
    Westchester Chapter, Civil Service Employees Association, Inc., et al., Appellants, v Arthur Levitt, as Trustee of the New York State Employees Retirement System and as Comptroller of the State of New York, Respondent.
    Argued October 15, 1975;
    decided October 17, 1975
    
      
      Arthur H. Grae for appellants.
    I. The common-law restriction against conflicts of interest and self-dealing by a trustee is applicable to Arthur Levitt as sole trustee of the New York State Employees’ Retirement System Pension Trust Fund by section 13 (subd b) of the Retirement and Social Security Law and expressly limits the Comptroller’s power, jurisdiction and authority to invest in New York State short-term tax anticipation notes. (Delafield v Barret, 270 NY 43; Meinhard v Salmon, 249 NY 458; Matter of Fulton, 253 App Div 494; Pyle v Pyle, 137 App Div 568, 199 NY 538; Gould v Gould, 108 Misc 42, 203 App Div 807; Bosworth v Allen, 168 NY 157.) II. In the event this court was to construe the law as abrogating the common-law conflict of interest rule against self-dealing by a trustee, such legislation would violate the due process and equal protection clauses of the Fourteenth Amendment of the United States Constitution. It would also constitute a taking of property for public use without just compensation in violation of the Fifth Amendment of the United States Constitution. (Berardi v W. T. Lane, Inc., 39 AD2d 936.) III. Any legislative authorization of a conflict of interest by the trustee would constitute an impairment of benefits under article V (§ 7) of the New York State Constitution.
    
      Louis J. Lefkowitz, Attorney-General (Jean M. Coon and Ruth Kessler Toch of counsel), for respondent.
    I. The Comptroller is expressly authorized by statute to make the proposed investment. (Sgaglione v Levitt, 37 NY2d 507; Matter of City of New York v Schoeck, 294 NY 559; Bulova Fund v Henshel, 31 AD2d 526.) II. Plaintiffs have not demonstrated a right to the ultimate relief they seek and thus the Appellate Division properly denied preliminary injunctive relief and this court should also deny such relief. (Kaminsky v Klasko Finance Corp., 191 App Div 412; Crawford v Newman, 11 Misc 2d 322, 5 AD2d 859.)
   Per Curiam.

There are two issues raised by appellants, and those only are considered by the court. The first is whether the nonimpairment clause of the State Constitution (art V, § 7) bars the statutory provisions permitting the State Comptroller to act in a dual capacity as the seller of State obligations on behalf of the State and the buyer of such obligations as the "trustee” of the funds of a retirement system. The second is whether, apart from express constitutional provisions, the Legislature was powerless to invest the State Comptroller with powers involving an inevitable conflict of interest.

The answer to the first question is uncomplicated. When the Constitution was amended to protect the beneficiáries of public employee retirement systems, the plan then extant provided for the dual capacity in which the State Comptroller still acts (see Civil Service Law, former § 57 [in effect in 1940], as added by L 1920, ch 741; State Finance Law, § 98 [L 1940, ch 593]). Hence, the nonimpairment clause is not violated (cf. Sgaglione v Levitt, 37 NY2d 507).

The answer to the second question is not much more complicated. It is obvious, and this court so noted in the Sgaglione case (supra), that the State Comptroller, within the meaning of section 13 (or § 313) of the Retirement and Social Security Law, is not necessarily a trustee in the same sense as a private trustee, or even a public trustee who is or may be charged with the investment of "trust” funds.

The area of actual or possible conflict of interest has such consequences as the Legislature, the primary lawmaking organ of the State, may provide. It speaks with plenary power limited only by the Constitution.

Consequently, a conflict of interest, created by statute since before 1940, need not involve an incapacity to act because of the conflict, but only an especial obligation to act fairly on behalf of those concerned with the results of the action taken. In any event, this is no more and this is no less than is expected of a trustee, in the classic sense, confronted with a conflict of interest (Restatement, Trusts, 2d, § 170, Comment r; 2 Scott, Trusts [3d ed], § 170.16; Bogert, Trusts & Trustees, § 543, subd [H]; cf. Business Corporation Law, § 713; Everett v Phillips, 288 NY 227, 236-237).

Accordingly, the order of the Appellate Division should be affirmed, without costs, and the certified question answered in the negative.

Chief Judge Breitel and Judges Jasen, Gabrielli, Jones, Wachtler, Fuchsberg and Cooke concur in Per Curiam opinion.

Order affirmed, etc.  