text:
    Woodmere Academy, Respondent, v Saul P. Steinberg, Appellant.
    Argued March 21, 1977;
    decided May 12, 1977

      David L. Foster and Frederick L. McKnight, New York City, for appellant.

      Samuel Gottlieb, Milton Shalleck and Nathan Silverman, New York City, for respondent.
   Fuchsberg, J.

Woodmere Academy, a nonprofit educational institution, brought this action to recover the balance due under a charitable pledge agreement. The defendant, Saul P. Steinberg, counterclaimed for the return of moneys he had paid on account. The parties are now here on defendant’s appeal from an order of the Appellate Division, First Department, which, reversing an order of Special Term, granted summary judgment to the plaintiff.

The issue is whether defendant’s contentions that the pledge was subject to certain unfulfilled oral conditions and had been induced by fraudulent misrepresentations raise triable issues of fact or legal defenses. We conclude they do not.

The agreement which is at the root of this case arises out of a fund-raising drive which the academy launched in 1969. One of its main objects was the construction of a school library building. It is undisputed that in August of that year Stein-berg, whose children then attended the school and whose wife for a time was a member of its board of trustees, agreed to contribute $375,000. The pledge was in writing and recited that it was made "in consideration of the gifts of others”. It specified that payments were to be made in installments of "$50,000 in 1970, $50,000 in 1971, and balance in 1972”. It contained no other conditions or limitations. The first installment was paid in January, 1971.

By letter dated December 12, 1972, plaintiff, at defendant’s request, agreed to extend the time for payment of the balance. Defendant, an experienced business executive who makes a point of the fact that prior unhappy experiences with charity-giving had alerted him to a need for great caution in such matters, signed that letter only after he had arranged for his own attorney to participate in the drafting and approval of its language. It reads:

This will confirm the agreement reached between us concerning payment of your pledge of $375,000 to the New Era Fund of Woodmere Academy. We received $50,000 in January 1971, and the balance of $325,000 was originally to have been paid $50,000 by the end of 1971, and $275,000 by the end of 1972.

We agree to extend the time for payment of the present balance of $325,000 from the original due dates, provided that we receive payment in cash, check or immediately marketable securities as follows—$125,000 simultaneously with the exchange of this letter between us, and $200,000 by December 31, 1972.

In recognition of your concern and interest in Woodmere Academy, our library, as you know, has been named "The Barbara Steinberg Learning Center.” You have our unconditional and unqualified assurance that the building will continue to be so designated as long as it is a part of the school, and will be so referred to in any communication, writing or message over which we have control, inasmuch as we view our obligation in this respect in the nature of a trust.

We would appreciate your indicating your confirmation of the foregoing by signing and returning the enclosed copy of this letter together with your payment of $125,000.

Sincerely yours,

THE WOODMERE ACADEMY

Defendant paid the $125,000 installment upon delivery of the letter, but approximately a year later, at a time when he no longer resided in the community where the school was located and his children no longer attended its classes, he advised the academy that another commitment rendered him unable to pay the balance during 1973. After some further communications between them, the parties were unable to agree upon a new schedule and, defendant having failed to make further payments, in August, 1974 plaintiff, having completed the library, elected to bring this suit.

In essence, Steinberg’s claim is that his undertaking was conditioned upon (1) the collection of pledges from other contributors in a total amount equivalent to the sums the academy received from Steinberg, (2) the academy’s earmarking of such matching funds solely for the construction of the library at a cost which was not to exceed $750,000, (3) its pursuit of a plan for merger with the neighboring Lawrence School and (4) the academy’s agreement to manage its financial affairs "wisely and soundly” and disburse its funds "carefully”. He goes on to allege, in rather broad and conclusory fashion, that the pledge was fraudulently induced because, among other things, the merger with the other school was not actively pursued and, despite verbal assurances he had received to the contrary, the school was not in sound financial condition because it had occasion to borrow money from a bank. For its part, the academy states that it undertook, dehors the writings, to obtain matching funds from others; on the motion for summary judgment, it submitted uncontroverted documentary proof that it had done so. It emphatically denies all the other items on which the defendant insists his pledge was conditioned.

Additionally, the academy urges that, even if defendant’s allegations were true, they would not constitute a defense. For the reasons which follow, we agree.

Preliminarily, we observe that, as a matter of public policy, pledge agreements calculated to foster eleemosynary enterprises are enforceable (I. & I. Holding Corp. v Gainsburg, 276 NY 427, 433; Allegheny Coll, v National Chautauqua County Bank, 246 NY 369; Liberty Maimonides Hosp. v Felberg, 4 Misc 2d 291 [Cooke, J.]; cf. Restatement 2d, Contracts [Tent Draft], § 90). Indeed, courts, in the enforcement of such agreements, seek to resolve doubtful questions so as to avoid their repudiation (Eastern States Agric. & Ind. League v Estate of Vail, 97 Vt 495, 505, and authorities cited therein). "To lightly withhold judicial sanction from such obligations would be to destroy millions of assets of the most benevolent institutions in our land, and to render such institutions helpless to carry out the purpose of their organizations” (Brokaw v McElroy, 162 Iowa 288, 293).

That is not to say that liability for the fulfillment of such a pledge may not be conditioned upon the performance of some act by the beneficiary (Allegheny Coll. v National Chautauqua County Bank, supra, p 375). However, as with contracts generally, when the pledge is made in writing, Unless conditions are expressed, or at least implicit, in the agreement itself, parol evidence may not be used to supply them except to show conditions precedent to the effectiveness of the agreement (Hicks v Bush, 10 NY2d 488, 491) or fraud in the inception (see Tioga County Gen. Hosp. v Tidd, 164 Misc 273, 282; see, also, 73 Am Jur 2d, Subscriptions, §§ 19, 30).

In the case now before us, the operative documents are the two writings to which we have already alluded. One is the original 1969 pledge agreement. The other is the letter-agreement of December 12, 1972, which, as Mr. Justice Capozzoli correctly suggested in his opinion for the majority at the Appellate Division, may be regarded either as a confirmation of the original pledge or as an enforceable agreement on its own (cf. Breger v Hampshire Country Club., 30 AD2d 526, affd 23 NY2d 958). Except as to the original agreement’s reference to the consideration consisting of "gifts of others”, from which it might have been possiblé to imply a promise to obtain matching funds, neither writing expressly or impliedly is conditioned in the other ways suggested by the defendant. If anything, on the principle of inclusio unius est exclusio alterius, the insertion of the one condition regarding the building and naming of the library for Mrs. Steinberg in the December 12 letter implies just the contrary, especially since at least one of its draftsmen was defendant’s counsel.

As already indicated, the documents on their face express a complete agreement with only one expressed condition. Under the parol evidence rule, which is more soundly to be regarded as one of substantive rather than procedural law (Fogelson v Rackfay Constr. Co., 300 NY 334, 338), it is conclusively presumed that that was the only remaining condition to the pledge, any others having merged in the second writing (Loomis v New York Cent. & Hudson Riv. R. R. Co., 203 NY 359; Thomas v Scutt, 127 NY 133, 138). The record having tendered no other admissible proof of a condition precedent and the single condition stipulated in the revision of the pledge agreement as incorporated in the letter of December 12 having already been performed, defendant’s obligation became absolute (see Keuka Coll, v Ray, 167 NY 96, 100).

Moreover, as to so much of the defense as, in essence, speaks of fraud in the inception, our review of the record reveals that the claimed representations on which the defendant relies are either not promises or not false. Even assuming the truth of the assertion that they were uttered, they turn out to have been mere expressions of opinion or of present or future expectations or, when promissory in nature, of conditions subsequent rather than precedent (cf. Cohoes Mem. Hosp. v Mossey, 25 AD2d 476).

Plaintiffs alleged undertaking to collect funds from other contributors, for instance, was, in defendant’s own words, a "challenge pledge”, i.e., one to be matched in futuro. Since the condition that it be matched was one to be performed subsequent to the execution of the original written contract, it too was required to be in writing. Otherwise, the unconditional form of defendant’s subscription could very well have misled others who may not have subscribed had they known of the conditional character of defendant’s commitment (see George v Harris, 4 NH 533). In any event, plaintiffs records showed that it did succeed in raising $563,443 for its "New Era Fund”, its label for the account from which payments for the construction of the library were actually made. This amount far exceeded the $175,000 that defendant had paid on account of his $375,000 pledge.

Similarly, the alleged oral promise to limit the construction cost of the library, then yet to be built, to $750,000 was necessarily a condition subsequent. This was not a misrepresentation of an existing intent; it is not claimed, and certainly not demonstrated in any way, shape or manner, that, at the time when plaintiff is said to have made that promise, it in fact planned to construct the library at a different cost than that represented (see Adams v Clark, 239 NY 403, 410). The cost of the building proper in the end came to $733,373. That an additional $80,698 was spent for equipment, a matter not one of the asserted misrepresentations or conditions, is besides the point. Indeed, even if both figures were added together, allowing for normal variations between projected and actual cost of most new construction, it is self-evident that the variation here can hardly be regarded as material, all the more so since it resulted in no increase in defendant’s obligation or in any frustration of the project for which he had made his pledge.

Obviously, a statement that the school would "wisely” manage its affairs in general, and the funds raised for the library in particular, is more precatory than promissory. Absent a showing of bad faith, of which none is disclosed here, its vagueness and subjectiveness drains it of practical meaning. Defendant also asserts that he had been assured that the school was in "sound financial condition and would so continue”, but he nowhere favors us with a definition of what constitutes "sound financial condition” in the case of a nonprofit organization dependent upon the generosity of its supporters. Taken in isolation, certainly the fact that the school borrowed money from a bank, especially while in the throes of expansion, does not establish the soundness or unsoundness of its financial condition either before or after the pledge was given.

