author: Desmond, J. Fuld, J.

text:
    In the Matter of Edward K. Barsky, Appellant, against Board of Regents of the University of the State of New York, Respondent. In the Matter of Jacob Auslander, Appellant, against Board of Regents of the University of the State of New York, Respondent. In the Matter of Louis Miller, Appellant, against Board of Regents of the University of the State of New York, Respondent.
    Argued October 23, 1952;
    decided February 26, 1953.

      Paxton Blair and Abraham Fishbein for appellant in first above-entitled proceeding.
    I. Respondent lacked jurisdiction because the offense of which appellant had been convicted in the District of Columbia is not defined as a crime in New York. (People v. Welch, 141 N. Y. 266; People v. Conti, 127 Misc. 244; Matter of Lindenfeld v. Board of Regents, 273 App. Div. 1040; People v. Fisher, 145 Misc. 406, 241 App. Div. 722; Matter of Donegan, 282 N. Y. 285; People ex rel. Marks v. Brophy, 293 N. Y. 469; People ex rel. Atkins v. Jennings, 248 N. Y. 46; People v. Stovali, 172 Misc. 469; People ex rel. Stein v. Murphy, 256 App. Div. 856; The Antelope, 10 Wheat. [U. S.] 66; United States v. Lathrop, 17 Johns. 4; Sims v. Sims, 75 N. Y. 466; Matter of Cohen, 164 Misc. 98, 254 App. Div. 571, 278 N. Y. 584; Packer Collegiate Inst. v. University of State of N. Y., 298 N. Y. 184.) II. Even if the Court of Appeals should hold that appellant had been convicted of a crime within the meaning of paragraph (b) of subdivision 2 of section 6514 of the Education Law, nevertheless respondent’s determination was arbitrary, capricious and unconscionable. One cannot be punished twice for the same offense. Respondent has no power to impose additional punishment merely for the sake of additional punishment. (Sinclair v. United States, 279 U. S. 263; Matter of Donegan, 265 App. Div. 774, 294 N. Y. 704; Matter of Mandel v. Board of Regents, 250 N. Y. 173; Ives v. South Buffalo Ry. Co., 201 N. Y. 271; Reduction Co. v. Sanitary Works, 199 U. S. 306; People ex rel. Bennett v. Laman, 277 N. Y. 368.) III. Respondent’s determination was predicated upon matter elicited by the Attorney General which has been held to be reversible error as a matter of law. (Anti-Fascist Comm. v. McGrath, 341 U. S. 123; Matter of People [International Workers Order], 199 Misc. 941.) IV. Respondent committed reversible errors in its exclusion of evidence and in predicating its determination on contrived conjecture. On the one hand, respondent ruled that appellant had so completely demonstrated that the organization was purely a relief organization, that no further evidence of its activities or expenditures would be allowed. On the other hand, respondent based its determination on conjecture, without proof, that there may have been wrongful activities or expenditures. (Matter of Lynch’s Builders Restaurant v. O’Connell, 277 App. Div. 705.) V. The courts have uniformly annulled determinations that were made without direct evidence involving the licensee, or that were predicated upon conjecture. The sole “ evidence ” adduced consisted of hearsay-upon-hearsay statements and conjecture, to the effect that the organization may have carried on unspecified propaganda. There was an utter absence of direct testimony to this effect, and not the slightest evidence to support this claim, and no attempt was made to link up any such claim with appellants. (Matter,of Friedel v. Board of Regents, 296 N. Y. 347; Matter of Toyos v. Bruckman, 266 App. Div. 28; Matter of Konopka v. Bruckman, 290 N. Y. 777; Matter of Stevensville Lake Holding Corp. v. O’Connell, 269 App. Div. 804.) VI. Respondent failed to discharge the burden of proving that the contempt of which appellant was convicted is a crime even under the Federal law. The contempt for which appellant was convicted is excluded from the “ Contempts constituting crimes ” listed in section 402 of title 18 of the United States Code. (Egbert v. Chew, 14 N. J. L. 446; Matter of Donegan, 282 N. Y. 285; Donnelley
      v. United States, 276 U. S. 505; Watts v. United States, 161 F. 2d 511.) VII. Section 6514 and subdivision 2 of section 6515 of the Education Law are unconstitutional on their face and as applied to the facts o£ this case. (Packer Collegiate Inst. v. University of State of N. Y., 298 N. Y. 184; Matter of Mandel v. Board of Regents, 250 N. Y. 173; Matter of Small v. Moss, 279 N. Y. 288; Matter of Seignious v. Rice, 273 N. Y. 44; Matter of Friedel v. Board of Regents, 296 N. Y. 347; Ives v. South Buffalo Ry. Co., 201 N. Y. 271.)

      Matthew Silverman for Haven Emerson and others, amici curiæ, in support of appellant’s position in first above-entitled proceeding.
    On the facts of this case there exists no valid basis for discipline beyond the statutory minimum of censure and reprimand; the suspension violates the spirit if not the letter of the law allowing such discipline.

      Paxton Blair, Joseph E. Brill, Coleman Gangel and Benjamin J. Jacobson for appellants in second and third above-entitled proceedings.
    I. The offense of which petitioners have been convicted in the United States District Court of the District of Columbia does not come within the purview of the “ crime ” contemplated by paragraph (b) of subdivision 2 of section 6514 of the Education Law. (Matter of Donegan, 282 N. Y. 285; People ex rel. Marks v. Brophy, 293 N. Y. 469; People v. Fury, 279 N. Y. 433; People ex rel. Goodrich v. Martin, 183 Misc. 790, 268 App. Div. 1077.) II. The crime of which petitioners have been convicted, not involving moral turpitude or their professional qualifications, is not such a crime as is contemplated by paragraph (b) of subdivision 2 as a basis for disciplinary action. (Liggett Co. v. Baldridge, 278 U. S. 105; Reduction Co. v. Sanitary Works, 199 U. S. 306; People v. Ford Motor Co., 271 App. Div. 141; Lawton v. Steele, 152 U. S. 133; People ex rel. Bennett v. Laman, 277 N. Y. 368; Sinclair v. United States, 279 U. S. 263.)

      Osmond K. Fraenkel and Herbert Monte Levy for New York Civil Liberties Union, amicus curiæ, in support of appellants’ position in all proceedings.
    The statute as construed below permits suspension or revocation of a physician’s license on grounds not involving moral turpitude and having no relation whatsoever to a physician’s qualifications for the practice of medicine. Such a construction is in violation of the due process clause of the Fourteenth Amendment to the United States Constitution. (Garner v. Los Angeles Bd., 341 U. S. 716; Breard v. Alexandria, 341 U. S. 622; New State Ice Co. v. Liebmann, 285 U. S. 262; Liggett Co. v. Baldridge, 278 U. S. 105; Douglas v. Noble, 261 U. S. 165; Hawker v. New York, 170 U. S. 189; Ex parte Wall, 107 U. S. 265; Cummings v. State of Missouri, 4 Wall. [U. S.] 277; Ex parte Garland, 4 Wall. [U. S.] 333.)

      Nathaniel L. Goldstein, Attorney-General (Henry S. Manley and Wendell P. Brown of counsel), for respondent in all proceedings.
    I. The statutory provision for disciplinary action does not provide either expressly or by implication that the “ crime ” must impute moral turpitude or involve professional activity or qualifications. (Matter of Okin, 272 App. Div. 607; Matter of Swift v. Graves, 173 Misc. 1085; Matter of Weinrib v. Beier, 269 App. Div. 481; Barretta v. Barretta, 182 Misc. 852; Hofferman v. Simmons, 177 Misc. 962, 290 N. Y. 449; United States v. Francioso, 164 F. 2d 163; Matter of Sagos v. O’Connell, 301 N. Y. 212; Helvering v. Mitchell, 303 U. S. 391; Ex parte Wall, 107 U. S. 265; People v. Hawker, 152 N. Y. 234, Hawker v. New York, 170 U. S. 189.) II. The Federal offense for which Dr. Barsky was convicted is a “ crime ’ ’ within paragraph (b) of subdivision 2 of section 6514 of the Education Law. (Matter of Donegan, 282 N. Y. 285; People ex rel. Marks v. Brophy, 293 N. Y. 469; Matter of Donegan, 265 App. Div. 774, 294 N. Y. 704; Matter of Greenberger, 265 App. Div. 343; Matter of Turley, 268 App. Div. 706; Matter of Butcher, 269 App. Div. 545; Matter of Hiss, 276 App. Div. 701; Matter of Sheinman, 277 App. Div. 39; People v. Lafaro, 250 N. Y. 336; Matter of Platzman v. Board of Regents, 274 App. Div. 952; Matter of Garsson v. Wallin, 279 App. Div. 1111, 304 N. Y. 702; Matter of Tonis v. Board of Regents, 295 N. Y. 286; Matter of Lindenfeld v. Board of Regents, 273 App. Div. 1040.)
   Desmond, J.

These are proceedings, brought under article 78 of the Civil Practice Act, to review determinations of respondent Board of Regents, suspending for certain periods the medical licenses of petitioners Barsky and Auslander, and censuring and reprimanding petitioner Miller. In each instance the board found authority for its action in paragraph (b) of subdivision 2 of section 6514 of the Education Law, which authorizes disciplinary action against a physician who ‘£ has been convicted in a court of competent jurisdiction, either within or without this state, of a crime ’ ’. The question on this appeal is as to the meaning and application of that statute.

Each of the petitioners-appellants is a physician licensed to practice in this State. All three were members of the executive board of the Joint Anti-Fascist Refugee Committee, a voluntary association which functioned during the Second World War and immediately thereafter (see the brief statement of its history and aims, in Anti-Fascist Committee v. McGrath, 341 U. S. 123, 130,131). All three were indicted in the United States District Court for the District of Columbia for, and all were, after a jury trial in that court, convicted of the misdemeanor of contempt of Congress, under section 192 of title 2 of the United States Code, in that each of them failed to obey a subpoena requiring him to produce before a Congressional Committee the financial books and records of the Joint Anti-Fascist Refugee Committee. Each was sentenced to a fine and to imprisonment. The judgments of conviction were affirmed on appeal (Barsky v. United States, 167 F. 2d 241), certiorari was twice denied by the Supreme Court (334 U. S. 843; 339 U. S. 971), and each petitioner paid his fine and was imprisoned. Then followed the charges with which we deal here.

