author: Alexander, J.

text:
    In the Matter of New York Public Interest Research Group, Inc., by its Chairperson of the Board of Directors, Nadya Lawson, et al., Appellants, v New York State Thruway Authority, by its Chairman of the Board, William Hennessy, et al., Respondents.
    Argued November 19, 1990;
    decided December 20, 1990

      POINTS OF COUNSEL

      Lewis B. Oliver, Jr., and Harriet B. Oliver for appellants.

      Robert Abrams, Attorney-General (Nancy A. Spiegel, O. Peter Sherwood and Peter H. Schiff of counsel), for respondents.
   OPINION OF THE COURT

Alexander, J.

In Patterson v Carey (41 NY2d 714), we held, inter alia, that Public Authorities Law § 153-c impermissibly infringed upon the State Comptroller’s discretionary power to supervise the financial accounts of public authorities. On this appeal we conclude that, Public Authorities Law §2804 (2) and (3), a statute essentially similar in scope and intent to Public Authorities Law § 153-c, likewise impermissibly infringes upon the State Comptroller’s discretionary powers and therefore is invalid. Accordingly, we affirm the order of the Appellate Division.

I

Respondent New York State Thruway Authority (Authority) is a public corporation, created in 1950 to construct, improve, maintain and operate the New York State Thruway. The Authority has the power to issue bonds and to impose and collect tolls for the use of the Thruway. The last toll increase took effect in 1980 and had generated sufficient revenues to enable the Authority to meet all of its obligations. In 1987, however, the Authority realized that in order to continue to meet its obligations to all of its bondholders and to embark on a major 8Vi-year maintenance and rehabilitation program, it would have to increase revenues. After reviewing its financial condition, the Authority concluded that it would experience a revenue shortfall through 1996 of approximately $706 million if it did not impose a toll increase. Thus, the Authority determined that an increase in the amount of the tolls on the Thruway was warranted and instituted the statutory procedures necessary to accomplish the increase.

Although aware of the questionable constitutionality of Public Authorities Law § 2804 (1) and (2), the Authority submitted appropriate information about the proposed increase to the Comptroller for review and a public report. The Comptroller refused to examine the proposal, indicating that under Patterson v Carey (41 NY2d 714, supra) any proposed toll increase by a public corporation such as the Authority was not dependent upon Comptroller review and support. To ensure some independent review, the Authority retained a private auditor who reviewed the proposed increases and the underlying projections and concluded that the projections were reasonable. The required public hearings were held, but no Comptroller’s report was available for public examination. The Authority adopted the proposed toll increases effective April 17,1988.

Petitioners commenced this article 78 proceeding challenging the toll increase, contending that the increase was null and void because it was adopted without the Comptroller’s participation as required by Public Authorities Law § 2804 (2) and (3). The Authority answered, asserting that the statute was unconstitutional under Patterson v Carey (supra) but that in any event, it had substantially complied with the statute’s audit and publication requirements. Supreme Court, without addressing the constitutionality of the statute, concluded that there had been substantial compliance with the statutory requirements and dismissed the petition. The Appellate Division, addressing the constitutional issue, unanimously affirmed stating, inter alia, that "Public Authorities Law § 2804 (2) and (3) unconstitutionally mandates that the Comptroller perform certain acts with regard to a proposed toll increase by a public corporation. The Comptroller’s refusal to perform these acts * * * was permissible and does not undermine the legality of the toll increase.” (155 AD2d 861, 862.)

Petitioners appealed to this Court as of right pursuant to CPLR 5601 (b) (2). We dismissed the appeal (75 NY2d 946), however, because no substantial constitutional question was directly involved. The constitutional issue presented had been resolved by our prior decision in Patterson concerning an essentially identical statute, and therefore, was insubstantial (see, Matter of David A. C., 43 NY2d 708; Tabankin v Codd, 40 NY2d 893; People ex rel. Uviller v Luger, 38 NY2d 854; see also, Cohen and Karger, Powers of the New York Court of Appeals § 55, at 254 [rev ed]). We subsequently granted leave to appeal, however, pursuant to CPLR 5602 (a) (1) (i).

II

In Patterson v Carey (41 NY2d 714, supra) we discussed the powers of the State Comptroller in regard to public corporations and political subdivisions. We noted that NY Constitution, article V, § 1 addresses the Comptroller’s constitutional jurisdiction with regard to the State and its political subdivisions and deems him the "independent auditing official for the affairs of the State.” (Id., at 723.) The Legislature is empowered to define the Comptroller’s "powers and duties” in respect to the State and its political subdivisions and to assign the Comptroller the supervision of accounts of political subdivisions.

In respect to public corporations, however, we noted that although article X, §5, which concerns public corporations, provides that every public corporation shall be subject to the supervision of the Comptroller, the Comptroller’s authority to supervise the accounts of public corporations was entirely discretionary. In exercising this discretion, the Comptroller is to be guided by " 'his personal responsibility and commitment to his oath of office.’ ” (Id., at 724, quoting Sgaglione v Levitt, 37 NY2d 507, 512.) We observed further that the drafters of the New York Constitution took great care to withhold from the Legislature "the power to define the Comptroller’s powers and duties with respect to public corporations”, because they feared the Legislature might "interfere unduly with the independence of the Comptroller’s supervision.” (Id., at 724.)

In Patterson, following an announcement by the Jones Beach Parkway Authority of an increase in the tolls on the Southern State Parkway, the Legislature enacted Public Authorities Law § 153-c, which rescinded the toll increase, provided that the increase could not be restored and that no future increases could be imposed unless the authority complied with a new four-stage review process. Additionally, the authority was required, at least 120 days prior to the effective date of any proposed toll increase, to submit a detailed written report with economic analysis to the State Comptroller justifying the need for an increase. Significantly, the statute also required the Comptroller to " 'review any proposed increase or imposition in tolls’ ” and " 'within sixty days make public his findings, conclusions and recommendations. ’ ” (Id., at 719.) We declared Public Authorities Law § 153-c invalid because, inter alia, it "purport[ed] to mandate that the Comptroller exercise his supervision over a particular topic in a particular manner” and "impose[d] upon the Comptroller the power and duty to conduct a study and review not merely of accounts but of a subject of administrative and operational concern in the management of the authority’s business.” (Id., at 724.)

Public Authorities Law § 2804 (2) and (3) has requirements similar to those in Public Authorities Law § 153-c that purport to "define the Comptroller’s powers and duties with respect to public corporations.” Specifically, subdivisions (2) and (3) provide:

"(2) The comptroller shall review any proposed increase or imposition in fees, tolls or other charges * * * and within sixty days make public a report of his findings, conclusions and recommendations * * *

"(3) Every authority or commission shall hold a public hearing or hearings after receipt of the report of the comptroller * * * not less than fifteen days prior to the effective date of such increase or imposition. * * * Following such public hearing or hearings, the authority or commission shall reconsider the proposed increase or imposition and may rescind, change or modify the proposal as it then deems necessary or advisable.” (Emphasis added.)

Thus, this statute, by requiring the Comptroller to review reports submitted by an authority, to utilize his resources to analyze the report and to recommend whether the proposed increase in fees, tolls or charges should take effect, impermissibly interferes with the exercise of the Comptroller’s discretion in respect to a public corporation just as did Public Authorities Law § 153-c. That there are some differences between the two statutes, e.g., Public Authorities Law § 2804 (2) and (3) does not authorize the Legislature to rescind a toll increase, is of no consequence. What is relevant is that Public Authorities Law § 2804 (2) and (3), like section 153-c, interferes with the Comptroller’s discretion. Indeed, the statute is even more intrusive because subdivision (1) requires the Comptroller to exercise a supervisory role in respect to all authorities "having jurisdiction over highway, bridge or tunnel facilities” and requires the authorities to submit a detailed report supporting any proposed increase in fees, tolls or other charges to the Comptroller at least 120 days prior to the time the change is to take place.

Petitioners concede that the Thruway Authority is a public corporation as defined in Public Authorities Law § 352, but contend that Patterson is not controlling here because the Thruway Authority is not an "ordinary public authority” over which the Comptroller has discretionary powers; rather, they argue, unlike other public corporations, the Comptroller is significantly involved with the financial affairs of the Thruway Authority since the Comptroller already has custody and control over all the funds of the Thruway Authority and the State guarantees some of the Authority’s bonds. They contend, therefore, that the Authority’s funds are "money under the control of the State,” in respect to which the Legislature is empowered to assign supervisory powers and duties to the Comptroller pursuant to article V, § 1 of the New York State Constitution. In support of these contentions, petitioners rely on Public Authorities Law §§ 364 and 366 (3). These statutes, however, are markedly different in purpose and effect from Public Authorities Law §2804 (2) and (3) and thus do not support petitioners’ argument.

Although the Comptroller has custody of the Thruway Authority’s funds, it is the Authority, not the Comptroller, which controls these funds. The Comptroller’s role is limited merely to serving as the Authority’s fiscal agent pursuant to Public Authorities Law § 364. This section provides that "[a]ll moneys of the authority from whatever source derived shall be paid to the comptroller as agent of the authority, who shall not commingle such moneys with any other moneys.” Public Authorities Law § 364 also grants the Comptroller the power to examine the accounts and books of the Authority and authorizes the Comptroller to invest the funds of the Authority in government bonds. He may do so only when the Authority does not require funds for immediate use, however, and only at the discretion of the Authority. In fact, the Comptroller is not given the power to disperse the Authority’s funds or use them in any manner without the Authority’s consent. Thus, notwithstanding the Comptroller’s limited authority to receive and hold the Authority’s funds and to examine its books and accounts, it cannot be said that these circumstances render the funds of the Authority "money under the control of the State.”

