author: Fuchsberg, J.

text:
    C. Douglas O’Malley, Appellant, v John J. Macejka, as Town Assessor of the Town of Rotterdam, et al., Respondents.
    Argued February 17, 1978;
    decided June 6, 1978

      POINTS OF COUNSEL

      Thomas E. De Lorenzo for appellant.
    I. The positions of Town Assessor and county representative are incompatible as the separate offices have the right to interfere with each other. (People ex rel. Ryan v Green, 58 NY 295; Matter of Town of Lewiston v State Bd. of Equalization & Assessment, 3 AD2d 498.) II. The complaint states a valid cause of action. (Matter of Smith v Dillon, 267 App Div 39.) III. The fact that defendant-respondent Macejka could not and did not legally hold the office of Town Assessor renders the payment of his salary illegal and a waste of public funds. (Ayers v Lawrence, 59 NY 192; Talcott v City of Buffalo, 125 NY 280; Gusdore Corp. v Michaels, 13 Misc 2d 762.) IV. There is no basis for barring plaintiffs claim for laches. (Appleton v National Park Bank of N. Y., 211 App Div 708, 241 NY 561; New York State Water Resources Comm. v Liberman, 37 AD2d 484, 30 NY2d 516; Matter of Levey [Catherwood], 33 AD2d 1066; Matter of Jamestown Lodge 1681 Loyal Order of Moose [Catherwood], 31 AD2d 981; Greenfield v Denner, 6 AD2d 263; Groesbeck v Morgan, 206 NY 385; Calhoun v Millard, 121 NY 69.) V. No factual issues exist which preclude the granting of summary judgment. (People ex rel. Ryan v Green, 58 NY 295.) VI. Sufficient evidence was presented to the court below to support the granting of summary judgment. (Glynn v Glynn, 30 AD2d 697; Getlan v Hofstra Univ., 41 AD2d 830.) VII. Defendants had sufficient time to oppose the motion for summary judgment and made no objection that they did not have sufficient time in the court below.

      Christian X. Kouray and Athena C. Kouray for respondents.

      I. The sections cited in the complaint to show conflict in the positions of Town Assessor and county representative have no application; the complaint should be dismissed. (People ex rel. Ryan v Green, 58 NY 295.) II. Plaintiff has failed to allege factual waste, or use of public property or funds for an entirely illegal purpose: the complaint should have been dismissed. (Talcott v City of Buffalo, 125 NY 280; Kaskel v Impellitteri, 306 NY 73; Gusdore Corp. v Michaels, 13 Misc 2d 762.) III. The complaint should be dismissed because of laches. IV. Triable issues exist and summary judgment should not have been granted. (Wanger v Zeh, 45 Misc 2d 93, 6 AD2d 729; Weiss v Garfield, 21 AD2d 156.) V. Plaintiff’s application for summary judgment was granted on insufficient evidence. (Davis v Shelton, 33 AD2d 707; Rosemont Enterprises v Choppy Prods., 74 Misc 2d 1003.) VI. Defendants had insufficient time to prepare a defense to plaintiff’s application for summary judgment.
   OPINION OF THE COURT

Fuchsberg, J.

This case presents issues regarding alleged incompatibility and conflict of interest in the simultaneous holding of two public offices.

Respondent John J. Macejka has for a long time occupied the appointive position of Assessor in the Town of Rotterdam in Schenectady County. Without relinquishing that office, on January 11, 1972 he was elected a member of the Schenectady County Board of Representatives, that local governmental unit’s legislative body. Having successfully stood for re-election, he has continued to act in both capacities ever since.

Appellant, C. Douglas O’Malley, a taxpayer and at the time a candidate opposing Macejka’s re-election to his seat on the Board of Representatives, commenced this action against the respondent and the members of the Rotterdam Town Board pursuant to section 51 of the General Municipal Law. He thereby sought to have the assessorship declared vacant and a refund ordered of the salary paid to Macejka for that office since the date he became a representative.

Special Term denied defendants’ CPLR 3211 motion for dismissal of the complaint and granted plaintiff’s motion for summary judgment. The Appellate Division, on the law and purportedly on the facts, has reversed the order and judgment entered thereon and dismissed the complaint. We believe that reversal was correct.

Initially, we observe that the appellant has utterly failed to make an evidentiary showing of the existence of any direct clash between Macejka’s personal interests and his public duties and responsibilities in either office. Not involved here, for example, is a situation where an assessor undertakes to assess his own property or a legislator votes on a claim he himself may have against the county. The mere possibility that such an eventuality might arise does not disqualify an officeholder from assuming or retaining his or her position (see People ex rel. Ryan v Green, 58 NY 295, 304-305), although, if this does occur, the officeholder should refrain from participating in any way (see, e.g., People ex rel. Pond v Board of Trustees of Vil. of Saratoga Springs, 4 App Div 399; People ex rel. Davis v Thomas, 33 Barb 287; cf. Rose v Eichhorst, 42 NY2d 92).

In the present case there is no assertion that Macejka has ever been faced with a conflict of this character and, much less, that he then failed to observe the appropriate standards of conduct. Nor is there any charge of even the slightest personal involvement touching on "any contract with the municipality of which [the respondent] individually or as a member of a board has the power or duty to (a) negotiate, prepare, authorize or approve the contract or approve payment thereunder” or "(b) audit bills or claims under the contract” or "(c) appoint an officer or employee who has any of the powers or duties set forth above” (General Municipal Law, § 801, subd 1). It is clear therefore that the only cognizable conflict to which appellant points is that which he claims is inherent in an alleged incompatibility between the respective responsibilities of respondent’s two offices themselves.

But, absent such a direct conflict in responsibilities, it would be no disqualification that the respondent’s position and experience as an assessor may influence his views on related legislative proposals. For a legislator properly may act as the zealous advocate of the most partisan of causes. Indeed, legislators often seek election on the basis of their support of particular programs or groups with whose special interests they may openly align themselves. Indeed, where a legislator possesses a special expertise — be it that of banker, labor leader, farmer, lawyer, artisan or, as here, tax assessor — he may not only be expected to bring his knowledge and opinions to bear on the proposals before him, but to share them with his legislative confreres as well. After all, as a legislator he is a member of a body which has been tellingly described as "a bargaining institution * * * a means by which society settles its accounts among various groups” (Prendergast, Professional Approach to Advocacy in a Legislature, 34 Albany L Rev 69, 70, 75).

Put another way, when he takes office a legislator need not, and hardly can, "divest himself of the attitudes he has acquired up to that time. The prevailing myths may hold that he does so or should do so, but to accept such folklore literally is to fall victim to the institutional fallacy, to look at formalities and to ignore relationships” (Truman, The Dynamics of Access in the Legislative Process, in Wahlke & Eulau, Legislative Behavior, 150, 156; see, also, The Federalist, No. 10 [Madison]; Lockard, The State Legislator, Report of Twenty-Ninth American Assembly on State Legislatures in American Politics, 98, 118-123).

Clearly an antithetical view would run counter not only to reality but to an enshrined principle of our legislative tradition — the right of electors to be represented by persons of their own choice (16 Parliamentary History of England 589-590 [1769]). As Alexander Hamilton expressed it at the New York convention which preceded the adoption of our Federal Constitution, "Representation is imperfect in proportion as the current of popular favor is checked” (2 Debates, Adoption of Federal Constitution 257 [Elliot ed, 1876]; see, also, Gordon, Constitutional Right to Candidacy, 25 Kan L Rev 545, 546-548).

It is then not surprising that there is no statutory prohibition against the respondent’s concurrent service as an appointed Town Assessor and as an elected county representative. Indeed, it has been common practice for executive officers of a town to simultaneously hold office in a county-wide legislature (County Law, § 150; Town Law, § 41, subd 7; cf. Village Law, § 4-400, subd 1; see Franklin v Krause, 32 NY2d 234, app dsmd 415 US 904).

We turn now to the appellant’s allegation that specific, statutorily defined functions of respondent’s two offices are so squarely at odds with one another that, notwithstanding the legislative nature of one of the offices, there is an inescapable incompatibility in permitting them to reside in the same individual. Incompatibility has been said to exist when there is a built-in right of the holder of one position to interfere with that of the other, as when the one is subordinate to, or subject to audit or review by, the second. Obviously, in such circumstances, were both posts held by the same person, the design that one act as a check on the other would be frustrated. (People ex rel. Ryan v Green, 58 NY 295, 304-305, supra; Matter of Fauci v Lee, 38 Misc 2d 564, 567-568, affd 19 AD2d 777; cf. Rose v Eichhorst, 42 NY2d 92, supra.)

Our examination reveals no problem of this kind in the case before us. Thus, while section 212 of the Real Property Tax Law provides a means to ascertain whether a town assessor is assessing property at full value, that evaluation, even when made by a county equalization agency rather than the State Board of Equalization and Assessment (Real Property Tax Law, § 800), is governed by data provided by the State alone (Real Property Tax Law, § 1202).

Even the procedure a property owner must follow to correct a clerical error is prescribed by the State board and the recommendations for correction are to be made by the County Director of Real Property Tax Service and not by the Town Assessor (Real Property Tax Law, § 554). The latter’s role is purely ministerial and the County Board of Representatives as an institution plays no role in this process.

True it is that, as assessor, respondent must certify the valuations he has placed on the real property within the town for use by the county legislature as a base for the application of the county-wide taxes it levies. However, neither local assessors nor county legislators review each other’s work. Moreover, while a town tax assessor may receive "advice” from the Schenectady County Manager, it is no more than that (Schenectady County Charter, § 3.01; see Real Property Tax Law, § 1530, subd 1).

It follows that the duties of County Representative Macejka are neither incompatible nor in conflict with those of Town Assessor Macejka. Accordingly, the order should be affirmed.

