text:
    Peter C. Flanagan, Appellant, v Board of Education, Commack Union Free School District, Respondent.
    Argued May 29, 1979;
    decided July 10, 1979

      POINTS OF COUNSEL

      David S. J. Neufeld and Douglas K. McNally for appellant.
    I. A defense founded upon subdivision 1 of section 3813 of the Education Law, which respondent initially interposed on appeal, is not a valid defense to appellant’s action. (Newburgh Nursery v Board of Educ., 41 Misc 2d 997; Matter of Martin v School Bd. of Union Free School Dist. No. 28, Long Beach, 301 NY 233; Union Free School Dist. No. 6 of Towns of Islip & Smithtown v New York State Human Rights Appeal Bd., 43 AD2d 749, 35 NY2d 371; Matter of Di Sano v Storandt, 43 Misc 2d 272, 22 AD2d 6; Matter of Guilderland Cent. School Dist. [Guilderland Cent. Teachers Assn.], 45 AD2d 85; Matter of Board of Educ. [Great Neck Teachers Assn.], 69 Misc 2d 1061; Ruocco v Doyle, 38 AD2d 132; Wood v Strickland, 420 US 308.) II. Appellant is entitled to summary judgment against respondent school district which breached its contract with him. (City of Troy, Unit of Rensselaer County Ch. of Civ. Serv. Employees Assn. v City of Troy, 36 AD2d 145, 30 NY2d 549; Guaranty Trust Co. of N. Y. v New York & Queens County Ry. Co., 254 NY 126, 282 US 803; Matter of Hehl v Gross, 35 AD2d 570, 30 NY2d 828; Matter of People v MacDonald, 69 Misc 2d 456; United States Mtge. & Trust Co. v Ruggles, 232 App Div 9, 258 NY 32; Matter of Skliar v Board of Educ., 45 AD2d 1012; Schwartz v Public Administrator of County of Bronx, 24 NY2d 65; Fairhaven Apts. v James, 79 Misc 2d 569; Matter of Wa-Wa-Yanda, Inc. v Dickerson, 18 AD2d 251; Matter of Pansa v Damiano, 14 NY2d 356.)

      Gerald Casper for respondent.
    I. Special Term did not have jurisdiction to enter its order since plaintiff-appellant failed to file a written verified notice of claim pursuant to subdivision 1 of section 3813 of the Education Law and failed to allege the presentation of said written verified notice of claim in his amended complaint. Defendant-respondent did not waive the notice requirements nor is defendant-respondent estopped from asserting the notice requirements. (Barchet v New York City Tr. Auth., 20 NY2d 1; Rudolph v City of New York, 191 Misc 947; Union Free School Dist. No. 6 of Towns of Islip & Smithtown v New York State Human Rights Appeal Bd., 35 NY2d 371, 36 NY2d 807; Ruocco v Doyle, 38 AD2d 132; Matter of Grey v Board of Educ., 60 AD2d 361, 44 NY2d 645; Todd v Board of Educ., 272 App Div 618, 297 NY 873; Matter of Board of Educ. [Wager Constr. Co.], 37 NY2d 282; Scherman v Board of Educ., 44 AD2d 831, 37 NY2d 839; Almar Constr. Corp. v Hughes & Sons, 58 AD2d 615, 42 NY2d 1009; Central School Dist. No. 2, Towns of Romulus, Varick & Fayette v Kasoff & Sons, 53 AD2d 1058.) II. The alleged agreement, dated July 15, 1975, is illegal, void and against the public policy of the State of New York. Chapter 952 of the Laws of 1974 is unconstitutional in that it is contrary to the public policy of the State of New York, unreasonable, vague and impossible of execution and enforcement. (Matter of Young v Board of Educ., 35 NY2d 31; Matter of Lezette v Board of Educ., 35 NY2d 272; Matter of Mitchell v Board of Educ., 40 NY2d 904; Matter of Van Heusen v Board of Educ., 26 AD2d 721; Matter of Lynch v Nyquist, 41 AD2d 363, 34 NY2d 583; Matter of Baer v Nyquist, 34 NY2d 291.)
   OPINION OP THE COURT

Meyer, J.

The issues on this appeal are whether plaintiffs failure to file a notice of claim pursuant to subdivision 1 of section 3813 of the Education Law bars his action to enjoin the termination of his position as a school principal and for damages for the breach of his contract; and if the action is not thus barred, whether section 2510 of the Education Law is to be read as terminating plaintiffs contract rights when his position is abolished even though the contract contains no such express provision. We hold that, the school district having failed to plead the statute, subdivision 1 of section 3813 does not bar the action, and that the abolition of a position pursuant to section 2510 does not destroy contract rights of the holder of the position. The order of the Appellate Division granting the school district’s cross motion for summary judgment is, therefore, reversed, the order of Special Term granting plaintiffs motion for summary judgment and denying defendant’s cross motion is reinstated, and the matter is remitted to Special Term for assessment of damages.

The plaintiff, Peter Flanagan, has been an elementary school principal in the Commack Union Free School District since February 1, 1972. At that time the Legislature had recently deleted the "principal” position from the tenure system, and Flanagan was given no contract of employment. He served, therefore, at the pleasure of the board of education. In 1974, however, the Legislature amended section 3012 of the Education Law to make the use of employment contracts mandatory as of July 1, 1975 (L 1974, ch 952, § 2), and on July 15, 1975 defendant school district entered into the agreement which is the subject of this action, employing Flanagan as a principal for a three-year term, from July 1, 1975 to June 30,1978.

Pressed by the "budget crunch” and flagging student enrollment, the school district in 1976 decided to eliminate two elementary school principal positions. On April 2, 1976, therefore, Flanagan received a letter from the superintendent of schools terminating his services as of June 30, 1976.

Flanagan did not await the July 1, 1976 termination date before beginning this action. Instead by order to show cause granted May 28, 1976, he began this action against the board in which he sought an injunction prohibiting his termination and ordering his reinstatement to the principal’s position, as well as damages. The complaint did not allege the service of a section 3813 notice of claim, nor has any document denominated as such a notice ever been served.

The school district’s answer raised three affirmative defenses: (1) that the employment agreement was void as against public policy, (2) that the amendment to section 3012 of the Education Law which required the use of employment contracts was unconstitutional, and (3) that Flanagan failed to mitigate his damages. On cross motions for summary judgment, the Supreme Court, Suffolk County, granted partial summary judgment in favor of Flanagan, referring the issue of damages (including the mitigation defense) for a hearing. On appeal to the Appellate Division, the school district claimed for the first time that plaintiff’s failure to serve a notice of claim barred the action.

The Appellate Division reversed and granted the school district’s cross motion for summary judgment, stating: "It is undisputed that plaintiff failed to file a written notice of claim as required by subdivision 1 of section 3813 of the Education Law * * * [A] notice of claim was a condition precedent to the commencement of this action”.

We conclude, however, that under the circumstances of this case subdivision 1 of section 3813 may not be interposed as a bar to plaintiff’s claim. The school district, though it pleaded other defenses, failed to raise the issue at Special Term, bringing the question up for the first time in its Appellate Division brief. While service of a notice of claim is a statutory condition precedent which does not have to be pleaded as an affirmative defense (Board of Educ. [Wager Constr. Corp.], 37 NY2d 283; Matter of Board of Educ. [Heckler Elec. Co.], 7 NY2d 476), the defense is, nevertheless, one which if not raised before the court of original jurisdiction is waived (Matter of Schlosser v Board of Educ., 47 NY2d 811; cf. Salesian Soc. v Village of Ellenville, 41 NY2d 521).

Turning then to consideration of the effect of section 2510 of the Education Law upon plaintiff’s rights, we note that nothing in the Constitution, statute or public policy prohibits a school district from extending to this plaintiff the benefit of a three-year contract term (see Board of Educ. v Yonkers Federation of Teachers, 40 NY2d 268; Matter of Susquehanna Val. Cent. School Dist. [Susquehanna Val. Teachers' Assn.], 37 NY2d 614). Indeed, when plaintiff’s contract was executed section 3012 of the Education Law required use of employment contracts. In light of that fact and of the obvious benefit in attracting the best qualified persons that the offer of a contract for a definite period affords, it cannot be said that plaintiff’s contract is void as against public policy.

Nor does it conflict with section 2510 of the Education Law. That statute merely provides, inter alia, "Whenever a board of education abolishes a position under this chapter, the services of the teacher having the least seniority in the system within the tenure of the position abolished shall be discontinued.” Whether this provision applies to the abolition of positions that are not tenured we need not now decide. Assuming that the school district can abolish appellant’s position, that does not destroy the rights that he has under contract (see Board of Educ. v Yonkers Federation of Teachers, supra).

Accordingly, we reverse and reinstate the order of Special Term, with costs.

