author: Chief Judge Cooke.

text:
    David Kush, an Infant, by Sally Marszalek, His Mother and Natural Guardian, et al., Respondents, v City of Buffalo et al., Appellants.
    Argued March 21, 1983;
    decided May 5, 1983

      POINTS OF COUNSEL

      Joseph P. McNamara, Corporation Counsel (Carl Tronolone and Michael Hughes of counsel), for appellants.
    I. Defendant breached no duty owing to this plaintiff. (Palsgraf v Long Is. R. R. Co., 248 NY 339; Pulka v Edelman, 40 NY2d 781; Donohue v Copiague Union Free School Dist., 64 AD2d 29; Basso v Miller, 40 NY2d 233; Quinlan v Cecchini, 41 NY2d 686; Polenamekos v Cohn, 234 App Div 563; Barnaby v Rice, 75 AD2d 179; Nussbaum v Lacopo, 27 NY2d 311.) II. Appellant was not negligent in its supervision of youthful employees. (Nolechek v Gesuale, 46 NY2d 332; Holodook v Spencer, 36 NY2d 35; Steinberg v Cauchois, 249 App Div 518; Kosok v Young Men’s Christian Assn. of Greater N. Y., 24 AD2d 113; Hoose v Drumm, 281 NY 54.) III. Instructions to jury as to unlocked doors was reversible error. (Basso v Miller, 40 NY2d 233; Martin v Herzog, 228 NY 164; Quinlan v Cecchini, 41 NY2d 686; Nielsen v City of New York, 38 AD2d 592.) IV. Appellant’s conduct was not the proximate cause of appellee’s injuries, which were caused by intervening acts which were not foreseeable by appellant. (Donohue v Copiague Union Free School Dist., 64 AD2d 29; Ward v State of New York, 81 Misc 2d 583; Kingsland v Erie County Agric. Soc., 298 NY 409; Perry v Rochester Lime Co., 219 NY 60; Tirado v Lubarsky, 49 Misc 2d 543; Hallenbeck v Lone Star Cement Corp., 273 App Div 327; Morse v Buffalo Tank Corp., 280 NY 110; Clark v City of Buffalo, 288 NY 62; Bolsenbroek v Tully & Di Napoli, 12 AD2d 376; Rivera v City of New York, 11 NY2d 856.)

      Robert B. Nichols and Paul William Beltz for respondents.
    I. The questions of negligence, causation and foreseeability were properly submitted to the jury. (Kingsland v Erie County Agric. Soc., 298 NY 409; Palsgraf v Long Is. R. R. Co., 248 NY 339; Johnson v State of New York, 37 NY2d 378; Derdiarian v Felix Contr. Corp., 51 NY2d 308; Muhaymin v Negron, 86 AD2d 836; Nallan v Helmsley-Spear, Inc., 50 NY2d 507.) II. The charge regarding supervision was proper. (Rupert v Sellers, 50 NY2d 881; Barker v Parnossa, Inc., 39 NY2d 926; Lopez v City of New York, 4 AD2d 48; O’Neill v City of Port Jervis, 253 NY 423; Poccia v City of New York, 279 App Div 761, 304 NY 664; Carlock v Westchester Light. Co., 268 NY 345; Ward v Newfield Cent. School Dist. No. 1, 66 AD2d 968; Nicholson v Board of Educ., 36 NY2d 798; Hoose v Drumm, 281 NY 54; Kosok v Young Men’s Christian Assn. of Greater N. Y., 24 AD2d 113, 19 NY2d 935.) III. The charge with respect to unlocked doors was proper. (Klein v Sura Jewelry Mfg. Corp., 53 AD2d 854.) IV. The cases cited by appellant are either not controlling or are distinguishable. (Barnaby v Rice, 75 AD2d 179, 53 NY2d 720; Perry v Rochester Lime Co., 219 NY 60; Hallenbeck v Lone Star Cement Corp., 273 App Div 327, 275 App Div 728, 299 NY 777; Morse v Buffalo Tank Corp., 280 NY 110; Beickert v G. M. Labs., 242 NY 168; Nussbaum v Lacopo, 27 NY2d 311; Donohue v Copiague Union Free School Dist., 64 AD2d 29,47 NY2d 440; Bolsenbroek v Tully & Di Napoli, 12 AD2d 376, 10 NY2d 960; Pulka v Edelman, 40 NY2d 781; Nielsen v City of New York, 38 AD2d 592.)
   OPINION OF THE COURT

Chief Judge Cooke.

A school that negligently fails to secure dangerous chemicals from unsupervised access by children will not be relieved of liability when an injury occurs and it is reasonably foreseeable that the chemicals might be stolen by children.

During 1972, as part of a summer youth program sponsored by the Buffalo Board of Education, two 15-year-old students were hired to assist the custodial staff at Kensington High School. On July 11, while the adult employees were on their coffee break, the two, unsupervised student employees went to the school’s chemistry laboratory. Neither the laboratory nor its adjacent storeroom were locked. The employees took some magnesium powder and potassium nitrate from glass jars, placed the chemicals into plastic sandwich bags, and dropped the bags from a fourth story window into the bushes below. They intended to retrieve the chemicals after work that day.

The infant plaintiff, then eight years old, lived near the school and regularly played on its grounds. On the day of the accident, as he had done previously, the child walked along a trodden path behind the bushes where the chemicals had been dropped. He found the chemicals and, believing them to be sand, began playing with the chemicals and with matches he had earlier found. The chemicals exploded and the boy sustained second degree burns to his hands, arms and face.

Plaintiffs brought this negligence action and the jury found the board of education liable for the infant plaintiff’s injuries. This appeal presents issues concerning the scope of defendant’s duty to secure dangerous chemicals stored on school premises, whether defendant breached this duty, and, if so, whether defendant’s breach proximately caused plaintiff’s injury. This court now affirms.

A landowner has a duty to exercise reasonable care under the circumstances in maintaining its property in a safe condition (see Basso v Miller, 40 NY2d 233, 241). Defining the nature and scope of the duty and to whom the duty is owed requires consideration of the likelihood of injury to another from a dangerous condition or instrumentality on the property; the severity of potential injuries; the burden on the landowner to avoid the risk; and the foreseeability of a potential plaintiff’s presence on the property (see id.; see, also, Danielenko v Kinney Rent-A-Car, 57 NY2d 198, 204-205; Akins v Glens Falls City School Dist., 53 NY2d 325, 329-330; Di Salvo v Armae, Inc., 41 NY2d 80, 82-83).

First deciding to whom a duty, if any, was owed, plaintiff’s presence on the school grounds could be found to be foreseeable. By their very nature, a school and its playgrounds attract children. In addition, Kensington High School is located in a residential neighborhood. It is true that the boy’s accident occurred when school was out of session, a factor germane to the issue of the foreseeability of his presence on the grounds. This, however, does not vitiate defendant’s duty to the infant plaintiff because there was proof that school authorities were aware that children played on the school property during the summer months.

Consideration now turns to what constituted reasonable care under the circumstances and whether defendant exercised that care. Defendant maintained on the school premises a store of dangerous chemicals for use in science classes. Defendant recognized that unsupervised access to these chemicals by children created a grave risk of harm to all present on the school grounds. The dangers inherent in many of the chemicals stored at the school included flammability and toxicity.

T^he superintendent of schools recognized the potential safety problem and promulgated regulations entitled “Safety in the Science Classroom and Laboratory”. The regulations unambiguously provided that “[pjupils are not allowed in science classrooms, laboratories, storerooms or preparation room when the teacher is not present. These rooms should be kept locked when not in use.” The regulations also stated that “[c]ombustible materials, e.g. red phosphorous and magnesium should be stored in a locked, fireproof cabinet.” Finally, a chemistry teacher who had been on the school’s faculty for 21 years testified that as a general practice, special security measures were necessary for chemicals that “would be likely to cause trouble * * * if gotten in poor hands.”

The severity of potential injuries from the misuse of chemicals is manifest. Accounts of children being maimed, blinded, or killed by playing with dangerous substances are legion. This danger could be averted with great ease and at little cost merely by storing the chemicals in a locked, fireproof cabinet — a remedy recognized in defendant’s own regulations.

