author: Gabrielli, J.

text:
    In the Matter of Barbara McGinley, Respondent, v Charles J. Hynes, as Deputy Attorney-General, Appellant, et al., Respondent.
    Argued September 8, 1980;
    decided October 14, 1980

      POINTS OF COUNSEL

      Charles J. Hynes, Deputy Attorney-General (Arthur Weinstein, Richard D. Carruthers and Terrence P. Buckley of counsel), for appellant.
    I. Permission to continue the investigation before a second Grand Jury was not required. (People ex rel. Flinn v Barr, 259 NY 104; People v Rodriguez, 11 NY2d 279; People v Nicholas, 35 AD2d 18; People v Nelson, 298 NY 272; Matter of Additional Jan. 1979 Grand Jury of Albany Supreme Ct. v Doe, 50 NY2d 14; People ex rel. Raimondi v Jackson, 277 App Div 924; People v Benson, 208 Misc 138; People v Kelly, 140 Misc 377; People v De Lio, 75 Misc 2d 711; People v Westbrook, 79 Misc 2d 902.) II. The writ of prohibition was improperly issued. (Matter of State of New York v King, 36 NY2d 59; Matter of Dondi v Jones, 40 NY2d 8; Matter of B. T. Prods. v Barr, 44 NY2d 226; Matter of Mann Judd Landau v Hynes, 49 NY2d 128; Matter of Spector v Allen, 281 NY 251; People v Di Falco, 44 NY2d 482; Matter of Nigrone v Murtagh, 36 NY2d 421; La Rocca v Lane, 37 NY2d 575; Matter of Agnello v Armer, 56 AD2d 712; Cunningham v Stern, 93 Misc 2d 516.) III. McGinley lacked standing to bring this proceeding. (Matter of Gold v Menna, 25 NY2d 475; United States v Miller, 425 US 435; Matter of Cappetta, 42 NY2d 1066.)

      Stephen R. Taub for respondent.
    I. The Special Prosecutor was guilty of misconduct and a violation of CPL 190.75 (subd 3) by convening a second Grand Jury without court permission based upon disclosure that the first Grand Jury had declined to indict. (People v De Lio, 75 Misc 2d 711; People v Westbrook, 79 Misc 2d 902; People v Nicholas, 35 AD2d 18; People v Rodriguez, 11 NY2d 279; People v Benson, 208 Misc 138; People v Nelson, 298 NY 272; People ex rel. Flinn v Barr, 259 NY 104; Matter of De Canzio v Kennedy, 67 AD2d 111; Matter of Forte v Supreme Ct. of State of N. Y., 62 AD2d 704; Matter of Additional Jan. 1979 Grand Jury of Albany Supreme Ct. v Doe, 50 NY2d 14.) II. Article 78 was the proper remedy to prohibit the Special Prosecutor from exceeding his jurisdiction. (People ex rel. Flinn v Barr, 259 NY 104; La

      Rocca v Lane, 37 NY2d 575; United States v Calandra, 414 US 338; Blair v United States, 250 US 273; Matter of Dondi v Jones, 40 NY2d 8; Matter of State of New York v King, 36 NY2d 59; Matter of Steingut v Gold, 42 NY2d 311; Matter of Forte v Supreme Ct. of State of N. Y., 62 AD2d 704; Matter of De Canzio v Kennedy, 67 AD2d 111; Matter of Lee v County Ct. of Erie County, 27 NY2d 432.) III. The target of a Grand Jury proceeding has standing to bring on a special proceeding to prohibit a Grand Jury from acting beyond its jurisdiction. (People ex rel. Flinn v Barr, 259 NY 104; Matter of De Canzio v Kennedy, 67 AD2d 111.)
   OPINION OF THE COURT

Gabrielli, J.

In this article 78 proceeding, the Special Nursing Home Prosecutor appeals from an order of the Appellate Division, which granted petitioner’s request for relief in the nature of prohibition and directed the Special Prosecutor to refrain from presenting additional evidence to the Grand Jury in connection with his investigation of a particular hospital without first seeking and obtaining judicial approval to "resubmit” pursuant to CPL 190.75 (subd 3). The present appeal requires us to consider novel questions concerning the availability of the prohibition remedy to prevent a prosecutor from carrying out his investigative functions when there is no claim that the subject matter of his investigation is beyond the scope of his prosecutorial authority. Because we conclude that prohibition does not lie under the circumstances presented in this case, we now reverse the order of the Appellate Division and direct that the petition for a writ of prohibition be dismissed.

The investigation in question was initially commenced, before a Suffolk County Grand Jury on September 5, 1978. Assistant Special Prosecutor Richard Miller informed the Grand Jury at that time that it would be looking into possible rebate and kickback schemes in the various hospitals, adult homes, health-related facilities and nursing homes in Suffolk County with a view toward determining, among other things, whether the State’s Medicaid system had been defrauded. Of particular interest, the Grand Jury was told, were the financial activities of the Brunswick Nursing Center, a general hospital in Suffolk County. Suspicion had focused upon the Brunswick facility because, as the Grand Jury was later advised, an audit of that hospital’s books by the Special Prosecutor’s office had revealed some rather unusual business transactions between Brunswick and two of its regular suppliers.

From the outset, the Grand Jury’s investigation of these matters was plagued with delays. Subpoenas had been issued commanding Brunswick and several of its suppliers to produce their records for the Grand Jury on September 5, but each of the vendors made immediate motions to quash and Brunswick requested a postponement to October 6 so that it would have an adequate opportunity to assemble the required material. The vendors’ motions to quash were not finally resolved in favor of the Special Prosecutor until the middle of October, when the Appellate’ Division vacated its stays. By that time, however, Brunswick had made its own motion to quash, despite its earlier promise to produce records by October 6. This motion delayed the production of Brunswick’s records through the end of December, 1978.

Additional delays were occasioned by the recalcitrance of various witnesses. One of the vendors involved in the investigation failed to appear as scheduled because his attorney was "very busy”. When he finally did appear two months later, he impeded the investigation by refusing to answer a number of crucial questions. His subsequent appearances before the Grand Jury were equally fruitless, and, as a consequence, a contempt proceeding was eventually commenced against him. The efforts to bring this witness before the Grand Jury dragged on through a chain of late appearances and outright failures to appear until the last month of the investigation. On several occasions during this period, the witness’ appearance had to be postponed because his attorney either appeared late or did not show up at all. Indeed, even the efforts of the Trial Judge to conduct contempt proceedings were confounded by the refusal of this witness and his attorney to appear when commanded to do so.

The performance of this witness was not atypical. Several witnesses represented by the same attorney caused repeated delays as a result of their own or their attorney’s failure to appear as scheduled. One of the other principals in the investigation also characteristically failed to be present on the dates he was scheduled to appear. A new series of motions to quash made in early 1979 by various witnesses produced additional delays and frustrations for the Grand Jurors. These difficulties were further compounded by the fact that many of the records subpoenaed by the Grand Jury either had been destroyed or simply could not be found.

Throughout the nine-month period of the Grand Jury session, representatives of the Special Prosecutor’s office were repeatedly compelled to ask for extensions of the Grand Jury’s term so that all of the evidence could be heard. On each occasion, the Grand Jurors were told that every effort was being made to obtain the cooperation of witnesses and put an end to the delays and collateral proceedings. Although the Grand Jurors initially were receptive to the Special Prosecutor’s requests for extensions, they began to express impatience as the months dragged on and the witnesses persisted in their dilatory tactics. At several points in the proceedings, individual members of the Grand Jury asked whether additional measures could be taken to hold the resistant witnesses and their attorneys accountable for their conduct. Additionally, a few of the Grand Jurors indicated that the repeated extensions of the investigation were beginning to disrupt their personal lives. Finally, at the May 25, 1979 session, the Grand Jurors took a vote among themselves and determined not to continue beyond the next scheduled termination date, June 22, 1979. Thus, although the Special Prosecutor had not had an opportunity fully to explore the evidence, the Grand Jury was disbanded without having taken any action in the Brunswick Nursing Center matter. It was apparent from the minutes of the Grand Jury sessions, however, that the decision of the Grand Jury to disband was based not upon its belief that no crime had been committed but, rather, upon the Grand Jurors’ impatience with the repeated delays occasioned by the witnesses’ recalcitrance.