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

Order reversed, with costs, the order of Special Term reinstated insofar as it granted plaintiff’s motion for summary judgment and denied defendant’s cross motion, and the case remitted to Supreme Court, Suffolk County, for assessment of damages.


source: Caselaw Access Project

author: Jones, J. Chief Judge Cooke

license: Public Domain

text:
    Elias Auerbach, Plaintiff, and Stanley Wallenstein, as Executor of Ida S. Wallenstein, Deceased, Respondent, v William F. Bennett et al., Appellants.
    Argued June 5, 1979;
    decided July 9, 1979

      POINTS OF COUNSEL

      Peter M. Fishbein, Steven J. Glassman, Myron Kirschbaum, Peter H. Morrison, Benjamin Zelermyer, Dean C. Rohrer and Samuel J. Wilson for William F. Bennett and others, appellants.
    I. A good-faith decision by disinterested and independent directors that a derivative action is not in the corporation’s best interests precludes such a lawsuit. (Pollitz v Wabash R. R. Co., 207 NY 113; Koral v Savory, Inc., 276 NY 215; Hornstein v Paramount Pictures, 22 Misc 2d 996, 266 App Div 659, 292 NY 468; Watson v Consolidated Laundries Corp., 235 App Div 234; Ashwander v Valley Auth., 297 US 288; Corbus v Gold Min. Co., 187 US 455; Rapoport v Schneider, 29 NY2d 396; Gilbert v Curtiss-Wright Corp., 179 Misc 641; Swanson v Traer, 249 F2d 854; Republic Nat. Life Ins. Co. v Beasley, 73 FRD 658.) II. The record in this case mandates summary judgment. (Greenbaum v American Metal Climax, 27 AD2d 225; J. C. F. Holding Corp. v General Gas & Elec. Corp., 181 Misc 283, 267 App Div 863; Gilbert v Curtiss-Wright Corp., 179 Misc 641; Ash v International Business Mach., 353 F2d 491, 384 US 927; Klotz v Consolidated Edison Co. of N. Y., 386 F Supp 577; Issner v Aldrich, 254 F Supp 696; Volkman v Miller, 52 AD2d 146, 41 NY2d 946; Wolf v Wolf, 26 AD2d 529; Aetna Ins. Co. v Logue, 68 Misc 2d 841; Gall v Exxon Corp., 418 F Supp 508.)

      Edward J. Ross, James D. Zirin and George F. Vary for Arthur Andersen & Co., appellant.
    I. Since the time to appeal from Justice Rubin’s decision and judgment had expired without a timely and valid notice of appeal having been filed by a party to the proceedings, the appeal should have been dismissed. Accordingly, the court below never acquired jurisdiction, the case had ended and Justice Rubin’s decision is the final decision in the case. (Moodie v American Cas. Co. of Reading, Pa., 27 AD2d 958; Matter of Johnson v Dreher, 278 App Div 1019; Coulbourn v Burns, 286 App Div 856, 309 NY 795; Matter of Benson Realty Corp. v Walsh, 40 AD2d 592, 31 NY2d 645; Warren v Marvin, 26 NY2d 803; Possenti v Lanza, 54 AD2d 728; Clark v Cunningham, 26 AD2d 715; Chimenti v Hertz Corp., 25 AD2d 562.) II. General Telephone and Electronics Corp. has properly determined that this action should not be maintained in its behalf and such determination suffices for dismissal as to Andersen. (United Copper Co. v Amalgamated Copper Co., 244 US 261; Koral v Savory, Inc., 276 NY 215; Hornstein v Paramount Pictures, 22 Misc 2d 996, 266 App Div 659, 292 NY 468; Pollitz v Wabash R. R. Co., 207 NY 113; Gall v Exxon Corp., 418 F Supp 508; Corbus v Gold Min. Co., 187 US 455; Hawes v Oakland, 104 US 450; Chelrob, Inc. v Barrett, 293 NY 442; Watson v Consolidated Laundries Corp., 235 App Div 234; Brody v Chemical Bank, 517 F2d 932.)

      Martin R. Gold, John M. Schwartz and Elliott J. Weiss for respondent.
    I. Wallenstein had standing to prosecute the appeal in the court below. (Triangle Pacific Bldg. Prods. Corp.

      v National Bank of North Amer., 62 AD2d 1017; People v Dobbs Ferry Med. Pavillion, 40 AD2d 324, 33 NY2d 584; Ryder v Cue Car Rental, 32 AD2d 143; Gats v Gats, 275 App Div 771; Grabb v Nicholas, 2 AD2d 446; Grant v Greene Cons. Copper Co., 169 App Div 206, 223 NY 655; Gerith Realty Corp. v Normandie Nat. Securities Corp., 154 Misc 615, 241 App Div 717, 266 NY 525; Isaac v Marcus, 258 NY 257; Alexander v Donohoe, 143 NY 203.) II. Where the controlling directors are involved in or presided over illegal and wrongful acts, they may not delegate the power to terminate a derivative action to a minority committee. (Surowitz v Hilton Hotels Corp., 383 US 363; Rapoport v Schneider, 29 NY2d 396; United Copper Co. v Amalgamated Copper Co., 244 US 261; Koral v Savory, Inc., 276 NY 215; Kavanaugh v Kavanaugh Knitting Co., 226 NY 185; Miller v American Tel. & Tel. Co., 507 F2d 759; Hornstein v Paramount Pictures, 22 Misc 2d 996, 266 App Div 659, 292 NY 468; Lasker v Burks, 404 F Supp 1172, 567 F2d 1208; Globe Woolen Co. v Utica Gas & Elec. Co., 224 NY 483.) III. Defendants cannot use a minority committee, appointed by the alleged wrongdoers, to cut off a derivative claim where plaintiff has had no discovery and there are serious questions concerning the independence and thoroughness of the committee and the fairness of its decision. (Terranova v Emil, 20 NY2d 493; Udoff v Zipf, 44 NY2d 117; Levine v Behn, 282 NY 120; Subin v Goldsmith, 224 F2d 753, 350 US 883; Fogelson v American Woolen Co., 170 F2d 660; Bernstein v Mediobanca Banca di Credito, 69 FRD 592; Tannenbaum v Zeller, 552 F2d 402; Syracuse Tel. v Channel 9, Syracuse, 28 AD2d 638; Everett v Philips, 288 NY 227; Sage v Culver, 147 NY 241.) IV. Defendant Andersen cannot obtain summary judgment on the basis of the special litigation committee report. (Ultramares Corp. v Touche, 255 NY 170; State St. Trust Co. v Ernst, 278 NY 104; 1136 Tenants’ Corp. v Rothenberg & Co., 36 AD2d 804, 30 NY2d 585.)
   OPINION OF THE COURT

Jones, J.

While the substantive aspects of a decision to terminate a shareholders’ derivative action against defendant corporate directors made by a committee of disinterested directors appointed by the corporation’s board of directors are beyond judicial inquiry under the business judgment doctrine, the court may inquire as to the disinterested independence of the members of that committee and as to the appropriateness and sufficiency of the investigative procedures chosen and pursued by the committee. In this instance, however, no basis is shown to warrant either inquiry by the court. Accordingly we hold that it was error to reverse the lower court’s dismissal of the shareholders’ derivative action.

In the summer of 1975 the management of General Telephone & Electronics Corporation, in response to reports that numerous other multinational companies had made questionable payments to public officials or political parties in foreign countries, directed that an internal preliminary investigation be made to ascertain whether that corporation had engaged in similar transactions. On the basis of the report of this survey, received in October, 1975, management brought the issue to the attention of the corporation’s board of directors. At a meeting held on November 6 of that year the board referred the matter to the board’s audit committee. The audit committee retained as its special counsel the Washington, D. C., law firm of Wilmer, Cutler & Pickering which had not previously acted as counsel to the corporation. With the assistance of such special counsel and Arthur Andersen & Co., the corporation’s outside auditors, the audit committee engaged in an investigation into the corporation’s worldwide operations, focusing on whether, in the period January 1, 1971 to December 31, 1975, corporate funds had been (1) paid directly or indirectly to any political party or person or to any officer, employee, shareholder or director of any governmental or private customer, or (2) used to reimburse any officer of the corporation or other person for such payments.

On March 4, 1976 the audit committee released its report which was filed with the Securities and Exchange Commission and disclosed to the corporation’s shareholders in a proxy statement prior to the annual meeting of shareholders held in April, 1976. The audit committee reported that it had found evidence that in the period from 1971 to 1975 the corporation or its subsidiaries had made payments abroad and in the United States constituting bribes and kickbacks in amounts perhaps totaling more than 11 million dollars and that some of the individual defendant directors had been personally involved in certain of the transactions.

Almost immediately Auerbach, a shareholder in the corporation, instituted the present shareholders’ derivative action on behalf of the corporation against the corporation’s directors, Arthur Andersen & Co. and the corporation. The complaint alleged that in connection with the transactions reported by the audit committee defendants, present and former members of the corporation’s board of directors and Arthur Andersen & Co., are liable to the corporation for breach of their duties to the corporation and should be made to account for payments made in those transactions.

On April 21, 1976 the board of directors of the corporation adopted a resolution creating a special litigation committee "for the purpose of establishing a point of contact between the Board of Directors and the Corporation’s General Counsel concerning the position to be taken by the Corporation in certain litigation involving shareholder derivative claims on behalf of the Corporation against certain of its directors and officers” and authorizing that committee "to take such steps from time to time as it deems necessary to pursue its objectives including the retention of special outside counsel.” The special committee comprised three disinterested directors who had joined the board after the challenged transactions had occurred. The board subsequently additionally vested in the committee "all of the authority of the Board of Directors to determine, on behalf of the Board, the position that the Corporation shall take with respect to the derivative claims alleged on its behalf’ in the present and similar shareholder derivative actions.

The special litigation committee reported under date of November 22, 1976. It found that defendant Arthur Andersen & Co. had conducted its examination of the corporation’s affairs in accordance with generally accepted auditing standards and in good faith and concluded that no proper interest of the corporation or its shareholders would be served by the continued assertion of a claim against it. The committee also concluded that none of the individual defendants had violated the New York State statutory standard of care, that none had profited personally or gained in any way, that the claims asserted in the present action are without merit, that if the action were allowed to proceed the time and talents of the corporation’s senior management would be wasted on lengthy pretrial and trial proceedings, that litigation costs would be inordinately high in view of the unlikelihood of success, and that the continuing publicity could be damaging to the corporation’s business. The committee determined that it would not be in the best interests of the corporation for the present derivative action to proceed, and, exercising the authority delegated to it, directed the corporation’s general counsel to take that position in the present litigation as well as in pending comparable shareholders’ derivative actions.

