author: Meyer, J. Jasen, J.

text:
    In the Matter of Circus Disco Ltd., Doing Business as The Electric Circus, Appellant, v New York State Liquor Authority, Respondent.
    Argued June 3, 1980;
    decided July 8, 1980

      POINTS OF COUNSEL

      Andrew S. Fisher, Harold L. Fisher and Gerald Gorinsky for appellant.
    I. The stated reasons of the court below for reinstating the authority’s determination denying petitioner’s license application, cannot, as a matter of law, provide an adequate basis upon which to base such a denial. (Matter of 1522-1526 Second Ave. Rest. v State Liq. Auth., 31 AD2d 534; Matter of Soul Scene v State Liq. Auth., 35 AD2d 574; Matter of Camuglia v Rohan, 9 NY2d 745; Matter of Whaley v State Liq. Auth., 21 AD2d 977; Matter of Shore Haven Lounge v New York State Liq. Auth., 37 NY2d 187; Matter of Farina v State Liq. Auth., 20 NY2d 484; Matter of Wonderland Bar v Hostetter, 24 AD2d 1020; Matter of Alvaro v State Liq. Auth., 43 AD2d 902; Matter of O’Brien’s Butcher Shop v State of New York Liq. Auth., 47 AD2d 588; Matter of Matty’s Rest. v New York State Liq. Auth., 21 AD2d 818, 15 NY2d 659.) II. The court below incorrectly applied an incomplete standard for determining if a reasonable basis existed for the authority’s determination. (Matter of Kendzie v O’Connell, 283 App Div 256; Matter of William H. Van Vleck, Inc. v Klein, 50 Misc 2d 622.) III. The authority has issued and petitioner is entitled to keep and maintain an unrestricted license. (Matter of Farina v State Liq. Auth., 20 NY2d 484; Matter of Ali v New York State Liq. Auth., 35 AD2d 1009, 28 NY2d 774.)

      Joseph S. Ryan and Warren B. Pesetesky for respondent.
    The State Liquor Authority, in refusing to issue a special on-premises liquor license to petitioner-appellant, was exercising its discretion as provided by law. The determination disapproving the license application, upon the record presented, was a reasonable exercise of that discretion, and hence, the order of the court below, which so ruled, should be affirmed in its entirety. (Bertholf v O’Reilly, 74 NY 509; Matter of Wager v State Liq. Auth., 4 NY2d 465; Matter of Yates v Mulrooney, 245 App Div 146; Crowley v Christensen, 137 US 86; People ex

      rel. Lodes v Department of Health of City of N. Y., 189 NY 187; Matter of Fink v Cole, 1 NY2d 48; Metropolitan Bd. of Excise v Barrie, 34 NY 657; Matter of Stracquadanio v Department of Health of City of N. Y., 285 NY 93; Matter of Restaurants & Patisseries Longchamps v O'Connell, 271 App Div 684, 296 NY 888; Matter of Commercial Pictures Corp. v Board of Regents of Univ. of State of N. Y., 280 App Div 260, 305 NY 336, revd on other grounds sub nom. Superior Films v Department of Educ., 346 US 587.)
   OPINION OF THE COURT

Meyer, J.

The State Liquor Authority is authorized by subdivision 6 of section 106 of the Alcoholic Beverage Control Law to control noise generated by a licensed on-premises establishment when the premises "become disorderly”, but may not deny a license because it believes the noise, parking and traffic that may be generated by an establishment permitted by governing zoning regulations will adversely affect community residents, noise, parking and traffic being matters for consideration of the zoning authorities. Nor may a license be denied because of the existence of a school and some churches more than 200 feet away, because community residents and political leaders oppose its issuance, or because an applicant which reported one increase in the expected cost to equip and decorate the establishment failed to report a later increase, where investigation shows that the money has come from proper sources and there is no evidence that the applicant willfully misled the authority. It is, moreover, improper for the Appellate Division to consider as a basis for upholding denial of the license a ground not considered by the authority or argued on appeal. The order of the Appellate Division should, therefore, be reversed, with costs, and the judgment of Special Term should be reinstated.

Petitioner, Circus Disco Ltd., planning to open what it expected to be the largest discotheque in New York City, rented the first three floors of a 16-story commercial building, located on the northwest corner of 15th Street and Fifth Avenue. The premises, in the southern portion of the Chelsea district, are zoned commercial, though the neighborhood includes a substantial residential population, due in good measure to loft conversions. Petitioner’s proposed operation is a permitted zoning use, though the record does not establish whether the loft conversions are. In relatively close proximity, though beyond the 200-foot restriction of the Alcoholic Beverage Control Law, are a church and a school. Also nearby are at least 5 apartment buildings and 11 brownstone residences.

The proposed discotheque was conceived on a grand scale, encompassing more than 22,000 square feet of floor space on three levels, each with a separate dance floor and distinctively shaped bar, as well as a game room, a glass enclosed lounge, and banquet facilities. As initially designed the establishment was to be a private club, characterized by luxury and elegance, accommodating more than 1,400 people, and including as part of its decor a 1928 fire engine and a carousel from Coney Island’s Steeplechase Park.

With petitioner’s principals doing much of the work themselves, the amount initially budgeted for renovation and equipment was $125,000, but that was thereafter revised in writing to $167,000. By the time the project was completed, however, actual expenditures exceeded $359,000, with more than $100,000 additional in accounts payable.

In July, 1978, petitioner applied for a special on-premise license (theater and entertainment). The Alcoholic Beverage Control Board unanimously recommended approval on condition that the premises be open to the public rather than be operated as a private club, a condition which petitioner accepted. The board expressly found that there was no church or school within 200 feet nor any licensed premises within 400 feet. The authority, however, denied the application, finding that issuance of a license would pose a threat to the welfare of the community because (1) petitioner’s principals were not experienced and did not plan to hire an experienced manager, (2) there were within one block of the club a school, church, townhouses and apartment houses, (3) the authority had received petitions from community groups and communications from elected officials in opposition, and (4) it was not satisfied that the premises would in fact be open to the public. Reconsideration was requested and a supplemental investigation made and the authority adhered to its determination to deny though for somewhat different reasons. Stated reasons were (1) opposition of community and political leaders, (2) that the area could not handle the parking and traffic that would result, (3) it was not satisfied that soundproofing would prevent disturbance outside the building, particularly during late night and early morning hours, (4) the operation would be disruptive of the life-style of local residents, and (5) that by failing to disclose its additional expenditures as required by 9 NYCRR 53.1 (b) or the sources of funds used for them petitioner had evidenced an inability to comply with the authority’s rules which was not cured by subsequent disclosure.

Petitioner then sought review in an article 78 proceeding. Special Term, finding that the zoning for the area permitted the operation, that the conclusion that it would be operated in violation of law or to the detriment of the community was speculation, and that the failure to disclose was an improper basis for denial, the additional cost having been revealed and the sources having been found satisfactory on investigation, annulled the authority’s determination. The Appellate Division reversed, finding relevant considerations the impact of the proposed establishment on the community, the failure to disclose, and, though not a reason advanced by the authority in its decision on reconsideration and not briefed or argued in the Appellate Division, the lack of supervisory experience of petitioner’s principals.

On appeal by petitioner to us from that reversal the issues for consideration are whether the Appellate Division could properly consider the experience issue, whether denial based on failure to comply with 9 NYCRR 53.1 (b) was proper, whether in deciding whether to issue a license the authority may consider noise, parking and traffic, and to what extent may the authority consider opposition from community residents and community and political leaders?

I

The first question need not long detain us. Following the authority’s initial determination petitioner obtained a professional manager and so advised the authority. Its supplemental investigation apparently satisfied it on the issue, for its reconsideration decision made no mention of the point which was not briefed or argued either at Special Term or at the Appellate Division. Since the Appellate Division must judge the authority’s action solely by the grounds invoked by the authority (Matter of Barry v O’Connell, 303 NY 46, 50), and the authority correctly based its decision on this point on the facts existing at the time of its reconsideration (Matter of Whaley v State Liq. Auth., 21 AD2d 977), it was error for the Appellate Division to resurrect the issue as a permissible basis for denial of the license.

II

Denial of the application because of the untimely disclosure of the increased expenditures was, when all of the circumstances are considered, arbitrary and capricious. The present case is essentially indistinguishable from Matter of Farina v State Liq. Auth. (20 NY2d 484). There we held it arbitrary to refuse to renew a license when there had been "no showing that when petitioner first applied for a license he willfully misled the Authority by designating funds different from those actually used” (20 NY2d, at p 492) and we noted that petitioner’s funds were honestly acquired and that "the innocence of the moneys used is strong evidence of the fact that there was no deliberate intent to conceal or suppress their source. The petitioner’s sole transgression was that he used certain funds which were not originally contemplated in his application and failed to report this change * * * because he was ignorant of the requirement” (20 NY2d, at p 493).

Here, though petitioner was aware of the requirement, having once revised the figure upward, the authority concedes that the additional funds came from proper sources, and has presented no evidence other than the omission itself to sustain its characterization of petitioner’s untimely disclosure as "concealment”. Absent any evidence that petitioner willfully misled the authority or of any prejudice to the public interest, except in the technical violation of the regulation and there being no reason to believe that such laxness will continue, denial of a license, which would as a practical matter destroy the half-million-dollar investment of petitioner’s principals, is, as we concluded in Matter of Shore Haven Lounge v State Liq. Auth. (37 NY2d 187, 190) "so disproportionate * * * as to constitute an abuse of * * * discretion” (accord Matter of O’Brien’s Butcher Shop v State of N. Y. Liq. Auth., 47 AD2d 588; Matter of Alvaro v State Liq. Auth., 43 AD2d 902).

