author: Jones, J.

text:
    The People of the State of New York ex rel. Edward Dowdy by Donald H. Zuckerman, Appellant, v Harold J. Smith, as Superintendent of Attica Correctional Facility, et al., Respondents.
    Argued October 18, 1979;
    decided November 27, 1979

      POINTS OF COUNSEL

      Donald H. Zuckerman and William E. Hellerstein for appellant.
    Respondent Board of Parole was precluded by the collateral estoppel doctrine, embodied in the Federal and New York State constitutional guarantee against double jeopardy, from revoking appellant’s parole for possession and sale of narcotics following his acquittal, unquestionably on entrapment grounds, of criminal charges arising from the very same acts. (Ashe v Swenson, 397 US 436; Sealfon v United States, 332 US 575; Humphries v Wainwright, 584 F2d 702; Schwartz v Public Administrator of County of Bronx, 24 NY2d 65; People v Isaacson, 44 NY2d 511; Standlee v Rhay, 557 F2d 1303; One Lot Emerald Cut Stones v United States, 409 US 232; People v Rasero, 62 AD2d 845; Watts v Swiss Bank Corp., 27 NY2d 270; Matter of Finn’s Liq. Shop v State Liq. Auth., 24 NY2d 647.)

      Robert Abrams, Attorney-General (Frederick R. Walsh and Shirley Adelson Siegel of counsel), for respondents.
    I. Appellant’s acquittal in the criminal proceeding did not act as a collateral estoppel barring subsequent parole revocation on the same underlying charge as there was no "identity of issues” between the criminal prosecution and the parole revocation hearing. (Schwartz v Public Administrator of County of Bronx, 24 NY2d 65; Neadeland v Commissioner of Internal Revenue, 424 F2d 639, 400 US 827; Commissioner v Sunnen, 333 US 591; People ex rel. West v Vincent, 46 AD2d 782; Matter of Mummiami v New York State Bd. of Parole, 5 AD2d 923; Morrissey v Brewer, 408 US 471; People ex rel. Menechino v Warden, Green Haven State Prison, 27 NY2d 376; People ex rel. Maggio v Casscles, 28 NY2d 415; Ashe v Swenson, 397 US 436; Standlee v Rhay, 557 F2d 1303.) II. Appellant’s acquittal at the criminal trial did not conclusively establish that his possession and sale of heroin were a result of entrapment so as to bar parole revocation. There was a general verdict by the jury; the Parole Board proved the violation; and appellant failed to show evidence of mitigation or collateral estoppel. (People ex rel. Warren v Mancusi, 40 AD2d 279; People v Laietta, 30 NY2d 68; People ex rel. Natoli v Lewis, 287 NY 478; Scales v Maxwell, 52 AD2d 719; Matter of Perry v Blair, 64 AD2d 870.)
   OPINION OF THE COURT

Jones, J.

A prior acquittal based on the defense of entrapment in a criminal proceeding collaterally estops the Board of Parole from revoking parole on the basis of the transactions proved and admitted in the criminal action.

Relator, a multiple felony offender, was on parole under concurrent sentences for robbery in the first degree and felonious possession of a weapon. On May 5, 1977 he was arrested on two indictments charging him with first degree criminal sale of a controlled substance, first and third degree criminal possession of a controlled substance and first degree conspiracy. On the same day he was served with a parole violation notice based on the same offenses, alleging that, by both possessing and selling heroin, he had violated general parole rule 12 which, in March, 1975, when relator was released on parole, provided: "I will not use, possess, or purchase any illegal drugs or use or possess those that have been unlawfully obtained.” (Formerly 7 NYCRR 1915.10, repeal filed Jan. 9, 1979.) After a jury trial in which relator interposed the affirmative defense of entrapment, he was acquitted on all counts. At the subsequent parole violation hearing relator, relying on the doctrine of collateral estoppel, contended that his acquittal in the criminal action constituted a complete defense to the charge of parole violation. The Parole Board rejected this contention and sustained both violations.

Relator then petitioned for a writ of habeas corpus. Supreme Court granted the writ, upholding relator’s defense under the doctrine of collateral estoppel. The Appellate Division reversed, holding the doctrine inapplicable. We now reverse and reinstate the judgment of Supreme Court.

To consider the application of the doctrine of collateral estoppel in this case a review of the proceedings below is necessary to an understanding of the procedural posture in which the case reaches us. At the parole revocation hearing the defense of collateral estoppel was advanced before the start of the evidentiary phase of the hearing as a "jurisdictional” bar to revocation of parole. The respective contentions of the relator and the Parole Division were pressed with some vigor. The arguments proceeded on the implicit assumption that the acquittal in the criminal action had indeed been in consequence of a jury determination that relator had established the affirmative defense of entrapment. At no point did the Parole Division contend or the Parole Board suggest that the acquittal was ambiguous or might have been based on a failure of the People to meet their burden of proof rather than on the success of relator in proving his affirmative defense. The Parole Board rejected the "jurisdictional” defense based on the doctrine of collateral estoppel in the following ruling: "the fact that there was a dismissal following a jury trial will not be treated as a bar to the statutory revocation proceedings in New York State because there is no legal precedent for such.”

The board and counsel then proceeded to the evidentiary stage of the hearing. The Parole Division introduced the testimony of the undercover police officer and that of relator on the criminal trial. Counsel for relator stood on his "jurisdictional” position based on collateral estoppel and offered no evidence. As indicated, the board sustained the violations and stated: "No evidence was presented to support the defense of entrapment, and entrapment was therefore not considered.” There is nothing to suggest that the decision of the Board of Parole did not proceed on the implicit assumption that the acquittal in the criminal action was based on the affirmative defense of entrapment; the board rather held that it would not recognize a defense based on such an acquittal in the absence of applicable precedent in New York State.

The handling of the case by Supreme Court on the petition for the writ of habeas corpus confirmed this analysis. That court, after reciting the facts of relator’s indictment and the finding of not guilty on all counts, explicitly stated, "It is agreed that the acquittal was the result of the affirmative defense of entrapment”, and concluded that such acquittal constituted a defense to parole revocation under the doctrine of collateral estoppel. Nowhere does the Attorney-General as counsel for respondents now disavow that agreement or press the contention in our court that the acquittal might reflect only a failure of the People to have met their burden of proof beyond a reasonable doubt in the criminal trial.

Accordingly, for the purposes of the disposition of the present appeal we take it as established that the acquittal in the criminal action did indeed constitute a determination that relator had proved the affirmative defense of entrapment by a preponderance of the evidence (Penal Law, § 25.00, subd 2; § 40.05).

We turn then to a brief consideration of the doctrine of collateral estoppel. That the doctrine, an aspect of the broader doctrine of res judicata, is applicable to criminal cases is not disputed (see Matter of McGrath v Gold, 36 NY2d 406, 411; cf. Ashe v Swenson, 397 US 436, 443). Both courts below agreed that, if the prerequisites to its invocation were met, the doctrine would be applicable to parole revocation proceedings. Several questions with respect to these prerequisites must be resolved, however, before it may be concluded that the doctrine is applicable to this case.

As to the identity of parties we encounter no difficulty in concluding, as did Supreme Court and as was not questioned by the Appellate Division, that for present purposes the People as prosecutors in the criminal action stood in sufficient relationship with the Division of Parole in the parole proceeding to meet the requirements of the doctrine in this respect. (Cf. Sunshine Coal Co. v Adkins, 310 US 381, 402-403; Matter of Finn’s Liq. Shop v State Liq. Auth., 24 NY2d 647, 662.)

With respect to identity of issues, as stated above the criminal acquittal in this case constituted a conclusive finding that relator’s conduct was induced by entrapment. The fact that the objectives of the criminal prosecution and of the parole revocation hearing may be differentiated — the one described as punitive and the other as remedial (Gagnon v Scarpelli, 411 US 778, 783-784) — is irrelevant for the purpose of application of the doctrine of collateral estoppel in this case. Our resolution of this appeal is not predicated on an application of relator’s constitutional protection against double jeopardy — as to which a punitive nature of the second proceeding against him would be crucial (Helvering v Mitchell, 303 US 391, 399); we are here applying the substantive rule of collateral estoppel which springs from res judicata principles, by which a determination in a prior criminal prosecution of a question necessarily involved in a subsequent proceeding may be conclusive, even though the second proceeding seeks some objective which is other than punitive (One Lot Emerald Cut Stones v United States, 409 US 232, 234-23G). The situation may perhaps be best understood as one of "issue preclusion” (Matter of American Ins. Co. [.Mes-singer — Aetna Cas. & Sur. Co.], 43 NY2d 184, 189, n 2), for the application of which it is of no significance how different in nature the parole revocation proceeding may be thought to be. The result turns on the circumstance that, having been afforded "a full and fair opportunity to contest” the claim that relator’s possession and sale of the drugs was induced by the conduct of the law enforcement officials in the criminal action, the People are thereafter bound in any proceeding brought against relator by the adverse factual determination made in the criminal action (cf. Schwartz v Public Administrator of County of Bronx, 24 NY2d 65, 71). That being so, any difference in objectives of the two proceedings provides no basis for nonapplication of the doctrine of collateral estoppel.

But that does not end our consideration of this aspect of our inquiry. As conceded by counsel for relator, "a majority of American jurisdictions which have passed on the issue have held that an acquittal in a criminal proceeding does not bar revocation of parole or probation on the underlying charge”. (See Acquittal in Criminal Proceeding as Precluding Revocation of Parole on Same Charge, Ann., 76 ALR3d 578; Acquittal in Criminal Proceeding as Precluding Revocation of Probation on Same Charge, Ann., 76 ALR3d 564.) Some of these decisions appear not to have involved a collateral estoppel analysis but rather to have been based on conclusions that there is a significant difference in the nature of criminal actions and parole revocation proceedings and that the actions of the parole authorities in the latter were not arbitrary or capricious. Where collateral estoppel arguments have been advanced, reference is made to the different levels of proof involved in the two proceedings. It is accurately asserted in those cases that an acquittal in a criminal trial establishes only the failure of the People to have proved the defendant’s guilt beyond a reasonable doubt. By pertinent contrast, this analysis continues, in parole revocation proceedings the People’s burden is of a significantly lesser quantum. Thus, the fact that the People have not previously met the burden of proof beyond a reasonable doubt does not mean that they could not meet the lesser standard in the parole revocation proceeding.