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

Order affirmed, with costs.


source: Caselaw Access Project

author: Jones, J.

license: Public Domain

text:
    In the Matter of Consolidated Edison Company of New York, Inc., et al., Appellants, v City of New York et al., Respondents.
    Argued April 25, 1978;
    decided June 8, 1978

      POINTS OF COUNSEL

      Robert G. Desmond and Robert G. Smith for appellants.
    I. The Real Property Tax Law does not apply to all equipment used by Con Ed regardless of its location or its characterization at common law. (People ex rel. Mutual Trust Co. of Westchester County v Miller, 177 NY 51; Matter of Grace v New York State Tax Comm., 37 NY2d 193; Matter of American Cyanamid & Chem. Corp. v Joseph, 308 NY 259; Matter of Good Humor Corp. v McGoldrick, 289 NY 452; Dun & Bradstreet, Inc. v City of New York, 276 NY 198; People ex rel. New York Mail & Newspaper Transp. Co. v Gaus, 198 NY 250; Matter of Crystal v City of Syracuse, Dept. of Assessment, 47 AD2d 29, 38 NY2d 883; Matter of City of New York v Schwartz, 36 AD2d 402; People ex rel. Seligman v Gilchrist, 215 App Div 166; People ex rel. Phillips v Raynes, 136 App Div 417.) II. At the very least, it should be held that the record on appeal presents fact issues which can only be resolved by trial.

      W. Bernard Richland, Corporation Counsel (Alfred Weinstein and L. Kevin Sheridan of counsel), for respondents.
    I. All of the property is real property within the meaning of paragraph (e) as authoritatively established by judicial decision and re-enactment in virtually identical language. All of the property is real property within the express coverage of paragraph (f). (People ex rel. Citizens’ Gas-Light Co. of Brooklyn v Board of Assessors of City of Brooklyn, 39 NY 81; People ex rel. Hudson Riv. Day Line v Franck, 257 NY 69; New York Mobile Homes Assn. v Steckel, 9 NY2d 533, 369 US 150; Herkimer County Light & Power Co. v Johnson, 37 App Div 257; Matter of Breslin, 45 Hun 210, app dsmd sub nom. People ex rel. Breslin v Lawrence, 107 NY 607; Boyd v United States, 116 US 616; Flanagan v Mt. Eden Gen. Hosp., 24 NY2d 427; People ex rel. Outwater v Green, 56 NY 466; Taylor v Village of Matteawan, 122 App Div 406; Matter of New York Tel. Co. v Ferris, 257 App Div 415, 282 NY 667.) II. All the property is real property within the meaning of paragraph (b), as "articles * * * affixed” to land. (People ex rel. Hudson Riv. Day Line v Franck, 257 NY 69; Voorhees v McGinnis, 48 NY 278; Matter of City of Lackawanna v State Bd. of Equalization & Assessment of State of N. Y., 21 AD2d 318; Matter of Capri Marina & Pool Club v Board of Assessors of County of Nassau, 84 Misc 2d 1096; People ex rel. Herzog v Miller, 170 Misc 1063.)
   OPINION OF THE COURT

Jones, J.

In this proceeding to review real estate tax assessments we determine that barge-mounted power plants, attached as these were to a pier in Gowanus Bay, Borough of Brooklyn, and operated by petitioner Consolidated Edison in connection with its Gowanus substation, together with auxiliary fuel supply barges, are structures "affixed” to land under section 102 (subd 12, par [b]) of the Real Property Tax Law and thus taxable as real property by respondent City of New York.

In describing the property we borrow liberally from the description in the opinion of Mr. Justice Carmine A. Ventiera at Special Term. The property which has been included in the assessment consists of: (1) four barges on which there are mounted gas turbine power plants designed to generate electric power; (2) accessory equipment mounted on the barges and used in connection with the power plants; (3) four fuel oil barges which supply fuel oil to the power plant barges, and (4) accessory equipment mounted on the fuel oil barges.

The barge-mounted power plants are moored at a pier owned by Consolidated Edison Company of New York adjacent to the Gowanus switching station and are connected with the adjacent land-based facilities of Con Ed by means of cables and transmission lines. The barges are owned by Marine Midland-New York, as trustee, and are leased to Con Ed for a period of 25 years under a "bareboat charter party” dated May 20, 1971.

The property of Con Ed, as an integrated functioning whole, is known as the Con Ed Gowanus switching station. The station includes land, structures thereon and other property and equipment and the property which is the subject of the present proceeding.

Each barge is approximately 215 feet long, 79 feet wide and 12 feet deep with a superstructure rising at least 56 feet above the water line. Each barge houses eight gas turbine generators developing a total of 622,000 kilowatts, together with auxiliary equipment, associated apparatus and various connections with the shore. The electric power generated is transmitted by feeder cables suspended from take-off towers leading to similar towers on the pier and then to the substation. The station is linked to other stations and is part of the system through which electric power is supplied to different areas of the city as needed and forms a part of the grid (network of equipment for the distribution of electric power) linking Con Ed’s power generating facilities with adjacent utility companies.

Each barge is connected to the pier by a "spud and clamp” design system which allows for vertical movement with tidal variations and for linear movement with the wind, waves and the wash from passing vessels. Each has two clamps that fit two spuds (designed as an H-shaped beam and connected to the mooring by bolts) in such manner as to be capable of movement along the H-shaped beam. Con Ed’s claim is uncontroverted that all connections can be severed and the barge can put to sea, if desired, in 8 to 12 hours.

The four auxiliary fuel oil barges are owned by Con Ed. In size, capacity and function they are similar to barges in general use in New York Harbor. They measure 250 feet by 44 feet by 14 Vi feet deep and each has a capacity of 1,000,000 gallons. Their function is to store and supply fuel oil to the barge-mounted gas turbine generators, and they contain the requisite equipment to do so. These fuel oil barges are permanently tied up at the pier and are connected to the power plants. The fuel stored therein is supplied by other barges, not claimed to be subject to assessment for real estate tax purposes.

In the assessments for the tax years here in question, 1972-1973 and 1973-1974, respondents assigned a total assessment to the Gowanus substation which included valuation of the property Con Ed asserts is personal property for which it seeks a reduction in assessment. Both courts below found that the barge-mounted power plants, the fuel supply barges and the necessary auxiliary equipment and apparatus were subject to taxation as "real property”, "property” or "land” under paragraphs (e) and (f) of subdivision 12 of the definitional section of the Real Property Tax Law (§ 102). Reliance was on the inclusion in those paragraphs of "Mains, pipes and tanks * ** * for conducting * * * heat, water, oil, electricity” (par [e]) and of "power generating apparatus * * * and equipment for the distribution of heat, light, power” (par [f]). In our view, however, because the property in question falls within the ambit of paragraph (b) of subdivision 12, it is unnecessary to determine whether it is also within the reach of the later paragraphs.

We note at the outset, as Con Ed concedes, that the Legislature has the power to classify all property for purposes of taxation, provided only that the classifications do not impinge on the constitutional right to equal protection by the absence of any reasonable and rational basis therefor (Matter of Grumman Aircraft Eng. Corp. v Board of Assessors of Town of Riverhead, 2 NY2d 500, 507; People ex rel. Farrington v Mensching, 187 NY 8, 16-17, 21-22). No claim of such impingement is made here; the question is simply whether the subject property is within the Legislature’s definition of real property for tax purposes. The resolution of the issue before us should not be predicated on the outcome of a logomachy as to the precise denotations of the words of the statute. Similarly our inquiry is not significantly advanced, much less concluded, by the references to precepts and canons of construction tendered by the parties; "As is often the case the classic canons of statutory construction hardly settle the controversy” (Becker v Huss Co., 43 NY2d 527, 540). The concepts and refinements which have been developed in the classifications of types of property at common law, while not determinative, are relevant for present purposes. (Cf. Matter of City of Lackawanna v State Bd. of Equalization & Assessment of State of N. Y., 16 NY2d 222, 226-227; Herkimer County Light & Power Co. v Johnson, 37 App Div 257, 263-264.)

Section 102 (subd 12, par [b]) contains the basic description of improvements which constitute real property for assessment purposes — "[b]uildings and other articles and structures, substructures and superstructures erected upon, under or above the land, or affixed thereto, including bridges and wharfs and piers”. In familiar concept most of such structures are erected along a vertical axis, rising in the airspace above the land or in consequence of excavation extending below the surface of the land. In this instance the improving structures are affixed, as are piers, along a horizontal axis. Whether improvement by structures of this type is to be included within the scope of paragraph (b) must turn to a large extent on the character of the particular structures and the degree to which they are affixed to the land. Surely power plants and fuel reservoirs of the type here considered fall within the familiar connotation of structures; no one would doubt that if erected on the land such facilities both in physical description and functional purpose would be within the easy reach of the real estate assessment rolls. At common law affixation turned on concepts of actual annexation to the realty, application to the use to which that portion of the associated realty is dedicated and the intention of the annexing party to make a permanent accession to the freehold. (Voorhees v McGinnis, 48 NY 278, 282; 23 NY Jur, Fixtures, § 2.) While, as we have noted, common law principles are not determinative, they are instructive. Here the question must be resolved by reference to the degree of physical and functional connection to the land-based station, as well as by reference to the intention of the parties. The concept of functional connection as the predicate for real property assessment of component units was articulated in Herkimer County Light & Power Co. v Johnson (37 App Div 257, supra, there, to be sure, under the predecessor provision to present par [e]). It has not since been repudiated by our courts.

Determining the issue in the physical circumstances disclosed in this record, we conclude that Con Ed’s four barge-mounted power plants are properly to be classified as structures affixed to the land on which is situated the land-based distribution system to which these facilities are physically connected and integrally related. Although, as Con Ed stresses, the barge-mounted plants are not irremovably attached to the elements of the power system located on land, that separation is an undertaking of substantial dimension may be inferred from the fact that a period of 8 to 12 hours is required for the severance. It is apparent that the barges must be applied to the use to which the realty is dedicated, and that, when detached, the plants cannot perform operations for which they were designed or serve the purpose for which they were constructed — to generate electric power for distribution to Con Ed users supplementary to and augmenting the power produced by its land-based facilities; the accomplishment of that objective can result only from the functional integration and physical connection of the barge- and land-based units. The expenditure by Con Ed of more than 10 million dollars in modification of the existing pier and in installation of necessary lines, services and circuits to accommodate the barge-mounted plants is demonstrative of the power company’s intention that the junction of the water-based and land-based facilities be of at least semipermanent duration. Further evidence from which such an intention may be inferred is the fact that the mooring connection employed — the spud and clamp design system — is such that it permits adjustment by the barges on a regular and self-tending basis to both vertical and linear variations. Additionally, there has been installed in the water in close outboard vicinity to the barges a group of permanent pile clusters to serve as a protective shield for the mounted power plants against passing ship traffic. Although the argument is advanced that these barges would be usable at other locations, there was no proof that they had ever been used at any other land-based station, or that they had ever been removed other than for purposes of repair for reannexation at the Gowanus switching station.

