author: Simons, J.

text:
    Milhelm Attea & Bros., Inc., Also Known as Milhem Attea & Brothers, Inc., Appellant, v Department of Taxation and Finance of the State of New York et al., Respondents. Elias H. Attea, Jr., Appellant, v James W. Wetzler, as Commissioner of Taxation and Finance of the State of New York, et al., Respondents.
    Argued April 28, 1993;
    decided June 10, 1993

      POINTS OF COUNSEL
    Zdarsky, Sawicki & Agostinelli, Buffalo (Joseph E. Zdarsky, Guy J. Agostinelli and Gerald T. Walsh of counsel), and Williams, Stevens, McCarville & Frizzell, P. C., Buffalo (Timothy M. O’Mara of counsel), for appellants in the two above-entitled actions.
    I. The State cannot tax or regulate plaintiffs’ wholesale sales of cigarettes to Indians on Indian reservations because Congress has preempted the field of regulating commerce between Indian purchasers and their wholesale suppliers. (Warren Trading Post v Tax Commn., 380 US 685; Central Mach. Co. v Arizona Tax Commn., 448 US 160; Herzog Bros. Trucking v State Tax Commn., 69 NY2d 536, 487 US 1212, 72 NY2d 720; Moe v Salish & Kootenai Tribes, 425 US 463; Washington v Confederated Tribes, 447 US 134; Felder v Casey, 487 US 131; Patterson v McLean Credit Union, 491 US 164.) II. The Supreme Court decisions recognizing that Congress has preempted the field of regulating trade between wholesalers and their Indian customers on Indian reservations were neither overruled nor modified by Potawatomi. (Oklahoma Tax Commn. v Potawatomi Tribe, 498 US 505; Moe v Salish & Kootenai Tribes, 425 US 463; Washington v Confederated Tribes, 447 US 134; Ex parte Young, 209 US 123; Permian Basin Area Rate Cases, 390 US 747; City Vending of Muskogee v Oklahoma Tax Commn., 898 F2d 122; Great N. Ry. Co. v U. S., 315 US 262; Central Mach. Co. v Arizona Tax Commn., 448 US 160.) III. Absent a reversal by the Supreme Court or an amendment of the Federal Indian Trader Laws by Congress, the Court of Appeals interpretation of the Supreme Court’s precedents regarding the preemptive effect of the Federal Indian Trader Laws is controlling. (Henry v City of Rock Hill, 376 US 776; California Bd. of Equalization v Chemehuevi Tribe, 474 US 9; Ostrofe v Crocker Co., 740 F2d 739, 469 US 1200.)

      Robert Abrams, Attorney-General, Albany (Lew A. Millenbach, Jerry Boone and Peter H. Schiff of counsel), for respondents in the two above-entitled actions.
    When viewed in light of the Potawatomi case, New York’s regulatory scheme, which, in order to prevent the avoidance of tax by non-Indian purchasers of cigarettes at reservation outlets, imposes minimal burdens on the retailers’ cigarette suppliers, meets constitutional muster and was correctly upheld by the Court below. (Confederated Salish & Kootenai Tribes v Moe, 392 F Supp 1297, 425 US 463; Confederated Tribes of Colville v State of Wash., 446 F Supp 1339, 447 US 134; Warren Trading Post v Tax Commn., 380 US 685; Central Mach. Co. v Arizona Tax Commn., 448 US 160; Permian Basin Area Rate Cases, 390 US 747; City Vending of Muskogee v Oklahoma Tax Commn., 898 F2d 122; Cotton Petroleum Corp. v New Mexico, 490 US 163; Rice v Rehner, 463 US 713.)

      Block & Colucci, P. C, Buffalo (Joseph F. Crangle of counsel), for Seneca Nation of Indians’ Honor Indian Treaties Supporters Tribal Council Committee and others, amici

      curiae. I. The Court below erred by deciding this dispute without considering the treaties and Federal statutes exclusively applicable to New York. (McClanahan v Arizona State Tax Commn., 411 US 164; Herzog Bros. Trucking v State Tax Commn., 69 NY2d 536; Moe v Salish & Kootenai Tribes, 425 US 463; Washington v Confederated Tribes, 447 US 134.) II. Specific treaties and statutes governing the parties prohibit the State of New York from imposing its taxing regulations within the boundaries of the Indian nation. (Fleming v McCurtain, 215 US 56; Kansas Indians, 5 Wall [72 US] 737; Tulee v Washington, 315 US 681; Carpenter v Shaw, 280 US 363; Alaska Pac. Fisheries Co. v United States, 248 US 78; New York Indians, 5 Wall [72 US] 761; Choate v Trapp, 224 US 665; Oklahoma Tax Commn. v U. S., 319 US 598; Squire v Capoeman, 351 US 1.) III. The New York Tax Department’s regulatory taxing scheme applied in this case violates New York law itself. (Fellows v Denniston, 23 NY 420; New York Indians, 5 Wall [72 US] 761; Boreali v Axelrod, 71 NY2d 1.)

      Sonosky, Chambers, Sachse & Endreson, of the District of Columbia Bar, admitted pro hac vice (Douglas B. L. Endreson and Anne D. Noto of counsel), and Hagerty & Brady, Buffalo (Michael A. Brady of counsel), for the Seneca Nation of Indians, amicus curiae.

    I. Inherent tribal sovereignty and the Federal Government’s paramount authority over Indian affairs preclude application of the New York cigarette tax regulations. (McClanahan v Arizona State Tax Commn., 411 US 164; Rice v Olson, 324 US 786; Worcester v State of Georgia, 6 Pet [31 US] 515; Cherokee Nation v State of Georgia, 5 Pet [30 US] 1; White Mtn. Apache Tribe v Bracker, 448 US 136; California v Cabazon Band of Mission Indians, 480 US 202; Montana v Blackfeet Tribe, 471 US 759; Warren Trading Post v Tax Commn., 380 US 685; New Mexico v Mescalero Apache Tribe, 462 US 324.) II. This Court’s decisions in Herzog I and II are controlling and establish that the State cigarette regulations are invalid. (Herzog Bros. Trucking v State Tax Commn., 69 NY2d 536, 72 NY2d 720; Confederated Salish & Kootenai Tribes v Moe, 392 F Supp 1297, 425 US 463; California v Cabazon Band of Mission Indians, 480 US 202; Three Affiliated Tribes v Wold Eng’g, 476 US 877; McClanahan v Arizona State Tax Commn., 411 US 164; New York Indians, 5 Wall [72 US] 761; Kansas Indians, 5 Wall [72 US] 737; Montana v Blackfeet Tribe, 471 US 759.)

      Hodgson, Russ, Andrews, Woods & Goodyear, Albany (Robert D. Plattner of counsel), for the Independent Petroleum Marketers of New York and another, amici curiae.

    I. The existing body of Supreme Court law, interpreted in light of the guidance provided in Potawatomi, makes clear that the State has acted within its authority in adopting the regulations at issue imposing minimal collection burdens on Indian traders and reservation Indians in support of a valid State tax. (Herzog Bros. Trucking v State Tax Commn., 69 NY2d 536, 72 NY2d 720; Warren Trading Post v Tax Commn., 380 US 685; Central Mach. Co. v Arizona Tax Commn., 448 US 160; White Mtn. Apache Tribe v Bracker, 448 US 136.) II. This Court’s opinions in Herzog I and II can no longer be followed to the extent they run contrary to established U. S. Supreme Court doctrine as set forth in Potawatomi and its predecessors. (Herzog Bros. Trucking v State Tax Commn., 69 NY2d 536, 72 NY2d 720; Washington v Confederated Tribes, 447 US 134; Moe v Salish & Kootenai Tribes, 425 US 463; Warren Trading Post v Tax Commn., 380 US 685; Central Mach. Co. v Arizona Tax Commn., 448 US 160.)

      Zapruder & Odell, of the District of Columbia Bar, admitted pro hac vice (Bradley S. Waterman and Samuel M. Maruca of counsel), for the Saint Regis Mohawk Tribe and another, amici curiae.

    I. The regulations unconstitutionally infringe the sovereignty of the six nations of the Iroquois Confederacy. (United States v Wheeler, 435 US 313; New York Indians, 5 Wall [72 US] 761; Washington v Fishing Vessel Assn., 443 US 658; McClanahan v Arizona State Tax Commn., 411 US 164; Jones v Meehan, 175 US 1; Rice v Rehner, 463 US 713; Moe v Salish & Kootenai Tribes, 425 US 463; Washington v Confederated Tribes, 447 US 134; California v Cabazon Band of Mission Indians, 480 US 202.) II. The regulatory scheme will result in impermissible burdens on Indian retailers and/or impermissible taxation of nontaxable consumers. (Moe v Salish & Kootenai Tribes, 425 US 463; Warren Trading Post v Tax Commn., 380 US 685.)

      Roland, Fogel, Koblenz & Carr, Albany (Emilio Petroccione and Usher Fogel of counsel), for Empire State Petroleum Association, Inc., amicus curiae.

    The Court below correctly decided that the Department’s cigarette regulations are constitutional. (Herzog Bros. Trucking v State Tax Commn., 69 NY2d 536, 487 US 1212, 72 NY2d 720; Washington v Confederated Tribes, 447 US 134; Moe v Salish & Kootenai Tribes, 425 US 463; Town Sound & Custom Tops v Chrysler Motors Corp., 959 F2d 468; United States v Bell, 524 F2d 202; Matter of Comae Co., 402 F Supp 43; McCoy v Massachusetts Inst. of Technology, 950 F2d 13; Powell v Kovac’s, Inc., 596 F Supp 1520; People v P. J. Video, 68 NY2d 296.)
   OPINION OF THE COURT

Simons, J.

This appeal requires the Court to assess the validity of tax regulations applicable to cigarette sales made on Indian reservations located in New York State. Although the challenged regulations are designed to prevent the avoidance of State taxes by non-Indians who purchase untaxed cigarettes from Indian retailers, and the incidence of the sales tax is intended to be borne by the ultimate non-Indian consumer, the tax provisions nevertheless regulate, to a significant degree, trade between wholesale distributors and their Indian purchasers, an area that relevant decisions of the Supreme Court and this Court have found preempted by Federal law. Accordingly, there must be a reversal.

