supra), of section 2 of the act, petitioner tells us that “ need ” is no criterion and no proper subject of inquiry. Of course, saying there is no “ need ” is really the Authority’s shorthand formula for expressing its opinion that “ public convenience and advantage ” do not require, and would not be served by, a liquor store in the particular community. Basing license denials on “ need ” has not in other Liquor Authority cases, been considered by this court to indicate the use of illegal standards (see the following decisions, in some of which this same word ‘ ‘ need ’ ’ was used by the Authority in stating its grounds for denial, which grounds we approved, expressly or impliedly: Matter of Glintenkamp v. O’Connell, 296 N. Y. 806; Matter of Watinsky v. O’Connell, 297 N. Y. 552; Matter of Fiore v. O’Connell, 297 N. Y. 260; Matter of Snetlage v. O’Connell, 297 N. Y. 707; Matter of Pichacz v. O’Connell, 297 N. Y. 981). When the Authority says there is no need ’ ’ for a package store, it is obviously saying that public convenience and necessity do not call for one, and it would be idle for us to send the case back to the Authority so that it might substitute the statutory phrase for the word need ”. Since the enactment of this statute “ public convenience and advantage ” and need ” have been considered to be synonymous (see Matter of Fenson v. State Liq. Authority, 152 Misc. 446; Matter of Glintenkamp v. O’Connell, supra; Matter of Pickacz v. O’Connell, supra). And, certainly, we should not send the case back to force the Authority to recite in a formal decision the data on which it acted, when that data is all in the record here, all undisputed and most of it furnished to the Authority by petitioner himself.

A word more as to this matter of findings. Formal findings, showing grounds for action, are necessary and important when an administrative body acts quasi-judicially with a hearing, evidence, etc., as in the cases cited in the opinion of Judge Lewis, or, as to the Liquor Authority itself, when it revokes or cancels a license for cause after a hearing. In such situations, adequate judicial review can be had only on a formal statement of the administrative body’s reasons for its quasi-judicial decision. But the discretionary refusal of a license is no quasi-judicial act. The test of the legality of such a refusal is not whether there is substantial evidence ” to support it, but whether it is arbitrary or capricious ” (see Attorney-General Goldstein’s Report on Judicial Review of Administrative Action, 2 Syracuse L. Rev., No. 2, p. 200, also in N. Y. L. J., May 15, 16, 17, 1951). As this court put it in Matter of Stracquadanio v. Department of Health (285 N. Y. 93, 96): “ our inquiry is limited to a determination whether the record discloses circumstances which leave no possible scope for the reasonable exercise of that discretion in the manner of which the appellant complains.” Since the question before the Authority here was not one on which it had to make a decision on conflicting evidence, but one in which, without a formal hearing, it exercised its own good judgment and as to which it could not be overruled if there is any “ possible scope ” for its exercise of discretion, findings are of little consequence, one way or the other. Even assuming their necessity in the present case, we do not know how the Authority could better inform the courts of its reason than by saying that it found no need for a package store in Verplanck. Further findings, which could be no more than a recital of undisputed facts, could serve no purpose at all.

Appellant, while properly insisting on his right to an article 78 court review, is limited to those questions which that article makes reviewable, in such a situation as this. Those questions are set out in section 1296 of the Civil Practice Act. Of the reviewable issues there listed, one only is here present, that is, No. 1: “Whether the respondent failed to perform a duty specifically enjoined upon him [it] by law ” — in other words, the question of whether the Authority was bound by law to give petitioner his license. This is mandamus, and, under settled rules petitioner could not have mandamus from any court unless he proved a clear legal right to the license. What clear legal right of his could possibly be infringed here f Surely he does not claim he had a right to sell liquor at retail in Verplanck. Instructive in this connection is the exhaustive opinion of Justice Rodenbeck in People ex rel. Reuther v. Sisson (supra) construing a 1917 Liquor Tax Law amendment by which the Legislature limited the number of licenses in each town to not more than 1 per 500 inhabitants, and left to local commissions the final determination as to who should have those licenses. That resulted, in Reuther’s Case, in his losing a license he had long enjoyed. Summing up an elaborate examination of the law of liquor licensing, Justice Rodenbeck wrote (101 Misc. 429, 438-439): “ The legislature has the power to reduce the number of liquor licenses in the state by limiting the number that shall exist in proportion to the population and for the purpose of reducing the existing number may authorize a local commission to determine after investigation and inquiry which places shall be licensed and what places shall not be licensed and to provide that their determination shall be final and conclusive.” Justice Rodenbeck cited Matter of Hoover (30 F. 51, 55), where a Federal Judge wrote: Now, if the state may prohibit the sale of liquor altogether, since it is clearly not a ‘ privilege or an immunity ’ in the meaning of the constitution, may it not authorize the sale on such terms, by such persons, and at such places, as it thinks proper? And, if it may do this directly, may it not delegate to others the exercise of the power? It has simply delegated a portion of its sovereignty to the county commissioners of Chatham county. The commissioners, in the exercise of that sovereignty, refuse a license to the petitioner: The discretion must rest somewhere.” That Hoover opinion was written in 1887 which saves it from any charge of “ new-fangled ” distortion of the relationship between administrative bodies and courts. The historic fact is that liquor sale licensing has always been carried on just about as it appears in this record, and the courts have always realized that there was nothing quasi-judicial about a routine, discretionary denial of a license.