On December 17, 1976 the corporation and the four individual defendants who had been served moved for an order pursuant to CPLR 3211 (subd [a], pars [3], [7]) dismissing the complaint or in the alternative for an order pursuant to CPLR 3211 (subd [c]) for summary judgment. On January 7, 1977 Arthur Andersen & Co. made a similar motion. On May 13, 1977 Supreme Court, Special Term, granted the motions of all defendants and dismissed the complaint on the merits.

When it appeared that plaintiff Auerbach had no intention of appealing from the determination of Special Term, on June 13, 1977 Stanley Wallenstein, as executor of the estate of Ida S. Wallenstein, a stockholder of the corporation, filed and served a "Notice of Appeal” from the order and judgment of Special Term. On July 11, 1977 defendants moved in the Appellate Division to dismiss the purported Wallenstein appeal on the ground that he was not an aggrieved party. Thereupon Wallenstein cross-moved for an order pursuant to CPLR 1012 to intervene in the present action, nunc pro tunc, for the purpose of appealing from the judgment of Special Term pursuant to his notice of appeal dated June 13, 1977. Wallenstein predicated his right to intervene and to appeal on the grounds that Ida S. Wallenstein had been a stockholder of the corporation continuously from 1959 until her death in 1976 and that her estate, of which Stanley Wallenstein is sole executor, had continuously owned the corporate shares since her death, that in January, 1977 Wallenstein had commenced a shareholders’ derivative action against the corporation, and that on May 24, 1977 the defendants in the Wallenstein action had moved for dismissal of that action on the ground that the order and judgment of Special Term in the present action was res judicata and resulted in collateral estoppel. On August 3, 1977 defendants’ motion to dismiss the appeal and Wallenstein’s cross motion for intervention were denied with leave to renew on argument of the appeal.

On August 7, 1978 the Appellate Division denied defendants’ motion to dismiss the appeal, granted Wallenstein’s cross motion for leave to intervene, and reversed the May 13, 1977 order of Special Term and denied defendants’ motions for summary judgment. On October 12, 1978 that court granted defendants’ motions for leave to appeal to our court. For the reasons stated below we now modify the order of the Appellate Division to the extent of reversing its reversal of the order of Special Term granting defendants summary judgment dismissing the complaint on the merits and reinstate the order of Special Term. We do not disturb those portions of the order at the Appellate Division which denied defendants’ motion to dismiss the Wallenstein appeal and granted the cross motion for leave to intervene.

Appellant Arthur Andersen & Co. poses the threshold question whether an error of law was committed by the Appellate Division in permitting intervention by Wallenstein and entertaining the appeal taken by him from Special Term’s dismissal of the complaint. Because Andersen’s challenge to the Appellate Division’s exercise of authority in Wallenstein’s favor, if successful, would dispose of the present appeal without reaching the merits of the attack on defendants’ conduct with respect to the derivative actions, we turn first to that aspect of the appeal and there find no error of law in the disposition by the court below.

As to the status of Wallenstein as an appellant and intervenor we agree with the analysis of Mr. Justice Hopkins and particularly his statements that in a stockholder’s derivative action, traditionally regarded as in the nature of a class action, the interests of the stockholder and the corporation are united and that "when a stockholder undertakes to sue on behalf of the corporation, his action concerns the other stockholders as well” (64 AD2d 98, 104). The extent of that concern with respect to the present Auerbach action on stockholder Wallenstein is tellingly demonstrated by the fact that defendants attempted by collateral estoppel to obtain a dismissal of the derivative action instituted by Wallenstein on the strength of Special Term’s dismissal of this suit by Auerbach. In view of the established rule that a dismissal on the merits of one derivative action is generally a bar to suits by other stockholders of the same corporation on the same cause of action (Grant v Greene Cons. Copper Co., 169 App Div 206, 215-216, affd 223 NY 655), we have no difficulty in recognizing one of the stockholders, who is within the class for whose benefit a derivative action has been instituted, as a party aggrieved by whom a notice of appeal may be filed under CPLR 5511.

The applicable rule has been well stated by a leading authority on New York practice: "Although ordinarily one not a party to the proceeding below will not be aggrieved because he will not be bound by the determination, in some situations a nonparty may be adversely affected, as in stockholders’ suits * * * In most such cases the real question is one of proper representation; if the person’s interests are not being adequately represented, or for any other reason he should be heard, the matter should properly be raised below, as by a motion for intervention (CPLR 1012-1013). If he had notice of the proceedings below and did nothing, considerations of orderly procedure will usually dictate that his subsequent attempt to appeal from the resulting judgment be denied, though intervention may be allowed in the appellate court in a proper case” (7 Weinstein-Korn-Miller, NY Civ Prac, par 5511.04 [emphasis supplied]). It cannot be disputed that, absent Wallenstein, his interests would not have been adequately represented in the Appellate Division; Auerbach’s decision not to appeal would have meant that such interests would not have been represented at all!

Appellant Andersen argues that, under the principles quoted, Wallenstein’s failure to have sought intervention earlier at Special Term is fatal to his appeal and to his application to intervene made to the Appellate Division. However, under the circumstances of this case when it was not until plaintiff Auerbach’s decision not to appeal from the dismissal by Special Term that the inadequacy of Auerbach’s representation of Wallenstein became apparent, Wallenstein cannot be faulted for not theretofore having sought intervention and for serving a notice of appeal to the Appellate Division — time for which was limited and if not complied with would have precluded any procurement of appellate review of Special Term’s dismissal — then moving in the Appellate Division for permission to intervene to secure to himself the full panoply of rights which attach to a named party in an action. The Appellate Division was vested with all the power of Supreme Court to grant the motion for intervention, and in the circumstances here present this was "a proper case” for the grant of such relief by the appellate court. (For a similar grant in the Court of Appeals see Soto v Lenscraft Opt. Corp. [Rayex], 7 NY2d 747.)

In reaching the conclusion we do we reject Andersen’s contention that the Appellate Division lacked power to permit intervention nunc pro tunc because that court lacked jurisdiction of the case by reason of Wallenstein’s lack of standing to serve and file a valid, timely notice of appeal. Because Wallenstein came within the ambit of a "party aggrieved” as that term is employed in CPLR 5511, no jurisdictional defect existed. The case of Matter of Benson Realty Corp. v Walsh (40 AD2d 592, mot for lv to app den 31 NY2d 645), relied on by appellant Andersen, is distinguishable; there no notice of appeal had been filed within the period mandated by statute. Also without relevance is the reference tendered on oral argument to legislative intent reflected in the alteration made in CPLR 5511 from its predecessor statute (Civ Prac Act, § 557), with respect to the right of a substituted party to file notice of appeal. No substitution is involved in the present case; Wallenstein’s application was one for intervention as a coplaintiff with Auerbach, not as a successor replacement for him. Insofar as the Appellate Division admitted him to the litigation and entertained the appeal, notice of which was filed by him, there was no error.

As all parties and both courts below recognize, the disposition of this case on the merits turns on the proper application of the business judgment doctrine, in particular to the decision of a specially appointed committee of disinterested directors acting on behalf of the board to terminate a shareholders’ derivative action. That doctrine bars judicial inquiry into actions of corporate directors taken in good faith and in the exercise of honest judgment in the lawful and legitimate furtherance of corporate purposes. "Questions of policy of management, expediency of contracts or action, adequacy of consideration, lawful appropriation of corporate funds to advance corporate interests, are left solely to their honest and unselfish decision, for their powers therein are without limitation and free from restraint, and the exercise of them for the common and general interests of the corporation may not be questioned, although the results show that what they did was unwise or inexpedient.” (Pollitz v Wabash R. R. Co., 207 NY 113, 124.)

In this instance our inquiry, to the limited extent to which it may be pursued, has a two-tiered aspect. The complaint initially asserted liability on the part of defendants based on the payments made to foreign governmental customers and privately owned customers, some unspecified portions of which were allegedly passed on to officials of the customers, i.e., the focus was on first-tier bribes and kickbacks. Then subsequent to the service of the complaint there came the report of a special litigation committee, particularly appointed by the corporation’s board of directors to consider the merits of the present and similar shareholders’ derivative actions, and its determination that it would not be in the best interests of the corporation to press claims against defendants based on their possible first-tier liability. The motions for summary judgment were predicated principally on the report and determination of the special litigation committee and on the contention that this second-tier corporate action insulated the first-tier transactions from judicial inquiry and was itself subject to the shelter of the business judgment doctrine. The disposition at Special Term was predicated on this analysis; its decision focused on the actions of the special litigation committee, and the motions for summary judgment were granted on the ground that the business judgment doctrine precluded the courts from going back of the decision of the special litigation committee on behalf of the corporation not to pursue the claims alleged in the complaint. Similarly the reversal at the Appellate Division was based on that court’s perception of the proper application of the business judgment rule to the actions and determination of the special litigation committee. We proceed on the same analysis, concluding, however, on the record before us, at variance with the Appellate Division, that the determination of the special litigation committee forecloses further judicial inquiry in this case.