In short, Con Ed, after obtaining a 25-year charter of the vessels, in lieu of comparable land-based facilities, has installed on four barges the equipment and facilities that constitute power generating plants. The barges have been so located at a pier which extends from the realty on which its facilities at Gowanus Bay are situated that the barge-mounted plants have been physically and functionally integrated on at least a semipermanent basis with its distribution system on the land. Protection for the floating units has been installed in the adjacent waters and in the method of their connection to the pier. Taken together with the facilities located on the land, they constitute an interrelated whole electric power production and distribution system. The consequence is no different than as though Con Ed had chosen to attach the four plants to the land by vertical — rather than horizontal — annexation. Recognizing the ingenuity in engineering design which they represent, in modern parlance they are readily conceived, for real estate tax purposes, as being within the definition of structures within the contemplation of paragraph (b).

Concluding that the barge-mounted power plants are real property within the meaning of section 102 (subd 12, par [b]) of the Real Property Tax Law, we find no sufficient reason to reach a contrary result with respect to the auxiliary apparatus and equipment and the four fuel oil barges which, in the manner of operation here employed, were used in connection with the power plants (Herkimer County Light & Power Co. v Johnson, 37 App Div 257, 264, supra).

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

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

Order affirmed.

      . The paragraphs referred to appear in subdivision 12 of section 102 of the Real Property Tax Law in full as follows:
      "12. 'Real property’, 'property’ or 'land’ mean and include:
      * * *
      "(b) Buildings and other articles and structures, substructures and superstructures erected upon, under or above the land, or affixed thereto, including bridges and wharves and piers and the value of the right to collect wharfage, cranage or dockage thereon, but shall not include bulk milk tanks or coolers installed upon a farm to hold milk awaiting shipment to market;
      * * *
      "(e) Mains, pipes and tanks permitted or authorized to be made, laid or placed in, upon, above or under any public or private street or place for conducting steam, heat, water, oil, electricity or any property, substance or product capable of transportation or conveyance therein or that is protected thereby;
      "(f) Boilers, ventilating apparatus, elevators, plumbing, heating, lighting and power generating apparatus, shafting other than counter-shafting and equipment for the distribution of heat, light, power, gases and liquids, but shall not include movable machinery or equipment consisting of structures or erections to the operation of which machinery is essential, owned by a corporation taxable under article nine-a of the tax law, used for trade or manufacture and not essential for the support of the building, structure or superstructure, and removable without material injury thereto”.

      . Petitioners’ argument that, inasmuch as the charter agreement between them with respect to the barges prohibited Con Ed from permitting the barges to become a part of, or subject to any liens on, any building or other real property, the barges may not be regarded as having been affixed to the land within the intention of the parties, is not persuasive. The attempt by the owner of the chartered vessels, Marine Midland, to preserve its interest in the barges from alienation or encumbrance by the charterer, is not binding on the taxing authority and could not of course serve to insulate from tax liability property otherwise subject to levy.


author: Gabrielli, J.

text:
    Walter A. Saxton et al., Appellants, v Hugh L. Carey, Governor of the State of New York, et al., Respondents.
    Argued May 4, 1978;
    decided June 8, 1978

      POINTS OF COUNSEL

      Ira M. Ball for appellant pro se and for Walter A. Saxton and another, appellants.
    I. Governor Carey has failed to carry out his constitutional duty to submit an itemized budget and appropriation bills to the Legislature. (People v Tremaine, 226 App Div 331, 252 NY 27; New York Public Interest Research Group v Carey, 55 AD2d 274; Ball v State of New York, 83 Misc 2d 903, 52 AD2d 47; 41 NY2d 617; Hidley v Rockefeller, 28 NY2d 439.) II. Respondents’ effort to reverse Tremaine (1939). (Matter of Picone v Commissioner of Licenses of City of N. Y., 241 NY 157; Matter of Smith v Morgan, 253 App Div 239; Ball v State of New York, 41 NY2d 617; New York Public Interest Research Group v Carey, 86 Misc 2d 329, 55 AD2d 274, 41 NY2d 1072; Judd v Board of Educ., 278 NY 200; Hidley v Rockefeller, 28 NY2d 439.) III. Respondents Carey and Miller have intentionally disregarded article VII of the Constitution. IV. The executive-legislative "trade-off”. (Boryszewski v Brydges, 37 NY2d 361; Matter of Lynch v O’Leary, 166 Misc 567; St. Clair v Yonkers Raceway, 13 NY2d 72.) V. The fallacy of "program budgeting”. (People v Tremaine, 281 NY 1.) VI. Judge Breitel’s dissenting opinion in Hidley. (St. Clair v Yonkers Raceway, 13 NY2d 72; Matter of Carey v

      Morton, 297 NY 361; United States v American Trucking Assns., 310 US 534; People v Cox Constr. Co., 172 Misc 244, 259 App Div 707; Ferraiolo v O’Dwyer, 302 NY 371; Household Fin. Corp. v Goldring, 263 App Div 524, 289 NY 574; Judd v Board of Educ., 278 NY 200.) VII. The provision in the executive budget permitting the free interchange and transfer of funds is unconstitutional on its face. VIII. The interest of the citizen-taxpayer must be the courts primary concern.

      Louis J. Lefkowitz, Attorney-General (Jean M. Coon and Ruth Kessler Toch of counsel), for respondents.
    I. Article VII of the New York Constitution does not require that either the executive budget or the appropriation bills submitted by the Governor be line-item in form. (City of Albany v McMorran, 16 AD2d 1021; Cuglar v Power Auth. of State of N. Y., 4 Misc 2d 879, 4 AD2d 801, 3 NY2d 1006; Kaskel v Impellitteri, 306 NY 73, 609, 347 US 934; Berman v Parker, 348 US 26; People v Tremaine, 281 NY 1; Graves v New York ex rel. O’Keefe, 306 US 466; New York Public Interest Research Group v Carey, 55 AD2d 274, 41 NY2d 1072; People v Tremaine, 252 NY 27; Hidley v Rockefeller, 36 AD2d 387, 28 NY2d 439.) II. The provisions contained in the budget bills authorizing the Director of the Budget to transfer funds within scheduled appropriations are valid budgetary provisions. (Matter of Posner v Rockefeller, 33 AD2d 314, 26 NY2d 970.)
   OPINION OF THE COURT

Gabrielli, J.

This court is presented with a frontal attack on the entire 1978-1979 State budget. It is urged that this budget for the operation of the State of New York is invalid and that both the executive and legislative action on the budget for the operation of the State as well as for aid and assistance to local governments, are violative of the State Constitution. These three plaintiffs have brought this action for declaratory relief seeking a judgment declaring the budget to be constitutionally infirm and, further, they seek to enjoin the Governor, legislative leaders, the fiscal committees of the Senate and Assembly, and the Legislature itself from "exercising any and all alleged functions, powers, authority, duties, rights and responsibilities relating to the legislative process of enacting” the budget and implementing budget bills.

Noting that the budget at that time had not yet been approved by the Legislature, Supreme Court dismissed the complaint as premature. The Appellate Division reinstated the complaint, reasoning that since the gravamen of the complaint went to the claimed failure of the Governor to submit a proper budget, and not any action or failure to act by the Legislature, this action was not premature. That court then declared the budget to be valid.

Initially, we note that the Legislature has since adopted the budget in substantially the same form in which it was submitted by the Governor. Accordingly, we need not consider the arguments presented below concerning prematurity, and we shall instead turn to the merits of the controversy before us.

Appellants correctly urge that the Governor is required to submit an "itemized” budget to the Legislature (NY Const, art VII, §§ 1-7; People v Tremaine, 281 NY 1). They argue that the challenged budget is insufficiently itemized to provide the Legislature with the information necessary for that body to properly perform its constitutional role as the ultimate guardian of the public fisc. They also suggest that the inclusion in the budget of a provision allowing the transfer of funds within particular programs and departments following passage of the budget by the Legislature, unconstitutionally precludes effective legislative control over the expenditure of public funds.

A similar challenge was made to the 1971-1972 budget in Hidley v Rockefeller (28 NY2d 439). There we found that the plaintiffs lacked standing to challenge the budget, and thus the court did not reach the merits of that challenge. In light of our subsequent holding in Boryszewski v Brydges (37 NY2d 361), no such barrier precludes the challenge now before the court.

The dispositive question presented by this case is the extent to which the courts of this State may intervene in the budgetary process in order to ensure that the methodology prescribed by the Constitution is properly utilized. The issue is a basic one, involving the application of certain principles fundamental to our system of government. It is, of course, beyond question that the Constitution does require itemization (see People v Tremaine, supra). Appellants argue quite properly that it is the responsibility of this court to apply and enforce the will of the people as expressed in our Constitution, even if this results in considerable practical difficulty (see Bethlehem Steel Corp. v Board of Educ., 44 NY2d 831); see, also, NY Const, art VI, § 3, subd b, par [8]); and they urge that no branch of government may avoid the mandate of the Constitution (see, e.g., Matter of Greene, 166 NY 485). From this, they would have us conclude that it is a proper function of the courts to police the degree of itemization necessary in the State budget. We cannot agree with this conclusion, for it would require the courts to assume a role for which they are neither constituted, suited, nor, indeed, designed.