We do not see how subdivision 2 of section 54 of the Alcoholic Beverage Control Law (found in art. 4, but seemingly made applicable, by subdivision 2 of section 63, to license applications like this one) helps appellant. It requires the State Authority, in such a case as this, to “ state and file in its office its reasons ” for disapproval. It has certainly done so, in this instance. Subdivision 2 requires no hearing at all (see, for contrast, subdivision 3 of the same section 54 which, under circumstances not present here, does mandate a hearing).

The order should be affirmed, with costs.

Conway and Froessel, JJ., concur with Lewis, J.; Ftjld, J., concurs for reversal in separate opinion; Desmond, J., dissents in opinion in which Loughran, Ch. J., and Dye. J.. concur.

Order reversed, etc.


author: Froessel, J.

text:
    In the Matter of Samuel W. Corwin et al., Appellants, against Thomas F. Farrell et al., Constituting the New York City Housing Authority, et al., Respondents.
    Argued May 16, 1951;
    decided July 11, 1951.

      Sanford Solarz for appellants.
    I. The notices of dismissal of appellants were given in violation of section 6 of article V of the State Constitution and section 31-a of the Civil Service Law, and hence are null and void. (Palmer v. Board of Educ., 276 N. Y. 222; Matter of Turel v. Delaney, 285 N. Y. 16; Matter of Edkins v. Wotherspoon, 173 App. Div. 330; Danker v. Department of Health, 153 Misc. 502, 266 N. Y. 365; Matter of Kraus v. Singstad, 275 N. Y. 302; Matter of Wipfler v. Klebes, 284 N. Y. 248; Matter of Andresen v. Rice, 277 N. Y. 271; Matter of Neary v. O’Connor, 173 Misc. 696, 260 App. Div. 986.) II. The contracts for letting- out of title examination to the abstract corporation wer.e illegal since such contracts violated section 6 of article V of the State Constitution. (Palmer v. Board of Educ., 276 N. Y. 222; Matter of Turel v. Delaney, 285 N. Y. 16; Danker v. Department of Health, 153 Misc. 502, 266 N. Y. 365; Matter of Kraus v. Singstad, 275 N. Y. 302; Matter of Andresen v. Rice, 277 N. Y. 271.)

      Irving Wise, Gerald J. Carey and Abram Rothfeld for respondents.
    I. The contracts for title information do not involve an employer-employee relationship and consequently do not come within the purview of civil service requirements. (Matter of Drummond v. Kern, 176 Misc. 669; Matter of Civil Service Tech. Guild v. La Guardia, 181 Misc. 492, 292 N. Y. 586; Beck v. Board of Educ. of City of N. Y., 268 App. Div. 644, 295 N. Y. 717; Guastoferri v. Board of Educ. of City of N. Y., 270 App. Div. 946.) II. The contracts for title information having rendered appellants’ services unnecessary, the authority had the right and duty to abolish their positions. (Matter of Edkins v. Wotherspoon, 173 App. Div. 330; Matter of Wipfler v. Klebes, 284 N. Y. 248; Matter of Turel v. Delaney, 285 N. Y. 16.)
   Froessel, J.

The basic question in this article 78 proceeding is whether respondents, the New York City Housing Authority and the members thereof, acted legally in dismissing the seven appellants from their civil service positions as title examiners, after the Authority had entered into contracts with a private abstract company to perform title examination work.

Appellants, as a result of open competitive civil service examinations, were duly appointed as permanent title examiners, grade 2, by the Authority at various times from 1943 to 1947. They sought in this proceeding an order directing in substance: (1) that the Authority’s notices of dismissal, dated May 4, 1950, be declared null and void; (2) that appellants be reinstated with retroactive pay; and (3) that certain contracts made by the Authority with the City Abstract Corporation be declared null and void. Special Term denied the relief sought, and the Appellate Division unanimously affirmed.

The facts are virtually undisputed, and the parties agree that the issue is solely a question of law. The Authority is a public corporation engaged, pursuant to article XVIII of our State Constitution and the Public Housing Law, in the construction and operation of public low rent housing projects. The Authority obtains loans and subsidies from the Federal Government, the State and the City of New York, but the site-acquisition pháse of the city-aided program was fully completed early in 1950, and thus no further title examination remained to be done in that connection. In the cases of the Federal-aided and State-aided projects, the contracts for financial assistance repose in these governments a large amount of supervision over the expenditures made by the Authority; the costs incurred, including the cost of title examination work, are subject to audit, review and approval by both the Federal and State lending agencies.

In connection with the acquisition of sites for projects of the Authority, a large volume of title examination work was required. Nearly all such work was performed by title examiners and others who were on the payroll of the Authority, but who worked exclusively from and under the complete supervision of the office of the corporation counsel of the city of New York. The Federal and State Government lending agencies protested the cost of title examination by the “ force account ” method, and brought pressure upon the Authority to reduce it.

