author: Wachtler, J.

text:
    Demov, Morris, Levin & Shein et al., Appellants, v Harold Glantz et al., Respondents.
    Argued September 3, 1981;
    decided October 22, 1981

      POINTS OF COUNSEL

      Joel J. Spector and Arthur Birnbaum for appellants.
    The court below misunderstood the fraud claim, (du Pont, Glore Forgan & Co. v Chen, 41 NY2d 794; Matter of Liberman, 6 NY2d 525; People v Grutola, 43 NY2d 116; Hanlon v Macfadden Pub., 302 NY 502; Hotaling v Leach & Co., 247 NY 84; National Exhibition Co. v Crane, 167 NY 505; Savodnik v Korvettes, Inc., 488 F Supp 822.)

      Howard M. Squadron and Eugenie C. Gavenchak for respondents.
    I. The court below was correct in dismissing appellants’ claim for fraud., (Lanzi v Brooks, 54 AD2d 1057, 43 NY2d 778; Brown v Lockwood, 76 AD2d 721; Reno v Bull, 226 NY 546; Sager v Friedman, 270 NY 472; Foster v Di Paolo, 236 NY 132; Hanlon v Macfadden Pub., 302 NY 502; Elliman & Co. v Lantzounis, 30 Misc 2d 550, 14 AD2d 872; Saslow v Novick, 19 Misc 2d 475; Loos v McCormack, 46 Misc 144, 107 App Div 8.) II. The trial court did not properly instruct the jury on burden of proof or justifiable reliance. (Freedman v Norddeutscher Lloyd, 22 Misc 2d 397, 12 AD2d 591; La Barr v La Barr, 282 App Div 583; Manchel v Kasdan, 286 App Div 483,1 NY2d 734;
      Hartley v Szadkowski, 32 AD2d 550; Zeffiro v Porfido, 265 App Div 185; Martinez v Adelphi Hosp., 21 AD2d 675.)
   OPINION OF THE COURT

Wachtler, J.

The question on this appeal is whether an attorney may recover upon a cause of action against a former client for fraudulently inducing the attorney to enter into a retainer agreement. The Appellate Division held the cause of action is insufficient as a matter of law and we agree.

In 1972, the City of New York condemned a parcel of land in Queens owned by respondent HGV Associates upon which an amusement park was operated by respondent MHG Enterprises, Inc. Between 1972 and 1976, respondents retained several attorneys to undertake efforts to retain possession of the premises and secure the most advantageous condemnation award. Respondents remained in possession until May 28,1976, when a Federal court ordered them to vacate the premises.

In June, 1976, respondent Glantz, the vice-president of MHG Enterprises, Inc., and a partner in HGV Associates, signed a retainer agreement which provided that appellants, individual attorneys, and a law firm, would prepare an application for a temporary stay of eviction permitting the amusement park to reopen and would represent respondents in the condemnation proceeding. Appellants were to be paid a fixed sum if the application to reopen was successful and their fee in the condemnation proceéding was dependent upon the amount eventually awarded to respondents. Appellants testified that they made it clear to Glantz that they would not work on the application to reopen unless they could also represent respondents in the condemnation proceeding. Glantz agreed to arrange to have appellants substituted as attorneys of record in the condemnation proceeding.

Appellants submitted the application to restore respondents to possession of the amusement park, which was denied. Thereafter, appellants were informed by respondents’ attorney of record in the condemnation proceeding that Glantz had issued instructions not to forward the stipulation of substitution to appellants. Glantz then formally discharged appellants in writing and requested a bill for services rendered.

In October, 1976 appellants commenced an action against respondents for fraud, breach of the retainer agreement, and the reasonable value of legal services rendered. The cause of action for fraud was grounded upon the allegation that appellants were induced to enter the retainer agreement by respondents’ promise to permit them to litigate the condemnation proceeding. Appellants also alleged that from the outset, respondents never intended to substitute appellants as attorneys of record in the condemnation proceedings unless and until the application to reopen was granted.

The trial court dismissed the claim for breach of contract, but upheld the cause of action for fraud. After trial a jury awarded appellants $34,000 as the reasonable value of their services and $310,000 as damages for fraud. The Appellate Division modified the judgment, on the law, by dismissing the cause of action sounding in fraud and otherwise affirmed the judgment insofar as is pertinent here.

The unique relationship between an attorney and client, founded in principle upon the elements of trust and confidence on the part of the client and of undivided loyalty and devotion on the part of the attorney, remains one of the most sensitive and confidential relationships in our society. A relationship built upon a high degree of trust and confidence is obviously more susceptible to destructive forces than are other less sensitive ones. It follows, then, that an attorney cannot represent a client effectively and to the full extent of his or her professional capability unless the client maintains the utmost trust and confidence in the attorney.

This philosophy engendered the development of the rule, now well rooted in our jurisprudence, that a client may at anytime, with or without cause, discharge an attorney in spite of a particularized retainer agreement between the parties (Matter of Dunn, 205 NY 398; Tenney v Berger, 93 NY 524). Moreover, we have held that since the client has the absolute right on public policy grounds to terminate the attorney-client relationship at any time without cause, it follows as a corollary that the client cannot be compelled to pay damages for exercising a right which is an implied condition of the contract, and the attorney discharged without cause is limited to recovering in quantum meruit the reasonable value of services rendered (Matter of Montgomery, 272 NY 323; Martin v Camp, 219 NY 170). In Martin v Camp (supra, p 176) we stated that the rule “is well calculated to promote public confidence in the members of an honorable profession whose relation to their clients is personal and confidential”.

To be sure, a deliberate misrepresentation of present intent made for the purpose of inducing another to enter a contract will normally constitute actionable fraud if there is a reliance by the party to whom the misrepresentation was made (Ritzwoller v Lurie, 225 NY 464; Adams v Gillig, 199 NY 314). It is equally well established, however, that a cause of action will not be cognizable in the courts of this State when it is violative of strong public policy (see, e.g., Drago v Buonagurio, 46 NY2d 778).

The public policy of New York which permits a client to terminate the attorney-client relationship freely at any time, notwithstanding the existence of a particularized retainer agreement between the parties, would be easily undermined if an attorney could hold a client liable for fraud on the theory that the client misrepresented his or her true intent when the retainer was executed. When an attorney-client relationship deteriorates to the point where the client loses faith in the attorney, the client should have the unbridled prerogative of termination. Any result which inhibits the exercise of this essential right is patently unsupportable.

Additionally, as a matter of law, the element of reliance essential to a cause of action for fraudulent misrepresentation of present intent (Channel Master Corp v Aluminum Ltd. Sales, 4 NY2d 403) cannot be established in this case. Given the rule that a client may discharge an attorney without cause at any time, it is evident that appellants could not rely upon Glantz’ promise to substitute them as attorneys of record in the condemnation proceeding any more than they could rely upon continued representation in the event thay had actually been substituted. Thus, an essential element of a claim of fraudulent misrepresentation is conspicuously absent.

Appellants argue that the result reached today enables unscrupulous clients to defraud their attorneys with impunity. We do not agree. We have said that [t]he law does not permit the client to cheat his attorney” (Matter of Levy, 249 NY. 168, 170). Permitting an attorney improperly discharged to recover the reasonable value of services rendered in quantum meruit, a principle inherently designed to prevent unjust enrichment, strikes the delicate balance between the need to deter clients from taking undue advantage of attorneys, on the one hand, and the public policy favoring the right of a client to terminate the attorney-client relationship without inhibition on the other (Matter of Krooks, 257 NY 329, 332).

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

Chief Judge Cooke and Judges Jasen, Gabrielli, Jones, Fuchsberg and Meyer concur.

Order affirmed.


source: Caselaw Access Project

author: Chief Judge Cooke.

license: Public Domain

text:
    Nassau Chapter of the Civil Service Employees Association, Inc., Appellant, v County of Nassau, Respondent.
    Argued September 8, 1981;
    decided October 20, 1981

      POINTS OF COUNSEL

      Marjorie E. Karowe for appellant.
    The court below erred in holding that employees employed by Nassau County pursuant to the Comprehensive Employment and Training Act prior to December 31, 1976, who were “rolled-over” into regular employment with Nassau County subsequent to January 1, 1977, were not entitled to participate in the incremental salary plan, “plan A”, by reason of the “temporary nature” of CETA employment. (Matter of Board of Educ. v Nyquist, 59 AD2d 76, 45 NY2d 975.)

      Edward G. McCabe, County Attorney (Robert O. Boylnan of counsel), for respondent.
    I. The court below properly found that CETA enrollees who subsequently became permanent employees of respondent were not employees during their CETA enrollment as defined by the collective bargaining agreement. (Gotbaum v Sugarman, 78 Misc 2d 827; Matter of Social Investigator Eligibles Assn. v Taylor, 268 NY 233; Matter of Board of Educ. v Nyquist, 45 NY2d 975; Matter of Gould v Griffin, 69 AD2d 1015; Matter of Roberts v Parker, 52 AD2d 651; Matter of Caslin v City Civ. Serv. Comm., 24 AD2d 842; Russell v Hodges, 470 F2d 212.) II. To reinstate the judgment of the trial court would violate the applicable Federal statutes and regulations.
   OPINION OF THE COURT

Chief Judge Cooke.

It is held here that, for purposes of the salary computation provisions in the collective bargaining agreement, civil service employees of Nassau County may be credited with their previous service for the county as participants in a Federally funded employment program.

This action arises out of a dispute between plaintiff Nassau Chapter of the Civil Service Employees Association, Inc. (CSEA), and defendant County of Nassau over the application of the salary provisions of their collective bargaining agreement to those employees of the county who obtained civil service positions after January 1,1977 but who prior to that date held Federally funded positions with the county under the Comprehensive Employment and Training Act of 1973 (CETA) (US Code, tit 29, § 801 et seq.) Under the contract, both parties agreed “that the [incremental graded salary plans] previously and currently in existence and affecting various employees * * * shall be amended so as to provide a continuance of said plans for those employees included therein whose service commenced no later than December 31, 1976. All new employees entering County service on or after January 1, 1977, shall not receive the benefits of said Graded Salary Plan but shall be included in the newly created ‘Non-Incremental Graded Salary Plan’ ”. When the county placed the former CETA workers in the nonincremental salary plan following their civil service appointment, CSEA brought this action on behalf of the workers for a declaration that county employment commenced when the workers initially were placed in CETA-funded positions, and thus were entitled to placement in the incremental salary plan.

