
    In the Matter of the Town of Smithtown, Appellant, v. Frank C. Moore et al., Constituting the State Board of Equalization and Assessment of the State of New York, Respondents.
    Argued February 22, 1962;
    decided April 26, 1962.
    
      
      Eugene L. Wishod for appellant.
    I. The board was not legally constituted when it made the determination complained of and hence the determination is jurisdictionally void. (Matter of Consolidated Edison Co. of N. Y. v. Moore, 277 App. Div. 245: Matter of Gray v. Maislen, 17 Misc 2d 161; Ahern v. McNab, 17 Misc 2d 162, 7 A D 2d 546; Matter of Clearview Garden Fifth Corp. v. Murdock, 12 A D 2d 521; People ex rel. Henry v. Nostrand, 46 N. Y. 375; Palmer v. Conway, 22 N. H. 144; Wenworth v. Farmington, 49 N. H. 119; Birnbaum v. New York State Teachers Retirement System, 5 N Y 2d 1; Matter of McInerney v. Valentine, 181 Misc. 1062; Matter of Ottinger v. Voorhis, 241 N. Y. 49; Matter of Sherrill v. O’Brien, 188 N. Y. 185; Matter of Collins, 75 App. Div. 87; Matter of Pardee, 259 App. Div. 101.) II. The only lawful equalization rate now in effect for the Town of Smithtown is the last rate fixed by the Temporary State Board of Equalization and Assessment, to wit: 43%. III. The board’s refusal to consider petitioner’s evidence as to the true rate of assessment in the Town of Huntington constitutes reversible error. IV. The reduction of petitioner’s rate from 43% to 34% was arbitrary, capricious and unreasonable. (Matter of Town of West Turin v. Moore, 10 Misc 2d 683.)
    
      Louis J. Lefkowitz, Attorney-General (Edward J. Grogan, Jr., Paxton Blair and George A. Radz of counsel), for respondents.
    I. Appellant’s contention that the State Board of Equalization and Assessment was not legally constituted when it made the determination under review and that such determination is judicially void is without merit in view of the provisions of the statute which created it and section 41 of the General Construction Law. (People ex rel. Kingsland v. Palmer, 52 N. Y. 83; Matter of Sherrill v. O’Brien, 188 N. Y. 185; Matter of Pardee, 259 App. Div. 101; Matter of Collins, 75 App. Div. 87; Matter 
      
      of Delehanty [Sullivan], 202 Misc. 33.) II. The State Board’s determination of a 34% equalization rate for the Town of Smith-town for the year 1959 was neither arbitrary nor capricious. (Matter of Town of West Turin v. Moore, 10 Misc 2d 683; Matter of Town of Lewiston v. State Board of Equalization & Assessment, 3 A D 2d 498, 5 N Y 2d 741; Matter of Town of Amherst v. Moore, 11 A D 2d 747, 8 N Y 2d 711; Matter of Mounting & Finishing Co. v. McGoldrick, 294 N. Y. 104; Matter of Colgate-Palmolive-Peet Co. v. Joseph, 308 N. Y. 333; Matter of Radigan v. O’Connell, 304 N. Y. 396; Matter of Stork Restaurant v. Boland, 282 N. Y. 256.) III. The State Board was under no obligation to give consideration to evidence relating to the State equalization rate for the Town of Huntington, since that rate was not directly before the board.
   Fuld, J.

We granted leave to appeal in this case primarily to consider the question, of state-wide interest and application, whether the State Board of Equalization and Assessment was validly constituted when, in August of 1960, it fixed the equalization rate for a town for the year 1959.

Some 10 or 15 years ago, because of an increase of real estate values with which local assessments had not kept pace, many equalization rates throughout the State were found to be extremely inequitable. To meet this situation, the Legislature in 1949 created a temporary commission, known as the State Board of Equalization and Assessment, to review and revise State equalization rates and to hear and determine appeals of equalization rates fixed by county boards of supervisors and other local authorities (L. 1949, ch. 346). It consisted of 3 members appointed by the Governor: the Comptroller— at that time, the Honorable Frank C. Moore — the Director of the Budget and the President of the State Tax Commission. This body was continued by express statutory enactment until April 1,1960, when the board was reconstituted as a permanent agency (L. 1960, ch. 335; Real Property Tax Law, art. 2, §§ 200-216).