I

Under New York Tax Law § 471 (1), a tax is imposed on all cigarettes purchased in New York. The tax is paid by the purchase of stamps which must be affixed to the cigarette packages as a precondition to the first taxable sale by the wholesaler or distributor. The tax is added and collected as a part of the selling price of the cigarettes along the distribution chain, until it is ultimately added to the retail price and is paid by the consumer.

Indians and Indian tribes are exempt from State taxation within their own territory and wholesale dealers may sell unstamped cigarettes to them. Consequently, many non-Indians travel to Indian reservations to buy unstamped cigarettes and avoid the sales tax which should attach to all sales to non-Indians. In an effort to prevent this circumvention of the sales tax and prevent the sale of untaxed (unstamped) cigarettes to non-Indians at retail outlets on Indian reservations located in New York, the State Commissioner of Taxation and Finance adopted the regulations now challenged.

Under these regulations, only reservation retailers who have registered with the State Department of Taxation and Finance are permitted to purchase unstamped cigarettes, and then only in a predetermined amount calculated by the Department to approximate "probable demand of qualified Indian consumers in the trade territory” (20 NYCRR 335.7 [d] [1] [now 20 NYCRR 336.7 (d) (1)]; see, 20 NYCRR 335.6 [d] [now 20 NYCRR 336.6 (d)]). Indian retailers may purchase an unlimited quantity of stamped cigarettes but, with respect to unstamped cigarettes, the wholesalers supplying them must (1) request a copy of the retailer’s tax exempt certificate, (2) keep records of their sales, (3) obtain approval prior to each sale, from either the Indian nation or the Department of Taxation and Finance, of the quantity of untaxed cigarettes which may be delivered, and (4) after completion of the sale, forward to the Department of Taxation and Finance a copy of the retailer’s tax-exempt coupon, a document issued by the Department and entitling the retailer to receive a predetermined maximum quantity of untaxed cigarettes.

II

Plaintiffs are business enterprises which sell cigarettes at wholesale to Indians on various Indian reservations in New York State. They commenced these actions claiming that the regulations, which impose additional burdens on their dealings with the Indians, are preempted by the Indian trader statutes (25 USC § 261 et seq.). The trial court granted plaintiffs’ motion for summary judgment, and the Appellate Division initially affirmed. It found that "the tax scheme under review here fails because it imposes some burden, although only minimal, on the Indian trader contrary to the Court of Appeals interpretation of the applicable Supreme Court decisions” (164 AD2d 300, 303, relying on Herzog Bros. Trucking v State Tax Comma., 69 NY2d 536, vacated and remanded 487 US 1212, prior determination adhered to on remand 72 NY2d 720).

On appeal, the United States Supreme Court vacated the judgment and remanded to the Appellate Division "for further consideration in light of Oklahoma Tax Commission v Citizen Band Potawatomi Indian Tribe of Oklahoma, 498 US [505]).” (— US —, 112 S Ct 926, 117 L Ed 2d 99.) Upon reconsideration, the Appellate Division reversed itself, reading the Potawatomi decision to indicate that the "minimal burdens” imposed upon Indian traders by New York’s tax scheme are not barred by Federal preemption, a holding which would create considerable uncertainty about the reasoning underlying our decision in Herzog.

Ill

In Herzog Bros. Trucking v State Tax Comma. (69 NY2d 536, supra), fuel distributors challenged a State motor fuel tax assessed against them. Like the cigarette tax, the motor fuel tax was designed to be paid ultimately by the consumer as it passed through the distribution chain. The legislation initially imposed a tax on wholesale sales of motor fuel to Indian retailers on Indian reservations but allowed a refund to distributors for previously paid taxes on fuel sold to Indians exempt from taxation. The Federal Indian trader statutes (25 USC § 261 et seq.), enacted pursuant to article I, § 8, cl (3) of the Federal Constitution, vest the Commissioner of Indian Affairs with the sole power and authority to regulate trade with Indians and, because the tax scheme in Herzog imposed obligations upon wholesale Indian traders, we held that it was preempted by Federal law (see, Herzog Bros. Trucking v State Tax Commn., 69 NY2d, at 545-546). Upon remand from the United State’s Supreme Court, we adhered to that determination (see, Herzog Bros. Trucking v State Tax Commn., 72 NY2d 720, supra). We conclude the regulations at issue in this case suffer from the same infirmity.

IV

As a general proposition Congress has preempted the field of regulating Indian traders. As the Supreme Court stated when referring to the Indian trader statutes and the regulations promulgated thereunder by the Commissioner of Indian affairs, "[tjhese apparently all-inclusive regulations and the statutes authorizing them would seem in themselves sufficient to show that Congress has taken the business of Indian trading on reservations so fully in hand that no room remains for state laws imposing additional burdens upon traders” (see, Warren Trading Post v Tax Commn., 380 US 685, 690).

Notwithstanding the body of law supporting this view, defendants contend that "minimal burdens” may be placed upon wholesale distributors, i.e., Indian traders, if the tax is ultimately borne by non-Indian consumers and the tax scheme is designed merely to prevent the evasion by those consumers of a legally imposed tax. They rely principally on two Supreme Court decisions in which the Court approved tax schemes which required Indian retailers to collect a tax validly imposed on non-Indian purchasers (see, Moe v Salish & Kootenai Tribes, 425 US 463; Washington v Confederated Tribes, 447 US 134). Explaining the result in Confederated Tribes, the Court stated that: "[tjhe Indian traders statutes * * * incorporate a congressional desire comprehensively to regulate businesses selling goods to reservation Indians for cash or exchange [citing Warren Trading Post v Tax Commn., supra], but no similar intent is evident with respect to sales by Indians to nonmembers of the Tribe” (see, Washington v Confederated Tribes, 447 US, at 155-156, supra [emphasis added]). Thus, the Supreme Court deemed it acceptable to place "minimal burdens” upon Indian retailers selling goods to non-Indians to aid a State in collecting and enforcing its taxes validly imposed upon non-Indian purchasers (see, Washington v Confederated Tribes, 447 US, at 159, supra).

Defendants assert that the tax regulations at issue here are substantially the same as those at issue in Moe and Confederated Tribes. They contend that inasmuch as the Supreme Court approved the imposition of precollection and record-keeping requirements on Indian retailers in those cases, the State can lawfully impose them on wholesalers, who are just one step further back on the distribution chain. Moe and Confederated Tribes involved burdens placed on Indian retailers dealing with non-Indians, rather than on wholesalers dealing with Indians, a significant difference, but defendants contend that a subsequent decision of the Supreme Court, Oklahoma Tax Commn. v Potawatomi Tribe (498 US 505, supra), makes it clear that a State’s interest in enforcing its taxes may also justify the imposition of certain regulatory burdens on wholesalers supplying Indian retailers as an aid to enforcement of State tax laws. Indeed, the Supreme Court remanded the instant case to the Appellate Division for further consideration in light of the Potawatomi case.

V

In Potawatomi, the Supreme Court held that Oklahoma could not bring suit against the Potawatomi tribes for payment of uncollected cigarette taxes due for past sales made on the reservation (see, Oklahoma Tax Commn. v Potawatomi Tribe, supra). Because the State sued the tribe seeking payment for past taxes, the Court’s decision was based upon the doctrine of sovereign immunity rather than on the Indian trader statutes. Oklahoma, noting that the Moe and Confederated Tribes decisions gave States a right to require Indian retailers to collect a State-imposed cigarette tax on their sales to non-Indians, contended that if the tribes were immune from suit these decisions gave the States a right without a remedy. In response to that contention, the Supreme Court stated:

"There is no doubt that sovereign immunity bars the State from pursuing the most efficient remedy, but we are not persuaded that it lacks any adequate alternatives. We have never held that individual agents or officers of a tribe are not liable for damages in actions brought by the State [citation omitted]. And under today’s decision, States may of course collect the sales tax from cigarette wholesalers, either by seizing unstamped cigarettes off the reservation, [Confederated Tribes], supra, at 161-162, or by assessing wholesalers who supplied unstamped cigarettes to the tribal stores, City Vending of Muskogee, Inc. v Oklahoma Tax Comm’n, 898 F.2d 122 (CA10 1990).” (Oklahoma Tax Commn. v Potawatomi Tribe, 498 US, at 514, supra [emphasis added].)

Defendants here rely on this emphasized language, claiming it establishes that States may impose some burden on wholesalers supplying goods to Indian retailers to assist in the collection of valid State taxes. However, we do not interpret the Supreme Court’s statement as altering the established rule stated in Warren Trading Post v Tax Commn. (380 US, at 690, supra) that Congress has taken the matter of regulating Indian traders so fully in hand that no room remains for State laws imposing additional burdens upon them. The language cites none of the relevant decisions in this area and, as interpreted by defendants, is contrary to the present state of the law on the subject. In the past, the Supreme Court has approved of cigarette seizures from wholesalers only where (1) the tribes to whom the cigarettes are to be sold have refused to fulfill tax collection and remittance obligations incurred on past sales, and (2) the seizures take place off the reservation "where state power over Indian affairs is considerably more expansive than it is within reservation boundaries” (see, Washington v Confederated Tribes, 447 US, at 161-162, supra). Here, the State is not seeking to collect taxes due on past sales, but is attempting, prospectively, to collect a tax on sales to be made directly on the reservation.

Just when "assessing wholesalers who supplied unstamped cigarettes to the tribal stores” would be justified remains unclear from the Supreme Court’s decision, although its use of the past tense "supplied” indicates that the method might somehow be used to retroactively collect taxes unpaid on past sales. But we do not read the Court’s suggestions for collection remedies as altering the established law regarding Federal preemption or validating comprehensive regulation by a State of the relationship between Indian traders and their Indian purchasers.

