author: Gabrielli, J. Wachtler, J.

text:
    In the Matter of Cataract Disposal, Inc., Respondent, v Town Board of the Town of Newfane, Appellant, and Country Side Disposal, Inc., et al., Respondents.
    Argued April 30, 1981;
    decided June 16, 1981

      POINTS OF COUNSEL

      Robert S. Roberson for Town Board of Town of Newfane, appellant.
    I. The court of original jurisdiction correctly held that the town board was not prohibited from allowing the low bidder to submit an indemnity bond backed by cash in lieu of a performance bond with a surety. II. The court of original jurisdiction correctly held that, under the facts of this case, acceptance of an indemnity bond in lieu of a performance bond was not a material variation of the bid specifications. (Matter of Glen Truck Sales & Serv. v Sirignano, 31 Misc 2d 1027; Matter of Carter v Blake, 63 AD2d 760, 45 NY2d 705; Le Cesse Bros. Contr. v Town Bd. of Town of Williamson, 62 AD2d 28, 46 NY2d 960.) III. The bid of Cataract Disposal, Inc., was not in conformity with the bid specifications. IV. The interpretation given the bid specifications by the court below is clearly erroneous. V. The purpose of the competitive bidding laws is to protect the municipality, not the bidders. (Matter of Allen v Eberling, 24 AD2d 594; McCord v Lauterbach, 91 App Div 315.)

      Michael W. Gibson for J & I Disposal, Inc., respondent.
    I. “Deposit” method of bonding complies with the law applicable to bonding in this State. II. A deposit of cash in the amount specified by the Town of Newfane satisfied basic requirements of bonding. (People ex rel. Commissioners of Public Charities & Correction of City of N. Y. v Dando, 14 Daly 66.) III. Deposit of cash as security for performance not a material or substantial variance from specifications. (Le Cesse Bros. Contr. v Town Bd. of Town of Williamson, 62 AD2d 28, 46 NY2d 960.) IV. Town board had right to accept deposit method of bonding in order to enter into advantageous contract. (McCord v Lauterbach, 91 App Div 315.)

      Leonard G. Tilney, Jr., for Cataract Disposal, Inc., respondent.
    I. Deposit method of bonding may comply with New York State law applicable to bonding if bid specifications so state. II. A deposit of cash ex post facto in the amount specified by the Town of Newfane did not satisfy basic requirements of bonding. (Triple Cities Constr. Co. v Dan-Bar Contr. Co., 285 App Div 299, 309 NY 665; Nichols v MacLean, 98 NY 458; Le Cesse Bros. Contr. v Town Bd. of Town of Williamson, 62 AD2d 28, 46 NY2d 960.) III. A deposit of cash as security for performance bond in lieu of a performance bond was a material variation of the bid specifications. IV. The town board did not have the right to accept deposit method of bonding in order to enter into a contract with J & I Disposal, Inc. (Matter of Cave-of-the-

      Winds Scenic Tours v Niagara Frontier State Park & Recreation Comm., 64 AD2d 818; Jered Contr. Corp. v New York City Tr. Auth., 22 NY2d 187; Matter of Sweet Assoc. v Gallman, 36 AD2d 95, 29 NY2d 902.)
   OPINION OF THE COURT

Gabrielli, J.

We hold that a municipality may, under certain circumstances, treat a cash deposit accompanied by a suitable indemnity agreement as satisfying a requirement in a bid specification that the successful bidder furnish a “performance bond”. In so holding, we note that a bid specification calling for a “performance bond” does not necessarily require the involvement of a third-party surety.

In the latter half of 1978, respondent, the Town Board of Newfane, advertised for bids for a refuse collection contract to cover a three-year period of time. Among the stated bid specifications was the following requirement: “BID SECURITY AND PERFORMANCE BOND * * * The successful bidder shall furnish a performance bond in an amount equal to fifty (50%) percent of the amount of the bid for the first year of the contract”.

Four bids were submitted, including those of petitioner, Cataract Disposal, Inc., and respondents, J & I Disposal, Inc., and Country Side Disposal, Inc. The lowest bid was submitted by respondent J & I Disposal (J & I), but that contractor was unable to furnish a surety bond “in an amount equal to fifty (50%) percent of the amount of the bid for the first year of the contract”, apparently because surety companies in the area were generally unwilling to guarantee performance of this type of contract. Instead, J & I included in its bid an offer to deposit an equal amount in cash with the town to insure its faithful performance. In addition, J & I offered to execute an agreement authorizing the town to appropriate the cash collateral “to indemnify itself against' any loss actually incurred by reason of any loss or damage directly arising by reason of the failure of the [contractor] to faithfully perform its * * * contract”.

The town board found this offer satisfactory and awarded the contract to J & I. Petitioner Cataract Disposal, Inc. (Cataract), which was the only bidder to offer a surety bond, then commenced the present proceeding in an effort to have the bid award set aside. It was Cataract’s position that the town board acted improperly in “waiving” the requirement of a “performance bond” and accepting a cash deposit as a substitute, since a “performance bond” had been expressly required in the bid specifications.

Following submission of proof by each of the parties, Special Term denied the requested relief, holding that the town’s acceptance of a cash deposit from J & I did not constitute a material departure from the advertised bid specifications. The Appellate Division, however, reversed on the ground that the language in the town’s advertisement for bids did not place potential bidders on notice that a cash deposit would be an acceptable form of security. While the Appellate Division majority recognized that a cash deposit could satisfy the statutory requirement that a municipality obtain some form of security to insure faithful performance (General Municipal Law, § 103, subd 1), it reasoned that once the municipality solicits a “performance bond” it must adhere to that specification in order to “guard against favoritism, extravagance and corruption”. Accordingly, the court held that the decision of the town to accept J & I’s cash deposit in place of a “performance bond” furnished by a third-party surety should be set aside. We conclude, however, that the Appellate Division was in error and, consequently, we hold that the decision of that court should be reversed.

At the outset, we note our disagreement with the assumption, made by both the Appellate Division majority and the dissenters in our court, that the town board was not entitled to consider the cash deposit supplied by J & I Disposal to be a “performance bond” as that term was used in the town’s advertisement for bids. This assumption rests upon the fallacious premise that a “performance bond” necessarily entails an agreement by a third-party surety to insure the successful bidder’s faithful performance of the contract.

The term “performance bond” is defined in Black’s Law Dictionary as a “[b]ond which guarantees * * * against breach of contract” (5th ed, at p 1024; see Isaac v Reliance Ins. Co., 201 Kan 288). Simply put, a “performance bond” is merely an undertaking “given to insure the public authority that the contract once awarded [will] be completed as awarded” (Extruder Louver Corp. v McNulty, 34 Misc 2d 566, 569). We know of no rule of law which confines this concept of insurance against breach to an undertaking posted by a third-party surety or which would exclude from the concept a cash deposit submitted by the bidder against which the contracting public authority has a right of direct recourse. Indeed, a deposit of cash together with an indemnity agreement, when placed in the hands of the contracting municipality, may be viewed as the functional equivalent of a third-party surety, since both simply provide a reliable source of recovery in the event of the contractor’s default or insolvency.

This is not to suggest that a municipality has no choice in all cases but to accept an offer of a cash deposit as security for the faithful performance of a public works contract. To the contrary, we merely hold that when the bidding specifications call for a “performance bond”, it lies within the province of the contracting municipality to consider the requirement to have been met when the bidder offers to post a cash deposit and an indemnity agreement permitting the municipality to appropriate the collateral directly in the event of a breach.

We note that even if we were to adopt the rule advocated by petitioner that a third-party surety is required to satisfy a bid specification calling for a “performance bond”, we could not conclude that the town in this case acted improperly in awarding the refuse disposal contract to respondent J & I, since the substitution of a cash deposit and indemnity agreement would not have represented a material departure from the bid specifications. A minor variation from the terms of an advertisement for bids should be considered material only when it would impair the interests of the contracting public authority or place some of the bidders at a competitive disadvantage (Le Cesse Bros. Contr. v Town Bd. of Williamson, 62 AD2d 28, affd 46 NY2d 960). Neither condition is present here.

The Town of Newfane, which now holds the cash deposit posted by J & I, is certainly in no worse position than it would have been had J & I posted a third-party surety bond. Indeed, it may actually be in a somewhat better position, since the terms of the “collateralized indemnity” agreement permit it to appropriate the deposit directly in the event of a default in performance and thereby eliminates the need for making a demand on a surety for payment with the attendant risk of litigation (see 33 Opns St Comp, 1977, p 55).

Moreover, there is no indication on the present record that the town’s decision to permit J & I to post a cash deposit placed the other bidders at a competitive disadvantage. Indeed, there was undisputed proof in this case that the cash deposit submitted by J & I actually cost that contractor more than an equivalent third-party surety bond would have cost. Thus, contrary to the assertions of the dissenters, it is simply inaccurate to say that the use of a cash deposit by J & I enabled the contractor to submit a lower bid than that submitted by petitioner Cataract. As for the suggestion that the other bidders may have been discouraged from submitting bids by the town’s insistence upon a “performance bond”, it should suifice to point out that the town merely indicated to potential bidders that it was unwilling to accede to their request that the requirement be dropped entirely. There was nothing in the town’s specifications, however, which would have led potential bidders to assume that only a bond supplied by a licensed surety company would satisfy the requirement for financial security.

