author:
      Fboessel, J.
      Desmond, J. Dye, J.

text:
    The People of the State of New York, Respondent, v. John Brophy, Appellant. (And Ten Other Actions.)
    Argued June 4, 1952;
    decided July 15, 1952.

      Daniel H. Prior, Edward T. Sullivan and Bay F. Fowler for appellants.
    The Grand Jury was illegally chosen, contrary to customary and lawful procedures, a large number of qualified persons were arbitrarily excluded from service thereon, and the Grand Jury was packed with persons of a political faction. (People v. Prior, 294 N. Y. 405; Matter of Shea v. Swift, 292 N. Y. 116; People v. Kruger, 302 N. Y. 447; State v. Cantrell, 21 Ark. 127; Dutell v. State, 4 Greene [Ia.] 125; People v. Minet, 296 N. Y. 315.)

      Nathaniel L. Goldstein, Attorney-General (Paul W. Williams, Harris B. Steinberg and John Benjamin Carroll of counsel), for respondent.
    I. The Grand Jury was properly selected and the court, vested with a discretion in excluding and excusing talesmen, properly exercised that discretion. (Butler v. Glens Falls, S. H. & F. E. S. R. R. Co., 121 N. Y. 112; Balbo v. People, 80 N. Y. 484.) II. Even if talesmen had been erroneously excused or excluded from service on the Grand Jury, there would have been no basis for dismissing the indictments. (People v. Prior, 294 N. Y. 405; People v. Borgstrom, 178 N. Y. 254; People v. Glen, 173 N. Y. 395; People v. Petrea, 92 N. Y. 128; Howard v. Kentucky, 200 U. S. 164; Brown v. New Jersey, 175 U. S. 172; Hayes v. Missouri, 120 U. S. 68.) III. Defendants’ constitutional rights were not impaired by the drawing of the second panel in the County Clerk’s office. (Friery v. People, 2 Abb. Ct. App. 215; People v. Kruger, 302 N. Y. 447; Fletcher v. Commonwealth, 239 Ky. 506.) IV. No constitutional rights of defendants were impaired by the prosecutor’s use of a “list” of officeholders in questioning the talesmen, nor were any rights prejudiced by the investigation of talesmen or the use of the checklists of talesmen. (People v. Prior, 294 N. Y. 405; Fay v. New York, 332 U. S. 261; Akins v. Texas, 325 U. S. 398; Snowden v. Hughes, 321 U. S. 1.)
   Fboessel, J.

By order of the Governor, an Extraordinary Special and Trial Term of the Supreme Court was appointed to be held in Saratoga County for the purpose of inquiry, prosecution and trial in relation to ‘ ‘ gambling, bribery and corruption, public offices and officers, the collection of public revenues, or the administration of justice ’ ’, and as to any violation of law “ by any official, officer, agent or employee of the State, or of the county of Saratoga or of any subdivision thereof or political or civil entity situated therein, or by any person or corporation aiding * * * such official, officer, agent or employee ”.

Defendants in these eleven cases were indicted in the course of said investigation for gambling and related offenses, to which indictments they pleaded not guilty. They thereupon moved to set aside the indictments, not under any provision set forth in section 313 of the Code of Criminal Procedure, but under the inherent power of the courts to set aside an indictment found in such manner as to violate constitutional rights. It is alleged that their rights under both Federal and State Constitutions have been violated, depriving them of due process of law and of equal protection of the laws, in that they have been indicted by a body not legally constituted as a Grand Jury. This result, it is asserted, flows from the alleged fact that the Grand Jury was “packed” with persons of a particular faction of the Republican party, to the serious and substantial prejudice of defendants. The alleged “ packing ” is said to have been accomplished (1) through the use of a list of 234 names of Saratoga County public officials and others, the venireman’s mere acquaintanceship among such persons being, as it is claimed, a ground of exclusion, and (2) through the use by the court of secret information sheets in ruling upon challenges to the talesmen.

In addition to the foregoing, it is urged that an extra panel of jurors was not drawn in the manner provided by statute (Code Crim. Pro., § 231), with resulting prejudice. The Appellate Division, reversing Special Term, denied the motion to dismiss the indictments.

If the jury as impaneled is an impartial body, no constitutional rights may be said to have been impinged upon, and mere error, not resulting in prejudice, is insufficient to invoke the power of the courts to look behind the indictments in a case not provided by statute (People v. Prior, 294 N. Y. 405; People v. Glen, 173 N. Y. 395; People v. Petrea, 92 N. Y. 128; Rawlins v. Georgia, 201 U. S. 638; see, also, People v. Borgstrom, 178 N. Y. 254; Hyde v. United States, 225 U. S. 347, 374). “ The defendant’s right is a neutral jury. He has no constitutional right to friends on the jury ” (Fay v. New York, 332 U. S. 261, 288-289). There is no claim here that any member of the Grand Jury was individually biased or prejudiced against defendants, and hence there can be no prejudice in the exclusion of talesmen, unless it be shown that there was a sustained, systematic effort by the court arbitrarily to exclude from the final panel persons of a particular classification ” (People v. Prior, supra, p. 410). It is our conclusion that no such unlawful effort appears in this record.

The list of names above referred to, unlike the mysterious list ” used in the Prior case (supra, p. 422), was placed in evidence and was at all times available for inspection by interested persons. The use made of the list was not improper, for it merely served as a convenient method of shortening the voir dire examination. Scrutiny of the record reveals that it was not employed as a pretext or subterfuge for the elimination of unwanted jurors; on the contrary, with possibly a few exceptions, there was proper basis for the court’s action in sustaining challenges to those excused, beyond the mere fact of acquaintanceship with persons on the list. Out of 153 talesmen called for the voir dire examination, 119 were excused for good and sufficient reasons, 23 were selected, and 11 were challenged for bias under subdivision 6 of section 239 of the code, despite their apparent willingness to serve. As to these 11, it may be said that the evidence with respect to a small number of them, as it appears in the record without benefit of the court’s observation of the talesmen and their demeanor, did not warrant sustaining the challenge, but that did not affect the impartiality of the Grand Jury and its conformity to the traditional standards governing that body.

Examination of both selected and rejected jurors fails to disclose any pattern of acceptance or elimination. Rather than on a political or other unlawful basis, the selection of jurors appears to have been motivated solely by the desire of court and prosecutor to obtain a jury which, under all the circumstances, could consider matters brought before it in a manner fair both to accused persons and to the People of the State of New York.

The charge that the court used secret information sheets in ruling upon challenges is based largely on assumption and surmise. The fact that the court may have had before it some information relating to the panel of grand jurors, prior to or even during the voir dire examination, is not sufficient, in and of itself, to impugn the integrity of the court, for, as this record indicates, local conditions were such that the membership on the Grand Jury had been consistently limited during a period of seventeen years, and there was an unduly high incidence thereon of officeholders, their wives and close relatives. The People, as well as a defendant, are entitled to a fair jury. The burden of proving discrimination purposeful and intentional is on defendant (Fay v. New York, supra, p. 285). We do not think the record supports the accusation so freely leveled at the court by defendants.

The alleged prejudicial departure from proper ■ procedure in the drawing of the second panel of veniremen was neither a substantial variance from the mode provided by section 231 of the Code of Criminal Procedure nor prejudicial. It lies wholly in the fact that such panel was drawn, in the presence of the court and the public, including members of the press, in the main business office of the county clerk, rather than in the courtroom. It appears that the court, in adjourning, announced publicly to all present in the courtroom that the drawing would take place immediately thereafter in the adjoining office of the county clerk, who is also the clerk of the court. The jurors were then drawn in precisely the same manner as was the original panel. The requirements of public notice relating to the drawing of additional jurors were thus observed and it cannot be said that any essential element of the statute was omitted. Obviously, no prejudice could result to defendants in these circumstances (see People v. Petrea, supra, p. 143).

This case is controlled by the principles enunciated in People v. Prior (supra) and it is our conclusion that the order of the Appellate Division should be affirmed.

Desmond, J.

(concurring). In 1945, when we decided People v. Prior, I said in dissent (294 N. Y. p. 417 et seq.) that the methods used in selecting that Grand Jury violated not only the Code of Criminal Procedure, but all the settled rules, and permitted a prosecutor to exclude and include grand jurors at will. Therefore, I thought and still think, indictments found by a Grand Jury so picked should be dismissed. Methods substantially similar were used in the present case and resulted in some exclusions. I still say that those methods are destructive of the Grand Jury as a traditional instrument of public justice in a free society. However, I am bound by the holding in People v. Prior (supra) that indictments so found are not void, and so I vote to affirm here.

Dye, J.

(concurring). I concur in the result for I feel obliged to do so under authority of People v. Prior (294 N. Y. 405), excepting for which the methods employed in the selection of talesmen should be disapproved, for the reasons stated in the dissenting opinion by Desmond, J., in which I concurred.

Lewis and Fuld, JJ., concur with Froessel, J.; Loughran, Ch. J., concurs on the authority of People v. Prior (294 N. Y. 405); Desmond and Dye, JJ., concur in separate opinions; Conway, J., not sitting.

Order affirmed.


source: Caselaw Access Project

author: Per Curiam.

license: Public Domain

text:
    In the Matter of Patrick J. Radigan et al., Respondents, against John F. O'Connell et al., Individually and as Members of the State Liquor Authority, Appellants.
    Argued June 2, 1952;
    decided July 15, 1952.

      Alvin McKinley Sylvester and John L. Murphy for appellants.
    I. Under all the circumstances, the finding that petitioners had ceased to conduct a bona fide restaurant was sustained by substantial evidence and should be confirmed. (Matter of Fiore v. O’Connell, 297 N. Y. 260; Matter of College Pt. Wine & Liquors v. O’Connell, 296 N. Y. 752; Matter of Restaurants Patisseries Longchamps v. O’Connell, 271 App. Div. 684, 296 N. Y. 888; Matter of Berger v. Quinn, 149 Misc. 545; Matter of Avon Bar & Grill v. O’Connell, 301 N. Y. 150; Matter of 54 Cafe & Restaurant v. O’Connell, 274 App. Div. 428, 298 N. Y. 883; Matter of Milstein v. O’Connell, 278 App. Div. 684; Matter of 59 Restaurant v. O’Connell, 274 App. Div. 1052; Matter of Lipra Restaurant Corp. v. O’Connell, 274 App. Div. 982.) II. Ceasing to conduct a bona fide restaurant is one of the causes for which a license may be revoked. A statement to that effect was prepared by the Authority and delivered to licensees in accordance with section 114 of the Alcoholic Beverage Control Law. III. The evidence overwhelmingly established that respondents had ceased to conduct a bona fide restaurant upon their premises. In holding to the contrary, the court below ignored the provisions of the Alcoholic Beverage Control Law. (Matter of 54 Cafe & Restaurant v. O’Connell, 274 App. Div. 428, 298 N. Y. 883.) IV. The charge of a sale of beer to an intoxicated person is clearly supported by the testimony of the investigator as to his physical condition and the statement that in his opinion the man was apparently intoxicated. Respondents have failed to justify their failure to call the person involved, although admittedly he was well known and available as a witness. (Matter of Ilnicki v. O’Connell, 275 App. Div. 1018.)

