text:
    [642 NE2d 1077, 618 NYS2d 621]
    The People of the State of New York, Appellant, v Andre Garcia, Respondent.
    Argued September 22, 1994;
    decided October 27, 1994

      POINTS OF COUNSEL

      Robert M. Morgenthau, District Attorney of New York County, New York City (Kathleen E. Fay and Norman Barclay of counsel), for appellant.
    Defendant was improperly sentenced to concurrent prison terms, since the factors relied upon by the courts below to permit those sentences did not constitute mitigating circumstances bearing directly upon the manner in which defendant had committed his crimes. (People v Williams, 79 NY2d 281; People v Sailor, 65 NY2d 224, 474 US 982; People v Felix, 58 NY2d 156, 464 US 802; People v Laing, 79 NY2d 166; Patrolmen’s Benevolent Assn. v City of New York, 41 NY2d 205; People v Baskerville, 60 NY2d 374; People v O’Neill, 86 AD2d 213; People v Smith, 182 AD2d 393, 79 NY2d 1054; People v Santiago, 181 AD2d 460, 80 NY2d 916.)

      David B. Affler, New York City, and Philip L. Weinstein for respondent.
    I. Since the prosecutor made no on-the-record complaint that the concurrent sentences which the sentencing court had promised to impose violated Penal Law § 70.25 (2-b) until after the court had accepted respondent’s guilty pleas to all the relevant counts, no question of law has been preserved. (People v Santiago, 181 AD2d 460, 80 NY2d 916; People v Farrar, 52 NY2d 302; People v Jones, 81 AD2d 22; People v Jackson, 196 NY 357; People v Liccione, 50 NY2d 850; People v Danny G, 61 NY2d 169; Matter of Benjamin S., 55 NY2d 116; People v Selikoff 35 NY2d 227, 419 US 1122; People v Ramos, 63 NY2d 640; People v Taylor, 73 NY2d 683.) II. Respondent’s concurrent sentences for four robberies committed while on bail release may not be disturbed by the Court of Appeals since the sentencing court’s findings that respondent never displayed an actual weapon and did not injure any victim bore "directly upon the manner” in which the crimes were committed, and the sentencing court did not abuse its discretion as a matter of law in concluding that these factors constituted "mitigating” circumstances. (People v Farrar, 52 NY2d 302; People v Day, 73 NY2d 208; Patrolmen’s Benevolent Assn, v City of New York, 41 NY2d 205; People v Williams, 79 NY2d 281; People v Belge, 41 NY2d 60; People v Felix, 58 NY2d 156; People v Doleo, 110 AD2d 524; People v Burke, 39 NY2d 729; People v Esteves, 41 NY2d 826; People v Rickert, 58 NY2d 122.)
   OPINION OF THE COURT

Bellacosa, J.

The issue on this appeal involves the meaning and application of the "mitigating circumstance[ ]” sentencing authorization in Penal Law § 70.25 (2-b). Specifically, we must decide whether the trial court appropriately exercised its narrow statutorily invested discretion in imposing a concurrent rather than consecutive sentence for a violent felony crime committed while defendant was free on bail. We conclude that the concurrent rather than consecutive sentence in the circumstances of this case is warranted and should be sustained. Thus, we affirm the order of the Appellate Division.

Penal Law § 70.25 (2-b) requires that:

”[w]hen a person is convicted of a violent felony offense committed after arraignment and while released on recognizance or bail, * * * such sentences shall run consecutively. Provided, however, that the court may, in the interest of justice, order a sentence to run concurrently * * * if it finds * * * mitigating circumstances that bear directly upon the manner in which the crime was committed” (emphasis added).

The trial court considered the absence of injury to others and nondisplay of a weapon as mitigating factors within the meaning of Penal Law § 70.25 (2-b), in addition to the defendant’s age, prior criminal history and drug addiction. We are satisfied that defendant’s failure to injure others and to display a weapon bear directly on defendant’s manner in committing the crime, the governing statutory phrase of art. These elements, therefore, constitute permissible mitigatory circumstances under Penal Law § 70.25 (2-b) with respect to which the trial court could bypass the mandatory consecutive sentencing regime. While the statute limits the historically wide latitude invested in sentencing courts (see, People v Farrar, 52 NY2d 302, 306), it correspondingly incorporates a discretionary exception, reflecting the Legislature’s counterweight to any absolute removal of judicial sentencing power (cf, People v Thompson, 83 NY2d 477).

This case arises on a People’s appeal, pursuant to permission granted by a dissenting Justice at the Appellate Division, from that Court’s order (195 AD2d 253). The Appellate Division modified, on the law, a judgment of Supreme Court, New York County, convicting defendant, upon his guilty pleas, of multiple robbery counts. He was sentenced to concurrent indeterminate terms on nine felony counts. The Appellate Division modified as to another sentencing aspect, not raised on or relevant to this appeal, and otherwise affirmed the judgment. Only the affirmance of the legality of the sentence is before us, insofar as the Appellate Division recognized and endorsed the trial court’s exercise of concurrent sentence discretionary power.

Between April 14, 1989 and May 25, 1989, defendant committed several robberies, for which he was arrested on May 25, 1989 and charged. On July 12, 1989, while free on bail, defendant committed another series of robberies and was charged with additional felony counts. On August 14, 1989, the defendant pleaded guilty in satisfaction of multiple robbery counts, respectively, from the first spree and during the bail period. The People pressed for consecutive sentences pursuant to Penal Law § 70.25 (2-b), pointing to the additional first degree robberies defendant committed while he was free on bail.

Over the People’s objection, the trial court found mitigating circumstances and sentenced defendant to concurrent indeterminate terms of imprisonment. The trial court relied on: (1) defendant’s youth; (2) his minor prior criminal history; (3) defendant’s drug abuse problem; (4) the absence of injury to others; and (5) the fact that no gun was displayed during the commission of the July robberies.

In its affirmance, the Appellate Division stated that the mitigating "factors set forth and relied upon by the sentencing court satisf[ied] the intent of the Legislature” as embodied in Penal Law § 70.25 (2-b) (195 AD2d 253, 255, supra). Justice Ross dissented in part and voted to remand for mandatory consecutive sentencing.

The People’s appeal challenges only the Appellate Division’s affirmance of the trial court’s ruling that a concurrent sentence was authorized under the circumstances of this case. Picking up on the dissent (id., at 262), the People argue that none of the factors relied on by the sentencing court — defendant’s age, prior criminal history, drug abuse problem, absence of injury to others and nondisplay of a gun — constitutes a "mitigating circumstance * * * bearing] directly upon the manner in which the crime was committed” (Penal Law § 70.25 [2-b]). The People, relying on People v O’Neill (86 AD2d 213, 215), contend that mitigating factors are limited only to those which diminish defendant’s culpability and alleviate guilt.

Defendant counters that the trial court’s consideration of lack of injury to others and lack of actual display of a gun are mitigating factors within the legislatively authorized test that allows for concurrent sentencing. Further, defendant contends that so long as some mitigating circumstance exists, the trial court’s consideration of other nonqualifying factors is not an abuse of sentencing discretion.

Penal Law §70.25 (2-b) was designed to circumscribe sentencing discretion, not eliminate it entirely. A sentencing court is authorized to sidestep the consecutive sentencing stricture and impose concurrent sentences, if it finds "mitigating circumstances that bear directly upon the manner in which the crime was committed” (Penal Law § 70.25 [2-b] [emphasis added]). The statute does not elaborate on the operative qualifying phrase.

Legislative history provides scant guidance in this regard. In enacting the consecutive sentencing mandate of Penal Law § 70.25 (2-b), the Legislature plainly sought to combat violent criminal activity by requiring longer and stricter sentences for additional violent felonies committed while a felon was allowed to be free on recognizance or bail (Governor’s Mem approving L 1982, ch 559, 1982 McKinney’s Session Laws of NY, at 2618-2619; see, People v Williams, 79 NY2d 281, 285). To exert an effective deterrent, the Legislature saw fit to add this limitation, among others, on the flexibility of sentencing courts (see, Governor’s Mem approving L 1982, ch 559, op. cit, at 2618). Yet, the Legislature also expressly refrained from removing all discretion (see, Penal Law § 70.25 [2-b]). Therefore, while we may not interpret the statute in a way that would eviscerate or contradict the legislative intent (see, People v Williams, supra, at 285-286), neither should we read it to create a virtual per se consecutive sentencing regime that would diminish the statute’s explicit authorization for some leeway.

Notably, the statutory language does not create, and the legislative history does not suggest, a litany of prescribed or disallowed criteria (compare, CPL 170.40, and 210.40). As a matter of prudent statutory interpretation, especially in this field of traditionally broad sentencing discretion, this Court should not erect its own restrictive regime when the Legislature eschewed that course of dealing. Mitigation is qualified only by the general phrase "circumstances that bear directly upon the manner in which the crime was committed.” The People urge this Court in this respect to adopt an interpretation of the statute which is much more restrictive than its plain language dictates and which would allow mitigation only in the presence of factors which "would tend to diminish the defendant’s culpability and alleviate his guilt” (see, People v O’Neill, 86 AD2d 213, 215, supra). We reject that approach because, to interpret the statute in such a manner, would contravene the statute’s plain meaning and constrict the very discretion that the Legislature chose to leave with sentencing courts.