Our discussion would be incomplete if we failed to address ourselves to some of the comments made in the dissenting opinion. The dissenters suggest that a bond supplied by a third-party surety carries with it certain advantages that are not present when the contractor merely posts a cash deposit. Specifically, the dissenters argue that in situations where a surety bond has been posted, it is the surety and not the contracting public authority which is “faced with the difficulty of obtaining a reliable susbtitute * * * contractor on short notice” in the event of a default (at p 275). This contention, however, must be rejected, since it is based upon an unjustified assumption that surety companies generally undertake the absolute obligation of furnishing substitute performance. In fact, sample clauses providing for completion of the contract work by the surety generally give the surety the option of either procuring substitute performance or reimbursing the assured for its expenses in securing completion of the work following a default in performance by the contractor (see Am Jur Legal Forms 2d, Contractors’ Bonds, §§ 67:161-67:162). Thus, the municipality which accepts a surety bond as security is not necessarily protected against the sometimes arduous task of locating a new contractor to complete the work. Moreover, far from being placed in an advantageous position, the municipality which accepts a surety bond may well find itself in the undesirable position of having to accept the surety’s choice of substitute contractors even though it might prefer to select its own contractor and then be reimbursed by the surety.

The dissenters’ additional argument in favor of surety bonds is similarly without merit. The dissenters contend that a surety bond is to be preferred over a cash deposit because it enables the contracting authority to assume, without substantial investigation on its own, that any contractor obtaining such a bond has demonstrated financial stability. A municipality, however, may not avoid its statutory duty to satisfy itself as to the contractor’s financial responsibility by simply delegating the task of investigating the contractor to a private surety company (see General Municipal Law § 103, subd 1). Thus, the argument advanced by the dissenters cannot be accepted.

However much the dissenters might prefer a surety bond to other forms of financial security, the choice of what type of security to demand ultimately rests with the contracting public authority. Although a public authority may not award a contract without insisting upon some reasonable form of security, it generally has considerable latitude in defining the terms under which such security must be offered. Thus, if a municipality considers the presence of a third-party surety to be an important safeguard, it may ensure protection for itself by drafting its bid specifications accordingly. The fact remains, however, that in this case the contracting agency chose to require only a “performance bond” and did not feel a need to make a more specific request for a performance bond supplied by a surety. We cannot and should not attempt to “second guess” the wisdom of this legislative decision by the town.

Finally, the dissenters expressed concern about, the danger of favoritism and the potential for venality is completely unwarranted in the present case. Respondent J & I submitted the lowest bid for the three-year refuse disposal contract and no question was raised about the firm’s financial responsibility or ability to perform the contract in accordance with its terms. Under such circumstances, it cannot be said that there was anything sinister or even improper in the town’s decision to award the contract to J & I.

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

Wachtler, J.

(dissenting). A public bidder for a municipal garbage collection contract who has agreed to furnish a performance bond as required by the announced bidding specifications should not be permitted, after being the successful bidder, to avoid the requirement by posting cash as a substitute.

The acceptance of substitutes, especially cheaper substitutes, after the bidding is over is unfair, not only to other bidders who honestly included the cost of the bond in their estimates, but also to other municipalities which may not be so willing in future cases to accept the unspecified substitute. The contract documents clearly required, under the heading, BID SECURITY AND PERFORMANCE BOND that “The successful bidder shall furnish a performance bond in an amount equal to fifty percent (50%) of the amount of the bid for the first year of the contract” (emphasis added). The respondent was unable to obtain a performance bond and posted a cash indemnity bond instead. Nowithstanding this noncompliance, the municipality awarded respondent the contract.

Petitioner, Cataract Disposal, Inc., initiated this proceeding to cancel the contract. Special Term held that the town acted properly, but the Appellate Division reversed holding that the successful bidder must comply with the bid specifications. Because it must be concluded on this record that the noncompliance is significant, I would affirm.

The competitive bidding statute (General Municipal Law, § 103), in its design to promote competition and discourage favoritism, improvidence, and corruption (see Matter of Exley v Village of Endicott, 51 NY2d 426) contains an inherent disposition towards equal treatment of contractors (see Matter of Glen Truck Sales & Serv. v Sirignano, 31 Misc 2d 1027,1030; see, also, Matter of Gottfried Baking Co. v Allen, 45 Misc 2d 708, 710). The reason for this orientation is apparent; by placing all bidders on the same footing, the municipality receives the benefit of each being given an adequate opportunity to present the lowest possible bid. In this context, then, it is essential for us to determine whether the bid the town accepted varied in any material way from the bid requirements, and if so whether the acceptance of the noncomplying bid placed others at a competitive disadvantage (see Le Cesse Bros. Contr. v Town Bd. of Williamson, 62 AD2d 28, affd 46 NY2d 960).

The difference between a performance bond and a cash indemnity bond cannot be said to be merely a matter of semantics. By insisting on security that in the event of a default a surety will undertake performance, a municipality ensures for itself that the surety, and not the town officials, will be faced with the difficulty of obtaining a reliable substitute garbage collection contractor on short notice. Beyond this, a municipality that insists on a performance bond issued by a reputable surety company deT rives the benefit, supplementing investigation on its own, of the surety company’s assessment that the contractor to whom such a bond has been issued has demonstrated the financial stability and accounting regularity which a commercial surety would require. A deposit of cash simply cannot provide the same assurance.

It is no answer to state that the discrepancy was not material because the town chose to ignore it. Had the municipality insisted instead on literal compliance, a suit against the municipality by a frustrated bidder who could not obtain the bond would have faced little hope for success, because we would certainly resolve all doubts concerning the materiality of the variation in accord with the preference based on municipal experience as expressed in the bid documents. To now hold that we give equal freedom to a municipality to ignore clearly stated bid requirements fosters the very opportunity for abuse the statute was designed to avoid (see 1A Antieau, Municipal Corporation Law, § 10.54). Under the majority’s holding, technical bid requirements can be enforced or ignored depending on the predelictions of the officials in favor or against a particular contractor.

The majority’s decision to gloss over the contract wording also will serve to inject unnecessary vagueness into the bidding process. To be sure, had the town chosen to specifically exclude any security but a performance bond, no room for argument would remain. The point, however, is that bid documents are not expected to state what is unacceptable, but rather only what actually will be required. To hold otherwise would cause an unacceptable burden and risk in the drawing of bidding documents. Nor should a prospective bidder be permitted to rely on dictionary definitions, as has the majority, rather than the clear wording of the bid documents.

Finally, even if it were to be asserted in the abstract that a cash deposit accompanied by an indemnity agreement might in some instances be the substantial equivalent of a performance bond, that it was not so considered by the Town Board of the Town of Newfane in this instance prior to the opening of the bids is clear beyond any doubt. The night before the bid specifications were sent out a request was made to the town by the garbage contractors to eliminate the performance bond requirement. It appears that this request was prompted by the circumstance that it was the policy of the surety companies operating in the western New York area not to issue performance bonds in connection with municipal garbage collection contracts. The request whs considered and rejected, and the bid specifications still contained the performance bond requirement. Bids were received on November 8. It was only on November 29 when the twon board awarded the contract to J & I Disposal, Inc., that it became known that the town had then decided to accept a deposit of cash in lieu of a performance bond. Not only was this postbid change of position wholly unfair to the bidders which would have thought themselves precluded from bidding; the town and its taxpayers were thereby deprived of the statutorily mandated benefit of open competitive bidding. We cannot know how many bidders were dissuaded from submitting bids in the circumstances. In my view there is no reason to opt for such unfairness and ignore the long-standing rule of adherence to the requirements laid down in the bid specifications (see Le Cesse Bros. Contr. v Town Bd. of Williamson, 62 AD2d 28, affd 46 NY2d 960, supra).

Accordingly, and for the additional reasons stated by the court below, I dissent and vote to affirm the order of the Appellate Division.

Chief Judge Cooke and Judges Jasen and Meyer concur with Judge Gabrielli; Judge Wachtler dissents and votes to affirm in a seperate opinion in which Judges Jones and Fuchsberg concur.

Order reversed etc.

      . According to the uncontroverted allegations in J & I’s affidavit before the court, that firm had “contacted a number of insurance companies in an effort to secure a performance bond for posting as security * * * and [was] advised that no insurance companies issuing performance bonds in the Western New York area will issue a performance bond covering the performance of garbage disposal contracts”. The accuracy of this statement was apparently borne out by the complaints made by other contractors at a public meeting that they were unable to obtain performance bonds from the licensed insurance companies in the area.

      . According to respondent J & I’s affidavit, Cataract, which submitted the third lowest bid, was able to have performance bonds written on its account by an insurance company with a New York City office “because of its relationship to a parent corporation or other similar entity”. This allegation was not disputed by Cataract.

      . It should be noted that the amount of petitioner’s bid exceeded that of respondent J & I by more than the cost of a surety bond.

      . We are informed that, because of its relation to a parent corporation and the relationship of that parent with an insurance carrier, Cataract Disposal, Inc., was able to obtain a performance bond out of the carrier’s New York City office.

