author: Titone, J. Bellacosa, J.

text:
    The People of the State of New York, Respondent, v Albion Muniz, Appellant.
    Argued October 13, 1989;
    decided November 21, 1989

      POINTS OF COUNSEL

      Steven M. Statsinger and Philip L. Weinstein for appellant.
    Appellant was improperly adjudicated a second felony offender based upon his convictions under the New Jersey burglary statute, which proscribes conduct which would not necessarily constitute a felony in New York. (People v Olah, 300 NY 96; People v Gonzalez, 61 NY2d 586; People v Covington, 144 AD2d 238; People v Schaner, 133 AD2d 582; People v Love, 111 AD2d 134; People v Rodgers, 128 AD2d 418; People v Martin, 81 AD2d 765; People v Burgos, 97 AD2d 826; People v Tilman, 114 AD2d 799; People ex rel. Goldman v Denno, 9 NY2d 138.)

      Robert T. Johnson, District Attorney (Terence J. Sweeney and Susan L. Valle of counsel), for respondent.
    The trial court properly adjudicated and sentenced appellant as a second felony offender. (People v Gonzalez, 61 NY2d 586; People v Sailor, 65 NY2d 224, 474 US 982; People ex rel. Goldman v Denno, 9 NY2d 138; People ex rel. Gold v Jackson, 5 NY2d 243.)
   OPINION OF THE COURT

Titone, J.

Following his plea of guilty to the crime of attempted second degree burglary, defendant was adjudicated a second felony offender on the basis of a prior New Jersey burglary conviction. On this appeal, he contends that the lower courts erred in determining that the New Jersey crime of which he was convicted is the equivalent of a New York felony sufficient to satisfy the requirements of Penal Law § 70.06 (1) (b) (i). His appeal requires us to consider whether the New Jersey crime of third degree burglary is, in the abstract, the equivalent of a New York felony and, if not whether the trial court could properly consider the factual allegations in the New Jersey accusatory instrument to elucidate the nature of defendant’s prior crime.

Having been charged in Bronx County with attempted second degree burglary and fourth degree criminal mischief, defendant entered a plea of guilty to the former crime in satisfaction of the indictment. Before the plea was entered, the People filed predicate felony statements claiming that defendant was a second felony offender by virtue of at least one prior conviction for burglary in New Jersey (see, CPL 400.21 [2]). In light of defense counsel’s stated intention to challenge this claim, the court gave defendant a conditional sentence promise of 1 to 3 years’ imprisonment, but advised him that a higher sentence would be imposed if his challenge were unsuccessful.

At the ensuing predicate felony hearing, the People submitted an accusatory instrument filed by the County Prosecutor of Burlington County, New Jersey, charging defendant with committing third degree burglary under New Jersey Statutes Annotated § 2C:18-2. This instrument alleged that defendant had "committed] an act of burglary by breaking and entering [certain premises] * * * with the intent to commit a theft”. Defense counsel argued that defendant’s conviction under this charge should not lead to his adjudication as a second felony offender, since the New Jersey penal statute treats unlawful entries with intent to commit any "offense” as burglaries while the New York felony burglary provisions require intent to commit a "crime.” After reserving decision, the trial court rejected defendant’s arguments and found that his prior New Jersey burglary conviction was "of such a nature” that it qualified as a predicate felony. Defendant was thereafter sentenced, as a second felony offender, to a term of 2 to 4 years’ imprisonment. The Appellate Division affirmed with a brief memorandum opinion in which it concluded that the "intent to commit an offense” referred to in New Jersey Statutes Annotated §2C:18-2 (a) was the equivalent of the "intent to commit a crime” required by the New York burglary provisions (144 AD2d 242, 243).

On defendant’s appeal to this court, the People concede that the Appellate Division’s analysis, which was not suggested by either party in the argument before that court, was "invalid” and should not be followed. Instead, the People rely on their own comparison of New Jersey’s and New York’s penalty systems, noting that even the lowest "offenses” in New Jersey are punished with maximum jail terms of 30 days and that New York authorizes 30-day sentences only for misdemeanors and felonies. These facts, according to the People, compel the conclusion that a New Jersey "offense” is the equivalent of a New York "crime” as defined in Penal Law § 10.00 (6), making the "intent to commit an offense” element of the New Jersey crime of third degree burglary the equivalent of the "intent to commit a crime” required for burglary in New York. Alternatively, the People contend, even if the New Jersey and New York burglary provisions have somewhat different statutory elements, the crime of which defendant was convicted is the equivalent of the New York felony because, as evidenced by the underlying accusatory instrument, he was charged in New Jersey with breaking and entering "with intent to commit a theft,” conduct which invariably constitutes a "crime” under New York law (see, Penal Law §§ 155.25-155.42). We now reject both arguments and reverse.

Penal Law § 70.06 requires the imposition of enhanced sentences for those found to be predicate felons. In determining whether a particular defendant has earned this label, the court’s analysis must begin with Penal Law § 70.06 (1) (b) (i), which includes in the definition of a predicate felon one who has been convicted in another jurisdiction of "an offense for which a sentence to a term of imprisonment in excess of one year * * * was authorized and is authorized in this state irrespective of whether such sentence was imposed” (emphasis supplied). Since New York authorizes sentences exceeding one year only for felonies, the second prong of this statutory test requires an inquiry to determine whether the foreign conviction has an equivalent among New York’s felony-level crimes.

As a general rule, this inquiry is limited to a comparison of the crimes’ elements as they are respectively defined in the foreign and New York penal statutes. The allegations contained in the accusatory instrument underlying the foreign conviction may ordinarily not be considered, because such instruments frequently contain nonessential recitals (People v Olah, 300 NY 96, 98; see, e.g., People v Spann, 56 NY2d 469). Since recitals that go beyond the statutorily required elements are not necessary to the determination of guilt, there can be no assurance that such allegations played any actual part in the foreign conviction (see, People ex rel. Goldman v Denno, 9 NY2d 138, 142). Accordingly, resort to such recitals to ascertain the nature of the crime of which the defendant was convicted has generally been deemed improper (see, People v Gonzalez, 61 NY2d 586).

This analysis is not applicable, however, where the foreign statute under which the defendant was convicted renders criminal several different acts, some of which would constitute felonies and others of which would constitute only misdemeanors if committed in New York (id., at 590-591). In such cases, the recitals in the accusatory instrument that describe the particular act or acts underlying the charge are necessary to the extent that they isolate and identify the statutory crime of which the defendant was accused. In such instances, the accusatory recitals are not merely surplusage, and they may properly be considered in determining whether Penal Law § 70.06 (1) (b) (i) has been satisfied (see, People ex rel. Gold v Jackson, 5 NY2d 243, 246).

A comparison between the facts in People v Olah (supra) and those in People ex rel Gold v Jackson (supra) illustrates the point. In Olah, the defendant had been charged with stealing property valued at $200 and convicted under a foreign felony provision that applied to any theft of property valued at more than $20. At that time, New York’s threshold for felonious larceny was $100. Although the foreign accusatory instrument alleged facts which, if proven, would also establish that this threshold had been satisfied, this court declined to permit consideration of those allegations, because the defendant could have been found guilty of the foreign crime regardless of the amount by which the stolen property’s value exceeded $20 and, thus, the “ensuing judgment * * * signified only (1) that Olah had stolen money or property and (2) that the amount involved was at least $20.” (300 NY, at 100, supra.)

In People ex rel. Gold v Jackson (supra), in contrast, the relator had been charged under a foreign statute that classified both "breaking in” and "breaking out” as felony burglaries at a time when New York treated only the former act as a felony. In those circumstances, this court approved resort to the recitals in the foreign accusatory instrument to establish which of those discrete, mutually exclusive acts formed the basis of the charged crime. Significantly, such consideration was necessary to enable the court to identify the precise crime of which the relator had been convicted and to ascertain its statutory elements, so that it could resolve whether the foreign crime was, in fact, the equivalent of a New York felony.

Applying these principles to the facts in the present case, we conclude that the statutory elements of the New Jersey crime of which defendant was convicted, which requires an intent to commit any "offense,” differ materially from the elements of its closest New York analog, third degree burglary, which requires an intent to commit a "crime” (Penal Law § 140.20). It is undisputed that New Jersey’s definition of "offense” includes all acts that are subject to criminal punishment in that State, including some that are the equivalent of petty offenses or violations in New York (NJ Stat Annot § 2C:l-4 [a], [b]; § 2C:1-14 [k]; compare, § 2C:33-2, with Penal Law § 240.20). In contrast, the "crimes” referred to in Penal Law §§ 140.20-140.30 encompass only felonies and misdemeanors (see, Penal Law § 10.00 [6]). Thus, it is possible to violate the New Jersey third degree burglary provisions, i.e., by acting with the intent to commit a petty offense, without necessarily acting with the level of intent required for a felonious burglary in New York.

Further, in determining whether a foreign crime is the equivalent of a New York felony, it is the conduct, rather than the prescribed punishment, that is controlling. Thus, contrary to the People’s argument, the fact that in New Jersey petty offenses may be punished with sanctions that are permissible in New York only for misdemeanors is irrelevant. Regardless of the States’ respective choices as to the proper penalties, the fact remains that the intended "offenses” referred to in the New Jersey burglary statute include conduct which New York would not consider a "crime” for purposes of determining whether the intent necessary to establish the felony of burglary was present.

Inasmuch as there are differences in the statutory elements of New Jersey’s and New York’s burglary provisions, it only remains for us to decide whether the New Jersey accusatory instrument may be considered in resolving defendant’s status as a predicate felon within the meaning of Penal Law § 70.06 (1) (b) (i). In this regard, we conclude that the People’s efforts to fit this case within the so-called "exception” to the general rule set forth in People v Olah (supra) are unavailing.

This is not a situation such as that in People ex rel. Gold v Jackson (supra), where the foreign jurisdiction’s crime could be committed in several different, alternative ways, some of which would constitute felonies if committed in New York and others of which would constitute only misdemeanors (see, People v Gonzalez, supra, at 590-591). Indeed, the facts in this case are indistinguishable in principle from those in Olah. Schematically, in both Olah and this case, the foreign crime was rendered a felony because of a particular aggravating circumstance — value in Olah and intent here — which included, but was broader in coverage than, the analogous aggravating element of the New York felony. In Olah, the foreign crime’s aggravating circumstance, the value of the stolen property, included values in excess of $100 as required in New York, but also encompassed all lesser values above $20. In this case, the foreign crime’s aggravating circumstance, criminal intent, encompasses the intent to commit a "crime” as required by New York law, but it also applies to less culpable levels of intent, notably, the intent to commit what would be a mere violation if committed in New York. In such circumstances, as we held in Olah, it is improper to look to the factual allegations in the accusatory instrument as a means of clarifying the nature of the defendant’s claimed predicate crime, since " 'the controversy did not turn upon [them]’ ” (People v Olah, supra, at 100, quoting Donahue v New York Life Ins. Co., 259 NY 98, 102).