For the purpose of the present appeal we do not need to subscribe to this analysis or to resolve the issue it presents. It is dispositive to note that in this case the comparison of the burdens of proof is in the relator’s favor. In none of the cases cited for the proposition that the criminal acquittal does not bar parole revocation has this been so. In this instance it was the relator’s burden in the criminal action to establish his defense of entrapment by a preponderance of the evidence, and this he did. In the parole revocation proceeding he had no burden at all; it was the People who bore the burden of establishing the violation by satisfactory evidence. Accordingly, we agree with Supreme Court that, having succeeded under the greater relative burden, relator may now properly claim the benefit, in consequence of the application of the doctrine of collateral estoppel, of the jury’s finding that his conduct was induced by entrapment.

There remains the final issue, whether entrapment is a defense to an alleged violation of the provisions of general parole rule 12. That entrapment would constitute such a defense appears to have been assumed by Supreme Court and recognized at least to some extent by the Appellate Division (65 AD2d 293). The Attorney-General does not contend otherwise. We hold that entrapment is a defense to a charge of violation of rule 12. If the particular possession or sale of the drugs has been induced by the conduct of law enforcement officials, any standard of elemental fairness would dictate that possession or sale so induced may not be made the basis for revocation of parole.

For the reasons stated, the order of the Appellate Division should be reversed, without costs, and the judgment of Supreme Court reinstated.

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

Order reversed, etc.

      . Relator had freely admitted his own participation in the alleged transactions which formed the predicate for the charges of both possession and sale. Indeed it was largely on the basis of the introduction at the later evidentiary stage of the parole revocation hearing of relator’s own testimony containing such admissions that the board sustained the violations.

      . Matter of Mummiami v New York State Bd. of Parole (5 AD2d 923, mot for Iv to app den 5 NY2d 709, mot for rearg den 7 NY2d 756, cert den 362 US 953) is the only case cited to us in which the courts of our State have been asked to consider the effect of an acquittal in the criminal action on a parole revocation based on the same conduct. In that case, decided before Ashe v Swenson (397 US 436, supra), People ex rel. Menechino v Warden, Green Haven State Prison (27 NY2d 376) and Morrissey v Brewer (408 US 471), no contention of preclusion in consequence of collateral estoppel appears to have been raised; the case was resolved on the standard that "the action of the board in finding a violation may not be said to be arbitrary or capricious” (5 AD2d 923).

      . When the second proceeding is one which constitutes a second criminal trial or one which would lead to a second criminal punishment, the doctrine of collateral estoppel has been regarded as being swept into the Fifth Amendment guarantee against double jeopardy (Ashe v Swenson, 397 US 436, 445 supra). One Lot Emerald Cut Stones v United States (409 US 232, supra) makes it clear however that the doctrine has viability quite apart from the fact that it is also an ingredient of the Fifth Amendment guarantee against double jeopardy.

      . For example, in New York State, the burden is only to prove the violation by "satisfactory evidence” (People ex rel. Warren v Mancusi, 40 AD2d 279, 283).

      . For a case rejecting this analysis see People v Grayson (58 Ill 2d 260, cert den 421 US 994), also Standlee v Smith (83 Wn 2d 405, dissenting opn Utter, J.).


source: Caselaw Access Project

author: Jasen, J.

license: Public Domain

text:
    In the Matter of Lloyd Plummer, Respondent, v Daniel Klepak, as Chairman of the New York State Drug Abuse Control Commission, et al., Appellants.
    Argued October 9, 1979;
    decided November 27, 1979

      POINTS OF COUNSEL

      Robert Abrams, Attorney-General (William J. Kogan, George D. Zuckerman and Emanuel M. Kay of counsel), for appellants.
    I. Petitioner failed to timely pursue his administrative remedies and is thereby barred from relief under article 78. (Young Men’s Christian Assn. v Rochester Pure Waters Dish, 37 NY2d 371; Slater v Gallman, 38 NY2d 1; Matter of Flemming v Cagliostro, 53 AD2d 187, 40 NY2d 806; Merante v Burns, 47 AD2d 671; Matter of Womer v Trustees of Univ. of State of N. Y., 47 AD2d 572; Matter of Roberts v County Ct. of Wyoming County, 39 AD2d 246; Matter of McGirr v Division of Veterans Affairs, Executive Dept., State of N. Y., 43 NY2d 635.) II. The court below erred in not viewing petitioner’s prolonged absence as a voluntary resignation. (Matter of Johnson v Director, Downstate Med. Center, State Univ. of N. Y., 41 NY2d 1061; Laba v Carey, 29 NY2d 302; Matter of Flemming v Cagliostro, 53 AD2d 187, 40 NY2d 806; Antinore v State of New York, 49 AD2d 6, 40 NY2d 921.)

      Joe Field for respondent.
    I. Appellants’ action deeming petitioner’s unexplained absence a voluntary resignation constituted discipline. (Board of Regents v Roth, 408 US 564; Matter of Johnson v Director, Downstate Med. Center, State Univ. of N. Y., 52 AD2d 357, 41 NY2d 1061; Matter of Dain v City Cent. School Dist. of Port Jervis, 57 AD2d 622, 46 NY2d 757; Matter of McGirr v Division of Veterans Affairs, Executive Dept., State of N. Y., 56 AD2d 653, 43 NY2d 635; Matter of Bernstein v Industrial Comr. of State of N. Y., 59 AD2d 678; Matter of Cooperman v Commissioner of Dept., of Correctional Servs. of State of N. Y., 57 AD2d 989.) II. Appellants before terminating petitioner’s employment because of alleged prolonged unexplained absence were obligated to invoke the agreed upon disciplinary procedure set forth in the agreement —to wit — article 8. . (Matter of Flemming v Cagliostro, 53 AD2d 187, 40 NY2d 806.) III. Petitioner was not barred from seeking relief from appellants’ action in terminating him by bringing the instant proceeding pursuant to CPLR article 78. (Matter of McGirr v Division of Veteran Affairs, Executive Dept., State of N. Y., 43 NY2d 635.)
   OPINION OF THE COURT

Jasen, J.

Petitioner, a narcotic control officer with the respondent New York State Drug Abuse Control Commission, was informed by letter dated October 7, 1975, that he had been on unauthorized leave from his employment since September 16, 1975. The letter stated further that this unexplained absence constituted a resignation under both subdivision (d) of section 5.3 of the Rules and Regulations of the Department of Civil Service (former 4 NYCRR 5.3 [d] [repealed Feb. 27, 1979]) and article 15.10 of the collective bargaining agreement between the State and petitioner’s union.

Thereafter, on November 5, 1975, petitioner filed a grievance pursuant to article 7 of the collective bargaining agreement ("Grievance and Arbitration”). This grievance was rejected ultimately as untimely inasmuch as it had not been presented within 10 days of the date petitioner first knew of his termination, as was required by the express terms of that article.

The instant proceeding was thereafter commenced pursuant to CPLR article 78. Special Term held that the termination was contrary to law, granted the petition and ordered respondents to reinstate petitioner to his former position, with back pay and interest retroactive to the date of his termination of employment, less compensation earned in other employment and unemployment benefits received since the date of termination, along with all other emoluments of employment. The Appellate Division unanimously affirmed. There should be a reversal.

Initially, we address the conclusions reached by the Appellate Division that petitioner’s resignation was disciplinary in nature and that respondents were obliged to invoke the notice and hearing procedures outlined in article 8 of the collective bargaining agreement ("Discipline”). This characterization of petitioner’s termination as "disciplinary” is at variance with the terms of the collective bargaining agreement in which the parties agreed that an unauthorized and unexplained absence for 10 consecutive workdays would be deemed a resignation. In our opinion, this dispute between the parties concerned the application of provisions of the agreement. Thus, it was incumbent upon petitioner to file a grievance within 10 days of the date he first learned of his termination as mandated by article 7 of the agreement. (See Matter of Flemming v Cagliostro, 53 AD2d 187, mot for lv to app den 40 NY2d 806.) This, he did not do.

Since petitioner failed to avail himself of the grievance procedure set forth in the collective bargaining agreement, he is precluded from seeking relief under CPLR article 78. (See, e.g., Matter of Flemming v Cagliostro, 53 AD2d, at p 189, supra; Merante v Burns, 47 AD2d 671; see, also, Slater v Gallman, 38 NY2d 1.)

Petitioner, having designated the union as his collective bargaining agent, is bound by the terms of the agreement negotiated for and made on his behalf. (Schacht v City of New York, 39 NY2d 28, 32.) The collective bargaining agreement expressly provides that an unauthorized absence for 10 consecutive workdays would be deemed to constitute a resignation. The bargain having been struck and the parties having agreed to a procedure for the resolution of disputes involving this provision, petitioner should not now be heard to complain, having failed to avail himself of the administrative remedies outlined in the collective bargaining agreement. (See Matter of Flemming v Cagliostro, 53 AD2d 187, supra.)

Nor is our holding today in conflict with our prior decision in Matter of Johnson v Director, Downstate Med. Center, State Univ. of N. Y. (41 NY2d 1061). Although in Johnson we held that subdivision (d) of section 5.3 of the Rules and Regulations of the Department of Civil Service (former 4 NYCRR 5.3 [d]) was invalid since its provisions were in conflict with section 75 of the Civil Service Law, we did not reach the further issue — presented by this appeal — whether a parallel provision embodied in a collective bargaining agreement would also be void.

Accordingly, the order of the Appellate Division should be reversed, with costs, and the petition dismissed.