In October, 1945, the State Division of Housing restricted the Authority from expending any further funds for title examination work until a more satisfactory method of performing it could be arrived at, and said division proposed that contracts for title examination be let. In July of the following year said division expressed its continued dissatisfaction and again insisted that the title work be done by contract. In August, 1946, a ‘ ‘ pilot ’ ’ contract for title examination was let. In May, 1948, the State agreed to remove the restrictions imposed by it on expenditures for title examination on previous projects, provided that in the future all work on State-aided projects be let by contract after competitive bidding.

The Federal Public Housing Administration adopted a standard form of contract applicable to local housing authorities throughout the nation which requires such authorities, including respondent, to use the contract” method for land surveys and title information for all Federal-aid projects hereafter to be developed; the State of New York and the Port of New York Authority likewise use such method.

In February, 1950, after many conferences with representativas. _of the Federal and State Governments, the Authority entered into two contracts with the City Abstract Corporation providing for a base charge for title certifications of $19.40 per parcel, said corporation having submitted the lowest figure among six sealed bids. Thereafter, appellants were dismissed, effective in May and June of 1950; four remaining title examiners are being continued in service. The Authority estimated that the reduction in title examination costs in 1950 by having title examination work done on the contract basis rather than by the direct force method was about $90 per parcel.

We are also told of advantages accruing from the contract system: (1) the abstract company assumes a liability to the Authority in the event of error due to negligence, which respondents’ title examiners do not; (2) the contract method enables the Authority to budget its title examination costs in a fairly accurate way, whereas the force account method resulted in budget overruns; and (3), the contracts require the services to be performed within specified time limits, whereas under the direct force method it may be necessary for the Authority to employ additional personnel in order to meet the demands of a heavy workload period, resulting in sporadic employment with its concomitant disadvantages, while in quiescent periods it requires much less help.

Respondents maintain that they have tried to find ways and means to avoid dismissing the title examiners and for many years have resisted the pressure to disband their title examination staff, but have now reached the point where as a practical matter they have very little choice because of the insistence of the Federal and State lending agencies, and their good faith has in nowise been challenged.

Appellants maintain that the action of the Authority is in violation of section 6 of article V of our State Constitution: “ Appointments and promotions in the civil service * * * shall be made according to merit and fitness to be ascertained, as far as practicable, by examination which, as far as practicable, shall be competitive ”, and section 31-a of the Civil Service Law, which provides that an employee ££ may maintain a mandamus proceeding for his re-instatement * * where it is shown that another person not appointed in accordance with the provisions of this chapter is employed in the same or a similar position, or assigned to or permitted to perform substantially similar duties or services theretofore performed by any such suspended employee.”

Certainly the command of the Constitution must be obeyed, and an appointment or promotion which violates this mandate may not be sanctioned by the courts, despite the good faith of the parties (Palmer v. Board of Educ., 276 N. Y. 222). Statutory exemptions by blanket enactment have been properly condemned (Matter of Ottinger v. State Civil Service Comm., 240 N. Y. 435; Matter of Kraus v. Singstad, 275 N. Y. 302; Matter of Andresen v. Rice, 277 N. Y. 271); and no method employed to evade, disregard or weaken the constitutional and statutory safeguards protecting the civil service may be permitted to succeed, however artfully concealed or cloaked (Matter of Wipfler v. Klebes, 284 N. Y. 248; Matter of Carow v. Board of Educ., 272 N. Y. 341). When any attempt is made to do so, the courts stand ready to defeat such effort and to protect the rights of civil service employees. We have done so on many occasions, as illustrated by the foregoing citations, and again in Matter of Turel v. Delaney (285 N. Y. 16), where, under the guise of an independent contract, an attempt was made to retain the services of a physician to supply medical and surgical care and treatment of employees of the board of transportation of the city of New York, injured in the course of their employment. For such services the physician was to be paid a fixed salary of $10,000 per year, and stipulated compensation over regular periods for each assistant surgeon, graduate nurse and a junior surgeon, none of whom was to be selected by means of competitive examinations, but their employment was to be “ subject to approval by the Board,” (supra, p. 19) and which arrangement was tantamount to an employee relationship, a situation quite unlike that presented here.

On the other hand, neither constitutional mandate nor statutory enactment requires that all services furnished or all labor performed for a governmental agency must be supplied by persons directly employed. It is common knowledge that such agencies have over a long period of years let contracts without question for the construction of buildings, roads, tunnels, bridges and other public improvements (see, e.g., N. Y. Const., art. I, § 17; art. IX, §§ 9, 10, 12; art. XVIII; Public Housing Law, § 32, subd. 1; § 37, subd.1, cl. [v]; Public Works Law, particularly §§ 8, 14, 15; Lien Law, § 2, subd. 7; art. 2, particularly §§ 5, 16, 25, 25-a, 25-b; § 42; Labor Law, art. 8), and for special services, as, by way of illustration, Matter of Fleischmann v. Graves (235 N. Y. 84); Matter of Clark v. Smith (250 App. Div. 233, affd. 276 N. Y. 473); Matter of Curran v. Board of Estimate of City of N. Y. (173 Misc. 1022, affd. 259 App. Div. 712, motion for leave to appeal denied 283 N. Y. 778), particularly when not related “ to conventional and stable duties of the functionaries of civil government.” (Matter of Social Investigator Eligibles Assn. v. Taylor, 268 N. Y. 233, 237.) Indeed, section 9 of article IX of our State Constitution expressly authorizes the Legislature to “ regulate and fix the wages or salaries, the hours of work or labor, and make provision for the protection, welfare and safety of persons employed * * * by any contractor or subcontractor performing work, labor or services for the state, or for any county, city, town, village or other civil division thereof.” (Emphasis supplied.) Section 12 of the same article empowers cities to adopt laws relating, among other things, to precisely the same subject matter.