The new legislation or, more particularly, section 200 of the Real Property Tax Law, provided that the State Board was to consist of the Commissioner for Local Government — an office created in 1959 (L. 1959, ch. 335, as amd. by L. 1960, ch. 320) — and 4 other members to be appointed by the Governor for terms of 8 years, by and with the advice and consent of the Senate. Until the new law became effective on April 1, 1960, the temporary board continued to consist of the 3 members occupying the positions referred to above. No appointments were made to the new board until January, 1961, at which time the Governor designated the respondents, the 3 men who had constituted the temporary board. A Commissioner for Local Government has not yet been appointed.

On August 25, 1960, after a hearing, the respondents made a determination reducing the equalization rate for the Town of Smithtown from 43% to 34%. Considering itself aggrieved, the town thereupon brought this proceeding, pursuant to section 760 of the Real Property Tax Law and article 78 of the Civil Practice Act, to annul the determination on two grounds: (1) the permanent State Board was not properly constituted — indeed, that it could not be until the Governor had appointed its full complement of 5, including the Commissioner for Local Government — and, therefore, the action taken by the respondents was without legal authority and void and (2), in any event, the determination made by the board was arbitrary, capricious and unreasonable. The courts below decided against the petitioner on both grounds.

The board is charged with a duty of fixing equalization rates for some 1,600 units of government for 30 vitally important governmental purposes. Surely, as the Appellate Division so well put it, the Legislature could not have intended ‘ ‘ to deprive the public of the benefits of the statutes relating to the equalization of tax assessments in any interval between the termination of the existence of the temporary commission and the bringing of the membership of the permanent board to its full statutory complement.” Nor could the Legislature have contemplated that, no matter how long the Governor took to act in designating all 5 members, equalization rates were to remain as they had been, petrified and frozen into outworn patterns despite constantly rising and changing real estate values in various sections of the State. Yet such would be the result were we to accept the petitioner’s contentions.

It is obvious from the statute creating the permanent board that uppermost in the minds of the legislators was the continuation of the operations of the temporary board without break or interruption. Section 11 of chapter 335 of the Laws of 1960 provides for the transfer of all “ officers and employees ” of the temporary board to the permanent one. And section 14 of the statute, entitled “ Continuity of authority ”, explicitly recites that, “ For the purpose of succession to functions, powers and duties transferred and assigned to and devolved upon the state board of equalization and assessment by this act, such board shall constitute a continuation of the temporary state board of equalization and assessment.”

The Governor did not, it is true, specifically appoint the 3 members of the former board to the permanent one until 1961, nor has he as yet made the additional appointments mandated by the statute, which he will ultimately have to do, since his duty is a continuing one. (See, e.g., Matter of Ottinger v. Voorhis, 241 N. Y. 49.) But the statute did provide for the transfer of officers and employees to the new board and for the continuity of its functions and authority. As for the requirement that there be 5 members rather than 3, it is significant not only that the applicable provision of the Beal Property Tax Law announces that “ a majority ” of the members of the board are authorized to act as a body when establishing equalization rates (Beal Property Tax Law, § 202, subd. 2, as amd. by L. 1960, ch. 335), but that section 41 of the General Construction Law, in defining a quorum as a majority of the whole number ”, declares that “ the words whole number ’ shall be construed to mean the total number which the board, commission, body or other groups of persons or officers would have were there no vacancies ”. We could say, as did the court at Special Term, that the respondents were empowered to act on the theory that the members of the old board served until their successors were appointed. Or we could say, as did the Appellate Division, that the respondents who acted as members of the permanent board under color of right and with the general acquiescence of State and local officials “ were at least de facto officers and their acts were valid.” But, however the thought be phrased, we deem it clear that the 3 respondents were empowered to act as a majority of the permanent board and fix the requisite equalization rates.