Our State government, like the Federal Government, is a tripartite institution, with power variously distributed between three coequal branches (see NY Const, art III, § 1; art IV, § 1; art VI). It comprises a system of checks and balances intended to ensure "the preservation of liberty itself, which is ended by the union of the three functions in one man, or in one body of men. It is a fundamental principle of the organic law that each department should be free from interference, in the discharge of its peculiar duties, by either of the others” (People ex rel. Burby v Howland, 155 NY 270, 282; see, also, People ex rel. Broderick v Morton, 156 NY 136). The power of the judiciary is as subject to such limitations as is that of its co-ordinate branches of government, for the spectre of judicial tyranny is no more palatable to a free people than is the threat of an uncontrolled executive or legislative branch.

Under our system of government, the creation and enactment of the State budget is a matter delegated essentially to the Governor and the Legislature. The Governor, as chief executive officer, has the responsibility and the obligation to ascertain the financial needs of the various departments and projects of the State government, and to submit to the Legislature for its consideration a budget and various appropriation bills incorporating those needs (NY Const, art VII, §§ 2, 3). It is for the Legislature to review that proposed budget, and to approve or disapprove of the various expenditures proposed by the Governor (NY Const, art VII, § 4). For the Legislature to intelligently fulfill its proper role, it is of course necessary that the budget be itemized, lest the Legislature simply be presented with a lump sum which could be spent at the discretion of the Governor.

No one disputes the need for itemization, and indeed, the present budget is certainly itemized to a considerable extent. Appellants urge us to review the extent of that itemization, and to determine whether it accords with the intent of the Constitution. The Constitution, however, does not prescribe any particular degree of itemization. As then Judge Breitel correctly stated in his dissent in the Hidley case, "[t]here is a constitutional mandate to itemize. There is no constitutional definition of itemization. There is no judicial definition of itemization and no inflexible definition is possible. Itemization is an accordion word. An item is little more than a 'thing’ in a list of things. A house is an item, and so is a chair in the house, or the nail in the chair, depending on the depth and purpose of the classification. The specificness or generality of itemization depends upon its function and the context in which it is used. In one context of a budget or appropriation bill the description of 1,000 police officers within a flexible salary range would be specific and particular; in another it would leave the appointing power with almost unlimited control. In one context an 'item’ of $5,000,000 for construction of a particular expressway might seem specific; in another, void of indication when, how, or where the expressway or segments of it would be constructed. This suggests that there is something of a battle over words in debating the need for items, rather than a grappling with a functional concept” (28 NY2d, p 444, supra).

As we noted above, itemization is necessary to facilitate proper legislative review of the. proposed budget. Since this is so, the degree of itemization necessary in a particular budget is whatever degree of itemization is necessary for the Legislature to effectively review that budget. This is a decision which is best left to the Legislature, for it is not something which can be accurately delineated by a court. It is, rather, a function of the political process, and that interplay between the various elected representatives of the people which was certainly envisioned by the draftsmen of the Constitution. Should the Legislature determine that a particular budget is so lacking in specificity as to preclude meaningful review, then it will be the duty of that Legislature to refuse to approve such a budget. If, however, as here, the Legislature is satisfied with the budget as submitted by the Governor, then it is not for the courts to intervene and declare such a budget invalid because of a failure to measure up to some mythical budget specifically delineating the exact fate of every penny of the public funds. "Direct concern with the degree of particularization or subdivision of items lies exclusively with the executive and legislative branches of government simply because they are the sole participants in the negotiation and adoption of an executive budget” (Hidley v Rockefeller, 28 NY2d, p 445, supra [Breitel, J, dissenting]). Should a Legislature fail in its responsibility to require a sufficiently itemized budget, the remedy lies not in the courtroom, but in the voting booth.

A similar conclusion must prevail with respect to the provision for the intra-program transfer of funds after the budget has been approved. If the Legislature determines that the demands of government require a certain flexibility in the use of appropriated funds within a particular program or department, then the Constitution is satisfied, and the courts will not disturb that result. Thus, appellants’ challenge to the authorization contained in the budget to transfer funds within scheduled appropriations must also fall. "Transfer provisions are really strings attached to the appropriated items and to that extent 'de-itemize’ them depending how unrestricted or unconditioned are the transfer provisions. Consequently, transfer provisions are valid because the Legislature has enacted them, and thereby approved flexibility in the appropriated items. If the Legislature is or should become concerned that the transfer provisions give the Executive too much leeway and deprives them of the supervisory power they have and wish to exercise, the remedy is in their hands. The point is that there is no constitutional invalidity involved so long as ultimately, however done, the Executive proposed the appropriations and there is agreement as to the limitations and conditions they contain” (Hidley v Rockefeller, 28 NY2d, p 446, supra [Breitel, J., dissenting]).

We do not suggest by our decision today that the budgetary process is per se always beyond the realm of judicial consideration. Nor do we retreat in the slightest from our decision in People v Tremaine (281 NY 1, supra), in which we struck down a legislative attempt to invade the power of the executive to draft the budget. The courts will always be available to resolve disputes concerning the scope of that authority which is granted by the Constitution to the other two branches of the government. Today, we simply refuse to extend the power of the robe into an arena in which it was never intended to play a role. We hold only that the degree of itemization and the extent of transfer allowable are matters which are to be determined by the Governor and the Legislature, not by judicial fiat.

Accordingly, the order appealed from should be affirmed, without costs.

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

Order affirmed.


text:
    The People of the State of New York, Respondent, v George Hodge, Appellant.
    Argued April 28, 1978;
    decided June 8, 1978

      POINTS OF COUNSEL

      Diana A. Steele and William E. Hellerstein for appellant.
    Appellant’s right to be free of unreasonable searches and seizures, guaranteed by both the Federal and New York State Constitutions, was violated (a) when the police, knowing only that the occupant of his apartment and the deceased were both white, blond men and that the homicide was connected to the community bathroom on the floor on which he lived, entered his home without a warrant, and (b) when they thereafter detained him at the station house for questioning based solely on his "consent” obtained within 10 minutes of the officers’ gun-point entry into his 6-by-12 foot apartment. These two constitutional violations independently tainted the evidence seized and the statements elicited shortly thereafter. (United States v United States Dist. Ct., 407 US 297; Coolidge v New Hampshire, 403 US 443; United States v Birrell, 470 F2d 113; People v Mitchell, 39 NY2d 173; People v Gallmon, 19 NY2d 389; United States v Barone, 330 F2d 543; People v Jeffries, 45 AD2d 6, 38 NY2d 722; Wong Sun v United States, 371 US 471; Brown v Illinois, 422 US 590.)

      Robert M. Morgenthau, District Attorney (Richard M. Seltzer, Peter L. Zimroth and Robert M. Pitler of counsel), for respondent.
    The police conducted a reasonable and legal investigation into an apparent homicide by following a bloodstained trail from the stabbed body to the defendant’s room, and by detaining defendant for questioning on the basis of his voluntary consent and probable cause. (Warden v Hayden, 387 US 294; United States v Keeble, 459 F2d 757, 412 US 205; United States v Birrell, 470 F2d 113; People v Mitchell, 39 NY2d 173; People v Etcheverry, 39 NY2d 252; People v Martinez, 37 NY2d 662; Lonquest v Wyoming, 409 US 1006; People v Clements, 37 NY2d 675; Root v Gauper, 438 F2d 361; People v Morales, 42 NY2d 129.)
   OPINION OF THE COURT

Fuchsberg, J.

The outcome of this appeal depends on whether certain tangible physical evidence and oral admissions should have been suppressed because the search and seizure of which they were products was conducted without a warrant.

George Hodge, the appellant here, stands convicted of manslaughter in the second degree. Though that judgment was entered upon his plea of guilty, pursuant to CPL 710.70 (subd 2) he nevertheless challenges the judgment of conviction as being founded upon the trial court’s erroneous prior refusal to suppress the articles and admissions in question.

We first set forth the controlling facts. At about 6:00 a.m. on February 20, 1972, Police Officer Paul Ryan and his partner received a radio message dispatching them to 83rd Street and Columbus Avenue in Manhattan, where they were to learn that a fatal stabbing had occurred. Repairing to the scene posthaste, they observed upon their arrival a bloodstain in the snow outside a four-story rooming house along with an equally bloody trial on the steps leading into the building.

Ryan at once began ringing the building’s doorbell. Receiving no response, he proceeded to break a window in order to open the front door and thus gain admission to the common hallway. With fellow officers, he began an immediate floor-to-floor search, as a result of which further bloodstains were found on one of the intermediate staircases and in a bucket, a commode and a sink on the fourth floor community bathroom.

After this discovery, the officers knocked on the doors of the rooms located on that floor in order to speak to their occupants. One tenant informed the police that at about 5:30 a.m. she had heard sounds of an argument emanating from room 46. Another referred to the occupant of 46 as "the white man with blond hair”. This description tallied with that which the police had received of the victim when they first came to the scene, but the fact, unknown to the police, was that it fit both the dead man and his assailant.

In any event, Officer Ryan then rapped on the door of 46. When there was no reply, a key was obtained from the building superintendent and the officers, guns drawn as a precaution, entered the apartment, where they found Hodge in bed. As soon as he stood up and the officers observed he was in his underwear, they put their guns back into their holsters and proceeded to ask for his name and address. As they did so, they noticed a bloodstain on his right hand. Their inquiry as to its source elicited the explanation that Hodge had cut his foot. But the officers observed no sign of injury or any blood on that part of his body.

Appellant then agreed to go to the police station to assist in the investigation. While handing Hodge his jacket preparatory to their leaving the room, Ryan patted it, felt something hard, and recovered two knives, one of which appeared to have still more blood on it. Appellant admitted the knives were his. The sequence of these events was rapid. When the officers left with the appellant it was only 6:50 a.m.

It was thereafter, during the ride to the station house, that Officer Ryan first gave the appellant the required warnings against self incrimination, whereupon Hodge agreed to answer questions in the absence of an attorney. The questioning that ensued became the basis for the prompt issuance of a warrant for a search of Hodge’s quarters, where a set of car keys fitting an automobile owned by the deceased was discovered. Several hours later, the appellant also made a separate inculpatory statement to an Assistant District Attorney.

