author: Conway, J.

text:
    In the Matter of the Town of Addison, Appellant, against Town of Tuscarora, Respondent. Settlement of Olivia Wright.
    Argued October 5, 1943;
    decided December 2, 1943.

      Charles L. Crane for appellant.
    The law of this case is found in subdivision 2 of section 58 of the Public Welfare Law being a proceeding between towns in a county public welfare district. The Appellate Division erred in reversing under Public Welfare Law section 58, subdivisions 1 and 3. The provision that a decision of the County Court shall be final and conclusive is constitutional and the County Court of Steuben County had jurisdiction under subdivision 2 of section 58 of the Public Welfare Law. (Matter of De Camp, 151 N. Y. 557; People ex rel. Schick v. Marvin, 271 N. Y. 219; People v. Fowler, 55 N. Y. 675; Tyndall v. N. Y. C. & H. R. R. R. Co., 162 App. Div. 920, 213 N. Y. 691; Sons of Italy Grand Lodge, Inc., v. Supreme Lodge, Inc., 125 Misc. 572.) The settlement of the Olivia Wright family was in the Town of Tuscarora and the Town of Tuscarora having admitted a settlement therein, the burden of proof establishing a settlement in the Town of Addison was upon the Town of Tuscarora. (Public Welfare Law, § 56; County of Broome v. County of Cortland, 154 App. Div. 349; Onondaga County v. City of Amsterdam, 139 App. Div. 877.)

      Claude V. Stowell for respondent.
    The Town of Addison had actual notice of the payment of relief to the Wright family, assumed responsibility and paid therefor, acquiesced in the decision of the Child Welfare Board and is now barred from denying liability therefor. (Town of Kiantone v. County of Chautauqua, 239 App. Div. 50; Op. Atty. Gen., 41 State Dept. Rep. 508; County of Broome v. County of Cortland, 154 App. Div. 349.) The Town of Addison is barred by the lapse of time from denying liability and should be held to be chargeable with liability for support of the Wright family. (Public Welfare Law, § 58; Williams v. County of Niagara, 249 App. Div. 904.) The County Court had no jurisdiction as the question of responsibility was barred by the failure of the town to file notice with the Commissioner (Public Welfare Law, § 58, subd. 3; Matter of Merville, 23 Misc. 398.)
   Conway, J.

There is presented to us the question of the “ settlement ” of one Olivia Wright. The dispute is between the Town of Tuscarora and the Town of Addison which are both in the county of Steuben.

Public Welfare Law, section 53, in effect at the time of the determination of the Commissioner of Public Welfare under review, is entitled “ Settlement ” and provides: “ Every person of full age who shall be a resident and an inhabitant of a town or city for one year, and the members of his family who shall not have gained a separate settlement, shall be deemed to have a settlement in such town or city,' which shall continue until he shall have gained a like settlement in some other town or city of this state or shall have removed from this state and remained therefrom for one year. Settlement in a county public welfare district shall be acquired by settlement in a town or city thereof.”

. Section 56 provides in part as follows: “ § 56. Qualification on the acquisition of settlement. * * * No person shall gain a settlement in a town or city except by residing for one year continuously without receiving public relief or care for himself or herself or for his wife, or a minor child for whose support either is responsible; * * *.”

Section 58 is entitled Proceedings to establish settlement.” The first two subdivisions deal with controversies over the location of the settlement and are entitled as follows:

“ 1. Between public welfare districts ” and
“ 2. Between towns and cities in a county public welfare district.”

Before examining section 58 further, it should be pointed out that subdivision 2 is the applicable subdivision since the controversy here involves two towns in a county public welfare district. We think the learned Appellate Division erred in holding that subdivision 1 was applicable. That subdivision controls disputes arising between public welfare districts. By Public Welfare Law, section 17, the State is divided into county and city public welfare districts certain of which are delineated and described in subdivisions 1 and 2. Subdivision 3 of that section reads as follows: “ Each of the counties of the state not included in subdivisions one and two of this section is hereby constituted a county public welfare district.” Steuben County is thus a county constituted and governed by subdivision 3.

In order to understand the facts and the reasons for the varying decisions below, it is necessary to go back to 1923. In that year Olivia Wright obtained an allowance as a dependent widow with one or more children under the age of sixteen years through the Child Welfare Board of Steuben County pursuant to General Municipal Law, article 7-A. That was a so-called “ Widow’s Pension.” Although Olivia Wright prior to moving to Addison in 1920 had had a settlement in the Town of Tuscarora, the Town of Addison paid the allowance from 1923 to 1933. In 1933 the allowance was discontinued. In 1934 application was made by Olivia Wright under Public Welfare Law to the Town of Tuscarora for relief and care. The public welfare officer of Tuscarora furnished relief and care but advised the county commissioner that such relief and care for Olivia Wright ivas chargeable to the Town of Addison. The county commissioner notified the public welfare officer of the Town of Addison of the claim of Tuscarora and thereafter held a hearing at which he was attended by the public welfare officer of each of the two interested towns. The county commissioner on April 9, 1935, rendered a decision by which he determined “ that Olivia Wright and her husband had a settlement in the Town of Tuscarora prior to moving to the Town of Addison; that they acquired a residence in the Town of Addison and that if they did not acquire a residence such residence was accepted by the Town of Addison due to their failure for a period of eleven years to protest against such charges being made against the Town of Addison by the Board of Child Welfare.” All the steps leading up to that determination were taken pursuant to and in accordance with the provisions of Public Welfare Law, section 58, subdivision 2, to which reference has already been made. The decision of the county commissioner would have been final under that subdivision except for the fact that the public welfare officer of Addison appealed therefrom to the County Court of Steuben County. On such appeal subdivision 2 provides that “ a new trial of the matters in dispute shall be had in the county court without a jury. A decision of the county court therein shall be final and conclusive, and the same costs shall be awarded as are allowed on appeals to said court.” (Emphasis supplied.)