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

Order reversed, etc.


author: Jasen, J. Wachtler, J.

text:
    In the Matter of Muriel Feinerman, Respondent-Appellant, v Board of Cooperative Educational Services of Nassau County, Appellant-Respondent, et al., Respondents.
    Argued October 15, 1979;
    decided November 27, 1979

      POINTS OF COUNSEL

      John J. Naun and James R. Sandner for respondent-appellant.
    I. The issue of the cross appeal is one involving substantive justice and affects all teachers so situated in this State. (Matter of Lezette v Board of Educ., 35 NY2d 272; Matter of Ward v Nyquist, 43 NY2d 57; Matter of Silver v Board of Educ., 46 AD2d 427.) II. Once the appellate court determined that petitioner had a probationary status and there was no allegation made that petitioner was terminated for any other reason than abolition of position, the court could not sua sponte ignore petitioner’s seniority rights under section 2510

      of the Education Law. (Matter of Lezette v Board of Educ., 35 NY2d 272; Matter of Roschelle v Nyquist, 61 AD2d 1073; Matter of Silver v Board of Educ., 46 AD2d 427; Matter of Ward v Nyquist, 43 NY2d 57.) III. Annual Federal funding does not cause a position to be temporary (and therefore on a nontenure-bearing line) under the Education Law. (Matter of Board of Educ. v Nyquist, 45 NY2d 975; Matter of McNamara v Board of Educ., 54 AD2d 467; Matter of Board of Educ. v Nyquist, 65 Misc 2d 154.) IV. There is one tenure area in BOCES covering all teachers of business subjects. (Matter of Silver v Board of Educ., 46 AD2d 427; Matter of Drefuss v Board of Educ., 72 Misc 2d 703, 42 AD2d 845, 76 Misc 2d 479, 45 AD2d 988; Matter of Van Heusen v Board of Educ., 26 AD2d 721; Matter of Becker v Board of Educ., 9 NY2d 111; Matter of Baer v Nyquist, 71 Misc 2d 741, 40 AD2d 925, 34 NY2d 291; Matter of Jadick v Board of Educ., 19 AD2d 153, 15 NY2d 652; Matter of Varon v Mackreth, 30 AD2d 810, 26 NY2d 1039.) V. The adult education program at the Board of Cooperative Educational Services in Nassau County is a full-time program not to be considered as similar to adult programs held after school in local districts. VI. The letter petitioner-appellant signed accepting an appointment which purported to carry no possibility of acquiring tenure was and is contrary to the Education Law and therefore is not binding. (Matter of Board of Educ. v Allen, 14 AD2d 429, 12 NY2d 980; Matter of Board of Educ. v Allen, 283 App Div 376.)

      Marshall D. Sweetbaum for appellant-respondent.
    I. Petitioner-respondent-appellant, Muriel Feinerman, was a temporary employee not entitled to protection under the tenure statutes. (Matter of Board of Educ. v Nyquist, 59 AD2d 76; Warner v Board of Educ., 14 AD2d 300; Matter of Owens v Arkport Cent. School Dist., 92 Misc 2d 1020.) II. Petitioner-respondent-appellant, Feinerman, was not in the same tenure category as respondents, Eisner and Smith. (Matter of Becker v Board of Educ., 9 NY2d 111; Steele v Board of Educ., 40 NY2d 456; Matter of Baer v Nyquist, 34 NY2d 291; Matter of Goldhirsch v Krone, 18 NY2d 178; Matter of Board of Educ. v Nyquist, 31 NY2d 468.)
   OPINION OF THE COURT

Jasen, J.

The dispositive issue on this appeal is whether a prospective teacher may waive the right to be appointed to a three-year probationary period in a tenure-bearing position.

The facts are uncomplicated and may be briefly summarized. In February of 1974, petitioner Muriel Feinerman was appointed by respondent Board of Cooperative Educational Services of Nassau County (BOCES) as a teacher of business subjects in the BOCES adult education program — a program which was, from its inception, wholly dependent upon Federal funding. The contract of employment, duly signed by petitioner, extended only until June 30, 1974, and provided for a per diem wage. It further stated that "[tjhere is no tenure with this position.”

Petitioner was reappointed to her position for the 1974-1975 school year and also for the 1975-1976 school term. By letter dated September 2, 1975, petitioner was again informed that her salary would be paid on a per diem basis and that no tenure would attach to her position. Petitioner signed a copy of this letter, thereby indicating her "acceptance of the terms and conditions of employment.” Further, petitioner was a member of a collective bargaining unit during her term of employment and was subject to the parties’ collective bargaining agreement. The express terms of the agreement then in effect provided that "[tjenure is not applicable in annually funded Day Time Adult Occupational Education projects.”

Prior to the commencement of the 1976-1977 school year, the superintendent of schools, by letter dated June 18, 1976, advised petitioner that her position as a teacher of business subjects in the BOCES adult education program would be terminated as of June 30, 1976, due to decreased enrollment. Thereafter, petitioner instituted this article 78 proceeding seeking a judgment directing respondent BOCES to reinstate her to the position of teacher, with full back pay and benefits. Special Term denied the requested relief and dismissed the petition, reasoning that since petitioner had consented to be appointed to a temporary, nontenure-bearing position, she should not now be heard to complain that her dismissal worked to deprive her of the statutory benefits which attach only to a tenure-bearing teaching position.

On appeal, a unanimous Appellate Division modified the judgment of Special Term by awarding petitioner 60 days’ back pay. Although concluding that petitioner’s position was, by law, tenure-bearing, the Appellate Division nevertheless determined that reinstatement was properly denied petitioner. The Appellate Division reasoned that even if "petitioner received the probationary appointment to which she was entitled in 1974, she still would have been subject to termination upon recommendation of the superintendent and vote of the board.” (62 AD2d 1036, 1038; see Education Law, § 3031.) The order of the Appellate Division should be modified by eliminating the award of 60 days’ back pay, and, as so modified, affirmed.

On these cross appeals to this court, petitioner contends that her teaching position was, by law, probationary, and, thus, tenure-bearing inasmuch as there exists no authority in the Education Law which permits BOCES to appoint a teacher to a "temporary” position which is freely revocable. Proceeding on this premise, petitioner maintains that her employment was terminated wrongfully since she has accumulated greater seniority rights than two other teachers — respondents Eisner and Smith — who serve in the same tenure area as petitioner. (See Education Law, § 2510, subd 2.) Further, petitioner contends that the Appellate Division erred in treating her termination as one pursuant to section 3031 of the Education Law, which delineates the procedure to be followed by BOCES when discontinuing the services of a probationary teacher.

Respondent BOCES counters these contentions by arguing that petitioner was, in fact, a temporary employee who was not entitled to protection under the tenure statutes. In support of its position, respondent emphasizes that the very terms of petitioner’s employment contracts provided that she was to be employed only for a limited period of time and, further, stated, in clear and unequivocal terms, that "[t]here is no tenure with this position.”

This case presents a novel issue for our consideration, to wit: whether considerations of public policy preclude BOCES from employing a teacher for a limited term in a position which carries with it no tenure rights. In our opinion, considerations of public policy do not prohibit such contracts.

It should be noted at the outset that petitioner is not now claiming that BOCES engaged in coercive tactics when negotiating the terms and conditions of her employment. Indeed, the record is devoid of any indication or hint of duress whatsoever. Rather, we are concerned here with a situation where a prospective teacher freely and knowingly consented to be employed for a series of one-year terms in a nontenure-bearing position.

We begin our analysis by recognizing that the Education Law provides that "teachers and all other members of the teaching and supervising staff of the board of cooperative educational services shall be appointed by a majority vote of the board of cooperative educational services upon the recommendation of the district superintendent of schools for a probationary period of not to exceed three years”. (Education Law, § 3014, subd 1.) While it has been stated that these so-called tenure statutes — promulgated by the Legislature in furtherance of the purpose to attract qualified educators and to provide teachers with job security — may not be subverted by denominating otherwise permanent teaching positions as "temporary” (see Matter of Board of Educ. v Nyquist, 45 NY2d 975, revg on dissenting opn below 59 AD2d 76; Serritella v Board of Educ., 58 AD2d 645, mot for lv to app den 43 NY2d 642; Matter of Board of Educ. v Allen, 12 NY2d 980) or by delaying the formal appointment of a teacher to a vacancy in a permanent position (Ricca v Board of Educ., 47 NY2d 385), these fact situations are not present here, for there exists an express agreement between the parties that petitioner was to be employed only for limited terms in a nontenure-bearing position. Further, even assuming that "temporary” appointments are not authorized by law (see Matter of Board of Educ. v Nyquist, 59 AD2d, at p 79, supra; Matter of Cardo, 8 Ed Dept Rep 182, 183), petitioner’s position could, at best, be viewed as an appointment to a limited probationary term which, by express agreement, did not carry with it the expectation of tenure.

Thus, the precise question which must be resolved on this appeal is whether a "probationary” teacher may waive any expectation of tenure and relinquish the right to be appointed to a three-year probationary term. We now hold such waivers to be valid if they are knowingly and freely made, and not the product of coercive influences.

Our holding today that a teacher may consent freely to be appointed to a nontenure-bearing position was foreshadowed by this court’s decision in Matter of Baer v Nyquist (34 NY2d 291). Although we held in Baer that the petitioner had not waived his statutory right to be appointed to a three-year probationary period, this finding was predicated not upon a determination that public policy prohibits such waiver, but, rather, upon the more narrow determination that the school system’s lack of formality in warning petitioner that a change in teaching assignments would commence his probationary period anew militated against a finding of waiver. (Id., at p 297.) Thus, it is implicit in our holding in Baer that public policy considerations do not dictate a finding that a teacher may never waive the right to be appointed for a three-year probationary period to a tenure-bearing position.

This, of course, does not mean that a waiver should ever be implied or presumed, for as we expressly noted in the Baer case: "It is not wise, however, in dealing with a personnel system to have too much confidence in the 'choices’ made by a school teacher who must seek and receive accommodations from his superiors. Otherwise, doctrines of waiver and estoppel could be used facilely to avoid ever giving tenure. The tenure statutes are intended to protect the teacher and not become a trap to those not guileful enough to avoid it.” (Id., at p 299.) Our holding that a teacher may consent to be appointed to a nontenure-bearing position in no way runs counter to the concerns expressed in this admonition. We stress again that a waiver must be found to have been knowingly and freely given, and not the product of coercive tactics.

Further support for our holding today can be drawn from our recent decision in Matter of Abramovich v Board of Educ. (46 NY2d 450, cert den 444 US 845). In Abramovich, we held that a tenured teacher could waive the protections afforded by section 3020-a of the Education Law if such waiver was freely, knowingly and openly made. Although recognizing that this section is grounded in strong public policy considerations in that it safeguards tenured teachers from official or bureaucratic caprice by delineating a method whereby tenured teachers are to be removed, this court nevertheless concluded "that section 3020-a is not so sacrosanct as to be impervious to waiver.” (Id., at p 455.)