The subsidiary claim—that the plaintiff agreed to pursue efforts to merge with the Lawrence School as a means of strengthening its financial condition—on its face also contemplates future efforts rather than ones preceding or contemporaneous with the giving of defendant’s pledge. Moreover, pursuit of such an objective, and even more so its fruition, necessarily had to be contingent upon a third party, the other school. The record offers nothing to support the barebones charge that such a promise had been dishonored—nothing about what merger efforts were in fact pursued, or what further efforts, if any, it would have been reasonable to pursue, or what reaction there was from Lawrence.

In sum, defendant’s opposing papers were insufficient to create a question of fact or to otherwise preclude the entry of a judgment in plaintiff’s favor as a matter of law (Capelin Assoc. v Globe Mfg. Corp. 34 NY2d 338, 343).

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

Chief Judge Breitel. and Judges Jasen, Gabrielli, Jones, and Cooke concur; Judge Wachtler taking no part.

Order affirmed, with costs.


source: Caselaw Access Project

author: Cooke, J.

license: Public Domain

text:
    In the Matter of the Board of Cooperative Educational Services of Rockland County, Respondent-Appellant, v New York State Public Employment Relations Board et al., Appellants-Respondents.
    Argued March 28, 1977;
    decided May 12, 1977

      Martin L. Barr, Anthony Cagliostro and Jerome Thier, Albany, for New York State Public Employment Relations Board, appellant-respondent.

      David N. Stein and James R. Sandner, New York City, for BOCES Staff Council and another, appellants-respondents.

      James K. Riley, Pearl River, for respondent-appellant.

      Stanley B. Hinman, Jr., Scotia, for New York State School Boards Association, Inc., amicus curiae.

   Cooke, J.

We hold that, after the expiration of an employment agreement, it is not a violation of a public employer’s duty to negotiate in good faith to discontinue during the negotiations for a new agreement the payment of automatic annual salary increments, however long standing the practice of paying such increments may have been. Accordingly, it was error for the Public Employment Relations Board (PERB) to order the petitioner in this proceeding to negotiate in good faith because of its failure to pay increments after expiration of an employment agreement.

This labor dispute arose between the Board of Cooperative Educational Services of Rockland County (BOCES), a public employer, and the BOCES Staff Council (the Staff Council), the recognized negotiating representative of instructional employees of BOCES. Since 1968, the parties have been signatories to a series of four agreements, the most recent of which covered the period from July 1, 1972 to June 30, 1974. A progression of automatic step increments for employees in the unit has been provided for in each of these agreements. In addition, in prior years, when a contract between the parties had expired, even if a successor agreement had not yet been reached, BOCES paid the automatic step increments to returning unit employees.

In March, 1974, the Staff Council advised BOCES that it wished to negotiate a successor contract to the 1972-1974 agreements. Prior to the commencement of negotiations, on June 19, 1974, BOCES adopted a resolution which provided that pending the execution of a new agreement or September 1, 1974, whichever came earlier, the provisions of the agreement expiring June 30, 1974 would be recognized, including salary and salary rates in effect on June 30, 1974, for the period herein contemplated. Pursuant to this resolution, which was subsequently extended, BOCES maintained the salaries at the rate in effect on June 30, 1974 during negotiations for the successor agreement, but refused to pay the step increments to returning unit employees. Because of this refusal, the Staff Council filed with PERB an improper practice charge against BOCES alleging that the latter had unilaterally withdrawn a previously enjoyed benefit—aútomatic salary increments—while a successor agreement was being negotiated, in violation of section 209-a (subd 1, par [d]) of the Civil Service Law (the Public Employees’ Fair Employment Act).

At the hearing, BOCES raised an affirmative defense that the right to the salary increments was extinguished when the most recent agreement expired, on June 30, 1974. This argument was rejected by the hearing officer, who reasoned that the duty of an employer to maintain the status quo during the course of negotiations is not directly concerned with whether or not contractual obligations survive a contract’s expiration. Authority for this reasoning was based on PERB’s decision in Matter of Triborough Bridge & Tunnel Auth. (District Council 37 & Local 1396) (5 PERB 3064 [1972]). In that decision, PERB held that it is a violation of a public employer’s duty to negotiate in good faith for it to alter, unilaterally during negotiations, terms and conditions of employment which include a long-standing and continued practice of providing annual salary increments, even though the agreement under which such increments were negotiated has expired. The hearing officer, applying this decision, commonly referred to as the "Triborough Doctrine”, found that BOCES had violated its duty to negotiate in good faith and recommended that it be ordered to negotiate in good faith, such order contemplating that it would cease and desist from refusing to pay the increments and would forthwith pay such increments retroactive to the commencement of the 1974-1975 school year.

Thereafter, PERB indorsed the reasoning of the hearing officer and his conclusions of law. It also reasserted the validity of the Triborough "doctrine” or proposition and further noted that it makes no difference under said proposition whether or not the practice of paying increments was ever embodied in an agreement. In addition, while recognizing that it could not compel BOCES to pay the increments, it rejected BOCES’ request that it limit its order to a direction that BOCES negotiate in good faith. PERB’s order, therefore, stated in relevant part: "we order respondent to negotiate in good faith, such order contemplating that respondent will cease and desist from refusing to pay increments to those of its employees entitled to increments under the recently expired agreement and that it will forthwith pay to such employees increments retroactive to the commencement of the 1974-75 school year”.

BOCES thereafter commenced an article 78 proceeding seeking to annul and vacate PERB’s order. The Appellate Division held that PERB’s determination that BOCES violated its duty to negotiate in good faith was not arbitrary and capricious and therefore must be confirmed. That court noted, however, that upon a charge that a public employer has failed to negotiate in good faith with the recognized representatives of its public employees, PERB is limited by statute to the entry of an order directing the public employer to negotiate in good faith (citing Civil Service Law, § 205, subd 5, par [d]; Matter of Jefferson County Bd. of Supervisors v New York State Public Employment Relations Bd., 36 NY2d 534). The order was therefore modified by the Appellate Division by deleting that part thereof which stated that it was contemplated that BOCES would cease and desist from refusing to pay increments and pay such increments retroactively. Finally, it rejected the request by the Staff Council and the New York State United Teachers that the court exercise its remedial powers by ordering payment of salary increments. The court reasoned that PERB had "exclusive nondelegable jurisdiction” in this area (see Civil Service Law, § 205, subd 5, par [d]), and that since the Legislature contemplated an administrative rather than a judicial approach, the court could not grant the relief sought.

Although BOCES was not aggrieved by the modification so that an appeal as of right by it would not lie (CPLR 5601, subd [a], par [iii]), we granted leave to it pursuant to CPLR 5602 in order to consider PERB’s so-called "Triborough Doctrine”. At the outset, it should be noted that the Federal cases involving the private sector relied on by the Staff Council and PERB are not dispositive. That there are problems peculiar to public employers is manifested by the number of cases before this court concerning the financial difficulties of these employers. In addition to financial pressures, other factors enter in the budgetary considerations of such employers (see, e.g., L 1976, ch 132, commonly known as the Stavisky-Goodman bill). Perhaps for this reason, the Legislature provided with respect to improper labor practices that "fundamental distinctions between private and public employment shall be recognized, and no body of federal or state law applicable wholly or in part to private employment, shall be regarded as binding or controlling precedent” (Civil Service Law, § 209-a, subd 3). So mindful, we turn to a consideration of "Triborough”.

It has been held that the Triborough proposition is unnecessary where the unilateral conduct of an employer in refusing to grant agreed upon increments occurs before the bargaining agreement expires, because in that instance the evidence of failure to negotiate in good faith is manifested by the failure to live up to the terms of the existing contract (see, e.g., Matter of Municipal Housing Auth. for City of Yonkers v New York State Public Employment Relations Bd., 46 AD2d 911; cf. Matter of City School Dist. of City of Oswego v Helsby, 42 AD2d 262). The proposition, however, is sought to be applied in circumstances where the contract has expired because, it is said, a unilateral failure to pay increments under the expired contract also manifests a lack of good faith. While such a principle may apply where an employer alters unilaterally during negotiations other terms and conditions of employment, it should not apply where the employer maintains the salaries in effect at the expiration of the contract but does not pay increments.

The reasons for not giving effect in these circumstances to the so-called "Triborough Doctrine” should be apparent. Involving a delicate balance between fiscal and other responsibilities, its perpetuation is fraught with problems, equitable and economic in nature. As a reward and by encouraging the retention of experienced personnel in public positions, the concept of increments based on continuance In service, properly exercised, is creditable for the public entity and the citizenry are better served, and time losses suffered because of training periods and inefficiency in performance are likely to be reduced. The concept of continual successive annual increments, however, is tied into either constantly burgeoning growth and prosperity on the part of the public employer, or the territory served by it, or a continuing general inflationary spiral, without admeasurement either of the growth or inflation and without consideration of several other relevant good faith factors such as comparative compensation, the condition of the public fisc and a myriad of localized strengths and difficulties. In thriving periods the increment of the past may not squeeze the public purse, nor may it on the other hand be even fair to employees, but in times of escalating costs and diminishing tax bases, many public employers simply may not be able in good faith to continue to pay automatic increments to their employees.

PERB’s counsel takes the position that applying "Triborough”, so as, in effect, to require the payment during negotiations of salary increments under an expired contract, does not lock the employees into a guaranteed gain position. Rather, it is argued, payment of such increments merely preserves the existing relationship until different conditions are established through collective bargaining which may include the entire abolition of the incremental structure. Such arguments, though superficially appealing, are not convincing. They are based on the erroneous assumption that it is the "existing relationship” which is being preserved, when, in reality, such payments extend or change the relationship established by the parties. In times either of inflation or depression, employees, quite naturally, will be reluctant to accept abolition of automatic increments which they have been receiving. To the extent that it provides that such increments must be paid even after expiration of contract, the proposition gives an edge and makes negotiation of that point that much more difficult.