      Monroe I. Katcher, II, for respondents.
    I. Since the enactment of chapter 605 of the Laws of 1950, ‘6 ceasing to be a bona fide restaurant ” is no longer a violation of the statute; nor have appellants made it the subject of a rule, regulation or code, as required by section 8 of article IV of the State Constitution and sections 102 to 106 of the Executive Law. As a result, appellants, although obliged to prove that “ ceasing to conduct a bona fide restaurant ” was a stated cause for revocation or cancellation of a license before they could predicate disciplinary action against respondents upon such a charge, failed to submit any proof whatsoever in this record that this alleged condition constituted a duly stated cause for cancellation. (Matter of Colonial Liq. Distributors v. O’Connell, 295 N. Y. 129; Matter of Glenram Wine & Liq. Corp. v. O’Connell, 295 N. Y. 336; Matter of Townley v. Bruckman, 168 Misc. 422; People ex rel. Browdy v. McDermott, 169 App. Div. 755.) II. Apart from the legal invalidity of the charge, there was no substantial evidence adduced by appellants that respondents had “ ceased ” to conduct a bona fide restaurant on the licensed premises, within the meaning of the law. (Matter of 54 Cafe & Restaurant v. O’Connell, 274 App. Div. 428, 298 N. Y. 883; Matter of Playdium, Inc., v. O’Connell, 276 App. Div. 14, 301 N. Y. 538; Matter of Oval Bar & Restaurant v. Bruckman, 177 Misc. 244; Matter of Berger v. Quinn, 149 Misc. 545.)
   Per Curiam.

We agree with the Appellate Division that there is no substantial evidence to support the determination of the State Liquor Authority that the licensee has ceased to conduct a bona fide restaurant in violation of section 118 of the Alcoholic Beverage Control Law. Under our view of the record, there is substantial evidence to support the determination of the State Liquor Authority that the licensee suffered or permitted the sale of an alcoholic beverage to an intoxicated person in violation of section 65 of the Alcoholic Beverage Control Law (Matter of Avon Bar & Grill v. O’Connell, 301 N. Y. 150). The court may not substitute its judgment for that of the Liquor Authority on a controverted question of fact (Matter of Stork Restaurant v. Boland, 282 N. Y. 256). It is when the circumstances admit of only one inference that the court may decide as a matter of law what inference should be drawn (Matter of Rumsey Mfg. Co. [Corsi], 296 N. Y. 113; Matter of Bolani v. O’Connell, 296 N. Y. 871; Matter of Menick v. Bruckman, 279 N. Y. 795, revg. 255 App. Div. 810).

The order of the Appellate Division should be affirmed insofar as it reverses and annuls the determination of the State Liquor Authority that the licensee has ceased to conduct a bona fide restaurant (Alcoholic Beverage Control Law, § 118), and should be reversed insofar as it annuls the determination of the State Liquor Authority that the licensee suffered or permitted the sale of an alcoholic beverage to an intoxicated person (Alcoholic Beverage Control Law, § 65), and the determination of the State Liquor Authority should be reinstated as to that charge. It is further ordered that the matter be and it hereby is remitted to the State Liquor Authority for the purpose of fixing the penalty, if any, for such single offense.

The order of the Appellate Division should be modified in accordance with the opinion herein, and, as so modified, affirmed.

Loughran, Ch. J., Lewis, Desmond, Dye, Fuld and Froessel, JJ., concur; Conway, J., not sitting.

Ordered accordingly.


author:
Desmond, J. Dye, J.
      Fuld, J.

text:
    Joseph Cardinal, Doing Business under the Name of Cardinal Engineering Company, Appellant and Respondent, v. State of New York, Respondent and Appellant.
    (Claim No. 28951.)
    Argued April 22, 1952;
    decided July 15, 1952.

      Thomas A. McDonald, James S. Tobin and Edward C. McDonald for appellant and respondent.
    I. The Appellate Division erred in ruling that a quasi-contractual duty of indemnification is excluded from coverage as an obligation ‘1 assumed by contract ” as opposed to one “ imposed by law ”. (Slattery v. Marra Bros., 186 F. 2d 134; Schwartz v. Merola Bros. Constr. Corp., 263 App. Div. 631, 290 N. Y. 145; Gallant v. Waterman S. S. Corp., 90 F. Supp. 495; City of New York v. Davis, 7 F. 2d 566.) II. The protection provided by the Legislature to an employer, who secures the payment of compensation to his employees by contributing premiums to the State Insurance Fund against liability arising from injuries to his employees, is absolute. (Matter of Post v. Burger & Gohlke, 216 N. Y. 544; People ex rel. Mutual Life Ins. Co. v. Board of Supervisors of City of N. Y., 16 N. Y. 424; Matter of Chatlos v. McGoldrick, 302 N. Y. 380; Claridge Apts. Co. v. Commissioner of Internal Revenue, 138 F. 2d 962; People ex rel. Steckler v. Warden of City Prison, 259 N. Y. 430; Great Northern Ry. Co. v. U. S., 315 U. S. 262; People v. Weinstock, 117 App. Div. 168; Matter of Clonan, 176 Misc. 557; Quaker Oats Co. v. City of New York, 295 N. Y. 527.) III. The undisputed proof established that recovery would have been allowed in the Admiralty Court against Cardinal for all sums which the United States was compelled to pay to the injured men. (Employers’ Liability Assur. Corp. v. Post & McCord, 286 N. Y. 254; Tipaldi v. Riverside Memorial Chapel, 273 App. Div. 414; Vanderlinden v. Lorentzen, 139 F. 2d 995; The Spokane, 294 F. 242; Westchester Lighting Co. v. Westchester Co. Small Estates Corp., 278 N. Y. 175; Burris v. American Chicle Co., 120 F. 2d 218; Strika v. Netherlands Ministry of Traffic, 185 F. 2d 555.) TV. By his contract with the United States, Cardinal assumed no liability which would not have been imposed by law. (American Stevedores v. Porello, 330 U. S. 446; Mostyn v. Delaware, L. & W. R. R. Co., 160 F. 2d 15; Petkinic v. Eidlitz & Son, 266 N. Y. 437; Thompson-Starrett Co. v. Otis Elevator Co., 271 N. Y. 36.) V. Claimant need only show that the settlements effected by him were made in good faith. Honest errors of judgment in the conduct of a defense involuntarily thrust upon him will not deprive him of protection. (Halcyon Lines v. Haenn Ship Corp., 342 U. S. 282; American Mut. Liability Ins. Co. v. Matthews,
      182 F. 2d 322; Green v. War Shipping Administration, 66 F. Supp. 393; Severn v. United States, 69 F. Supp. 21; Barbarino v. Stanhope S. S. Co., 151 F. 2d 553; Brassil v. Maryland Cas. Co., 210 N. Y. 235; St. Louis Beef Co. v. Casualty Co., 201 U. S. 173; Carthage Stone Co. v. Travelers Ins. Co., 186 Mo. App. 318; Berger Bros. Elec. Motors v. New Amsterdam Cas. Co., 267 App. Div. 333.) VI. There is no limitation on the coverage provided by the State Insurance Fund. (Matter of Humphrey v. State Ins. Fund, 298 N. Y. 327; Murray v. Gerrick & Co., 291 U. S. 315; Capetola v. White Co., 139 F. 2d 556; Sadrakula v. Stewart & Co., 254 App. Div. 892; Puleo v. Moss & Co., 159 F. 2d 842.) VII. The duty of the State Fund of defending Cardinal in the admiralty actions brought against him was clear. (Nilsen v. American Bridge Co., 221 N. Y. 12; Goldberg v. Lumber Mut. Cas. Ins. Co., 297 N. Y. 148; Pow-Well Plumbing & Heating v. Merchants Mut. Cas. Co., 195 Misc. 251; Christian v. Royal Ins. Co., 185 Minn. 180; Maryland Cas. Co. v. Pearson, 194 F. 2d 284; Lee v. Ætna Cas. & Sur. Co., 178 F. 2d 750.)

      Bernard Katzen, General Attorney (William H. Stieglitz and Harry Schechter of counsel), for State Insurance Fund, amicus curiae.

    I. The State Fund was given legislative authority in 1928 to insure any employer’s liability whether covered by the Workmen’s Compensation Law or under any other law or theory of law. (W. H. H. Chamberlin, Inc., v. Andrews, 159 Misc. 124, 271 N. Y. 1; Westchester Lighting Co. v. Westchester Co. Small Estates Corp., 278 N. Y. 175.) II. The courts will follow the practical construction adopted by the State Insurance Fund, acquiesced in and acted upon for thirty years. (Cardinal v. United States Cas. Co., 277 App. Div. 1140, 302 N. Y. 853.)

      Nathaniel L. Goldstein, Attorney-General (Henry S. Manley and Wendell P. Brown of counsel), for respondent and appellant.
    I. Cardinal’s liability to the United States, which he compromised, was assumed by his contract with the United States and so was expressly excluded from the policy. (Halcyon Lines v. Haenn Ship Corp., 342 U. S. 282.) II. The State Fund’s policy did not cover third-party liability. (Treadwell Co. v. United States Fidelity & Guar. Co., 275 N. Y. 158.) III. The only effect of the 1951 and 1952 amendments is to authorize the State Fund to provide third-party liability coverage after the amendments. (Westchester Lighting Co. v. Westchester Co. Small Estates Corp., 278 N. Y. 175.) IV. Liabilities of the State Fund are not collectible in the Court of Claims. V. The policy restricts recovery to $25,000. VI. The Appellate Division erred in awarding Cardinal his entire legal expenses for defending and settling a litigation which presented against him two causes of action, the first insufficient on its face and the second expressly excluded from the policy coverage. (Mason-Henry Press v. Ætna Life Ins. Co., 211 N. Y. 489; Goldberg v. Lumber Mut. Cas. Ins. Co., 297 N. Y. 148; Grand Union Co. v. General Accident, Fire & Life Assur. Corp., 254 App. Div. 274, 279 N. Y. 638.)
   Desmond, J.

This suit, being on an insurance policy issued by the State Insurance Fund (see Workmen’s Compensation Law, §§ 76-99), was properly brought against the State itself, in the Court of Claims (see Heath v. State of New York, 303 N. Y. 658). The lower courts denied recovery. We do not agree.

