text:
    In the Matter of Thomas Chaipis, Appellant, v State Liquor Authority, Respondent.
    Submitted February 7, 1978;
    decided March 28, 1978

      POINTS OF COUNSEL

      Michael Linn for appellant.
    I. Respondent’s determination of cancellation, recall and nonrenewal should be vacated and set aside as not based on substantial evidence. (Matter of Gitlin v Hostetter, 32 AD2d 1012, 27 NY2d 934; Matter of Kelly v Murphy, 20 NY2d 205; Matter of Toyos v Bruckman, 266 App Div 28; Matter of Jackson v Rohan, 1 AD2d 89.) II. Respondent’s determination canceling and recalling petitioner’s liquor licence was a breach of his original plea bargain and should be annulled as offensive to public policy and violative of petitioner’s constitutional rights. (Santobello v New York, 404 US 257; Geisser v United States, 513 F2d 862.) III. The penalty imposed by the authority was wholly disproportionate to the charges preferred and the offense committed. (Matter of Victorian House v New York State Liq. Auth., 24 AD2d 484; Matter of Stolz v Board of Regents of Univ. of State of N. Y, 4 AD2d 361; Matter of Mitthauer v Patterson, 8 NY2d 37; Matter of Pitt v Town Bd. of Town of Ramapo, 10 AD2d 958; Matter of Elks Inn Corp. v New York State Liq.

      Auth., 38 AD2d 796; Castellano v Ring, 37 AD2d 1049; Matter of Papoutsis v State Liq. Auth., 32 AD2d 284; Matter of Becker v New York State Liq. Auth., 28 AD2d 980; Matter of Ronall Rest, v New York State Liq. Auth., 45 AD2d 682.) IV. The Liquor Authority’s determination in recalling petitioner’s liquor license and refusing to renew said license was arbitrary and capricious and an abuse of discretion. (Matter of Fink v Cole, 1 NY2d 48; Matter of Wager v State Liq. Auth., 4 NY2d 465; Matter of Papoutsis v State Liq. Auth., 32 AD2d 284; Matter of Ronall Rest, v New York State Liq. Auth., 45 AD2d 682.)

      Joseph S. Ryan and Warren B. Pesetsky for respondent.
    I. The record discloses substantial, competent evidence to sustain the authority’s determination that petitioner’s conduct leading to his arrest and indictment on charges of promoting prostitution, second degree (a class "D” felony), and promoting prostitution, third degree (a class "A” misdemeanor), and his subsequent conviction, after a plea of "guilty” to permitting prostitution (a class "B” misdemeanor), was of such an improper nature as to warrant cancellation of his restaurant liquor license in accordance with section 126 (subd 1) of the Alcoholic Beverage Control Law and rule 36 (subds 7, 14) of the Rules and Regulations of the State Liquor Authority (9 NYCRR 53.1 [g], [n]). There was also substantial evidence to sustain the authority’s determination that petitioner, in violation of section 106 (subd 6) of the Alcoholic Beverage Control Law, had suffered or permitted the licensed premises to become disorderly by promoting and permitting prostitution therein. (Matter of Miller v Kling, 291 NY 65; Matter of Avon Bar & Grill v O’Connell, 301 NY 150; Matter of Kopec v Buffalo Brake Beam-Acme Steel & Malleable Iron Works, 304 NY 65; Matter of Metronome Rest. Corp. v New York State Liq. Auth., 12 AD2d 449; Matter of El Caribe Rest, v New York State Liq. Auth., 19 AD2d 786; Matter of Palm Lounge v Epstein, 15 AD2d 944, 11 NY2d 645; Castellano v Ring, 37 AD2d 1049; Matter of Elks Inn Corp. v New York State Liq. Auth., 38 AD2d 796; Two Friends Supermarket v Sarafan, 41 AD2d 605; Labor Bd. v Nevada Copper Corp., 316 US 105.) II. The measure of penalty imposed, i.e., cancellation of petitioner’s restaurant liquor license and the forfeiture of his bond in the sum of $1,000 was, in the circumstances, a reasonable exercise of the discretion vested in the authority by law, and was neither unduly harsh nor excessive, and should not be disturbed by this court. (Matter of Cota v New York State Liq. Auth., 282 App Div 931, 306 NY 761; Matter of Vedes Rest, v New York State Liq. Auth., 8 AD2d 278; Matter of Jonad Rest. Corp. v State Liq. Auth., 23 AD2d 629; Matter of Caffe Da Vinci v State Liq. Auth., 27 AD2d 800; Matter of South Shore Yacht Club v State Liq. Auth., 34 AD2d 794; Santobello v New York, 404 US 257; Palermo v Oswald, 412 F Supp 935, affd sub nom. Palermo v Warden, Green Haven State Prison, 545 F2d 286; Matter of Gambino v State Liq. Auth., 4 AD2d 37, 4 NY2d 997; Matter of Stolz v Board of Regents of Univ. of State of N. Y., 4 AD2d 361.) III. The State Liquor Authority, in refusing to renew petitioner’s restaurant liquor license for 1976-1977, was exercising its licensing function under the Alcoholic Beverage Control Law. Upon the authority has been placed the obligation of determining, in its discretion, whether or not an applicant should be licensed. The determination to deny renewal of petitioner’s license, upon the record presented, was a reasonable exercise of that discretion. It was neither arbitrary nor unreasonable; it was lawful and not in violation of any right of petitioner, and therefore the disapproval of the license renewal should be affirmed. (People ex rel. Lodes v Department of Health of City of N. Y, 189 NY 187; Matter of Fink v Cole, 1 NY2d 48; Matter of Katz’s Delicatessen v O’Connell, 302 NY 286; Metropolitan Bd. of Excise v Barry, 34 NY 657; Matter of Wager v State Liq. Auth., 4 NY2d 465; Matter of Restaurants & Patisseries Longchamps v O’Connell, 271 App Div 684, 296 NY 888; Matter of King v O’Connell, 280 App Div 852; Matter of Le Club, Inc. v State Liq. Auth., 20 AD2d 110.)
   OPINION OF THE COURT

Chief Judge Breitel.

In this CPLR article 78 proceeding petitioner Chaipis, owner of a restaurant and bar, appeals from the Appellate Division’s unanimous confirmation of a determination by respondent State Liquor Authority canceling his liquor license, imposing a forfeiture of his bond, and disapproving renewal of the license.

The narrow issue is whether the State Liquor Authority may cancel a liquor license, based on the substantial evidence of licensee’s bad character, without evidently giving serious weight to critical services rendered by the licensee in consideration of representations of the prosecutor, later confirmed in writing, concerning efforts to preserve the license. In broader terms, the issue involves the effect of prosecutorial representations made to a criminal defendant when fulfillment of those representations is beyond the power of the prosecutor and can be effected only by another arm of the State.

The judgment of the Appellate Division should be reversed, and the matter remitted to the State Liquor Authority for reconsideration. A prosecutor’s representation, even when qualified, impliedly or expressly, by the limited authority he possesses, to a criminal defendant or potential criminal defendant should not be lightly disregarded. While the representations may not bind other State agencies, they should not be ignored either. This is especially so when the reasonable expectations of the person addressed, who has made substantial contributions in return, would be frustrated. Competing policies are involved. The harm of fulfilling a representation, not illegal, but made by a prosecutor with limited authority, must be weighed against loss of public confidence in the State and its integrity if representations made by one arm of the State are treated lightly by another.

Petitioner Chaipis, having held since 1962 a liquor license for Magoo’s Cafe, was indicted and arrested in late 1973, and charged with the felony of promoting prostitution. On May 3, 1974, petitioner, pursuant to negotiation, pleaded guilty to one count of permitting prostitution, a misdemeanor. He was sentenced to a discharge conditioned upon his continued cooperation with the police and the special State prosecutor in pending investigations of widespread official corruption in the police department.

There is some dispute over the extent of the representations made to Chaipis at the time of the plea. Even accepting the version in the affidavit of the Manhattan bureau chief in the office of the special prosecutor, however, defendant was promised "that his cooperation would be brought to the attention of the New York State Liquor Authority with a view towards preserving his liquor license.” Defendant was also promised, and subsequently received from Supreme Court, a permanent certificate of relief from civil disabilities.