If the construction to be accorded a statute is clearly indicated, it is to be adopted by the courts regardless of consequences. Where, however, doubt exists as to its meaning, and a choice between two constructions is afforded, results become important, for, although ‘ ‘ Consequences cannot alter statutes * * * [they] may help to fix their meaning.” (Matter of Rouss, 221 N. Y. 81, 91; see, also, Kauffman & Sons Saddlery Co. v. Miller, 298 N. Y. 38, 44; Matter of Emerson v. Buck, 230 N. Y. 380, 388.) We must, therefore, have in mind the far-reaching and upsetting consequences which would attend reading the legislation before us as the petitioner urges and holding that the State Board was improperly constituted after April 1, 1960 and that all of its subsequent acts are void. Since, as noted above, approximately 1,600 tax districts throughout the State are involved, annulling and setting aside the rates which the respondents fixed after April 1, 1960 would cause a breakdown in the operation both of local tax machinery and of many important local governmental functions. Nothing in the wording of the new statute requires the drastic interpretation of its provisions sought by the petitioner.

Since, then, the board was validly constituted, we proceed to a consideration of the petitioner’s second contention, namely, that the determination made by the board was arbitrary and unreasonable.

Section 1200 of the Real Property Tax Law, entitled ‘ Studies for establishing state equalization rates ’ ’, directs the State Board, as part of its procedure for establishing state equaliza- ■ tion rates ”, to “ sample ”, at least once in every 5 years, “ the ratio of assessments to market values for each major type of taxable real property * * * in all cities, towns and villages.” The 1959 rate, challenged in this proceeding, was based on studies made in 1952 and 1957.

On June 10, 1960, the board notified the petitioner that it had tentatively fixed its equalization rate for 1959 at 34%, a reduction of 9% below the rate previously fixed. The petitioner filed a written complaint, a hearing was held and, after considering the objections voiced and the evidence adduced, the board adhered to the 34% rate. This determination has been sustained by the courts below against the charge of arbitrariness and unreasonableness.

In computing the equalization rate for the petitioner, the board chose 90 samples of property for appraisal, selected at random from among the four types of property chiefly represented in Smithtown and comprising • 85%—the minimum requirement is 80% —of the total assessment roll. The 4 types consisted of 1- and 2-family residences (comprising 61.16% of the assessment roll), residential land vacant (11.62%), estates (5.53%) and commercial, under $50,000 in value (6.88%). The State Board, pursuant to settled procedure, makes no classification of its own of sample properties for appraisal. Its rules require local assessors to indicate on the assessment roll the type of property being assessed for each of the parcels listed, and it then adopts the classifications which have been made by the local assessors. In collecting sales data to verify its appraisals, the board used 45 bona fide sales reported to it by the local assessors for the period from April 1, 1956 through September 30, 1957. The board also ascertained from the local assessors the existence of any circumstances indicating that the transfer was not 'bona fide and the inclusion, if any, of personal property in the sales price.

The town objects to the board’s methods on a number of grounds. In the first place, it points out that its own local assessors had incorrectly classified properties — for instance, labelling residential property as commercial — and that the State Board simply adopted such classifications, thereby compounding the local assessors’ errors, particularly since the total appraised value of the sample parcels in each class was weighted by the percentage which that class bore to the total assessment valuation. Quite apart from the fact that all of these sample properties were appraised by the board’s appraisers at their market values — to cull from the affidavit of the board’s director of equalization—“ in accordance with the conditions and circumstances as the appraisers found them, notwithstanding any error which may have been made by the [local] assessors ” in classifying the properties on the assessment rolls, the simple answer to the petitioner’s complaint is that it has only itself to blame for any erroneous classifications which were made. In point of fact, they did not even attempt to correct the asserted errors when afforded the opportunity. After the appraisers for the board had made their computation, they submitted it to the local authorities to give them an opportunity to object either to values or to the representativeness of the samples selected. At the meeting held for this purpose, the local assessors made no objection on either score. Under these circumstances, it certainly may not be said that the State Board acted arbitrarily, as a matter of law, in using the very classification submitted by the local assessors. If the petitioner wished equalization rates to be established on the basis of the assessed values of its various types of property in accordance with their correct classification, it was up to the petitioner’s local assessors to provide the State Board with the proper information with respect to such classifications. It was not up to that board to verify the classification of, or to reclassify where necessary, incorrectly typed property. If such a duty had to be undertaken in every one of the 62 cities, 932 towns and 550 villages of the State of New York, it would become impracticable, if not impossible, for the State Board to do its job.

