author: Fuld, J.

text:
    Eugene T. Singer, Appellant and Respondent, v. Yokohama Specie Bank, Ltd., Defendant, and Elliott V. Bell, Superintendent of Banks of the State of New York, as Liquidator of Yokohama Specie Bank, Ltd., Respondent and Appellant.
    Argued January 11, 1949;
    decided April 14, 1949.

      Albert B. Connelly, George M. Billings and Jack W. Robbins for plaintiff, appellant and respondent.
    I. The provisions of
    Executive Order No. 8389 did not prevent the accrual of plaintiff’s claim as a preferred creditor of Yokohama Specie Bank within the meaning of subdivision 4 of section 606 of the New York Banking Law. (Sokoloff v. National City Bank, 250 N. Y. 69; Matter of Goebel, 295 N. Y. 73; Yokohama Specie Bank, Ltd., v. Milbert Importing Corp., 182 Misc. 281; Banque Mellie Iran v. Yokohama Specie Bank, Ltd., 188 Misc. 346; Cable & Wireless, Ltd., v. Yokohama Specie Bank, Ltd., 191 Misc. 567.) II. The Treasury Supervisor was without power to prevent the acts and transactions of the New York agency from having their normal legal effect. (Alexewicz v. General Aniline & Film Corp., 181 Misc. 181; Addison v. Holly Hill Fruit Products, 322 U. S. 607.) III. Federal freezing control policy favored the adjudication of claims upon even those transactions which were required to be licensed where payment or transfer of title remained subject to license requirements. (Commission for Polish Relief, Ltd., v. Banca Nationala a

      Rumaniei, 288 N. Y. 332.) IV. Payment of the claim and judgment has been authorized by the Federal authorities. The Treasury authorized payment on January 14, 1942, and on October 29, 1942. V. A Treasury license was not necessary after the Alien Property Custodian assumed jurisdiction over the State liquidation proceeding. VI. The Alien Property Custodian has specifically authorized the Superintendent to pay the claims of all creditors of the bank preferred under the New York Banking Law. (Commission for Polish Relief, Ltd., v. Banca Nationala a Bumaniei, 288 N. Y. 332; United States v. Pink, 315 U. S. 203.)

      Edward Feldman, Henry L. Bayles and Daniel Gersen for defendant, respondent and appellant.
    I. The prohibitions of Executive Order No. 8389 and of the Treasury Supervisor in charge of the agency prevented the creation of any obligation in favor of Standard Oil Company. (Leeds v. Guaranty Trust Co. of N. Y., 65 N. Y. S. 2d 431, 272 App. Div. 909, 297 N. Y. 1019; Clark v. Propper, 169 F. 2d 324; Legniti v. Mechanics & Metals Nat. Bank, 230 N. Y. 415.) II. Transactions governed by the provisions of Executive Order No. 8389 are void unless licensed. (Leeds v. Guaranty Trust Co. of N. Y., 65 N. Y. S. 2d 431, 272 App. Div. 909, 297 N. Y. 1019; Miyuki Okihara v. Clark, 71 F. Supp. 319; Clark v. Propper, 169 F. 2d 324; Markham v. Taylor, 70 F. Supp. 202; Bernstein v. N. V. Nederlandsche-Amerikaansche, 76 F. Supp. 335, 79 F. Supp. 38.) III. The intervention by the Treasury Supervisor in the affairs of the agency deprived the agency of the power to incur enforcible legal obligations without his consent. (Alexewics v. General Aniline & Film Corp., 181 Misc. 181.) IV. Executive Order No. 8389 prohibits the payment of plaintiff’s claim until licensed. No such license has ever been issued. It follows that plaintiff is not entitled to any interest whatsoever upon his claim and that payment to him of any judgment entered herein should be conditioned upon the procurement of an appropriate license. (Varick Spring Corp. v. Bank of United States, 149 Misc. 908, 240 App. Div. 968, 264 N. Y. 297; Ruppert Realty Corp. v. Bank of United States, 156 Misc. 93, 249 App. Div. 721, 276 N. Y. 629; Bollack v. Societe Generale, 263 App. Div. 601; Singer v. Yokohama Specie Bank, Ltd., 293 N. Y. 542; Commission for Polish