Chaipis’ co-operation was considerable. He testified before a "special” Grand Jury and before police department hearing boards, and his testimony led to enforced retirement of high ranking police officers. Such assistance in weeding out police corruption is, of course, extremely valuable to the public, but not without grave danger to the witness.

On July 2, 1975, the State Liquor Authority, relying principally on petitioner’s indictment and conviction, instituted proceedings for revocation of his liquor license (see Alcoholic Beverage Control Law, §§ 118, 119). The charges were based on his prior activities in promoting prostitution in connection with his operation of the licensed premises. After a revocation hearing, the hearing officer sustained the charges. Then, effective August 12, 1976, despite letters from both the office of the special prosecutor and the police department in support of Chaipis reciting his significant contributions, the State Liquor Authority canceled the restaurant’s liquor license, imposed a forfeiture of petitioner’s $1,000 bond, and determined that the license for 1976-1977 should not be renewed (see Alcoholic Beverage Control Law, §§ 112, 118, 119). On August 31, 1976, the authority granted reconsideration, but adhered to its original determination. At no point did the authority indicate, except perfunctorily, the consideration it had given, if any, to petitioner’s efforts in the corruption investigation or to the written representations made by the special prosecutor.

Petitioner then brought this article 78 proceeding, but the Appellate Division confirmed the authority’s determination, and petitioner now appeals to this court. Cancellation of his license has been stayed throughout the court proceedings.

This case cannot be resolved, as the authority would have it, by the usual analysis in reviewing administrative determinations. It may be true that the authority’s license revocation rested on substantial evidence in the record of Chaipis’ prior misconduct, and that therefore the refusal to renew the license would not be arbitrary (cf. Matter of Avon Bar & Grill v O’Connell, 301 NY 150, 153; Matter of 125 Bar Corp. v State Liq. Auth., 24 NY2d 174, 178). That does not, however, comprise the whole case and therefore dictate affirmance. Instead, the effect of Chaipis’ significant efforts in rooting out police corruption and the representations made by the prosecutor must be considered.

It is a truism that a guilty plea, which waives even many constitutional rights, must be taken only when the defendant has knowledge and understanding of the consequences of the plea (see, e.g., People v Seaton, 19 NY2d 404, 406). If the plea be coerced, or if defendant’s knowledge of its consequences be not explored sufficiently, the plea may be subject to vacation on proper and timely motion (see People v Gina M. M., 40 NY2d 595, 596-597).

A corollary of the prohibition on coerced guilty pleas is the obligation of prosecutors not to retract or falter on promises made to a criminal defendant in return for a plea of guilty (Santobello v New York, 404 US 257, 260-262). Moreover, within the criminal law enforcement system generally a representation made by one agent or agency is binding on another regardless of knowledge of the representation when made (id.; People v McLaurin, 38 NY2d 123, 126). Knowledge and understanding of the consequences of defendant’s plea is impossible if the prosecutor is free to change the consequences at will after the plea is entered. Therefore, if a prosecutor makes a representation within the scope of his power, and defendant acts in reliance upon the representation, defendant may be entitled to have the representation enforced, at least where merely vacating the plea would result in significant prejudice to defendant (see People v Selikoff, 35 NY2d 227, 239, cert den 419 US 1122).

Different, to some extent, is the prosecutor’s representation which extends beyond the power of his office. Enforcement of that type of representation would be unthinkable in some situations, as, for example, a promise by a prosecutor that, in return for valuable testimony about other public officials, a Judge would not be removed from office for bribe receiving. Even in less compelling situations, however, public policy would not permit excesses by a prosecutor to divest an independent body of its lawful discretion.

The rights of the criminal defendant, however, may not be sacrificed to the conflict between two arms of the State (cf. Santobello v New York, 404 US 257, 262, supra). The office of the special prosecutor and the State Liquor Authority are both but agents of the same State of New York, having a common public policy to enforce. Justice does not allow one agent to ignore promises made by the other, whatever the breadth of discretion involved.

Instead, an earlier promise made by a prosecutor, an agent of the State, must be treated as a highly significant factor when the State agency with the power to enforce the promise is called upon to do so. The mere fact that an agent of the State made a representation to a criminal defendant and the defendant then pleaded guilty, assertedly in reliance on the representation, is entitled to weight. Even more important, emphatically, is an evaluation of the services performed by the promisee in return for the promise. Where those services have been significant, or have involved considerable risk or sacrifice on the defendant’s part, failure to enforce the promise might do substantial injustice, not only to the defendant but to the public which is entitled to have the benefit of future co-operation, and is to be avoided. Not to be ignored, of course, is the primary duty of the State agency to fulfill its statutory responsibilities when confronted with the prosecutorial promise or representation, but that duty must not be construed so narrowly as to exclude offsetting circumstances relating to the private and public justice of the matter.

Of course, the competing policies might often be resolved by permitting defendant to vacate the plea entered in reliance upon a promise made by a prosecutor without power to enforce it (see People v Selikoff, 35 NY2d 227, 241, supra). But in many instances, as in this case, merely vacating the plea would not make defendant whole again. Permitting defendant to proceed to trial is a satisfactory remedy when, by pleading guilty, defendant has given up nothing but his right to trial. But where the defendant not only waives his right to trial, but performs other services for the prosecutor as well, services that involve considerable risk or sacrifice, merely undoing the plea is small compensation, if any. In such cases, the representation made to a criminal defendant is entitled, at least, to considerable weight before the State agency empowered to fulfill it.

Not sanctioned, of course, is enforcement of promises made not only in excess of prosecutorial power, but in violation of the law (cf. People v Selikoff, 35 NY2d 227, 238, supra). When no agent of the State could legally perform the promise made to defendant, the promise may not be enforced or given consideration by other State agencies.

The representation made to Chaipis was certainly not illegal, and, on a surface analysis of the conceded content of the prosecutor’s representation, not beyond the power of the prosecutor to make. Chaipis was promised, according to the prosecutor, "that his cooperation would be brought to the attention of the New York State Liquor Authority with a view towards preserving his liquor license.” Admittedly, the Liquor Authority was advised of Chaipis’ co-operation. But, even on the prosecutor’s own affidavit, Chaipis could reasonably have believed that the special prosecutor’s recommendation carried considerable weight before the Liquor Authority. Such a belief, reasonable as it would have been, does not, apparently, accurately portray the Liquor Authority’s attitude toward prosecutorial recommendations. Thus, however indirectly, and even innocently on the part of the prosecutor, Chaipis was misled by the prosecutor’s promise into believing his liquor license would be preserved.

In reliance on this belief, Chaipis assisted an investigation into one of the most pernicious types of crime, official corruption. While his own criminal activity is not to be minimized, his repeated testimony about corruption in government, fraught, as such testimony often is, with danger of retaliation by the corrupt targets, far exceeds the importance of his own execrable conduct. Rooting out official corruption is so important that until 1962 the crime of bribery was covered in the State Constitution and not left to statute alone (NY Const of 1894, art XIII, § 2, repealed Nov. 6, 1962). In short, Chaipis, like so many other lesser criminals before him, selfishly but nevertheless significantly, served the public good, and the representations made to him in eliciting his co-operation are entitled to weighty, albeit not conclusive, consideration before regulatory agencies who also serve the public weal.

Only the authority, of course, unless it acts arbitrarily, has the power to cancel or renew a liquor license. The discretion vested in the authority may not be arrogated by a prosecutor or by this court. But the authority may not, by self-imposed blinders, ignore its responsibility as an arm of the State, but only one among many. If it were so probable, almost to inevitability, that Chaipis, under any circumstances would, as a licensee, continue to be a source of harm to the public, denial of a license to him would be mandated. Moreover, even if the hapless Chaipis were to retain his license, his further right to retain it would be forfeit if he should misconduct himself in the future. The matter should, therefore, be remitted to the authority for reconsideration and a statement of reasons for whatever determination it makes in light of the principles expressed in this opinion.

