text:
    Pearl Street Development Corporation, Appellant, v Conduit and Foundation Corporation, Respondent.
    Argued November 17, 1976;
    decided December 28, 1976

      Arnold I. Roth, Leonard H. Rubin and Jeffrey L. Braun, New York City, for appellant.

      Alvin Goldstein and Murray T. Berman, New York City, for respondent.
   Jones, J.

We hold that in this instance under a broad arbitration clause it is for the arbitrators, as one aspect of their consideration of the claim on its merits, to resolve questions of interpretation of the contract documents, on the outcome of which will depend whether there are requirements preliminary to the presentation of this claim to arbitration, and, if so, then to determine whether there has been such failure to meet those requirements as to preclude arbitration of the claim.

The parties are engaged as the general contractor and the subcontractor for site preparation in the construction of a downtown wire center building for the New York Telephone Company in the City of New York. The subcontractor has demanded arbitration under the subcontract of a claim which it asserts against the general contractor. On this appeal issues are raised as to the interrelation and application of three separate provisions relating to arbitration; one is set forth in the subcontract and the other two are to be found in the general contract.

The subcontract between the parties to the present proceeding contained its own broad arbitration clause providing that "[a]ll disputes, controversies or claims of any and all kinds which may arise out of, under or in relation to this Agreement, or the breach thereof * * * shall be submitted to and settled by arbitration” in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association. This clause contained no time limit or other prerequisite to the submission to arbitration. The subcontract also contained a provision by which the subcontractor agreed to be bound to the contractor by the terms of the general contract and the contract documents and to assume toward the contractor all the obligations and responsibilities that the contractor assumed toward the owner. Elsewhere the provisions of the general contract were incorporated by reference.

The general contract contained two arbitration clauses. There was a broad clause providing that "All claims, disputes and other matters * * * arising out of, or relating to” the general contract were to be decided by arbitration in accordance with the same rules of the American Arbitration Association. From the sweep of this clause were excepted certain disputes between the contractor and the owner relating to the progress of the work or the interpretation of the general contract. Such disputes were to be submitted initially to the architect, after which any unresolved issue was to be subject to arbitration, likewise before the American Arbitration Association, at the demand of either party. Notice of a demand for arbitration under the broad clause was to be submitted within a reasonable time after the claim arose.

The subcontractor served a demand on the general contractor calling for arbitration under the provisions of the broad arbitration clause in the subcontract of a claim for the reasonable value of the work, labor and services performed and equipment and material furnished by the subcontractor. The claim was described as arising from breaches of the subcontract by the contractor and the owner and their interferences with the work of the subcontractor.

The contractor thereupon instituted the present proceeding under CPLR 7503 (subd [b]) for a stay of arbitration, on the ground that the subcontractor had failed to comply with conditions precedent to arbitration expressly set forth in the general contract, to wit, that the claim had not first been referred to the architect and that no demand for arbitration had been made within a reasonable time after the claim arose. The subcontractor conceded that there had been no submission to the architect, but contended that there were no conditions precedent to the arbitration which it demanded under the subcontract. Special Term agreed with the subcontractor, and, although indicating that the demand for arbitration had not been first referred to the architect or filed within a reasonable time, concluded that the conditions precedent to arbitration under the general contract did not apply to arbitration under the subcontract. It therefore denied the application for a stay and granted the subcontractor’s cross motion to compel arbitration. The Appellate Division affirmed, one Justice dissenting, and the contractor has appealed as of right to our court. We now affirm the disposition at the Appellate Division, but on an analysis other than that adopted by the courts below.

At the outset it should be observed that, as the case comes to us, the determination crucial to a disposition of this appeal is not the more familiar inquiry whether the party seeking arbitration has fulfilled conditions precedent to access to the arbitration process. As we have said, the issue of compliance with express conditions precedent to arbitration "is a question at least initially for the court, not the arbitrator” (Matter of Opan Realty Corp. v Pedrone, 36 NY2d 943, 944; Matter of Raisler Corp. [New York City Housing Auth.], 32 NY2d 274, 282; Matter of Rosenbaum [American Sur. Co. of NY], 11 NY2d 310, 314).

In this case, preliminary to consideration of whether the subcontractor has fulfilled the asserted prerequisites to arbitration, however, there is a prior question, not usually posed, which must first be resolved—i.e., whether there is a prerequisite to the submission of this claim to arbitration, namely, either a requirement of prior reference to the architect or one of reasonably timely demand for arbitration. Resolution of that question requires interpretation of the contract executed by the parties to this proceeding. Whereas in the usual case the existence of a condition precedent has been agreed to by the parties or is otherwise established, and their threshold dispute is as to performance of nonperformance of that condition (e.g., Matter of Opan Realty Corp. v Pedrone, 36 NY2d 943, supra; Matter of Rosenbaum [American Sur. Co.], 11 NY2d 310, supra), here the threshold issue turns on the interrelation of differing provisions of their written agreements—specifically are the prerequisites to arbitration under either or both of the arbitration clauses of the general contract to be imported into the broad arbitration clause of the subcontract? Historically, issues of contract interpretation are precisely the type of dispute to be left to arbitration. As we said in Matter of Exercycle Corp. (Maratta) (9 NY2d 329, 336): "If the issue involved was solely one of construction or interpretation, it would, without a doubt, be for the arbitrators to decide.” (See, also, Matter of Dimson [Elghanayan] 19 NY2d 316, 324; Matter of De Luca [MVAIC], 17 NY2d 76, 80.)

The principle that under a broad arbitration clause the interpretation of contract provisions is for the arbitrator has general application. Without intending to imply the existence of any special judicial rule, we note that the principle has peculiar pertinence to the interpretation of standardized sets of published forms (here those published by the American Institute of Architects) where it appears that all the forms contemplate arbitration as the normal forum for the resolution of all claims and disputes. Such forms often take on in the minds of the parties an operational existence, and it is appropriate that controversies be determined by those selected by the parties as familiar with such operational aspects. It may even be suggested that with respect to printed forms in widespread use the relatively limited, ad hoc significance which accompanies arbitration awards may be preferable to the more inflexible, stare decisis status which would attach to a judicial determination.

In any event, we conclude that under the broad arbitration clause of their subcontract by which the contractor and subcontractor agreed to submit all disputes to arbitration, they agreed to submit questions of contract interpretation, and specifically those presently advanced by the contractor, to resolution by that forum. Thus, in the arbitration proceeding itself, in addition to contesting the subcontractor’s claim on the merits, it will be open to the general contractor there to advance the contentions it has thus far unsuccessfully urged in this special proceeding—that as a matter of interpretation the subcontract should be read to require that the prerequisites to arbitration of claims under the general contract be met with respect to arbitration of claims under the subcontract as well, and that in this instance the subcontractor has not met them.

The order of the Appellate Division should be affirmed.

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

Order affirmed, with costs.

       By a proviso in this clause it was agreed that any determination made by a court or in arbitration under the provisions of the general contract involving the interpretation or construction of the terms of the general contract or the manner or sufficiency of the work comprehended by the general contract would be determinative and conclusive of any dispute with reference thereto between the parties to the subcontract. No reliance is placed by either party on the existence of this proviso.


source: Caselaw Access Project

author: Cooke, J.

license: Public Domain

text:
    The People of the State of New York, Respondent, v Lawrence Wright, Appellant.
    Argued November 15, 1976;
    decided December 28, 1976

      William E. Hellerstein and Lawrence H. Sharf, New York City, for appellant.

      Nicholas Ferraro, District Attorney (Joseph R. Onorato of counsel), Kew Gardens, for respondent.
   Cooke, J.

Not only does a defendant have a constitutional right to a fair trial, but such right is fundamental to our whole system of jurisprudence. We hold that this defendant, Lawrence Wright, was deprived of such a right by virtue of various remarks made in the course of the People’s summation and that he should have a new trial.