This Court has addressed the mitigation issue in the context of interpreting a similarly worded exception to the handgun possession sentencing mandate (Penal Law § 70.02 [5] [b]; People v Williams, 79 NY2d 281, supra). That case is instructive. It involved the application of Penal Law § 70.02 (5) (b), which allows a less severe sentence to be imposed on a defendant convicted of possession of a handgun, if the court finds "mitigating circumstances that bear directly upon the manner in which the crime was committed” (Penal Law § 70.02 [5] [b] [i]; People v Williams, supra, at 284-286). In Williams, we vacated the trial court’s sentence because it relied on factors not "relate[d] to defendant’s conduct in committing the crime” (id., at 286). This Court disagreed with the trial court’s finding that conduct by the law enforcement personnel in effecting the arrest qualified as a mitigating circumstance (id.). We provided some boundaries for the clause "mitigating circumstances that bear directly upon the manner in which the crime was committed.” Factors "directly” flowing from and relating to defendant’s personal conduct while committing the crime qualify (see, People v Williams, 79 NY2d 281, supra; see also, People v Felix, 58 NY2d 156, 164).

Applying the statute’s plain words and the reasoning in Williams in the instant case, we conclude that the lower courts properly considered lack of injury to others and nondisplay of a weapon as qualifying mitigating circumstances under Penal Law § 70.25 (2-b), because these factors bear directly on defendant’s personal conduct in committing the crime (see, People v Williams, supra, at 286).

We note, however, that, generally, defendant’s age, background, criminal history and drug habit do not pertain to defendant’s direct manner in the commission of the crime. Therefore, these factors were not appropriate to the "mitigating circumstances” analysis and application under Penal Law § 70.25 (2-b) (see, People v Williams, supra; see also, People v Felix, supra, at 164). To the extent that People v Smith has been read for the proposition that lack of injury to others is nonmitigatory (182 AD2d 393, 395-396, Iv denied 79 NY2d 1054), and to the extent that People v Santiago held the "nature of the perpetrator” (i.e., age and drug addiction) to be mitigatory under Penal Law § 70.25 (2-b) (181 AD2d 460, 460-461, affd on other grounds 80 NY2d 916), they are no longer applicable in light of the rationale we adopt today.

Moreover, in exercising its discretion under Penal Law § 70.25 (2-b), the court is not precluded from considering traditional sentencing factors once qualifying mitigatory factors are found to be present. The Governor’s memorandum accompanying the bill that enacted Penal Law § 70.25 (2-b) states:

"The bill permits the sentencing judge to waive [the consecutive sentencing] requirement only in the presence of specific mitigating factors that bear directly on the manner in which the offense was committed” (Mem approving L 1982, ch 559, 1982 McKinney’s Session Laws of NY, at 2618 [emphasis added]).

Consequently, the trial court’s consideration of nonmitigatory factors, as long as permissible mitigatory ones are found and reflected on the record, does not vitiate the legality of the sentencing court’s ruling. Rather, this consideration is entirely appropriate, done as part of the court’s discretionary exercise with respect to the ultimate consecutive versus concurrent sentencing decision. Thus, the People’s appeal at the Appellate Division with respect to this claimed illegality of the sentence was properly rejected.

The essence of the People’s argument is that allowing lack of injury to others and nondisplay of a weapon to qualify as mitigation from the mandatory consecutive sentencing regime clashes with the overall goal of the Legislature. The People urge this Court to impose a stricter, less forgiving exception than the Legislature imposed. This argument founders against the Legislature’s explicit retention of some sentencing discretion. The Legislature did not narrow the range of allowable mitigating factors to only those which "diminish the defendant’s culpability and alleviate his [or her] guilt,” as in People v O’Neill (86 AD2d 213, 215, supra). Instead, it prescribed a general qualifying phrase for governing the exception from the mandatory consecutive sentencing command. The trial court in this case exercised a sustainable, flexible choice allowed to it by the Legislature with respect to two permissible mitigatory factors.

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

Chief Judge Kaye and Judges Simons, Titone, Smith, Levine and Ciparick concur.

Order affirmed.


source: Caselaw Access Project

author: ClPARICK, J.

license: Public Domain

text:
    [642 NE2d 1082, 618 NYS2d 626]
    David W. Chapel et al., Plaintiffs, v Samuel J. Mitchell et al., Defendants and Third-Party Plaintiffs-Respondents. Robert E. Lee, Doing Business as Protdec, Third-Party Defendant-Appellant.
    Argued September 19, 1994;
    decided October 27, 1994

      POINTS OF COUNSEL

      Cherin & Gold, Binghamton (Sanford P. Tanenhaus of counsel), for third-party defendant-appellant.
    I. The third-party plaintiffs have no right to recover attorneys’ fees from the third-party defendant herein. (Cross v Zyburo, 185 AD2d 967; Alyeska Pipeline Co. v Wilderness Socy., 421 US 240; Gottlieb v Laub & Co., 82 NY2d 457; O’Dowd v American Sur. Co., 2 AD2d 956, 3 NY2d 347; Taylor Wine Co. v Pipe Welding Supply Co., 177 AD2d 940; Gray Mfg. Co. v Pathe Indus., 33 AD2d 739, 26 NY2d 1045; Owens v Palm Tree Nursing Home, 89 AD2d 619; Leingang v Bottled Gas Corp., 332 F2d 959.) II. Under no circumstances is an indemnitee entitled to reimbursement of attorneys’ fees for its action against the common-law indemnitor. (Gray Mfg. Co. v Pathe Indus., 33 AD2d 739; Hooper Assocs. v AGS Computers, 74 NY2d 487; Melnyk v United States Lines Co., 35 AD2d 152; Coyle v Gerritsen Ave. Shopping Ctr., 176 AD2d 232; O’Dowd v American Sur. Co., 2 AD2d 956; Phoenix Bridge Co. v Creem, 102 App Div 354, 185 NY 580; Venneri Co. v Central Heating & Plumbing Co., 40 Misc 2d 125; Peter Fabrics v S. S. Hermes, 765 F2d 306; Signal Oil & Gas Co. v Barge W-701, 654 F2d 1164; Saks Intl. v M/V Export Champion, 817 F2d 1011.)
    No appearance for respondent.
   OPINION OF THE COURT

ClPARICK, J.

This case requires us to decide whether an indemnitee may recover from an indemnitor the legal expenses incurred in prosecuting a common-law indemnification claim. We conclude that such legal expenses are not recoverable.

While employed by third-party defendant Robert E. Lee, plaintiff David W. Chapel sustained injuries when he fell from the roof of a building owned by defendants/third-party plaintiffs Samuel J. Mitchell and S.J.M. Entertainment Corp. (defendant). Plaintiff commenced an action against defendant under Labor Law § 240. Defendant in turn commenced a third-party action against third-party defendant seeking common-law indemnification. Plaintiff moved for summary judgment against defendant on the ground that defendant was strictly liable for plaintiff’s injuries under Labor Law § 240. Defendant cross-moved for summary judgment to declare third-party defendant liable to it for plaintiff’s injuries.

Supreme Court granted plaintiff’s motion as against defendant. By separate order, it also granted defendant’s cross motion for summary judgment as against third-party defendant, finding that defendant was not actively negligent and, thus, was entitled to full indemnification. Defendant then moved against third-party defendant for an order to recover attorneys’ fees, costs, and disbursements incurred in defending the first-party action and in prosecuting the third-party indemnification claim. Supreme Court granted defendant’s motion and ordered a hearing on attorneys’ fees. The court awarded defendant $9,268.30, which sum also included the legal fees and costs expended for the third-party action. The Appellate Division affirmed, concluding that the legal expenses of the third-party action were incidentally and legitimately incurred in the defense of plaintiff’s lawsuit.

The first question to be addressed is whether defendant is entitled to recover the legal expenses incurred in defending the main action. It is well settled that an owner who is only vicariously liable under the Labor Law may obtain full indemnification from the party wholly at fault (see, Kelly v Diesel Constr. Div. of Carl A. Morse, Inc., 35 NY2d 1, 6). This common-law right of indemnification against the party actually at fault encompasses the right to recover attorneys’ fees, costs, and disbursements incurred in connection with defending the suit brought by the injured party (see, Phoenix Bridge Co. v Creem, 102 App Div 354, affd 185 NY 580). In this case, the nature of defendant’s liability is vicarious and its predicate purely statutory. Accordingly, defendant is entitled to recover as part of its indemnification award the legal expenses for defending plaintiffs action.

As to the third-party action, however, we conclude that the legal expenses incurred in its prosecution are not recoverable. The Appellate Division held that "the defense of plaintiffs’ action and the prosecution of the third-party complaint are legitimate expenses incurred in defending against plaintiffs’ lawsuit” (197 AD2d 780, 781). Initially, we note that Gray Mfg. Co. v Pathe Indus. (33 AD2d 739, affd 26 NY2d 1045), the sole authority relied upon by the Court below for this proposition, is inapposite; that case involved the interpretation of contractual indemnity provisions whereas this case is governed by common-law principles as no contract provision or statute is implicated. True, the instant indemnification claim can be fairly characterized as incidental to the main action; however, we cannot agree that the legal expenses of pursuing it are recoverable on this basis.

The question which confronts us has been addressed in slightly different procedural and substantive settings. In Johnson v General Mut. Ins. Co. (24 NY2d 42, 50), we held that the insured was entitled to recover from its insurer the legal expenses arising out of the defense of declaratory judgment actions brought by the injured persons’ subrogee, but we refused to award damages encompassing the legal expenses incurred in pursuing the cross claim itself (id., at 50). In Doyle v Allstate Ins. Co. (1 NY2d 439), the insurer refused to defend its insured in a nuisance action. The insured successfully defended himself and then sued the insurer to establish coverage and to recover the legal expenses arising out of both actions. We held that the insured was entitled to recover the legal expenses of defending the nuisance action, but as to the second action we concluded that the expenses of seeking legal redress are not recoverable as damages (id., at 443-444).