A new Grand Jury was convened on October ,1, 1979. Once again, a representative of the Special Prosecutor’s office appeared and informed the Grand Jurors that they would be looking into the financial activities of the Brunswick Nursing Center with a view toward the possibility of Medicaid fraud. Several witnesses were called to testify regarding the Brunswick matter, but the progress of the investigation was once again halted when a Brunswick employee whose bank record had been subpoenaed commenced the instant article 78 proceeding in an effort to restrain the Special Prosecutor from pursuing the matter further.

The petition was based upon CPL 190.75 (subd 3), which provides that when a charge presented to a Grand Jury has been dismissed, "it may not again be submitted to a grand jury unless the court in its discretion authorizes or directs the people to resubmit such charge to the same or another grand jury”. Although the first Grand Jury in the Brunswick Nursing Center case had been discharged before it had had an opportunity to consider and act upon any charges, petitioner argued that, under the circumstances, the Grand Jury’s non-action should be considered the equivalent of a dismissal for purposes of CPL 190.75 (subd 3) and the Special Prosecutor should therefore be prohibited from proceeding before a second Grand Jury unless and until court approval for resubmission is obtained.

Special Term did not directly address the merits of petitioner’s contentions, but instead dismissed the petition upon the ground that the extraordinary remedy of prohibition was simply not justified under the facts of the case. The Appellate Division, however, reversed, concluding that prohibition was available to prevent the prosecutor from acting "in excess of [his] powers” (La Rocca v Lane, 37 NY2d 575, 579, cert den 424 US 968) in violation of CPL 190.75 (subd 3). The court then went on to hold that petitioner was a person with "standing” to bring the proceeding, since, as an employee of Brunswick, she was a potential target of the Special Prosecutor’s investigation. Finally, reaching the merits of the dispute, the Appellate Division found that the Special Prosecutor had indeed exceeded the bounds of his authority by reviving the Brunswick investigation before a second Grand Jury without first obtaining judicial approval. Consequently, the Appellate Division held, petitioner was entitled to the requested relief.

We do not reach the merits of petitioner’s contentions, however, because we conclude that prohibition does not lie under circumstances such as these. The "ancient and just” writ of prohibition is available "only where there is a clear legal right and only when the body or officer 'acts or threatens to act without jurisdiction in a matter over which it has no power over the subject matter or where it exceeds its authorized powers in a proceeding over which it has jurisdiction’ ” (Matter of Dondi v Jones, 40 NY2d 8, 13, quoting Matter of State of New York v King, 36 NY2d 59, 62; Matter of Nigrone v Murtagh, 36 NY2d 421, 423-424; see Matter of Vega v Bell, 47 NY2d 543, 546-547). The writ "must be directed to some inferior judicial tribunal or officer and lies to prevent or control judicial or quasi-judicial action only, as distinguished from legislative, executive or ministerial action” (Matter of Forte v Supreme Ct. of State of N. Y., 48 NY2d 179, 183; accord Matter of Nicholson v State Comm. on Judicial Conduct, 50 NY2d 597, 606; Matter of B. T. Prods. v Barr, 44 NY2d 226, 231-232; Matter of Steingut v Gold, 42 NY2d 311, 315; see Matter of Kaney v New York State Civ. Serv. Comm., 190 Misc 944, 951, affd 273 App Div 1054, affd 298 NY 707; Note, Writ of Prohibition in New York — Attempt to Circumscribe an Elusive Concept, 50 St John’s L Rev 76, 84). It is the latter aspect of this oft-repeated formulation that causes the difficulty here.

We have recently had occasion to observe that "[a] public prosecutor is a quasi-judicial officer, who performs important duties within our judicial system, and is subject to prohibition under proper circumstances not alone confined to double jeopardy situations” (Matter of Dondi v Jones, 40 NY2d 8, 13, supra; accord Matter of B. T. Prods. v Barr, 44 NY2d 226, 232, supra). We have not yet had an opportunity, however, to articulate an analytical framework for determining precisely what circumstances justify the issuance of a writ of prohibition against a public prosecutor, although we have found such a remedy to be appropriate in particular cases (Matter of B. T. Prods. v Barr, supra; Matter of Dondi v Jones, supra; cf. Matter of Nicholson v State Comm. on Judicial Conduct, supra).

Essential to the development of such an analytical framework is a recognition that the role of a public prosecutor in our system of criminal justice has two fundamentally distinct and separate aspects. On the one hand, the public prosecutor has the obligation of representing the State in its efforts to bring individuals accused of crimes to justice. When he is fulfilling this responsibility, the public prosecutor may readily be viewed as an officer performing a "quasi-judicial” act, and his conduct may therefore become the subject of an article 78 proceeding in the nature of prohibition (see, e.g., Matter of Simonson v Cahn, 27 NY2d 1; People v Fielding, 158 NY 542, 547; Matter of Nolan v Court of Gen. Sessions of County of N. Y., 15 AD2d 78, affd 11 NY2d 114; People ex rel. Luetje v Ketcham, 45 Misc 2d 802, 804). On the other hand, public prosecutors also perform a role "analogous to that of a police officer”, which entails the investigation of suspicious circumstances with a view toward determining whether a crime has been committed (Toker v Pollak, 44 NY2d 211, 220; see, also, Executive Law, § 63). Manifestly, when this purely investigative function is involved, the acts of the public prosecutor are to be regarded as "executive” in nature and, in consequence, cannot legitimately be the object of a writ of prohibition, except, perhaps, in a most unusual and at present unforeseeable circumstance.

Of course, just as "there is no sharp line between a court acting in error * * * and a court acting in excess of its powers” (La Rocca v Lane, 37 NY2d 575, 580, supra), there can be no bright, clear line separating the investigative activities of a public prosecutor from his "quasi-judicial” activities. Each case must be considered individually in accordance with its peculiar facts and without regard to mechanistic verbal formulations that serve no purpose other than to becloud the issues and confound reasoned analysis. Such a case-by-case approach is not unusual in our system of jurisprudence. "The law generally and the extraordinary remedy of prohibition has not developed as a linguistic exercise but as a response in language and concept to the recognized needs and accommodations in a society governed by the rule of law” (La Rocca v Lane, supra, at p 581). Accordingly, although we have delineated in broad terms the outer limits of the "ancient and just writ”, we have carefully avoided imposing a straitjacket of rigid rules and verbal formulae upon the prohibition remedy (see, generally, Note, Writ of Prohibition in New York—Attempt to Circumscribe an Elusive Concept, 50 St John’s L Rev 76, 101). The distinction we draw today between those prosecutorial acts to which a writ may properly be directed and those which are not subject to prohibition is thoroughly consistent with this tradition.

While we decline on principle to define the precise boundaries of the "quasi-judicial” as distinguished from the "investigative” activities of a public prosecutor, we would nevertheless find no need to do so here, since the activities which petitioner seeks to enjoin fall clearly and unambiguously within the latter category. Pursuant to an Executive Order issued on February 7, 1975 (Executive Order No. 4, 9 NYCRR 3.4; see Executive Law, § 63, subd 8) and to the specific requests of the Commissioner of Health and the Acting Commissioner of the Department of Social Services (see Executive Law, § 63, subd 3), the Special Nursing Home Prosecutor was carrying out his mandate by looking into the possibility of corruption and Medicaid fraud on the part of certain health care facilities in Suffolk County when the instatit petition for a writ was brought. Although his investigation had focused upon Brunswick Nursing Center and some of that facility’s suppliers, it had not yet progressed to a stage where individual wrongdoers had been identified or discrete charges of criminality raised. That the matter had been brought to the attention of a Grand Jury does not detract from our conclusion that no "quasi-judicial” activity was involved, since Grand Juries no less than public prosecutors have investigative as well as accusatory functions to perform in our system of criminal justice (see Matter of Additional Jan. 1979 Grand Jury of Albany Supreme Ct. v Doe, 50 NY2d 14, 19; People v Calbud, Inc., 49 NY2d 389, 394). When a Grand Jury, aided by a public prosecutor, is carrying out its purely investigative role, it is no more subject to prohibition than is the prosecutor.