VI

To the extent that the Supreme Court’s decisions in Moe, Confederated Tribes and Potawatomi may be read as validating the imposition of minimal burdens on Indian retailers and Indian traders, we conclude that the tax regulations at issue here impose significant burdens on the wholesaler. They dictate to Indian traders the number of unstamped cigarettes they can sell to reservation Indians and direct with whom they may trade (see, 20 NYCRR 335.7 [b] [3]; [c], [d] [6] [now 20 NYCRR 336.7 (b) (3); (c), (d) (6)]). The tax scheme requires wholesale distributors to prepay taxes on all cigarettes delivered on the reservations in excess of the predetermined maximum amount and, with respect to those cigarettes, imposes a sales tax on Indian retailers.

While the State’s efforts to avoid what it perceives as pervasive tax avoidance by non-Indians is understandable, this tax scheme attempts to regulate in an area which Congress has taken "fully in hand” (see, Warren Trading Post v Tax Commn., 380 US, at 690, supra). It impinges on the Federal interest, as evidenced by the Indian trader statutes, to "comprehensively * * * regulate businesses selling goods to reservation Indians” (see, Washington v Confederated Tribes, 447 US, at 155, supra), and it impinges on the authority of the Commissioner of Indian Affairs to determine "the kind and quantity of goods and the prices at which such goods shall be sold to the Indians” (see, 25 USC § 261). Furthermore, to the extent that the sales tax is imposed on all stamped cigarettes, the regulations place "financial burdens on [plaintiffs] or the Indians with whom [they] deal[ ] in addition to those Congress or the tribes have prescribed, and could thereby disturb and disarrange the statutory plan Congress set up in order to protect Indians against prices deemed unfair or unreasonable by the Indian Commissioner” (see, Warren Trading Post v Tax Commn., 380 US, at 691, supra). Manifestly, the tax regulations before us regulate trade with Indians to a significant degree. As such, they are barred by Federal preemption and cannot be applied to cigarette wholesale dealers involved in trading with Indians on reservations located in New York State.

Accordingly, the order of the Appellate Division should be reversed, with costs, the respective plaintiffs’ motions for summary judgment granted, the defendants’ cross motions to dismiss or for summary judgment denied, and judgment granted to plaintiffs in accordance with this opinion.

Chief Judge Kaye and Judges Titone, Hancock, Jr., Bellacosa and Smith concur.

Order reversed, etc.

       The tribe or nation may submit statistical information relating to probable demand, or the Department of Taxation will calculate the demand based upon average New York consumption per capita (20 NYCRR 335.7 [d] [2] [now 20 NYCRR 336.7 (d) (2)]).


source: Caselaw Access Project

license: Public Domain

text:
    Pauline M. Snyder et al., Appellants, v Town Insulation, Inc., et al., Respondents, et al., Defendants.
    Argued May 5, 1993;
    decided June 15, 1993

      POINTS OF COUNSEL

      Allen, Lippes & Shonn, Buffalo (Richard J. Lippes and Dana M. Louttit of counsel), for appellants.
    I. The courts below failed to apply the well-settled law as established by this Court that the Statute of Limitations in an exposure case runs on the last date of exposure to the substance. (Matter of Steinhardt v Johns-Manville Corp., 54 NY2d 1008; Thornton v Roosevelt Hosp., 47 NY2d 780; Schwartz v Heyden Newport Chem. Corp., 12 NY2d 212, 374 US 808; Schmidt v Merchants Desp. Transp. Co., 270 NY 287; Ward v Desachem Co., 771 F2d 663; Riebow v Qemetco, Inc., 148 AD2d 692; Cornell v Exxon Corp., 162 AD2d 892; Militello v Frank & Leo Piotrowski Bldrs., 145 Misc 2d 1056; Askey v Occidental Chem. Corp., 102 AD2d 130; Riley v State of New York, 105 AD2d 1104.) II. The trial court improperly determined material issues on a motion for summary judgment. (Esteve v Abad, 271 App Div 725; Sillman v Twentieth Century-Fox Film Corp., 3 NY2d 395; Andre v Pomeroy, 35 NY2d 361; Millerton Agway Coop. v Briarcliff Farms, 17 NY2d 57; Carey v Campbell, 93 AD2d 923; City Univ. of N. Y. v Finalco, Inc., 93 AD2d 792; Village of Chatham v Board of Fire Commrs., 90 AD2d 860; Moskowitz v Garlock, 23 AD2d 943; Wanger v Zeh, 45 Misc 2d 93, 26 AD2d 729.) III. Even if the discovery rule of CPLR 214-c is applied, this action is timely and the decision below must be reversed. (Amax, Inc. v Sohio Indus. Prods. Co., 121 Misc 2d 814; State of New York v Schenectady Chems., 103 AD2d 33; Kearney v Atlantic Cement Co., 33 AD2d 848; Bloss v Village of Canastota, 35 Misc 2d 829; Glod v Ashland Chem. Co., 145 Misc 2d 200, affd as mod sub nom. Glod v Morrill Press Div. of Engraph, 168 AD2d 954.)

      Brown & Kelly, Buffalo (William E. Nitterauer of counsel), for Town Insulation, Inc., respondent.
    I. The courts below applied well-settled law to undisputed facts and properly determined that the Statute of Limitations began to run on the date of injury. (Victorson v Bock Laundry Mach. Co., 37 NY2d 395; Brick v Cohn-Hall-Marx Co., 276 NY 259; Smirlock Realty Corp. v Title Guar. Co., 63 NY2d 955; Schmidt v Merchants Desp. Transp. Co., 270 NY 287, 271 NY 531; Matter of Steinhardt v Johns-Manville Corp., 54 NY2d 1008; Thom

      ton v Roosevelt Hosp., 47 NY2d 780; New York Seven-Up Bottling Co. v Dow Chem. Co., 96 AD2d 1051, 61 NY2d 828.) II. The issues on appeal to the Court of Appeals are limited to the questions of law presented in appellants’ application for leave to appeal. (Quain v Buzzetta Constr. Corp., 69 NY2d 376.)
    Scientific Applications, Inc., respondent precluded.
   OPINION OF THE COURT

Simons, J.

Plaintiffs seek to recover damages for injuries they allegedly sustained as a result of emissions from ureaformaldehyde foam insulation installed in their home in 1977. Defendants are the manufacturers and installers of the insulation. The sole issue is whether plaintiffs’ causes of action for personal injuries are barred by the three-year Statute of Limitations. Because plaintiffs conceded before the trial court that the date of discovery rule of CPLR 214-c should not apply retroactively to their claims, resolution of that question turns on whether accrual under CPLR 214 is measured from the date of injury or from the date of last exposure. We agree with the courts below that the date of injury rule applies and that the causes of action were time-barred. We therefore affirm.

In February 1977, plaintiff Pauline Snyder contracted with defendant Town Insulation to have Rapco brand insulation installed at the home she shared with her son, plaintiff Richard Snyder. The insulation was blown into the walls of the house on March 29, 1977. Plaintiffs allege they began to experience respiratory problems and other symptoms of physical illness "about the date of installation”. It was not until 1981, however, when the Federal Government banned the sale of ureaformaldehyde foam insulation, that the Snyders learned of the emissions and that health hazards were associated with the product. The State Department of Health later determined that formaldehyde was present in the air inside the Snyders’ home. The insulation has not been removed from the dwelling.

On February 1, 1982, nearly five years after the Snyders had the insulation installed, a class action suit against defendants and other installers and manufacturers was commenced in Supreme Court, with the Snyders as members of the putative class of plaintiffs. Defendants do not challenge that the Statute of Limitations in the present action was tolled during the pendency of the class action. On July 19, 1985, Supreme Court denied class certification, and the Snyders instituted this action on December 19, 1986.

Defendants thereafter moved to dismiss the complaint asserting that the Snyders’ causes of action for personal injury accrued on the date of injury and that the action was time-barred (CPLR 214 [5]). Because the Snyders claimed in their pleadings that they were injured "about the date of installation”, defendants contended that the limitations period expired in 1980, at the latest. The Snyders responded that under New York law a cause of action for personal injury arising from the injection, ingestion, or inhalation of a substance accrues on the date of last exposure. Under their theory, Richard Snyder’s causes of action accrued in 1982 when he moved out, and Pauline Snyder’s have not yet accrued because she continues to reside in the house and, presumably, be exposed to the emissions.

Supreme Court dismissed the complaint, holding that a cause of action for personal injury accrues on the date of injury. The Appellate Division affirmed but added in dicta that the date of last exposure rule applies only to employment-related torts. We agree with both courts that accrual is measured from the date of injury. We find no basis in our decisions, however, for the distinction between injuries arising in the workplace and those arising elsewhere.

An action to recover damages for personal injuries must be commenced within three years from the date of accrual (CPLR 203 [a]; 214 [5]; but see, 214-c). As a general proposition, the cause of action does not accrue until an injury is sustained (Schmidt v Merchants Desp. Transp. Co., 270 NY 287, 300-301; accord, Kronos, Inc. v AVX Corp., 81 NY2d 90; see generally, Siegel, NY Prac §40, at 47 [2d ed]). Stated another way, accrual occurs when the claim becomes enforceable, i.e., when all elements of the tort can be truthfully alleged in a complaint (Aetna Life & Cas. Co. v Nelson, 67 NY2d 169, 175; Jacobus v Colgate, 217 NY 235, 245; Roldan v Allstate Ins. Co., 149 AD2d 20, 26). The straightforward application of these principles leads to the conclusion that plaintiffs’ causes of action accrued on the date they were first injured. At that moment, all elements of the tort could be truthfully alleged, and they had a colorable claim against defendants.

Plaintiffs contend, however, that our Court has applied a different rule in so-called "toxic tort” cases, where the injury results from injection, ingestion, or inhalation of a substance. In such cases, plaintiffs assert, accrual is marked from the date of last exposure. To support their position, they rely on a statement made in Martin v Edwards Labs. (60 NY2d 417) and our decisions in four earlier cases: Matter of Steinhardt v Johns-Manville Corp. (54 NY2d 1008, cert denied 456 US 967); Thornton v Roosevelt Hosp. (47 NY2d 780); Schwartz v Heyden Newport Chem. Corp. (12 NY2d 212, remittitur amended 12 NY2d 1073, cert denied 374 US 808); and Schmidt v Merchants Desp. Transp. Co. (supra).