It appears to us that the business judgment doctrine, at least in part, is grounded in the prudent recognition that courts are ill equipped and infrequently called on to evaluate what are and must be essentially business judgments. The authority and responsibilities vested in corporate directors both by statute and decisional law proceed on the assumption that inescapably there can be no available objective standard by which the correctness of every corporate decision may be measured, by the courts or otherwise. Even if that were not the case, by definition the responsibility for business judgmerits must rest with the corporate directors; their individual capabilities and experience peculiarly qualify them for the discharge of that responsibility. Thus, absent evidence of bad faith or fraud (of which there is none here) the courts must and properly should respect their determinations.

Derivative claims against corporate directors belong to the corporation itself. As with other questions of corporate policy and management, the decision whether and to what extent to explore and prosecute such claims lies within the judgment and control of the corporation’s board of directors. Necessarily such decision must be predicated on the weighing and balancing of a variety of disparate considerations to reach a considered conclusion as to what course of action or inaction is best calculated to protect and advance the interests of the corporation. This is the essence of the responsibility and role of the board of directors, and courts may not intrude to interfere.

In the present case we confront a special instance of the application of the business judgment rule and inquire whether it applies in its full vigor to shield from judicial scrutiny the decision of a three-person minority committee of the board acting on behalf of the full board not to prosecute a shareholder’s derivative action. The record in this case reveals that the board is a 15-member board, and that the derivative suit was brought against four of the directors. Nothing suggests that any of the other directors participated in any of the challenged first-tier transactions. Indeed the report of the audit committee on which the complaint is based specifically found that no other directors had any prior knowledge of or were in any way involved in any of these transactions. Other directors had, however, been members of the board in the period during which the transactions occurred. Each of the three director members of the special litigation committee joined the board thereafter.

The business judgment rule does not foreclose inquiry by the courts into the disinterested independence of those members of the board chosen by it to make the corporate decision on its behalf — here the members of the special litigation committee. Indeed the rule shields the deliberations and conclusions of the chosen representatives of the board only if they possess a disinterested independence and do not stand in a dual relation which prevents an unprejudicial exercise of judgment. (Cf. Koral v Savory, Inc., 276 NY 215.)

We examine then the proof submitted by defendants. It is not disputed that the members of the special litigation committee were not members of the corporation’s board of directors at the time of the first-tier transactions in question. Howard Blauvelt, chairman of the board of Continental Oil Company, had been elected to the corporation’s board of directors on October 9, 1975. Dr. John T. Dunlop, Lamont University professor at the Graduate School of Business Administration of Harvard University had been elected to the board on April 21, 1976. James R Barker, chairman of the board and chief executive officer of Moore McCormack Resources, Inc., was added as the third member of the committee when he was elected to the board on July 19, 1976. None of the three had had any prior affiliation with the corporation. Notwithstanding the vigorous and imaginative hypothesizing and innuendo of counsel there is nothing in this record to raise a triable issue of fact as to the independence and disinterested status of these three directors.

The contention of Wallenstein that any committee authorized by the board of which defendant directors were members must be held to be legally infirm and may not be delegated power to terminate a derivative action must be rejected. In the very nature of the corporate organization it was only the existing board of directors which had authority on behalf of the corporation to direct the investigation and to assure the co-operation of corporate employees, and it is only that same board by its own action — or as here pursuant to authority duly delegated by it — which had authority to decide whether to prosecute the claims against defendant directors. The board in this instance, with slight adaptation, followed prudent practice in observing the general policy that when individual members of a board of directors prove to have personal interests which may conflict with the interests of the corporation, such interested directors must be excluded while the remaining members of the board proceed to consideration and action. (Cf. Business Corporation Law, § 713, which contemplates such situations and provides that the interested directors may nonetheless be included in the quorum count.) Courts have consistently held that the business judgment rule applies where some directors are charged with wrongdoing, so long as the remaining directors making the decision are disinterested and independent. (Swanson v Traer, 249 F2d 854, 858-859; Gall v Exxon Corp., 418 F Supp 508, supplemented 75 Civ 3582 [US Dist Ct, SDNY, Jan. 17, 1977]; Issner v Aldrich, 254 F Supp 696, 701-702; Republic Nat. Life Ins. Co. v Beasley, 73 FRD 658, 668-669; Gilbert v Curtiss-Wright Corp., 179 Misc 641, 645.)

To accept the assertions of the intervener and to disqualify the entire board would be to render the corporation powerless to make an effective business judgment with respect to prosecution of the derivative action. The possible risk of hesitancy on the part of the members of any committee, even if composed of outside, independent, disinterested directors, to investigate the activities of fellow members of the board where personal liability is at stake is an inherent, inescapable, given aspect of the corporation’s predicament. To assign responsibility of the dimension here involved to individuals wholly separate and apart from the board of directors would, except in the most extraordinary circumstances, itself be an act of default and breach of the nondelegable fiduciary duty owed by the members of the board to the corporation and to its shareholders, employees and creditors. For the courts to preside over such determinations would similarly work an ouster of the board’s fundamental responsibility and authority for corporate management.

We turn then to the action of the special litigation committee itself which comprised two components. First, there was the selection of procedures appropriate to the pursuit of its charge, and second, there was the ultimate substantive decision, predicated on the procedures chosen and the data produced thereby, not to pursue the claims advanced in the shareholders’ derivative actions. The latter, substantive decision falls squarely within the embrace of the business judgment doctrine, involving as it did the weighing and balancing of legal, ethical, commercial, promotional, public relations, fiscal and other factors familiar to the resolution of many if not most corporate problems. To this extent the conclusion reached by the special litigation committee is outside the scope of our review. Thus, the courts cannot inquire as to which factors were considered by that committee or the relative weight accorded them in reaching that substantive decision — "the reasons for the payments, the advantages or disadvantages accruing to the corporation by reason of the transactions, the extent of the participation or profit by the respondent directors and the loss, if any, of public confidence in the corporation which might be incurred” (64 AD2d, at p 107). Inquiry into such matters would go to the very core of the business judgment made by the committee. To permit judicial probing of such issues would be to emasculate the business judgment doctrine as applied to the actions and determinations of the special litigation committee. Its substantive evaluation of the problems posed and its judgment in their resolution are beyond our reach.

As to the other component of the committee’s activities, however, the situation is different, and here we agree with the Appellate Division. As to the methodologies and procedures best suited to the conduct of an investigation of facts and the determination of legal liability, the courts are well equipped by long and continuing experience and practice to make determinations. In fact they are better qualified in this regard than are corporate directors in general. Nor do the determinations to be made in the adoption of procedures partake of the nuances or special perceptions or comprehensions of business judgment or corporate activities or interests. The question is solely how appropriately to set about to gather the pertinent data.

While the court may properly inquire as to the adequacy and appropriateness of the committee’s investigative procedures and methodologies, it may not under the guise of consideration of such factors trespass in the domain of business judgment. At the same time those responsible for the procedures by which the business judgment is reached may reasonably be required to show that they have pursued their chosen investigative methods in good faith. What evidentiary proof may be required to this end will, of course, depend on the nature of the particular investigation, and the proper reach of disclosure at the instance of the shareholders will in turn relate inversely to the showing made by the corporate representatives themselves. The latter may be expected to show that the areas and subjects to be examined are reasonably complete and that there has been a good-faith pursuit of inquiry into such areas and subjects. What has been uncovered and the relative weight accorded in evaluating and balancing the several factors and considerations are beyond the scope of judicial concern. Proof, however, that the investigation has been so restricted in scope, so shallow in execution, or otherwise so pro forma or halfhearted as to constitute a pretext or sham, consistent with the principles underlying the application of the business judgment doctrine, would raise questions of good faith or conceivably fraud which would never be shielded by that doctrine.

In addition to the issue of the disinterested independence of the special litigation committee, addressed above, the disposition of the present appeal turns, then, on whether on defendants’ motions for summary judgment predicated on the investigation and determination of the special litigation committee, Wallenstein by tender of evidentiary proof in admissible form has shown facts sufficient to require a trial of any material issue of fact as to the adequacy or appropriateness of the modus operandi of that committee or has demonstrated acceptable excuse for failure to make such tender. (Friends of Animals v Associated Fur Mfrs., 46 NY2d 1065; CPLR 3212, subd [b].) We conclude that the requisite showing has not been made on this record.

At the outset we observe that Wallenstein, the intervener, must accept the record in the state in which he finds it at the time he was granted leave to intervene in the Appellate Division. No application for intervention was made prior thereto, nor did the application when made seek any relief other than the right to appeal from the order of Special Term. (Cf. Matter of Martin v Ronan, 47 NY2d 486). Thus, because plaintiff Auerbach had submitted none, the record in this case is devoid of any affidavits or documentary evidence in opposition to the motions for summary judgment.

On the submissions made by defendants in support of their motions, we do not find either insufficiency or infirmity as to the procedures and methodologies chosen and pursued by the special litigation committee. That committee promptly engaged eminent special counsel to guide its deliberations and to advise it. The committee reviewed the prior work of the audit committee, testing its completeness, accuracy and thoroughness by interviewing representatives of Wilmer, Cutler & Pickering, reviewing transcripts of the testimony of 10 corporate officers and employees before the Securities and Exchange Commission, and studying documents collected by and work papers of the Washington law firm. Individual interviews were conducted with the directors found to have participated in any way in the questioned payments, and with representatives of Arthur Andersen & Co. Questionnaires were sent to and answered by each of the corporation’s nonmanagement directors. At the conclusion of its investigation the special litigation committee sought and obtained pertinent legal advice from its special counsel. The selection of appropriate investigative methods must always turn on the nature and characteristics of the particular subject being investigated, but we find nothing in this record that requires a trial of any material issue of fact concerning the sufficiency or appropriateness of the procedures chosen by this special litigation committee. Nor is there anything in this record to raise a triable issue of fact as to the good-faith pursuit of its examination by that committee.