It is clear that the trial court showed care in parsing out the components of appellant’s motions. It suppressed his admission of the ownership of the knives (because it had been elicited before the Miranda warnings were given) and the statement he made to the Assistant District Attorney (because the interrogation had proceeded before the summoning of a priest, as appellant had requested while failing, in answer to a question, to indicate an unequivocal willingness to be interviewed by the Assistant District Attorney without the presence of a lawyer). But, as to the knives, the car keys and the remaining statements, all of which the appellant contends were the fruit of the initial warrantless, and, therefore, in his view, illegal entry of his room, the motions were denied.

The Appellate Division, in affirming the judgment, upheld these rulings. On the analysis which follows, we too find that the refusal to suppress these evidentiary matters did not trespass on the appellant’s constitutional rights.

The motive force for the constitutional safeguards precluding unreasonable searches and seizures (NY Const, art I, § 12; US Const, 4th Arndt) is protection against arbitrary governmental invasion of privacy (see United States v Chadwick, 433 US 1, 11). To assure that, save for few specifically established and well-defined exceptions, the determination of whether the desire of the police to conduct a search or seizure is supported by probable cause is entrusted in the first instance to a neutral Magistrate. In the absence of "exigencies of the situation [that] made that course imperative” (McDonald v United States, 335 US 451, 456), all warrantless searches presumptively are unreasonable per se (Schneckloth v Bustamonte, 412 US 218, 219; Katz v United States, 389 US 347, 357). Where a warrant has not been obtained, it is the People who have the burden of overcoming that presumption.

In the present case, that burden was well met. Under the circumstances here, prudence obviously called for an immediate inquiry into the unsolved crime (People v Danziger, 41 NY2d 1092, 1094). The trappings of an emergency were self-evident. It would have been senseless for the police not to contemplate the likelihood that the fresh, bloody trail would lead to the perpetrator (Fellows v State, 13 Md App 206, cert den 264 Md 747; cf. Warden v Hayden, 387 US 294), or to the scene of the crime (United States v Keeble, 459 F2d 757, revd on other grounds 412 US 205), or to another person who was injured in whatever violence had occurred (People v Mitchell, 39 NY2d 173, cert den 426 US 953), or to the victim’s room (United States v Birrell, 470 F2d 113, 116-117). That Officer Ryan’s personal opinion favored the existence of one of these alternatives does not eliminate the validity of the others. (Mascólo, The Emergency Doctrine Exception to the Warrant Requirement under the Fourth Amendment, 22 Buffalo L Rev 419, 426-427.)

Moreover, the exigent nature of the circumstances is supported by other factors. For instance, no one could mistake the utmost gravity of the crime under investigation, a violent taking of life. Also, that the perpetrator, if found, would probably be armed with at least a knife was a necessary inference from the stabbing. The bloody clues and the neighbor’s report of the quarrel at a time just before the stabbing almost inexorably linked any occupant of room 46 and the crime to one another. And, certainly, the brevity of the time lapses between the quarrel and the killing, and the killing and the police investigation, heightened the probability that a suspect might still be found on the premises (United States v Jarvis, 560 F2d 494, 498, cert den 435 US 934).

Nor can it be said, in the light of the rapidly unfolding facts that confronted the officers upon their arrival, that the manner of their investigation was unjustifiably intrusive (cf. Wayne v United States, 318 F2d 205, 212 [Burger, J.], cert den 375 US 860). By the time their attention was focused upon room 46, immediate entrance had become urgent (People v Vaccaro, 39 NY2d 468, 473). While according full weight to the relevant constitutional safeguards, to suggest in this framework that, once the door to the room had been opened, the police should have turned on their heels and left without at least asking some questions simply because the room’s occupant had been found in bed is to defy common sense (State v Hardin, 90 Nev 10; Fellows v State, 13 Md App 206, cert den 264 Md 747, supra).

Finally, we note that, though it might have been possible to conclude, as appellant urges, that the information elicited from him was not sufficient to establish probable cause for his arrest — especially since the knives were not discovered until after he was asked to come down to the station house — we are faced with an affirmed finding of fact that he voluntarily consented to accompany the officers. Consent is a valid substitute for probable cause and, since there is support for the factual finding in this record, it is binding on our court (People v Morales, 42 NY2d 129, 137-138, cert den 434 US 1018).

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

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

Order affirmed.

       Of course, if the apartment had belonged to the deceased, a search warrant would have been unnecessary (United States v Birrell, supra).


text:
    In the Matter of Yolande D. Buckley et al., Appellants. Wild Oaks Park, Inc., et al., Respondents.
    Argued May 2, 1978;
    decided June 13, 1978

      POINTS OF COUNSEL

      Michael J. Trainor and Maurice F. Curran for appellants.
    I. The issuance of stock to Galine Duraffourd violated the fiduciary duty owed by the board of directors of Wild Oaks to its shareholders. Under the authority of Schwartz v Marien (37 NY2d 487 [1975]) the issuance must be set aside. II. The issuance of the 1,150 shares of stock to Galine Duraffourd violated petitioner-appellants’ pre-emptive rights. (Musson v New York & Queens Elec. Light & Power Co., 138 Misc 881; Stokes v Continental Trust Co. of City of N. Y., 186 NY 285; Dunlay v Avenue M. Garage & Repair Co., 253 NY 274; Hammer v Werner, 239 App Div 38.)

      William J. Greer and Emery M. Anderson for Galine Duraffourd, respondent.
    I. The issuance of 1,150 shares of stock of Wild Oaks to Galine Duraffourd did not violate petitioners’ pre-emptive rights. (Schwartz v Marien, 37 NY2d 487.) II. Under the applicable French law, Madame Duraffourd received a quasi or imperfect usufruct, which vested title in her with the obligation to restore only the equal quantity, quality and value on her death. Her position is not that of an executor or an administrator. (Benedict v Clarke, 139 App Div 242.) III. The provision in the will that Madame Duraffourd make no donation or legacy from said usufruct cannot apply to the income and profits but rather applies only to the substance of the usufruct.

      Henry J. Smith, Raymond P. O’Keefe and Charles M. Feuer for Wild Oaks Park, Inc., and others, respondents.
    I. The action of the board of directors in issuing the 1,150 shares of stock to Galine Duraffourd was in full compliance with its fiduciary duty to all shareholders of Wild Oaks Park, Inc. (Schwartz v Marien, 37 NY2d 487; Matter of Faehndrich, 2 NY2d 468; Beltrone v State of New York, 63 Misc 2d 389; Matter of Flagg-Utica Corp. v Baselice, 14 Misc 2d 476.) II. The 1,150 shares were issued in consideration of the extinguishment of a $115,000 debt of Wild Oaks and were not subject to pre-emptive rights. (Veeder v Mudgett, 95 NY 295; Frankowski v Palermo, 47 AD2d 579; Dunlay v Avenue M. Garage & Repair Co., 253 NY 274; Musson v New York & Queens Elec. Light & Power Co., 138 Misc 881; People ex rel. New York Trust Co. v Graves, 265 App Div 94.)
   OPINION OF THE COURT

Jones, J.

We conclude that, without a prior adjudication as to the beneficial (as distinguished from the record) ownership of the outstanding shares, it is inappropriate in this case to determine the application of the rule that, in issuing authorized but theretofore unissued shares of stock, corporate directors have a fiduciary responsibility to treat all their shareholders fairly and evenly. The courts below appear to have proceeded to a determination on the basis of the distribution of outstanding shares as reflected on the books of the corporation, while explicitly recognizing that beneficial ownership of those shares remains to be determined elsewhere. An adjudication of the rights of the parties cannot now be predicated on any such basis.

An outline of the background of the present litigation, intentionally skeletal because factual issues remain to be determined, is necessary to an understanding of the disposition we make of this appeal. The assets which gave rise to the present controversy had their origin, at least in major part, in the estate of Camille Duraffourd who died in Lebanon on November 11, 1941, leaving him surviving his wife, Galine Duraffourd, his daughter Yolande Duraffourd (now Buckley) and George S. Ojarovsky, his wife’s son by a prior marriage. Under Camille Duraffourd’s will his wife was named universal legatee and his estate was divided so that she was to receive one half of the estate as a "usufruct” for life. It appears that under French and Lebanese law, a usufruct is the right to use a portion of an estate and to invest it, and that Galine Duraffourd as usufructuary was entitled to all income and as well to all growth of capital of her half of the estate. The mother was also legal guardian of the daughter’s other one-half share of the estate until the daughter’s majority, and it appears that during the daughter’s minority the mother was entitled under French and Lebanese law to use any profit or gain as her own so long as she provided for the health, welfare and education of her ward. After the daughter reached her majority in 1951, her mother continued to manage the daughter’s properties under a power of attorney executed by the daughter.

At its inception in 1941 the Camille Duraffourd estate consisted of gold and cash valued at approximately 1,800,000 Lebanese pounds (roughly $600,000). From 1941 to 1971, Ga-line Duraffourd engaged in numerous financial and business adventures, making considerable profits. The great majority of these assets were placed in the name of her daughter although there was no requirement under French Civil Law that the mother do this.

In 1958 Galine Duraffourd became interested in investing in real estate in the United States. A limited partnership and two corporations were formed as investment vehicles. In 1965 the limited partnership was converted into Wild Oaks Park, Inc., a New York corporation with an authorized capital of 5,000 shares of no-par common stock, for the purpose of acquiring, developing and reselling real estate. There were issued 3,850 shares — 2,316 in the name of the daughter and her husband, 316 in the name of Galine Duraffourd and her trust, 936 in the name of George Ojarovsky and his wife, and 282 to other shareholders. The board of directors of the corporation has always consisted of George Ojarovsky and his wife, Felicia, and Frederick H. Seacord, an attorney. The funds which the corporation received over the years as investment capital had always come from Galine Duraffourd.

In 1971 differences arose between mother and daughter, and the latter revoked the power of attorney which she had given her mother. In December, 1971, for what the trial court found was a valid business reason, the board of directors decided to issue some or all of the remaining 1,150 shares of authorized but unissued stock. After declaring a waiting period in which it was hoped that there might be a reconciliation of the differences between mother and daughter, on June 7, 1972 the board of directors issued all 1,150 shares to the mother. As a result, whereas prior to this stock issue the daughter and her husband had been owners of record of 60% of the outstanding corporate shares, after the additional shares had been issued to the mother, the holdings of the daughter and her husband were reduced to 46%; thus the Buckley interests no longer held control. It was the issuance of the additional 1,150 shares to the mother and the re-election of the directors then in office based on the votes of the new shareholdings which gave rise to the present proceeding.