We find no authority for the proposition that the legal expenses of pursuing a common-law indemnification claim are recoverable when such claim is incidental to another action. Moreover, we could not adopt such a rule without simultaneously disparaging the fundamental principle that "the prevailing litigant is ordinarily not entitled to collect a reasonable attorneys’ fee from the loser” (Alyeska Pipeline Co. v Wilder ness Socy., 421 US 240, 247; see, Hooper Assocs. v AGS Computers, 74 NY2d 487, 491 ["attorney’s fees are incidents of litigation and a prevailing party may not collect them from the loser unless an award is authorized by agreement between the parties, statute or court rule”]).

Whatever its advantages or disadvantages, and these have been amply analyzed and require no extended discussion here (see, e.g., Ehrenzweig, Reimbursement of Counsel Fees and the Great Society, 54 Cal L Rev 792 [1966]), the American rule, as opposed to the British rule which requires the unsuccessful litigant to pay legal expenses for both sides, represents an implicit legislative judgment regarding the allocation of legal fees. As we have stated, our rule encourages the "submission of grievances to judicial determination and [provides] freer and more equal access to the courts * * * promoting] democratic and libertarian principles” (Mighty Midgets v Centennial Ins. Co., 47 NY2d 12, 22).

We thus conclude that in the absence of any pertinent contractual or statutory provision with respect to the recovery of amounts expended in the successful prosecution or defense of an action, each party is responsible for its own legal fees. Consequently, defendant is entitled to attorneys’ fees, costs, and disbursements incurred in defense of the main action only.

Accordingly, the order of the Appellate Division should be modified, without costs, and the case remitted to Supreme Court for a de nova hearing on the question of reasonable attorneys’ fees for the defense of the main action only; and, as so modified, affirmed.

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

Order modified, without costs, and case remitted to Supreme Court, Tioga County, for further proceedings in accordance with the opinion herein and, as so modified, affirmed.


author: Ciparick, J.

text:
    [643 NE2d 72, 618 NYS2d 753]
    The People of the State of New York, Respondent, v Sean Roselle, Appellant.
    Argued September 22, 1994;
    decided October 25, 1994

      POINTS OF COUNSEL

      Robin J. Bauer, White Plains, and Stephen J. Pittari for appellant.
    I. The doctrine of collateral estoppel bars the criminal prosecution in the instant case since the Family Court adjudication necessarily determined respondent’s non-guilt pursuant to a petition litigated in Family Court; moreover, all other criteria for application of the doctrine were met. (United States v Oppenheimer, 242 US 85; Ashe v Swenson, 397 US 436; Matter of McGrath v Gold, 36 NY2d 406; People ex rel. Dowdy v Smith, 48 NY2d 477; People v Acevedo, 69 NY2d 478; People v Aguilera, 82 NY2d 23; People v Plevy, 52 NY2d 58; United States v Abatti, 463 F Supp 596; Schwartz v Public Adm’r of County of Bronx, 24 NY2d 65; People ex rel. Matthews v New York State Div. of Parole, 58 NY2d 196.) II. It is in the interest of public policy to preclude criminal prosecution in the instant case by the application of the doctrine of collateral estoppel. (Gilberg v Barbieri, 53 NY2d 285; People v Goodman, 69 NY2d 32; People v Aguilar, 82 NY2d 23; People v Acevedo, 69 NY2d 478; Green v United States, 355 US 184; Grady v Corbin, 495 US 508.)

      Jeanine Pirro, District Attorney of Westchester County, White Plains (Richard E. Weill of counsel), for respondent.
    The State evidentiary doctrine of collateral estoppel does not bar a criminal prosecution based upon the Family Court’s disposition of a child protective petition (Family Ct Act art 10), particularly where the Family Court conducted no formal "fact-finding hearing”. (Matter of McGrath v Gold, 36 NY2d 406; People ex rel. Dowdy v Smith, 48 NY2d 477; People v Aguilera, 82 NY2d 23; People v Plevy, 52 NY2d 58; People v Reisman, 29 NY2d 278; People v Fagan, 66 NY2d 815; People v Berkowitz, 50 NY2d 333; Gilberg v Barbieri, 53 NY2d 285; People v Smith, 62 NY2d 306; Nelson v Dufficy, 104 AD2d 234.)
   OPINION OF THE COURT

Ciparick, J.

The genesis of this criminal action is an April 29, 1990 incident which resulted in a Family Court determination that defendant neglected his three-year-old daughter. The issue framed for our review is whether the doctrine of collateral estoppel precludes the criminal prosecution of defendant for the same incident that resulted in the neglect finding.

I.

On April 29, 1990, the child sustained severe burns to her buttocks and right foot when defendant placed her in a bathtub containing scalding hot water. In response to her squirming and screaming, defendant claims he removed his daughter from the tub, saw that her skin was burned, administered cold water and cocoa butter and took her to a local hospital for emergency treatment. The Westchester County Department of Social Services (DSS) was promptly apprised of the incident, and on May 1, 1990, a caseworker from Child Protective Services interviewed defendant. On May 4, 1990, the child was placed in the temporary custody of DSS.

On May 16, 1990, DSS filed an abuse and neglect petition in Family Court against defendant and the child’s mother alleging that the child was burned by scalding hot water on the buttocks and top of her right foot while in the care of defendant, and that the child’s mother failed to take appropriate measures to protect her daughter after she was informed of her injuries. The petition further charged that defendant’s explanation of the incident was inconsistent with his daughter’s injuries. The Westchester County District Attorney was named as a party to the petition pursuant to Family Court Act §254 (b). At the July 6, 1990 Family Court fact-finding hearing, defendant consented to withdraw his denial of the petition and, in lieu of a trial, provided a statement to the court regarding the April 29,1990 incident.

Under oath, defendant stated that he tested the water and determined the water "was warm enough to take a bath.” He indicated that the child was crying at the time he placed her in the tub because, he thought, she did not want to take a bath. Defendant explained that the child had a bad temper which manifested itself in rebellious behavior, conduct defendant attributed to a case of lead poisoning. When the child began screaming and fighting, defendant, who was holding her by the shoulder, told her to sit down. Defendant noticed steam rising from the water, touched the water and did not find it hot. Then he saw the child’s body was "all messed up,” and he tended to her wounds with cold water and cocoa butter. When her skin peeled off, defendant decided to bring her to the hospital for treatment because he did not have cream and bandages.

In response to the court’s query whether defendant learned a lesson from this incident, defendant replied, "I learned a big lesson.” The Assistant County Attorney proceeded to question defendant. Defendant was unable to explain why only his daughter’s right foot was burned or how her left foot stayed out of the water. During this questioning, defendant further admitted he originally lied about his responsibility for the incident, alternately blaming the mother and a woman named Dorothy for causing the child’s injuries.

Upon conclusion of the hearing, Family Court sustained the petition, finding

"[0]n or about April 29 [the child] was burned on the buttocks and top of her feet by scalding hot water while in the care and custody of [defendant].
"The [defendant] explained to the Court how the injuries occurred and his explanation was very very credible as to how they occurred.
”[T]he Court, because of his explanation is going to make a finding of neglect rather than abuse, but again, the injuries are serious. So, I have to tell you again, when you have a child in your care and custody you got to be awful careful.
'Tt’s not enough to say I did test the water when you put your finger in originally and it’s not enough to say you didn’t put your finger in it just before you put the child in. That is a crucial point, and, therefore, the petition is sustained as to neglect.”

By order of fact-finding and interim disposition dated August 15, 1990, Family Court adjudged that the child was neglected by defendant and her mother. It was ordered that the child remain in the care and custody of DSS pending the dispositional hearing and that DSS arrange for a psychological evaluation of the child. The order also directed DSS to arrange for psychological and psychiatric evaluations of defendant and the child’s mother.

Thereafter, on September 26, 1990, defendant was indicted for assault in the first degree, criminal possession of a weapon in the fourth degree and endangering the welfare of a child as a result of the April 29, 1990 incident. The indictment further charged defendant with making a punishable false statement and perjury in the third degree in connection with his purported false statements on May 7, 1990 and May 11, 1990 regarding the incident.

Approximately two months later, on November 16, 1990, Family Court held the dispositional hearing and issued an order directing that the child remain in the custody of DSS for an additional six months and that defendant participate in a parenting skills program and obtain job counselling.

By omnibus motion dated November 16, 1990, defendant sought, inter alla, dismissal of the first three counts of the indictment relating to the April 29, 1990 incident on the ground that the People were collaterally estopped from relitigating whether defendant intentionally caused injury to his daughter by means of a dangerous instrument on that date. Defendant maintained that the Family Court’s finding that his conduct was not intentional constitutes a final determination in a prior proceeding in which all parties to that proceeding, including the District Attorney, had a full and fair opportunity to actually litigate that issue.

County Court granted the motion, holding that collateral estoppel precluded the criminal prosecution of defendant on the first three counts of the indictment. Reasoning that nothing in the Family Court Act or the Criminal Procedure Law enjoins a criminal proceeding subsequent to a Family Court adjudication, County Court concluded that estoppel could be properly invoked in this case to bar the criminal prosecution (People v Roselle, 152 Misc 2d 191, 194). County Court held that the issue of guilt or innocence was "necessarily” determined by Family Court in defendant’s favor and that the District Attorney was a necessary party to the Family Court proceeding pursuant to Family Court Act § 254 (b) and, therefore, had a "full and fair opportunity” to litigate the issue of abuse but instead "sat on [his] hands” (People v Roselle, 152 Misc 2d, at 193, supra).

In a comprehensive opinion that cogently identifies the legal and policy reasons why collateral estoppel does not bar the criminal prosecution of defendant, the Appellate Division reversed, reinstated the first three counts of the indictment and remitted to County Court for further proceedings (People v Roselle, 193 AD2d 56).