Indeed, among the many powers Public Authorities Law § 354 gives the Authority are the power to sue and be sued, to acquire, hold and dispose of personal property, to make contracts, to borrow money and issue bonds and to fix and collect fees, rentals and charges for the use of the Thruway to produce sufficient revenue to meet the maintenance and operation costs of the Thruway — all powers relating and pertinent to the acquisition, use and control of the Authority’s funds. It is these powers granted to the Authority which demonstrate control over the Authority’s moneys, not the limited role in which the Comptroller is cast as the Authority’s agent.

Petitioners’ contention that because New York State guarantees bonds of the Thruway Authority the Authority’s funds constitute "money under the control of the State,” thereby empowering the Legislature to assign the Comptroller supervision of the Thruway Authority’s funds, is equally without merit.

In support of this argument, petitioners cite article X, § 6 of the Constitution authorizing the Legislature to "make or authorize making the state liable for the payment of the principal of and interest on bonds of a public corporation created to construct state thruways, in a principal amount not to exceed five hundred million dollars” and article V, § 1 providing: "The payment of any money of the state, or of any money under its control, or the refund of any money paid to the state, except upon audit by the comptroller, shall be void * * * In such respect the legislature shall define his powers and duties”.

They argue that, when considered in connection with Public Authorities Law § 366 which provides for State guarantee of bonds issued by the Authority and for the Comptroller to pay the principal and interest thereon in the event of the Authority’s default, these constitutional provisions clearly render funds of the Authority "money under the control of the State.” In addition, petitioners contend that while the Authority is authorized to issue nonguaranteed bonds which have priority over guaranteed bonds, it may do so only upon the consent of the Comptroller and upon the determination by the Authority that it will have adequate means to meet its obligations upon the outstanding guaranteed bonds (see, Public Authorities Law § 366 [3]).

That New York State guarantees bonds of the Thruway Authority and that the Authority’s power to issue nonguaranteed bonds is limited does not transform the Authority’s funds into "money under control of the State.” In Matter of Smith v Levitt (37 AD2d 418 [Simons, J., participating], affd 30 NY2d 934), the Appellate Division specifically addressed the issue of whether the money to finance a project of the State Urban Development Corporation, a public benefit corporation (see, L 1968, ch 174), received from the sale of bonds guaranteed by the State, constituted money of the State or money under the State’s control so as to require an audit by the Comptroller. The court discussed the genesis and purpose of article V, § 1 and the enabling legislation creating the Urban Development Corporation. It determined that payments the corporation received from the sale of bonds and notes were not money of the State or money under its control even though "the bonds of UDC might be classified as contingent liabilities on the part of the State of New York.” (Id., at 421.) Thus, here, as in Levitt, the fact of the State’s guarantee of the Authority’s bonds which might classify the bonds as "contingent liabilities on the part of the State,” does not transform the Authority’s funds into money under the State’s control.

Finally, that the State has a "major concern” in the Authority’s business because it guarantees some of the Authority’s bonds, cannot, as petitioners would have it, serve to justify the impermissible interference by the Legislature with the Comptroller’s discretion to supervise the accounts of public authorities.

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

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

Order affirmed, with costs.


source: Caselaw Access Project

author: Hancock, Jr., J. Titone, J.

license: Public Domain

text:
    The People of the State of New York, Respondent, v Terrence Carter, Also Known as Terrance Carter, Appellant. The People of the State of New York, Respondent, v Solomon Witherspoon, Appellant.
    Argued October 17, 1990;
    decided November 29, 1990

      POINTS OF COUNSEL

      Andrea Hirsch and Philip L. Weinstein for appellant in the first above-entitled action.

      Steven A. Feldman and Arza Rayches Feldman for appellant in the second above-entitled action.

      Robert M. Morgenthau, District Attorney (Nikki Kowalski and Mark Dwyer of counsel), for respondent in the first and second above-entitled actions.
   OPINION OF THE COURT

Hancock, Jr., J.

Defendants were tried jointly before a jury and convicted of drug-related crimes. The common question in their appeals is whether the convictions should be set aside as invalid because the Assistant District Attorney who handled the prosecution — both in presenting evidence to the Grand Jury which returned the indictments and later in conducting the actual trial — was not licensed as an attorney. They advance two arguments: (1) that the appearance before the Grand Jury of the nonlawyer Assistant District Attorney constituted the presence of an unauthorized person before the Grand Jury in violation of CPL 190.25 (3) requiring dismissal of the indictments as defective pursuant to CPL 210.20 (1) (c) and 210.35 (5); and (2) that, in any event, their prosecution by a person not duly admitted to practice as an attorney deprived them of a fair trial in contravention of their right to due process under the Federal and State Constitutions (US Const 14th Amend; NY Const, art I, §6). For reasons to be explained, we are not persuaded by either contention. Defendant Witherspoon also argues that the trial court committed a prejudicial error in admitting proof of uncharged crimes in violation of the rule of People v Molineux (168 NY 264, 291-294). Because we find no basis for reversal in this or other points raised by defendant Witherspoon, the convictions in each case should be affirmed.

I

The particular drug transaction out of which defendants’ convictions arose involved a sale of narcotics in Manhattan on January 28, 1987 to one Charles Humphrey. The main witness for the prosecution was Police Officer Higgins who, using high-powered binoculars, observed the sale which took place on the sidewalk at the southeast corner of West 123rd Street and Seventh Avenue. Higgins testified that he saw Charles Humphrey approach and talk to defendant Carter. Carter, he testified, took a small pink envelope from his pocket and handed it to Humphrey who, after apparently smelling the envelope, gave money to Carter. Humphrey put the envelope inside his coat and walked away. Carter then handed the money to defendant Witherspoon who had been standing about 10 feet away during the transaction. Higgins radioed the description of Humphrey and his location to Officer Hayes of the backup unit. Hayes arrested Humphrey at 124th Street and recovered the pink envelope from inside his jacket. In the envelope was vegetable matter which, chemical analysis later revealed, contained phencyclidine.

When Hayes returned to his backup post, Higgins resumed his surveillance of defendants. During the ensuing two hours, Higgins saw Carter and Witherspoon engage in what appeared to be transactions similar to the one involving Humphrey. Three to five people approached Carter, talked with him and gave him money in exchange for pink envelopes. On each occasion Carter gave the money he received to Witherspoon. After defendants’ arrest, Officer Higgins identified them as the two men whom he had observed trading the envelopes for money.

Prior to the opening of trial the People had applied for an advance ruling on the admissibility of Higgins’ testimony concerning defendants’ dealings with other persons subsequent to the Humphrey sale. Over defendants’ objection, the court determined that evidence of what amounted to "a continued course of conduct paralleling” the Humphrey sale was admissible "to establish that defendants were acting in concert”. The evidence was accordingly admitted at trial.

The jury found both defendants guilty of criminal sale of a controlled substance in the fifth degree and, in addition, convicted defendant Witherspoon of criminal possession of a controlled substance, seventh degree. During the pendency of defendants’ appeals to the Appellate Division and prior to argument, defense counsel learned of the unlicensed status of Daniel J. Penofsky, the Assistant District Attorney who presented the case to the Grand Jury and later represented the People as prosecutor in the trial. Penofsky, it appears, had never been admitted to the Bar although he had been prosecuting cases for 16 years. He was, however, a law school graduate.

Penofsky served as an Assistant District Attorney in Kings County for three years before becoming an Assistant District Attorney under the Special Narcotics Prosecutor, a position which he had held for 12 to 13 years. It was in this role as an assistant for the Special Narcotics Prosecutor, Sterling Johnson, that Penofsky handled the prosecution against defendants.

Although Penofsky’s lack of admission to practice was not addressed in defendants’ Appellate Division briefs, defense counsel raised the issue during oral argument and advised the Appellate Division that the identical question had been fully briefed in two other appeals involving Penofsky prosecutions scheduled to be argued in that court a few days later (People v Munoz and People v Sanchez-Medina). In its unanimous affirmance in the instant appeals, the Appellate Division did not address the Penofsky issue. In an opinion released approximately five weeks later (People v Munoz, 153 AD2d 281), however, the Appellate Division rejected the same arguments which defendants assert here. Distinguishing the situation where the prosecuting authority has no jurisdiction over the subject matter (see, People v Di Falco, 44 NY2d 482), the Munoz court noted that the Grand Jury presentation was by a duly appointed Assistant District Attorney representing a prosecutor’s office which did have jurisdiction and that this "authority [was] extended to Assistant District Attorneys as appointees” (153 AD2d 281, 283). Although the court decried Penofsky’s flagrant conduct as amounting to a fraud on the appointing authority, it held that the fact that defendants had been prosecuted by a nonlawyer did not, without more, require a reversal. It observed that there "is currently no rule in New York to the effect that prosecution by an unadmitted lawyer entitles a defendant to an automatic reversal.” (Id., at 284.) For reasons which will be explained, we agree with these conclusions of the Appellate Division in Munoz and Sanchez-Medina and hold that Penofsky’s unadmitted status does not require a reversal in the instant appeals.

In its unanimous decision affirming the convictions before us, the Appellate Division addressed only issues unrelated to Penofsky. It rejected defendants’ Molineux argument and held that Higgins’ testimony concerning the subsequent exchanges was properly admitted on the issue of concerted action as well as on the question of defendants’ identity. The court observed that "at trial the element of acting in concert was hotly disputed.” (People v Witherspoon, 156 AD2d 306, 307.) Moreover, it pointed out, identity was in issue as well since defendants "were not arrested until two hours after the charged sale.” (Id., at 308.) The court concluded that under "these circumstances, Officer Higgins’ testimony was also admissible to establish that both defendants were under surveillance for the entire period after the sale and before the arrest.” (Id., at 308.)