The facts were stipulated. CSEA is the certified bargaining representative of individuals included in the negotiating unit, defined in the collective bargaining agreement by reference to the Public Employment Relations Board Certification of Representative. The certification defines the unit as “all Nassau County employees”, excluding certain job titles not relevant here. The individuals occupying CETA-funded positions were permitted to join CSEA as union members and the county deducted the bi-weekly dues for CSEA. Agency shop deductions were also made and the funds forwarded to CSEA.

Prior to January 1, 1977, and continuing thereafter, individuals were hired and employed pursuant to the CETA legislation to perform work for the county in job titles included in the negotiating unit. These individuals were hired at step one of an appropriate labor grade under the incremental graded salary plan and received annual salary increments. Funding for these positions came solely from the Federal Government. However, the individuals were paid by county check, supervised by county employees, given county identification cards, accorded sick leave, vacation leave, holidays, personal leave, bereavement days and the benefit of all other terms and conditions of employment included in the agreements between CSEA and the county in effect during the time they worked for the county, except that they were excluded from the New York State Employees Retirement System. While holding CETA-funded positions, the individuals accumulated vacation and sick leave. When the individuals secured civil service positions after January 1, 1977, the county placed them in the first salary grade under the nonincremental salary plan, although accrued leave time was left standing to the employees’ credit.

Based upon these facts and. the terms of Federal statutes and regulations, Supreme Court found that the workers come within the contract definition of employees and thus are entitled to continued participation in the incremental graded salary plan. On appeal to the Appellate Division, that court reversed on the law. The Appellate Division agreed that, although not civil service employees, the CETA workers were in the employ of the county. It nonetheless determined that, for purposes of the collective bargaining agreement, commencement of county service did not begin until civil service status was obtained. We do not agree.

The collective bargaining agreement at issue provides simply and unambiguously that the incremental graded salary plan shall be continued for those employees who commenced service with the county on or before December 31, 1976. The questions presented are whether those working by virtue of the CETA program were employees of the county during their CETA tenure and whether the contract provision applies only to those employees who commenced service with the county in a permanent civil service position prior to the cutoff date.

The record amply supports the trial court’s finding, not disturbed by the Appellate Division, that those persons providing service to the county under the CETA program were employees of the county. Although the Federal Government provided funding for the CETA positions, salaries were paid through county accounts, the county had the power to hire and fire the CETA workers and the county exercised direct control and supervision over their work. That these factors are sufficient to establish an employment relationship is well settled (see Matter of Board of Educ. v Ny quist, 45 NY2d 975, revg on dissenting opn at 59 AD2d 79-81; Matter of Morton, 284 NY 167). Nor does the county seriously dispute that its relationship with the CETA workers had the indicia of employment. Under the circumstances presented, we find no basis for disturbing the determination that the workers here were county employees during the period they held CETA-funded positions.

The remaining question is whether, given the existence of an employment relationship from the commencement of service for the county, these workers are entitled to benefit from the provision in the collective bargaining agreement continuing the incremental graded salary plan for employees commencing county service prior to December 31, 1976.

The collective bargaining agreement defines an “employee” as an individual who is “in the negotiating unit”, i.e., all county employees in job titles specified in the PERB Certification of Representative. There is no dispute that the county employees here both before and after 1977 were in job titles covered by the certification. They also were subject to the same employer control as other employees of the county. Additionally, pursuant to Federal mandate, persons holding CETA-funded positions receive the same benefits and working conditions as other employees similarly employed (see US Code tit 29, § 824, subd [k]). It is, therefore, appropriate to recognize the community of interest between the two groups of workers and the right of the CETA workers to be represented by the certified bargaining representative of the other employees (e.g., Village of Nassau [Nassau Police Officers’ Assoc.], 14 PERB, par 14-4022; Catholic Community Servs., Newark, N. J. & Dist. 1199-J, Hosp. & Health Care Employees, 254 NLRB No. 90). Indeed, the county itself has recognized CSEA’s status as representative of the CETA workers, deducting union dues or agency shop fees from their salaries for CSEA.

It being established at the trial level that CETA workers are as a factual matter county employees and hold covered job titles, it follows that they are “in the negotiating unit” and thus “employees” under the collective bargaining agreement. And, once it is determined that the workers are covered by the agreement and that they commenced service in the county’s employ prior to December 31, 1976, there is no basis in the language of the agreement upon which to hold inapplicable to these workers the provision continuing the incremental graded salary plan.

Contrary to the county’s argument, whether persons employed in CETA-funded positions are to be classified as “temporary” employees is not determinative, for the contract provision at issue makes no such distinction. Nor can the county maintain that persons occupying CETA-funded positions do not derive their employment benefits from the collective bargaining agreements between CSEA and the county. It is true that, as a condition of Federal funding, CETA employees in public service employment must receive the same benefits and working conditions as other employees (US Code, tit 29, § 824, subd [k]). This condition, however, does not translate into the source of benefits for CETA employees. The county hired them, albeit under the Federally imposed conditions, and it is the collective bargaining agreement between the representative union and the county that defines the benefits to which CETA employees are entitled.

Similarly unpersuasive is the county’s argument that either State or Federal law is violated by recognizing the applicability of the incremental plan to civil service employees who formerly occupied CETA-funded positions. It has long been recognized that appointment to a position created as part of a work-relief program, which does not require compliance with civil service eligibility provisions, does not contravene the State constitutional mandate that appointments to civil service be based on merit and fitness (NY Const, art V, § 6). This is so, at least in part, because in such circumstances there has been no appointment to the civil service, although the functions performed parallel those of appointees; the employment is in response to an emergency situation; and there has been no demonstrable adverse impact on civil servants (see Matter of Social Investigator Eligibles Assn. v Taylor, 268 NY 233; Papa v Ravo, 70 AD2d 59).

Under the Federal scheme, civil service appointees may not be adversely affected by employment of persons in CETA-funded positions. They may not be laid off, discharged or replaced by CETA workers, or be denied promotion opportunities or other employment benefits because of the CETA-funded positions (see US Code, tit 29, § 824, subd [c], par [1]; subd [d]). Additionally, CETA-funded jobs must be those which would not have existed but for the financial assistance provided (see US Code, tit 29, § 823, subd [g], par [1], cl [B]). Given these safeguards, it is evident that the initial hiring for CETA-funded positions did not violate New York’s merit-based civil service appointment scheme. Nor did the subsequent appointments of these employees, following compliance with the civil service eligibility provisions, do violence to any policy of this State. There simply has been no showing that a civil service employee’s entitlement to a salary based on total service with the county pursuant to a collective bargaining agreement contravenes the laws of the State (cf. Matter of Board of Educ. v Nyquist, 45 NY2d 975, supra [time spent in CETA-funded teaching position credited toward tenure]).

Finally, we perceive no conflict between the Federal scheme and the decision to credit time in the CETA-funded position for purposes of calculating salary under the collective bargaining agreement. There has been no demonstration that crediting duly appointed civil service employees with the CETA time for salary purposes benefits a CETA employee at the expense or to the disadvantage of other employees. No employee has been displaced by or been denied employment benefits because of an employee in a CETA-funded position. There simply is no Federal statutory proscription against crediting such an employee with his or her employment experience under CETA (see Matter of Board of Edue. v Nyquist, 45 NY2d 975, supra).

The congressional purpose underlying the comprehensive Federal assistance programs in the employment area is expressly stated to include “provid [ing] job training and employment opportunities for economically disadvantaged, unemployed or underemployed persons which will result in an increase in their earned income, and to assure that training and other services lead to maximum employment opportunities and enhance self-sufficiency” (US Code, tit 29, § 801; see, also, § 841). Commendably, the county fulfilled the congressional objectives and provided significant job opportunities. The county’s interests, however, have also been served by its participation in the funded program. The county obtained the product of the workers’ labor during their CETA tenure and now has qualified, experienced workers who perform needed county services. Having obtained the benefit of the employees’ CETA experience, the county may not now argue that such experience should be ignored for purposes of the contractual salary provision at issue.

Inasmuch as the Appellate Division determination is stated to be on the law, it is necessary to remit to that court for a review of the facts (CPLE 5613). Accordingly, the order of the Appellate Division should be reversed, with costs, and the case remitted to the Appellate Division, Second Department, for further proceedings in accordance with this opinion.

Judges Jones, Wachtler, Fuchsberg and Meyer concur with Chief Judge Cooke; Judges Jasen and Garrielli dissent and vote to affirm for reasons stated in the memorandum at the Appellate Division (77 AD2d 616).

Order reversed, with costs, and case remitted to the Appellate Division, Second Department, for further proceedings in accordance with the opinion herein.

      . The Comprehensive Employment Training Act of 1973 is the successor of the Emergency Employment Act of 1971 (formerly codified at US Code, tit 42, § 4871 et seq.) and was substantially revised in 1978 (Public Law No. 95-524). References are to the present codification.

      . The prime sponsor under the CETA program was a consortium composed of the county, the towns of Hempstead, North Hempstead and Oyster Bay, and the cities of Glen Cove and Long Beach; the county was designated by the consortium to administer the CETA programs in the county.

      . Nor does the Federal scheme necessarily proscribe benefits based on length of service. Subdivision (k) of section 824 provides only that a distinction between public service (CETA) employees and others “may be made * * * for purposes of determining eligibility for participation in retirement systems or plans which provide benefits based on age or service or both.”