The trial court, in its dismissal of the daughter’s petition to set aside the election of directors and the issuance of the 1,150 shares, expressly stated: "It should be noted that the court does not make a finding as to the propriety of Madame Duraffourd’s actions in the manner of handling the estate. * * * At this time, whether the funds came from the corpus or income of the usufruct is immaterial; that issue will have to be resolved in the future by the Lebanese courts.” In other words, both the trial court and the Appellate Division (the majority of which affirmed on the opinion of the trial court) disposed of the claims of the parties without making a judicial inquiry into the ownership of the funds which were transferred to the corporation or determining beneficial ownership as between mother and daughter of the corporate shares.

Both appellants and respondents devote extensive attention in their briefs and on oral argument to our holding in Schwartz v Marien (37 NY2d 487). Appellants argue that the doctrine recognized in that case mandates a reversal; respondents contend that the disposition below was not in conflict with Schwartz. All the litigants recognize and concede that the "members of a corporate board of directors * * * owe a fiduciary responsibility to the shareholders in general and to individual shareholders in particular to treat all shareholders fairly and evenly” (Schwartz v Marien, 37 NY2d 487, 491, supra). Their differences arise over the precise formulation of the doctrine and more particularly over its application to the factual situation disclosed in this record.

As with other fiduciary responsibility recognized by our courts, the origins of the presently pertinent doctrine stem from the equity side. (See 11 Fletcher, Cyclopedia Corporations, § 5135.1.) It is equitable concepts which both give rise to the responsibility and thus describe its boundaries and determine its application. In this circumstance we conclude, therefore, that it is inappropriate to consider the scope or application in this case of what is inherently an equitable doctrine without first determining the equitable ownership, of the outstanding shares of stock on which to predicate our decision. Thus, different results might attend an adjudication that record ownership accurately reflected beneficial ownership than would result from a contrary conclusion that the daughter was a bare legal title-holding nominee for her mother’s benefit, or that the daughter was the beneficial owner of substantially all the corporate shares. Intermediate conclusions might call for varying judicial consequences. To phrase it another way, a determination as to the underlying beneficial interests of the parties is necessary to an enforcement of their rights with respect to the corporation. (Cf. Matter of Utica Fire Alarm Tel. Co., 115 App Div 821, under former General Corporation Law, § 27, L 1892, ch 687.) Should it be determined that the daughter was the beneficial owner (as well as the record owner) of a majority interest in the corporation prior to the issuance of the new shares, and that the result of the issuance of the additional shares was to deprive her of control of the corporation, the application of the principles enunciated in Schwartz would be appropriate.

The present is a special proceeding instituted under section 619 of the Business Corporation Law. Under section 25 of the former General Corporation Law, the predecessor of the present section, it was held that the clause, "as justice may require”, did not expand judicial authority or authorize the courts to grant different or greater relief than was specified in the statute, namely, to confirm an election or to order a new one (Matter of Faehndrich, 2 NY2d 468, 474). The new section, however, grants the courts a somewhat broader authority and discretion to "take such other action as justice may require” (Matter of Crass v Budd Pub., 28 AD2d 1100; Hornstein, Analysis of Business Corporation Law, McKinney’s Cons Laws of NY, Book 6, Part 2, Business Corporation Law, p 483; Henn, Outline of Principal Changes in Business Corporation Law, McKinney’s Cons Laws of NY, Book 6, Part 2, Business Corporation Law, p 495).

Choosing to exercise the authority granted under section 619, we remit this case to Supreme Court for a determination of the beneficial ownership of the parties in the shares of stock of Wild Oaks Park, Inc. Presumably this will entail consideration of relevant claims with respect to the administration of the assets of the Camille Duraffourd estate which may be traced into the consideration given for the issuance of the corporate shares, together with attention to be given to the effect properly to be accorded inter vivos transfers, if any, by one or other of the beneficiaries of the estate after receipt of estate distributions. There may be other aspects pertinent to the resolution of the issues of beneficial ownership. We are encouraged to the disposition we make by the circumstances that all interested persons appear presently to be parties to this proceeding and that the inference is available that with the assistance of their accountant the parties have maintained careful records of the various relevant transactions. We are not unaware that the attempts of the parties to obtain in Lebanese courts what Anglo-Saxon law terms an accounting of the administration of the Camille Duraffourd estate have so far been frustrated and that, given the present tensions and uncertainties of the Middle East, there is no reasonable prospect thereof in the near future. The lack of access to what would normally be the appropriate forum for a judicial settlement of the Camille Duraffourd estate should not be permitted to forestall or delay the determination of the beneficial ownership in the shares of Wild Oaks Park, Inc. Only after an adjudication of the issues of beneficial ownership can the court then proceed to a resolution of the ultimate issues tendered in this proceeding.

For the reasons stated, the order of the Appellate Division should be reversed, without costs, and the case remitted to Supreme Court for further proceedings in accordance with this opinion.

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

Order reversed, etc.


text:
    Reynolds Securities, Inc., Respondent, v Underwriters Bank and Trust Company, Defendant, and Andre Rostworowski, Appellant.
    Argued April 24, 1978;
    decided June 13, 1978

      POINTS OF COUNSEL

      Alan Palwick for appellant. I. The judgment dated May 7, 1976 was appealable.

      (McClelland v Climax Hosiery Mills, 252 NY 347; James v Powell, 19 NY2d 249; Merchants Mut. Ins. Co. v Magee, 29 AD2d 841.) II. Judgment in the Supreme Court should not have been entered without an inquest as to damages. (Matter of Naftalin & Co. v Merrill Lynch, Pierce, Fenner & Smith, 469 F2d 1166; Norden v Duke, 129 App Div 158, 198 NY 562; Wilmot v State of New York, 32 NY2d 164; Mayes Co. v State of New York, 18 NY2d 549; Merchants Mut. Ins. Co. v Magee, 29 AD2d 841; McClelland v Climax Hosiery Mills, 252 NY 347; Angelo v Laremet Corp., 23 AD2d 191; Steward v Allegheny Mut. Cas. Co., 64 Misc 2d 1090; Wine Antiques v St. Paul Fire & Mar. Ins. Co., 40 AD2d 657.)

      Michael J. McAllister and James J. De Luca for respondent.
    I. The judgment by default entered against appellant is not appealable. (Kirsch v Hercules Prods. Co., 205 App Div 530, 237 NY 525; Stehlik v City of New York, 22 AD2d 777; James v Powell, 19 NY2d 249.) II. Even if it was improper to dismiss appellant’s appeal, appellant is precluded from introducing any evidence at an inquest concerning respondent’s alleged failure to cover timely. (McClelland v Climax Hosiery Mills, 252 NY 347; Angelo v Laremet Corp., 23 AD2d 191; Merchants Mut. Ins. Co. v Magee, 29 AD2d 841; Wine Antiques v St. Paul Fire & Mar. Ins. Co., 40 AD2d 657; Steward v Allegheny Mut. Cas. Co., 64 Misc 2d 1090.)
   OPINION OF THE COURT

Fuchsberg, J.

The issue on this appeal, seemingly commonplace but a source of more controversy than one would expect, is whether, under the facts in this case, a default judgment, obtained as a result of a willful refusal to comply with discovery orders, was properly entered for the full amount of the ad damnum without the holding of an inquest to assess the damages.

On three separate occasions, the defendant, Andre Rostworowski, placed an order with the plaintiff, Reynolds Securities, Inc., a national brokerage firm, to sell shares of a particular stock for his account. Though notified that the sales had been executed, the specified settlement date came and went without Rostworowski’s having delivered the certificates for transfer to the buyers. In fact, he never did so. Consequently, approximately two months after the initial sale, plaintiff proceeded to "buy-in” the required securities in the open market. In the intervening time, the securities appreciated considerably. This action was thereafter brought to recover $21,768.61, presumably the difference between the money it had expended, inclusive of the brokerage commissions, to purchase the covering stock and the amounts it had received for the stock ordered sold by the defendant.

After issue was joined and in personam jurisdiction unsuccessfully contested (51 AD2d 957), defendant willfully refused to comply with several discovery notices and four different court orders which directed him to appear for the taking of his deposition. As authorized by the last of these orders, upon a demonstration of defendant’s failure to attend on the appointed date, plaintiff obtained an ex parte order striking the answer and directing the entry of judgment for the full amount demanded in the complaint. No proof of the actual loss sustained was submitted, either in testimonial or affidavit form, in support of the award.

Defendant thereupon moved to vacate the judgment, open the default and have the matter set down for an inquest at which the quantum of damages would be the subject of proof. Special Term denied the motion. The Appellate Division, in a single order, unanimously dismissed defendant’s appeal from the judgment, but affirmed on a companion appeal taken from the order denying the motion to vacate. We granted leave to appeal only from so much of the Appellate Division’s order as dismissed the appeal from the judgment. (42 NY2d 1073.)

Defendant does not, and indeed cannot successfully, quarrel with the order to the extent that it struck the answer and directed the entry of a default judgment on liability, for the court was more than eminently justified in following that course (CPLR 3126; cf. Laverne v Meehan, 18 NY2d 635, app dsmd 386 US 682). Rather, he claims that the damages, not being liquidated, were not ascertainable without a hearing at which he could appear and offer evidence to contest the extent of plaintiff’s claimed loss. In particular, he asserts that plaintiff unduly delayed its purchase of the covering securities and thus failed to "promptly cancel or otherwise liquidate the transaction” as mandated by Federal Reserve Board Regulation T (12 CFR 220.4, subd [c], pars [2], [5]; cf. Matter of Naftalin & Co. v Merrill Lynch, Pierce, Fenner & Smith, 469 F2d 1166).

