New York Law Review

Tag: Colonial Bus Service

  • Matter of Comptroller of City of New York v. Colonial Bus Service, Inc., 51 N.Y.2d 570 (1980): Scope of NYC Comptroller’s Investigatory Powers

    Matter of Comptroller of City of New York v. Colonial Bus Service, Inc., 51 N.Y.2d 570 (1980)

    The New York City Comptroller has broad investigatory and audit powers over city agencies and those contracting with them, including the power to issue subpoenas duces tecum, as long as the inquiry is within the Comptroller’s granted powers and the materials requested bear a reasonable relationship to the inquiry.

    Summary

    This case addresses the extent of the New York City Comptroller’s authority to investigate and audit contracts between the Board of Education and private entities. The Comptroller issued a subpoena duces tecum to Colonial Bus Service, a company providing transportation for handicapped children under contract with the Board of Education. Colonial refused to comply, arguing the Comptroller lacked the authority. The Court of Appeals held that the Comptroller’s broad powers under the New York City Charter authorize such investigations into the efficiency and proper expenditure of city funds, provided the inquiry is relevant and not conducted for harassment or as a sham investigation. The court emphasized the public interest in ensuring the Comptroller’s ability to effectively oversee city finances.

    Facts

    Colonial Bus Service had a contract with the New York City Board of Education for six years to transport handicapped children. The Comptroller of New York City, as part of a broader investigation into pupil transportation contracts, issued a subpoena duces tecum to Colonial, seeking their books and records. The Comptroller’s audit aimed to determine whether city funds were being spent efficiently in four key areas: competitive bidding, contract specifications, performance monitoring, and contract enforcement. Colonial refused to comply with the subpoena.

    Procedural History

    The Comptroller petitioned the Supreme Court for an order compelling Colonial to comply with the subpoena. The Supreme Court granted the petition. The Appellate Division reversed the Supreme Court’s decision and denied the Comptroller’s application. The Comptroller appealed to the New York Court of Appeals.

    Issue(s)

    Whether section 93 of the New York City Charter empowers the Comptroller to issue a subpoena duces tecum for the books and records of a corporation that contracts with the Board of Education to transport handicapped children?

    Holding

    Yes, because section 93 of the New York City Charter grants the Comptroller broad investigatory and audit powers over city agencies and their contracts, as long as the inquiry is within the Comptroller’s granted powers and the materials requested bear a reasonable relationship to the inquiry.

    Court’s Reasoning

    The Court of Appeals emphasized the Comptroller’s broad mandate under section 93 of the New York City Charter to oversee city finances, investigate contracts, and audit the expenditure of city funds by agencies like the Board of Education. While the Comptroller cannot interfere with purely educational matters, the court found that transportation contracts fall within the scope of municipal control. The court rejected Colonial’s argument that the investigation was a subterfuge, stating that there was no evidence to support such a claim. The court cited Matter of Edge Ho Holding Corp., 256 NY 374, 381, stating that nothing in the record suggests that “the professed object of the inquiry * * * is merely a cover and a sham.” The court also dismissed concerns about the subpoena’s scope, noting that the inquiry was into pupil transportation contracts generally, and Colonial was not protected from disclosing its own affairs in such an inquiry. Furthermore, the court reasoned that limiting the comptroller would make it impossible for him to audit the board’s expenditure of funds, as subdivision c directs him to do, in any case in which the board had failed to conduct a proper audit. The court found a reasonable relationship between the documents sought and the Comptroller’s investigation into the efficiency of the contracts, particularly concerning the relationship between Colonial and another contractor, Abco Bus. The court acknowledged Colonial’s right to seek further review if the inquiry became unduly protracted or burdensome but upheld the Comptroller’s power to issue the subpoena and compel compliance. The court stated that all that need be shown is “‘a reasonable relation to the subject matter under investigation and to the public purpose to be achieved’ ” quoting from Carlisle v Bennett, 268 NY 212, 217.