The dissenter asserts that resort to the New Jersey accusatory instrument is proper here because the burglary statute under which defendant was convicted "proscribes several acts, some of which if committed in New York could be a felony” (dissenting opn, at 472). He then goes on to explain this assertion by noting that "[t]he 'offense’ part [of the intent element] can be fulfilled in a number of ways including, as specifically charged in this case, theft.” (Id.) Thus, the dissenter’s position appears to be that the "several acts” test of Gonzalez (supra) is satisfied here because "unlawfully entering with intent to commit a theft” and "unlawfully entering with intent to commit a mere offense” are conceptually different acts.

The fallacy in this analysis is its failure to distinguish between the specific criminal acts required by a penal statute and the various ways in which the statutory crime may be committed. The former concerns the crime’s statutory elements and is relevant to the Penal Law § 70.06 (1) (b) (i) inquiry; the latter concerns the underlying facts and, under Olah (supra), is not relevant to that inquiry.

Moreover, under the dissenter’s formulation, the cases in which the indictment could be considered would be expanded dramatically. Since most penal statutes establish crimes that may be factually committed "in a number of ways,” conduct that violates a particular statute may always be recast in terms that make it appear to be a discrete criminal act by simply substituting a factual description of the conduct for a statutory element, as the dissenter has done. If the dissenter’s view were to prevail, even Olah would have a different outcome, since the out-of-State larceny at issue in that case could have been committed "in a number of ways,” i.e., stealing property valued at different amounts, and it is therefore possible, at least under the dissenter’s formulation, to identify several discrete criminal acts, i.e., stealing property valued at more than $100 (equivalent to a New York felony) and stealing property valued at less than $100 but more than $20 (a nonfelony crime in New York). Thus, if the dissenter were correct, Olah would essentially be overruled. Plainly, nothing that the court said in Gonzalez (supra) was intended to effect such a drastic change in the law.

In summary, inasmuch as there are differences in the intent elements of the crimes and the recitals in the New Jersey "accusation” cannot be considered, it was error to adjudicate defendant a second felony offender on the basis of his Burlington County burglary conviction. Accordingly, the order of the Appellate Division, insofar as appealed from, should be reversed, the second felony offender adjudication vacated and the sentence reduced to a term of imprisonment of 1 to 3 years in accordance with Supreme Court’s conditional sentence promise.

Bellacosa, J.

(dissenting). I respectfully tender a different analysis of this case which would warrant an affirmance of the conviction with its second felony offender sentence, based on defendant’s guilty plea to attempted burglary, second degree. A New Jersey burglary conviction — unlawful entry with intent to commit theft — constituted the felony predicate for defendant’s now-challenged New York enhanced sentence.

Step one of the process to determine whether a crime committed in another jurisdiction would have been a felony if perpetrated here requires examination of the foreign statute (Penal Law § 70.06 [1] [b] [i]; People v Olah, 300 NY 96 [1949]). If the statute proscribes one act, the inquiry ends. If, however, the statute proscribes more than one act, one or more of which if committed in New York would be felonies but others misdemeanors, then a second step is necessitated: examination of the foreign accusatory instrument (People ex rel. Goldman v Denno, 9 NY2d 138, 140-141 [1961] [opn by Fuld, J., also the author of People v Olah, supra]; People ex rel. Gold v Jackson, 5 NY2d 243, 245 [1959]). If that indictment and ensuing conviction involve even one act which would be a felony in this State, a predicate felony satisfying Penal Law § 70.06 is established.

Putting the instant case through those statutory and precedential hoops proves conclusively that defendant’s previous New Jersey conviction was for a crime which would have been a felony in New York. This case, therefore, falls squarely within Denno (supra) and Jackson (supra) because the New Jersey burglary statute under which defendant was convicted proscribes several acts, some of which if committed in New York could be a felony or a misdemeanor, and which in the particular case constituted the equivalent of the New York felony of burglary in the third degree.

The New Jersey statute provided in pertinent part that "[a] person is guilty of burglary if [he unlawfully enters or remains] with purpose to commit an offense therein” (NJ Stat Annot § 2C:18-2 [emphasis added]). The "offense” part can be fulfilled in a number of ways including, as specifically charged in this case, theft. Correspondingly in New York, a person who unlawfully enters or remains in a structure with intent to commit a crime (defined as a misdemeanor or a felony) is guilty of a burglary felony (Penal Law § 140.20). The New Jersey burglary statute necessarily embraces several acts which, depending on the generic "offense” intended to be committed within the structure, clearly qualify as a defined "crime” under New York law and therefore rank as the equivalent burglary felony. That feature compels us to continue our quest beyond just the New Jersey statute and further into the accusatory instrument, because that is the only way to determine what act, among the several generically proscribed, served as the basis for defendant’s conviction. Only then can it be known in this particular case if the out-of-State conviction qualifies for New York sentence enhancement (People ex rel. Goldman v Denno, 9 NY2d, supra, at 140-141; People ex rel. Gold v Jackson, 5 NY2d, supra, at 244-245). We are not, therefore, rummaging through surplus-age in the indictment, as People v Olah (supra) forbids us to do, but rather searching for the essence of the out-of-State conviction, as the subsequent cases direct us to do.

The Burlington County, New Jersey, accusatory instrument at issue in this case reveals that defendant burglarized a dwelling "with intent to commit a theft” (count 1) by actually stealing "property valued at over $500” (count 2). In New York, theft constitutes at the very least a misdemeanor (Penal Law § 155.25). Thus, the "theft” species of the generic "offense” culpable mental state element in the New Jersey statute, coupled with the predicate illegal entry, unquestionably qualifies as a felony for New York enhanced sentencing purposes (Penal Law §§ 140.20, 70.06). That should seal the case for the enhanced sentence imposed here under our controlling and most recent guideposts.

Defendant, however, would shackle our analysis to the one word "offense” in the New Jersey statute and forbid us from looking beyond to the accusatory instrument itself. But under our cases that is an incomplete process. Reverting and stopping solely at the elemental Olah (300 NY 96, supra) proposition would undercut the subsequent building blocks of realistic flexibility which Jackson and Denno engrafted on Olah. Indeed, in People v Gonzalez (61 NY2d 586, 589), we dealt with a Florida statute defining an assault committed with intent to commit a felony, which could equal the New York felony of robbery or attempted robbery if the culpable mental state felony corresponded to the forcible theft of property from the victim’s person (compare, Penal Law § 160.00). We expressly noted in Gonzalez that it was "similar to Denno and Jackson because the statute of which defendant stands convicted is so broad that it proscribes conduct which in New York could be either a felony or a misdemeanor.” (Supra, at 591 [emphasis added].) That is the same as the "offense” breadth in the pertinent New Jersey statute. Thus, we scrutinized the indictment in Gonzalez to determine what the felonious acts were and whether they constituted a felony in New York (id., at 589-590). The result was ultimately inconclusive because, after reviewing the accusatory instrument, we were unable to discern which act defendant had committed inasmuch as the jury convicted him of a lesser included count, not one charged in the indictment (id., at 591-592). Here, we know because defendant’s conviction was for the burglary as charged, i.e., "with intent to commit a theft” in a dwelling. The point, therefore, is that the test used in Gonzalez is precisely the one applicable to the instant case where the record unequivocally reveals the particular and distinct act underlying defendant’s violation of New Jersey’s equivalent felony statute — the "offense” of "theft”. The majority interpretation of our precedents, it seems to me at least, not only undercuts Gonzalez but then tries simultaneously to impute to my harmonization of the precedents an overruling effect on Olah by Gonzalez. I do not intend that consequence and it is not necessary to my analysis or result.

The lower courts correctly imposed a second felony offender sentence, which should be upheld.

Chief Judge Wachtler and Judges Simons, Kaye, Alexander and Hancock, Jr., concur with Judge Titone; Judge Bellacosa dissents and votes to affirm in a separate opinion.

Order, insofar as appealed from, reversed, etc.

       The prosecutor had also filed a predicate felony information, and submitted a corresponding accusatory instrument, alleging that defendant had been convicted of third degree burglary in Somerset County, New Jersey. However, the People have since eschewed reliance on the Somerset County conviction.


source: Caselaw Access Project

author: Kaye, J.

license: Public Domain

text:
    Cobble Hill Nursing Home, Inc., Appellant, v Henry and Warren Corporation, Respondent. David Axelrod, as Commissioner of the State of New York Department of Health, Intervenor.
    Argued October 17, 1989;
    decided November 21, 1989

      POINTS OF COUNSEL

      Louis A. Craco, Diana B. Simon and Gregory L. Harris for appellant.
    I. The purchase option is fully enforceable in accordance with its terms. (Matter of McManus, 83 AD2d 553, 55 NY2d 855; Martin Delicatessen v Schumacher, 52 NY2d 105; Northrup v Hushard, 129 AD2d 1005; Lee v Seagram & Sons, 413 F Supp 693, 552 F2d 447; Di Maria v Michaels, 90 AD2d 676; Matter of Hodes v Axelrod, 70 NY2d 364; Matter of Schwartzberg v Axelrod, 100 AD2d 694; Hempstead Gen. Hosp. v Whalen, 474 F Supp 398, 622 F2d 573; Wedtke Realty Corp. v Karanas, 286 App Div 339, 309 NY 904; Cohen & Sons v Lurie Woolen Co., 232 NY 112.) II. The trial court’s dismissal of Cobble Hill’s complaint was error because the valid stipulation consenting to judgment in appellant’s favor was binding on the parties and on the court. (Matter of New York, Lackawanna & W. R. R. Co., 98 NY 447; Hallock v State of New York, 64 NY2d 224; Mitchell v New York Hosp., 61 NY2d 208; Nishman v De Marco, 76 AD2d 360; Gildston v Terilli, 146 AD2d 738; Salesian Socy. v Village of Ellenville, 41 NY2d 521; Tepper v Tannenbaum, 83 AD2d 541; Ragen v City of New York, 45 AD2d 1046; Silverstein v Minkin, 49 NY2d 260.) III. Respondent is barred from contesting the enforceability of the option agreement by the doctrines of estoppel and waiver. (Anonymous v Anonymous, 137 AD2d 739; Environmental Concern v Larchwood Constr. Corp., 101 AD2d 591; State of Arizona v Shamrock Foods Co., 729 F2d 1208, 469 US 1197; Kassner & Co. v City of New York, 46 NY2d 544; Ripley v Aetna Ins. Co., 30 NY 136.)