We have held independent contractual arrangements valid in a number of cases. Matter of Hardecker v. Board of Educ. (180 Misc. 1008, affd. 266 App. Div. 980, affd. 292 N. Y. 584) involved the legality of contracts between the board and private architects and engineers for part of the architectural and engineering work required in connection with the city’s program for the postwar construction of public buildings. Theretofore plans and specifications for city school buildings had for many years been wholly prepared by employees of the bureau of construction. Upon the application of an assistant engineer in said bureau, who maintained this practice might affect his right to continued employment, and a structural steel draftsman on the eligible list who had been previously dropped from the department for lack of work or funds, we held such contracts may be validly made. In Matter of Civil Service Tech. Guild v. La Guardia (181 Misc. 492, affd. 267 App. Div. 860, affd. 292 N. Y. 586), a substantially similar situation was presented, except that it involved postwar projects other than schools, and we came to the same conclusion.

In Beck v. Board of Educ. (182 Misc. 886, revd. 268 App. Div. 644, affd. 295 N. Y. 717) the question presented was Avhether the 6 ‘ indirect ’ ’ custodial system employed by the board met the test of section 6 of article V of the Constitution. Under that system a custodian, appointed in accordance with the Civil Service Law, was permitted to engage and discharge at mil all matrons, firemen and other help. Special Term held the system violated our Constitution, but this court held to the contrary in affirming the Appellate Division’s reversal of Special Term. (See, also, Matter of Curran v. Board of Estimate of City of N. Y., supra; People ex rel. Seib v. Redfield, 86 App. Div. 367; Matter of Drummond v. Kern, 176 Misc. 669.)

Under the circumstances here presented, and in the light of these decisions, we are of the view that the Authority’s action here Avas Avithin its power, that it was not exercised in bad faith, arbitrarily or capriciously, nor in an attempt to evade the civil service laws. It has not appointed individuals in the places of those dismissed, but, because of the unusual situation it faced, to which we have already adverted, it entered into a normal modern business practice of purchasing abstracts and certifications of title at a fixed price. The Authority does not select, control or even approve the officers or employees of the contractor; does not fix their compensation or their hours of work; does not engage them exclusively nor restrict them from engaging in their regular business with anyone they choose; there is no employer-employee relationship whatever; and these contracts do not constitute an “appointment” in the civil service.

This is not to say that any type of service performed by civil service employees may be contracted, to private firms, and where such contracts are employed as a scheme to oust civil service employees simply to make room for others, or to mask a true employment relationship, or to circumvent the civil service laws, even if not made in bad faith, we shall not hesitate to strike them down as we did in Matter of Turel v. Delaney (supra).

Accordingly, the order of the Appellate Division should be affirmed, with costs, and, since this case directly involves the construction of section 6 of article V of the State Constitution, the motion to dismiss the appeal should he denied, with $10 costs.

Conway, Desmond and Dye, JJ., concur with Fboessel, J.; Loughran, Ch. J., Lewis and Fuld, JJ., dissent and vote to reverse the order appealed from and to grant the relief prayed for in the petition upon the authority of Matter of Turel v. Delaney (285 N. T. 16).

Order affirmed, etc.


author: Fuld, J.

text:
    Maxwell Laskey, Appellant, v. Rubel Corporation, Respondent.
    Argued May 21, 1951;
    decided July 11, 1951.

      Arthur Block for appellant.
    I. A written contract merges within it any oral agreements or oral discussions had or made prior thereto. (William H. Waters, Inc., v. March, 240 App Div. 120; Gangi v. Fradus, 227 N. Y. 452.) II. The writing lacks the element of mutual assent and does not express the result of the meeting of the minds of the parties. (Whipple v. Brown Bros. Co., 225 N. Y. 237.) III. Pure questions of fact were submitted to the jury for its determination and were resolved in favor of plaintiff. (Maxwell v. Peters Co., 219 N. Y. 597.) IV. The verdict of $3,000 is in accordance with the evidence and the law and the Appellate Division erred in its reversal. (Davis v. Dodge, 126 App. Div. 469; Wakerman v. Wheeler & Wilson Mfg. Co., 101 N. Y. 205; Hollwedel v. Duffy-Mott Co., 263 N. Y. 95.)