The ultimate issue in this case is broad. As the State government becomes increasingly large, complex, and perhaps bureaucratic, its agencies may not proliferate a morass of conflicting authority and responsibility. Absent stated countervailing considerations, a promise or representation by one agent of the State should be fulfilled by other agents of the State, as it undoubtedly would have been in simpler days.

Accordingly, the judgment of the Appellate Division should be reversed, with costs, and the case remitted to Supreme Court, New York County, with directions to remand to the State Liquor Authority for reconsideration.

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

Judgment reversed, with costs, and the matter remitted to Supreme Court, New York County, with directions to remand to the State Liquor Authority for reconsideration in accordance with the opinion herein.


source: Caselaw Access Project

author: Jasen, J.

license: Public Domain

text:
    In the Matter of the Arbitration between Niagara Wheat-field Administrators Association, Appellant, and Niagara Wheatfield Central School District, Respondent.
    Argued February 13, 1978;
    decided March 28, 1978

      POINTS OF COUNSEL

      Charles D. Tuppen, Jr., for appellant.
    I. The award of the arbitrator should not have been vacated. (Matter of Cohoes City School Dist. v Cohoes Teachers Assn., 50 AD2d 24; Matter of Maye [Bluestein], 40 NY2d 113; Matter of Torano [MVAIC], 19 AD2d 356, 15 NY2d 882; Matter of Ciba Corp. v Ryan Constr. Co., 49 AD2d 859; Matter of Praetorian Realty Corp. [Presidential Towers Residence], 49 AD2d 816.) II. Questions of fact or law not presented to the lower court may not be raised for the first time on appeal. (Holherg v Westchester Racing Assn., 184 Misc 581; Matter of Flanagan v Nyquist, 38 AD2d 645; Smith v Stewart, 45 AD2d 853; Archer v City of Mount Vernon, 171 NY 639; Persky v Bank of Amer. Nat. Assn., 261 NY 212; Hirschberg v Bertal Textile Co., 238 App Div 338.) III. The award of the arbitrator did not violate the public policy of New York State even if such argument may be raised for the first time on appeal. (Matter of Teachers Assn., Cent. High School Dist. No. 3 [Board of Educ.], 34 AD2d 351; Matter of Union Free School Dist. No. 2 of Town of Cheektowaga v Nyquist, 38 NY2d 137; Matter of Board of Educ. v Yonkers Federation of Teachers, 40 NY2d 268; Matter of Weinrott [Carp], 32 NY2d 190.) IV. The public policy of the State of New York is to encourage resolution of labor disputes involving public employers and public employee organizations by arbitration rather than through the courts. (Board of Educ. v Associated Teachers of Huntington, 30 NY2d 122.)

      Richard C. Doherty and Clarence R. Runals for respondent.
    I. The award requiring respondent to pay to members of the association compensation at rates prescribed, and to give to them costly fringe benefits provided in an expired contract "until a new contract is agreed to by the parties” binds the school board for an indefinite and indeterminate period of time, terminable only by consent of the union, deprives the board of equal bargaining power, precludes the board from the exercise of rights granted to and duties mandated by the Legislature and contravenes public policy. (Matter of Union Free School Dist. No. 2 of Town of Cheektowaga v Nyquist, 38 NY2d 137; Sun Print. & Pub. Assn, v Mayor of City of N. Y, 152 NY 257; Board of Educ. v Yonkers Federation of Teachers,
      40 NY2d 268; Matter of Burke v Bowen, 40 NY2d 264.) II. Appellant’s contention that on appeal a court may not vacate an award on the ground it contravenes public policy unless that issue shall have been raised in the court below is untenable. (O'Mara v Dentinger, 271 App Div 22; Dyer v Broadway Cent. Bank, 225 App Div 366, 252 NY 430; Equity Serv. Corp. v Agull, 250 App Div 96.) III. It is respectfully submitted the order of the court below should be modified by deletion of the remittitur.
   OPINION OF THE COURT

Jasen, J.

We are asked to decide whether public policy is offended by a term of a public employees’ contract continuing, after expiration of the contract and during the negotiation of a subsequent contract, a provision that ties school administrators’ salaries to teachers’ salaries. We hold that under the facts here presented continuation of the tie-in provision does not violate public policy.

On July 1, 1973, Niagara Wheatfield Central School District (school board) and Niagara Wheatfield Administrators Association (association) signed a collective bargaining agreement effective until June 30, 1975. A provision of this agreement tied salaries of association members to those received by teachers according to a mathematical formula; changes in pay rates for teachers would therefore alter the salaries of administrators. (Art XIX.) Another term of the agreement, paragraph D of article II, provided: "The current negotiated agreement and established fringe benefits between the Board of Education and the NWAA [association] shall remain in effect until modified or changed by mutual agreement in subsequent negotiations.” As the expiration date of the contract approached, the parties negotiated unsuccessfully to reach a new agreement. In the meantime, the teachers negotiated a new contract with the school board which provided for an increase in their compensation. The administrators requested that their salaries be adjusted to reflect the increases granted the teachers in accordance with the tie-in provision of the contract as prescribed in paragraph D of article II, but the school board refused upon the ground that the association’s contract had expired. The association responded by pursuing a grievance procedure established in the agreement, the final step of which was arbitration. No objection was raised by the school board to this procedure. After a hearing, the arbitrator issued an award stating: "The district [school board] violated the contract when it failed to pay the administrators on July 1, 1975 according to article XIX. The district [school board] is ordered to reimburse each administrator according to article XIX from July 1, 1975 until a new contract is agreed to by the parties.”

Special Term confirmed the arbitration award. On appeal to the Appellate Division, the school board, for the first time, argued that continuation of the tie-in provision, after the expiration of the agreement, violated public policy by emasculating the school board’s ability to negotiate a new contract effectively. The Appellate Division unanimously reversed and remitted the matter to the arbitrator for a new award. That court concluded that the "continuation” provision of paragraph D of article II was void as against public policy and accordingly held that the award based thereon, which had the effect of extending the 1973-1975 contract provision with respect to administrators’ salaries until such time as a new contract should be agreed upon, was also void as against public policy.

The threshold question raised by the association is whether the school board may raise, for the first time on appeal to the Appellate Division, the issue of unenforceability of the contract upon the ground that it contravenes public policy. We believe that it can. Where a contract provision is arguably void as against public policy, that issue may be raised for the first time at the Appellate Division by a party, or by the court on its own motion. (O’Mara v Dentinger, 271 App Div 22, 32-33.)

Resolution of the public policy issue presented in this case requires an examination of the public employment collective bargaining process. Public employers are clothed with broad powers to recognize, negotiate with and enter into contracts with employee organizations with respect to terms and conditions of employment. (Syracuse Teachers Assn. v Board of Educ., 35 NY2d 743, 744; Board of Educ. v Associated Teachers of Huntington, 30 NY2d 122, 130; Civil Service Law, § 204, subd 2.) Where such contracts spring into controversy, the parties may provide for arbitration as an expeditious means of resolving the conflict. (Board of Educ. v Bellmore-Merrick United Secondary Teachers, 39 NY2d 167.) Once such a resolution is reached by the arbitrator, the courts generally have no power to consider or pass upon the merits of the dispute. (CPLR 7501.) Were judicial intervention permitted, the very purpose of arbitration, to finally resolve conflicts between consenting parties, would be thwarted.

Nevertheless, the freedom of a public employer to contract with an employee organization, although broad, is not wholly unrestrained. Any provision of a collective bargaining agreement which contravenes public policy, statute or decisional law may not stand (Matter of Acting Superintendent of Schools of Liverpool Cent. School Dist. [United Liverpool Faculty Assn.], 42 NY2d 509; Matter of Union Free School Dist. No. 2 of Town of Cheektowaga v Nyquist, 38 NY2d 137, 143; Matter of Susquehanna Val. Cent. School Dist. at Conklin [Susquehanna Val. Teachers’ Assn.], 37 NY2d 614, 616-618; Matter of Burke v Bowen, 40 NY2d 264, 267), and an arbitration award effectuating such a provision is vulnerable to attack (Matter of Board of Educ. v Yonkers Federation of Teachers, 40 NY2d 268, 274).