To say that the status quo must be maintained during negotiations is one thing; to say that the status quo includes a change and means automatic increases in salary is another. The matter of increments can be negotiated and, if it is agreed that such increments can and should be paid, provision can be made for payment retroactively. The inherent fallacy of PERB’s reasoning is that it seeks to make automatic increments a matter off right, without regard to the particular facts and circumstances, by establishing a rule that failure by a public employer to continue such increments during negotiations is a violation of the duty to negotiate in good faith. No such principle appears in the statute, nor should one exist by administrative fiat. Therefore, without expressing complete disapproval of the "Triborough Doctrine”, we hold that it was error for PERB to determine that BOCES had violated its duty to negotiate in good faith solely because of its failure to pay increments after the expiration of an employment agreement.

Accordingly, the judgment of the Appellate Division should be modified, without costs, by annulling and vacating PERB’s determination in its entirety, and, as so modified, affirmed.

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

Cross appeal taken as of right by petitioner dismissed, without costs, upon the ground that petitioner was not aggrieved by the modification at the Appellate Division (CPLR 5601, subd [a], par [iii]). Motion by petitioner for leave to appeal granted. Judgment modified, without costs, in accordance with the opinion herein and, as so modified, affirmed.


author: Per Curiam.

text:
    The People of the State of New York, Respondent, v Joseph Prochilo, Appellant. The People of the State of New York, Appellant, v Clarence Goings, Respondent. The People of the State of New York, Respondent, v William Bernard, Also Known as James Rogers, Appellant.
    Argued April 27, 28, 1977;
    decided June 2, 1977

      James J. Cally, New York City, for appellant in the first above-entitled action.

      Eugene Gold, District Attorney (Richard E. Mischel of counsel), Brooklyn, for respondent in the first above-entitled action.

      Robert M. Morgenthau, District Attorney (David I. Pincus and Peter L. Zimroth of counsel), New York City, for appellant in the second above-entitled action.

      Joel Brenner and J. Jeffrey Weisenfeld, New York City, for respondent in the second above-entitled action.

      Patricia L. Goughan and William E. Hellerstein, New York City, for appellant in the third above-entitled action.

      Robert M. Morgenthau, District Attorney (Henry Steinglass, Peter L. Zimroth and Richard M. Seltzer of counsel), New York City, for respondent in the third above-entitled action.
   Per Curiam.

In each of these three cases the defendant sought to suppress a handgun which had been taken from him by the police. The single issue presented—whether the action of the police officer was reasonable—"must necessarily turn on the facts in each individual case”. (People v Green, 35 NY2d 193, 195.) Because of the number of cases arising in somewhat comparable factual contexts, it may be useful to identify some general guidelines for the resolution of individual cases, with full recognition, however, that there can be no satisfactory frame of reference or template applicable in every instance. At the outset we observe that much weight must be accorded the determination of the suppression court with its peculiar advantages of having seen and heard the witnesses (cf. People v Oden, 36 NY2d 382).

The ultimate determination will depend on a balancing of the legitimate interests of the defendants against the reasonableness and appropriateness of the police action. At least three aspects of each individual transaction should be considered. Was there proof of a describable object or of describable conduct that provides a reasonable basis for the police officer’s belief that the defendant had a gun in his possession? Was the manner of the officer’s approach to the defendant and the seizure of the gun from him reasonable in the circumstances? Was there evidence of probative worth that there had been a pretext stop and frisk or that the police were otherwise motivated by improper or irrelevant purpose? There will be other material considerations, too, in individual cases. Because the totality of the circumstances in each case is necessarily unique, there should be no expectation that comparable significance will always attach to the same or similar factors in different cases.

We turn then to the three appeals which are now before us. In Prochilo, the denial of suppression by Supreme Court should be upheld. An experienced officer, on routine patrol in the 500 block of Flatbush Avenue in Brooklyn, from his vantage sitting in a parked automobile, observed defendant standing watching other officers interviewing passing pedestrians. From a distance of some seven or eight feet the officer saw defendant making continuing hand motions toward his side. The officer then noticed a bulge at defendant’s right hip. The officer left the automobile and as he approached defendant, who was still making the hand motions, observed through defendant’s tight outer clothing the complete outline of a revolver at his side. The officer then reached out and removed a .32 calibre revolver loaded with seven rounds of live ammunition from defendant’s waistband. The evidence warranted the officer’s acting on his belief that defendant had a gun.

In Goings, Supreme Court’s denial of a suppression should likewise be sustained. Officers in the Street Crime Unit were patrolling the Times Square area of New York City in a yellow taxicab. In the brightly lighted area of 42nd Street from the slowly moving cab they observed defendant walking along the sidewalk with a female companion. From a distance of some 20 feet one of the officers saw a bulge in defendant’s . right-hand jacket pocket which struck him immediately as having "the configuration of a handgun”, "the outline of a gun”. The cab parked and the officer approached defendant, displayed his shield and said that he would like to have a word with him. The officer then put his hand on defendant’s pocket, squeezed and felt what the officer believed was a gun. Defendant was arrested and a .32 calibre, short-barrel revolver in a partial brown leather holster with six rounds of live ammunition was taken from his pocket. This case approaches a true stop and frisk. In any event the evidence here, too, warranted the officer’s belief that defendant was carrying a gun.

In Bernard, by some contrast we conclude that the denial of suppression by Supreme Court must be set aside. But the case confirms that criminal cases defy classification by categories. As two officers were on routine motor patrol in central Harlem, a pimp known to one of the officers waved hello, the patrol car pulled to the curb and the pimp and defendant approached the officers in the car. As one of the officers was conversing with the pimp, defendant was standing behind the latter. The officer detected a nervous uneasiness in defendant’s manner and observed that he was standing with his hands in the pockets of his long outer coat, slouched forward from the waist at a 45 degree angle. When the officer told defendant to remove his hands from his pockets defendant did so very slowly and the officer saw a heavy object slide against the material in the right pocket. The officer then got out of the patrol car, tapped defendant’s right pocket and on feeling a hard object, reached into the pocket and removed a .22 calibre six-inch revolver with six rounds of live ammunition. Were there no more we might conclude that the revolver should not have been suppressed. In this instance it was defendant and his companion, not the police, who initiated the encounter. In this circumstance the police officer might naturally have been apprehensive for his safety when approached by a known lawbreaker with another man in his company who was slouched over, and who kept his hands in the pockets of his long coat as the conversation progressed. The inferences thus naturally to have been drawn must be deemed, however, to have been negated on this record. The officer testified that before he reached into defendant’s pocket, defendant had done nothing wrong, that he could not tell what the heavy object appeared to be by looking at the pocket, and that until he had reached into the pocket he had not seen "any part of what appeared to be a gun, a handle, a barrel, or anything like that”. Nor is there anywhere in his testimony any suggestion that at any time he was apprehensive for his own safety. On this state of the record there was nothing in defendant’s standing behind the pimp, in his nervousness or his slouched stature, or the fact that he had his hands in his coat pockets and removed them very slowly when requested to do so, or that a heavy object slid against the material of defendant’s pocket which can be said to be reasonably referable to or indicative of the presence of a revolver.

Accordingly, the order of the Appellate Division in Prochilo should be affirmed; that in Goings should be reversed and the case remitted to the Appellate Division for review of the facts (CPL 470.40, 470.25); and that in Bernard reversed, the motion for suppression granted, the judgment of conviction vacated, and the indictment dismissed.

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

In People v Prochilo: Order affirmed.

In People v Goings: Order reversed and case remitted to the Appellate Division, First Department, for further proceedings in accordance with the opinion herein.

In People v Bernard: Order reversed, motion to suppress granted, judgment of conviction vacated and the indictment dismissed.


author: Fuchsberg, J.

text:
    In the Matter of the City of Buffalo, Respondent, v Thomas N. Rinaldo et al., Respondents, and Buffalo Police Benevolent Association, Appellant.
    Argued May 31, 1977;
    decided June 6, 1977

      Nicholas J. Sargent, Buffalo, for appellant.

      Leslie G. Foschio, Corporation Counsel (Joseph A. Tringali of counsel), for City of Buffalo, respondent.

      Carmin R. Putrino, Buffalo, for Buffalo Professional Firefighters Association, Inc., Local 282, I.A.F.F., AFL-CIO, amicus curiae.

   Fuchsberg, J.

By these proceedings, originally brought pursuant to CPLR article 78 against the Buffalo Police Benevolent Association (PBA), the State Public Employment Relations Board (PERB) and the members of an ad hoc public arbitration panel, the City of Buffalo sought to vacate a determination by which the panel had granted a salary increase to the police bargaining unit represented by the PBA. The Appellate Division vacated the award because it concluded that the city was without the means to fund the increase.

The genesis of the proceedings were collective bargaining negotiations for a new contract between the city and the PBA for the fiscal year July 1, 1975 through June 30, 1976. After all attempts, including mediation and fact finding, to resolve an impasse in their negotiations had failed to resolve their differences, the dispute was referred for compulsory binding arbitration by a public panel in accordance with the procedures set forth in section 209 (subd 4, par [c]) of the Civil Service Law.

After entertaining extensive proof and argument proffered by both sides, the panel awarded a 5% salary increase retroactive to July 1, 1975. In doing so, it rejected the PBA’s demand for a 10% increase and an improvement in other conditions of employment; it also thereby rejected the fact finder’s earlier recommendation, unacceptable to both parties, that the police be granted a $50 increase in uniform allowance and a nonrecurring salary bonus in an amount equivalent to 6% of base salary.