We note that our holding today does not in any way conflict with prior cases in which we have recognized the availability of prohibition as a means to prevent a public prosecutor from acting in excess of his authority. In Matter of B. T. Prods. v Barr (44 NY2d 226, supra), for example, we held that prohibition would lie to prevent the New York State Organized Crime Task Force from retaining property seized pursuant to a judicially issued warrant. Although we did not analyze in detail the nature of the acts sought to be enjoined there, it is evident from our discussion that we considered the acts of the prosecutor in that case to be "quasi-judicial” because they were logically inseparable from the acts of the court which had improperly issued the search warrant. In Matter of Dondi v Jones (40 NY2d 8, 13, supra), we recognized that prohibition would be an appropriate remedy if it were found that a Special Prosecutor was exceeding the authority conferred upon him through Executive Order by prosecuting a particular criminal defendant under an existing indictment. Unlike the activities of the Special Prosecutor in the present situation, however, the prosecutorial acts at issue in Dondi may readily be classified as "quasi-judicial”, since in that case the matter had progressed well past the investigative, fact-finding stage and the function of the prosecutor had become purely that of an accuser (cf. Matter of Nicholson v State Comm. on Judicial Conduct, 50 NY2d 597, supra [prohibition would lie to enjoin improper judicial conduct investigation which has a "chilling effect” upon protected First Amendment rights]). In the instant situation, in contrast, none of the traditional characteristics of a judicial proceeding are present. No one has been accused of committing a crime, and, indeed, there is yet no concrete indication of any criminal wrongdoing. At this point, the role of the Special Prosecutor is limited to investigating the circumstances surrounding Brunswick’s financial transactions and gathering testimony for the purposes of ascertaining whether a crime has been committed. Inasmuch as the activities of the Special Prosecutor in this role are related only to his "executive” functions and are in no way connected with the "quasi-judicial” functions he may perform in other contexts, this cannot be considered a proper case for prohibition. Petitioner’s remedy, if indeed she is entitled to remedy at all, lies solely in a traditional motion to quash the subpoena issued against her bank.

Accordingly, the order of the Appellate Division should be reversed, with costs, and the petition dismissed.

Chief Judge Cooke and Judges Jasen, Jones, Wachtler, Fuchsberg and Meyer concur.

Order reversed, etc.

      . In view of our conclusion that prohibition would not, in any event, lie, we find it unnecessary to comment upon the determination of the Appellate Division that petitioner had "standing” by reason of her status as a "potential target” for Grand Jury action.

      . The circumstances of the present case do not require us to consider whether prohibition would lie to enjoin a public prosecutor, who has not obtained judicial approval, from resubmitting speciñc charges against a particular, named defendant to a second Grand Jury after a prior Grand Jury has voted to dismiss or has been discharged without taking any action on the charge.

      . Petitioner has not contended that the investigation in question was not within the scope of the Special Prosecutor’s executive authority as outlined in Executive Order No. 4 (9 NYCRR 3.4). We note, however, that the traditional remedy of a motion to quash provides adequate protection to those who feel themselves aggrieved by the conduct of a public prosecutor who pursues an investigation in excess of his legitimate authority (see, e.g., Matter of Additional Jan. 1979 Grand Jury of Albany Supreme Ct. v Doe, 50 NY2d 14, supra; Matter of Mann Judd Landau v Hynes, 49 NY2d 128).


source: Caselaw Access Project

author: Meyer, J. Chief Judge Cooke

license: Public Domain

text:
    In the Matter of St. Joseph’s Health Center Properties, Inc., Respondent, v Robert Z. Srogi, as Commissioner of Assessment of the City of Syracuse, Appellant. (And Four Other Proceedings.)
    Argued September 8, 1980;
    decided October 16, 1980

      POINTS OF COUNSEL

      David M. Garber, Corporation Counsel (Anthony S. Bottar of counsel), for appellant.
    I. Properties is not a corporation entitled to a real property tax exemption under section 421 (subd 1, par [a]) of the Real Property Tax Law. (Matter of Genesee Hosp. v Wagner, 47 AD2d 37, 39 NY2d 863; Matter of Chautauqua Inst. v Town of Chautauqua, 35 AD2d 1; Matter of St. Joseph’s Health Center Props. v State Tax Comm., 55 AD2d 484, 41 NY2d 804.) II. The court below erred in adopting an alter ego approach with respect to Properties’ claim for a tax exemption under section 421 (subd 1, par [a]). (Matter of Beth Israel Hosp. Housing Co. [Catherwood], 35 AD2d 397; Matter of City of Lackawanna v State Bd. of Equalization & Assessment of State of N. Y., 16 NY2d 222; Matter of Colum

      bia County Mental Retardation Realty Co. v Palen, 97 Misc 2d 9; Matter of St. Joseph’s Health Center Props. v State Tax Comm., 55 AD2d 484; Matter of Association of Bar of City of N. Y. v Lewisohn, 34 NY2d 143.)

      Charles E. Cooney, Jr., and Angela S. Cooney for respondent.
    I. St. Joseph’s Health Center Properties was organized exclusively for nonprofit charitable hospital purposes. (Matter of St. Luke’s Hosp. v Boyland, 12 NY2d 135; Matter of Faculty-Student Assn. of State Univ. Coll. at Oswego v Sharkey, 35 AD2d 161, 29 NY2d 621; Matter of Chautauqua Inst. v Town of Chautauqua, 35 AD2d 1, 27 NY2d 485; People ex rel. Watchtower Bible & Tract Soc. v Haring, 8 NY2d 350; Matter of Beth Israel Hosp. Housing Co. [Catherwood], 35 AD2d 397; Matter of Syracuse Univ., 214 App Div 375; Matter of Genesee Hosp. v Wagner, 47 AD2d 37, 39 NY2d 863.) II. Properties is so closely related to the Hospital as to be a mere appendage thereof for purposes of the tax exemption. (Matter of Beth Israel Hosp. Housing Co. [Catherwood], 35 AD2d 397; Matter of St. Joseph’s Health Center Props. v State Tax Comm., 55 AD2d 484, 41 NY2d 804.) III. St. Joseph’s Health Center Props. v State Tax Comm. is not controlling. (Matter of St. Joseph’s Health Center Props. v State Tax Comm., 55 AD2d 484; Matter of Beth Israel Hosp. Housing Co. [Catherwood], 35 AD2d 397.)
   OPINION OF THE COURT

Meyer, J.

Real property which is owned by a not-for-profit corporation and used exclusively to provide housing for staff personnel of a separate hospital corporation is "conducted” exclusively for hospital purposes and is, therefore, exempt from taxation under section 421 (subd 1, par [a]) of the Real Property Tax Law, where the property owning corporation operates solely to carry out a purpose of the exempt corporation. The order of the Appellate Division affirming the judgment of the Supreme Court declaring the property exempt and directing a refund of taxes paid by petitioner should be affirmed, with costs.

On this appeal from the Appellate Division order, here by our leave, the affirmed findings of fact establish that petitioner, St. Joseph’s Health Center Properties, Inc. ("Properties”), is a ngt-for-profit corporation the purposes of which, as stated in its* certificate of incorporation and by-laws, include "To receive and pay over monies to St. Joseph’s Hospital Health Center for its corporate purposes” and "to carry out such programs, research or activities as may be necessary or desirable to further the corporate interests of St. Joseph’s Hospital Health Center” and limit Properties’ purposes "to those which are strictly scientific, educational and charitable as more specifically described above” (emphasis supplied). Paragraph 7 of the certificate also requires that there be not less than three nor more than nine directors "all of whom shall be members of the Board of Trustees of St. Joseph’s Hospital Health Center and they shall be designated at the Annual Meeting by the President of St. Joseph’s Hospital Health Center.” Equity Term also found that: the properties in question in these proceedings are adjacent to the Hospital and its school of nursing; they are used exclusively to house Hospital personnel, which makes it possible to attract desirable personnel from outside the area; the rents are nominal; the properties are managed by Hospital’s director of special services and security and are maintained by Hospital to which the rents are turned over and which pays for all utilities and maintenance of the properties.