      . Former section 801 was substantially similar (see Public Law No. 93-203, § 2). Former section 841 (Public Law No. 93-203, tit II, § 201, as amd by Public Law No. 93-567, tit I, § 106, subd [a]), the congressional statement of purpose for public service employment programs, provided that the purpose of the subchapter was “to provide unemployed and underemployed persons with transitional employment in jobs providing needed public services in areas qualifying for assistance and, wherever feasible, related training and manpower services to enable such persons to move into employment or training not supported under this subchapter.”


author: Jones, J.

text:
    Home Mutual Insurance Company, Appellant, v Broadway Bank and Trust Company, Respondent.
    Argued September 2, 1981;

      decided October 22, 1981

      POINTS OF COUNSEL

      Richard G. Vogt for appellant.
    I. The court below erred in holding that respondent, Broadway Bank and Trust Company, owed no duty to appellant, Home Mutual Insurance Company, and, therefore, its failure to issue a proper cancellation notice would not constitute the actionable tort of negligent misrepresentation. (International Prods. Co. v Erie R. R. Co., 244 NY 331; White v Guayente, 43 NY2d 356; Glanzer v Shephard, 233 NY 236; Dyer v Great Eastern Ins. Co., 41 AD2d 581; Matter of Lumbermens Mut. Cas. Co. v Berkovic, 74 AD2d 496; Jones v Aetna Ins. Co., 59 Misc 2d 698, 35 AD2d 738, 29 NY2d 772; Palsgraf v Long Is. R. R. Co., 248 NY 339; Ultramares Corp. v Touche, 255 NY 170; Johnson v General Mut. Ins. Co., 26 AD2d 602, 24 NY2d 42.) II. The court below erred in holding that plaintiff did not have the right to rely on the cancellation notice and was contributorily negligent. (Cannon v Merchants Mut. Ins. Co., 35 Misc 2d 625.) III. The court below erred in limiting the amount of damages recoverable by plaintiff to $243, the return of the unused premium. (Lumbermans Mut. Ins. Co. v Bowman, 313 F2d 381; People ex rel. Daily Credit Serv. Corp. v May, 162 App Div 215, 212 NY 561; Brumel v Hartford Fire Ins. Co., 158 Misc 311; Sass v Ocasio, 59 AD2d 859; Teeter v Allstate Ins. Co., 9 AD2d 176, 9 NY2d 655; Netherlands Fire Ins. Co. v Barry, 103 App Div 581; Dunn v Commercial Union Ins. Co. of N. Y., 27 AD2d 240; Caledonian-American Ins. Co. of N. Y. v Benson, 246 App Div 859; International Prods. Co. v Erie R. R. Co., 244 NY 331.) IV. The decisions of the courts below are in contravention of the public policy of the State of New York. V. As between the parties, equity requires full and complete indemnification of plaintiff by defendant. (Ultramares Corp. v Touche, 255 NY 170; International Prods. Co. v Erie R. R. Co., 244 NY 331.)

      Louis D’Amanda for respondent.
    I. The court below was correct in holding that since the premium finance company had no relationship with and, accordingly, owed no duty to the insurance company, its notification to the insurance company that it had properly canceled the insured’s coverage was not negligent misrepresentation. (Glanzer v Shepard, 233 NY 236; Ultramares Corp. v Touche, 255 NY 170; Gordon v Nationwide Mut. Ins. Co., 37 AD2d 265, 30 NY2d 427, 410 US 931; MacPherson v Buick Motor Co., 217 NY 382; Cullings v Goetz, 256 NY 287; Codling v Paglia, 32 NY2d 330; Putnam v Stout, 38 NY2d 607; Palsgraf v Long

      Is. R. R. Co., 248 NY 339; Jaillet v Cashman, 235 NY 511; Courteen Seed Co. v Hong Kong & Shanghai Banking Corp., 245 NY 377.) II. Return to Home Mutual of its insured’s unused premium puts it back in the position it was before the improper cancellation by Broadway Bank, the premium finance company, even though Home Mutual was required to indemnify its insured after it disclaimed coverage. (Lumbermans Mut. Ins. Co. v Bowman, 313 F2d 381.)

      Patrick J. Crowe for Hartford Accident & Indemnity Company, amicus curiae.

    I. The court below erred in holding that respondent, Broadway Bank and Trust Company, owed no duty to appellant, Home Mutual Insurance Company, to issue a proper cancellation notice. (Johnson v General Mut. Ins. Co., 26 AD2d 602, 24 NY2d 42; International Prods. Co. v Erie R. R. Co., 244 NY 331; Ultramares Corp. v Touche, 255 NY 170; Glanzer v Shepard, 233 NY 236; White v Guarente, 43 NY2d 356; Daas v Pearson, 66 Misc 2d 95, 37 AD2d 921; Johnson v State of New York, 44 AD2d 151; Home Mut. Ins. Co. v Broadway Bank & Trust Co., 100 Misc 2d 228.) II. The decision of the court below offends the public policy behind the enactment of section 576 of the Banking Law. III. The court below erred in holding that appellant suffered no legal damage as a result of the misrepresentation by respondent.
   OPINION OF THE COURT

Jones, J.

A premium finance agency is under no duty to the insurer, under section 576 of the Banking Law, with respect to cancellation of an automobile liability insurance policy after default by the insured in payment to the agency of a premium installment, nor does its inaccurate representation to the insurer that the policy has been propery canceled impose on it any liability to the insurer for moneys paid in settlement of a policy claim arising out of an accident occurring after the date of the misrepresentation.

At the time of the events that give rise to this action defendant Broadway Bank was authorized under article 12-B of the Banking Law to engage in the business of a premium finance agency, advancing premiums for an insurance contract on behalf of an insured who, by written agreement, promised to repay the bank in regular installments. The statute authorized the inclusion in the premium finance agreement of a provision empowering the bank to cancel the insurance policy to which the agreement related in the event of the insured’s failure to make the agreed installment payments to the bank. Procedures prescribed for accomplishing such a cancellation — including in particular 10 days’ prior notice to the insured with three additional days if the notice were mailed — were set out in section 576 of the Banking Law.

On June 19, 1972 Shelva Ludwig, through her insurance agent, executed a premium finance agreement with defendant, in connection with plaintiff’s issuance to her of an automobile liability policy through the assigned risk pool, by which she agreed to make monthly payments to the bank and authorized the bank to cancel the policy in the event of her default. Defendant bank thereafter paid the full premium for the policy to plaintiff insurer. The insured apparently defaulted in payment of the installment due the bank in July and, on July 21, 1972, the bank mailed a default notice to her and to her insurance agent, urging payment to avoid cancellation and containing an entry of August 24, 1972 as the effective date of cancellation, without however a check mark in a box which was to be marked if the paper was to serve as a cancellation notice. No copy of this paper was sent to the insurer.

One month later, on August 21, 1972, when the insured still had not paid the installments due the bank, the bank sent to her and to her insurance agent, as well as to the insurer, a default notice identical to that sent in July except that this time there was a mark in the box indicating that it was a cancellation notice. The effective date of cancellation was again stated as August 24, 1972 and, as on the prior notice, the line titled “Original Date of Notice” bore the date “7/21/72” — thereby erroneously representing that the statutory period which must elapse between notice of cancellation to the insured and the effective date of cancellation had been complied with. As a consequence of the receipt of its copy of this paper, the insurer, believing that the policy had been canceled, refunded the unearned portion of the policy premium ($243) to the bank.

On September 21, 1972 the vehicle that had been covered by plaintiff’s policy was involved in an accident resulting in personal injuries to a third party. Despite the insurer’s claim that the policy had been canceled prior to the date of the accident, it was judicially determined in independent litigation that there had been no effective cancellation (Balboa Ins. Co. v Widener, 47 AD2d 815). The insurer subsequently settled the personal injury action arising out of the accident for $25,000. In the present action against the bank, the insurer now seeks to recover from the bank the amount of the settlement together with attorney’s fees and expenses incurred by it incidental to the defense of the personal injury claim. The theory of the action is that the bank acted negligently in attempting to cancel the policy previously issued by the insurer and misrepresented to the insurer that it had been effectively canceled and that the damages now sought to be recovered were incurred by reason of the bank’s negligence.

After a non jury trial in which the facts were stipulated Supreme Court concluded that the bank was not the agent of the insurer and therefore could not be held liable for negligent performance of any purported agent’s duty properly to effect a cancellation of the policy, but that the insurer had established a negligent misrepresentation by the bank — that the policy had been properly canceled — sufficient to impose liability to the insurer for the proximate consequences of the bank’s misconduct. Determining however that the settlement and expenses incurred in connection with the personal injury action against its insured were the result of the insurer’s issuance of its policy, which it would have continued in force had the bank taken no action at all, the court awarded plaintiff a judgment for only $243, the amount of the unearned premium refund made by the insurer to the bank, which it found was the only proximate consequence of the actions of the defendant.

On appeal by the insurer, the Appellate Division unanimously affirmed the judgment, stating that because the policy had not in fact been canceled there should have been no return to the bank of the unearned premium; accordingly plaintiff insurer was entitled to recover back that amount. With respect to the insurer’s claim for indemnification for the settlement and expenses incident to the personal injury action against the insured, the court found, as had the trial court, that the bank had not been an agent of the insurer and Concluded further that there had not otherwise been any such relationship between the parties as to create a duty on the bank to take effective action to cancel the Ludwig policy or not negligently to misrepresent to the insurer that it had done so. Additionally, the court observed that, had there been any duty owing, the insurer, by its contributory negligence in failing to make certain that proper notice to effect cancellation had been given, was barred from recovering from the bank. We granted leave to appeal.

As the courts below and the parties all have recognized, the critical issue here is whether there is any predicate for the duty plaintiff insurer would have us impose on defendant bank — a duty not to represent to the insurer that a proper notice of cancellation of one of its liability policies had been sent to the insured when in fact it had not. Concluding, as we do, that plaintiff has failed to establish the existence of any such duty, breach of which was the cause of the economic loss sustained by the insurer in discharging its obligations under the policy of insurance, we affirm the order of the Appellate Division.

At the outset we observe that plaintiff cites no decided case in this or other jurisdictions in which its argument has been accepted. Rather, it seizes on the definition of the cause of action for negligent misrepresentation contained in lnternational Prods. Co. v Erie R. R. Co. (244 NY 331, 338) and, as a foundation for its claim that there here existed the necessary element of a relationship between the parties giving rise on the part of one (here, the bank) to give accurate information, points to section 576 of the Banking Law. It argues that, because that statute vested in the bank, as premium finance, agency, the exclusive power to cancel the Ludwig policy for default in payment of installments due it, the bank was under an obligation to the insurer to send proper notice of cancellation to the insured and, as an extrapolation, an obligation not to misrepresent to the insurer that it had done so.

