Associated Teachers of Huntington, Inc. v. Board of Ed., Union Free School, Dist. No. 3, Town of Huntington

CourtNew York Court of Appeals
Citation33 N.Y.2d 229,351 N.Y.S.2d 670,306 N.E.2d 791
Parties, 306 N.E.2d 791, 85 L.R.R.M. (BNA) 2795, 73 Lab.Cas. P 53,255 In the Matter of ASSOCIATED TEACHERS OF HUNTINGTON, INC., Appellant, v. BOARD OF EDUCATION, UNION FREE SCHOOL, DISTRICT NO. 3, TOWN OF HUNTINGTON, Respondent.
Decision Date27 December 1973

Bernard F. Ashe, James R. Sandner and Ivor R. Moskowitz, Albany, for appellant.

Joseph W. Campanella, Plainview, for respondent.

BREITEL, Judge.

In a proceeding to confirm an arbitration award against respondent Board of Education, petitioner Associated Teachers of Huntington, Inc. appeals. The issues are whether the arbitrator in ordering the board to grant sabbatical leaves to the teachers contravened the State's Sabbatical Leave Moratorium Act, and, if so, whether the act expressed so strong a public policy as to require vacating an award otherwise not reviewable for errors of law.

The arbitrator ruled in favor of the association and ordered the board to grant the sabbaticals in the exercise of a good faith judgment. The Supreme Court confirmed the award. The Appellate Division reversed by a 3 to 2 vote on the law and vacated the award, 40 A.D.2d 122, 338 N.Y.S.2d 45.

The order of the Appellate Division should be reversed, and Special Term's judgment confirming the award should be reinstated. Under its agreement with the board, the association had an existing and enforceable contractual right to the sabbaticals at the time of the effective date of the Moratorium Act. Therefore, the arbitrator's award neither contravened the statute nor its public policy. Moreover, the issue was a proper subject for arbitration and, in any event, the limited public policy involved did not justify a judicial overriding of the arbitrator's award.

Faced with a severe fiscal crisis on both State and local levels, the Legislature enacted in 1971 a law declaring a moratorium on leaves of absence and sabbatical leaves of absence for the 1971--1972 school term, effective immediately and therefore with the Governor's approval effective April 12, 1971 (Civil Service Law § 82; L.1971, ch. 124). To avoid conflict with section 10 of article I of the United States Constitution, subdivision 3 of the 'Moratorium Act' specified that its provisions 'shall not be construed so as to impair any contractual right to a leave of absence or sabbatical leaves of absence where such contractual right was in existence and enforceable prior to the effective date of this section.'

There was then in existence on April 12, 1971 a collective bargaining agreement between petitioner association and respondent board, covering the period 1969--1971, previously held valid by this court (Board of Educ. of Union Free School Dist. No. 3 of Town of Huntington v. Associated Teachers of Huntington, 30 N.Y.2d 122, 331 N.Y.S.2d 17, 282 N.E.2d 109). Article XVI--J of this agreement covered sabbatical leaves, enumerating criteria for eligibility and the policies to which the board would adhere in making its discretionary judgments. Subdivision 3 specified that no more than 3% Of the staff would be granted sabbatical leaves in any one year. Subdivision 4 required that applications be filed on or before April 1 of the preceding school year, and indicated that the board would ordinarily act upon the applications during the month of April.

By April 1, 1971, 21 teachers had applied for sabbaticals beginning July 1, 1971. However, on May 1, 1971, the superintendent of schools notified all teachers that pursuant to the intervening Moratorium Act, the board would grant no leaves of absence for the 1971--1972 school year. None of the applications had been acted upon at that time.

Three applicants claimed that they had been wrongfully denied the benefits of the sabbatical provisions, and the unresolved dispute was submitted without objection to arbitration. The arbitrator ruled that the association had an existing enforceable contract right on April 12, 1971, and thus was excluded from the moratorium. He ordered the board to grant the sabbaticals pursuant to article XVI--J. Special Term confirmed the award. The Appellate Division, reversing, held that as a matter of law no enforceable contract right existed; therefore the arbitrator's award violated the Moratorium Act and subverted its public policy. The arbitrator was deemed to have exceeded his powers, and the award therefore vacated (CPLR 7511, subd. (b), par. 1, cl. (iii)).