We consider that, in these records on appeal, there are no controlling facts other than those above summarized, since the voluminous testimony before the Regents as to the character and purposes of the Joint Anti-Fascist Refugee Committee, and as to the motives of these appellants, could not change the admitted fact of their conviction. From the record it is clear that each petitioner has, in fact, ££ been convicted in a court of competent jurisdiction * * * without this state, of a crime ” (Education Law, § 6514, subd. 2, par. [b]). Petitioners, however, make these arguments: first, that the statutory language applies only to such offenses as are crimes under New York law, and that contempt of Congress (U. S. Code, tit. 2, § 192) is not a crime under any statute of this State; second, that the legislative intent of section 6514 (subd. 2, par. [b]) is to authorize disciplinary action for such offenses only as involve moral turpitude, or are related to professional ability or conduct, and, third, that the Regents imposed unwarranted punishment, and took into account prejudicial matter in fixing the penalties.

There is nothing in section 6514 (subd. 2, par. [b]) which says that, in order to serve as a predicate for action thereunder, the crime ” must be one specifically forbidden as such by a New York penal statute. Indeed, a directly opposite idea is expressed in the language: ‘1 convicted in a court of competent jurisdiction, either within or without this state ”. Such language is too plain to permit construction by addition of unexpressed qualifications or exceptions (Matter of Rathscheck, 300 N. Y. 346, 350). Petitioners, however, argue that such decisions as Matter of Donegan (282 N. Y. 285); People ex rel. Marks v. Brophy (293 N. Y. 469); Matter of Tonis v. Board of Regents (295 N. Y. 286), and Matter of Garsson v. Wallin (304 N. Y. 702) mean that the New York courts construe such statutes as section 6514 (subd. 2, par. [b]) as authorizing penalties for such offenses only as are made criminal, if committed in this State, by our own laws. As to the Donegan, Marks, Tonis and Garsson cases, each had to do with the imposition of stringent additional penalties on, and solely because of, conviction of a “ felony ”. Donegan, Marks, Tonis and Garsson had each fallen afoul of a foreign statute which made certain conduct a felony which was either a misdemeanor in New York or not cognizable at all under our domestic statutory definitions and classifications of crimes. Indeed, this court, as to Donegan (see 282 N. Y., p. 293), made it clear that it was not denying the Appellate Division’s discretionary power to deal with him as one guilty of a “ crime ” (Judiciary Law, former § 88, subd. 2, now § 90, subd. 2). In the statute now before us (Education Law, § 6514, subd. 2, par. [b]), the Legislature has authorized disciplinary action against one convicted, not of a “ felony ”, but of a “ crime ”. Traditionally as well as by express statute (Penal Law, § 2), the word “ crime ” in New York law includes misdemeanors as well as felonies, and so it.is patent that these petitioners have been convicted in a court of competent jurisdiction * * * without this state, of a crime ”. As we remarked in People ex rel. Marks v. Brophy (supra, pp. 474-475), it is the policy of our State not to decree forfeitures in our courts, if we can avoid them, for violations of the criminal laws of another jurisdiction. But public policy is made by the Legislature (see Matter of Rhinelander, 290 N. Y. 31, 36) and the policy of this section of the Education Law cannot be misunderstood. It does not require the imposition of any particular penalties, but leaves it to the Regents to decide on the measure of discipline, up to the extreme limit of license revocation.

We do not find it necessary to rely on an additional ground, put forward in the report of the Regents’ Committee on Discipline in those proceedings for holding that petitioners’ conviction in the District of Columbia was for a crime ”, as that word is used in the Education Law section. The Committee on Discipline noted that New York does have, in section 1330 of the Penal Law, a provision making it a misdemeanor willfully to refuse to produce material and proper documents before a committee of our State Legislature. That enactment, the Regents’ Committee thought, is so similar in meaning to section 192 of title 2 of the United States Code, that one violating the latter is really committing about the same offense as is made criminal by our section 1330. Be that as it may, we construe section 6514 (subd. 2, par. [b]) of the Education Law as it plainly reads, that is, to authorize discipline by the Regents in the event of a conviction of a physician of a crime in any court of competent jurisdiction. Section 1330 (supra) does, however, have this significance at this point: it illustrates, at least, that making a criminal offense out of a refusal to obey a legislative subpoena is in line with New York public policy, as well as that of the Federal Government.

Appellants suggest that a literal construction of section 6514 (subd. 2, par. [b]) will empower the Board of Regents to destroy a person, professionally, solely on a showing of the commission by him in some other State (or country) of an act which we in New York consider noncriminal, or even meritorious. Two answers are available to that: first, some reliance must be placed on the good sense and judgment of our Board of Regents, in handling any such theoretically possible eases; and, second, the offense here committed, contempt of Congress, is no mere trivial transgression of an arbitrary statute.

Turning to appellants’ second main argument, we consider it impossible to read into section 6514 (subd. 2, par. [b]) a condition or qualification that, to justify professional discipline, the crime must be one involving moral turpitude (see, as to there being no moral turpitude in this offense Sinclair v. United States, 279 U. S. 263, 299), or one related to the profession itself. The Legislature knows how to state such limitations when it so desires (see, for instance, present Education Law, § 7406, subd. 1, as to certified public accountants, and, as to physicians, compare former Public Health Law, § 161, with present Education Law, § 6502). Nor is this an attempt to enforce the criminal laws of the United States ” (People v. Welch, 141 N. Y. 266, 275). We are enforcing our own statute, of not uncertain meaning, which simply empowers the Regents to impose a penalty upon any physician who has been convicted of a crime in any competent court anywhere. Stringent as it is, that statute needs no cutting down for constitutionality’s sake. In is no argument against the validity of this statute that it considers a criminal conviction anywhere as a showing of unfitness, for “ it is not open to doubt that the commission of crime, the violation of the penal laws of a State, has some relation to the question of character ” (Hawker v. New York, 170 U. S. 189, 196). A professional license is a high privilege from the State, and the State can attach to its possession conditions onerous and exacting. The special equities of individual cases can be reflected in variety of punishment, as was done here, but the choice among such varieties is for the board, not the courts (Matter of Sagos v. O’Connell, 301 N. Y. 212).

Somewhat similar to the argument (supra) that moral turpitude must be shown, is the contention that the Regents acted arbitrarily in acting on the Federal conviction alone, without regard to the moral right or wrong of what petitioners actually did, that is, refuse to obey legislative subpoenas, and without regard to their motives. Of course, the statute itself was justification for taldng the conviction as a professional fault, and the Regents, receiving voluminous testimony as to the nature of the work of the Joint Anti-Fascist Refugee Committee, and of the character and purposes of these petitioners, are presumed to have taken all those things into account in fixing the penalties.

As to the assertions, by appellants, that the Regents dealt too severely with them, or that the Regents, in deciding on punishment, ignored weighty considerations and acted on matters not proper for consideration, it is enough to say that we are wholly without jurisdiction to review such questions (People ex rel. Masterson v. French, 110 N. Y. 494, 500; People ex rel. McAleer v. French, 119 N. Y. 502, 507; Matter of Greenebaum v. Bingham, 201 N. Y. 343, 347; People ex rel. Morrissey v. Waldo, 212 N. Y. 174,179; People ex rel. Regan v. Enright, 240 N. Y. 194,198,199; Matter of Sagos v. O’Connell, 301 N. Y. 212, 215, supra; 1 Benjamin, Report to the Governor on Administrative Adjudication, pp. 170, 217; see Jaffe v. State Dept. of Health, 135 Conn. 339, 352, 353, 354; Williams v. New York, 337 U. S. 241, 246 et seq.). Matter of Tompkins v. Board of Regents (299 N. Y. 469) does not announce or apply any different rule as to court review of administrative direction in measuring out discipline against physicians. In the Tompkins case, we reversed an Appellate Division order annulling a Regents’ determination, because the Appellate Division had exceeded its powers in so doing. Sending the whole matter back to the Regents, because of that error of law, we reminded the board of the physician’s fine record, etc., and suggested that such factors should be significant to the board in again exercising its broad discretion to frame the appropriate discipline, for the offense and for the offender.” In that same connection, however, in Tompkins, we made it entirely clear that the exercise of that discretion is beyond our power to review” (p. 476). Had we not there found an error of law (not as to punishment but as to the Appellate Division’s unwarranted annulment order) we could not, in the Tompkins case, have done other than affirm. In the present case there is no error of law, and so no basis for any interference by us.

The orders should be affirmed.

Fuld, J.

(dissenting). It is “ the public policy of this State that we do not, if we can avoid it, decree forfeitures in our courts because of violations of the criminal laws of another jurisdictian.” (People ex rel. Marks v. Brophy, 293 N. Y. 469, 474.) That public policy is grounded in a natural and humane abhorrence of heaping added domestic penalties upon one convicted of a crime in a foreign jurisdiction. I cannot, therefore, agree with the court’s conclusion that the license of a physician may be suspended or revoked by the Regents — pursuant to paragraph (b) of subdivision 2 of section 6514 of the Education Law — because of a conviction of a crime without this state,” when the underlying act is not of a character recognized as criminal by the laws of this state, when it has been held by the courts of the convicting jurisdiction not to involve moral turpitude, and when there is no evidence reflecting adversely on the licensee’s qualifications to practice his profession.