Along with Ronald Diamond, defendant was indicted for criminal possession of a dangerous drug in the third degree, for which crime he was ultimately found guilty and sentenced. Prior to defendant’s trial, Diamond pled guilty to criminal possession of a dangerous drug in the sixth degree and was sentenced.

At trial, Patrolman Anderson, the People’s sole witness, testified that during the evening of January 21, 1971, he observed defendant and Diamond drive to a gas station at Linden Boulevard and Van Wyck Expressway in Queens County. From his patrol car and with the aid of binoculars, Anderson observed various people approach the vehicle in which defendant was seated and "lean into the car” with the money. Anderson and his partner, Patrolman Balf, followed the car driven by Diamond as it left the gas station and proceeded to 135th Street and Liberty Avenue where the car pulled to the curb. As Anderson got out of his unmarked car, he was approached by Diamond who asked him what was wrong. Anderson observed Diamond drop manila envelopes on the ground and the officer eventually recovered four bags from the ground around Diamond. One bag was opened and Anderson saw marijuana in it. While Diamond was being placed under arrest, Balf kept a watch on defendant, still seated on the passenger side of the automobile. While Wright was in the automobile, Anderson saw in "just about the back of the car on the very end of the console” a large piece of tin foil containing what he believed to be a half brick of marijuana. It was stipulated that if a laboratory technician were called as a witness he would testify that he discovered slightly more than two ounces of marijuana within the tin foil package.

Defense counsel, toward the conclusion of his summation, called the jury’s attention to the People’s failure to call Officer Balf as a witness despite his presence in the courtroom. The Assistant District Attorney turned to this subject at the beginning of his summation and stated: "The People don’t have a burden of calling every witness if every witness is just going to come in and repeat the testimony of his brother officer. I don’t feel that it is necessary. I don’t want to encumber you and bring in that witness.” Upon objection, the court stated: "I will allow that. It is an inference that he is asking the jury to draw.” The prosecutor then remarked that if defense counsel had "so wished, he could have called” Balf as a witness and, upon further objection, the court said "The statement is a fair comment. However, I again advise the jury that the defendant is not obligated to call any witnesses.”

The prosecuting attorney later referred to defendant as: "Mr. Wright, an admitted drug user, an admitted drug addict, hanging out in a drug area which he knew was a drug area.” Upon objection, trial court informed the jury: "It is the jury’s recollection of what the testimony is in connection with the case; not what the counsel says it is.”

The following colloquy then transpired:

"Mr. Katz [Assistant District Attorney]: Mr. Wright comes and takes the stand. You didn’t expect him to tell us that he knew what was in the car. Of course he is going to say he didn’t know what was in the car. Do you believe him? Here he is a drug addict who went into a drug program in '69. He gets arrested for this case in '71. In '72 he gets arrested again where he pleads guilty to possession of a hypodermic instrument. He is apparently still a drug addict.

"We know what he was doing in that gas station. We know when we heard the evidence of Ptl. Anderson, that several people approached them and engaged in conversation, he was probably selling marijuana to support his drug habit.

"Mr. Tierney [defense counsel]: I object, Your Honor; that is inflammatory bias and it is grounds for a mistrial.

"The Court: It is for the jury to infer from the evidence that they heard.

"Mr. Katz: Does Mr. Wright work? No. Yet he has money for drugs.

"Mr. Tierney: I object, Your Honor. Once again, Mr. Katz is trying to inflame the jury.

"The Court: Yes. There is no testimony. Please stay away from that.”

Toward the very end of his summation, the prosecutor asked that the jurors place before themselves this question: "[Wjhether you can believe that this defendant did not know that he had marijuana in that car. Where else did that marijuana come from where one had pleaded guilty to it and another defendant admits that he is an addict.” When the summation had been completed, a motion for a mistrial was made based on "inflammatory and prejudicial remarks.”

Although "a defendant who chooses to testify may be cross-examined concerning any immoral, vicious or criminal acts of his life which have a bearing on his credibility as a witness, provided the cross-examiner questions in good faith and upon a reasonable basis in fact * * * the law is inflexibly set against questioning as to such acts when the obvious intent is to show from character or experience a propensity to commit the crime for which defendant is on trial” (People v Duffy, 36 NY2d 258, 262, cert den 423 US 861). Thus, under these basic principles, it would have been perfectly proper for the prosecutor to discuss defendant’s drug addiction and his conviction for attempted possession of a hypodermic instrument, as these matters pertained to defendant’s credibility, but it was highly improper, without a shred of evidence that defendant ever engaged in selling, to urge that because of the addiction "he was probably selling marijuana to support his drug habit” on the night in question. The Assistant District Attorney had no right to refer to matters not in evidence or to ask the jury to draw such a conclusion which was not fairly inferrable from the evidence (People v Ashwal, 39 NY2d 105, 109-110). The use of defendant’s conviction in reference to the hypodermic instrument as a predicate for the proposition that defendant was a seller was prejudicial, it having been noted previously that "in the prosecution of drug charges, interrogation as to prior narcotics convictions (unless proof thereof is indepedently admissible) may present a special risk of impermissible prejudice because of the widely accepted belief that persons previously convicted of narcotics offenses are likely to be habitual offenders” (People v Sandoval, 34 NY2d 371, 377-378). Here the prosecutor utilized defendant’s conviction and addiction as proof of a propensity to sell, a crime not charged and for which there was no evidentiary support. The prejudicial nature of these inflammatory remarks was intensified by comments that: "He is apparently still a drug addict”; "Does Mr. Wright work? No. Yet he has money for drugs.” Although defendant lived with his mother and was unemployed, there is nothing in the proof to suggest or prove that he had to resort to criminal activity to obtain money. Neither was there any dissipation or even alleviation of the harmful effects of the arguments by statements from the court that the comments were improper and must be completely disregarded (see People v Ashwal, 39 NY2d 105, 111, supra).

The prosecutor’s rhetorical query of "Where else did that marijuana come from where one had pleaded guilty to it and another defendant admits that he is an addict” was also objectionable. Although a codefendant’s plea of guilt might be admissible on the question of credibility if the codefendant takes the stand in defendant’s trial, that plea has no probative value as to defendant’s guilt. In the absence of a proper explanation, this statement, too, was prejudicial (see People v Colascione, 22 NY2d 65, 73). None of this is to suggest that a prosecutor may not argue all relevant circumstances tending to support the statutory presumption of possession (Penal Law, § 220.25) but, he may not rely on incompetent matter such as another participant’s plea of guilty.

Proof of the commission by defendant of the crime charged depended for all practical purposes solely on the testimony of Patrolman Anderson. Patrolman Balf acted jointly with Anderson and, under the circumstances here, particularly the impeaching and uncertainties developed on the cross-examination of Anderson, Balf s testimony would not have been cumulative or trivial (see People v Brown, 34 NY2d 658). Defense counsel had the right during his summation to comment concerning Balf s absence but the prosecutor had no right to respond by asserting that he did not "want to encumber” the jury and that the People don’t have to call every witness if the witness "is just going to come in and repeat the testimony of his brother officer” (see People v Thomas, 43 AD2d 547; cf. People v Lovello, 1 NY2d 436). This error, under the circumstances, was compounded by the denial of defense counsel’s request for a charge that the jury could infer that Patrolman Balfs testimony would not have strengthed the People’s case (see People v Brown, 34 NY2d 658, 660, supra; see, also, People v Valerius, 31 NY2d 51, 55).

The order of the Appellate Division should be reversed and a new trial ordered.

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

Order reversed, etc.


author: Gabrielli, J. Cooke, J. (dissenting).

text:
    Duobond Corporation, Respondent, v Congress Factors Corporation, Appellant.
    Argued November 23, 1976;
    decided December 22, 1976

      Robert A. Weiner, New York City, for appellant.

      Irving Moldauer and Bruce H. Beckmann, New York City, for respondent.
   Gabrielli, J.