Although the Appellate Division confined itself to a consideration of proof of the financial ability of the public employer to pay (Civil Service Law, § 209, subd 4, par [c], cl [v], subcl [b]), considerable evidence had been presented to the panel and, earlier, to the fact finder, whose findings of fact and recommendations for settlement go to the panel, on a variety of issues. Included in that presentation was proof on such other vital issues as the comparability of the benefits received by the employees involved in the arbitration proceeding with those of similar employees in public or private employment in comparable communities, the training hazards peculiar to police work and other such matters to which the statute also specifically directed the attention of the panel (Civil Service Law, § 209, subd 4, par [c], cl [v], subcls [a], [c], [d]).

Before further alluding to the considerations which may have motivated the panel, we note that the source of judicial power to review findings in compulsory interest arbitrations conducted under subdivision 4 of section 209 is not to be found in the statute, which itself is completely silent on the matter, but rather in the requirements of due process, so "that the contract imposed by the arbitrator under the power conferred by statute have a basis not only in his good faith, but in law and the record” (Mount St. Mary’s Hosp. v Catherwood, 26 NY2d 493, 507).

For such purposes there must be a sufficient form of review. Thus, since the statute here contains detailed standards which are to be considered, though only "so far as [the panel] deems them applicable,” "in arriving at [its] determination” (Civil Service Law, § 209, subd 4, par [c], cl [v]), it is appropriate to review whether that requirement has been followed (Matter of Guardian Life Ins. Co. v Bohlinger, 308 NY 174, 183). And, since, as we only recently had occasion to make clear, "the essential function of these compulsory arbitration panels is to 'write collective bargaining agreements for the parties’ (Mount St. Mary’s Hosp. v Catherwood, 26 NY2d 493, 503, supra), * * * [i]t follows that such awards, on judicial review, are to be measured according to whether they are rational or arbitrary and capricious in accordance with the principles articulated in Mount St. Mary’s Hosp. v Catherwood (supra) (see CPLR 7803, subd 3, for parallel language)” (Caso v Coffey, 41 NY2d 153, 158).

Turning now to the three-man panel’s determination in this case, both the majority and minority opinion and a voluminously documented record reveal that the PBA introduced considerable evidence that, among other things, the wages, hours and working conditions of a Buffalo police officer compare unfavorably with those in contiguous or other comparable areas, that his services must be performed on a police force of diminishing size in the face of the growing hazards of an increasing crime rate and that an unusually high rise in the cost of living in the Buffalo area had substantially reduced the employees’ real wages.

The city did not seriously dispute these contentions, but relied on proof of property abandonment, shrinking tax collections, fleeing population and industry, high unemployment and a declining tax rate base, all of which, it contended, combined to compound the city’s financial problems. However true, this picture did not go uncontroverted. On this issue, the PBA introduced analyses and proof of its own so that the record reveals important differences between the parties on the probability and amount of a projected increase in sales tax, on the anticipated availability of Federal funds under the Public Works and Economic Development Act of 1965, on State revenue sharing, on the city’s residual tax ability and on other fiscal measures available to it.

In the end, the panel came to the conclusion that "the fiscal problems of the City must be weighed against the services performed by a police officer”. In making its award, it went on to state that "Buffalo police officers can surely be asked to share in this fight, but cannot be expected to bear the full burden of the City’s fiscal problems”.

On this record, it cannot be said that the panel’s award was irrational. It was within its province, under the applicable statute, not only to judge the facts but choose the priorities which, in its judgment, some matters were entitled to over others. It had a right to balance the ability of the city to pay against the interest of the public and the PBA members. Under subdivision 4 of section 209 the panel is the one to determine what constitutes "a just and reasonable determination of the matters in dispute” (§ 209, subd 4, par [c], cl [v]). It was therefore for it, and not for the courts, to decide what weight to give to each matter vis-á-vis the others.

It could, be argued that a finding of the city’s ability to pay based on expectations of increased revenue sharing, or even the availability of grants under Federal public works programs, might be so speculative as to approach irrationality. Even were that position to be accepted, there here remain other identified, nonspeculative sources of additional revenue. Beyond any such analysis, however, and most significant, it must be recognized that the statute, the wisdom of which it is for others to decide, vests broad authority in the arbitration panel to determine municipal fiscal priorities within existing revenues. Thus, even if the statute were to mandate consideration of municipal ability to pay (rather than as at present only to identify ability to pay as one of the factors to be taken into consideration "so far as it deems them applicable”), the panel would still be confronted with responsibility and vested with authority to determine priorities among all relevant factors in a balancing process. The panel might determine that a particular increase in compensation should take precedence over other calls on existing or even diminishing municipal revenues.

The reviewing court could only inquire whether there was support based on all the statutory criteria. The economic evidence was received in relation to all the "matters in dispute”. It was the judgment of the majority of the panel that the evidence relating to comparability and other matters dehors the city’s ability to pay was such as to require increases in salary. Ability to pay was only one of the considerations to be weighed by the panel. The applicable statute, reading as it does, empowered the arbitrators to conclude that it was not dispositive. What must be assumed is that the city’s ability to pay was considered; the opinion of the panel demonstrates a reasonable basis for its determination.

Conceivably, rare circumstances might arise when the cost of a particular award, when taken against particular economic conditions in a municipality and other relevant factors, would, on review, be found to be irrational. But this is not such a case. Here the Appellate Division should not have drawn its own conclusions from the weight of the evidence or substituted its judgment for that of the arbitrators.

Accordingly, the order of the Appellate Division should be reversed and the award of the arbitrators reinstated, without costs.

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

Order reversed, etc.

       Pursuant to CPLR 7804 (subd [g]), Special Term transferred the proceeding to the Appellate Division which, correctly treating it as one under article 75, properly dismissed it against PERB and the panel (see Caso v Coffey, 41 NY2d 153, 156, 160).


author: Gabrielli, J.

text:
    Frederick R. Haines, on Behalf of Himself and All Other Property Owners in the Town of Hunter, Similarly Situated, Respondent, and Town of Hunter et al., Intervenors-Respondents, v City of New York et al., Appellants.
    Argued April 25, 1977;
    decided June 7, 1977

      W. Bernard Richland, Corporation Counsel (Stephen R Kramer, L. Kevin Sheridan and Alexander Gigante, Jr., of counsel), New York City, for appellants.

      Louis M. Weber, New York City, for respondent.

      Charles J. Brown Windham, and Anthony Bucca, Tannersville, for intervenors-respondents.
   Gabrielli, J.

In the early 1920’s, respondent City of New York and intervenors Town of Hunter and Village of Tanners-ville embarked upon negotiations for the construction of a sewage system to serve the village and a portion of the town. These negotiations were prompted by the city’s need and desire to prevent the discharge of untreated sewage by residents of the area into Gooseberry Creek, a stream which fed a reservoir of the city’s water supply system in the Schoharie watershed.

In 1923, the Legislature enacted enabling legislation authorizing the city to enter into contracts with municipalities in the watershed area "for the purpose of providing, maintaining [and] operating systems and plants for the collection and disposal of sewage” (L 1923, ch 630, § 1). The statute further provided that any such contracts would be subject to the approval of the New York City Board of Estimate and Apportionment.

The negotiations culminated in an agreement in 1924 between the city and intervenors. By this agreement, the city assumed the obligation of constructing a sewage system consisting of a sewage disposal plant and sewer mains and laterals, and agreed that "all costs of construction and subsequent operation, maintenance and repair of said sewerage system with the house connections thereof and said disposal works shall be at the expense” of the city. The agreement also required the city to extend the sewer lines when "necessitated by future growth and building constructions of the respective communities”. The village and town were obligated to and did obtain the necessary easements for the construction of the system and sewage lines.

The Board of Estimate, on December 9, 1926, approved the agreement and authorized the issuance of $500,000 of "corporate stock” of the City of New York for construction of the system by appropriate resolution. It is interesting to here note that a modification of the original agreement occurred in 1925 wherein the village agreed to reimburse the city for a specified amount representing the expense of changing the location of certain sewer lines. The plant was completed and commenced operation in 1928. The city has continued to maintain the plant through the ensuing years and in 1958 expended $193,-000 to rehabilitate and expand the treatment plant and facilities.

Presently, the average flow of the plant has increased from an initial figure of 118,000 gallons per day to over 600,000 gallons daily and the trial court found that the plant "was operating substantially in excess of design capacity”. The city asserts, and it is not disputed by any of the parties in this action, that the system cannot bear any significant additional "loadings” because this would result in inadequate treatment of all the sewage and consequently harm the city’s water supply. The instant controversy arose when plaintiff, who is the owner of a tract of unimproved land which he seeks to develop into 50 residential lots, applied to the city for permission to connect houses, which he intends to construct on the lots, to existing sewer lines. The city refused permission on the ground that it had no obligation to further expand the plant, which is presently operating at full capacity, to accommodate this new construction.

Plaintiff then commenced this action for declaratory and injunctive relief, in which interveners town and village joined as plaintiffs, maintaining that the 1924 agreement is perpetual in duration and obligates the city to expend additional capital funds to enlarge the existing plant or build a new one to accommodate the present and future needs of the municipalities. Both the trial court and the Appellate Division, by a divided court, held in favor of plaintiff and intervenors concluding, that, while the contract did not call for perpetual performance, the city was bound to construct additional facilities to meet increased demand until such time as the village or town is legally obligated to maintain a sewage disposal system. Two members of the court dissented in part stating that the agreement should not be construed as requiring the city to construct new or additional facilities.