      Joseph Frost, Alan J. Firestone and George Meissner for respondent.
    I. The courts below properly concluded that the option to purchase contained within the lease was unenforceable due to a failure of definiteness as to a price to be paid or to a method by which said price could be determined. (United Press v New York Press Co., 164 NY 406; Ayer v Board of Educ., 69 Misc 2d 696; Trimmer v Van Bomel, 107 Misc 2d 201; Shell Oil Co. v Federal Power Commn., 292 F2d 149; United Fuel Gas Co. v Columbian Fuel Corp., 165 F2d 746; Martin Delicatessen v Schumacher, 52 NY2d 105; Candid Prods. v International Skating Union, 530 F Supp 1330; Mocca Lounge v Misak, 94 AD2d 761; Hempstead Gen. Hosp. v Whalen, 474 F Supp 398; Matter of Marra v City of White Plains, 96 AD2d 17.) II. The courts below properly excluded parol evidence offered to attempt to prove an essential term of the option agreement. (Loch Sheldrake Assocs. v Evans, 306 NY 297; Hayes v Hudson Riv. Tel. Co., 181 App Div 217; Fogelson v Rackfay Constr. Co., 300 NY 334; Lebowitz v Mingus, 100 AD2d 816; United Press v New York Press Co., 164 NY 406; Evans v Pelta, 146 App Div 749; Jordan v Sharpe, 92 AD2d 946; Sutton v Santora, 87 AD2d 796; Cordua v Guggenheim, 274 NY 51; Di Maria v Michaels, 90 AD2d 676.) III. The Supreme Court properly vacated the prior stipulation upon the agreement of all parties. (Campbell v Bussing, 274 App Div 893; Hallock v State of New York, 64 NY2d 224; Salesian Socy. v Village of Ellenville, 41 NY2d 521.) IV. Appellants, by failing to raise the issues of estoppel and time limitations in the courts below, have waived same and may not raise them for the first time in the Court of Appeals. V. The Court of Appeals is bound by the factual findings of the courts below as to the failure of the option to provide either a price or a viable method for determining such a price. (Town of Massena v Niagara Mohawk Power Corp., 45 NY2d 482; People v Yarter, 41 NY2d 830.)

      Robert Abrams, Attorney-General (R. Scott Greathead, O. Peter Sherwood, Lawrence S. Kahn and Christopher Keith Hall of counsel), for intervenor.
    I. The option to purchase was a valid contract. (Matter of Penn Cent. Corp. [Consolidated Rail Corp.], 56 NY2d 120; Martin Delicatessen v Schumacher, 52 NY2d 105; Backer Mgt. Corp. v Acme Quilting Co., 46 NY2d 211; Matter of New York, Lackawanna & W. R. R. Co., 98 NY 447; Bedell v Kennedy, 109 NY 153; Rae Co. v Courtney, 250 NY 271; Matter of St. Joseph’s Immigrant Homes v Seaman, 53 Misc 2d 1095; Village Nursing Home v Axelrod, 146 AD2d 382; Concoff v Occidental Life Ins. Co., 4 NY2d 630; Cordua v Guggenheim, 274 NY 51.) II. The stipulation bound the parties and the court. (Hallock v State of New York, 64 NY2d 224; Abramovich v Board of Educ., 46 NY2d 450, 444 US 845; Salesian Socy. v Village of Ellenville, 41 NY2d 521; Matter of New York, Lackawanna & W. R. R. Co., 98 NY 447; Nishman v De Marco, 76 AD2d 360, 62 NY2d 926; Tepper v Tannenbaum, 83 AD2d 541; Ragen v City of New York, 45 AD2d 1046.)

      Edward J. Kuriansky, Arthur A. Munisteri, Elizabeth T. Bogren and Donald H. Zuckerman for New York State Deputy Attorney-General for Medicaid Fraud Control, amicus curiae.

    I. Estoppel against inconsistent positions in judicial proceedings prevents Eugene Hollander from contradicting the representations he made to the court that sentenced him. (Houghton v Thomas, 220 App Div 415, 248 NY 523; Matter of Kisloff v Covington, 73 NY2d 445; Santobello v New York, 404 US 257; People v Selikoff, 35 NY2d 227; United States v Alexander, 869 F2d 91.) II. Hollander’s corporation should be held to its stipulation. (Freidus v Eisenberg, 123 AD2d 174, 71 NY2d 981.) III. The purchase option is fully enforceable.

      Leslie Salsman and Herbert Semmel for Alzheimer’s Association, New York City Chapter, and others, amici curiae.

    I. There is a critical and growing need for nursing beds in New York City. II. The closing of Cobble Hill Nursing Home and the transfer of over 500 frail elderly and disabled residents will have a significant negative impact on their health and well-being. (Parrino v Lindsay, 29 NY2d 30; O’Bannon v Town Ct. Nursing Center, 447 US 773.)
   OPINION OF THE COURT

Kaye, J.

The legal question at the core of this human drama is whether an option permitting plaintiff to purchase a nursing home is so indefinite in its price term as to preclude enforcement by the courts. Contrary to the trial court and the Appellate Division, we conclude that the price term is sufficiently definite, and therefore grant judgment to plaintiff requiring specific performance of the contract.

The agreement at issue arose in connection with the nursing home scandals of the 1970’s. Eugene Hollander, then a prominent figure in the industry, had for years been the operator of several nursing homes, until his felony convictions in 1976. He was and remains president of defendant Henry and Warren Corporation, owner of the Brooklyn property plaintiff seeks to purchase; his wife was and remains the corporation’s sole shareholder. Prior to his convictions Hollander and his wife leased this property from defendant corporation, and operated the Congress Nursing Home there.

In July 1975 Hollander was indicted by State and Federal Grand Juries for crimes involving unwarranted health and medical care reimbursements. Faced with possible loss of operating certificates and preclusion from the nursing home business, Hollander during plea negotiations asked that the Department of Health appoint receivers who would continue to operate his nursing homes and pay rent to Henry and Warren Corporation. Negotiations ensued for the appointment of plaintiff — a not-for-profit hospital corporation organized by community residents — as receiver for the Congress Nursing Home. Hollander’s efforts at similar arrangements for his other nursing homes proved fruitless, as did his litigation to compel appointment of receivers for those facilities.

Talks regarding plaintiff’s receivership continued through year-end. At a meeting in December, the Department informed Hollander that the maximum rent payable by a receiver would be calculated pursuant to the Medicaid reimbursement regulations (10 NYCRR part 86), which provided for reimbursement based upon a facility’s historical cost. Thus calculated, projected rent for Congress was approximately half the amount defendant was then receiving. The Department refused to reconsider the matter, and indeed advised Hollander that it would take steps to revoke his operating certificates if a receiver was not soon installed.

In May 1976 Hollander entered a plea to the Federal charges and was sentenced to a five-year term of imprisonment (which was suspended), fined $10,000 and placed on probation for five years; a condition of his probation was that he "divest himself of all connections, direct or indirect, with any occupation that requires the custody or care of other people.” Hollander had earlier pleaded guilty in State Supreme Court to the felonies of grand larceny in the second degree and offering a false instrument for filing in the first degree, but sentencing on the State charges was postponed because of the ongoing negotiations involving the transfer to plaintiff.

On May 17, 1976, a receivership agreement was signed by plaintiff, defendant, the Hollanders and the Department. On that same date, plaintiff and defendant additionally entered into a lease for the premises, assuring defendant continuing income from the operation of the nursing home, with rent to be "determined * * * by [the Department of Health] pursuant to all applicable statutes, rules and regulations.” Both the receivership agreement and the lease — each incorporating the other — contain the following purchase option: "During the Term of the Lease, [plaintiff] shall have an option to purchase the premises (including without limitation the improvements thereon and the items set forth on the Inventory) at any time during said Term at a price determined by the Department in accordance with the Public Health Law and all applicable rules and regulations of the Department without prejudice to the remedies, if any, of the parties herein.”

The very day after these agreements were signed — May 18, 1976 — Hollander was sentenced to five years’ probation conditioned on payment of a fine of $250,000 and $1,000,000 restitution to the State, as well as permanent divestiture of all his nursing home interests. The receivership agreement and lease enabled Hollander to represent to the sentencing court that he was completely out of the nursing home business.

More than three years later, in fall 1979, plaintiff notified the Department that it elected to exercise its option, and asked the Department to set the price. The Department in turn supplied "a computation of the Medicaid allowable transfer price which is the Price as called for by the Receiver Agreement.” As the Department explained: "The Medicaid allowable transfer price (as well as Medicaid reimbursement for capital cost) is based upon the original historical cost of a facility as reported to the Department, subject to Departmental review. The original historical cost of a facility is also called the initial allowed facility cost and is defined in 10 NYCRR 86-2.21(a)(6). This cost serves as the basis for a capital cost component in the Medicaid reimbursement rate determined pursuant to 10 NYCRR 86-2.21(e).” The Department determined that as of January 1, 1980, the initial price defined in the purchase option provisions of the agreements was $3,046,352.

Plaintiff exercised the option, and delivered its down payment. Defendant, however, refused stating that it had "no intention of selling the facility in question to Cobble Hill at a price to be established by the Department in accordance with the Public Health Law as it is presently constituted.” Defendant objected that the transfer price established by those provisions was "confiscatory,” in that it bore "no relation to market value or any other reasonable criteria of true value for this facility.” Defendant filed suit in the United States District Court for the Eastern District of New York, alleging due process violations and unjust taking. Those charges were dismissed for failure to state a claim, and the pendent State law claims were dismissed for want of jurisdiction.

Plaintiff meanwhile commenced an action in the State Supreme Court for specific performance of the option; defendant counterclaimed for rescission or adjustment of rent payments to fair market value. Defendant also separately sued the Department and the Commissioner of Health (intervenor on this appeal) challenging the determinations of rent and price as less than fair value. Both State court actions were consolidated into the present suit.

In response to plaintiff’s motion for summary judgment, the parties entered into a stipulation. By agreement, Supreme Court awarded plaintiff partial summary judgment and struck defendant’s affirmative defenses and the counterclaims except for "financial matters,” which were reserved for the court. If the parties could not themselves reach an amicable resolution by June 16, 1986, they were to return to court for a hearing on those matters. In December 1986, at a hearing on the open financial matters, Supreme Court sua sponte vacated the stipulation and proceeded to hear argument on the validity of the option. Defendant at that point contended that the option was void for indefiniteness of the price term, in that no provision of the Public Health Law or the Department’s rules and regulations provide a method for fixing the sales price of real property.