Ill

To what extent and under what circumstances the authority may consider the possible adverse impact of petitioner’s operation upon the community presents a more difficult issue. The authority relies upon the authorizations to it in subdivision 1 of section 17 of the Alcoholic Beverage Control Law to issue or refuse to issue licenses and in section 2 of that law to "determine whether public convenience and advantage will be promoted by the issuance of licenses to traffic in alcoholic beverages.” The words "public convenience and advantage” appear from the Moreland Commission Report which preceded revision of the law to be related more to justice for the consumer and the promotion of temperance in the consumption of alcoholic beverages and of respect for the law (see Matter of Forman v State Liq. Auth., 17 NY2d 224; Matter of Hub Wine & Liq. Co. v State Liq. Auth., 16 NY2d 112; Martin v State Liq. Auth., 43 Misc 2d 682 [Cooke, J.], affd on opn below 15 NY2d 707) than to the factors here considered by the authority — the proximity of a school and churches; the possibility of noise disturbing to area residents; the traffic and parking congestion that may result. Though "public convenience and advantage” is not an unconstitutionally vague standard (Martin v State Liq. Auth., supra), its meaning cannot be divorced from the rest of the Alcoholic Beverage Control Law and its generality does not confer upon the authority the powers which it has here presumed to exercise.

A.

Proximity to churches and schools is, for special licensees, governed by subdivision 7 of section 64-a, which provides in pertinent part: "No special on-premises license shall be granted for any premises which shall be on the same street or avenue and within two hundred feet of a building occupied exclusively as a school, church, synagogue or other place of worship; the measurements to be taken in h straight line from the center of the nearest entrance of such school, church, synagogue or other place of worship to the center of the nearest entrance of the premises to be licensed.” The school and churches here in question are each more than 200 feet from petitioner’s discotheque when measured in accordance with the subdivision’s minutely explicit provisions. Recognizing that the subdivision is not violated, the authority argues, nonetheless, that it establishes only the point at which a license application must be denied but does not proscribe rejection of an application because of the presence of a religious or educational institution outside the 200 feet distance. We disagree.

The explicit and detailed language of the subdivision defining the conditions that must be met before its rule is applicable (same street; within 200 feet; building exclusively occupied as a school or place of worship), to state exactly how the measurement of the 200 feet is to be made, and to delimit other exceptions to its rule lead compellingly to the conclusion that had the Legislature intended the Liquor Authority to consider the presence of schools, churches and synagogues more distant it would have said so. Since it has not, we hold that the authority may not deny a license on such a basis.

The conclusion thus reached accords with the substantial governmental interest in uniform application of the law (Grundman v Town of Brighton, 1 Misc 2d 860, 862) and with the weight of existing case law interpreting the subdivision (Matter of Soul Scene v State Liq. Auth., 29 AD2d 543, after remand 35 AD2d 574; Matter of Bubany v State Liq. Auth., 27 AD2d 752; Matter of Surface Line Operators Fraternal Organization v State Liq. Auth., 25 AD2d 775, app den 17 NY2d 425; Matter of Waverly Rest. Corp. v State Liq. Auth., 24 AD2d 985; Matter of Steiert v Epstein, 15 AD2d 532, but see Matter of Santillo v State Liq. Auth., 54 Misc 2d 557, 559, affd 29 AD2d 739; Matter of P. G. P. Entertainment Corp. v State Liq. Auth., 73 AD2d 554).

We do not regard either Matter of Drew v State Liq. Auth. (2 AD2d 75, affd without reaching the merits 2 NY2d 624) or Matter of Kaplan v O’Connell (281 App Div 46, affd 305 NY 850) as contrary to our conclusion. Drew is not contrary because the radius plan in the record shows that Drew’s liquor store was within 200 feet of Ebenezer Gospel Tabernacle and that another church there involved, St. Martin’s, had an auxiliary entrance within 200 feet of it. Kaplan did hold that the broad language of sections 2 and 17 was sufficient to overcome the inference arising from the fact that the Alcoholic Beverage Control Law omitted as to beer-dispensing licensees the visibility and toilet facility requirements it mandated for liquor- and wine-dispensing licensees, but the holding is distinguishable both because of the exquisitely explicit provisions of subdivision 7 of section 64-a and because at least as to the visibility requirement which Kaplan applied it was clearly related to section 2’s purpose of "fostering and promoting temperance * * * and obedience to law” while the distance provision of subdivision 7 of section 64-a is not.

B.

The noise generated by a licensed establishment may furnish a basis for suspending an issued license when its level is such as to affect adversely and unreasonably the repose of area residents, because subdivision 6 of section 106 of the Alcoholic Beverage Control Law mandates that no licensee "suffer or permit [his] premises to become disorderly” (see Quintard Assoc. v State Liq. Auth., 57 AD2d 462, app dsmd 42 NY2d 973, app den 42 NY2d 805; 9 NYCRR 53.1 [q]). But the authority’s denial of petitioner’s license because of the noise potential cannot be sustained.

There simply is no support in the record for the authority’s conclusion that it was "not persuaded that adequate steps [had] been taken to soundproof the premises.” Petitioner’s president’s affidavit details at length the acoustical design of the premises and the materials used in construction and the noise level tests conducted. Based so far as the record reveals, solely on the concerns expressed by residents and community leaders and without any factual data contravening petitioner’s presentation, the application has been rejected. Denial of a license on the speculation that it will be operated in violation of law is impermissible (Matter of Sled Hill Cafe v Hostetter, 22 NY2d 607, 612-613; Matter of Santini Rest. v State Liq. Auth., 32 AD2d 514).

The likelihood of future violation can furnish a basis for denial only when there are facts in the record which rationally support doing so (Matter of Matty’s Rest. v State Liq. Auth., 21 AD2d 818, affd 15 NY2d 659; Matter of Olympia Rest. Corp. v O’Connell, 199 Misc 397, affd 278 App Div 925, affd 303 NY 780). Here there are none.

That a license may not be denied for such a reason does not mean that area residents are without remedy. As already noted, the authority may step in if what is now feared becomes fact. Moreover, the residents themselves may obtain an injunction against the noise if the premises do in fact become a noise nuisance (Peters v Moses, 171 Misc 441, mod 259 App Div 307; see Public Dances or Dance Halls as Nuisances, Ann., 44 ALR2d 1381; Nuisance — Saloons or Taverns, Ann., 5 ALR3d 989).

C.

The authority’s attempt to rest its decision upon a finding that the area surrounding the discotheque cannot accommodate the parking and traffic problems that will result is subject to challenge on several grounds. To begin with, it is not clear that such a finding is supported by substantial evidence. Where an administrative body renders an unfavorable determination because traffic congestion will result, there must be evidence to support that conclusion (see Matter of Young Men’s Christian Assn. of Greater N. Y. v Burns, 13 AD2d 1009; see, also, Matter of Mollineaux v Michaelis, 29 Misc 2d 933, affd 16 AD2d 697). In the present case the authority’s determination does not appear to be founded upon anything more than its own generalizations concerning its past experiences with other discotheques and their attendant crowds of patrons.

There are, however, more fundamental reasons. Parking and traffic are essentially problems for the police or a traffic control commission (see, e.g., General City Law, § 20, subd 32) or for zoning authorities. Presumably, therefore, traffic and parking congestion were taken into account when the zoning decision was made and are not matters to be separately considered by the State Liquor Authority in relation to licensing an establishment permitted by the zoning. And the more clearly is this so in view of the absence of any reference in the Alcoholic Beverage Control Law to traffic or parking. We have held in the zoning context that traffic and parking problems may be considered by an administrative body only when "such policy or standard was declared in the statute” (Matter of Diocese of Rochester v Planning Bd. of Town of Brighton, 1 NY2d 508, 525) and in the context of a licensing law that the Commissioner of Licenses of the City of New York could not refuse to license a theater because the " 'noise, traffic congestion and attendant parking problem resulting from the erection of a theatre at the proposed location would be a serious detriment to the general welfare, public health and safety of the community’ ” (Matter of Small v Moss, 279 NY 288, 293). We see no reason why a different rule should apply to the State Liquor Authority, to which as already noted the Legislature has not delegated the authority to consider these problems.

IV

The final question is the weight to be given by the authority in its decision making process to the opposition of community residents and political leaders. The authority suggests that the addition by chapter 256 of the Laws of 1978 of subdivision 7 to section 100 of the Alcoholic Beverage Control Law, which requires every applicant for a retail license to post a notice of the pendency of the application on the premises proposed to be licensed, indicates the Legislature’s intent that the authority consider community views concerning whether a license should be issued. Assuming that such a provision would not constitute an unconstitutional delegation of power (an issue on which we express no view, but compare Seattle Trust Co. v Roberge, 278 US 116; and Matter of Concordia Coll. Inst. v Miller, 301 NY 189, with City of Eastlake v Forest City Enterprises, 426 US 668), we find nothing in the wording of the subdivision or in the authority’s memorandum in support of the amendment (NY Legis Ann, 1978, p 185) to suggest that its purpose was other than fairness and openness in government by making the application known so that objections otherwise cognizable under the statute could be brought to the authority’s attention. A more explicit indication of legislative intent than subdivision 7 would be required were public or community reaction alone, unrelated to the other standards set forth in the law, to be a basis for denial of a license. While it is not always inappropriate for the authority to receive the views of others (see Matter of Barry v O’Connell, 303 NY 46, 51, supra; Matter of Winkler v State Liq. Auth., 3 AD2d 1011, affd 4 NY2d 856; Matter of Waverly Rest. Corp. v State Liq. Auth., 24 AD2d 985, supra; Matter of Steiert v Epstein, 15 AD2d 532, supra), the authority cannot deny an application without a reason other than the recommendation or views thus expressed any more than it could properly grant a license application on the basis of outside recommendation and without reference to the statutory standards. As Mr. Justice Pittoni succinctly put it in a zoning case, Matter of Mollineaux v Michaelis (29 Misc 2d 933, 935, affd 16 AD2d 697, supra), "Perhaps the respondents were swayed by the number of objectors. However, we must keep in mind that ours is a government of law and not of men; and that decisions, especially where property rights are protected by Constitutions and laws, .must be based upon such laws and not upon sympathy or public opinion.” (Accord: Matter of Pleasant Val. Home Constr. v Van Wagner, 41 NY2d 1028, 1029; Udell v Haas, 21 NY2d 463, 469; De Sena v Gulde, 24 AD2d 165, 171.)