Finally, there should be a word as to the contention advanced by the intervenor that summary judgment should at least be withheld until there has been opportunity for disclosure. We note preliminarily as a matter of procedure that there was no application at Special Term for any such relief nor is there in the record any opposing affidavit from which it appears that essential facts may exist which could be obtained by disclosure (CPLR 3212, subd [f]). It is also significant that neither in his brief nor on oral argument did Wallenstein identify any particulars as to which he desires discovery relating to the disinterestedness of the members of the special litigation committee or to the procedures followed by that committee. To speculate that something might be caught on a fishing expedition provides no basis to postpone decision on the summary judgment motions under the authority of CPLR 3212 (subd [fl). The disclosure proposed and described by Wallenstein on oral argument would go only to particulars as to the results of the committee’s investigation and work, the factors bearing on its substantive decision not to prosecute the derivative actions and the factual aspects of the underlying first-tier activities of defendants — all matters falling within the ambit of the business judgment doctrine and thus excluded from judicial scrutiny.

For the reasons stated the order of the Appellate Division should be modified, with costs to defendants, by reversing so much thereof as reversed the order of Supreme Court, and, as so modified, affirmed.

Chief Judge Cooke

(dissenting). There should be an affirmance for the reasons set forth in the excellent analysis of Mr. Justice James D. Hopkins who wrote for a unanimous Appellate Division. In response to the majority opinion, a few remarks are added.

True, the "business judgment rule” is potentially applicable in these circumstances. But this case differs markedly from the typical situation in which that rule would be invoked. Here, the alleged wrongdoers are directors of the corporation. Of course, it would be most inappropriate to allow these interested directors to vote to preclude a shareholder’s suit and thereby insulate themselves from liability (see Koral v Savory, Inc., 276 NY 215, 217-218; see, also, United Copper Co. v Amalgamated Copper Co., 244 US 261, 263). Hence, the lawsuit should be terminated only if a sufficient number of disinterested directors (cf. Business Corporation Law, § 713; Rapoport v Schneider, 29 NY2d 396, 402), in this case the special litigation committee, rendered a good faith, " 'unprejudiced exercise of judgment’ ”, determining that maintenance of the action would not be in the best interests of the corporation (see Koral v Savory, Inc., supra, at p 217).

Since the continuation of the suit is dependent, in large measure, upon the motives and actions of the defendants and the special litigation committee, and since knowledge of these matters "is peculiarly in the possession of the defendants themselves”, summary judgment should not be granted prior to disclosure proceedings (Terranova v Emil, 20 NY2d 493, 496-497). That the intervenor has not proposed potentially fruitful areas for disclosure should not, contrary to the majority holding, be determinative (see Udoff v Zipf, 44 NY2d 117, 122). It is precisely because certain defendants and the members of the committee are possessed of exclusive knowledge of the facts that the intervenor is now unable to suggest the possible avenues which might successfully be pursued upon pretrial disclosure. And it is for this reason that we have formulated a rule precluding a grant of summary judgment where the case is likely to turn on "knowledge in the possession of the” moving party (e.g., Udoff v Zipf, 44 NY2d 117, 122, supra; Terranova v Emil, supra, at p 497; 4 Weinstein-Korn-Miller, NY Civ Prac, par 3212.18). No reason can be discerned for denying application of that rule at this early stage in these obvious circumstances. The result of the majority ruling is to place the intervenor in a classic "Catch-22” situation, denying him disclosure because he has not come forward with facts — facts which by their very nature are discernible only after disclosure.

In sum, to deny the intervenor an opportunity for pretrial disclosure is to mistakenly group this case with the typical case involving the business judgment rule. Since the business judgment rule is only conditionally applicable here, and since certain defendants as well as the members of the special litigation committee have the sole knowledge of the facts upon which its applicability turns, summary judgment should be withheld pending disclosure proceedings. The result reached by the majority not only effectively dilutes the substantive rule of law at issue, but may also render corporate directors largely unaccountable to the shareholders whose business they are elected to govern.

Judges Jasen, Wachtler, Fuchsberg and Meyer concur with Judge Jones; Chief Judge Cooke dissents and votes to affirm in a separate opinion; Judge Gabrielli taking no part.

Order modified, with costs to defendants, in accordance with the opinion herein and, as so modified, affirmed. Question certified answered in the negative.

      . The audit committee made a brief supplemental report under date of November 4, 1976, which also was filed with the Securities and Exchange Commission and was publicized through a press release.

      . It appears that only 4 of the 13 named individual defendants, all present directors, have been served. By stipulation plaintiff agreed not to serve the other individual defendants and not to make them parties to this action unless and until their involvement in the actions alleged in the complaint appeared.


author: Jasen, J.

text:
    In the Matter of the Industrial Commissioner of the State of New York, Respondent, v Five Corners Tavern, Inc., Respondent, and Manufacturers Hanover Trust Company, Appellant.
    Argued June 1, 1979;
    decided July 9, 1979

      POINTS OF COUNSEL

      Whitney North Seymour, Jr., Roy L. Reardon and Thomas M. Bistline for appellant.
    I. The bank’s statutory contractual and common-law rights of setoff were not extinguished by service of the tax compliance agent’s levy. (Matter of Industrial Comr. of State of N. Y. v South Shore Amusements, 55 AD2d 141; Brown v Morgan & Co., 177 Misc 626, 265 App Div 631, 295 NY 867; United States v Sterling Nat. Bank & Trust Co. of N. Y., 494 F2d 919; United States v Manufacturers Trust Co., 198 F2d 366; Meyers v New York County Nat. Bank, 36 App Div 482; Menkes Feuer, Inc. v Peoples Bank of Johnstown, 268 App Div 809, 294 NY 748; Delano v Equitable Trust Co. of N. Y., 110 Misc 704; Edwards v Sterling Nat. Bank & Trust Co., 5 F Supp 925; Samuel v Public Nat. Bank & Trust Co. of N. Y., 140 Misc 744, 151 Misc 200.) II. In holding that levy of execution extinguishes any right of setoff under section 151 of the Debtor and Creditor Law, the court has created an exception to section 151 which cannot be justified on any principled basis. (Adler v Greenfield, 83 F2d 955; New York County Nat. Bank v Massey, 192 US 138; Miller v Wells Fargo Bank Int. Corp., 406 F Supp 452; Brennan v Willson, 71 NY 502; Matter of Margolis & Meadow [New York Credit Men’s Assn.], 252 App Div 513; Matter of Lenox Corp., 57 App Div 515; Matter of West Harlem Pork Center v Empire Nat. Bank, 60 AD2d 859.)
      Sylvester and Robert A. Feuerstein of counsel), for Industrial Commissioner, respondent. The bank account was the property of the judgment debtor at the time execution was levied. After levy of execution, the bank had no property to which setoff could be applied. (Matter of Industrial Comr. of State of N. Y. v South Shore Amusements, 55 AD2d 141; United States v Sterling Nat. Bank & Trust Co. of N. Y., 494 F2d 919; Bank of Nev. v United States, 251 F2d 820, 356 US 938; United States v First Nat. Bank of Ariz., 348 F Supp 388; Ruppert v Community Nat. Bank, 16 NY2d 589; Matter of International Ribbon Mills [Arjan Ribbons], 36 NY2d 121; Corrigan v United States Fire Ins. Co., 427 F Supp 940; Knapp v McFarland, 462 F2d 935.)

      Robert Abrams, Attorney-General (Irving Jorrisch, Murray

      John L. Warden, H. Rodgin Cohen and Mark J. Welshimer for The New York Clearing House Association, amicus curiae.

    I. A bank’s statutory right of setoff, even after being served with an execution creditor’s levy, is clear on the face of section 151 of the Debtor and Creditor Law. (Matter of West Harlem Pork Center v Empire Nat. Bank, 60 AD2d 859.) II. CPLR 5232 (subd [a]) does not supersede the right of setoff. (Mitchell v Grant Co., 416 US 600; Fuentes v Shevin, 407 US 67; Sniadach v Family Fin. Corp., 395 US 337; Lederer v Wise Shoe Co., 276 NY 459; Johanns v Ficke, 224 NY 513; Matter of Anderson v Board of Educ., 46 AD2d 360; Cook v Town of Nassau, 33 NY2d 7; Matter of Doyle, 180 App Div 398; People v O’Donnell, 61 Misc 2d 194; Solicitor for Affairs of His Majesty’s Treasury v Bankers Trust Co., 304 NY 282.) III. Decisions under the Federal Tax Lien Act have no application here. (United States v Sterling Nat. Bank & Trust Co. of N. Y., 494 F2d 919.)
   OPINION OF THE COURT

Jasen, J.

In this case, we are called upon to determine whether a depository bank’s statutory right of setoff (Debtor and Creditor Law, § 151) is extinguished by service of a tax compliance agent’s levy pursuant to CPLR 5232 (subd [a]).

The facts are not in dispute. In February, 1976, appellant Manufacturers Hanover Trust Company (hereinafter Manufacturers) extended a loan of approximately $1,800 to its depositor, Five Corners Tavern, Inc. (hereinafter Five Corners), to enable the latter to secure a liquor license. Pursuant to the terms of the loan agreement, Manufacturers was given as security for the loan "a continuing lien and/or right of set-off * * * upon any and all deposits (general or special) and credits of [Five Corners] with [Manufacturers].” This agreement further provided that upon the occurrence of certain specified events with respect to Five Corners — including "entry of judgment, issuance of an order of attachment, making of a tax assessment by the United States or any state, or an execution against property of [Five Corners] * * * or the commencement of any proceeding or procedure for the enforcement of a money judgment” — the indebtedness of Five Corners to Manufacturers would become immediately due and payable without notice or demand, and Manufacturer’s right of setoff might then be exercised.