The petitioner also attacks the board’s method of “random selection” of samples of property because in one instance it resulted in the choice of seven private homes side by side in the Village of the Branch in Smithtown. The appraisals of these homes were not used in fixing the town’s equalization rate, but only in determining the rate for the village itself, which is not in issue here. Nevertheless, the petitioner contends that this example furnishes irrefutable proof of the impropriety of the board’s random selection method. However, even assuming that such an example affords an instance in which the board’s method worked badly, one such unfortunate example cannot serve to invalidate the entire process.

The petitioner further objects to the hoard’s use of sales data and, although we fail to appreciate its force, urges in its brief that the board “ used forty-five sales of residential property only” and that “ thirty-one of the forty-five sales used were original sales of new development houses,” which the petitioner asserts are known to depreciate quickly Moreover, the town claims, the value of personal property was improperly included in some instances as part of the sales price. To all of which the respondents have given a short and decisive answer; they considered all of the bona fide sales available and, even more to the point, all of the pertinent information which they used was obtained from the local assessors themselves. Consequently, they very properly observed, they may not be held accountable or responsible for the few errors which occurred with respect to the inclusion of the value of items of personal property. In addition, where differences between sales price ratios and appraisal ratios were greater than 20%, the board sent questionnaires to purchasers, made recomputations based upon their replies and in some instances, where the results obtained were unsatisfactory, selected different samples for appraisal or used only appraisal values. Although the petitioner is obviously dissatisfied with the results of such appraisals, no basis exists for their argument that the board acted capriciously in making them.

Having in mind the complexities of the task confronting the board, the vast and intricate process of fixing equalization rates, there can be no doubt that the methods employed by the board were more than adequate “ for practical attainment of the rough equality which is all that has heretofore been possible under any system of taxation.” (People ex rel. Hagy v. Lewis, 280 N. Y. 184,188.) Consequently, to state the matter briefly, when the board has acted within its jurisdiction and has given the parties before it a fair hearing, the courts have no alternative but to confirm its determination when substantial evidence is at hand to support it. (See, e.g., Matter of Town of Lewiston v. State Bd. of Equalization & Assessment, 5 N Y 2d 741; Matter of Town of Amherst v. Moore, 11 A D 2d 747, motion for leave-to app. den. 8 N Y 2d 711.) In the case before us, despite the board’s acceptance of certain erroneous classifications and of sales samples which may not have been completely representative in character, both items having been furnished by the local assessors, it may not be said that the reduced rate arrived at—which was considerably less than the average reduction throughout the State — was arbitrary or unreasonable as a matter of law.

Before concluding, we note briefly the petitioner’s further plaint that the board should have considered evidence with regard to the equalization rate of the Town of Huntington. Both Huntington and Smithtown are located in a school district for which both towns share the expense of school taxes. The petitioner -contends that the allegedly erroneous equalization rate of Huntington saddles the taxpayers of Smithtown with an inequitable share of the school taxes for the district in question. However, if the matter requires correction, application should have been made, as the Appellate Division noted, for a special equalization rate provided for school districts in section 1314 of the Beal Property Tax Law.

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

Froessel, J. (dissenting).

We are here dealing with a case involving the wholly unauthorized exercise of power in an important branch of our State Government.

In 1949 the Legislature created a temporary commission, known as the State Board of Equalization and Assessment, empowered, among other things, to review and revise State equalization rates and to hear and determine appeals and reviews of equalization rates fixed by county boards of supervisors and other local authorities (L. 1949, ch. 346). The commission was to consist of three members appointed by the Governor; respondents were duly appointed to these positions.

In recognition of the State’s “ responsibility ”, the Office for Local Government was created by the Legislature in 1959 to ‘ ‘ help local government in making itself as strong and effective a-s possible ” (L. 1959, ch. 335, eff. April 1,1959; Executive Law, §§ 470, 474).

In 1960, as part of the reorganization of the executive branch of the State Government, the Legislature created a permanent Board of Equalization and Assessment within the Office for Local Government (L. 1960, ch. 335). The new board was to consist of the Commissioner for Local Government and four other members who were to be appointed by the Governor with the advice and consent of the Senate (Real Property Tax Law, § 200). Under this statute and section 39 of the Public Officers Law, the Governor was empowered to make appointments immediately. Although mandated to do so, the Governor has not as yet appointed a Commissioner for Local Government.