      Sol H. Yellin for respondent.
    I. Admission of paroi evidence contradicting the express provisions of the written employment agreement was prejudicial error. (Hendricks v. Clements, 195 App. Div. 144; Piretti v. Firestone Tire & Rubber Co., 120 N. Y. S. 782.) II. Assuming that plaintiff’s oral evidence contradicting the express provisions of the written agreement was admissible, a finding that an oral promise was made was unjustified, as it was against the weight of the credible evidence. (Tucker v. O’Brien, 117 N. Y. S. 1010; Banker v. Haynes Stellite Co., 135 Misc. 452; Hildebrand v. Hempstead Mach. Works, 246 App. Div. 756; Low v. Dyer, 196 App. Div. 346.)
   Fuld, J.

This case involves the application of the paroi evidence rule to a contract partly oral and partly in writing.

According to plaintiff, he and defendant entered into an oral contract of employment, pursuant to which it was agreed that plaintiff was to be employed for a year, at a stipulated weekly salary plus expenses, to act as a sort of sales manager of defendant’s branch office. Defendant, acknowledging a contract of employment, denied that it was for a year and pointed to a paper, entitled “ Terms and Conditions of Employment ”, which was signed by plaintiff and which — while silent as to duties and salary — explicitly provided that the “ employment shall be terminable, at any time, at the option of the Company. ’ ’ The document concluded with the paragraph that ‘ ‘ The undersigned has read the foregoing and understands and agrees to all the terms and conditions therein contained. ’ ’

Dismissed two weeks after he started work, plaintiff sued for wrongful discharge. The jury — instructed to decide the question as to whether the hiring was for a year or was terminable at will — returned a verdict in plaintiff’s favor for $3,000. Upon appeal from the resulting judgment, the Appellate Division reversed and dismissed the complaint “ on the law ”.

It is well settled that, where parties have reduced their bargain, or any element of it, to writing, the paroi evidence rule applies to prevent its variance by paroi evidence. If, therefore, the agreement is partly oral and partly written, paroi evidence, while admissible to complete the written portion or to resolve some ambiguity therein, may not be used to vary or contradict its contents. (See, e.g., Thomas v. Scutt, 127 N. Y. 133, 138; Beattie v. New York & Long Is. Constr. Co., 196 N. Y. 346, 355; Newburger v. American Sur. Co., 242 N. Y. 134, 142; Apparel & Accessories Associates v. New York World’s Fair 1940, 176 Misc. 26, 27, affd. 261 App. Div. 944, motion for leave to appeal denied 286 N. Y. 733; see, also, 3 Williston on Contracts [Rev. ed., 1936], § 633, pp. 1820-1822; § 636, pp. 1830-1832; Restatement, Contracts, § 239; Strahorn, The Unity of the Parol Evidence Rule, 14 Minn. L. Rev. 20, 35-37; but cf. Corbin, The Parol Evidence Rule, 53 Yale L. J. 603, 627-628.) In the Thomas case (supra, 127 N. Y. 133), the court pointed out that, if the writing be incomplete, paroi evidence may be admitted, not to contradict or vary, but to complete the entire agreement of which the writing was only a part ” (p. 138). And Williston sums up the applicable principle in this way (op. cit., Vol. 3, § 636, pp. 1830-1832):

“ The paroi evidence rule assumes agreement upon the writing in question as a complete statement of the bargain, that is, as an integration. If the parties never adopted the writing as a statement of the whole agreement, the rule does not exclude paroi evidence of additional promises.
It should be observed, however, that a writing though incomplete may, nevertheless, be adopted as the expression by the parties of that portion of their agreement to which it relates. Accordingly, if a contract is even partially reduced to writing, the written portion is no more subject to contradiction by paroi than the entire contract would be had it been wholly reduced to writing.”

The same rule applies, of course, to employment cases. (See, e.g., Hendricks v. Clements, 195 App. Div. 144, 149-150; Leifer v. Scheinman, 179 App. Div. 665, 667.) In the Leifer case (supra, 179 App. Div. 665), for instance, the writing dealt with the salary to be paid plaintiff, but not with his duties or with the period of his employment. In a suit for damages for an alleged wrongful discharge, he sought to show that the hiring was for a year. In holding that such evidence was properly admitted since it did not contradict any element of the bargain as reflected in the writing, the Appellate Division wrote that, “ while paroi evidence cannot be received to contradict or vary the terms of the contract,” it may be received — if there was some part of the agreement not embodied in the writing — to supply omitted items and to show the full agreement (p. 667).

The case before us falls squarely within the compass of those decisions, for the writing signed by plaintiff is in no sense a mere memorandum or note to which the paroi evidence rule does not apply. (Cf., e.g., Friedman & Co. v. Newman, 255 N. Y. 340, 344; Mesibov, Glinert & Levy, Inc., v. Cohen Bros. Mfg. Co., 245 N. Y. 305, 313; also, 9 Wigmore on Evidence, § 2429, pp. 95-96.) Here, we have a written instrument which deals with the duration of plaintiff’s employment and another item not here relevant. Since there was thus reduced to writing by the parties a particular segment of their bargain, paroi evidence was permissible to fill in the other elements and complete the agreement but not to contradict the expressed provision that plaintiff’s employment was “ terminable, at any time ”, at the employer’s option.