On April 8, 1976, respondent Industrial Commissioner of the State of New York filed in the office of the Bronx County Clerk a warrant against Five Corners in the amount of $522.54 alleging Five Corners’ failure to pay contributions due and owing under the New York State Unemployment Insurance Law (Labor Law, art 18). By statute, when such warrant remains unsatisfied, as occurred here, it can be treated as a judgment and is enforceable as such. (Labor Law, § 573, subd 2.)

Thereafter, on May 13, 1976, a tax compliance agent’s levy was served on Manufacturers pursuant to CPLR 5232 (subd [a]) garnishing its Five Corners’ account. By letter dated May 24, 1976, Manufacturers advised the Industrial Commissioner that although there was a balance of $263.69 in the Five Corners’ account at the time of levy, this balance no longer existed to satisfy the levy and execution inasmuch as Manufacturers exercised its right to set off these funds against the indebtedness owing it by Five Corners. The Industrial Commissioner, however, responded by making a written demand on June 10, 1976 for the funds on deposit in the Five Corners’ account, maintaining that under the law as then construed by the courts of this State, the balance in a bank account "may not be applied in reduction of indebtedness once [the bank has] been served with a Tax Compliance Agent’s levy.” The next day, Manufacturers again informed the Industrial Commissioner that it was unable to remit any funds, remaining steadfast in its position that it possessed an indefeasible right to set off the funds in question against the moneys owing it by Five Corners pursuant to the loan agreement, even if such right to set off was actually exercised subsequent to the service of the tax compliance levy.

Faced with Manufacturers’ refusal to turn over the funds, the Industrial Commissioner then commenced this proceeding pursuant to CPLR 5225, 5227 to obtain a court order directing Manufacturers to remit the moneys in Five Corners’ account. Special Term granted the requested relief and an unanimous Appellate Division affirmed. Leave to appeal to this court was granted by the Appellate Division. There should be a reversal.

At issue here is the resolution of an apparent conflict between two statutory provisions — to wit: CPLR 5232 (subd [a]) and section 151 of the Debtor and Creditor Law. In essence, CPLR 5232 (subd [a]) provides judgment creditors with a procedure for levying upon any interest of the judgment debtor, here Five Corners, in personal property not capable of delivery or upon any debt owed a judgment debtor by a third party. CPLR 5232 (subd [a]) states in pertinent part that "[t]he person served with the execution shall forthwith transfer all such property, and pay all such debts upon maturity, to the sheriff and execute any document necessary to effect the transfer of payment.” The statute further provides that "the garnishee is forbidden to make or suffer any sale, assignment or transfer of, or any interference with, any such property, or pay over or otherwise dispose of any such debt, to any person other than the sheriff, except upon direction of the sheriff or pursuant to an order of the court.” The Industrial Commissioner argues that this express language mandates that Manufacturers relinquish the funds in Five Corners’ account at the time of service of the tax compliance agent’s levy. Simply stated, the Industrial Commissioner maintains that Manufacturers had no option but to turn over the funds.

Manufacturers counters the position taken by the Industrial Commissioner by claiming that section 151 of the Debtor and Creditor Law bestows upon it the indefeasible right to set off Five Corners’ deposits against the debt owing it by the latter, even if the setoff is not exercised until after levy by service of execution. Specifically, Manufacturers cites the following statutory language: "Every debtor [here, Manufacturers] shall have the right upon * * * the issuance of any execution against any of the property of * * * a creditor [here, Five Corners], to set off and apply against any indebtedness, whether matured or unmatured, of such creditor to such debtor, any amount owing from such debtor to such creditor, at or at any time after, the happening of * * * the above mentioned [event], and the aforesaid right of set off may be exercised by such debtor against such creditor * * * notwithstanding the fact that such right of set off shall not have been exercised by such debtor prior to the making, filing or issuance, or service upon such debtor of, or of notice of * * * issuance of execution, subpoena or order or warrant.” (Debtor and Creditor Law, § 151.) In short, Manufacturers’ position is that when the garnishee is also a creditor of the judgment debtor, section 151 of the Debtor and Creditor Law provides a specific exception to the general rule set forth in CPLR 5232 (subd [a]) that the property of the judgment debtor should be transferred to the judgment creditor forthwith. We agree with this contention.

In our view, the legislative history of these two sections indicates an intention on the part of the Legislature to preserve the set-off defense for use by a garnishee-creditor against a levying judgment creditor any time after issuance of execution. Levy by execution upon intangibles such as bank accounts by judgment creditors first became authorized in 1952 when the Legislature enacted section 687-a of the Civil Practice Act, the predecessor of CPLR 5232 (subd [a]). (L 1952, ch 835.) To ensure that the garnishee’s defenses and set-off rights would not be extinguished or jeopardized by permitting levy by service of execution upon intangibles, the Legislature simultaneously modified section 151 of the Debtor and Creditor Law to preserve the right of a garnishee to interpose against executing judgment creditors, even subsequent to the "issuance of execution”, any right to setoff the garnishee may have possessed against the judgment debtor. (L 1952, ch 835.) The underlying reason prompting this amendment to section 151, as stated by the New York Law Revision Commission — the body responsible for recommending the enactment of section 687-a of the Civil Practice Act and the amendment to section 151 — was to make "clear that the third party debtor [garnishee] is entitled to utilize (in defending a suit brought against him by the judgment creditor), all defenses and set-offs he might have had against the judgment debtor”. (1952 Report of the NY Law Rev Comm, p 365 [emphasis added].)

This legislative intent to permit a setoff by a garnishee any time after issuance of execution, and even at any time subsequent to levy by service of execution, is reflected in unequivocal terms in the language of section 151 of the Debtor and Creditor Law itself, for the statute expressly provides that the issuance of any execution against any property of the judgment debtor shall not work to preclude the right of the garnishee to set off any amount owing from the judgment debtor to the garnishee. To hold, as the courts below did, that this right terminates upon levy by service of execution not only contravenes legislative intent, but, also, ignores the realities of everyday practice regarding executions generally, and would work to nullify a garnishee’s right to setoff after issuance of execution — the very benefit which section 151 of the Debtor and Creditor Law bestows. This is so because, in most instances, the garnishee bank’s first effective notice of the issuance of execution occurs only upon service. Executions are often issued by the attorney for the judgment creditor in the privacy of his or her office (CPLR 5230, subd Pd]), with levy by service of execution upon the garnishee usually occurring only a few days thereafter. (See Siegel, Practice Commentary, McKinney’s Cons Law of NY, Book 7B [1965 Supp], CPLR 5230, p 35.) Thus, to limit the availability of section 151 to garnishees only to that time at which a copy of the execution is served would work to deprive a garnishee of its opportunity to assert its right of setoff against a creditor - —a result clearly not intended by the Legislature. It remains a basic principle of statutory construction that a court will "not by implication read into a clause of a rule or statute a limitation for which * * * no sound reason [can be found] and which would render the clause futile.” (Lederer v Wise Shoe Co., 276 NY 459, 465.)

In holding that the right of setoff embodied in section 151 of the Debtor and Creditor Law is not extinguished upon levy by service of execution pursuant to CPLR 5232 (subd [a]), we reject the analysis adopted by the court in Matter of Industrial Comr. of State of N. Y. v South Shore Amusements (55 AD2d 141) — the case relied upon by the courts below in reaching a contrary result. In South Shore, a divided Appellate Division reasoned that inasmuch as "nothing in section 151 * * * requires the nullification of such levy” and the funds of the judgment debtor on deposit cease to belong to it upon levy, the right of setoff terminated upon levy by service of execution since CPLR 5232 (subd [a]) expressly provides that "[t]he person served with the execution shall forthwith transfer such property”. (Id., at p 143.)

In reaching this result, the South Shore majority relied extensively upon the decision in United States v Sterling Nat. Bank & Trust Co. of N. Y. (360 F Supp 917, affd in relevant part 494 F2d 919). Such reliance is misplaced. In Sterling, the court held that a bank cannot exercise its right of setoff after a levy is effected pursuant to Federal law. This result, however, was clearly predicated upon the basis that the provisions of the Internal Revenue Code, by virtue of the supremacy clause (US Const, art VI, cl 2), supersede any right of setoff which may be granted by State law. In South Shore (supra), as in the present case, however, the levy was effectuated pursuant to State law, rather than Federal law. Therefore, we find no justification for not permitting the garnishee to invoke its right of setoff even after levy by service of execution pursuant to CPLR 5232 (subd [a]) — a result clearly intended by the Legislature, as reflected by legislative history and unequivocal statutory language. (See Matter of Industrial Comr. of State of N. Y. v South Shore Amusements, 55 AD2d 141, 144-146 [dissenting opn], supra; 51 St John’s L Rev, pp 651-655.)

Accordingly, the order of the Appellate Division should be reversed, with costs, and the Industrial Commissioner’s motion denied.

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

Order reversed, etc.

      . CPLR 5232 (subd [a]) provides that "[t]he sheriff shall levy * * * upon any debt owed to the judgment debtor, by serving a copy of the execution upon the garnishee”. A garnishee is defined as "a person who owes a debt to a judgment debtor, or a person other than the judgment debtor who has property in his possession or custody in which a judgment debtor has an interest.” (CPLR 105, subd [i].) In this case, Manufacturers is a garnishee.