      . That J & I Disposal, Inc., had itself interpreted the bid specifications to require a performance bond appears from the fact that its bid stated that it had made unsuccessful efforts to obtain a performance bond and set forth as “Alternative No. 2” — “Waive bonding requirements due to unavailability of same”.


source: Caselaw Access Project

author: Meyer, J.

license: Public Domain

text:
    Anthony O’Connor et al., Respondents, v G&R Packing Co., Appellant.
    Argued April 27, 1981;
    decided June 18, 1981

      POINTS OF COUNSEL

      William F. McNulty and Anthony J. McNulty for appellant.
    I. The doctrine of collateral estoppel clearly barred plaintiffs from relitigating the issue of young O’Connor’s own contributory negligence in their present action. (Vincent v Thompson, 50 AD2d 211; Schwartz v Public Administrator of County of Bronx, 24 NY2d 65; Gramatan Home Investors Corp. v Lopez, 46 NY2d 481; People ex rel. Dowdy v Smith, 48 NY2d 477; Merriman v Baker, 34 NY2d 330; Nucci v Warshaw Constr. Corp., 13 AD2d 699, 12 NY2d 16.) II. In reversing the order of the Special Term, the court below relied heavily on matters that are not germane to the central issue of collateral estoppel. (Putnam v Stout, 38 NY2d 607; Grubb v Public Utilities Comm., 281 US 470; Brady v Harborfields Cent. School Dist. No. 6, Greenlawn, 60 AD2d 591; Bacon v Celeste, 30 AD2d 324; MacDowall v Koehring Basic Constr. Equip., 49 NY2d 824.) III. Under the holding of this court in Zuckerman v City of New York (49 NY2d 557), plaintiffs at Special Term herein clearly failed to meet the basic evidentiary standards required for opposing a motion for summary judgment. (Zuckerman v City of New York, 49 NY2d 557.)

      Emilio Nunez for respondents.
    I. The Judge in the first trial never reached the question of contributory negligence. (City Bank Farmers Trust Co. v Macfadden, 13 AD2d 395, 12 NY2d 1035, cert den sub nom. City Bank Farmers Trust Co., Trustee v Macfadden Foundation, 375 US 823; Vincent v Thompson, 50 AD2d 211; Magar v Hammond, 183 NY 387; Dominguez v Manhattan & Bronx Surface Tr. Operating Auth., 46 NY2d 528; Jasinski v New York Cent. R. R., 21 AD2d 456; Lederman v New York City Tr. Auth., 36 Misc 571, 21 AD2d 751, 14 NY2d 488; Lo Casto v Long Is. R. R. Co., 6 NY2d 470; Ralff v Long Is. R. R. Co., 266 App Div 794, 292 NY 656; Van Houten v Long Is. R. R. Co., 279 App Div 1099, 280 App Div 830, 304 NY 990; Merriman v Baker, 34 NY2d 330.) II. Any conclusion as to infant plaintiff’s contributory negligence would have been unfiecessary to the decision in the first trial. (Wartels v County Asphalt, 29 NY2d 372; MacDowall v Koehring Basic Constr. Equip., 49 NY2d 824; Scurti v City of New York, 40 NY2d 433; Basso v Miller, 40 NY2d 233; Magar v Hammond, 183 NY 387; Glicksman v Smith, 43 AD2d 544; Dole v Dow Chem. Co., 30 NY2d 143; Lewis v Royle & Sons, 46 AD2d 304; Slater v American Min. Spirits Co., 33 NY2d 443; Carmel Assoc. v Turner Constr. Co., 35 AD2d 157.) III. Appellant’s limited motion for summary judgment on its collateral estoppel defense was properly opposed and correctly denied. (Zuckerman v City of New York, 49 NY2d557.)
   OPINION OF THE COURT

Meyer, J.

Issue preclusion is available to protect a defendant who was not a party to an earlier lawsuit from the relitigation of an issue considered alternatively in the prior trial only when it is clear that the prior determination squarely addressed and specifically decided the issue. On the record before us it cannot be said that contributory negligence, which would bar plaintiffs’ recovery in the instant action, was so determined in plaintiff’s prior action against other defendants. Defendant’s motion for summary judgment was, therefore, correctly denied.

Plaintiff, Anthony O’Connor, then 16 years of age, was injured on February 11, 1967 in a Brooklyn railroad yard, when, having climbed a ladder on a freight car, he attempted to throw a snowball át his companions and his hand touched an overhead wire carrying 11,000 volts. An action brought by Anthony and his father against the railroads using the yard was dismissed at the end of the plaintiffs’ case, the Trial Judge ruling (1) that as a trespasser Anthony was owed only the duty of refraining from inflicting a willful or wanton injury; (2) that Anthony had violated Penal Law and Railroad Law provisions by going upon defendants’ tracks and cars; (3) that many cases, a number of which he cited, hold that in those circumstances the railroad is not liable, even though some of the plaintiffs involved in those cases were younger than Anthony; and (4) that plaintiffs had not substantiated a last clear chance theory because Anthony was not in a position from which he could not extricate himself, and the evidence did not establish that any of defendants’ employees had knowledge of Anthony’s situation in time to avoid the accident or failed to exercise care to do so. As part of his oral decision, the Trial Judge, just prior to his reference to the cases supporting his conclusion that defendants were not liable, stated: “The infant plaintiff not only disobeyed these statutes which were enacted for the benefit of the public but also deliberately and needlessly exposed himself to a known danger by climbing to the top of a freight car and moving about in a close proximity to live high tension wires.” No appeal was taken from the dismissal of the action against the railroads.

In this action Anthony and his father seek to recover from G & R Packing Co. whose yard adjoined the railroad yard and through whose yard Anthony gained access to the railroad yard. Contending that dismissal of the prior action was grounded on both absence of a breach of duty by the railroads and presence of contributory negligence, G & R Packing moved under CPLR 3211 and 3212 to dismiss. Its motion was granted by Special Term, but that ruling was reversed in an exhaustive opinion by the Appellate Division.

We write essentially to place this matter in context with our decision in Malloy v Trombley (50 NY2d 46), which the Appellate Division had no opportunity to consider because it was handed down only four days before that court’s decision in the present case.'Malloy concerned the preclusive effect to be given a finding by the Court of Claims in negligence actions against the State, jointly tried, that both plaintiffs had been guilty of contributory negligence. In those actions both Malloy and Trombley contended that a State trooper had been negligent in stopping his vehicle on the southbound side of the roadway and leaving its headlights on while he went to inquire why Malloy’s vehicle was parked without lights at 10:30 p.m. partially on the northbound side of an unlighted rural highway. Trombley’s vehicle collided with the Malloy vehicle as Trombley proceeded northbound on the roadway. After a Bench trial, the Court of Claims Judge, aware of the pendency of the Supreme Court actions, held that each claimant had failed to prove negligence on the part of the State, and “[ajlthough unnecessary to a decision herein” (at p 50) that each was barred from recovery by his own contributory negligence. We held the contributory negligence finding preclusive in the later actions, noting that the thorough and careful deliberation of the Court of Claims Judge and the substantial operational purpose of his determination in relation to the judicial process made it evident that, though an alternative finding, the determination was neither “casual [n]or of any lesser quality than had the outcome of the trial depended solely on this issue” (50 NY2d, at p 52).

The contrast between the two situations is clear. Malloy dealt with findings of fact, made by the trier of fact, after a full trial, in an opinion which made evident that the Judge had firmly in mind the possible preclusive effect of his factual findings on the then pending other actions and which, since it spoke directly of “contributory negligence”, left no doubt that the precluded litigant had been given his day in court on that issue. In the present action, we deal with a Trial Judge’s ruling at the end of the plaintiff’s case which involves no findings of fact. Rather it constitutes a holding that as a matter of law the evidence adduced was insufficient to present a question of fact for the jury. Because the statement of that holding was phrased in terms of Anthony’s status as a trespasser, and the cases cited in support of the holding all concerned the duty of a landowner to a trespasser, there can be no question that the essence of the ruling was that no breach of duty had been proved. The same cannot be said with respect to the sentence quoted above in which the Judge before whom the railroad actions were tried arguably touched on plaintiff’s duty of care for his own safety. The ambivalence of the words used, and of the holding in relation to that issue, arises from a number of factors: the words “contributory negligence” were not used; the Trial Judge could not have had in mind the effect of his holding on the present action which was not begun until several months after his dismissal of the action against the railroads; none of the cases cited concerned contributory negligence, nor does the language used indicate that consideration had been given to Anthony’s age, experience, intelligence, and degree of development (see PJI 2:48), to “the well-known propensities of children to climb about and play” which a jury would be entitled to consider (Mayer v Temple Props., 307 NY 559, 563), or to the rule that contributory negligence “is a jury question in all but the clearest cases” (MacDowall v Koehring Basic Constr. Equip., 49 NY2d 824, 827). Litigation of the contributory negligence issue is not precluded by such a nonspecific nonfactual determination (cf. Bell v Merrifeld, 109 NY 202, 211; City Bank Farmers Trust Co. v Macfadden, 13 AD2d 395, 404, affd 12 NY2d 1035; Restatement, Judgments 2d [Tent Draft No. 2], § 88, Comment g).

Though not considered below, defendant argues before us that it is in any event entitled to summary judgment because plaintiffs’ response to its motion for that relief was simply an attorney’s affidavit which did not meet plaintiffs’ burden of demonstrating by admissible evidence the existence of a factual issue concerning contributory negligence (Zuckerman v City of New York, 49 NY2d 557). That argument overlooks the fact that the trial transcript of the action against the railroads was appended to the attorney’s affidavit as an exhibit, as properly it might be (Zuckerman v City of New York, supra, at p 563). The testimony of Anthony and his father contained in that transcript presents a jury question on the issue of contributory negligence, bearing in mind the rules, averted to above, that contributory negligence is almost always an issue of fact and, with respect to an infant plaintiff, must be evaluated in light of the intelligence and development of the particular individual.