Thus, defendant purposely maintained a store of chemicals, some of which were inherently dangerous, and recognized that, in the environs of a school, a serious hazard would arise if deliberate safeguards were not in place. Reasonable care under the circumstances required the securing of the dangerous chemicals in such a way that their unsupervised access could not be readily obtained by children (cf. Kingsland v Erie County Agric. Soc., 298 NY 409, 426). In light of the foreseeability of the risk and potential severity of harm to others engendered by a breach of this duty and the ease with which this duty could be satisfied, the jury acted rationally in finding that defendant failed to exercise reasonable care under the circumstances by failing to secure the dangerous chemicals from unsupervised access by school children.

Defendant’s breach of duty was comprised of two elements. First, defendant failed to adequately supervise its two student employees. The director of the summer employment program testified that “the key word is supervision” in the operation of the program. One of the program’s co-ordinators admitted that he had expected the two student employees to be under complete supervision at all times. Nevertheless, the adults charged with overseeing the students left them alone for 30 minutes each day when they went to the school’s basement for their coffee break. The students were told to stand by until the ádults returned. It was during one of these periods that the students took the chemicals that eventually caused plaintiff’s injuries.

Defendant’s argument that it should be liable only for the acts of its employees done in the scope of their employment and that here the students acted outside the scope of their employment is inapposite. Defendant’s duty in this case is not predicated on its status as an employer. Rather, the control and supervision of school-aged children present within the building, whether as students or employees, is an essential part of defendant’s duty to secure dangerous chemicals from the children’s access.

The second element of defendant’s negligence was its failure to adequately secure the dangerous chemicals. There was testimony that, on the day of the accident, the door leading from the corridor to the laboratory was unlocked. The door connecting the laboratory and the storeroom could not be locked because the custodial staff had no key. Finally, in direct contravention of one of its safety regulations, defendant failed to maintain a locked, fireproof cabinet for storage of the chemicals. As a consequence of defendant’s acts, children were left unsupervised in a building with unsecured dangerous chemicals, a situation defendant had expressly recognized would create a grave safety risk.

There remains the issue whether defendant’s breach proximately caused plaintiff’s injury. To establish a prima facie case, plaintiff must show that “defendant’s negligence was a substantial cause of the events which produced the injury” (Derdiarian v Felix Contr. Co., 51 NY2d 308, 315). An interruption of the nexus between defendant’s negligence and plaintiff’s injury by the act of a third party may affect defendant’s liability. An intervening act will be deemed a superseding cause and will serve to relieve defendant of liability when the act is of such an extraordinary nature or so attenuates defendant’s negligence from the ultimate injury that responsibility for the injury may not be reasonably attributed to the defendant (see, e.g., Martinez v Lazaroff, 48 NY2d 819; Kingsland v Erie County Agric. Soc., 298 NY 409, supra; Perry v Rochester Lime Co., 219 NY 60; Hallenbeck v Lone Star Cement Corp., 273 App Div 327, affd no opn 299 NY 777). When, however, the intervening act is a natural and foreseeable consequence of a circumstance created by defendant, liability will subsist (see Derdiarian v Felix Contr. Co., supra; Parvi v City of Kingston, 41 NY2d 553; Prosser, Torts [4th ed], § 44, pp 272-280).

Defendant argues that the student employees’ stealing of the chemicals was an intentional act aqd, hence, a superseding cause of plaintiff’s injury, relieving it of liability. Defendant is correct that an intervening intentional or criminal act will generally sever the liability of the original tort-feasor (see Perry v Rochester Lime Co., supra; Prosser, Torts [4th ed], § 44, p 287), but, on the facts here, it may not rely on this doctrine.

That doctrine has no application when the intentional or criminal intervention of a third party or parties is reasonably foreseeable (see Nallan v Helmsley-Spear, Inc., 50 NY2d 507; Restatement, Torts 2d, §§448, 449). Defendant’s duty was to take reasonable steps to secure the dangerous chemicals from unsupervised access by children. By its very definition, any breach of this duty that leads to injury will involve an intentional, unauthorized taking of chemicals by a child. When the intervening, intentional act of another is itself the foreseeable harm that shapes the duty imposed, the defendant who fails to guard against such conduct will not be relieved of liability when that act occurs.

In this case, the Trial Judge charged the jury that it must consider whether the theft of the chemicals by the student workers was foreseeable and that if it found that “a reasonably prudent person would not have foreseen the act of the third person as a probable consequence of defendant’s negligence, then the defendant is not responsible for plaintiff’s injuries and your verdict must be for the defendant.” The verdict for plaintiff carried the implicit finding that such third-party intervention was reasonably to have been foreseen, and there is sufficient evidence in the record to sustain this finding.

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

Judges Jasen, Jones, Wachtler, Fuchsberg, Meyer and Simons concur.

Order affirmed, with costs.

      . The court instructed the jury that it was up to them to “determine whether there was reasonable supervision of these young boys under the conditions and circumstances of their employment.” On this appeal, defendant argues that this charge was erroneous as “too vague and incomplete to enable the jury to consider the issue intelligently.” Inasmuch as defendant neither requested an alternative charge nor made an objection to this charge, the point has not been preserved for this court’s review (see Rupert v Sellers, 50 NY2d 881).

      . Also to be distinguished in this regard are the holdings of Hoose v Drumm (281 NY 54) and Kosok v Young Men’s Christian Assn. of Greater N. Y. (24 AD2d 113, affd no opn 19 NY2d 935). In each of these cases defendants had a duty to supervise children left in their charge. In Hoose, a child when at play at school was blinded by a goldenrod stalk. In Kosok, a child at a summer camp was injured by a bucket dropped as a prank by another child. In both cases, plaintiffs charged negligent supervision and, in both cases, defendants were found not liable. The common characteristic of these cases that distinguishes them from the case at bar is that the duty of supervision was a general one and had no relation to any dangerous condition on property that could foreseeably cause harm.


source: Caselaw Access Project

author: Jones, J. Simons, J.

license: Public Domain

text:
    In the Matter of Warren M. Levin, Appellant, v Thaddeus J. Murawski, as Executive Secretary of the State Board for Professional Medical Conduct, Respondent. In the Matter of Edmund J. McGrath, Respondent, v State Board for Professional Medical Conduct, Appellant.
    Argued March 22, 1983;
    decided May 5, 1983

      POINTS OF COUNSEL

      Lorraine Backal for appellant in the first above-entitled proceeding, and Robert Abrams, Attorney-General {Alan W. Rubenstein and Peter H. Schiff of counsel), for appellant in the second above-entitled proceeding.
    Since respondent completely failed to demonstrate a factual basis establishing the relevancy of the items sought in the subpoena duces tecum to the subject matter of the investigation and the public purpose to be achieved, the court below erred in reversing the order of the Supreme Court quashing said subpoena. (Matter of A’Hearn v Committee on Unlawful Practice of Law of N. Y. County Lawyers’ Assn., 23 NY2d 916; Myerson v Lentini Bros. Moving & Stor. Co., 33 NY2d 250; Matter of Napatco, Inc. v Lefkowitz, 43 NY2d 884; Virag v Hynes, 54 NY2d 437; Matter of New York State Bd. of Elections, 49 AD2d 806; Matter of Murawski [Schachter], 95 Misc 2d 249; Matter of Temporary Comm. of Investigation of State of N. Y. v French, 68 AD2d 681; Matter of Becker v Levitt, 65 AD2d 865; New York State Div. of Human Rights v Nationwide, 74 AD2d 16, 53 NY2d 1008.)

      Robert Abrams, Attorney-General (.Alan W. Rubenstein and Peter H. Schiff of counsel), for respondent in the first above-entitled proceeding.
    The subpoena in the case at bar was properly and lawfully issued and compliance with its terms should be directed. (Matter of A’Hearn v Committee on Unlawful Practice of Law of N. Y. County Lawyers’ Assn., 23 NY2d 916; Myerson v Lentini Bros. Moving & Stor. Co., 33 NY2d 250; Matter of Nicholson v State Comm. on Judicial Conduct, 50 NY2d 597; Virag v Hynes, 54 NY2d 437; Matter of La Belle Creole Int. v Attorney-General of State of N. Y., 10 NY2d 192; Matter of Stevens Imports v Lack, 52 AD2d 928, 41 NY2d 939; Matter of Temporary Comm. of Investigation of State of N. Y. v French, 68 AD2d 681; Matter of Murawski [Schachter], 95 Misc 2d 249; Matter of Amos Post, Inc. v Attorney-General of State of N. Y., 70 AD2d 750; Matter of Sussman v New York State Organized Crime Task Force, 39 NY2d 231.)