The entry of a default judgment against a defendant, though it be for noncompliance with a discovery order, is governed by CPLR 3215 (4 Weinstein-Korn-Miller, NY Civ Prac, par 3215.02). Where the damages sought are for a "sum certain or for a sum which can by computation be made certain”, subdivision (a) of that section makes it permissible for the clerk, without notice to the defendant (subd [f]) and upon proof by the affidavit of a party setting forth the facts constituting the claim, the default and the amount due, to enter judgment up to the amount demanded in the complaint. Otherwise, application to the court is required (CPLR 3215, subd [b]) and a defendant who has appeared is entitled to five days’ notice of the application (subd [f]), as well as a full opportunity to cross-examine witnesses, give testimony and offer proof in mitigation of damages (see McClelland v Climax Hosiery Mills, 252 NY 347; Default — Damages—Notice and Hearing, Ann., 15 ALR3d 586, 607, § 5).

The term "sum certain” in this context contemplates a situation in which, once liability has been established, there can be no dispute as to the amount due, as in actions on money judgments and negotiable instruments. Obviously, the clerk then functions in a purely ministerial capacity. (Cf. Ace Grain Co. v American Eagle Fire Ins. Co., 11 FRD 364, 365-366 [Weinfeld, J.], construing the analogous provisions of Fed Rules of Civ Pro, rule 55, subd [b] [US Code, tit 28, appendix].)

In the present case, however, the damages sought cannot be determined without extrinsic proof, for the amount of plaintiff’s damages is not readily ascertainable without consideration of the reasonableness of the time which plaintiff permitted to elapse before making the covering purchase (see Uniform Commercial Code, §§ 2-712, 1-204, subd [2]; cf. Commercial Nat. Bank v Zimmerman, 185 NY 210) and the correctness of the calculation of the commissions. It follows that the entry by the clerk was unauthorized and an inquest should therefore have been ordered (Hotel Syracuse v Brainard, 256 App Div 1055; Siegel, Practice Commentaries, McKinney’s Cons Laws of NY, Book 7B, C3215:2, p 862; cf. Davis v Sisti, 3 Misc 2d 132).

On remittal for that purpose, it is not to be assumed that defendant’s obligation to afford plaintiff the opportunity to pursue discovery terminated when the answer was stricken. Though, as a result of his default, the defendant has now forfeited his right to take the plaintiff’s deposition, it does not follow that plaintiff is to be handicapped in the proof of its damages by defendant’s prior defiance of orders, notices, or subpoenas calling for his production of records or the taking of his deposition (cf. Glens Falls Ins. Co. v Weiss, 6 Misc 2d 729 [Matthew M. Levy, J.]).

Thus, to anticipate the eventuality that the defendant may elect to proceed with his avowed intention to contest the damage issue by opposing proof, plaintiff, if it chooses to do so, may press its right to discovery in advance of the inquest, whether for direct use as evidence in proving its damages or for the procurement of information that may lead to such evidence.

True, in the past it has been held that ordinarily an examination cannot be had of a party whose default has left no issues to be tried. Such testimony was not regarded as "material and necessary” to the prosecution of the action (Kozuch v Bachmann, 244 App Div 250; Syracuse Mtge. Corp. v Kepler, 122 Misc 95; cf. Erdenbrecher v Erdenbrecher, 188 Misc 94 [Froessel, J.]; Hodderson v Charles, 124 NYS2d 467, authorizing an examination by treating the party as a witness with knowledge of special facts). Even if that rule retained its efficacy under more modern practice statutes (cf. Bearman v Bearman, 28 AD2d 673), it cannot be applied where a defendant may intend to testify at an inquest or appears to possess highly pertinent evidence relevant to damages (see Jacobs, Examinations Before Trial, p 213; Siegel, Practice Commentaries, McKinney’s Cons Laws of NY, Book 7B, C3105:l, p 345).

Moreover, if the defendant’s deposition or his response to subpoena is vital to plaintiff’s proof and the defendant holds to his prior course by refusing to obey orders or subpoenas, the plaintiffs rights should not have to hang on the compulsion to comply which may follow the possible exercise of the trial court’s powers of contempt against the defendant. Among other things* the defendant may then be precluded from offering any evidence at the inquest (CPLR 3126; cf. Brown v Hilton Hotels Corp., 25 AD2d 646; Burgin v Ryan, 238 App Div 122).

Beyond that, if the plaintiffs ability to prove his affirmative case with a fair degree of precision is seriously hampered by the defendant’s obstructiveness, the court, in order that a just result be achieved, is not without power, where necessary, to rely on lesser and more informal proofs. A defendant whose conduct has both caused injury to another and put obstacles in the path of the plaintiff’s recovery is hardly in a position to complain when, as a consequence, the damages cannot be established with exactitude (see Matter of Rothko, 43 NY2d 305, 323; Bigelow v RKO Radio Pictures, 327 US 251, 264-265; see, also, Randall-Smith v 43rd St. Estates Corp., 17 NY2d 99, 106, quoting Wakeman v Wheeler & Wilson Mfg. Co., 101 NY 205, 209).

Accordingly, the order of the Appellate Division should be modified by remitting the matter to the Supreme Court, New York County, for the purpose of conducting an assessment as to damages and for other proceedings consistent herewith, with costs to plaintiff to abide the event. And, pending the final disposition of this action, the judgment affected by this decision should continue to stand as security (cf. Treitel v Arnold Chait, Ltd., 20 AD2d 711).

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

Order modified and the case remitted to Supreme Court, New York County, for further proceedings in accordance with the opinion herein and, as so modified, affirmed, with costs to plaintiff to abide the event. Pending final disposition of the action, the judgment shall continue to stand as security.

      . An order dismissing an appeal is the functional equivalent of an affirmance for jurisdictional purposes (Cohen and Karger, Powers of the New York Court of Appeals, § 27, p 110). Contrary to plaintiffs protestations, which were necessarily rejected when we granted leave, we note that this appeal is not barred by CPLR 5511’s preclusion of appeals from default judgments (Cohen and Karger, Powers of the New York Court of Appeals, § 93, pp 401-403; 7 Weinstein-Korn-Miller, NY Civ Prac, par 5511.11; cf. James v Powell, 19 NY2d 249, 256, n 3).

      . If a verified complaint has been served, it qualifies as an affidavit attesting to the claim and the amount due (CPLR 3215, subd [e]; see, also, CPLR 105, subd [s]).

      . Since the complaint was unverified and no affidavit of facts underlying the claim was filed, the clerk should not have entered the judgment even if the case before us had been one for a "sum certain” (CPLR 3215, subds [a], [e]; Grant Co. v Payne, 64 Misc 2d 797, 799).


text:
    In the Matter of the New York State Department of Taxation and Finance, Respondent, v New York State Department of Law, Statewide Organized Crime Task Force, Appellant.
    Argued May 3, 1978;
    decided June 13, 1978

      POINTS OF COUNSEL

      Maxwell B. Spoont, Acting Deputy Attorney-General (James H. Sweeny of counsel), for appellant.
    I. The right of the Grand Jury to subpoena evidence is superior to a general secrecy provision. (Matter of Manning v Valente, 272 App Div 358, 297 NY 681; People v Stern, 3 NY2d 658; Branzburg v Hayes, 408 US 665; People v Rallo, 46 AD2d 518, 39 NY2d 217; United States v Nixon, 418 US 683.) II. The secrecy provisions of the Tax Law do not apply to Grand Jury proceedings and the court below erred in its statutory analysis in so holding. (Matter of Manufacturers Trust Co. v Browne, 269 App Div 108, 296 NY 549; Matter of People v Johnson & Co., 213 App Div 402; Matter of New York State Sales Tax Records, 382 F Supp 1205; Matter of Grand Jury Impaneled Jan. 21, 1975, 541 F2d 373; People v Stern, 3 NY2d 658; Matter of Grand Jury Subpoenas, 58 AD2d 1; Matter of Charles, 200 Misc 452, 279 App Div 791, 304 NY 776; People v Rodriguez, 13 Misc 2d 1004.)

      Arthur R. Rosen, Peter Crotty and Laurence E. Stevens for respondent.
    I. Grand Juries are subject to section 697 (subd [e]) of the Tax Law. (Branzburg v Hayes, 408 US 665; People v Johnson, 20 NY2d 220; Matter of Heisler v Hynes, 42 NY2d 250.) II. Section 697 (subd [e]) of the Tax Law permits tax return disclosure "in accordance with proper judicial prder”. When a violation of the Tax Law is not in issue, a Grand Jury subpoena does not constitute a "proper judicial order” nor can a court order sustaining such a subpoena constitute a "proper judicial order”. (Matter of People v Johnson & Co., 213 App Div 402; Matter of Manufacturers Trust Co. v Browne, 269 App Div 108, 296 NY 549; Matter of Fowlkes, 16 Misc 2d 1043; People v Wedelstaedt, 77 Misc 2d 918; Matter of New York Sales Tax Records, 382 F Supp 1205.) III. Section 697 (subd [e]) of the Tax Law permits tax return disclosure when "otherwise provided by law”. There is no such law applicable here. IV. Disclosure of tax return information in a nontax proceeding is contrary to the general public policy of the State of New York and of the United States, the Tax Law, the Internal Revenue Code and the Fifth Amendment to the United States Constitution.

      John Finnerty, B. Anthony Morosco and Joseph Aviv for New York State District Attorneys Association, amicus curiae.

    The subpoena in question was specifically authorized by statute and not prohibited by the secrecy provisions of the Tax Law. (Matter of Manufacturers Trust Co. v Browne, 269 App Div 108, 296 NY 549; Matter of People v Johnson & Co., 213 App Div 402.)
   OPINION OF THE COURT

Fuchsberg, J.

The question presented on this appeal is whether the nondisclosure provision of subdivision (e) of section 697 of the Tax Law requires the Department of Taxation and Finance to refuse to comply with a Grand Jury subpoena duces tecum for the production of an individual income tax return.

The subpoena was issued by the Statewide Organized Crime Task Force (OCTF). The department moved to quash. The County Court denied the motion. On appeal from its order, the Appellate Division reversed (58 AD2d 298). Because we have concluded that disclosure of the taxpayer’s individual tax return would accord with neither the language nor the policy of subdivision (e) of section 697 of the Tax Law, we believe the order of the Appellate Division should be affirmed.