Appellant Barsky and a number of others, all members of the Executive Board of the Joint Anti-Fascist Refugee Committee, were convicted, under section 192 of title 2 of the United States Code, of the misdemeanor of contempt of Congress, for failing to produce records of the organization, pursuant to a subpoena of a Congressional Committee conducting an investigation. The conviction was affirmed — one judge dissenting — by the United States Court of Appeals for the District of Columbia (Barsky v. United States, 167 F. 2d 241); a petition for a writ of certiorari was denied by the United States Supreme Court in June, 1948 (334 U. S. 843) and a petition for rehearing was denied two years later, with a notation that two of the justices were of the opinion that the petition should be granted (339 U. S. 971). Bar sky served a term of five months in prison.

The Regents’ Committee on Discipline — here comprised of two lawyers and a physician — is the body set up by statute to conduct hearings for the Board of Regents (Education Law, § 211; § 6515, subd. 4; § 6517). It summarized “ the issues litigated and not litigated at the criminal trial ” in this way: There was no adjudication with respect to the actual facts regarding the Refugee Committee and its operations. There was no adjudication with respect to the motives or reasons of the defendants in failing to comply with the subpoenas. There was adjudication that the constitutional challenges and the defense of lack of custody or control of the records were legally insufficient. ’ ’ The Committee on Discipline noted further that the federal court had directed judgment of acquittal on a conspiracy count in the indictment.

With regard to the reasons given by Barsky and the other members of the Refugee Committee for withholding records called for by the subpoena, the Regents ’ Committee on Discipline wrote as follows:

“ They had been advised by counsel that the subpoenas were • invalid. They asserted that " * * [none] of their activities fell within the scope of the matters into which * * * the Congressional Committee was authorized to inquire. These facts, they asserted, could be ascertained by examination of the reports which the Refugee Committee had filed with the President’s War Relief Control Board. With regard to the scope of the Congressional Committee’s authority, they referred further to a statement of the Congressional Committee as to its regular duty of collecting information on the operations and activities of fund-raising organizations in this country, whose purpose is in part to conduct activities abroad ’, and denied that this was among the subjects committed to the Congressional Committee by the House of Representatives. They expressed a fear that to make public some of the information contained in their records, specifically the names of Spanish Republican exiles who participated in the Refugee Committee’s activities or were the beneficiaries of its relief, would endanger the lives of the families of those persons still in Spain. Based in part on a newspaper statement emanating from the Congressional Committee to the effect that its Chief Counsel had on December 1,1945 [before the subpoenas were issued], asked the President’s War Relief Control Board to cancel the Refugee Committee’s license, they asserted that the Congressional Committee had evidenced hostility and prejudgment. Finally, they asserted that they were challenging the authority of the Congressional Committee and the validity of its subpoena,3 so that those questions might if necessary be determined by the courts.
“ If these views were honestly held and these assertions honestly made, they would sufficiently explain the refusal by Respondent and the others to produce the subpoenaed records, that being the only method by which the legal objections to the Congressional Committee’s course could be judicially determined, and the traditional method by which such legal questions are raised (Sinclair v. United States, supra [279 U. S. 263]). The question is, then, whether there is any basis in the record for concluding that these views and assertions were not honestly held and made. Our examination of the record discloses no such basis.”

And, commenting on the crime of which appellant was later convicted, the Regents’ Committee found that “ no moral turpitude ” was involved.

Those findings are not here questioned; actually, they rest, in large part, on concessions of the Attorney-General at the hearing before the Medical Grievance Committee. Thus, he conceded that appellant was advised by counsel that the subpoenas were unconstitutionally issued and that he was not legally required to respond to them that that opinion at that time was not “ an unreasonable construction of law and that the same opinion “ was held by many lawyers and some jurists ’ ’ — indeed, by one of the federal court of appeals judges who heard the appeal in the criminal case. In essence, then, the gist of the findings by the Committee on Discipline appears to be this: that the crime of which appellant was convicted did not, as the Supreme Court unequivocally stated, involve moral turpitude (see Sinclair v. United States, 279 U. S. 263, 299), and that the record was barren of evidence reflecting upon appellant as a man or a citizen, much less upon his professional capacity or his past or anticipated conduct toward his patients.

Against such a background, and in the light of facts such as those set out, it should require language, clear and clean cut, to cause a court to conclude that the legislature has authorized appellant’s suspension from practice for six months or, indeed, the revocation of his license.

The court chooses to find such language in that portion of the section of the Education Law which authorizes disciplinary action against a physician who “ has been convicted in a court of competent jurisdiction, either within or without this state, of a crime ”. It is said, in part, that that “ is too plain to permit construction ” (opinion, p. 96). I cannot concur. Experience has taught that sheer literalism is more often than not a poor guide to meaning and that a judge must go beyond and outside the dictionary to ascertain the legislative purpose and design. This is especially so here, for reasons which we have discussed at length in analogous cases. (See, e.g., People ex rel. Marks v. Brophy, supra, 293 N. Y. 469; Matter of Donegan, 282 N. Y. 285; see, also, Matter of Garsson v. Wallin, 304 N. Y. 702.) In Matter of Donegan (supra, 282 N. Y. 285, 292), we said that discipline “ partakes of the nature of punishment ’ ’, with the consequence that statutes imposing discipline must be strictly construed ”, and, in the Marks case (supra, 293 N. Y. 469, 474), we declared, to ££ decree forfeitures * * * because of violations of the criminal laws of another jurisdiction ”, is contrary to the established “ public policy of this State ”.

For my own part, I cannot divine in the words of paragraph (b) of subdivision 2 of section 6514 any legislative instruction to apply them literally and remorselessly. On the contrary, I find nothing to indicate that the legislature had any desire to change a policy which has been so often declared and so uniformly adhered to. There is nothing new in the words “ convicted * * * without this state ”; the Marks case (supra, 293 N. Y. 469) dealt with virtually identical language and the Donegan case (supra, 282 N. Y. 285), with language equally broad. In the former case, this court, after noting that the question for decision was the meaning of the language contained in a commutation agreement- — conviction of “ a felony, ‘ either in New York State or any other state ’ ” — declared (293 N. Y., at p. 474):

The Atkins case (248 N. Y. 46, supra), held that when the Governor of this State in 1914 decreed that a released prisoner should forfeit his commutation if convicted of £ any felony,’ the Governor referred only to a conviction of a crime described in our laws as a felony. We think the Governor who in 1935 ordered that this relator should suffer a similar forfeiture if convicted of ‘ a felony, either in New York State or any other state ’ meant the same thing.”

Those cases make it abundantly clear that the mere fact of conviction in another jurisdiction is not enough to warrant the imposition of an additional penalty in this state. It must be a particular kind of conviction.

“ Felony,” as a term of art, still retains much of its character as an infamous crime and is universally used in American law to distinguish those breaches of the law which are of a more serious character. Despite that, we held that, when the legislators (Matter of Donegan, supra, 282 N. Y. 285) or the governor (People ex rel. Marks v. Brophy, supra, 293 N. Y. 469) used the word “ felony,” they meant only such acts as would be deemed a felony in New York. Matter of Donegan (supra, 282 N. Y. 285) is illustrative; we were there required to construe the sections of the Judiciary Law (old § 88, subds. 3, 4, § 477; present § 90, subds. 4, 5), providing for disbarment of an attorney convicted of a felony under the federal law (old § 88, subd. 4; present § 90, subd. 5) as well as under our law. Donegan had been convicted of a conspiracy to commit a mail fraud, a felony under the federal law. It could logically and reasonably be presumed that our legislature, when it required disbarment for conviction of a federal “felony,” considered that all crimes classified as felonies by the federal law were of a sufficiently serious character to require such disbarment. Nevertheless, we held that even in that case we would not ascribe such an intention to the legislature, in view of the established policy against forfeiture for violations of the laws of another jurisdiction and in view of the requirement that the statute be strictly construed.

So, here, where the legislature has declared that it must be a conviction of a “ crime ”, the same rules of policy and construction call upon us to hold that only acts which are criminal under our laws are included. Indeed, if any distinction is to be drawn between the two types of cases — that involving “felony” and the one before us involving “crime” — the argument is far stronger for limiting the term “ crime ” than it is for limiting the term “ felony ”. In enacting the provision under consideration, it is, of course, obvious that the legislature did not canvass all of the myriad ‘ ‘ crimes ’ ’ in the other forty-seven states or under the federal law or under the laws of foreign countries — undoubtedly included in the statute’s “without this state,” if sheer literalism is the guide — and reach the conclusion that each of those crimes warranted an administrative board in depriving a doctor of his license. Instances may readily be cited of acts denominated crimes — and I cull from the court’s opinion (p. 97) —“ in some other State (or country) * * * which we in New York consider noncriminal, or even meritorious.”

It seems almost incredible to me that the legislature could have contemplated that such “ noncriminal ” or “ meritorious ” acts might be the predicate for a consequence so harsh as revocation or suspension of a physician’s right to practice. Yet that is precisely what the court is now holding. It is no answer to say, as the court does — when it is pointed out that such “ a literal construction 56 * * will empower the Board of Regents to destroy a person ” without the slightest warrant — that “ some reliance must be placed on the good sense and judgment of our Board of Regents, in handling any such theoretically possible cases ” (opinion, p. 97). That may well be so, and it is also true that the Board did not here disbar the licensee or revoke his license, but the fact is, as we wrote in Packer Collegiate Inst. v. University of State of N. Y. (298 N. Y. 184, 190), a “ statute’s validity must be judged not by what has been done under it but ‘ by what is possible under it ’ ”. And even formal censure, the minimum discipline that the statute prescribes, may itself be extremely damaging to a physician’s career. As a matter of statutory construction alone, without considering whether such legislation may be constitutionally enacted, we should not attribute to the legislature a design so palpably harsh and extreme. (See Matter of Rouss, 221 N. Y. 81, 91, where the court declared, “ Consequences cannot alter statutes, but may help to fix their meaning. ”)

While affirmance herein may affect only appellant, the present decision has an importance that transcends and reaches far beyond this case. And that — its impact over the years — is what so deeply concerns and troubles me. As I have sought to show, the only reasonable construction, and the one recognized by our precedents, is that only those acts, recognized by the laws of this state as criminal in nature, are encompassed by the statute before us. In point of fact, the Regents ’ Committee on Discipline suggested that the charge against appellant might be sustained upon the ground that the federal crime of which he was convicted finds its analogue in section 1330 of our Penal Law. That section provides that one who, being present before the state legislature or one of its committees, willfully refuses to produce documents in his possession or under his control,” is guilty of a misdemeanor. Whether the act committed by appellant is embraced within that statute presents a highly debatable question, and, since the court has found it unnecessary —• in the view that it has taken — to consider the matter, I see little to be gained by discussing it.