      Paul E. Fitzmorris for respondent in the second above-entitled proceeding.
    I. Respondent board has not shown by any factual basis how the records sought are relevant and material to its inquiry. (Matter of Whalen v John P., 72 AD2d 961; Matter of Simpson v Wolansky, 38 NY2d 391; Matter of Marshall v State Bd. for Professional Med. Conduct, 73 AD2d 798; Matter of A’Hearn v Committee on Unlawful Practice of Law of N. Y. County Lawyers’ Assn., 23 NY2d 916; Matter of New York State Bd. of Elections, 49 AD2d 806; Matter of Murawski [Schachter], 95 Misc 2d 249; Matter of Temporary Comm. of Investigation of State of N. Y. v French, 68 AD2d 681; Matter of Napatco, Inc. v

      Lefkowitz, 43 NY2d 884; Virag v Hynes, 52 NY2d 437; Myerson v Lentini Bros. Moving & Stor. Co., 33 NY2d 250.) II. The board has failed to comply with its statutory obligation to serve charges upon Dr. McGrath and afford him a hearing, thus denying him due process. (Matter of Jones v Berman, 37 NY2d 42; Matter of Hecht v Monaghan, 307 NY 461; Matter of Friedel v Board of Regents of Univ. of State of N. Y., 296 NY 347; Mullane v Central Hanover Trust Co., 339 US 306.) III. The case at bar can be distinguished from Matter of Nicholson v State Comm. on Judicial Conduct.

   OPINION OF THE COURT

Jones, J.

To sustain a subpoena issued on behalf of the State Board for Professional Medical Conduct for production of medical records in aid of an investigation of an individual physician when the investigation has been triggered by receipt of a third-party complaint, there must be a minimal threshold showing that the complaint is authentic and that it is of sufficient substance to warrant investigation. No such showing was made with respect to the issuance of the subpoenas in either of these cases.

The executive director of the State Board for Professional Medical Conduct served an office subpoena duces tecum on Dr. Levin directing him to produce “[a]ny and all records, documents or other writings pertaining to” three named patients. Dr. Levin thereupon moved pursuant to CPLR 2304 to quash the subpoena. The State Board cross-moved to compel compliance with the subpoena. Supreme Court granted the motion to quash and denied the cross motion to compel compliance. The Appellate Division, First Department, one Justice dissenting, reversed, denied the motion to quash and directed the doctor to furnish the materials requested. Dr. Levin has appealed as of right to our court.

An office subpoena duces tecum was similarly issued on behalf of the State Board to Dr. McGrath directing him to produce “[a]ny and all records, documents or other writings pertaining to every patient treated by you at your office between 2:00 p.m. and 6:00 p.m. on the afternoon of July 12, 1979.” Counsel for the State Board later offered to modify the subpoena to limit the records directed to be produced to those of female patients and of one named male patient. Dr. McGrath, too, moved to quash the subpoena, and the board cross-moved to compel compliance. Special Term denied the motion to quash and granted the cross motion to compel compliance. The Appellate Division, Second Department, reversed, granted the motion to quash and denied the cross motion to compel compliance. The State Board has appealed as of right to our court.

We reverse in Levin and affirm in McGrath, holding that, on the records before us, the State Board has failed to establish a sufficient foundation for the issuance of either subpoena.

Both subpoenas were issued pursuant to authority conferred in section 230 (subd 10, pars [k], [l]) of the Public Health Law. To establish the basis for the exercise of this authority in the present instances, the executive secretary of the State Board and Director of the Office of Professional Medical Conduct filed an affidavit in each case. The two affidavits are substantially similar and so far as presently pertinent each contains the following allegations: that the doctor to whom the subpoena was issued is currently under investigation by the State Board; that the office received “a complaint alleging professional misconduct” by the doctor (“concerning methods of treatment of particular patients” as to Dr. Levin; “with respect to his methods of alleged treatment using dangerous drugs” as to Dr. McGrath); that a proper investigation into the possible charges against the doctor requires examination of the materials subpoenaed; that the issuance of the subpoena was authorized by a screening committee of the State Board; and that the materials subpoenaed “are highly relevant and material to the investigation” of the doctor.

Each doctor challenged the subpoena served on him on two grounds — that the State Board had not established a sufficient basis for its issuance nor had it demonstrated the relevancy of the materials subpoenaed to the investigation being conducted. We uphold the former challenge.

It is not disputed that section 230 (subd 10, par [k]) of the Public Health Law confers general authority on the executive secretary of the State Board to subpoena medical records of physicians. Although the practice of medicine is subject to regulation by the State under the police power and implied authorization is given the State Board to obtain patient records for purposes of investigation of a physician notwithstanding the confidential physician-patient relationship, a minimum threshold foundation must be established to support the issuance of an office subpoena in the individual case (cf. Matter of Nicholson v State Comm. on Judicial Conduct, 50 NY2d 597 [subpoena upheld where issued on written complaint by attorney together with a formal administrator’s complaint and after an ex parte judicial hearing to determine the basis for the investigation]; Matter of Napatco, Inc. v Lefkowitz, 43 NY2d 884 [subpoena quashed where issued on basis of advertisement and form solicitation letter]; Matter of Sussman v New York State Organized Crime Task Force, 39 NY2d 227 [subpoena quashed where no basis shown]; Myerson v Lentini Bros. Moving & Stor. Co., 33 NY2d 250, 259 [subpoena “of the broadest possible dimensions” quashed where only basis was receipt of “numerous complaints” not otherwise authenticated]; Matter of A’Hearn v Committee on Unlawful Practice of Law of N. Y. County Lawyers’ Assn., 23 NY2d 916 [subpoena upheld on bare showing of basis for committee’s inquiry]). As we wrote in A’Hearn “[i]t is ancient law that no agency of government may conduct an unlimited and general inquisition into the affairs of persons within its jurisdiction solely on the prospect of possible violations of law being discovered, especially with respect to subpoenas duces tecum * * * There must be authority, relevancy, and some basis for inquisitorial action” (23 NY2d, at p 918).

The requirement that there be prima facie proof of a justifiable basis for a good faith investigation of professional misconduct attaches to the issuance of subpoenas by the State Board for Professional Medical Conduct. That the State Board is required to “investigate each complaint received regardless of the source” (Public Health Law, § 230, subd 10, par [a]) does not serve to dispense with the necessity for such a preliminary showing. Complaints can be authenticated and the State Board can determine whether there is ground for investigation of the charges made without recourse to subpoenas. To warrant the issuance of a subpoena in furtherance of an investigation, undertaken in consequence of receipt of a complaint or otherwise, however, there must be a showing that there exists “some basis for inquisitorial action”.

What is required when investigation is triggered by receipt of a complaint is a threshold showing of the authenticity of the complaint as warranting investigation, not a threshold substantiation of the charges made in the complaint. Verification of the authenticity of the complaint addresses the propriety of undertaking the investigation and can be made without the disclosure sought by a subpoena; the disclosure compelled by a subpoena is ordered in aid of investigation of the merits of the charges. It is fitting that before the investigative engines of governmental agencies are started up against an individual at least minimal warrant is shown for such intrusion.

We turn then to the cases before us. In addition to the unquestioned statutory grant of legal authority to issue an office subpoena, the State Board must establish the bona fide authenticity of the particular occasion for the exercise of the subpoena power. Where the issuance of the subpoena is based, as in these cases, on the receipt of a complaint or complaints, there must be a minimal showing that, in consequence of verification or otherwise, the complaint reasonably justifies the issuance of the subpoena in furtherance of an investigation. What showing will suffice to cross this threshold will necessarily vary from case to case. It may relate to the reliability of the complainant; it may be shown by the substance of the complaint. Specific detail as to identification of the complainant, some evidence of his good faith or reliability, disclosure of the basis for his knowledge of the substance of the complaint, with dates to establish its currency, and some revelation of the substance of the complaint will normally suffice, but all or most of this data may not be necessary. Sufficient authenticating detail may be found in the complaint itself; if not, it must be independently supplied. In the present case the only showing offered by the State Board is a bare recital of the receipt of “a complaint”, with no identifying or authenticating detail. This will not suffice.