The restraints imposed by public policy on the scope of the public employment collective bargaining process stem from the need "to protect the public by assuring, at all times, the orderly and uninterrupted operations and functions of government.” (Civil Service Law, § 200.) A public employer may not, through a collective bargaining agreement, jeopardize its effectiveness by relinquishing control of essential facets of its operation. In some cases a specific statute will proscribe such an abrogation of authority (Matter of Union Free School Dist. of Cheektowaga v Nyquist, 38 NY2d 137, 143, supra), while other times public policy will serve this salutary function (Matter of New York City School Bds. Assn. v Board of Educ., 39 NY2d 111, 121; see, generally, Koretz and Rabin, Labor Relations Law, 28 Syracuse L Rev 75, 91-106; McHugh, New York’s Experiment in Public Employee Relations: The Public Employee’s Fair Employment Act, 32 Albany L Rev 58, 86-89).

In the case before us, we must first observe that the tie-in provision alone is not offensive to public policy. In fact, a tie-in provision similar to that here presented was statutorily required until 1971. (Education Law, § 3103, repealed 1971.)

Neither can it be said at this time that the continuation of the tie-in provision during the period of contract negotiation contravenes public policy. Although the bargaining position of the association is thereby bolstered, the school board’s ability to negotiate effectively has not been so encumbered that it has, in essence, lost control over this important facet of its operation. While the agreement guaranteed salary increments to association members when teachers’ salaries were increased, nothing in the agreement assured that teachers’ salaries would be increased substantially or even at all during the period of negotiation between the school board and the association. That the school board voluntarily agreed to raise teachers’ salaries during the period of negotiation with the association, thereby raising association members’ salaries, hardly demonstrates that the school board has lost control over its negotiations with the association. Moreover, there is no evidence that enforcement of the continuation provision would imperil the school board with impending financial crisis. (Cf. Matter of Board of Coop. Educational Servs. of Rockland County v New York State Public Employment Relations Bd., 41 NY2d 753, 757-758.)

It is critical to note that the tie-in provision was only to "remain in effect until modified or changed by mutual agreement in subsequent negotiations.” (Art II, par D.) Surely it was the expectation of the parties that the negotiations span a period of relatively short duration. The longer the negotiations linger, the greater is the indication that the school board has lost its ability to bargain effectively. Such an eventuality might well be seen as a violation of the "public policy of the state * * * to promote harmonious and cooperative relationships between government and its employees” (Civil Service Law, § 200; cf. Matter of Board of Educ. v Yonkers Federation of Teachers, 40 NY2d 268, supra). A protracted course of negotiation might also suggest a breach of the duty to negotiate in good faith, for the association, enjoying salary increments flowing from the tie-in provision, might impermissibly cease conscientious pursuit of an equitable agreement with the school board. In the present case, although the parties have failed since the expiration of the contract to agree on a new contract, we cannot say upon the record before us that either public policy or the duty to negotiate in good faith has been violated.

Accordingly, the order of the Appellate Division should be reversed, with costs, and the judgment of Supreme Court, Niagara County, reinstated.

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

Order reversed, etc.


author: Jones, J.

text:
    The People of the State of New York, Respondent, v Sylvester Jones, Appellant.
    Argued February 10, 1978;
    decided March 28, 1978

      POINTS OF COUNSEL

      William E. Hellerstein for appellant.
    I. The District Attorney’s deliberate concealment during plea negotiations that complainant had died rendered the court’s refusal to vacate appellant’s guilty plea a denial of due process under both State and Federal Constitutions. (Brady v United States, 397 US 742; Von Moltke v Gillies, 332 US 708; Giglio v United States, 405 US 150; People v Zimmerman, 10 NY2d 430; United States v Battle, 447 F2d 950; Correale v United States, 479 F2d 944; Santobello v New York, 404 US 257; McMann v Richardson, 397 US 759; Parker v North Carolina, 397 US 790.)

      Mario Merola, District Attorney (Alan Seth Adolph and Alan D. Marrus of counsel), for respondent.
    I. Defendant is not entitled to vacatur of his guilty plea because the People did not previously disclose the unavailability of complainant to testify. (Mooney v Holohan, 294 US 103; Pyle v Kansas, 317 US 213; Napue v Illinois, 360 US 264; Miller v Pate, 386 US 1; Giglio v United States, 405 US 150; People v Savvides, 1 NY2d 554; People v Zimmerman, 10 NY2d 430; People v Robinson, 12 NY2d 355; People v Fein, 24 AD2d 32, 386 US 978; United States v Agurs, 427 US 97.)
   OPINION OF THE COURT

Jones, J.

We hold that defendant was not denied due process when the District Attorney’s office did not disclose during plea negotiations that it had received information that the complaining witness had died.

On January 5, 1975 as he was entering his car, Juan Rodriguez was approached at gunpoint by three persons including defendant who forced their way into the vehicle, drove him a distance and stole his wallet before releasing him and driving off. Following his arrest defendant was indicted for robbery in the first degree, robbery in the second degree, grand larceny in the third degree and criminal possession of a weapon in the fourth degree and entered pleas of not guilty. The case appeared on the calendar a number of times during 1975 and was adjourned on each occasion for various reasons, among them the inability of the People to locate the complaining witness, Rodriguez. On January 15, 1976 investigators for the defense located the witness, and shortly thereafter defense counsel was informed that the District Attorney’s office had also found and conferred with him. On February 3, 1976 the prosecution announced the case ready for trial.

Plea negotiations had been conducted before the complaining witness had been located, were continued after the case had been marked ready, and culminated on April 26, 1976 when defendant withdrew his prior plea of not guilty and pleaded guilty to robbery in the third degree in full satisfaction of the indictment. After defendant admitted his guilt and established a factual basis for the plea, the plea was accepted and sentencing was put over until June 7.

When defendant appeared for sentencing, defense counsel moved to withdraw the plea of guilty on the ground that it had come to his attention the previous day that the District Attorney’s office had been informed of the death of Rodriguez, the victim, on April 22, 1976, four days prior to the acceptance of the plea.

In support of the motion to withdraw the plea, counsel for defendant contended that "in the spirit of Brady versus Maryland [373 US 83]” the prosecution was obliged to disclose the fact of Rodriguez’ death to the defense and averred that had counsel "known that the witness in chief passed away, had I been informed of that fact I would not have allowed, at least I would have advised my client not to make the plea”. A hearing was had on defendant’s application on June 17, 1976, at the conclusion of which, following submissions of counsel, the application was denied (87 Misc 2d 931). The Appellate Division affirmed defendant’s judgment of conviction on the plea, and we now affirm the dispositions of both courts below. At no time did defendant assert, nor does he now, that he was innocent of having committed the criminal acts charged.

It advances analysis to focus on the precise nature of the matter which was not disclosed by the prosecutor during the plea negotiations — information with respect to the death of the complaining witness. The circumstance that the testimony of the complaining witness was no longer available to the prosecution was not evidence at all. Further, to the extent that proof of the fact of the death of this witness might have been admissible on trial, it would not have constituted exculpatory evidence — i.e., evidence favorable to an accused where the evidence is material either to guilt or to punishment. Accordingly, it does not fall within the doctrine enunciated by the Supreme Court of the United States in Brady v Maryland (373 US 83, 87; and cf. United States v Agurs, 427 US 97, 112). Counsel does not now claim otherwise. Rather, as counsel tacitly admitted in his colloquy with the court on the motion to withdraw the plea, the death of Rodriguez would merely have been one of the factors — though a most significant factor —to be weighed by defendant in reaching his decision whether, as a matter of tactics in light of the strength of the People’s case against him, to interpose a negotiated plea of guilty.

The question remains as to the extent of the prosecution’s obligation to disclose information in its possession which, as here, is highly material to the practical, tactical considerations which attend a determination to plead guilty, but not to the legal issue of guilt itself. Analytically the issue is not whether this defendant was entitled to evidence in the possession of the prosecution; the question before us on this appeal is whether the pretrial conduct of the prosecutor in the course of plea negotiation was such as to constitute a denial of , due process to defendant in the circumstances disclosed in this record.