Here the authority noted in its decision the letters received by it from the area’s State Senator, Assemblyman and Councilperson and the filing of a petition with more than 800 signatures protesting the application. The filing of such letters and petition were proper but of themselves cannot sustain the authority’s determination, unsupported as to other permitted bases as above shown, to reject the application.

For the foregoing reasons the order of the Appellate Division should be reversed, with costs, and the judgment of Special Term should be reinstated.

Jasen, J.

(dissenting). On the conceded facts and circumstances present before the authority, I would hold that its determination that the issuance of the license to petitioner would not be in the public interest and would not promote public convenience and advantage was anything but arbitrary and capricious. There can be little doubt that the disapproval of petitioner’s license application by the authority was an act within the compass of its discretionary power to issue or refuse to issue an entertainment liquor license predicated upon its determination "whether public convenience and advantage will be promoted.” (Alcoholic Beverage Control Law, § 2.) In my opinion, the determination disapproving the license application, upon the record presented, was a reasonable exercise of that discretion.

After initially disapproving the application on November 15, 1978, the authority thereafter granted petitioner’s request to reconsider the disapproval and upon reconsideration made the following determination:

"The applicant will operate the proposed premises as a discotheque with a seating capacity for 250 persons. The applicant’s proposed layout, however, states that the premises can accommodate more than 1400 persons at one time. The applicant’s brochure states that the premises will offer * * * 'Three floors of thrills * * * Disco Dancing to the Most Incredible Sound System in New York. Carousel with original steeplechase horses * * * Carnival Games for the Young at Heart * * * and excitement * * *’ The premises will have three standup bars. The ground floor, which houses the main dance floor, will have a 105 foot serpentine shaped bar. The mezzanine which contains another dance floor has a 32 foot standup bar. The basement has a game room and a 20 foot semicircular bar.
"In the Authority’s experience, discotheques of this size, with their attendant crowds of patrons, often result in a significant increase in noise, vehicular traffic and pedestrian congestion in the surrounding neighborhoods. The Authority is not persuaded that adequate steps have been taken to soundproof the premises so that the highly-amplified disco-beat music cannot be heard outside the premises, particularly during the late night and early morning hours.
“The Authority has approved applications for large discotheques in centers of concentrated night-life entertainment, such as the mid-Manhattan theatre district. In those cases, it was apparent that a benefit to the area would result from an influx of patrons and tourists. However, the Authority notes that the subject premises are located on the corner of 15th Street and Fifth Avenue, in the southern portion of the Chelsea section of Manhattan. The area, although zoned commercially, has a substantial residential population. Within a one block radius there is a school, a church, a townhouse, and apartment houses. Neighborhood redevelopment and loft conversions have encouraged a stable population to move in, creating a larger residential area than zoning maps would otherwise indicate. Many of the long-time residents of the older apartment buildings are elderly.
"The Authority notes that the changeover of the neighborhood to residential use is virtually complete on 15th, 16th and 17th Streets, with two apartment buildings on 14th and 15th Streets.
"The Authority finds that the neighborhood cannot handle the volume of people contemplated by this operation. Notwithstanding the existence of some garages and parking lots in the area, it would not be possible to accommodate all of the vehicular traffic which will be attracted, resulting in double parking and slow-moving traffic, with the attendant noise that congested traffic generates.
"The Authority also notes that the community is and has been struggling to alleviate serious safety problems. The type of operation planned by the applicant would tip the balance against the neighborhood and be disruptive of the style of life there,, incompatible with the right of local residents to the peaceful enjoyment of their community.
"For the foregoing reasons, the Authority finds that the public convenience and advantage would not be promoted by the approval of this application for premises licensed to sell alcoholic beverages for on-premises consumption in this area and that approval of this application would not be conducive to proper regulation and control.
"The Authority also notes the opposition of many community, political and religious leaders in the area. The Authority has received a petition with more than 800 signatures protesting the approval of this application. Letters have been received from State Senator Manfred Ohrenstein (in which he states that he is joined by Assemblyman William F. Passannante), Councilwoman Carol Greitzer and the Pastor of the Church of St. Francis Xavier, all tending to confirm the foregoing.
"The Authority further finds that in connection with the original application, the cost of renovating and equipping the premises was estimated by the applicant at $125,000 and ultimately was raised to $167,000. While the applicant’s request for reconsideration was pending, it came to the Authority’s attention that the applicant had in fact expended a far greater sum in the proposed premises. Thereafter, the Authority conducted a further investigation which disclosed that the applicant had expended $359,580 to renovate, equip and furnish the premises and additionally owed $100,573 on the purchase of fixtures, equipment and furniture. The applicant had not previously informed the Authority of this significant increase in the investment in these premises. The Rules and Regulations of the Authority require an applicant to notify the Authority in writing within 48 hours of any change in fact stated in an application or submitted in support thereof which occur prior to the issuance of the license. The Authority finds that the applicant, while its application was pending before the Authority, concealed and suppressed the fact that its investment in these premises had more than doubled. The Authority further finds that the applicant’s conduct in this matter demonstrates an inability to comply with the Rules and Regulations of the Authority, which conduct was not alleviated by the applicant’s subsequent disclosure, after the fact, upon inquiry by the Authority.
"The Authority has considered this application in the light of all the aforementioned facts and circumstances and the Authority, in the exercise of its considered discretion and independent judgment, determines that approval of this application would pose a threat to the objectives of alcoholic beverage control and to the welfare of this community; that such approval would not be in the public interest and accordingly, the Authority determines that public convenience and advantage would not be promoted by the approval of this application.
"The application is disapproved.”

In reviewing whether the action of the authority was arbitrary and capricious, consideration should be given to the established principle of law governing judicial review, namely that in the absence of clear and convincing proof that an administrative body has acted without reasonable basis, its determinations should be sustained, even though individual Judges might be inclined to feel that they would have reached a different result. (E.g., Matter of Sled Hill Cafe v Hostetter, 22 NY2d 607, 612; Matter of Wager v State Liq. Auth., 4 NY2d 465, 468.) In other words, unless it is clear that there is no substantial reason or basis for the exercise of the discretion vested in the authority, we should not interfere with its determination.

Applying these guidelines to the case before us, I find that the record does support the authority’s determination "that public convenience and advantage would not be promoted by the approval of [petitioner’s] application.” The record discloses that the premises in question can accommodate more than 1,400 patrons at one time, thus making it one of the largest discotheques in New York City. Certainly the authority, based on its expertise, could reasonably conclude discotheques of this size frequently cause problems involving noise, vehicular traffic and pedestrian congestion, all of which work to the detriment of the surrounding community’s well-being — in this case, the South Chelsea residential area. The authority took particular note of the limited number of garages and parking lots in the area which would be available to the crowds frequenting the premises. Consequently, the authority’s conclusion that there would be an attendant and significant increase in traffic noise and double parking is well founded and is not, as the majority categorizes, mere speculation.

The authority has also taken note of the many vigorous community protests and objections voiced by local civic groups, religious organizations, community residents and their elected representatives against the licensing of the premises. While I would agree that such protests, in and of themselves, are not determinative of whether a premises should be licensed or not, such objections should not be disregarded completely in the consideration of whether public convenience and advantage would be served by the granting of an entertainment liquor license. The Legislature in enacting subdivision 7 of section 100 of the Alcoholic Beverage Control Law intended to provide the community in which a new premises for licensing was proposed notice of the pendency of the application and, concomitantly, an opportunity to register protests against the licensing of the premises, such as occurred here. It seems abundantly clear that the Legislature obviously concluded that the voice of the local community was a definite factor to be considered by the authority when determining whether or not public convenience and advantage would be promoted by the licensing of the premises.

Complying with this legislative mandate, the authority received and considered a petition with more than 800 signatures. The petition states that the neighborhood is primarily residential with many elderly residents and that the premises would generate noise, pollution and vehicular and pedestrian congestion. State Senator Ohrenstein, joined by Assemblyman Passannante, both representing the interest of the community, advised the authority that the neighborhood was currently struggling to alleviate serious public safety problems and that "the establishment of a discotheque would serve to seriously undermine these efforts.” Senator Ohrenstein noted the high incidence of violent crimes in the area and the proliferation of drug-related activities which could only be compounded by the introduction of a monstrous discotheque, accompanied by parking and noise problems, loitering, and the like. Further, he advised the authority that neighborhood redevelopment and loft conversions have encouraged a stable population to move into the area, creating a residential community larger than zoning maps indicate, and that attempts were being undertaken to revitalize the merchant strip. Without doubt, the Senator’s expression of concern was justified. Councilwoman Carol Greitzer expressed similar concerns.

In addition, the pastor of the Church of St. Francis Xavier, a church situated around the corner from the discotheque location, submitted a letter in opposition to the establishment of the disco bar stressing that the business operation planned by petitioner would tip the balance against the neighborhood by disrupting the residential style of life. The president of Xavier High School, also located in close proximity to the proposed site, expressed serious concern as to the strain on parking facilities and the increase in traffic problems.