Subdivision (e) of section 697 provides that "[ejxcept in accordance with proper judicial order or as otherwise provided by law, it shall be unlawful” for the department or any of its officers to divulge the information contained in any return filed with it, and that it "shall not be required to produce any of them or evidence of anything contained in them in any action or proceeding in any court”.

Narrowly circumscribed exceptions are specified in the statute. They include use of the return in proceedings concerning the collection of taxes, or in cases where "the reports, returns or facts shown thereby are directly involved”; in such event, the court may then order the production of portions germane to the issues in dispute. Additionally, the exceptions allow for transmission of certified copies of returns to taxpayers themselves and, when litigation over tax liability has been commenced or recommended, to the Attorney-General. Reciprocal exchange of information with other taxing authorities is also permitted (subd [f]). None of these pertains to the case before us.

The contours of this closely confined confidentiality are consistent with those governing returns for most other types of taxation in this State (see Tax Law, § 202 [corporation tax]; § 211, subd 8 [business corporation franchise tax]; § 437 [alcoholic beverages tax]; § 514 [highway use tax]; § 1146 [sales tax]; § 1467 [banking franchise tax]; § 1518 [insurance franchise tax]). These statutes, imposing virtually identical restraints on disclosure by the department or its employees of information contained in returns, have, not surprisingly, given rise to common problems of scope and interpretation (see Matter of Manufacturers Trust Co. v Browne, 269 App Div 108, affd 296 NY 549; Matter of People v Johnson & Co., 213 App Div 402; People v Wedelstaedt, 77 Misc 2d 918; Matter of Thaler v Murphy, 42 Misc 2d 1; Matter of Fowlkes, 16 Misc 2d 1043). Taken together, they constitute a veritable chorus of policy declarations designed by our Legislature to insulate tax return information from scrutiny in nontax related matters.

The unusually great store which the Legislature placed on the erection and maintenance of this wall of confidentiality is brought home by the nature of its prescription of penalties for any breach by the officers or employees of the department. It was not satisfied to rely on the usual administrative disciplinary devices. In this instance, it not only spelled out vocational punishments such as a fine, suspension or discharge, but included imprisonment for a year and prohibition on the holding of any other public office for five years (Tax Law, § 697, subd [e]).

The policy considerations underlying these secrecy provisions are not of recent origin, nor difficult to comprehend. Our deep concern for individual privacy and for protection from self incriminatory demands has long made us sensitive to the "substantial and difficult constitutional questions [posed by obligatory reports which] touch upon intimate areas of an individual’s personal affairs [and which] can reveal much about a person’s activities, associations, and beliefs” (California Bankers Assn. v Shultz, 416 US 21, 78-79 [Powell, J., concurring]; Marchetti v United States, 390 US 39; Hunter v City of New York, 58 AD2d 136, 140-142, affd 44 NY2d 708; see, generally, 8 Wigmore, Evidence [McNaughton rev], § 2377 [f]; Required Report Privileges, 56 Nw U L Rev 283).

Specifically, both in New York and elsewhere, it has come to be recognized that tax reports, in which private parties may reveal to the government many aspects of their personal affairs, warrant such protection (see Boske v Comingore, 177 US 459, 469-470; Matter of People v Johnson & Co., 213 App Div 402, supra; Wales v Tax Comm., 100 Ariz 181; Sav-On Drugs v Superior Ct., 15 Cal 3d 1; Leave v Boston Elevated R. Co., 306 Mass 391).

It is also clear that the interest protected by restrictions on disclosure is not purely that of an individual in his own privacy, significant as that is. By preventing the use of compulsorily self-reported tax information in ways that could harm the reporting taxpayer, the State serves its own administrative ends as well (cf. Matter of Bakers Mut. Ins. Co. [Department of Health], 301 NY 21).

Full compliance with its laws on such information-gathering is particularly vital to tax collection. Without gainsaying the fact that penal sanctions against tax evasion constitute the ultimate compulsion for observance of these laws (see Garner v United States, 424 US 648, 652-653; United States v King, 73 FRD 103, 108), the degree to which self-reporting and partial self-auditing by the taxpayer is relied on by our revenue system is not to be underestimated. Were it not for the volitional acts of countless citizens in providing complete statements of their financial affairs, the manpower and resources which would have to be expended to enforce our tax laws would increase enormously. "[Bjasically the Government depends upon the good faith and integrity of each potential taxpayer to disclose honestly all information relevant to tax liability” (United States v Bisceglia, 420 US 141, 145).

Clearly, the Legislature, in whom resides the power to levy taxes under our scheme of government (NY Const, art III, § 1; Matter of United States Steel Corp. v Gerosa, 7 NY2d 454, 459), has reached a calculated conclusion that, if the information provided by taxpayers is held in the strictest confidence, the temptation to withhold information and, consequently, tax payments, will be warded off. Thus, it is recognized that a major "purpose of * * * statutory provisions prohibiting disclosure is to facilitate tax enforcement by encouraging a taxpayer to make full and truthful declarations in his return, without fear that these statements will be revealed or used against him for other purposes” (Webb v Standard Oil Co., 49 Cal 2d 509, 513).

Significantly, the exceptions contained within the statute are integrally related to this dominant purpose. By allowing the limited use of returns in investigations and proceedings dealing with the collection of taxes themselves, or in cases in which the returns themselves are at issue, the statute serves to insure swift enforcement of revenue laws and to prevent other irregularities in the processing of tax collections. So too does the provision allowing for the reciprocal sharing of information with other taxing jurisdictions. And neither the State’s interest in obtaining a full report nor the taxpayer’s in his privacy is diminished by affording the right to receive a certified copy of his or her own return. But, notedly, none of these exceptions allows disclosure of tax information for other governmental purposes than those related to the marshaling of revenues. It is therefore inescapable that the bar on its use "in any action or proceeding in any court” must include nontax criminal proceedings.

To be sure, our Legislature has enacted other statutes which allow intrusion into the protected domain of tax return information. For example subdivision 8 of section 663 of the Education Law, which deals with the monitoring of data on applications made by students seeking financial aid, requires the State Tax Commission in certain situations to compare information submitted for that purpose with that appearing on tax returns and to indicate to the education authorities any discrepancy that is thus made to appear. Similarly, section 49 of the Executive Law explicitly provides that section 697 of the Tax Law shall not be construed to prevent the welfare inspector general, who is charged with investigation of the efficiency and probity with which the allocation of funds for those in need of public assistance is administered (Executive Law, § 48), from obtaining "the name, address, social security number, employment history and number of dependents claimed” by recipients suspected of abusing the system. However, it is interesting that it required the adoption of these statutory sections, which consciously and articulately expressed a legislative determination that these exceptional public interests permit deviation from the policies embodied in the secrecy provisions of the Tax Law, to allow even the limited disclosure so permitted. Moreover, since these relate to eligibility for aid voluntarily sought from the State and no disclosure is required unless the application is pursued, disclosure may be thought to have a voluntary character (cf. Matter of Strycker’s Bay Apts. v Walsh, 67 Misc 2d 134).

Furthermore, we can find no comparable legislative decision to ease the restrictions in favor of the OCTF. To fill this vacuum, respondent places heavy reliance on subdivision 3 of section 70-a of the Executive Law which directs the Department of Taxation and Finance, as well as every other State agency, to afford the Deputy Attorney-General in charge of the Task Force "cooperation and assistance in the performance of his duties”. But such a generalized authorization to "cooperate”, which is commonplace in the statutory descriptions of the powers granted public State agencies (see, e.g., ECL 3-0301, subd 2, pars d, i; Vehicle and Traffic Law, § 210, subds 4, 6; L 1951, ch 784, § 21, subd 3, par q [as amd] [Civil Defense Comm.]; L 1974, ch 576, § 13 [covering State Division of Housing and Community Renewal, "any” rent guidelines board, and New York City Conciliation and Appeals Bd.]) hardly can serve to lift the very clear strictures placed on the Department of Taxation by subdivision (e) of section 697. We find indorsement for that view in the memoranda accompanying the enactment of section 70-a of the Executive Law which speak of co-operation in terms of personnel assistance and are completely silent on the confidentiality issue (NY Legis Ann, 1970, pp 36, 535-536).

Nor can the subpoena be justified in this case by reference to subdivision (e) of section 697’s initial exception for disclosures "in accordance with proper judicial order”. Absent possible circumstances so extraordinary that they plumb the very depths of judicial and Grand Jury power, a "proper order” is one which either effectuates the enumerated exceptions within the statute or which arises out of a case in which the report is itself at issue, as in a forgery or perjury prosecution.

It is true, as the Task Force urges, that a Grand Jury has very broad investigative powers (see People v Stern, 3 NY2d 658; Matter of Manning v Valente, 272 App Div 358, affd 297 NY 681; cf. Matter of Heisler v Hynes, 42 NY2d 250; Matter of Sussman v New York State Organized Crime Task Force, 39 NY2d 227). These powers must, however, be exercised in accordance with the procedural and evidentiary rules laid down in the Criminal Procedure Law and other statutes, none of which sanctions a general remission of the Tax Law’s call for secrecy merely to accommodate a Grand Jury subpoena in a case where there is a total absence of any showing or intimation that the investigation bears some relationship to tax matters (see CPL 190.30, 190.40, 60.10, 610.10).

Whether or not there may be Grand Jury nontax investigations in which the extraordinary circumstances to which we have so hypothetically and cautiously referred, and in which great public urgency exists and alternative means to secure the information are totally lacking, it is clear beyond peradventure that this is not such a case.

The order of the Appellate Division should, therefore, be affirmed.

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

Order affirmed, without costs.

      . The OCTF was created by section 70-a of the Executive Law. The nature of the investigation it was conducting in this case does not appear in the record. There has, in any event, been no allegation that it dealt with a violation of the Tax Law.

      . The enactment of article 16 of the Income Tax Law was by chapter 627 of the Laws of 1919. Section 384 of that article was the secrecy provision of the Income Tax Law. The statutory language here at issue is virtually identical to the original 1919 enactment.