Because the State Board has failed to make a threshold demonstration of the authenticity of the complaints as justifying the issuance of the subpoenas, they must be quashed. This determination serves to dispose of the appeals in the two cases before us. Accordingly, there is no necessity now to address the second branch of the assault on these subpoenas, namely, that there was a failure to demonstrate the relevancy of the materials subpoenaed to the investigations. being conducted. To do so would be inappropriate, especially in view of the failure of the parties to consider what significance, if any, should be attached to the particular language found in section 230 (subd 10, par [k]) of the Public Health Law authorizing the issuance of subpoenas “with reference to a matter within the scope of the inquiry or the investigation being conducted by the board.”

For the reasons stated, the order of the Appellate Division in Matter of Levin should be reversed, with costs, and the order of Supreme Court reinstated, and in Matter of McGrath the order of the Appellate Division should be affirmed, with costs.

Simons, J.

(dissenting). I would deny petitioners’ motions to quash and grant respondents’ cross motions to compel compliance with the subpoenas in these proceedings.

A motion to quash or compel compliance with an office subpoena issued by an administrative agency “raises only the issues of the authority of the investigating body and whether the inquiry falls within the scope of that authority.” “To sustain the subpoenas, the [agency] need only make a preliminary showing that the information sought is reasonably related to a proper subject of inquiry” (Matter of Nicholson v State Comm. on Judicial Conduct, 50 NY2d 597, 610, 611). That is the most recent statement by this court of the legal test applicable to these proceedings and the subpoenas issued by the State Board for Professional Medical Conduct should be summarily sustained because they satisfy it. By focusing upon language found in some of the older cases (and misconstruing it in my view), the majority has formulated a new rule requiring prior proof of the complainant’s reliability which will frustrate administrative investigations, and it has done so although neither petitioner nor the Appellate Divisions considered that issue. The Legislature, with the support of representative medical societies, has made recent and repeated efforts to improve and strengthen the investigative and disciplinary machinery of the board. The majority’s new rule impedes these efforts and is not needed to correct any identified abuse. The change is not mandated by constitutional principles (see Schachter v Whalen, 581 F2d 35), by statute, or by established case law and I, therefore, dissent.

All the cases make this much clear: an administrative officer or agency, acting pursuant to a legislative grant, may issue a subpoena duces tecum requiring the production of books, records and documents where such material is relevant to an authorized investigation (Matter of Nicholson v State Comm. on Judicial Conduct, 50 NY2d 597, supra; Myerson v Lentini Bros. Moving & Stor. Co., 33 NY2d 250; Carlisle v Bennett, 268 NY 212, 217-218). The subpoena is subject to court attack by the recipient but all the agency need show to sustain it is the administrative “authority and relevancy” and, as some of our cases have added, “some basis for inquisitorial action” (Matter of A’Hearn v Committee on Unlawful Practice of Law of N. Y. County Lawyers’ Assn., 23 NY2d 916, 918, cert den 395 US 959; see, also, Myerson, supra, at p 256; but cf. Matter of Nicholson, supra, at pp 610, 611). The majority has expanded upon the term “some basis for inquisitorial action” and interpreted it to mean that the agency must investigate the complainant before it investigates the complaint. It has even suggested that in some cases a Darden-type hearing (People v Darden, 34 NY2d 177) may be required (at p 42). It holds that subpoenas may not issue unless the board can satisfy the court that the complainant is reliable. Some factual basis is required for the inquiry, certainly, but we have previously held that this requirement relates to the breadth of the inquiry and the extent of the investigation preceding the subpoena (Matter of Myerson, supra, at p 258; Matter of A’Hearn, supra, at pp 918-919). In the case of preliminary investigative inquiries, made before charges have been preferred, we have stated that the required factual basis “is not very exacting” (Virag v Hynes, 54 NY2d 437, 442) and that a “bare showing” of the basis of the inquiry is sufficient (see Matter of A’Hearn, supra, at p 918). The requirement is really little more than a facial showing that the investigating officer is proceeding in good faith (Matter of Nicholson v State Comm. on Judicial Conduct, 50 NY2d 597, 611, supra; Matter of Sussman v New York State Organized Crime Task Force, 39 NY2d 227, 231-232), a requirement so minimal that the courts, upon finding authority in the agency, have presumed good faith (see, e.g., Matter of Nicholson, supra; Matter of Ryan v Lefkowitz, 26 AD2d 604, affd 18 NY2d 977; Matter of Amos Post, Inc. v Attorney-General of State of N. Y., 70 AD2d 750). In some jurisdictions it has even been held that once the administrative authority appears, no factual basis need be shown for believing a violation of law has occurred before the inquiry may be undertaken (see Oklahoma Press Pub. Co. v Walling, 327 US 186, 208-209). Indeed, it is common for regulatory bodies, to say nothing of legislative bodies, to subpoena witnesses, records and documents only for the purpose of preparing legislation (see, generally, 1 Davis, Administrative Law, § 3.04, and cases cited therein).

The application of these rules by contrasting the A’Hearn and Myerson cases illustrates the departure now taken by the majority from what we have required in the past. In A’Hearn, petitioner, an insurance agent under investigation by the Committee on Unlawful Practice of the Law, was issued a subpoena duces tecum requiring him to produce copies of advertisements for pension services placed by him between specified dates, copies of brochures and copies of agreements concerning such pension services (30 AD2d 47, 49, affd 23 NY2d 916, supra). The only “factual basis” offered to support the subpoena was that the Committee on Unlawful Practice had “reason” to believe that petitioner was unlawfully practicing law and wished to investigate the matter. The “reason” apparently was little more than an inference made by the members of the committee after seeing the advertisement (see Matter of A’Hearn v Committee on Unlawful Practice of Law of N. Y. County Lawyers’ Assn., supra, at pp 918-919). Nevertheless, we sustained the subpoena. In Myerson, by contrast, the Commissioner of Consumer Affairs in New York City issued a subpoena duces tecum to a corporation in the business of moving household goods requiring it to produce all of its books and records for the preceding 17 months. The commissioner alleged that she had received “numerous complaints” of underestimates and overcharges which led her to believe that the corporation was engaged in a pattern of deceptive practices. Observing that the commissioner had sought to enforce a subpoena of “the broadest possible dimensions”, we held her factual showing insufficient and granted the motion to quash, noting that more information relating to the number of the complaints, the period covered or the period over which they were received was required in order to support such a broad request. Additionally, we pointed out that the investigation had gone beyond the stages of a preliminary inquiry. The commissioner had already audited Lentini’s books on two occasions and yet she had offered the court no evidence, either on the development of the case or the information gained by the audits, to rebut possible inferences that she was engaged in unjustified harassment. We held the factual basis was insufficient to support the subpoena because of its breadth and the corresponding intrusion into the subject’s private affairs.

Considering the legislative delegation of powers to this board, only a minimal factual basis should be required. The authority of the board is set forth in section 230 óf the Public Health Law which creates a State Board for Professional Medical Conduct composed of physicians, osteopaths and lay members. The physician and osteopathic members, no less than 18, are appointed by the commissioner on the recommendation of various State and local medical societies and the lay members, no less than seven, are appointed by the commissioner with the approval of the Governor. The board, certainly not a body one would expect to be hostile to the interests of physicians, is charged with the duty of investigating professional misconduct. The statute provides that the board “may investigate on its own any suspected professional misconduct” and it “shall investigate each complaint received regardless of the source” (Public Health Law, § 230, subd 10, par [a] [emphasis added]). It “may examine and obtain records of patients in any investigation or proceeding” (Public Health Law, § 230, subd 10, par [l] [emphasis added]). This language evinces as clearly as any could, a legislative intent to empower the board with “broad discretion in determining what records are necessary to facilitate an effective investigation” (see Matter of Murawski, 84 AD2d 496, 498).

The board initiated these two inquiries because it received complaints about petitioners and by law it was required to investigate them “regardless of the source”. Although the majority recognizes this statutory obligation, it states that the complaints must be investigated first by means other than office subpoenas unless the board can demonstrate the bona fides of its investigation. In my judgment, given the authority for the investigation and the relevance of the inquiry, the statutory duty resting on the board is sufficient predicate for showing the “good faith” of the preliminary inquiry after the board has received a complaint. Moreover, the legislative scheme adds additional protection to the subject of the subpoena. It provides that there shall be a Committee on Professional Conduct consisting of four physicians and one lay member (see Public Health Law, § 230, subd 6) and that the committee must approve all subpoenas before they are issued by the executive secretary (Public Health Law, § 230, subd 10, par [k]). In view of this check on the board’s action, one not provided in the legislation creating many administrative agencies, no reason appears why the court should assume the determination of whether complaints are sufficiently reliable to warrant investigation by subpoena.