The Supreme Court has observed that the prosecutor "is the representative not of an ordinary party to a controversy, but of a sovereignty whose obligation to govern impartially is as compelling as its obligation to govern at all; and whose interest, therefore, in a criminal prosecution is not that it shall win a case, but that justice shall be done. As such, he is in a peculiar and very definite sense the servant of the law, the twofold aim of which is that guilt shall not escape or innocence suffer. He may prosecute with earnestness and vigor — indeed, he should do so. But, while he may strike hard blows, he is not at liberty to strike foul ones. It is as much his duty to refrain from improper methods calculated to produce a wrongful conviction as it is to use every legitimate means to bring about a just one.” (Berger v United States, 295 US 78, 88.) Defendant notes that, as the basis for announcing the case ready, the prosecutor had represented to the court and to defense counsel that the complaining witness had been located and would therefore be available to testify at trial. Defendant adds that the prosecutor knew, or at least was chargeable with knowledge, that the plea for which defendant had negotiated was predicated principally on the availability of the Rodriguez testimony. Defendant then argues that it was reprehensible on the part of the prosecutor not to dislcose that he had been informed of Rodriguez’ death, before the acceptance of defendant’s guilty plea. He asserts that nondisclosure in these circumstances constituted a denial of due process and that the sanction therefor must be to permit a withdrawal of the plea. We reject this contention.

Counsel cite no reported case, nor has our independent research disclosed any, in which judicial attention has been focused on the failure of a prosecutor before trial or during plea negotiations to disclose nonevidentiary information pertinent to the tactical aspects of a defendant’s determination not to proceed to trial. No particularized rule can or need be laid down; some comments may usefully be assayed, however. At the threshold we assume that, notwithstanding that the responsibilities of a prosecutor for fairness and open-dealing are of a higher magnitude than those of a private litigant, no prosecutor is obliged to share his appraisal of the weaknesses of his own case (as opposed to specific exculpatory evidence) with defense counsel. "A defendant is not entitled to withdraw his plea merely because he discovers * * * that his calculus misapprehended the quality of the State’s case”. (Brady v United States, 397 US 742, 757.) At the other extreme it is equally clear that the courts will allow a defendant to withdraw a guilty plea when the prosecution has either coerced him by threats or persuaded him by affirmative deceit to enter a guilty plea (e.g., People v O’Neill, 7 NY2d 867). All the reported instances of deceitful persuasion appear to have involved positive misstatement or misrepresentations; none has considered the effect to be accorded silence only. Consistent with legal principles recognized elsewhere in our jurisprudence, it would seem that silence should give rise to legal consequences only if it may be concluded that the one who was silent was under an affirmative duty to speak (cf., e.g., 24 NY Jur, Fraud and Deceit, § 107, pp 160-161). Whether and to what extent the courts, in the absence of statute or possible rule of court would impose such an affirmative duty on a prosecutor would necessarily be dependent on the circumstances of the individual case. Thus, we do not decide what the rule might be where in the course of plea negotiation a particular defendant staunchly and plausibly maintains his innocence but states explicitly apd^creditably that as a matter of balanced judgment in the lightbfi the apparent strength of the People’s proof he wishes to interpose a negotiated plea to reduced charges to avoid the risk of a more severe sentence likely to attend conviction after trial; failure of the prosecutor to reveal the death of a critical complaining witness might then call for a vacatur of the plea. Silence in such circumstances might arguably be held to be so subversive of the criminal justice process as to offend due process.

It may be of more than passing interest that the formal statements of the professional responsibilities of prosecutors to make disclosure appear to address only the obligation to disclose exculpatory evidence (Code of Professional Responsibility, DR7-103, subd [B]; cf. former canon 5 of the Canons of Professional Ethics). None touches on disclosure of tactical data. The applicable provision of the Standards Relating to the Prosecution Function and the Defense Function promulgated by the American Bar Association Project on Standards for Criminal Justice, is found in subdivision (c) of section 4.1: "It is unprofessional conduct for a prosecutor knowingly to make false statements or representations in the course of plea discussions with defense counsel or the accused.” Here, too, the formulation of standards appears to consider only affirmative misrepresentation and possibly, by reasonable extension, misleading silence when there is an affirmative duty of disclosure. The provision does not, however, assist in determining when there may be such an affirmative duty to disclose.

A fundamental concern of the criminal justice system, of course, is that an innocent defendant shall not be convicted; not that a possibly guilty actor shall escape conviction because the People are not able to establish his guilt.

Turning then to the present case, we hold that there was no obligation on the part of the prosecutor to reveal to defense counsel that Rodriguez had died, prior to acceptance of defendant’s plea of guilty. Defendant does not protest his innocence; on the contrary he testified to the factual basis for the charge to which he pleaded. While the prosecutor failed to inform defense counsel of Rodriguez’ death, there is no claim of affirmative misrepresentation. And, it is critical, the failure to disclose did not involve exculpatory evidence. We perceive no reason to depart from the principle that a fairly and voluntarily negotiated plea is the equivalent of a conviction after trial (Boykin v Alabama, 395 US 238).

Accordingly, for the reasons stated, the order of the Appellate Division should be affirmed.

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

Order affirmed.

       Reference to such standards should not be taken to imply that sanction for violation of professional responsibilities on the part of a prosecutor would necessarily inure to the benefit of a defendant. The appropriate remedy might be limited to disciplinary proceedings. In any event, we now express no view on this aspect of the matter.


author: Cooke, J.

text:
    John Grace & Co., Inc., Respondent, v State University Construction Fund, Appellant. A. D. Herman Construction Co., Inc., Respondent, v State University Construction Fund, Appellant.
    Argued February 13, 1978;
    decided March 28, 1978

      POINTS OF COUNSEL

      Jay R. Handwerger and Henry G. Cohn for appellant in the first and second above-entitled actions.
    I. The decisions below upholding the applicability of chapters 944 and 945 of the Laws of 1974 to construction contracts of defendant-appellant are contrary to established decisions of this court that public benefit corporations are subject only to legislative requirements that are expressly applicable to them. (Matter of Plumbing, Heating, Piping & Air Conditioning Contrs. Assn. v New York State Thruway Auth., 5 NY2d 420; Pantess v Saratoga Springs Auth., 255 App Div 426; Gardner v State of New York, 62 Misc 2d 278; Matter of New York Post Corp. v Moses, 10 NY2d 199; People ex rel. Makin v Wilkins, 22 AD2d 497; Matter of Kiley v Kennedy, 16 Misc 2d 969; George R. Whitten, Jr., Inc. v State Univ. Constr. Fund, 493 F2d 177;
      Simkin & Sons v State Univ. Constr. Fund, 352 F Supp 177, 486 F2d 1393; Matter of City of Schenectady v Helsby, 57 Misc 2d 91; Dixon v LaGuardia, 166 Misc 889, 253 App Div 881, 277 NY 84.) II. Chapters 944 and 945 of the Laws of New York of 1974 apply only to line item and unit price construction contracts. (Lentilhon v City of New York, 102 App Div 548, 185 NY 549; Posillico Constr. Co. v State of New York, 31 AD2d 693, 27 NY2d 523; Beaudouin v Board of Trustees of Police Pension Fund, Article 1, 78 Misc 2d 258; People v Psaty & Fuhrman, 39 Misc 2d 435; Oneida Nat. Bank & Trust Co. v Manikas, 10 Misc 2d 671; Matter of Naylor, 284 NY 188; Drake v State of New York, 144 NY 414.) III. Chapters 944 and 945 of the Laws of New York of 1974 authorize adjustments to amounts of construction contracts but do not mandate the use of such authorization. (Gilmore v City of Utica, 121 NY 561; People ex rel. Dinsmore v Gilroy, 145 NY 596.)