The proceedings before the County Court are therefore not merely an appeal. In reality a new trial — a trial de novo is had and was had in this matter. Witnesses were called and examined on direct hy the attorney for the Town of Tuscarora and cross examined by the counsel for the Town of Addison. At the conclusion of the trial the learned County Judge rendered his decision that the settlement of Olivia Wright was in the Town of Tuscarora. Judgment was entered accordingly with costs against that town.

That decision of the County Court was final and conclusive and should not have been disturbed by the learned Appellate Division, since the County Court had jurisdiction both of the parties and subject matter. (See Matter of De Gamp, 151 N. Y. 557, 563; People ex rel. Schick v. Marvin, 271 N. Y. 219.) The reason for the provision in section 58, subdivision 2, is clear. Where there is a dispute between towns in a county welfare district, it is a county matter. No one except the county and the towns is interested or concerned.. It is different when under section 58, subdivision 1, there is a controversy between public welfare districts. The County Judge of a single county should then not have final and conclusive determining power. The Legislature has made the distinction and its meaning clear. Section 58, subdivision 1, provides for judicial review by an article 78 proceeding under the Civil Practice Act; subdivision 2 provides for an appeal to the County Court arid a new trial which is to be “ final and conclusive ’ ’.

Subdivision 1 of section 58 has no applicability here. Neither has subdivision 3 in this instance since the appeal provided for in subdivision 2 was duly taken within the time specified and properly raised the question which the County Judge decided after trial.

There was • ample support in the evidence before the County Judge for the decision made by him.

We shall now return to the fact that the county commissioner was of the opinion that if “ residence ” (settlement) of Olivia Wright had not been acquired in Addison at least it had been accepted by Addison due to its failure to protest charges made against it by the Board of Child Welfare. We assume that the county commissioner meant that that was a defect affecting his jurisdiction and so that of the County Court on an appeal from his decision. (See Matter of Merville, 23 Misc. 398.) The word protest ” is used only in Public Welfare Law section 58, subdivision 1, which was enacted in 1929 (L. 1929, ch. 565). We have indicated'that in any event that subdivision is not applicable. No protest is mentioned or required by Public Welfare Law section 58, subdivision 2, but only a notification to which reference will be made hereafter. No protest was required nor in terms permitted under General Municipal Law, article 7-A (repealed L. 1937, ch. 15). See former section 154 which provided in part: “ * * * ; the board of supervisors of any county may determine, as provided in section one hundred and thirty-eight of the poor law, whether or not the actual expense for the relief of widowed mothers and their children under this article shall be a charge upon the county or upon the respective towns thereof.” No protest was required under Poor Law sections 42 (subd. 4), 43, 44, 45 prior to their repeal in 1929 and their inclusion generally in Public Welfare Law, but only a notice.”

Aside from that, however, the allowance so made by the Board of Child Welfare was not to Olivia Wright as a poor person (see County of Tompkins v. County of Ontario, 92 Misc. 272; Public Welfare Law § 18; former Poor Law, § 2) but to Olivia Wright as a widowed mother with children under the age of sixteen years in order that such children might be suitably cared for by her in her home. (General Municipal Law', former § 148.) No doubt the payment of the so-called “ Widow’s Pension ” by the Town of Addison was entitled to weight as evidence of an admission against interest by the Town of Addison but it certainly was not such a conclusive admission that a determination could not be made upon the true facts as to place of settlement under a different statute involving a different status of the applicant. There was no legal action or proceeding and so the matter was not res judicata.

All that Public Welfare Law section 58, subdivision 2, required was notice, in this instance by the Town of Tuscarora (see Matter of Merville, 23 Misc. 398) to the county commissioner of the facts of the case. Thereafter it was required that the commissioner should notify the public welfare officer of the town in which the person is alleged to have a settlement, in this instance the Town of Addison, and that thereafter the county commissioner should cause an investigation to be made to determine the question of settlement, and, if no agreement could be reached, that the commissioner should hold a hearing upon notice. The county commissioner held the hearing and made his decision. After that was done all that was needed to bring the matter before the County Judge was an appeal within thirty days after the receipt of a copy of the commissioner’s decision. The decision of the County Judge was final and conclusive.

The order of the Appellate Division should be reversed and the determination of the County Court of Steuben County reinstated, with costs in this court and in the Appellate Division.

Lehman, Ch. J., Loughran, Rippey, Lewis, Desmond and Thacher, JJ., concur.

Judgment accordingly.


source: Caselaw Access Project

author: Lehman, Ch. J.

license: Public Domain

text:
    Samuel Leviten, Appellant, v. William Sandbank et al., Defendants. Michael Lessin, Respondent.
    Submitted October 8, 1943;
    decided December 2, 1943.

      Maxwell Stettner and Morris J. Bosner for appellant.
    The order of Special Term directing the replaced attorney to turn over the pleadings in this action, was proper. A substitution of attorneys during the pendency of a law suit is meaningless if the substituted attorney is unable to proceed with the suit. That is the situation here. The new attorney does not have copies of the pleadings drawn by the attorneys for both sides, and is consequently unable properly to prepare the case, and certainly in no position to go to trial. (Matter of Rieser, 137 App. Div. 177; Galanter v. Pearson, 290 N. Y. 886; Matter of Senitha [McGurk], 252 App. Div. 304, 284 N. Y. 730; Friedman v. Gordon, 260 App. Div. 1023, 285 N. Y. 630; Bloom v. Irving Trust Co., 152 Misc. 50; Matter of Cusimano, 174 Misc. 1068.)