Moreover, the formulation adopted by the majority lacks precision. It requires the board, once challenged, to demonstrate prima facie a “justifiable basis for a good faith investigation”; its papers must state a “sufficient” or “a minimum threshold foundation” for the investigation. This requires a “threshold showing of authenticity” of the complaint, i.e., “a minimal showing that, in consequence of verification or otherwise”, issuance of a subpoena is necessary to further the investigation. The necessary “threshold showing” includes all or some of the following: (1) identification of the complainant, (2) evidence of his reliability and (3) a disclosure of the basis for his complaint including dates.

I assume all of this means that the board must satisfy itself by an independent investigation that the complainant is reliable and that unless it can satisfy the court of that fact the subpoenas must be quashed. Matter of Myerson (supra) is not cited as the authority for this rule but it appears to be based upon Myerson. The distinction, however, between the cases before us and Myerson could hardly be greater. These are preliminary inquiries based upon legally confidential complaints, resulting in a narrowly drawn subpoena in each case directing the production of documents to enable the board to investigate. They should be sustained because the board has acted well within the rule first stated in Matter of A’Hearn v Committee on Unlawful Practice of Law of N. Y. County Lawyers’ Assn. (supra) and repeatedly approved in our later decisions that the agency need show only authority, relevancy and some basis for the inquiry. The practical effect of this decision is that the board must now undertake a preliminary investigation of the complainant and satisfy the court with its findings, and it must do so without aid of the subpoena power. Just how this could be done in the case of an anonymous complaint is not clear but, more to the point, in most cases investigation of the complainant requires some investigation of his or her complaint and there would be little need for preliminary inquiry thereafter. The matter might as well proceed to formal charges. We rejected a similar argument in Matter of Nicholson v State Comm. on Judicial Conduct, supra, at p 611, and see n).

Finally, these requirements cut against traditional principles, also codified in the statute, which favor quick and confidential investigations of complaints against professionals (see Public Health Law, § 230, subds 9, 10, par [l]; see, also, Matter of John P. v Whalen, 54 NY2d 89; Matter of Marshall v State Bd. for Professional Med. Conduct, 73 AD2d 798, mot for lv to app den 49 NY2d 709) followed by prompt exoneration of the blameless and aggressive action to protect the public from those suspected of being professionally incompetent, mentally ill or dishonest. Undoubtedly, the quickest way to investigate a patient’s complaint (and a way, one would think, not unfairly prejudicial to the physician) is to examine the doctor’s own records. In the case of Dr. Levin, three patients were involved, in the case of Dr. McGrath, only a few more. Surely, established procedure accomplishes the board’s oversight responsibilities more efficiently and with greater protection for the confidentiality of the complainant and the doctor than would necessitate investigative interviews of the doctor’s staff, other doctors, hospital personnel or members of the community to establish “authenticity”. Certainly, it does so with less cost to the taxpayer.

To state the obvious, investigative agencies interfere with individual privacy and freedom and thus there is always the temptation to insulate the citizenry from their “meddling”. But such agencies are created for a reason. In the absence of constitutional infringement or a demonstrated need for the court or Legislature to correct abuses, they should be permitted to serve the public interest as the Legislature intended and without judicial interference. In the case of the Board of Professional Medical Conduct, many of its powers have been granted only in the last few years as both the government and the medical profession recognized the need for stricter oversight of the profession. The present statute was part of a comprehensive bill which addressed the medical malpractice crisis (L 1975, ch 109; see, also, McKinney’s Session Laws of NY, 1975, Legislative Memoranda, pp 1599,1601). It eliminated or restricted certain causes of action against doctors, shortened the Statute of Limitations and created the Board of Professional Medical Conduct to strengthen disciplinary proceedings. When it appeared that the board’s powers were insufficient for the task, the Legislature enacted the Medical Malpractice Act of 1977 which improved the board’s complaint and summary removal procedures. Included in the act, with the support of the Medical and Osteopathic Societies of the State of New York and the New York Hospital Association, were the subpoena powers found in section 230 (subd 10, pars [k], [l]) of the Public Health Law (L 1977, ch 773, and Bill Jackets thereto; and see, generally, Matter of Murawski, 84 AD2d 496, 497-498, supra). In 1980 the statute was amended again, twice, to permit early intervention by the board in aid of physicians suffering from mental illness or drug abuse (L 1980, ch 343) and to eliminate a large backlog of complaints by streamlining and speeding up investigations (L 1980, ch 866; see, also, McKinney’s Session Laws of NY, 1980, Governor’s Memoranda, p 1919). In light of all this activity, the legislative intent and the public need may hardly be doubted. The court should not eviscerate these efforts to improve the board’s ability to fulfill its statutory duties by engrafting onto the statute subpoena requirements which were not intended and which are not required by constitutional precedent or established case law.

I would affirm the order in Matter of Levin and reverse the order in Matter of McGrath.

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

In Matter of Levin v Murawski: Order reversed, with costs, and the order of Supreme Court, New York County, reinstated.

In Matter of McGrath v State Bd. for Professional Med. Conduct: Order affirmed, with costs.

      . These paragraphs provide as follows:
      “(k) The executive secretary of the board with the specific approval of a committee on professional conduct of the board shall have the power to issue subpoenas requiring persons to appear before the board and be examined with reference to a matter within the scope of the inquiry or the investigation being conducted by the board and produce books, papers, records or documents pertaining thereto.

        “(l) The board or its representatives may examine and obtain records of patients in any investigation or proceeding by the board acting within the scope of its authorization. Unless expréssly waived by the patient, any information so obtained shall be confidential and shall not be disclosed except to the extent necessary for the proper function of the board and New York state board of regents and the name of the patient may not be disclosed by the board or its employees at any stage of the proceedings unless the patient has expressly consented. Any other use or dissemination by any person by any means, unless pursuant to a valid court order or otherwise provided by law, is prohibited.”

      . For the reasons explained in Matter of Sussman v New York Organized Crime Task Force (39 NY2d 227, 231-232) the situation is otherwise with respect to the issuance of a Grand Jury subpoena (cf. Virag v Hynes, 54 NY2d 437, 441-446).

      . The suggestion in the dissent that in Nicholson we dispensed with the necessity for threshold proof of a basis for investigation is belied by examination of the record in that case. Our concern there was with a challenge to the issuance of the subpoenas after the sufficiency of the complaint as a basis for their issuance had been established in an ex parte judicial hearing (50 NY2d, at pp 611-612, n; see Matter of Nicholson v State Comm. on Judicial Conduct, 67 AD2d 649, 68 AD2d 851).

        . If the issuing agency demonstrates the delicacy of a particular investigation or the risk of and consequences attendant on premature disclosure, it may be appropriate to take proof of the threshold foundation in camera (see Matter of Sussman v New York State Organized Crime Task Force, 39 NY2d 227, 233).


author: Per Curiam.

text:
    The People of the State of New York, Respondent, v Evangelos Bakolas and Ioannis Bakolas, Appellants.
    Decided May 5, 1983

      APPEARANCES OF COUNSEL

      Alfred P. Kremer for appellants.

      Donald O. Chesworth, Jr., District Attorney (.Kenneth R. Fisher of counsel), for respondent.
   OPINION OF THE COURT

Per Curiam.

Subdivision 2 of section 240.20 of the Penal Law, which prohibits making “unreasonable noise” with “intent to cause public inconvenience, annoyance or alarm, or recklessly creating a risk thereof”, is not unconstitutional, either for vagueness or for overbreadth. The order of the County Court of Monroe County should, therefore, be affirmed.

Defendants were arrested on November 29, 1980, and both were charged with violating subdivisions 2 and 5 of section 240.20 of the Penal Law. Ioannis Bakolas was also charged with violating subdivision 1 of that section. The information recited in support of the charges as to Ioannis Bakolas, that “the defendant was stopped for a traffic violation and then became abusive to officer, yelling, threatening and when ordered to return to vehicle, he refused and stood in the roadway forcing vehicular traffic to swerve to avoid striking the defendant,” and as to Evangelos Bakolas, that he was observed “standing in the westbound traffic lane of Monroe Ave. yelling at Officer Trite. Defendant was told to desist and remove himself from the roadway and he refused to do so.”