However, at least one other question remains for decision. After noting that the courts would ultimately have to decide whether appellant’s crime was one contemplated by the statute, the Regents’ Committee turned to the subject of discipline and asserted that there was no basis in the facts presented for any punishment greater than censure and reprimand: ‘ ‘ While the Board of Regents is vested with wide discretion as to the measure of discipline on the facts of a particular disciplinary proceeding,” the Committee wrote, “ the imposition in any instance of discipline beyond the statutory minimum of censure and reprimand must * * * be based either on the inherent nature of the respondent’s violation of the disciplinary statute or on an evidentiary showing that the respondent’s conduct justifies more than the minimum discipline.” And it ended its report in this way: Since violation of the Federal statute which [appellant] has been convicted of violating involves inherently no moral turpitude, and since there has been no impeachment by evidence of [appellant’s] explanation (sufficient if unimpeached) of his failure to produce the subpoenaed documents, we find in the record no valid basis for discipline beyond the statutory minimum of censure and reprimand; and we therefore recommend that [appellant’s] license be not suspended, as the Medical Committee on Grievances has recommended, but that he be censured and reprimanded.”

The Board of Regents, however, disregarded that recommendation. Instead, giving no reason whatsoever for its action, it confirmed the recommendation of the Medical Committee on Grievances — made, it must be remarked, on a record less complete than the one before the Committee on Discipline. (See, supra, fn. 1, p. 101.)

This court has heretofore declined, in most instances, to consider the measure of discipline imposed by an administrative agency. (But cf. Matter of Tompkins v. Board of Regents, 299 N. Y. 469, 476-477, where, instead of reinstating determination of Board of Regents, which had been annulled by Appellate Division, this court, upon reversing Appellate Division, remitted matter to the Board so that it might reconsider the measure of discipline.) That is a subject, we have concluded, that rests in the discretion of the agency. However, there is no more reason here, than with other discretionary matters, why some limit should not be imposed on the exercise of discretion, and judicial review sanctioned, where that exercise is unsupportable on rational grounds and becomes arbitrary and capricious. If the statutory authority of the Regents is, in truth, as the court here holds, so broad, so unrestrained, then, I venture, the statute exceeds constitutional limits.

It is not without relevance to observe that, in the process of time, practically every calling necessitating skill has been subjected in some measure to the requirements of a license. The lawyer and the physician have been followed by the dentist, the teacher, the barber, the plumber and many others. It may not be long before the list embraces the butcher and the baker. To what extent the public interest requires protection from incompetent or dishonest practitioners of medicine or of plumbing is, of course, for the legislature to decide. But there can be no gainsaying the fact that the legislature advances into the frontiers of the individual’s constitutional right to liberty and property, when it undertakes to deprive a man of his profession or his trade for reasons unconnected with its proper exercise. (Cf. Bartos v. United States District Court, 19 F. 2d 722.)

In sum, then, the court’s construction of the Education Law provision, particularly when taken with its grant to the Board of Regents of uncontrolled discretion, not only as to the matters on which they may rely in reaching a determination, but also as to the measure of discipline, places the statutory scheme beyond the bounds of what is permitted to the legislature. To me, it seems not merely delegation run riot but legislative abdication.

To be sure, as the court remarks, something may — and I assume must — be left to the good sense and judgment ” of the Regents, but, while “ good sense and judgment ” are essential qualities for members of an administrative board, they certainly do not furnish any guide or standard for administrative action. The fact that crime ” has been committed somewhere is too vague, too capricious, too unrelated to anything that a citizen of our state is entitled to have considered, to be regarded as a standard for any legislation, much less for legislation that is said to authorize a penalty that may destroy a person professionally, that may result in the loss “ of all that makes life worth living.” (Ng Fung Ho v. White, 259 U. S. 276, 284.) In Matter of Small v. Moss (279 N. Y. 288, 299), we declared that “ The Legislature must set bounds to the field, and must formulate the standards which shall govern the exercise of discretion within the field. Without the second rule as a corollary to the first rule there would be no effective restraint upon unfair discrimination or other arbitrary action by the administrative officer ”, and in Packer Collegiate Inst. v. University of State of N. Y. (supra, 298 N. Y. 184, 189), after quoting that passage, we stated that ‘ ‘ there must be a clearly delimited field of action and, also, standards for action therein.” (See, also, Niemotko v. Maryland, 340 U. S. 268, 273; Matter of Fink v. Cole, 302 N. Y. 216, 225.) The wisdom of that constitutional safeguard is highlighted by its disregard in this case.

For his federal offense, appellant has served a jail sentence. Unless the nature of the criminal statute or the circumstances of its infraction or some other evidentiary fact casts doubt upon his character or upon his past or anticipated conduct as a physician, his further suspension from practice is truly an additional penalty for that single offense, rather than the regulation of medical practice in the public interest. (Cf. Ex parte Garland, 4 Wall. [U. S.] 333, 377.) The facts found by the Regents’ Committee on Discipline, not challenged either by the Regents or by this court, prevent any other conclusion.

Loughran, Ch. J., Lewis, Conway, Dye and Froessel, JJ., concur with Desmond, J.; Fuld, J., dissents in opinion.

Orders affirmed. [See 305 N. Y. 691.]

      . It should be noted that, when the parties were before the Committee on Discipline, counsel stipulated that that Committee should consider and take into account matter not in the record of the hearing before the Medical Grievance Committee, including specifically the record of the criminal case in the federal court.

      . The Regents’ Committee on Discipline, for instance, called attention to the fact that, whereas our Domestic Relations Law (§ 5) permits marriage between first cousins, the State of Arkansas stamps it a crime (Ark. Stat. Ann. [1947], §§ 55-103, 41-811, and see Nations v. State, 64 Ark. 467). I mention but two other instances. In a number of states, it is a violation of so-called segregation laws and a crime for a Negro passenger to refuse to occupy his assigned seat in a segregated section of a public bus. (See, e.g., Ala. Code [1940], tit. 48, § 301 (31a); La. Rev. Stat. [1950], tit. 45, § 195; N. C. Gen. Stat. [1950], §§ 62-121.71, 62-121.72, and see State v. Johnson, 229 N. C. 701; S. C. Code [1952], § 58-1496; Tex. Penal Code, art. 1659; Code of Va. [1950], § 56-329, and see New v. Atlantic Greyhound Corp., 186 Va. 726.) And, in Kansas, it is a crime to sell or even to drink alcoholic liquor in a public place. (Kan. Gen. Stat. [1949], §§ 41-719, 41-803, and see State v. Shackle, 29 Kan. 341.)

      . While it is impossible to say what prompted the Regent’s acceptance of the Medical Grievance Committee’s recommendation that appellant’s license be suspended for six months, it may be of some significance that, among the findings made by the Grievance Committee, and confirmed by the Regents, was the finding that “ Ever since 1947, the Committee [Anti-Fascist Refugee Committee] has been listed as subversive by the Attorney General of the United States.” Reliance upon that fact was, of course, improper, for, as the Committee on Discipline pointed out, that listing was entitled to no weight whatsoever in the present proceeding, and its utilization constituted gross and prejudicial error. (See Anti-Fascist Committee v. McGrath, 341 U. S. 123.)

      . In the course of its opinion, the court has written: “ As to the assertions, by appellants, that the Regents dealt too severely with them, or that the Regents, in deciding on punishment, ignored weighty considerations and acted on matters not proper for consideration, it is enough to say that we are wholly without jurisdiction to review such questions ” (supra, p. 99, emphasis supplied).


source: Caselaw Access Project

author: Fuld, J.

license: Public Domain

text:
    In the Matter of Frank S. Hogan, as District Attorney of New York County, Respondent, against Owen W. Bohan, as a Judge of the Court of General Sessions of the County of New York, Appellant. Daniel Connolly, Appellant.
    Argued January 8, 1953;
    decided March 5, 1953.

      Allan J. Parker and Florence M. Kelley for appellants.
    I. The lower court correctly held that there is no difference between a suspended and a deferred sentence. (Wood v. Duff-Gordon, 222 N. Y. 88; People ex rel. Bierbaum v, Jennings, 135 Misc. 809; Gehrmann v. Osborne, 79 N. J. Eq. 430; People ex rel. Hirschberg v. Seeger, 179 App. Div. 792; People ex rel. Holton v. Hunt, 217 App. Div. 428; People ex rel. Decker v. Page, 125 Misc. 538; Matter of Donnelly [Kuney-Sauter], 168 Misc. 285; People ex rel. Kuney v. Adams, 256 App. Div. 802, 280 N. Y. . 794; People v. O’Donnell, 177 Misc. 562.) II. The Court of General Sessions has the power to defer sentence. (Commonwealth v. Minnich, 250 Pa. 363; People v. La Sasso, 182 Misc. 538; People ex'rel. Forsyth v. Court of Sessions, 141 N. Y. 288; Plumb v. Almekinder, 98 Misc. 435; Puls v. New York, L. S W. R. R. Co., 54 Misc. 303; People ex rel. Woodin v. Ottaway, 129 Misc. 120, 222 App. Div. 711, 247 N. Y. 493; Gehrmann v. Osborne, 79 N. J. Eq. 430; Miller v. Aderhold, 288 U. S. 206; Zerbst v. Nahas, 67 F. 2d 742.)