The judgment of the Appellate Division should be affirmed, with costs.

Loughban, Oh. J., Lewis, Conway, Desmond, Dye and Fboessel, JJ., concur.

Judgment affirmed.


author: Lewis, J. Conway, J.

text:
    The People of the State of New York, Appellant, v. William Rudolph, Respondent.
    Argued April 11, 1951;
    decided July 11, 1951.

      Frank S. Hogan, District Attorney (Peyton H. Moss and Richard G. Denzer of counsel), for appellant.
    I. The People presented sufficient proof as a matter of law to sustain defendant’s conviction of the crimes of oppression and coercion. (Langan v. First Trust & Deposit Co., 293 N. Y. 604; People v. Pesky, 254 N. Y. 373; People v. McCarthy, 250 N. Y. 358; People v. Boas, 92 N. Y. 560; People v. Jackson, 121 App. Div. 856, 191 N. Y. 293; People v. Bellows, 281 N. Y. 67; People v. Phillips, 42 N. Y. 200; People v. Kaplan, 262 N. Y. 507; People v. Kaplan, 240 App. Div. 72, 264 N. Y. 675; People v. Thompson, 97 N. Y. 313; People v. Wickes, 112 App. Div. 39; People v. Sheridan, 186 App. Div. 211; People v. Weinseimer, 117 App. Div. 603, 190 N. Y. 537; People v. Greenwald, 299 N. Y. 271.) II. The evidence of oppression was sufficient as a matter of law. (People v. Kaplan, 240 App. Div. 72, 264 N. Y. 675; People v. Kaplan, 262 N. Y. 507; Dean v. Kochendorfer, 237 N. Y. 384; People v. Summers, 40 Misc. 384; State v. Barts, 132 N. J. L. 74, 420.)

      James H. Tully, Truman H. Lurhman and Moses Polakoff for respondent.
    I. The proofs of the People are insufficient as a, matter of law to establish the crimes of either coercion or oppression. (People v. Hüter, 184 N. Y. 237; People v. Barker, 74 Hun 368.) II. The People failed to establish the commission of the crime of oppression under color of official authority by defendant. (People v. Learman, 261 App. Div. 748; People ex rel. Devery v. Jerome, 36 Misc. 256; People v. Summers, 40 Misc. 384; People ex rel. Reardon v. Flynn, 58 Misc. 621, 624; Delaney v. Flood, 183 N. Y. 323.)
   Lewis, J.

The defendant, William Rudolph, a police officer, was convicted in the Court of Special Sessions of the City of New York of the crimes of coercion (Penal Law, § 530) and oppression (Penal Law, § 854). At the Appellate Division the judgment of conviction was reversed on the law and the facts, and the information was dismissed, two Justices dissenting. The case is here on appeal by the plaintiff by permission of a member of this court. (Code Crim. Pro., § 519, subd. 1; § 520, subd. 3.)

By the decision of the Appellate Division that court concluded that upon this record the proof was insufficient as a matter of law to sustain the charges of oppression and coercion. (277 App. Div. 195, 199.) Accordingly, we are obliged to review the evidence to ascertain whether it presented a substantial question for determination by the triers of the facts. (People v. Bellows, 281 N. Y. 67, 73-75; People v. Scheinman, 295 N. Y. 142, 144.) To that end direction for our inquiry is given by statutory definitions of the misdemeanors here involved, which we quote below from the Penal Law:

§ 530. Coercing another person a misdemeanor. A person who with a view to compel another person to do or to abstain from doing an act which such other person has a legal right to do or to abstain from doing, wrongfully and unlawfully,
“ 1. Uses violence or inflicts injury upon such other person or his family, or a member thereof, or upon his property or threatens such violence or injury; or
“ 2. Deprives any such person of any tool, implement or clothing or hinders him in the use thereof; or
“3. Uses or attempts the intimidation of such person by threats or force,
‘ ‘ Is guilty of a misdemeanor. ’ ’
" § 854. Oppression committed under color of official right. A public officer, or a person pretending to be such, who, unlawfully and maliciously, under pretense or color of official authority;
1. Arrests another, or detains him against his will; or,
“ 2. Seizes or levies upon another’s property; or,
“ 3. Dispossesses another of any lands or tenements; or,
“ 4. Does any other act, whereby another person is injured in his person, property, or rights,
“ Commits oppression and is guilty of a misdemeanor.”

As to evidence educed upon the trial: In the early morning hours of July 27,1949, the defendant and a fellow officer, while patrolling Second Avenue, came upon an illegally parked motor truck in which they found the complainant, William Howell, asleep. When the officers laid hands upon him and roused him from his sleep he failed at the time to identify the intruders as police officers and stoutly resisted their efforts to remove him from his truck. A scuffle ensued and came to an end only when the complainant’s resistance had been overcome. He was then arrested and taken to a police precinct station where he was charged with felonious assault.