The matter is before us by leave of a Judge of this Court, and we now affirm.

II.

We begin by reiterating that the "separate and civil” nature of an article 10 proceeding is indelibly clear from its provisions (People v Smith, 62 NY2d 306, 311). One of the stated purposes of article 10 is "to establish procedures to help protect children from injury or mistreatment and to help safeguard their physical, mental, and emotional well-being” (Family Ct Act § 1011). The orientation of Family Court is rehabilitative, directed at protecting the vulnerable child, as distinct from the penal nature of a criminal action which aims to assess blame for a wrongful act and punish the offender.

In tracing the legislative history of article 10, Justice Ritter, writing for the Appellate Division, demonstrates that the role of the District Attorney in a child protective proceeding devolved into that of a "necessary party to the proceeding”

(Family Ct Act § 254 [b]), without standing to originate an article 10 proceeding absent leave of the court (see, Family Ct Act § 1032; see also, Matter of Weber v Stony Brook Hosp., 60 NY2d 208, cert denied 464 US 1026). Justice Ritter suggests such status "confers no responsibility beyond the duty to cooperate in the effort to protect abused children,” and concludes that "the District Attorney’s election to simply monitor the proceedings with a nonlawyer domestic violence aide employed in his office had no adverse impact on the filing of criminal charges” (People v Roselle, 193 AD2d, at 65-66, supra).

Not only would it transmute the nature of a child protective proceeding to require the District Attorney to present the criminal case in an article 10 petition or forever be enjoined from such prosecution but it is also contrary to our jurisprudence to hold that the article 10 proceeding collaterally estops a criminal action emanating from the same incident (see, Family Ct Act § 1013 [b]; § 1014 [c]; People v Aguilera, 82 NY2d 23; People v Goodman, 69 NY2d 32; People v Fagan, 66 NY2d 815; People v Plevy, 52 NY2d 58; People v Berkowitz, 50 NY2d 333).

From a policy perspective, collateral estoppel conserves the time and resources of the court and the litigants, furthering society’s interests in the peaceful, orderly and impartial resolution of disputes by enjoining repetitious litigation and the consequent potential for inconsistent results (see, People v Aguilera, 82 NY2d, at 29-30, supra; Staatsburg Water Co. v Staatsburg Fire Dist., 72 NY2d 147, 150; Gilberg v Barbieri, 53 NY2d 285, 290; People v Berkowitz, 50 NY2d, at 345, supra). Collateral estoppel is "a long-recognized equitable reaction against allowing a party to relitigate issues which have already been decided against him” (People v Lo Cicero, 14 NY2d 374, 380). Criminal defendants, unlike civil litigants, are protected by constitutional and statutory prohibitions against double jeopardy (see, People v Berkowitz, 50 NY2d, at 345-346, supra; People v Goodman, 69 NY2d, at 37-38, supra), rendering the litigation-limiting policy underlying collateral estoppel less compelling in a criminal action, particularly in view of the function of a criminal prosecution and society’s interest in the conviction of the guilty and acquittal of the innocent (see, People v Berkowitz, 50 NY2d, at 345, supra).

In any case, collateral estoppel, a flexible doctrine, should not be mechanically applied just because some of its formal prerequisites, like identity of parties, identity of issues, a final and valid prior judgment and a full and fair opportunity to litigate the prior determination, may be present (see, People v Plevy, 52 NY2d, at 64, supra; Gilberg v Barbieri, 53 NY2d, at 292, supra). Whenever collateral estoppel is in issue, the analysis whether a party had a full and fair opportunity to litigate requires consideration of the " ’realities of the * * * litigation’ ” (People v Plevy, 52 NY2d, at 65, supra; see also, Gilberg v Barbieri, 53 NY2d, at 292-293, supra), and it is critical that the issues are identical (see, Ryan v New York Tel. Co., 62 NY2d 494, 500). Applying these principles to the instant case, it is evident that collateral estoppel is inapplicable.

While an article 10 petition may identify the perpetrator of enumerated abusive acts, the real subject of the petition is the child, whose welfare and safety are at the heart of a proceeding designed to expeditiously determine the most suitable environment for the child and institute corrective measures for the benefit of both the child and the parents. Notwithstanding that the same set of facts is in issue, defendant misapprehends the nature of the article 10 proceeding by arguing that the identical legal issue is the subject of this criminal action (see, People v Reisman, 29 NY2d 278, 285-286, cert denied 405 US 1041; People v Lo Cicero, 14 NY2d, at 380, supra).

The Family Court proceeding was not a trial, no evidence was presented against defendant, and only defendant’s sworn admission to the court formed the basis for the neglect adjudication. Defendant’s "testimony” was not in the nature of a defense but consisted of an explanatory statement of the incident. It was the function of Family Court to determine whether defendant’s admission constituted an admission of abuse and neglect or neglect alone, and then to fashion an expedient remedy. Actually in issue was defendant’s ability to adequately care for his daughter, not his criminal culpability. Significantly, a neglect finding can result in the possibility of the child’s placement outside the familial home, not a penal sanction against defendant. The desired end of the article 10 proceeding is to ensure the expeditious protection of the child’s welfare, not to secure a conviction against defendant (see, Gilberg v Barbieri, 53 NY2d, at 293, supra). In this case,

it was the County Attorney, not the District Attorney, who was charged with presenting the article 10 petition. The fact that the District Attorney was represented by a nonattorney Senior Domestic Violence Aide trained to monitor and detect abuse contemplated further development of the facts underlying the abuse petition in the event criminal prosecution was warranted.

To the extent that the article 10 proceeding is directed at protecting the child, it is defendant’s parental rights that are at stake. In this regard, no legally cognizable identity of issues exists between the child protective proceeding, which seeks to safeguard the child, and a criminal action, which yields a final determination conclusive of defendant’s penal responsibility (see, Gilberg v Barbieri, 53 NY2d, at 292, supra [point of inquiry is whether the prior determination should be accorded conclusive effect beyond the case in which it was made]). For purposes of deciding this case and the issue before us, it is of no consequence to the criminal prosecution that there was a final adjudication of neglect in the article 10 proceeding; such adjudication is dispositive only for purposes of placing the neglected child.

III.

We further note that a concurrent criminal action in which defendant’s conduct is at issue is plainly contemplated by article 10. Family Court Act § 1013 (b) provides that

"For the protection of children, the family court has jurisdiction over proceedings under this article notwithstanding the fact that a criminal court also has or may be exercising jurisdiction over the facts alleged in the petition or complaint.”

Further, section 1014 (c) provides that

"Nothing is this article shall be interpreted to preclude concurrent proceedings in the family court and a criminal court.”

Juxtaposed against article 10’s framework for safeguarding the child’s interest is the penal sanction for endangering the welfare of a child. Penal Law § 260.10 states

"A person is guilty of endangering the welfare of a child when:
"2. Being a parent * * * he fails or refuses to exercise reasonable diligence in the control of such child to prevent him from becoming * * * a 'neglected child’ * * * as [that] term [is] defined in article 10 * * * of the family court act.”

In the prosecution of a parent for this crime, the District Attorney bears the heavy burden of demonstrating defendant’s guilt beyond a reasonable doubt, whereas in an article 10 proceeding, the determination that a child is neglected must be based on a preponderance of the evidence offered by the civil presenting agency (Family Ct Act § 1046 [b] [i]). Therefore, the use of evidence initially presented in the article 10 proceeding under the circumstances of this criminal action does not offend the Fifth Amendment’s Double Jeopardy Clause or defendant’s due process rights (see, People v Berkowitz, 50 NY2d, at 345-346, supra; People v Goodman, 69 NY2d, at 37-38, supra).

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

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

Order affirmed.

      . Family Court Act § 254 (b) provides: "In all cases involving abuse, the corporation counsel of the city of New York and outside the city of New York, the appropriate district attorney shall be a necessary party to the proceeding.”

      . "Fact-finding hearing” is defined in Family Court Act § 1044 as "a hearing to determine whether the child is an abused or neglected child as defined by this article.”

      . Family Court Act § 1045 defines "dispositional hearing” as "a hearing to determine what order of disposition should be made.”

      . In the City of New York, it is the Corporation Counsel, not the District Attorney, that must be named as a necessary party (see, Family Ct Act § 254 [bp.


author: Levine, J.

text:
    [643 NE2d 77, 618 NYS2d 758]
    Charles Walker et al., Respondents, v Town of Hempstead, Appellant.
    Argued September 21, 1994;
    decided November 1, 1994

      POINTS OF COUNSEL

      Rivkin, Radler & Kremer, Uniondale (Evan H. Krinick, Merril Schapiro Biscone and Christine M. Metzner of counsel), for appellant.
    I. Section 6-2 of the Town of Hempstead Code is not inconsistent with General Municipal Law § 50-e (4). (People v Evans, 79 NY2d 407; People v Laing, 79 NY2d 166; Matter of Sutka v Conners, 73 NY2d 395; Matter of KnightRidder v Greenberg, 70 NY2d 151; Price v Price, 69 NY2d 8; Matter of Niagara Mohawk Power Corp. v Public Serv. Commn., 69 NY2d 365; 41 Kew Gardens Rd. Assocs. v Tyburski, 70 NY2d 325; Lighthouse Shores v Town of Islip, 41 NY2d 7; Stepping Stones Assocs. v City of White Plains, 100 AD2d 619, 64 NY2d 690, 471 US 1066; MacMullen v City of Middle-town, 187 NY 37.) II. The prior written notice provision of the Town of Hempstead Code is a valid exercise of the Town’s supersession authority and was enacted in conformance with the Municipal Home Rule Law. (Kamhi v Town of Yorktown, 74 NY2d 423; Rozler v Franger, 61 AD2d 46, 46 NY2d 760; Matter of Sherman v Frazier, 84 AD2d 401; Albany Area Bldrs. Assn. v Town of Guilderland, 74 NY2d 372; Holt v County of Tioga, 56 NY2d 414; Fullerton v City of Schenectady, 285 App Div 545, 309 NY 701; Canzano v Gates, 85 AD2d 878; Klimek v Town of Ghent, 71 AD2d 359.) III. The issue raised by the New York State Trial Lawyers Association regarding the constitutional authority for the prior written notice provision of the Code of the Town of Hempstead is unpreserved for Court of Appeals review and, in any event, is meritless. (Voorheesville Rod & Gun Club v Tompkins Co., 82 NY2d 564; Sheemaker v State of New York, 70 NY2d 985; Gregory v Town of Cambria, 69 NY2d 655; Matter of Schulz v State of New York, 81 NY2d 336; Matter of Barbara C, 64 NY2d 866; Kuriansky v Bed-Stuy Health Care Corp., 73 NY2d 875; Cibro Petroleum Prods. v Chu, 67 NY2d 806; Ginsberg v Purcell, 51 NY2d 272; New York Pub. Interest Research Group v Steingut, 40 NY2d 250; Browne v City of New York, 241 NY 96.)