The policy which the Fund issued to claimant Cardinal was in a familiar form. By it, the Fund agreed, in broadest language, to indemnify the insured “ against loss by reason of any liability imposed upon him by law for damages on account of such injuries to [his] employees ”, agreeing, also, to insure claimant-insured against all liability under the New York Workmen’s Compensation Law and the Federal Longshoremen’s and Harbor Workers’ Compensation Act, there being an express exception in the policy as to any liability assumed by the employer under any contract entered into with any other person, association or organization.” The policy contained the usual promise by the Fund, as insurer, that it would defend ‘ ‘ in the name and on behalf of this employer, any suits or other proceedings which may at any time be instituted against him on account of such injuries, including suits or other proceedings alleging such injuries and demanding damages or compensation therefor, although such suits, other proceedings, allegations or demands are wholly groundless, false or fraudulent ”. In other words, the Fund promised claimant not only that it would indemnify him against all liability to his employees under the two compensation statutes, and against any loss by reason of any other liability imposed on him by law for injuries to his employees, but also that it would defend, in his name and behalf, any suits or proceedings brought against him “ on account of such injuries,” excepting only liabilities assumed by contract and not imposed by law.

On January 3, 1945, while the policy above described was in effect, claimant Cardinal, a ship repairer, was engaged in carrying out, through employees, a contract with the United States for repairs and changes to the refrigeration system of a vessel owned by the United States and lying at a berth in the Port of New York. While a large number of claimant’s employees were in the hold of the vessel, ammonia gas was, accidentally, allowed to escape from the refrigeration pipes, with the result that eighteen of the employees were injured, one of them fatally. Sixteen of the injured employees, and the administratrix of the deceased employee, filed separate libels in admiralty in the United States District Courts for the Southern and Eastern Districts of New York, against the United States as owner of the ship, alleging total damages of about $555,000, the general theory of those libels being that the shipowner had failed to keep the ship in a safe and seaworthy condition, and had failed to furnish Cardinal’s employees with a safe place to work. The United States, as respondent in those suits, then filed petitions to implead claimant Cardinal in each such suit. Each such impleading petition contained two .alleged causes of action against Cardinal. The first of those, clearly sounding in tort, charged that Cardinal had failed to act with reasonable care, and had failed to avoid the dangerous conditions on the ship and to eliminate them, this first cause of action in the impleading petitions alleging that, if any libelant suffered any damages and was entitled to recover against the United States, the actual fault for the occurrence was that of Cardinal, and that for any such recovery by any libelant, the United States should have full indemnity, or contribution, from Cardinal. The second cause of action in the impleading petitions filed by the United States against Cardinal, called attention to a provision in the repair contract between the United States and Cardinal, by the terms.of which provision Cardinal had agreed to indemnify and save harmless, the United States against all suits, actions, claims, etc., by third parties- arising from the fault of Cardinal or his agent or servants. The substance of those impleading petitions, therefore, was that, as to any damages recovered by any of the libelants against the United States, the latter should have recovery over in part or in full against Cardinal, either on the ground that the actual fault was his, or because he had agreed to indemnify the United States against all claims by third parties resulting from Cardinal’s own fault. ' The process issued by the United States courts against Cardinal, on those impleading petitions, required that Cardinal, conformably to admiralty practice, make answer to the allegations not only of the petitions, but of the original libels, also. Thus, he was required to defend against the claims of the libelants as well as against the claims over, asserted by the United States against him. At that juncture Cardinal, through his attorney, took these matters up with the State Insurance Fund, notifying them of the filing of the various pleadings, and, under date of August 6, 1946, Cardinal’s attorney formally demanded that the Fund undertake the defense, for Cardinal, of all the actions. Under date of August 9, 1946, the Fund, through its general attorney (whose authority to act for the Fund in the matter is not disputed) notified Cardinal’s attorney, in writing, that the Fund disclaimed and disavowed any liability or responsibility as to the cross-claims ”, as well as any liability to defend against the same. The sole asserted reason for this disclaimer by the Fund was the provision, above referred to, in the policy, excluding from its -coverage ‘1 any liability assumed by the employer under any contract entered into with any other person, association or organization.” In other words, the Fund denied policy coverage as to these liabilities- asserted against Cardinal by the libelants and the United States, but only because the second of the two causes of action in the impleading petitions asserted that Cardinal had, by contract, assumed such liabilities. It is important to note that, aside, from the matter about to be mentioned in the last sentence of this paragraph, the State Insurance Fund never disclaimed coverage, or refused to defend, on any except that one sole ground, that is, that the liability was one assumed by contract by Cardinal, and so not insured against. The other reason given by the Fund at a later time for not defending or for limiting its defense, was that it claimed, as will appear, that the extent of its liability as to these claims was no more than a total of $25,000. It seems clear to us, however, that paragraph One (b) of the original policy provided indemnification as to all third-party liabilities on account of injuries to Cardinal’s employees “ wherever such injuries may be sustained.” There was nothing in the rider issued later, drawn by the insurer and headed United States Longshoremen’s and Harbor Workers’ Compensation Endorsement ” which sufficiently put the insured on notice that a limitation of amount as to third-party claims was being imposed. The lower court opinions in this case do not discuss that alleged limitation.

After the Fund had thus, because of the allegations as to contract assumption in one part of the impleading petitions, refused tq undertake the defense of these suits for Cardinal, Cardinal’s lawyer filed answers to all the libels and impleadingpetitions, and the cases went onto the trial calendar to await their turn. Then, after some months, and in March, 1947, there was decided by the United. States Supreme Court the case of American Stevedores v. Porello (330 U. S. 446), which decision, construing an indemnity provision, in another contract between the United States and a stevedoring concern, much like the clause to which Cardinal had agreed, held that the clause was ambiguous and might mean any one of three things. Such a clause, held the Supreme Court, might have this meaning: that a contractor (like Cardinal) was to indemnify the United States if the latter should be held liable for damages solely caused by the contractor’s negligence, or, said the court, it might be that the intent was that a contractor (like Cardinal) should fully reimburse the United States for all damages caused in any part by the contractor’s negligence, or, finally, the intention might have been that the contractor, in case there was joint negligence of the parties, should be responsible for that portion of the damages which the contractor’s fault bore to total fault (see 330 U. S., pp. 457, 458). The Supreme Court held, therefore, in the Porello case, that the meaning of a clause, quite similar to the one that Cardinal signed, and on which clause alone the insurer here had disclaimed liability, was a question of fact, calling for the production of evidence. As soon as that Porello decision was handed down, Cardinal’s attorney, in April, 1947, wrote to the Fund calling the Fund’s attention to this new and controlling decision. In that letter, he volunteered a prediction that there was little or no chance of damages being awarded against Cardinal in favor of the United States on the basis of that indemnity agreement, stating further that there was a strong likelihood that Cardinal would be held liable in the pending admiralty suits because of Cardinal’s own fault, notifying the Fund that there was some disposition on the part of the libelants and the United States to negotiate a settlement of all the libels, pointing out that the actions had been called on the calendar for trial and marked ready ”, and again demanding that the Fund undertake the defense of the actions, or interest itself in settlement negotiations. Under date of May 14, 1947, before the actions were actually reached for trial and before any definite settlement negotiations had been had, the Fund wrote to Cardinal’s attorney a letter which is, we think, of major importance. In that letter, which was a reply to the letter (supra) calling the Fund’s attention to the Porello decision, the Fund, through its general attorney, expressly offered “ to accept the defense of each impleading petition ”, but only on the condition that in the event judgments were recovered by the United States against Cardinal, the Fund would pay on account of all such judgments, a total of not more than $25,000. This letter cannot be interpreted otherwise than as a withdrawal of the Fund’s previous assertion that, because of the provisions in the policy excluding liability assumed by contract, it was not bound to defend Cardinal against the libel and petitions. Cardinal’s attorney did not agree to the $25,000 limitation and, as we have said, there was no such applicable limitation in the policy. However, the Fund adhered to its position. The position, therefore, was this: the cases were up for trial and had promptly to be settled or defended, but the insurer, having previously asserted a policy exclusion and having later withdrawn that, was now offering to defend on an inapplicable condition. The insured was, in effect, left to his own devices.

There can be no doubt that the paragraph next above correctly summarizes the meaning of the correspondence between the parties. In a letter from the Fund to Cardinal’s attorney in June, 1947, the Fund again stated that it would assume the defense of the actions but only up to $25,000, a limitation to which Cardinal, of course, did not agree. (Indeed, the Fund later made it clear that it would pay $25,000, on any judgments.) Cardinal, holding the Fund’s indemnity policy, was not bound to accept any such quasi-defense. Thus, the Fund, as to a major part of its obligation, had definitely breached its contract (see Brassil v. Maryland Cas. Co., 210 N. Y. 235; Mason-Henry Press v. Ætna Life Ins. Co., 211 N. Y. 489, 496; Matter of Empire State Sur. Co., 214 N. Y. 553, 563; Moore Constr. Co. v. United States Fidelity & Guar. Co., 293 N. Y. 119, 125; Goldberg v. Lumber Mut. Cas. Ins. Co., 297 N. Y. 148, 154).

The actions were not reached for trial in the spring of 1947, and, during that summer and early' autumn, there were negotiations between representatives of libelants and representatives of the United States and Cardinal, respectively, which finally culminated in an agreement whereby all of the libels were settled by a total payment to the libelants of $145,000, of which the United States paid 40%, and Cardinal paid 60% or $87,000. Cardinal, besides, paid his own attorney’s $14,000 legal fees, or a total of $101,000, for which total amount the present suit is brought. The State Fund, while insisting that it would not defend or participate in settlements unless a $25,000 limitation was agreed to, was kept informed of the settlement negotiations, and even now approves the settlements as to fairness. It concedes, also, the reasonableness of the amount paid by Cardinal for attorney’s fees.