Supreme Court dismissed the complaint, finding that the option agreement was unenforceable for failure to specify a method by which price could be determined, and a divided Appellate Division affirmed. The court concluded that the specified law and regulations did not provide an explicit mechanism for determining purchase price, and that the parties had therefore failed to state an essential term, rendering the option unenforceable. The dissenting Justice, by contrast, found an enforceable contract, because the option expressed the parties’ intent that the price be fixed by a third party, or because the agreement set forth a practicable method by which price was to be determined, or because the question was foreclosed by the parties’ stipulation for partial summary judgment (144 AD2d 518, 524-527).

After dismissal for nonfinality of a motion for leave to appeal to this court, Supreme Court granted defendant’s application to direct plaintiff to surrender possession of the nursing home — at the time housing more than 500 elderly residents— and denied a cross motion for a stay. We then granted leave to appeal as well as a stay, and now reverse.

Few principles are better settled in the law of contracts than the requirement of definiteness. If an agreement is not reasonably certain in its material terms, there can be no legally enforceable contract (Martin Delicatessen v Schumacher, 52 NY2d 105, 109; Restatement [Second] of Contracts § 33 [1981]). The doctrine of definiteness serves two related purposes.

First, unless a court can determine what the agreement is, it cannot know whether the contract has been breached, and it cannot fashion a proper remedy (see, Metro-Goldwyn-Mayer v Scheider, 40 NY2d 1069, 1070-1071; Restatement [Second] of Contracts § 33 [2] [1981]). This is particularly significant where specific performance is sought. Second, the requirement of definiteness assures that courts will not impose contractual obligations when the parties did not intend to conclude a binding agreement (see, Restatement [Second] of Contracts § 33 [3] [1981]).

While the settled principles are easily articulated, their proper application has sometimes proved elusive. The difficulty is that the concept of definiteness cannot be reduced to a precise, universal measurement (Calamari & Perillo, Contracts § 2-9, at 53 [3d ed]). The standard is necessarily flexible, varying for example with the subject of the agreement, its complexity, the purpose for which the contract was made, the circumstances under which it was made, and the relation of the parties (id., at 54; Farnsworth, Contracts §§ 3.27, 3.29 [1982]).

Moreover, at some point virtually every agreement can be said to have a degree of indefiniteness, and if the doctrine is applied with a heavy hand it may defeat the reasonable expectations of the parties in entering into the contract (see, Cohen & Sons v Lurie Woolen Co., 232 NY 112, 114 [Cardozo, J.]; Murray, Contracts § 27, at 47 [2d ed 1974]). While there must be a manifestation of mutual assent to essential terms, parties also should be held to their promises and courts should not be "pedantic or meticulous” in interpreting contract expressions (1 Corbin, Contracts §95, at 396 [1963]; see also, UCC 2-204 [3]). Before rejecting an agreement as indefinite, a court must be satisfied that the agreement cannot be rendered reasonably certain by reference to an extrinsic standard that makes its meaning clear (1 Williston, Contracts § 47, at 153-156 [3d ed 1957]). The conclusion that a party’s promise should be ignored as meaningless "is at best a last resort.” (Cohen & Sons v Lurie Woolen Co., 232 NY, at 114, supra.)

Passing from the general to the particular, a price term is not necessarily indefinite because the agreement fails to specify a dollar figure, or leaves fixing the amount for the future, or contains no computational formula. Where at the time of agreement the parties have manifested their intent to be bound, a price term may be sufficiently definite if the amount can be determined objectively without the need for new expressions by the parties; a method for reducing uncertainty to certainty might, for example, be found within the agreement or ascertained by reference to an extrinsic event, commercial practice or trade usage (Metro-Goldwyn-Mayer v Scheider, 40 NY2d 1069, 1070-1071, supra; Annotation, Requisite Definiteness of Price to Be Paid in Event of Exercise of Option for Purchase of Property, 2 ALR3d 701). A price "so arrived at would have been the end product of agreement between the parties themselves.” (Martin Delicatessen, supra, at 110.)

That standard is met here. Applying the foregoing principles to the facts, we conclude that the price term was sufficiently definite for an enforceable contract.

Addressing first the language of the agreement, the option manifests the parties’ unmistakable intent that price was to be fixed by a third person — the Department of Health — itself providing an objective standard without the need for further expressions by the parties (compare, Martin Delicatessen, su pra; see also, UCC 2-305 [1] [c]; 1 Corbin, op. cit., § 98, at 435-436; Farnsworth, op. cit., § 3.28, at 198; Knapp, Enforcing the Contract to Bargain, 44 NYU L Rev 673, 696 [1969]). That the agreement additionally directed the Department to fix the price "in accordance with the Public Health Law and all applicable rules and regulations” does not render the term indefinite.

Defendant urges that there is in fact no "applicable” rule or regulation for fixing the sales price of real property and therefore the essential term is illusory. But it is apparent from the agreement that these parties reposed discretion in the Department to make the price determination, limited only by the requirement that it apply provisions that were suitable, pertinent and appropriate for the task at hand. As the dissenting Justice below correctly observed, while the regulations did not authorize the Department to set a purchase price they did provide a means of fixing one — which is all these parties required. "The Public Health Law contemplates 'Medicaid’ reimbursement to nursing home operators for 'real property costs’ (see, Public Health Law § 2808), including reasonable rent (see, 10 NYCRR 86-2.21 [c]) and, where the operator is the owner, the reasonable costs of acquisition, e.g., amortization, interest and 'return of equity’ (see, 10 NYCRR 86-2.21 [e]).” (144 AD2d, at 525 [dissenting opn].)

That the Department could indeed calculate a price by reference to its rules and regulations is evidenced by the fact that it did exactly that. As reflected in its letter fixing the price, the Department followed its regulations by referring to historical cost, then reducing that figure by the amount paid by the Medicaid program as capital cost reimbursement as of January 1980, and announcing the option price.

Beyond the contract language, the undisputed circumstances in which this agreement was made further confirm that the Department was to have the authority it exercised in fixing the price.

This was hardly an ordinary contract concluded between two private parties. Hollander’s overriding objective was to avoid incarceration for his crimes; only the binding agreement he had reached with plaintiff literally on the eve of sentencing permitted him to make the representations to the court necessary to attain that objective. The Department’s interest was to ensure the continuing operation of the nursing home, on a financial basis that would attract a responsible operator yet meet the cost-containment standards set by law for this largely publicly funded program.

The agreements repeatedly refer to plaintiffs limited resources and inability to pay more than reimbursable amounts. The receivership agreement states that plaintiff is a not-for-profit corporation having minimum capital, that plaintiff may not receive any fee as a receiver, and that "[notwithstanding anything to the contrary contained herein or in the Lease, the liability of [plaintiff] for rent, additional rent or other liability due to the Landlord or the Operator hereunder shall be limited to amounts finally determined by the Department or other applicable authority to be reimbursable under the Medicaid program.” Likewise, the lease reflects the parties’ recognition that plaintiff expects that "the primary source of its revenues” from the operation of the nursing home would be Medicaid payments and that this expectation was "a substantial and material inducement” to enter into the lease.

In these circumstances, when the parties designated the Department to fix the option price, that designation was obviously not for the purpose of calculating the nursing home’s market value (see, Farnsworth, op. cit., § 3.28, at 198, n 20 [noting the risks of third-party valuation]). Defendant’s contention that, under this agreement, it is somehow entitled to the equivalent of fair market value is simply without substance.

Bearing in mind the two objectives served by the definiteness requirement in contract law, there is no legal justification for voiding this agreement. The terms of agreement and the appropriate remedy can be readily determined, and it is plain that the parties intended this to be a complete and binding contract. Far from being a necessary "last resort,” to declare this defendant’s promise legally meaningless — thus allowing it to walk away with its property after enjoying the benefits of the bargain — defeats the reasonable expectations of the parties in entering into the contract and is a misuse of the definiteness doctrine.

Given an enforceable agreement that permitted the Department of Health to fix the option price as it did, and given defendant’s refusal to comply, there can be no question that defendant has breached the contract. Where, as here, the agreement is for the conveyance of real property, specific performance rather than damages is the appropriate remedy (see, Van Wagner Adv. Corp. v S & M Enters., 67 NY2d 186, 192).

Accordingly, the order of the Appellate Division should be reversed, with costs, and judgment granted in plaintiffs favor.

Chief Judge Wachtler and Judges Simons, Alexander, Titone, Hancock, Jr., and Bellacosa concur.

Order reversed, etc.

       Hollander’s request was made pursuant to Public Health Law § 2810 (1), which provides: "The owner or owners of any residential health care facility may at any time request the department to take over the operation of such facility by the appointment of a receiver. Upon receiving such a request, the department may, if it deems such action desirable, enter into an agreement with any such owners on the appointment of a receiver to take charge of the facility under whatever conditions as shall be found acceptable by both parties. Receivership commenced in accordance with the provisions of this subdivision shall terminate at such time as is agreed upon by the parties, or at such time as either party notifies the other in writing that he wishes to terminate such receivership.”


author: Simons, J.

text:
    Hooper Associates, Ltd., Respondent, v AGS Computers, Inc., Appellant. (And a Third-Party Action.)
    Argued October 17, 1989;
    decided November 21, 1989

      POINTS OF COUNSEL

      Sanford F. Young and Jan B. Rothman for appellant.
    I. The indemnity provision of the subject agreement clearly expresses the intent of the parties to award attorney’s fees only when a party is compelled to defend a third-party claim. (Atlantic Richfield Co. v Interstate Oil Transp. Co., 784 F2d 106; Schiavone Constr. Co. v County of Nassau, 717 F2d 747; Miller & Co. v Louisville & Nashville R. R. Co., 328 F2d 73; Rosano’s Farm Store v International Collection Serv., 115 AD2d 195; Mobil Oil Corp. v Wellpoint Dewatering Co., 110 AD2d 1085; Owens v Palm Tree Nursing Home, 89 AD2d 619; Breed, Abbott & Morgan v Hulko, 139 AD2d 71; Matter of A. G. Ship Maintenance Corp. v Lezak, 69 NY2d 1; Brooklyn Union Gas Co. v Shields Detective Bur., 121 AD2d 587; Smith v Hooker Chem. & Plastics Corp., 83 AD2d 199.) II. The parties clearly contemplated that, consistent with well-settled precedents, the indemnification section and its reference to attorney’s fees apply only to third-party claims. (Niagara Frontier Transp. Auth. v Tri-Delta Constr. Corp., 107 AD2d 450; Tokyo Tanker Co. v Etra Shipping Corp., 142 AD2d 377; Information Sciences v Mohawk Data Science Corp., 56 AD2d 706; Tantleff v Truscelli, 110 AD2d 240, 69 NY2d 769; Plant Planners v Pollock, 91 AD2d 1017.) III. The decision in Breed, Abbott does not support plaintiff’s claim. (Breed, Abbott & Morgan v Hulko, 139 AD2d 71, 74 NY2d 686; Mighty Midgets v Centennial Ins. Co., 47 NY2d 12.) IV. In any event, it is submitted that plaintiff should not have been awarded summary judgment. V. Defendant’s alternative request for discovery should be granted. (Matter of 425 Park Ave. Co. v Finance Adm’r, 69 NY2d 645; People v Bestline Prods., 41 NY2d 887; Albany

      Custom, Floors v Urbach, Kahn & Werlin, 135 AD2d 972; Austin Zuur, Ltd. v Lowell, 109 AD2d 696; Chase v Sullivan’s of Middletown, 108 AD2d 713.)