II

Defendants’ primary argument is that because Penofsky was not a lawyer he could not properly serve as an Assistant District Attorney and, therefore, his presence before the Grand Jury was not authorized under CPL 190.25 (3) (a). It follows, defendants maintain, that because an unauthorized person was present in the Grand Jury room the proceedings were defective (see, CPL 210.35 [5]) and the indictments should have been dismissed (see, CPL 210.20 [1] [c]). Defendants refer essentially to three cases in support of their position: People v Di Falco (44 NY2d 482, supra), People v Dunbar (53 NY2d 868) and People v Beauvais (98 AD2d 897). Their reliance on these cases is misplaced.

In People v Di Falco (supra), in holding that the Special Prosecutor was unauthorized to appear before the Grand Jury, we specifically noted that the prosecutor had "concede[d] that he lacked jurisdiction to prosecute the matter” (44 NY2d, at 485).* * We held simply that "where a prosecutor lacks the requisite authority he is not a proper person before the Grand Jury and those proceedings conducted by him before the Grand Jury are defective.” (Id., at 486.)

The converse of the Di Falco situation was presented in People v Dunbar (supra), where defendants claimed that a nonresident Special Assistant District Attorney’s presence before the Grand Jury was unauthorized because no waiver of the residency requirement had been obtained in compliance with the Nassau County Administrative Code. Unlike Di Falco, there was no lack of the underlying prosecutorial jurisdiction and for that very reason the Court held that the indictment was not defective under CPL 210.35 (5). We stated: "[i]t is true that presentation to a Grand Jury by one who has no jurisdiction over the subject matter so impairs the integrity of the Grand Jury as to require dismissal of the indictment (People v Di Falco, 44 NY2d 482). But there is no such lack of authority here. Whatever the other effects of a failure to comply with the waiver of nonresidence requirement, that omission does not affect the authority or power of an appointee to serve as Special Assistant District Attorney following appointment by the District Attorney and the taking of the oath of office.” (53 NY2d, at 871.)

The reasoning of Di Falco and Dunbar supports the decision in People v Beauvais (supra). There, the purported prosecuting agency — the office of the Regional Attorney for the Department of Environmental Conservation — was without any authority to represent the People before a Cortland County Grand Jury and, as in Di Falco, the necessary jurisdiction to prosecute was lacking. The attempt to vouch in the DEC attorney as an Assistant District Attorney pro hac vice for the purpose of making the presentation was of no effect and his appearance before the Grand Jury was, therefore, unauthorized (CPL 190.25 [3]). The indictment, accordingly, was properly dismissed.

Here, there was no lack of jurisdiction to proceed with the prosecution. Indeed, defendants make no challenge on this ground. The Special Narcotics Prosecutor and the Assistant District Attorneys assigned to his office were specifically authorized to appear before Special Narcotics Grand Juries such as the one which indicted defendants (see, Judiciary Law §§ 177-b — 177-d). Nor do defendants question that Penofsky was appointed Assistant District Attorney by the District Attorney of Kings County on February 26, 1973, that he duly executed the oath of office and that, thereafter, on August 27, 1976 he was regularly assigned as an Assistant District Attorney to the office of the Special Narcotics Prosecutor. Under CPL 1.20 (31), (32) the term "district attorney” includes any "assistant district attorney”. Thus, Penofsky, as one holding the office of Assistant District Attorney, was by express statutory provision a person entitled to be in the Grand Jury room while evidence was being presented (see, CPL 190.25 [3] [a]).

Defendants argue, nevertheless, that Penofsky’s lack of admission to the Bar vitiated the authority to be present before the Grand Jury granted to him by virtue of his appointment as Assistant District Attorney. Thus, they maintain that, irrespective of the Special Narcotics Prosecutor’s jurisdiction in the matter, Penofsky’s presence in the Grand Jury room was that of an unauthorized person and the proceedings were, therefore, defective. We disagree.

Defendants contend that, unlike the absence of the waiver of nonresidency in Dunbar, Penofsky’s unlicensed status was not a technical defect but a "serious, substantial defect”. They point out that under Judiciary Law §§478 and 484 any practice of law by Penofsky — including presenting evidence before the Grand Jury — was unlawful. And they cite recent decisions where criminal convictions have been vacated due to the "serious and substantive” defect caused by defense counsel’s fraudulent admission to legal practice (see, United States v Novak, 903 F2d 883, 889-890 [2d Cir 1990]; People v Chin Min Foo, 144 Misc 2d 589).

But the argument misses the point. Whatever may be said about Penofsky’s conduct, the fact remains that his unlicensed status did not, without more, undermine the underlying prosecutorial jurisdiction possessed by the Special Narcotics Prosecutor or affect his permission to be present before the Grand Jury as an Assistant District Attorney (see, CPL 1.20 [31], [32]; 190.25 [3] [a]). In holding that the Assistant District Attorney’s nonlawyer status did not result in a loss of jurisdiction so as to require a dismissal under CPL 210.35 (5) (see, People v Dunbar, 53 NY2d 868, supra; People v Di Falco, 44 NY2d 482, supra), we note that the purpose of the provision upon which defendant relies (CPL 190.25 [3] [a]) is to ensure the secrecy of the Grand Jury proceedings (see, Bellacosa, Practice Commentary, McKinney’s Cons Laws of NY, Book 11A, CPL 190.25, at 215-216). The question of whether a duly sworn Assistant District Attorney has been admitted to the Bar has no bearing on whether his presence compromises the secrecy of the proceedings. Moreover, neither the Constitution nor any statute requires that a District Attorney or an Assistant District Attorney be an admitted lawyer (see, NY Const, art XIII, § 13; art IX, § 1; County Law §§ 702, 930). Our conclusion as to the effect of Penofsky’s presence as Assistant District Attorney in these circumstances does not, of course, suggest that "apparently anyone can present the People’s case to the Grand Jury” (dissenting opn, at 108 [emphasis in original]). Cases such as People v Felder (47 NY2d 287), United States v Novak (supra) and People v Chin Min Foo (supra), do not help defendants inasmuch as they turn on a criminal defendant’s Sixth Amendment right to be represented by counsel at a critical stage of the proceedings, an issue obviously not involved here.

Defendants make additional arguments concerning the detrimental effect of Penofsky’s conduct in appearing before the Grand Jury, pointing out that "it is universally regarded as a given” that "the District Attorney and Assistant District Attorneys be admitted to the Bar” (brief of appellant Carter, at 39). But these arguments are similarly unavailing. Concededly, the Special Narcotics Prosecutor had jurisdiction in the matter (see, People v Di Falco, supra, at 485-486) and Penofsky was present before the Grand Jury in his capacity as a regularly appointed Assistant District Attorney serving under the Special Narcotics Prosecutor. The sole question is whether the fact that Penofsky was not a lawyer, without more, negated the authority that his appointment as Assistant District Attorney conferred on him to be present in the Grand Jury room (see, CPL 1.20 [31], [32]; 190.25 [3] [a]) so as to affect the prosecutorial jurisdiction. We conclude that it did not.

III

In their second challenge to the convictions, defendants contend that their prosecution by someone other than an attorney constituted a violation of their rights to due process of law under the Federal and State Constitutions (US Const 14th Amend; NY Const, art I, § 6). They point to no aspect of the case where Penofsky’s not being a lawyer assertedly deprived them of a fair trial or resulted in prejudice. Instead, they argue that a defendant’s right to be prosecuted for a felony by a lawyer is fundamental — a right that has an historical basis and is protected by the Due Process Clauses in our Federal and State Constitutions. Because the right is fundamental, it is argued, it does not matter that they identify no specific prejudice.

No one disputes that defendants should have been prosecuted for these felonies by an Assistant District Attorney who was duly admitted to practice (see, e.g., ABA Standards for Criminal Justice, Prosecution Function, Standards 3-2.1, 3-2.3). Indeed, it was assumed by all concerned that Penofsky was admitted. But whether defendants should have been prosecuted by a licensed attorney is not determinative. The question is whether the fact of defendants’ prosecution by a nonlawyer, standing alone, has deprived them of protections guaranteed by the Federal and State Constitutions.

Defendants cite no authority for the proposition that a defendant has a due process right to be prosecuted by a duly admitted attorney. We know of none. They quote language from cases such as Young v United States ex rel. Vuitton & Fils (481 US 787, 807) and People v Zimmer (51 NY2d 390, 394) to demonstrate the undeniably broad discretion vested in public prosecutors and the extent of their control "over individuals’ liberty and reputation” (People v Zimmer, supra, at 394). But neither Young nor Zimmer involved prosecutions by nonattorneys. Rather, the cases concerned prosecution by attorneys who had some financial or other personal interest in the outcome of the proceedings. And, as noted, cases such as People v Felder (supra) and United States v Novak (supra), are not helpful since they deal with the Sixth Amendment right of a defendant to be represented by a lawyer — not prosecuted by a lawyer.

In sum, while we agree with the Appellate Division in Munoz that "the egregious nature of Penofsky’s conduct” (153 AD2d, at 285) cannot be minimized, we accept that court’s conclusion that, in the absence of prejudice, the fact that Penofsky was not a lawyer did not result in a deprivation of defendants’ constitutional due process rights (US Const 14th Amend; NY Const, art I, § 6).

IV

Finally, we conclude that the trial court properly exercised its discretion in permitting Higgins’ testimony concerning defendants’ conduct in exchanging pink envelopes with other persons for money after the Humphrey transaction. We agree with the Appellate Division that this proof was admissible on the issues of "acting in concert” and identity, both of which were disputed. As we have noted, "[w]hile 'acting in concert’ is not one of the five Molineux exceptions, it has been said that those categories are merely illustrative, not exclusive (People v Calvano, 30 NY2d 199, 205-206; Richardson, Evidence [Prince — 10th ed], § 170, p 140).” (People v Jackson, 39 NY2d 64, 68; see, People v Alvino, 71 NY2d 233, 241-243.)

We have examined the other arguments advanced by defendant Witherspoon and conclude that they present questions which, if not beyond our power of review or unpreserved for review, provide no basis for reversal.

Accordingly, in each case, the order of the Appellate Division should be affirmed.

Titone, J.