      Frank S. Hogan, District Attorney (Charles W. Manning and Richard G. Denser of counsel), for respondent.
    The order of the Appellate Division properly affirmed that part of the order of Special Term directing that judgment be pronounced. (People v. Kennedy, 58 Mich. 372; People v. Penn, 302 Ill. 488; Matter of Richetti v. New York State Bd. of Parole, 300 N. Y. 357; People ex rel. Spurio v. Foster, 293 N. Y. 820; People v. Tissier, 254 N. Y. 572; People v. Gianni, 201 Misc. 275.)
   Fuld, J.

Defendant Connolly was convicted of grand larceny in the second degree in the County Court of Queens County in 1946 and sentenced to a term in prison as a second felony offender. He was released on parole after some three years and, while at liberty, proceeded to forge about fifty credit slips, involving small amounts of money. Indicted for those forgeries, he pleaded guilty, in March of 1950, in the Court of General Sessions of the County of New York to the crime of attempted forgery in the second degree. When, a month later, defendant appeared before the Honorable Owen W. Bohan for sentence, he admitted that he was the person named in the information filed against him, pursuant to section 1943 of the Penal Law, accusing him of two prior felony convictions.

If section 219 of the Correction Law applied, defendant would be required to serve — in addition to the term imposed upon him as a prior felony offender — the balance of the unexpired term of imprisonment, almost seven years, stemming from the Queens County Court sentence in 1946.

To temper what seemed the harsh demands of the law, Judge Bohan ‘ deferred ’ ’ his sentence, on the assumption that defendant could thus avoid, perhaps forever, being treated or punished as “ a parole violator * * * convicted of a felony while on parole.” (Cf. Matter of Richetti v. New York State Bd. of Parole, 300 N. Y. 357, 360.) The district attorney protested the judge’s deferment of sentence and some time .later brought this article 78 proceeding to compel him to pronounce judgment. The courts below ruled that sentence could not be indefinitely deferred or postponed, and we agree.

There is a statutory scheme calling for indictment, trial, verdict, pronouncement of judgment and appeal. As to judgment, section 471 of the Code of Criminal Procedure provides, a court “ must appoint a time for pronouncing judgment ”, and that time, section 472 recites, must be “at least two days after the verdict, if the court intend to remain in session so long, or if not, as remote a time as can reasonably be allowed At such time, and in the absence of “ sufficient cause [appearing] to the court why judgment should not be pronounced,” section 482 of the Code prescribes, “ it must thereupon be rendered.” (Emphasis supplied.) The plan is unmistakable ; the court is afforded time to reach decision and pronounce judgment, without running the risk of losing jurisdiction of the defendant by the expiration of its term — as was the case at common law. (See, e.g., Matter of Rudd v. Hazard, 266 N. Y. 302, 306; People v. Kennedy, 58 Mich. 372.) But pronounce judgment, impose sentence, it must. And that mandate appears even more clear, when it is realized — as we have already had occasion to remark — that the process of appeal is completely frustrated by the court’s act of deferring sentence. (See Matter of Richetti v. New York State Bd. of Parole, supra, 300 N. Y. 357, 361.) In brief, once the legislature has spoken, neither court nor judge may modify or change its pronouncement.

Matter of Richetti v. New York State Bd. of Parole (supra, 300 N. Y. 357) does not hold otherwise; all that we there decided was that deferment of sentence does not constitute a “ conviction under section 242 of the Correction Law, the counterpart of section 219, requiring a prisoner whose sentence has been commuted by the Governor to serve out his unexpired term if convicted of a felony committed while on parole. Nor may the Richetti case be invoked for the proposition, advanced by defendant, that to defer sentence is to suspend it and that, by reason thereof, judgment was pronounced and sentence imposed. On the contrary, the opinion of the court suggests just the opposite (p. 360).

In sum, then, following an adjudication of guilt, sentence must be imposed; it may not be deferred or postponed indefinitely. It is incumbent upon the Court of General Sessions to pronounce judgment, either to sentence defendant to a term in prison or to suspend sentence or to impose a sentence and suspend its execution. (See People v. Webster, 201 Misc. 239, affd. 279 App. Div. 944, affd. 304 N. Y. 621.)

The order of the Appellate Division should be affirmed.

Lotjghran, Ch. J., Lewis, Conway, Desmond, Dye and Froessel, JJ., concur.

Order affirmed.

      . Section 219 of the Correction Law recites that, if any prisoner is “ convicted in this state of a felony committed while on parole * * * he shall, in addition to the sentence which may be imposed for such felony, and before beginning to serve such sentence, be compelled to serve in state’s prison the portion remaining of the maximum term of the sentence on which he was released on parole from the time of such release on parole until the expiration ”.


author: Dye, J. Froessel, J.

text:
    The People of the State of New York, Respondent, v. Alphonse J. Oskroba, Appellant.
    Argued December 2, 1952;
    decided March 5, 1953.

      Arthur G. Silverman and Milton Pinkus for appellant.
    I. The introduction at the hearing of charges not specified in the information to which defendant pleaded, the extensive testimony taken thereon, its decisive influence in inducing the County Judge’s drastic conclusion and the refusal of any adjournment to meet such testimony operated to deprive defendant of the “ opportunity to be heard ” prescribed by section 935 of the Code of Criminal Procedure for revocation of probation. II. The effect of the unspecified matters and of the refusal of an adjournment to allow defendant’s wife to testify was to deprive defendant of his “ opportunity to be heard ”. (Matter of Citron v. O’Shea, 244 App. Div. 158; Matter of Merritt v.
      Swope, 267 App. Div. 519; Luellan v. City of Aberdeen, 20 Wn. [2d] 594; Matter of Long, 287 N. Y. 449; People ex rel. Benacquista v. Blanchard, 267 App. Div. 663; People ex rel. Stumpf v. Craig, 79 Misc. 98; People v. Hill, 164 Misc. 370; Sellers v. State, 105 Neb. 748; Hollandsworth v. United States, 34 F. 2d 423; Howe v. State, 170 Tenn. 571; State v. Gooding, 194 N. C. 271; United States v. Van Riper, 99 F. 2d 816; Clifton Shirting Co. v. Bronne Shirt Co., 213 App. Div. 239.) III. The record compels the inference that the unspecified and extraneous matters above referred to substantially influenced, if not determined, imposition of these drastic sentences. This, in itself, requires reversal.

      Frank A. Gulotta, District Attorney (Henry P. De Vine of counsel), for respondent.
    I. The evidence was sufficient to establish the violation as a matter of law. II. The testimony of Officer Eyan dealing' with the character of the grill plus the testimony of Lieutenant Janiec that probationer had threatened him did not deprive probationer of an opportunity to be heard as required by section 935 of the Code of Criminal Procedure. (Burns v. United States, 287 U. S. 216; Matter of Merritt v. Swope, 267 App. Div. 519.)
   Dye, J.

The appellant having pleaded guilty in Nassau County Court to the crime of forgery, second degree, was, upon proof of two prior felony convictions, sentenced to a term of five to ten years in Sing Sing Prison, which sentence was suspended and appellant placed on probation for the maximum term permissible under the law. Later his parole was transferred to New Jersey (Code Grim. Pro., § 932). While there an information was filed in Nassau County Court based on a notice from the Probation Officer of Bergen County, New Jersey, charging the defendant-appellant with violation of his parole in that he has failed to obtain regular employment and has deceived the writer [Probation Officer] as to his employment status ”. Upon arraignment in Nassau County Court, he pleaded not guilty. A hearing was then had following which his probation was revoked and his State prison sentence reinstated.

According to the record, proof was adduced at the hearing which'is sufficient to establish a violation of parole by reason of failure to obtain regular employment. The circumstance giving rise to this appeal relates to what may very well be termed additional or collateral matter upon which the revocation of parole does not depend, but in respect to which the appellant claims he was denied an “ opportunity to be heard ”, as prescribed by section 935 of the Code of Criminal Procedure.

This contention is based on the following circumstances: During cross-examination of Probation Officer Ryan, counsel for appellant questioned him as to what rules the appellant had violated and was told rules 2 and 8. Rule 8 requires a probationer to work at suitable regular employment, violation of which was charged in the information. Rule 2, however, requires probationer to avoid places or persons of disreputable * * * character ”, violation of which had not been charged, and no mention of which had been made during the direct examination. Counsel for appellant, however, persisted in delving into it with particular reference to the bar and grill owned by appellant’s wife which the Probation Officer had on a prior occasion warned him not to work in. The answers elicited indicated that the establishment had a bad reputation. The door having been opened, the People then called a police officer on the issue of the reputation of the bar and grill thus raised, and he too said it was bad, and also that on one occasion he had been threatened with physical violence by the defendant. The defendant-appellant took the stand in his own behalf to state, by way of explanation and extenuation of his failure to obtain regular employment as charged, that because of the illness of his wife it was necessary for him to be near her, which circumstance brought him into the bar and grill from time to time, but that he never tended bar for her nor had he threatened a policeman. He did admit on cross-examination, however, that he had been found selling beer by an agent of the State Liquor Authority. Counsel for defendant-appellant then asked for an adjournment to permit him to call the defendant’s wife to contradict the testimony that the bar and grill had a bad reputation. The wife was ill in a hospital and would not be available for some time. The County Judge refused the adjournment for such purpose, which refusal the appellant says deprived him of his opportunity to be heard.

If error there was, it is insubstantial. The granting or denial of an adjournment by a trial judge is a matter of discretion and his action will not ordinarily be reviewed unless it appears that the refusal is so unreasonable as to be arbitrary and capricious as a matter of law (Cohen & Karger, Powers of the New York Court of Appeals, § 151 et seq.; Webster v. People, 92 N. Y. 422; Eighmy v. People, 79 N. Y. 546).