The present suit, of course, is not one by the injured men against the United States or Cardinal, or by the United States against Cardinal. If it were, other rules of law might apply. What we have here is a suit on an insurance policy, alleging a breach by the insurer in refusing to defend, and demanding damages therefor. The applicable law, as well stated in Apple-man’s Insurance Law and Practice (Vol. 8, § 4690), is this: If an insurer unjustifiably refuses to defend a suit, the insured may make a reasonable settlement or compromise of the injured person’s claim, and is then entitled to reimbursement from the insurer, even though the policy purports to avoid liability for settlements made without the insurer’s consent ” (Matter of Empire State Sur. Co., 214 N. Y. 553, 563, supra; Mayor, Lane & Co. v. Commercial Cas. Ins. Co., 169 App. Div. 772; Alliance Cas. Co. v. Miele, 249 App. Div. 650). Simple justice requires such a rule. That this insurer’s refusal to defend Cardinal was unjustified cannot be doubted on this record. In offering to undertake the defense on an invalid condition (limitation of $25,000) it had finally, irrevocably, and as matter of law waived any other possible defense as to policy coverage (Gerka v. Fidelity & Cas. Co., 251 N. Y. 51; Kiernan v. Dutchess Co. Mut. Ins. Co., 150 N. Y. 190, 194, 195; Clark v. West, 193 N. Y. 349, 360; Rosenwasser v. Globe Ind. Co., 224 N. Y. 561; Moore Constr. Co. v. United States Fidelity & Guar. Co., 293 N. Y. 119, 123, supra, and cases cited). The asserted limitation of $25,000 was baseless, but, since the Fund would not defend except with that limitation, it, in the eyes of the law, refused to defend at all, and for no reason at all. (It is true that in a letter dated September 11, 1947, the Fund stated, without amplification, that it stood on the position taken by it ” in its letter of August 9, 1946, but this was not enough for a withdrawal of its former express waiver — see cases just above cited.) The only question, then, as it seems to us, is whether Cardinal, after being left by the insurer in that position, made a reasonable settlement of the injured men’s claims. His good faith in so doing is conceded. The reasonableness of the $145,000 total figure is conceded. The question is: was Cardinal reasonably justified in paying $87,000 thereof?

Under the facts as Cardinal believed them to be, and as later established in the present suit without dispute, his workmen had been injured by escaping fumes, and the fault therefor was, at least in part, Cardinal’s own fault in that his agents failed to clean out those pipes, although Cardinal had notice of their dangerous condition. Another possible fault was that of the United States in failing to follow customary practices in cleaning out the ship before turning it over to Cardinal. Under the law maritime, as experienced counsel would have found it to be at the time of the settlements, the results possible in the admiralty suits, if they went to trial, were these:

1. Cardinal and the United States might be held to be joint tort-feasors, and, under maritime law as then thought settled, this would result in Cardinal being liable over to the United States, not by contract but by substantive maritime law, for half the damages (Erie R. R. Co. v. Erie Transportation Co., 204 U. S. 220; The Ira M. Hedges, 218 U. S. 264, 270; The Wonder, 79 F. 2d 312, 314; Barbarino v. Stanhope S. S. Co., 151 F. 2d 553, 555 [C. A. 2d, 1945], Learned Hand, J.). In these very cases, two different Federal District Judges had held in passing on Cardinal’s exceptions to the pleadings, in 1946, that, despite and in addition to Federal compensation liability, Cardinal could be liable over to the United States (see Green v. War Shipping Administration, 66 F. Supp. 393; Severn v. United States, 69 F. Supp. 21).

2. Cardinal might be held to be primarily liable, that is, wholly to indemnify the United States (Porello v. United States, 153 F. 2d 605, 607, revd. in part on other grounds sub nom. American Stevedores v. Porello, 330 U. S. 446, supra; and see McFall v. Compagnie Maritime Belge, 304 N. Y. 314, decided herewith).

3. Cardinal might, also, be held liable to indemnify the United States on a question of fact only, since Cardinal’s claim that the United States was obligated to purge the system of fumes was based not on a writing but on a custom, testimony as to which custom a trial court might reject as untrue.

4. Cardinal had by contract assumed some liability to indemnify the United States, but the meaning of the assumption clause was unsettled (see United States Supreme Court opinion in American Stevedores v. Porello, supra).

Cardinal might have been held, on trial of the admiralty causes, for half or all of such damages as might be adjudged in suits brought for $555,000 damages. Under one or more of the Porello case theories, such a recovery might have been on the ground: not that Cardinal had by contract promised to assume liability, but because the actual fault was wholly or partly his. It seems to us that, on this record, there is nothing to answer Cardinal’s contention here that, abandoned by his insurer, he made a reasonable settlement, chargeable against the insurer as matter of law.

Several reasons are advanced for defeating a recovery here. The Court of Claims denied all recovery, and the Appellate Division modified to the extent of awarding to Cardinal his legal fees only. Since we hold that the Fund is liable to pay the settlement amount, it follows that it is liable for attorney’s fees, also, and so we do not discuss the two items of the claims separately. The Court of Claims decision held, in substance, these things: first, that the New York Workmen’s Compensation Law did not authorize the State Fund to insure against third-party liabilities; second, citing Treadwell Co. v. United States Fidelity & Guar. Co. (275 N. Y. 158), that a policy like this does not in terms insure against third-party liabilities, and, third, that although under the Westchester Lighting Co. case (278 N. Y. 175), such a third-party liability runs even against an employer as to compensation-covered injuries to his employees, nevertheless, citing American Mut. Liability Ins. Co. v. Matthews (182 F. 2d 322), that sort of third-party liability does not, under maritime law, run against a third party whose direct liability by law is for workmen’s compensation payments only, and who, like Cardinal, has provided for or paid such compensation benefits. The Court of Claims, therefore, concluded that the liability which Cardinal settled could have been based on a contract assumption of such liability only, that is, a liability such as was excluded from this policy. In the Appellate Division that court’s opinion, again citing the Matthews case (supra), said that this settlement could have been of a contract-assumed liability only. In our court, the State relies on still another legal theory, based on the United States Supreme Court’s holding in Halcyon Lines v. Haenn Ship Corp. (342 U. S. 282), which was decided on January 14, 1952, a few days after the Appellate Division’s modification in the present case. The Supreme Court held (in Halcyon Lines v. Haenn Ship Corp.) substantially this: that, while substantive maritime law has usually decreed contribution as between joint tort-feasors (see Erie R. R. Co. v. Erie Transportation Co., 204 U. S. 220, supra; The Ira M. Hedges, 218 U. S. 264, 270, supra; The Wonder, 79 F. 2d 312, 314, supra; Barbarino v. Stanhope S. S. Co., 151 F. 2d 551, 553, supra [C. A. 2d, 1945], Learned Hand, J.; and the Green and Severn decisions in these very cases, 66 F. Supp. 393, 69 F. Supp. 21, supra), nevertheless, such contribution should not be enforced against an employer joint tort-feasor, where the injury was to one of his employees who was entitled to compensation under the Federal Longshoremen’s and Harbor Workers’ Compensation Act (U. S. Code, tit. 33, § 901 et seq.). As we read the cases, Halcyon is the first one containing an authoritative holding, at least by the highest court, that the ordinary maritime law system of contribution between joint tort-feasors was not available in such a situation (there was a holding against such contribution in the Second Circuit, in 1950, in American Mut. Liability Ins. Co. v. Matthews [supra], long after the settlement here, but even then, as the Circuit Court noted, the majority of the lower court decisions were the other way, as was, it seems, the Second Circuit’s own earlier case of Rich v. United States, 177 F. 2d 688).

Thus, in our court, the State has asserted at least three different grounds for escaping liability: first, that the New York Workmen’s Compensation Law does not authorize the Fund to issue a policy indemnifying against an employer’s third-party liabilities; second, that even if the statute did so permit, this policy, under the Treadwell case (supra) does not cover such liabilities; and, third, that under the Halcyon case (supra), Cardinal could not, in the admiralty cases brought by the workmen, have been held liable as in tort, but only because he had covenanted to bear the burden of such third-party claims, a burden against which he was not insured, since the poEcy contained an exclusion applicable thereto. At the risk of making this opinion overlong, we feel it necessary to take up, separately, each of those separate positions of the State.

The State says, first, that article 6 (§ 76) of the Workmen’s Compensation Law, which commands the setting up of a State bureau or £ ‘ Fund ’ ’ to operate as an insurer and to be known as the State Insurance Fund, did not license the Fund to insure employers against these third-party liabiEties. To that contention, there are a series of answers, each answer adequate in itself. The most impressive of them is this: on November 12, 1946, before these cases were settled, and after the Fund had made and had not yet withdrawn its claim of poEcy noncoverage because of the assumption of Eability, the State Fund in a most formal and solemn way, issued a written statement to each of its policyholders, including Cardinal, announcing that its poEcies, of the kind here in suit, did cover such third-party liabilities. ' That notice said in part: £ £ The State Fund has always maintained that its employers are entitled to such indemnity protection and accordingly, our poEcies have always been interpreted to grant such coverage without extra charge.” That notice went on to say that, to give evidence of the ££ State Fund’s long standing practice ”, there was being sent to each insured (and was so sent to Cardinal) a poEcy indorsement in which the State Fund agreed £ £ to indemnify this employer against loss by reason of the liabiEty imposed upon him by law for damages on account of such injuries to such employees wherever such injuries may be sustained including the liability imposed upon this employer by reason of a suit or claim brought against him by another to recover the amount of damages obtained from such other by an employee of the employer for injuries sustained by such employee arising out of and in the course of his employment.” That could not possibly be read as anything less than a binding declaration by the insurer, as to the meaning of the policy. Whether we treat is as a construction, or admission against interest, by an insurer, or a waiver by the insurer of any right ever to take a different position, or as something creating an estoppel, makes little difference. The result, in law, of the Fund’s announcement, was that it was thereafter bound to that meaning of the policy. And all that is quite apparent to those who manage the State Fund, since, on this very appeal in this very case, the State Insurance Fund, as such, has filed a separate brief (amicus curiae) in which it tells us, as it told Cardinal and its numerous other policyholders in 1946, that its policies covered, and had always covered, such third-party liability. Part of the reason for that position is this: that, as long ago as 1928, the then New York State Attorney-General formally gave it as his opinion (see 1928 Atty.-Gen. 151) that the Fund did have a statutory right to insure third-party liabilities of employers, and, accordingly, the Fund later adopted a new form of policy like the one here in suit to evidence such insurance coverage. Another compelling reason for holding that the State Fund's policies do cover third-party liabilities of employers, is found in an amendment to section 76 of the Workmen’s Compensation Law, passed by the Legislature some two weeks after the Court of Claims decision in this case, and approved by the Governor on March 29, 1951 (L. 1951, ch. 306). That amendment was passed, in response to an emergency message from the Governor and at the request of the State Insurance Fund, to reassure the sixty thousand (it is said) insureds who carry policies, like this one, issued by the State Fund. The whole history of that amendment, as well as its language, makes it clear that it was an interpretive and clarifying law, not one looking to the future, and that it was intended to and did state the view of the Legislature as to what the statute, and the policies, had always meant (see Matter of Chatlos v. McGoldrick, 302 N. Y. 380). All these considerations, separately and together, confirm the view that it was always intended, and always lawful for the Fund, to cover these third-party liabilities, by means of the policy language in which the Fund agrees: “ to indemnify this employer against loss by reason of any liability imposed upon him by law for damages on account of such injuries to such employees wherever such injuries may be sustained.” So much for the argument, which we reject, that the policies could not legally, and did not by intent, cover this sort of liability.