Upon these circumstances, and the reasonable inferences which could be drawn therefrom by the State Liquor Authority, based on their expertise, I can only conclude that the authority properly exercised its statutory discretion in finding that the operation of such a large scale discotheque would not promote public convenience or the welfare of the residents of the surrounding community. The State Liquor Authority, and not the courts, is in the better position to measure the impact of operating an entertainment complex upon the community, and its determination, if rational, should be upheld. A rational basis for the authority’s decision certainly appears on this record.

Accordingly, I would affirm the unanimous order of the Appellate Division.

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

Order reversed, with costs, and judgment of Supreme Court, New York County, reinstated.

      . Petitioner presents as a further issue the question whether the authority is estopped to deny a license, having on March 1, 1980 renewed without condition the license previously issued to petitioner when the Appellate Division vacated the automatic stay resulting from the authority’s appeal (CPLR 5519, subd [a], par 1). Since for other reasons we conclude that the Appellate Division order must be reversed, we do not reach the estoppel question, but see Matter of Farina v State Liq. Auth. (20 NY2d 484, 491-492).

      . For like reason the authority’s initial concern that the premises might not be open to the public is not before us.

      . The parallel provision for retail on-premises consumption licenses, contained in subdivision 7 of section 64, is in essentially identical language.

      . "Within the context of this subdivision, the word ’entrance’ shall mean a door of a school, of a house of worship, or of the premises sought to be licensed, regularly used to give ingress to students of the school, to the general public attending the place of worship, and to patrons or guests of the premises proposed to be licensed, except that where a school or house of worship is set back from a public thoroughfare, the walkway or stairs leading to any such door shall be deemed an entrance; and the measurement shall be taken to the center of the walkway or stairs at the point where it meets the building line or public throughfare [sic]. A door which has no exterior hardware, or which is used solely as an emergency or fire exit, or for maintenance purposes, or which leads directly to a part of a building not regularly used by the general public or patrons, is not deemed an ’entrance’.”

      .  Nor may the zoning authorities consider the service of liquor as a reason to exclude an establishment otherwise permitted by the zoning ordinance (Tad’s Franchises v Incorporated Vil. of Pelham Manor, 42 AD2d 616, affd 35 NY2d 672; Zoning Regulations in Respect of Intoxicating Liquors, Ann., 9 ALR2d 877).

        . Subdivision 7 of section 100 of the Alcoholic Beverage Control Law provides, in pertinent part: "Within ten days after filing a new application to sell liquor at retail under section sixty-three, sixty-four, sixty-four-a or sixty-four-b of this chapter, a notice thereof, in the form prescribed by the authority, shall be posted by the applicant in a conspicuous place at the entrance to the proposed premises. The applicant shall make reasonable efforts to insure such notice shall remain posted throughout the pendency of the application.”

      . The fact that the area was zoned commercial is of little consequence. The commercial zoning classification does not entitle a landowner or lessee to use the property, as a matter of law, for any commercial purpose, especially where, as here, a license is required to operate the premises as an entertainment emporium dispensing liquor. While the zoning classification may be instructive as to the nature of the neighborhood, it is by no means determinative. There can be no doubt that the State Liquor Authority has the absolute right, if not the obligation, to look behind the zoning classification to ascertain the true character of the area.


source: Caselaw Access Project

author:
      Per Curiam.
     Jasen, J.

license: Public Domain

text:
    The People of the State of New York, Appellant, v Henry Geoghegan, Respondent.
    Argued May 28,1980;
    decided July 3,1980

      POINTS OF COUNSEL

      Robert M. Morgenthau, District Attorney (Amyjane Rettew and Robert M. Pitler of counsel), for appellant.
    I. Defendant’s guilt was proven beyond a reasonable doubt. II. Robert Jones’ inculpatory declarations against penal interest were properly admitted into evidence against defendant. (People v Settles, 46 NY2d 154; People v Maerling, 46 NY2d 289; Bruton v United States, 391 US 123; Douglas v Alabama, 380 US 415; Dutton v Evans, 400 US 74; California v Green, 399 US 149; Mancusi v Stubbs, 408 US 204; People v Settles, 46 NY2d 154.)

      Steven G. Eckhaus and Zoltán Hankovszky for respondent.
    I. The judgment of the court below should be affirmed: Respondent was deprived of his right to confront witnesses when an unavailable alleged accomplice’s out-of-court confession, incriminating respondent, was admitted into evidence over objection. (People v Cepeda, 61 AD2d 962; People v Torres, 57 AD2d 561; People v Maerling, 46 NY2d 289.) II. Under the rule of Bruton v United States, it was correct for the court below to have reversed respondent’s conviction and ordered a new trial. (Pointer v Texas, 380 US 400; Douglas v Alabama, 380 US 415.) III. The denial of respondent’s right to confrontation was not harmless error. (People v Wheatman, 31 NY2d 12; Marcus v New York, 409 US 1027; People v O’Farrell, 175 NY 323; People v Meyers, 56 AD2d 853; People v Cefaro, 23 NY2d 283; People v Baker, 23 NY2d 307; People v Boone, 22 NY2d 476; People v Jackson, 22 NY2d 446; People v Peller, 291 NY 438.) IV. Respondent’s additional points requesting guidance for purposes of the new trial. (People v Arce, 42 NY2d 179; People v Kitchen, 55 AD2d 575; People v Adams, 21 NY2d 397.)
   OPINION OF THE COURT

Per Curiam.

The issue on this appeal is whether a statement made by an accomplice, characterized as a declaration against penal interest, was properly admitted against the defendant. We conclude that it does not satisfy the tests for admission of a statement against penal interest laid down in People v Maerling (46 NY2d 289) and that the defendant’s conviction, therefore, may not stand. Because we decide that the statement cannot be consider whether the defendant’s right of confrontation guaranteed by the Sixth Amendment has been violated.

The defendant was convicted after a jury trial of second degree murder and first and second degree robbery in connection with the death of a wealthy homosexual. The Appellate Division reversed the conviction and we affirm. The facts relevant to this appeal were testified to by Detectives John Toone and Carl Sgrizzi and by Thomas Gilligan, a participant in the crime who co-operated with the prosecution and was permitted to plead guilty to attempted second degree robbery. Principally as told by Gilligan the events surrounding the murder were as follows:

The victim had been at various times the friend and lover of Gilligan, Robert Hoke and one Robert Jones. Gilligan, Hoke, and Jones, had become acquainted with the defendant and one Chris Denim. In October, 1975, at a party attended by Gilligan, Hoke, Jones, the defendant, the defendant’s brother and possibly Denim, there was a general discussion about obtaining money without labor, by means such as robbing the victim.

The next month Denim, Gilligan, Jones, and the defendant, decided to obtain money from the victim by telling him, falsely, that bail money was needed for Jones. If that did not work, they intended to rob him. At the building the defendant and Denim went upstairs to the victim’s apartment while Jones and Gilligan waited for a while in the vestibule. When they reached the apartment the defendant, holding a knife, was standing over the victim’s body. After being threatened by the defendant, Gilligan opened a file cabinet which he knew to contain valuables, then fled from the scene.

Shortly after the murder Jones was questioned by the police, but denied his own participation or having recently seen Gilligan, and offered to help the police find Gilligan. Gilligan was arrested December 3, 1975.

The defendant and Jones were separately arrested early on December 4, 1975 by Detectives Toone and Sgrizzi. According to the detectives Jones, upon seeing Gilligan and the defendant in custody, gave an account of the crime which was basically the same as that given by Gilligan at the trial. Jones thereafter testified before the Grand Jury but refused to testify at the defendant’s trial after the prosecutor declined to give consideration to his co-operation.

Because Jones was unavailable at trial the detectives were permitted to recount his confession without mention of the defendant, as a declaration against penal interest. Toone, however, in testifying as to Jones’ confession, made one reference to “the defendant”, from which the jury could infer that Jones implicated Geoghegan. It is that statement by Jones which is the focus of this appeal.

In People v Maerling (supra, at p 298), we required that for a statement against penal interest to be admissible the interest compromised must be such as to "all but rule out” motive to falsify, the declarant must be conscious of the consequences of his statement at the time it is made, that only those parts which inculpate the declarant should be admitted, and that there should be an opportunity to show from the circumstances of its making that any indicia of apparent reliability are misleading. Those assurances of probative value, which might in a proper case substitute for cross-examination, were not present in this case. Additionally, the fact that Jones’ confession was not restricted to self-inculpation, but as well implicated defendant, deprives it of admissibility under Maerling.

At the time Jones’ confession was made he had already been arrested for the murder and was subject to criminal prosecution. Moreover, having seen Gilligan and Geoghegan in custody at the station house he believed the police to be already fully apprised of his own role in the crime. Thus, there was more than the “distinct possibility” we referred to in People v Settles (46 NY2d 154, 168), that he would be motivated to implicate falsely in hope of winning immunity to prosecution or a plea to a reduced charge. That achieving lenient treatment for himself was indeed Jones’ goal is demonstrated by the degree of co-operation he gave the prosecution at various stages of the proceedings.

In his initial contact with the police Jones denied his own participation and misled the police. Only under stimulus of the belief that police already knew his role in the affair did Jones acknowledge a part in the crime, and then his "confession” carefully limited his participation to the less culpable role of -waiting with Gilligan while, without their knowledge, others accomplished the actual killing.- Jones then testified on his own behalf and against the others before the Grand Jury, and did not invoke his Fifth Amendment privilege until shortly before trial when it became clear that the prosecutor would afford him no consideration for his cooperation. That the particulars of Jones’ recital of the facts may be said to mirror those to which Gilligan testified may not be remarkable either, inasmuch as Gilligan too might be expected to have been disposed to implicate defendant in exchange for acceptance of his plea to a charge of robbery.