While it is true that in Abramovich we were concerned with a waiver of statutory protections accorded a tenured teacher and not, as in this case, a waiver of a teacher’s right to be appointed to a three-year probationary period in a tenure-bearing position (Education Law, § 3014), this distinction is, in our opinion, of little consequence. Indeed, public policy considerations would appear to pose a greater impediment to allowing a tenured teacher to waive statutory rights which reflect the dictates of procedural due process than they would to permitting a nontenured teacher to waive his or her right to be appointed to a tenure-bearing position. It must be remembered that a probationary teacher’s right to tenure is, at most, a mere expectancy, and that his or her services may be terminated by BOCES, upon recommendation of the district superintendent, at any time during the probationary period even without a hearing and without giving reasons for such action. (See Matter of Lezette v Board of Educ., 35 NY2d 272, 278, supra; Matter of Milman, 9 Ed Dept Rep 51.)

Moreover, section 3014 of the Education Law itself does not contain a provision which prevents a prospective teacher from knowingly and voluntarily waiving the three-year probationary period embodied therein. (See Matter of Abramovich v Board of Educ., 46 NY2d, at p 455, supra.) There is simply no indication that the Legislature ever intended this section to forbid absolutely BOCES from engaging the services of a teacher for a limited term in a nontenure-bearing position if the teacher voluntarily consents to such employment. When the parties mutually agree to the terms and conditions of employment, and, further, when such terms and conditions are embodied in a collective bargaining agreement, there is little, if any, danger that the public policy underpinnings of section 3014 will be undermined.

Returning to the case before us, we stress that petitioner had been employed pursuant to individual, one-year contracts providing that "[t]here is no tenure with this position.” Petitioner willingly signed these contracts, thereby indicating expressly her "acceptance of the terms and conditions of employment.” Petitioner does not now allege that she was coerced or tricked into signing these agreements, and, indeed, there is no hint of duress whatsoever. Rather, the record reveals that she openly, knowingly and voluntarily consented to be appointed to a position which carried with it no tenure rights. Further, the collective bargaining agreement between the parties expressly provided that the position occupied by petitioner was to be nontenure-bearing. Under these circumstances, it must be concluded that petitioner knowingly and voluntarily waived her right to be appointed to a three-year probationary term in a tenure-bearing position. As such, when BOCES terminated petitioner’s position as of June 30, 1976— the last day for which she was employed — petitioner possessed no statutory rights upon which to predicate her claim that she was discharged wrongfully.

Finally, a few qualifying remarks are necessary. It should be noted that our decision today was in no way influenced by the fact that petitioner’s teaching position was dependent upon Federal funding. We have only recently held that the source of funding of a teacher’s position is irrelevant to a determination of whether a teacher should be accorded protection under the various tenure statutes. (Matter of Board of Educ. v Nyquist, 45 NY2d 975, revg on dissenting opn below 59 AD2d 76, supra.) Further, we would emphasize that our holding is limited largely to a situation such as we have here. Only when it is clearly demonstrated that a teacher voluntarily, knowingly and openly waived the right to be appointed to a three-year probationary term in a tenure-bearing position and there is no evidence of coercion or duress should the public policy considerations embodied in the tenure statutes be said to yield to the terms of the employment agreement between the parties.

Accordingly, the order of the Appellate Division should be modified, with costs to Board of Cooperative Educational Services of Nassau County, and as so modified, affirmed.

Wachtler, J.

(dissenting). No teacher should be required to waive tenure rights as a condition of employment. Any "agreement” signed by an applicant for public employment, including a teacher, which purports to waive, in advance, rights which the Legislature has conferred on all public employees should be unenforceable as against public policy.

An agreement to waive tenure rights as part of the original employment contract cannot be upheld by analogy to cases involving settlements. In those cases the court must reconcile the policy underlying the statute with the "competing public policy favoring the nonjudicial resolution of legal claims” (Matter of Abramovich v Board of Educ., 46 NY2d 450, 455). In addition the "waiver serves as the quid pro quo for countervailing benefits” (Matter of Abramovich v Board of Educ., supra, at p 455). Here, however, there is no policy competing with the policy underlying the tenure laws. The "agreement” made at the time of hire did not settle an existing dispute, nor did it simply and reasonably provide for a substitute forum in the event of future disputes. It served only as a complete surrender of rights conferred by the Legislature. The petitioner, in fact, received nothing in exchange — except public employment without the tenure rights granted others similarly employed.

The law has always distinguished between waivers made in the course of litigation and those included in the original contract or obligation, if the rights sought to be waived are based on public policy. When the original contract also includes a complete waiver of rights conferred by statute, there is a greater likelihood that it "was the result of ignorance, improvidence, an unequal bargaining position or was simply unintended” (Kassner & Co. v City of New York, 46 NY2d 544, 551). Thus it is a long-standin'g principle of general application that a party cannot "in advance, make a valid promise that a statute founded in public policy shall be inoperative” (Shapley v Abbott, 42 NY 443, 452; Wood Co. v Horgan, 291 NY 422, 426; Kassner & Co. v City of New York, supra; Crocker v Ireland, 235 App Div 760; Pine v Okoniewski, 256 App Div 519). There can be no doubt that this principle should apply to the terms of public employment. Indeed the Legislature has expressly provided that no public official may require a candidate for employment to waive any civil service rights (Civil Service Law, § 96).

The majority, of course, has not cited any authority which would permit the hiring of a public employee on condition that he or she waives tenure rights. It is doubtful that any court has upheld the practice since the adoption of the modern statutes governing civil service. It is no longer accepted that public employees may be terminated at the will of those who appointed them. The modern statutes, conferring rights and benefits on public employees, represent a legislative determination that uniformity and equality in the classification and retention of public employees is essential to insure competent public service (see, e.g., People ex rel. Callahan v Board of Educ., 174 NY 169).

Thus there is no reason why officials who are charged with hiring public employees should be permitted to demand waivers, or insist that they accept employment on terms other than those provided by the Legislature. Today’s decision permitting the hiring of classless, rightless public employees, who are once again subject completely to the whim of hiring officials, subverts the legislative policy underlying the civil service statutes and leaves the law in this important area of public service in disarray.

Significantly the school district does not make such a drastic argument. It does not" claim that it could demand that petitioner waive her tenure rights as a condition of employment or that the employment letter should be so construed. It argues that she was not appointed to a tenure-bearing position and that the employment letter therefore correctly reflects her status.

This contention, however, is erroneous (Matter of Board of Educ. v Nyquist, 45 NY2d 975). On this and the other issues concerning the petitioner’s probationary status, tenure area, and qualifications now before us, the Appellate Division was correct. But the court erred in concluding that the petitioner was only entitled to 60 days’ pay. Although that is all she would have been entitled to if she had been terminated upon the recommendation of the superintendent and the board (Education Law, § 3031), that is not what happened in this case. Here it is conceded that the petitioner was discharged solely because her position had been abolished. Under those circumstances we have held that a probationary teacher has seniority rights over other probationary teachers in the tenure area (Matter of Lezette v Board of Educ., 35 NY2d 272). Since the school district retained two probationary teachers with less seniority than petitioner within the tenure area, she is entitled to reinstatement with back pay, less amounts earned from other employment during the period in issue (Matter of Lezette v Board of Educ., supra, at pp 282, 283). The order of the Appellate Division should be modified accordingly.

Judges Jones, Fuchsberg and Meyer concur with Judge Jasen; Judge Wachtler dissents and votes to modify in favor of petitioner in a separate opinion in which Chief Judge Cooke and Judge Gabrielli concur.

Order modified, with costs to Board of Cooperative Educational Services of Nassau County, in accordance with the opinion herein and, as so modified, affirmed.

      . As found by the Appellate Division, petitioner’s contract for the 1974-1975 school year also stated that "[t]here is no tenure with this position.”

      . Respondent BOCES appeals, pursuant to CPLR 5601 (subd [a], par [iii]), on the basis of the Appellate Division’s modification awarding petitioner 60 days’ back pay. Petitioner cross-appeals pursuant to leave granted by this court.

      . Because of the ground on which we base our disposition of this appeal, it is not necessary to reach or consider the contention that section 2510 does not apply to BOCES employees.

      . This is not to say, however, that BOCES or a board of education may dismiss a probationary teacher in violation of law or in contravention of the terms of a collective bargaining agreement. Such dismissals are subject to the provisions of the Taylor Law (Civil Service Law, art 14), the provisions of the Human Rights Law (Executive Law, art 15), and the terms of arbitration agreements. (See Matter of Lezette v Board of Educ., 35 NY2d 272, 278, and citations therein.)


text:
    Harcel Liquors, Inc., Appellant, v Evsam Parking, Inc., et al., Defendants, and New York State Department of Taxation and Finance, Respondent.
    Argued October 12, 1979;
    decided November 29, 1979

      POINTS OF COUNSEL

      Michael Linn for appellant.
    I. The court has subject matter jurisdiction in that the order sought to be appealed finally determines the action as required by CPLR 5601. (Sirlin Plumbing Co. v Maple Hill Homes, 20 NY2d 401; Behren v Papworth, 30 NY2d 532.) II. The court below erred in granting the State’s request for dismissal of plaintiffs complaint. (Foley v D’Agostino, 21 AD2d 60; Dulberg v Mock, 1 NY2d 54; Skyway Container Corp. v Castagna, 27 AD2d 542.) III. The court erred in finding plaintiff liable for taxes sustained by defendant Evsam Parking, Inc., and in denying its request for a temporary injunction. (Tabin Corp. v Climax Boutique, 40 AD2d 146; Fletcher v Peck, 6 Cranch [10 US] 87; Dartmouth Coll, v Woodward, 4 Wheat [17 US] 518; Matter of Montauk Improvement v Proccacino, 41 NY2d 913; Burlingame v Milone, 62 Misc 2d 853; Board of Higher Educ. v Marcus, 63 Misc 2d 268; Graham v Board of Supervisors of Erie County, 49 Misc 2d 459; Ming v Simpkins, 59 Misc 2d 853.)