Next we come to the State’s argument, based on the Treadwell case (supra). We do not find it necessary to determine the exact limits of that holding. As we have pointed out above, this insurer, when there was tendered to it the defense of these claims, and later when it was asked to settle them, waived every possible question of policy coverage except the unfounded $25,000 limitation. The matters set forth in the paragraph next above of the present opinion answer this argument of the State, also since they show that, regardless of the Treadwell case (the holding of which we do not further analyze) this insurer affirmatively and knowingly waived any claim that it was not bound by its policy to defend third-party claims. Beyond this, there is a technical reason (to which we do not attach major importance) why, in any event, the Treadwell case could not control here. It is undisputed that, when the United States impleaded Cardinal, Cardinal was, pursuant to admiralty court procedure, and by the terms of the admiralty process served on him, required to answer not only the impleading petitions but also the original libels themselves. That necessary defense as to the libels would seem to be, specifically and in terms, covered by this policy. In other words, the Fund by this policy had promised to defend against, and to pay the damages in, any suits by employees. So far as Cardinal was concerned, these were suits by employees against him.

We come now to the State’s argument based on Halcyon Lines v. Haenn Ship Corp. (supra) decided by the nation’s highest court after the present suit had been passed on by the Appellate Division. Of course, Halcyon v. Haenn would be the present law of a hypothetical case which would be up for decision now, had the United States paid the whole settlement, and were it now suing Cardinal for contribution. But there is no such suit, and no such situation. Our problem is "as to the rights, between themselves, of Cardinal and the State Insurance Fund, as of 1946 and 1947, when the Fund breached its obligation to defend Cardinal, and waived all questions except as to the $25,000 alleged limit. The Fund, had it so chosen, could have taken on the defense of the impleading petitions, with such reservations of rights as against Cardinal, as it thought appropriate. The Fund, we suppose, could.have defended against the tort count in the impleading petitions, and required Cardinal to defend himself as to any contract claim by the United States, if the Fund thought that there was any difference between the “tort ” liability and the £ ‘ contract ’ ’ obligation. It did none of these things. It waived all claims of noncoverage, except one now shown to be invalid, and, while conceding the fairness of the settlements, refused to defend, or to join in the settlements. By so doing, it, as matter of law, breached its insurance contract and, on the concessions here, the damages for that breach could be in no sum other than the total of the settlement amount plus the lawyer’s fees paid by Cardinal.

We come, next, to a matter taken up here for the sake of completeness, although perhaps not necessary to this decision. The argument from the Halcyon case (supra), is that, since Cardinal and the United States have, in the present suit, by findings of fact, been held to be joint tort-feasors, thus, it is said, there never was any right in the United States to exact contribution from its joint tort-feasor Cardinal. Of course, that is all “ after the event ” material, since when the settlements were made, there not only was no Halcyon case, but there was no finding, and no certainty that there ever would be a finding, that the United States and Cardinal were joint tort-feasors. Cardinal knew that he was at fault, and, presumably, the Fund knew that too, but, whether the United States was at fault was another question, since Cardinal’s claim of fault against the United States rested on information, which he says he had, that the United States breached a duty and failed to follow a custom when it failed to purge the pipes, before handing the ship over to Cardinal. As we have, pointed out above in one of the earlier paragraphs of this opinion, the admiralty courts, had the cases gone on to trial, might very well have held that the United States was secondarily liable only, and that Cardinal was the real wrongdoer. Seemingly, the maritime courts, despite the Halcyon and Matthews cases (supra), still follow our Westchester Lighting Co. case (278 N. Y. 175, supra) rule (see Rich v. United States, 177 F. 2d 688, 691, supra). In any case, the Fund never, at any time in its negotiations with Cardinal, disputed with him as to whether or not he was at fault, or as to whether he was a joint tort-feasor or a primary wrongdoer, or neither. Had the Fund wished to claim that, under the Halcyon or some similar theory, no tort liability ran against Cardinal, it should have undertaken the defense for that purpose. Suppose the admiralty cases had gone to trial and the finding had been that the fault of the United States was merely passive, and that the fault of Cardinal was primary, principal and active. Then, it seems probable, the Halcyon theory would have nothing to do with the case. A recovery over in such a situation would have been of full indemnity, just as we are holding in McFall v. Compagnie Maritime Belge (304 N. Y. 314, supra) handed down today, and decided under our concept of the substantive maritime law governing-recovery over by a shipowner, who fails to furnish a safe place to work, against an employer whose fault was subsequent and active.

So we come back to where we were when we began to discuss the various arguments for affirmance. On the clear showing of an unlawful refusal by this insurer to defend, the sole question is as to the reasonableness of the settlement thereafter made by the insurer. That question must be answered nunc pro tune, not by a long-later trial, under newly handed down decisions, as to who could be held for damages, and on what theory, for the injuries to Cardinal’s workmen.

We mention one more matter. We decided, in 1951, Cardinal v. United States Cas. Co. (302 N. Y. 853) wherein Cardinal tried to recover the amount of this same settlement, from an insurer which had covered him as to accidental injuries to persons other than employees of the insured. Enforcing the exclusion, in the policy there in suit, of claims for injuries to Cardinal’s employees, we, agreeing with the court below, denied recovery. Broadly, the basis for our decision as to that other policy was that Cardinal had settled claims for injuries to his employees, and, on that same broad basis, this State Fund policy should cover, since the United States Casualty Co. policy did not.

Summing up, we think that the breach by the Fund, of its policy contract, and the reasonableness of the subsequent settlement made by Cardinal, were established beyond any dispute, and accordingly, that there was no defense to this suit and that there is now no necessity for a new trial.

The order of the Appellate Division should be modified in accordance with the opinion herein, the judgment of the Court of Claims reversed, and the case remitted to the Court of Claims for entry of judgment in favor of the claimant, as demanded in the claim, with costs in all courts.

Dye, J.

(dissenting). These cross appeals bring up for consideration the liability of the State Insurance Fund (hereinafter called the Fund) under a policy issued by it to insure the appellant, a ship repairer (hereinafter called Cardinal) under the New York Workmen’s Compensation Law and the Federal Longshoremen’s and Harbor Workers’ Compensation Act. The issue turns on the construction to be given the policy provisions insuring “ against loss by reason of any liability imposed upon him by law for damages on account of such injuries to such employees wherever such injuries may be sustained ”, such obligations being limited, however, to the liability imposed by law upon the employer for negligence but specifically exclude * * * any liability assumed by the employer under any contract entered into with any other person, association or organization.” The policy also contained a standard form clause whereby the insurer undertook to defend “ in the name and on behalf of this employer, any suits or other proceedings which might at any time be instituted against him on account of such injuries, including suits or other proceedings alleging such injuries and demanding damages or compensation’therefor, although such suits, other proceedings, allegations or demands are wholly groundless, false or fraudulent ”.

While the policy was in effect, Cardinal undertook to make alterations and repairs to the S.S. Hilton, an ocean going vessel owned by the United States and berthed at the time in New York Harbor. During the progress of the work, a quantity of ammonia gas used in the vessel’s refrigerator system was carelessly allowed to escape into the confined area in which the insured’s employees were working, causing injuries to eighteen of them and death to another. The Fund thereafter paid in full the compensation awards made to the injured workmen and the death benefits made to the representative of the deceased worker. Subsequently, the same workmen and the representative of the deceased workman brought separate suits in the Federal Admiralty Court against the United States of America for damages aggregating $550,000, for personal injuries suffered by reason of the same accident. The suits were grounded in negligence for failure to provide a safe place to work. The United States of America then filed a petition to implead Cardinal as a third-party defendant and for judgment over, alleging two causes of action, one based on common-law tort liability and the other based on a contract by the terms of which Cardinal had expressly agreed to indemnify the United States against all claims made by third parties arising from the fault of Cardinal. The alleged second cause creates no difficulty here as the parties recognize that the liability thus assumed was specifically excluded from the policy coverage. Cardinal, nonetheless, demanded that the Fund undertake the defense of the impleading petitions but the Fund refused because, in its opinion, the claim was outside the terms of the policy coverage. Coincident therewith, Cardinal, through his personal attorneys, was negotiating with the United States for a settlement of the suits, the Fund being informed as to progress. By letter dated April 29, 1947, Cardinal’s attorney called the attention of the Fund to the case of American Stevedores v. Porello which had imposed liability on the stevedores by virtue of an indemnity agreement issued to the United States in a case where there was mutual fault.. The United States Supreme Court reversed however (330 U. S. 446), and remanded the case to the District Court for the taking of further proof on the meaning of the indemnity agreement. Cardinal’s attorney thought the principle of law enunciated therein might lead to the establishment of liability on the “ usual common law principles ” in the case under consideration. In response to this, the Fund offered in its letter dated May 14, 1947: “ to accept the defense of each impleading petition upon the express understanding that in the event judgments are recovered by the United States of America against Cardinal Engineering Co. on the impleading petitions, the State Insurance Fund will pay on account of all such judgments the total sum of Twenty-Five Thousand and 00/100 ($25,000.00) Dollars ” and requested confirmation if the offer was accepted. Cardinal, however, did not accept this offer and the Fund by letter dated September 11, 1947, advised Cardinal that: The State Insurance Fund stands on the position taken by it as outlined in * # * letter to you dated August 9, 1946.” In that letter the Fund stated that it ‘1 disclaims and disavows any liability or responsibility whatsoever under the cross-claims in each of the foregoing petitions,” as well as any liability or responsibility to undertake the defense of the same and/or the employment of counsel for that purpose.”

Thereafter the suits were settled prior to trial, the United States paying 40% of the settlement and Cardinal 60%, its share being the sum of $87,000. Cardinal then made demand on the Fund for reimbursement of the amount paid by him plus his attorney’s fees and disbursements in the sum of $14,000. On the Fund’s refusal the instant suit was then brought in the Court of Claims. The Court of Claims denied all relief and entered its judgment dismissing the complaint. The Appellate Division modified the Court of Claims judgment to the extent of allowing attorney’s fees and both parties cross-appealed here. No question is raised as to the reasonableness of either the sum paid in settlement or the amount paid to the attorney.

There is no longer any doubt that the Fund may be sued in the Court of Claims and we all agree that the policy, by its terms, purported to insure against third-party liability, that the Fund has statutory authority to issue such a policy, and that the $25,000 limited liability rider is not applicable to the instant claims.