In view of the seriousness of the charges facing him and the belief that his participation in the crime was already known, it is apparent that Jones had powerful incentives to minimize his own role and to place primary blame on others. We conclude therefore, as a matter of law, that Jones had motive to falsify, and that his declaration should not be admissible to prove the guilt of another.

The order of the Appellate Division should be affirmed.

Jasen, J.

(dissenting). I would hold that the confession of one participant in a crime who refuses to testify at trial should be admitted in evidence as a declaration against penal interest where there exists a clear indication of the statement’s reliability.

It is difficult to understand the majority’s view that a statement or confession made by a participant in a crime revealing his involvement therein, such as that made by Jones in this case, is not admissible in evidence as a declaration against penal interest. I had thought such a statement or confession was admissible as an exception to the hearsay rule where the person making the admission is dead or beyond the jurisdiction and, thus, not available; or where he is available but refuses to testify in court on the ground of self incrimination. (E.g., People v Maerling, 46 NY2d 289, 295-299; People v Brown, 26 NY2d 88.) As the court below aptly observed, “[Jones’] statements were properly characterized as declarations against penal interest for they qualified as such under the fourfold test enunciated in People v Settles (46 NY2d 154, 167). First of all, [Jones] was unavailable because he refused to testify at defendant’s trial. Secondly, he realized that the statements were against his penal interest when made. Thirdly, the declarant demonstrated a first-hand knowledge of the facts surrounding De Vroom’s murder. Lastly, Gilligan’s testimony constituted independent evidence confirming the reliability and trustworthiness of the declarations.” (68 AD2d, at p 283; see, e.g., People v Piazza, 48 NY2d 151, 157; People v Maerling, 46 NY2d 289, 295-299, supra; People v Brown, 26 NY2d 88, supra; see, generally, Richardson, Evidence [10th ed], §§ 255-266.)

The majority, however, holds that Jones’ station house confession is not admissible as a declaration against penal interest by suggesting that Jones may have bent the truth in a misguided attempt to save his own skin. I find such logic strained.

In the Maerling case, we stated "that the interest which the declaration compromises must be one of sufficient magnitude or consequence to the declarant to all but rule out any motive to falsify.” (46 NY2d 289, 298, supra.) I simply cannot imagine a more compelling interest than the interest of a suspect in a brutal murder to conceal his involvement therein. It seems incredible that a man would confess fully to his participation in a murder in the farfetched hope of receiving lenient treatment, especially where, as here, the very persons whom he could implicate are already in the custody of law enforcement officials. If Jones “believed the police to be already fully apprised of his own role in the crime” (at p 49), it seems far more likely that Jones was prompted to confess because he believed that remaining silent would serve little purpose, rather than to confess in furtherance of an on-the-spot, contrived plan to escape prosecution for murder.

To insist on more reliability than was demonstrated evinces a quest for certainty that transcends the reality of litigation. Such insistence forgets that the dozens of forms of admissible hearsay that are so essential to the trial process would disappear if insurance rather than assurance of reliability was the test. It ignores the fact that direct testimonial proof offers no guarantee of truth, and overlooks the role in our adversarial system of counsel, through whose ministrations the inherent limitations of any form of proof, hearsay or direct, may be put in appropriate perspective.

Once it is established that Jones’ confession is admissible in evidence as a declaration against penal interest, it becomes necessary to resolve the further issue — not reached by the majority due to its disposition — whether defendant’s constitutional right "to be confronted with the witnesses against him” (US Const, 6th Arndt; NY Const, art I, § 6) was violated by the use of these statements at trial. I am convinced that defendant’s right of confrontation was not transgressed, and it was error for the court below to hold to the contrary.

It is fundamental that the confrontation clause does not require that all hearsay statements be excluded from evidence in criminal proceedings, even where the extrajudicial statement incriminates defendant. (See, e.g., Ohio v Roberts, 448 US 56, 63; Dutton v Evans, 400 US 74, 80; Pointer v Texas, 380 US 400, 407; People v Salko, 47 NY2d 230, 241.) This is so because the confrontation clause does not entitle criminal defendants to cross-examine witnesses against them in each and every instance (see United States v King, 552 F2d 833, 846, cert den 430 US 966); rather, if clear indications of reliability exist independent of cross-examination and the finder of facts has sufficient basis for evaluating the truth of the statement offered, a defendant under such circumstances is not deprived of the protections accorded by the confrontation clause. As the Supreme Court wrote in the Dutton case, "[t]he decisions of this Court make it clear that the mission of the Confrontation Clause is to advance a practical concern for the accuracy of the truth-determining process in criminal trials by assuring that 'the trier of fact [has] a satisfactory basis for evaluating the truth of the prior statement.’ ” (400 US, at p 89, supra, quoting California v Green, 399 US 149, 161.) This view has been recently reaffirmed (Ohio v Roberts, 448 US 56, 65-66, supra), and, thus, it is clear that “practical concern” for the reliability of inculpatory hearsay is the key to confrontation clause analysis. (United States v Alvarez, 584 F2d 694, 701.)

The very predicate for this court’s decision that "[t]he rule in New York should be modernized to hold that an admission against penal interest will be received” in evidence was a recognition of these statements’ inherent reliability (People v Brown, 26 NY2d 88, 94, supra), and further documentation of this well-settled observation would be mere surplusage. Suffice it to say that in People v Maerling (46 NY2d 289, supra), a case in which we undertook an extensive review of declarations against penal interest, our court unanimously held that "in the case of declarations against interest, the theory is that such assurance [of reliability] flows from the fact that a person ordinarily does not reveal facts that are contrary to his own interest. Therefore, the reasoning goes, absent other motivations, when he does so, he is responding to a truth-revealing compulsion as great as that to which he would likely be subjected if cross-examined as a witness.” (Emphasis added.) We went on to say that "[o]ne thing is clear: the severe sanctions potentially attendant upon a conviction for crime, whether by way of imprisonment or fine or both, make admissions of guilt among the most disserving of declarations. We therefore conclude that, conceptually, declarations against penal interest may be admissible against an accused.” (Id., at pp 295, 297.) When one recalls that the introduction of a declaration against penal interest is also dependent upon the submission of "other evidence tending to show that the declarant or someone he implicates as his accomplice actually committed a crime” (People v Settles, 46 NY2d 154, 169, supra), the reliability of the declaration is certainly assured. Indeed, the Supreme Court has observed that "[reliability can be inferred without more in a case where the evidence falls within a firmly rooted hearsay exception.” (Ohio v Roberts, 448 US 56, 66, supra.)

Here, not only are Jones’ statements inherently reliable as declarations against penal interest, but there was clear proof, independent of these statements, to establish defendant’s culpability and, thus, confirm the declarations’ veracity. As the majority itself notes, “Jones ** * * gave an account of the crime which was basically the same as that given by Gilligan at the trial.” (At p 48 [emphasis added].) There can be no doubt that defendant’s conviction rested almost entirely upon Gilligan’s testimony at trial. His recitation of the events surrounding the brutal, slashing murder of De Vroom and defendant’s involvement in this animalistic act were exposed to cross-examination and, therefore, the jury was able to assess fully the truth of these statements. Further, one Kremer Hoke testified that a discussion had taken place between defendant and his cohorts in which the victim’s status as an easy prey was mentioned, and not to be forgotten is the jury’s opportunity to evaluate Detective Toone’s credibility.

Under these circumstances, I can only come to the conclusion that defendant’s right to confront the witnesses against him was not transgressed by the introduction of Jones’ declarations against penal interest. Reliability — the very essence of the confrontation clause — was certainly demonstrated as to these statements.

Before concluding, one point should be made clear. By this dissent, I am not advocating a rule of law which contemplates that every extrajudicial statement qualifying as an exception to the hearsay rule be permitted into evidence in a criminal proceeding, for I too recognize that "[wjhile the hearsay rule and the confrontation clause share a similarity of purpose, the protections they afford have not been viewed as entirely equatable.” (People v Salko, 47 NY2d 230, 241, supra, citing Dutton v Evans, 400 US 74, 86, supra; see California v Green, 399 US 149, 155, supra.) Phrased differently, the indicia of reliability which sustain an exception to the hearsay rule do not automatically render nugatory a defendant’s right to confront the witnesses against him. However, if, as in this case, clear indications of reliability exist, I would hold that the confession of . one participant in a crime who refuses to testify at trial, even if it implicates the defendant, should be admitted into evidence. (See, generally, Fine, Declarations Against Penal Interest in New York: Carte Blanche?, 21 Syracuse L Rev 1095, 1118-1134A.)

For the above-stated reasons, I would reverse the order of the Appellate Division, reinstate the murder and robbery convictions, and remit the case to the Appellate Division for determination of the facts. (GPL 470.40, subd 2, par [b]; 470.25, subd 2, par [d].)

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

Order affirmed.

       Name used herein is fictitious for the purpose of publication. [Rep.

      . As stated in Dutton v Evans (400 US 74, 80): "It is not argued, nor could it be, that the constitutional right to confrontation requires that no hearsay evidence can ever be introduced.” Phrased differently, "[i]f one were to read [the language of the confrontation clause]' literally, it would require, on objection, the exclusion of any statement made by a declarant not present at trial. See Mattox v. United States, 156 U. S. 237, 243 (1895) ('[T]here could be nothing more directly contrary to the letter of the provision in question than the admission of dying declarations’). But, if thus applied, the Clause would abrogate virtually every hearsay exception, a result long rejected as unintended and too extreme.” (Ohio v Roberts, 488 US 56, 63.)