(dissenting). It has been observed that a Grand Jury can indict anyone or anything — even a ham sandwich. Now, under the majority’s holding, apparently anyone can present the People’s case to the Grand Jury — even an unadmitted layperson masquerading as an attorney. Because this position makes a mockery of both the rules prohibiting legal practice by laypersons and the Grand Jury system itself, I dissent.

In People v Di Falco (44 NY2d 482, 488), after analyzing the history and import of CPL 190.25 (3) and 210.35 (5), this Court held that "where an unauthorized prosecutor conducts the [Grand Jury] proceedings, prejudice to the defendant may result and the indictment should be dismissed.” The majority has declined to apply that holding here because, in its view, despite his deception, Assistant District Attorney Daniel Penofsky was not an "unauthorized” person. This conclusion is, in turn, based on the observation that "neither the Constitution nor any statute requires that a District Attorney or an Assistant District Attorney be an admitted lawyer” and on the further premise that the requirement of "authority” is satisfied whenever an individual purporting to fulfill the prosecutor’s role has been appointed by a prosecutorial authority with subject matter jurisdiction over the controversy. The clear import of this analysis is that the District Attorney or Special Prosecutor in whose jurisdiction the prosecution falls may appoint anyone, regardless of his or her background and training, to conduct the Grand Jury proceedings. Although the majority disclaims that position (majority opn, at 105), its holding can be interpreted in no other way. For the following reasons, the Court’s holding cannot be sustained.

Initially, the majority’s startling suggestion that one need not be an attorney to qualify for the office of District Attorney or Assistant District Attorney is untenable. Until now, one would have thought that there was no need for an explicit provision in the Constitution or County Law §§702 and 930 requiring that the District Attorney and his appointed assistants be admitted attorneys (see, majority opn, at 105). The very term "district attorney” denotes an individual with the training and other required qualifications of an admitted attorney. More importantly, sections 478 and 484 of the Judiciary Law forbid unadmitted individuals from practicing law or appearing in any judicial proceeding (except in behalf of themselves). In fact, Judiciary Law § 485 makes it a crime to practice law without a license in this State. Since the activities performed by the People’s representative in the Grand Jury room — e.g., eliciting testimony from witnesses and giving legal instructions — unquestionably constitute the practice of law, it seems obvious and beyond any question that the role cannot be filled by a layperson. Any other view would lead to the absurd conclusion that those charged with the duty of enforcing the criminal laws may, in the process, break them.

If there remains any doubt on the subject, it should be dispelled by the special exemptions in Judiciary Law §§478 and 484 for law students or recent law graduates who are "acting under the supervision of the state or a subdivision thereof or of any officer or agency of the state or a subdivision thereof, pursuant to a program approved by the appellate division.” By these provisions, the Legislature has indicated that if a District Attorney wishes to appoint unadmitted individuals to act as Assistants, the appointments must be confined to a narrow class of laypersons with the statutorily defined qualifications. The precision with which the Legislature has expressed its wishes in Judiciary Law §§ 478 and 484 precludes any conclusion that a "regularly assigned” Assistant District Attorney may be someone other than a licensed attorney or a person likely to become licensed at the earliest possible point.

Even if the majority did not rest its holding on the untenable proposition that Assistant District Attorneys need not be admitted lawyers, its ultimate conclusion in this case would be difficult to sustain. First, in this case the appointing authority, the Special Narcotics Prosecutor, was not even aware of Penofsky’s status as an unadmitted layperson. Thus, contrary to the majority’s assertion (majority opn, at 105), it cannot fairly be said that this imposter was acting with the "permission” of the Special Narcotics Prosecutor.

Second, there is no support in law or logic for the majority’s suggestion that only a lack of subject matter jurisdiction will suffice to vitiate the prosecutor’s authority under CPL 190.25 to appear before the Grand Jury. We held in People v Di Falco (44 NY2d 482, 487, supra) that "the sound theory and policy of our criminal procedure [requires] that only the regularly constituted officials upon whom the law devolves the power, may officiate in aid of the Grand Jury” (id. [emphasis supplied]). While this analysis has been applied in the past only in cases involving a flaw in the presenting prosecutor’s subject matter jurisdiction (People v Di Falco, supra; cf., People v Beauvais, 98 AD2d 897 [rejecting District Attorney’s attempt to appoint a prosecutor without jurisdiction pro hac vice]), there is no reason to confine the Di Falco analysis to those situations.

Certainly, People v Dunbar (53 NY2d 868), on which the majority heavily relies, did not suggest that Di Falco was intended to be read so narrowly. The Dunbar Court merely stated that the "effects of a failure to comply with the waiver of nonresidence requirement,” whatever they might be, did not include the invalidation of an otherwise duly appointed Assistant’s authority to act as the People’s representative (id., at 871). The minor procedural defect in the Dunbar Assistant’s appointment, however, cannot seriously be compared to the fundamental disqualifying circumstance in this Assistant’s case — i.e., his inability to engage in the practice of law without simultaneously violating it. And, contrary to the majority’s repeated assertions, this fundamental defect cannot be cured through the simple expedient of characterizing A.D.A. Penofsky as having "duly executed the oath of office,” having been "regularly assigned as an Assistant District Attorney” or having been "regularly appointed” to that office (majority opn, at 104, 106). Plainly, a person cannot be said to have "duly” executed the oath of office, or to be "regularly appointed” to an office, when his or her performance of the duties associated with the office constitutes a blatantly criminal act.

Further, as was made clear in Di Falco, the central importance of the prosecutor’s role in the Grand Jury process forecloses any argument that the presence of an unauthorized person in that capacity is a mere technical defect not rising to the level of an impairment of the integrity of the process. The Di Falco Court’s observations on this point bear repetition (44 NY2d, at 486-487, supra): "During the actual [Grand Jury] proceedings, the legal adviser of the Grand Jury is the District Attorney [represented by an appointed Assistant] * * *. The District Attorney [through an appointed Assistant] determines the competency of witnesses to testify * * * and must instruct the jury on the legal significance of the evidence * * *. He, in effect, determines what witnesses to present * * * and who should be excluded. These duties and powers * * * vest th[e District Attorney and the appointed Assistants] with substantial control over the Grand Jury proceedings, requiring the exercise of completely impartial judgment and discretion.”

These factors, which were deemed sufficient to justify the invalidation of an indictment obtained by a prosecutor lacking subject matter jurisdiction (People v Di Falco, supra), furnish an even stronger case for the invalidation of an indictment obtained by a person who has never passed the Bar examination or been admitted to practice law in this State. Because of these serious defects in A.D.A. Penofsky’s credentials, there can be no assurance that he exercised the considerable discretion that the law confers upon the District Attorney in a manner consistent with the controlling legal principles, the ethical precepts that constrain licensed attorneys and the sound judgment that licensed attorneys are presumed to possess (see generally, Jemzura v McCue, 45 AD2d 797 [recognizing dangers posed by legal practitioners not trained, examined and licensed for the work]; see also, People v Jones, 70 NY2d 547 [conviction obtained by A.D.A. Penofsky reversed for failure to disclose Rosario material]).

Finally, even if the foregoing considerations were not sufficient to "impair the integrity of the proceeding” and to "create the possibility of prejudice” (CPL 210.35 [5]; People v Di Falco, 44 NY2d, at 488, supra), those conclusions would necessarily follow from the serious threat to the secrecy requirement that flows from the presence of this unadmitted imposter. As was noted in Di Falco (supra, at 488), "[s]ecrecy is a vital requisite of Grand Jury proceedings” (accord, People v Minet, 296 NY 315, 323). Indeed, it has been observed that the "blessings [that] accrue from the grand jury [exist] because its proceedings are secret” (People v Minet, supra, at 323). We concluded in Di Falco (supra, at 488) that the presence of a duly admitted prosecutor lacking subject matter jurisdiction so "infringe[d] upon the secrecy requirement” that the integrity of the proceeding was irreparably tainted, providing an additional reason for the indictment’s dismissal (see also, People v Minet, supra, at 323-324). The risk of disclosure is obviously no less formidable when a charlatan such as Penofsky, who is not an "officer of the court” and is not accountable to any disciplinary authority, has been permitted in the Grand Jury room.

In the final analysis, I cannot concur in a rule that would permit the State to prosecute on the basis of an indictment obtained by a layperson because, in my view, such a rule compromises the integrity of the process and thereby undermines the public’s ability to invest its confidence in that process. In theory, the Grand Jury is the bulwark in our legal system against oppressive and abusive conduct by the prosecutorial arm of government (see, People v Calbud, Inc., 49 NY2d 389, 395-396; People v Iannone, 45 NY2d 589, 594). In modern practice, however, it has come to be regarded, all too often, as a mere "investigative agent for the prosecutor.” (Matter of Additional Jan. 1979 Grand Jury v Doe, 50 NY2d 14, 23 [Wachtler, J., concurring].) As one court has observed, the Grand Jury frequently "operat[es] * * * as a rubber stamp * * * generally affirming] what the prosecutor calls upon it to affirm * * * [and] indict[ing] or fail[ing] to indict as the prosecutor ’submits’ that it should.” (People v Colebut, 86 Misc 2d 729, 734.) Given the central importance of the prosecutor’s role in the Grand Jury system, I do not believe that we can, or should, accept as a proper predicate for a criminal prosecution the work product of a Grand Jury whose "legal adviser” was a person such as Daniel Penofsky — who was never certified as competent by the State Board of Law Examiners, was never approved by the Committee on Character and Fitness and who himself had such little personal regard for the law that he was willing to perpetuate a 16-year fraud on both his employers and the public.

We demean the process as a whole when we hold, in essence, that the Grand Jury proceeding was not fatally tainted by either Penofsky’s lack of admission to the Bar or his criminally fraudulent conduct. Accordingly, I would hold that the indictment under which defendant was prosecuted was defective and should have been dismissed.