The difficulty with plaintiff’s argument is that there is no basis for the consequence it would attach to the power vested in the bank as financer of the premium due and paid to the insurer. Plaintiff concedes that the bank was not obligated by the statute to cancel Ludwig’s policy when she defaulted in her payments to it; the choice whether to do so was with the bank and the carrier had no right either to demand or expect cancellation of the obligation it had assumed when it entered into the contract of insurance. The statutory authorization for cancellation by the financing agency was for the benefit of the agency, which could thereby recoup a part of the premium it had advanced to the insurer. When the bank chose to exercise that authority it was acting solely for its own interest and not for the purpose of extending any advantage to the carrier; indeed, cancellation of a policy, the premium for which had been fully paid to the insurer, would normally be regarded at that time as contrary to the interests of the carrier which presumably was .interested in writing insurance. It was only the subsequent, improvidential loss under the policy which prompted the insurer to seek to shift the economic burden of the risk it had been paid to underwrite. The present case is therefore quite different from White v Guarente (43 NY2d 356), on which plaintiff relies, in which the defendants’ accountants had contractually undertaken to perform auditing services for the purpose and with the intention of benefiting a partnership of which the plaintiff, suing for negligent performance of the services, was a member.

Plaintiff asserts that, even if defendant bank was not obliged to cancel the Ludwig policy, nevertheless when it undertook to work a cancellation it was bound to complete the cancellation in a careful manner, an adaptation of the principle stated in Glanzer v Shepard (233 NY 236, 239) that “one who assumes to act, even though gratuitously, may thereby become subject to the duty of acting carefully, if he acts at all”. When the rule has been held applicable, it has not been applied to one, as the bank here, who justifiably undertakes a course of conduct in his own behalf and in furtherance of his own interests, but to one whose effort is extended for the purpose of aiding or serving another (e.g., Wolf v City of New York, 39 NY2d 568 [fire lieutenant advising volunteer fireman as to route of departure from roof of burning building] ; Zalak v Carroll, 15 NY2d 753 [relatives providing day care for child of working mother]; Marks v Nambil Realty Co., 245 NY 256 [landlord, under no duty to repair, repairing broken stairway for tenant]).

The present case is very like Gerace v Liberty Mut. Ins. Co. (264 F Supp 95) in which the court dismissed an action against a contractor’s liability insurance carrier by a workman injured by a defective condition on a construction site previously inspected by the carrier. In rejecting the claim that the carrier was under a duty to make inspections with sufficient care to discover the defective condition the court said(p 97):

“There is a general principle of law that a person who volunteers to do something that he is under no obligation to do, must nevertheless use due care in carrying on the voluntary activity. This doctrine applies if the volunteered act is undertaken for the benefit of someone else. A Good Samaritan who carelessly injures the person he is trying to help may perhaps be liable for his negligence.

“In this case, however, the insurance carrier did not undertake to perform a voluntary act for the benefit of someone else. It did so for its own protection in order to reduce risks that might give rise to liability on the policy.”

So here, the bank in attempting to cancel the Ludwig policy was not doing it to benefit someone else, but for its own benefit in order that it might recover that portion of the premium it had advanced to the insurer that would be unearned if the policy were canceled.

A short answer to plaintiff’s claim (with a citation to Palsgraf v Long Is. R. R. Co., 248 NY 339) that the duty for which it argues existed because the bank could have foreseen the consequences to the insurer if the policy were not effectively canceled is found in our statement in Pulka v Edelman (40 NY2d 781, 785): “Foreseeability should not be confused with duty. The principle expressed in Palsgraf v Long Is. R. R. Co. (248 NY 339, supra), quoted by the dissent [the same quote tendered by plaintiff in the present case], is applicable to determine the scope of duty —only after it has been determined that there is a duty. Since there is no duty here, that principle is inapplicable”.

Finally, with respect to duty, public policy argues strongly against the creation of the duty sought by plaintiff and never heretofore recognized in this, or apparently any other, jurisdiction. If indeed a financial institution or an agency authorized to advance insurance premiums on the strength of premium finance agreements were to be subjected not merely to a loss of recoupment of the premium advanced by it but also to contingent liability for whatever loss (potentially large) might befall an insurer under its policy obligations in the event the lender ineffectively attempted to cancel a policy on the insured’s default in payments to it, qualifying banks and lending units might well decline to act as premium financing agencies. The gain to the lender (interest chargeable on the premium advanced— in this case, $20.94) might look all too small when contrasted with the potential liability (in this case, $25,000 plus) to make the premium finance agreement an attractive, or even palatable, lending device. That a lender might avoid the risk of liability by foregoing the exercise of its right of cancellation would make the agreement no more acceptable inasmuch as that election would deprive the lender of the only ready method available to it to reduce its loss when a borrower defaults. If, as might therefore be expected, lenders chose not to engage in the premium finance arrangements authorized by article 12-B of the Banking Law, the intent of the Legislature in enacting it would be effectively frustrated. That prospect alone weighs heavily against imposition of the duty for which plaintiff argues.

The dependence placed both by plaintiff and by a fellow insurance carrier which has filed a brief amicus curiae on Johnson v General Mut. Ins. Co. (24 NY2d 42) is unwarranted. In that case we simply upheld a denial of a motion for summary judgment by an insurance carrier against a premium finance agency on a claim of defective cancellation of a policy by the agency, without passing on whether such an action would lie.

One other aspect of this litigation merits comment — the question of plaintiff’s asserted reliance on defendant’s negligent misrepresentation that the Ludwig policy had been canceled and the claim that that reliance resulted in the damage of more than $25,000 flowing from the defense and settlement of the personal injury action which was within the policy coverage. Reliance, as that term describes an element of an action for negligent misrepresentation, connotes something more than simply a bare hope or anticipation; in order that liability result from a negligent statement the words communicated must be “words upon which others were expected to rely and upon which they did act or failed to act to their damage” (White v Guarente, 43 NY2d 356, 363, supra). In the case before us the only action plaintiff took in reliance on the misrepresentation made by defendant that the August 21, 1972 notice of policy cancellation had been timely sent to the insured was the refund to the bank of the $243 unearned premium, which the bank unsuccessfully attempted to return and which has been awarded to plaintiff by the judgment affirmed by the order we are reviewing. Beyond that refund the insurer neither did nor omitted to do anything with respect to the policy it had issued to the insured Ludwig. It. does not suggest that there is anything it would have done — or indeed could have done — to have relieved itself of the contractual obligation to which it was bound, by which it was subjected to a significant liability, if the bank had not erroneously led it to believe that the policy had been canceled. It was the insurance contract entered into by plaintiff, by which for a premium it undertook the very risk that opérated when the Ludwig vehicle became involved in a collision, which was the predicate for its loss; it has no complaint because defendant bank, in ineffectively protecting itself, failed to exonerate it from that contractual obligation. That it lost a windfall it might have had had the bank effectively canceled the policy before the accident occurred is no ground for shifting to the bank the economic obligation which stemmed from its own insurance agreement.

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

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

Order affirmed.

       In open court defendant acknowledged that plaintiff was entitled to recovery of this item, stating without contradiction by the insurer that the bank had attempted to return the premium refund to the insurer shortly after it had been received by the bank.


text:
    In the Matter of Marion G. Vogt, Individually and as Executrix of George R. Vogt, Deceased, Appellant, v James H. Tully, Jr., et al., Constituting the Tax Commission of the State of New York, Respondents.
    Argued September 11, 1981;
    decided October 27, 1981

      POINTS OF COUNSEL

      Joseph H. Murphy and E. Parker Brown, II, for appellant.
    I. Respondents violated the Tax Law and their own regulations and applied the wrong legal standard in deciding that a partnership, of which appellant George R. Vogt was a nonresident limited partner, was not engaged in a business in New York State in the year 1970. (Matter of Wohlreich v Tully, 72 AD2d 825; Matter of Swid-Pearlman Mgt. v Tully, 67 AD2d 1022; Flint v Stone Tracy Co., 220 US 107; Cooper Tire & Rubber Co. Employees’ Retirement Fund v Commissioner of Internal Revenue, 306 F2d 20; McCoach v Minehill Ry. Co., 228 US 295.) II. Respondents misapplied the United States Treasury Regulation (§ 1.704-1 [d]) regarding the partnership loss deduction entering into appellant George R. Vogt’s Federal adjusted gross income for the year 1970, and, in consequence, improperly determined New York adjusted gross income under the Tax Law (§ 637, subd [a], par [1]).

      Robert Abrams, Attorney-General (Wayne L. Benjamin and Shirley Adelson Siegel of counsel), for respondents.
    I. Appellant’s express admission on their partnership’s tax return for the year in issue, that Endeavor had “no New York source income”, and that the losses that appellants seek to deduct were not “derived from or connected with New York sources” provides substantial evidence in support of the Tax Commission’s determination that appellant’s distributive share of Endeavor’s loss was not deductible by them since the loss was not derived from or connected with New York sources. (Martin v City of Cohoes, 37 NY2d 162; Matter of Schrader v State Tax Comm., 72 AD2d 873.) II. There is substantial evidence in the record to support the Tax Commission’s determination that Endeavor’s ownership of out-of-State railroad cars pursuant to a net lease whereby PPG Industries agreed to assume liability for the railroad cars, indemnify Endeavor for all losses, pay or reimburse Endeavor for all taxes, and at its own expense maintain each railroad car, did not amount to the “conduct of business” within the State of New York. (McCoach v Minehill Ry. Co., 228 US 295; Sun Oil Co. v Commissioner of Internal Revenue, 562 F2d 258; Matter of Burrell Inv. Trust v Lynch, 274 App Div 347; People ex rel. Nauss v Graves, 283 NY 383; Flint v Stone Tracy Co., 220 US 107;' Matter of Steinbeck v Gerosa, 4 NY2d 302; Union Nat. Bank of Troy v United States, 195 F Supp 382;
      Matter of Costa v State Tax Comm., 67 AD2d 1074, 48 NY2d 604; Hindes v United States, 246 F Supp 147, 371 F2d 650.)
   OPINION OF THE COURT

Jones, J.

Inasmuch as there is no substantial evidence in the record to support the State Tax Commission’s finding that Endeavor Car Company, a limited partnership engaged in the financing and leasing of railroad tank cars, was not carrying on a business in New York State, the commission’s determination, dependent on that finding, that the distributive share of partnership losses was not deductible on the taxpayers’ nonresident return should be annulled.