Congress Factors Corporation (Congress) entered into a "discounting factoring agreement” on December 20, 1971 with Duobond Corporation (Duobond), a textile finishing business, whereby Congress agreed to purchase certain accounts receivable, on an approved list, and assumed responsibility for the debtor’s failure or inability to pay, reserving only the right to charge back any accounts which were disputed. Duobond, the assignor of the accounts receivable under the agreement, commenced this action to recover payment from the assignee, Congress, for accounts which Congress charged back to the assignor. The issue is whether there was a bona fide dispute over certain accounts which would give Congress the right under the terms of the factoring agreement to charge back to Duobond the accounts involved.

The factoring .contract provided, in pertinent part, that: "We [Congress] agree to purchase the account receivable arising from sales to purchasers whose credit we have approved provided the goods have been actually delivered to the purchaser and have been finally accepted without dispute. You [Duobond] agree to indemnify and protect us against all liability, loss or expense caused by or arising out of the rejection of goods and claims of every kind and nature by purchasers, other than loss or expense resulting from ñnancial inability of the purchaser to pay. It is understood that you will promptly adjust all disputes with purchasers and promptly advise us of same * * * and we shall have the right to charge the disputed account or accounts back to you before or after the maturity thereof * * * The charge back of any such accounts shall not be deemed a reassignment thereof, and title * * * shall remain in us until we shall have been fully reimbursed. We agree to reassign to you any such charged-back accounts upon your payment to us, in cash, of the amount or amounts credited by us to you”. (Emphasis added.)

Duobond had been doing business with Herman Zucker Textile Co., Inc. (Zucker), and its affiliates and pursuant to the above agreement, with proper credit approvals by Congress, the accounts arising out of such business were assigned to Congress. In early 1972 Duobond had completed finishing work for Zucker on Style 271 fabric, the accounts were assigned to Congress and by April 26, 1972 they had been paid in full. At this point Congress was liable to Duobond for a percentage of the amount collected as set forth in the agreement and if there were dispute over the quality of the goods, Zucker’s only recourse was against Duobond. Once the account is paid the factor is no longer involved in any dispute that arises over the goods (see Iselin-Jefferson Fin. Co. v Makel Textiles, 21 AD2d 758; McMullen Leavens Co. v Van Buskirk Co., 275 App Div 701, affd 299 NY 784). Duobond, however, was unaware that the account relating to the Style 271 goods was paid, although Duobond’s account for these goods had been credited by Congress in the normal course of their arrangement.

Between April 1 and August 7, 1972 Duobond performed additional finishing work for an affiliate of Zucker, the bills being charged to Zucker on whose credit the business was handled. This work involved some 67 invoices totaling $15,459.24 which were assigned to Congress who in turn billed Zucker. Zucker failed and refused to pay on the ground that there was a dispute over the quality of work. On August 10 Congress sent Duobond a notice of dispute relating only to the 67 invoices, which stated that Zucker "claims that all bills are in dispute—that goods bled and are going to be tested by independent adjusters.” The notice also contained the following printed statement: "Please note that all items in dispute must be adjusted by you with the customer within 30 days. If unresolved this item(s) will be charged to your account.”

In fact the dispute did not arise over the items covered by the 67 invoices but over the Style 271 fabric which had been previously factored and paid. Congress was unaware that the dispute did not involve the items covered by the 67 invoices and failed to properly identify the disputed items with any open account it was holding. In any event Congress made several unsuccessful attempts to collect from Zucker. Likewise, during August and September Duobond wrote to Zucker informing him that in their opinion the bleeding which occurred during cleaning was not the fault of Duobond but was caused by defective dye. Finally, Duobond sent Zucker a report prepared by Dow Chemical Company which confirmed its assertion that the defect was in the dye and no basis for a dispute existed between Duobond and Zucker.

Zucker still refused to pay and on October 31 Congress charged back to Duobond the sums it had advanced on the 67 invoices. Congress did not know and concededly did not investigate to learn that the dispute was not over the 67 invoices. Requests by Duobond that Congress sue Zucker were refused on the ground that under the agreement the factor was not responsible for disputed accounts. Not wishing to abandon its right to payment and realizing that Congress refused to pursue the matter, Duobond sought and received a reassignment of the 67 invoices for the sole purpose of instituting suit against Zucker. During the course of this suit, Duobond discovered that the Style 271 account had been paid by Zucker and credited to Duobond’s account by Congress, and that there was no dispute over the items covered by the 67 invoices, which were in all respects satisfactory. Consequently Duobond was granted summary judgment against Zucker, but on the day before judgment was entered, Zucker filed in bankruptcy. After collecting 10% of its claim in bankruptcy, Duobond instituted this action against Congress on the ground that the charge-back was improper.

The discounting factoring agreement provided that Congress "shall have the right to charge the disputed account or accounts back” to Duobond (emphasis added). Under this language the right to charge back arises only on an account which is disputed. There was no "dispute” over the 67 invoices and yet those were the accounts charged back. This action by Congress was clearly in violation of the contract because no basis whatsoever for a charge-back on the 67 invoices existed. The fact that both Congress and Duobond did not fully understand the circumstances surrounding the dispute is of no consequence. The decisive issue is ^whether Congress was entitled to charge back the accounts on the 67 items and under no interpretation of the contract did it obtain this right. Under the agreement Congress had the legal right to collect the accounts assigned to them and, absent a dispute on a particular account, it could not arbitrarily charge back the amount due.

We are not faced with a case where several accounts of a single buyer are outstanding and one such account is disputed. We need not decide under those circumstances what method of charge-back would be proper. Nor are we faced with a case where the dispute is arbitrary and frivolous and yet a charge-back may still be proper (see Mountain Top Mfg. Co. v Business Factors Corp., 39 Misc 2d 408). This case involves a dispute between Duobond and Zucker which relates in no way to any outstanding account held by Congress, other than by similarity of parties. Thus, the charge-back was improper.

By the terms of the agreement Congress assumed liability for "loss or expense resulting from financial inability of the purchaser to pay”. After Congress refused to pursue the matter, Duobond successfully brought suit for payment of the debt but collection on the judgment was frustrated by the intervening bankruptcy of Zucker. This situation was the very type contemplated by the agreement which undeniably places liability for the loss on Congress.

Furthermore, Duobond should not be prejudiced by its attempts to collect the debt after Congress improperly charged back the account. The reassignment of the accounts and the eventual law suit are insufficient to support a defense of waiver or estoppel. Duobond never intentionally abandoned a known right (Alsens Amer. Portland Cement Works v Degnon Contr. Co., 222 NY 34), nor was there any reliance by Congress on the words or deeds of Duobond which resulted in prejudice to it (see Lynn v Lynn, 302 NY 193; Metropolitan Life Ins. Co. v Childs Co., 230 NY 285). The claims of waiver and estoppel are without merit.

The judgment of the Supreme Court should be affirmed, with costs.

Cooke, J. (dissenting).

I dissent and vote for reversal.

Congress Factors Corporation (Congress) is engaged in the factoring business. Duobond Corporation (Duobond) is a finisher and dyer in the textile industry.

These parties, defendant and plaintiff, entered into a factoring agreement under which Duobond agreed to sell to Congress certain accounts receivable arising from sales by Duo-bond to customers whose credit Congress had approved. In return, Congress agreed to pay Duobond, as a purchase price for the said accounts receivable, a net amount arising from Duobond’s sales. Congress also agreed, under stated conditions, to make advance payments to Duobond, as a purchase price for the said accounts receivable, a net amount arising from Duobond’s sales. Congress also agreed, under stated conditions, to make advance payments to Duobond in an amount up to 85% of Duobond’s net sales.

Crucial to the resolution of this controversy is paragraph 2 of the agreement which provides in part: "We [Congress] agree to purchase the account receivable arising from sales to purchasers whose credit we have approved provided the goods have been actually delivered to the purchaser and have been finally accepted without dispute. You [Duobond] agree to indemnify and protect us against all liability, loss or expense caused by or arising out of the rejection of goods and claims of every kind and nature by purchasers, other than loss or expense resulting from financial inability of the purchaser to pay. It is understood that you [Duobond] will promptly adjust all disputes with purchasers and promptly advise us [Congress] of the same upon your receiving notice thereof, and we [Congress] shall have the right to change the disputed account or accounts back to you [Duobond] before or after the maturity’thereof”. (Emphasis added.)