The collective bargaining agreement created existing and enforceable, albeit conditional, contractual rights to sabbaticals for association members. Those rights were extant on April 12, 1971 when the Moratorium Act took effect. The introductory paragraph of article XVI--J is mandatory in tone: 'the Board shall adhere to the following policies in respect to granting sabbatical leaves'. The board is thus obligated to apply the criteria enumerated in the succeeding paragraphs, and while discretion in the board is discernible, it is circumscribed by the implicit requirement for good faith appraisal of the various applications.

That the board would be the final judge whether each applicant met the conditions necessary to receive the benefits of the agreement does not negate the existence of an enforceable contract right. Both common law and statutory law recognize the existence of contractual obligations where either the satisfactory performance of one party or the existence of conditions precedent is left solely to the good faith judgment of the other party. (E.g., Studner v. H. & N Carburetor Co., 230 N.Y. 534, 130 N.E. 883; Baker v. Chock Full O'Nuts Corp., 30 A.D.2d 329, 292 N.Y.S.2d 58; Zeiss v. American Wringer Co., 62 App.Div. 463, 70 N.Y.S. 1110; see 10 N.Y.Jur., Contracts, § 301, with respect to conditions of personal satisfaction. See, also, Uniform Commercial Code, §§ 1--208, 2--311, covering options to accelerate performance and to specify particulars of performance.)

It is also irrelevant that the board could not grant sabbatical leaves to all 21 applicants, no individual teacher therefore being certain on April 12, 1971 of receiving the benefits. The contractual rights and obligations ran between the board and the association, and the applicants for sabbaticals, as a group, had contractual interests, at least analogous to those of third-party beneficiaries.

It is not necessary that third-party beneficiaries be identified or identifiable at the time of the making of a contract (Vandewater & Lapp v. Sacks Bldrs., 20 Misc.2d 677, 680, 186 N.Y.S.2d 103, 106; 10 N.Y.Jur., Contracts, § 241; Restatement, Contracts, § 139; 4 Corbin, Contracts, § 781). A third-party beneficiary has no right to enforce the contract himself until such time as he is identified (10 N.Y.Jur., Contracts, § 241). Nevertheless, the promisee has an undisputed right to enforce the contract made for the benefit of third parties (Croker v. New York Trust Co., 245 N.Y. 17, 20, 156 N.E. 81, 82; Rosenblatt v. Birnbaum, 20 A.D.2d 556, 245 N.Y.S.2d 72, affd. 16 N.Y.2d 212, 264 N.Y.S.2d 521, 212 N.E.2d 37; Restatement, Contracts, § 138; 10 N.Y.Jur., Contracts, § 233, n. 17).

The board's obligation to grant the sabbaticals in good faith, up to the 3% Limitation, was thus extant and enforceable by the promisee association on April 12, although the ultimate particular beneficiaries were, and still are unascertained. The enforceable right was that of the association, not the 21 applicants, and the arbitrator's award vindicates only that right.

Recent cases in which lower courts held that various boards of education were under no contractual obligation to grant sabbaticals when the Moratorium Act intervened, are distinguishable from the present one. In Matter of Ewen v. Board of Educ., 67 Misc.2d 555, 323 N.Y.S.2d 789, affd. 39 A.D.2d 605, 331 N.Y.S.2d 957, the collective bargaining agreement expressly reserved to the board the right to reject all applications (67 Misc.2d, at p. 557, 323 N.Y.S.2d, at p. 791). In Legislative Conference of City Univ. of N.Y. v. Board of Higher Educ. of City of N.Y., 67 Misc.2d 648, 324 N.Y.S.2d 924, mod. on other grounds 38 A.D.2d 524, 327 N.Y.S.2d 1, mot. for lv. to app. den. 30 N.Y.2d 481, 330 N.Y.S.2d 1025, 280 N.E.2d 894), the agreement emphasized that 'the granting of sabbatical leave shall not be in any sense automatic' (67 Misc.2d, at p. 649, 324 N.Y.S.2d, at p. 925). Although the latter case presents a close parallel, the language in the agreement there involved is distinguishable from that in the present agreement, and in any event did not involve the invoking of an arbitration, an additional material difference.

In summary, then, there existed on April 12, 1971, an enforceable...

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