Because the less than explicit holding in the prior action should not be given preclusive effect and we cannot say on the evidence before us that Anthony was guilty of contributory negligence as a matter of law, the order of the Appellate Division should be affirmed, with costs, and the certified question answered in the affirmative.

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

Order affirmed, etc.

      . The incident out of which the action arises predates enactment of CPLR 1411 (L 1975, ch 69).

      . Not until 1976 was the status distinction excised from premises liability law (Basso v Miller, 40 NY2d 233; Scurti v City of New York, 40 NY2d 433).


author: Wachtler, J. Meyer, J.

text:
    David C. Gilberg, Respondent, v Joseph P. Barbieri, Appellant.
    Argued April 3, 1981;
    decided June 16, 1981

      POINTS OF COUNSEL

      Joseph F. Longo, Joseph G. Goubeaud, Jr., and Mary Ellen Manley for appellant.
    I. The doctrine of collateral estoppel as set forth in S. T. Grand, Inc. v City of New York applies only to convictions for crimes, not to convictions for violations under the Penal Law. (S. T. Grand, Inc. v City of New York, 32 NY2d 300; Read v Sacco, 49 AD2d 471; Walther v News Syndicate Co., 276 App Div 169; Augustine v Village of Interlaken, 68 AD2d 705, 48 NY2d 881.) II. Appellant was deprived of his right to trial by a jury of his peers, as guaranteed by the Constitution of the United States and the Constitution of the State of New York. (Duncan v Louisiana, 391 US 145; Baldwin v New York, 399 US 66; Hires v New York Cent. R. R., 24 AD2d 1075; Jones v Young, 257 App Div 563; Chaffee v Lawrence, 282 App Div 875; Matter of Tierney v State of New York, 55 AD 2d 158; Duverney v State of New York, 96 Misc 2d 898; People v Delaware & Hudson R. R. Corp., 42 AD2d 618; Rembrandt Inds. v Hodges Int., 38 NY2d 502.) III. The first criterion set forth in S. T. Grand, Inc. v City of New York has not been satisfied, as there is nbt sufficient identity of issue. (Schwartz v Public Administrator of County of Bronx, 24 NY2d 65; People v Moyer, 27 NY2d 252.) IV. The second criterion set forth in S. T. Grand, Inc. v City of New York has not been satisfied, as there was not full and fair opportunity to contest the issues during the harassment trial. (Read v Sacco, 49 AD2d 471; Schwartz v Public Administrator of County of Bronx, 24 NY2d 65.) V. A dangerous precedent would be set if a conviction for the violation of harassment was permitted to stand as the basis for summary judgment on the issue of liability in a subsequent civil assault case.

      David C. Gilberg, respondent pro se.

    I. Appellant was found guilty after trial of the charge of harassment; by such finding his conviction was proven beyond a reasonable doubt; such standard of proof was with greater certainty than required in the civil cases. (People v Todaro, 26 NY2d 325; People v Ferrara, 199 NY 414.) II. The evidence adduced at the harassment trial upon which defendant was found guilty, cannot be relitigated in this civil action. (De Witt v Hall, 19 NY2d 141; People v Ferrara, 199 NY 414; S. T. Grand, Inc. v City of New York, 32 NY2d 300.) III. Summary judgment is constitutionally permissible. (Walker v Sauvinet, 92 US 90; Hanna v Mitchell, 235 NY 534.) IV. A conviction of the offense of harassment, after trial, may be used in support of a motion for summary judgment on the theory of collateral estoppel. (People v Gray,
      41 AD2d 125, 34 NY2d 903, 419 US 1055; People v Van Buren, 71 AD2d 755; Ando v Woodberry, 8 NY2d 165; Walther v News Syndicate Co., 276 App Div 169; Watson v State of New York, 53 AD2d 798; Augustine v Village of Interlaken, 68 AD2d 705; Rera v Rera, 100 Misc 2d 670; People v Klein, 96 Misc 2d 692; People v Felton, 95 Misc 2d 960; People v Scott, 93 Misc 2d 1074.) V. CPLR 3212 governs summary judgment; the moving papers in support of the motion made by plaintiff met its requirements; the cause of action was established; the opposition to the motion for summary judgment did not meet the requirements to defeat such a motion. (Columbia Ribbon & Carbon Mfg. Co. v A-1-A Corp., 42 NY2d 496; Capelin Assoc. v Globe Mfg. Corp., 34 NY2d 338; Johnson v Sharpe, 66 AD2d 955; Central School Dist. No. 2 of Town of Oyster Bay v Cohen, 60 Misc 2d 337; Speller v Ryder Truck Rental, 47 AD2d 608; Connell v St. Mary’s Hosp. of Troy, 45 NY2d 944; Middle States Leasing Corp. v Manufacturers Hanover Trust Co., 62 AD2d 273; Lincoln First Bank of Rochester v Siegel, 60 AD2d 270; Freedman v Chemical Constr. Corp., 43 NY2d 260; Richard Equip. Corp. v Manhattan Ind. Contr. Co., 9 AD2d691.)
   OPINION OF THE COURT

Wachtler, J.

The question on this appeal is whether a conviction for the petty offense of harassment can later be used to preclude the defendant from disputing the merits of a civil suit for assault, involving the same incident and seeking a quarter of a million dollars in damages. The Trial Court held that collateral estoppel precluded the defendant from contesting the merits of the civil complaint and that the plaintiff was therefore entitled to summary judgment on the liability issue. The Appellate Division affirmed with one dissent and granted the defendant leave to appeal to this court on a certified question concerning the correctness of its order.

Plaintiff is a lawyer who for many years had been representing defendant’s former wife in various matrimonial proceedings involving the defendant. In February, 1976 he called the defendant to appear for an examination before trial in connection with a claimed breach of a separation agreement. Defendant arrived at plaintiff’s office without an attorney and repeatedly refused to answer questions until he had retained a lawyer. After several minutes of unproductive questioning plaintiff granted defendant an adjournment and shouted at him to get out of his office. Defendant then came around the desk toward the plaintiff and the two men scuffled until pulled apart by the plaintiff’s sons. The plaintiff recovered the defendant’s glasses and threw them at him. As he left, the defendant reciprocated by throwing plaintiff’s glasses at him.

Plaintiff filed an information accusing defendant of harassment, a petty offense designated a violation by the Penal Law. A nonjury trial was held in the City Court of Mount Vernon on the afternoon of July 27, 1976. The plaintiff testified that after he told the defendant to leave the defendant stood up, came around to where the plaintiff was seated behind his desk and repeatedly “pummelled” him. The defendant stated that he had merely shoved the plaintiff in self-defense when the plaintiff shouted at him to get out and reached, in a threatening manner, toward a hard object on his desk. The stenographer, called by the People, testified that both men rose from their chairs and grappled after- a heated exchange. She claimed, however, that the defendant struck the first blow.

During the brief trial the court informed defense counsel that a felony hearing was scheduled to begin when this trial concluded. At the close of arguments for both sides the court immediately found the defendant guilty of harassment for “using physical force against” the plaintiff. The court noted, however, “You’re not found guilty of a crime, it’s a violation. It’s merely a pushing or shoving of somebody, it’s not assault third degree.” The court also immediately sentenced the defendant to a one-year conditional discharge, the condition being that “you are not to have any encounters with the law firm of Gilberg and Gilberg whether you like it or not.” The court strongly suggested that the defendant retain a lawyer to act as his spokesman in future dealings' with his former wife’s attorneys.

The plaintiff then commenced this civil action for assault. The summons was issued the day following the defendant’s conviction for harassment. The complaint, subsequently served, alleges that the defendant “assaulted and beat” the plaintiff “by striking him repeatedly”. A quarter of a million dollars in damages are sought for injuries which allegedly include emotional distress, “injuries to head, face, arm and chest, causing discomfort, massive sweating, diarrhea, nausea” and aggravation of a preexisting heart condition.

After the case had been placed on the jury calendar plain-. tiff moved for summary judgment noting that the defendant had previously been convicted of harassment as a result of this incident and contending that therefore there was no “issue as to the assault for determination by a court or jury”. The trial court agreed that at the prior City Court proceeding defendant “was afforded a full and fair opportunity to litigate the very issue raised upon this motion * * * viz, did defendant lay violent hands upon plaintiff” and, noting the City Court Judge’s finding that defendant used “physical force against” the plaintiff, concluded that defendant’s liability is “no longer disputable”. Accordingly the court granted the motion for summary judgment against the defendant on the issue of liability and ordered the matter to proceed on the issue of damages alone.

The Appellate Division affirmed in a memorandum in which it concluded that all the requirements necessary to invoke the doctrine of collateral estoppel had been met in this case. Specifically the court found that the factual issue necessarily decided in the harassment action was identical and decisive of the present action. The court also stated that the defendant had a full and fair opportunity to contest the accusation of harassment at his trial in the City Court. One Justice dissented primarily on the ground that the defendant had been deprived of his right to a jury trial which, although not available to him on the harassment charge, was constitutionally and statutorily guaranteed to him in the civil action for money damages.