When Congress attempted to collect on the 67 invoices, Herman Zucker Textile Co., Inc. (Zucker), Duobond’s customer, claimed a dispute as to those invoices and refused to make payment. Thus, under the explicit words of the agreement, Congress was under no obligation to purchase the accounts receivable of Duobond arising from the services in question performed for Zucker because the goods had not been "finally accepted without dispute.”

Once notice of the dispute had been given, Duobond, not Congress, had the obligation to investigate and adjust the dispute. This is obvious from the contract provision that: "It is understood that you [Duobond] will promptly adjust all disputes with purchasers and promptly advise us [Congress] of the same”. Duobond was unable to resolve its dispute with Zucker, even to the extent that litigation eventually ensued between them and proceeded to judgment. Duobond having been unable to adjust the dispute, Congress was permitted under the factoring agreement to charge back Duobond’s account and, accordingly, Congress did not breach the agreement.

Even under equitable principles, a subject mentioned at the Appellate Division, Congress should succeed. If it be assumed that each of the parties was innocent, it has been stated that, where one of two innocent persons must suffer a loss, it should fall on the party who by reasonable diligence or care could have protected himself or herself rather than on the party who could not (see Savings Bank v Creswell, 100 US 630, 643). Here, Duobond, who was in the fabric business and who conducted the underlying transaction with Zucker, was in a much better position than Congress to ascertain the mistake and correct it.

The prior judgment of the Supreme Court, dismissing the complaint, should be reinstated.

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

Judgment affirmed.


text:
    In the Matter of Anthony J. Meliti, Respondent-Appellant, v Ewald B. Nyquist, as Commissioner of Education of the State of New York, Respondent, and Board of Education of Central School District No. 1 of the Town of Rhinebeck et al., Appellants-Respondents.
    Argued November 23, 1976;
    decided December 22, 1976

      Richard C. Heffern and Bernard F. Ashe, Albany, for appellant.

      Frederick W. Burgess and Robert D. Stone, Albany, for respondent.

      Robert A. MacKennan, Rhinebeck, for appellants-respondents.
   Cooke, J.

Both Special Term and the Appellate Division describe petitioner Anthony J. Meliti as a teacher, tenured but uncertified. Petitioner was first employed as a physical education teacher in Rhinebeck Central School District in September, 1967. His provisional teaching certificate (issued Feb. 1, 1961) was to be valid for a period of 10 years, during which time petitioner was to have completed the 30 credit hours of graduate study necessary for permanent certification. Although petitioner was granted tenure in September, 1970, he failed to acquire the requisite graduate credits during the specified time and, facing loss of certification, applied for an extension of his provisional certificate based upon time spent in military service. The regulation pursuant to which such application was made (8 NYCRR 80.2 [f]) provides that "The time validity of certificates held by teachers on active duty of at least six months duration with the armed forces * * * may be extended by the amount of time of such service”. While petitioner’s military service record reflected approximately seven and a half months of active duty over his six-year stint in the Marine Corps Reserve, he was mistakenly granted an extension for a full six years.

On March 5, 1974, after the mistake became apparent, a letter was sent to petitioner from respondent New York State Education Department advising him that his extension certificate was being annulled and that his provisional certificate had expired on September 1, 1973. Petitioner complied with the department’s request to return the extension certificate. Since the annulment left petitioner as an employed but uncertified teacher, the letter advised petitioner that it was critical that he immediately establish his eligibility for a permanent certificate by filing an application and an official transcript of all graduate study completed. Petitioner made the suggested submissions and, upon further review, petitioner was found to lack the credits necessary for certification, having obtained but 9 of the required 30. Pursuant to an Education Department regulation governing employment of uncertified teachers (8 NYCRR 80.32 [a]), petitioner was permitted to teach during the 1974-1975 school year but was advised that it would be necessary for him to complete at least six additional semester hours of approved and appropriate graduate study toward satisfying the requirements for a permanent certificate if he wished to teach during the 1975-1976 school year.

Petitioner obtained no additional credits toward certification and, by letter dated August 26, 1975, written in confirmation of a conference between petitioner and the district principal, the former was informed by the latter that, since an uncertified teacher was deemed an unqualified teacher and as sections 3009 and 3010 of the Education Law prohibit payment to unqualified teachers, it would be impossible for the school system to pay petitioner for the school year beginning September 2, 1975. Petitioner’s removal from the payroll as of that date was, in effect, a suspension without pay. Pursuant to section 3020-a of the Education Law, the respondent Board of Education, meeting in executive session on November 3, 1975, determined that there was probable cause for charges against petitioner for insubordination, mental and physical incapacity and lack of certification. Petitioner, on receiving notice of these charges, demanded a hearing as provided for under the same statutory section.

On December 8, 1975 and prior to such hearing, this proceeding was commenced with petitioner seeking (1) to obtain back pay and benefits from September 2, 1975; (2) to have the court direct the board to place petitioner back on the payroll until such time as he is lawfully terminated; (3) to obtain rescission of the Education Department decision annulling the extension of his provisional certificate; and (4) to enjoin the board from proceeding on the charges brought against him pursuant to section 3020-a of the Education Law. Although Special Term originally denied the petition in all respects, upon reargument it determined petitioner to be entitled to pay pending the outcome of the 3020-a termination proceedings. The Appellate Division affirmed.

The primary question presented on this appeal is whether a tenured but uncertified teacher may be suspended without pay pending the outcome of section 3020-a proceedings instituted to terminate that teacher’s services where a basis for such termination is the teacher’s lack of certification. It should be noted that when this court granted respondent Board of Education’s motion for leave to appeal, it also consented to consider the question raised on cross appeal, that being whether petitioner was entitled to a hearing on the annulment of his certification.

In response to the latter question we need only state, as did the Appellate Division, that while petitioner was entitled to challenge the annulment of his certification, the time to have made such challenge had already passed when the instant article 78 proceeding was instituted. CPLR 217 provides that for a challenge of this sort to be timely, it must be made "within four months after the determination to be reviewed becomes final and binding upon the petitioner”. Here, the March 5, 1974 letter informing petitioner that the time extension to his provisional certificate had been annulled marked the time from which his period to challenge ran, as it was this determination, the determination of the annulment of his extension, that petitioner had the right to challenge. Certainly the fact that petitioner complied with this determination and returned the extension certificate as requested was an indication that such determination was final and binding upon him —and ripe for challenge.

The more troublesome question, and here the primary question, is that of a tenured teacher’s right to pay during suspension pending termination proceedings for lack of certification. It is argued that the holding of Matter of Lynch v Nyquist (41 AD2d 363, affd 34 NY2d 588) read in conjunction with Matter of Jerry v Board of Educ. (35 NY2d 534) mandates suspension with pay in this type of situation, irrespective of directions to the contrary contained in sections 3001, 3009 and 3010 of the Education Law. A close study of these cases and statutory provisions reveal that this is not so.

In Matter of Lynch v Nyquist (supra), the courts reaffirmed a tenured teacher’s right to the protections afforded such teacher under the Education Law. There, Ms. Lynch, though certified only in Latin had been tenured for Latin, English and Social Studies during the 1970-1971 school year and had taught five classes a day in English and Social Studies. At the end of that school year, petitioner Lynch was notified that her services would no longer be needed as Latin had been eliminated from the curriculum, her Latin teaching position had been abolished, and the teaching of English had been assigned to a nontenured teacher provisionally certified in that subject. Petitioner’s challenge to this manner of dismissal was sustained by the courts, which held that circumvention of proper procedure was not to be tolerated. The two options open to the board in that situation were (1) to discontinue the services of the teacher having the least seniority within the tenure of the position abolished, pursuant to subdivision 2 of section 2510 of the Education Law or (2) to discontinue petitioner’s services for legal incompetence due to lack of certification by following the procedure mandated by the tenure statutes which include the granting of a hearing pursuant to sections 3012 and 3020-a of the Education Law. Since neither procedure had been followed, the appellate courts determined that petitioner Lynch had been illegally dismissed and affirmed Special Term’s judgment which restored petitioner as a tenured teacher with full economic benefits. As the board had not proceeded by way of the 3020-a proceeding, the question of suspension, with or without pay, did not arise and was not considered on that appeal.