      . In this case, Manufacturers is a "debtor” for purposes of section 151 of the Debtor and Creditor Law, for it is the well-settled rule of law in this State that the bank becomes the debtor of the depositor (here, Five Corners) with respect to the deposited funds. (Brigham v McCabe, 20 NY2d 525, 530-531; Solicitor for Affairs of His Majesty’s Treasury v Bankers Trust Co., 304 NY 282, 291.)

      . For purposes relevant to this case, the subsequent amendment to section 151 of the Debtor and Creditor Law made the right of setoff available to a garnishee against a judgment creditor in supplementary proceedings, in addition to a judgment creditor actually levying execution or serving a warrant of attachment as previously embodied in the statute. (L 1959, ch 156.)


text:
    In the Matter of Joseph Hofbauer, a Child Alleged to be Neglected. Saratoga County Department of Social Services, Appellant; John Hofbauer et al., Respondents; Robert P. Whalen, as Commissioner of the New York State Department of Health, et al., Intervenors-Appellants.
    Argued June 5, 1979;
    decided July 10, 1979

      POINTS OF COUNSEL

      Robert Abrams, Attorney-General (Douglas K. McGivney and Shirley Adelson Siegel of counsel), for intervenors-appellants and Francis E. Dorsey, County Attorney, for appellant.
    I. The Appellate Division erred by failing either to remand this case to the Family Court for further findings of fact or to make requisite findings of fact consistent with its decision. (Conklin v State of New York, 22 AD2d 481; Metropolitan Life Ins. Co. v Union Trust Co. of Rochester, 268 App Div 474, 294 NY 254; Ryan & Son v Lancaster Homes, 22 AD2d 186; Wilkinson v State of New York, 9 AD2d 859; Matter of Bennett v Jeffreys, 40 NY2d 543.) II. The term "adequate medical care” as utilized in section 1012 of the Family Court Act does not include treatment by a psychiatrist who is not qualified by training and experience to treat Hodgkin’s disease and does not include a modality that is novel, experimental and dangerous when there is available an effective medical remedy. (Matter of Sampson, 65 Misc 2d 658, 37 AD2d 668, 29 NY2d 900; Cohen v State of New York, 51 AD2d 494; People v Pierson, 176 NY 201.) III. The court below erred in giving consideration to parental good faith and the technical legal status of the treating physician as measures of the care to which Joseph Hofbauer is entitled. (Matter of Franz, 84 Misc 2d 914, 55 AD2d 424; Matter of Gregory S, 85 Misc 2d 846.)

      Leslie F. Couch and Mary Anne Tommaney for respondents.
    I. The instant case presents no question of law reviewable by this court. (Matter of Westerfield, 163 NY 209; Bandike Assoc. v B. B. M. Realty Corp., 44 AD2d 622; Gabriel Inds. v Defiance Inds., 22 NY2d 405; People v Yarter, 41 NY2d 830, 433 US 910; Simon v Electrospace Corp., 28 NY2d 136; Matter of Altschuller v Bressler, 289 NY 463; Matter of Zaepfel v du Pont de Nemours & Co., 284 App Div 693, 309 NY 962.) II. The Appellate Division was correct in affirming the Family Court’s holding that neglect cannot be attributed to parents who bring their child under the care of a physician or physicians who are licensed to practice their profession, unless the treatment accorded the child is without any medical or scientific support. (Matter of Franz, 84 Misc 2d 914, 55 AD2d 424; Matter of Gregory S, 85 Misc 2d 846; Matter of Bennett v Jeffreys, 40 NY2d 543; Cohen v State of New York, 51 AD2d 494, 41 NY2d 1086; Matter of Corey L v Martin L, 45 NY2d 383; Doe v Bolton, 410 US 179; Matter of Vulon, 56 Misc 2d 19.) III. The record establishes that there is divergence in the medical opinions of licensed physicians on the relative safety and effectiveness of conventional therapy and of metabolic therapy for treatment of Hodgkin’s disease. IV. The record establishes that the treatment prescribed for Joseph Hofbauer by his attending physician has been beneficial in controlling the disease, while protecting Joseph from the dangers inherent in conventional therapy. V. A reversal of the order of the court below would impair, rather than advance, the treatment of Joseph’s disease, and would be an unconstitutional infringement of the Hofbauers’ right of privacy. (Roe v Wade, 410 US 113; Quilloin v Walcott, 434 US 246; Matter of Corey L v Martin L, 45 NY2d 383; Olmstead v United States, 277 US 438.)

      Courtnay W. Hall, Law Guardian, for Joseph Hofbauer.
    I. Although metabolic therapy is not acceptable to the majority of the medical establishment, supportive medical evidence has been presented and such evidence precludes a finding of neglect. (Matter of Bennett v Jeffreys, 40 NY2d 543; Doe v Bolton, 410 US 179.) II. The term "adequate medical care” as utilized in section 1012 of the Family Court Act includes: (a) biweekly reports to the court by the treating physician; (b) frequent consultations with other physicians and knowledgeable scientists by the treating physician; (c) refusal to exclude any program of treatment where such program has medical and scientific support. (Matter of Sampson, 65 Misc 2d 658, 37 AD2d 668, 29 NY2d 900; Matter of Hofbauer, 65 AD2d 108.)
   OPINION OF THE COURT

Jasen, J.

This appeal involves the issue whether a child suffering from Hodgkin’s disease whose parents failed to follow the recommendation of an attending physician to have their child treated by radiation and chemotherapy, but, rather, placed their child under the care of physicians advocating nutritional or metabolic therapy, including injections of laetrile, is a "neglected child” within the meaning of section 1012 of the Family Court Act. This case does not involve the legality of the use of laetrile per se in this State inasmuch as neither party contends that a duly licensed New York physician may not administer laetrile to his or her own patients. Nor is this an action brought against a physician to test the validity of his determination to treat Hodgkin’s disease by prescribing metabolic therapy and injections of laetrile. Rather, the issue presented for our determination is whether the parents of a child afflicted with Hodgkin’s disease have failed to exercise a minimum degree of care in supplying their child with adequate medical care by entrusting the child’s physical well-being to a duly licensed physician who advocates a treatment not widely embraced by the medical community.

The relevant facts are as follows: In October, 1977, Joseph Hofbauer, then a seven-year-old child, was diagnosed as suffering from Hodgkin’s disease, a disease which is almost always fatal if left untreated. The then attending physician, Dr. Arthur Cohn, recommended that Joseph be seen by an oncologist or hematologist for further treatment which would have included radiation treatments and possibly chemotherapy, the conventional modes of treatment. Joseph’s parents, however, after making numerous inquiries, rejected Dr. Cohn’s advice and elected to take Joseph to Fairfield Medical Clinic in Jamaica where a course of nutritional or metabolic therapy, including injections of laetrile, was initiated.

Upon Joseph’s return home to Saratoga County in November, 1977, the instant neglect proceeding was commenced, pursuant to article 10 of the Family Court Act, upon the filing of a petition in Family Court by the Saratoga County Commissioner of Social Services. The petition alleged, in substance, that Joseph’s parents neglected their son by their failure to follow the advice of Dr. Cohn with respect to treatment and, instead, chose a course of treatment for Joseph in the form of nutritional therapy and laetrile. A preliminary hearing was held and the court, finding "that there exists the probability of neglect of [Joseph] by his parents,” ordered that Joseph be temporarily removed from the custody of his parents and placed in St. Peter’s Hospital in Albany.

Thereafter, Joseph’s parents made an application to have Joseph returned to their custody. A hearing was duly commenced in December, 1977, but the proceeding was suspended for six months when a stipulation was entered into by the parties returning Joseph to the custody and care of his parents, and authorizing Joseph to come under the care of Dr. Michael Schachter, a physician duly licensed in New York who is a proponent of metabolic therapy. The stipulation further provided that at least one other physician would be consulted regularly, with medical reports to be submitted to the court periodically.

At the direction of the Appellate Division, a fact-finding hearing on the merits of this case was conducted by Family Court in June, 1978. A review of the testimony adduced at the hearing reveals a sharp conflict in medical opinion as to the effectiveness of the treatment being administered to Joseph. The physicians produced by appellants testified, in substance, that radiation and chemotherapy were the accepted methods of treating Hodgkin’s disease and that nutritional therapy was an inadequate and ineffective mode of treatment. In addition, two physicians, who by stipulation examined Joseph during the hearing, testified, in essence, that there had been a progression of the disease and denounced the treatment being rendered to Joseph as ineffective.

Two physicians produced by respondents, however, testified that they prescribed nutritional therapy for cancer patients and considered such therapy as a beneficial and effective mode of treatment, although they did not preclude the use of conventional therapy — radiation treatments and chemotherapy — in some cases. In addition, a biologist testified as to a study which had been conducted which demonstrated significant regression in cancerous tumors in mice which had been treated with amygdalin (laetrile), vitamin A, and proteolytic enzymes. Dr. Schachter, the attending physician, then testified that in his opinion Joseph was responding well to the nutritional therapy and that both his appetite and energy levels were good. Dr. Schachter further stated that he had consulted with numerous other physicians concerning Joseph’s treatment, and that he never ruled out the possibility of conventional treatment if the boy’s condition appeared to be deteriorating beyond control. Significantly, Joseph’s father also testitied that he would allow his son to be treated by conventional means if Dr. Schachter so advised. Both appellants’ and respondents’ witnesses testified as to the potentially dangerous side effects of radiation treatments and chemotherapy which could include, among other things, fibrosis of the body organs, swelling of the heart, impairment of the growth centers and leukemia.