We conclude that the city is presently obligated to maintain the existing plant but is not required to expand that plant or construct any new facilities to accommodate plaintiff’s substantial, or any other, increased demands on the sewage system. The initial problem encountered in ascertaining the nature and extent of the city’s obligation pursuant to the 1924 agreement, is its duration. We reject, as did the courts below, the plaintiffs contention that the city is perpetually bound under the agreement. The contract did not expressly provide for perpetual performance and both the trial court and the Appellate Division found that the parties did not so intend. Under these circumstances, the law will not imply that a contract calling for continuing performance is perpetual in duration (Milton v Freideberg, 32 Misc 2d 78, 85; Warner-Lambert Pharm. Co. v John J. Reynolds, Inc., 178 F Supp 655, affd 280 F2d 197; Holt v St. Louis Union Trust Co., 52 F2d 1068, 1069; Town of Readsboro v Hoosac Tunnel & Wilmington R.R. Co., 6 F2d 733 [L. Hand, J.]; Borough of West Caldwell v Borough of Caldwell, 26 NJ 9, 28-29; 1 Williston, Contracts [3d ed], § 38, p 113).

On the other hand, the city’s contention that the contract is terminable at will because it provides for no express duration should also be rejected. In the absence of an express term fixing the duration of a contract, the courts may inquire into the intent of the parties and supply the missing term if a duration may be fairly and reasonably fixed by the surrounding circumstances and the parties’ intent (Warner-Lambert Pharm. Co. v John J. Reynolds, Inc., supra, p 661; Benham v World Airways, 432 F2d 359, 361; Town of Readsboro v Hoosac Tunnel & Wilmington R. R. Co, supra, p 735). It is generally agreed that where a duration may be fairly and reasonably supplied by implication, a contract is not terminable at will (1 Williston, op. cit, p 112; 10 NY Jur, Contracts, § 412, p 426; 17 Am Jur 2d, Contracts, § 487, p 957; 17A CJS, Contracts, § 398, p 480; see, also, Restatement, Contracts 2d [Tent Draft No. 7], § 230).

While we have not previously had occasion to apply it, the weight of authority supports the related rule that where the parties have not clearly expressed the duration of a contract, the courts will imply that they intended performance to continue for a reasonable time (Colony Liq. Distrs. v Daniel Distillery-Lem Motlow Prop., 22 AD2d 247, 249-250 [Aulisi, J]; Metal Assoc. v East Side Metal Spinning & Stamping Corp., 165 F2d 163, 165; Borough of West Caldwell v Borough of Caldwell, supra, p 412; Simpson, Contracts, §48, p 74; 1 Williston, op. cit., pp 116-117; 10 NY Jur, Contracts, § 413, p 427). For compelling policy reasons, this rule has not been, and should not be, applied to contracts of employment or exclusive agency, distributorship, or requirements contracts which have been analogized to employment contracts (see, e.g., Clark Paper & Mfg. Co. v Stenacher, 236 NY 312; Watson v Gugino, 204 NY 535, 541; Churchill Evangelical Assn. v Columbia Broadcasting System, 236 App Div 624; Outerbridge v Campbell, 87 App Div 597; see, also, Simpson, op. cit, p 74). The considerations relevant to such contracts do not obtain here. Thus, we hold that it is reasonable to infer from the circumstances of the 1924 agreement that the parties intended the city to maintain the sewage disposal facility until such time as the city no longer needed or desired the water, the purity of which the plant was designed to insure. The city argues that it is no longer obligated to maintain the plant because State law now prohibits persons from discharging raw sewage into streams such as Gooseberry Creek. However, the parties did not contemplate the passage of environmental control laws which would prohibit individuals or municipalities from discharging raw, untreated sewage into certain streams. Thus, the city agreed to assume the obligation of assuring that its water supply remained unpolluted and it may not now avoid that obligation for reasons not contemplated by the parties when the agreement was executed, and not within the purview of their intent, expressed or implied.

Having determined the duration of the city’s obligation, the scope of its duty remains to be defined. By the agreement, the city obligated itself to build a specifically described disposal facility and to extend the lines of that facility to meet future increased demand. At the present time, the extension of those lines would result in the overloading of the system. Plaintiff claims that the city is required to build a new plant or expand the existing facility to overcome the problem. We disagree. The city should not be required to extend the lines to plaintiffs’ property if to do so would overload the system and result in its inability to properly treat sewage. In providing for the extension of sewer lines, the contract does not obligate the city to provide sewage disposal services for properties in areas of the municipalities not presently served or even to new properties in areas which are presently served where to do so could reasonably be expected to significantly increase the demand on present plant facilities.

Thus, those paragraphs of the judgment which provide that the city is obligated to construct any additional facilities required to meet increased demand and that plaintiff is entitled to full use of the sewer lines should be stricken.

Accordingly, the order of the Appellate Division should be modified and the case remitted to Supreme Court, Greene County, for the entry of judgment in accordance with the opinion herein and, as so modified, affirmed, with costs to appellants against plaintiffs-respondents only.

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

Order modified, etc.


author: Jasen, J.

text:
    In the Matter of Max Liberman, Respondent, v Norman S. Gallman et al., Constituting the State Tax Commission, Appellants.
    Argued April 25, 1977;
    decided June 7, 1977

      Louis J. Lefkowitz, Attorney-General (George M. Thorpe, Ruth Kessler Toch and John F. Forner, Jr., of counsel), Albany, for appellants.

      Neil H. Rivchin, Albany, for respondent.
   Jasen, J.

The sole issue presented on this appeal is whether the determinations of the State Tax Commission that petitioner shoe salesman was not an employee of the shoe manufacturer and, hence, was subject to the unincorporated business tax are erroneous as a matter of law.

Petitioner Max Liberman, a resident of New York City, has been engaged in the business of manufacturing, designing and selling children’s shoes for approximately 40 years. Ever since 1940, he has served as a sales representative of the Reider Shoe Manufacturing Company of Schuylkill Haven, Pennsylvania. The latest contract between petitioner and the shoe manufacturer was executed in 1955 and is renewable from year to year. His primary function was to solicit orders for Reider shoes from retail outlets in a territory stretching along the eastern seaboard from Maine to Florida. His efforts accounted for approximately 75% of Reider’s sales. Petitioner worked for Reider exclusively. Secondary responsibilities included the rendition of advice on such matters as shoe design and marketing techniques.

In return for his services, Liberman received a straight commission on the shoe sales that he arranged. On occasion, however, certain accounts he had established would unilaterally be designated "house accounts” by the company and his commission would be terminated. To compensate him for his design and merchandising assistance, the company paid him an additional commission based upon a set percentage of the company’s total monthly sales. He was also entitled to an "override commission” in the event that the company’s total sales for the calendar year exceeded specified levels. Reider deducted both Social Security and disability benefits taxes from the commissions paid to Liberman. The company, however, did not withhold amounts due for Federal or New York State income taxes.

Liberman maintained an office in a New York City building primarily occupied by business concerns active in the shoe industry. The lease for the office space was for a term of two or three years and was in Liberman’s name. Liberman was responsible for payment of the rent, but he and the company divided the cost of office furnishings. The names of both the company and Liberman are posted in the building directory. The company name appears on the office door with Liberman’s name listed in smaller print as the company representative. The telephone and the office stationery are in Reider’s name.

The nature of the business required Liberman to travel extensively to visit customers and to solicit new business. He spent approximately 35 to 45% of his time outside of New York City. The selection of locations to be visited and the timing of the visits were left primarily to Liberman’s discretion, although, periodically, the company would direct him to visit particular sales areas or customers. This was done to insure that petitioner was covering his assigned territory. All payments from customers are made directly to Reider and all new customers obtained by petitioner must have their credit approved by Reider before orders would be accepted. Liberman was directed to report frequently on his sales activities. The company occasionally required petitioner to concentrate on specific duties, to attend to specific accounts, to emphasize the sale of certain shoe styles and to attend sales meetings and conventions. When Reider selected additional salesmen to work in petitioner’s territory, petitioner was responsible for instructing them.

Reider required that the New York City office be open even when Liberman was traveling out of town. Reider also required that Liberman hire a secretary. Liberman was responsible for selecting the secretary and establishing her rate of compensation and paying her salary. However, when Reider had complaints regarding the secretary’s performance, Liberman would discharge her. The secretary answered the telephone in Reider’s name. Liberman established the office hours, but could not take time off without company permission. Petitioner used the New York office to entertain visiting officers of Reider and to display merchandise to potential customers. However, orders arising from office displays would be credited to other salesmen.

The State of New York imposes a tax upon the income of every unincorporated business wholly or partially carried on within the State. (Tax Law, § 701, subd [a].) An unincorporated business is defined as any trade, business or occupation engaged in by an individual or an unincorporated entity. (Tax Law, § 703, subd [a].) However, "[t]he performance of services by an individual as an employee * * * of a corporation * * * shall not be deemed an unincorporated business, unless such services constitute part of a business regularly carried on by such individual”. (Tax Law, § 703, subd [b].)

In 1965, petitioner Liberman was found tax deficient for failing to pay unincorporated business taxes for the years 1960 through 1963. Petitioner commenced an administrative proceeding for a redetermination of the deficiency. After a hearing, the State Tax Commission found that "[t]he taxpayer has not carried the burden of proof to show that he is under the direction and control of his principal so as to be an employee rather than independent contractor.” Therefore, the commission determined that the deficiencies were valid and denied the applications for redetermination.

Petitioner brought an article 78 proceeding to review the determinations of the State Tax Commission. The Appellate Division, to which the case had been transferred, annulled the determinations by a divided court. The majority stated that "[w]e are persuaded that Reider exercised all the direction and control that it could realistically be expected to exert under the circumstances to continue petitioner as an employee within the intendment of the Tax Law.” (53 AD2d 766, 767.) Two Justices dissented, taking the view that "[w]here, as here, there are facts or reasonable inferences from the facts to sustain it, the court must confirm the Tax Commission’s determination.” (53 AD2d, at p 767.) We agree with the dissenting Justices that the petitioner failed to carry his burden of establishing his entitlement to a tax exemption. We would, therefore, reverse the judgment of the Appellate Division.