There are Appellate Division decisions construing these cases as establishing a date of last exposure rule (see, e.g., Cornell v Exxon Corp., 162 AD2d 892; Riley v State of New York, 105 AD2d 1104; Askey v Occidental Chem. Corp., 102 AD2d 130), but neither Martin nor any of the cited decisions of this Court have done so. For more than a half a century, our cases have uniformly held that such causes of action accrue upon injury.

Indeed, none of the five cases relied upon by plaintiffs dealt with the issue of whether the date of injury or the date of last exposure should mark accrual. They posed the distinctly different question of how accrual should be determined when an injury was latent and went undiscovered until long after exposure.

In Schmidt, a worker commenced a negligence action against his employer, alleging that inhalation of dust on the job resulted in lung disease several years later. He argued that accrual should be marked from the date of the onset of the disease (270 NY 287, 300, supra). We rejected that proposition and restated the traditional rule: "There can be no doubt that a cause of action accrues only when the forces wrongfully put in motion produce injury” (id., at 300). Disease was a consequence of the injury, we said, not the injury itself, and the injury was complete at the moment the dust was inhaled even though plaintiff may not have been aware of it then (at 301). Giving the plaintiff the benefit of the doubt that dust inhalation — and thus injury — might have occurred on the last day of his employment, we noted that his employment had ceased more than three years before. Therefore, under any possible view of the evidence, his cause of action was time-barred. Because the parties did not address whether accrual may actually have occurred before the last day, the Court had no need to decide whether the date of injury or the date of last exposure marked the date of accrual.

Nor was the issue raised in Schwartz v Heyden Newport Chem. Corp. (12 NY2d 212, supra). There, in fact, plaintiff had only a single exposure to the harmful substance. The question in Schwartz was whether a discovery rule should apply to a claim that the harm caused by a substance taken at a hospital in 1944 first became apparent 13 years later when cancer was discovered. We once again stated the established rule: "[T]he action accrues only when there is some actual deterioration of a plaintiff’s bodily structure” (at 217). This, we concluded, occurred at the time the substance was introduced into plaintiff’s body. We declined to adopt a discovery rule, and we reiterated that position in Thornton v Roosevelt Hosp. (47 NY2d 780, supra), which addressed the same legal issue. Thus none of the earlier cases supports plaintiffs, and their position ultimately rests on dicta in Matter of Steinhardt v Johns-Manville Corp. and Martin v Edwards Labs.

We first made an explicit, albeit passing, reference to the date of last exposure rule in Matter of Steinhardt v Johns-Manville Corp. (54 NY2d 1008, supra), a case involving employment-related exposure to asbestos. Once again, we declined to adopt a discovery rule and, in so doing, stated: "Plaintiffs now urge * * * that the Statutes of Limitations applicable to their cases should not run from the date of the last exposure to the invading substance, but rather from the date on which the asbestos-related disease was or could have been discovered” (at 1010). Though plaintiffs here claim otherwise, we did not approve a rule of last exposure based upon the language the Steinhardt plaintiffs pressed on us when framing the issue before the Court. Instead, we "reaffirmed] the principle announced in Schmidt and followed in Schwartz” (at 1010). That principle had been stated correctly in the decision of the Appellate Division, the order which we affirmed in Steinhardt: " 'The injury occurs when there is a wrongful invasion of personal or property rights and then the cause of action accrues’ ” (78 AD2d 577, quoting Schmidt, and citing Thornton and Schwartz).

The date of last exposure was also referred to in Martin v Edwards Labs, in a paragraph summarizing prior cases (60 NY2d 417, 426, supra). However, the decision did not apply a last exposure rule, although the opportunity to do so was clearly presented by the facts, but instead relied on the established rule that accrual occurs at injury.

Martin involved two consolidated actions. In the first, the decedent’s representative claimed that the death was caused by the release of Teflon particles into the body from a defective artificial heart valve. In the second, plaintiff asserted that she developed a pelvic infection when a defective contraceptive device allowed entrance of bacteria into her uterus. We held that the proper accrual point was the date of injury, "which will most often be the date when the product malfunctions” (at 428). Accordingly, accrual occurred in the first case when the Teflon particles entered the bloodstream (id.). That explicit holding cannot be squared with a date of last exposure rule. Had last exposure been the law, the cause of action would not have accrued upon entry of the particles but upon the decedent’s death, for he continued to be exposed to the hazardous Teflon flakes (see, 91 AD2d 1172, 1173). Similarly, accrual in the second case occurred at the entry of the bacteria into the uterus, not at the removal of the contraceptive device, the act that logically would have marked the end of exposure. In sum, our holdings have consistently applied the date of injury rule.

Determining when limitations begin to run requires a balancing of policy considerations (Martin v Edwards Labs., 60 NY2d, at 425, supra; Victorson v Bock Laundry Mach. Co., 37 NY2d 395, 403). On one side of the scale are the interests of injured parties. Unquestionably, a Statute of Limitations can have a severe impact on their rights when, for instance, an injury is not discovered until years later. The Legislature has acted to ameliorate the rule in such cases in recent years (see, CPLR 214-c). Conversely, defendants are entitled to a fair opportunity to defend claims against them before their ability to do so has deteriorated (Schwartz v Heyden Newport Chem. Corp., supra, at 218). But under the rule proposed by plaintiffs in this case, a plaintiff would have the power to put off the running of the Statute of Limitations indefinitely. Because of these competing policy considerations, we have been reluctant to modify the law governing limitations, even when a party’s case seems particularly compelling and we have consistently stated that the responsibility for balancing the equities and altering Statutes of Limitations lies with the Legislature (id., at 218-219; accord, Matter of Steinhardt v Johns-Manville Corp., supra, at 1010-1011; Thornton v Roosevelt Hosp., supra, at 782).

Plaintiffs have given us no reason to diverge from that position here. They alleged in their pleadings that the injuries resulting from defendant’s conduct arose "about the date of installation”. Under our precedents, that was the date of accrual because plaintiffs then could truthfully allege all the elements of the tort in their complaint. Thus, the limitations period had clearly run by the time the class action suit was commenced in 1982.

Accordingly, the order of the Appellate Division should be affirmed, with costs.

Chief Judge Kaye and Judges Titone, Hancock, Jr., Bellacosa and Smith concur.

Order affirmed, with costs.

      . Seven of the 11 causes of action were dismissed pursuant to CPLR 214 (5). The remaining four were dismissed on other grounds or other limitations provisions and are not at issue on appeal.

      . CPLR 214-c, which provides that actions to recover for the latent effects of exposure to toxic substances accrue on the date of discovery, was enacted in 1986 (L 1986, ch 682). Although plaintiffs raised on appeal the possible applicability of CPLR 214-c to their claims, the issue is not properly before us because of plaintiffs’ concession before the trial court.


author: Chief Judge Kaye.

text:
    Ramsar Williams, an Infant, by His Father and Natural Guardian, David Williams, et al., Respondents-Appellants, v Robert Niske et al., Infants, by Their Father and Natural Guardian, "John” Niske, et al., Defendants, Union Underwear Company, Inc., Respondent, and Billy the Kid, Inc., Appellant-Respondent.
    Argued April 28, 1993;
    decided June 15, 1993

      POINTS OF COUNSEL

      Kelly & McGlynn, New York City (Martin M. McGlynn of counsel), for appellant-respondent.
    Since under section 15-108 of the General Obligations Law a nonsettling defendant against whom a verdict is obtained is entitled to reduce the amount of the verdict by the full amount of any settlement by each of the other parties, even if the settling party was not found liable or by the equitable share of the damages attributable to each settling party, whichever is greatest, the manner in which the trial court applied section 15-108 to reduce the verdict against defendant, Billy the Kid, was proper as a matter of law, and the judgment entered by the trial court should be reinstated. (Dole v Dow Chem. Co., 30 NY2d 143; Rock v Reed-Prentice Div. of Package Mach. Co., 39 NY2d 34; Killeen v Reinhardt, 71 AD2d 851; Purcell v Doherty, 102 Misc 2d 1049, 80 AD2d 755, 55 NY2d 985; Werner v Our Lady of Lourdes, 60 AD2d 791; Sega v State of New York, 60 NY2d 183; rearg denied sub nom. Cutway v State of New York, 61 NY2d 670; Bright Homes v Wright, 8 NY2d 157; Anderson v Regan, 53 NY2d 356; Apple v Jewish Hosp. & Med. Ctr., 829 F2d 326.)

      Gandin, Schotsky & Rappaport, P. C., Melville (Charles J. Rappoport, Robert A. Katz and Margery Weinroth of counsel), for respondents-appellants.
    I. For a court to properly construe and apply section 15-108 (a) of the General Obligations Law, it must take into consideration the purpose of its enactment. (In re Brooklyn Navy Yard Asbestos Litig., 971 F2d 831; Williams v Niske, 147 Misc 2d 556, 181 AD2d 307.) II. The argument that the Legislature let a poorly drafted statute remain on the books and, therefore, the Draconian construction of the trial court must be upheld is a position devoid of merit. (Anderson v Regan, 53 NY2d 356; Bright Homes v Wright, 8 NY2d 157; Sega v State of New York, 60 NY2d 183; New York State Bankers Assn. v Albright, 38 NY2d 430.)

      Quirk and Bakalor, P. G, New York City (Richard H.

      Bakalor of counsel), for respondent.
    In applying section 15-108 of the General Obligations Law, after multiple tortfeasors have settled with plaintiff, the total amount of settlement moneys paid by those tortfeasors against whom no finding of fault is made should always be reduced from the verdict before reducing damages by the equitable share of tortfeasors who have been found at fault but whose equitable share of damages is above the amount of moneys for which they settled. (Killeen v Reinhardt, 71 AD2d 851; Rock v Reed-Prentice Div. of Package Mach. Co., 39 NY2d 34.)
   OPINION OF THE COURT

Chief Judge Kaye.

Plaintiff Ramsar Williams, an infant, was severely burned in a fire started by several other children with whom he was playing. Ramsar and his father brought this action against the children and their parents, as well as manufacturers and distributors of Ramsar’s clothing, which allegedly contributed to the burns.