      David S. Meyer for respondent.
    The issues having been adjudicated, the determination is conclusive upon the parties in a subsequent proceeding or action. (Bannon v. Bannon, 270 N. Y. 484; Culross v. Gibbons, 130 N. Y. 447; Williams v. Barkley, 165 N. Y. 48; Kamp v. Kamp, 59 N. Y. 212; Gardner v. Gardner, 87 N. Y. 14; Matter of Ungrich, 201 N. Y. 415; Matter of Winkler, 154 App. Div. 532.) The lien of the attorney having been fixed in an amount payable in cash, payment thereof was a condition precedent to the surrender of papers in his possession. (Martucci v. Brooklyn Children’s Aid Society, 284 N. Y. 408; Matter of Dunn, 205 N. Y. 398; Robinson v. Rogers, 237 N. Y. 467; Matter of Tillman, 259 N. Y. 133; Matter of Krooks, 257 N. Y. 329; Bernstein v. Bedrick, 262 N. Y. 472; Matter of Weitling, 266 N. Y. 184; Matter of Montgomery, 272 N. Y. 323; Matter of Korn, 255 App. Div. 870; Refractolite Corp. v. Prismo Holding Corp., 257 App. Div. 671; Matter of McNally v. Youngs, 237 App. Div. 787.)
   Lehman, Ch. J.

The respondent, Michael Lessin, was retained in 1935 by the plaintiff, Samuel Leviten, to collect the sum of $11,508.96 which he claimed was due to him from William Sandbank. The moneys due were secured by collateral, assigned, but not delivered, to the plaintiff by Sandbank. Two notes for $3,000 made by Pat Realty Corp., to the order of Sandbank and some stock certificates were included in the collateral described in the assignment. The respondent in 1936 began an action on behalf of the petitioner • in the Supreme Court in New York County to compel the delivery of these certificates. That action was settled. In 1939 the respondent began another action on behalf of the petitioner in Kings County to enforce payment of the notes for $3,000. That action is still pending. The plaintiff in that action moved, in February, 1943, for an order of substitution and asked that the 11 new attorney be permitted to make copies of the pleadings, and related papers in this case ’ ’ in the possession of the respondent.

The respondent has a retaining lien upon these papers, as well as upon stock certificates and other papers in his possession belonging to the plaintiff for the unpaid balance remaining due to him from the petitioner for services rendered and disbursements made by the respondent in the pending action and in other matters in which he was retained as attorney by the petitioner. The amount of that lien had been fixed at the sum of $509.37 by an order of the Supreme Court made a few weeks earlier in proceedings brought by the plaintiff in New York County. That order provides that it is Ordered, that upon payment by the petitioner Samuel Leviten to the respondent Michael Lessin of the said sum of $509.37, the respondent turn over to the petitioner or to his attorney, the shares of stock, assignments, and all other papers and evidences of debt in his possession, and papers and copies of papers in his possession relating to the various actions commenced by him on behalf of the petitioner Samuel Leviten.” The problem presented upon this appeal is whether that order, as matter of law, bars the plaintiff from obtaining any relief which would interfere with the respondent’s exclusive possession of any papers upon which he has a retaining lien.

The respondent stated in opposition to the motion for substitution and other relief that he “ has no objection to the substitution of attorneys as requested by the plaintiff provided however, that there is full compliance with the provisions of the order hereinabove referred to.” No ground for other opposition to the motion is indicated. The respondent does not claim that the stock certificates and other papers remaining in his possession would not be ample security for the sum of $509.37, the amount of his retaining lien, even if he relinquished his lien upon the pleadings and related papers in this action. He does not dispute the assertion of the plaintiff that the stock certificates retained by him have a value of more than $4,000. He does not claim that the papers in the pending action have any value to him other than a “ nuisance ” value which may arise from the power to impede the new attorney in the prosecution of the pending suit by refusing to permit the new attorney to use or see the pleadings and related papers. The justice at Special Term rejected that ground of opposition and ordered a substitution of attorneys and directed “ that the replaced attorney, Michael Lessin, Esq., turn over all papers in his possession relating to this action, to Morris J. Eosner, Esq., and that the lien of the said replaced attorney in the amount of $509.37 attach to any recovery obtained by the plaintiff in the above entitled action, whether received by suit, settlement, compromise, or recovery, or by way of judgment, and that Morris J. Eosner, Esq., be and he hereby is directed to retain out of any sums payable to the plaintiff herein, the sum of $509.37 to satisfy the said lien of the replaced attorney ”. The “ replaced attorney ” appealed to the Appellate Division from the order except insofar as it directed the substitution of a new attorney. The Appellate Division held that the order fixing the amount of the retaining lien was “ conclusive upon the parties. (Matter of Winkler, 154 App. Div. 532, 535.) The Special Term was without power to make a different direction in respect of the terms of the turnover of such papers.” (266 App. Div. 854.) Accordingly the Appellate Division modified the order appealed from by striking therefrom all the “ ordering paragraphs ” except the paragraph directing the substitution of the new attorney and the succeeding paragraph which provided that “ the substitution * * * be without prejudice to the adjudged lien which Michael Lessin, Esq., now has ”. In place of the paragraphs stricken out, the order of the Appellate Division provides that a provision be inserted " directing that the papers be turned over upon the payment of $509.37.”