It is well settled that the burden of overcoming a tax assessment rests with the taxpayer. An exemption from taxation "must clearly appear, and the party claiming it must be able to point to some provision of law plainly giving the exemption”. (People ex rel. Savings Bank of New London v Coleman, 135 NY 231, 234.) Further, the judicial function is limited. "If there are any facts or reasonable inferences from the facts to sustain it, the court must confirm the Tax Commission’s determination. Thus, a determination of the Tax Commission will not be disturbed by the courts unless shown to be erroneous, arbitrary or capricious”. (Matter of Grace v New York State Tax Comm., 37 NY2d 193, 195-196; accord Matter of Young v Bragalini, 3 NY2d 602, 605-606; People ex rel. Hull v Graves, 289 NY 173, 177.) The courts may not substitute their judgment for that of the Tax Commission "where reasonable minds may differ as to the probative force of the evidence”. (Matter of Great Lakes Dredge & Dock Co. v Department of Taxation & Fin. of State of N. Y., 39 NY2d 75, 79, cert den 429 US 832.)

There is no dispute as to the standard to be applied in determining whether or not petitioner was an employee, as opposed to an independent contractor. "The distinction between an employee and an independent contractor has been said to be the difference between one who undertakes to achieve an agreed result and to accept the directions of his employer as to the manner in which the result shall be accomplished, and one who agrees to achieve a certain result but is not subject to the orders of the employer as to the means which are used.” (Matter of Morton, 284 NY 167, 172.) It is the degree of control and direction exercised by the employer that determines whether the taxpayer is an employee. (E.g., Matter of Greene v Gallman, 39 AD2d 270, 272, affd 33 NY2d 778; Matter of Frishman v New York State Tax Comm., 33 AD2d 1071, mot for lv to app den 27 NY2d 483; Matter of Hardy v Murphy, 29 AD2d 1038; see 20 NYCRR 203.10; cf. Matter of Sullivan Co., 289 NY 110, 112.) "From the nature of the problem the degree of control which must be reserved by the employer in order to create the employer-employee relationship cannot be stated in terms of mathematical precision, and various aspects of the relationship may be considered in arriving at the conclusion in a particular case.” Matter of Morton, 284 NY 167, 173, supra.)

Turning to the particular case before us, we conclude that there are sufficient facts in the record and inferences which may reasonably be drawn from the facts to sustain the commission’s determinations that petitioner was not an employee. Liberman was engaged as a sales representative and Reider did not exercise any control over his sales endeavors. Although the company did assert some supervision to assure itself that Liberman was covering his territory and was visiting its substantial customers, Reider did not, and indeed could not have, controlled or regulated the manner in which Liberman attempted to solicit business. Petitioner conducted solicitations of business while traveling on his own, out of town, and his selection of sales approaches was primarily a matter of personal style and discretion.. To be sure, Reider periodically directed that certain styles be stressed in order to guard against cumulations of unsold stock. However, the manner in which customers would be approached and persuaded to purchase was solely within Liberman’s control. In the absence of supervision and control of the sales routine, salesmen do not become employees. (People ex rel. Feinberg v Chapman, 274 App Div 715, 720; cf. Matter of Britton v State Tax Comm., 22 AD2d 987, affd 19 NY2d 613.) "It has consistently been held that salesmen are not employees where they are not subject to direction or control as to the manner in which they are to make sales, by the concerns whose products they sell.” (Matter of Hardy v Murphy, 29 AD2d 1038, 1039, supra.)

A second important factor is that petitioner was directly responsible for paying for his own office space and clerical help. (See Matter of Silver v Gallman, 51 AD2d 633, 634, mot for lv to app den 39 NY2d 1055.) While there is some evidence that one of the purposes of the override commission was to reimburse petitioner for some of his office related expenses, it still remains true that, had his services been terminated by the company, Liberman would have remained personally liable for any unexpired term of the office lease. Moreover, his net income was reduced by the fact that office expenses would have to come out of his total commissions.

Thirdly, Reider failed to withhold income taxes from the commissions paid to Liberman. While this fact would not by itself be dispositive (see Matter of Lampel v Procaccino, 46 AD2d 966), it is nevertheless significant that petitioner was treated for tax withholding purposes by the company as being self-employed. (Matter of Frishman v New York State Tax Comm., 33 AD2d 1071, 1072, mot for lv to app den 27 NY2d 483, supra; see Matter of Britton v State Tax Comm., 22 AD2d 987, 988, affd 19 NY2d 613, supra.) It is also important to note that Reider delegated much to Liberman in order that it might avoid being subjected to taxation in New York.

All of this is not to say that the record would not have supported a contrary conclusion by the agency. However, the scope of judicial review is limited. The courts may intervene only where the determination of the commission is erroneous as a matter of law. We may not substitute our judgment for that of the commission where reasonable minds may differ as to the probative force of the evidence. The record in this case contains sufficient facts to sustain the commission’s determinations and there our review must end.

Accordingly, the judgment of the Appellate Division should be reversed, with costs, the determinations of the State Tax Commission confirmed, and the petition dismissed.

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

Judgment reversed, etc.


text:
    In the Matter of Steven G. Dworsky et al., Respondents, v Dan G. Farano, as a Judge of the City Court of Troy, Appellant. Pat M. Casale et al., Intervenors-Appellants.
    Argued June 6, 1977;
    decided June 9, 1977

      Donald C. Bowes, Corporation Counsel (Thomas V. Kenney, Jr., of counsel), Troy, for appellant.

      Peter R. Kehoe, Troy, for intervenors-appellants.

      Richard A. Hanft, Troy, for respondents.
   Per Curiam.

Section 2.00 of the Troy City Charter provides that in the event of the death of any city councilman, the vacancy thereby created shall be filled by the vote of the remaining members of the council and, in the event of a tie vote, the City Judge of the City of Troy shall cast the deciding vote. Prior to a special meeting of the city council called for the purpose of filling a vacancy created by the death of the Mayor, a member of the council, petitioners commenced this article 78 proceeding by order to show cause, challenging the validity of the afore-mentioned provision of the Troy City Charter, and obtained a temporary restraining order prohibiting respondent City Judge from exercising the authority conferred upon him by section 2.00 of the Troy City Charter. A tie vote occurred at the meeting and respondent City Judge, under compulsion of the restraining order, did not cast the tie breaking vote. Following a hearing in the article 78 proceeding, Supreme Court held that section 2.00 was unconstitutional, reasoning that the power therein conferred upon the City Judge was not "in aid or furtherance of judicial duties” and was not "connected with a judicial purpose”.

We reverse and hold that the challenged section of the Troy City Charter is valid and constitutional. Article IX (§1, subd [b]) of the New York State Constitution provides that: "All officers of every local government whose election or appointment is not provided for by the constitution shall be elected by the people of the local government, or of some division thereof, or appointed by such officers of the local government as may be provided by law” (emphasis added).

We begin, therefore, with the premise that the State Constitution vests local government with the right to confer upon their officers the authority to appoint other officers of local government. Indeed, the parties are in full agreement that the city council validly possesses the authority, by virtue of the city charter, to fill a vacancy in its own number. A City Judge is, of course, an "officer of local government” and thus may be given the power provided for in the Constitution. Section 20 of article VI of the Constitution, which prohibits certain judicial officers from holding "any other public office or trust” (with exceptions not relevant here) does not abrogate or supersede section 1 of article IX since the former provision applies only to Judges of the Court of Appeals, Supreme Court, Court of Claims, County Court, Surrogate’s Court, Family Court and courts for the City of New York. It places no restrictions on City Court Judges outside of the City of New York. Thus, Matter of Richardson (247 NY 401) is distinguishable because in that case extrajudicial duties were thrust upon a Supreme Court Justice by the State Legislature in violation of the express provision in section 19 of article VI of the Constitution (the predecessor to art VI, § 20) that a Supreme Court Justice and Judges of certain constitutional courts could not hold "any other public office or trust”.

Here, there is no attempt to transform the City Court Judge into an investigative or administrative arm of the executive (cf. Matter of Richardson, supra, p 411) or thrust upon him burdensome duties which would interfere with the performance of his judicial function under applicable statutes, or would violate any constitutional prohibition as with Judges of higher courts. Rather, we have an emergency provision operative only in the limited instance and fully discharged in a single act of short duration, in which members of the city council cannot agree on a candidate to fill a vacancy in their number. Should such a procedure be deemed unwise, as well it might, or if there be dissatisfaction with the method chosen by the City of Troy to resolve such a deadlock, it is for others, and not the courts, to legislate change.

Accordingly, the judgment of Supreme Court, Rensselaer County, is reversed, and section 2.00 of the Troy City Charter is declared to be constitutional.

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

Judgment reversed, without costs, and section 2.00 of the Troy City Charter declared to be constitutional.


text:
    Benjamin Ostrer, Respondent, v Benjamin R. Schenck, as Superintendent of Insurance of the State of New York, Appellant.
    Argued March 21, 1977;
    decided June 7, 1977

      Louis J. Lefkowitz, Attorney-General (Robert S. Hammer and Samuel A. Hirshowitz of counsel), New York City, for appellant.

      Philip R. November, New York City, for respondent.
   Jasen, J.

In June, 1973, the Superintendent of Insurance promulgated regulation 65 (11 NYCRR Part 202), which limits to specified maximum levels, adjusted for volume, the commissions an insurance agent may receive for life insurance policies issued on a mass-merchandising basis under plans sponsored by union-management employee welfare funds. The issue on this appeal is whether regulation 65 conflicts with positive provisions of the Insurance Law and is, therefore, a nullity. Or put more concretely, the issue is whether the Superintendent of Insurance may adopt a regulation to control the masking of a group insurace arrangement, subject to close statutory and administrative regulations, under the guise of issuing individual policies by which a salesman of insurance in complicity with a union-management welfare fund may enhance his commissions.