George R. Vogt and Marion G., his wife, resided in the State of New Jersey and filed a joint New York State nonresident income tax return for the year 1970, in which they took a deduction for losses sustained by George R. Vogt as a limited partner in Endeavor Car Company. Following audit of the return, the Department of Taxation and Finance issued a notice of deficiency disallowing these losses. The taxpayers filed a petition for review. After a hearing the State Tax Commission made a determination sustaining the notice of deficiency and denying the taxpayers’ petition. Thereupon the present proceeding under CPLR article 78 was instituted to review the commission’s determination. On transfer from Supreme Court, Albany County, the Appellate Division, one Justice dissenting, confirmed the determination of the State Tax Commission. We now reverse, grant the petition and annul the determination of the State Tax Commission.

The issue is whether George R. Vogt’s distributive share of the partnership loss for the year 1970 was an allowable deduction, and that question turns on whether there was substantial evidence to sustain the commission’s determination that “the activities of the partnership, Endeavor Car Company, were passive in nature and did not have the frequency, continuity, and regularity of activities so as to constitute a regular business activity” carried on in the State of New York.

Endeavor Car Company (Endeavor) was a limited partnership established in 1968 under the Partnership Law of the State of New York. It consisted of two general partners and 18 limited partners of which George R Vogt was one. PPG Industries (formerly Pittsburgh Plate Glass) was a corporation engaged in the production of glass, basic chemicals, coatings and resins. It used a large number of railroad tank cars to transport both raw materials to its plants and finished products to its customers. Endeavor was formed to purchase used tank cars from PPG and new tank cars from their manufacturer and then to lease these cars to PPG. This method of operating was cheaper for PPG than its ownership of the rolling stock and achieved certain other corporate objectives. At the end of 1970 Endeavor owned 614 tank cars (546 used cars and 68 new cars), all of which were leased to PPG.

The business of Endeavor was to purchase, finance and lease these tank cars. To finance the acquisition of the rolling stock, Endeavor raised a total of $10,679,500 in capital, $1,429,500 from general and limited partners and $9,250,-000 in long-term debt. The latter was negotiated from lending institutions in two stages. Initially temporary financing was obtained; the partnership paid interest on the temporary borrowings, increasing the amount thereof as additional tank cars were acquired, and paid commitment fees on the balance of the loan. In the latter part of 1970 when all aspects of Endeavor’s transaction with PPG were in place, Endeavor secured commitments for long-term financing from four institutional lenders, based on current appraisals of the rolling stock. The closing of the long-term financing took place in January, 1971, at which time a corporate trustee was appointed to act on behalf of the institutional lenders.

As Endeavor purchased tank cars it leased them to PPG Under a temporary lease negotiated with PPG with supplements prepared from time to time to cover additional cars (ordered by PPG) as they arrived from the manufacturers. The temporary lease covered the transitional period from late 1968 through 1970 and was replaced with a permanent lease in January, 1971.

The partnership activities were directed and supervised by Charles A. Lee, Jr., one of Endeavor’s two general partners, from the offices of First Boston Corporation (of which Mr. Lee was a vice-president) at 20 Exchange Place, New York, New York. The Tax Commission found: that Mr. Lee devoted approximately 30 % of his time to partnership business; that the partnership books of account, ledgers, files and other records were kept at this office; that mail addressed to the partnership was delivered either to this office or to the partnership’s statutory address at 10 Garden Place, Brooklyn, New York (Mr. Lee’s residence); that Mr. Lee’s activities consisted of arranging for temporary and long-term financing, negotiating lease arrangements, issuing capital calls on partners, conducting correspondence, providing facilities and personnel on a contractual basis, and supervising the general activities of the partnership ; that while the partnership had no employees, as such, it utilized the services of employees of First Boston Corporation and also relied on that company for other services, which services and personnel were provided on a contractual basis under a compensatory arrangement between the partnership and First Boston Corporation; and that the partnership had no other offices either inside or outside New York State. In sum the facts found by the Tax Commission on the basis of the evidence in the record demonstrate that all the business activities of this somewhat unusual enterprise were conducted within the State of New York, at or through its office at 20 Exchange Place.

Section 637 (subd [a], par [1]) of the Tax Law provides: “In determining New York adjusted gross income of a nonresident partner of any partnership, there shall be included only the portion derived from or connected with New York sources of such partner’s distributive share of items of partnership income, gain, loss and deduction entering into his federal adjusted gross income, as such portion shall be determined under regulations of the tax commission consistent with the applicable rules of section six hundred thirty-two.”

Section 632 provides in pertinent part:

“(a) General. The New York adjusted gross income of a nonresident individual shall be the sum of the following:
“(1) The net amount of items of income, gain, loss and deduction entering into his federal adjusted gross income, as defined in the laws of the United States for the taxable year, derived from or connected with New York sources, including:
“(A) his distributive share of partnership income, gain, loss and deduction, determined under section six hundred thirty-seven,

* * *

“(b) Income and deductions from New York sources.
“(1) Items of income, gain, loss and deduction derived from or connected with New York sources shall be those items attributable to:

* * *

“(B) a business, trade, profession or occupation carried on in this state.”

These statutory provisions are supplemented by the provisions of regulations (§ 131.4[a]; 20 NYCRR 131.4[a]):

“131.4 Business, trade, profession or occupation carried on in this State (Tax Law, § 632[b] [1] [B]). The New York adjusted gross income of a nonresident individual includes items of income, gain, loss and deduction entering into his Federal adjusted gross income which are attributable to a business, trade, profession or occupation carried on in this State.

“(a) A business, trade, profession or occupation (as distinguished from personal services as an employee) is carried on within the State by a nonresident when he occupies, has, maintains or operates desk room, an office, a shop, a store, a warehouse, a factory, an agency or other place where his affairs are systematically and regularly carried on, notwithstanding the occasional consummation of isolated transactions without the State. This definition is not exclusive. Business is carried on within the State if activities within the State in connection with the business are conducted in this State with a fair measure of permanency and continuity. A taxpayer may enter into transactions for profit within the State and yet not be engaged in a trade or business within the State. If a taxpayer pursues an undertaking continuously as one relying on the profit therefrom for his income or part thereof, he is carrying on a business or occupation.”

The critical question, therefore, is whether the partnership was carrying on a business in New York State within the contemplation of the cited sections of the Tax Law in 1970. If so George R. Vogt’s distributive share of the partnership losses for that year would be derived from or connected with New York State sources and, as such, would be includable in the calculation of his adjusted gross income for that year.

Considering only the factual findings made by the Tax Commission itself with respect to the business activities of this partnership we conclude there is no evidence to support the determination that the business of the partnership was passive only and was not “systematically and regularly carried on * * * with a fair measure of permanency and continuity” in New York State. The partnership was established and operated to arrange financing and to acquire and lease railroad tank cars for use by the lessee out of State. Its business was conducted by Mr. Lee as general partner at 20 Exchange Place in New York City. In addition to his own substantial personal services, he utilized personnel and services of First Boston Corporation which were provided the partnership on a contractual basis under a compensatory arrangement. In the light of the nature of this enterprise, the activities in New York constituted an active business (cf. Cooper Tire & Rubber Co. Employees’ Retirement Fund v Commissioner of Internal Revenue, 36 TC 96, affd 306 F2d 20).

In our court the Tax Commission relies heavily to support its determination on a statement which appears on the partnership’s New York State tax returns for each of the years 1969, 1970 and 1971:

“STATEMENT REGARDING ALLOCATION OF NET OPERATING LOSS TO NONRESIDENT PARTNERS

“The property owned by this partnership is located and operated outside the State of New York. No part of the net operating loss of the partnership is derived from or connected with New York State sources, and therefore not allocable to New York State by nonresident partners.”

The evidence at the hearing before the commission revealed that this statement had been placed on the returns by the partnership’s accountants, and the returns with such statement had been signed by Staghound Corporation as a general partner.

The first sentence of the statement is descriptively accurate; the railroad tank cars owned by .the partnership were located outside the State of New York and they were operated outside the State, but by PPG as lessee and not by the partnership. It is the second sentence on which the State Tax Commission seizes and which its counsel in our court characterizes as “an unequivical admission by Endeavor that the losses appellants seek to deduct in the instant proceeding were not ‘derived from or connected with New York sources’ within the meaning and intent of Tax Law, § 632(a) (1), (b) (1) (B) or Tax Law, § 637(a) (1).” The nature of this statement must be considered to determine the legal significance properly to be accorded to it. This sentence is not an affirmation or admission of fact; it is rather a statement of a conclusion of law, a legal characterization of tax consequence, tracking the language of the statute. The Tax Commission, in effect, would have us deem it an “admission of non-deductibility”. We do not question that an admission as to tax consequences (even though it is an admission with respect to a conclusion of law) if made by a taxpayer or on his behalf might be binding on him and might therefore properly be made the predicate for imposition of tax liability. Thus, the critical issue on this branch of the present case is whether the Tax Commission’s determination of deficiency against Mr. and Mrs. Vogt could properly be premised on this “admission of nondeductibility”. There is no proof in this record that Stag-hound Corporation, the general partner that signed the partnership tax returns, was authorized by Mr. Vogt to make this admission on his behalf or that the statement was otherwise ratified or adopted by Mr. Vogt. Although the law is clear that admissions or representations made by a partner concerning partnership affairs within the scope of his authority may be used against the partnership (e.g., Partnership Law, § 22), here the situation is the converse. The Tax Commission would use this statement by the partnership not against or with respect to the affairs of the partnership, but as an admission to fix the liability of an individual limited partner in the conduct of his personal affairs. No authority is cited for any such use, nor does it comport with analysis of legal principle. The conclusory declaration on the partnership returns as to characterization for tax purposes of the net operating loss of the partnership, for whatever purpose or possible advantage there sought, was in no way binding on Mr. Vogt in the computation of his individual personal income taxes.

Absent the impermissible reliance on the statement affixed to the partnership returns, we conclude that there was no evidence, let alone any substantial evidence, to support the Tax Commission’s finding that the activities of the partnership did not constitute the carrying on of a regular business in the State of New York. Accordingly, the determination of the Tax Commission that Mr. Vogt’s distributive share of the partnership loss for the year 1970 was not an allowable deduction, dependent as it was on the underlying factual finding, cannot stand.

For the reasons stated, the judgment of the Appellate Division should be reversed, with costs, the petition granted, and the determination of the State Tax Commission annulled.