The order of the Supreme Court in the proceeding brought in New York recites that an Official Eeferee was designated “ to take proof and report with his opinion, with all convenient speed, as to the amount of the lien if any, to which respondent is entitled ” and that the Official Referee thereafter took the proofs of the parties and “ rendered his report that the respondent herein had rendered valuable services to the petitioner and that he was entitled to a fee in the sum of $850 together vTith disbursements of $159.37 expended by the respondent, making a sum in all for services and disbursements of $1,009.37 and after crediting the petitioner with the sum of $500 received by the respondent for services, leaving a balance due on the entire amount awarded to the respondent in the sum of $509.37 ”. The court “ adopted and confirmed ” the report of the Official Referee in all respects ” and fixed the amount of the retaining lien accordingly. We assume that the order is conclusive upon the parties in regard to the amount of the [respondent’s] lien, if any ” for that question was submitted to the court and determined by it. It does not appear that any other issue was litigated and determined. Certainly the court in that proceeding was not asked to determine the terms upon which a substitution might be ordered in the action pending in Kings County. Such questions could be decided only in that action.

The control by the courts of their own officers, and their power to compel attorneys to act equitably and fairly towards their clients ” is not open to challenge. (Robinson v. Rogers, 237 N. Y. 467, 472.) It is a continuing control and the power may be exercised at any time when occasion arises. Retaining liens were created by the court for the protection of its officers but a court should not permit an attorney to insist upon his retaining lien when such insistence is unfair and unequitable. “ Where the retention of papers by an attorney serves to embarrass a client the attorney should be required to deliver up the papers upon receiving proper security for his compensation, because insistence upon his lien under such circumstances is not in accordance with the standard of conduct which a court may properly require of its officers.” (Robinson v. Rogers, supra, p. 473.) In that case we pointed out that even though delivery of papers upon which an attorney has a retaining lien would destroy the lien, yet the courts have at least assumed ” that they have power “ to compel the delivery of such papers by a discharged attorney before payment of his fees upon the giving of security ” citing Matter of Dunn (205 N. Y. 398). The court referred to the ‘ well-established practice of the courts to compel the attorney to deliver up papers or property under such circumstances

The power of the court to compel a discharged attorney to deliver papers upon which he has a retaining lien, though too well established to be open to challenge now, is a discretionary power and may be invoked only upon proof that insistence by the attorney upon retention of the papers would be unfair if security is otherwise given to the attorney. The Appellate Division has not in this case reviewed the determination of the Supreme Court at Special Term that the plaintiff has submitted proof which calls for the exercise of the power to compel the respondent to deliver paper upon which he has a retaining lien “ before payment of his fees upon the giving of security ” nor has it determined whether sufficient security is given to the attorney under the terms of the order. It has held only that as matter of law these issues have been conclusively determined in the proceedings previously brought in the county of New York by the order fixing the retaining lien. We review only that question of law. (Civ. Prac. Act, § 606.)

The attorney was retained not only in connection with the claim against Sandbank, but also in connection with another claim. He rendered services in connection with both claims. He brought not only the action pending in Kings County, but also the action in New York County which was settled. He has in his possession not only the pleadings and related papers in the pending action, but other papers including stock certificates which are in no wise connected with that action. Until he has received compensation for his services in all these matters he has a retaining lien on all these papers. In the proceeding in New York County the plaintiff here claimed that the respondent had been paid for all these services. The only issue between the parties and the only issue which could be determined concerned, as we have said, “ the amounts of the [respondent’s] lien, if any.” The respondent in that proceeding “ succeeded merely in having the amount of his lien determined which, of course, will be conclusive upon the parties in any subsequent proceeding ”. (Cf. Matter of Winkler, 154 App. Div. 532, 535.)

The plaintiff may not now challenge the existence or amount of the lien conclusively established by the order of the court in the earlier proceeding. He does not attempt to do so herein. He asks only that the respondent be not permitted to insist upon retaining all the papers to which his lien attached insofar as such insistence is unequitable. The facts upon which that claim is based did not exist when the previous application was made. After the determination of that proceeding fixing the amount of the retaining lien, the court in Kings County still has power to order substitution and may in proper case direct the discharged attorney to deliver up the papers required for the prosecution of that action provided the attorney has adequate security for the amount of his retaining lien previously established conclusively. The Appellate Division has not reviewed the propriety of the exercise of that power.

The order of the Appellate Division should be reversed, with costs in this court and the matter remitted to the Appellate Division.

Loughban, Rippey, Lewis, Conway, Desmond and Thacher, JJ., concur.

Order reversed, etc.


text:
    In the Matter of Ruth Katz, as Administratrix of the Estate of Jeanette Levy, Deceased, Respondent, against New York City Teachers’ Retirement Board, Appellant.
    Argued May 19, 1943;
    decided December 2, 1943.

      Robert H. Schaffer, Acting Corporation Counsel (Nicholas Bucci and Paxton Blair of counsel), for appellant.
    Petitioner’s application was not subject to the general provisions of section B20-46.0 of the Administrative Code (L. 1937, ch. 929); her application was governed by the special provisions of section B2Q-40.0 of that Act which applied specifically to applications for disability retirement. (Matter of Keily v. Teachers’ Retirement Board, 226 App. Div. 99; Rees v. Teachers’ Retirement Board, 247 N. Y. 372; Matter of McAneny v. Board of Estimate, 232 N. Y. 377; People ex rel. Casler v. Eysaman, 126 Misc. 853; Reycroft v. City of Binghamton, 138 Misc. 257.) If a member’s right to select an option was meant to continue to such time as she was actually retired by resolution of the Board, there would have been no necessity to adopt language limiting that right to thirty days. The Board meets but once a month and therefore in most cases action cannot be taken until more than thirty days after the medical examination. If the Legislature had intended to grant the member thirty days, or until the adoption of a retirement resolution, it would have been simple to use specific and appropriate language to accomplish that end. But the language of the statute is clear and unambiguous and does not so provide. (Matter of O’Brien v. New York State Teachers’ Retirement Board, 215 App. Div. 220, 244 N. Y. 530; Rees v. Teachers’ Retirement Board, 247 N. Y. 372; Moorhead v. Teachers’ Retirement Board, 134 Misc. 123; Matter of Creveling v. Teachers’ Retirement Board, 255 N. Y. 364.)