The doctrine of collateral estoppel is based on the notion that it is not fair to permit a party to relitigate an issue which has previously been decided against him in a proceeding in which he had a fair opportunity to fully litigate the point (see, e.g., Schwartz v Public Administrator of County of Bronx, 24 NY2d 65, 69; People v Lo Cicero, 14 NY2d 374, 380; People v Berkowitz, 50 NY2d 333, 344). Properly utilized it also serves to conserve the resources of courts and litigants. Because the doctrine is based on general notions of fairness there are few immutable rules.

Due process, of course, would not permit a litigant to be bound by an adverse determination made in a prior proceeding to which he was not a party or in privity with a party (Postal Tel. Cable Co. v Newport, 247 US 464; Provident Bank v Patterson, 390 US 102). Until recently the prior determination generally could not even be used against a party to the prior suit unless his current opponent had also been a party who would have been mutually bound by the determination had it been unfavorable to him (see Siegel, New York Practice, § 460). In 1967, however, we held that mutuality of estoppel “is a dead letter” in this State (B. R. De Witt, Inc. v Hall, 19 NY2d 141, 147) and subsequently in Schwartz v Public Administrator of County of Bronx (24 NY2d 65, 71, supra) indicated that “New York law has now reached the point where there are but two necessary requirements for the invocation of the doctrine of collateral estoppel. There must be an identity of issue which has necessarily been decided in the prior action and is decisive of the present action, and, second, there must have been a full and fair opportunity to contest the decision now said to be controlling” (but, also, see People v Berkowitz, supra, preserving the mutuality concept in criminal cases). The rejection of the mutuality principle in civil actions also undermined the rule, which had long prevailed in this State, that a conviction in a criminal case could not be given conclusive effect in a subsequent civil suit (Schindler v Royal Ins. Co., 258 NY 310). That rule was abandoned in 1973 (S. T. Grand, Inc., v City of New York, 32 NY2d 300).

These developments were not merely a remodeling of a rigid mechanism with fewer parts. In the Schwartz case and subsequent decisions it was emphasized that historically and necessarily collateral estoppel is a flexible doctrine which can never be rigidly or mechanically applied (Schwartz v Public Administrator of County of Bronx, supra, at p 73; People v Berkowitz, 50 NY2d 333, 344, supra; People v Plevy, 52 NY2d 58). The question as to whether a party has had a full and fair opportunity to contest a prior determination cannot be reduced to a formula. It cannot, for instance, be resolved by a finding that the party against whom the determination is asserted was accorded due process in the prior proceeding (People v Plevy, 52 NY2d 58, 65, supra). The point of the inquiry, of course, is not to decide whether the prior determination should be vacated but to decide whether it should be given conclusive effect beyond the case in which it was made (see, e.g., Restatement, Judgments 2d [Tent Draft No. 3], § 88, Comment i).

Thus we noted in the Schwartz case (at p 72) that when collateral estoppel is in issue, the question as to whether a party had a full and fair opportunity to litigate a prior determination, involves a practical inquiry into “the realities of litigation. A comprehensive list of the various factors which should enter into a determination whether a party has had his day in court would include such considerations as the size of the claim, the forum of the prior litigation, the use of initiative, the extent of the litigation, the competence and experience of counsel, the availability of new evidence, indications of a compromise verdict, differences in the applicable law and foreseeability of future litigation” (see, also, Restatement, Judgments 2d [Tent Draft No. 3], § 88). A consideration of those factors in this case leads to the conclusion that,the City Court harassment conviction should not be given conclusive effect in the civil action for damages.

The City Court action was a relatively minor one. Although nominally a criminal trial, the defendant was not actually charged with committing a crime, which by definition includes only felonies and misdemeanors (Penal Law, § 10.00, subd 6). As the drafters of the Penal Law noted, petty infractions below the grade of a misdemeanor are, like traffic violations, more accurately described as “noncriminal offenses” (see Gilbert’s Criminal Law and Procedure [1970 ed], Commission Staff Notes on Proposed Penal Law, § 15.00, p 2-190). By statute collateral estoppel effect is denied to traffic convictions (Vehicle and Traffic Law, § 155) and determinations in small claims actions (see section 1808 of the Uniform City Court Act, Uniform Justice Court Act and New York City Civil Court Act). Even in the absence of statute, however, these minor suits are illustrative of the type of determination which, under accepted common-law principles, should not be held conclusive in later cases (see, e.g., Restatement, Judgments 2d [Tent Draft No. 4], § 68.1, subd [c], and Comment d).

Because of the relative insignificance of the charge, the defendant had no constitutional or statutory right to a jury trial, as he would have in a true criminal prosecution (Duncan v Louisiana, 391 US 145; Baldwin v New York, 399 US 66; CPL 340.40; CPL 260.10; see, also, Practice Commentary to CPL 340.40, McKinney’s Cons Laws of NY, Book 11A), or even in the subsequently initiated civil action for damages (CPLR 4101, subd 1; see, also, NY Const, art I, § 2). Nor could he reasonably expect or be expected to defend with the same vigor. The brisk, often informal, way in which these matters must be tried, as well as the relative insignificance of the outcome, afford the party neither opportunity nor incentive to litigate thoroughly or as thoroughly as he might if more were at stake.

Of course the defendant did not choose to litigate the matter first in the City Court. It was the plaintiff who had the initiative. Nor is there any suggestion that the defendant or the City Court Judge were aware of the possibility that a conviction on the petty criminal charge might later be used to conclusively establish liability in a quarter million dollar damage suit. As noted that action was not initiated until the day following the conviction. Consistent with the apparent minor nature of the charge, and the general practice in the local criminal courts, the non jury trial was brief, consuming but part of an afternoon, followed immediately by verdict, allocution and sentence. In short the defendant was not afforded the same opportunity to litigate his liability in the City Court as he would in the Supreme Court. Thus it. is not unfair to permit hfm one opportunity to fully defend the civil complaint on the merits in a manner consistent with the potential magnitude of the suit.

A contrary ruling, granting collateral estoppel effect to convictions in this type of case would not reduce the amount of litigation in the long run. It would, of course, provide an incentive to potential plaintiffs to file a minor criminal charge before commencing a civil action. If the defendant is convicted the prosecution will have also won the plaintiff’s civil action, without the expense of a civil trial and, more important, without the plaintiff having to convince a jury of the merits of his action. If, on the other hand, the defendant is acquitted, the plaintiff’s civil action would not be jeopardized because he could not be bound by the acquittal for the reason, among others, that he was not a party to the criminal trial. Of course a defendant alerted to the potential impact in future cases would be compelled to defend the violation charge with a vigor out of all proportion to its otherwise petty nature, and at variance with the proper function of the local criminal courts, to provide expeditious disposition of minor cases. As one commentator has noted in a similar context: “In the end this could frustrate the very purpose of res judicata to reduce contention and dispute. Instead of more litigation later, there' will be more litigation now” (Rosenberg, Collateral Estoppel in New York, 44 St Johns L Rev 165, 177).

Accordingly, the order of the Appellate Division should be reversed and the motion for summary judgment denied. The certified question should be answered in the negative.

Meyer, J.

(dissenting). Respectfully, I dissent. I would affirm because (1) the issues in this action and the prior criminal proceeding are identical; (2) defendant was represented in the criminal proceeding by the same attorney who represents him in this action and had a full and fair opportunity in the criminal proceeding to litigate the question whether he struck plaintiff; (3) the absence of a right to jury trial in the criminal proceeding raises neither a constitutional nor a statutory bar to the application of the rules of collateral estoppel; and (4) the fact that harassment is a violation, rather than a misdemeanor or felony is, by itself, an insufficient basis for denying collateral estoppel effect to the criminal court’s finding.

I

The underlying principles can be quickly stated. S. T. Grand, Inc. v City of New York (32 NY2d 300) establishes that the rule of issue preclusion applies where the defendant in a prior criminal proceeding is defendant in a subsequent civil action involving the same issue and that the collateral estoppel rules enunciated in Schwartz v Public Administrator of County of Bronx (24 NY2d 65) apply as well when the prior proceeding is criminal as when it is civil. The Schwartz case makes clear that the criteria are two: “an identity of issue which has necessarily been decided in the prior action and is decisive of the present action, and, second, there must have been a full and fair opportunity to contest the decision now said to be controlling” (24 NY2d, at p 71). Schwartz and B. R. De Witt, Inc. v Hall (19 NY2d 141) require that the opponent of collateral estoppel bear the burden of establishing that he did not have a full and fair opportunity, but impose on the proponent the burden of showing identicality of issue and that the issue was necessarily decided. Moreover, the S. T. Grand holding has been applied in Read v Sacco (49 AD2d 471) in awarding summary judgment to the victim of an assault, seeking to recover $225,000 as damages for his personal injuries, against the defendant in the civil action, previously convicted in Town Justice Court of assault, third degree, and fined $25. While the Appellate Division’s holding in Read is not binding upon us, its persuasive reasoning is not lessened by the similar holdings in Ross v Lawson (395 A2d 54 [DC]) and Newman v Larsen (225 Cal App 2d 22) or by the subsequent adoption by the American Law Institute of section 133 of the Restatement of Judgments, Second. Comment c to that section (Tent Draft No. 7, p 64) notes that the rule of preclusion in favor of a third person in a subsequent civil action “applies whether the defendant in the criminal action is defendant or plaintiff in the subsequent civil action,” and the last paragraph of Comment e to the same section (Tent Draft No. 7, pp 66-67) states that: “There are two basic patterns for applying issue preclusion in favor of a third party. The clearest situation is where the person who was convicted of an offense brings an action against the third party to assert a claim that rests on factual premises inconsistent with those established in the criminal prosecution. The other situation is where the victim of the conduct that was criminally prosecuted then brings an action for civil redress against the wrongdoer for the consequences of the conduct. Although the courts were somewhat slower in coming to apply issue preclusion in the latter situation than in the former, it is now settled that preclusion should apply in both.”