      William B. Flynn and Peter Goetz for respondent in the first and second above-entitled actions.
    I. The court below correctly found that defendant-appellant is a State agency within the purview of the remedial legislation in question and that it is subject, as such, to the mandates of those statutes. (Matter of Plumbing, Heating, Piping & Air Conditioning Contrs. Assn. v New York State Thruway Auth., 5 NY2d 420; Simkin & Sons v State Univ. Constr. Fund, 352 F Supp 177, 486 F2d 1393; George R. Whitten, Jr., Inc. v State Univ. Constr. Fund, 493 F2d 177; Easley v New York State Thruway Auth., 1 NY2d 374; Matter of Nager Elec. Co. v Office of Gen. Servs. of State of N. Y, 56 Misc 2d 975.) II. The remedial purpose of chapters 944 and 945 of the Laws of New York of 1974 requires the application of those provisions to both unit price and lump-sum construction contracts administered by agencies of the State. III. The broad remedial purpose of chapters 944 and 945 requires a mandatory implementation of such legislation so long as the statutory conditions precedent to recovery are satisfied. (Gilmore v City of Utica, 121 NY 561; People ex rel. Dinsmore v Gilroy, 145 NY 596; Supervisors v United States, 4 Wall [71 US] 435; Matter of New York State Soc. of Professional Engrs. v Education Dept. of State of N. Y., 176 Misc 136.)
   OPINION OF THE COURT

Cooke, J.

We hold that the State University Construction Fund (Fund), although created by the State of New York, is neither the State of New York nor an agency thereof for purposes of application of chapters 944 and 945 of the Laws of 1974.

Respondents were successful bidders for public contracts and entered into lump-sum construction contracts with the Fund in the fall of 1973. The agreement with respondent John Grace & Co. called for the construction of a project described as a "Sitework High Temperature-water Distribution” on the campus of the State University of New York at Stony Brook. Respondent A. D. Herman Construction Co. agreed to construct certain buildings at "Campus Core West” at the State University College at Old Westbury.

Subsequent to the execution of these contracts, the Legislature enacted two general laws, "to provide equitable relief to those contractors who, having been awarded public contracts, have sustained damage by reason of [the] energy crisis” (L 1974, ch 944, § 1). Chapter 944 authorizes certain adjustments in public construction contracts to reflect the increased cost of products containing petroleum derivatives; chapter 945 amends the previous chapter to include adjustments for increased steel costs. So far as is relevant here, the statute provides: "Whenever the terms and conditions of a construction contract awarded by the state of New York * * * requires a contractor to furnish materials containing petroleum derivatives of any kind or steel products * * * line items in such contracts pertaining to such materials may be adjusted upon a determination made by the officer of the department, board or agency that awarded such contract” (L 1974, ch 945, § 2).

Upon refusal by the Fund to adjust prices to reflect the escalated cost of petroleum derivatives and steel products used by them in the performance of their contractual obligations, each respondent instituted an action seeking, inter alia, a declaration that the Fund is subject to the provisions of chapters 944 and 945 and is required to make the adjustments requested. Asserting that the statutes in issue are inapplicable to it, the Fund moved to dismiss the respondents’ complaints on the ground that they failed to state a cause of action (CPLR 3211, subd [a], par 7). The court at Special Term denied the motion. A unanimous Appellate Division affirmed, certifying the following question for our review: "Did Special Term err as a matter of law in denying defendant’s motion to dismiss the complaint?”

The Fund was created in 1962 as a public benefit corporation to receive and administer moneys available for the construction of facilities of the State University of New York (L 1962, ch 251, § 1). We begin our inquiry, then, with the proposition that public benefit corporations, such as the Fund, created by the State for the general purpose of performing functions essentially governmental in nature, are not identical to the State or any of its agencies, but rather enjoy, for some purposes, an existence separate and apart from the State, its agencies and political subdivisions (Matter of Smith v Levitt, 37 AD2d 418, 421, affd 30 NY2d 934; Matter of New York Post Corp. v Moses, 10 NY2d 199, 203; Benz v New York State Thruway Auth., 9 NY2d 486, 489; Pantess v Saratoga Springs Auth., 255 App Div 426, 428). Although there is necessarily some degree of relationship between the Fund and the State — the fund was created by the State and is subject to dissolution by the Legislature — as a public benefit corporation, the Fund is "independent and autonomous, deliberately designed to be able to function with a freedom and flexibility not permitted to an ordinary State board, department or commission” or agency (see Matter of Plumbing, Heating, Piping & Air Conditioning Contrs. Assn. v New York State Thruway Auth., 5 NY2d 420, 423; see, also, 1951 Opns Atty Gen 130, 132).

The distinction is at once obvious. The mere fact that the Fund is an instrumentality of the State, and as such, engages in operations which are fundamentally governmental in nature does not inflexibly mandate a conclusion that it is the State or one of its agencies for purposes of chapters 944 and 945 (compare Easley v New York State Thruway Auth., 1 NY2d 374, 376-377, with Matter of Plumbing, Heating, Piping & Air Conditioning Contrs. Auth., supra, p 424). Instead, a particularized inquiry into the nature of the instrumentality and the statute claimed to be applicable to it is required. In the context of this case, if the statutes creating the Fund and empowering it to let its contracts (Education Law, art 8-A) imbue it with such a degree of identity as to be considered an integral part of the State qua State, the provisions of chapters 944 and 945 of the Laws of 1974 are applicable to the Fund as it would be an agency of the State. On the other hand, if its enabling act distinguishes Fund contracts from those let by the State or its agencies, and in so doing, distinguishes the Fund sharply from an agency which is merely an alter ego of the State, then the statutes at issue here are inapplicable to it (see Matter of Dormitory Auth. of State of N. Y. [Span Elec. Corp.], 18 NY2d 114, 117).

Chapters 944 and 945 of the Laws of 1974 were enacted to provide a measure of relief to those awarded contracts "by the state of New York”. An examination of the relationship between the State and the Fund leads inexorably to the conclusion that, for purposes of the applicability of these statutes, the fund stands on an independent footing from the State or an agency of the State which would be subject to the provisions of chapters 944 and 945. The Legislature has explicitly chosen to distinguish between contracts let by the Fund and those let by the State and its agencies. By way of illustration, the Fund may award one contract for all work to be performed incidental to the acquisition and construction of a project without independent bidding on subdivisions of work to be performed (Education Law, § 376, subd 7), whereas contracts of the State or its agencies must be independently bid on enumerated subdivisions of work to be performed (State Finance Law, § 135); the Fund, in its discretion, may require the contractor to post a bond in connection with the award of a contract in an amount it determines as proper (Education Law, § 376, subd 8, par e), whereas all contracts awarded by the State or one of its agencies must be accompanied by a bond for the completion of the work specified (State Finance Law, § 136); the Fund is authorized to make full progress payments to contractors as the work is completed (Education Law, § 376, subd 8), whereas the State and its agencies must withhold 10% of the principal amount of each progress payment, pending certification of the Commissioner of General Services (State Finance Law, § 139, subd 1); and, Fund contracts are specifically subject to the approval of the Comptroller (Education Law, § 376, subd 8, par d), an inclusion which would be surplusage if Fund contracts and those of the State and its agencies were identical (see State Finance Law, § 112, subd 2). These differences by no means exhaust the list. There is left, then, an explicit signification of separateness and distinction between contracts of the State of New York, its boards, agencies, departments and commissions and those of the Fund.

We conclude, therefore, that upon consideration of its powers, functions and obligations, that the Fund, which enjoys a separate existence, independently transacts its business and hires and compensates its own personnel outside of the civil service system, is not identical with the State, nor is it one of its various agencies for purposes of chapters 944 and 945 of the Laws of 1974 and, hence, is not subject to those statutes. In view of the disposition set forth herein, it is unnecessary to address the remaining contentions of the parties.

In each case, the order of the Appellate Division should be reversed, with costs, the certified question answered in the affirmative, and, on defendant’s motion for dismissal, judgment should be granted in favor of defendant declaring that defendant is not subject to chapters 944 and 945 of the Laws of 1974 (see Lanza v Wagner, 11 NY2d 317, 334).