Chapter 335 of the Laws of 1960 provided that the newly created permanent hoard was to come into existence on April 1, 1960, when the temporary commission terminated (ch. 335, § 9; Beal Property Tax Law, § 1602, subd. 8). Neither the temporary commission nor its individual members were granted any authority to set new equalization rates after April 1, 1960. Subdivision 8 of section 1602 of the Beal Property Tax Law expressly provides: ‘ ‘ The use of the term 1 state board ’ in this chapter shall in no way extend or be construed to extend the existence of the temporary commission created by [L. 1949, ch. 346] * * V’ (Emphasis supplied.) Thus it is not correct to say that the temporary commission was 11 reconstituted ’ ’; it was abolished as of April 1, 1960 and replaced by the newly created permanent State Board of Equalization and Assessment.

With respect to the individual members of the defunct board, section 5 of the Public Officers Law provides that an officer shall not hold over after the expiration of his term where, as here, “the office shall terminate or be abolished”. The majority attempt to circumvent the prohibition imposed by this statute by resorting to an unwarranted construction of section 11 of chapter 335 of the Laws of 1960. In their opinion, that section provides “ for the transfer of all6 officers and employees ’ of the temporary board to the permanent one — and this presumably includes the transfer of the 3 ‘ members ’ of the former board to the latter ”. Such a construction is manifestly unjustified.

In the first place, section 11 does not purport to transfer anyone from the temporary commission or “ former board ” to the newly created permanent board. It merely provides for the transfer of the 11 officers and employees of the temporary state board of equalization and assessment * * * to the division of equalisation and assessment without further examination or qualification” (emphasis supplied), and such persons “shall retain their respective civil service classification and status”. There is a significant distinction between the permanent State Board of Equalization and Assessment, described in section 200 of the Beal Property Tax Law, and the Division of Equalization and Assessment, described in section 201, to which the officers and employees of the temporary commission were transferred. The division merely carries out the policies and programs of the board (id., § 201, subd. 1; N. Y. Legis. Manual, 1961-62, pp. 460-461). Moreover, it is clear from a reading of section 11 that it is not applicable to the board members who were appointed by the Governor and whose offices were abolished, but relates only to civil service officers and employees subject to examination and qualification, and described in section 201.

Recognizing that there might be a brief interval between the termination of the temporary commission and the appointment of the members of the new board, the Legislature provided for the continuance of ‘ ‘ All orders, rules, regulations and determinations ” of the temporary commission “in force on the effective date of this act ” as orders of the newly created board “ until duly modified or abrogated by such board ” (L. 1960, ch. 335, § 15). Of course, necessarily implicit in the entire scheme, and indispensable to its effectiveness, was the appointment by the Governor of board members within a reasonable time; and there was every indication that he would do so, for, in approving the law establishing the permanent board and terminating the temporary commission, he recognized that the board “ would consist of the Commissioner for Local Government and four other members to be appointed ” by him (N. Y. Legis. Annual, 1960, p. 482; emphasis supplied). It could hardly have been anticipated that no appointment of any kind would be made until January, 1961-—when the three respondents were appointed to the new board — and that to this day neither the Commissioner for Local Government, the only permanent member of the board unequivocally designated by the Legislature, nor the fifth member of the board has been named.

In August, 1960 respondents, as former members of the then defunct temporary commission, and without any legal authority whatsoever, purported to set the final State equalization rate for 1959 for the Town of Smithtown at 9% lower than the last duly established rate of the temporary commission. Petitioner promptly instituted this article 78 proceeding in October, 1960, challenging the legality of respondents’ action and seeking to have the rate annulled and set aside.