II

The complaint in the present action alleges that “defendant assaulted and beat the plaintiff herein, by striking him repeatedly.” The accusatory instrument in the criminal proceeding contained but one count which charged harassment in violation of section 240.25 of the Penal Law in that “with intent to harass, annoy and alarm another person, the deft, [sic] struck such, person, to wit, the deft, [sic] struck your deponent several times about the chest, head and face area.” Section 240.25 of the Penal Law denominates harassment “a violation” and so far as here pertinent defines harassment as follows: “A person is guilty of harassment when, with intent to harass, annoy or alarm another person: 1. He strikes, shoves, kicks or otherwise subjects him to physical contact, or attempts or threatens to do the same”. Under familiar principles, the accusatory instrument having alleged that defendant struck Mr. Gilberg, defendant could not have been convicted of harassment without proof of striking. It is, therefore, irrelevant that under the statutory definition proof of an attempt or threat to strike would have been sufficient, and clear that the issues are identical and that the City Court Judge in stating to defendant that “I’m finding you guilty of using physical force” was making a finding essential to the criminal proceeding (cf. O’Connor v G & R Packing Co., 53 NY2d 278). Plaintiff has, therefore, borne his burden of showing identically of issue and that the issue was necessarily decided.

III

Defendant, however, has not borne his burden. Whether defendant had a full and fair opportunity to establish in the criminal action that he did not use physical force on plaintiff Gilberg requires consideration of such factors as “the size of the claim, the forum of the prior litigation, the use of initiative, the extent of the litigation, the competence and experience of counsel, the availability of new evidence, indications of a compromise verdict, differences in applicable law and foreseeability of future litigation” (Schwartz v Public Administrator of County of Bronx, 24 NY2d, at p 72, supra), or as it was recently put, in People v Plevy (52 NY2d 58, 65), consideration of “the ‘realities of the [prior] litigation’, including the context and other circumstances which, although not legal impediments, may have had the practical effect of discouraging or deterring a party from fully litigating the determination which is now asserted against him.”

Since it is defendant’s burden, as the opponent, to tender evidentiary proof that he did not have full and fair opportunity (Zuckerman v City of New York, 49 NY2d 557), we need consider only so many of the Schwartz-Plevy factors as his papers on the motion for summary judgment put in issue. Defendant’s attorney’s affirmation asked that the motion be denied because (a) the issue was not identical and the proof required for harassment was less than required for assault inasmuch as proof of annoyance would suffice for harassment, (b) the City Court proceeding was nonjury, (c) the City Court Judge cut off his cross-examination of plaintiff concerning his activities during the altercation, (d) the City Court Judge was anxious to end the trial because he had other business to attend to and cut short the questioning, (e) the City Court Judge did not set forth in his opinion the type of conduct required for conviction of harassment, (f) harassment is a violation not a crime, and (g) defendant denied striking plaintiff and “has evidence to offer on the facts in question.”

Item (a) is answered in Part II above; Items (b) and (f) in Parts IV and V below. Item (e) is irrelevant, the City Court Judge having found as already noted that defendant was guilty of “using physical force.” Items (c) and (d) are simply not borne out by the record. The colloquy that is referred to in Item (c) occurred during cross-examination of plaintiff and concerned the propriety of the Trial Judge’s statement that it was well known that plaintiff had had a heart attack some years before. Defendant’s attorney ultimately withdrew his motion for a mistrial and proceeded with cross-examination. The record contains not the slightest evidence that defendant’s attorney was prevented from asking plaintiff any question. As for Item (d) the Trial Judge did no more than note that he had a felony hearing to conduct when the harassment trial concluded. Defendant’s attorney did not even suggest then or at the end of the trial that he had been so hurried that he was unable to present his defense clearly or adequately, or ask for an adjournment, or otherwise indicate that he wished to examine defendant on redirect. Moreover, he answered the court’s inquiry at the end of the cross-examination of defendant concerning whether defendant had any further witnesses with a simple “No. Your Honor.” To give credence to the argument that defendant did not have a full and fair opportunity to present his defense on the basis of Items (c) and (d) is to emasculate the rule of issue preclusion. Finally, Item (g) is not only irrelevant because defendant furnishes no valid excuse for not offering the evidence during the City Court trial, but also is defective in form since it does not specify the nature of the evidence to be offered and its relevance to the issue.

The result is no different if we ignore defendant’s failure to raise the additional factors referred to in Schwartz and considered in the majority opinion. That opinion emphasizes (a) that defendant was found guilty and sentenced “immediately” upon conclusion of the trial, (b) that the present action was not begun until the day after defendant’s conviction for harassment and defendant and the City Court Judge were not aware that his finding might be given collateral estoppel effect, (c) that plaintiff claims damages of $250,000 in this action, (d) the flexibility of collateral estoppel as a doctrine, (e) the relative insignificance of the charge, and the brisk and informal way in which such a charge is tried, (f) the absence of a right to a jury trial, (g) the fact that defendant did not choose the forum, and (h) that plaintiff would not be bound by an acquittal but defendant would have to defend the charge with a vigor “out of all proportion to its otherwise petty nature, and at variance with the proper function of the local criminal courts, to provide expeditious disposition of minor cases.” I cannot accept the majority’s reasoning, as to jury trial and the fact that harassment is only a violation, for the reasons stated in Parts IV and V below; as to the other grounds because it deals with generalities rather than the facts of this case (Items [a], [c], [d], [e], [g]), misconceives the operations of a local criminal court such as the City Court of Mount Vernon (Items [a], [e], [h]), confuses foreseeability and knowledge (Item [b]) and overemphasizes mutuality (Item [h]), previously limited, if not entirely discarded, by this and most other courts.

The transcript of the City Court trial is part of the record on this appeal. It is 100 pages in length and shows that before trial began defendant’s attorney moved to dismiss for failure to accord defendant a speedy trial and in the interest of justice, that the witnesses for the prosecution were plaintiff, the court reporter who had taken the record of the examination before trial during which the altercation between plaintiff and defendant occurred, and one of plaintiff’s sons, who had been called into the examination room by the reporter when the altercation began, all of whom were cross-examined at considerable length by defendant’s attorney, that at the end of the People’s case defendant’s attorney moved to dismiss and when that motion was denied presented defendant as a witness in his own behalf, after which he acknowledged that he had no other witnesses to present. The City Court Judge then heard

closing arguments from each side before rendering his decision and, after hearing defendant in his own behalf, imposed sentence. Since the sentence imposed was a one-year conditional discharge (the condition being not to harass the Gilberg firm) and the factual issue to be determined was essentially one of credibility relating to whether defendant struck plaintiff, there simply was no reason why decision and sentence should not have followed immediately after the close of trial. To characterize the procedure as brisk and informal and speak of a vigorous defense as out of proportion with the function of the court is utterly inconsistent with the record in this case, which shows beyond peradventure that the trial was conducted and completed with as much formality, dignity and decorum as any Supreme Court trial. Nor apart from the record in this case am I prepared to accept the majority’s conception of the operations of a local criminal court as a basis for denying preclusion to the determination of such a court, except when concrete objective factors indicate that in a particular case there has not been full and fair opportunity to litigate the issue. As Comment d to section 68.1 of the Restatement of Judgments, Second, to which the majority refers, indicates, “The question in each case should be resolved in the light of the nature of litigation in the courts involved and the legislative purposes in allocating jurisdiction among the courts of the State” (Tent Draft No. 4, p 35). Illustrative of when preclusion should not apply is the example given in that Comment of procedures “tailored to the prompt, inexpensive determination of small claims” (id.). To equate the City Court’s trial of a violation which carries with it the possibility of a sentence of imprisonment for 15 days (Penal Law, § 70.15, subd 4) with the determinations made in small claims, mostly without lawyers or court reporters, is unrealistic and inconsistent with New York’s statutory scheme. Furthermore, that defendant did not choose the City Court forum is clearly not decisive even as to offensive preclusion (Restatement, Judgments 2d [Tent Draft No. 3], § 88, Comment d), and defendant has not suggested that, except for trial by jury, the procedures available to him in the Supreme Court, but not available in the City Court, “may have been significantly influential in determination of the issue” (id.).