Judges Gabrielli, Fuchsberg and Meyer concur with Judge Jones; Chief Judge Cooke and Judges Jasen and Wachtler dissent and vote to affirm for reasons stated in the memorandum at the Appellate Division (79 AD2d 758).

Judgment reversed, etc.

      . George R. Vogt died April 30, 1977.

      . The other general partner was Staghound Corporation, a New York corporation.

      . In its decision of September 21, 1979 the Tax Commission purported to rely on section 703 of the Tax Law and regulations promulgated with reference thereto. Literally read these provisions related to the tax on unincorporated businesses and not to the tax on personal income, although the underlying concepts are not dissimilar.

      . The contention, relied on for the first time in this article 78 proceeding, that no deduction should be allowed on the ground that Endeavor’s transactions were not entered into for profit and constituted nothing but an impermissible tax shelter, not having been the premise for the Tax Commission’s ruling, cannot now be urged to sustain that ruling (Matter of Montauk Improvement v Proccacino, 41 NY2d 913; Matter of Barry v O’Connell, 303 NY 46, 50-51).

      . The only case cited on behalf of the Tax Commission in our court is Matter of Schrader v State Tax Comm. (72 AD2d 873), a case involving an assessment of an unincorporated business tax in consequence of the conduct of a farming business and presenting no issue as to the legal significance to be accorded a statement made by a partnership for tax or other purposes. The majority at the Appellate Division cited only Hutchison v Brown (277 App Div 130), a case involving the admissibility of statements made by the plaintiffs to the defendant that a third person was the plaintiff’s partner in the transactions and of statements made by such third person with respect to the transactions in issue. Neither case constitutes authority for the proposition sought to be advanced by the State Tax Commission in this case.

      . Testimony as to facts with respect to the conduct of the activities of the partnership (as contrasted with an admission with respect to a legal issue) made by another partner on the basis of his personal knowledge of partnership affairs would, of course, be admissible against an individual partner, as would comparable testimony of any third-party witness, but not on any theory that such testimony was an admission binding on the individual partner. Indeed so it was in this case with reference to the testimony of Mr. Lee as to his activities on behalf of the partnership.

      . The contention, originally advanced by the State Tax Commission, that in any event Mr. Vogt would not have been entitled to claim a loss under the United States Treasury Regulation (§ 1.704-1 [d]) has been abandoned in our court. one factor to be considered in determining whether an action should be dismissed pursuant to CPLR 327.


author: Wachtler, J. Fuchsberg, J.

text:
    The People of the State of New York, Respondent, v Robert A. Kates, Appellant.
    Argued September 11,1981;
    decided October 27, 1981

      POINTS OF COUNSEL

      Charles F. Crimi for appellant.
    I. The results of a blood test drawn pursuant to section 1194 of the Vehicle and Traffic Law should be suppressed as evidence in a criminal prosecution where the blood was withdrawn from a non-consenting, unconscious or uncomprehending person. (People v Biester, 24 AD2d 1021; People v Goodman, 31 NY2d 262; People v Acme Markets, 37 NY2d 236; People v Thomas, 46 NY2d 100.) II. The court below erred in refusing to dismiss the appeal by the People of a pretrial order. (Mapp v Ohio, 367 US 643; Matter of Forte v Supreme Ct. of State of N. Y., 62 AD2d 704, 48 NY2d 179.)

      Donald O. Chesworth, Jr., District Attorney (Glenda K. Brayman of counsel), for respondent.
    I. The court below properly held that the results of defendant’s blood test were admissible at trial. (People v Boodle, 47 NY2d 398, 444 US 969; People v Jennings, 45 NY2d 998; People .v Cantor, 36 NY2d 106; People v McGroder, 81 Misc 2d 1081; Matter of Albano v Kirby 36 NY2d 526; Schmerber v California, 384 US 757; People v Thomas, 46 NY2d 100; People v Craft, 28 NY2d 274; Matter of June v Tofany, 34 AD2d 732; People v Young, 42 Misc 2d 540.) II. The court below properly refused to dismiss the appeal below.
   OPINION OF THE COURT

Wachtler, J.

The primary question on this appeal is whether a blood alcohol test of a hospitalized driver, who was unconscious or so disoriented that the police were unable to obtain his consent, was made in violation of section 1194 of the Vehicle and Traffic Law. The trial court suppressed the test results holding that the statute requires express consent and that a contrary interpretation would violate the equal protection rights of the unconscious driver. The Appellate Division reversed finding no statutory or constitutional bar to admissibility. The defendant appeals claiming the trial court properly suppressed. He also argues that the prosecutor possesses other evidence of intoxication and thus had no right to appeal the suppression order in this case.

At approximately 6:00 P.M. on March 3, 1979 a car driven by the defendant collided with another car fatally injuring the woman driving that vehicle. The defendant and his three passengers were removed to nearby hospitals. After examining the accident scene the police spoke to one of the defendant’s passengers who appeared to be intoxicated. At approximately 9:00 p.m. the police went to see the defendant who was then in another emergency room being treated for various injuries including lacerations of the head. As the police approached the defendant they detected an odor of alcohol, observed that his eyes were bloodshot and watery and concluded that he was intoxicated. They also concluded, and it was found as a fact at the hearing, that the defendant was so disoriented as to be incapable of giving or refusing consent to a blood test. Thus, unable to obtain his consent the police simply asked the attending physicial to take a blood sample. This was done without incident and subsequent analysis showed that defendant’s blood contained .18% by weight of alcohol. The defendant was indicted for criminally negligent homicide, driving while intoxicated and related offenses.

Prior to trial the defendant moved to suppress the blood test results on the grounds that they were obtained without his consent in violation of section 1194 of the Vehicle and Traffic Law and his constitutional rights under the Fourth Amendment and the equal protection clause of the Fourteenth Amendment. After a hearing the court found that it was, in fact, impossible for the police to obtain defendant’s consent because of his condition at the time of the test. Nevertheless the court concluded that under the statute blood test results are not admissible unless the defendant “expressly consented” to the test. The court also agreed with the defendant that if the statute were construed to dispense with the need to consent in the case of an unconscious driver it would violate the defendant’s constitutional right of equal protection.

The People appealed the suppression order (CPL 450.20, subd 8) and certified that the remaining proof was not sufficient to obtain a conviction (CPL 450.50, subd 1). The Appellate Division reversed concluding that section 1194 literally read did not require the driver’s express consent to a blood test and that its history showed that the Legislature did not intend lack of consent to be a bar to the admissibility of blood test results when the driver was unconscious or otherwise incapable of giving or refusing consent. The court also found that there was a basis for distinguishing between conscious drivers and unconscious drivers and thus no denial of equal protection. The defendant’s contention that the suppression order was not appealable because the prosecutor had other evidence of intoxication was found to be without merit in view of the prosecutor’s certification that the suppressed evidence was essential to his case. On these points we agree with the Appellate Division.

Initially it should be noted that taking the blood sample in this case did not involve any violation of the defendant’s constitutional rights under the Fourth or Fifth Amendments. Taking a driver’s blood for alcohol analysis does not call for testimonial compulsion prohibited by the Fifth Amendment (Schmerber v California, 384 US 757, 760-765; People v Thomas, 46 NY2d 100). Nor does it involve an unreasonable search under the Fourth Amendment when there is probable cause, exigent circumstances and a reasonable examination procedure (Schmerber v California, supra, pp 768-772). So long as these requirements are met —and the defendant does not suggest that they were not met in this case — the test may be performed absent defendant’s consent and indeed over his objection without violating his Fourth Amendment rights (Schmerber v California, supra, p 759).

Thus the defendant’s contention that the test made without his consent was illegal, depends solely upon his interpretation of section 1194 of the Vehicle and Traffic Law. Subdivision 1 of that statute establishes the general rule that “Any person who operates a motor vehicle in this state shall be deemed to have given his consent” to such a test. Subdivision 2 contains an exception which is only applicable when the driver refuses to consent. It states “If such person having been placed under arrest or after a breath test indicates the presence of alcohol in his system and having thereafter been requested to submit to such chemical test, refuses to submit to such chemical test, the test shall not be given”. The statute also provides penalties for the driver who refuses to submit after being advised of the consequences of refusal (see subds 2, 4; People v Thomas, supra, p 108).

Literally read the statute was not violated in this case because the defendant had not refused consent. Of course the result would be different if the Legislature had provided that no test could be given unless the driver expressly consents to it. Under such a statute consent would be a prerequisite and the unconscious or incapacitated driver could not be given a blood test because of the impossibility of obtaining his consent. However, subdivision 2 cannot be read as requiring the driver’s express consent because that would effectively nullify the consent implied in subdivision 1 or at least make the statute inherently inconsistent. In any event that is not the way the Legislature worded the exception and the history of the statute shows that the wording was carefully chosen with this situation in mind. The legislative committee responsible for this statute noted in its report: “In the case of an unconscious individual, a chemical test can be administered since he is deemed to have given his consent when he used the highway. It is not necessary that a person be given the opportunity to revoke his consent. The only reason the opportunity to revoke is given is to eliminate the need for the use of force by police officers if an individual in a drunken condition should refuse to submit to the test” (Report of Joint Legislative Committee on Motor Vehicle Problems, McKinney’s 1953 Session Laws of NY, pp 1912-1928). Indeed it would have been odd if the Legislature had provided that the blood test and the penalties for refusal designed to remove drunken drivers from the road would become inapplicable when the driver has, by excessive drinking or injuries sustained in a related accident, made himself incapable of consenting or refusing to submit to the test.

The distinction drawn between the conscious driver and the unconscious or incapacitated driver does not offend the equal protection clause. It was reasonable for the Legislature, concerned with avoiding potentially violent conflicts between the police and drivers arrested for intoxication, to provide that the police must request the driver’s consent, advise him of the consequences of refusal and honor his wishes if he decides to refuse, but to dispense with these requirements when the driver is unconscious or otherwise incapacitated to the point where he poses no threat. Indeed there is a rational basis for distinguishing between the driver who is capable of making a choice and the driver who is unable to do so. Thus, denying the unconscious driver the right to refuse a blood test does not violate his right to equal protection.