The city argues that Properties does not satisfy the exclusive purposes requirement of section 421 (subd 1, par [a]) of the Real Property Tax Law, that to be exempt the properties must be owned by Hospital rather than an alter ego and that to hold otherwise is inconsistent with the legislative purpose to stem erosion of municipal tax bases. As hereafter demonstrated these arguments ignore both judicial precedent and the addition to the subdivision in question by chapter 414 of the Laws of 1971 of the words "or conducted” after the word "organized”, which amendment makes clear the legislative purpose to grant tax exemption to a corporate property owner conducted for a hospital purpose, even though the owner corporation is not itself authorized to operate a hospital.

The city’s argument concedes that if Hospital itself owned the properties in question they would be within the. exemption granted by the Legislature and thus by legislative design unavailable as a part of the municipal tax base. The concession is not surprising in view of our decision in Matter of St. Luke’s Hosp. v Boyland (12 NY2d 135). In St. Luke’s we held exempt apartment buildings owned by a hospital corporation, located in close proximity to the hospital, to the extent used as living accommodations for hospital personnel and their immediate families, reasoning that such use was " 'reasonably incident’ to the major purpose of the hospital” (12 NY2d, at p 143) and that neither the fact that the buildings were not immediately contiguous to the hospital nor that rent was paid by the hospital personnel occupying the apartments destroyed the exemption. Not only was that holding amply supported by prior precedents of our and other courts cited at pages 143 and 144 of the St. Luke’s decision, but it has been followed consistently since in Matter of Genesee Hosp. v Wagner (47 AD2d 37, affd on opn below 39 NY2d 863); Matter of Shrine of Our Lady of Martyrs at Auriesville v Board of Assessors of Town of Glen (40 AD2d 75, affd 33 NY2d 713); Matter of Chautauqua Inst. v Town of Chautauqua (35 AD2d 1, mot for lv to app den 27 NY2d 485); see Matter of Faculty-Student Assn. of State Univ. Coll. at Oswego v Sharkey (35 AD2d 161, affd 29 NY2d 621).

The city’s alter ego contention is answered by the last cited case as well as by Matter of Beth Israel Hosp. Housing Co. (Catherwood) (35 AD2d 397). Matter of Faculty-Student Assn. (supra) involved two nonprofit corporations, one organized to promote educational relations at a college of the State University and which under contract with the State University operated food services, a book and supply store and other activities at the college; the other organized to promote fellowship among students at the same college and which operated off-campus properties for recreation and housing of students and faculty members of the college. The same section of the Real Property Tax Law (then numbered § 420) was involved, but since the proceedings arose before 1971 its then wording required that to be exempt, property be "owned by a corporation or association organized exclusively for” educational purposes, among others. The conclusion was that the corporations were "organized exclusively” for educational purposes since their functions were "necessary to the college community and so further the goal of education” (35 AD2d, at p 166). Beth Israel (supra) concerned a membership corporation organized under the Private Housing Finance Law for the purpose of building and operating housing facilities for hospital personnel and their families. The Appellate Division, Third Department, noting that occupancy of the housing company’s properties was limited to hospital personnel, that the company’s directors were required to be directors or trustees of the hospital, and that on dissolution its property reverted to the hospital, held the company to be "merely an appendage of the hospital” and therefore "operated exclusively for hospital purposes” within the meaning of the requirement of subdivision 4 of section 560 of the Labor Law, as it then read, that the corporation be "organized and operated exclusively for * * * charitable purpose”.

If any question remained after the Faculty-Student and Beth Israel decisions about the right to exemption of a corporation which performed a function "reasonably incident to the major purpose of’ a separate exempt corporation (People ex rel. Watchtower Bible & Tract Soc. v Haring, 8 NY2d 350, 358; accord Matter of St. Luke’s Hosp. v Boyland, 12 NY2d 135, supra), it was removed by the enactment of chapter 414 of the Laws of 1971. Adopted after intensive study by the Joint Legislative Committee to Study and Investigate Real Property Tax Exemptions culminating in a report (NY Legis Doc, 1970, No. 15) which pointed up the need of municipalities for a broader tax base and which, therefore, inserted a new subdivision (b) making the exemptions enumerated therein subject to local option rather than absolute, as they previously had been, it nevertheless inserted in both subdivision (a), which continued the State mandated exemption of hospitals, among others, and in the new subdivision (b), which established "local option” exemptions, the words "or conducted” between "organized” and "exclusively”. Such legislative history as there is concerns the reasons for the local option provision and does not discuss the reason for the insertion of the words "or conducted.” The facts that the insertion is in the disjunctive, that it was made at a time when municipalities were being granted relief the need for which was well documented, that it was made in both subdivisions, and that it was made but shortly after the Faculty-Student and Beth Israel decisions, strongly suggest however, the Legislature’s intention to exempt property owned by a corporation conducted for a purpose reasonably incident to the major purpose of another subdivision (a) exempt corporation, even though not itself organized to engage in all of the activities of the latter corporation.

There is yet another argument by analogy supporting the conclusion reached. Subdivision 2 of section 421 provides that such portion of real property as is used for exempt purposes is exempt even though some part of the property is used for nonexempt purposes. That declaration is, however, followed by a proviso that "such real property [i.e., that specified in paragraphs (a) and (b) of subdivision 1] shall be fully exempt from taxation although it or a portion thereof is used * * * for purposes which are exempt pursuant to this section * * * by another corporation which owns real property exempt from taxation * * * or whose real property if it owned any would be exempt from taxation”. That provision derives from an amendment adopted in 1948 in order to overturn cases such as People ex rel. Frick Collection v Chambers (196 Misc 1026, affd 276 App Div 891), which had held that an exempt corporation which allowed its property to be used by another exempt corporation thereby lost its exemption (NY Legis Ann, 1948, pp 291-293). Having thus made clear that ownership and use by separate exempt corporations did not forfeit the exemption, the Legislature can hardly be deemed to have intended in the circumstances of the present case that exemption be denied notwithstanding a clearly exempt use simply because the user though empowered to carry out a function which is part of an exempt purpose is not itself empowered to carry out all of the functions of the exempt purpose. The more so is that true after the addition in 1971 of the words "or conducted” to paragraph (a) of subdivision 1.

In conclusion it is necessary only to note that nothing in Mohonk Trust v Board of Assessors of Town of Gardiner (47 NY2d 476), Matter of Presbyterian Residence Center Corp. v Wagner (66 AD2d 998, affd 48 NY2d 885), or Matter of St. Joseph’s Health Center Props. v State Tax Comm. (55 AD2d 484, mot for lv to app den 41 NY2d 804) is contrary to the conclusion here reached, and that to the extent that Matter of Columbia County Mental Retardation Realty Co. v Palen (97 Misc 2d 9) is to the contrary we do not adopt its reasoning.

For the foregoing reasons the order of the Appellate Division should be affirmed, with costs.

Chief Judge Cooke

(dissenting). The majority today holds that a corporation organized and conducted solely to aid an exempt corporation is itself entitled to an exemption under the Real Property Tax Law. Because this action contravenes the well-recognized concerns of the Legislature and the language of the statute itself, I must dissent.

Petitioner, a Type B not-for-profit corporation set up by St. Joseph’s Hospital Health Center in 1972, seeks an exemption under section 421 (subd 1, par [a]) of the Real Property Tax Law. The corporation owns properties in the Syracuse area, which it rents at low cost to personnel associated with the Hospital. There is no question that the petitioner operates solely for the benefit of the Hospital and is under the effective control of the Hospital. The president of the Hospital selects the corporation’s directors and the Hospital pays the corporation’s maintenance and utility costs and receives any excess revenues. Petitioner argues that because its corporate purposes aid the Hospital, which is undeniably entitled to an exemption under section 421, it also should receive such an exemption. In light of the clear legislative direction to the contrary, however, this court should not read such a "piggyback” exemption into the statute.