Nor is it relevant that the present action had not been begun when the City Court trial concluded. The factor as identified in Schwartz (24 NY2d, at p 72) is the “foreseeability of future litigtaion” (emphasis supplied), not awareness of the existence of other litigation. That foreseeability, rather than awareness, is the key is emphasized by Comment i to section 68.1 of the Restatement of Judgments, Second, which states (at Tent Draft No. 4, pp 40-41) that: “[P]reclusion should not operate to foreclose redetermination of an issue if it was unforeseeable when the first action was litigated that the issue would arise in the context of the second action, and if that lack of foreseeability may have contributed to the losing party’s failure to litigate the issue fully. Such instances are rare, but they may arise, for example, between institutional litigants as a result of a change in the governing law. Thus, a determination in an action between the taxing authorities and a corporate taxpayer that a transfer of property has not occurred may become relevant to a wholly different question of tax liability under an amendment to the tax law passed after the initial judgment was rendered. Another example of a case in which a determination may have unforeseeable consequences is one in which that determination is relevant to a claim involving property acquired after the first judgment has become final.” To suggest, as the majority does, that because the present action had not been begun when the harassment case was decided the Trial Judge and defendant’s attorney may not have realized the possibility is to do a disservice to both (the more so in light of the holding in Read v Sacco, supra, and similar cases), for it takes no imagination to foresee that a harassment complaint may be the ground for an action for damages.

Likewise blown out of proportion by the majority is the amount claimed in this action. Just as defendant’s attorney and the City Court Judge must be deemed to have been aware of the possibility of a damage action, so the defendant’s attorney and the Trial Judge in the present action were necessarily aware that in such an action the only limitation on the amount claimed is the number of zeroes a typewriter can print. Balancing that awareness against the possible 15-day imprisonment sentence on the harassment charge, I find it difficult to see the disproportion the majority finds. The more so is this true if one looks at the bill of particulars in the present action, which has some relevance to whether preclusion should apply, and which shows that plaintiff was in the hospital for part of one day and unable to attend to business for several days, that he lost no earnings and had a hospital bill of only $109.50 and that his claim was essentially for discomfort and aggravation of a pre-existing heart condition.

It is, of course, true that plaintiff would not be precluded by defendant’s acquittal on the harassment charge. This results from the difference in the burdens of proof on the violation and on the personal injury action (Restatement, Judgments 2d, § 68.1, subd [d], and Comment f). It is difficult, however, to understand why the absence of mutuality should be given much weight in light of our flat statement in B. R. De Witt, Inc. v Hall (19 NY2d, supra, at p 147) that mutuality “is a dead letter,” and of the conclusion of Comment e of section 133 of the Restatement of Judgments, Second (Tent Draft No. 7), that preclusion is not barred by the fact that “the third party would not have been bound in his civil action if the prosecution had resulted in an acquittal.”

In summary, I agree that collateral estoppel is intended to be a flexible doctrine and that some of the factors considered by the majority bear minimally on the determination to be made on this record, but conclude that most of the elements on which the majority relies have nothing to do with this case. Since the flexibility concept, as I understand it, requires close analysis of the record before us rather than generalities, I cannot agree that preclusion should not be applied in this case.

IV

The suggestion that offensive use of collateral estoppel would violate defendant’s right to a jury trial under either Federal or State Constitution is answered by the decision of the United States Supreme Court in Parklane Hosiery Co. v Shore (439 US 322, 333-337) and the seminal study of Shapiro and Coquillette entitled The Fetish of Jury Trial in Civil Cases: A Comment on Rachal v Hill (85 Harv L Rev 442), as well as by the Restatement of Judgments, Second.

Section 68 of the Eestatement of Judgments, Second (Tent Draft No. 4), states the general rule of issue preclusion. Comment d to that section flatly states (Tent Draft No. 4, p 7) that “The determination of an issue by a judge in a proceeding conducted without a jury is conclusive in a subsequent action whether or not there would have been a right to a jury in that subsequent action if collateral estoppel did not apply.” Section 88 states the rule of issue preclusion when the subsequent litigation is with a person not a party to the earlier litigation, and applies preclusion unless procedures were not available in the first action “which may have been significantly influential in determination of the issue” (Comment d [Tent Draft No. 3, p 164]), among which may be considered “the right of jury trial.” Clearly, therefore, the American Law Institute saw no constitutional impediment to preclusion predicated on a Bench trial finding.

The reason becomes clear when one reviews the Shapiro and Coquillette article which shows that at least since 1772 the rule, as declared in Francis Buller’s Trials at Nisi Prius, has been (85 Harv L Rev, p 452): “ ‘And note; Wherever a matter comes to be tried in a collateral way, the decree, sentence, or judgment, of any court, ecclesiastical or civil, having competent jurisdiction, is conclusive evidence of such matter; and in case the determination be final in the court of which it is a decree, sentence, or judgment, such decree, sentence, or judgment will be conclusive in any other court having concurrent jurisdiction’ ” and reviews a series of New York cases (Post v Neafie, 3 Caines 22 [NY Sup Ct, 1805]; Le Guen v Gouverneur, 1 Johns Cas 436, 492 [NY Ct Err, 1800]; Simpson v Hart, 1 Johns Ch 91, 97 [1814]; Gelston v Hoyt, 1 Johns Ch 543, 546 [1815] ; Dobson v Pearce, 12 NY 156 [1854]) holding an equity decree conclusive in a later action at law.

Nor does CPLR 4101 (subd 1) avail defendant. Though it calls for a jury trial in an action for a sum of money only, the historically recognized preclusive effect of a prior non jury determination in an action for a sum of money only no more bows to the CPLR provision than did the right to a reference in a matter involving a long account sustained in Malone v Saints Peter & Paul’s Church (172 NY 269) and Steck v Colorado Fuel & Iron Co. (142 NY 236; see, also, 4 Weinstein-Korn-Miller, NY Civ Prac, par 4101.13; and see Right to Trial By Jury in Second Prelim Rep of Adv Comm on Practice and Procedure, NY Legis Doc, 1958, No. 13, p 559). The reference procedure survives as an exception to New York’s constitutional and statutory provisions because it existed, as did preclusion, when the Constitution was adopted. Nothing in the legislative history of the CPLR indicates an intention to reverse the centuries old rule of preclusion. Nor is there valid reason to change the rule, bearing in mind that preclusion need not be applied when significant unfairness can be shown (Shapiro & Coquillette, op. cit., p 455; Restatement, Judgments 2d [Tent Draft No. 3], § 88, Comment d).

V

Finally, that harassment is but a violation in the criminal hierarchy is, by itself, no reason for denying preclusion. To the extent that preclusion may be found to be unfair in the circumstances of a given case, the lesser importance of a violation is a factor to be considered in determining whether defendant in the prior criminal proceeding should not be held bound. Beyond that, however, the Legislature has been specific when it found reason to deny collateral estoppel effect as a matter of policy (Vehicle and Traffic Law, § 155 [traffic convictions] ; Uniform City Court Act, § 1808; Uniform Justice Court Act, § 1808; New York City Civil Court Act, § 1808 [small claims judgments]). We should not extend that list by implication, but rather should leave it to the opponent of preclusion to demonstrate unfairness as a reason for denial of preclusion, whatever the nature of the charge tried in the earlier trial. Here, as already shown, no such demonstration has been (or could be) made.

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

Order reversed, with costs, and the motion for summary judgment denied. Question certified answered in the negative.

       Defendant was charged with violating subdivision 1 of section 240.25 of the Penal Law, which states “A person is guilty of harassment when, with intent to harass, annoy or alarm another person: 1. He strikes, shoves, kicks or otherwise subjects him to physical contact, or attempts or threatens to do the same * * * Harassment is a violation.”

      . (Compare, Mayers, Constitutional Guarantee of Jury Trial in New York, 7 Brooklyn L Rev 180, 192.)

      . Indeed the difference in burden of proof favors preclusion of a defendant convicted in the first trial for he can only have been convicted if the fact finder found against him beyond a reasonable doubt and taking into consideration the presumption of innocence, whereas, in the personal injury action the burden of proof is only a preponderance and the “presumption of innocence is not indulged in a civil action,” even one predicated upon an assault (Kurz v Doerr, 180 NY 88, 91).

      . As put in Comment j to section 68.1 (Tent Draft No. 4, p 41): “[T]he court in the second proceeding may conclude that issue preclusion should not apply because the party sought to be bound did not have an adequate opportunity or incentive to obtain a full and fair adjudication in the first proceeding. Such a refusal to give the first judgment preclusive effect should not occur without a compelling showing of unfairness, nor should it be based simply on a conclusion that the first determination was patently erroneous. But confined within proper limits, discretion to deny preclusive effect to a determination under the circumstances stated is central to the fair administration of preclusion doctrine.” (Emphasis supplied.)


author: Fuchsberg, J.

text:
    In the Matter of the Arbitration between Geneseo Central School, Appellant, and Perfetto & Whalen Construction Corp., Respondent.
    Argued May 1, 1981;
    decided June 18, 1981

      POINTS OF COUNSEL

      Richard S. Mayberry and Jerry A. Goldman for appellant.
    I. Petitioner-appellant did not waive the applicability of subdivision 1 of section 3813 of the Education Law. (Matter of Board of Educ. [Heckler Elec. Co.], 12 AD2d 938, 7 NY2d 476; Matter of Board of Educ. [Minstein

      Constr. Co.], 12 AD2d 40; Strauss v Union Cent. Life Ins. Co., 170 NY 349; Matter of Board of Educ. [Wager Constr. Corp.], 45 AD2d 63, 37 NY2d 283.) II. The issue of waiver of section 3813 of the Education Law was not properly before the court below and is not properly. before this court because respondent-respondent never filed a notice of appeal from the order of the Honorable Robert P. Kennedy, Justice of the Supreme Court, dated April 21, 1976 which finally decided the issue. III. The claim at issue was not timely filed pursuant to section 3813 of the Education Law. (Carthage Cent. School Dist. No. 1 v Reddick & Sons of Gouverneur, 67 AD2d 808; Central School Dist. No. 3, Towns of Romulus, Varick & Fayette v Kosoff & Sons, 53 AD2d 1058.) IV. Section 3813 of the Education Law is not violative of the Federal and State Constitution equal protection clauses. (People v Pagnotta, 25 NY2d 333; Pausley v Chaloner, 54 AD2d 131, 41 NY2d 900; Guarrera v Lee Mem. Hosp., 51 AD2d 867.)