The defendants moved to dismiss the information on the ground that subdivisions 1, 2 and 5 of section 240.20 are unconstitutionally vague or overbroad. Rochester City Court upheld subdivisions 1 and 5 but ruled subdivision 2 unconstitutionally vague on its face because the meaning of the term “unreasonable noise” depends on the ear and mind of the listener. Accordingly, the court dismissed the count of each information charging a violation of subdivision 2.

On appeal to the County Court of Monroe County, that court reversed and reinstated the subdivision 2 charges, holding that the culpability requirement (“with intent to cause public inconvenience, annoyance or alarm, or recklessly creating a risk thereof”) saved the statute. Defendants appeal by permission. Both defendants and the People have agreed to our review of the appeal on submissions pursuant to rule 500.2 (b) of the Rules of the Court of Appeals (22 NYCRR 500.2 [g]).

Defendants argue with respect to vagueness that because noises, in and of themselves, are neither reasonable nor unreasonable, the term “unreasonable noise” is meaningless. Further, they argue, the statute here, like the ordinance at issue in People v New York Trap Rock Corp. (57 NY2d 371), attempts to govern every possible situation and thus provides inadequate standards for enforcement.

The term “unreasonable noise” is not incapable of definition. Rather, it describes a noise of a type or volume that a reasonable person, under the circumstances, would not tolerate (cf. People v Byron, 17 NY2d 64, 67; Kovacs v Cooper, 336 US 77, 79). Section 240.20 is largely based upon section 250.2 of the American Law Institute’s Model Penal Code, which in paragraph (b) of subdivision (1) penalizes “unreasonable noise.” As the comments indicate, the purpose of section 250.2 is to penalize “public nuisance” (ALI Model Penal Code and Commentaries, part II, p 328) and unreasonableness as used in the section relates to “an assault on public sensibilities” (id., p 332). Similarly, section 240.20 by its requirement that the noise be intended to cause, or recklessly create a risk of, public inconvenience, annoyance or alarm, narrows the definition, so that no inadvertently disturbing act may be punished (see People v Todaro, 26 NY2d 325, 329). The public nature of the requisite intent or risk makes this essentially a disturbing the peace ordinance of the sort upheld in People v Hardy (47 NY2d 500). There the prohibited act was “knowingly” keeping a “place of public resort by which the peace, comfort or decency of a neighborhood is disturbed” (47 NY2d, at p 504). Indeed, the Hardy ordinance was less definite than the instant one because it did not enumerate the specific actions, such as making unreasonable noise, which would constitute violations.

People v New York Trap Rock Corp. (supra), is not to the contrary. The ordinance there at issue proscribed making “any excessive or unusually loud sound or any sound which either annoys, disturbs, injures or endangers the comfort, repose,, health, peace or safety of a person” (57 NY2d, at p 375), and suffered from several defects not present in the instant statute. First, it provided a subjective standard — the annoyance, etc., of a person, rather than a neighborhood or the public — and thus was subject to enforcement according to the “ ‘malice or animosity of a cantankerous neighbor’ ” or the “ ‘boiling point of a particular person’ ” (57 NY2d, at p 380). Second, “the pervasive nature of its catchall effect” made it capable of ad hoc and discriminatory enforcement and incapable of a narrowing construction (57 NY2d, at p 381). Here, the objective standard of public disturbance, the requirement of unreasonableness, and the Narrowing effect of the fact that all of the other acts proscribed by the section are publicly offensive, permit, if they do not require, the construction above set forth.

The conclusion that, so construed, the státute is not unconstitutionally vague, accords with the holdings of the majority of the other courts that have considered the question. Statutes similar to section 240.20 have been upheld against a vagueness argument in Commonwealth v Mastrangelo (489 Pa 254, app dsmd sub nom. Mastrangelo v Pennsylvania, 449 US 894 [“unreasonable noise”]); People v Fitzgerald (194 Col 415 [“unreasonable noise”]); State v Marker (21 Ore App 671 [“unreasonable noise”]); State v Anonymous (6 Conn Cir 667 [“unreasonable noise”]); see Heard v Rizzo (281 F Supp 720, 741, affd Per Curiam 392 US 646 [“unseemly noise”]); State v Johnson (112 Ariz 383 [“loud or unusual noise”]); Hess v State (260 Ind 427, revd on other grounds sub nom. Hess v Indiana, 414 US 105 [“unusual noise”]). Although Marks v City of Anchorage (500 P2d 644 [Alaska]), Matter of Brown (9 Cal 3d 612), Pritikin v Thurman (311 F Supp 1400) and Gardner v Ceci (312 F Supp 516) can be said to be to the contrary, they cannot be considered authoritative in view of the Supreme Court’s summary affirmance in Heard v Rizzo (supra), and its dismissal “for want of substantial federal question” in Mastrangelo v Pennsylvania (supra), both rulings being on the merits of the issue presented for review (Hicks v Miranda, 422 US 332, 344).

For like reason the overbreadth contention cannot be sustained. Although the facts recited in the information involve speech, protected speech may be restricted as to time, place and manner (Heffron v International Soc. for Krishna Consciousness, 452 US 640, 647-648; cf. Kovacs v Cooper, 336 US 77, supra). The activity prohibited by section 240.20 is speech so unreasonably noisy as “to cause public inconvenience, annoyance or alarm”. Such a prohibition is not on its face impermissibly overbroad (State v Johnson, 112 Ariz 383, supra; People v Fitzgerald, 194 Col 415, supra; cf. Hess v Indiana, 414 US 105, 108, supra). On the present record we, of course, do not reach the question of constitutionality as applied.

For the foregoing reasons, the order of the County Court of Monroe County should be affirmed.

Chief Judge Cooke and Judges Jasen, Jones, Wachtler, Fuchsberg, Meyer and Simons concur in Per Curiam, opinion.

On review of submissions pursuant to rule 500.2 (b) of the Rules of the Court of Appeals (22 NYCRR 500.2 [g]), order affirmed.

      . Section 240.20 of the Penal Law provides in full: "A person is guilty of disorderly conduct when, with intent to cause public inconvenience, annoyance or alarm, or recklessly creating a risk thereof: 1. He engages in fighting or in violent, tumultuous or threatening behavior; or 2. He makes unreasonable noise; or 3. In a public place, he uses abusive or obscene language, or makes an obscene gesture; or 4. Without lawful authority, he disturbs any lawful assembly or meeting of persons; or 5. He obstructs vehicular or pedestrian traffic; or 6. He congregates with other persons in a public place and refuses to comply with a lawful order of the police to disperse; or 7. He creates a hazardous or physically offensive condition by any act which serves no legitimate purpose. Disorderly conduct is a violation.”

      . Section 250.2 of the Model Penal Code provides in pertinent part: “(1) Offense Defined. A person is guilty of disorderly conduct if, with purpose to cause public inconvenience, annoyance or alarm, or recklessly creating a risk thereof, he: (a) engages in fighting or threatening, or in violent or tumultuous behavior; or (b) makes unreasonable noise or offensively coarse utterance, gesture or display, or addresses abusive language to any person present; or (c) creates a hazardous or physically offensive condition by any act which serves no legitimate purpose of the actor.”

      . For like reason the doubt whether an unreasonable noise ordinance could survive a vagueness attack expressed in the ALI Model Penal Code Commentaries to section 250.2 (at p 347), which was predicated on the fact that “No case directly on point seems to have been decided” is no longer valid.


author: Meyer, J. Fuchsberg, J.

text:
    In the Matter of the City of New York, Appellant, Relative to Acquiring Title to Real Property for Clinton Urban Renewal Project in the Borough of Manhattan. Franklin Record Center, Inc., Respondent.
    Argued March 21, 1983;
    decided May 10, 1983

      POINTS OF COUNSEL

      Frederick A. O. Schwarz, Jr., Corporation Counsel {Peter A. Mound and Leonard Olarsch of counsel), for appellant.
    It was error to hold earnings derived from the operation of claimant’s business conducted in seven separate buildings and claimant’s use of a “unique idea” indicative of the value of the property under review. Special Term’s original $635,000 award — nearly double claimant’s purchase price for the property and based on the rental and market value of comparable properties — is just by any reasonable standard. (United States v Miller, 317 US 369; Burdick v State of New York, 276 App Div 1052, 302 NY 670; Matter of City of Rochester [Smith St. Bridge], 234 App Div 583;
      Humbert v State of New York, 278 App Div 1041, 303 NY 929; City of Syracuse v Stacey, 45 App Div 249; Sauer v Mayor of City of N. Y., 44 App Div 305; Matter of Gilroy, 26 App Div 314; Matter of City of Mount Vernon [Centennial Church of African M. E. Zion Connection of U. S. of Amer.], 277 App Div 775; Matter of Lane Bryant v Tax Comm. of City of N. Y., 21 AD2d 669, 19 NY2d 715.)