      . I am not implying, of course, that the right of criminal defendants to question the witnesses against them is not a very important component of the confrontation clause. (E.g., Bruton v United States, 391 US 123.) Also, I must admit that I find the Supreme Court’s analysis in this area less than lucid. (See Younger, Confrontation and Hearsay: A Look Backward, A Peek Forward, 1 Hofstra L Rev 32.)

      . It should be noted that at the time Bruton v United States (391 US 123, supra)
        was tried, the Federal courts did not recognize the declaration against penal interest exception. (Donnelly v United States, 228 US 243.) However, rule 804 (subd [b], par [3]) of the Federal Rules of Evidence now provides, in pertinent part: "The following are not excluded by the hearsay rule if the declarant is unavailable as a witness: * * * A statement which was at the time of its making so far contrary to the declarant’s pecuniary or proprietary interest, or so far tended to subject him to civil or criminal liability * * * that a reasonable man in his position would not have made the statement unless he believed it to be true. A statement tending to expose the declarant to criminal liability and offered to exculpate the accused is not admissible unless corroborating circumstances clearly indicate the trustworthiness of the statement.”


author: Wachtler, J. Jasen, J.

text:
    The People of the State of New York, Respondent, v Jorge Marrero, Appellant.
    Argued June 6, 1980;
    decided July 8, 1980

      POINTS OF COUNSEL

      Susan C. Thon and William E. Hellerstein for appellant.
    The police and prosecutor violated appellant’s right to counsel when they obtained an uncounseled waiver of that right and uncounseled statements from him although they knew he had been surrendered to the police by an attorney (US Const, 5th, 6th, 14th Arndts; NY Const, art I, §§ 5, 6). (People v Hobson, 39 NY2d 479; People v Carl, 46 NY2d 806; People v Tompkins, 45 NY2d 748; People v Buxton, 44 NY2d 33; People v Pinzon, 44 NY2d 458; People v Arthur, 22 NY2d 325; People v Taylor, 27 NY2d 327; People v Hetherington, 27 NY2d 242; People v Ermo, 47 NY2d 863; People v Ramos, 40 NY2d 610.)

      Eugene Gold, District Attorney (Richard E. Mischel of counsel), for respondent.
    Appellant’s motion to suppress his incriminating statements made to Detective Bernard McSweeney and Assistant District Attorney Bruce Cutler was properly denied. (People v Settles, 46 NY2d 154; Kirby v Illinois, 406 US 682; Brewer v Williams, 430 US 387; Moore v Illinois, 434 US 220; Escobedo v Illinois, 378 US 478; People v Ramos, 40 NY2d 610; People v Donovan, 13 NY2d 148; People v Failla, 14 NY2d 178; People v Friedlander, 16 NY2d 248.)
   OPINION OF THE COURT

Wachtler, J.

The question on this appeal is whether the police may question an individual in the absence of counsel when they know that the defendant was represented by counsel at the time of arrest, but did not know that the attorney had only agreed to arrange the defendant’s surrender to the police.

The defendant, believing he was sought by the police in connection with a homicide investigation, consulted an attorney. At the defendant’s request the attorney contacted the police, learned that they were looking for the defendant, and arranged for his surrender. The police went to the attorney’s office and took the defendant into custody. At the police station the defendant was advised of his rights, waived them and, after being questioned by the police and an assistant prosecutor, made incriminating statements without the assistance of counsel.

A pretrial motion to suppress the statements was denied after a hearing. The defendant was then tried and convicted. The Appellate Division modified the sentence in the interests of justice, but otherwise affirmed.

On this appeal the defendant claims that the statements should have been suppressed. Relying on People v Hobson (39 NY2d 479) and related cases, he argues that the police should not have questioned him in the absence of counsel. In Hobson we held (at p 481): "Once a lawyer has entered a criminal proceeding representing a defendant in connection with criminal charges under investigation, the defendant in custody may not waive his right to counsel in the absence of the lawyer”. The People urge that this principle is not applicable here because the defendant was not represented by counsel at the time of the police interrogation. They note that the trial court found that the lawyer had only agreed to assist the defendant by contacting the police and arranging the surrender at which time his services terminated.

Subsequent to our decision in Hobson we have attached little significance to the contractual arrangements between the defendant and his attorney in determining whether the defendant’s right to counsel has been violated during custodial interrogation (but see People v Taylor, 27 NY2d 327, decided prior to Hobson). Once an attorney has appeared on the defendant’s behalf we have refused to allow the police to rely on arguable ambiguities in the attorney-client relationship in order to justify police questioning of the defendant without the attorney being present (see, e.g., People v Ramos, 40 NY2d 610). We have indicated that if the police are uncertain as to the scope of the attorney’s representation, the defendant should not be questioned (People v Coleman, 42 NY2d 500, 507). Indeed we have recently held that the prohibition against custodial questioning of a defendant in the absence of his attorney may extend to crimes other than those for which the attorney was expressly retained or appointed (People v Rogers, 48 NY2d 167).

The important factor in these cases was the police awareness of an attorney’s appearance on the defendant’s behalf, rather than the precise terms of the retainer or appointment. Here, of course, the police were made aware, in the most demonstrable way, of the fact that the defendant was represented by counsel at the time of his arrest. Because of the limited and unusual arrangement the attorney had made with the defendant, that representation may actually have terminated prior to the questioning. But there was no finding that the police were aware of that peculiar arrangement. All they knew was that the defendant had sought the assistance of counsel in connection with the charge they were investigating. If the defendant had verbally expressed a desire to be assisted by counsel during the interrogation, the police would have been precluded from questioning him in the absence of counsel (People v Cunningham, 49 NY2d 203). We see no significant distinction between a verbal request for counsel and the defendant’s conduct in this case. By consulting a lawyer to contact the police, and then surrendering in the attorney’s office with counsel present, the defendant had manifested " 'his own view that he is not competent to deal with the authorities without legal advice’ (Michigan v Mosely, 423 US 96, 110, n 2 [White, J., concurring]).” (People v Cunningham, supra, p 209.)

Accordingly, the order of the Appellate Division should be reversed, the motion to suppress the statements granted and a new trial ordered.

Jasen, J.

(dissenting). I had thought the rule well established that our court is bound by affirmed findings of fact made by the courts below where the record supports such findings. (NY Const, art VI, § 3; see, e.g., People v Bryant, 50 NY2d 949; People v Morales, 42 NY2d 129, 138; People v Paulin, 25 NY2d 445, 449-450; People v Leonti, 18 NY2d 384, 390-391.) Evidently that is no longer the case, as the majority today has chosen to disregard the affirmed finding of fact that counsel had not entered the proceedings when defendant was arrested and brought to the police precinct where he confessed to the crime of murder after he was advised of his constitutional rights. In its stead, the majority has made its own independent finding of fact that "the police were made awafe, in the most demonstrable way, of the fact that the defendant was represented by counsel” (p 59). Even if I were to assume the role of fact finder, as my colleagues have apparently chosen to do, I would conclude that counsel had not entered the proceedings herein, for there is absolutely no evidence in this record that Ivy Blecher, the attorney in question, ever represented appellant in this case. All that the record establishes, as found by the suppression court and affirmed by the Appellate Division, is that “Ivy [Blecher] was consulted by the defendant, the defendant’s father and a mutual friend, oné, Raphael Velasquez, for the sole purpose of determining whether or not the defendant who was interested in turning himself in was wanted by the police, what precinct if any might be seeking the defendant, who was looking for him, the reasons why he was being sought, and that since the defendant had every intention of turning himself in, for Mr. [Blecher] to determine to whom and why.” (Emphasis added.) Once the attorney provided this information and arranged for the police to take the defendant into custody, their limited relationship ended. Indeed, the only legal advice Mr. Blecher gave to defendant was to “get Legal Aid”.

Both defendant and Mr. Blecher, as found by the courts below, were aware of the limited nature of their relationship and that it had terminated before defendant was arrested and questioned at the police precinct. Inasmuch as the parties themselves did not intend to establish an ongoing attorney-client relationship, it is difficult to understand how the police can be held accountable for an alleged violation of such a nonexistent relationship. This is not the kind of situation presented by the Hobson case (39 NY2d 479) and its progeny. In each of those cases, "a lawyer ha[d] entered a criminal proceeding representing a defendant in connection with criminal charges under investigation” (p 481) or had been retained to represent the defendant in some other pending criminal prosecution. Here, there was a specific finding of fact by the suppression court, affirmed by the Appellate Division, that Mr. Blecher did not represent the defendant in connection with any criminal charges, but was merely consulted "for the sole purpose of determining whether or not the defendant * * * was wanted by the police * * * [and] at no time otherwise represented the defendant.” I had always believed that the object of the Hobson rule is to prohibit law enforcement agencies from subverting an established attorney-client relationship by interrogating a defendant who had already exercised his right to counsel. Since the record conclusively indicates, and the courts below found, that there was no attorney-client relationship when defendant was taken into custody and subsequently advised of his constitutional rights in the presence of his father, I would hold that his confession to the murder charged was properly admitted at trial. Consequently, there should be an affirmance.

Chief Judge Cooke and Judges Gabrielli, Jones, Fuchs-berg and Meyer concur with Judge Wachtler; Judge Jasen dissents and votes to affirm in a separate opinion.