The dispute turns on whether, under the circumstances of this case, Cardinal as impleaded defendant was under an obligation imposed by law ” to contribute to his joint tort-feasor; for if he was, then the coverage of the policy was available to him and the Fund should have reimbursed him for his contribution to the settlement and accepted defenses of the interpleading petition. Everyone agrees that unless there is a liability imposed by law ”, he may not recover for the indemnity obligation assumed by contract is specifically excluded. When the accident giving rise to the claims occurred on January 3, 1945, it is claimed that the admiralty law was not clear as to whether contribution between joint tort-feasors in noncollision cases was governed by the moiety rule (The North Star, 106 U. S. 17; The Chattahoochee, 173 U. S. 540; Aktieselskabet Cuzco v. The Sucarseco, 294 U. S. 394) or the comm on-law rule (Chapman v. Forbes, 123 N. Y. 532). The Federal courts have held, however, that when the third party is an employer covered by the Longshoremen’s and Harbor Workers’ Compensation Act (U. S. Code, tit. 33, § 933) the liability of the employer is not the kind of wrongdoing that will be regarded as creating a common responsibility, for the act has provided an absolute duty to pay the prescribed compensation (The Ira M. Hedges, 218 U. S. 264). The Longshoremen’s Act is also a valid defense to an asserted right of contribution (American Mut. Liability Ins. Co. v. Matthews, 182 F. 2d 322 [C. A. 2d]; see, also, Rich v. United States, 177 F. 2d 688 [C. A. 2d]).

The Fund took the position throughout, and was sustained in the courts below, that Cardinal had no liability imposed by law within the coverage of the policy. While the case was being litigated, albeit subsequent to the date of the accident giving rise to it, the United States Supreme Court settled any doubt as to contribution between joint tort-feasors in noncollision cases by holding that the common-law rule of noncontribution between joint tort-feasors is applicable (Halcyon Lines v. Haenn Ship Corp., 342 U. S. 282). We are bound by the rule of that decision. Our practice is well settled that we take the law as we find it at the time of the appeal, whether statutory (Matter of Kahn [National City Bank], 284 N. Y. 515; Robinson v. Robins Dry Dock & Repair Co., 238 N. Y. 271; Matter of Tartaglia v. McLaughlin, 297 N. Y. 419; Gilpin v. Mutual Life Ins. Co. of N. Y., 299 N. Y. 253), or decisional (Graybar Elec. Co. v. New Amsterdam Cas. Co., 292 N. Y. 246). The case of McFall v. Compagnie Maritime Belge (304 N. Y. 314), handed down herewith, suggests no different result for there we dealt with the rights of a passively negligent owner and active wrongdoers, while our present case arose out of a joint wrong* by active tort-feasors, a difference which points the distinction.

It is equally clear that the Fund was under no obligation to undertake the defense of the impleading petition. Its obligation to defend depended upon whether the liability sought to be imposed was within the coverage of the policy. It has long been the rule that an insurer’s duty to defend is determined by the allegations of the pleading matched against the terms of the policy. If the pleading states a cause of action within the coverage of the policy, even though the allegations are wholly groundless, false or fraudulent ” there is a duty to defend (Mason-Henry Press v. Ætna Life Ins. Co., 211 N. Y. 489; Goldberg v. Lumber Mut. Cas. Ins. Co., 297 N. Y. 148). The words “ false ” and groundless ” obviously mean false and groundless in fact. In the petition under consideration here no facts were pleaded showing a liability “ imposed by law ” and the State Fund was clearly justified in refusing to defend,

Furthermore, a careful reading of the correspondence passing between the parties as outlined above, clearly demonstrates that the Fund neither waived its defenses to the policy coverage nor became estopped from asserting them by reason of its offer to defend provided its liability was limited to $25,000. Patently the offer was made to compromise a disputed claim involving upwards of $550,000. In this case the parties themselves did not argue or even suggest that said offer was a waiver of the question of coverage. Moreover, even if the Fund’s offer is regarded as a withdrawal of all other grounds for contesting coverage, the authorities are in accord that no estoppel results unless the assured relied thereon to his detriment (45 O. J. S., Insurance, § 707, pp. 677-678, and cases cited therein; 29 Am. Jur., Insurance, § 871, pp. 667-668, and cases cited therein). Nowhere in this record does it appear that Cardinal placed any reliance on the offer and he was not misled in any way.

The judgment of the Appellate Division should be modified by reversing so much thereof as adjudges the State Insurance Fund liable to the plaintiff in the amount of $14,000 paid by him defense of the impleader petition.

Fuld, J.

(dissenting). While I agree with the court that the State Insurance Fund was under the necessity of defending the actions that had been brought in the federal court and, accordingly, defendant is liable for payment of the legal fees incurred by plaintiff in connection with their defense, I see no basis for holding defendant responsible for the amount that plaintiff paid to the United States pursuant to the agreement of settlement. The question for decision is whether the claims, settled by plaintiff’s payment of $87,000 to the Government were included within the coverage of the Fund’s policy of insurance and not, as Judge Desmond puts it (opinion, p. 411), whether plaintiff was ‘1 reasonably justified ’ ’ in paying that amount in settlement. The policy covered only those obligations “ imposed by law ”, and, since the Supreme Court of the United States has decided that there is no right to contribution between joint tort-feasors in noncollision cases (see Halcyon Lines v. Haenn Ship. Corp., 342 U. S. 282), plaintiff was under no such obligation. In my view, therefore, it follows that plaintiff may not look to the policy for reimbursement or recovery of the amounts paid in settlement.

I would affirm the judgment of the Appellate Division.

Loughran, Ch. J., Lewis, Conwat and Froessel, JJ., concur with Desmond, J.; Dye and Fuld, JJ., dissent in separate opinions.

Judgment accordingly. [See 304 N. Y. 732, 875.]


author: Lewis, J. Fuld, J.

text:
    In the Matter of Anthony B. Fusco et al., Respondents, against Robert Moses, as Chairman of the Triborough Bridge and Tunnel Authority of the City of New York, Appellant.
    Argued May 27, 1952;
    decided July 15, 1952.

      G. Frank Dougherty and Ruth I. Wilson for appellant.
    I. The charges were meticulously proved. The proof had all been collected before petitioners were suspended from duty. It is impossible to attribute, and petitioners’ counsel does not attempt to attribute, the determination of guilt to anything Berninger heard in Mr. Schwartz’ office. It was error to ignore these facts as immaterial. (Matter of Schadler v. Graves, 258 App Div. 451, 282 N. Y. 716; Matter of Carlson v. Delaney, 262 App. Div. 1011; People v. Swift, 161 Misc. 851, 251 App. Div. 808, 277 N. Y. 618.) II. The Authority did not send Berninger to Mr. Schwartz’ office. It did not instigate or suggest the visits or know of his intention to make them. Berninger knew that he had no authority to act as detective for the Authority at the time of these visits. In the face of these proven facts it was error for Special Term to assume, on a basis of mere surmise and suspicion, that Berninger attended the meetings in Mr. Schwartz’ office as an agent for the Authority. (Scher v. United States, 305 U. S. 251; United States v. Rogers, 53 F. 2d 874; Shore v. United States, 49 F. 2d 519.) III. It was error to find that petitioners were denied the assistance of counsel. Up to the time of his withdrawal on October 24th, they were represented by Mr. Schwartz. He interviewed each of them privately before the hearings and zealously conducted their defense until he withdrew. Opportunity to get another lawyer and an adjournment for that purpose were then offered and were waived by all petitioners. IV. No prejudice to petitioners is shown or even claimed. No possibility of exoneration is shown or claimed to have been lost because of Berninger’s mistaken action. (Canizio v. New York, 327 U. S. 82; People v. Perez, 300 N. Y. 208; People ex rel. O’Neill v. Bingham, 132 App. Div. 667; People ex rel. Brown v. Greene, 106 App. Div. 230, 184 N. Y. 565.) V. In the absence of any showing of prejudice or claim of innocence the application should be dismissed. (People ex rel. Weston v. McClave, 123 N. Y. 512; Matter of People ex rel. Burby v. Common Council of City of Auburn, 85 Hun 601; People ex rel. Flanagan v. Board of Police Comrs. of City of N. Y., 93 N. Y. 97; People ex rel. Fitzpatrick v. French, 32 Hun 112; People ex rel. McCarthy v. Board of Police Comrs. of City of N. Y., 98 N. Y. 332; Sharkey v. Thurston, 268 N. Y. 123; Matter of Miller v. Kling, 291 N. Y. 65; State ex rel. Rockwell v. State Bd. of Educ., 213 Minn. 184; People ex rel. Cunningham v. Bingham, 134 App. Div. 602; Matter of Yates v. Mulrooney, 245 App. Div. 146; Matter of Smith v. Lyons, 262 App. Div. 374; People ex rel. O’Shea v. Lantry, 44 App. Div. 392; People ex rel. O’Neill v. Bingham, 132 App. Div. 667; Pike v. Walker, 121 F. 2d 37; Whitney v. Judge of Dist. Ct., 271 Mass. 448.)

      Asher W. Schwartz for respondents.
    I. The right to counsel included the right to the private aid of counsel in preparation for trial and the right to consult with counsel in confidence without, in either case, the presence of any agent of appellant, whether such agent were present by compulsion or by deceit. The undercover presence of appellant’s agent during private communication between petitioners and counsel in discussions of the charges and during their preparation for trial deprived petitioners of their right to counsel. (People ex rel. Ellett v. Flood, 64 App. Div. 209; People ex rel. Mayor of City of N. Y. v. Nichols, 79 N. Y. 582.) II. An intrusion, whether hy force or deceit, into private consultation between attorney and client preparatory to trial constitutes a denial of the right to counsel. (Coplon v. United States, 191 F. 2d 749; People v. McLaughlin, 291 N. Y. 480; Glasser v. United States, 315 U. S. 60; Powell v. Alabama, 287 U. S. 45; Ex Parte Rider, 195 P. 965 [Cal.]; People ex rel. Burgess v. Risley, 66 How. Prac. 67.) HI. Petitioners were deprived of their right to counsel within the meaning of the law as herein set forth, in that an agent of the disciplining agency was present hy deceit during the most vital phase of the exercise hy petitioners of their statutory right to counsel. (United States v. Coplon, 185 F. 2d 629; United States v. Venuto, 182 F. 2d 519; People ex rel. Mayor of City of N. Y. v. Nichols, 79 N. Y. 582.)
   Lewis, J.

We review a nonunanimous order of the Appellate Division affirming an order of Special Term which annulled resolutions by the Triborough Bridge and Tunnel Authority of the City of New York dismissing petitioners from their positions as bridge and tunnel officers and directing restoration of their civil service status and rights.

The petitioners, as veterans and employees in the competitive class of civil service, were accorded hearings upon stated charges. (Civil Service Law, § 22.) Thereafter the Authority, by formal resolutions, dismissed the petitioners upon its determination that, while employed as toll collectors at the BronxWhitestone Bridge, they had been guilty of neglect of duty, and had violated the Authority’s rules and regulations by corrupt dealings in prepaid toll tickets, passes and cash tolls.