The question of payless suspension of a tenured teacher did soon come before the courts in Matter of Jerry v Board of Educ. (35 NY2d 534, supra), a decision written to include two separate appeals. Petitioner Jerry, a physical education teacher, had been charged with excessive physical force and use of profane language while petitioner Goldin, a guidance counselor, faced charges of misconduct stemming from alleged sexual activity with an 18-year-old female student. Both teachers were tenured, both were suspended without pay. Although it was the unanimous view of this court (p 541) "that suspension of a tenured teacher without pay pending the final determination of section 3020-a disciplinary proceedings, provided such determination is not unreasonably delayed, would involve no infringement of the teacher’s constitutional rights (Sanford v. Rockefeller, 35 N Y 2d 547; Arnett v. Kennedy, 416 U. S. 134; cf. Mitchell v. Grant Co., 416 U. S. 600; Pordum v. Board of Regents of State of N. Y., 491 F. 2d 1281, cert. den. 419 U. S. 843)”, the majority held that there was no specific statutory provision in the Education Law authorizing the withholding of pay during a period of suspension pending a hearing on the particular charges there made.

Here, however, where suspension is based upon charges of incompetence due to lack of certification, such is not the case. Section 3001 of the Education Law, entitled "Qualifications of teachers” provides, in part, that

"No person shall be employed or authorized to teach in the public schools of the state who is:

* * *

"2. Not in possession of a teacher’s certificate issued under the authority of this chapter”.

Section 3009 provides that "1. No part of the school moneys apportioned to a district shall be applied to the payment of the salary of an unqualified teacher”. Further, section 3010 imposes a penalty for payment of an unqualified teacher: "Any trustee or member of a board of education who applies, or directs, or consents to the application of, any district money to the payment of an unqualified teacher’s salary, thereby commits a misdemeanor; and any fine imposed upon him therefor shall be for the benefit of the common schools of the district.”

Thus, in the case of an uncertified teacher there is a quite specific statutory prohibition against payment during suspension. If, after a 3020-a hearing the previously suspended teacher is acquitted, as where a timely, prior or concurrent challenge to a determination annulling certification results in a reversal of that determination and then in a subsequent finding of certification under 3020-a review, subdivision 4 of section 3020-a provides that such teacher "shall be restored to his position with full pay for any period of suspension”. We note that while the distinction focused upon here may in some future case result in a temporary injustice, only the Legislature can effect what might be viewed as a more equitable uniformity.

Accordingly, the order of the Appellate Division should be modified by reversing that portion thereof which granted relief to petitioner and, except as so modified, affirmed.

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

Order modified, without costs, in accordance with the opinion herein and, as so modified, affirmed.


author: Fuchsberg, J. Wachtler, J. (dissenting).

text:
    In the Matter of the Claim of Elizabeth Malacarne, Appellant, v City of Yonkers Parking Authority et al., Respondents. Workmen’s Compensation Board, Respondent.
    Submitted October 20, 1976;
    decided December 28, 1976

      Morris Gelbman and Benjamin Zeche, Yonkers, for appellant.

      Kenneth Thomas Edson, P. C., and Anne G. Kafka, New York City, for City of Yonkers Parking Authority and another, respondents.
   Fuchsberg, J.

The Workmen’s Compensation Board found that Maurice Malacarne was killed in the course of his employment. The Appellate Division held that he was not and, accordingly, reversed. For the reasons which follow, we believe its decision should be upheld.

The decedent’s usual job, as one of two part-time attendants who manned a Yonkers Raceway parking lot, was to jockey cars, collect parking fees and, shortly before its 11 p.m. closing time, deposit the evening’s proceeds in a bank located directly across the street. However, on January 23, 1971, having arranged for his coemployee to take sole charge, Malacarne quit work about 45 minutes earlier than usual in order to meet his wife at a party at her brother Frank Merola’s home, about a half hour’s automobile drive away from the parking facility. Having parked his car near his brother-in-law’s house, the decedent was walking toward it when he was shot to death by an unknown assailant.

No witness either to Malacarne’s activities while he was en route from his job to the party or to the shooting itself has ever been found. Members of the decedent’s family, as well as neighbors who heard the shot, found the wounded man lying on the sidewalk in front of the house. Malacarne’s personal possessions, which included a wallet containing about $250 in cash, were intact.

The authorities had arrived almost at once, initially in the form of two patrol cars in charge of police officers named Campanelli and Masi. They immediately questioned the injured man, being able to do so without any difficulty since Malacarne, who was soon thereafter to lapse into an incommunicative state from which he was never to recover, was then still both conscious and lucid. Following that inquiry and the garnering of such information as brother-in-law Merola, himself a police officer, and a second brother-in-law, who had also attended the party, were able to furnish, Officer Masi that very night made entries in his official memorandum book as required by police department regulations. He noted therein that the decedent had said that his assailant "was wearing a tan full length trench coat”, that he "appeared nervous”, that he acted like he was "fooling around”, that, so far as the weapon was concerned, he "had in his hand what appeared to be an umbrella”, that "he [Malacarne] offered money to the assailant”, an offer the assailant did not accept, and that Malacarne then "walked away at a fast pace yelling for his brother-in-law”, the policeman.

The decedent was rushed to the hospital by ambulance within about five minutes after the police arrived. At the hospital, only about 10 minutes after decedent had left the scene, Masi checked on the information he had received by reinterviewing Malacarne; Malacarne had nothing to add. As Masi put it, "[h]e told me the same thing he told me at the scene.”

The physician charged with the duty of obtaining a history from Malacarne at the hospital also advised Masi that Malacarne had told him "approximately the same thing”. Specifically, the doctor’s entry stated that Malacarne said that he had been shot, that he had told his assailant not to fool around with him because his brother-in-law was a police officer and that it was while he was running away shouting for his brother-in-law that he was shot in the back. The hospital record indicated that the bullet had indeed entered from the back, a fact further confirmed by the location of the powder burns.

Thereafter, starting with the night of the shooting, under the direction of an officer named Lieutenant Pellicci, the police, with the co-operation of both the District Attorney and the Sheriff’s office, undertook a long, intensive and wide-ranging, though ultimately unsuccessful, investigation to solve the crime. In the search for clues and a motive there were conversations with decedent’s brothers-in-law, neighbors and others who might possibly shed some light on the inquiry. The voluminous file thus generated in the end showed not a bit of information beyond that originally reported by Masi. After the exhaustion of all possible sources of information, Malacarne’s killing had to be regarded as an unsolved street crime.

But the scene then shifts. The time is almost a year and a half later. The setting is the workmen’s compensation hearing. The dramatis personae are the same, but the story is different.

Brother-in-law Merola testifies that decedent, while lying on the sidewalk after the shooting, told him that his assailant had demanded "the money bag with the money from the parking lot” and that he said "that if it was money that he wanted, to take his own wallet”. In view of the fact that Merola was himself an experienced police officer, that he recognized that motive was central to any possible discovery of those who had murdered his sister’s husband, and that he had discussions "in relation to the crime” with the investigating police officers on various occasions, it is odd that his justification for never having told the authorities so much as a word about decedent’s reference to a "money bag” is a lame "nobody asked me that” and "in the excitement, it was slipped up”. Most interestingly, the police records do indicate that it had never occurred to Merola to volunteer the dead man’s words even though he otherwise aggressively encouraged Lieutenant Pellicci to try to find a link between the decedent’s employment and his death. Pellicci’s efforts proved no such link.