Under section 421 (subd 1, par [a]), a corporation seeking an exemption must show that it is "organized or conducted exclusively for religious, charitable, hospital, educational, moral or mental improvement of men, women or children or cemetery purposes * * * and used exclusively for carrying out thereupon one or more of such purposes”.

Petitioner corporation does not assert that it could fulfill the purposes of a hospital itself. The issue is rather whether the corporation, created to assist the Hospital in performing its purposes, can itself be construed as "conducted exclusively for * * * hospital * * * purposes”. The words "or conducted” were added to section 421 (subd 1, par [a]) in 1971, at the same time that the Legislature cut back on the categories of unconditional exemptions under the section and gave municipalities broad power to eliminate other categories of such exemptions. In Mohonk Trust v Board of Assessors of Town of Gardiner (47 NY2d 476), this court analyzed the impact of this addition. It noted (at pp 483-484) that "until 1971 an organization qualified for an exemption only if it was 'organized’ for an exempt purpose (see L 1971, ch 414, § 2). Under that statutory language the determination of an organization’s purpose was in large part limited to an examination of the documents by which it was created and which regulated its organizational structure and powers (see Matter of De Peyster, 210 NY 216). Hence, it was irrelevant that a particular organization created under a broad charter or agreement providing both exempt and nonexempt purposes might in fact have limited its activities solely to exempt purposes. Now, however, an organization may be entitled to an exemption if it is either 'organized or conducted’ primarily for an exempt purpose or purposes. Hence, the determination of an organization’s primary purpose may turn upon the extent to which it pursues the-various purposes for which it was created, and is not necessarily dependent solely upon the language of the document pursuant to which the organization operates” (emphasis in original).

A wide variety of corporate purposes qualified for exemptions before the Legislature cut them back in 1971. By simultaneously adding the words "or conducted”, as Mohonk Trust noted, the Legislature permitted examination of which stated purposes a corporation was actually implementing where the certificate of incorporation or by-laws included both exempt and nonexempt purposes. Both before and after the 1971 amendments, however, the statute distinguished this inquiry from the separate and additional requirement that the property be actually used for a tax exempt purpose. This court has long recognized the dual nature of this test, that "[bjefore nonprofit real property may be exempt from taxes, petitioner must establish that it is (1) organized or conducted exclusively for one or more exempt purposes specified in the statute and (2) used exclusively for such exempt purposes (Matter of Association of Bar of City of N. Y. v Lewisohn, 34 NY2d 143; Matter of Genesee Hosp. v Wagner, 47 AD2d 37, 43, affd 39 NY2d 863)” (Matter of Presbyterian Residence Center Corp. v Wagner, 66 AD2d 998, 999, affd 48 NY2d 885). The majority today overlooks the requirement that the corporation be organized or conducted for an exempt purpose and instead focuses solely on the requirement that the corporation’s property be used for an exempt purpose. It applies only half of the statute’s test for exempt status.

When the full two-part test of section 421 (subd 1, par [a]) is applied to this case, it is clear that petitioner is not entitled to an exemption. The purposes for which it was organized or conducted, either those stated in its corporate papers or those stated purposes that it has actually implemented, are not those of a hospital. Petitioner could not legally operate or conduct a hospital. Petitioner thus fails this portion of the test, regardless of whether its property is actually used to further the purposes of a hospital corporation.

Petitioner cannot dispute that it was organized primarily and is conducted solely for the purpose of owning, operating and managing real property. Unable to meet the statute’s requirements, it would have this court usurp the Legislature’s function and amend the section to permit it to ride on the exempt shoulders of the Hospital. If the Hospital itself owned the properties in question there would of course be no doubt as to their exempt status (Matter of St. Luke’s Hosp. v Boyland, 12 NY2d 135). But the properties are owned by a separate corporation, and section 421 (subd 1, par [a]) requires that either the purposes for which such corporation is organized or those stated purposes to which it actually gives effect must fall into one of the exempt categories in paragraph (a). Aiding another corporation that does qualify for the exemption is not one of the purposes listed in paragraph (a), and this court would do violence to the statute if it were to read it into the section.

As this court has already asserted, the prime purpose behind the 1971 amendments was to stem the steadily increasing flow of property from municipal tax rolls (e.g., Association of Bar, supra, at p 155; Matter of American Bible Soc. v Lewisohn, 40 NY2d 78, 86). The joint legislative committee whose recommendations formed the basis for the amendments estimated that more than 30% of the real property in the State was tax exempt and that unless action was taken that figure would rise to 50% by 1985 (NY Legis Doc, 1970, No. 15). The Legislature then acted to give municipalities greater leeway to cut back on such exemptions. This is not to argue that the motives for which petitioner corporation was created are in any way unworthy. The Legislature might very well decide in the future that a corporation one step removed from the exempt purposes of the statute should be allowed an exemption. But in light of the Legislature’s concern over the impact of exemptions on municipal tax rolls, as well as the traditional maxim that exemption statutes should be construed strictly against the party seeking the exemption, this court should not take it upon itself to make such a policy determination.

It remains to distinguish two Appellate Division opinions relied upon by petitioner, Matter of Faculty-Student Assn. of State Univ. Coll. at Oswego v Sharkey (35 AD2d 161, affd 29 NY2d 621) and Matter of Beth Israel Hosp. Housing Co. (Catherwood) (35 AD2d 397). In each case, the Appellate Division countenanced exemptions in situations similar in many respects to the case at hand. This court, however, has never expressly adopted the reasoning of these decisions. The court never passed on Beth Israel, and it affirmed Faculty-Student Association, without opinion. Significantly, the cases were decided by the Appellate Division in 1970, before the Legislature reversed a trend of many years and moved to curtail the expansion of real property tax exemptions. In light of the detailed discussion that this court has subsequently given to the Legislature’s motivation in enacting the 1971 amendments, these cases are of questionable applicability to the current situation. They certainly do not provide a strong enough base to allow this court to rewrite the Legislature’s handiwork in such a sensitive area.

From time immemorial, real property tax exemption statutes have been construed rigidly against parties claiming exemptions. Exemptions have been denied unless the statutory language was clear and unambiguous and unless the intention of the Legislature to grant the exemption indisputably appeared. Any doubt should be resolved in favor of the taxing authority. (See Town of Harrison v County of Westchester, 34 Misc 2d 1020, 1033 [Hoyt, J.], affd 18 AD2d 1136, affd 13 NY2d 258.)

Property tax exemptions have the direct effect of shifting the burden of who must pay for municipal services. Simple arithmetic dictates that when one parcel is removed from the tax rolls, all other taxpayers — businesses, nonexempt nonprofit organizations, homeowners — must pay an increased share. The Legislature was aware of this in 1971 when, in the same act that amended the statute involved here, it declared that "the continuous removal from the tax rolls of taxable real property, is a particular hardship on the local governments of this state and upon the citizens of this state” (L 1971, ch 414, § 1). Certainly there are many organizations that should receive exemptions. The fact that the Legislature has granted the exemptions that it has testifies to this. But in these days when municipalities are already hard pressed and requests for tax exemptions are mushrooming, this court should not take it upon itself to alter the scheme established by the Legislature.

The order of the Appellate Division should be reversed.

Judges Gabrielli, Wachtler and Fuchsberg concur with Judge Meyer; Chief Judge Cooke dissents and votes to reverse in a separate opinion in which Judges Jasen and Jones concur.

Order affirmed.

      . Referred to hereafter in this opinion simply as "Hospital”.

        . The finding in the third from last paragraph of the decision of Equity Term is that "the directors of the petitioner corporation are required to be directors or trustees of the Hospital itself’, which is inconsistent with the statement in the second paragraph of the decision that three of the nine directors be members of and appointed by the president of Hospital. However, the only evidence in the record on the point is the paragraph of the certificate of incorporation quoted above. We accept as fact, therefore, that "all of’ the directors must be members of Hospital’s board and appointed by Hospital’s president.

      . In light of the subsequent amendment of section 421 (subd 1, par [a]) of the Real Property Tax Law discussed below, we deem it unnecessary to comment upon whether such a corporation is an "appendage” or is operated in its own right for hospital purposes.