      Ludwig A. Saskor for respondent.
    I. This court does not have subject matter jurisdiction of the appeal which seeks to review an interim ruling of the trial court. (Matter of Grade Crossings of N. Y. Cent. R. R. [Buffalo], 297 NY 246; Brown v Micheletti, 97 AD2d 529; Matter of Civil Serv. Employees Assn. v Evans, 92 AD2d 669; Devine v Devine, 106 AD2d 487; Brady v Ottaway Newspapers, 63 NY2d 1031; Matter of De Zimm v Connelie, 64 NY2d 860; Herrick v Second Cuthouse, 64 NY2d 692; Middletown v Boardman, 240 NY 552; Matter of Mohawk Overall Co., 210 NY 474.) II. The contract drawn by appellant contains no limitation on the right to recover attorney’s fees. (Schiavone Constr. Co. v County of Nassau, 717 F2d 747; Breed, Abbott & Morgan v Hulko, 139 AD2d 71, 74 NY2d 686; Zissu v Bear, Stearns & Co., 627 F Supp 687, 805 F2d 75; Matter of State of New York v Avco Fin. Serv., 50 NY2d 383; City of New York v State of New York, 39 NY2d 951; Rogers v Dorchester Assocs., 32 NY2d 553; Telaro v Telaro, 25 NY2d 433.) III. Any ambiguity should be resolved against appellant, who drew the contract and who did not support its motion with any evidence of intent. (Atterbury v Bank of Washington Hgts., 241 NY 231; Atlantic Richfield Co. v Interstate Oil Transp. Co., 784 F2d 106.) IV. By failing to argue question No. 2 of its "questions presented”, appellant has waived and abandoned that issue. (Matter of Smith, 91 AD2d 789; Lamphear v State of New York, 91 AD2d 791; Peluso v Rochester Gen. Hosp., 64 AD2d 1013; Matter of Pessano, 269 App Div 337, 296 NY 564.)
   OPINION OF THE COURT

Simons, J.

This action is based upon a contract between plaintiff, Hooper Associates, Ltd., and defendant, AGS Computers, Inc., in which Hooper agreed to purchase computer equipment and services from defendant. Plaintiff successfully sued for breach of the contract and the question submitted to us, by leave of the Appellate Division, is whether the contract’s indemnity clause entitles plaintiff to recover counsel fees incurred in prosecuting the action against defendant also. We hold that it does not.

In 1977 the parties entered into a written contract whereby defendant agreed to design, install and supply a computer for plaintiff. Three years later plaintiff commenced an action for compensatory and punitive damages claiming breach of contract, breach of express and implied warranties and fraud in the inducement. Plaintiff also asserted an indemnity claim for attorney’s fees pursuant to article 9 (A) of the contract. At trial the parties agreed to sever the claim for attorney’s fees, reserving it for decision by the court after the jury had decided the remaining causes of action.

The jury held for plaintiff but found that it had suffered no damages. On plaintiff’s postverdict motion, Supreme Court awarded nominal damages of $1 plus costs on each of the three causes of action. Defendant then moved for summary judgment dismissing plaintiff’s claim for attorney’s fees. Supreme Court denied the motion and, on searching the record, granted summary judgment to plaintiff. The court found that the contract between the parties was "clear and unambiguous in its terms * * * in providing for indemnification of all claims, including reasonable attorney’s fees”. Consequently, the court found defendant’s contention that article 9 (A) related only to the defense of a third-party claim against plaintiff to be without merit.

The Appellate Division affirmed, without opinion, with Justice Milonas concurring separately on constraint of Breed, Abbott & Morgan v Hulko (139 AD2d 71), a decision subsequently affirmed by this court (see, 74 NY2d 686). It granted defendant leave to appeal on the following certified question: "Was the order of the Supreme Court, as affirmed by this Court, properly made?”

Under the general rule, attorney’s fees are incidents of litigation and a prevailing party may not collect them from the loser unless an award is authorized by agreement between the parties, statute or court rule (see, Matter of A. G. Ship Maintenance Corp. v Lezak, 69 NY2d 1, 5; Mighty Midgets v Centennial Ins. Co., 47 NY2d 12, 21-22; City of Buffalo v Clement Co., 28 NY2d 241, 262-263). It is not uncommon, however, for parties to a contract to include a promise by one party to hold the other harmless for a particular loss or damage and counsel fees are but another form of damage which may be indemnified in this way (see, e.g., Breed, Abbott & Morgan v Hulko, supra; Brooklyn Union Gas Co. v Shields Detective Bur., 121 AD2d 587, 590, appeal denied 69 NY2d 610; Rosano’s Farm Store v International Collection Serv., 115 AD2d 195, 196; Lavorato v Bethlehem Steel Corp., 91 AD2d 1184, 1185; see also, Zissu v Bear, Stearns & Co., 805 F2d 75, 79-80; Atlantic Richfield Co. v Interstate Oil Transp. Co., 784 F2d 106, 115, cert denied 479 US 817). In the contract before us the parties provided that defendant must indemnify plaintiff for "reasonable counsel fees”. They failed to define the scope of defendant’s promise, however, and thus, we must interpret the language and determine whether it is limited to attorney’s fees incurred by plaintiff in actions involving third parties or also includes those incurred in prosecuting a suit against defendant for claims under the contract.

Words in a contract are to be construed to achieve the apparent purpose of the parties. Although the words might "seem to admit of a larger sense, yet they should be restrained to the particular occasion and to the particular object which the parties had in view” (Robertson v Ongley Elec. Co., 146 NY 20, 23). This is particularly true with indemnity contracts. When a party is under no legal duty to indemnify, a contract assuming that obligation must be strictly construed to avoid reading into it a duty which the parties did not intend to be assumed (Levine v Shell Oil Co., 28 NY2d 205, 211; Kurek v Port Chester Horn. Auth., 18 NY2d 450, 456). The promise should not be found unless it can be clearly implied from the language and purpose of the entire agreement and the surrounding facts and circumstances (Niagara Frontier Transp. Auth. v Tri-Delta Constr. Corp., 107 AD2d 450, 452, affd for reasons stated in opn of Justice M. Dolores Denman 65 NY2d 1038; Margolin v New York Life Ins. Co., 32 NY2d 149, 153; Inman v Binghamton Hous. Auth., 3 NY2d 137, 147). Inasmuch as a promise by one party to a contract to indemnify the other for attorney’s fees incurred in litigation between them is contrary to the well-understood rule that parties are responsible for their own attorney’s fees, the court should not infer a party’s intention to waive the benefit of the rule unless the intention to do so is unmistakably clear from the language of the promise (see, Tokyo Tanker Co. v Etra Shipping Corp., 142 AD2d 377, 378; Carr v First Fed. Sav. & Loan Assn., 132 AD2d 513, 514).

The clause in this agreement does not contain language clearly permitting plaintiff to recover from defendant the attorney’s fees incurred in a suit against defendant. On the contrary, it is typical of those which contemplate reimbursement when the indemnitee is required to pay damages on a third-party claim. It obligates defendant to "indemnify and hold harmless [plaintiff] * * * from any and all claims, damages, liabilities, costs and expenses, including reasonable counsel fees” arising out of breach of warranty claims, the performance of any service to be performed, the installation, operation and maintenance of the computer system, infringement of patents, copyrights or trademarks and the like. All these subjects are susceptible to third-party claims for failures in the installation or operation of the system. None are exclusively or unequivocally referable to claims between the parties themselves or support an inference that defendant promised to indemnify plaintiff for counsel fees in an action on the contract.

Our interpretation also is supported by other provisions in the contract which unmistakably relate to third-party claims. Thus, article 9 (D) requires plaintiff to "promptly notify” defendant of "any claim or litigation to which the indemnity set forth in Sub-Paragraph 9 (A) shall apply” and it further provides that defendant "may assume the defense of any such claim or litigation with counsel satisfactory to [plaintiff].” To extend the indemnification clause to require defendant to reimburse plaintiff for attorney’s fees in the breach of contract action against defendant would render these provisions meaningless because the requirement of notice and assumption of the defense has no logical application to a suit between the parties. Construing the indemnification clause as pertaining only to third-party suits affords a fair meaning to all of the language employed by the parties in the contract and leaves no provision without force and effect (see, Corhill Corp. v S. D. Plants, 9 NY2d 595, 599).

Plaintiff relies on our decision in Breed, Abbott & Morgan v Hulko (74 NY2d 686, supra), asserting that the Appellate Division there adopted a rule liberalizing the interpretation of indemnification clauses when a party seeks indemnification of legal expenses incurred in successfully asserting its rights under a contract (139 AD2d 71, 74-75, supra). It contends that our affirmance necessarily embraced this analysis.

In Breed, Abbott defendant Hulko contracted to purchase a home from another. Plaintiff acted as escrow agent for the parties, holding Hulko’s down payment for delivery to the seller if he defaulted. The contract contained an indemnification agreement which provided that Breed, Abbott would not be liable to either party to the sale " 'for any act or omission except for bad faith or gross negligence’ ” and that it would be indemnified and held " 'harmless from any claims, damages, losses or expenses arising in connection [^herewith.’ ” (Breed, Abbott & Morgan v Hulko, 139 AD2d 71, 72, supra.) Hulko defaulted on the contract of sale and Breed, Abbott delivered the down payment to the sellers. Hulko then sued Breed, Abbott, claiming that its release to the sellers of the escrow down payment was wrongful. Breed, Abbott prevailed and subsequently commenced an action to recover the legal expenses it incurred in defending against Hulko’s claim. The Appellate Division reversed Supreme Court’s dismissal of the complaint and we affirmed, finding that defendant Hulko had agreed to indemnify plaintiff for the legal expenses it incurred in resisting his claims (74 NY2d 686, 687, supra).