      Robert Abrams, Attorney-General (Kathleen Gill Miller and Shirley Adelson Siegel of counsel), for respondent.
    I. There is no genuine issue as to the dismissal of appellant’s complaint, since in essence the court rendered a declaratory judgment as to the rights of the parties in finding appellant liable for the tax. (Slater v Gallman, 38 NY2d 1; Peters v State Tax Comm., 18 AD2d 886, 13 NY2d 1148; Rapoport v Schneider, 29 NY2d 396; Hoffman v City of Syracuse, 2 NY2d 484; Civil Serv. Forum v New York City Tr. Auth., 4 AD2d 117; Law Research Serv. v Honeywell, Inc., 31 AD2d 900.) II. There was no substantial question as to either the constitutionality of subdivision (c) of section 1141 of the Tax Law or its application to appellant. (Tabin Corp. v Climax Boutique, 40 AD2d 146; Matter of Niagara Mohawk Power Corp. v Wanamaker, 286 App Div 446, 2 NY2d 764; Montgomery v Daniels, 38 NY2d 41; Magnano Co. v Hamilton, 292 US 40; Oshkosh Waterworks Co. v Oshkosh, 187 US 437; Lehnhausen v Lake Shore Auto Parts Co., 410 US 356.) III. Appellant is precluded from seeking review of the tax assessment by its failure to follow the "exclusive” administrative-judicial remedies provided by statute. (Richfield Oil Corp. of N. Y. v City of Syracuse, 287 NY 234, 289 NY 651; Berkshire Fine Spinning Assoc. v City of New York, 5 NY2d 347; Slater v Gallman, 38 NY2d 1.)
   OPINION OF THE COURT

Jasen, J.

Defendant Evsam Parking, Inc., sold its liquor store and business to plaintiff Harcel Liquors, Inc., in a bulk sale. In conjunction with the sale which occurred on February 28, 1974, defendant Samuel Karpoff, president of Evsam, submitted an affidavit that "the corporation is not indebted to any one and has no creditors”. Plaintiff, however, did not inform the State Tax Commission of the proposed sale before taking possession as required by law. (Tax Law, § 1141, subd [c].)

The commission ultimately learned of the sale some nine months after it took place, and undertook an audit of the seller’s books and records which were in plaintiff’s possession. After audit, plaintiff was notified by the commission that sales and use taxes in the amount of $6,216.23 had been determined to be owing from the seller for the period from February 29, 1972 to February 28, 1974. The notice stated further that plaintiff, as purchaser of the business, was liable for such back taxes under subdivision (c) of section 1141 of the Tax Law.

Thereafter, plaintiff commenced the instant action seeking —as far as is pertinent to this appeal — a declaration as to its liability for the taxes claimed to be payable under subdivision (c) of section 1141 of the Tax Law and an injunction permanently enjoining the commission from collecting such taxes.

A fair reading of the complaint reveals that plaintiff takes the position that subdivision (c) of section 1141 of the Tax Law cannot be construed as imposing liability for taxes owed by the seller upon a purchaser in a bulk sale, where the purchaser has relied upon an affidavit of the seller stating that the corporation, which is the subject of the sale, is free from debt and has no creditors. If plaintiff’s position is correct, it would be entitled to the relief sought despite its admitted failure to exhaust the administrative remedies set forth in section 1138 of the Tax Law which provide for the review of a tax assessment. (See, e.g., Slater v Gallman, 38 NY2d 1, 3-4; Matter of First Nat. City Bank v City of New York, 36 NY2d 87, 92-93; Richfield Oil Corp. v City of Syracuse, 287 NY 234, 239.) If incorrect, plaintiff’s complaint as against the commission must be dismissed due to its failure to exhaust administrative remedies. (See, e.g., Slater v Gallman, 38 NY2d, at pp 3-4, supra; Richfield Oil Corp. v City of Syracuse, 287 NY, at pp 238-239, supra; Peters v State Tax Comm., 18 AD2d 886, affd 13 NY2d 1148; see, also, Tax Law, § 1140 [remedies set forth in sections 1138 and 1139 of the Tax Law shall be "exclusive”].)

We simply cannot accept plaintiff’s contention that the existence of an affidavit from the seller stating that the corporation is "debt free” insulates it from liability under subdivision (c) of section 1141 of the Tax Law. That section provides, in unequivocal terms, that a purchaser who fails to give notice of the proposed sale to the tax commission becomes personally liable for the payment of the seller’s unpaid sales and use taxes to the extent of the purchase price or the fair market value of the assets sold, whichever is higher. (See Arthur Treacher’s Fish & Chips v New York State Tax Comm., 69 AD2d 550, 552-553.) In our opinion, to exempt any purchaser who has failed to comply with the clear notice requirements of this section would work to deprive the State of a means of collecting taxes duly imposed pursuant to the State’s taxing power. Thus, we conclude that the existence of an affidavit from the seller stating that the corporation has no creditors cannot either cure plaintiffs failure to notify the tax commission of the sale as required by law or insulate a purchaser from the liability which attaches due to its failure to follow clearly delineated notice procedures.

Nor does such construction violate any notion of fundamental fairness. Clearly, the State has the right to ensure that there exists a source of funds from which to satisfy its tax claims. By imposing a first priority right and lien on the consideration transferred from purchaser to seller and, further, by making the purchaser personally liable for the payment of taxes due and owing to the extent of the purchase price or fair market value of the assets sold, the State merely preserves its indisputable right to collect taxes which could otherwise be extinguished by the simple expedient of a taxpayer transferring its assets. It must be stressed that the statute provides more than adequate protection to the prospective purchaser who needs only to inform the tax commission of the expected sale in order to protect itself from liability.

Thus, having concluded that subdivision (c) of section 1141 of the Tax Law applies, by its very terms, to plaintiff, the complaint must be dismissed as against respondent New York State Department of Taxation and Finance due to plaintiffs conceded failure to exhaust available administrative remedies to challenge the tax assessment.

Accordingly, the order of the Appellate Division should be affirmed, with costs to respondent New York State Department of Taxation and Finance.

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

Order affirmed, with costs.


text:
    In the Matter of 17 Cameron St. Restaurant Corp., Doing Business as Dillons, Respondent, v New York State Liquor Authority, Appellant.
    Argued October 18, 1979;
    decided November 29, 1979

      POINTS OF COUNSEL

      Martin P. Mehler and Warren B. Pesetsky for appellant. The measure of penalty imposed by respondent against petitioner was a reasonable exercise of its discretion.
    The nature and gravity of the charge furnishes reasonable basis for and justifies the penalty imposed. (People v Daiboch, 265 NY 125; Matter of Scranton Volunteer Fire Co. v Ball, 37 AD2d 757; Hudson v United States, 272 US 451; United States v Norris, 281 US 619; Matter of Nicotare Rest, v State Liq. Auth., 33 AD2d 859; Matter of Victorian House v New York State Liq. Auth., 24 AD2d 484; People v Lynn, 28 NY2d 196; Matter of Barnes v Tofany, 27 NY2d 74; Matter of South Shore Yacht Club v State Liq. Auth., 34 AD2d 794; Matter of Stolz v Board of Regents of Univ. of State of N. Y., 4 AD2d 361.)

      Henry J. Boitel and Charles J. Carreras for respondent.
    The court below properly exercised its authority under CPLR 7803. (Matter of Mitthauer v Patterson, 8 NY2d 37; Matter of Julia’s Lounge v State of New York Liq. Auth., 44 AD2d 786; Matter of Ronall Rest. v New York State Liq. Auth., 45 AD2d 682; Becker v State Liq. Auth., 44 AD2d 594; Danchak v State Liq. Auth., 44 AD2d 638; Matter of Papoutsis v State Liq. Auth., 32 AD2d 284; Matter of 230 Green Rest. Corp. v State Liq. Auth., 32 AD2d 898; Matter of Bovino v Scott, 22 NY2d 214; Matter of Pell v Board of Educ., 34 NY2d 222; Matter of Butterly & Green v Lomenzo, 36 NY2d 250.)
   OPINION OF THE COURT

Jasen, J.

On this appeal, the sole issue presented for our consideration is whether the penalty imposed on a corporate licensee by the State Liquor Authority is excessive.

On June 1, 1974, respondent State Liquor Authority issued petitioner 17 Cameron St. Restaurant Corp., doing business as Dillons, a restaurant liquor license for the on-premises consumption of alcoholic beverages. That license was renewed annually, the last such renewal having been made for the license period expiring February 28, 1979. However, on June 26, 1978, respondent commenced a proceeding pursuant to sections 118 and 119 of the Alcoholic Beverage Control Law to revoke petitioner’s license upon the ground that one of petitioner’s coprincipals, Howard Kolbenhayer, a 50% shareholder of petitioner, had been convicted of a felony, to wit: criminal sale of a controlled substance in the fifth degree. Petitioner entered a plea of no contest and offered evidence of mitigating circumstances. Thereafter, on November 1, 1978, respondent ordered that petitioner’s license be revoked, that petitioner forfeit a $1,000 bond which had been given to ensure compliance with the Alcoholic Beverage Control Law and that a two-year proscription against the sale of alcoholic beverages be entered on the premises at 17 Cameron Street, Southampton, New York.

Petitioner commenced the instant CPLR article 78 proceeding contending that the penalty ordered by respondent was excessive. Upon transfer from Supreme Court, the Appellate Division granted the petition to the extent that it modified, on the law, the determination of the State Liquor Authority by reducing the penalty to the bond forfeiture alone. As so modified, the determination of respondent was affirmed. Respondent appeals from this judgment. There should be a reversal.

It should be noted at the outset that petitioner does not deny the existence of the facts underlying the revocation proceeding, nor does it now contend that a disciplinary proceeding could not properly be based upon these facts. Rather, petitioner’s sole contention is that the sanction imposed by respondent was excessive. In this situation, the role of the courts in reviewing the penalty imposed by an administrative agency is extremely limited. Indeed, it is well settled that "where the finding of guilt is confirmed and punishment has been imposed, the test is whether such punishment is ' "so disproportionate to the offense, in light of all the circumstances, as to be shocking to one’s sense of fairness”.’ ” (Matter of Pell v Board of Educ., 34 NY2d 222, 233; Matter of Stolz v Board of Regents of Univ. of State of N. Y., 4 AD2d 361.) We cannot say, as a matter of law, that the penalty imposed was excessive in this case.