One year before trial, plaintiffs settled with four defendants —Talon Corporation, Salant Corporation, Thompson Company and Travis Textiles — for a total of $900,000. During trial, plaintiffs settled with individual defendants Thomas and Robert Niske (the Niske defendants) for $100,000, and with defendant Union Underwear Company on a high-low basis, Union agreeing to pay a base amount of $100,000 and up to $400,000 more to assure that plaintiffs at trial recovered at least $500,000. Defendant Billy the Kid (BTK) did not settle. The jury returned a verdict of $2,600,000, apportioning liability 35% to BTK, 30% to Niske and 35% to Union. No proof was offered with respect to the percentage fault (i.e., the equitable share of the damages) of the four defendants who had settled before trial.

Under General Obligations Law § 15-108 (a), the settlements unquestionably reduce BTK’s liability for the verdict. The question before us is how much that reduction should be.

Supreme Court concluded that BTK’s liability should be reduced to $10,000, leaving Union then responsible for $490,000. The Appellate Division modified, concluding that BTK must pay $595,000, and Union thus only $100,000. BTK appeals and plaintiffs cross-appeal by leave of the Appellate Division.

I.

Analysis begins with General Obligations Law § 15-108 (a):

"When a release * * * is given to one of two or more persons * * * claimed to be liable in tort for the same injury * * * it does not discharge any of the other tortfeasors from liability * * * but it reduces the claim of the [plaintiff] against the other tortfeasors to the extent of any amount stipulated by the release or the covenant, or in the amount of the consideration paid for it, or in the amount of the released tortfeasor’s equitable share of the damages under article fourteen of the civil practice law and rules, whichever is the greatest.”

Where there is only one settling defendant whose equitable share of the damages has been determined — the situation described in the statute — calculating the amount to be paid by nonsettling defendants is a simple task. If the settlement figure is below the settling defendant’s equitable share, the nonsettling defendants pay only their equitable share of the verdict. If the settlement exceeds the settling defendant’s equitable share, the nonsettling defendants pay only the difference between the settlement and the verdict, equitably apportioned among them. If the settlement exceeds the verdict, the nonsettling defendants have no liability at all.

Here, however, the situation is more complicated. There are six settling defendants, four of whom settled before trial with no assessment of their equitable share of the damages. In these circumstances, the statute cannot be applied literally. First, by its terms the statute contemplates a release of only one defendant; here, releases were given to several. Second, the statutory formula requires a comparison of equitable share with actual settlement payment. Where four defendants settled without any assessment of their equitable share, it is impossible to make the comparison as to them.

The parties suggest three methods for calculating the amount by which BTK’s liability is to be reduced.

The first method, advocated by BTK and applied by Supreme Court, begins with the defendants who settled during trial; their equitable shares were determined, and the statutory comparison thus can be made as to them. According to this method, first the $2,600,000 verdict is reduced by the 65% equitable liability ($1,690,000) of the defendants who settled at trial, that being greater than the amounts they actually paid. The resulting amount — $910,000—is then reduced by the $900,000 plaintiffs obtained in the pretrial settlements. BTK is thus liable for $10,000, and Union for $500,000; plaintiff would recover a total of $1,510,000.

The second method, urged by Union and applied by the Appellate Division, begins by subtracting the $900,000 pretrial payments from the verdict ($2,600,000 — $900,000 = $1,700,000), thus treating the case as if total liability were $1,700,000 instead of $2,600,000 and doing the statutory comparison as to the remaining defendants. If the remaining defendants had all proceeded to a verdict in the amount of $1,700,000, their shares would have been $595,000 from BTK (35%), $595,000 from Union (35%) and $510,000 from Niske (30%). Those shares being greater than the actual settlement amounts paid by Union and Niske, BTK’s liability is its equitable share of the reduced verdict — $595,000—and Union’s $100,000. Plaintiffs recover a total of $1,695,000.

The third method, urged by plaintiffs, would total the equitable shares of the settling defendants (65% or $1,690,000, allocating nothing for the defendants who settled before trial, since we do not know what their equitable share should be), then total the settlement payments ($600,000 + $900,000 = $1,500,000), and reduce the verdict ($2,600,000) by the greater aggregate number ($1,690,000). This results in a liability for BTK in the amount of $910,000; Union is responsible for $100,000; and plaintiffs recover a total of $2,010,000.

Of the three methods, we conclude that the Appellate Division’s calculation most closely approximates the statutory language and purposes, and we therefore affirm.

II.

General Obligations Law § 15-108 was enacted in 1972 to encourage settlements by abrogating the common-law rule that a release of one joint tortfeasor automatically released all others — a rule perceived as trapping litigants who would naturally assume that settlement with one party would have no effect on their ability to pursue another (see, Hill v St. Clare’s Hosp., 67 NY2d 72, 83; 1972 NY Legis Doc No. 65[K], reprinted in 1972 McKinney’s Session Laws of NY, at 3237-3239). Abrogation of the rule encouraged plaintiffs to settle by ensuring preservation of their cause of action against others. To address the specter of double recovery by plaintiffs, the statute as originally enacted codified the rule that a release would reduce the plaintiff’s claim against the other tortfeasors "to the extent of any amount stipulated by the release or the covenant, or in the amount of the consideration paid for it, whichever is the greater” (see, L 1972, ch 830; 1972 McKinney’s Session Laws of NY, at 3239).

At common law, there was no right to contribution from wrongdoers not part of the lawsuit, including defendants who settled (see, Fox v Western N. Y. Motor Lines, 257 NY 305, 308). General Obligations Law § 15-108 did not change this rule, and thus the statute did not need to include any inducement for defendants to settle — release from further liability and freedom from contribution was inducement enough. (12th Ann Report of Jud Conf on CPLR, reprinted in 1974 McKinney’s Session Laws of NY, at 1816-1817.)

General Obligations Law § 15-108, however, failed to take into account our decision in Dole v Dow Chem. Co. (30 NY2d 143) — decided just as the statute was enacted — which significantly changed the law of contribution by requiring apportionment of liability among all tortfeasors. While encouraging settlements remained an important goal of the judicial system, Dole-Dow announced another important goal: equitable loss-sharing among wrongdoers (Dole v Dow, 30 NY2d at 153). To further this goal, Dole-Dow was interpreted to allow defendants who proceeded to judgment to obtain contribution from all tortfeasors, even those who had settled (see, Codling v Paglia, 32 NY2d 330, 344).

The Judicial Conference thereafter commissioned a study on the effects of Dole-Dow, including its effects on settlement. The study concluded that Dole-Dow provided a disincentive for defendants to settle since they could no longer be assured that a settlement would include immunity from liability, and recommended amending General Obligations Law § 15-108 to foreclose actions for contribution against settling defendants. That objective was accomplished with the addition of General Obligations Law § 15-108 (b).

Consistent with the goals of Dole-Dow, however, the study concluded that the statute also should ensure that nonsettling defendants did not bear more than their equitable share of a plaintiff’s damage (see, Occhialino, Contribution, reprinted in 19th Ann Report of NY Jud Conf, at 217, 224). That objective was accomplished by amendment to subdivision (a) (see, Report on Right of Contribution, 1974 NY Legis Ann, at 15-17). Under the amended subdivision (a), even if the settlement amount is less than the settling tortfeasor’s equitable share, the nonsettling defendants pay no more than their equitable share of the verdict. If the settlement amount exceeds the settling defendant’s equitable share, the benefit inures to the nonsettling defendants, who are credited with the larger amount actually paid (1974 NY Legis Ann, at 17; see also, Killeen v Reinhardt, 71 AD2d 851; Werner v Our Lady of Lourdes, 60 AD2d 791).

This rule has been criticized as a disincentive to settlement because it can result in undercompensation to a settling plaintiff and a windfall to a nonsettling defendant (see, Carbone, Repealing New York’s Post-Settlement Equitable Share Reduction Scheme: An Idea Whose Time Has Come, 49 Alb L Rev 856, 864-867; Green, General Obligations Law Section 15-108: An Unsettling Law, 55 [No. 6] NY St BJ 28, 29-30; Occhialino, op. cit., at 224). It is clear, however, that in amending subdivision (a), the Legislature was well aware of such concerns (see, Occhialino, op. cit., at 219), but saw the risk of chilling plaintiff’s desire to settle as largely outweighed by the benefits of early settlement, and the potential windfall to defendants as necessary to ensure that plaintiffs do not in effect have a double recovery against nonsettling defendants (1974 McKinney’s Session Laws of NY, at 1818 [citing Kelly v Long Is. Light. Co, 31 NY2d 25, 30]; see also, Purcell v Doherty, 102 Misc 2d 1049, affd 80 AD2d 755, affd 55 NY2d 985).

Thus, while the general purpose of General Obligations Law § 15-108 (a) is to encourage settlements, the statute is concerned as well with assuring that a nonsettling defendant does not pay more than its equitable share. This consideration is particularly pertinent in evaluating the three proffered methods, to which we next turn.

III.

As the Appellate Division observed, given the numerous possible variations in multidefendant litigation, the task of formulating a single method for reducing verdicts to account for settlements "appears all but insuperable if the statute’s important objectives are not to be sacrificed in the process * * * In the end then, it will be up to the courts to determine the method of verdict reduction which best promotes the statute’s broad objectives.” (181 AD2d 307, 312.) Here, we must determine the most appropriate method where equitable liability has been determined for some settling defendants but not for others. While none of the three proffered methods is a perfect solution, we conclude that the method advocated by Union and adopted by the Appellate Division most closely comports with the statutory scheme.

We first reject the method suggested by plaintiffs, which meets neither the statutory language nor its purposes. By its terms, the statute directs that the reduction be the greater of actual settlement payment or equitable share. While plaintiffs purport to make that precise analysis — aggregating all six settling defendants and their payments — it is a false comparison because in fact no equitable share was determined as to the four defendants who settled before trial. As a practical matter, moreover, the result is that — contrary to the statutory objective — BTK is deprived of credit for the $900,000 pretrial settlement.

Unlike plaintiffs’ method, the remaining methods both make the statutory comparison of equitable share against actual settlement payments for those settling defendants. Both, in other words, compare like figures, whereas plaintiffs do not. Where the remaining two methods differ, however, is in their treatment of the $900,000 pretrial payment: BTK and Supreme Court would first deduct the 65% and then the $900,000; Union and the Appellate Division would first deduct the $900,000 and then the 65%.