Order reversed, etc.


author: Jasen, J. Fuchsberg, J.

text:
    In the Matter of Richard D. Priest et al., Appellants, v Richard A. Hennessy, Jr., as District Attorney of Onondaga County, Respondent.
    Argued June 5, 1980;
    decided July 8, 1980

      POINTS OF COUNSEL

      Joseph E. Fahey for appellants.
    I. The Appellate Division, Fourth Department, erred in reversing the judgment of the Onondaga County Court in the within action. (Colton v United States, 306 F2d 633; United States v Pape, 144 F2d 778; United States v Kovel, 296 F2d 918; Matter of Grand Jury Subpoenas, Dated April 19, 1978, 451 F Supp 969; Matter of Stolar, 397 F Supp 520; People ex rel. Vogelstein v Warden of County Jail of County of N. Y., 150 Misc 714; Baird v Koerner, 279 F2d 623; Matter of Grand Jury Proceedings, 517 F2d 666; People v Cook, 82 Misc 2d 875; People v Belge, 59 AD2d 307; Matter of Glines v Estate of Baird, 16 AD2d 743.) II. The issuance of the subpoena compelling testimony from appellants in the proceeding below violates the Fourth, Fifth and Sixth Amendments to the Constitution of the United States and CPLR 4503. (Powell v Alabama, 287 US 45; Gideon v Wainwright, 372 US 335; United States v Wade, 388 US 218; Miranda v Arizona, 384 US 436; People v Donovan, 13 NY2d 148; People v Huntley, 15 NY2d 72; People v Arthur, 22 NY2d 325; People v Ramos, 40 NY2d 610; People v Hobson, 39 NY2d 479; People v Rogers, 48 NY2d 167.)

      Richard A. Hennessy, Jr., District Attorney (John A. Cirando and Gail N. Uebelhoer of counsel), respondent pro se.

    The court below properly determined that there was no attorney-client privilege and no confidential communication. (Matter of Trotta, 99 Misc 2d 278; United States v Stern, 511 F2d 1364; Matter of Bonanno, 344 F2d 830; United States v Kovel, 296 F2d 918; Colton v United States, 306 F2d 633; People v Beige, 59 AD2d 307; United States v De Mauro, 581 F2d 50; Matter of Grand Jury Subpoenas, Dated April 19, 1978, 451 F Supp 969; Matter of Kaplan [Blumenfeld], 8 NY2d 214; People ex rel. Vogelstein v Warden of County Jail of County of N. Y., 150 Misc 714, 242 App Div 611.)
   OPINION OF THE COURT

Jasen, J.

This case involves an ongoing Grand Jury investigation of prostitution in Onondaga County. During the course of this investigation, several women testified before the Grand Jury concerning their involvement in prostitution between 1975 and the present. Petitioners Richard D. Priest and George M. Raus are attorneys who had represented some of these witnesses on various occasions during this time period. The Grand Jury seeks to obtain information regarding the nature of the fee arrangements between petitioners, their former clients and any third party who may have retained them to appear for the prostitutes. The issue on this appeal is whether petitioners properly refused to answer the questions posed by the Grand Jury upon the ground that such questions seek , to inquire into matters protected by the attorney-client privilege.

On January 18, 1980, petitioners were served with Grand Jury subpoenas duces tecum which required them to provide the Grand Jury with "any and all records of amounts billed and payments made for services rendered to [various prior clients] including fee arrangements and retainer agreements from January 1975 to present.” On January 22, 1980, Onondaga County Court issued an order to show cause why such subpoenas should not be declared void and ordered a hearing. At the hearing, petitioners contended that the fee arrangements between petitioners and their former clients were privileged and that they should not be compelled to disclose such information. The court, however, refused to quash the subpoenas and ordered petitioners to appear before the Grand Jury.

On January 28, 1980, petitioners testified before the Grand Jury that although they had represented certain named individuals, they kept no written records of fees charged or payments made on behalf of these clients. They further testified that they had no set fee which they required for an appearance and that when they were paid at all they were usually paid in cash. Petitioners were then asked whether any third party had ever made payments on behalf of the named clients. Raus testified that a third party might possibly have made such payments, but he refused to disclose the identity of any such party. Priest refused to discuss the subject of third-party payments altogether.

Faced with petitioners’ refusal to testify further, the Grand Jury formulated several specific questions regarding third-party payments and requested that the Onondaga County Court order petitioners to appear and respond to the inquiry. By order dated February 5, 1980, the court required petitioners to appear before the Grand Jury and to answer the following questions:

"1. What written or oral agreement [was made] regarding fees existing between Mr. Priest and Mr. Raus and the named clients or between Mr. Priest or Mr. Raus and any third party on behalf of the named clients, and who were the third parties.
”2. Were payments for legal services on behalf of the named clients made by any third parties or by the clients themselves which are not identified in any records of Mr. Priest or Mr. Raus, [and] who were the third parties.”

Thereafter, the court issued judicial subpoenas to effectuate its order.

On February 11, 1980, petitioners moved to quash these judicial subpoenas, arguing that the testimony sought to he adduced was protected by the attorney-client privilege and that the constitutional rights of the third-party payor would be infringed if petitioners were required to respond. Oral argument was heard on petitioners’ application on February 15, 1980; and on February 26, 1980, County Court quashed its own subpoenas.

On appeal, the Appellate Division unanimously reversed the County Court’s order and denied petitioners’ motion. The court found that there was insufficient evidence in the record to support petitioners’ claim that an attorney-client relationship existed between themselves and the unnamed third party which they sought to protect and noted that even if such a relationship had been demonstrated, the payment of legal fees on behalf of another is not a confidential communication within the scope of the attorney-client privilege. There should be an affirmance.

This case presents a unique factual pattern not heretofore examined by this court. At first blush, the questions posed by the Grand Jury appear to be an inquiry solely into the fee arrangements between attorneys Priest and Raus and various clients accused of prostitution-related offenses. Normally, the question whether the attorney-client privilge should prevent disclosure of such fee arrangements, including payments, if any, made by a third party, would entail an examination of the scope of the privilege as it applies to the attorneys and the parties they represented. In this case, however, petitioners allege that the third-party benefactor of the criminal defendants which they represented was also their client. Thus, the case actually presents three distinct questions, to wit: (1) whether the fee arrangements may be shielded from disclosure on the strength of the privilege surrounding the attorney-client relationship between petitioners and the women they represented; (2) whether such disclosure is barred by the privilege which surrounds the attorney-client relationship arising out of any prior representation of the third party; and (3) whether a separate attorney-client relationship was created between the attorneys and their clients’ benefactor upon the payment of legal fees which is itself deserving of the protection of the attorney-client privilege. Although the factual situation presenting these questions is novel, we believe that each may be answered by applying the analysis traditionally used to test the scope of the privilege.

The attorney-client privilege is, in this State, a creature of statute. (CPLR 4503, subd [a].) It exists to ensure that one seeking legal advice will be able to confide fully and freely in his attorney, secure in the knowledge that his confidences will not later be exposed to public view to his embarrassment or legal detriment. (See, e.g., Matter of Jacqueline F., 47 NY2d 215, 218; Hurlburt v Hurlburt, 128 NY 420, 424; see, also, 8 Wigmore, Evidence [McNaughton rev, 1961], § 2291 [hereinafter Wigmore]; Richardson, Evidence [10th ed], § 410.) The privilege, however, is not limitless. It has long been recognized that "the attorney-client privilege constitues an 'obstacle’ to the truth-finding process, the invocation of which should be cautiously observed to ensure that its application is consistent with its purpose.” (Matter of Jacqueline F., 47 NY2d 215, 219, supra; see, also, Matter of Horowitz, 482 F2d 72, 81-82; Matter of Field, 408 F Supp 1169, 1173; 5 Weinstein-Korn-Miller, NY Civ Prac, par 4503.19, p 45-148; 8 Wigmore, § 2291, p 554.)

Defining the limits of the privilege is, of course, not an easy task. Although several enlightening general statements of the scope of privilege appear in the cases and the treatises (see, e.g., United States v United Shoe Mach. Corp., 89 F Supp 357, 358-359; United States v Stern, 511 F2d 1364, 1367; 8 Wigmore, § 2292), no clear rule of general application can be simply articulated. Indeed, as we have often observed, " 'much ought to depend on the circumstances of each case’.” (See Matter of Jacqueline F., 47 NY2d 215, 222, supra; and Matter of Kaplan [Blumenfeld], 8 NY2d 214, 219, quoting 8 Wigmore [5th ed], § 2313, p 609.) However, there are some general principles relevant to this case by which our analysis may be guided.

First, it is beyond dispute that no attorney-client privilege arises unless an attorney-client relationship has been established. Such a relationship arises only when one contacts an attorney in his capacity as such for the purpose of obtaining legal advice or services. (CPLR 4503, subd [a]; see, e.g., People v Belge, 59 AD2d 307, 309; United States v United Shoe Mach. Corp., 89 F Supp 357, 358-359, supra; 8 Wigmore, § 2292.) Second, not all communications to an attorney are privileged. In order to make a valid claim of privilege, it must be shown that the information sought to be protected from disclosure was a "confidential communication” made to the attorney for the purpose of obtaining legal advice or services. (Matter of Jacqueline F., 47 NY2d 215, 219, supra; People ex rel. Vogelstein v Warden of County Jail of County of N. Y., 150 Misc 714, 717-718; 8 Wigmore, § 2292.) Third, the burden of proving each element of the privilege rests upon the party asserting it. (Matter of Gavin, 39 AD2d 626, 628; Matter of Grand Jury Empanelled Feb. 14, 1978, 603 F2d 469, 474.) Finally, even where the technical requirements of the privilege are satisfied, it may, nonetheless, yield in a proper case, where strong public policy requires disclosure. (Matter of Jacqueline F., 47 NY2d 215, supra; People ex rel. Vogelstein v Warden of County Jail of County of N. Y., 150 Misc 714, supra.) Applying these pinciples to the case before us, we conclude that no claim of privilege can be made herein.