Family Court, finding that Joseph’s mother and father are concerned and loving parents who have employed conscientious efforts to secure for their child a viable alternative of medical treatment administered by a duly licensed physician, found that Joseph was not a neglected child within the meaning of section 1012 of the Family Court Act and dismissed the petitions. On appeal, a unanimous Appellate Division affirmed. Leave to appeal to this court was granted by the Appellate Division. There should be an affirmance.

At the outset, we note that our scope of review is narrow in a case, such as this, coming to us with affirmed findings of fact. This is so because this court is without power to review the findings of fact if such findings are supported by evidence in the record. (Matter of Rochester Urban Renewal Agency [Patchen Post], 45 NY2d 1, 7; Matter of Rothko, 43 NY2d 305, 318; Simon v Electrospace Corp., 28 NY2d 136, 139; Matter of City of New York [Fifth Ave. Coach Lines], 22 NY2d 613, 620-621; St. Agnes Cemetery v State of New York, 3 NY2d 37, 40.) Thus, our review is confined solely to the legal issues raised by the parties. (CPLR 5501, subd [b].)

Our threshold task in this case is, by necessity, the identification of the standard of neglect against which the facts of this case may be measured. So far as is material for the issue under consideration, a neglected child is defined, by statute, to "[mean] a child less than eighteen years of age whose physical * * * condition has been impaired or is in imminent danger of becoming impaired as a result of the failure of his parent * * * to exercise a minimum degree of care in supplying the child with adequate * * * medical * * * care, though financially able to do so.” (Family Ct Act, § 1012, subd [f], par [i], cl [A].)

A reading of this statutory provision makes it clear that the Legislature has imposed upon the parents of a child the nondelegable affirmative duty to provide their child with adequate medical care. What constitutes adequate medical care, however, cannot be judged in a vacuum free from external influences, but, rather, each case must be decided on its own particular facts. In this regard, we deem certain factors significant in determining whether Joseph was afforded adequate medical care.

It is readily apparent that the phrase "adequate medical care” does not require a parent to beckon the assistance of a physician for every trifling affliction which a child may suffer for everyday experience teaches us that many of a child’s ills may be overcome by simple household nursing. We believe, however, that the statute does require a parent to entrust the child’s care to that of a physician when such course would be undertaken by an ordinarily prudent and loving parent, "solicitous for the welfare of his child and anxious to promote [the child’s] recovery.” (See People v Pierson, 176 NY 201, 206.) This obligation, however, is not without qualification.

It surely cannot be disputed that every parent has a fundamental right to rear its child. (Matter of Bennett v Jeffreys, 40 NY2d 543, 546; Quilloin v Walcott, 434 US 246, 255, reh den 435 US 918.) While this right is not absolute inasmuch as the State, as parens patriae, may intervene to ensure that a child’s health or welfare is not being seriously jeopardized by a parent’s fault or omission (see Wisconsin v Yoder, 406 US 205, 233-234; Prince v Massachusetts, 321 US 158, 166-167, reh den 321 US 804; Matter of Vasko, 238 App Div 128), great deference must be accorded a parent’s choice as to the mode of medical treatment to be undertaken and the physician selected to administer the same. As we have only recently stated, "[t]he filial bond is one of the strongest, yet most delicate, and most inviolable of all relationships.” (Matter of Corey L v Martin L, 45 NY2d 383, 392.)

In this regard, it is important to stress that a parent, in making the sensitive decision as to how the child should be treated, may rely upon the recommendations and competency of the attending physician if he or she is duly licensed to practice medicine in this State, for "[i]f a physician is licensed by the State, he is recognized by the State as capable of exercising acceptable clinical judgment.” (Doe v Bolton, 410 US 179, 199, reh den 410 US 959.) Obviously, for all practical purposes, the average parent must rely upon the recommendations and competency of the attending physician since the physician is both trained and in the best position to evaluate the medical needs of the child.

Ultimately, however, the most significant factor in determining whether a child is being deprived of adequate medical care, and, thus, a neglected child within the meaning of the statute, is whether the parents have provided an acceptable course of medical treatment for their child in light of all the surrounding circumstances. This inquiry cannot be posed in terms of whether the parent has made a "right” or a "wrong” decision, for the present state of the practice of medicine, despite its vast advances, very seldom permits such definitive conclusions. Nor can a court assume the role of a surrogate parent and establish as the objective criteria with which to evaluate a parent’s decision its own judgment as to the exact method or degree of medical treatment which should be provided, for such standard is fraught with subjectivity. Rather, in our view, the court’s inquiry should be whether the parents, once having sought accredited medical assistance and having been made aware of the seriousness of their child’s affliction and the possibility of cure if a certain mode of treatment is undertaken, have provided for their child a treatment which is recommended by their physician and which has not been totally rejected by all responsible medical authority.

With these considerations in mind and cognizant that the State has the burden of demonstrating neglect (see Matter of C. Children, 55 AD2d 646), we now examine the facts of this case. It is abundantly clear that this is not a case where the parents, for religious reasons, refused necessary medical procedures for their child (e.g., Matter of Sampson, 37 AD2d 668, affd 29 NY2d 900; Matter of Gregory S, 85 Misc 2d 846), nor is this a case where the parents have made an irreversible decision to deprive their child of a certain mode of treatment (Custody of a Minor, 379 NE2d 1053 [Mass]). Indeed, this is not a case where the child is receiving no medical treatment, for the record discloses that Joseph’s mother and father were concerned and loving parents who sought qualified medical assistance for their child.

Rather, appellants predicate their charge of neglect upon the basis that Joseph’s parents have selected for their child a mode of treatment which is inadequate and ineffective. Both courts below found, however — and we conclude that these findings are supported by the record — that numerous qualified doctors have been consulted by Dr. Schachter and have contributed to the child’s care; that the parents have both serious and justifiable concerns about the deleterious effects of radiation treatments and chemotherapy; that there is medical proof that the nutritional treatment being administered Joseph was controlling his condition and that such treatment is not as toxic as is the conventional treatment; and that conventional treatments will be administered to the child if his condition so warrants. In light of these affirmed findings of fact, we are unable to conclude, as a matter of law, that Joseph’s parents have not undertaken reasonable efforts to ensure that acceptable medical treatment is being provided their child.

By our decision today, we are by no means advocating the use of nutritional or metabolic therapy, including injections of laetrile, as a means to cure or control cancer, since this is not, in the context of this case, an issue for our resolution. (See, generally, Comment, Laetrile: Statutory and Constitutional Limitations on the Regulation of Ineffective Drugs, 127 U Pa L Rev 233, 249-252, and citations therein; 42 Fed Reg 39,768, 39,775-39,787 [1977].) We decide only the issue presented in the context of the particular facts of this case as found by the courts below.

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

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

Order affirmed.

      . Hodgkin’s disease is a "disease marked by chronic inflammatory enlargement of the lymph nodes, first the cervical and then the axillary, inguinal, mediastinal, mesenteric, etc., together with enlargement of the spleen, and often of the liver and kidneys, with lymphoid infiltration along the blood vessels; there is no pronounced leukocytosis.” (Stedman’s Medical Dictionary [19th ed].)

      . In February, 1978, the New York Commissioners of Health and Social Services moved to intervene in the neglect proceeding. Although such motion was denied by Family Court, the Appellate Division reversed, and granted the motion to intervene. (61 AD2d 1102.) Thereafter, the interveners applied to vacate the stipulation and requested that a plenary hearing pursuant to article 10 of the Family Court Act be held immediately. The Family Court denied the requested relief and the Appellate Division affirmed such order (62 AD2d 508). The Appellate Division, however, did direct Family Court, immediately upon expiration of the stipulation, to proceed with the requisite "fact-finding” and dispositional hearing on the merits.

      . It was stipulated by the parties that Joseph’s parents are financially able to provide medical care.

      . We would note that it appears that no appropriate State agency has taken any disciplinary action against Dr. Schachter for his treatment of Joseph.

      . It should be noted that the New York State Senate and Assembly have passed a bill now before the Governor which would expressly give patients, after consultation with their physicians, the right to decide whether to use amygdalin (laetrile). (S 1681-A, A 63-A, 202d Sess [1979].) This act provides, in substance, that no physician may be subjected to disciplinary action by any medical licensing board of this State or any private professional organization in this State for prescribing amygdalin (laetrile) to his or her patient if the patient consents in writing to such treatment after being fully informed that the substance is not an approved substance by certain delineated agencies (id., amdg Education Law, § 6527); that no duly licensed pharmacist shall be subject to any penalty or disciplinary action for dispensing, upon receipt of a prescription, amygdalin (laetrile) provided a label is affixed to the container which states that amygdalin has not been approved as a treatment for disease by the United States Food and Drug Administration (id., amdg Education Law, § 6812); and that no hospital or health-related institution shall prohibit the use of amygdalin (laetrile) when it is prescribed or administered by a duly licensed physician and requested by a patient (id., amdg Public Health Law, § 207).

      . We recognize that the United States Supreme Court in United States v Rutherford (442 US —, 47 USLW 4724 [decided June 18, 1979]) has recently held that the "safety and effectiveness” standards of the Federal Food, Drug and Cosmetic Act do apply to terminally ill patients seeking to obtain drugs (including laetrile) which are not generally recognized as safe and effective. In our view, however, the narrow legal issues faced by the court in Rutherford — limited only to the statutory authority of the Federal Government to ban laetrile from interstate commerce — have little bearing on the instant case.