The manner of the testimony of the second brother-in-law also merits comment. His initial testimonial description of the decedent’s sidewalk statement is bare of any "money bag” reference; it becomes necessary for claimant’s counsel to prod him in order to get him to flesh out the dying man’s words so as to include "They asked for the money bag”. It is even stranger that the single neighbor and friend of Merola’s who appears with him before the compensation referee testifies that he heard practically nothing of the Merola conversation with the decedent except the remark about a money bag. "That is all I heard”, he insists. It never seems to have occurred to either of these witnesses that any of the dozen or more police officers at the scene or those who made the later investigative inquiries would find this information of interest.

Finally, Officer Masi, following Officer Merola to the stand, enlarges on his official police entries by the vague recollection that, "As I recall, something was said that he usually made the deposits from the parking lot at Yonkers Raceway, and this night he did not”, to which he voluntarily adds his own pure speculation, "/ thought at this time this is what they were after”. Queried about why this matter was omitted from his written report in what had all the earmarks of a first degree murder case, he takes refuge behind the assertion that "in the confusion you can forget something and not put something down”.

Despite the fact that somehow not one of these witnesses’ hearsay knowledge of a possible motive for robbery found its way into the formal and official records of the thorough investigation the authorities had made and that no other proof of any kind linked Malacarne’s work with his shooting by an unknown person at a time long after he had left his job and at a place half an hour’s drive away, the board found that Malacarne’s injuries arose "out of and in the course of’ his employment (Workmen’s Compensation Law, § 10).

It is pertinent therefore to say that, while courts called upon to review quasi-judicial findings of an administrative agency are of course bound to affirm those supported by substantial evidence (Matter of Fisher [Levine], 36 NY2d 146, 150), and, in a workmen’s compensation case, there is a statutory presumption that "in the absence of substantial evidence to the contrary * * * the claim comes within the provision of this chapter” (Workmen’s Compensation Law, § 21, subd 1), it is well established that a claimant is not thereby totally relieved of "the burden of showing that accidental injuries suffered by him actually were sustained in the course of his employment and arose out of the employment” (see Matter of Seymour v Rivera Appliances Corp., 28 NY2d 406; Matter of Daus v Gunderman & Sons, 283 NY 459, 465). Without such proof, an award cannot properly be granted; it is then unsubstantiated under the law.

It should be noted that the test to be met is stated in the conjunctive. The injury must be one "arising out of’ the employment, that is, it must be "a natural incident to the work * * * one of the risks connected with the employment, flowing therefrom as a natural consequence and directly connected with the work”. It must also arise "in the course of the employment”, that is, "it must have been received while the employee was doing the work for which he was employed” (Matter of Scholtzauer v C. & L. Lunch Co., 233 NY 12, 14-15; Matter of Wilson v General Motors Corp., 298 NY 468).

Consequently, even when injuries arise out of the employment, the employer is under no duty to compensate his employees if the injuries arise while the employees are "pursuing their private interests on their own time and at a distance from their employer’s premises”, since they would then not be in the course of their employment (Matter of Wilson v General Motors Corp., supra, p 476). If, therefore, there was no proof in the present case that the death arose "in the course of’ the employment, it becomes unnecessary for us to consider whether it arose "out of’ it, or whether, though hearsay evidence alone may be sufficient to support a compensation finding, it here so challenged credulity that it did not meet the substantial evidence test (cf. 3 Larson, Workmen’s Compensation Law, § 79.23). On the other hand, if the death here arose in the course of the employment, it would be presumed that it also arose out of it (Matter of Slade v Perkins, 33 NY2d 988, 989).

We turn directly, therefore, to the "course of employment” question.

Generally, absent some physical connection to the premises of an employer in time and space, an accident which befalls an employee on his way to or from work has not arisen "in the course of the employment” (Schwimmer v Kammerman & Kaminsky, 262 NY 104; Matter of Trent v Collins Tuttle & Co., 20 AD2d 948; Matter of Douglas v Kenn-Well Contr. Co., 249 NY 609; Matter of McGrinder v Sullivan, 290 NY 11; Matter of Wood v New York State Dept. of Environmental Conservation, 46 AD2d 961).

There are variations on this rule, however, particularly in cases involving robberies and assaults on employees. Analysis of such cases shows them to have been rooted in events which, though perhaps completed at other times or places, started at or about the premises of the employer.

Matter of Field v Charmette Knitted Fabric Co. (245 NY 139), may be regarded as the grandfather of such cases. It involved an altercation between two employees which began inside the employer’s premises, was stopped by neutral employees, and was resumed as the assaulted man stepped over the factory threshold onto the sidewalk. As Chief Justice Cardozo there put it (p 142), "[cjontinuity of cause has been so combined with contiguity in time and space that the quarrel from origin to ending must be taken to be one”.

Field’s progeny have presented similar situations. Thus, in Matter of Craig v Jefferson Auto Painting Co. (33 AD2d 526), a shop steward threw the contents of a chemical solution on a coemployee after their day’s work was finished and both had left the employer’s premises; the act followed a threat made earlier by the steward during an on-the-job work-related dispute. In overruling appellants’ contention that the incident did not arise in the course of the employment, the court noted that the "fulfillment of threats uttered during working hours, in the course of a work-connected argument, was compensable * * * under the continued altercation rule” because it was "commenced within the time and space limits of the employment”.

Similarly in Matter of Feuchtbaum v Simwitz Bros. Trucking Co., (28 AD2d 575), an employee who was a shop steward was assaulted by two fellow workers who resented his having made a complaint against them. They having requested to see him after he punched out, he immediately went across the street from the employer’s premises to meet his assailants, whereupon the assault occurred. In upholding a finding that the event took place in the course of the employment again the court considered the crucial issue to be whether the entire chain of events was, realistically evaluated, but a single incident begun at a time when the "claimant had not separated himself from the animosities and danger of employment”.

It is noteworthy that in none of these cases was where, how, why and with whom the event had started a matter of conjecture.

Matter of Seymour v Rivera Appliances Corp. (28 NY2d 406, supra), on which appellant relies, is not to the contrary. All the injuries in that case took place on the employer’s premises, and there was never any question but that they had arisen in the course of the employment. The episode there had been initiated when the deceased went to the aid of a female employee who worked under his direction when she was assaulted by another male employee. The deceased had no personal relationship with either the lady in distress or with her assailant. The next day the other male employee shot the deceased on the employer’s premises. The sole issue litigated was whether the shooting arose "out of’ the employment.

Nor is claimant aided by our decision in Matter of Notowitz v Rose Towel & Linen Supply Co. (36 AD2d 543, affd 29 NY2d 502). Though the attackers there were not themselves coemployees of the victim, they were permitted to loiter about the doorway of the employer’s garage to which the claimant, a route salesman, was required to bring his truck. They began to chase him from the very door of the garage, catching him within a block. Our affirmance on the theory that the employer’s obligation to provide a safe means of egress from its premises extended at least to these facts in no way suggested abandonment of the requirement that, for an event which befalls an employee after he departs from his employment to be deemed to have arisen "in the course of’ his employment, it must have been one that "commenced within the time and space limits of the employment.” Indeed, to the extent that today’s dissent omits from the test for "in the course of the employment” any requirement of "contiguity in time and space” (Matter of Field v Charmette Knitted Fabric Co., 245 NY 139, 142, supra), relying instead solely on "continuity of cause”, it would serve but to blur the long-recognized and meaningful distinctions between the "arising out of’ and the "arising in the course of’ employment tests.

Consequently, if, in the case before us, there had been substantial evidence rather than mere conjecture to support a finding that an attempted robbery had begun at the deceased’s point of departure from the parking lot itself, the board might have been entitled to consider whether that event and the subsequent shooting were but two parts of a whole. The reality, however, is that there was not a scintilla of evidence of any earlier event related to the shooting. The "money bag” statement attributed to the decedent during the testimony before the referee does not supply it. That bare statement did not include, for instance, anything to indicate that suspicious persons had been lurking in the vicinity of the parking lot, or that anyone had been seen to follow the decedent from there or, for that matter, that he had observed anyone following him at any time during his half hour’s drive to his sister’s house until he had already arrived on her street. Even assuming that the decedent had in fact made the "money bag” statement and, in doing so, had accurately quoted his assailant, on the record here we are left then with nothing but speculation on which to base a choice from among the countless number of possibilities of where, how or why the assailant came to the erroneous belief that Malacarne would have a money bag on him when he arrived at his sister’s house.