      DiJoseph, Portegello & Schuster, New York City (Arnold DiJoseph, III, of counsel), for respondents.
    I. The Town’s prior written notice law is patently inconsistent with General Municipal Law § 50-e (4). (Alexander v Eldred, 63 NY2d 460; Doremus v Incorporated Vil. of Lynbrook, 18 NY2d 362; Holt v County of Tioga, 56 NY2d 414, 466 US 919; F. T. B. Realty Corp. v Goodman, 300 NY 140; Consolidated Edison Co. v Town of Red Hook, 60 NY2d 99; Bernardine v City of New York, 294 NY 361; Schiavone v County of Nassau, 41 NY2d 844; Zumbo v Town of Farmington, 60 AD2d 350; Tyner v City of Buffalo, 152 AD2d 978; Klimek v Town of Ghent, 71 AD2d 359.) H. The Municipal Home Rule Law does not permit the enactment of a prior written notice law such as the one at bar. (Zumbo v Town of Farmington, 60 AD2d 350; Amsterdam Brush Corp. v City of Amsterdam, 105 AD2d 881; Barsh v Town of Union, 126 AD2d 311; Ling Ling Yung v County of Nassau, 77 NY2d 568; Consolidated Edison Co. v Town of Red Hook, 60 NY2d 99; People v Cook, 34 NY2d 100; New York State Club Assn. v City of New York, 69 NY2d 211, 487 US 1; Albany Area Bldrs. Assn. v Town of Guilderland, 74 NY2d 372; Hughes v Jahoda, 75 NY2d 881; Alexander v Eldred, 63 NY2d 460.) III. Defendant failed to follow the strict procedural guidelines in enacting its prior written notice law. (Kamhi v Town of Yorktown, 74 NY2d 423.)

      Lydia Rocissano Marola, Albany, and A. Kevin Crawford for the New York State Conference of Mayors and Municipal Officials and another, amici curiae.

    I. Adoption of a local law providing for prior written notice of defect for other than those on a street, highway, bridge, culvert, sidewalk or crosswalk is authorized by the Constitution and State law. (Bernardine v City of New York, 294 NY 361.) II. The local law adopted by the Town of Hempstead complies with Municipal Home Rule Law § 22 (1).

      Schneider, Kleinick, Weitz, Damashek, Godosky & Gentile, New York City (Brian J. Shoot of counsel), and Abraham Fuchsberg, for New York State Trial Lawyers Association, amicus curiae.

    I. Individual localities, in contrast to the State itself, have never been authorized to limit their tort liability under State law as to places other than "highways, roads, streets, avenues” and "property” of that character. (Holt v County of Tioga, 56 NY2d 414; People ex rel. Simon v Bradley, 207 NY 592; Matter of Thirty-fourth St. R. R. Co., 102 NY 343; Amsterdam Brush Corp. v City of Amsterdam, 105 AD2d 881; Zumbo v Town of Farmington, 60 AD2d 350; Walker v Town of Hempstead, 190 AD2d 364; Browne v City of New York, 241 NY 96; Albany Area Bldrs. Assn. Town of Guilder-land, 141 AD2d 293, 74 NY2d 372; MacMullen v City of Middletown, 187 NY 37.) II. Section 50-e (4) of the General Municipal Law, which flatly precludes local adoption of notice laws except as apply to "any street, highway, bridge, culvert, sidewalk or crosswalk,” should be construed in accordance with its plain meaning. (Walker v Town of Hempstead, 190 AD2d 364.) III. The municipalities’ cries of impending doom are contrived and wholly unwarranted. (Doremus v Incorporated Vil. of Lynbrook, 18 NY2d 362; Hughes v Jahoda, 75 NY2d 881; Miller v State of New York, 62 NY2d 506.)
   OPINION OF THE COURT

Levine, J.

Plaintiff commenced this personal injury action against the Town of Hempstead to recover for injuries sustained on a municipal paddleball court located at a Town beach area. The defendant Town moved for summary judgment on the ground that it had not been given prior written notice of any defective condition of the paddleball court as required by Town of Hempstead Code § 6-2. In opposition, plaintiff argued that to the extent Hempstead Code § 6-2 required notice of defect in connection with paddleball court accidents, it was inconsistent with General Municipal Law § 50-e (4), made applicable to towns pursuant to Town Law § 67, and therefore was beyond the Town’s authority to enact local laws. Supreme Court granted defendant’s motion and dismissed the complaint, perceiving no inconsistency between Hempstead Code § 6-2 and General Municipal Law § 50-e (4).

The Appellate Division reversed and reinstated the complaint (190 AD2d 364), holding that while the two enactments were in fact inconsistent, the adoption of the local law fell within the Town’s authority to supersede State laws under Municipal Home Rule Law § 10 (1) (ii) (d) (3). Nonetheless, the Court ultimately found the local law invalid because of the Town’s failure to substantially comply with the procedural requirements of Municipal Home Rule Law § 22. The Appellate Division granted leave to appeal to this Court and certified the following question: "Was the order of this court dated June 1, 1993, properly made?” While we agree with the Appellate Division that the Town failed to comply with Municipal Home Rule Law §22, we affirm, and answer the certified question in the affirmative, primarily on another ground.

I.

The Municipal Home Rule Law authorizes every local government to adopt laws relating to its "property, affairs or government”, so long as those enactments are not inconsistent with the Constitution or any general law (Municipal Home Rule Law § 10 [1] [i]; see, NY Const, art IX, § 2 [c] [i]). Also, counties, cities, towns and villages can adopt local laws in 14 other enumerated instances, provided that the legislation is not inconsistent with the Constitution or any general law or prohibited by State law (Municipal Home Rule Law § 10 [1] [ii]; see, NY Const, art IX, § 2 [c] [ii]; see also, Kamhi v Town of Yorktown, 74 NY2d 423, 428-429).

Because defendant is a town, however, its enactment of a local law inconsistent with the Town Law may be permissible under Municipal Home Rule Law § 10 (1) (ii) (d) (3), which confers express authority on towns to amend or supersede provisions of the Town Law in relation to matters as to which they are otherwise authorized to adopt local legislation under the Municipal Home Rule Law, "unless the legislature expressly shall have prohibited the adoption of such a local law” (Municipal Home Rule Law § 10 [1] [ii] [d] [3]; see, Kamhi v Town of Yorktown, supra, at 429-430). The general authority to enact notice of defect provisions has been held to fall under a local government’s power to legislate relating to "[t]he presentation, ascertainment, disposition and discharge of claims against it” (Municipal Home Rule Law § 10 [1] [ii] [a] [5]; see, NY Const, art IX, § 2 [c] [ii] [5]) and "[t]he acquisition, care, management and use of its highways, roads, streets, avenues and property” (Municipal Home Rule Law § 10 [1] [ii] [a] [6]; see, NY Const, art IX, §2 [c] [ii] [6]; see also, Holt v County of Tioga, 56 NY2d 414; Fullerton v City of Schenectady, 285 App Div 545, affd 309 NY 701). Since General Municipal Law § 50-e (4) is made applicable to towns pursuant to Town Law § 67, the validity of Hempstead Code § 6-2 turns on whether it is inconsistent with General Municipal Law § 50-e (4) and, if so, whether the Legislature has expressly prohibited the adoption of such a local law so as to preclude the Town’s supersession of so much of Town Law §67 as incorporates General Municipal Law § 50-e (4).

II.

At the outset, we reject defendant’s primary contention on this appeal and agree with the conclusion of the Appellate Division that Town of Hempstead Code § 6-2 is in fact inconsistent with General Municipal Law § 50-e (4). The local law— to the extent that it requires prior notice of defect for accidents at a Town "parking field, beach area”, etc., as a condition precedent to the commencement of an action against the Town — is flatly inconsistent with the plain language of section 50-e (4) mandating that "[n]o other or further notice * * * shall be required as a condition to the commencement of an action”, subject to an exception for notices of defect for six specific kinds of locations, none of which is applicable here. Defendant’s proffered interpretation of this introductory clause of subdivision (4) as addressing only notices of claim and not notices of defect is belied by the Legislature’s reservation of the named notice of defect requirements as exempt from the "[n]o other or further notice” provision in the introductory clause. We can presume that the Legislature would not have deemed it necessary to except those enumerated notice of defect provisions had it not intended notice of defect provisions to fall within the preceding general proscription (see, McKinney’s Cons Laws of NY, Book 1, Statutes § 213 ["when there is a prohibition in general words and a saving of particular things, there is a strong implication that what is excepted would have been within the prohibition if it had not been excepted, and so the prohibitory words may receive a more comprehensive construction than they would otherwise have received”]).