      Robert H. Basso for respondent.
    I. The school district waived section 3813 of the Education Law. (Matter of Board of Educ. [Heckler Elec. Co.], 7 NY2d 476; Newburgh Nursery v Board of Educ., 41 Misc 2d 997; Matter of Guilderland Cent. School Dist. [Guilderland Cent. Teachers Assn.], 45 AD2d 85; Matter of Grey v Board of Educ., 60 AD2d 361; Matter of Board of Educ. [Wager Constr. Corp.], 37 NY2d 283; Matter of County of Rockland [Primiano Constr. Co.], 51 NY2d 1; Henderson Tire & Rubber Co. v Wilson & Son, 235 NY 489; Gillet v Bank of Amer., 160 NY 549.) II. Damages can only be ascertained when the information is known. (Matter of Board of Educ. [Wager Constr. Corp.], 37 NY2d 283; P. J. Panzeca, Inc. v Board of Educ., 29 NY2d 508; Morrison & Quinn v State of New York, 204 App Div 623; Paduano v State of New York, 203 App Div 503; Huff v State of New York, 47 Misc 2d 1053; Otis Elevator Co. v State of New York, 52 AD2d 380; Almar Constr. Corp. v Hughes & Sons, 58 AD2d 615; Matter of Wilaka Constr. Co. [New York City Housing Auth.], 17 NY2d 195; Brown v Lyddy, 11 Hun 451; Taylor v State of New York, 302 NY 177.) III. The claim accrued when the damages could be determined with reasonable accurary. (Taylor v State of New York, 302 NY 177; Bronxville Palmer v State of New York, 36 AD2d 647; Board of Educ. v Wager Constr. Corp., 45 AD2d 63, affd sub nom. Matter of Board of Educ. [Wager Constr. Corp.], 37 NY2d 283; Otis Elevator Co. v State of New York, 52 AD2d 380; Chartrand v State of New York, 46 AD2d 942; Morrison & Quinn v State of New York, 204 App Div 623; Wm. J. Schmitt, Inc. v Penfield Cent. School Dist., 54 AD2d 1100; McKay Constr. Co. v Board of Educ., 33 AD2d 862; Shalman v Board of Educ., 31 AD2d 338.) IV. Section 3813 of the Education Law violates the equal protection and due process constitutional guarantees. (People v Pagnotta, 25 NY2d 333; Board of Educ. v Nyquist, 94 Misc 2d 466; United States v Kiffer, 477 F2d 349; Graham v Richardson, 403 US 365; Dandridge v Williams, 397 US 471; Florence v Goldberg, 44 NY2d 189; Matter of Board of Educ. [Wager Constr. Co.], 37 NY2d 283; Wm. J. Schmitt, Inc. v Penfield Cent. School Dist., 54 AD2d 1100; Reed v Reed, 404 US 71; Royster Guano Co. v Virginia, 253 US 412.)
   OPINION OF THE COURT

Fuchsberg, J.

This appeal requires us to construe the American Institute of Architects’ (AIA) “Standard Form of Agreement Between Owner and Contractor”. The precise question posed is whether its execution by the governing body of a school district waived the protection afforded by section 3813 of the Education Law, which, among other things, makes the filing of a written verified notice “within three months after the accrual of [a] claim” a condition precedent to the bringing of any “action or special proceeding”.

The issue is one which has divided the Appellate Divisions. Both the Fourth Department, in the present case, and the Second Department, in Matter of Florida Union Free School Dish (Eastern Elec. Contr. Corp.) (75 AD2d 580), have found a waiver; the Third Department, in Matter of Board of Educ. (Wager Constr. Corp.) (45 AD2d 63, affd 37 NY2d 283), came to a contrary conclusion.

The matter arises from a dispute between the petitioner, Geneseo Central School, and the respondent, Perfetto & Whalen Construction Corporation, a contractor engaged by it to perform general construction and site improvement work for a new school building. It is pertinent to this case that the form agreement they signed sets out a dispute settlement procedure according to which any controversy between the parties was first to be referred to the project’s architect for decision, after which, upon demand of either party, it becomes arbitrable pursuant to.what, with exceptions not relevant here, is a broad arbitration cause. Two other clauses also come into play. One, denominated section 7.4.1 of the AIA form, provides that all claims for injury and damage “shall be made in writing * * * within a reasonable time after the first observance”. The other, numbered section 7.6.1 in the same document, specified that the contractual rights and remedies “shall be in addition to and not a limitation of any duties,, obligations, rights and remedies otherwise imposed or available by law”.

The events which were to trigger these provisions started with a letter dated November 24, 1975, in which the contractor advised the district of its intention to seek additional compensation for increased costs incurred on account of changed conditions and delays. As mandated by the contract, the claim was duly referred to the architect, who rejected it. It was only then, on December 22, 1975, that the contractor served a notice of claim as required by section 3813 of the Education Law. The district having neglected “to make an adjustment or payment thereof for thirty days after such presentment” (Education Law, § 3813, subd 1), the contractor demanded arbitration.

In this proceeding, brought by the district to stay the arbitration, essentially for an alleged lack of timely compliance with section 3813, Trial Term found that the contractor’s claim had accrued on June 24, 1975, the date on which it held that all required work had been completed, and that, therefore, the claim was barred by the statute because it was served more than three months later.

The Appellate Division, acting on the ensuing judgment granting a permanent stay, reversed on the theory that the contractual stipulation for notification of claims “within a reasonable time after first observance” superseded the temporal restriction of section 3813. On that premise, it decided that the reasonableness of the time within which notice had to have been given was, in the circumstances of this case, a question to be decided by the arbitrator. This ruling was in error.

Section 3813 of the Education Law is designed to give school districts prompt notice of claim “ ‘before it is too late for investigation to be efficient’ ” (Matter of Board of Educ. [Wager Constr. Corp.], 37 NY2d 283, 289, supra, quoting Matter of Board of Educ. [Heckler Elec. Co.], 7 NY2d 476, 483). To that end, in the absence of an agreement to the contrary, compliance with its provisions is a condition precedent to arbitration and, therefore, a matter for judicial resolution (Matter of Board of Educ. [Wager Constr. Corp.], supra, p 288).

Consistent with this policy, a waiver is not to be presumed. The parties must either affirmatively agree that the statutory notice clause be inapplicable (Matter of Board of Educ. [Minstein Constr. Co.], 12. AD2d 40, 43) or, at least, set out detailed procedures which are “plainly inconsistent with those contained in that section” (Matter of Guilderland Cent. School Dist. [Guilderland Cent. Teachers Assn.), 45 AD2d 85, 86 [Cooke, J.]). If they do neither, the provisions of the statute are to be deemed part and parcel of any contract entered into by the district (Matter of Central School Dist. No. 1, Town of Highlands v Double M Constr. Corp., 34 NY2d 695, affg 41 AD2d 771; cf. Strauss v Union Cent. Life Ins. Co., 170 NY 349, 356).

Against these established principles, in their briefs to our court the parties focused almost entirely upon whether section 7.4.1, the contractual requirement for notice within a “reasonable time after the first observance of * * * injury or damage”, effected such a waiver. However, we find it unnecessary to resolve that question,-for, though neither side initially relied upon it, section 7.6.1 of the agreement, in declaring that the contractual “rights and remedies available thereunder shall not be a limitation of any duties, obligations, rights and remedies otherwise imposed or available by law”, is dispositive. To say the least, it is inconsistent with an intent to relinquish statutory rights.

Nor, in light of this article, which subordinates the contractual rights and remedies to the provisions of section 3813, can the agreement for a “reasonable time” within which to file a claim be said to enlarge the statutory period.

Accordingly, the order of the Appellate Division should be reversed and the matter remitted to that court for a review of the facts (CPLR 5613).

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

Order reversed, with costs, and matter remitted to the Appellate Division, Fourth Department, for review of the facts.

      . Since we did not discuss the waiver issue in Wager, the Appellate Division’s observations do not, of course, bind us (see Matter of Wolfe v Sibley, Lindsay & Curr Co., 36 NY2d 505, 510; Nehrbas v Incorporated Vil. of Lloyd Harbor, 2 NY2d 190, 195). Moreover, examination of the Wager record on appeal indicates that a 1967 form contract was involved. In this case, we are concerned with a revised form which, since 1970, contains additional and amended clauses. The AIA contract may be found in Dib, Forms and Agreements For Architects, Engineers and Contractors (vol 2, appendix C) as well as in PLI, Construction Contracts (p 565 et seq.).

      . We, of course, are not bound by the parties’ formulation of the issues (Matter of Wiley v Altman, 52 NY2d 410, 414, n 6; Rentways, Inc. v O’Neill Milk & Cream Co., 308 NY 342, 349). Accordingly, after review of the record and the briefs, we invited both sides to, and they did, comment on article 7.6.1(see Traynor, Badlands in an Appellate Judges Realm of Reason. 7 Utah L Rev 157, 159).