      Samuel D. Smoleff and Aaron H. Shaffer for respondent.
    Petitioner made a valid selection of Option No. 1 before her retirement. (Matter of O’Brien v. New York State Teachers’ Retirement Board, 244 N. Y. 530; Matter of Creveling v. Teachers’ Retirement Board, 255 N. Y. 364; Matter of Keily v. Teachers’ Retirement Board, 226 App. Div. 99.) The interpretation urged by appellant would give the Retirement Board an arbitrary discretion to grant or withhold benefits in disability cases. (Rees v. Teachers’ Retirement Board, 247 N. Y. 372.)
   Lehman, Ch. J.

The rights and obligations of members of the Teachers’ Retirement Association of the City of New York are defined in Title B of Chapter 20 of the Administrative Code of the City of New York (L. 1937, ch. 929), and the Retirement System must be administered in accordance with the provisions of that title. “ All teachers ” are “ members ” of the Teachers’ Retirement Association and as “ members ” of the association are “contributors”; a “beneficiary” means a “ person in receipt of a pension, an annuity, a retirement allowance, or other benefit ”. (§ B20-1.0.) Upon retirement a “ contributor ” is entitled to the retirement allowances described in sections B20-44.0 and B20-45.0. These “ retirement allowances ” include a “ pension ” and in addition “ an annuity * * * which shall be the actuarial equivalent of his accumulated deductions ”. A “ contributor ” is not, however, compelled ‘ ‘ to receive on retirement his benefits in a retirement allowance payable throughout life ”. He may “ at any time ” file with the Retirement Board “ his election to receive on retirement his benefits in a retirement allowance payable throughout life or to receive the actuarial equivalent of his * * * retirement allowance in a * * * lesser retirement allowance, payable throughout life,” with a provision that the balance of such actuarial equivalent be paid upon his death to his estate or shall be paid to a person nominated by him in accordance with one of the four options specified in the statute. (B20-46.0.) Since only a “ contributor ” has the right to file his election “ at any time,” and since a teacher ceases to be a “ contributor ” and becomes a “ beneficiary ” after retirement and receipt of retirement benefits, we assume that the right to file an election does not survive after retirement is complete.

The problem presented upon this appeal is whether Jeannette Levy, a teacher in the public schools of the city of New York and a member of the Teachers’ Retirement Association from 1917 till 1942, who was retired by resolution of the Retirement Board on April 28, 1942, filed her election while she was still a “ contributor ” and before she became a “ beneficiary ” as those terms are defined in the statute. On January 26th the Board of Education of the City of New York by formal resolution requested the Retirement Board to retire her for disability. Section B20-42.0 of the Administrative Code provides: “ Retirement; for Disability.— Upon the application of the head of the department in which a contributor is employed, or upon the application of such contributor or of one acting in his behalf, such board shall retire such contributor for disability, provided the medical board, after a medical examination of such contributor made by the medical board or by a physician or physicians designated by the medical board * * * shall certify to such board that such contributor is physically or mentally incapacitated for the performance of duty and that such contributor ought to be retired, and, provided further, that such contributor has had ten or more years of city-service.” She attempted to file her election more than thirty days after the medical examination required by the statute had been made, but before the Retirement Board had taken any action to retire the contributor. The Retirement Board rejected the election on the ground that it was made after the “ effective date ” of retirement.

The medical examination was made at the teacher’s home . on March 28th by a physician designated by the Medical Board, and after such examination the Medical Board pursuant to the statute, certified to the Retirement Board that the contributor was incapacitated for the performance of duty “ and that such contributor ought to be retired.” On April 10th the contributor received the following letter or notice from the Retirement Board:

Teachers’ Retirement System of the City of New York
.Notice of Prospective Retirement
Miss Jeannette Levy,
785 Park Avenue,
New York City. Public School 92
Borough of Manhattan
Dear Madam:
Your retirement from active service in the position of teacher in the Department of Education will be listed on the calendar for action by the Retirement Board at its meeting to be held April 28, 1942 subject to receipt of salary record from the Board of Education, and verification of salary deductions and service.
Your retirement is scheduled to take place as of April 1,1942.
Under the law governing the operation of the retirement system, you may receive either the maximum retirement allowance or convert all or part of it into an allowance payable in accordance with certain options which you may elect prior to the time of your retirement. The options permit you to use the reserve on your allowance for the purchase of a smaller allowance, with a provision covering you by life insurance for the benefit of your family or estate, or, with a provision under which all or part of your allowance will b,e continued to some member of your family or other beneficiary should you die before such other person. Blanks upon which such options may be elected and information regarding the same may be obtained from the office of the Retirement Board.
An option cannot be selected or canceled after the effective date of your retirement. This is to remind you that you have selected the maximum retirement allowance without optional modification.
Very truly yours,
Louis Taylor,
Secretary, Retirement Board.”
[Italics are new.]