Our affirmance in Breed, Abbott did not signal any departure from settled rules. We affirmed the Appellate Division’s decision on the narrow ground that the intent of the parties was manifest: if the promise to indemnify Breed, Abbott did not extend to " 'legal expenses incurred in defending against an action by one of the parties alleging misconduct by the escrowee which resulted in a determination in favor of the escrowee’ ”, it was " 'difficult, if not impossible, to ascertain for what it was that the parties had agreed to indemnify the escrowee.’ ” (74 NY2d, at 687, quoting from 139 AD2d, at 73.)

In this case, however, the potential existed for third-party actions seeking lost profits, personal injury or property damages from plaintiff due to a malfunction of the computer resulting from defendant’s improper installation or design. The indemnity clause clearly covers those circumstances and permitted plaintiff to seek indemnity from defendant for the counsel fees incurred in defending such claims.

Accordingly, the order of the Appellate Division should be reversed, with costs, defendant’s motion for summary judgment granted and the certified question answered in the negative.

Chief Judge Wachtler and Judges Kaye, Alexander, Titone, Hancock, Jr., and Bellacosa concur.

Order reversed, etc.

      . Article 9 (A) provides:
      ”9. INDEMNITY
      "(A) AGS shall at all times indemnify and hold harmless HLTD [Hooper], its successors and assigns and any of its officers, directors, employees representatives, and/or agents, and their heirs, executors, administrators, successors and assigns or each of them against and from any and all claims, damages, liabilities, costs and expenses, including reasonable counsel fees arising out of:
      "(i) Any breach by AGS of any express or implied warranty hereunder and any express representation or provision hereof;
      "(ii) The performance of any service to be performed hereunder;
      "(iii) Infringement of the patent rights, copyright or trademark (of which AGS is not the patentee or assignee or has not the lawful right to use or transfer same) of any person, firm corporation as a result of any use by HLTD, its successors and assigns and any of its officers, directors, employees, representatives, and/or agents of the system hereunder;
      "(iv) The installation, operation, and maintenance of the system; or
      "(v) Mechanic’s liens for labor and materials” (emphasis supplied).

      . One method of providing for attorney’s fees in actions between the parties is to provide for payment as a form of liquidated damages. Such fees are enforceable if they are not unconscionable (see, Equitable Lbr. Corp. v IPA Land Dev. Corp., 38 NY2d 516).


author: Bellacosa, J.

text:
    In the Matter of State of New York, by Robert Abrams, as Attorney-General of the State of New York, Respondent, v Ford Motor Company, Appellant.
    Argued October 12, 1989;
    decided November 28, 1989

      POINTS OF COUNSEL

      Jerome G. Shapiro, Philip A. Lacovara, William R. Stein and Ross Lipman for appellant.
    I. General Business Law § 198-a (b) permits manufacturers to impose deductible charges as a condition precedent to provision of warranty service. II. The court below improperly awarded restitution. (Matter of State of New York v Avco Fin. Serv., 50 NY2d 383; State of New York v Princess Prestige Co., 42 NY2d 104; Matter of State of New York v Magley, 105 AD2d 208; Gambar Enters. v Kelly Servs., 69 AD2d 297; Watmet, Inc. v Robinson, 116 AD2d 998; Flaum v Birnbaum, 115 AD2d 1004; Western Regional Off-Track Betting Corp. v Town of Henrietta, 46 AD2d 1010; Town of Stanford v Donnelly, 131 AD2d 465; Picotte Realty v Gallery of Homes, 66 AD2d 978; R & J Bottling Co. v Rosenthal, 40 AD2d 911.) III. General Business Law § 198-a (b) as interpreted by the courts below violates the Commerce Clause of the United States Constitution. (Motor Vehicle Mfrs. Assn. v Abrams, 720 F Supp 284.)

      Robert Abrams, Attorney-General (Thomas G. Conway, O. Peter Sherwood, Peter H. Schiff, Rachel Kretser and Wayne L. Benjamin of counsel), for respondent.
    I. General Business Law § 198-a (b) prohibits an automobile manufacturer from imposing a charge for warranty repairs during the first 18,000 miles or two years of operation of a new motor vehicle. (Eaton v New York City Conciliation & Appeals Bd., 56 NY2d 340; Rankin v Shanker, 23 NY2d 111; Laiosa v Camelot AMC/Jeep, 113 AD2d 145.) II. The court below did not abuse its discretion by awarding restitution to Ford customers who were required to pay the illegal deductible. (Matter of Von Bulow, 63 NY2d 221; Patron v Patron, 40 NY2d 582; Matter of Attorney-General of State of N. Y. v Katz, 55 NY2d 1015; Brady v Ottaway Newspapers, 63 NY2d 1031; Phoenix Mut. Life Ins. Co. v Conway, 11 NY2d 367; Syracuse Sav. Bank v Syracuse, Chenango & N. Y. R. R. Co., 88 NY 110; Hanover Fire Ins. Co. v Tomlinson, 58 NY 215; Pietraroia v New Jersey & Hudson Riv. Ry. & Ferry Co., 197 NY 434; James v Board of Educ., 42 NY2d 357; Rosemont Enters. v Irving, 41 NY2d 829.) III. General Business Law § 198-a (b) does not violate the Commerce Clause. (Motor Vehicle Mfrs. Assn. v Abrams, 720 F Supp 284.)

      Richard J. Davis, Craig M. J. Allely, William H. Crabtree and Charles H. Lockwood, II, for Motor Vehicle Manufacturers Association of the United States, Inc., and another, amici curiae.

    I. General Business Law § 198-a permits automobile manufacturers to impose a deductible charge as a condition precedent to warranty service. (Matter of Allstate Ins. Co. v Libow, 106 AD2d 110, 65 NY2d 807; Finger Lakes Racing Assn. v New York State Racing & Wagering Bd., 45 NY2d 471; People v Dugan, 91 Misc 2d 239.) II. The court below improperly awarded restitution. (Lefkowitz v Bull Inv. Group, 46 AD2d 25, 35 NY2d 647; Matter of Lefkowitz v E. F. G. Baby Prods. Co., 40 AD2d 364; Matter of State of New York v Interstate Tractor Trailer Training, 66 Misc 2d 678; Matter of State of New York v Bevis Indus., 63 Misc 2d 1088; People v Autosure, Inc., 131 Misc 2d 546; Paramount Film Distrib. Corp. v State of New York, 30 NY2d 415; Slater v Gulf, Mobile & Ohio R. R. Co., 307 NY 419; McGrath v Hilding, 41 NY2d 625; Schuler-Haas Elec. Corp. v Wager Constr. Corp., 57 AD2d 707; Gargiulo v Oppenheim, 63 NY2d 843; Schank v Schuchman, 212 NY 352.)
   OPINION OF THE COURT

Bellacosa, J.

New York’s "Lemon Law”, enacted in 1983, represents this State’s comprehensive program to protect consumers purchasing new cars (General Business Law § 198-a [L 1983, ch 444]). Pertinently, it prohibits motor vehicle manufacturers from charging for warranty-covered repairs made during the earlier of the vehicle’s first two years or 18,000 miles (General Business Law § 198-a [b]). We are called upon to determine whether that statute is violated when an automaker requires a new car owner to pay a $100 deductible against the cost of covered warranty repairs. We hold that the deductible charging practice violates the Lemon Law. We also uphold the constitutionality of the statute in this respect and verify the authority of the Appellate Division of the Supreme Court to review and to grant the discretionary remedy of restitution.

Appellant Ford Motor Company issues a two-stage warranty for its new automobiles and light trucks. In its primary stage, the basic warranty covers the entire vehicle (except tires) and is effective for the vehicle’s first year or 12,000 miles, whichever occurs first. Repairs covered by this primary warranty, by its terms, are cost-free to consumers. Solely at issue is the $100 deductible facet of Ford’s extended warranty, which applies for the remainder of the statutory period, i.e., the earlier of the vehicle’s second year or 18,000th mile. The extended warranty reduces the protections of the primary warranty in two ways: coverage is limited to the powertrain and certain other major components, and the first $100 towards the cost of any repair is imposed against the vehicle owner.

Respondent Attorney-General brought a special proceeding under Executive Law §63 (12) seeking to enjoin the automaker from charging the deductible and requesting restitution for those who had already paid it. Supreme Court declared the deductible to be in violation of the express warranty provision of the Lemon Law (General Business Law § 198-a [b]). The Appellate Division upheld the judgment in that respect and also granted the Attorney-General’s petition for restitution and a refund program.

We first address the issue whether Ford may impose a deductible on repairs covered by thé extended warranty during the period governed by General Business Law § 198-a (b). It is undisputed that Ford’s extended warranty is within the purview of the Lemon Law, which defines a warranty as "including any terms or conditions precedent to the enforcement of obligations under that warranty” (General Business Law § 198-a [a] [3]). Ford argues that its $100 charge is a "condition precedent” to the ignition of its extended warranty obligations and is therefore in compliance with New York’s Lemon Law.

Our cardinal function in interpreting a statute should be to " 'attempt to effectuate the intent of the Legislature, and where the statutory language is clear and unambiguous, the court should construe it so as to give effect to the plain meaning of the words used’ ” (Doctors Council v New York City Employees’ Retirement Sys., 71 NY2d 669, 674-675, quoting Patrolmen’s Benevolent Assn. v City of New York, 41 NY2d 205, 208). It is difficult to imagine the disputed $100 deductible being more easily resolved than by the Legislature’s plain expression: When a new motor vehicle does not conform to all express warranties for the earlier of its first two years or 18,000 miles, "[t]he manufacturer * * * shall correct said nonconformity * * * at no charge to the consumer” (General Business Law § 198-a [b] [emphasis added]).