Specifically, the possibility that there had been an observation at the parking lot itself is an especially unlikely one; an uninformed observer would have had no reason to believe that Malacarne was carrying the receipts when he left with the lot still in full operation that night, and one familiar with the lot’s operation would have known that deposits were never carried further than the bank across the street and then only at closing time. Further, while the precise motive of the assailant would not be determinative, there is much mystery even as to whether it was robbery that was intended at all; the rejection of the offer of the wallet, which contained a larger sum than the average receipts from the small parking lot, strongly negates even that part of the theory. In any event, the money bag testimony, if some evidence on the "arising out of’ question, certainly did not satisfy the essential requirement that the accident had arisen "in the course of’ the employment.

In short, the decedent here performed his work only at the parking lot, his workday started the moment he arrived there, and, on the day of the shooting, it ended as usual when he drove away. His job did not demand travel. He was not on an errand for his employer. He was not required or permitted to take the proceeds or any other indicia of his employment with him when his day’s work was done, and he followed that rule on this occasion.

Under those circumstances, he was precisely in the same position as are thousands of retail employees who handle money on the premises of their employers and whose jobs include short trips to the bank during the workday in order to exchange money or make a deposit. Their employers do not become subject to liability in workmen’s compensation if, at places and times when they are away from work, they are attacked by predators who hope that the employees are then in possession of the employers’ money. Whatever other means of coverage there may be or, as some believe, there should be to protect such employees against such vicissitudes (Matter of Scholtzhauer v C. & L. Lunch Co., 233 NY 12, 15, supra), the scope of liability under the Workmen’s Compensation Law is fixed by the range of the employment and not by the misconceptions of the predators.

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

Wachtler, J. (dissenting).

It has been noted that "There is no single class of cases in which the basic purposes of compensation law have so far miscarried as in these 'delayed-injury’ cases”, that is, cases dealing with "work-connected assaults outside working hours” (1 Larson, Workmen’s Compensation Law, § 29.21). This case presents another example of that type of misapplication of the law.

Here there was a factual finding that claimant’s husband, a parking lot attendant at Yonker’s Raceway, who normally collected the receipts and deposited them in a nearby bank, was shot and killed by a man who demanded "the money bag with the money from the parking lot.” Common sense would indicate that this is a work-connected injury and that his widow should be compensated under the Workmen’s Compensation Law. That in fact was the finding of the Workmen’s Compensation Board. But because the injury occurred off the employer’s premises, after the employee had completed work, the majority, after lengthy and complex analysis, has con-eluded that compensation should be denied. In my view this type of analysis and conclusion is at variance with the rule of liberal construction applicable to the Workmen’s Compensation Law and completely disregards the policy underlying the statute.

As the majority notes an employer is obligated to compensate an employee or his statutory beneficiaries for any "injury arising out of and in the course of the employment” (Workmen’s Compensation Law, § 10). And although they intentionally avoid the issue there is no doubt that the injury here arose "out of the employment”. It is settled that when an employee is assaulted in order to rob the employer, any injury inflicted arises out of the employment (Matter of Simonetti v Capitol Coal Co., 270 NY 633). This much should be obvious.

The primary issue is whether the injury arose "in the course of the employment”, in view of the fact that it "occurred” after the employee had completed work for the night and had left the place of employment. The test, it should be emphasized, is whether the injury arose in the course of the employment and not whether it occurred in the course of the employment. The distinction is quite significant and the failure to recognize it undoubtedly explains why so many of these cases involving "assaults after working hours” go wrong.

The use of the word "occur” would suggest that the injury be manifested or consummated in the course of the employment. "Arising” on the other hand "connotes origin, not completion or manifestation” (1 Larson, Workmen’s Compensation Law, § 29.22). Thus for instance, a disease or physical defect may originate during the course of employment, although disability or death may occur at a different time and place. Nevertheless the injury is held to "arise” in course of employment (see, e.g., Matter of McCormick v Green Bus Lines, 29 NY2d 246). The same is true of a job-related dispute initiated at the place of employment which results in an assault at another time and place (Matter of Field v Charmette Knitted Fabric Co., 245 NY 139; Matter of Notowitz v Rose Towel & Linen Supply Co., 36 AD2d 543, affd 29 NY2d 502; cf. Matter of Harrison v New York City Housing Auth., 32 NY2d 754). The same principle should apply, and has been applied, to an off-duty employee who is assaulted away from the premises in connection with an effort to rob the employer (Matter of Cain v Paramount Theatres Corp., 286 App Div 907, mot for lv to app den 309 NY 1030).

Although the courts have attached significance to "the contiguity in time and space” in these assault cases (Matter of Field v Charmette Knitted Fabric Co., supra, p 142; cf. Matter of Lampert v Siemons, 235 NY 311; Matter of Douglas v Kenn-Well Contr. Co., 249 NY 609; Matter of Bonnafoux v Downtown Athletic Club, 268 NY 657), on principle, the only relevant factor would seem to be whether there is "continuity of cause” (Matter of Field, supra, p 142). In other words, if the assault, like the disease, or physical strain, has its origin in an incident of employment it should not matter when or where the injury occurs (see, e.g., Larson, op. cit., § 29.22).

However the majority has concluded that compensation should be denied because there is no evidence that any "event” occurred at the place of employment which could be related to the subsequent shooting to show that there was indeed an attempt to rob the employer. But it is unrealistic to expect a robber to begin the robbery like a quarrel with a verbal exchange or other noticeable "event” at the point of origin. In this type of case the assailant will rarely be seen or noticed prior to the robbery—especially when the place of employment is open to the public and draws a large crowd— and we must consider other factors to determine whether the injury had its origin in the decedent’s employment activities. Here the origin of the assault is the fact that the employee normally collected the parking fees and deposited the receipts at a local bank at the end of work. This, taken together with the statement allegedly made by the assailant establishes the assault as an incident or hazard of the employment, or so the board could find. Questions of credibility of course are for the board to resolve.

It is fundamental that the Workmen’s Compensation Law is remedial in nature and should be liberally construed (see, e.g., Matter of Commissioner of Taxation & Finance v Nu-Art Adv. Co., 271 NY 112, 115); that an assault is compensable "so long as there is any nexus, however slender, between the motivation for the assault and the employment” (Matter of Seymour v Rivera Appliances Corp., 28 NY2d 406, 409) and that when this raises "a debatable matter of fact” the board’s finding should be sustained (see, e.g., Matter of McGrinder v Sullivan, 290 NY 11, 12). The majority opinion completely overlooks these basic principles. Above all it seems to defy common sense to say, as the majority has, that this is not, and could not possibly be considered a work-related injury within the meaning of the statute.

Accordingly, I would reverse the order of the Appellate Division and affirm the finding of the Workmen’s Compensation Law.

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

Order affirmed, without costs.


author: Cooke, J. Jasen, J. (dissenting).

text:
    Hampton Rhabb, an Infant, by His Mother and Natural Guardian, Edna Rhabb, et al., Appellants, v New York City Housing Authority, Respondent.
    Argued November 18, 1976;
    decided December 22, 1976

      Steven Di Joseph, Charles F. McGuire and Thomas R. Newman, New York City, for appellants.

      Raymond J. MacDonnell, Philip Hoffer, Rose L. Hoffer, Peter T. Affatato and Adolph B. Salib, New York City, for respondent.
   Cooke, J.