It is beyond dispute that the liquor industry has a significant impact upon the health, welfare and morals of the people of this State and that it must, of necessity, be strictly controlled. Further, the power of the State to regulate every facet of this industry has long been recognized by the courts. (See, e.g., Seagram & Sons v Hostetter, 16 NY2d 47, 56, affd 384 US 35.) As a result, those who engage in the sale of intoxicants do so with the knowledge that their business conduct will be subject to constant scrutiny and that any violation of the law governing their trade is subject to a penalty commensurate with the nature of the offense. Thus, where it has been shown that a coprincipal of a corporate licensee has engaged feloniously in the sale of illegal drugs, it cannot be said that the penalty of license revocation and the entry of a two-year proscription against the premises formerly operated by the guilty coprincipal is so disproportionate as to be shocking to one’s sense of fairness. Trafficking in narcotics is a serious national problem and the authority, in imposing the sanctions, took cognizance of this fact.

Nor can it be said that the inability of the remaining coprincipal to do business under the corporate license requires us to reach a contrary conclusion. As we have noted in a case involving the operation of a nursing home, another regulated industry, the disqualification of only one of two partners authorized to operate the nursing home does not oblige the licensing agency to continue such authorization for the benefit of the remaining partner alone. (Matter of Spiegel v Whalen, 44 NY2d 745.) The innocence of one co-owner of petitioner does not diminish the wrongdoing of his associate, nor does it obviate the necessity of penalizing this corporate petitioner where its president, who held 50% of its stock, has been shown to have engaged feloniously in the sale of illegal drugs. In our view, this penalty against the corporate licensee does not become excessive merely because it may have a financial effect upon a shareholder of the guilty corporation. This is a risk any shareholder assumes when a corporation operates a licensed premises.

For the above reasons, the judgment of the Appellate Divij sion should be reversed, with costs, and the determination of the State Liquor Authority reinstated.

Chief Judge Cooke and Judges Jones, Wachtler, Fuchs-berg and Meyer concur; Judge Gabrielli taking no part.

Judgment reversed, etc.


author: Fuchsberg, J. Gabrielli, J.

text:
    David S. Salla et al., Respondents, v County of Monroe of the State of New York et al., Appellants, and Louis J. Lefkowitz, Attorney-General of the State of New York, Intervenor-Appellant.
    Argued October 15, 1979;
    decided November 29, 1979

      POINTS OF COUNSEL

      John D. Doyle, County Attorney (Christine E. Burke of counsel), for appellants.
    I. The C.D.R. case has no applicability to the case at bar. (C. D. R. Enterprises v Board of Educ., 412 F Supp 1164; Graham v Richardson, 403 US 365.) II. The compelling State interest test should not have been used by the trial court to test the validity of section 222 since the type of travel interest asserted by respondents does not trigger strict scrutiny. (Shapiro v Thompson, 394 US 618; Memorial Hosp. v Maricopa County, 415 US 250; Sosna v Iowa, 419 US 393; Vlandis v Kline, 412 US 441; Starns v Malkerson, 326 F Supp 234, 401 US 985; People v McNair, 46 AD2d 746, 37 NY2d 100; McGowan v Maryland, 366 US 420.) III. The trial court erred in applying the compelling State interest test on the theory that respondents have a "fundamental right” to work. (Massachusetts Bd. of Retirement v Murgia, 427 US 307; Frederick v United States, 507 F2d 1264.) IV. Respondents’ rights under the privileges and immunities clause, section 2 of article IV of the United States Constitution, have not been impaired by section 222. (Toomer v Witsell, 334 US 385; McCready v Virginia, 94 US 391; Hicklin v Orbeck, 437 US 518; Baldwin v Montana Fish & Game Comm., 436 US 371; Greer v Connecticut, 161 US 519; McGinnis v Royster, 410 US 263.) V. Section 222 does not violate the commerce clause of the United States Constitution. (Hughes v Alexandria Scrap Corp., 426 US 794; Philadelphia v New Jersey, 437 US 617; Baldwin v G. A. F. Seelig, 294 US 511; Boston Stock Exch. v State Tax Comm., 429 US 318; Polar Co. v Andrews, 375 US 361.)

      Robert Abrams, Attorney-General (John Q. Driscoll and Jeremiah Jochnowitz of counsel), for intervenor-appellant.
    I. Section 222 of the New York State Labor Law, providing a preference to citizens of New York State who have been residents of the State for 12 months in employment of persons upon public works projects, does not violate the constitutional rights of respondents. (People v Crane, 214 NY 154; August v Bronstein, 369 F Supp 190, 417 US 901; Russell v Hodges, 470 F2d 212; C. D. R. Enterprises v Board of Educ., 412 F Supp 1164; Sturgis v Washington, 368 F Supp 38, 414 US 1057; Starns v Malkerson, 326 F Supp 234, 401 US 985; Vlandis v Kline, 412 US 441; Hooban v Boling, 503 F2d 648, 421 US 920; Graham v Richardson, 403 US 365; Shapiro v Thompson, 394 US 618.) II. Section 222 of the Labor Law, extends a limited preference to New York residents in benefits flowing from the expenditure of public funds in construction upon public lands. (Hicklin v Orbeck, 437 US 518; Toomer v Witsell, 334 US 385; People v Crane, 214 NY 154.)

      Paul R. Braunsdorf for respondents.
    I. Section 222 is unconstitutional because it denies fundamental legal rights guaranteed to Salla and Keppley by the privileges and immunities clause of the United States Constitution. (Hicklin v Orbeck, 437 US 518; Baldwin v Montana Fish & Game Comm., 436 US 371; McCready v Virginia, 94 US 391; Geer v Connecticut, 161 US 519; Baldwin v G. A. F. Seelig, 294 US 511; Brown v Anderson, 202 F Supp 96; Toomer v Witsell, 334 US 385; Goldberg v Kelly, 397 US 254; Shapiro v Thompson, 394 US 618; Sherbert v Verner, 374 US 398.) II. Section 222 is unconstitutional because it restrains interstate competition for employment in violation of the commerce clause of the United States Constitution. (Matter of Tuscan Dairy Farms v Barber, 45 NY2d 215; Baldwin v G. A. F. Seelig, 294 US 511; Polar Co. v Andrews, 375 US 361; Boston Stock Exch. v State Tax Comm., 429 US 318; Edwards v California, 314 US 160; Philadelphia v New Jersey, 437 US 617; Hood & Sons v Du Mond, 336 US 525; A&P Tea Co. v Cottrell, 424 US 366; Douglas v Seacoast Prods., 431 US 265; Toomer v Witsell, 334 US 385.) III. Section 222 is unconstitutional because it denies plaintiffs the equal protection of the laws guaranteed to them by the Fourteenth Amendment to the Constitution of the United States. (Oregon v Mitchell, 400 US 112; Sherbert v Verner, 374 US 398; Bates v City of Little Rock, 361 US 516; Korematsu v United States, 323 US 214; Skinner v Oklahoma, 316 US 535; C. D. R. Enterprises v Board of Educ., 412 F Supp 1164, affd sub nom. Lefkowitz v C. D. R. Enterprises, 429 US 1031; Graham v Richardson, 403 US 365; Takahashi v Fish

      Comm., 334 US 410; Truax v Raich, 239 US 33; Dunn v Blumstein, 405 US 330.)

      Joseph M. Stone for National Utility Contractors’ Association, Inc., amicus curiae.

    I. Section 222 of the New York Labor Law is unconstitutional because it violates section 8 of article I of the United States Constitution. (Baldwin v G. A. F. Seelig, 294 US 511; Hood & Sons v Du Mond, 336 US 525; Boston Stock Exch. v State Tax Comm., 429 US 318; Philadelphia v New Jersey, 437 US 617; Hicklin v Orbeck, 437 US 518; Douglas v Seacoast Prods., 431 US 265.) II. Section 222 is unconstitutional because it denies United States citizens the equal protection of the laws as guaranteed by the Fourteenth Amendment to the Constitution of the United States. (Oregon v Mitchell, 400 US 112; Sherbert v Verner, 374 US 398; Bates v City of Little Rock, 361 US 516; Korematsu v United States, 323 US 214; Skinner v Oklahoma, 316 US 535; United States v Guest, 383 US 745; Shapiro v Thompson, 394 US 618; Nehring v Ariyoshi, 443 F Supp 228; King v New Rochelle Municipal Housing Auth., 442 F2d 646; Dunn v Blumstein, 405 US 330.)
   OPINION OF THE COURT

Fuchsberg, J.

We hold that section 222 of the Labor Law, which mandates preferential employment of New York citizens on public works projects, offends the privileges and immunities clause of section 2 of article IV of the United States Constitution.

In broad and unqualified terms, section 222 commands that, in the construction of public works, the State, its subdivisions and the contractors they, employ must give "preference in employment * * * to citizens of the state of New York who have been residents of the state for at least twelve consecutive months immediately prior to the commencement of their new employment”. The statute comes before us in the following factual and procedural context:

Plaintiffs David S. Salla and Robert W. Keppley, residents of Pennsylvania, are employed as equipment operators by Lisbon Contractors, Inc., a Pennsylvania corporation engaging almost exclusively in the installation of public sanitary sewers. One of the largest firms in its highly specialized industry, Lisbon carries on its activities throughout the east coast, about 40% of its work being done away from its home State. It maintains a permanent crew of employees whose experience, ranging in duration in individual cases from between 3 to 16 years, averages 6 years overall. For many employees the wide-ranging location of Lisbon’s job sites has made it necessary for them to shift from one temporary abode to another as Lisbon’s projects move them from State to State.

Lisbon was awarded a contract to construct a sanitary sewer line for Monroe County and its Division of Pure Waters. Seventy-five percent of the project’s funding came from Federal moneys allocated to implementation of the Environmental Protection and Pure Water Acts of the United States. Salla and Keppley, who were assigned to the Monroe project, immediately entered into a one-year lease for local living quarters. Soon thereafter, their employment terminated because Lisbon found it necessary to accede to the county’s insistence on strict enforcement of section 222, which had been incorporated as a term of the contract. The individual employees have alleged that, because of job scheduling conflicts, they would find themselves without work for a period of four to five months.

Salla and Keppley, together with Lisbon, then brought this action, in which they sought a declaration that section 222 is unconstitutional and an injunction against its enforcement. Pursuant to CPLR 1012 (subd [b]), the Attorney-General intervened on behalf of the State in support of the statute’s constitutionality. There being no dispute as to the essential facts, on a motion for summary judgment, Special Term, finding support for its determination not only in section 2 of article IV but in both the Federal Constitution’s commerce clause and its Fourteenth Amendment’s equal protection clause as well, granted the requested relief. In turn, the Appellate Division, premising its own conclusion on the privileges and immunities and commerce clauses alone, affirmed (64 AD2d 437). For the ensuing reasons, we uphold its determination, but we find it unnecessary to go beyond the privileges and immunities clause.