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

In each case: Order reversed, etc.


text:
    In the Matter of George Granger, Respondent, v Fred A. Urda, as Clerk of the Supreme Court of Chenango County, Respondent, and Unigard Jamestown Mutual Insurance Co., Appellant.
    Argued February 8, 1978;
    decided March 28, 1978

      POINTS OF COUNSEL

      Peter J. Vivona for appellant.
    I. The Legislature has mandated, and the appellate courts have upheld, the clear right of a workmen’s compensation carrier to obtain reimbursement from the proceeds of any recovery obtained by an employee in a third-party action, for compensation paid, or to be incurred. (Matter of Petterson v Daystrom Corp., 17 NY2d 32; Matter of Simonetti v Munro Waterproofing Co., 282 App Div 899; Matter of Travaglione, 36 Misc 2d 645; Commissioners of State Ins. Fund v O’Dwyer, 37 AD2d 297; Matter of Ryan v General Elec. Co., 26 NY2d 6; Commissioners of State Ins. Fund v Motor Vehicle Acc. Ind. Corp., 256 AD2d 325, 21 NY2d 918.) II. In creating article 18 of the Insurance Law, the Legislature did not abolish the established right of an employer or workmen’s compensation carrier to secure reimbursement pursuant to the provisions of section 29 of the Workmen’s Compensation Law. (Matter of McKay v Town of West Seneca, 51 AD2d 373.) III. Where an employee is injured in an automobile accident while in the course of his employment as a result of the negligence of a third party, the third party is liable for the damages of the employee and the employer or workmen’s compensation carrier should be entitled to secure reimbursement for compensation and medical benefits paid or to be incurred.

      Peter J. McBride for respondent.
    I. The Legislature, in enacting section 29 of the Workmen’s Compensation Law of the State of New York, thereby creating a lien in favor of a workmen’s compensation carrier on the proceeds of a recovery by a claimant against a third party, placed a twofold restriction on that lien, first as to the amount expended or to be expended by the carrier and second as to the extent the recovery from the third party was deemed to be for the benefit of the carrier. II. In enacting section 29 of the Workmen’s Compensation Law, the history of said statute clearly manifests a legislative intent to broaden claimant’s right of recovery so that a claimant could be made whole. (Calhoun v West End Brewing Co., 269 App Div 398.) III. The imposition of the lien in favor of the carrier in the instant case would unjustly enrich said carrier and would deprive claimant of full redress for his injuries. IV. Appellant herein has alternative remedies to seek redress while claimant does not. V. It was not the Legislature’s intent in enacting article 18 of the Insurance Law to place an injured party who is a covered person under article 18 in a position where he cannot collect workmen’s compensation benefits, first-party benefits or recover from a third-party wrongdoer.

      Peter M. Pryor, Raymond C. Green, Leonard M. Schnitzer and Mark Slotkin for The State Insurance Fund, amicus curiae.

    I. Any payments in excess of basic economic loss may be recovered by claimant-plaintiff in his third-party lawsuit. I. Montgomery v Daniels, 38 NY2d 41; Matter of Bednar v Ingersoll Rand Co., 279 NY 80.) II. Statute and case law demonstrate that where claimant obtains a third-party recovery for the injury that is the predicate for compensation payments, the carrier (or employer) is entitled to reimbursement for its payments from the proceeds of that recovery. (Matter of Petterson v Daystrom Corp., 17 NY2d 32; Matter of Granger v Urda, 54 AD2d 377; Matter of Ryan v General Elec. Co., 26 NY2d 6; Cederman v Liberty Mut. Ins. Co., 58 AD2d 969; Scott v Orange County Dept. of Health, 89 Misc 2d 853; Wekofsky v Hartford Ins. Co., 88 Misc 2d 688; Calhoun v West End Brewing Co., 269 App Div 398; Matter of McKay v Town of West Seneca, 51 AD2d 373, 41 NY2d 931.) III. If there is no lien, there is in the alternative a right to proceed in arbitration pursuant to section 674 of the Insurance Law. IV. An independent cause of action to recover damages exists against the tortious third party even if there is no lien or right to proceed in arbitration. (General Aniline & Film Corp. v Schrader & Son, 12 NY2d 366; Millington v Southeastern Elevator Co., 22 NY2d 498; Johnson v State of New York, 37 NY2d 378; Louviere v Shell Oil Co., 509 F2d 278, 515 F2d 571; Landon v Hoegh & Co., 521 F2d 756; Dole v Dow Chem. Co., 30 NY2d 143.) V. There is an independent right under subdivision c of section 13 of the Workmen’s Compensation Law to recover all amounts the employer (or carrier) has expended for medical treatment. (Butchers’ Mut. Cas. Co. of N. Y. v Emerald Cab Corp., 174 Misc 1.)
   OPINION OF THE COURT

Cooke, J.

The narrow issue presented here is whether a workmen’s compensation carrier, which has made payments for compensation and medical expenses to a claimant injured during the course of his employment, may assert a lien pursuant to subdivision 1 of section 29 of the Workmen’s Compensation Law against the proceeds of a judgment obtained by the claimant against a third-party tort-feasor pursuant to article 18 of the Insurance Law (no-fault). We hold that it may.

The facts are undisputed. Petitioner George Granger, an employee of Queens Farms Dairy, sustained personal injuries in a work-related accident when struck by a motor vehicle owned by third-party Thomas Tripple and operated by third-party Garland Jacobs. Upon making a claim for workmen’s compensation benefits and medical expenses pursuant to the regulations of the New York State Workmen’s Compensation Board, Granger received from appellant Unigard Jamestown Mutual Insurance Co. (Unigard), the compensation carrier of Queens Farms Dairy, a total of $8,923.56, representing compensation payments of $7,832.72 and medical payments of $1,090.84.

Thereafter, in an action authorized by subdivision 1 of section 29 of the Workmen’s Compensation Law, Granger recovered a judgment for money damages based upon the negligence of third parties Tripple and Jacobs. From the jury verdict in the amount of $52,759.52, the trial court properly deducted $10,010 for lost wages, $10,608.31 for future wages lost until three years after the date of the accident and $1,003.98 for medical services. These sums, totaling $21,622.29, represented petitioner’s "Basic economic loss” (Insurance Law, § 671, subd 1), which Granger could not recover from the third parties due to the prohibition contained in subdivision 1 of section 673 of the Insurance Law.

After entry of judgment for $31,137.23, Tripple and Jacobs paid petitioner all but $8,923.56, upon which Unigard had asserted a lien pursuant to subdivision 1 of section 29 of the Workmen’s Compensation Law. This latter sum, representing the total benefits paid by Unigard to petitioner was deposited with respondent Urda, Clerk of the Supreme Court, Chenango County, pursuant to CPLR 5239, inasmuch as Tripple and Jacobs could not determine the proper person to whom payment should be made. In a proceeding brought by petitioner to establish his right to said money held by respondent Urda, both Special Term and the majority in the Appellate Division (54 AD2d 377), granted judgment to petitioner, reasoning that the benefits paid by Unigard under the Workmen’s Compensation Law were not recovered by Granger in his third-party action against Tripple and Jacobs. Implicit in the determinations of those courts was a finding that a compensation carrier has no lien pursuant to subdivision 1 of section 29 of the Workmen’s Compensation Law in an instance in which the compensation claimant recovers a third-party judgment brought pursuant to the no-fault automobile accident compensation law (Insurance Law, aft 18).

The courts below failed to appreciate the inviolability of the lien given to a workmen’s compensation carrier against any recovery by a compensation claimant in a third-party action. In essence, subdivision 1 of section 29 of the Workmen’s Compensation Law provides that if the claimant elects to pursue his common-law remedies against a third-party tortfeasor for damages on account of an injury for which workmen’s compensation benefits were paid, the compensation carrier shall have a lien on the proceeds of any recovery by the claimant to the extent of compensation and medical expenses awarded. While the payments of a compensation carrier are not normally advances to a claimant for which repayment is contemplated, where a third-party tort-feasor is involved, different considerations are evident. In such an instance, section 29 provides that compensation and medical payments may be recouped by the compensation carrier "whenever a recovery is obtained in tort for the same injury that was a predicate for the payment of compensation benefits” (Matter of Petterson v Daystrom Corp., 17 NY2d 32, 39; see, also, Matter of Ryan v General Elec. Co., 26 NY2d 6, 9; Calhoun v West End Brewing Co., 269 App Div 398, 400).