Chief Judge Wachtler and Judges Simons, Kaye and Bellacosa concur with Judge Hancock, Jr.; Judge Titone dissents and votes to reverse in a separate opinion in which Judge Alexander concurs.

In each case: Order affirmed.

      . At the time of his arrest Witherspoon was found to be in possession of a plastic envelope and a cigarette both of which contained phencyclidine. He, alone, was charged with criminal possession of a controlled substance.

      . CPL 190.25 (3) (a) states:
      "During the deliberations and voting of a grand jury, only the grand jurors may be present in the grand jury room. During its other proceedings, the following persons, in addition to witnesses, may, as the occasion requires, also be present:
      "(a) The district attorney”.

      . The prosecutor had exceeded his grant of authority (Executive Order No. 55 [9 NYCRR 1.55]) which was "limited to those cases dealing with corruption relating strictly to the criminal justice process and [did] not embrace the judicial system in general or the civil justice system in particular” (44 NY2d, at 485-486).

      . The parties cite numerous cases dealing with the circumstances under which a defendant may properly be prosecuted by a nonlawyer or by someone other than a District Attorney for certain minor offenses (e.g., People v Van Sickle, 13 NY2d 61; People v Czajka, 11 NY2d 253; People v Vial, 132 Misc 2d 5; People v Birnberg, 112 Misc 2d 870; People v Vlasto, 78 Misc 2d 419). These cases, however, are not germane to defendants’ contention that they have a fundamental, constitutional right to be prosecuted by a duly admitted attorney.

      . Wolfe, The Bonfire of the Vanities, at 603, quoting Wachtler, Ch. J.

      . Specifically, the exemption applies to (1) "law students who have completed at least two semesters of law school” and (2) recent graduates of approved law schools who have taken the next Bar examination "immediately available” after they graduated or were notified of their failure on a prior examination and have not yet been notified on their failure to pass two Bar examinations (Judiciary Law §§ 478, 484).

      . Indeed, the majority’s statement that Penofsky’s unlicensed status did not "affect his permission” to represent the People before the Grand Jury is undermined by the fact that the Special Narcotics Prosecutor fired him immediately after his fraud was revealed (see, People v Munoz, 153 AD2d 281, 283).

        . The potential for mischief in these cases is not vitiated by the fact that Penofsky was acting under the aegis of the Special Narcotics Prosecutor’s office, with its internal hierarchy of supervision by admitted attorneys. No matter how conscientious that office’s supervisory staff may be, it cannot involve itself in the minutiae of the day-to-day decisions that must be made in connection with each prosecution. Similarly the availability of judicial review through a motion to inspect and dismiss is not a sufficient means of ensuring the regularity of the underlying process, since many of the activities of the Assistant District Attorney handling the Grand Jury presentation, including witness preparation and selection of the counts to be submitted, take place off the record and, consequently, routinely evade judicial scrutiny (see also, People v Minet, 296 NY 315, 322).


author: Hancock, Jr., J.

text:
    In the Matter of Ellington Construction Corp., Respondent, v Zoning Board of Appeals of the Incorporated Village of New Hempstead, Appellant.
    Argued November 13, 1990;
    decided December 20, 1990

      POINTS OF COUNSEL

      Doris F. Ulman, Village Attorney (Frank I. Brown of counsel), for appellant.

      John S. Edwards for respondent.

      Barbara J. Samel for the New York State Conference of Mayors and Other Municipal Officials, amicus curiae.

   OPINION OF THE COURT

Hancock, Jr., J.

For a village having both a Planning Board and a Zoning Board of Appeals, Village Law § 7-708 (2) establishes an exemption period of three years after the filing of a subdivision plat during which an amendment increasing lot area or dimension requirements shall not “be applicable to or in any way affect any of the lots shown and delineated on such subdivision plat” (§ 7-708 [2] [a]). Prior to an increase in the applicable area and dimension requirements, the owner of an approved subdivision failed to complete it or to apply for building permits on all of the proposed lots. It did, however, take sufficient steps toward completion of the proposed subdivision before the exemption period expired to acquire common-law vested rights. The question presented by the appeal of respondent Zoning Board is whether the petitioner owner, by virtue of these vested rights, is exempt from compliance with the new, more stringent area and dimension requirements when it applies for building permits for its remaining lots. Supreme Court and the Appellate Division both held that the owner is protected under the exemption in Village Law § 7-708 (2) (b), and we agree. There should, accordingly, be an affirmance.

I

On April 29, 1975, the Town of Ramapo Planning Board accepted for filing petitioner’s "average density” subdivision plat (see, Town Law § 281). As a condition of its "average density” approval, the town required that 12.105 acres of the 33.522 acres in the subdivision be irrevocably dedicated to it for parkland purposes. The subdivision was approved for development in two sections, the first to consist of 9 lots and the second of 22 lots.

On July 3, 1975, petitioner’s predecessor dedicated the parkland and thereafter, on September 24, 1975, the subdivision plat was filed. On June 29, 1982, the town approved a revised subdivision plat. This plat, filed on October 14, 1982, did not in any way modify the original layout of the lots, streets and other improvements.

Between 1980 and early 1984, petitioner built seven homes on section one of the subdivision. No homes were constructed in section two which had been laid out for lots having widths of between 108 and 120 feet and areas complying with the 22,500 square-foot minimum requirement of the Town of Ramapo ordinance.

In 1984, when the Village of New Hempstead was incorporated, the territory of the town which encompassed petitioner’s subdivision became part of the Village. On January 2, 1986, the Village amended the applicable zoning ordinance to increase the minimum area requirement for average density lots to 35,000 square feet and the minimum width requirement for such lots to 150 feet. Prior to this time, petitioner had installed various improvements on the subdivision including, on section two, drainage facilities, water and sewer lines, fire hydrants, curbs and curb cuts, and underground telephone and electric service. After the amendment to the ordinance— and with the Village’s knowledge — petitioner installed a paved road on section two.

In June 1986, petitioner applied for a building permit to construct a house on lot D-10 in section two. The Village building inspector denied the permit because petitioner failed to make certain public improvements to a county road adjoining the subdivision, and because the lot did not meet the amended, more restrictive Village zoning requirements. With respect to this second reason, the inspector ruled that the exemption in Village Law § 7-708 did not apply inasmuch as petitioner had not sought a building permit during the three-year exemption period. Petitioner then commenced its first article 78 proceeding to review the denial of its permit. Supreme Court dismissed this proceeding for petitioner’s failure to exhaust administrative remedies since it had not sought relief in an appeal to the Zoning Board of Appeals. Accordingly, petitioner appealed the building inspector’s denial to the Zoning Board of Appeals and, as alternative relief, requested a variance.

When respondent Zoning Board of Appeals denied petitioner’s application in all respects, it commenced the present article 78 proceeding. Supreme Court annulled respondent’s determination and directed the Village inspector to issue the building permit for lot D-10 and the other lots in the subdivision "if, as, and when petitioner makes an application for same”. The Appellate Division agreed with Supreme Court’s conclusion that petitioner had acquired vested rights to complete the subdivision under the originally applicable area and dimension requirements, but modified by requiring petitioner to fulfill certain conditions in order to obtain the building permit.

II

This appeal turns on a question of statutory interpretation: the intended effect of the language in Village Law § 7-708 (2) creating the exemption. Respondent Zoning Board of Appeals contends that the statute affords protection only for those lots in a filed subdivision which an owner has completed or for which it has actually obtained a building permit during the exemption period. Petitioner argues that the statute protects subdivision lots in which an owner has acquired common-law vested rights during the period. In construing section 7-708 (2), as with any legislation, we first "look to the particular words for their meaning, both as they are used in the section and in their context as part of the entire statute.” (Price v Price, 69 NY2d 8, 13.) For if the statute is unambiguous and its meaning evident from the language, as respondent contends, we need look no further (see, Sega v State of New York, 60 NY2d 183,190-191).

From the language of section 7-708 (2), as it applies to the Village of New Hempstead, there is no question: (1) that its purpose is to create an exemption from the operation of amendments imposing stricter area and dimension requirements; and (2) that the period of the exemption is three years commencing on the date of the filing of the subdivision plat. But the statute contains no language which prescribes the conditions which must be satisfied for an owner to receive the benefit of the exemption. It does not specify whether as a prerequisite for claiming the exemption for a particular lot, the owner must, during the exemption period, have completed construction on the lot or obtained a building permit for such construction — or whether it is sufficient if the owner has taken sufficient steps toward completion of the subdivision under the existing, more liberal zoning requirements to have acquired vested rights in the remaining undeveloped lots. The only statutory mandate is that the stricter requirements of the amended ordinance "shall not * * * be applicable to or in any way affect any of the lots shown and delineated on such subdivision plat” (Village Law § 7-708 [2] [a] [emphasis added]). Exactly what the lots are protected from — i.e., what is meant by the phrases "be applicable to” and "in any way affect” — is not clear. It is necessary, therefore, to look beyond the words of the statute at the circumstances surrounding its adoption and to consider the policy reasons for enacting legislation in an area where common-law rules have long controlled (see, Price v Price, supra, at 13-14), being mindful, of course, that the " 'legislative intent is the great and controlling principle’ ” (id., at 14; People v Ryan, 274 NY 149, 152).

Village Law § 7-708 (2) and its counterpart, Town Law § 265-a, were enacted in 1960 (L 1960, chs 1060, 1061). The Legislature adopted a similar measure for cities in 1961 (General City Law § 83-a, L 1961, ch 275). Prior to these enactments, questions concerning the rights of owners of approved subdivisions to complete their subdivisions in accordance with the regulations existing at the time of their approval were governed exclusively by the common law pertaining to vested rights.