It has long been accepted practice in the administration of criminal law that, after conviction, a court may suspend the sentence or execution of judgment and place the defendant on probation, a power inherent in the court at common law (People ex rel. Forsyth v. Court of Sessions of Monroe Co., 141 N. Y. 288) and now authorized by statute (Code Crim. Pro., part VI, tit. IX). Being placed on probation, however, is a privilege to be accorded by the court in the exercise of its broad discretionary powers upon such conditions as the court shall determine which may include work at suitable employment (Code Crim. Pro., § 932). When, however, the probationer shall violate the conditions of his parole, the court may issue an order for his arrest and upon arraignment and “ after an opportunity to be heard ” the court may revoke, continue or modify the probation (Code Crim. Pro., § 935).

We do not seem to have passed on the meaning of the phrase “ an opportunity to be heard ” as used in the statute; at least no case has been called to our attention by counsel and our own research has produced none. However, it would seem elemental that the term contemplates notice to the probationer of the violation charged, with an opportunity to attack or deny the charge (Matter of Long, 287 N. Y. 449; People ex rel. Benacquista v. Blanchard, 267 App. Div. 663; People ex rel. Stumpf v. Craig, 79 Misc. 98; cf. People ex rel. Valiant v. Patton, 221 N. Y. 409). There is no requirement of formal procedure (People ex rel. Kuney v. Adams, 280 N. Y. 794, affg. 256 App. Div. 802) but nonetheless the defendant here was accorded every reasonable opportunity to be heard within the common understanding of due process. He had notice of the charge upon arraignment — he pleaded not guilty — witnesses were sworn — he-took the stand in his own behalf, and from the record thus made the court was able to decide and did decide that the evidence adduced established the violation as charged. The circumstance that the trial court allowed the defendant-appellant wide latitude in the cross-examination of People’s witnesses, thereby bringing out matters coming within the scope of rule 2, a violation with which defendant had not been charged, is not tantamount to saying that revocation of the probation as made depended thereon, or that his refusal to allow an adjournment to throw further light on such extraneous matter was such an abuse of judicial discretion as to amount to a denial of due process. This is not a case where defendant has been charged with one violation, and failing proof thereof has nonetheless been held because there was proof of another violation not charged (cf. Matter of Merritt v. Swope, 267 App. Div. 519; Matter of Citron v. O’Shea, 244 App. Div. 158).

Probation being a matter of grace, its revocation also depends on the sound exercise of judicial discretion. (Burns v. United States, 287 U. S. 216, 220.) In view of the uncontradicted proof establishing violation by his failure to work at suitable employment, it cannot be said that the determination in any way depended on the other and additional testimony relating to matters concerning which no charges have been made, from which it follows that he was not deprived of the 11 opportunity to be heard ” contemplated by the statute. When the record is so viewed it may not be said that the ruling as made by the court was so unreasonable as to constitute an abuse' of discretion as a matter of law.

The judgment appealed from should be affirmed.

Froessel, J.

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

Judgment affirmed. [See 305 N. Y. 696.]


author: Lewis, J. Desmond, J.

text:
    Meyer Bank et al., Copartners Doing Business under the Name of Bank Electric Co., Appellants, v. Board of Education of the City of New York, Respondent.
    Argued December 3, 1952;
    decided March 5, 1953.

      Nelson Rosenbaum for appellants.
    I. Whether defendant impliedly represented all four contracts would be awarded at the same time was properly a question of fact for the jury. Defendant was not legally authorized to insert in its documents that it reserved the right to reject any or all bids. (B. M. Heede, Inc., v. Roberts, 303 N. Y. 385; Walls v. Bailey, 49 N. Y. 464; Fuller v. Robinson, 86 N. Y. 306; Ferguson v. West Coast Shingle Co., 96 Ark. 27; Robeson v. Pels, 202 Pa. 399; Traill v.
      Baring, 4 G-iff. 485, 4 De G. J. & S. 318; Downey v. Finucane, 205 N. Y. 251; Walker v. People, 170 111. 410; Warnock v. Wray, 194 N. Y. S. 396; Arensmeyer, Warnock, Zarndt, Inc., v. Wray, 118 Misc. 619; Finizio v. American Steel Export Co., 192 App. Div. 571, 233 N. Y. 514; Gillet v. Bank of America, 160 N. Y. 549; Churchill v. St. George Development Co., 174 App. Div. 1.) II. Plaintiffs had the right to rely on defendant’s representation that all four contracts would be awarded at once. (Jackson v. State of New York, 210 App. Div. 115, 241 N. Y. 563; Moore v. Mayor of City of N. Y., 73 N. Y. 238.) III. The trial court properly instructed the jury that if defendant represented to plaintiffs its intention to award all four contracts at once and changed such intention without first advising plaintiffs of such change, defendant committed a fraud upon plaintiffs. (Adams v. Gillig, 199 N. Y. 314; Ritzwoller v. Lurie, 225 N. Y. 464; Deyo v. Hudson & Co., 225 N. Y. 602; Pease & Elliman v. Wegeman, 223 App. Div. 682; Edgington v. Fitzmaurice, 29 Ch. D. 459; Schroeder v. Schroeder, 269 App. Div. 405; With v. O’Flanagan, [1936] Ch. 575; Ultramares Corp. v. Touche, 255 N. Y. 170; State St. Trust Co. v. Ernst, 278 N. Y. 104; Harlem Gaslight Co. v. Mayor of City of N. Y., 33 N. Y. 309; Matter of McNutt Co. v. Eckert, 257 N. Y. 100; Graffam v. Burgess, 117 U. S. 180.) IV. Defendant’s fraud vitiated the contract awarded to plaintiffs so that plaintiffs were entitled to the fair and reasonable value of their work. (Harris Structural Steel Co. v. Smith, 110 Me. 123; Tyra v. Cheney, 129 Minn. 428; Nordone Contr. Co. v. City of New York, 295 N. Y. 985; Davis v. Reisinger, 120 App. Div. 766; Angerosa v. White Co., 248 App. Div. 425, 275 N. Y. 524; Rickard v. Stanton, 16 Wend. 25; Hanlon v. Macfadden Publications, 302 N. Y. 502; Pink v. Title Guar. & Trust Co., 274 N. Y. 167; MacMurray v. City of Long Beach, 292 N. Y. 286.) V. Whether defendant’s fraud caused plaintiffs’ injury and damages was properly a question of fact for the jury. (Ochs v. Woods, 221 N. Y. 335; Hanlon v. Macfadden Publications, 302 N. Y. 502; Abner N. Harper, Inc., v. City of Newburgh, 159 App. Div. 695; Martens &c. Co. v. City of Syracuse, 183 App. Div. 622; City of New York v. Dowd Lbr. Co., 140 App. Div. 358; Moffett, Hodgkins &c. Co. v. Rochester, 178 U. S. 373; Rickard v. Stanton, 16 Wend. 25; Farris v. Ware,
      60 Me. 482; Hotaling v. Leach & Co., 247 N. Y. 84; State St. Trust Co. v. Ernst, 278 N. Y. 104; Continental Ins. Co. v. Mercadante, 222 App. Div. 181; Gray v. Richmond Bicycle Co., 167 N. Y. 348; Bagley v. Bowe, 105 N. Y. 171; Bristol-Myers Co. v. Picker, 302 N. Y. 61.) VI. The judgment obtained by plaintiffs at Trial Term should be reinstated also on the equitable ground of restitution of benefits conferred by plaintiffs on defendant. (Rickard v. Stanton, 16 Wend. 25; Seneca Wire & Mfg. Co. v. Leach & Co., 247 N. Y. 1; Bloomquist v. Farson, 222 N. Y. 375; Nordone Contr. Co. v. City of New York, 295 N. Y. 985; Fitzgerald v. Title Guar. & Trust Co., 290 N. Y. 376; Hifler v. Calmac Oil & Gas Corp., 258 App. Div. 78; Kley v. Healy, 127 N. Y. 555; Brennan v. National Equitable Investment Co., 247 N. Y. 486; Douglass v. Scott, 130 App. Div. 322.)

      Denis M. Hurley, Corporation Counsel (Andrew Bellanca and Seymour B. Quel of counsel), for respondent.
    I. Plaintiffs failed as a matter of law to establish fraud or misrepresentation. The failure to award all contracts simultaneously or to advise plaintiffs of inability to grant the same until additional funds were available cannot support a claim of fraud and deceit, for no contract can be let in the absence of a specific appropriation sufficient to pay estimated expense of such contract and the amount appropriated was a matter of public record. Further the statute and the instructions to bidders gave notice to plaintiffs that defendant reserved the right to reject any and all bids. (Ochs v. Woods, 221 N. Y. 335; Lynch v. Gibson, 254 App. Div. 47, 279 N. Y. 634; Woolson v. Waite, 158 Misc. 764, 247 App. Div. 855; Benz v. Kaderbeck, 241 App. Div. 583; Reno v. Bull, 226 N. Y. 546; Central Sav. Bank in City of N. Y. v. Amted Realty Co., 274 App. Div. 392; Tamm v. Ford Motor Co., 80 F. 2d 723; United States v. Stanolind Crude Oil Purchasing Co., 113 F. 2d 194; Ruppert v. Brooklyn Heights R. R. Co., 154 N. Y. 90; B. M. Heede, Inc., v. Roberts, 303 N. Y. 385; Schroeder v. Schroeder, 269 App. Div. 405; With v. O’Flanagan, [1936] Ch. 575; McDonald v. Mayor of City of N. Y., 68 N. Y. 23; Parr v. Village of Greenbush, 72 N. Y. 463; Lyddy v. Long Island City, 104 N. Y. 218; Village of Fort Edward v. Fish, 156 N. Y. 363; People ex rel. Lyon Co. v. McDonough, 173 N. Y. 181.) II. No causal connection was established between the alleged misrepresentation — that all four contracts would be let at the same time — and plaintiffs’ delay and increased costs and expenses. Admittedly, plaintiffs’ delay in commencing their work was occasioned by the general contractor’s delay in completing his preliminary work — not to any act or failure to act on the part of defendant. Plaintiffs voluntarily assumed this risk by the very terms of their contract. Possibility of rising prices is a gamble of any fixed fee contract. (Weston v. State of New York, 262 N. Y. 46; Tamm v. Ford Motor Co., 80 F. 2d 723.) III. In any event, plaintiffs’ election to proceed with the work under their contract after discovery of defendant’s alleged wrongful acts operates as an effective and binding release of any claim asserted therefor, and accordingly plaintiffs may not recover. (Saratoga & Schenectady R. R. Co. v. Row, 24 Wend. 74; Seglin Constr. Co. v. Columbia Cas. Co., 239 App. Div. 803; Phillips Petroleum Co. v. Rau Constr. Co., 130 F. 2d 499; Nounnan v. Sutter Co. Land Co., 81 Cal. 1.)
   Lewis, J.