Furthermore, we can only construe the Legislature’s enumeration of six, specific locations in the exception (i.e., streets, highways, bridges, culverts, sidewalks or crosswalks) as evincing an intent to exclude any others not mentioned (see, McKinney’s Cons Laws of NY, Book 1, Statutes § 240 ["where a statute creates provisos or exceptions as to certain matters the inclusion of such provisos or exceptions is generally considered to deny the existence of others not mentioned”]). Although, as defendant points out, the statute retains the validity of the excepted notice of defect provisions "where such notice now is, or hereafter may be, required by law”, the phrase "such notice” can only be interpreted as encompassing notices of defect at the six locations previously specified.

Plainly then, Hempstead Code § 6-2, in extending the Town’s bar to the commencement of suit without prior notice of defect to defective conditions not within those authorized by General Municipal Law § 50-e (4), is inconsistent with that State law. As noted above, however, this inconsistency does not necessarily serve to invalidate the legislation if it can be found to fall within the Town’s supersession authority under Municipal Home Rule Law § 10 (1) (ii) (d) (3). That issue is dependent, in the first instance, on whether General Municipal Law § 50-e (4) expressly prohibits the adoption of local notice of defect laws pertaining to locations beyond the six enumerated therein (see, Municipal Home Rule Law § 10 [1] [ii] [d] [3]; Kamhi v Town of Yorktown, 74 NY2d 423, 430, n 2, supra), which we next address.

III.

We find the conclusion inescapable, contrary to the Appellate Division, that General Municipal Law 50-e (4), as made controlling over town notice statutes by Town Law § 67, does indeed contain an express prohibition against the adoption of the provisions of Hempstead Code § 6-2 requiring prior notice of defects at municipal locations other than the enumerated streets, highways, bridges, culverts, sidewalks or crosswalks. This express prohibition precludes the exercise of the Town’s supersession authority under Municipal Home Rule Law § 10 (1) (ii) (d) (3) (cf., Kamhi v Town of Yorktown, supra, at 430, n 2 [although inconsistency existed between local and State law, no express prohibition against the local law’s adoption existed to preclude supersession]).

General Municipal Law § 50-e (4) contains clear, prohibitory language strictly limiting deviations from the notice requirements specifically set forth in that section, excepting only notice of defect provisions pertaining to the six enumerated locations. The statute does not merely omit a grant of authority to localities to require notice of defect at locations beyond the six specified (cf., Kamhi v Town of Yorktown, supra), but rather in unmistakable terms provides that "[n]o other or further notice * * * shall be required” beyond those permitted by its terms. The statute must be construed, therefore, as a flat prohibition not only of the Town’s enactment of any notice of claim provision other than that provided for in the statute, but also a prohibition of any notice of defect enactment pertaining to locations beyond the six specified. As the plain language of section 50-e (4) as incorporated into Town Law § 67 thus expressly prohibits a town’s adoption of a notice of defect law pertaining to locations other than those excepted in the statute, Hempstead Code § 6-2, to the extent that it pertains to locations other than streets, highways, bridges, culverts, sidewalks or crosswalks, is without the Town’s super-session authority under Municipal Home Rule Law § 10 (1) (ii) (d) (3). Therefore, the absence of prior written notice of defect was not a defense to plaintiffs suit arising out of the paddle-ball court accident.

Accordingly, the order of the Appellate Division should be affirmed, with costs, and the certified question answered in the affirmative.

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

Order affirmed, etc.

      . Town of Hempstead Code § 6-2 provides as follows: "No civil action shall be maintained against the Town of Hempstead for damages or injuries to persons or property sustained by reason of any defective parking field, beach area, swimming or wading pool or pool equipment, playground or playground equipment, skating rink or park property, no matter where situated, being defective, out-of-repair, unsafe, dangerous or obstructed unless written notice of, by the witness to, the defective, unsafe, dangerous or obstructed condition of such parking field, beach area, swimming or wading-pool or pool equipment, playground or playground equipment, skating rink or park property was actually served upon the Town Clerk in accordance with § 6-4 hereof and there was a failure or neglect within a reasonable time after the giving of such notice to repair or remove the defect, danger or obstruction complained of. Under no circumstances shall the Town of Hempstead be liable for injuries or damages to persons or property due to defective conditions of the aforesaid town property in the absence of such prior written notice to the town of the existence of the defective condition causing said injuries or damages” (emphasis supplied).

      . General Municipal Law § 50-e (4) provides as follows: "Requirements of section exclusive except as to conditions precedent to liability for certain defects or snow or ice. No other or further notice, no other or further service, filing or delivery of the notice of claim, and no notice of intention to commence an action or special proceeding, shall be required as a condition to the commencement of an action or special proceeding for the enforcement of the claim; provided, however, that nothing herein contained shall be deemed to dispense with the requirement of notice of the defective, unsafe, dangerous or obstructed condition of any street, highway, bridge, culvert, sidewalk or crosswalk, or of the existence of snow or ice thereon, where such notice now is, or hereafter may be, required by law, as a condition precedent to liability for damages or injuries to person or property alleged to have been caused by such condition, and the failure or negligence to repair or remove the same after the receipt of such notice” (emphasis supplied).

      . Town Law § 67 provides in pertinent part: "1. Any claim including a claim specified in section sixty-five-a of this chapter which may be made against the town or town superintendent of highways for damages for wrong or injury to person or property or for the death of a person, shall be made and served in compliance with section fifty-e of the general municipal law.”


author: Smith, J.

text:
    [643 NE2d 80, 618 NYS2d 761]
    Francine L. Burns, Appellant-Respondent, v Edward J. Burns, Respondent-Appellant.
    Argued September 19, 1994;
    decided November 1, 1994

      POINTS OF COUNSEL

      Franeine L. Burns, Rochester, appellant-respondent pro se.

    I. In addition to his capital account, respondent has the right to participate in the net income of his firm at the highest level that can be achieved, for the tenure of his partnership interest until age 67. (Cohen v Lord, Day & Lord, 75 NY2d 95.) II. This Court granted leave to appeal because this Court determined that there are issues of law to be decided. III. The lower court decided properly in distributing respondent’s non-qualified pension plan. (Majauskas v Majauskas, 61 NY2d 481; Olivo v Olivo, 82 NY2d 202; Cavaretta v Cavaretta, 127 AD2d 1002.) IV. The lower court acted appropriately in making an award of counsel fees without conducting a hearing. V. The award of life insurance to secure the payment of maintenance was proper, however the lower court failed to order life insurance coverage to secure the payment of child support until our son Christopher’s 21st birthday. VI. The lower court did not err with regard to respondent’s claims of alleged separate property contributions toward the marital residence.

      Alfred P. Kremer, Rochester, for respondent-appellant.
    I. Mr. Burns has no greater interest in his partnership than his capital account. (Amodia v Amodio, 70 NY2d 5; Matter of Pace Photographers v Rosen, 71 NY2d 737; Dignan v Dignan, 156 AD2d 995, 75 NY2d 915; O’Brien v O’Brien, 66 NY2d 576; Finocchio v Finocchio, 162 AD2d 1044.) II. With respect to the remaining points of Mrs. Burns’ brief, they raise no issues of law. (Oldman v Oldman, 3 AD2d 983.) III. The Court below erred as a matter of law in distributing a nonqualified, non-vested pension. (Majauskas v Majauskas, 61 NY2d 481; Cavaretta v Cavaretta, 127 AD2d 1002; Olivo v Olivo, 82 NY2d 202.) IV. The lower court committed error when it ordered Mr. Burns to pay plaintiff’s attorney fees. (Matter of Freeman, 34 NY2d 1; Sedofsky v Sedofsky, 78 AD2d 520; Stern v Stern, 114 AD2d 408; Olsan v Olsan, 100 AD2d 776, 63 NY2d 649; Matter of Rahmey v Blum, 95 AD2d 294; Matter of Cooperman, 82 NY2d 745.) V. The award of life insurance was improper. VI. The lower courts failed to distribute Mr. Burns’ separate property or its increases.
   OPINION OF THE COURT

Smith, J.

In this matrimonial action, the primary issue is whether the trial court erred by limiting the wife’s proof of the value of her husband’s interest in his law firm partnership to the value of his capital account. We conclude that there was error and we modify the Appellate Division order accordingly.

Plaintiff, Francine L. Burns, and defendant, Edward J. Burns, were married on December 30, 1972, subsequent to defendant’s achieving partnership status, in January 1972, at Nixon, Hargrave, Devans & Doyle, a Rochester law firm. At the time Mrs. Burns was 21 years of age and Mr. Burns was 35. In 1975, the only child of the marriage was born. During the marriage Mrs. Burns was primarily a homemaker. In addition, she graduated from college, and obtained a master’s degree in business administration and a pilot’s license.

In January 1987, plaintiff commenced this divorce action. Defendant, then a managing partner at the firm, counterclaimed for the same relief. At the commencement of trial, plaintiff sought disclosure relating to defendant’s interest in the firm and a ruling permitting her to introduce evidence of the value of that interest. Plaintiff’s motions were denied in all respects except that defendant was compelled to provide plaintiff with copies of the K-l forms (indicating defendant’s share of partnership income) and defendant’s personal income tax forms. Supreme Court limited plaintiff’s proof of value to the partnership agreement provision regarding defendant’s capital account, citing the Fourth Department’s "numerous pronouncements on the [valuation] of a partner’s interest in this particular law firm.”