Yet, the automaker would interpose a condition precedent, "an act or event, other than a lapse of time, which must exist or occur before a duty to perform a promised performance arises” (Calamari & Perillo, Contracts § 11-2, at 438 [3d ed]). By its expressly warranting the performance of the power-train and other major components during the extended portion of the statutory period, there arose, however, by operation of the Lemon Law, an unconditional duty by Ford to repair any warranted nonconformities (an apparent euphemism for defect) "at no charge” to the consumer. Even if the deductible can be legally transformed into a condition precedent, it would be in direct contravention of the legislative expression and intent found in the statute itself. Moreover, the automaker’s characterization is not even so described in the terminology of the written extended warranty between the parties. It simply reads: "You will be required to pay the first $100 of the warranty repair charge for each covered visit”.

The Lemon Law’s legislative history further supports the conclusion that warranty-covered repairs must be made free of charge to the owner if the "nonconformity” occurs during the earlier of the vehicle’s first two years or 18,000 miles (see, e.g., Mem of New York City’s Legislative Representative, 1983 McKinney’s Session Laws of NY, at 2554-2555). To accept appellant automaker’s condition precedent theory would drain the statute of a central and significant consumer protection, in effect setting the stage to swallow the rule by allowing automakers to impose other unilateral charges for warranty-covered repairs merely by sticker-labeling them "conditions precedent”.

The important public policy consumer statutory protection at issue here would be contradicted by imposing on it a legal condition precedent. We are obligated to insure faithfulness to the protections afforded by the statute so that our rulings do not add jurisprudential insult to the consumer injury sustained by the purchase of a defective and unsatisfactory product.

On a second rung, Ford attacks the Appellate Division’s order of restitution, objecting to the grant of that relief by that court in the first instance. As appellant frames it, the Appellate Division acted ultra vires because Supreme Court did not abuse its discretion by denying restitution, making that denial conclusive and unalterable. The fundamental fallacy of appellant’s approach is that the Appellate Division of Supreme Court "possesses] coordinate authority” (State of New York v Barone, 74 NY2d 332, 336) with the trial court on all questions of fact and law (NY Const, art VI, §4; see, Merritt Hill Vineyards v Windy Hgts. Vineyard, 61 NY2d 106, 110-111; CPLR 5501 [c]; Broida v Bancroft, 103 AD2d 88, 93 [per Titone, J. P.: "(We) are not limited to determining whether Special Term abused its discretion * * * (and) may exercise discretion independently”]; see also, Project, The Appellate Division of the Supreme Court of New York: An Empirical Study of its Powers and Functions as an Intermediate Court, 47 Fordham L Rev 929, 930).

To bolster its unorthodox premise that de novo relief in the Appellate Division requires a finding of abuse of discretion in the Supreme Court as a kind of condition precedent to the exercise of the Appellate Division’s plenary review jurisdiction, Ford adverts to this being an Executive Law § 63 (12) action. There is no support and no reason for exempting proceedings under the Executive Law from the ordinary jurisdictional purview of this State’s principal intermediate appellate court. Executive Law § 63 (12) is the procedural route by which the Attorney-General may apply to Supreme Court for an order enjoining repeated illegal or fraudulent acts. The statute expressly provides that such an injunction, if granted, may also direct restitution. Appellant should take little solace from the truism that the application for, or award of, restitutionary relief is not mandatory, because neither is there anything in the particular statute reposing an exclusive and nonreviewable discretionary choice in the nisi prius court. Without question, "[a]n application by the Attorney-General for remedial orders under subdivision 12 of section 63 is addressed to the sound judicial discretion of the court” (State of New York v Princess Prestige Co., 42 NY2d 104, 108), but once that court makes its ruling, it is likewise an unassailable proposition that the initial adjudication is reviewable in a plenary fashion by the appellate level of the Supreme Court itself. We recognize a limitation in review power at our level, of course, where we are powerless "absent an exercise of discretion * * * so egregious that it can be characterized as an abuse as a matter of law” (Majauskas v Majauskas, 61 NY2d 481, 493-494, citing Patron v Patron, 40 NY2d 582). But the Appellate Division’s discretionary grant of restitution for consumers who had paid the forbidden deductible was not so encumbered and cannot be said to be beyond its traditional and customary powers.

The third issue advanced by appellant — the constitutionality of the Lemon Law in respect to the deductible at issue— is complicated by a threshold procedural concern. In deciding that appellant’s constitutional argument was not properly before it, the Appellate Division engaged in a technical analysis of the interplay of the primary and extended warranties. As it turns out, that approach is irrelevant to the preliminary question as to whether the constitutional question in the particular aspect at issue in this case remains in the case. Close but careful examination manifests the constancy from the onset in this litigation of the constitutional challenge to the statutory prohibition of a $100 deductible. That being so, we should resolve it as part of the appeal before us on our grant of the motion for leave to appeal.

The governing propositions may be briefly stated. A State statute regulating commercial activity is burdened by constitutional limitations as to its effects on interstate commerce. Congress has reserved to it the "[p]ower * * * [t]o regulate Commerce * * * among the several States” (US Const, art I, § 8, cl 3). Thus, if a State statute "directly regulates or discriminates against interstate commerce, or when its effect is to favor in-state interests over out-of-state interests”, a violation of the Commerce Clause occurs (Brown-Forman Distillers v New York Liq. Auth., 476 US 573, 579). The United States Supreme Court further instructs, however, that when "a statute has only indirect effects on interstate commerce and regulates evenhandedly, we have examined whether the State’s interest is legitimate and whether the burden on interstate commerce clearly exceeds the local benefits” (id.).

The question is whether the Commerce Clause has been violated only with respect to the charging of a deductible for a warranty-covered repair during the period covered by General Business Law § 198-a (b). We conclude it has not been inasmuch as there is no attempt at direct regulation, no discriminatory effect and no in-State favoritism by the "at no charge” requirement as limited to vehicles sold and registered in New York State (General Business Law § 198-a [a] [2]; see, Motor Vehicle Mfrs. Assn. v Abrams, 720 F Supp 284 [SD NY, Aug. 16, 1989, Sand, J.] [upholding the constitutionality of the Lemon Law against a Commerce Clause challenge]).

Also, balancing the State’s interest in the regulation against the burden it places on interstate commerce starts with the proposition that the express warranties accompanying new motor vehicles are surely contracts of adhesion. The terms are not negotiable and a purchaser is often left with the non-choice — "take it or leave it” — because it is virtually the same for all vehicles and all automakers. The "at no charge to the consumer” language of the New York Lemon Law credibly and understandably assures purchasers that a manufacturer’s express warranty will not be nullified by "the small print”. Weighed against this interest is Ford’s burden of fully reimbursing warranty-covered repairs on vehicles sold and registered in New York. In this computerized age, the "burden” of determining who is entitled to a full refund and who must pay a deductible cannot be anything but incidental, in the constitutional Commerce Clause sense.

In sum, we hold that appellant’s imposition against consumers of a $100 deductible for repairs covered by the extended warranty violates section 198-a (b) of the General Business Law, which does not unconstitutionally burden interstate commerce. Also, the action pursuant to Executive Law § 63 (12) is not exempt from the general and plenary jurisdiction of the Appellate Division of the Supreme Court to impose a discretionary restitutionary remedy.

Accordingly, the judgment appealed from and the order of the Appellate Division brought up for review should be affirmed, with costs.

Chief Judge Wachtler and Judges Simons, Kaye, Alexander and Titone concur; Judge Hancock, Jr., taking no part.

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


text:
    In the Matter of Tze Chun Liao, Doing Business as Money Express Check Cashing Service, Appellant, v New York State Banking Department, Respondent.
    Argued October 12, 1989;
    decided November 28, 1989
    POINTS OF COUNSEL

      Jerald D. Kreppel for appellant.
    I. Destructive competition is not a valid consideration or factor in determining whether to grant a check casher’s license. (Boreali v Axelrod, 71 NY2d 1; Two Assocs. v Brown, 127 AD2d 173; Matter of Campagna v Shaffer, 73 NY2d 237; Farmland Dairies v Commissioner of N. Y. State Dept. of Agric. & Mkts., 650 F Supp 939; Hegeman Farms Corp. v Baldwin, 293 US 163; Matter of Nostrand Check Cashing Co. v Clark, 27 Misc 2d 799, 13 AD2d 922; Checker Motors Corp. v Chrysler Corp., 283 F Supp 876, 405 F2d 319, 394 US 999.) II. In any event, the Banking Department’s "destructive competition rule” is invalid since it was not filed with the Secretary of State and was not published in the Official Compilation of Codes, Rules, and Regulations of the State of New York. (People v Cull, 10 NY2d 123.) III. In any event, it was not proven that granting a license to Liao would result in destructive competition.

      Robert Abrams, Attorney-General (Charles F. Sanders, O. Peter Sherwood, Harvey M. Berman and Judith T. Kramer of counsel), for respondent.
    I. The Department rationally denied Money Express’ first application for a check casher’s license. (Matter of Purdy v Kreisberg, 47 NY2d 354; 300 Gramatan Ave. Assocs. v State Div. of Human Rights, 45 NY2d 176; Matter of Pell v Board of Educ., 34 NY2d 222; Matter of Sullivan County Harness Racing Assn. v Glasser, 30 NY2d 269; Matter of Howard v Wyman, 28 NY2d 434; J. W. J. Check Cashing Corp. v Siebert, 91 AD2d 1034; Matter of Nostrand Check Cashing Co. v Clark, 27 Misc 2d 799, 13 AD2d 922.) II. Under Banking Law § 369, the Department may consider distance between locations in determining whether the application for a license will promote the convenience and advantage of the area. (Matter of Nicholas v Kahn, 47 NY2d 24; Boreali v Axelrod, 71 NY2d 1; Martin v State Liq. Auth., 15 NY2d 707; Matter of Memorial Hosp. v Axelrod, 68 NY2d 958; Matter of Howard v Wyman, 28 NY2d 434; Matter of State Bank v Bell, 197 Misc 97, 277 App Div 924; Matter of Hansen v State Liq. Auth., 77 AD2d 703, 53 NY2d 693; Matter of One St. Mark’s Place Wines & Liqs. v New York State Liq. Auth., 82 AD2d 734; Hempstead Bank v Smith, 540 F2d 57; American Consumer Indus. v City of New York, 28 AD2d 38.) III. Petitioner’s allegation that the Department improperly failed to file a rule with the Secretary of State should be rejected. (County of Nassau v Cuomo, 69 NY2d 737; Matter of Gregory v Board of Appeals, 57 NY2d 865; Matter of Roman Catholic Diocese v New York State Dept. of Health, 66 NY2d 948; Matter of Krauskopf v Perales, 139 AD2d 147.)

      Gerald Goldman for The Check Cashers Association of New York, Inc., amicus curiae.