Plaintiff Benjamin Ostrer is a duly licensed life insurance agent who is in the business of soliciting and placing life insurance coverage for members of union-management welfare funds. Ostrer had an agency relationship with the International Life Insurance Company of Buffalo. Under the terms of his agency agreement with the insurance carrier, Ostrer was to receive a commission on each individual life insurance policy he placed with the company equal to 55% of the first-year premium. The rate of commission applicable to the placement of a single policy covering a group of individuals was substantially lower.

In the spring of 1973, plaintiff successfully arranged for the placement with International Life of a life insurance program to be sponsored by the Airline, Aerospace and Affiliated Employees Severance Fund for Local 732. The assets of this union-management welfare fund were contributed pursuant to the terms of a collective bargaining agreement. Instead of providing for a single-group policy to cover all fund members, plaintiff arranged with the trustees of the fund for a program whereby each member would be issued a uniform individual policy with terms prearranged by the trustees of the fund and the insurance carrier. Ostrer was, thus, able to claim the benefits of the higher commission rate applicable to individual policies. Regulation 65, which took effect prior to payment of the commission to Ostrer, limits his commission to no more than 5.2% of the annual premium of each policy. (11 NYCRR 202.2.) Relying upon the duly promulgated regulation, the insurance carrier refused to pay Ostrer the full commission specified in the agency agreement.

Plaintiff brought an action to invalidate regulation 65. After a trial, Special Term found in favor of the plaintiff and held that regulation 65 conflicted with subdivision 4 of section 213 of the Insurance Law. The Appellate Division affirmed. We conclude that regulation 65 is a valid exercise of powers conferred upon the Superintendent of Insurance by statute, that the regulation does not conflict with any provision of the Insurance Law, and that the order of the Appellate Division should be reversed.

Subdivision 4 of section 213 of the Insurance Law establishes, as a general principle, that the first-year commission on the sale of life insurance may be as great as 55% of the first-year premium. Plaintiff argues that regulation 65 reduces the maximum commission level below the rate established by statute and must, therefore, be invalidated. However, subdivision 11 of section 213 specifically excludes group insurance from the expense limitations provided elsewhere in the statute. Thus, the threshold question is whether it was reasonable for the Superintendent of Insurance to conclude that the mass-merchandising of identical policies to members of a defined group was, in reality, a form of group insurance. If the classification was reasonable, subdivision 4 of section 213 is no bar to the regulation.

Group life insurance is defined by statute to include a policy issued to the trustees of a fund established by two or more employers in the same industry or labor unions to insure employees of the employer or members of the unions. The basic requirements are that the persons eligible for insurance be employees or union members; that the premium be paid by the trustees from fund assets; that the policy include at least 25 persons on the date of issue; and that the amounts of insurance available under the policy be fixed. (Insurance Law, § 204, subd 1, par [d].) We conclude that the Superintendent of Insurance could reasonably exercise his broad regulatory powers to prevent a collusive arrangement between an insurance salesman and the trustees of a union-management welfare fund from masking a group insurance program through the mass issuance of standard individual policies, pursuant to a common plan to fund members.

The superintendent has wide authority to "prescribe, in writing, official regulations, not inconsistent with the provisions of this chapter * * * interpreting the provisions of this chapter”. (Insurance Law, § 21.) Further, the superintendent possesses whatever powers may be "reasonably implied” from the statute. (Insurance Law, § 10.) The courts have consistently recognized that these provisions vest the superintendent "with broad power to interpret, clarify, and implement the legislative policy”. (Breen v Cunard Lines S. S. Co., 33 NY2d 508, 511.) Provided that his regulations are not inconsistent^ with some specific statutory provision, the superintendent may prescribe regulations "to effectuate any of the powers given to him by law” (Matter of B. & R. Excess Corp. v Thacher, 37 Misc 2d 307, 309, affd 18 AD2d 1137), including any powers that the statute reasonably implies.

The function of a reviewing court is a limited one. The challenger of a regulation must establish that the regulation "is so lacking in reason for its promulgation that it is essentially arbitrary.” (Matter of Marburg v Cole, 286 NY 202, 212.) The interpretation given a statute by the administering agency "if not irrational or unreasonable, should be upheld.” (Matter of Howard v Wyman, 28 NY2d 434, 438.) As was observed in Mississippi Val. Barge Co. v United States (292 US 282, 286-287), "[t]he judicial function is exhausted when there is found to be a rational basis for the conclusions approved by the administrative body.”

There is ample warrant in the record to support the conclusion of the superintendent that mass-merchandised, standard individual policies issued to members of a group are the functional equivalent of a single-group policy issued to the representatives of the group. Except for the fact that there is no single piece of paper specifying the terms of the group program with the word "policy” embellished upon it, mass-merchandised and standard policies, issued only to members of a given group, are, practically speaking, group policies. The only distinction is merely one of paper form and is of no real difference. Under the mass-merchandised plan, the individual group member has no bargaining power; he must accept or reject the terms as offered. The terms of the plan are not negotiated by the individual members of the group, but rather are negotiated solely by their representatives. Of course, the most critical feature is that these mass-merchandised policies are sold only to group members and not to the public at large. We believe that the superintendent could reasonably guard against a contrived evasion of the statutory restriction on insurance salesmen’s commissions in writing group insurance coverage under the guise of standard individual policies.

To resolve the case, we need take the analysis only one further step. Granted that mass-merchandised individual policies are group insurance and, thus, maximum commissions are not regulated by statute, it remains for us to consider whether the superintendent acted reasonably in limiting commissions ,, on such standardized policies to a maximum of 5.2% per annual premium. We believe that he did.

The superintendent’s regulation affects only mass-merchandised policies issued pursuant to plans sponsored by union-management welfare funds. (11 NYCRR 202.2.) The record discloses that, coincident with the rapid post-World War II expansion of union welfare funds, some insurance companies began to follow unsound and unethical practices in connection with the solicitation and issuance, of group insurance contracts covering union welfare plans. During the early 1950’s, "the public [was] shocked by the dislcosure of excesses which have taken place in the management of the sums contributed by employers to union welfare funds for insurance and pension benefits of employees and their dependents.” (NY Legis Ann, 1956, pp 259, 260.) In 1956, the Legislature reacted to the crisis by vesting considerable authority in the Superintendent of Insurance to supervise operations of employee welfare funds. (L 1956, ch 774; see Governor’s Message of Approval, McKinney’s Session Laws of NY [1956], p 1687.) It became declared State policy "that employee welfare funds are of great benefit to employees and their families and that their growth should be encouraged; that the establishment and management of such funds vitally affect the well-being of. millions of people and are in the public interest; and that such funds should be supervised by the state to the extent necessary to protect the rights of employees and their families, without imposing burdens upon such funds which might discourage their orderly growth and without duplicating the supervisory responsibilities presently vested in any state agencies.” (Insurance Law, § 37.) Subsequently, the superintendent was granted broad authority to "from time to time promulgate appropriate supplementary rules and regulations designed to carry out the express provisions and purposes” of the statutes regulating employee welfare funds. (Insurance Law, § 37-n, subd 1.)

Upon investigation, the superintendent discovered instances where some employee-management welfare funds were induced to purchase individual policies for each employee, rather than a single policy covering all members of the relevant group. The consequence of this method of purchase, as nicely illustrated in the present case, was to permit insurance agents to collect the substantially higher commissions that result from the issuance of individual policies rather than one group policy. In light of the fact that only one true sales effort is involved, the superintendent found that commissions for such "individual” policies were "unconscionably high”. Commissions and allowances amounted to as much as 90% of the first-year premium. Such rates constituted a clear violation of the Code of Ethical Practices adopted in 1957 by the National Association of. Insurance Commissioners (Code of Ethical Practices with Respect to the Insuring of the Benefits of Union or Union-Management Welfare and Pension Funds).

The record establishes that the incentive to earn the excessive commissions associated with individual policies also induced other abuses in the sale of insurance to union-management welfare funds. For example, the Insurance Department discovered that this plaintiff sold a series of individual policies in a situation where a single-group policy would have more appropriately satisfied the particular insurance needs of the welfare fund. Further, under some plans, individual policies would lapse when an employee, covered for only a few years, was laid off for a period in excess of three months. Upon the employee’s return to gainful employment, a new individual policy would be issued and another full commission paid. This was a hardship to the employee because he had aged in the interval, resulting in a diminution of coverage. One company reported instances where welfare fund trustees permitted a whole series of individual policies to be periodically transferred from one carrier to another in order to generate the large first-year premiums. In short, the potential for excessive commissions was a factor in the determination of the form of insurance purchases and the best interests of welfare fund members, was frequently overlooked or disregarded. Further, the practice of selling individual policies on a mass-merchandising basis had become so widespread that insurance companies developed programs with such practices specifically in mind.

In our view, regulation 65 is a reasonable exercise of the superintendent’s broad power to protect the beneficiaries of union-management welfare funds from abuses. Such funds, the Legislature has declared, are to be operated for the benefit of the members. Clearly, the payment of excessive premiums is not in the economic best interests of the membership. The superintendent could reasonably expect that, as a result of a prohibition against the payment of excessive commissions, welfare fund beneficiaries would receive better coverage and greater return for the same or less cost. The record reflects that, because of reduced commissions, at least one insurance company has requested permission to increase the cash value of existing policies. In short, the superintendent had a rational basis for promulgating regulation 65.

