Case ID: ny-2d_60/html/0065-01.html
Source: Caselaw Access Project
Author: {"author": "\n      Per Curiam.\n     Jasen, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

In the Matter of Queens Farms, Inc., et al., Respondents-Appellants, v Joseph Gerace, as Commissioner of the Department of Agriculture and Markets of the State of New York, Appellant-Respondent. Herbert Marks et al., Intervenors-Appellants-Respondents.
    Argued September 22, 1983;
    decided September 27, 1983
    
      POINTS OF COUNSEL
    
      Thomas G. Conway, Dennis P. Buckley and Joan A. Kehoe for appellant-respondent.
    I. Section 258-b (subd 5, par [b]) entrusts the Commissioner with discretion whether or not to allege as an issue at the claim hearing, the reasonableness of claimant’s business judgment. The statute does not require an affirmative finding of good judgment as a precondition for the payment of every claim. (Matter of Dairylea Coop. v Walkley, 38 NY2d 6.) II. The Commissioner gave explicit consideration to the extension of credit issue. His decision that there was no legitimate issue with respect to individual farmers was a sound exercise of discretion. (Matter of Dairylea Coop. v Walkley, 38 NY2d 6.) III. The arguments of the majority of the court below are without merit. (Matter of Eastern Milk Producers Coop. Assn. v State of New York Dept. of Agric. & Markets, 58 NY2d 1097.) IV. Petitioners’ claim that Glen & Mohawk was not a licensed milk dealer is a verbal quibble. (Matter of Glen & Mohawk Milk Assn. v Barber, 77 AD2d 127, 52 NY2d 704, 828.) V. Petitioners are without standing to seek judicial review of the Commissioner’s determination to make payments to milk producers from the Milk Producers Security Fund. (Matter of Dairylea Coop. Walkley, 38 NY2d 6.)
    
      John T. Driscoll, Edwin M. Mulholland and Michael J. Comerford for respondents-appellants.
    I. Petitioners have standing to object to payment from the fund by the Commissioner. (Matter of Eastern Milk Producers Coop. Assn. v State of New York Dept. of Agric. & Markets, 58 NY2d 1097; Matter of Dairylea Coop. v Walkley, 38 NY2d 6.) II. Payments to claimants of Glen & Mohawk, an unlicensed milk dealer, are prohibited by statute. III. A hearing concerning the extension of credit to Glen & Mohawk is required prior to any payments. (Matter of Eastern Milk Producers Coop. Assn. v State of New York Dept. of Agric. & Markets, 58 NY2d 1097.)
    
      John Benjamin Carroll for Herbert Marks and others, intervenors-appellants-respondents.
    I. Glen & Mohawk was licensed within the intent of section 258-b of the Agriculture and Markets Law. (Matter of P. T. & L. Constr. Co. v Hennessy, 68 AD2d 992; Matter of Eastern Milk Producers Coop. Assn. v State of New York Dept. of Agric. & Markets, 58 NY2d 1097.) II. Petitioners do not meet the legal test for standing to sue. (Matter of Dairylea Coop. v Walkley, 38 NY2d 6.) III. Petitioners’ evidence on reasonableness of credit was all taken from the Commissioner’s own files and these were before him at the time of his determination and considered.
   OPINION OF THE COURT

Per Curiam.

This is a proceeding under CPLR article 78 to review a determination of the Commissioner of Agriculture and Markets (Commissioner) which would have permitted pay-merits to be made to the claimants from the Milk Producers Security Fund (Agriculture and Markets Law, § 258-b).

In the first week of July, 1983 certain checks issued to dairy farmers by the Glen & Mohawk Milk Association at Fultonville, New York, were dishonored by the banks because of insufficient funds. These checks had been issued for May milk with no checks having been issued by the corporation for milk delivered to it during the month of June. The unpaid farmers and dairy farmer cooperatives filed claims against the Milk Producers Security Fund pursuant to section 258-b of the Agriculture and Markets Law. After conducting a hearing, the Commissioner issued a determination ordering immediate payment from the fund of one half of the amount of each of the certified claims. Petitioners then commenced this CPLR article 78 proceeding seeking to annul the Commissioner’s determination. Special Term denied the relief sought and dismissed the petition. A divided court in the Appellate Division reversed and remitted the matter to the Commissioner. We granted leave to appeal pursuant to CPLR 5602 (subd [a], par 2).

Petitioners consist of (1) licensed milk dealers who are contributors to the security fund and (2) dairy farmer/producers who did not deal with Glen & Mohawk, but who rely on the fund as security in their sales to other dealers. For the reasons stated by the majority at the Appellate Division the petitioners have standing to bring this proceeding.

Turning to the merits of petitioners’ claims, the Commissioner’s determination is challenged on two bases. First, it is contended that payments to claimants of Glen & Mohawk are prohibited by statute (Agriculture and Markets Law, § 258-b, subd 5, par [d]) because the dealer is not licensed. The Commissioner found that Glen & Mohawk was properly licensed within the meaning of subdivision 2 of section 401 of the State Administrative Procedure Act. The application of section 401 and the determination that the dealer’s license had not expired were correct.

Petitioners’ second contention is that the Commissioner was precluded from allowing claims arising out of the extension of credit by the claimants until a hearing is held to determine whether such extensions of credit constituted a reasonable exercise of business judgment. Paragraph (b) of subdivision 5 of the statute provides that: “No claims against the producers security fund shall be allowed for * * * sales of milk by a producer to a milk dealer subsequent to its failure to pay within the time periods prescribed * * * where the commissioner finds, after due notice and opportunity of hearing, that such extension of credit, whether direct or indirect, to such milk dealer by the producer did not constitute a reasonable exercise of business judgment”. Plainly, the statute commits the decision whether to take issue with the reasonableness of claimants’ extension of credit solely to the discretion of the Commissioner. If he concludes that there is reason to believe that the milk dealer failed to exercise reasonable business judgment in extending credit a hearing should be ordered. Inasmuch as the Commissioner’s investigation did not lead him to question the claimants’ business judgment, he was not required by the statute to hold a hearing on the issue.

Accordingly, the order of the Appellate Division should be modified by dismissing the petition and reinstating the Commissioner’s determination, and, as so modified, the order should be affirmed.

Jasen, J.

(concurring in result). Inasmuch as I do not believe the petitioners have standing to bring this proceeding, I would dismiss the petition for the reasons stated in the dissenting opinion of Justice T. Paul Kane at the Appellate Division. The clear legislative intent negates review of the Commissioner’s determination by persons other than claimants and defaulting milk dealers. (Agriculture and Markets Law, § 258-b, subd 5, pars [c], [d].)

Chief Judge Cooke and Judges Jones, Wachtler, Meyer, Simons and Kaye concur in Per Curiam opinion; Judge Jasen concurs in result in a memorandum.

Order modified, with costs to the Commissioner against the petitioners only, in accordance with the opinion herein and, as so modified, affirmed.