Defendant appealed from so much of the final divorce judgment concerning the issues of child support, spousal maintenance, equitable distribution and attorney’s fees. Plaintiff cross-appealed from the judgment, contesting (1) the determination that defendant’s ownership interest in the firm was equal only to the amount of his capital account ($35,000) and (2) the $40,000 counsel fee award.

The Appellate Division modified Supreme Court’s judgment, allowing defendant to claim the parties’ child as a dependent on his tax returns and adjusting defendant’s maintenance payments and life insurance requirements. The Court further held that Supreme Court correctly determined the value of defendant’s interest in the firm and that plaintiff’s counsel fees were proper. We granted plaintiff’s motion and defendant’s cross motion for leave to appeal.

Although Supreme Court limited plaintiff’s proof of defendant’s interest in the firm to the value of his capital account, it did so on constraint of Appellate Division decisions which construed the same partnership agreement in the context of other cases. In Rosenberg v Rosenberg (145 AD2d 916, 919, lv denied 74 NY2d 603), the Appellate Division held that Supreme Court in that case properly limited the plaintiff’s interest in the firm to the partnership agreement provision indicating that a withdrawing partner is entitled to the amount in her capital account as of the date of the parties’ separation (id.). The same Court, in a later case, Dignan v Dignan (156 AD2d 995, appeal dismissed 75 NY2d 915), again involving a partner at the same firm, reached the same conclusion (contrast, Harmon v Harmon, 173 AD2d 98 [Appellate Division sanctioned expert’s use of provisions of partnership agreement including death benefit and withdrawal provisions notwithstanding that the defendant had not died or withdrawn from firm]). We conclude that this was error.

The Equitable Distribution Law broadly defines the term marital property, very narrowly defines "separate” property (see, Domestic Relations Law § 236 [B] [1] [d]; Majauskas v Majauskas, 61 NY2d 481, 489) and seeks to achieve the fairest result for both parties upon dissolution of the marriage (see, O’Brien v O’Brien, 66 NY2d 576, 584-585). In the seminal case of O’Brien v O’Brien (id.), this Court held that a medical license acquired during the marriage was marital property under Domestic Relations Law § 236 (B) (1) (c) subject to equitable distribution under section 236 (B) (5). In Price v Price (69 NY2d 8), we held that where separate property appreciated during the marriage, in part due to the efforts and contributions of the nontitled spouse, the amount of the appreciation was marital property subject to equitable distribution. It follows that where the nontitled spouse has contributed to the appreciation of the titled spouse’s interest in a partnership, even though the spouse was already a partner at the time of the marriage, the appreciation constitutes marital property subject to equitable distribution.

The problem here lies not in the fact that the nontitled spouse is entitled to share in the interest of the titled spouse but in how that interest should be valued (see, Batts, Remedy Refocus: In Search of Equity in "Enhanced Spouse/Other Spouse” Divorces, 63 NYU L Rev 751; Note, Professional Licenses as Marital Property: Responses to Some of O’Brien’s Unanswered Questions, 73 Cornell L Rev 133).

Other cases give some guidance as to the resolution here. This Court, in Amodio v Amodio (70 NY2d 5), addressed a similar situation in the context of valuing stock for the purposes of equitable distribution in a divorce proceeding. We held that "[t]here is no uniform rule for valuing stock in closely held corporations” (id., at 7) and noted that methods must be tailored to each case with due consideration given to " 'enlightened prediction of the future’ ” (id., at 7, quoting Estate of Snyder v United States, 285 F2d 857, 861). In Amodio, this Court listed several factors identified by the Internal Revenue Service that aid in valuing stock, such as the nature and history of the business, book value of the stock, the company’s goodwill and other intangible assets, and the company’s earning capacity (id.). We further stated that even where the transfer of stock in a given corporation was governed by an agreement predating the marital discord, the price fixed by the agreement would be only one factor to be considered and not conclusive of the value of the stock (id.).

Defendant concedes that he could have more of an interest in the firm’s assets if it were to dissolve. He claims, however, that because the courts cannot predict whether that event will occur or how to properly evaluate that interest presently, plaintiff cannot have a present interest in the firm’s assets. As Amodio demonstrates, however, uncertainty concerning future events should not bar attempts to assign value to an asset. To limit defendant’s interest to the capital account, which measured a partner’s interest on withdrawal from the firm, is to ignore defendant’s status as a continuing and productive partner in an ongoing enterprise.

We conclude that the appreciation, during marriage, in the value of defendant’s partnership interest is marital property to be valued for equitable distribution, and that defendant’s capital account (an agreed value on withdrawal) does not necessarily determine the value of his ownership interest in the ongoing law firm.

As previously stated, we have recognized that there is no uniform rule for fixing the value of a going business for equitable distribution purposes (see, Amodio v Amodio, 70 NY2d 5, 7, supra). Indeed, valuation is an exercise properly within the fact-finding power of the trial courts, guided by expert testimony (see, Litman v Litman, 61 NY2d 918, 920). The parties are entitled to offer expert testimony and other evidence as to that increase in value. In addition, plaintiff is entitled to discovery from the law firm on this issue, subject to the usual safeguards of relevance, materiality and undue burden.

Plaintiff was entitled to have the benefit of disclosure to prove that the value of defendant’s interest in his firm exceeded his capital account. It would counter the theme of the Equitable Distribution Law and New York’s policy of liberal disclosure to narrowly limit plaintiff’s offer of proof in this case. That the proper valuation of defendant’s interest in the firm was not apparent should provide no impediment to plaintiff’s inquiry. As in Amodio, the capital account here may be considered as one factor but is not conclusive of the value of the partner’s interest.

By this holding, we do not give plaintiff unfettered access to the firm’s financial records. Moreover, whether plaintiff will ultimately prevail in her attempt to prove that defendant’s interest exceeds that circumscribed by the documents she was provided at Supreme Court is another question we do not address.

Defendant contends on his cross appeal that the trial court erred by rendering a distribution ($6,102.32) to plaintiff based upon defendant’s nonqualified, nonvested pension from which, according to defendant, he could receive no benefits until he reached age 55. Defendant argues that he maintains only an expectancy interest in his pension. He relies partially upon our decision in Majauskas v Majauskas (61 NY2d 481, 491, n 5, supra) where we held that vested pension rights are properly considered marital property and explicitly refused to reach the issue of nonvested pension rights (id.).

Mindful of the purposes underlying the adoption of equitable distribution and the broad legislative definition of "marital property” (see, Majauskas v Majauskas, supra, at 489), we conclude that nonvested pensions are subject to equitable distribution. That position builds on our analysis in Majauskas v Majauskas (supra), in which we rejected the contingent elements of pensions in general as suitable bases for denying distribution under Domestic Relations Law § 236 (B) (see, id., at 488-489). It is also consistent with the legislative goal of ensuring that the nontitled spouse has the opportunity to share fairly in the economic fruits of the marital partnership.

Like their vested counterparts, nonvested pensions often represent deferred compensation for service performed over a number of years (cf., Olivo v Olivo, 82 NY2d 202, 207). Where that is the case, their value cannot reasonably be deemed to accrue only at the particular point in time when vesting occurs. Rather, the view that the nonvested pension has been earned gradually over a period of time that encompasses the marriage and should be distributed accordingly more appropriately reflects the economic realities.

To be sure, there are uncertainties associated with the division of pension rights that have not yet vested. However, as is true of the valuation of defendant’s interest in his law firm, these uncertainties do not present an insurmountable barrier to a fair and realistic distribution. The presence of several contingencies before vesting may operate to reduce the fact finder’s estimate of the present value of the asset. Alternatively, where the asset’s present value cannot be determined at all at the time of the divorce, the court may, in the exercise of its discretion, devise an order that allocates a portion of each future payment to the nontitled spouse (see, Majauskas v Majauskas, supra, at 487-488 [citing an example of a Qualified Domestic Relations Order]).

Here, the uncertainties associated with defendant’s non-vested pension were de minimis since he was only two years away from vesting at the time of the trial and there was no evidence that he was planning to leave the law firm before that point. Under these circumstances, the trial court did not err in assessing a present after-tax value for defendant’s nonvested pension and in directing that plaintiff be awarded half of that amount. Further, in view of the size and liquidity of the marital estate, the trial court had the discretion either to order an immediate payout of a party’s share of the future pension benefits or to delay that payout until the vesting of said benefits (Domestic Relations Law § 236 [B] [1] [b]; [5] [e]).

Finally, plaintiff argues that the trial court erred by calculating arrearages of child support and maintenance from the date of the temporary order of support and failed to order such support from the date of the commencement of the action. A final order of maintenance or child support "shall be effective as of the date of the application therefor” (Domestic Relations Law § 236 [B] [6] [a]; [7] [a]). Plaintiff’s summons with notice, by service of which she commenced this action on January 5, 1987, contains her application for an award of maintenance and support. Since defendant concedes that plaintiff is entitled to "retroactivity as of the date of the application” and does not contest that the summons with notice contained her first application, we conclude that in these circumstances plaintiff is entitled to have the final awards of support and maintenance modified to be made retroactive to January 5, 1987. Defendant is entitled to a credit for "any amount of temporary maintenance [and child support] which has been paid” (Domestic Relations Law § 236 [B] [6] [a]; [7] [a]).

We find no reason to disturb the conclusions reached by the Appellate Division on the other issues raised.

Accordingly, the order of the Appellate Division should be modified, with costs to plaintiff, and the case remitted to Supreme Court, Monroe County, for further proceedings in accordance with the opinion herein and, as so modified, affirmed.

Chief Judge Kaye and Judges Simons, Titone, Bellacosa, Levine and Ciparick concur.