      M. Robert Goldstein for respondent.
    The rental from the subject building was neither the product of a warehouse or moving business nor was it so inextricably intertwined with an affiliated warehouse and moving business as to be inseparable from that business. The value of the property, based on the income from the building was transferable in the market. The use of the building as an archive’s building is not unique. Similar buildings were run by ordinary real estate investors and managers. (Matter of City of New York [Glantz], 82 AD2d 829, 55 NY2d 345; Fredenburgh v State of New York, 26 AD2d 966; Getty Oil Co. v State of New York, 33 AD2d 705; Brown v State of New York, 52 AD2d 1079; Matter of City of New York [Oceanview Terrace], 42 NY2d 948; Boon Co. v Patterson, 98 US 403; Keator v State of New York, 23 NY2d 337; Matter of City of New York [Broadway Cary Corp.], 34 NY2d 535; Burdick v State of New York, 276 App Div 1052, 302 NY 670; Matter of City of Rochester [Smith St. Bridge], 234 App Div 583.)
   OPINION OF THE COURT

Meyer, J.

The compensation due a claimant in condemnation who was able, because its building had shelves and movable partitions and was leased for record storage, to obtain higher rentals per square foot than were obtainable for storage space in loft buildings not similarly equipped and rented is not limited by the sale value of such loft buildings. Absent evidence that the market value of a loft building with similar interior construction and similarly used is less than the value of claimant’s building determined by capitalizing the rental income actually received by claimant, the latter value is the proper measure of compensation. The decree appealed from and order of the Appellate Division brought up for review should, therefore, be affirmed, with costs.

Claimant, Franklin Record Center (Franklin), owned a 10-story loft building located at 545-551 West 52nd Street in Manhattan which, on June 1, 1970, the city appropriated. Prior to the condemnation Franklin rented space to approximately 90 tenants for the storage of records and office supplies. Some rented entire floors; some rented smaller areas enclosed by movable partitions; some rented only shelf space in an open area. All, however, had three-to five-year leases, except that at the time of title vesting 12 of the then 89 tenants, because of the imminence of condemnation, did not sign leases. Because of the flexibility obtained through use of portable metal partitions and the availability of shelf space, tenants were able to rent only the area actually needed at any particular time and, therefore, were willing to pay Franklin a greater per square foot rental for its building than was generally paid to owners of loft buildings in the area used for different purposes.

The experts for both claimant and the city appraised the building by capitalizing net rental income. They determined rental income differently, however. Franklin’s expert, based on the rents actually received, found the gross rental income to be $203,000 and the value of the building to be $1,100,000. The city’s expert, concluding that only a portion of the payment made by each tenant constituted rent, the rest being in his view for service rendered, found the gross rental income to be $105,965 and the value of the building as a loft building to be $635,000. Special Term adopted the city’s view and awarded $635,000, but the Appellate Division, by a divided court, reversed on the law and the facts and remanded, finding Franklin’s use of the building to be its highest and best use and holding that it should not be deprived of that use because it was “an even higher and better use than envisioned by * * * others” (69 AD2d 111, 114). On remand, the city declined to offer any additional evidence and Special Term, finding the rental income to be as Franklin’s expert testified, awarded Franklin $1,100,000. That decree is now appealed to us pursuant to CPLR 5601 (subd [d]).

The record does not sustain the conclusion that Franklin’s tenants purchased anything other than the right to occupy space in the condemned building during the term of their leases. The opinion of the city’s expert to the contrary was based solely upon his view that the building should be valued as a loft, rather than as the records storage building it was in fact rented as, because records storage necessarily required service to the tenants, because Franklin operated other record storage buildings and because Franklin’s principals owned a moving company and other related companies. He conceded, however, that he had never seen the leases between Franklin and its tenants, that he did not know which of the approximately 10 persons he had seen when he visited the premises were Franklin employees and which were employees of tenants, that he could not testify what services the tenants were getting, and that he had not examined the market to find out whether there were other enterprises running similar record centers. Absent any evidence that services were supplied by Franklin or any related company without the payment of reasonable compensation therefor over and above the rent, Franklin’s experience and reputation and its relationship with the other companies was simply irrelevant to the determination of the compensation to be paid. None of the leases was shown to include a right of the tenant to terminate in the event Franklin ceased to be landlord.

The measure of damages in condemnation is the fair market value of the condemned property in its highest and best use on the date of the taking (Matter of City of New York [Shorefront High School — Rudnick], 25 NY2d 146, 148; Keator v State of New York, 23 NY2d 337, 339). Here both sides agreed upon capitalization of net rental income as the proper measure of fair market value but differed as to the part played by the actual use in the determination of rental income. The weight of the evidence supports the conclusion of the Appellate Division majority that the highest and best use of the property in question was its actual use as a record storage facility and that the entire income from that use was rental, not business, income. Indeed, there is no evidence in the record to support the contrary conclusions of the city’s expert, nor does it change the nature of the income from rental to business that after the condemnation of the building in question Franklin was able to establish a similar center in another building and that some of the same tenants leased space in the new building. That being so, and there being no claim by the city that Franklin’s actual receipts were a temporary aberration (cf. Matter of City of Mount Vernon [Centennial Church of African M. E. Zion Connection of U. S. of Amer.], 277 App Div 775; Matter of City of New York [Seventh Ave.], 196 App Div 451, 456-457), it follows that the decree appealed from and the order of the Appellate Division which the appeal brings up for review should be affirmed.

Fuchsberg, J.

(dissenting). Claimant, Franklin Record Center, owner of a Manhattan loft building purchased for $340,000 and thereafter appropriated for a public purpose, elected to appeal from a Special Term award of $635,000, a sum fixed after comparison with the market value of other buildings of similar size, structure and location. On review, a sharply divided Appellate Division was persuaded to render a decision which, when applied on remand, enlarged the award to $1,100,000. This it accomplished by placing a compensable value on the owner’s exploitation of what, in the majority’s words, is describable either as a “unique entrepreneurial device” or a “unique idea” (69 AD2d, at p 112) for the management of the premises. Because, in my view, the additional allowance runs counter to the principles of the law of eminent domain, I am compelled to dissent.

One of several interrelated corporations owned by the same principals, the claimant is engaged in the moving and storage business. The condemned building, one of seven under the control of itself and its associates, was devoted to customers who required space for the storage of office furniture, business records and the like. The “unique idea” it employed at this building was the use of portable metal partitions which, since these were not affixed to the realty, could be moved about to provide customers with space limited to their actual requirements. So, what in other respects was a “standard form of loft lease” would provide, for instance, for the rental of “a room of sufficient size to accommodate 55 transfiles or its equivalent”. In addition, to further extend the effective use of space longitudinally as well as horizontally, it would also undertake to install shelving for occupants at its own cost. Since tenants thus could avoid committing themselves for a larger area than they needed at a particular time, compensatorily they could be prevailed upon to agree to a per square foot charge in excess of the prevailing rate for similar space in neighboring warehouses whose managers did not so precisely tailor space to use. The bargaining position this modus operandi achieved also made it possible for the claimant to exact commitments for the exclusive right to the business of moving the belongings of an occupant in and out of the space. Furthermore, as the dissenters at the Appellate Division pointed out, the mobility of the “entrepreneurial device” which brought all this about was such that, when the building was condemned, the claimant “quickly acquired an alternative property” (69 AD2d, at p 115) for its continued advantagement.