      . (Final Report of the Joint Legislative Committee to Study and Investigate Real Property Tax Exemptions, NY Legis Doc, 1970, No. 15, pp 40-41; NY Legis Ann, 1971, p 392.) The Governor’s bill jacket on chapter 414 contains nothing explanatory of the insertion either.

      . Of relevance in that connection is the fact that the statute involved in Beth Israel was in the conjunctive and the owning corporation was nevertheless held exempt, for it suggests that in using the disjunctive in the 1971 amendment the Legislature was making its intention pellucid.

      . Rather than controvert that conclusion, as the dissent suggests, the Mohonk Trust holding (that what the corporation does rather than what its certificate says determines exemption) supports it. To suggest as the dissent does (p 137) that petitioner "is conducted solely for the purpose of owning, operating and managing real property” is inconsistent with the affirmed findings of fact and with the dissent’s emphasis on the "requirement that the property actually be used for a tax exempt purpose” (p 136), for petitioner’s real property is used only to house hospital personnel, as the courts below found, which is, as St. Luke's holds, a hospital purpose. To read the subdivision as requiring that only a corporation which operates a hospital is exempt is to ignore the wording of the subdivision, which speaks of "hospital * * * purposes”, a far broader concept, as well as the prior case law and the 1971 amendment discussed in the text above (pp 131-133).

        Presbyterian Residence Center held only that operation of a housing project for the elderly was not an exempt use under section 421 for charitable or moral or mental improvement purposes where the tenants were self-supporting and the fees, rents and charges imposed made the apartments self-sustaining, though conceivably exemption might be available under the special provision (§ 422) governing not-for-profit housing for the elderly.

        St. Joseph’s Health Center Properties concerned the same corporation involved in the instant appeal but the mortgage recording tax statute there in question exempted only a "mortgage executed by a voluntary nonprofit hospital corporation,” which Properties clearly is not. Moreover, the Appellate Division’s statement (55 AD2d, at p 485) that "petitioner was formed with the intent that it would undertake a building project [an office building and garage] upon land then owned by the Hospital for the purpose of insulating other Hospital buildings from the possibility of liens arising out of the proposed construction” does not avail the city. We need not analyze its argument that lien protection is not a charitable purpose, for the simple answer is that the argument confuses the motive for forming Properties with its corporate purposes and the housing use to which the properties here in question have been put.

      . A possible basis for distinction is that in Palen the exempt corporation leased the property from the realty owning corporation under a lease providing for the substantial annual rental of $48,000. Moreover, the cases relied on in Palen (Hebrew Free School Assn. of City of N. Y. v Mayor, 99 NY 488; People ex rel. National Commercial Bank & Trust Co. v Lewis, 179 Misc 140) involved statutes relating exemption to ownership by the exempt corporation rather than ownership by a corporation "organized or conducted” for an exempt purpose, as the statute as presently worded provides for.

        St. Luke’s did not hold that owning and operating living quarters for hospital personnel was a hospital "purpose” under section 421 (subd 1, par [a]). In St. Luke’s, the hospital corporation, which unquestionably met the "purposes” test of the section, owned the apartment house itself. The court focused on the second branch of the test, involving the actual "use” to which those buildings were put, and found that those portions of the apartment buildings used to house hospital personnel were entitled to exemptions (12 NY2d, at p 143). The court thus found an exemption in order only where both the "purpose” and "use” branches of the test had been met. Its holding cannot be used to support the merger of those two distinct concepts to broaden the statute’s grounds for exemption.


author: Meyer, J.

text:
    In the Matter of Alfred S. Koffler and William H. Harrison, Jr., Attorneys, Appellants. Joint Bar Association Grievance Committee for the Tenth Judicial District, Respondent.
    Argued September 9, 1980;
    decided October 21, 1980

      POINTS OF COUNSEL

      Melvin L. Wulf and Thomas P. Kerrigan for appellants.
    I. Appellants’ advertising is constitutionally protected speech and may not be prohibited or punished by the State. (Virginia Pharmacy Bd. v Virginia Consumer Council, 425 US 748;
      Bigelow v Virginia, 421 US 809; Ohralik v Ohio State Bar Assn., 436 US 447; Pittsburgh Press Co. v Human Relations Comm., 413 US 376; N. A. A. C. P. v Button, 371 US 415; Matter of Primus, 436 US 412; People v Mobil Oil Corp., 48 NY2d 192; Tinker v Des Moines School Dist., 393 US 503.) II. Respondents’ direct mail advertising is permissible under DR 2-101 and 2-103 of the Code of Professional Responsibility, and under the rules for lawyer advertising adopted by the court below.

      Francis F. Doran, James R. Augenthaler and Grace D. Moran for respondent.
    I. Appellants’ conduct constituted solicitation and not advertising as permitted under Bates. (Bates v State Bar of Ariz., 433 US 350.) II. Solicitation by attorneys constitutes conduct harmful to the public and to the legal profession. (Matter of Primus, 436 US 412.) III. The State has a compelling interest to protect the public from the harms created by solicitation and therefore a right to prohibit it. (Ohralik v Ohio State Bar Assn., 436 US 447; Virginia Pharmacy Bd. v Virginia Consumer Council, 425 US 748; Goldfarb v Virginia State Bar, 421 US 773.)

      Frederic Block, Richard C. Cahn and Bernard J. Reilly for New York State Bar Association, amicus curiae.

    I. The Court of Appeals should identify and articulate the State’s interests by which the Bar should be guided in respect to attorney advertising and solicitation by the use of the mails. (Friedman v Rogers, 440 US 1; Matter of Primus, 436 US 412; Bates v State Bar of Ariz., 433 US 350; N. A. A. C. P. v Button, 371 US 415; Miller v California, 413 US 15; People v Clayton, 41 AD2d 204.) II. State interests implicated in attorney advertising and solicitation by the use of the mails and suggested regulations relating thereto. (Kovacs v Cooper, 336 US 77; Lehman v City of Shaker Hgts., 418 US 298; Martin v Struthers, 319 US 141; Breard v Alexandria, 341 US 622; Mine Workers v Illinois Bar Assn., 389 US 217; CSC v Letter Carriers, 413 US 548; Ohralik v Ohio State Bar Assn., 436 US 447; Buckley v Valeo, 424 US 1; Board of Governors v Agnew, 329 US 441.)

      David C. Vladeck and Alan B. Morrison for New York Public Interest Research Group and others, amici curiae. Respondents’ direct mail campaign is protected by the First Amendment.

      (Matter of Primus, 436 US 412; Ohralik v Ohio State Bar Assn., 436 US 447; N. A. A. C. P. v Button, 371 US 415; Bigelow v Virginia, 421 US 809; First Nat. Bank of Boston v Bellotti, 435 US 765; Buckley v Valeo, 424 US 1; Goldfarb v Virginia State Bar, 421 US 773; Matter of Gordon, 48 NY2d 266.)
   OPINION OF THE COURT

Meyer, J.

Direct mail solicitation of potential clients by lawyers is constitutionally protected commercial speech which may be regulated but not proscribed. The Appellate Division’s contrary holding, predicated upon an artificial distinction between solicitation and advertising, should, therefore, be reversed, without costs.

The appeal comes before us as of right, on constitutional grounds. It is from an order of the Appellate Division, made in a disciplinary proceeding, which confirmed the report of the referee that respondents-appellants Koffler and Harrison (hereafter respondents) had violated section 479 of the Judiciary Law and DR 2-103 (A) of the Code of Professional Responsibility, but which, finding that respondents had apparently acted in good faith, imposed no sanction.