We are to determine whether actionable constructive fraud was proven by the plaintiffs in connection with the award to them by the defendant of one of four separate contracts for the construction of an addition to a public school building.

By constructive fraud is meant “ * * * an act done or omitted, not with an actual design to perpetrate positive fraud or injury upon other persons, but which, nevertheless, amounts to positive fraud, or is construed as a fraud by the court because of its detrimental effect upon public interests and public or private confidence.” (Eaton on Equity, § 125; and see 1 Story, Equity Jurisprudence [13th ed.], § 258, p. 265.) That concept will give direction to our inquiry.

A chronological statement of facts from the record will contribute to an understanding of our problem: On June 13, 1946, the board of estimate of the city of New York, at the request of the defendant board of education, approved plans for an addition to Public School 35 in Brooklyn. The total estimated cost of that project was $960,000, which amount was authorized as a charge against the current capital budget appropriation of $1,322,196.87 allotted to that school improvement. Such approval by the board of estimate, as shown by its minutes, contained a provision that if the total of the low bids received in connection with the project exceeded the aggregate estimate of cost, no contracts would be let without resubmission to the board of estimate for subsequent approval. Thereafter, to meet the requirements of section 88 of the General Municipal Law, the defendant divided the work of the project into four separate parts and, after the issuance of specifications for each part, it advertised for bids upon four separate contracts to be performed in constructing the addition to Public School 35— (1) general construction work, (2) plumbing and drainage, (3) heating and ventilating, (4) electric work and lighting fixtures. Our problem relates itself to the contract last mentioned above — electric work and lighting fixtures — which, as will presently appear, was awarded to the plaintiffs in circumstances which gave rise to the present litigation.

There was undisputed testimony by the defendant’s superintendent and its assistant superintendent in charge of design and construction of school buildings, that in arranging for public building construction — as here involved — where the work is to be accomplished under four separate contracts, the work of all the contractors must be integrated to assure completion within the contract time; and that, in the present case, at the time when the four separate contracts were advertised it was the intention, in accord with ‘ ‘ normal procedure ’ ’, to award all four contracts at about the same time.

When, however, the bids were received on the addition to Public School 35 the lowest qualified bid upon each of the four separate contracts and the total of those four bids were as follows:

As the total bids received on the four contracts exceeded the amount approved by the board of estimate on June 13,1946, the defendant, on July 10,1946, adopted a resolution requesting the board of estimate to increase the total estimated cost of the school addition from $960,000 to $1,538,340 — an amount in excess of the sum appropriated in the 1946 capital budget. On July 18, 1946, the defendant applied to the Federal Civilian Production Administration for a permit to build the proposed addition to Public School 35, such permit being required by a Federal regulation then in effect governing public building construction. In that application the defendant stated that the estimated cost of the Public School 35 addition was $1,050,000; that under the proposed schedule of work the project would be completed 450 days after construction commenced, and that “ The appropriation of the money for the construction of this school has been made by the City ”. At its meeting of July 25, 1946, the board of estimate considered and took action upon a letter, addressed to it by the defendant’s secretary, which reviewed the defendant’s action in reference to the proposed addition to Public School 35, and set forth the bids which had been received on July 8, 1946 on the four separate contracts. As the letter suggested procedure later followed by the defendant, of which the plaintiff now complains, we regard statements made therein to be worthy of quotation. After stating that bids for heating and ventilating work had been rejected as unqualified, and that funds available for the project would be insufficient to defray the cost of the proposed work, the defendant’s letter stated:

“ Accordingly, the Department proposes to award contracts for general construction and electric work and lighting fixtures at this time in the total amount of $1,275,340. An additional appropriation in the sum of $287,803, chargeable to the Amended 1946 Capital Budget, and added to the $1,014,000 available would provide sufficient funds to defray the cost of the two contracts proposed to be let. The remaining two mechanical contracts would be let at some future date, dependent upon another amendment of the Amended 1946 Capital Budget to provide additional funds. Readvertising will be required for the heating and ventilating work as the Department has rejected all bids, and the same may be necessary for the plumbing and drainage work as the 45 day limit on holding a low bidder after receipt of bids may expire before additional funds are made available.
“ The Board of Education is of the opinion that the bids received reflect present trends in building construction, and that awards at this time would be in the best interests of the Board of Education and the City.
It might be added that the general impression is that said trend is upward, with no indication that there will be a reversal or leveling off in the near future. Furthermore, the experience of other City agencies indicates that no savings are obtained upon readvertising.
While the proposal to let only general construction and electrical work at this time is not considered best practice for building construction, which is a highly integrated process, there appears to be no alternative to such procedure except deferment of the entire work until conditions are more favorable.
If work proceeds now, and on the basis proposed, the City may expect increased construction costs as well as additional engineering expenditures attendant upon construction not being fully integrated, and extending over a longer period. * * *
As noted herein, the sum of the low bid for general construction and the lowest responsible bid for electrical work is $1,275,340. The allotment proposed in the Amended 1946 Capital Budget is $287,803.13, which together with the approximately $1,014,000 available funds, would provide a total of $1,301,803, or $26,463 in excess of that required for the two contracts proposed. This balance could be used for possible contingencies.
No approval is required, or possible at this time, of the requested revised aggregate estimated cost of $1,538,340 for general construction and all mechanical contracts until sufficient funds are made available in the future.”

Acting upon the foregoing recommendations by the board of education, no action was taken by the board of estimate to assure the integration of the work to be separately undertaken by the four contractors who had submitted the lowest bids. Instead, the board of estimate appropriated an additional $287,803 for the Public School 35 addition and approved increased estimates of cost on only two of the four contracts, viz., $1,191,840 for general construction work and $83,500 for electric work and fixtures. That approval was granted “ with the understanding that an increased aggregate estimate of cost will be approved at a later date as funds are made available ”. On July 30, 1946, the Civilian Production Administration approved defendant’s application for a building permit for the addition to Public School 35, which approval contained the following statement: “You are hereby authorized * * * to construct the project or do the work described in this application, subject to these conditions: The Civilian Production Administration in granting this authorization relied on the statements and representations made by the applicant; failure to abide by these statements and representations ® * * constitutes a violation of this authorization and grounds for its immediate cancellation.”

On the following day, July 31, 1946, the defendant awarded the contract for general construction work on Public School 35 to John T. Brady & Co. and on the same date awarded to the plaintiffs the contract for electric work and lighting fixtures.

It is appropriate to interrupt the narrative at this point to state that at the trial herein the plaintiffs introduced testimony by the assistant superintendent of school buildings employed by the defendant that the decision of the board of education on July 30, 1946, to award at that time only the contracts for general construction work and electric work and lighting fixtures, constituted a change of plans after the time the bids were received, which change was made necessary by the lack of available funds sufficient to cover the cost of all four contracts. According to the minutes of its meeting held on July 31, 1946, when the defendant again reviewed what had occurred in connection with the addition to Public School 35, a request to the city planning commission was authorized for an amendment of the 1946 capital budget sufficient to make available the total cost of the project. The city planning commission, however, declined to make the recommendation necessary to an amendment of the capital budget of 1946 and no additional funds were made available in that year to meet the cost of the addition to Public School 35.

On August 1,1946, plaintiffs received notice from the defendant that the contract for installation of electric work and lighting fixtures in the Public School 35 addition had been awarded to them on the preceding day, and that the contract for such work should be executed within five days under penalty of forfeiture by plaintiffs of their bid deposit. The contract was executed by the parties to this action on August 5, 1946.

There is evidence, however, from which the jury could find that the defendant did not inform the plaintiffs, either prior to or at the time of signing the contract for electric work and lighting fixtures, that the award of the contracts for plumbing and drainage and for heating and ventilating was to be delayed for an indefinite period until sufficient funds were available to cover the cost thereof. Indeed, those two contracts were not awarded until January 20, 1947, five months after approval of the two contracts for electric work and general construction and after there had been included in the 1947 capital budget funds sufficient to defray the expense thereof and the appropriation of such funds by the board of estimate on January 16, 1947. Those two contracts were finally approved by the comptroller and the commencement of work thereunder was authorized on February 4, 1947.

Meantime, on August 27, 1946, the defendant by its secretary sent to plaintiffs a formal notice that the contract for electric work and lighting fixtures — upon which they had been the low bidder — had been approved on that date by the city comptroller “ * * * and is therefore a valid contract.” The notice also stated: The contract time [450 days] begins to run from the date of this notification ”. On the same date (August 27, 1946) the comptroller indorsed upon the plaintiffs’ contract his certificate as follows: “ In pursuance of the provision of Section 93c-3.0 of the Administrative Code of the City of New York, I hereby certify that there remains unapplied and unexpended a balance of the appropriation of fund applicable to this contract sufficient to pay the estimated expense of executing the same, viz.: $83500 ”. (Emphasis supplied.) The plaintiffs were first able to perform work under their contract on April 14,1947; they completed their work in February, 1949 — 880 consecutive calendar days after the approval of the contract on August 27,1946. For complete performance of their contract they were paid by the defendant $83,500 — the original contract price agreed upon. Thereafter plaintiffs instituted the present action to recover $45,237.94, that sum being arrived at by deducting from the alleged fair and reasonable value of work performed by them in connection with the addition to Public School 35, viz., $128,737.94, the sum of $83,500, being the contract price received by them.