We reject BTK’s proposed method. The jury apportioned fault (65%-35%) only among the trial defendants, not including the pretrial settling defendants; the pretrial settling defendants were not before the jury. BTK’s method, however, changes the jury’s allocation by deducting 65% of the total verdict, which includes the $900,000 paid by the pretrial settling defendants. BTK is not entitled to both a percentage reduction of the $900,000 and subtraction of the $900,000.

The Appellate Division’s method ameliorates that problem. Plaintiffs received $900,000 up front, which reduced the verdict. Plaintiffs’ remaining uncompensated damages — $1,700,000—were then apportioned according to the equitable fault assigned by the jury, with each nonsettling defendant responsible only for its equitable share. That method best accomplishes the purposes of General Obligations Law § 15-108 (a).

Accordingly, the order of the Appellate Division should be affirmed, without costs.

Judges Simons, Titone, Hancock, Jr., and Bellacosa concur; Judge Smith taking no part.

Order affirmed, without costs.

      . Even though a defendant in a multidefendant suit settles, proof as to the settler’s fault may still be presented at trial and the settler’s equitable share determined. Generally, the remaining defendants will choose to present such proof as a way of limiting their own equitable share (see, Siegel, NY Prac § 176, at 267 [2d ed]; McLaughlin, Practice Commentaries, McKinney’s Cons Laws of NY, Book 23A, General Obligations Law § 15-108, at 701). The parties do not raise, and we therefore do not consider, where the burden for pleading and proving the equitable fault for settling defendants lies.

      . For convenience, throughout this opinion we consider the 30% and 35% allocated to the defendants who settled during trial as a single 65% figure. Since each of those defendants settled for less than their equitable share, their percentages can be aggregated without changing the result. We make no determination as to whether it is proper to aggregate amounts or make the calculations on a defendant-by-defendant basis.


author: Hancock, Jr., J.

text:
    In the Matter of Susan Gould, Appellant, v Board of Education of the Sewanhaka Central High School District et al., Respondents.
    Argued May 4, 1993;
    decided June 10, 1993

      POINTS OF COUNSEL

      Janet Axelrod, Albany, and Robert D. Clearfield for appellant.
    I. Appellant achieved tenure by acquiescence and estoppel as of September 1, 1988. (Matter of Rho v Ambach, 74 NY2d 318; Matter of Lewis v Cleveland Hill Union Free School Dist., 119 AD2d 263; Matter of Carpenter v Board of Educ., 71 NY2d 832; Matter of Roberts v Community School Bd., 66 NY2d 652; Matter of Cole v Board of Educ., 90 AD2d 419, 60 NY2d 941; Matter of Lindsey v Board of Educ., 72 AD2d 185; Matter of Dwyer v Board of Educ., 61 AD2d 859; Matter of Board of Educ. v Nyquist, 59 AD2d 76, 45 NY2d 975;
      Matter of Connell v Board of Educ., 106 AD2d 866; Ricca v Board of Educ., 47 NY2d 385.) II. Appellant’s resignation was involuntary and should be rescinded. (Matter of Marland v Arnbach, 79 AD2d 48; Matter of Girard v Board of Educ., 168 AD2d 183; Matter of Cannon v Ulster County Bd. of Coop. Educ. Servs., 155 AD2d 846; Matter of Nassau Ch. of Civ. Serv. Empls. Assn. v Milhim, 110 AD2d 839; Matter of Di Giacomo v Ames, 72 AD2d 562; Matter of Sherman v Board of Educ., 88 Misc 2d 661; Matter of Farrar v State of New York, 92 AD2d 546; Matter of Rychlick v Coughlin, 99 AD2d 863, 63 NY2d 643; Matter of Roman v Tompkins-Seneca-Tioga Bd. of Coop. Educ. Servs., 98 AD2d 835.)

      Douglas E. Libby, Elmont, for respondents.
    Petitioner’s resignation was a voluntary act not induced by fraud, duress or coercion. (Matter of Girard v Board of Educ., 168 AD2d 183; Matter of Cannon v Ulster County Bd. of Coop. Educ. Servs., 155 AD2d 846; Matter of Sherman v Board of Educ., 88 Misc 2d 661; Matter of Cedar v Commissioner of Educ., 53 Misc 2d 702, 30 AD2d 882, 22 NY2d 646; Matter of Marland v Arnbach, 79 AD2d 48, 59 NY2d 711; Matter of Di Giacomo v Ames, 72 AD2d 562; Matter of Herbert v Nyquist, 53 NY2d 785.)

      James R. Sandner, New York City, and Richard A. Shane for New York State United Teachers, amicus curiae.

    I. Compelling circumstances support a finding that petitioner’s resignation did not entail a knowing waiver of her tenure rights and was not voluntarily submitted. (Matter of Girard v Board of Educ., 168 AD2d 183; Matter of Cannon v Ulster County Bd. of Coop. Educ. Servs., 155 AD2d 846; Matter of Roman v Tompkins-Seneca-Tioga Bd. of Coop. Educ. Servs., 98 AD2d 835; Matter of Cohoes City School Dist. v Cohoes Teachers Assn., 40 NY2d 774; Kinsella v Board of Educ., 378 F Supp 54; Perry v Sindermann, 408 US 593; Board of Regents v Roth, 408 US 564; Matter of Abramovich v Board of Educ., 46 NY2d 450; Matter of Feinerman v Board of Coop. Educ. Servs., 48 NY2d 491; Matter of Soucy v Board of Educ., 41 AD2d 984, 33 NY2d 653.) II. Respondent School District should be estopped from asserting the finality of petitioner’s April 13, 1989 resignation. (Williams v Supreme Council, 80 App Div 402; Matter of 1555 Boston Rd. Corp. v Finance Adm’r, 61 AD2d 187; Matter of Parkview Assocs. v City of New York, 71 NY2d 274, 488 US 801; Matter of New York State Med. Transporters

      Assn. v Perales, 77 NY2d 126; Matter of E.F.S. Ventures Corp. v Foster, 71 NY2d 359.)
   OPINION OF THE COURT

Hancock, Jr., J.

The issues are whether petitioner, a tenured elementary school teacher, acquired tenure by estoppel as a special education high school teacher and, if so, whether her resignation submitted to respondents under the parties’ mistaken belief that she had not yet acquired tenure precludes her from regaining her teaching position. We conclude that petitioner acquired tenure by estoppel and that her resignation is without legal effect under the circumstances of this case. Accordingly, we reverse the order of the Appellate Division.

I

Petitioner Susan Gould achieved tenure under the Education Law in 1965 as a "common branch” elementary school teacher in a New York City District. In her application to teach in respondent Sewanhaka Central High School District, she indicated that she had been previously tenured. On September 1, 1986, she was appointed to a three-year probationary term as a special education teacher at a high school in respondent District. By letter dated February 24, 1989, six months before the expiration of her three-year probationary term, petitioner was advised that at the April 25, 1989 School Board meeting the Superintendent of Schools would recommend that her probationary appointment be terminated as of June 23, 1989. Petitioner requested and later received a statement of reasons for the Superintendent’s recommendation.

On April 12, 1989, petitioner met with the Superintendent to review the reasons for the denial of tenure. She asked "whether it was true that if she resigned, there would be nothing in her file” referring to the negative tenure recommendation. The Superintendent assured her that this was true and that she would have to submit her resignation with enough lead time for the Board to act upon it at its April 25 meeting. The next day, petitioner submitted her resignation for "personal reasons” effective June 30, 1989 and her resignation was accepted by the Board at its April 25, 1989 meeting.

When she submitted her resignation and when the Board accepted it, petitioner and respondents assumed that petitioner was resigning as a probationary teacher. None of the parties was aware that petitioner’s New York City tenure had entitled her to a reduction in her probationary term from three to two years by operation of Education Law § 3012 and that, therefore, she might already possess tenure by estoppel. By letter dated May 17, 1989 — after her resignation was accepted, but before its effective date — petitioner’s attorney notified the Board that petitioner had acquired tenure by estoppel. He asked it to rescind its acceptance of petitioner’s resignation. The Superintendent and the School Board took no action on this request.

Petitioner commenced a CPLR article 78 proceeding seeking reinstatement as a teacher on the grounds that the Superintendent and the School Board had acted arbitrarily and capriciously in accepting petitioner’s resignation and refusing to treat the resignation as a nullity. Supreme Court granted the petition and reinstated petitioner as a tenured teacher with back pay and benefits, reasoning that her resignation was of no legal effect because if "she had known the true facts, that she was already tenured, the resignation would have never been tendered”. The Appellate Division reversed and dismissed the proceeding, stating that "absent a showing of fraud, duress, coercion, or other affirmative misconduct on the part of school officials which renders a resignation involuntary, a resignation cannot be withdrawn once it has been accepted by school authorities” (Matter of Gould v Board of Educ., 184 AD2d 640, 641).

II

Education Law § 3012 (1) (a) states:

"Teachers * * * shall be appointed * * * for a probationary period of three years; provided, however, that in the case of a teacher who has been appointed on tenure in another school district within the state, * * * and who was not dismissed from such district or board * * * the probationary period shall not exceed two years” (emphasis added).

The language of the section is plain and the meaning unambiguous. Because of petitioner’s previous tenure in New York City, the acquired term of her probationary service had been reduced from three years to two years. The statute itself is self-executing. It makes no difference that her tenured status was in a different tenure area in another school district or that she had left her tenured position more than 20 years before. Thus, after September 1, 1988, she was eligible to acquire tenure.

Tenure by estoppel "results when a school board fails to take the action required by law to grant or deny tenure and, with full knowledge and consent, permits a teacher to continue to teach beyond the expiration of [the] probationary term” (Matter of Lindsey v Board of Educ., 72 AD2d 185, 186). Here, petitioner’s required probationary period had unquestionably been reduced from three years to two years. Although the Superintendent and the Board had constructive knowledge of the facts pertaining to petitioner’s 1965 tenure from the information contained in her application, they were presumably not cognizant of the legal implications of continuing to employ petitioner beyond September 1, 1988 when her two years of probation ended. Respondents were, however, concededly aware of the operative facts — petitioner’s continuing service as a teacher in the District’s employ. It is of no legal significance that respondents did not know that petitioner’s continued employment would enable her to acquire tenure by estoppel (see, Lindsey, supra; Matter of Dwyer v Board of Educ., 61 AD2d 859).