There is testimony by the complainant that, although he had apologized to the defendant, he was beaten while at the precinct station. Several hours later, while in the custody of the defendant and a detective, he was fingerprinted and taken to Felony Court. Before reaching the court building and during conversation had with the defendant and the detective, the complainant was .informed that he would be charged with felonious assault. He was also asked who would claim his truck which had been driven vto the precinct station. When he replied that he would drive the truck away himself after leaving court, the complainant was told that he “ wouldn’t be leaving the court building because [he] was going to get time, maybe several months to a year ”. Upon receiving that information the complainant renewed his apologies for what had occurred earlier in the morning and sought from his custodians advice as to how he should behave in court in order to avoid being sent to jail. The detective then asked whether he could “get fifty dollars ” and was assured that the money would be supplied. The police car was then driven to a candy store where the defendant, the detective and the complainant went to a telephone booth from which the complainant called a woman who was asked by him to bring $60 or $70 to court. During this telephone conversation the defendant Rudolph kept his head inside the booth and spoke to the woman telling her where to meet them at court, describing his own attire, and asking her what she would be wearing. When the three men returned to the car the detective outlined for the complainant the testimony which the defendant would give as a witness in court — ‘ ‘ Officer Rudolph * * * was going to tell about he figured that it was a mistake in identity and some other little things like that Later, while the complainant was in the rear of the courtroom awaiting his arraignment, the defendant told him that the woman to whom they had talked on the telephone was already seated in court and that he would be unable to get the money from her. In response the complainant assured the defendant that “ * * * if he [defendant] would go ahead and do what he had promised to do for me, that as soon as I could get away, that I would see that he got his money ”. Upon Howell’s arraignment he was charged with felonious assault. Then followed a court hearing during which the defendant, as a witness, referred to the case as one involving ‘ ‘ a mis-1 take in identity ’ ’. At the conclusion of the hearing the charge against the complainant was reduced from felonious assault to disorderly conduct to which the complainant pleaded guilty. Thereupon a fine of $10 was imposed which was paid by the complainant. Immediately thereafter the complainant met the defendant in the corridor outside the courtroom and asked him “ Will $40 be enough, as I had to pay $10 to the court? ” When the defendant answered “All right ”, the complainant secured $40 from the woman to whom they had telephoned and paid that sum to the defendant in the presence of two persons who, as witnesses at the trial of the present case, testified to what they had seen and heard when the payment was made.

The evidence outlined above embraces testimony by the complainant which was corroborated by several witnesses as to points vital to the successful prosecution of the defendant for the crimes of oppression and coercion. In addition there is testimony by the defendant himself that, after the complainant had been “ booked ” at the police precinct station and charged with felonious assault and was being conveyed to Felony Court in the custody of the defendant and a detective, he was told he would get a year in jail”. That unqualified statement addressed to the complainant in the defendant’s presence — that the complainant would be subjected to a substantial prison term — must be considered not only in the light of evidence that the defendant was present on the two occasions when the complainant was asked 1 ‘ can you get fifty dollars ’ ’ and when he was told that if the money was forthcoming he u wouldn’t be sent to jail ”, but also in the light of evidence, already noted, that in eager co-operation with the complainant’s efforts to procure $50, the defendant, as an intruder upon the complainant’s telephone conversation with a woman benefactor, had made suggestions to her as to where the money should be delivered, and ultimately became the receiver of $40 from that benefaction, after the defendant, as a witness in Magistrate’s Court had belittled the complainant’s offense and the complainant had escaped a prison term.

In People v. Bellows (supra, p. 73) Chief Judge Crane wrote —“ It is a question of law whether, from any view of the testimony, there was a question of fact regarding the defendant’s guilt which should have been submitted to the trial judge or to the jury and not disposed of by dismissal in the appellate court.”

Applying that rule to the case at bar we conclude that the evidence of record, to which reference is made above, presents questions of fact which were properly submitted to the Court of Special Sessions for determination, viz., whether, in violation of subdivision 3 of section 530 of the Penal Law, the defendant used or attempted intimidation of the complainant by threats or force; and whether, in violation of subdivision 4 of section 854 of the Penal Law, the defendant as a public officer did any act whereby the complainant was injured in his person, property, or rights.

Accordingly, the order of the Appellate Division should be reversed, the information reinstated, and a new trial ordered.

Conway, J.

(dissenting). The sole question presented for our consideration is whether the facts in this record establish the crimes of coercing another person and of oppression committed under color of official right as defined in sections 530 and 854 of the Penal Law and as charged in the informations upon which the defendant was tried in the Court of Special Sessions. In reaching our conclusion we disregard, of course, the character of the complainant and the defense interposed by the defendant. We accept as the basis for our conclusion that there is no support in the record for conviction of the two crimes with which the defendant was charged, the following well-chosen words and fair statement in the opinion of Judge Lewis of the facts leading up to the time when the complainant was charged with felonious assault in the Felony Court: “In the early morning hours of July 27, 1949, the defendant and a fellow police officer, while patrolling Second Avenue, came upon an illegally parked motor truck in which they found the complainant, William Howell, asleep. When the officers laid hands upon him and roused him from his sleep he failed at the time to identify the intruders as police officers and stoutly resisted their efforts to remove him from his truck. A scuffle ensued and came to an end only when the complainant’s resistance had been overcome. He was then arrested and taken to a police precinct station Avhere he was charged with felonious assault.” We shall only add the further statement from Judge Lewis’ opinion reading:1 ‘ Upon Howell’s [the complainant] arraignment he Avas charged with felonious assault.”