Until the contributor received that letter she had not given the Retirement Board notice that she had “ selected the maximum retirement allowance without optional modification ” as stated in the letter, nor had she filed an election to receive a lesser allowance payable throughout life with provision for payment of the balance of the actuarial equivalent of her retirement benefit to her estate or to a person nominated by her in accordance with one of the options offered to a contributor in section B20-46.0. At that time she was still a contributor and under the statute still had a right to file an election. So the letter informed her, and it gave her notice, too, that the election must be filed before “ the effective date of [her] retirement.” The Medical Board under the statute has power to certify only that the contributor “ ought to be retired.” The statute places upon the Retirement Board the function and duty to retire the applicant after the examination is made. The letter gave notice to the contributor that her retirement from active service * * * will be listed on the calendar for action by the Retirement Board at its meeting on April 28,1942 ’ ’ and that such ‘ ‘ retirement is scheduled to take place as of April 1, 1942.” The date of April 1st had passed, and though the medical examination by a physician designated by the Medical Board had been held four days before that date, it does not appear whether or not the Medical Board had on or before that date certified to the Retirement Board that the contributor ought to be retired.”

Whether or not the Medical Board had so certified is immaterial. The Retirement Board had not exercised the retiring function vested in it, and concededly both on that date and on April 10th, when the letter was sent, the contributor’s retirement was not yet accomplished. The contributor filed her election to receive the actuarial equivalent of her retirement allowance in accordance with Option I, as provided in section B20-46.0, before the time when, according to the notice, the retirement was listed for action by the Retirement Board. At the appointed time the Retirement Board, it is said, approved ” the teacher’s retirement — “ said retirement to he effective as of April 1,1942 on a maximum retirement allowance without optional modification.”

The statute vests the retiring function in an officer or board when it commands that the officer or board shall retire ” a member of the civil service of the State or of a municipal corporation when conditions specified in the statute are proven. The statute may leave little or no room for discretion in the exercise of the retiring function. Nonetheless, retirement is not complete until the statutory command had been obeyed and the retiring function has been exercised. That rule has been consistently followed in every case where the question has been presented to this court. In Matter of Keily v. Teachers’ Retirement Board (226 App. Div. 99) the Appellate Division of the First Department held that, under the provisions of the Greater New York Charter, section 1092, subdivision L, paragraph 1 (now § B20-42.0 of the Administrative Code), retirement does not become effective until the Retirement Board exercises the retiring functions ” vested in it, and that a teacher might file an election at any time before the. Retirement Board had acted upon the certificate of the Medical Board. The Retirement Board does not now challenge the correctness of that decision under the provisions of the statute as it existed at the time when the teacher in that case filed her election. The Board maintains that while the case was pending in the Appellate Division, the Legislature adopted a new statutory rule that 11 in case of disability retirement, the effective date of retirement shall be the date of the medical examination or such other date within thirty days subsequent to the medical examination as shall be mutually agreed upon by the contributor and retirement board.” (L. 1929, ch. 513.) We must now determine the scope and effect of that statute.

The Retirement System of the City of New York in substantially its present form was created by the Legislature by chapter 303 of the Laws of 1917. That statute introduced into the Greater New York Charter a new section, 1092, entitled “Public School Teachers’ Retirement Fund.” The provisions of that section of the charter as thereafter amended were transferred in 1937 to title B of chapter 20 of the Administrative Code. The provisions of subdivision L, paragraph 1, were transferred without change to section B20-42.0 of the Administrative Code entitled “ Retirement: for disability.” Subdivision 0 of section 1092 of the Greater New York Charter as amended by chapter 784 of the Laws of 1920, provided that “ a contributor may at any time ” file with the board of retirement his election to receive on retirement his benefits in a retirement allowance payable throughout life or to receive the actuarial equivalent of the value of his annuity, his pension or his retirement allowance payable throughout his life, with the provision that the balance of such actuarial value be paid to his estate or to a person nominated by him in manner described in options defined by the statute. The statutory provision that the contributor may at any time file his election was transferred without change to section B20-46.0.

The Charter section as it existed prior to 1929 provided in subdivision N that upon the death of a contributor “ before retirement ”, death benefits therein described must be paid to Ms estate or to a person nominated by him. The same section of the Charter provided in subdivision 0 for benefits on retirement, and the right to file an election ‘ at any time ’ ’ was, as we have said, part of that subdivision and applied only to the options therein defined. By chapter 513 of the Laws of 1929 the Legislature inserted a new subdivision, N-l, between subdivisions N and 0. The new subdivision created a right which a contributor had not previously enjoyed, whereby “ upon the death of a contributor (1) before retirement, or (2) within thirty days after the effective date of his service retirement, or within thirty days after the filing of his application for disability retirement, in lieu of any retirement allowance, or optional benefit, or any death benefit, there shall be paid to his estate or to such person as he shall have nominated * * * ” sums of money calculated in manner specified in that subdivision. The same subdivision contains the definition of the effective date of retirement upon which the appellant Retirement Board relies. The provisions of that subdivision, including the definition of the effective date of retirement, have been transferred to section B20-40.0 of the Administrative Code entitled Special death and retirement benefits.”