As the result of a 1973 playground incident, Hampton Rhabb, the infant plaintiff, allegedly sustained a fractured patella requiring open reduction and resulting in permanent disability. In a suit brought on his behalf and by his mother, at the conclusion of their proof upon a trial to determine liability, the complaint was dismissed. The Appellate Division, one Justice dissenting, affirmed.

Defendant operated the Williamsburg Housing Project covering 16 blocks of Brooklyn real estate. Within this space were several playgrounds, all open to the public. One of these play areas, located at or near 164 Ten Eyck Walk, was about a half block in size. There was a fence around part or all of it, with paths leading therefrom to the street and to a basketball court. The playground was equipped with items such as a spider web, rocket, airplane and monkey bars. Children of tender years played there. It was unsupervised. Across the street was a school, I.S. 49, at which Hampton Rhabb, then 12, was a student.

There was testimony: that every noon hour on nice days from the beginning of school in September, 1972 until the day of the accident, a period of about four months, pupils from the school went to the playground; that on each of these occasions an unleashed black, shaggy dog about two or two and a half feet tall and belonging to one of defendant’s employees was in the playground; that this dog during said period attempted to bite the infant plaintiff five or six times and on divers instances had chased other children, also trying to bite them. There was also proof: that during the luncheon recess period of January 8, 1973 the infant plaintiff went from the school to the playground with his friends Craig Chapman and Peter Martin; that they were playing tag for about 10 minutes when the dog barked and started chasing them; that the dog chased Craig and he jumped over a fence; that the animal then chased Peter and he climbed up the monkey bars; that the dog then went towards Hampton who started to run; and that, when the dog bit Hampton on the pant leg, he tried to break loose but fell at a point about six feet from the bars and could not get up.

It is the general rule that a municipality is under a duty to maintain its park and playground facilities in a reasonably safe condition (Nicholson v Board of Educ., 36 NY2d 798, 799). It has been held that this duty goes beyond the mere maintenance of the physical condition of the park or playground and, although strict or immediate supervision need not be provided, the municipality may be obliged to furnish an adequate degree of general supervision which may require the regulation or prevention of such activities as endanger others utilizing the park (Caldwell v Village of Is. Park, 304 NY 268, 273). When in the discharge of that duty it is or should be apparent, or it otherwise comes to the attention of a municipality, that its park or playground is being used as a site for patently dangerous activities and that such use is likely to be continued, the municipality may not ignore the foreseeable dangers, continue to extend an invitation to the public to use the area and not be held accountable for resultant injuries (p 275). Furthermore and more significantly, when practices or activities pregnant with danger take place with frequency and regularity and over an extended period it cannot be said that the condition of the playground was safe (cf. Caldwell v Village of Is. Park, 304 NY 268, 275, supra; see, also, Nicholson v Board of Educ., 36 NY2d 798, supra). Apart from questions relating to actual notice, when a defective and dangerous condition has existed for such a length of time that knowledge thereof could be acquired by reasonable inspection or supervision, then such party will be held to have known what he should have known as the result of such inspection or supervision (1 Shearman and Redfield, Negligence [Rev ed], § 21, pp 46-47; Magid v City of New York, 234 App Div 38, 42, affd 259 NY 618).

Upon defendant’s motion made at the close of plaintiffs’ case, the test was whether there was any rational basis on which a jury could have found for plaintiffs, the plaintiffs being entitled to every favorable inference which could reasonably be drawn from the evidence submitted by them (4 Weinstein-Korn-Miller, NY Civ Prac, par 4401.05). Despite questions of inconsistency of proof and credibility of witnesses, the motion should not have been granted because plaintiffs had by their proof made out a prima facie case. There was evidence that the black, shaggy dog had been in this public playground during the noon hour, when customarily visited by students, over a four-month period. During this interval, the animal not only chased these children but attempted to bite them. Under plaintiffs’ proof, it could be found by the trier of the facts that defendant had constructive notice of a dangerous condition upon its playground, that defendant ignored this condition and failed in the exercise of the duty cast upon it to remove or prevent this danger, that because of the use of the area by youngsters and considering their propensities, the injury to the infant plaintiff was foreseeable, and that defendant was liable.

The order of the Appellate Division should be reversed and a new trial granted, with costs.

Jasen, J. (dissenting).

I agree with the Appellate Division that the trial court properly dismissed the complaint. When, as in the present case, the alleged negligence involves a failure to correct a dangerous situation, a municipality is not liable unless it received "notice and knowledge” within a reasonable time in which "to repair or guard against” the danger. (Cohen v City of New York, 204 NY 424, 427; accord Breil v City of Buffalo, 144 NY 163.) Although a municipality has a duty to maintain its parks and playgrounds in a reasonably safe condition, we have never extended that duty to hazards about which the municipality had no prior notice. The cases cited by the majority do not support a contrary view. In Nicholson v Board of Educ. (36 NY2d 798), the defendant received actual notice when it was specifically forewarned about the dangerous situation. Both Caldwell v Village of Is. Park (304 NY 268, 275) and Magid v City of New York (234 App Div 38, affd 259 NY 618) involved municipalities who had at least received constructive notice. However, my reading of the present record does not support a similar finding.

Without doubt, the defendant Housing Authority never received actual notice about the allegedly dangerous dog. The plaintiff offered no proof that, prior to the accident, anyone had complained of the dog’s presence in the playground area. Indeed, the manager of the adjoining apartment complex testified that he learned about the dog only after the accident occurred. Nor was the hazard so blatant and notorious that the authority can be presumed to have received constructive notice of a dangerous situation. Dealing with the issue of what constitutes constructive notice, Caldwell v Village of Is. Park (304 NY 268, supra) is misinterpreted by the majority. In Caldwell, the plaintiff suffered an eye injury when a third party illegally exploded fireworks in a public park. The court held that when "it is or should be apparent or it otherwise comes to the attention of a municipality that its park is being used by visitors as a site for criminal and patently dangerous activities and that such use is likely to be continued * * * the municipality may not ignore the foreseeable dangers, continue to extend an invitation to the public to use the area and not be held accountable for resultant injuries.” (304 NY, at p 275 [emphasis added].) The Caldwell decision specifically stated that the injury resulted not "from a danger inherent in the ordinary play of children”, but from a hazard so great that the Legislature made such unsupervised discharge of fireworks a crime. (304 NY, at p 275.) Because the use of fireworks was so inherently dangerous, constructive knowledge of that use also established constructive knowledge of a dangerous situation.

In the present case, however, the mere presence of a dog in the playground is neither criminal nor patently dangerous. The alleged incident occurred in a public playground in which any pedestrian could freely bring a domesticated animal. Unlike the situation in Caldwell, where fireworks exploded over a course of several hours, the dog came into the playground for at most a few moments each day. The dog was always accompanied by his master. There is no evidence that, prior to the accident, the dog ever bit anyone or caused any physical injury. Even if one could infer a hazard from the fact that the dog allegedly chased children on several occasions, the plaintiff failed to establish that the authority had any notice of such occurrences. The undisputed testimony of both the victim and a companion was that over a four-month period, the dog chased them on only five or six occasions. In my opinion, notice should not be imputed ffom so sporadic and infrequent an occurrence. Indeed, any periodic observer would more likely have inferred that the dog presented no hazard, since on the vast majority of occasions master and dog walked peacefully without disturbing the activity of children at, play.

Nor should constructive notice arise from the fact that the dog’s master, George Arroya, was an employee at a nearby Housing Authority project. As a worker on the maintenance staff, Arroya did not hold any supervisory responsibilities and was not a representative of the authority. He was not on duty when he walked the dog, and his employment responsibilities did not involve the public playground where the accident occurred.

Today’s decision comes close to transforming the authority and every municipality into an insurer for injuries caused by the many domesticated animals who habitually roam public areas. I cannot accept this extension of liability to dangers which the authority has no real opportunity to prevent.

Therefore, I conclude, as the Appellate Division did, that ”[u]nder the circumstances herein, having no prior notice, the defendant cannot be held responsible for the infant plaintiffs injuries”. (51 AD2d 1036, 1037.)

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

Order reversed, etc.