Special Term denied petitioner relief, holding that in the “ absence of the appointment of any successors, it would appear that the members of the temporary Board or Commission would serve as [the new] Board until their successors might be appointed Such a result is of course completely contrary to the express statutory provisions terminating the existence of the temporary commission and stating that the use of the term “ state board ” was in no way to “ extend or be construed to extend the existence of the temporary commission

Affirming Special Term, the Appellate Division rejected petitioner’s jurisdictional objection to respondents’ action as “ without substance It held, by reasoning somewhat different from that employed by Special Term, but equally erroneous, that “ it is clear that the Legislature did not intend to deprive the public of the benefits of the statutes relating to the equalization of tax assessments in any interval between the termination of the existence of the temporary commission and the bringing of the membership of the permanent board to its full statutory complement. * * * The members of the permanent board who acted in good faith, under color of right and with the general acquiescence of State and local officials were at least de facto officers and their acts were valid. ’ ’ It would be difficult to make a more patently erroneous statement with respect to the facts of the instant case. Certainly the Legislature did not intend a vacuum upon the termination of the temporary commission; it, therefore, enacted section 15 of chapter 335, which, as noted, provides for the continuance in effect of all orders, rules, regulations and determinations of the temporary commission. The vacuum was created by the failure to appoint.

There is no indication in the statute that the members of the temporary commission could make new determinations after their positions were abolished. Indeed, section 5 of the Public Officers Law expressly provides that they shall not hold over and continue to exercise their former functions. Under what “ color of right ”, then, did respondents act, and how may they be termed de facto officers in view of the applicable statutes to the contrary, and the fact that they had not even been appointed to the new board in August, 1960? There was clearly no acquiescence on the part of petitioner, since this proceeding was instituted about a month after the act complained of.

Subdivision 19 of section 102 of the Real Property Tax Law defines State equalization rate ” as “ the percentage of full value at which taxable real property in a county, city, town or village is assessed as determined by the state board ” (emphasis supplied). The term “ state board ” is defined in subdivision 18 of section 102 of the Real Property Tax Law as “ the state board of equalization and assessment ”, the definition having been changed by section 6 of chapter 335 of the Laws of 1960, by elimination of the words ‘1 temporary state commission created by [L. 1949, ch. 346] ”.

Since the three respondents, who had not even been appointed to the new board in August, 1960, certainly did not comprise the “state board of equalization and assessment” — a body consisting of five members including the Commissioner for Local Government — no “state equalization rate”, as that term is defined in the statute, was established as the result of their completely unauthorized act. It necessarily follows that petitioner, who moved promptly, is entitled to have the purported final 1959 equalization rate annulled.

Inasmuch as the statute is crystal clear, we have no right under the guise of strained construction to alter the will of the Legislature or to sanction the executive’s failure to carry out that will, because of in terrorem arguments, with which I do not agree, suggested by the majority. More than a century ago in People v. Cowles (13 N. Y. 350, 359-360), where “ the possible inconveniences ” resulting from our decision were considered, we stated: 1 ‘ The period has been when an inconvenience which would arise from construing a statute as it stood and as it read, was deemed abundantly to warrant a court to put upon it a strained and unnatural construction, for the purpose of avoiding the inconvenience and substantially conforming the will of the law-makers to the better judgment of the judges. But courts at the present day, both in this country and in England, acknowledge that their simple duty is to strive to ascertain the will of the law-makers from the law itself, and having ascertained it, to give it effect ”. In Birnbaum v. New York State Teachers Retirement System (5 N Y 2d 1) we did not hesitate to strike down an attempted breach of the contractual relationship of members of the New York State Teachers Retirement System despite the claim that bankruptcy was ultimately threatened. (See, also, People v. Friedman, 302 N. Y. 75, 79, app. dsmd. 341 U. S. 907.) Neither the courts nor the executive have the right to ignore the will of the people as clearly expressed in the legislative mandates of their duly elected representatives.

Accordingly, the orders of the courts below should be reversed and the determination of respondents annulled and set aside.

Chief Judge Desmond and Judges Dye, Van Voobhis, Bubke and Fosteb concur with Judge Fuld; Judge Fboessel dissents in a separate opinion.

Order affirmed. 
      
      . The purposes and functioning of the equalization process have been described in a recent booklet issued by the State Board of Equalization and Assessment. (See Principles and Procedures Used in Establishing State Equalization Rates, Eebruary, 1961.)
     
      
      . It is worth noting that only one other community, the Town of West Turin, sought to have its equalization rate upset in the courts. (Matter of Town of West Turin v. Moore, 10 Misc 2d 683.)
     