That definition was, it seems plain, intended to supplement references to the ‘ ‘ effective date ’ ’ of retirement in other parts of the same subdivision of section 1092 of the Charter, and to fix for administrative purposes what otherwise would have been doubtful and would have required judicial construction. If, as the appellant contends, the Legislature intended that this definition should change the time when retirement for disability in accordance with the provision of section B20-42.0 becomes complete, and thus should limit the time for choice of an option in accordance with the provisions of section B20-46.0 to the period within thirty days after the medical examination, it failed to formulate its intention in language which could be easily understood by a contributor. We find it difficult, if not impossible, indeed, to discern in the statute a legislative intent to deprive the Board, by implication, of the retiring functions expressly conferred upon that Board in section B20-42.0, or to limit by implication the time when a contributor may file his election, though the statute which creates the right expressly provides that he may file his election at any time ”. The date of the medical examination is the statutory “ effective date ” of disability, unless the Board agrees to another date within thirty days subsequent to the examination. The medical' examination is, under the statute, made by one or more ° physicians designated by the Board. The function of these physicians is confined to making the examination. They advise the Medical Board. Their opinion of the mental or physical capacity of the contributor whom they examine may be accepted by the Medical Board or rejected by the Board. The medical examination is solely for the information of the Medical Board and serves no other purpose. Two other steps remain before retirement is accomplished. Even if the medical examination discloses that the contributor is incapacitated for the performance of his duties, the Medical Board must so certify and must certify, too, that the contributor 11 ought to be retired and then the Retirement Board must act upon that certificate. If the Legislature had provided that the effective date of disability retirement shall be the date of the certificate of the Medical Board, there might be some basis for an argument that it intended that retirement should be accomplished by the filing of that certificate, even though the Legislature failed to amend at the same time the statute which provides that the Retirement Board “ shall retire ” for disability. There can be no reasonable basis for any argument that the Legislature intended that retirement should be accomplished when the medical examination has been made, repealing by implication the requirement of certification thereafter by the Medical Board of action to the Retirement Board.

The legislative intention to leave unchanged the manner in which the retirement should be accomplished is clear. Until that time, it is also clear that “ the contributor ” has not become a “ beneficiary.” Administrative efficiency may at times require that after application to retire a teacher for disability has been made by the appropriate authority, and after a medical examination has been made, the teacher should not be permitted to teach; and the Legislature might reasonably provide that when the retirement is thereafter accomplished, the effective date of retirement should, for administrative purposes, be retroactively fixed at the date when the examination was made unless the Retirement Board and the contributor agree upon another date within thirty days subsequent to the date of examination. Even if the language of the statute were open to a construction that in the interval between the statutory effective date of retirement and the actual accomplishment of retirement, a contributor should no longer have any right to file an election, it would be ™ patently unreasonable to give such construction to a statute which provides that the effective date of retirement shall be the date of the medical examination or such other date within thirty days subsequent to the medical examination as shall be mutually agreed upon by the contributor and the Retirement Board. Under that construction the Board by refusing to agree to any other date could render almost illusory the right of election of a teacher retired for disability.

It is argued, however, that the Retirement' Board has by Regulation F afforded a contributor reasonable time within which to select the effective date of retirement and to file his election. That regulation purports to confer upon the contributor the right to select the date of the medical examination as the date of retirement or any date within thirty days thereafter. Pursuant to the provisions of that regulation the Retirement Board recognizes an election filed by a contributor within thirty days after the medical examination unless the contributor has previously selected an earlier date for retirement. Assuming, arguendo, that the Board might, by regulation, make a general rule to apply in all cases where the Legislature had vested discretion in it (but cf. Matter of O’Brien v. N. Y. State Teachers’ Retirement, 215 App. Div. 220, affd. 244 N. Y. 530), it remains true that the Legislature did vest in the Board the power in each case to agree or to refuse to agree to the choice of a date later than the medical examination, and the Legislature could not reasonably have intended to grant such power if the right to file an election is thus made dependent upon the choice of the Board.

That right of election may be very valuable to a teacher who has been retired for disability. A retirement allowance terminating with death would be of little value to many teachers who are retired for disability, and for that reason the statute gives to a teacher the right to elect to take a smaller retirement allowance with a death benefit which will accrue upon her death. At times that election cannot be made intelligently until the teacher has been informed whether as a result of the examination it appears that in fact she is incapacitated and will be compelled to retire. A teacher has not received that information authoritatively at the time of the medical examination. The statute does not- even require that the medical examination be made by the Medical Board. It may be made by a physician appointed by the Board and it has no effect (§ B20-42.0) except as one step toward certification thereafter by the Medical Board th?,t the teacher is incapacitated.

There can be no possible doubt that at least until then the status of a contributor who is retired for disability either upon her own application or upon the application of the head of the department remains unchanged. There can be no doubt that a teacher is, at the time of the medical examination, a “ contributor,” and since the statute gives a contributor the right to file an election at any time ”, by the plain language of the statute, an election, filed thereafter but before retirement is complete, is timely. The Legislature has said that the date of the medical examination may retroactively become the effective date ” of retirement when the retirement is effected, but the Legislature has not said that rights which have accrued in the interval may be made void retroactively. Since the petitioner’s intestate filed her election before the Retirement Board had, in accordance with the mandate of the statute, retired her, she was at that time still a contributor, and the Board was bound to give effect to her election.

The order should be affirmed.

Lohghran, Rippey and Desmond, JJ., concur; Lewis and Conway, JJ., dissent; Thacher, J., taking no part.

Order affirmed.


text:
    Jessie Marcellus, Respondent, v. First Trust & Deposit Company, Appellant.
    Argued April 19, 1943;
    decided December 2, 1943.