Respondents’ principal contention is not that petitioner failed to acquire tenure by estoppel, but that her resignation was voluntary and, therefore, irrevocable. They argue that there is no claim of duress, coercion or fraud and that there is no other basis on which to nullify it. We disagree.

A tenured teacher has a protected property interest in her position and a right to retain it subject to being discharged for cause in accordance with the provisions of Education Law § 3020-a (see, Kinsella v Board of Educ., 378 F Supp 54, 59 [quoting Perry v Sindermann, 408 US 593, 601-602]). A teacher may, of course, relinquish her tenured rights in her position voluntarily by resigning (see, Matter of Girard v Board of Educ., 168 AD2d 183, 186; Matter of Roman v Tompkins-Seneca-Tioga Bd. of Coop. Educ. Servs., 98 AD2d 835, 836). A teacher’s resignation which has been obtained by fraud or which is the result of coercion or duress, however, does not represent a voluntary act and may be nullified (see, Matter of Marland v Ambach, 79 AD2d 48, affd on opn below 59 NY2d 711; see also, Matter of Di Giacomo v Ames, 72 AD2d 562). The question before us is whether a teacher should be held to have voluntarily relinquished rights in a tenured position where the teacher, the Superintendent and the Board mistakenly believe that the teacher is resigning not from a tenured position but from an unprotected probationary position. We hold that, under the circumstances in this case, such a resignation is ineffective and may be rescinded.

Petitioner argues that her resignation is tantamount to a waiver of her protected tenure rights and to be effective must, under familiar principles, constitute a voluntary relinquishment of known rights (see, Werking v Amity Estates, 2 NY2d 43, 52; Matter of City of Rochester [Otis El. Co.], 208 NY 188, 197; S. & E. Motor Hire Corp. v New York Indem. Co., 255 NY 69, 73; see especially, Matter of Feinerman v Board of Coop. Educ. Servs., 48 NY2d 491, 497-498; Matter of Abramovich v Board of Educ., 46 NY2d 450, 455). It is a basic rule that a person may not knowingly relinquish rights that she does not knowingly possess (see, Rochester, supra ["knowledge, actual or constructive, of the existence of the right or condition alleged to have been waived is an essential prerequisite to its relinquishment” (id., at 197)]). Thus, petitioner concludes that because she was unaware of her tenured status and resigned in good faith, believing that she was only probationary, she cannot be held to have voluntarily waived rights she had unknowingly acquired in her position.

These established waiver principles have been applied in various contexts (see, e.g., Feinerman, supra, at 497-498 [waiver of teacher’s right to be appointed to probationary term in tenure-bearing position]; Abramovich, supra, at 455 [waiver of protection afforded tenured teacher under Education Law § 3020-a]; Werking, supra, at 52 [action to rescind tax deed, no waiver of tax collector’s failure to comply with statute]; Rochester, supra, at 197 [action to set aside condemnation award, no waiver of objection to conflict of interest of condemnation commissioners]; Miller v Greyvan Lines, 284 App Div 133, 136, affd 308 NY 853 [no waiver of plaintiff’s right to have goods stored in fire-proof warehouse]). These principles should apply with equal force to a resignation involving the relinquishment of a teacher’s tenure rights, statutorily protected entitlements for which the Legislature has evinced its special concern (see, e.g., Ricca v Board of Educ., 47 NY2d 385 ["(i)n order to effectuate these convergent purposes (fostering academic freedom and protection of competent teachers from capricious dismissal), it is necessary to construe the tenure system broadly in favor of the teacher” (id., at 391)]; Matter of Baer v Nyquist, 34 NY2d 291, 299 ["The tenure statutes are intended to protect the teacher and not become a trap to those not guileful enough to avoid it”]). We need not decide, however, whether waiver principles alone support this result. For, under the particular facts here, there is an additional related factor for this decision: respondents and petitioner both proceeded under the same misapprehension.

Generally, a contract entered into under a mutual mistake of fact is voidable and subject to rescission (see, Coffin v City of Brooklyn, 116 NY 159; Schmidt v Magnetic Head Corp., 97 AD2d 151, 159). The mutual mistake must exist at the time the contract is entered into and must be substantial. The idea is that the agreement as expressed, in some material respect, does not represent the "meeting of the minds” of the parties (see, Ryan v Boucher, 144 AD2d 144, 145; Brauer v Central Trust Co., 77 AD2d 239, 243, lv denied 52 NY2d 703; and see, Rosenblum v Manufacturers Trust Co., 270 NY 79, 84-85 [plaintiff may be entitled to have a court of equity rescind a contract even where the mistake is unilateral, not mutual, if failing to do so would result in unjust enrichment of defendant]; see generally, 13 Williston, Contracts §§ 1541, 1542, 1557, 1559, 1578 [3d ed 1970]).

The Superintendent advised petitioner at their meeting on April 12, 1989 that if she submitted her resignation in time for the Board to act on it by April 25, 1989, no information regarding the tenure denial would remain in her employment file. To avoid having such material kept in her file, petitioner submitted her resignation the following day and the Board accepted it at its April 25 meeting. The discussion between petitioner and Superintendent on April 12 and the subsequent actions of petitioner in submitting her resignation and the Board in accepting it were all premised on a mutual mistake of fact as to a critical element: that petitioner was only a probationary employee. Where, as here, such a misconception concerning a critical aspect of petitioner’s employment pervades the entire transaction, we conclude that the general principles of mutual mistake in the formation of contracts provide an additional related basis for treating petitioner’s resignation as a nullity.

Respondents argue, however, that petitioner’s resignation should be effective because they are blameless in the matter, there is no claim qf fraud or duress, and because they, like petitioner, were totally unaware that by holding over in her position beyond September 1, 1988, petitioner was acquiring tenure by estoppel. But respondents’ good intentions do not matter in these circumstances where it is petitioner’s protected tenure rights which are at stake. As we have noted, even " 'good faith’ violations of the tenure system must be forbidden, lest the entire edifice crumble from the cumulative effect of numerous well-intentioned exceptions” (Ricca, supra, at 391).

Nor does respondents’ innocent unawareness of the facts alter the effect of the critical point: that the resignation was submitted and accepted under a fundamental misassumption as to the position petitioner was relinquishing. Respondents’ argument necessarily comes to this: as between petitioner and the Board, it was petitioner, rather than the Board, who had the responsibility of understanding the legal effect of Education Law § 3012 on her employment status. Respondents cite no authority for their proposition. The argument overlooks the fact that respondents gave nothing in return for petitioner’s resignation and that the only rights to be lost as a consequence of the mistake were those of petitioner. To accept respondents’ argument, we believe, would conflict with our Legislature’s firm policy of safeguarding teachers’ tenure rights (see, Ricca, supra, at 391; Baer, supra, at 299).

The cases cited by respondents’ are distinguishable (see, Girard, supra; Roman, supra; Matter of Cannon v Ulster County Bd. of Coop. Educ. Servs., 155 AD2d 846) in that in each instance the resigning or retiring teacher was sufficiently aware of the operative facts to make a knowing, intelligent and voluntary decision about submitting a resignation.

Accordingly, the order of the Appellate Division should be reversed, with costs, and the judgment of Supreme Court, reinstated.

Chief Judge Kaye and Judges Simons, Titone, Bellacosa and Smith concur.

Order reversed, etc.


author: Bellacosa, J.

text:
    In the Matter of Elaine A. Leirer, Appellant, v Joseph R. Caputo, as Suffolk County Comptroller, et al., Respondents.
    Argued May 5, 1993;
    decided June 15, 1993

      POINTS OF COUNSEL

      Stewart Krupin, Hauppauge, for appellant.
    I. Each audit prepared by the Suffolk County Department of Audit and Control is merely an audit with recommendations (if any), which cannot be acted upon unilaterally by the Comptroller, pursuant to the specific mandates of article V of the Suffolk County Charter. (Matter of Roe, 46 AD2d 723.) II. Respondents had no legal authority to exercise any common-law right of recoupment by setoff against appellant Leirer’s duly earned, future paychecks for alleged overpayments. (People ex rel. Myers v Barnes, 114 NY 317; Bull v United States, 295 US 247; Peuser v Marsh, 218 NY 505; Williams Press v State of New York, 45 AD2d 397; Matter of Soto [Catherwood], 35 AD2d 395; Matter of Shufelt v Beaudoin, 116 AD2d 422; Jewish Bd. of Family & Children’s Servs. v City of New York, 109 AD2d 619; Salling v Koch, 115 Misc 2d 514; Matter of Feinberg v Board of Educ., 74 Misc 2d 371; Matter of Jones [Peter Pan Nursery Prods. — Catherwood] 14 NY2d 558.) III. The recoupment plan of setoff in the amount of 10% from appellant’s future earned wages is not in compliance with the mandates of CPLR 5231, thereby violating due process. IV. The practical result of the Court below’s decision is unbridled and unchecked potential for abuse of power by the County Comptroller.

      Robert J. Cimino, County Attorney of Suffolk County, Hauppauge (Joyce D. Long of counsel), for respondents.
    I. The Suffolk County Comptroller in his capacity as the County’s chief fiscal officer possesses the inherent authority to recoup improper payment of public moneys as indicated by audit by withholding a portion of appellant’s County salary without prior legislative or judicial approval. (Stemler v Mayor of City of N. Y., 179 NY 473; Matter of Cortlandt Nursing Home v Axelrod, 66 NY2d 169, 476 US 1115; Matter of Fahey v Whalen, 84 Misc 2d 1040, 54 AD2d 1094, 41 NY2d 900; Matter of Carlon v Regan, 98 AD2d 544, 63 NY2d 1011; Matter of Daleview Nursing Home v Axelrod, 62 NY2d 30; Matter of Shufelt v Beaudoin, 116 AD2d 422; Matter of Feinberg v Board of Educ., 74 Misc 2d 371, 51 AD2d 548; People ex rel. Grannis v Roberts, 163 NY 70; People ex rel. Desiderio v Conolly, 238 NY 326; City of New York v State of New York, 40 NY2d 659.) II. Respondents’ recoupment procedures to implement the audit recommendation were in accord with article V of the Suffolk County Charter. (City of New York v State of New York, 40 NY2d 659.) III. The Comptroller’s recoupment action does not violate appellant’s due process rights. (Matter of Mayflower Nursing Home v Office of Health Sys. Mgt. of Dept. of Health, 88 AD2d 192, 59 NY2d 935; Matter of Cortlandt Nursing Home v Axelrod, 66 NY2d 169.)
   OPINION OF THE COURT

Bellacosa, J.