Since its establishment in the early part of this century, workmen’s compensation has been envisioned by the Legislature as a system whereby employees sustaining accidental injuries arising out of and in the course of their employment might be compensated for their injuries regardless of fault (see Workmen’s Compensation Law, § 2, subd 7; § 10). It was also recognized, however, that although funded primarily by means of employer contributions, measures had to be taken which would ensure that the cost of providing this protection to injured employees did not escalate to the point of economic impracticality (see 1 Larson, Workmen’s Compensation Law, § 2.70, pp 13-14). That this cost factor is of manifest concern to the Legislature is evinced by section 18 of article I of the Constitution of the State which provides that compensation payments "shall be held to be a proper charge in the cost of operating the business of the employer.” Moreover, in realizing that a workable system of compensation could not totally redress an injured employee’s injuries and remain a financially viable institution at the same time, a decision was reached whereby a limitation was placed on the amount of benefits recoverable by a compensation claimant (see Workmen’s Compensation Law, §§ 12, 15, subd 2).

Viewed in this light, the intent behind the enactment of section 29 of the Workmen’s Compensation Law (L 1937, ch 684, as amd) is obvious. Where a compensation claimant is injured due to the fault of one not a fellow employee, the Legislature has provided a means whereby the claimant may recover damages to compensate him for the full extent of his injuries, a remedy not otherwise available within the compensation system, by permitting him to prosecute a third-party action against the party actually responsible for those injuries (see Koutrakos v Long Is. Coll. Hosp., 47 AD2d 500, 505, affd 39 NY2d 1026). At the same time, the statute cushions the inflationary impact of the cost of compensation insurance and avoids double recovery by the claimant for the same predicate injury by permitting the compensation carrier to recoup its compensation and medical payments from the third-party tortfeasor by means of its section 29 lien on the claimant’s recovery in the third-party action (see Matter of Curtin v City of New York, 287 NY 338, 340; Becker v Huss Co., 43 NY2d 527).

However, events not foreseen at the time section 29 was enacted in 1937, have injected an air of uncertainty into an otherwise smoothly operating procedure. When the no-fault provisions were added to the Insurance Law (L 1973, ch 13), the then existing system, "a system which costs too much, takes too long to pay off and delivers too little protection— [was] cast aside. In its stead [there now exists] a new insurance reparations system which — assures that every auto accident victim will be compensated for substantially all of his economic loss, promptly and without regard to fault; — will eliminate the vast majority of auto accident negligence suits, thereby freeing our courts for more important tasks” (Governor’s Memorandum of Approval, 1973 NY Legis Ann 298; see, generally, Montgomery v Daniels, 38 NY2d 41).

Broadly stated, no-fault provides for different treatment of economic and noneconomic loss, thereby distinguishing between the types of damages recoverable by an injured employee involved in an automobile accident with a negligent third party. Previously, the injured employee was entitled to maintain a third-party action and recover a judgment for the full extent of his injuries, upon which the section 29 lien would attach. With the advent of no-fault, the statute provides that the injured employee is now entitled to his basic economic loss from his no-fault carrier, less "amounts recovered or recoverable on account of such injury under state or federal laws providing * * * workmen’s compensation benefits” (Insurance Law, § 671, subd 2, par [b]). Where the injured employee previously could institute an action against a negligent third-party driver, under the statute he may now do so only if his damages exceed the no-fault threshold; but in such third-party action, the injured employee has "no right of recovery * * * for basic economic loss” (Insurance Law, § 673).

The instant case, then, poses a problem apparently not contemplated by the Legislature. In enacting the no-fault law, the Legislature chose not to alter the absolute nature of the section 29 lien in favor of a compensation carrier which attaches to the "proceeds of any recovery” in favor of a compensation claimant against a third party. At the same time, it also authorized the no-fault insurer to deduct from those benefits payable to an injured employee on account of his basic economic loss any amounts recovered or recoverable as workmen’s compensation benefits. Thus, if both statutes are read literally a harsh, unintended result obtains. The no-fault scheme provides that the no-fault carrier need not pay its insured first-party benefits to the extent that a workmen’s compensation award is recovered or recoverable, while section 29 of the Workmen’s Compensation Law, by failing to limit the applicability of the compensation carrier’s lien on any recovery by a compensation claimant in a third-party action, results in converting the injured employee into a self-insurer for at least a portion of his basic economic loss (see Grello v Gaszykowski, 58 AD2d 412, 428 [concurring opn of Shapiro, J.]). Manifestly, corrective legislative action is advisable, if not imperative.

In dissent, Justice Herlihy (54 AD2d 377, 382-383) was of the opinion that although section 673 of the Insurance Law on its face prohibits the recovery of basic economic loss in a third-party action, the provisions of this statute should not be construed to prohibit recovery where a portion thereof is for the benefit of the compensation carrier under section 29 of the Workmen’s Compensation Law. Justice Greenblott in his dissent (54 AD2d 377, 381-382) concludes that "it is the no-fault carrier which should suffer the loss, and petitioner should be required to proceed against the no-fault carrier to enforce his rights against it.” This conclusion is reasoned from the holding that the compensation benefits received by petitioner are not amounts "recovered or recoverable” within the meaning of section 671 (subd 2, par [b]) of the Insurance Law and due to the entitlement of the workmen’s compensation carrier to recoup such benefits pursuant to subdivision 1 of section 29 of the Workmen’s Compensation Law. However, since petitioner’s no-fault carrier and the third-party no-fault carrier are not parties to this proceeding, we refrain from comment or adjudication of such rights against them as may be asserted by those who are parties to this proceeding — the petitioner and the workmen’s compensation insurance carrier. Likewise, we abstain from determining the right, if any, of a no-fault carrier of an injured employee, upon payment of full first-party benefits, to seek recoupment for such payments from a third-party’s insurer, pursuant to the loss transfer provisions of section 674 of the Insurance Law. In each of these areas, among possibly other things, there has not been furnished for consideration necessary factual bases, such as compliance with required time limitations and procedures, nor has there been provided to all involved an opportunity to contest.

Accordingly, the order of the Appellate Division should be reversed, without costs, and judgment should be granted in favor of appellant.

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

Order reversed, etc.

      . The statute provides, in relevant part: "If any employee entitled to compensation under this chapter be injured * * * by negligence or wrong of another not in the same employ, such injured employee * * * need not elect whether to take compensation and medical benefits under this chapter or to pursue his remedy against such other but may take such compensation * * * and at any time * * * pursue his remedy against such other subject to the provisions of this chapter * * * In such case, the * * * insurance carrier liable for the payment of such compensation * * * shall have a lien on the proceeds of any recovery from such other, whether by judgment, settlement or otherwise * * * to the extent of the total amount of compensation awarded or provided or estimated by this chapter for such case and the expenses for medical treatment paid or to be paid by it and to such extent such recovery shall be deemed for the benefit of such * * * carrier” (emphasis added).

      . Parenthetically, it is interesting to note how closely the workmen’s compensation scheme parallels the recovery provisions of the no-fault automobile insurance law (Insurance Law, art 18). In both instances, the insured’s initial loss is reimbursed by the compensation carrier or no-fault insurer irrespective of fault (compare Workmen’s Compensation Law, art 2, with Insurance Law, §§ 671-672). Both statutes permit third-party actions in certain circumstances. More importantly, once culpability is established both the compensation carrier and the no-fault insurer are entitled to recoupment from the party ultimately adjudged responsible for causing the injuries: the compensation carrier by means of its section 29 lien; the no-fault insurer by means of the loss transfer procedures contained in section 674 of the Insurance Law. Thus, similar to the pattern of section 29 of the Workmen’s Compensation Law, subdivision 2 of section 673 of the Insurance Law provides that a no-fault insurer which has paid its insured first-party benefits "shall have a lien against any recovery to the extent of [basic economic loss] payable by it to the [insured].”