      H. Duane Bruce for appellant.
    Under the Appellate Division’s decision express provisions of the trust instrument have been disregarded, and erroneously interpreted. (Bergmen v. Bergmen, 323 Ill. 73; Matter of Flint, 240 App. Div. 217, 266 N. Y. 607; Marczak v. Brooklyn City R. R. Co., 237 App. Div. 841, 262 N. Y. 473; Matter of Cary, 162 Misc. 95.) The mortgage participations, when taken, were a proper investment. (Heiman v. Bishop, 272 N. Y. 83; Hoard v. Luther, 251 App. Div. 692; Matter of Sheldon, 160 Misc. 194; Matter of Poillon, 163 Misc. 897; Matter of Nugent, 280 N. Y. 505; Mills v. Bluestein, 275 N. Y. 317.) The notice requirements of subdivision 7 of section 188 of the Banking Law were complied with in taking the participations. (Matter of Nugent, 280 N. Y. 505; Matter of Smith, 279 N. Y. 479.) It was error to base the surcharge on acquisition of the mortgage for the trust on January 6, 1931. Findings to the effect that defendant failed in its duty in connection with its repurchase of such mortgage on January 28, 1933, because it had not then, or before, advised plaintiff such mortgage had stood in its individual name when taken into the trust are outside the issues herein. There was no prohibited self-dealing in transferring said mortgage to the trust. (Matter of Dalsimer, 160 Misc. 906; First Nat. Bank v. Basham, 191 So. 873; Matter of Union Trust Co. [Hoffman], 219 N. Y. 514.)

      William H. Harding, Charles H. Comstock and James P. Burns, Jr., for respondent.
    The trustee was properly surcharged with the amount of the mortgage participations, with interest thereon from January 1, 1937. (Banking Law, § 188; Matter of Flint, 240 App. Div. 217, 266 N. Y. 607; Matter of Baker, 249 App. Div. 265; Matter of Long Island Loan & Trust Co., 92 App. Div. 1, 179 N. Y. 520; Matter of Roche, 245 App. Div. 192; Matter of Bearns, 251 App. Div. 222; Matter of Dalsimer, 251 App. Div. 385, 277 N. Y. 717.) There was no diversity of investment as required by law. (Durant v. Crowley, 197 App. Div. 540, 234 N. Y. 581; Cobb v. Gramatan Nat. Bank & Trust Co., 261 App. Div. 1086.) Assuming the participations were legal and not sub-standard, they should not have been purchased by the trustee under the terms of the trust agreement, and the circumstances surrounding the same.
   Lehman, Ch. J.

The plaintiff expressly conferred upon the defendant, as trustee, power to invest the trust fund in “ first mortgages on improved real estate in the City of Syracuse ”. In the exercise of that power the trustee was under a duty to refrain from placing itself in a position in which its own interests might conflict with the interests of the cestui que trust. It might not as trustee purchase from itself securities which it owned. That is true even though in fact the trustee may have been guided solely by the interests of the cestui uninfluenced by its own conflicting interest. (Matter of Ryan, 291 N. Y. 376, decided herewith.) The defendant breached that duty on January 6, 1931, when it invested the sum of $8,000 in a mortgage which it had purchased on September 3, 1929, and had held until it sold the mortgage to itself as trustee.

The trustee urges that the rule against self-dealing does not apply to an investment of trust funds in securities which a trust company purchases and holds for the purpose of transfer to a trust fund when moneys in a trust fund become available for investment. That question is not presented by this record and may not be considered by us. There is no evidence here that the mortgage purchased by the trust company more than a year before it was transferred to the trust fund was acquired by the trust company solely for such purpose or was held in a suspense account or was otherwise earmarked for ultimate transfer to a trust fund. There can he no doubt that if the trustee had continued to hold the mortgage as a trust investment it should be surcharged with the amount so invested.

The trustee, however, repurchased the mortgage in 1933 when the settlor asked that in accordance with the terms Of the trust indenture she he permitted to withdraw some of the principal of the trust fund. The trustee then paid to the settlor $1,000 and invested $7,000 of the trust fund in certificates of participation in the $8,000 mortgage. An investment by a trust company, acting as trustee, in a certificate of participation in a mortgage owned by the trust company was at that time lawful if made in accordance with the provisions of section 188, subdivision 7, of the Banking Law. (See Matter of Ryan, supra.) In this case, however, the trust company did not own the mortgage at the time that the settlor sought to withdraw part of the principal of the fund. It informed the settlor that it could comply with the settlor’s request only if it bought back the mortgage and if it then issued participation certificates therein for the amount which remained in the trust fund after payment to the settlor of $1,000 of principal. If at that time the trustee had recognized that its investment of $8,000 in a mortgage which it owned was unlawful, it would he plain that a change in the form of investment to protect itself from the result of its original wrong would have been a fraud on the settlor unless the settlor had been informed of the original wrong. It is immaterial that the change was not made for that purpose and even that the trustee may not have known that the original investment was unlawful and may not have believed that the mortgage would ever he worth less than the amount paid for it. The fact still remains that, in the repurchase by the trust company from the trust estate of a mortgage held by that estate, the trust company was again acting in a dual capacity and it claims that it gained from the transaction immunity from liability for antecedent undisclosed wrong. The original investment by the trustee in a wholly owned mortgage was unlawful; and the original investment, the repurchase by the trust company and the investment of the trust fund in certificates of participation are inextricably intertwined. Throughout the series of transactions: in the original investment, in the repurchase and in the reinvestment of the proceeds of the repurchase, the trustee dealt with itself and had interests which conflicted with the interests of the cestui. For these reasons the investment of trust funds in the participation certificates of the mortgage was no less unlawful than the original investment in the whole mortgage.

The judgment should be affirmed, with costs. '

Loughban, Rippey, Conway and Desmond, JJ., concur; Lewis, J. taking no part.

Judgment affirmed.