Order modified, etc.


text:
    [643 NE2d 85, 618 NYS2d 766]
    Rosario-Paolo, Inc., Appellant, v C & M Pizza Restaurant, Inc., Defendant, and Investors Insurance Company of America, Inc., Respondent.
    Argued September 20, 1994;
    decided November 1, 1994

      POINTS OF COUNSEL

      Howard Rukeyser, Mount Vernon, for appellant.
    I. Plaintiff-appellant was entitled to the proceeds of the contract of insurance between defendant-respondent and its assured. (McGraw-Edison Credit Corp. v Allstate Ins. Co., 62 AD2d 872; Villano v Gable Professional Adjusters, 139 AD2d 957; Nor-Shire Assocs. v Commercial Union Ins. Co., 25 AD2d 868; Weinreb v M. & S. Bagels, 44 Misc 2d 537, affd sub nom. Weinreb v Webster Bagels, 23 AD2d 884; Kovacs v New York Prop. Ins. Underwriting Assn., 101 Misc 2d 244; Cromwell v Brooklyn Fire Ins. Co., 44 NY 42.) II. Defendant-respondent is accountable for its negligence in paying the proceeds solely to its insured despite actual notice of the claim of plaintiff-appellant. (Poughkeepsie Sav. Bank v R & G Sloane Mfg. Co., 84 AD2d 212; Lauer v Dunn, 115 NY 405; Palsgraf v Long Is. R. R. Co., 248 NY 339.)

      Maloof, Lebowitz & Bubb, New York City (Michael S. Bubb and Steven J. Plofsky of counsel), for respondent.
    I. Plaintiff-appellant was not entitled to the proceeds of the contract of insurance between defendant-respondent and its insured. (McGraw-Edison Credit Corp. v Allstate Ins. Co., 62 AD2d 872; Schleimer v Empire Mut. Ins. Co., 65 Misc 2d 520, 71 Misc 2d 1014, 43 AD2d 825; Andrello v Nationwide Mut. Fire Ins. Co., 29 AD2d 489; Tette v Marine Midland Bank, 78 AD2d 383.) II. Defendant-respondent was not negligent in paying the proceeds of the insurance policy to its insured. (Cromwell v Brooklyn Fire Ins. Co., 44 NY 42; Poughkeepsie Sav. Bank v R & G Sloane Mfg. Co., 84 AD2d 212; Pulka v Edelman, 40 NY2d 781; Palsgraf v Long Is. R. R. Co., 248 NY 339.)
   OPINION OF THE COURT

Ciparick, J.

Plaintiff vendor instituted this action to recover fire loss insurance proceeds it claims were wrongfully paid by defendant insurer to the insured, defendant vendee, notwithstanding plaintiffs prior notice to the insured of its interest in the proceeds. The issue presented on this appeal is whether plaintiff holds an equitable lien in the insurance proceeds to the extent of its security interest in the insured premises to permit recovery.

On or about March 6, 1987, plaintiff sold the premises, a pizza restaurant, to defendant C & M Pizza Restaurant, Inc. (C & M). In partial consideration of the purchase price, C & M executed a series of promissory notes in the amount of $63,000. As security for this indebtedness, the parties entered into a security agreement pursuant to which C & M warranted, covenanted and agreed to keep the premises insured against loss by fire, theft and other hazards; to name plaintiff as a beneficiary; and to deposit certificates of insurance with plaintiff. Paragraph 14 (A) of the security agreement provides that if the subject chattels or fixtures are destroyed by fire, and there is no default under the security agreement,

"then the proceeds of the fire insurance policy or policies covering such loss shall be deposited under a trust agreement with the attorney for the Secured Party, wherein and whereby such trustee will be directed and authorized to pay out of such funds * * * the cost of repairing and replacing the chattels, fixtures and equipment, so damaged”.

In accordance with the terms of the security agreement, C & M duly filed a UCC-1 financing statement on April 9, 1987. Subsequently, on or about April 21, 1987, C & M procured an insurance policy from defendant, The Investors Insurance Company of America, Inc. (Investors), covering the premises from multiple perils, including fire, for the period March 9, 1987 to March 9, 1988. Despite the express provision in the security agreement, C & M failed to list any loss beneficiary under the policy.

After the catastrophic fire on January 19, 1988, C & M filed a claim with Investors. By certified letter dated April 13, 1988, plaintiff notified Investors of its claim to any proceeds from the fire loss. Notwithstanding this uncontroverted notice, Investors issued a check dated May 18, 1988 for $49,598.52 to C & M. The check was endorsed by an owner of C & M and deposited into an individual account. Plaintiff demanded payment from C & M to satisfy the outstanding indebtedness but C & M refused to remit any moneys.

Thereafter, plaintiff instituted this action against C & M and Investors and, subsequently, moved for summary judgment on its complaint. Investors cross-moved for summary judgment against plaintiff and C & M. Supreme Court denied that branch of the motion for summary judgment as against Investors and granted Investors’ cross motion for summary judgment dismissing plaintiff’s cause of action against it. Supreme Court granted summary judgment against C & M on default.

The Appellate Division affirmed, with one Justice dissenting (Rosario-Paolo, Inc. v C & M Pizza Rest, 194 AD2d 776). The Appellate Division found that although plaintiff had an equitable lien on the proceeds of the insurance policy based on C & M’s breach of the security agreement, Investors did not have a duty to investigate the legitimacy of plaintiff’s claim to the insurance proceeds where plaintiff was not a party to the insurance contract (id., at 778). Consequently, the majority found that Investors was not required to honor plaintiff’s claim.

The dissenting Justice would have awarded plaintiff summary judgment against Investors and denied Investors’ cross motion based on the uncontroverted proof of plaintiff’s entitlement to the policy proceeds under the security agreement, and Investors’ failure to raise any triable issues of fact regarding receipt of plaintiff’s notice of claim to the proceeds or the wrongful payment to C & M. The dissenter opined that the equitable lien established by plaintiff created a separate and distinct obligation on behalf of Investors, which "imposed no burden except prudence,” to preserve the proceeds until the competing claims were resolved, even though the insurer did not have a duty to investigate the validity of the claim (194 AD2d, at 779, supra). We agree, and conclude that Investors is liable to plaintiff for proceeds to the extent of its secured interest.

Plaintiff notified Investors of its equitable stake before Investors paid C & M’s claim, stating:

"Please be advised that * * * [plaintiff has an interest in] the proceeds of the * * * fire insurance policy pursuant to a Security Agreement and Financing Statement (UCC-1) * * * duly filed on April 9, 1987.
"Accordingly, take notice that none of the proceeds of said policy are to be paid to the insured unless the check is also to the order of [plaintiff] as loss payee.”

Investors ignored this notice and issued payment directly to C & M without regard to plaintiff’s interest. We do not quarrel with the Appellate Division’s finding that Investors had no duty to investigate the legitimacy of plaintiff’s claim; however, once Investors had notice of the claim, it paid C & M at its peril and "assumed the hazard of resisting the equity claimed by the plaintiff” (Cromwell v Brooklyn Fire Ins. Co., 44 NY 42, 49; see also, Lauer v Dunn, 115 NY 405, 409).

The insurance against fire loss was procured by C & M to protect both its interest and plaintiff’s interest in the secured property. C & M’s covenant under the security agreement to insure the premises against fire loss for plaintiff’s benefit gives plaintiff an equitable lien in any proceeds to the extent of its interest — in this case, the remaining unpaid portion of the purchase price (see, Cromwell v Brooklyn Fire Ins. Co., 44 NY, at 47, supra; accord, Nor-Shire Assocs. v Commercial Union Ins. Co., 25 AD2d 868). Because Investors had notice of plaintiff’s equitable claim but nevertheless satisfied a claim without regard to its interest, plaintiff can recover to the extent of its equitable lien in an action at law (Cromwell v Brooklyn Fire Ins. Co., 44 NY, at 48, supra).

C & M’s failure to name plaintiff as a loss beneficiary did not extinguish plaintiff’s interest in the secured property, nor did it impair plaintiff’s status as an equitable lienholder. In this regard, an insurance policy that contains a loss payable clause is not a separate insurance of the debt but a separate security for the debt (see, Fields v Western Millers Mut. Fire Ins. Co., 290 NY 209, 214).

Because of the promise to insure for plaintiff’s benefit that is embodied in the security agreement between plaintiff and C & M, plaintiff is entitled to enforce its covenant with C & M to recover damages to the extent of its equitable lien, rendering the Appellate Division’s reliance on McGraw-Edison Credit Corp. v Allstate Ins. Co. (62 AD2d 872) misplaced. In McGraw, plaintiff creditor lacked any legal or equitable claim to the policy proceeds where plaintiff’s debtor sold the collateral to a third party which then procured fire insurance solely for its own benefit. Plaintiff creditor’s inability to establish any jurai relationship with the insurer, such as one arising from an agreement between plaintiff’s debtor and the third party regarding insurance coverage for the benefit of plaintiff creditor, contravened its claim of an equitable lien (McGraw-Edison Credit Corp. v Allstate Ins. Co., 62 AD2d, at 876-877, supra). In this circumstance, an interest in insured property created by virtue of a security agreement does not translate into an interest in the insurance proceeds due to the third party in the event of a loss.

In this case, Investors’ only obligation, when confronted with apparently conflicting claims, was to preserve the insurance proceeds for the rightful owner. As aptly noted by the dissenter below, in such a situation an insurer can adequately protect its interests by way of an interpleader action.

Accordingly, the order of the Appellate Division should be reversed, with costs to plaintiff against defendant Investors; Investors’ cross motion for summary judgment dismissing the complaint denied and plaintiff’s motion for summary judgment granted.

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

Order reversed, with costs to plaintiff against defendant-respondent Investors Insurance Company of America, Inc., defendant-respondent’s cross motion for summary judgment dismissing the complaint denied and plaintiff’s motion for summary judgment granted.