The New York rule, both before and after the exemption statutes, has been that where a more restrictive zoning ordinance is enacted, an owner will be permitted to complete a structure or a development which an amendment has rendered nonconforming only where the owner has undertaken substantial construction and made substantial expenditures prior to the effective date of the amendment (see, People v Miller, 304 NY 105, 107-109; Matter of Putnam Armonk v Town of Southeast, 52 AD2d 10, 14-15; 4 Rathkopf, Zoning and Planning § 50.03 [3], at 50-25 — 50-28 [4th ed]; 1 Anderson, New York Zoning Law and Practice § 6.18, at 229-234 [3d ed]). The doctrine of vested rights has generally been described as an application of the constitutionally based common-law rule protecting nonconforming uses (see, People v Miller, supra, at 107; 4 Rathkopf, op. cit., at 50-13, n 2). But the doctrine is also said to have been grounded on principles of equitable estoppel (see, Matter of Pokoik v Silsdorf, 40 NY2d 769, 773, and at 774 [Breitel, Ch. J., dissenting]; 7 Rohan, Zoning and Land Use Controls § 52.08 [4], at 52-78 — 52-80; 4 Rathkopf, op. cit., § 50.04, at 50-41 — 50-42). Whether rooted in equity or the common law, the operation and effect of the vested rights doctrine is the same and it has been applied alike to a single building or a subdivision (see, Matter of Putnam Armonk v Town of Southeast, 52 AD2d 10, supra; Elsinore Prop. Owners Assn. v Morwand Homes, 286 App Div 1105, 1106-1107; Ward v City of New Rochelle, 20 Misc 2d 122, affd 9 AD2d 911, affd 8 NY2d 895; 4 Rathkopf, op. cit., § 50.03 [3] [d], at 50-39 — 50-41).

Under the vested rights doctrine as it applied to subdivisions (prior to the exemption statutes), nothing cut off the period during which a developer could acquire vested rights after initial approval. On the other hand, nothing prevented a municipality from subjecting the undeveloped lots in an approved subdivision to more stringent restrictions at any time after the plat was filed so long as vesting had not occurred. Protecting the owner depended entirely on the date of vesting relative to the effective date of the amended ordinance. If vesting occurred first, the owner was protected. It mattered not when the events occurred with respect to the initial date of plat approval, but only which came first.

The enactment of the statutory exemption provisions (Village Law § 7-708 [2]; Town Law § 265-a [2]; General City Law §83-a [2]) obviously supplied something which the decisional law of vested rights lacked: a specific period during which the developer could secure the right to complete the unfinished lots free from the requirements of the new, more restrictive ordinance and beyond which such right could not be secured. But the statutes did not define precisely what the developer must do during the period to obtain the protection of the exemption.

Respondent Zoning Board of Appeals contends that, under the statute, in order to achieve freedom from the amended ordinánce for any uncompleted lot, a developer must have actually completed the lot or obtained a building permit for it. Under this construction, a developer which had done more than enough during the exemption period to acquire common-law vested rights for the remaining undeveloped lots in the subdivision, would be required, nevertheless, to comply with the amended ordinance for these lots. Such construction, if adopted would produce an extensive change in the law, and would deprive the developer of what, but for the effect óf the statute, would be its right to achieve vesting during the exemption period under the common-law rule. It would, thus, contravene the established rule of construction that zoning legislation of the type in question which is "in derogation of the common law * * * must be strictly construed against the municipality which * * * seeks to enforce [it]” (Matter of Allen v Adami, 39 NY2d 275, 277; see, Matter of 440 E. 102nd St. Corp. v Murdock, 285 NY 298, 304-305; 1 Anderson, New York Zoning Law and Practice § 17.01, at 740-743 [3d ed]; see generally, McKinney’s Cons Laws of NY, Book 1, Statutes § 153, at 331-332 ["(t)he courts will not construe a statute as abolishing a common-law right in the absence of a clear intent on the part of the Legislature”]).

Contrary to respondent Zoning Board’s position, a commonsense analysis of the legislative purpose of Village Law § 7-708 and Town Law § 265-a in the light of the circumstances surrounding their original enactment (L 1960, chs 1060, 1061) does not suggest that the legislation was intended to deprive a subdivision developer of its capacity to acquire vested rights in a subdivision during the exemption period. The legislative history shows that the enactment was the culmination of a successful legislative compromise between the views of the developers and the differing views of the municipalities and that representatives of both groups urged its adoption (see, Mem of Westchester County Village Officials Assn, Bill Jacket, L 1960, chs 1060, 1061; Mem of Office for Local Government, id.; Mem of New York State Home Builder’s Assn, id.; Mem of American Institute of Planners, id.; Mem in support of A 3834, id.). Indeed, Governor Rockefeller in his memorandum approving the legislation stated that the "purpose of these bills is to reconcile the interests of home builders and developers who have made financial commitments relying on existing zoning ordinances, and the interests of towns and villages in not being unduly restrained from upgrading zoning requirements” (1960 McKinney’s Session Laws of NY, Messages of Governor, at 2064).

Petitioner’s interpretation of the statute — that it was intended to permit a developer to gain vested rights during the exemption period — seems fully consistent with this legislative purpose of effecting a compromise in a statute which would fairly balance the conflicting interests of the developers and municipalities. Under petitioner’s construction, each group gains something and gives up something. The developers gain the assurance of a definite period during which they can protect their subdivisions by securing vesting; they give up the possibility of protection under the statute after that period. The municipalities gain the authority to enforce an upgrading of their zoning requirements at any time after the exemption period and the assurance that the new requirements will bind any developer which has not by then achieved vesting; the municipalities give up their former unrestricted power to subject a subdivision to new requirements at any time before the owner has acquired vesting rights.

The view of the statute espoused by respondent Zoning Board, on the other hand — that a developer can derive no protection for the balance of its subdivision by achieving vesting during the exemption period — permits undeniably harsh results. Obviously, where a developer has completed a substantial portion of a subdivision, it could be faced with large losses and unanticipated additional cost if compelled to restructure its plans and dismantle and reconstruct subdivision improvements in order to complete the remaining lots. As has been observed, a rule of such stringency applying to subdivisions imposes a formidable barrier to development (4 Rathkopf, op. cit., § 50.05 [3], at 50-73) and actually impedes rational land use planning (id., at 50-72). Under established rules, we must presume that the Legislature could not have intended respondent’s interpretation of the statute which produces such unreasonable and potentially unjust consequences (see, Ferres v City of New Rochelle, 68 NY2d 446, 454; Matter of Petterson v Daystrom Corp., 17 NY2d 32, 38; McKinney’s, Cons Laws of NY, Book 1, Statutes §§ 141, 143, 146, at 280-284, 286-290, 297-302).

We accordingly agree with the courts below that Village Law § 7-708 (2) was intended to permit a developer to secure the right to complete a subdivision in accordance with the existing zoning requirements by manifesting a commitment to the execution of the subdivision plan through completing improvements and incurring expenditures in connection therewith, during the exemption period, sufficient to constitute vesting under common-law rules. Moreover, our review of the record concerning the work performed and expenditures made by petitioner confirms the conclusion of the Appellate Division that, as found by the Supreme Court, the substantial improvements and expenditures made during the three-year exemption period "conferred a vested right to obtain building permits in accordance with the provisions of the former zoning ordinance.” (152 AD2d 365, 377.)

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

Chief Judge Wachtler and Judges Simons, Kaye, Alexander, Titone and Bellacosa concur.

Order affirmed, with costs.

      . Insofar as is pertinent, Village Law § 7-708 provides:
      "2. (a) Notwithstanding any inconsistent provision of this chapter or of any general, special or local law, the provisions of a zoning law hereafter adopted, and the provisions of a change or amendment hereafter adopted to a zoning law which provisions establish or increase lot areas, lot dimensions which are greater than or in excess of the lot areas or lot dimensions of the lots shown and delineated on a subdivision plat of land into lots for residential use and which said subdivision plat also shows and delineates one or more new streets, roads or highways in addition to lot lines and dimensions of the lots thereon delineated and which said subdivision plat has been duly approved by the planning board, if any, of the village in which the land shown on said plat is situate, or approved by such other board or officer, if any, of such village, vested with authority to approve subdivision plats, and which said subdivision plat or the first section thereof has been duly filed in the office of the recording officer of the county in which the land shown on said subdivision plat is situate, or which provisions establish or increase side, rear or front yard or set-back requirements in excess of those applicable to building plats under the provision of the zoning law, if any, in force and effect at the time of the filing of the said subdivision plat or first section thereof, shall not, for the period of time prescribed in paragraph (b) of this subdivision, be applicable to or in any way affect any of the lots shown and delineated on such subdivision plat.

      "(b) If at the time of the filing of the subdivision plat or first section thereof referred to in paragraph (a) of this subdivision there was in the village both a zoning board and a planning board vested with authority to approve subdivision plats, then the exemption provided for in such paragraph shall apply for a period of three years after the filing of the subdivision plat or first section thereof. ” (Emphasis added.)
      Provisions virtually identical to those in Village Law § 7-708 (2) are contained in Town Law § 265-a and General City Law § 83-a.

      . It is not disputed that the three-year exemption period at issue began to run on the date the revised plat was filed (Oct. 14,1982).

      . The other reason given for the denial of the permit — i.e., that petitioner failed to pay an inspection fee — is not at issue on this appeal.

      . Both Supreme Court and the Appellate Division also concluded that— if the new, more restrictive zoning requirements were held to be applicable despite the exemption period in Village Law § 7-708 (2) — the Zoning Board of Appeals lacked a rational basis for the denial of petitioner’s request for a variance. In the light of our conclusion that petitioner was entitled to the benefit of the exemption provision, we do not reach the variance issue.

      . We have considered respondent’s remaining arguments and conclude that they provide no basis for disturbing the Appellate Division’s order.


author: Kaye, J. Alexander, J.

text:
    In the Matter of New York State Medical Transporters Association, Inc., et al., Appellants, v Cesar A. Perales, as Commissioner of the Department of Social Services of the State of New York, Respondent.
    Submitted November 14, 1990;
    decided December 20, 1990

      POINTS OF COUNSEL

      Daniel J. Roberts and Jeffrey M. Roberts for appellants.