Since the circumstances surrounding the adoption of the constitutional clause in question will help clarify the scope of the protection it was intended to afford, we start our analysis with a brief review of its history. Section 2 of article IV was born of more than the founding fathers’ commitment to the creation of a Nation that recognized the universality of "natural rights”. By its adoption, the architects of the Constitution also sought to deal with a more specific and immediate problem. For, once the unifying influence of the British Crown had been swept away by the Revolution, strong strains of separatism had emerged among the former colonies. Threatened with the prospect that the treasured independence each of the individual States had now achieved might lead them to adopt highly protectionist economic policies, careful provision to avoid such an eventuality was made as early as in the drafting of the Articles of the Confederation: "The better to secure and perpetuate mutual friendship and intercourse among the people of the different states in this union, the free inhabitants of each of these states * * * shall be entitled to all privileges and immunities of free citizens in the several states; and the people of each state shall have free ingress and regress to and from any other State, and shall enjoy therein all the privileges of trade and commerce, subject to the same duties, impositions and restrictions, as the inhabitants thereof respectively”. (9 Journal of the Continental Congress. [Govt Printing Office, 1906], pp 908, 909.)

The importance ascribed to the right to travel and to pursue a livelihood or to otherwise engage in trade and commerce is seen from the juxtaposition of these rights with the "privileges and immunities of free citizens”. For "privileges and immunities of free citizens” embraced no less than those "natural rights” thought to inhere in the very concept of civilized government, such as the right to "enjoyment of life and liberty” and the pursuit of "happiness and safety”, the denial of which by any of the States would have been unthinkable to the revolutionary theoreticians (Blake v McClung, 172 US 239, 248-249; see, generally, Antieau, Modern Constitutional Law [1969 ed], §§ 9:13, 9:14).

It is a measure of the unanimity that prevailed on this subject that Alexander Hamilton dubbed it the very "basis of the Union” (The Federalist No. 80). So, when the Constitution itself was penned, unlike those provisions whose detail reflects the controversy and compromise that preceded their adoption, the privileges and immunities clause was set out in broad, concise and unqualified terms. (See, generally, 3 Farr and, Records of the Federal Convention of 1787 [1911 ed], at p 112; 5 Elliot’s Debates on Adoption of Federal Constitution [2d ed, 1836], at p 487; Madison, The Federalist No. 42). Ironically, it was this lack of specificity that later would make it possible for courts to be persuaded, on a seemingly ad hoc basis, to introduce exceptions to the clause’s literal application.

For example, it was held not to interdict a State’s conditioning of the right of a nonresident to bring suit on the posting of security for court costs (see Blake v McClung, 172 US 239, 256-257, supra), its exclusion of noncitizens from access to State-owned oyster beds (Corfield v Coryell, 6 Fed Cas 546), or its requirement that any employee of a nonresident business be deemed an agent for the receipt of process (Doherty & Co. v Goodman, 294 US 623). But the clause was applied to strike down statutes under which out-of-State merchants alone were required to take out licenses (Ward v Maryland, 12 Wall [79 US] 418), under which citizen creditors were given a preference over nonresidents in the distribution of assets of local insolvent businesses (Blake v McClung, supra), under which property of noncitizens was taxed at a higher rate or in a different manner than that of citizens (Matter of Stanford, 126 Cal 112) and under which barbers’ licenses were restricted to residents (Templar v State Bd. of Examiners of Barbers, 131 Mich 254).

In all, these cases evidence an approach under which courts, while giving obeisance to the immunity clause’s broad-ranging proscription against disabilities when they were based on alienage per se, would allow disparate treatment of a noncitizen when the particular circumstances which brought him into the State were, in the exercise of what has been characterized as a largely standardless judicial judgment, deemed sufficient to make differentiation "reasonable” (see Tribe, American Constitutional Law, § 6-32, pp 407-408).

However, the time came when the Supreme Court, obviously less than happy with this unstructured and unpredictable method for determining the availability of a constitutional principle on which the unity of the citizens of the Nation in large part rested, substituted a more sophisticated measure that balanced the national interest in access to local resources against the local interest in developing homegrown cures for indigenous evils (Toomer v Witsell, 334 US 385). Toomer involved a South Carolina statute which discriminated against nonresident commercial shrimp fishermen by imposing a license fee 100 times greater than that charged residents. In declaring that statute invalid, the court did not revert to the absolute language of the clause itself, but, emphasizing that each State had to accord substantial equality of treatment to the citizens of the others, went on to formulate the more precise test that prevails to this day.

The test is twofold. When a right protected by section 2 of article IV is infringed, a court must first determine whether "perfectly valid independent reasons” for the disparity of treatment exist. But that is not enough. It must also decide whether, quantitatively or qualitatively, the degree of discrimination bears a truly "close relation” to the reasons assigned (334 US, at p 396). Since there was nothing in tbe record in Toomer to indicate that nonresident fishermen were a "peculiar source” (at p 398) of the danger of overfishing, the evil which the State claimed it was combatting, the statute was found to be unconstitutional. In the wake of this decision has come renewed appreciation of the breadth of the protections afforded by the privileges and immunities clause (see, e.g., Doe v Bolton, 410 US 179 [access to medical services cannot be limited to State residents]; Matter of Gordon, 48 NY2d 266 [bar examination residency requirements unconstitutional]).

In now applying the Toomer test, we observe, initially, that the interests of Salla and Keppley are within the purview of section 2 of article IV. From the very beginning, it has been clear that the right to ply one’s trade in any State in the Nation was at the heart of the clause’s guarantees. Indeed, the Supreme Court only recently re-emphasized this point in a privileges and immunities context by contrasting the fundamental nature of the right of a citizen to earn a living in a State other than his own with the less essential nature of such a pursuit of recreational activity (see Baldwin v Montana Fish & Game Comm., 436 US 371). Moreover, shortly thereafter, in passing on an Alaska statute substantially similar to section 222, the same court, in an approving elaboration of Toomer, reiterated the basic tenet that "a resident of one State is constitutionally entitled to travel to another State for purposes of employment free from discriminatory restrictions in favor of state residents imposed by the other State” (Hicklin v Orbeck, 437 US 518, 525, noted in 12 Akron L Rev 346).

Conscious of the importance of the interest at stake, we turn to the nature of the "independent reason” on which the State and county urge that the statute does not run afoul of the constitutional bar. As did the State of Alaska in Hicklin, they insist that a high rate of unemployment in the State justifies the preferring of New York residents for public works jobs. Granted that the counteracting of unemployment is a legitimate State concern, the relevant criteria for privileges and immunities analysis still are whether nonresidents are a "peculiar source” of the evil of joblessness in New York and whether the statute is fashioned with sufficient precision to meet the problem without unduly impinging on the rights of those who do not contribute to it. In the end, nothing less than a unique link between the interest served and the discrimination practiced will do. (See, generally, The Supreme Court, 1977 Term, 92 Harv L Rev 57, 75-86.)

Far from any demonstration of a close relationship between nonresident employment on public works projects and unemployment rolls, there is nothing in this record to connect the two at all. In fact, there is nothing to indicate that an influx of nonresidents for any purpose is a major cause of our unemployment. Furthermore, though, simplistically viewed, it of course can be said that every position filled by a Pennsylvania resident is one less job for a New Yorker, the statute does not in fact prefer the unemployed over the employed as replacements for dislocated nonresidents. For all that it provides, qualified residents may be drawn away from ongoing employments in order to accept what they may regard as the more attractive opportunities thus created, an inconsistency given considerable weight in Hicklin (supra, at pp 527-528).

Nor is section 222 geared to focus efficiently on its goal. Instead, with blunderbuss overbreadth, it makes no distinction between supervisory and nonsupervisory employees, giving no consideration at all to the much smaller universe of jobs or of suitable replacements that are in the offing at that level. And, it goes without saying that, even if the New York pool of workers includes persons with qualifications for the openings the statute forces, a project is likely to be completed more quickly, more efficiently and more economically under supervisors who enjoy an employer’s confidence and who are familiar with its practices. Nor is it to be assumed that the readier co-ordination between experienced supervisors and a team of tried employees who customarily work together is inconsequential. Such factors may readily give rise to a situation in which the disadvantages of additional expense, inconvenience and organizational disruption are sufficient to deter contractors from bidding on New York public works jobs altogether. The consequences hardly "secure [the] community of intercourse” among the States that is the raison d’etre of the privileges and immunities clause (Lemmon v People, 20 NY 562, 607).

The defendants, largely ignoring the fact that most of the project’s funds emanated from Federal sources, nevertheless maintain that, in any event, the so-called public ownership exception to section 2 of article IV articulated in such cases as McCready v Virginia (94 US 391) makes the Toomer-Hicklin test inapplicable to this case. But, though the expenditure of State funds was the major factor relied on by the courts in upholding section 222’s predecessor statute more than 60 years ago (People v Crane, 214 NY 154, affd 239 US 195; Heim v McCall, 214 NY 629, affd 239 US 175), the revolution in section 2 of article IV jurisprudence wrought by Toomer recognized that the State ownership exception was not an indelible canon of constitutional law. Rather, it was premised on a "fiction” designed to highlight the importance of the State’s interest in the exploitation of a resource, a factor that now is weighed along with many others in the dispositive balancing of local and national priorities in such cases (see Baldwin v Montana Fish & Game Comm., 436 US, at pp 385, 386, supra [wild game]; see, also, Hicklin v Orbeck, 437 US, at pp 528-530, supra [oil and gas]). Far from indorsing an approach in which particular resources are categorized according to whether they are passively owned rather than actively created by the State, the recent decisions reaffirm the Constitution’s original intendment by probing the full range and depth of the competing considerations that permeate a particular dispute.

Thus, while the division’s project could, in some of its aspects, be thought to be of local concern, the increasing interdependence of one State on another reflected in the renewed emphasis on the privileges and immunities clause hardly permits that factor to control. That interrelationship indeed is epitomized in this very case by the fact that, as it happens, the project was largely financed by the national Government. Beyond that, one thing is clear above all. It does not outweigh the constitutional concern for the right of a citizen of one State to pursue his vocation in another. And, as to those funds which the State itself invested in this project, it also may not be amiss to suggest, as we have done in the past, that "cost consideration^]” alone need not dictate "judicial outcome” (Brooklyn Union Gas Co. v New York State Human Rights Appeal Bd., 41 NY2d 84, 90).