At Special Term the Authority’s resolutions of dismissal were annulled on the theory that petitioners had been denied the right to be represented by counsel with whom they could consult in circumstances which were confidential. At the Appellate Division, where the order of Special Term was affirmed, one Justice dissenting, the following questions were certified:

“1. Do the petition, answer, affidavits and the record of petitioners’ hearings show facts sufficient to entitle petitioners to an annulment of the resolutions of the Triborough Bridge and Tunnel Authority dated October 31, 1950, dismissing the petitioners from the service of the Authority?

“ 2. Was petitioners’ right to the assistance of counsel ‘ violated to the prejudice of the petitioners ’ within the meaning of subdivision 5 of Section 1296 of the Civil Practice Act? ”

The record discloses that tolls of the Triborough Bridge and Tunnel Authority are payable either in cash or by the presentation of prepaid toll tickets, the latter method of payment being frequently employed by business concerns which regularly use the bridges and tunnels operated by the Authority. Such concerns purchase books of toll tickets from the Authority which are then given to the drivers of company vehicles for use in payment of the toll charges.

On July 21, 1950, one John Berninger, employed as a bridge and tunnel officer at the Bronx-Whitestone Bridge, reported to his superior, Lieutenant Milton Rogers, that unused prepaid toll tickets, which had been misappropriated from their owners by truck drivers or other persons, were being sold to bridge and tunnel officers for less than face value — usually at half price. According to Berninger, tickets thus acquired were being included by certain bridge officers among daily toll receipts, the officers withdrawing and retaining cash equal to the full value of the prepaid toll tickets thus substituted. Lieutenant Rogers, who was then acting captain in charge of the Bronx-Whitestone Bridge, thereupon reported Berninger’s conversation to his superior and — at the latter’s suggestion — requested Berninger to obtain as much information as possible about the corrupt transactions. In accord with direction by Lieutenant Rogers, Berninger continued in his position and in so doing not only participated in the unlawful manipulation of tolls, but gathered and relayed to his superior detailed information regarding the misappropriations and the persons involved therein.

On September 28, 1950, Berninger and several bridge and tunnel officers were summoned to the office of the District Attorney of Bronx County where they were questioned with regard to the handling of toll tickets and notified of their suspension from duty pending investigation by the Bridge Authority, Although Berninger on that occasion was told of his suspension in the presence of the other suspected employees, that notification was not intended to be effective but had as its sole purpose the concealment of Berninger’s identity as an informer for the Bridge Authority. Berninger himself was apprehensive of the safety of himself and his family if his co-operation with the bridge authority as an informer should become known, and it was at his request that he was ostensibly suspended from duty and later was served with formal charges of misconduct.

On the day of their appearance at the District Attorney’s office, the suspected employees — including the petitioners herein —■ determined to consult an attorney, and, on the following day, September 29, 1950, all or most of such employees, including Berninger, called upon Asher W. Schwartz, whom they retained to serve as their attorney in whatever proceeding should eventuate. It is Berninger’s testimony that he continued to fear his status as an informer might become known if he did not accompany his fellow employees to the attorney’s office. The following excerpt from Berninger’s testimony bears upon our inquiry:

“ Mr. Schwartz [counsel for petitioners and Berninger]: After I met that group and with all discussing the case with me and the trouble you were in, I interviewed each man personally, is that correct?

Mr. Berninger: Yes, sir.

“ Mr. Schwartz: And you came in to me personally, is that right?

“ Mr. Berninger: That is right.

Mr. Schwartz: At that time, didn’t I say to you at the outset that you were coming to me as a client to a lawyer and that whatever you told me in that discussion would be privileged and that I was not free to disclose to anybody, including any union official or any other party to these proceedings?

“ Mr. Berninger: I believe so.

Mr. Schwartz: And I told you that I would not disclose that, is that correct?

“ Mr. Berninger: That is correct.”

On October 14, 1950, formal charges of misconduct, together with notice of hearings to commence on October 18th were served upon petitioners and Berninger. Three days later, on October 17, 1950, the petitioners and Berninger again consulted their attorney, on which occasion Berninger gave no indication that the charges against him were not valid. In the afternoon of the date of that conference, the attorney contacted the attorney for the Authority and then furnished the names of the suspended officers by whom he had been retained to represent them at the hearings. Included among the names so listed was that of the informer Berninger.

At the hearings upon the charges, commencing on October 18, 1950, Berninger testified as a witness for the Authority, at which time his status as an informer was not revealed. Although the petitioners’ attorney was not present at the next hearing on October 19th, he appeared on the following day at which time Berninger informed him that his retainer was withdrawn. At the hearing of October 23d Berninger again testified as a witness for the Authority and on that occasion he frankly admitted his role as a “ checker ” and recited in detail his activities leading up to the filing of charges against himself and the petitioners herein.

It thus appears from an affidavit filed by Berninger and from his testimony that for a period of more than two months he acted as a “ checker or informer ” for the Authority in furtherance of its investigation to determine whether there existed misconduct and neglect of duty among the bridge and tunnel officers as toll collectors at the Bronx-Whitestone Bridge. It also appears that, although Berninger and each of the petitioners had received from the Authority a notice of hearings to be held upon charges made against them, in which notice each was advised of his right to be “ represented by counsel ”, he participated in conferences — of which the first was on September 29, 1950 — when he and the petitioners consulted with the attorney whom he and they had retained, without his revealing the fact that since July 21,1950, he had acted as an informer for the Authority in furtherance of its investigation.

Upon evidence to which reference is made above the learned Justice at Special Term concluded (200 Misc. 196, 197-198): ‘‘ The proceedings are not void if petitioner is not represented by counsel. They only assume that aspect if respondent deprives nim of that right. Respondent [the Authority] denies sending Berninger to the consultation or having prior knowledge that he would attend it. It is claimed that Berninger’s presence resulted from his own act induced by a fear to disclose his true relationship to the situation. It is argued that any loss of rights which resulted from Berninger’s act, as far as the authority is concerned, is fortuitous. This argument overlooks the fact that the respondent used Berninger for a special purpose and it would be drawing too fine a line to hold that his authority did not go to the extent of attending the meeting.”

We think the following statements by Lieutenant Rogers — Berninger’s superior officer — in his affidavit of record before us, afford ample support for the conclusion reached at Special Term and affirmed at the Appellate Division: After referring to the fact that on July 21st, Berninger had told him of having observed “ mishandling of prepaid toll tickets ” by certain bridge and tunnel officers, the affidavit by Lieutenant Rogers states in part: “ Mr. Berninger said that he did not want to get involved in these transactions, which were becoming wide-spread among the men employed at the bridge. I reported this conversation to the Assistant Superintendent of Operations of the Authority and upon his advice the next day I suggested to Mr. Berninger that he endeavor to find out as much as he could about the transactions and, if necessary, participate in them, and to report in detail to me with respect to each transaction. * * * Thereafter, commencing on or about August 1st, Mr. Berninger reported to me from time to time, both orally and in writing, transactions involving the purchase of prepaid toll tickets by certain of the Bridge and Tunnel Officers and the distribution of these and other wrongfully acquired tickets among certain of the officers at the bridge and the deposits of these tickets in lieu of cash tolls with daily toll receipts turned in by the men. * * # He said that he saw certain of the accused men from time to time and on these occasions acted as though he too was under charges. For his safety I advised him to continue the pretext. * * * Mr. Berninger also told me that to avoid suspicion he had gone along with a group of the accused men to the law office of O’Donnell & Schwarts, who had been retained by all, or practically all, of the 14 or 15 men who had been suspended pending hearings on charges of misconduct in the handling of the toll tickets. Mr. Berninger said that he and the other men had told Mr. Schwartz that they wanted him to act as their attorney” (emphasis supplied).

The right accorded to the petitioners to be represented by counsel at hearings upon charges filed against them with regard to toll-ticket manipulation involved more than the mere privilege of being accompanied by an attorney at the hearings. It included the right to private consultation with the attorney of their choice free from the presence of an informer or ‘ checker ’ ’ who, as such, was following instructions given him by a responsible agent of the Authority. As was said by Judge Desmond in People v. McLaughlin (291 N. Y. 480, 482-483): To give it [the right to counsel] life and effect *■ * * it must be held to confer upon the relator every privilege which will make the presence of counsel upon the trial a valuable right, and this must include a private interview with his counsel prior to the trial ’

Appellant asserts that, even assuming Berninger attended the consultations as agent for the Authority, petitioners have not shown any prejudice resulting to their rights from his presence and, accordingly, the determination of the Authority should not have been annulled. That contention is based upon subdivision 5 of section 1296 of the Civil Practice Act which provides that one of the questions to be determined in an article 78 proceeding is — “ Whether, in making the determination, any rule of law affecting the rights of the parties thereto has been violated to the prejudice of the petitioner.”

That statute, of course, does not change the fundamental rule that any deprivation of the right to counsel and to a fair trial is, in itself, a basis for annulment of a determination resulting therefrom (U. S. Const., 6th Amendt.; N. Y. Const., art. I, § 6; People v. McLaughlin, 291 N. Y. 480, 482-483, supra). Indeed, as to the application of that fundamental rule, it has been said: ( ‘ ‘ The right to have the assistance of counsel is too fundamental j and absolute to allow courts to indulge in nice calculations as to the amount of prejudice arising from its denial ” (Glasser v. United States, 315 U. S. 60, 76; see, also, Coplon v. United States, 191 F. 2d 749, 760, certiorari denied 342 U. S. 926).

The suggestion that the cases last cited above do not apply to the present proceeding, inasmuch as we are here concerned with a disciplinary proceeding rather than a criminal action, is without merit. Upon that aspect of the case we think what was written in Matter of Greenebaum v. Bingham (201 N. Y. 343, 347) — a case involving disciplinary action against a police officer — applies here with equal force: While the hearing may be more or less informal, the trial must be -fair in all substantial respects. Some latitude is allowed as to rules of evidence, methods of examination and the like, but no essential element of a fair trial can be dispensed with unless waived, and no vital safeguard violated without rendering the judgment of conviction subject to reversal upon review. ” (See, also, Glasser v. United States, supra, p. 76.)

The order appealed from should be affirmed, with costs. Each of the certified questions should be answered in the affirmative.

Fuld, J.

(dissenting). Petitioners were discharged from their positions as toll collectors by the Triborough Bridge and Tunnel Authority of the City of New York, following hearings upon charges of misapplication of toll tickets and misappropriation of funds at one of the Authority’s bridges. The evidence against them was in large measure gathered by one Berninger, a fellow employee, who served as an undercover investigator for the Authority, and whose activities, as such, were completed on September 28, 1950, when petitioners were suspended. Fearful of reprisals if petitioners were to learn of his activities, Berninger asked that he be suspended along with petitioners. Then, that having been done, Berninger, on his own initiative and without advising anyone connected with the Authority, joined petitioners in “ retaining ” attorney Asher W. Schwartz and in attending two conferences held by Mr. Schwartz at his office before the hearings were scheduled to begin on October 18th.