      Robert Abrams, Attorney-General (Michele M. Woodard, O. Peter Sherwood, Lawrence S. Kahn, Harvey M. Berman and Elizabeth Bradford of counsel), for respondent.
   OPINION OF THE COURT

Kaye, J.

Petitioners, providers of nonemergency transportation services to Medicaid recipients, by this proceeding seek to compel respondent, Commissioner of the Department of Social Services (DSS), to process their claims for transportation services rendered to Medicaid recipients without the agency’s prior approval. Petitioners acknowledge that prior agency approval is a statutory prerequisite but contend they are nonetheless entitled to have their claims processed because of an informal practice permitting them to obtain "retroactive prior approval” after the services were rendered, which respondent should either be estopped from contesting, or found to have ratified. In that there is no basis here for the application of estoppel or ratification, we affirm the order of the Appellate Division dismissing the petition.

By statute, DSS must provide Medicaid recipients with "transportation when essential to obtain care and services” (Social Services Law § 365-a [2] [j]). The statute requires that such transportation be "upon prior approval, except in cases of emergency,” and the implementing regulation states that "[pjrior authorization by the local social services official shall be required for * * * transportation when essential to obtain medical care and services, except emergency care” (18 NYCRR 505.10 [b]).

Petitioner New York State Medical Transporters Association, Inc. is an association of companies that provide nonemergency invalid coach services to Medicaid recipients. Petitioner Medicab Inc. of New York was such a company during times relevant to this lawsuit, but was disqualified from further participation in the Medicaid program because its president pleaded guilty to grand larceny in connection with fraudulent Medicaid claims. Although a stipulation would have permitted Medicab’s subsidiaries to resume services if certain conditions were met, Medicab’s present status is unclear.

It is undisputed that under the applicable New York City plan, medical transporters were not themselves permitted to obtain the requisite approval. Instead, the medical care provider was to request approval from DSS’s fiscal agent, a separate entity operating under contract with DSS. After approving a request, the fiscal agent would assign a prior approval number to the claim, which the medical care provider would then communicate to the transporter and the transporter would include on its claim form. A prior approval number did not guarantee that a claim would be paid, only that it would be processed.

Monthly calls for prior approval reached 60,000 in 1986. Because the fiscal agent was unable to respond to that volume of calls, it adopted a practice of giving "retroactive prior approvals” after services had been rendered. The record does not establish when the fiscal agent adopted that practice, or how long it was maintained, or how many patients were transported, or when — prior to May 15, 1987 — respondent learned of the practice.

On May 15, 1987, respondent sent petitioner Association a draft letter restating the requirement that prior approval be obtained before transportation services were rendered in all nonemergency cases, and one month later sent the final version of the letter to all transportation providers in New York City. The letter reiterated that ”[i]t is the policy of the New York State Medicaid Program that all requests for non-emergency ambulance and ambulette transportation be made via the telephone Prior Approval system at Computer Sciences Corporation (CSC) prior to or on the same date as the medical service.” The letter further stated that the requirement of prior approval would be relaxed only when "extreme difficulty had been experienced by an ordering provider in getting through on the telephone to obtain a Prior Approval,” and that such "retroactive prior approval” requests could in no event be made more than 30 days after the patient had been transported.

By this proceeding, petitioners then sought to compel respondent to reinstitute the prior practice, and also to process claims for transportation that had been provided without prior approval. They do not indicate how many claims are involved, only that respondent denied one request made August 14, 1987 for "prior approval” of transportation provided to a patient in February 1986, and another request made June 27, 1987 for "prior approval” of transportation provided to eight patients in February 1985. While denying that portion of the petition seeking reinstitution of the practice, Supreme Court granted the petition to the extent it sought to compel processing of claims, on the ground that the DSS had "ratified the irregular procedure by its failure to end it within a reasonable time, and by its retention of the benefits resulting from petitioner’s services.” The Appellate Division reversed and dismissed the petition, concluding that there was no basis for the application of estoppel or ratification. We agree.

We have repeatedly made clear that estoppel cannot be invoked against a governmental agency to prevent it from discharging its statutory duties (Matter of Wedinger v Goldberger, 71 NY2d 428, 441, cert denied 488 US 850; Matter of E.F.S. Ventures Corp. v Foster, 71 NY2d 359, 369-370; Matter of Parkview Assocs. v City of New York, 71 NY2d 274, 282, cert denied 488 US 801; Scruggs-Leftwich v Rivercross Tenants’ Corp., 70 NY2d 849, 852). Among other reasons, to permit estoppel against the government "could easily result in large scale public fraud.” (Matter of E.F.S. Ventures Corp. v Foster, supra, at 370.) While we have not absolutely precluded the possibility of estoppel against a governmental agency, our decisions have made clear that it is foreclosed "in all but the rarest cases.” (Matter of Parkview Assocs. v City of New York, supra, at 282.)

We reject petitioners’ contention that this is such a case. First, nothing in this record suggests that the Appellate Division erred when it found that petitioners were well aware that the law required prior approval; thus, petitioners here are in an even weaker position than the petitioner in Park-view Assocs., which could have discovered the law by reasonable diligence (71 NY2d, at 282, supra). Second, we are not persuaded that the potential for public fraud is eliminated, as petitioners contend, because they seek only processing, not payment, of their claims. The possibility that collusive behavior will result if the government can be prevented from enforcing a law on the grounds that its agents excused compliance is the same, regardless of the immediacy of the expected benefit.

Finally, petitioners’ claim that "manifest injustice” will result if respondent is not compelled to process their claims has no foundation in this record, which does not even reveal how many claims are involved. Furthermore, the law is clear that those who deal with the government are expected to know the law, and cannot rely on the conduct of government agents contrary to law as a basis for "manifest injustice” claims (Parsa v State of New York, 64 NY2d 143, 147; Heckler v Community Health Servs., 467 US 51, 63). "Men must turn square corners when they deal with the Government” (Rock Is., Ark. & La. R. R. Co. v United States, 254 US 141, 143). Thus, the Appellate Division correctly concluded that the doctrine of estoppel is not available to allow petitioners — who have only themselves to blame — to avoid the consequences of their own knowing failure to follow the law.

No doubt recognizing the difficulty of their estoppel claim, petitioners advance the closely related doctrine of ratification, contending that respondent knew of its agent’s practice, accepted the benefits, and is therefore bound (see generally, 57 NY Jur 2d, Estoppel, Ratification, and Waiver, § 76). For much the same reason, that contention also must fail.

At the outset, ratification of an agent’s acts requires knowledge of material facts concerning the allegedly binding transaction (see, e.g., Stauss v Title Guar. & Trust Co., 284 NY 41, 45-47; Pollitz v Wabash R. R. Co., 207 NY 113, 129-130; Reuschlein and Gregory, Agency and Partnership § 30, at 74; Restatement [Second] of Agency § 91 [1958]). Here, as the Appellate Division noted, there has been no showing that respondent knew of and intentionally condoned its agent’s practice before its letters repudiating that practice. Nor does the record demonstrate that respondent retained benefits provided by petitioners. There was no evidence that the persons to whom transportation services were provided were Medicaid recipients or that that transportation was "essential to obtain care and services.”

But petitioners’ arguments suffer from an even more fundamental flaw. Illegal contracts are not generally enforceable (Weir Metro Ambu-Service v Turner, 57 NY2d 911, 912 [regulation]; Tooker v Inter-County Tit. Guar. & Mtge. Co., 295 NY 386, 390 [statute]) — a rule that applies as well to ratification. A principal cannot ratify an agent’s act that the principal itself could not have authorized (Restatement [Second] of Agency § 84 [2] [1958]; 6A Corbin, Contracts § 1532, at 806 [1962 ed]; 15 Williston, Contracts § 1786A, at 346 [3d ed 1972]; Reuschlein and Gregory, Agency and Partnership § 30, at 73).

Petitioners’ argument is that respondent ratified its agent’s act excusing compliance with the legal requirement that approval be obtained before transportation services are rendered. Neither the statute nor the regulation which imposes the requirement (Social Services Law § 365-a [2] [j]; 18 NYCRR 505.10 [b]) gives respondent discretion to excuse that legal requirement, and respondent thus could not ratify the fiscal agent’s practice of excusing compliance with the law.

The argument of the dissent that this appeal involves social legislation, that should be humanely administered (dissenting opn, at 136), misses the mark. The issue here is not whether a statute should be humanely administered so that Medicaid recipients receive its intended benefit, but rather whether those who provide certain services to Medicaid recipients should be permitted to circumvent legislative measures that help to insure against fraud on the public. The methodology by which the statutory requirement of prior approval is to be implemented may be — as the dissent suggests — a policy decision, but the statutory requirement itself is not.

Our conclusion that ratification is not available to prevent respondent from enforcing the law here is entirely consistent with our decisions holding that the principle of estoppel is not available to petitioners for that purpose. The very reasons that the doctrine of estoppel are not available apply with equal force to petitioners’ claims of ratification. If respondent could be prevented from enforcing the law on the ground that its agent had excused compliance, the possibilities for collusive behavior and large scale public fraud are not hard to imagine.

Indeed, this case demonstrates how difficult it would become to enforce the law if respondent could be prevented from adhering to legal requirements on the ground that its fiscal agent had excused compliance with the law. Petitioners’ argument that respondent ratified the practice of "retroactive prior approvals” is based, in large part, on respondent’s letters emphasizing that the legal requirement of prior approval meant exactly that. In other words, petitioner is relying on respondent’s efforts to enforce the law as the basis for its claim that respondent ratified a policy contrary to that law. Such a claim obviously cannot succeed.

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

Alexander, J.