It was for a warehouse property whose business was so conducted that claimant pressed for an enlargement of the $635,000 awarded in the tentative decree, a quest on which it bore the burden of proof (Heyert v Orange & Rockland Utilities, 17 NY2d 352, 364; 5 Nichols, Eminent Domain, § 18.5; cf. Matter of Rochester Urban Renewal Agency v Willsea Works, 48 NY2d 694). Yet, it relied solely on an unadjusted capitalization of income approach. And, the single expert through whom it advanced this theory chose to draw no distinction between income fairly attributable to the property as such and that which could be said to be the avails of his client’s entrepreneurial ingenuity. Offering no evidence as to sales or rentals involving comparables, and indeed admitting on cross-examination that physically comparable warehouses would bring much less than his $1,100,000 appraisal, to justify the disparity he fell back upon the fact that his client’s building was “operated in a vastly different manner than a normal loft building”. So doing, he in no way attempted to rely on any special physical characteristics of the property per se nor to offer proof of sums expended by it and its affiliates in support of its idiosyncratic business “idea”.

In contrast, the city’s appraiser utilized a combined market and capitalization method, in the process citing specific sales and rentals of premises whose structural and geographical comparability went unquestioned. Amplifying his rationale, he expressed the opinion that the revenue claimant received from those who stored property on the condemned premises was greater than that of each of the comparables only because the others reflected real estate income alone, while that of the claimant represented “a marriage or a combination” of that attributable to the real estate and that attributable to its extraordinary business acumen. The value of the latter, he pointed out, would not be realized in a sale of the property on the open market.

On this record, Special Term, finding as a fact that the revenue received from the storage customers was “entwined with the skill, fortune, judgment and good management of the business conducted on the premises in conjunction with other interrelated property”, rejected the claimant’s appraisal as a “mathematical exercise of no probative value”. But, for its part, reversing on the law and the facts, the Appellate Division majority held it error to base an award on a “hypothetical rent roll” which, in its view, deprived the claimant of the benefit of its “unique idea” (69 AD2d, at p 112).

Before venturing my own analysis, it seems in order to observe, as has long been recognized, that the “just compensation” to which one whose property is taken under the power of eminent domain is entitled (US Const, 5th Amdt; NY Const, art I, § 7), does not embrace every conceivable loss or inconvenience. Thus, assuming that, as here, it is the realty and not the business which is condemned, the incidental damages to good will wrought by removal of a business conducted on premises taken for a public purpose is to be seen as one of the burdens, if that it be, that is balanced by the benefits of government (Banner Milling Co. v State of New York, 240 NY 533, cert den 269 US 582; see Kimball Laundry Co. v United States, 338 US 1, 5).

This in mind, especially since the claimant’s building, undisputably, is not a specialty (see Dormitory Auth. of State of N. Y. v 59th St. & 10th Ave. Realty Corp., 51 AD2d 953, affd 41 NY2d 1037), the preferred method of computing appropriate compensation was not keyed to its worth to the owner, but to market value, no more and no less (Matter of Rochester Urban Renewal Agency [Patchen Post], 45 NY2d 1, 8; United States v Certain Prop., 306 F2d 439, 447).

Regarded as accepted criteria for ascertaining market value are comparable sales (Matter of Great Atlantic & Pacific Tea Co. v Kiernan, 42 NY2d 236, 239). However, in the case before us now, to meet the need to segregate the component of the income inherent in the realty itself from that which could be fairly adjudged to have been managerially produced, the city’s appraiser took a two-step approach. First, by studying the comparables, uncomplicated as these were by any “unique entrepreneurial device”, he was able to ascertain their “overall price per square foot of building”. Then, applying the “gross rent multiplier” so disclosed to the square footage in claimant’s building, he arrived at the price a willing purchaser, in light of the picture presented by the comparables, would pay a willing seller in the open market.

In following this procedure, the appraiser acted in accordance with the sound principle that the contractual rents reserved do not necessarily control the evaluation of real estate. For, the ultimate determinant is “economic rent”, a term of art which may be defined as the maximum net rent a property can produce in the long run (Ring, Valuation of Real Estate [1963 3d ed], pp 194-195). This flows from the fact that, because “contract rent may be greater or lesser than the economic rent under the highest and best — and legally permissible — use of the property”, calculation of economic rent demands that the appraiser make “appropriate adjustments” to reflect “economic advantages or disadvantages” ascribable to inchoate factors such as the vicissitudes of a commercial undertaking (ibid.). In sum, the contractual rent, far from being conclusive, is but one of the relevant facts and circumstances to be considered (Matter of City of New York [Lincoln Sq. Slum Clearance Project), 16 NY2d 497, 499; Kommit v State of New York, 60 AD2d 945, 946; Matter of Town of Oyster Bay, 50 Misc 2d 91, 94 [Hogan, J.]; 5 Nichols, Eminent Domain, § 19.21).

Decisional law is well-nigh unanimous, therefore, in differentiating between earnings derived from the intrinsic use of property, which is compensable, and profits earned from a business being conducted thereon, which is not (Banner Milling Co. v State of New York, 240 NY 533, 539-541, supra; Matter of People v Johnson & Co., 219 App Div 285, affd 245 NY 627, cert den 275 US 571; see, e.g., Aloi & Goldberg, A Reexamination of Value, Good Will and Business Losses in Eminent Domain, 53 Cornell LQ 604, 628). To the same effect, speaking pragmatically as well as conceptually, all the standard appraisal texts which have come to my attention stress the value of comparable rental data to separate the two (see Friedman, Encyclopedia of Real Estate Appraising [3d ed], p 496; McMichael, Appraising Manual [4th ed], p 305; American Inst of Real Estate, Appraisal of Real Estate [5th ed], p 359; see, also, Matter of City of New York [School of Ind. Arts], 2 Misc 2d 403, 408).

Returning now to the incontrovertible facts in the present case, it is almost impossible to say that claimant’s records storage business, even in the unusual way in which it was carried on, was inextricably related to or connected with the land or building at which it was located. By their very nature, the managerial talent and imagination the claimant applied to the conduct of the business could be, and indeed were, transferred to another site, which, though it would be acquired at a price which did not include the entrepreneurial overlay for which claimant here seeks additional compensation, presumably would soon be embellished by the same imaginative and promotional ability to service its customers in a fashion that disposed of less space for more dollars, an enterprise with which the city hardly would compete, much less pre-empt, simply because it took the underlying property for public use.

In short, it cannot be said that it was the character of the property, which on its own was indistinguishable from that of the much lower priced comparables, rather than the labors of its owner, which marked the difference between the $635,000 awarded by Special Term and the $1,100,000 to which the Appellate Division, by its vote of 3 to 2, would have raised it. Consequently, in claimant’s expert’s own words, simply because the warehouse was “being operated in a vastly different manner than a normal loft building” does not add to its market value (e.g., United States v Certain Prop., supra; 1 Orgel, Valuation Under Eminent Domain, § 38, p 177).

To this I respectfully add that references to “highest and best use” in the opinions of both the majority here and that of the majority at the Appellate Division are simply inapropos. The phrase “highest and best use” conveys two ideas, neither of which serves the claimant’s cause. One, not asserted here, is that an owner of condemned property not be limited to its value for the use to which it is presently put when prospective rezoning or other changes in the character of its neighborhood would enhance its market price. The second, urged here, is that property be evaluated in excess of market price when it is worth more to the owner. But the cases reveal that such a personal value receives recognition only when the subject property is a specialty (United States v Certain Prop., supra, at p 447), while the sort of property readily bought and sold is governed by market value even in the face of a “clear discrepancy between market value and value to the owner” (1 Orgel, Evaluation Under Eminent Domain [2d ed], § 38, p 177).

Accordingly, instructed by the legal principles enunciated above, and on the facts in this record, I inescapably conclude that the findings at Special Term more nearly comported with the weight of the evidence. It follows that the order of the Appellate Division should be reversed and the decree at Special Term reinstated.

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

Decree appealed from and order of the Appellate Division brought up for review affirmed, with costs.

      . (E.g., Matter of Town of Islip [Mascioli], 49 NY2d 354 [probability of rezoning considered in evaluating highest and best use]; Matter of County of Suffolk [Firester], 37 NY2d 649 [growing residential demand considered in evaluating vacant land].)

      . (E.g., Matter of County of Suffolk [Van Bourgondien], 47 NY2d 507 [greenhouse complex]; Keator v State of New York, 23 NY2d 337 [clubhouse]; Matter of Rochester Urban Renewal Agency [Patchen Post], 45 NY2d 1 [fraternal meeting hall].)