As noted the defendant also contends that the prosecutor had no right to appeal the suppression order because the defendant believes that the remaining evidence is sufficient to sustain a conviction. The statute provides however, that the prosecutor may appeal not only where the remaining proof is legally insufficient but also where he certifies that it is “so weak in its entirety that any reasonable possibility of prosecuting such charge to a conviction has been effectively destroyed” (CPL 450.50, subd 1, par [b]). The quoted portion obviously calls for a personal evaluation which can only be made by the prosecutor who is a better judge than his opponent or an appellate court of his chance of succeeding at trial with the remaining proof. Nor is there any general need to check the accuracy of the prosecutor’s assessment since the statute itself discourages a prosecutor from overestimating his need for the suppressed evidence. Once he files the certification and takes an appeal, he will not be permitted to change his position and try the defendant on other proof if the suppression order is upheld on appeal (CPL 450.50, subd 2; Matter of Forte v Supreme Ct. of State of N. Y., 48 NY2d 179). Thus the prosecutor’s certification is sufficient; he need not expose his case for appellate confirmation of his likelihood of obtaining a conviction without the suppressed proof.

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

Fuchsberg, J.

(concurring). While, for the reasons I advanced in my dissent in People v Thomas (46 NY2d 100, 110-113), I do not depart from my conviction that section 1194 of the Vehicle and Traffic Law runs afoul of the fundamental constitutional bar against testimonial compulsion, I am now constrained to concur on authority of the majority’s holding in that case.

Chief Judge Cooke and Judges Jasen, Gabrielli, Jones and Meyer concur with Judge Wachtler; Judge Fuchs-berg concurs in a concurring memorandum.

Order affirmed.


text:
    Snyder Construction Company, Inc., Respondent, v State of New York, Appellant.
    (Claim No. 62762.)
    Argued February 10,1981;
    decided March 24, 1981

      APPEARANCES OF COUNSEL

      Robert Abrams, Attorney-General (Richard J. Dorsey and Shirley Adelson Siegel of counsel), for appellant.

      Spencer G. Feldmann for respondent.
   OPINION OF THE COURT

Order reversed, with costs, and motion to dismiss the claim granted for reasons stated in the dissenting opinion by Justice J. Clarence Herlihy at the Appellate Division (73 AD2d 50, 52-55). Question certified answered in the negative.

Concur: Chief Judge Cooke and Judges Jasen, Gabrielli, Jones, Wachtler, Fuchsberg and Meyer.


text:
    Dairy Barn Stores, Inc., Appellant, v State Liquor Authority, Respondent.
    Argued February 11,1981;
    decided March 24, 1981

      APPEARANCES OF COUNSEL

      Darrin Berger for appellant.

      Stanley Stein and Warren B. Pesetsky for respondent.
   OPINION OF THE COURT

Order affirmed, with costs, for reasons stated in the memorandum at the Appellate Division (77 AD2d 612).

Concur: Chief Judge Cooke and Judges Jasen, Gabeielli, Jones, Wachtler, Fuchsberg and Meyer.


text:
    Town of Junius et al., Appellants, v Robert F. Flacke, as Commissioner of Environmental Conservation of the State of New York, Respondent.
    Argued February 10, 1981;
    decided March 24, 1981

      APPEARANCES OF COUNSEL

      John M. Sipos for appellants.

      Robert Abrams, Attorney-General (Peter G. Crary, Shirley Adelson Siegel and James A. Sevinsky of counsel), for respondent.
   OPINION OF THE COURT

Order affirmed, with costs, for reasons stated in the opinion by Justice John H. Doerr at the Appellate Division (71 AD2d 423).

Concur: Chief Judge Cooke and Judges Jasen, Gabrielli, Jones, Wachtler, Fuchsberg and Meyer.


text:
    Westwood Associates et al., Appellants, v Deluxe General, Incorporated, Respondent, et al., Defendants.
    Argued February 9,1981;
    decided March 24, 1981

      APPEARANCES OF COUNSEL

      Ephraim London and William S. Hochenberg for appellants.

      Margaret Blair Soyster, Guy C. Quinlan and William R. Henrich for respondent.
   OPINION OF THE COURT

Memorandum.

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

The Appellate Division did not abuse its discretion in dismissing the action on grounds of forum non conveniens. That all of the parties to the action may have been New York residents is not dispositive, since the residence of the parties in New York is but one factor to be considered in determining whether an action should be dismissed pursuant to CPLR 327 (see Silver v Great Amer. Ins. Co., 29 NY2d 356; see, generally, Irrigation & Ind. Dev. Corp. v Indag, S. A., 37 NY2d 522).

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

Order affirmed, with costs, in a memorandum.


text:
    James T. Farrell, Appellant, et al., Plaintiff, v Royal Crown Bottling Co., Inc., et al., Defendants and Third-Party Plaintiffs-Respondents. Thalle Construction Company, Third-Party Defendant-Respondent.
    Argued February 9,1981;
    decided March 24, 1981

      APPEARANCES OF COUNSEL

      Martin S. Rothman and Joseph Irom for appellant.

      William F. McNulty, Joseph W. Conklin and Anthony J. McNulty for defendants and third-party plaintiffs-respondents.

      Steven B. Prystowsky and Patrick A. Lyons for third-party defendant-respondent.
   OPINION OF THE COURT

Memorandum.

The order of the Appellate Division should be reversed, with costs, and the case remitted to that court for determination of questions of fact.

It cannot be said as a matter of law that no jury could find that in clearing the flatbed from which the unloading was being conducted by so narrow a margin as one foot the driver of the soda truck failed to exercise reasonable care in the circumstances. Similarly, it cannot be concluded as a matter of law that, if the driver were thus found to have been negligent, his negligence was not a substantial factor in bringing about plaintiff’s injuries. Inasmuch as the disposition at the Appellate Division was on the law, the case must be remitted to that court pursuant to CPLR 5613.

Order reversed, with costs, and case remitted to the Appellate Division, First Department, for further proceedings in accordance with the memorandum herein.

Chief Judge Cooke and Judges Gabrielli, Jones, Wachtler, Fuchsberg and Meyer concur; Judge Jasen dissents and votes to affirm for reasons stated in the memorandum at the Appellate Division (72 AD2d 531).


text:
    Brick Hill Construction Corp. et al., Appellants, v Zoning Board of Appeals of Town of Somers, Respondent.
    Argued February 10, 1981;
    decided March 24, 1981

      APPEARANCES OF COUNSEL

      Miles F. McDonald, Jesse Climenko and Stevan Keram for appellant.

      Henry J. Smith and James G. Fine for respondent.
   OPINION OF THE COURT

Memorandum.

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

After a hearing the zoning board of appeals denied appellant’s application for a special exception use permit to excavate sand and gravel. There was substantial evidence in the record to support, and thus a rational basis for, the determination of the board made on the grounds that the proposed use (1) would substantially increase truck traffic, thereby posing a threat to the movement of school buses and creating unreasonably hazardous traffic conditions and a danger to public safety; (2)’would create unacceptably high noise and air pollution levels which would bring about a diminution in property values in the neighborhood; and (3) would increase the extent and frequency of flooding in the area. Such findings comport with the standards set forth in the applicable provisions of the zoning ordinance. Nor is the determination affected by any error of law. In particular even if it be assumed that appellant timely raised the contention that the board’s determination was improperly. based on community pressure, such contention is not supported by evidentiary proof in the record or inferences which might be drawn from such proof.

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

Order affirmed, with costs, in a memorandum.


text:
    In the Matter of Rosbar Company, Appellant, v Board of Appeals of the City of Long Beach, Respondent.
    Submitted February 10,1981;
    decided March 24, 1981

      APPEARANCES OF COUNSEL

      Jack Korshin for appellant.

      Eli Kramer, Corporation Counsel (Carolyn A. Cairns of counsel), for respondent.
   OPINION OF THE COURT

Memorandum.

The prior nonfinal order of the Appellate Division dated January 22, 1979 having been reviewed, the order of that court dated July 7, 1980 should be affirmed, with costs.

There is substantial evidence in the record to support the finding of the board of appeals that there had been such a change in use of the subject premises as to cause it to lose its nonconforming status. There was proof that what was in essence a seasonal summer hotel had been converted to a year-round facility for senior citizens with a consequent significant increase in demand for municipal services. Nor does this case present any occasion to make an exception to the general rule that the doctrine of estoppel is not applicable to preclude a municipality from enforcing the provisions of its zoning ordinance.

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

Order affirmed, with costs, in a memorandum.


text:
    Robert Kerwick, Appellant, v Orange County Publications Division of Ottaway Newspapers, Inc., Respondent.
    Argued February 11,1981;
    decided March 24, 1981

      APPEARANCES OF COUNSEL

      Stephen L. Oppenheim for appellant.

      Joseph Sluzar for respondent.
   OPINION OF THE COURT

Memorandum.

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

On the publisher’s motion for summary judgment it was not disputed that the editorial complained of was factually false. The publisher’s editor admitted in the course of his examination before trial that his conduct with respect to the factual material contained in the editorial did not “meet with the standards of [the] profession in information gathering and dissemination” as he understood them, in that there was “Reliance on memory rather than search of material, or original research”. This admission, unaccompanied by any explanation or justification, constituted evidentiary proof in admissible form showing facts sufficient to require a trial on the issue of malice. That a retraction was promptly published might be considered evidence of lack of malice in certain instances but would not be sufficient as a matter of law for that purpose.

Accordingly, it was-error to grant the motion for summary judgment.

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

Order reversed, with costs, and defendant’s motion for summary judgment denied in a memorandum.


text:
    Mars Associates, Inc., et al., Appellants, v City of New York, Respondent.
    Argued February 10, 1981;
    decided March 24, 1981

      APPEARANCES OF COUNSEL

      Louis Cantor for appellants.

      Allen G. Schwartz, Corporation Counsel (James Griffin, Francis F. Caputo, Angelo Aiosa and Carolyn Herman of counsel), for respondent.
   OPINION OF THE COURT

Memorandum.

The judgment appealed from and-the order of the Appellate Division brought up for review should be affirmed, with costs, for the reasons stated in that court’s memorandum.