(dissenting). Because, in my view, the record amply supports the conclusion that DSS ratified the acts of its fiscal agent with respect to the retroactive assignment of prior approval numbers, I would reverse the order of the Appellate Division and reinstate the judgment of Supreme Court. Therefore, I respectfully dissent.

In connection with the discharge of its statutory obligation to provide transportation services to Medicaid recipients, DSS delegated processing of payments for transportation services to its agent along with responsibility for issuing prior approval numbers which ensure that only medically necessary transportation services are provided to Medicaid recipients. DSS gave its agent unfettered access to its computerized management database system (MMIS) and allowed the agent to process payments through that system without any control to ensure prior approval numbers had been assigned before services had been provided. These numbers were assigned upon telephone requests from medical providers and when in 1985 the volume of these telephone requests for prior approval numbers reached as high as 60,000 monthly, it became virtually impossible for medical providers to reach respondent’s agent to obtain the prior approval number in advance of arranging for transportation with providers like petitioner.

DSS admits that in response to this crisis, which would have left Medicaid recipients without needed transportation in violation of DSS’ statutory duty to provide such services, its agent devised a procedure to enable medical providers to arrange for these transportation services and then obtain the approval number. The agent designed a form and distributed it to providers to facilitate their use of the new policy and that form served as input into respondent’s MMIS. Petitioners have used that form and the process announced by the agent beginning in 1985. They have submitted and been paid claims based upon retroactive prior approval numbers issued in this manner by the agent. Moreover, petitioners have submitted logs that reflect that retroactive prior approvals were processed and numbers assigned by the agent as early as 1985 and as late as 1987.

DSS acknowledges that it gave the agent the capability to process payments directly through its system but claims it had no knowledge that its agent had implemented the revised process. However, in May 1987, DSS acknowledged that "it ha[d] become apparent by the number of written prior approval requests after the date of service, without any original prior approval information in our system” that its agent had been assigning prior approval numbers after services had been provided. Indeed DSS indicated that requests for nonemergency transportation services by a medical provider beyond 30 days from the date of the medical services "will no longer be accepted” as a valid request for transportation clearly implying that, to its knowledge, such requests had previously been accepted and processed. DSS does not contend that it lacked the capability to identify that information which existed in its own computerized files since 1985.

Petitioners argue that DSS should be estopped to deny the processing of their claims for reimbursement for the transportation services furnished or should be held to have ratified the acts of its agent in retroactively issuing prior approval numbers. Supreme Court concluded that DSS had ratified its agent’s procedure for retroactively issuing prior approval numbers. The Appellate Division rejected this finding. That court concluded, and the majority agrees (see, majority opn, at 131) that the record was "devoid of any indication that the DSS knew of and thus intentionally condoned the acts of its agent” (160 AD2d 710, 712 [emphasis added]). Petitioners’ estoppel arguments likewise were rejected.

Although reasonable minds may differ as to whether there is sufficient evidence in the record to support Supreme Court’s finding that there had been an express ratification, in my view, the record clearly reflects sufficient evidence to demonstrate an implied ratification.

A principal’s ratification of the acts of its agent may be express or implied (see, Reuschlein and Gregory, Agency and Partnership § 33, at 76) and may be demonstrated by the words, acts or conduct of the principal. Moreover, the principal’s acquiescence in the acts of its agent, may constitute implied ratification when the principal accepts a benefit resulting from those acts (see, Pollitz v Wabash R. R. Co., 207 NY 113, 119; Maloy v Montgomery, 246 App Div 482, 486, affd 272 NY 630; Hedman v Security Tit. & Guar. Co., 245 App Div 224, 227); the acceptance of such benefit substitutes for the intent necessary to establish an express ratification (Reuschlein and Gregory, op. cit., at 76).

DSS acquiesced in the retroactive prior approval policy in processing transportation claims because it failed for at least a year and a half to take any action with respect to information contained in its own files (see, Pollitz v Wabash R. R. Co., supra, at 129; Matter of 54/55 Sixth Realty Corp. v Leventhal, 51 AD2d 714, 715, affd 42 NY2d 935, 937; Matter of Minerva v Ward, 101 AD2d 754, 755, affd 63 NY2d 739). Moreover, it is undisputed that DSS failed to place adequate controls over its MMIS to ensure that its agent processed claims properly.

The majority apparently rejects implied ratification because, in its view, DSS has not accepted a benefit as a result of its agent’s policy. However, Supreme Court’s undisturbed finding was that petitioner’s provision of transportation services inured to DSS’ benefit because it fulfilled its statutory obligation to provide those benefits. Social Services Law § 365-a (2) (j) and 18 NYCRR 505.10 (b) (1) require DSS to provide transportation services when medically necessary. The record clearly demonstrates that a number of these claims, based on retroactive prior approvals were processed and paid. In the posture of this case, where the hearing initially ordered by Supreme Court was aborted by DSS’ concession that its agent was indeed employing a procedure of retroactive prior approval, the fact that the record does not contain proof that transportation services provided prior to June 1987 were medically necessary should not redound to DSS’ benefit. All agree that prior approval numbers ensure merely that a claim is processed rather than paid. Since it is the medical providers, not the transportation providers, who request transportation services, the medical necessity of the transportation is readily verifiable and will establish DSS’ obligation to pay the claims.

The majority concludes, however, that in any event the subject contracts were illegal and therefore unenforceable. A contract for the provision of transportation services to Medicaid recipients however is not illegal; indeed the service is expressly required by statute and regulation. The question is whether DSS’ failure, through its agent, to provide prior approval numbers to petitioners in respect to medically authorized transportation prevents them from receiving payment for the services rendered on behalf of the State.

Where a statute requires performance of a function by a public officer in a specified manner, only substantial compliance with the statute is required to render the act valid (People ex rel. Lyon Co. v McDonough, 173 NY 181, 190-191; Brown v Ward, 218 App Div 643, 645). A statute is not required to be literally performed; the focus is on whether the purpose of the statute is served (id.). Thus, whether respondent was required to issue prior approval numbers before transportation services were provided to Medicaid recipients depends on the over-all significance of the prior approval requirement contained in Social Services Law § 365-a.

Social legislation must be interpreted and enforced in a "reasonable and humane manner in accordance with its manifest intent and purpose” (Matter of Sabot v Lavine, 42 NY2d 1068, 1069; see, Sawma v State of New York, 72 NY2d 979, 980; O’Neill v Blum, 95 AD2d 357, 360-361). In this case, Social Services Law § 365-a (2) (j) and regulation 18 NYCRR 505.10 (b) (1) require the State to provide transportation services to Medicaid recipients "when essential to obtain medical care and services”. Prior approval is required, except in emergency cases, to ensure transportation services are medically necessary before they are provided. Assignment of a prior approval number in response to a medical provider’s transportation order, is but a method of demonstrating that the services were viewed as essential in advance of the provision of those services. Neither the statute nor the regulation define prior approval, state who is responsible for verifying prior approval, or indeed require the assignment of a prior approval number. That methodology was merely respondent’s policy decision to satisfy the statutory prior approval requirement and while that methodology may be effective to reduce or eliminate the risk of fraud and may be viewed as a reasonable implementation of the statute at issue, there is no requirement that that method be viewed as the sole legal method of ensuring that transportation services are medically necessary. Such necessity exists because providers of medical services determine that transportation services are required and those providers are competent to make such determinations in the first instance. That the policy of respondent’s agent at issue here is not "illegal”, is demonstrated by respondent’s June 1987 memo "revising and enforcing” the prior approval policy and continuing the retroactive assignment of prior approval numbers for services provided within 30 days of the request. Surely the majority does not suggest that respondent’s current policy is likewise illegal.

Although the State has a valid interest in preserving the fiscal integrity of the Medicaid program and preventing fraud and collusion, "[the] regulations [and statute] may not be applied with a literal rigidity that would effectively deny to eligible persons intended medical assistance” (Matter of Kaminsky v Brezenoff, 77 AD2d 550, 551, appeal dismissed 51 NY2d 1009). The refusal to process these claims may ultimately redound to the detriment of the Medicaid recipients. I would reject the rigid application of the prior approval requirement under the particular circumstances of this case, and grant the petition herein to the limited extent of requiring respondent to process the rejected transportation claims (cf., Matter of Bryson v Blum, 97 AD2d 514, 515; O’Neill v Blum, 95 AD2d 357, 361, supra).

Chief Judge Wachtler and Judges Titone, Hancock, Jr., and Bellacosa concur with Judge Kaye; Judge Alexander dissents and votes to reverse in a separate opinion in which Judge Simons concurs.

Order affirmed, with costs.

      . The factual premise on which the dissent rests — that information concerning the "retroactive prior approvals” was in respondent’s computer files beginning in 1985 (dissenting opn, at 133-134, 135) — lacks basis in the record. There is, for example, no evidence that the logs reflecting retroactive prior approvals by the fiscal agent (dissenting opn, at 134) were ever sent to respondent. Nor is there a factual predicate for the assertion that the fiscal agent’s forms (which did not in any event reveal that there were any "retroactive prior approvals”) were entered into respondent’s computer (dissenting opn, at 134).

      . There is no "undisturbed finding * * * that petitioner’s provision of transportation services inured to DSS’ benefit” (dissenting opn, at 135). The Appellate Division reversed the trial court, and in so doing rejected its ratification analysis. Proof that respondent knew of the prior approval system and accepted the benefit of it is of course central to the dissent’s position that there was an implied ratification.

      . The issue of whether respondent could authorize retroactive prior approvals if requested within 30 days of the provision of services (see, dissenting opn, at 137) is not before us, and we do not address it. Nor is there any basis here for the speculation that petitioners’ voluntary provision of services without regard to the statutory requirement of prior approval could redound to the detriment of any Medicaid recipient (dissenting opn, at 137).

       This assurance is secured by requiring the medical provider, rather than the transportation provider, to secure a "prior approval number” from DSS’ agent.