Petitioner-appellant is a Senior Deputy County Clerk of Suffolk County. Since May 1989, the County Comptroller has been unilaterally withholding 10% from each of her current paychecks as a method of recouping wages paid to her when, allegedly, she was not on the job. An audit conducted by the respondent Comptroller estimated the total back-due sum as $13,614.90. The intertwined issues on this appeal by permission of this Court are whether the County Comptroller is invested by statute or common-law right or both with a unilateral wages recoupment power and whether statutory or common-law procedural safeguards in the exertion of such power were met.

Supreme Court granted the employee’s petition precluding the use of recoupment in this case. The Appellate Division, with one Justice dissenting, reversed and insofar as pertinent, rejected the employee’s principal request for relief. We now reverse and reinstate the core determination of Supreme Court in petitioner’s favor. The County Comptroller surely possesses certain powers with respect to such fiscal matters, but they have not been invoked properly or exercised in this case with procedural regularity. Moreover, this County official cannot rely on a general, inherent common-law recoupment authority. This is not the type of case and circumstance in which that remedy may be interposed.

Appellant has been a Suffolk County employee since 1969, serving since 1978 as a Senior Deputy County Clerk. Her lawsuit challenges the County Comptroller’s actions with a sworn statement that her employee time and accrual records were always filled out accurately and properly verified and countersigned by her "designated supervisor” in the County Clerk’s office. From September 1987 to January 1989, the County Comptroller directed an "on site audit” of her work station to investigate her presence and hours of work at her desk. On September 20, 1988, she received a letter from respondent Comptroller indicating that she had unaccounted for hours on her time sheets. Her September 22 salary check was then withheld. Appellant demanded her paycheck and instituted this CPLR article 78 proceeding.

On May 9, 1989, the Comptroller released a so-called final audit report, indicating that appellant had received $13,614.90 in unearned wages going back to 1983 through 1989. The Comptroller sent appellant a copy of the audit and filed copies with the County Legislature as required by Suffolk County Charter, article V, § C5-4. Appellant declined to sign a tendered confession of judgment. On May 28, 1989, the Comptroller began withholding 10% from her biweekly paycheck, $200 per pay period. There is no indication how the unaccounted time was computed with respect to the period from 1983 through September 1987, when the on-site audit was ordered and thereafter sporadically conducted. A statement in the unofficial audit report merely recites that time and accrual records for the entire period in controversy were the only records made available by the office of the County Clerk.

Supreme Court granted the petition insofar as it sought to prohibit the Comptroller from recouping from appellant’s present paychecks sums paid to her for allegedly unworked time from 1983 through 1989. The trial court dismissed the petition insofar as it sought mandamus to compel the Comptroller to release her paychecks for the weeks ending September 22, 1988 through October 16, 1988. The court converted the petition and counterclaim into a plenary declaratory judgment action in other respects, which are not now before us. Supreme Court also ordered the Comptroller to return to appellant the $3,000 in wages garnished under the 10% back-pay recoupment device.

On the Comptroller’s appeal, the Appellate Division reversed and allowed the garnishment to continue. That Court framed the issue as whether the County Comptroller "possesses the inherent authority, pursuant to his express duties as the chief fiscal officer of the County, to recoup alleged salary overpayments from the wages of a County employee,” and concluded that the Comptroller has that authority (Matter of Leirer v Caputo, 181 AD2d 119, 120).

As that Court acknowledged, there is little decisional law upon which to base such a ruling in the context of, and application to, the facts at hand. In Matter of Carlon v Regan (98 AD2d 544, affd as mod 63 NY2d 1011), this Court allowed the State to recoup funds expended for unrelated mental health care from a negligence and medical malpractice award against the State. This Court has also approved the withholding of Medicaid reimbursements to nursing homes to recoup monies wrongfully or erroneously paid (Matter of Daleview Nursing Home v Axelrod, 62 NY2d 30; Matter of Mayflower Nursing Home v Office of Health Sys. Mgt. of Dept. of Health, 88 AD2d 192, affd 59 NY2d 935) and New York courts have allowed Aid to Families with Dependent Children grants and public assistance grants to be reduced to recover erroneous overpayments (Matter of Couch v Perales, 78 NY2d 595; Matter of Shufelt v Beaudoin, 116 AD2d 422). While these precedents appear superficially to offer some support for the existence in this case of "inherent common-law authority to formulate and implement a plan of recoupment * * * when an audit reveals the erroneous or improper payment of public funds” (Matter of Leirer v Caputo, 181 AD2d, at 123-124, supra), significant distinctions abound. For example, these authorities have never been applied to recoup wages paid on certified records, as to which a controverted amount estimated to be due and owing has not been reduced to an independently established debt. Indeed, the cited cases involved erroneous payments or expenditures which were, for the most part, not disputed as to amount. By sharp contrast, the employee here alleges that she properly filled out all past time sheets and had them certified by the designated supervisor in her particular office. The Comptroller, however, disputes the propriety of that certification method and interposes the desk audit to reconstruct and substitute for those regular records. In effect, the Comptroller displaces the ostensibly regular employee time certifications and then invokes a self-help recoupment remedy to reclaim past paid wages. Thus, the proffered authorities do not support this extraordinary extension in category and method of the recoupment power.

Notably, too, common-law recoupment is essentially a defensive mechanism available to a payer, interjected to offset continuing expenditures to or damage claims against a payee. It has not been traditionally allowed as a self-help recovery plan. No justification has been advanced that persuades us to allow this remedy to be invoked in these circumstances in substitution for an independent adjudicative modality of establishing a debt (e.g., by concession, agreement, litigation, or the like) before recoupment can be interposed. Simply "deeming” or estimating the amount of an alleged past debt by a unilateral audit and ukase is unwarranted.

The fact that "petitioner was afforded the opportunity to submit evidence of her work attendance to the Comptroller and she in fact attended conferences with and submitted documentation to him in an attempt to resolve the matter prior to the issuance of the disputed audit” (Matter of Leirer v Caputo, 181 AD2d, at 127, supra) does not constitute the establishment of a genuine debt or provide sufficient procedural protection before allowing the Comptroller to unilaterally initiate this recoupment remedy.

To be sure, audits are an important and appropriate mechanism, especially in connection with public expenditures and monies. But like all remedies, audits should not be telescoped and transformed into self-executing weapons. While the Comptroller, as noted in Justice Rosenblatt’s cogent dissent, has broad and important powers, the procedure he used in this matter was "seriously flawed in that no tribunal was convened, no witnesses were sworn, no testimony was taken by anyone, no arbitration was conducted, and no contract was relied upon. Furthermore, the procedure suffered from the absence of any judicial action or legislative approval, and the Comptroller sought none” (Matter of Leirer v Caputo, 181 AD2d, at 129, supra [Rosenblatt, J., dissenting]).

The precise holding in this case does not diminish the importance of the audit tool in general or the particular audit procedures authorized by the Suffolk County Charter. These verifying methods reflect a necessary and proper wariness about the unauthorized expenditure of public funds and may provide a basis for appropriate action by appropriate officials. However, actions must be undertaken in conformity with procedural safeguards, designed to protect those adversely affected by such serious steps. The officious actions deployed here failed to comport with even rudimentary procedural safeguards.

We conclude also that the Suffolk County Charter offers no authority for the Comptroller’s unilateral action in this case. Article V, § C5-2 grants the County Comptroller authority to perform all the duties of the chief fiscal officer of a county under the County Law, as well as various specific powers to audit and approve expenditures and other related powers. County Law § 577 (1) (i) gives the County Comptroller the duty to "certify the correctness of payrolls for the payment of salaries of officers and employees paid from county funds”. These provisions create specific powers and responsibilities in the office of the Comptroller, but they stop short of granting a unilateral recoupment power with respect to disputed past wages. Indeed, the County Charter specifies a different regimen for the use of audits, which was not followed.

Article V, § C5-4 mandates that audits must be filed with the County Legislature. That section does not suspend all interim action until the Legislature approves or orders something to be done. In fact, the provisions contemplate that some action will be taken to implement the audit recommendations prior to any involvement of a legislative committee. However, section C5-4 envisions action by the "department head or elected official in charge of the department * * * which was the subject [of the] audit”. This department head must appear before the Legislature to explain "what actions have been taken to implement the recommendations, if any, of said auditor,” and if nothing has been done, to "give an explanation as to why such recommendations have not been implemented”. In the instant case, the employee’s department head did not act. Section C5-4 contemplates a recommendations role for the Comptroller. Here, the Comptroller leapfrogged to act alone and circumvented the department head as well as the Legislature and implemented his own findings and "recommendations” by docking Mrs. Leirer’s pay, at an arbitrarily selected rate of 10% from presently earned wages as against alleged past due wages paid on certified payroll records.

We hold that statutory and common-law recoupment powers of the County Comptroller do not extend to the unilateral design and execution of a wage withholding regime to recoup purported salary overpayments under circumstances such as these when the basis for and amounts of the overpayments were never reduced to an established debt and when County Charter procedural rubrics have been ignored or bypassed.

Accordingly, the order of the Appellate Division should be reversed, with costs, and the judgment of Supreme Court, Suffolk County, insofar as it is before us, reinstated.

Chief Judge Kaye and Judges Simons, Titone, Hancock, Jr., and Smith concur.

Order reversed, with costs, and judgment granted in accordance with the opinion herein.