In addition, we note that the circumstances of the waiver demonstrate as a matter of law that it was designed to cover the claim upon which plaintiff now sues. Plaintiff is a sophisticated contractor, and in withstanding the motion for summary judgment it did not show that the instant claim for delay damages was covered by the exceptions from the blanket waiver. Those exceptions covered “various change orders and work under protest”, and the parties have used these terms to refer to extra work beyond the original contract, not claims for damages by reason of acts or omissions of the city. If the exemptions were intended to be broader in scope, it was incumbent upon plaintiff to state its intentions with clarity.

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

Judgment appealed from and order of the Appellate Division brought up for review affirmed, with costs, in a memorandum.


text:
    Murray Lewis, Appellant, v Frank J. Macchiarola, as Chancellor of the Board of Education of the City School District of the City of New York, et al., Respondents.
    Argued February 9, 1981;
    decided March 24, 1981

      APPEARANCES OF COUNSEL

      Murray B. Schneps for appellant.

      Allen G. Schwartz, Corporation Counsel (Alexander J. Wulwick and Carolyn E. Demarest of counsel), for respondent.
   OPINION OF THE COURT

Memorandum.

The order appealed from should be affirmed, essentially for the reason stated in the memorandum at the Appellate Division. In that connection we note that, if the respondent had raised the failure to exhaust administrative remedies point at Special Term, it could not have been obviated factually or legally. Therefore, especially since the matter was legally conclusive of the case, we cannot say that it was error as a matter of law for the Appellate Division to have based its disposition on that ground.

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

Order affirmed, with costs, in a memorandum.


text:
    In the Matter of Robert J. La Sota, Appellant, v Ernest Green, as Commissioner of the Department of Public Works of the City of Yonkers, et al., Respondents.
    Argued February 12,1981;
    decided March 24, 1981

      APPEARANCES OF COUNSEL

      Frederick S. Buck, Jr., for appellant.

      Arthur J. Doran, Jr., Corporation Counsel (Jane M. Maguire of counsel), for respondents.
   OPINION OF THE COURT

Memorandum.

The order of the Appellate Division, insofar as appealed from, should be reversed, with costs, and the matter remitted to Supreme Court, Westchester County, for further proceedings in accordance with this memorandum.

The issue is whether petitioner was “continued in” his position as assistant water chemist and bacteriologist so as to convert his provisional status to a permanent appointment pursuant to subdivision 4 of section 65 of the Civil Service Law. The Appellate Division read into the statute a requirement that such continuation last a substantial period of time. This interpretation, however, is at odds with the statute’s plain wording. Nothing in section 65 indicates that attainment of permanent status is dependent upon the length of time a provisional employee is “continued in” his or her position after becoming eligible for permanent appointment. Thus, petitioner, who was retained over a month beyond the nine-month statutory term of his provisional appointment, which ended on March 21,1979 (Civil Service Law, § 65, subd 2), attained permanent status when he was continued in his position subsequent to his name appearing on an eligible list on March 6, 1979.

It remains to be determined whether petitioner’s termination complied with the applicable rules dealing with probationary terms for permanent appointees. For this reason, the matter is remitted to Special Term.

Chief Judge Cooke and Judges Jasen, Gabrielli, Jones, Wachtler, Fuchsberg and Meyer concur in memorandum. Order, insofar as appealed from, reversed, etc.


text:
    City of Albany, Respondent, v Donna Lee, Appellant.
    Argued February 10, 1981;
    decided March 24, 1981

      APPEARANCES OF COUNSEL

      Dennis B. Schlenker for appellant.

      John E. Roe, Corporation Counsel (James D. Linnan of counsel), for respondent.
   OPINION OF THE COURT

Memorandum.

The order of the Appellate Division should be affirmed for reasons set forth in the memorandum at the Appellate Division. To this we but add the observation that, in the application of this ordinance to the appellant, “The Constitution * * * does not require impossible standards; it is enough that the language used ‘ “conveys sufficiently definite warnings as to the proscribed conduct when measured by common understanding and practices” ’ ” (People v Illardo, 48 NY2d 408, 414, quoting Miller v California, 413 US 15, 27-28, n 10).

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

Order affirmed, with costs, in a memorandum.


text:
    Linda Sagan, Appellant, v Carl Sagan, Respondent.
    Argued February 12, 1981;
    decided March 24, 1981

      APPEARANCES OF COUNSEL

      Arthur J. Ginsburg for appellant.

      Irving M. Gruber, Leanora S. Gruber and Melvyn N. Spain for respondent.
   OPINION OF THE COURT

Memorandum.

The order of the Appellate Division should be modified by granting judgment on the second cause of action declaring that there is no valid agreement between the parties and, as so modified, the order should be affirmed, with costs to respondent.

The internal material indices of incompleteness in the conditioned so-called “Preliminary Agreement” and the parties’ conceded subsequent unsuccessful efforts to flesh it out together support the conclusion of the Appellate Division that there is no enforceable agreement between the parties. Concordantly, the request for a declaration of rights should have been granted and a declaration made that, since there was no valid agreement between the parties, no rights inured to the plaintiff thereunder (Lanza v Wagner, 11 NY2d 317, 334). There, therefore, was insufficient support for the causes so premised.

Moreover, to the extent that the plaintiff seeks reformation of the writing, her tender of proof in evidentiary form does not rise to the high level required to resist a motion for summary judgment directed against such an action (see Backer Mgt. v Acme Quilting Co., 46 NY2d 211, 219-220).

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

Order modified, with costs to respondent, in accordance with the memorandum herein and, as so modified, affirmed,


text:
    John S. Hall, Respondent, v Howard W. La Rose, as Executor of Winifred S. La Rose, Deceased, Appellant.
    Argued February 13, 1981;
    decided March 24, 1981

      APPEARANCES OF COUNSEL

      William W. Millington for appellant.

      John S. Hall, respondent pro se, and Henry D. Sintzenich, II, for respondent.
   OPINION OF THE COURT

Order affirmed, with costs, for reasons stated in the memorandum at the Appellate Division (76 AD2d 989). Van Wormer v Giovatto (46 NY2d 751) is not authority to the contrary.

Concur: Chief Judge Cooke and Judges Jasen, Gabrielli, Jones, Wachtler, Fuchsberg and Meyer..


text:
    Diane Elkan et al., Plaintiffs, v Simon Arredondo et al., Defendants. Luby Volkswagen, Inc., Third-Party Plaintiff-Appellant, v Volkswagenwerk AG., Third-Party Defendant-Respondent, et al., Third-Party Defendant.
    Argued February 9, 1981;
    decided March 24, 1981

      APPEARANCES OF COUNSEL

      William F. McNulty, Harold M. Foster and Anthony J. McNulty for appellant.

      Herbert Rubin, Edward L. Birnbaum and David B. Hamm for respondent.
   OPINION OF THE COURT

Memorandum.

The order of the Appellate Division should be reversed, with costs, and that of Special Term reinstated.

The summary judgment motion of third-party defendant, Volkswagenwerk, AG. (VWAG), was denied by Special Term but granted by the Appellate Division. In the main action plaintiffs Elkan sue defendant Arredondo, driver of a vehicle which collided with the Elkans’ Volkswagen, Luby Volkswagen, from whom the Elkans purchased their car secondhand, and Volkswagen of America, Inc., United States distributor of Volkswagen automobiles. Luby, as third-party plaintiff, then impleaded VWAG and Klippan G.M.B.H., manufacturer of the vehicle and of the seat belts, respectively.

In the main action the claim is that after the Arredondo vehicle struck the Elkans’ Volkswagen, the seat belt for the front passenger seat came open and Mrs. Elkan was propelled out of the seat and against the passenger side door which opened, causing her to sustain severe injuries when she was precipitated into the roadway.

VWAG concedes that the Elkan vehicle was manufactured by it and was equipped with seat belts when it was imported into the United States. The theory of the Elkans’ claims against Luby and Volkswagen of America is that the seat belt system and door latch mechanism were defective in, among other things, design. VWAG predicates its motion on the fact that the Volkswagen in question went through four prior owners before being purchased by the Elkans from Luby, that when Mr. Elkan first saw the car it had no seat belts and Luby installed “the seat belt system.” It therefore contends, and the Appellate Division agreed, it cannot be shown that the vehicle was defective when it left VWAG’s hands.

The difficulty with the argument is that the evidence on which VWAG relies does not establish that Luby installed the seat belt system. The testimony of Mr. Elkan was that “seat belts” were installed, not the seat belt system, and the Luby work order simply says “install seat belt.” The trier of fact may infer from this evidence either that the installation was of the belt but not the anchors or that it was of both. There is thus an issue of fact concerning whether VWAG was the installer of anchors defective in design or in manufacture or installation. Had VWAG included in its motion papers the affidavit of an expert who had examined the Elkan car after the accident and could pinpoint what caused the seat belt to open, Luby would then have been required to come forward with countervailing proof. On the papers presented it is for the trier of fact to decide whether the evidence establishes the existence of a defect at the time the vehicle left VWAG’s hands.

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

Order reversed, with costs, and the order of Supreme Court, New York County, reinstated in a memorandum.


text:
    Charles Borda, Respondent, v Leopold Borda et al., Respondents, and Susan R. Borda, Appellant.
    Submitted February 23, 1981;
    decided March 24, 1981
   Motion for leave to appeal dismissed upon the ground that the order appealed from does not finally determine the action within the meaning of the Constitution.

Judge Fughsberg taking no part.


text:
    Joan R. Davis et al., Respondents, v Elethea H. Caldwell et al., Appellants.
    Submitted March 2, 1981;
    decided March 24, 1981
   Motion to dismiss the appeal denied.


text:
    In the Matter of John Esler et al., Respondents, v Carl J. Walters, as Supervisor of the Town of Guilderland, et al., Appellants.
    Decided March 24, 1981
   Appeal transferred, without costs, by the Court of Appeals sua sponte, to the Appellate Division, Third Department, upon the ground that a direct appeal does not lie where questions other than the constitutional validity of a statutory provision are involved (NY Const, art VI, § 3, subd b, par [2] ; § 5, subd b; CPLR 5601, subd [b], par 2).


text:
    Robert W. Nishman, Respondent, v Anthony J. De Marco, Jr., Appellants.
    Decided March 24, 1981
   Appeal dismissed, without costs, by the Court of Appeals sua sponte, upon the ground that the order appealed from does not finally determine the action within the meaning of the Constitution (Cohen and Karger, Powers of the New York Court of Appeals, § 16, pp 68-69).