The proceeding, begun by the Joint Bar Association Grievance Committee, Tenth Judicial District (hereafter Committee), charged that respondents, in violation of section 479 of the Judiciary Law and the Code of Professional Responsibility, caused to be mailed between August 24, 1977 and October 24, 1977, to approximately 7,500 individual real property owners a letter on respondents’ legal stationery which solicited the addressees to use respondents’ services in connection with the sale of real property, and during the same period caused to be mailed to a number of real estate brokers a letter on respondents’ legal stationery soliciting the brokers to refer clients to respondents in connection with the purchase or sale of real property. The texts of the two letters are set forth in the Appellate Division’s opinion (70 AD2d 252, 254-255) and need not be repeated here. The Appellate Division noted (id., at p 256) respondent Koffler’s testimony that the results of their Newsday advertisement, reproduced as part of their letter, '■ 'were negligible’ ” and that respondents " 'felt if we could direct our advertising specifically at the person who was interested in the sale of a house, — for example, instead of just advertising in a paper with a general circulation — we might be able to get better results and do the mass production idea that we had.’ ” He also testified that the firm did about 200 closings at the fee stated in the letter.

By their answer and by stipulation made before the referee respondents admitted sending the letters and the text of them. The answer, however, alleged as a defense that both facially and as applied the Judiciary Law and the code violate the First and Fourteenth Amendments to the United States Constitution, that respondents acted in good faith reliance on the decision of the Supreme Court in Bates v State Bar of Ariz. (433 US 350), decided June 27, 1977, and that they have acted and are continuing to act in compliance with the guidelines for advertising adopted by the New York State Bar Association and approved by the Appellate Division, Second Department.

Since overbreadth analysis is not applicable to commercial speech (Ohralik v Ohio State Bar Assn., 436 US 447, 462, n 20; People v Mobil Oil Corp., 48 NY2d 192, 199), respondents are limited to contesting the invalidity of the statute and code provisions as applied to them. The referee concluded that respondents had violated the Judiciary Law and DR 2-103 (A) of the code because their communications constituted constitutionally unprotected solicitation rather than advertising. In so finding he made no distinction between the letter to homeowners and the letter to brokers, nor had any distinction between them been suggested by the Committee’s presentation at the hearing before the referee. Confirming, the Appellate Division, without reaching the question whether all mailing to nonclients is proscribed, held the' statute and DR 2-103 (A) "constitutional insofar as they ban solicitation of legal business by mail as well as in person” (70 AD2d 252, 274) but, except for a passing footnote reference to the potential conflict of interest that could be involved in the solicitation of real estate brokers to refer clients to respondents, likewise did not differentiate between the two letters. For the reasons hereafter set forth we conclude that neither statute nor code provision can constitutionally prohibit advertising of attorneys’ services by direct mail addressed to potential clients. We do not, however, pass upon direct mail solicitation of clients through materials addressed to third persons, preferring to leave determination of that question, distinguishable as it is in a number of ways from direct client solicitation by letter, for a matter in which a more complete record has been made and there has been more extensive consideration by the Appellate Division, in which is vested primary jurisdiction in matters of discipline.

While prohibitions against solicitation of legal business by or for attorneys have ancient roots (Note, Attorney Solicitation of Clients, 7 Hofstra LR 755, 757), their constitutionality has come into question only recently. The proscriptions the Committee seeks to enforce against respondents are contained in section 479 of the Judiciary Law, which read in 1977 and still reads: "It shall be unlawful for any person or his agent, employee or any person acting on. his behalf, to solicit or procure through solicitation either directly or indirectly legal business, or to solicit or procure through solicitation a retainer, written or oral, or any agreement authorizing an attorney to perform or render legal services, or to make it a business so to solicit or procure such business, retainers or agreements”, and section DR 2-103 (A) of the Code of Professional Responsibility, which as it read at the time respondents’ letter to homeowners was circulated, provided: "A lawyer shall not recommend employment, as a private practitioner, of himself, his partner, or associate to a non-lawyer who has not sought his advice regarding employment of a lawyer.” Since to recommend one’s self for employment is to solicit employment, the two provisions are, at least in the context of the present proceeding, coextensive.

We disagree, however, with the Appellate Division’s conclusion that the solicitation that those provisions condemn can be differentiated from constitutionally protected commercial speech simply by categorizing the former as solicitation and the latter as advertising. The Supreme Court has said so in so many words, overruling in N. A. A. C. P. v Button (371 US 415, 429) the contention that "solicitation” is wholly outside the area of First Amendment protection, and declaring in Bigelow v Virginia (421 US 809, 826) that: "Regardless of the particular label asserted by the State — whether it calls speech 'commercial’ or 'commercial advertising’ or 'solicitation’ — a court may not escape the task of assessing the First Amendment interest at stake and weighing it against the public interest allegedly served by the regulation.” (See, also, Matter of Madsen, 68 Ill 2d 472, 478.)

Semantically, of course, there is a difference. Not all solicitation is advertising, though all advertising either implicitly or explicitly involves solicitation. To "solicit” means to move to action, to endeavor to obtain by asking, and implies personal petition to a particular individual to do a particular thing (Webster’s Third New International Dictionary, p 2169; Black’s Law Dictionary [5th ed], pp 1248-1249), while "advertising” is the calling of information to the attention of the public, by whatever means (Webster’s, p 31; Black’s, p 50). To outlaw the use of letters, the content of which does not violate DR 2-101, addressed to those most likely to be in need of legal services, because in addition to "advertising” the nature of the service and its price the letters implicitly or explicitly suggest employment of the writer to perform those services, ignores the strong societal and individual interest in the free dissemination of truthful price information as a means of assuring informed and reliable decision making in our free enterprise system, about which both the Supreme Court (Bates v State Bar of Ariz., 433 US 350, 364, supra) and we (People v Mobil Oil Corp., 48 NY2d 192, 200, supra) have had occasion to comment, and can only be productive of confusion for the profession (see Freedman, Lawyers’ Ethics in an Adversary System, ch 10). To do so, moreover, is to suggest that there is necessarily something improper about an attorney’s desire to earn a fee, and that there is something different about the legal profession that makes direct mail advertising improper though it would not be for other businesses or professions and though indirect forms of advertising are not improper even for the legal profession, notwithstanding the contrary indications in the writings of both the Supreme Court (Bates, supra, at pp 368-369, 371-372; Pittsburgh Press Co. v Human Relations Comm., 413 US 376, 385) and of our court (Matter of Gordon, 48 NY2d 266, 272).

Turning, then, to consideration of the provisions in question in the context of the case law on commercial speech, we note that the Supreme Court of Kentucky has upheld letter solicitation of clients in real estate transactions (Kentucky Bar Assn. v Stuart, 568 SW2d 933 [Ky]; see, also, the reference to "mail circulations” in the concurring in-part opn of Mr. Justice Powell in Bates v State Bar of Ariz., 433 US 350, 402, n 12, supra), but that none of the United States Supreme Court’s pronouncements in cases concerned with lawyer-client speech is directly in point. Matter of Primus (436 US 412) dealt with lawyer-client speech but at the political and associational level, not here involved, and while it held protected letter solicitation of a prospective client, did so on the basis (see 436 US, at p 431) of the more generous protection accorded such speech. Bates v State Bar of Ariz. (supra) though it held protected price advertising by lawyers, did so with respect to the more indirect method of newspaper advertising. Ohralik v Ohio State Bar Assn. (436 US 447, supra), while it held constitutional a restriction on in-person solicitation of accident victims while in the hospital, did so on the possibility of overreaching inherent in such a person-to-person confrontation.

Those cases are nonetheless helpful in the determination of the instant appeal, as is the more structured analysis for commercial speech cases stated by the Supreme Court in its most recent opinion on the subject, Central Hudson Gas v Public Serv. Comm. (447 US 557). In that case the court defined commercial speech as “expression related solely to the economic interest of the speaker and its audience” (447 US, at pp 561-562), a definition within which respondents’ letter to homeowners comfortably fits, and posited a four-part analysis (447 US, at p 566): (1) Is it misleading or related to unlawful activity? (2) Are the Government interests sought to be protected substantial? (3) How directly does the regulation advance those interests? (4) Is there a less restrictive alternative?

The Committee did not claim in its petition that respondents’ letter was either misleading or related to unlawful activity. At the hearing before the referee, its counsel rested after putting on record the stipulation by which respondents’ sending of the letters and the content of them was put in evidence and cross-examined respondents only to show that they were commercially motivated. The Appellate Division (70 AD2d, at p 274, n 5) characterized as a questionable tactic the statement in the letter that " 'We understand that you are selling your home’ ”, noting that the mailing of 7,500 such letters "would apparently indicate that they [respondents] had no such understanding at all”, but made no finding that the letter was misleading, as, indeed, on the record it could not have, there being nothing in the record to indicate how the list of addressees was compiled by respondents. We conclude that the letter to homeowners was neither misleading nor did it relate to unlawful activity.