Although petitioners do not press this point, we note that they may not assert a privilege based upon their representation of the prostitutes who testified before the Grand Jury. The fee arrangements between attorney and client do not ordinarily constitute a confidential communication and, thus, are not privileged in the usual case. (United States v Pape, 144 F2d 778, 782, cert den 323 US 752; see, also, Matter of Michaelson, 511 F2d 882, 888, cert den 421 US 978; Matter of Semel, 411 F2d 195, 197, cert den 396 US 905; Colton v United States, 306 F2d 633, 637-638, cert den 371 US 951.) A communication concerning the fee to be paid has no direct relevance to the legal advice to be given. It is a collateral matter which, unlike communications which relate to the subject matter of the attorney’s professional employment, is not privileged.

Nor does the payment of legal fees by a third person, in and of itself, create an attorney-client relationship between the attorney and his client’s benefactor sufficient to sustain a claim of privilege. (United States v Pape, 144 F2d 778, supra; Matter of Richardson, 31 NJ 391.) While such an arrangement may well be intended to be confidential, it is not, under ordinary circumstances, undertaken for the purpose of obtaining legal advice for the third party and, therefore, no attorney-client relationship arises between the third party and the attorney on the mere payment of attorney fees on behalf of another. The name of the person retaining an attorney for another and the amount of the retainer paid are quite simply not the confidences which the privilege was intended to protect. Rather, "the statements of the client for the purpose of seeking advice from his counsel were the disclosures which were to be kept secret.” (People ex rel. Vogelstein v Warden of County Jail of County of N. Y., 150 Misc 714, 717-718, supra.)

Furthermore, no claim of privilege necessarily arises out of petitioners’ characterization of the third party as a client. As noted earlier, the burden of proving the existence of the privilege is upon the party asserting it. (Matter of Gavin, 39 AD2d 626, 628, supra; 5 Weinstein-Korn-Miller, NY Civ Prac, par 4503.22; see, also, United States v Stern, 511 F2d 1364, 1367, supra; Matter of Bonanno, 344 F2d 830, 833.) The mere statement that the third party was a "client” does not satisfy this burden. (Matter of Bonanno, 344 F2d 830, 833, supra; see, also, Colton v United States, 306 F2d 633, 636-637, supra.) If such an unembellished statement, without more, could seal forever the lips of an attorney, it is difficult to conceive of a situation in which an attorney could be compelled, over his objection, to testify as to any transactions with anyone, for he could too easily refuse to answer on the strength of his own unsupported allegation that such person was a client. Thus, independent facts beyond the attorney’s statements must be shown in order to demonstrate the existence of an underlying attorney-client relationship upon which a claim of privilege could be based. There are no such facts here.

Moreover, even if we were to accept petitioners’ assertion that the third party who paid his clients’ fees had at one time also been a "client”, this fact alone would not be determinative. As we have indicated, no attorney-client relationship arises out of the payment of another’s attorney’s fees. The fortuitous circumstance that the attorney had on occasion represented the payor on other matters is of no consequence, since such representation has no relation to the confidential communication which is claimed to be privileged.

Since we conclude that no attorney-client relationship between petitioners and the third party has been demonstrated, we need not address the further question of whether public policy considerations might require disclosure had such a relationship been shown to exist. (Cf. Matter of Jacqueline F., 47 NY2d 215, supra; People ex rel. Vogelstein v Warden of County Jail of County of N. Y., 150 Misc 714, supra.)

We have examined petitioners’ remaining contentions, including their constitutional claims, and find them to be devoid of merit.

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

Fuchsberg, J.

(dissenting). To set this case in its proper perspective, it is essential to point out that the Grand Jury’s target was the subject of prostitution in Onondaga County generally; in other words, the promoters of that illegal activity, whether working singly or in conspiracy, were the most likely candidates for indictment. Obviously, the payment of attorney’s fees on behalf of one or more prostitutes might be construed as an indication that the benefactor was involved in wrongdoing. This kind of incrimination is precisely what the petitioning attorneys sought to avoid.

Beyond that, it is also crucial to note that the name of the only "third party” the District Attorney appears to have had reason to connect to the petitioners was already known to the authorities. More so, the petitioners conceded in open court that they knew this individual and asserted, without contradiction, that they had represented him up until his arrest several months earlier on charges intimately related to the Grand Jury’s investigation.

What more they could do to carry the burden of proving the existence of an attorney-client relationship is hard to see. The attorneys are officers of the court, and the prosecution does not question their bona ñdes. Moreover, the relationship between attorney and client most often is one-to-one, and there might be no other nonconfidential evidence of its existence short of haling the client into court and seeking a waiver of immunity.

In view of these circumstances, it is apparent that the interrogation of the attorneys was not for the purpose of uncovering previously unknown leads, but in order to get them to produce hard evidence against their former client that would support an indictment. To condone this strategem is to tolerate a completely unjustified abuse of the principle of safeguarding the confidentiality of communications between attorney and client.

It would be superfluous at this late date to retrace the many, varied and time-honored sources of the attorney-client privilege (see, generally, 8 Wigmore, Evidence [McNaughton rev, 1961], §§ 2290, 2291). Suffice it to note that it finds expression in statute (CPLR 4503) and ethical code (Code of Professional Responsibility, EC- 4-1) and is strongly rooted in the constitutional right to'counsel (US Const, 6th Amdt; NY Const, art I, § 6). We need look no further than the sweeping nature of our series of recent rulings in right to counsel cases for a reflection of the central role the right plays in securing justice under law (see People v Arthur, 22 NY2d 325; People v Hobson, 39 NY2d 479; People v Settles, 46 NY2d 154; People v Maerling, 46 NY2d 289; People v Garofolo, 46 NY2d 592; People v Rogers, 48 NY2d 167; People v Cunningham, 49 NY 2d 203; People v Marrero, 50 NY2d 56.) The adversarial nature of our legal system puts a premium on free and unconstrained access to legal advice and, in so doing, re-emphasizes how essential it is that we do not slacken in our support for the strong public policy favoring confidentiality of attorney-client communications.

To deny the privilege here drastically undermines its efficacy as a means of promoting consultation with counsel and informed participation in the legal process. In balancing the prosecution’s need for the information against the importance of the privilege, the scale clearly tips in favor of confidentiality. Foremost is the recognition that the third party’s payment of counsel fees is no less a communication intended to be kept secret than would be his verbal admission to counsel that he was a promoter of prostitution (cf. United States v Pape, 144 F2d 778, 783 [Learned Hand, J., dissenting]). The client’s failure to make an express request that the information not be disclosed does not make it any less confidential. And, even cases holding the identity of the payor of a fee and the amount thereof not protected by the privilege acknowledge that confidentiality nonethless prevails when the facts may be seen as some acknowledgment of guilt by the client as to the very matter for which legal advice was sought in the first place (see Matter of Michaelson, 511 F2d 882, 888; Colton v United States, 306 F2d 633, 637; see, also, Matter of Grand Jury Proceedings [Lawson], 600 F2d 215, 218; Matter of Grand Jury Proceedings [Jones], 517 F2d 666, 672; 97 CJS, Witnesses, § 283, subd e, p 803).

Moreover, the prosecution is not entitled to pierce the privilege simply because it is an easier means of obtaining information diligent investigation would nonetheless turn up. This is especially true where the confidential representation, could provide a vital link in the chain leading to conviction (see Baird v Koerner, 279 F2d 623; see, also, Matter of Kaplan [Blumenfeld], 8 NY2d 214). There is little doubt here that this identifying information was precisely the goal of the District Attorney in seeking to pry into matters as to which he already had significant independent evidence. “That [the privilege’s] enforcement at times may frustrate the administration of justice will not suffice alone to allow for its breach; indeed, its very purpose may be to keep secure the imparting of information which the State would, if known to it, use to its advantage” (Matter of Jacqueline F., 47 NY2d 215, 226 [my dissent]).

Because I am unable to agree that the prosecution’s need for this information outweighs the interest of attorney and client in preserving a confidentiality reasonable in scope (see Matter of Michaelson, 511 F2d 882, 894, supra [Merrill, J., dissenting]), I would reverse the order from which this appeal is taken.

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

Order affirmed.

      . "(a) Confidential communication privileged; non-judicial proceedings. Unless the client waives the privilege, an attorney or his employee, or any person who obtains without the knowledge of the client evidence of a confidential communication made between the attorney or his employee and the client in the course of professional employment, shall not disclose, or be allowed to disclose such communication, nor shall the client be compelled to disclose such communication, in any action, disciplinary trial or hearing, or administrative action, proceeding or hearing conducted by or on behalf of any state, municipal or local governmental agency or by the legislature or any committee or body thereof. Evidence of any such communication obtained by any such person, and evidence resulting therefrom, shall not be disclosed by any state, municipal or local governmental agency or by the legislature or any committee or body thereof. The relationship of an attorney and client shall exist between a professional service corporation organized under article fifteen of the business corporation law to practice as an attorney and counselor-at-law and the clients to whom it renders legal services.”

      . There is no need to address the situation in which the identity of the client or the terms of the retainer agreement were imparted to the attorney as an express pledge of nondisclosure. (Banco Frances e Brasileiro S. A. v Doe, 36 NY2d 592, 599.)

      . We note that our finding that no attorney-client relationship sufficient to support a privilege exists in this case should not be read as indicating that no conflict of interest can arise upon third-party payment of legal fees. Indeed, the payment of legal fees may, in a proper case, create a conflict of interest even though it does not form the basis of a claim of privilege.