    I. The Superintendent of Banking acted within her statutory authority in denying petitioner’s application. (Matter of Pell v Board of Educ., 34 NY2d 222.) II. Arguendo even if the destructive competition was a factor in considering the Superintendent’s determination, it was a valid consideration. (Hempstead Bank v Smith, 540 F2d 57; Matter of Howard v Wyman, 28 NY2d 434; Matter of Ward v Nyquist, 43 NY2d 57; Matter of Tommy & Tina, Inc. v Department of Consumer Affairs, 95 AD2d 724; RKO-Keith-Orpheum Theatres v City of New York, 308 NY 493; Matter of Foscarinis [Corsi], 284 App Div 476; Matter of Public Serv. Commn. v Peyton Automotive Transp. Serv., 16 Misc 2d 1007.) III. The Donnelly Act does not apply in this case. IV. Even if the Department had considered destructive competition in denying petitioner’s application, there was no violation of the State Constitution, the Executive Law, or the State Administrative Procedure Act. (Matter of Roman Catholic Diocese v New York State Dept. of Health, 109 AD2d 140, 66 NY2d 948; Matter of Stuyvesant Polyclinic v Axelrod, 117 AD2d 99.)
   OPINION OF THE COURT

Bellacosa, J.

Appellant Tze Chun Liao seeks to annul a determination of the New York State Banking Department denying him a check casher license at his stationery store location in The Bronx. The Department used "destructive competition” as the ground for denial, having almost simultaneously considered and licensed a satellite for a city-wide check cashing corporation in close proximity to Mr. Liao’s desired enterprise. The Legislature has not authorized the Superintendent of Banks to use "destructive competition” as a criterion for the issuance or denial of check casher licenses. Nor is there any duly promulgated Banking Department regulation in that respect. We thus conclude that the Department’s licensing determination was not lawfully founded and that its 1985 policy letter purporting to enunciate the "destructive competition” factor fails to shore up the statutory vacuum. The denial of the license should be annulled, so we reverse the order of the Appellate Division.

Due to dramatic lessening of personal consumer services at traditional banking institutions, licensed check cashing outlets have emerged as significant servicing businesses, especially in urban neighborhoods throughout New York City. Residents of these areas have been left with little choice but to resort to these multipurposed commercial shops for their primary monetary transactions, such as cashing their paychecks, income maintenance checks, food stamp checks; for payment of utility bills; and for purchasing money orders. In exchange for these services, a licensed check casher is authorized to charge a fee (Banking Law § 372) — .9 of 1% of the amount of the check or 50 cents, whichever is greater (3 NYCRR 400.13). Pursuant to article IX-A of the Banking Law, the Department is authorized to license check cashers and to regulate and supervise the check cashing industry (Banking Law § 367 [1]). Banking Law § 369 (1) sets forth the requirements in pertinent part: "1. If the superintendent shall find that the financial responsibility, experience, character, and general fitness of the applicant * * * are such as to command the confidence of the community and to warrant belief that the business will be operated honestly, fairly, and efficiently * * * and if the superintendent shall find that the granting of such application will promote the convenience and advantage of the area in which such business is to be conducted, and if the superintendent shall find that the applicant has available for the operation of * * * each location * * * liquid assets of at least ten thousand dollars, he shall thereupon execute a license * * * to permit the cashing of checks, drafts and money orders in accordance with the provisions of this article” (emphasis added). Duly promulgated regulations also purport to implement the legislative standards (see, 3 NYCRR 400 et seq.; Banking Law § 369 [1]).

Neither the statute nor the regulatory standards mention the "destructive competition” factor. Rather, it sprang forth in 1985 for the first time fully grown as part of the Department’s license approval process, after consultation by Department officials with banking industry representatives. It is found "formally” only in a letter-statement of the Banking Superintendent, dated December 16,1985, providing:

"1. Distance between competing check casher locations will no longer, in and of itself, be a prime factor in considering whether or not to approve an application.

"2. The standards employed in licensing decisions will conform to statutory requirements including financial responsibility, experience, character and fitness of the applicant; assurance that the business will be operated honestly, fairly and efficiently within the purposes set forth in the statute; and that the application will promote the convenience and advantage of the public in the service area.

"3. The Banking Department, in deciding upon an application, will include in its determination an evaluation of any potential destructive competition” (see, Letter of Superintendent of Banks to Chief Executive Officer of State of NY Banking Dept, rec on app, at 74 [emphasis added]; Affidavit of Deputy Superintendent of Banks, rec on app, at 60).

In August 1986, Mr. Liao, the owner of a small stationery store in The Bronx, applied for his first check casher license. Nine days earlier, Home Check Cashing Corporation (Home Check), the holder of 95 check casher licenses throughout New York City, also had filed an application for a license for a location across the street from the Liao store. Both Mr. Liao and Home Check were afforded the opportunity to object to the other’s application by filing a protest with the Banking Department. Home Check did so based on the close proximity of Mr. Liao’s location to Home Check’s proposed location. That, of course, was no longer a "prime factor” according to subdivision (1) of the Superintendent’s December 16, 1985 letter quoted above. Home Check also urged the Department, however, to consider the potential "destructive competition” that would result to Home Check, presuming, it would seem, that its license approval at that location was a foregone conclusion. Home Check argued it would suffer an estimated 50% loss in potential customers. The Banking Department conducted an investigation into the background of both applicants and, in December, Mr. Liao’s application was denied and Home Check’s application was granted.

The Department’s notification to Mr. Liao that his application had been denied stated: "[W]e have made a decision to grant a license to the competing applicant who submitted an application for a location only 80 feet from your site. * * * Please be aware that this decision in no way precludes you from applying for a license at another location” (see, letter dated Dec. 1, 1986, rec on app, at 73). The Banking Department’s investigative report reveals the examiner rested his recommendation to deny in part on the fact that Home Check’s application for a location across the street had been approved (see, Mem dated Nov. 18, 1986, rec on app, at 148-151). Throughout, the Banking Department has urged that "destructive competition” is a lawful factor and that it was properly applied in this licensing case.

Mr. Liao turned to Supreme Court, which dismissed his petition and his appeal was rejected by the Appellate Division, which affirmed, without opinion. We granted petitioner leave to appeal and now reverse and annul the Banking Department’s determination.

Administrative agencies, as creatures of the Legislature within the executive branch, can act only to implement their charter as it is written and as given to them (Finger Lakes Racing Assn. v New York State Racing & Wagering Bd., 45 NY2d 471, 480). An agency cannot create rules, through its own interstitial declaration, that were not contemplated or authorized by the Legislature and thus, in effect, empower themselves to rewrite or add substantially to the administrative charter itself (Matter of Campagna v Shaffer, 73 NY2d 237, 243; Matter of Consolidated Edison Co. v Department of Envtl. Conservation, 71 NY2d 186, 191-192; Boreali v Axelrod, 71 NY2d 1, 9).

In section 369 of the Banking Law, the Legislature has explicitly enumerated the factors to be considered by the Superintendent for check casher license qualification: "financial responsibility, experience, character, and general fitness of the applicant”; promotion of "the convenience and advantage of the area”; and liquid assets of $10,000 for each check cashing location. There is not a word about "destructive competition”, a term of art and a concept of very specific and significant implications. Surely, had the Legislature intended "destructive competition” — a potent rubric used elsewhere in administrative agency lexicons — as a ground for denial of a check casher license, they knew how to engrave it in statutory form (see, Patrolmen’s Benevolent Assn. v City of New York, 41 NY2d 205, 209; McKinney’s Cons Laws of NY, Book 1, Statutes § 240).

The Department’s case is particularly vulnerable in view of the Legislature’s express use in another section of the Banking Law that "all banking organizations shall be supervised and regulated through the banking department in such manner as * * * to eliminate unsound and destructive competition among such banking organizations” (Banking Law § 10 [emphasis added]). We do not have the validity of that provision before us, so, of course, we do not pass on it in any way.

Check casher licensees, however, are not within the statutory definition of "banking organizations” (Banking Law §2 [11]), being defined elsewhere and separately in article IX-A of the Banking Law and under a subchapter entitled "Non-Banking Organizations” (see, 3 NYCRR subchapter B). Thus, the explicitness of the Legislature’s inclusion of "destructive competition” in a section of the Banking Law wholly inapplicable to check cashing institutions manifests the legislative choice to exclude that nettlesome concept from the check casher licensing process.

While we decide no more in this case than that the "destructive competition” concept is not available in the check casher regulatory scheme, it is not without significance that the same economic bunting found in former section 258-c of the Agriculture and Markets Law was repealed in 1987 (L 1987, ch 540, §9 [dealing with milk distribution licensing]). The long and bitter public debate with respect to the legislative authorization for the use of that criterion in a different agency regulatory scheme culminated in this coup de grace upon the signing of the repealer: "The old Depression-era concept of 'destructive competition’ is dead. * * * We move confidently into a new era of 'healthy competition’ that will benefit * * * consumers” (see, Governor’s statement on signing the repealer, July 7,1987, Bill Jacket, L 1987, ch 540).

By legislative policy choice then, consumers should have broader access to cash their weekly paychecks without being subjected to a more tightened marketplace in the grip of already powerful suppliers benefited by the "destructive competition” standard imposed as a governmental regulatory mechanism. It would surely be an ironic twist if the economically superior holder of 95 check casher licenses, vying against the supplicant for his first such license, could use the State’s regulatory process to enforce and assure its own market advantage and domination by getting the State to block its "destructive” competitor.

Finally in this regard, the Banking Department’s argument that "destructive competition” should be viewed as a concept synonymous with or subsumed within the legislative template "to promote the convenience and advantage of the area” crumbles under the applicable legal analysis and legislative history.

The alternative argument advanced by the Department, that we should defer to its expertise, even assuming a valid policy promulgation, in the interpretation and administration of its statute barely requires mention (cf., Matter of Howard v Wyman, 28 NY2d 434, 438). Plainly, "the question [here] is one of pure statutory reading and analysis, dependent only on accurate apprehension of legislative intent” (Kurcsics v Merchants Mut. Ins. Co., 49 NY2d 451, 459). If the agency’s implementation of its powers violates the clear enablement of the statute, we need accord it no weight (id., at 459); indeed, our exclusive judicial reviewing duty in such instances requires us to act autonomously.

Accordingly, the order of the Appellate Division should be reversed, with costs, the Department’s cross motion to dismiss the petition denied and the determination denying the check casher license annulled; the matter should be remitted to Supreme Court with directions to remand to the Department of Banking for further proceedings on the license application.

Chief Judge Wachtler and Judges Simons, Kaye, Alexander, Titone and Hancock, Jr., concur.

Order reversed, etc.