Called upon to evaluate the competing considerations in the case before us, we therefore conclude that section 222’s potentially absolute barrier to out-of-State public works contractors who seek to market their skills in a legitimate manner within the borders of the State is in conflict with the national policy of economic unity. We further conclude that the State’s interest in allocating its funds to their beneficial owners, its citizens — even if it could achieve that here to any degree — is insignificant in comparison.

It follows that the order of the Appellate Division should be affirmed.

Gabrielli, J.

(dissenting). I cannot agree with the view expressed by the majority that section 222 of the Labor Law violates the privileges and immunities clause of the United States Constitution (US Const, art IV, § 2), as that clause has been applied in recent years. Accordingly, I would reject the contentions advanced by the plaintiffs in this case and reverse the order of the Appellate Division which struck down the statute as unconstitutional.

I note at the outset that we are not here faced with a challenge to the durational aspects of the residency requirement contained in section 222 of the Labor Law (compare Shapiro v Thompson, 394 US 618, with Sosna v Iowa, 419 US 393; Memorial Hosp. v Maricopa County, 415 US 250; and Vlandis v Klein, 412 US 441). Nor have we been asked to consider the propriety of a purely regulatory measure calculated to prevent or inhibit nonresident construction workers from traveling into our State and "plying their trade” in the private marketplace (see Ward v Maryland, 12 Wall [79 US] 418), for section 222 erects no such barrier to outsiders seeking employment within the State. Rather, we are asked only to determine whether New York State may refuse to do business with those who hire nonresidents without running afoul of the privileges and immunities clause of the United States Constitution.

In concluding that it may, I draw upon principles derived from the related body of interpretive law associated with the commerce clause (US Const, art I, § 8, subd 3). Although the commerce clause, like the privileges and immunities clause, generally prohibits States from using their regulatory powers to discriminate against interstate commercial activities (e.g., Baldwin v G. A. F. Seelig, 294 US 511; Blake v McClung, 172 US 239; cf. Matter of Gordon, 48 NY2d 266), it does not impose a similar restriction upon a State’s right to use its spending powers to promote local industry or give its citizens a competitive edge in pursuit of its governmental goals (Hughes v Alexandria Scrap Corp., 426 US 794). This is especially so where, as here, the State’s decision to spend creates a new or additional market for the particular goods or services which would not otherwise have existed (Hughes v Alexandria Scrap Corp., supra, at pp 806-810). Indeed, it is because section 222 is directed only at those job opportunities which are created by the State’s exercise of its spending power that the cases cited by the majority are not controlling here.

In Toomer v Witsell (334 US 385) and the cases that followed (e.g., Hicklin v Orbeck, 437 US 518; Mullaney v Anderson, 342 US 415), the Supreme Court made clear that the mere "ownership” by a State of a natural resource does not, without more, provide sufficient justification for the State to enact legislation limiting access to that resource to its own residents. According to the Toomer line of cases, the privileges and immunities clause precludes States from hoarding their resources for their own citizens unless it can be shown that the use of the resource by outsiders poses a "peculiar” threat to the resource’s existence and, additionally, that the discriminatory measure adopted by the State bears a substantial relation to the type of harm it purports to prevent.

An entirely different question is presented, however, when a State seeks to preserve for the enjoyment of its citizens a "resource” it has created through its own efforts (Tribe, American Constitutional Law, § 6.33 [1979 Supp], pp 38-39; see Baldwin v Montana Fish and Game Comm., 436 US 371). Under such circumstances, the doctrine enunciated in Toomer would appear to be of little significance.

That this is so is strongly suggested by the Supreme Court’s language in Doe v Bolton (410 US 179), a case involving a constitutional challenge to a Georgia statute which precluded nonresidents from obtaining abortions at any medical facilities within the State whether privately or publicly operated. Citing its earlier decision in Toomer v Witsell (334 US 385, supra), the Supreme Court in Bolton held that the privileges and immunities clause "protects] persons who enter Georgia seeking the medical services that are available there”, but noted that its conclusion might be different if the challenged statute was based upon a more limited policy of "preserving state-supported facilities for Georgia residents” (Doe v Bolton, supra, at p 200; see Tribe, American Constitutional Law, § 6.33 [1979 Supp], pp 38-39, & n 92).

Like the hypothetical statute in Bolton, section 222 of the Labor Law is calculated only to preserve for New York State residents the expanded employment opportunities that are created when the State embarks upon a public works project. The statute does not prevent out-of-State laborers from coming into the State and securing jobs in their accustomed field; rather, it simply establishes, as a matter of public policy, that when the State of New York enters the marketplace as a purchaser of services, it will use its bargaining power to promote the interests of its citizens. In my view, there is nothing in the privileges and immunities clause or in the case law interpreting it that would proscribe such a policy.

I note that the Supreme Court’s recent decision in Hicklin v Orbeck (437 US 518, supra) does not suggest a contrary conclusion. In Hicklin, the court struck down as violative of the privileges and immunities clause an Alaska statute which mandated that (at p 520) "all oil and gas leases, easements or right-of-way permits for oil or gas pipe line purposes” obtained from the State’s Natural Resources Commissioner contain a provision requiring the lessee to give preference in hiring to Alaska residents. The "Alaska Hire” statute was broadly drafted, its reach extending to all private employment generated by activities within the State (at p 529) "which [are] a result of oil and gas leases, easements, leases or right-of-way permits”. Finding no substantial relationship between the discriminatory effect of the statute and the "evil” it was designed to address, the State’s high unemployment rate, the Supreme Court concluded that the statute was incompatible with the privileges and immunities clause.

Although there are superficial similarities between section 222 of the Labor Law and the "Alaska Hire” provisions struck down in Hicklin, the fundamental differences between the legislative measures becomes apparent when the two are closely compared. The "Alaska Hire” statute represented a naked attempt by the State to use its fortuitous ownership of the rights to gas and oil lands as a predicate for regulating the hiring practices of private employers in a manner that would otherwise be impermissible under the privileges and immunities clause. While acknowledging that a State’s ownership of a resource will ordinarily be the dispositive factor in evaluating whether a discriminatory statute passes muster under the privileges and immunities clause (see McCready v Virginia, 94 US 391), the Supreme Court nevertheless rejected the enactment at issue in Hicklin, stating: "Alaska has little or no proprietary interest in much of the activity swept within the ambit of Alaska Hire; and the connection of the State’s oil and gas with much of the covered activity is sufficiently attenuated so that it cannot justifiably be the basis for requiring private employers to discriminate against nonresidents” (437 US, at p 529).

In contrast, New York State has a clear and direct proprietary interest not only in the "resource” with which section 222 of the Labor Law is concerned, but also in the activities subsumed within the statute’s terms: public works projects. Indeed, it is New York’s ongoing interest in and control over public works projects that renders section 222 of the Labor Law constitutionally unobjectionable. While it is true that a State may not baldly exploit its passive ownership of a resource by indirectly using it as a basis for requiring discrimination against nonresidents in private hiring, nothing in Hicklin or the cases preceding it suggests that when a State has created a resource such as job opportunities, it cannot direct that the resource be used to the advantage of its own citizens.

For the foregoing reasons, I vote to reverse the determinations below.

Judges Jasen, Jones, Wachtler and Meyer concur with Judge Fuchsberg; Judge Gabrielli dissents and votes to reverse in a separate opinion in which Chief Judge Cooke concurs.

Order affirmed, with costs.

      . "The Citizens of each State shall be entitled to all Privileges and Immunities of Citizens in the several States.” This provision, commonly referred to as the "interstate privileges and immunities clause”, is to be distinguished from the so-called "national privileges and immunities clause” of the Fourteenth Amendment, which guarantees to all Americans the rights of national citizenship, such as the right to vote for national officials, the right to petition Congress for redress of grievances and the right to enter public lands (see Tribe, American Constitutional Law, §§ 7-2, 7-4). The latter was one of the clauses adopted after the Civil War "primarily to protect the newly freed slaves from oppression at the hands of the state governments in the south” (Hall, Constitutional Law, § 74).

      . [2] While we note that it may be settled law that corporations are not "citizens” within the meaning of section 2 of article IV and thus cannot seek protection under the clause, we need not address the consequences, if any, of this doctrine in the present case since none of the parties raised the issue below (see, generally, Paul v Virginia, 8 Wall [75 US] 168; 1 Willoughby, Constitutional Law of the United States [2d ed, 1929], § 161).

      . (See text, at pp 520-521, infra.)

      . Hughes v Alexandria Scrap Corp. (426 US 794), relied on by the dissent, is not persuasive authority to the contrary. In that case the Supreme Court held that a Maryland program creating a market for abandoned automobile hulks did not burden interstate commerce despite its incidental effect on nonresident metal processors. Here the very target of the statute is the nonresident, and our focus is on the privileges and immunities clause. Moreover, the Hughes court was careful to note that the State had not sought to forbid or regulate the interstate flow of hulks, an allusion to the prohibition against the erection of absolute trade barriers between the States (id., at p 806; see, also, Philadelphia v New Jersey, 437 US 617). In contrast, section 222 may well have the protectionist effect of discouraging nonresident public works contractors from seeking any New York work whatsoever.

      . In addition to challenging the validity of section 222 of the Labor Law under the privileges and immunities clause, plaintiffs have also raised claims under the equal protection clause of the Fourteenth Amendment as well as under the commerce clause of the United States Constitution (art I, § 8, subd 3). For the reasons stated in Presiding Justice Michael F. Dillon’s dissenting opinion at the Appellate Division (64 AD2d 437, 445-446), I find the latter claims to be wholly without merit.

      . Section 222 of the Labor Law requires that public works contractors give preference in hiring to job applicants who have been New York State residents for at least 12 consecutive months. While there may be some question concerning the validity of this durational requirement, plaintiffs in this case have no standing to raise such a question, since they admittedly have no intention of establishing residency in New York under any circumstances.

      . The majority bolsters its position by noting that the public works project at issue in this case was heavily financed by the Federal Government. I fail to grasp the significance of this fact, however, since there are no indications in the record that the hiring preference mandated by section 222 of the Labor Law contravenes any of the policies underlying the Federal legislation which authorized the sewer project subsidy.