The interests sought to be protected are identified in the Appellate Division opinion (70 AD2d, at p 274) and in the Committee’s brief as the potentials for deception, for invasion of privacy, for overcommercialization of the profession and for conflict of interest. Bates, Ohralik and Primus establish that these are legitimate and important State interests.

There is, however, obvious tension between these interests and the societal interest, already noted, in the free dissemination of truthful price information in order to assure "informed and reliable decisionmaking” (Bates, 433 US 350, 364, supra). It is in the light of that tension that the directness of relation of regulation to purpose is to be considered. So considered, the only interest concerning which it can be said that there is a sufficiently direct relationship is prevention of deception. The Committee does not suggest how conflict of interest can arise through direct mail client solicitation or how the proscription of such solicitation will "help to avoid situations where the lawyer’s exercise of judgment on behalf of a client will be clouded by his own pecuniary self-interest”, as its brief suggests, and no such possibility occurs to us (cf. Note, 81 Yale LJ 1181, 1187).

The overcommercialization potential of direct mail advertising is now sufficiently controlled by the Appellate Division’s rule 691.12 and DR 2-101, the constitutionality of which have not been questioned in this proceeding. Though those controls were not in effect when respondents mailed their letters, the connection between professional standards (as distinct from the traditions of the profession, cf. Bates, supra, at p 371) and direct mail advertising of the nature and cost of legal services offered is too indirect to sustain proscription of such advertising (cf. Central Hudson Gas, supra, 447 US, at pp 563-564; Terry v California State Bd. of Pharmacy, 395 F Supp 94, 106, affd 426 US 913). The more so is this true in light of Bates’ conclusions that “competition through advertising is ordinarily the desired norm” (at p 378, n 35) and that restraints on advertising “are an ineffective way of deterring shoddy work” (at p 378).

Invasion of privacy and the possibility of overbearing persuasion, both of which were condemned in Ohralik and which could conceivably be present in telephone solicitation as the Appellate Division suggests (70 AD2d, at p 273), are not sufficiently possible in mail solicitation to justify banning it. As the Supreme Court put it in. Consolidated Edison v Public Serv. Comm. (447 US 530, 542-543), a recipient of a lawyer’s letter “may escape exposure to objectionable material simply by transferring * * * [it] from envelope to wastebasket.” It is not enough to justify a ban that in some situations (marital discord, a death in the family) a solicitation letter may be offensive to the recipient, or that some people may fear receiving a lawyer’s letter, or to suggest that there may be some who by reason of frequent receipt of lawyer’s solicitation letters may discard without opening a mailed summons.

The potential for deception is a different matter, for unlike newspaper, television or radio advertising, direct mail goes only to the addressee. The temptation for deception is, therefore, greater, and the probability of exposure less, than for those more public media. Enforcement of the State’s strong interest that “the stream of commercial information flow cleanly as well as freely” (Virginia Pharmacy Bd. v Virginia Consumer Council, 425 US 748, 772) and that, to that end, there be effective oversight of members of the Bar is less probable, therefore, with respect to mail than to media advertising (see Ohralik, 436 US 447, 466-467, supra; Allison v Louisiana State Bar Assn., 362 So 2d 489, 496 [La]).

That there is a substantial State interest to which the regulations are closely related does not end the inquiry, however, for complete suppression is not constitutional if the State’s interest can be adequately protected by more limited regulation. That it can be seems hardly open to question, in view, for example, of the filing requirement for retainer statements now contained in the Appellate Division’s rule 691.20 (22 NYCRR 691.20). That similar filing of a solicitation letter assures the public ample protection was the conclusion of the Supreme Court of Kentucky (Kentucky Bar Assn. v Stuart, 568 SW2d 933, 934 [Ky], supra).

Our discussion so far assumes that the ban against solicitation is a restriction as to content or subject matter, rather than manner of communication. The Supreme Court has, however, differentiated between the two applying the criteria discussed above to content restriction but upholding a regulation of time, place or manner if reasonable, if it serves a significant governmental interest and if it leaves ample alternative channels for communication (Consolidated Edison v Public Serv. Comm., 447 US 530, 535-536, supra; Virginia Pharmacy Bd. v Virginia Consumer Council, 425 US 748, 771, supra).

Since that categorization gives rise to some problems in analysis (cf. Reich, Preventing Deception In Commercial Speech, 54 NYU LR 775), we note that the result would not differ were we to apply the manner rather than the content criteria. The Committee argues that "ample alternative channels” are left open because nothing in the letter, with the exception of the personal references, was unsuited to communication in a newspaper, magazine, advertising supplement, telephone directory, radio or television advertisement. There is, however, nothing to show what the comparative costs of the suggested alternatives is or whether the more direct and discursive letter form is not more effective, and thus no basis for concluding that the alternatives are "ample”. There is, moreover, respondent Koffler’s testimony that at least the newspaper advertising which they tried first was ineffectual, the response being negligible, whereas they were retained for some 200 closings as a result of their letter to homeowners. Moreover, unless the reasonableness of regulation is to be considered in the abstract, a regulation which completely proscribes use of direct mail when the State’s purpose can readily be achieved by a less restrictive alternative cannot be said to be reasonable.

Whether considered as a restriction on the content of, or a regulation of the manner of, commercial speech, the restrictions in question may not constitutionally proscribe direct mail advertising of the availability of particular legal services and the cost of those services.

For the foregoing reasons, the order of the Appellate Division should be reversed, without costs, and the proceeding dismissed.

Chief Judge Cooke and Judges Jasen, Gabrielli, Jones, Wachtler and Fuchsberg concur.

Order reversed, etc.

      .  Absence of a sanction does not affect respondents’ right of appeal from the confirmed finding of violation (CPLR 5601, subd [b], par 1).

      . For example, third person mailings will, if their ends are to be achieved, almost always involve in-person solicitation by the intermediary, and are, therefore, much closer to speech of the type Ohralik v Ohio State Bar Assn. (436 US 447) has held can be proscribed (cf. Matter of State Bar Grievance Administrator v Jacques, 407 Mich 26, 51 [Coleman, Ch. J., dissenting]).

      . On April 29, 1978, DR 2-103 was amended. Subdivisions (A) and (F) of the amended provision read as follows:
      "(A) A lawyer shall not solicit employment as a private practitioner of himself or herself, a partner or an associate to [sic] a person who has not sought advice regarding employment of a lawyer in violation of any statute or court rule. Actions permitted by DR 2-104 and advertising in accordance with DR 2-101 shall not be deemed solicitation in violation of this provision.”
      "(F) Advertising permitted under DR 2-101 shall not be deemed in violation of any provision of this Disciplinary Rule.” On March 1, 1978, the Appellate Division, Second Department, implemented its rule 691.22, originally filed in 1976 (22 NYCRR 691.22). The rule is entitled "Advertising and publicity by attorneys” and, in pertinent part, permits public communications that are not false or deceptive and that do not include puffery or claims concerning quality of services that cannot be measured or verified, and requires that advertised fees be maintained for specified periods. DR 2-101, referred to in DR 2-103 (A) and (F), is, except for the substitution of "lawyer” for "attorney”, identical with rule 691.22. When respondents’ letters were sent, however, the guidelines were not in effect.

      . Of course, the Committee in seeking to have respondents disciplined for violating the Judiciary Law is, in one sense, urging that respondents acted unlawfully, but that is not the activity (sale of a house) to which the letter related.

      . It is the potential that is to be considered in determining constitutionality (Ohralik v Ohio State Bar Assn., 436 US 447, 464, supra), although respondents could not be disciplined unless their "activity in fact involved the type of misconduct at which” the prohibitions in question are directed (Matter of Primus, 436 US 412, 434, supra).

      . Our discussion of a filing requirement is, of course, by way of example only and not by way of prescription.