That it was Berninger’s own idea both to “ retain ” Mr. Schwartz and to visit the latter’s office with petitioners when they conferred with him, cannot, in the light of the evidence, be disputed. In point of fact, not only did no one associated with the Authority request or suggest to Berninger that he do either the one or the other, but no official of that body had any inkling that Berninger had seen Mr. Schwartz until the evening of October 17th, after the conclusion of the second conference — and that was some weeks after petitioners had been suspended and several days after formal charges of misconduct had been filed and served upon them. It is likewise indisputable, first, that all of the evidence upon which the charges were predicated had been gathered prior to the time that Berninger had “ retained ” Mr. Schwartz; second, that Berninger obtained no additional evidence or information as a result of attending the conferences at the lawyer’s office; and, third, that his presence there in no way operated to petitioners ’ prejudice. In brief, Berninger’s action in joining with petitioners occurred after he had concluded his work as an undercover investigator, was his own idea and was conceived solely for his own personal protection.

Guilt having been proved beyond all question, petitioners challenged the Authority’s decision solely on the ground that they were denied a fair hearing by reason of Berninger’s intrusion into their conferences with their attorney. They urge that they were deprived of the right of private consultation with counsel in preparation for the hearings. The courts below, agreeing with that contention, have annulled the Authority’s determination and directed reinstatement of petitioners’ jobs and restoration of their civil service rights.

Opportunity for private consultation with counsel is an essential element of the right to he represented by an attorney, so essential that a deprivation of that opportunity or an intrusion upon the privacy of consultation by government, or one of its agencies, must be deemed a denial of that right. (Cf. Coplon v. United States, 191 F. 2d 749, 759-760, certiorari denied 342 U. S. 926.) I would agree, therefore, that petitioners would be entitled to a vacatur of the Authority’s determination, if the Authority had had anything to do with Berninger’s attendance at the conferences or if it had made use of any information obtained at those conferences. Where, however, as in the case before us, the record is devoid of any such evidence — where it appears without contradiction that Berninger had acted as he did without the knowledge or authorization of the agency, prompted solely by personal considerations of his own — to annul the Authority’s decision, not only would extend the scope of the right of representation by counsel beyond all reasonable limits, but would serve no possible purpose. WTiile justice is our objective, fail-dealing our aim, I cannot perceive how invalidating the Authority’s action would advance either. Highly apposite are the words of Mr. Justice Cardozo in a capital case: “ justice, though due to the accused, is due to the accuser also. The concept of fairness must not be strained till it is narrowed to a filament. ’ ’ (Snyder v. Massachusetts, 291 U. S. 97, 122.) I would confirm the determination of the Authority.

The order appealed from should be reversed and the petition dismissed.

Loughran, Ch. J., Desmond and Dye, JJ., concur wth Lewis, J.; Field, J., dissents in opinion in which Conway and Froessel, JJ., concur.

Order affirmed, etc.

      . Berninger swore — and no one disputed or contradicted him — that “Neither Mr. Dougherty, who was acting as counsel for the Authority, nor anyone else connected with the Authority ever suggested that I visit Mr. Schwartz’ office or that I should retain him as my attorney.” And it is clear from the affidavit of Lieutenant Rogers, to whom Judge Lewis refers in his opinion, that he learned of Berninger’s retention of Mr. Schwartz and his visits to the latter’s office only after they had taken place; thus, he asserted, “Mr. Berninger also told me that to avoid suspicion he had gone along with a group of the accused men to the law office of O’Donnell & Schwartz ”.
      Moreover, the record conclusively demonstrates that Berninger neither acted as informant nor reported anything to Rogers or to anyone else after the middle of September; it was not until September 29th, I note, that he first saw attorney Schwartz. Thus, Berninger averred, “ The period covered by these reports made to Lieut. Rogers was from about the first of August 1950 until shortly after the middle of September of that year”. Lieutenant Rogers confirmed that with the statement that “ All Mr. Berninger’s reports on the mishandling of the toll tickets by the men at the bridge were made to me prior to the time of their suspension on September 28th.” And the Authority’s counsel, Mr. Dougherty, likewise declared, “ I know and emphatically state that the Authority’s information had all been collected before the notice of suspension was given on September 27 [sic] and that no information or evidence used on the hearings was obtained through Berninger’s visits to Mr. Schwartz’ office”.


author: Froessel, J.

text:
    In the Matter of Harriet W. Gehr, Appellant, against Board of Education of the City of Yonkers et al., Respondents.
    Argued October 6, 1952;
    decided October 16, 1952.

      John L. Class for appellant.
    I. The court decided originally to grant claimant’s motion. After study of the testimony taken at the reference, the court indicated that it was of the same opinion on the merits. The court’s independent judgment thus continuing in favor of granting claimant’s motion, it was an abuse of discretion for the court to set aside its own convictions. (Matter of Superintendent of Banks [Goldsmith], 207 N. Y. 11; Ferguson v. Ferguson, 271 App. Div. 976.) II. The court’s decision contains ample findings to entitle claimant to the relief sought. Where there are conflicting findings, appellant is entitled to the benefit of those most favorable to her cause. (Moller v. Pickard, 232 N. Y. 271.) III. The Referee’s report is based upon the erroneous legal theory that a claimant’s delay in serving her claim must be due “ solely ” to her mental and physical disability, to justify granting her relief. The only reasonable interpretation that can be given to the statute is that the delay in serving must he due “ in any substantial degree ” to the fact of mental or physical incapacity. (Matter of Hogan v. City of Cohoes, 279 App. Div. 282.) IV. The mental incapacity contemplated by the statute (General Municipal Law, § 50-e, subd. 5) can reasonably only be held to mean inability to initiate ideas and projects in protection of one’s interests under the statute. In claimant’s case there was a definite impairment of those mental processes which are prerequisite to planned initiative. V. The order appealed from can only be justified by placing the unreasonable construction on the statute that it requires an “ absolute mental incapacity at all times during the ninety-day period to excuse a failure to file a timely notice of claim ”. (Matter of Huntley v. City of Albany, 201 Misc. 426.)

      J. Raymond Hannon, Corporation Counsel (John Preston Phillips of counsel), for respondents.
    I. Upon the facts as found by the Official Referee, confirmed by Special Term and affirmed by the Appellate Division, claimant’s motion was properly denied. (Education Law, § 3813, subd. 2; Second Class Cities Law, § 244; Matter of Donovan v. Board of Educ., Peekskill, 277 App. Div. 904, 301 N. Y. 739; Matter of De Crescenzo v. City of New York, 274 App. Div. 889; Matter of Kesdan v. City of New York, 273 App. Div. 1020; Matter of Auricchio v. City of New York, 272 App. Div. 1067, 299 N. Y. 607; Matter of Haas v. Incorporated Vil. of Cedarhurst, 272 App. Div. 1031, 298 N. Y. 757; Matter of Sullivan v. Town of Babylon, 277 App. Div. 791, 302 N. Y. 609; Matter of Fabricant v. City of New York, 273 App. Div. 975, 298 N. Y. 818; Matter of Figueroa v. City of New York, 279 App. Div. 771.) II. Receipt of the original report of the accident within five days thereafter does not aid appellant. (Matter of Brown v. Trustees, Hamptonburg School Dist., 303 N. Y. 484; Weisman v. City of New York, 219 N. Y. 178; Ponsrok v. City of Yonkers, 254 N. Y. 91; Fellmeth v. City of Yonkers, 222 App. Div. 815.) III. There was no abuse of discretion by Special Term. IV. There is no conflict in the findings of fact. (Moller v. Pickard, 232 N. Y. 271.) V. Appellant’s delay in filing was due to reasons other than mental or physical incapacity. (Derlicka v. Leo, 259 App. Div. 607, 284 N. Y. 711; Parsons v. Village of Dannemora, 275 App. Div. 738;
      Olian v. City of New York, 271 App. Div. 1029; Matter of Hogan v. City of Cohoes, 279 App. Div. 282; Matter of Nori v. City of Yonkers, 274 App. Div. 545, 300 N. Y. 632.) VI. Claimant was not mentally incapacitated during the period of ninety days after the accident. VII. The order appealed from was founded upon the only reasonable construction of the statute.
   Froessel, J.

Appellant, a teacher in Longfellow Junior High School of Yonkers, aged fifty-two years, claims that on September 8, 1950, as she walked across the front of her classroom, she fell, due to the negligence of respondents in creating a dangerous and unsafe condition. In consequence thereof she sustained, as Special Term found, a fracture of the skull and a severe concussion of the brain involving serious brain damage, resulting in double vision, numbness and facial paralysis, impaired memory and inability to concentrate. A physician, in the employ of defendant board, did not note the fracture, and indeed did not think her condition was serious, though he conceded claimant’s “ memory wasn’t too certain at that time.” Two or three weeks later, her true injuries were discovered by other physicians after X rays were taken and a spinal tap was made. She was then confined to a hospital for nearly six weeks and to a convalescent home for nearly four weeks.

In this proceeding under section 50-e of the General Municipal Law, for permission to serve a proposed notice of claim and intention to sue after the expiration of the ninety-day period, Special Term at first stated it would grant the application “ unless respondent stipulates to pay all reasonable expense of the production of petitioner’s witnesses ” before an Official Referee. Having so stipulated, the matter was referred to an Official Referee to hear and report. Upon the coming in of said report, in which the Referee stated that neither on the facts nor on the law can it be held that petitioner’s failure to serve the required notice within the ninety-day period was due “solely” to her disability, Special Term made findings — which have support in the record — quite different from and at variance with those made by the Official Referee. Nevertheless, instead of exercising its own discretion in the light of its own contrary findings, the court deferred to the recommendation of the Official Eeferee, based on findings with which the court disagreed.

A majority of the Appellate Division, in affirming without opinion, did not disturb the findings of Special Term; the minority voted for reversal and the granting of claimant’s application.

The Eeferee’s report was of course in no way binding upon Special Term but was merely to inform the conscience of the court ” (Bannon v. Bannon, 270 N. Y. 484, 493). The discretion should be exercised by the court itself (§ 50-e, subd. 5).

The orders should be reversed, with costs in all courts to abide the event, and the matter remitted to Special Term for further proceedings not inconsistent with this opinion.

Lotjghrak, Ch. J., Lewis, Con way, Desmoto, Dye and Ftjld, JJ., concur.

Orders reversed, etc.