It is the plaintiffs’ ppsition that by the information and data furnished by the defendant at and prior to the time they submitted their bid on the contract for electric work and lighting fixtures, the defendant impliedly represented to them that the construction of the addition to Public School 35 would require the integration of the various types of work involved in the project and close co-ordination between the four contractors who would perform that work, and to that end the four contracts to which reference has been made — on which bids were sought at the same time — would be awarded at or about the same time. The plaintiffs’ claim is that they relied on that implied representation when they prepared their bid for the work they undertook to do, and when they signed the contract therefor ; that the defendant, at a time when it knew that the award of two of the four contracts would be delayed indefinitely, failed to advise the plaintiffs of that fact before they executed their contract ; that defendant’s failure to inform the plaintiffs of such impending delay in the award of the remaining two contracts was in effect fraud which caused serious interruptions and long delay in carrying out their plan of work to meet the obligations they had assumed and ultimately fulfilled, and resulted in increased cost to them for labor and materials they have furnished to the finished project.

At the trial, in addition to testimony to which reference has been made, the plaintiff Morton Bank testified that it was usual procedure for the defendant to advertise and award the four contracts simultaneously and that, at the time plaintiffs made up their bid, they assumed that — inasmuch as all four contracts covering the work required for the school addition had been advertised together — the four contracts would be awarded at about the same time and work on the whole project would begin promptly. The plaintiffs also considered the time for completing the contract as fixed in the instructions to bidders — 450 days — as an important factor to be considered in determining their estimate of cost of labor and material before submitting their bid. There was uncontradicted testimony from a number of witnesses that in the erection of a school addition the work is an integrated process which requires co-ordination of the various types of work and installations required of each contractor. In fact, in connection with the time limit of the job being fixed at 450 days, the instructions to bidders gave notice that plaintiffs would be required to co-ordinate their work with other contractors “ * * * so that all work shall be completed simultaneously with the substantial completion of the General Construction work * * V’ Furthermore, as if effectively to forestall any lack of co-ordination, and certainly affording the plaintiffs a valid basis for their assumption that all four contracts were to be awarded at about the same time, the contract which plaintiffs were called upon to sign, and did sign, five days after they received the notice of August 1,1946, under penalty of forfeiture of their bid deposit, contained the following provision: “ 29. Co-operation with Other Contractors. — (a) Inasmuch as the completion of the building within the prescribed limit of time is dependent very largely upon the close and active co-operation of all those engaged therein, it is therefore expressly understood and agreed that the Contractor shall lay out and install his work at such time or times and in such a manner as not to delay or interfere with the carrying forward of the work of the Contractors for General Construction, Plumbing and Drainage, and Heating and Ventilating.” (Emphasis supplied.)

It is difficult to understand how plaintiffs could maintain close and active co-operation ” with all ” the other three contractors expressly referred to in the contract when, to the defendant’s knowledge at the time the contract was signed, there was to be only one other contractor for an indefinite time in the future.

In its charge, the court at Trial Term submitted to the jury, as a guide for their deliberations, and without exception by the defendant, the following four questions, the instructions being that, if they answered any one of the questions in the negative, their verdict should be for the defendant, and that, if they answered each of the questions in the affirmative, their verdict should be for the plaintiffs in the amount of increased cost of labor and materials to which plaintiffs were subjected as a result of defendant’s failure to award all four contracts at once or to advise the plaintiffs that all four contracts were not so awarded:

1. Were the circumstances such that the Board of Education impliedly represented to the plaintiffs that all four contracts would be awarded at once.
“ 2. Did the plaintiffs believe and rely upon that representation.
3. Did the failure of the Board to award all four contracts at once, or advise the plaintiffs that all four would not be awarded at once, amount to a fraud upon the plaintiffs.
‘ ‘ 4. Did the failure of the Board to award all four contracts at once or advise the plaintiffs that they would not be so awarded, subject the plaintiffs to increased costs for labor and materials.”

When, during their deliberations, the jury requested the Trial Justice to repeat the questions he had formulated for their guidance, he complied with their request and added the following instructions which, in the absence of an exception to any part thereof, become the law of the case: I also repeat what I said on the subject of fraud, that a mere breach of contract, a mere failure to perform a promise, is not a fraud. Fraud consists of inducing action by a false representation as to an existing fact. But a state of mind is a fact; and a representation that one intends to do a thing when in fact there is no intention to do that thing, is a false representation as to an existing fact. So, too, a positive representation as upon knowledge, that a thing is to be done when in fact there is no such knowledge and no intention that that thing is to be done, may be found by you to be a fraudulent representation. Still further, if the Board in fact intended when they advertised for bids to award all four contracts at the same time, and represented that intention to the plaintiffs, but then changed that intention before plaintiffs executed their contract, and failed to advise the plaintiffs of that change of intention and allowed the plaintiffs to execute their contract, knowing that plaintiffs were executing it in reliance upon a belief that all four contracts were to be executed at once, that failure to advise the plaintiffs of that change of intention may be found by you to constitute a fraud. That means that even if you find that a representation was made and that it was true when made, nevertheless if the representation became untrue before the plaintiffs executed their contract, and the Board failed to advise the plaintiffs that the representation had become untrue and allowed the plaintiffs to execute their contracts in the mistaken belief that all contracts would be awarded at once, then you may find that a fraud was committed.”

The jury, apparently answering all four questions in the affirmative, returned a verdict for the plaintiffs in the amount of $16,000. At the Appellate Division, the judgment was reversed, two Justices dissenting, and the complaint was dismissed on the law and the facts, upon the grounds, stated in the opinion, that plaintiffs had failed, as a matter of law, to establish actionable fraud on the part of the defendant and that there had been no causal connection established between the alleged fraudulent representation by the defendant and the increased costs to which plaintiffs were subjected. Our reading of this record has led us to a contrary conclusion.

We do not think the plaintiffs were required to do more than they did to acquaint themselves with the status of the policy by which the addition to Public School 35 was being financed. With full knowledge before the contract here involved was signed that funds were not available to meet the entire cost of the addition to Public School 35, the defendant did not reject the bids upon all four contracts; nor did it inform the plaintiffs of its plan — made after the four bids were received — to award only two of the four contracts. Instead, as we have seen, the defendant on July 31, 1946, awarded to the plaintiffs the contract for electric work and lighting fixtures, notified them to execute the contract within five days under penalty of forfeiting their bid deposit, and sent them a formal written notice on August 27, 1946 that the agreement had been approved, that it was a valid contract ”, and that the contract time for performance (450 days) began to run on the date of that notification. That contract bore the indorsement by the comptroller, quoted (supra), which certified that there “ remains unapplied and unexpended ” a balance of the appropriated fund applicable to plaintiffs’ contract “ sufficient to pay the estimated expense of executing the same, .viz.: $83500 Such indorsement ’ ’, according to the statute cited by the comptroller as authority for his certificate, “ shall be sufficient evidence of such appropriation or fund in any action ” (Administrative Code of City of New York, § 93e-3.0, subd. c). Mindful, as we are, that £ £ Men must turn square corners when they deal with the Government ”, Rock Island, A. & L. R. R. v. United States (254 U. S. 141, 143), we do not think the plaintiffs were required to look beyond the comptroller’s certificate, indorsed upon their contract, to ascertain whether sufficient funds were then legally available to meet the cost of work to be done under the other three contracts. In our view the plaintiffs were justified in assuming that the defendant — which had prepared the contract requiring plaintiffs so to progress their work and installations thereunder ££ * * * as not to delay or interfere with the carrying forward of the work of the Contractors for General Construction, Plumbing and Drainage, and Heating and Ventilating” — had not postponed the award of contracts to those three contractors with whom plaintiffs were required to co-ordinate their work.

Knowing, as did the defendant, before the plaintiffs’ contract was executed, that funds were then lacking sufficient to meet the known cost of constructing the addition to Public School 35, and having then concluded to change its plans and to delay indefinitely the award of two of the four contracts, each of which called for integrated work and co-ordination by the plaintiffs, the defendant should not have withheld from plaintiffs information as to a change in plan so vital as to make inappropriate the basis of plaintiffs’ bid. Silence by the defendant as to a change in plans so important to the timely performance of the work plaintiffs were about to undertake served to mislead them into a false assurance that the work contemplated by their bid would progress according to plan along with the integrated work of the other three contracts. True, no duty rests upon a party to a contract to speak where silence does not constitute deception. Silence may, however, constitute fraud where one of two parties to a contract has notice that the other “ * * * is acting upon a mistaken belief as to a material fact ” (Donovan v. Aeolian Co., 270 N. Y. 267, 271).

The defendant’s position is not strengthened by its assertion that in 1946 there was statutory authority for the rejection by a city agency of any and all bids upon a public contract. The provision of statute upon which the defendant relies — section 343 (subd. b) of the New York City Charter — which authorizes a city agency to ‘ ‘ reject all bids if it shall deem it for the interest of the city so to do ”, is made inapplicable to the board of education by section 349 of the city charter. The provision in subdivision 10 of section 2556 of the Education Law that “ The board may reject all bids and re-advertise for new bids ” was not added to that section until 1950 (L. 1950, ch. 156).

The judgments should be reversed and a new trial granted, with costs to abide the event.

Desmond, J.

(dissenting). I dissent and vote to affirm on both grounds set forth in the majority opinion of the Appellate Division: first, that there was no proof of any fraud, actual or constructive, and, second, that there was no proof that the board’s conduct caused any damage to plaintiffs. As to fraud or misrepresentation, I call attention, particularly, to these two undisputed facts: first, that the board not only did not agree to let all the contracts simultaneously but expressly reserved the right to reject any and all bids, and, second, that before the contract was signed by plaintiffs, they were on notice, from proceedings of both the board of estimate and the board of education, that two contracts only were to be let, at that time.

Loxjghran, Ch. J., Conway, Dye, Ftjld and Froessel, JJ., concur with Lewis, J.; Desmond, J., dissents in opinion.

Judgments reversed, etc.