We now turn to section 530 of the Penal Law Avhich provides, insofar as applicable, that:

“ A person who with a view to compel another person to do or to abstain from doing an act which such other person has a legal right to do or to abstain from doing, wrongfully and unlawfully, * * *
“ 3. Uses or attempts the intimidatión of such person by threats or force,'
11 Is guilty of a misdemeanor. ’ ’

The information filed under that section charged that the defendant on July 27, 1949: 61 unlawfully and wrongfully did use and attempt the intimidation of the said William Howell by threats and force with a view to compel him, the said William Howell, to do an act which he, the said William Howell, had a legal right to abstain from doing, to wit, to compel him, the said William Howell, to pay and give him, the said defendant, the sum of $40.00 in United States currency. ”

In other words the defendant was charged with intimidating the complainant into giAÚng to the defendant $40 in currency as a bribe or as a payment for the commission of perjury by the defendant in changing his testimony so that it would be made to appear to the Magistrate that it was a case involving a question of mistaken identity rather than one of felonious assault. The complainant Howell not only as the information quaintly phrases it had “ a legal right to abstain from doing ” the act of paying and giving the defendant the sum of $40 in United States currency but the absolute duty as a citizen of abstaining, from doing it since by its doing the complainant became a briber (Penal Law, § 371) and a suborner of perjury. That was not the crime of ‘ ‘ Coercing another person ’ ’ by the defendant as defined in section 530 of the Penal Law.

We.now turn to section 854 of the Penal Law. Insofar ais applicable here it reads as follows:

. “ Oppression committed under color op official right. A public officer, or a person pretending to be such, who, unlawfully and maliciously, under pretense or color of official authority:
“ 1. Arrests another, or detains him against his will; or
“ 4. Does any other act, whereby another person is injured in his person, property, or rights,
“ Commits oppression and is guilty of a misdemeanor ”.

(By L. 1945, ch. 486, the title “ Extortion ” was changed to “Oppression”.)

The information, of course, did not charge a violation of subdivision 1 because it is not questioned that the complainant was lawfully arrested and charged with felonious assault.

The information charging the crime of oppression as just defined by section 854 charged that the defendant, a police officer, on July 27, 1949: “ unlawfully and maliciously, under pretense and color of official authority, did an act whereby one William Howell was injured in his person, property and rights, to wit, defendant obtained $40.00 in United States currency from the said William Howell. ’ ’

In other words it was there charged that the defendant, a police officer, unlawfully and maliciously under pretense or color of official authority injured the complainant in his person, property and rights by obtaining from him $40 in United States currency as a bribe or payment for the changing of his testimony and the commission by him of perjury. That is not and never, was either extortion or oppression committed under color of official right.

According to the theory of the prosecution, therefore, it is necessary for it first to establish that the defendant as a police officer properly arrested the complainant, properly charged him with felonious assault and that, in his affidavit in the Magistrate’s Court, the Felony Court, the defendant correctly made affidavit as to the facts as to the felonious assault. The affidavit in the Felony Court is before us as an exhibit. Establishing those facts to the satisfaction of a court or jury beyond a reasonable doubt makes clear that in the arrest and charging of the crime of felonious assault against Howell there was neither coercion nor oppression. With these indisputable facts as a foundation, the People have urged upon the Appellate Division and upon us that the subsequent acceptance of $40 by the defendant for the changing of his testimony so as to have the charge against Howell reduced to disorderly conduct (to which Howell pleaded guilty) constitutes coercion and oppression. Such acts by the defendant, assuming the truth of the testimony against him, quite clearly constitute the crime of bribery (Penal Law, §§ 372, 379), or of taking an unlawful fee (Penal Law, § 1826) or of perjury, but not of coercion or oppression. Such acts, indeed, were the antithesis of coercion or oppression.

There are no common-law crimes in this State but only those denominated such by the Legislature. The Legislature has provided under chapter headings in the Penal Law various categories of crimes. It is clear, it seems to us, from the chapter headings and the sections with their respective headings, the acts which the Legislature intended to make crimes under appropriate circumstances. The Penal Law and its predecessor, the Penal Code, are more than a century old and until now, no prosecutor has charged the acts here set forth — following, as they do, a proper arrest and a proper charge of crime both in the police station house and the Magistrate’s Court- — to be either coercion, extortion or oppression. In our judgment we should not so construe sections 530 and 854 of the Penal Law as to permit it at this late date when the statutes have been practically construed by prosecuting officers to the contrary for so long a period.

The order of the Appellate Division should be affirmed.

Loughban, Ch. J., Desmond and Dye, JJ., concur with Lewis, J.; Conway, J., dissents in opinion in which Fuld and Fboessel, JJ., concur.

Order reversed, etc.

       By L. 1945, ch. 486 the title “ Extortion ” was changed to “ Oppression ”.