In sum, we conclude that regulation 65 is not in conflict with any positive provision of the Insurance Law. Instead, we hold that the regulation is a permissible and reasonable exercise of the superintendent’s broad statutory authority to regulate fraudulent and collusive insurance practices so as to carry out the legislative policy to protect the beneficiaries of welfare funds. It is well within the proper province of the Superintendent of Insurance, the official responsible for the effective implementation of the Insurance Law, to regulate, control and suppress devised and contrived schemes targeted at the contravention or avoidance of the legislative policy. Indeed, it is most vital and paramount that the superintendent vigorously pursue and thwart disingenuous efforts to evade and detour the legislative design, especially where the Legislature has acted to protect a particular class from the consequences of fraud and overreaching.

Accordingly, the order of the Appellate Division should be reversed and judgment granted in favor of defendant declaring regulation 65 (11 NYCRR Part 202) valid.

Chief Judge Breitel and Judges Jones, Fuchsberg and Cooke concur; Judges Gabrielli and Wachtler taking no part.

Order reversed, with costs, and judgment granted in favor of defendant declaring regulation 65 valid.


author: Chief Judge Breitel. Gabrielli, J. (dissenting).

text:
    The People of the State of New York, Respondent, v James Staley, Appellant.
    Argued April 1, 1977;
    decided June 7, 1977

      Joseph A. Shifflett and Nathaniel A. Barrell, Buffalo, for appellant.

      Edward C. Cosgrove, District Attorney (Judith Blake Manzella of counsel), Buffalo, for respondent.
   Chief Judge Breitel.

Defendant, convicted after a jury trial of unauthorized use of a vehicle (Penal Law, § 165.05), seeks reversal of his conviction and dismissal of the indictment. The Appellate Division affirmed the conviction, one Justice dissenting, and defendant appeals.

Defendant had been arrested and the charges dismissed, without prejudice to presentation to the Grand Jury, at the prosecutor’s request. Thirty-one months later, for no stated reason explaining the delay, an indictment was returned. The issue is whether the unexplained delay deprived defendant of a constitutionally guaranteed speedy trial or of due process of law, thus requiring dismissal of the indictment.

The order of the Appellate Division should be reversed, and the indictment dismissed. Once a suspect has been proceeded against in some sort of judicial proceeding as an accused, either by arrest, indictment, or other pretrial proceeding, he is entitled, in the absence of prosecutorial justification or excuse, to reasonably prompt prosecution of the charges against him. The guarantee of prompt prosecution is derived in part from the constitutional right to a speedy trial, but in more encompassing terms, from the constitutional mandate of due process of law. As a result of the wholly unexplained 31-month delay, defendant was denied reasonably prompt prosecution of charges, a denial of due process of law which should result in the dismissal of his indictment.

About August 15, 1972, a Cadillac automobile was stolen from one Angelo Plumeri. Four days later, defendant, seen driving the car, was arrested after a protracted chase, during which the car crashed into a house. Charged with criminal possession of stolen property and reckless endangerment, defendant was arraigned the next day. He evidently spent four days in jail before bail was posted (dissenting opn at App Div). Then, on September 21, 1972, the complaint was dismissed at the request of the District Attorney so that the charges could be directly presented to the Grand Jury, and the bail was discharged. The case was then apparently forgotten, for more than two and one-half years, until March 25, 1975, when defendant was indicted.

The indictment for the 1972 offense was tried, finally, in September, 1975, after defendant had entered, and then withdrawn, a guilty plea. At trial, defendant’s motion to dismiss the indictment for failure to prosecute promptly was denied. The jury found defendant guilty of unauthorized use of a vehicle, and the court sentenced defendant to one year in prison. (Defendant pleaded guilty to another 1972 automobile crime, under indictment No. 40,211-A, and has been sentenced. That conviction is not involved in this appeal.)

By statute, this State has long guaranteed criminal defendants the right to a speedy trial (CPL 30.20; see People v Prosser, 309 NY 353, 356; see, also, CPL 30.30).

There has been in recent years a considerable expansion of the Federal constitutional right to a speedy trial (see Dillingham v United States, 423 US 64, 64-65; United States v Marion, 404 US 307, 320-321; Klopfer v North Carolina, 386 US 213, 221-226). Once an arrest has been made, the criminal proceeding is deemed to have started, and defendant is entitled, constitutionally, to a speedy trial (Dillingham v United States, 423 US 64, 65, supra).

Even before the Supreme Court’s most recent broadening of the constitutional guarantee of a speedy trial, however, this court recognized that unreasonable delay in prosecuting a defendant constitutes a denial of due process of law (People v Winfrey, 20 NY2d 138, 143; see People v Wilson, 8 NY2d 391, 394-395). And, when unexplained or inexcusable preindictment delay and postindictment delay, taken together, work a deprivation, it is a deprivation of düe process of law. In such case, it is unnecessary to determine whether the postindictment delay alone is sufficiently unreasonable to mandate dismissal of an indictment (see People v Winfrey, 20 NY2d 138, 143-144, supra).

Moreover, in this State, failure to conduct a prompt prosecution, in a proper case, may require dismissal of an indictment even in the absence of prejudice to the defendant. (See People v Taranovich, 37 NY2d 442, 447; People v Blakley, 34 NY2d 311, 317; for a less liberal rule see Barker v Wingo, 407 US 514, 532, 534; United States v Finkelstein, 526 F2d 517, 526, cert den sub nom. Scardino v United States, 425 US 960; United States v Ferrara, 458 F2d 868, 875, cert den 408 US 931; but see Dillingham v United States, 423 US 64, 64-65, supra.)

Society, as well as the defendant, has an important interest in assuring prompt prosecution of those suspected of criminal activity (People v Johnson, 38 NY2d 271, 276). Prompt prosecution removes criminals from society’s midst, and allows correctional authorities to start the rehabilitation process (see id., p 276). It is more than of passing significance that defendant at the time of his arrest was 17 years old, perhaps still within the age group when the probability of rehabilitation is greater than at a later age.

Of course, the constitutional guarantee of due process of law provides no absolute, simple, or single standard. Delays due to difficulty in obtaining sufficient evidence to indict or even to arrest do not mandate dismissal of charges, subject of course to the Statute of Limitations. Similarly, delays due to difficulty in locating a suspect, and other delays may also be excused. But, once a person stands accused of a crime, he must be prosecuted promptly. Sheer neglect or trifling, as in this case, is not permissible.

As already discussed, when the delay is long enough, the charges must be dismissed whether or not defendant’s ability to present a defense has been shown to have been hampered. Even shorter delays may result in a deprivation of constitutional rights, especially if it is shown that the defendant has been prejudiced by the delay. As with the right to speedy trial, the due process right to prompt prosecution must be tested on a balancing analysis, with seriousness of the crime and length of the delay being significant factors, among others (see People v Taranovich, 37 NY2d 442, 445-447, supra).

In this case, after defendant’s initial arrest, 31 months passed before indictment. This extraordinary time-lapse without acceptable excuse or justification would, without question, be cause for dismissal of the indictment. The intervening dismissal of the charges without prejudice, made on the prosecutor’s own request, should not change the result. Indeed, it adds strength to the grounds for dismissal.

Defendant’s arrest, and the circumstances surrounding it, established him as an accused, and in fact provided considerable evidence of defendant’s guilt. The prosecution had its man, and the defendant knew he stood accused. The dismissal, designed solely to allow the prosecutor to present the case to the Grand Jury, did not alter this situation, despite defendant’s temporary freedom of movement.

Whether through inadvertence, neglect, or malice, the prosecutor’s office allowed this 17-year-old defendant to remain in legal limbo for more than two and one-half years. This is not a permissible omission after defendant has first been arrested and thus put on notice that a criminal proceeding is contemplated. It is no answer that defendant made no effort to clarify his status, for this court has long recognized that a defendant should not be expected to push his own prosecution (People v Prosser, 309 NY 353, 358-359, supra). The primary responsibility for assuring prompt prosecution rests with the prosecutors. A failure in that responsibility unexplained by acceptable excuse or justification dictates dismissal of the indictment.

Accordingly, the order of the Appellate Division should be reversed, and the indictment dismissed.

Gabrielli, J. (dissenting).

I vote to affirm upon the majority memorandum at the Appellate Division, with these additional comments.

The defendant argues strongly that the holding in United States v Marion (404 US 307) justifies a determination that his right to a speedy trial has been violated, and that the case stands for the proposition that the measuring time commences when he becomes an accused by arrest. The court in that case, however, was careful to point out that "the protection of the [Sixth] Amendment is activated only when a criminal prosecution has begun and extends only to those persons who have been 'accused’ in the course of that prosecution. These provisions would seem to afford no protection to those not yet accused, nor would they seem to require the Government to discover, investigate, and accuse any person within any particular period of time” (p 313). In the case presently before us, the charges against the defendant were dismissed in the Buffalo City Court and he was then no longer an accused in either a legal or practical sense. Indeed, as noted by the Chief Judge writing for the majority, the defendant’s bail was discharged (p 791) and, under all these circumstances, the defendant was no longer under restraint of any kind; nor could he, in any imaginable context, be considered an "accused” for Sixth Amendment purposes. "It is well-settled law that a prosecution is terminated by the discharge of [a defendant by] an examining magistrate” (People v Dillon, 197 NY 254, 256, cited with approval People v Saccenti, 14 NY2d 1, 4; see, also, Robbins v Robbins, 133 NY 597).

There being no charges of any kind against defendant at the point of dismissal, the "speedy trial” time could not then have either begun to run or, indeed, continue to run. At that point, the defendant stood in a position no different than one who had engaged in some possible illegal activity and the People, having knowledge of the activity, waited for some time before commencing a prosecution (see United States v Marion, supra, p 313).

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

Order reversed, etc.