      Relief, Ltd., v. Banca Nationala a Rumaniei, 288 N. Y. 332; Feuchtwanger v. Central Hanover Bank & Trust Co., 288 N. Y. 342; H. P. Drewry, S. A. R. L. v. Onassis, 188 Misc. 912, 272 App. Div. 870; Moscow Fire Ins. Co. v. Heckscher & Gottlieb, 260 App. Div. 646.) V. Neither the license of January 14, 1942, nor the Treasury letter of October 29, 1942, licensed the payment of the claim in suit. (Singer v. Yokohama Specie Bank, Ltd., 293 N. Y. 542; Commission for Polish Relief, Ltd., v. Banca Nationala a Rumaniei, 288 N. Y. 332; Feuchtwanger v. Central Hanover Bank & Trust Co., 288 N. Y. 342; H. P. Drewry, S. A. R. L. v. Onassis, 188 Misc. 912, 272 App. Div. 870; Bollack v. Societe Generale, 263 App. Div. 601.) VI. None of the documents issued by the Alien Property Custodian licensed payment of the claim in suit. VII. Plaintiff’s claim did not arise out of a transaction had by Standard Oil Company with the New York agency. VIII. Executive Order No. 8389 prevents the accrual of plaintiff’s claim as a preferred creditor of the agency. (Legniti v. Mechanics & Metals Nat. Bank, 230 N. Y. 415; Carr v. Bell, 144 F. 2d 47, 323 U. S. 786; American Sur. Co. v. Philippine Nat. Bank, 245 N. Y. 116.)

      James L. Morrisson, David L. Bazelon, John F. X. McGohey and J. Roger Wollenberg for United States, amicus curiae, in support of defendant-appellant’s position.
    I. In the absence of an appropriate Federal license, Executive Order No. 8389 and rulings issued pursuant thereto prohibited not only the payment of plaintiff’s claim but also the creation of any obligation to pay on the part of the agency. (Singer v. Yokohama Specie Bank, Ltd., 293 N. Y. 542; Alexewicz v. General Aniline & Film Corp., 181 Misc. 181.) II. No license authorizing the creation of an obligation on the part of the agency or the payment of plaintiff’s claim has ever been issued.
   Fuld, J.

This case and its companion, Banque Mellie Iran v. Yokohama Specie Bank (299 N. Y. 139) which we also decide today, arise out of the liquidation by the State Superintendent of Banks, of the New York Agency of Yokohama Specie Bank, Ltd., a Japanese national bank (hereinafter referred to as the New York Agency or as the Agency).

By the judgment before us, the Superintendent, as liquidator, is ordered to pay the principal of plaintiff’s preferred claim against the New York Agency, together with interest from October 29, 1942. It is our conclusion that such payment has not been authorized in the manner required by applicable Federal freezing controls, and that the judgment appealed from must, consequently, be reversed.

The transaction here engaging our attention falls within the ambit of Federal orders and regulations which became effective in July, 1941, a month before the acts underlying plaintiff’s claim were performed in Japan (Executive Order No. 8832; Code of Fed. Beg., Cum. Supp., tit. 3, p. 969 [1941]). By that executive order, existing controls on the domestically-situated assets and property of nationals of certain foreign countries were extended to include the nationals of Japan. In general, the controls prevented any dealings in assets in blocked accounts unless licensed by the United States Treasury Department (Executive Order No. 8389; Code of Fed. Beg., Cum., Supp., tit. 3, p. 645 [1940]). Judicial as well as voluntary transfers were interdicted if such authorization was not obtained (U. S. Treasury General Buling No. 12; Code of Fed. Beg., Cum. Supp., tit. 31, p. 8849 [1942]).

A survey of the underlying facts leaves no doubt that plaintiff’s claim rests upon a transaction which was subject to the licensing requirements. In point of fact, we so ruled in 1944, when this litigation was before us in an earlier phase — on appeal from an order granting defendant’s motion for summary judgment. (See Singer v. Yokohama Specie Bank, 293 N. Y. 542, 550.) Our detailed narrative on that occasion, we but briefly review here.

Plaintiff sought to establish his status as a preferred creditor of the New York Agency as a result of a transfer of funds, by forward foreign exchange contracts, to his assignor, the Standard Vacuum Oil Company (hereinafter called Standard). The underlying dealings reached their culmination on August 29, 1941, when the Yokohama office of Standard delivered to the Yokohama Specie Bank in Japan the yen equivalent of $557,561.25, with instructions to pay that amount to Standard in New York. The hank cabled necessary orders to its New York Agency and the Agency straightaway advised Standard by telephone and letter that it was in receipt of payment instructions and that funds were available. The letter concluded with the statement that “We understand that you [Standard] are filing an application with The Treasury Department of the U. S. A. for a License in order to permit us to make this payment to you.”

Without delay, Standard applied for a license and in December, 1941, renewed the application. Both requests were, as presently will appear, categorically denied by the Federal authorities early in 1942.

In the meantime, the Japanese struck at Pearl Harbor, and on the day following, December 8, 1941, simultaneous with our declaration of war, the State Superintendent of Banks took possession of the New York Agency and its funds, for purposes of liquidation in accordance with the provisions of the Banking Law. Some months later — on November 21, 1942 — plaintiff, as Standard’s assignee, filed with the Superintendent a claim for $557,561.25 against funds of the New York Agency in the Superintendent’s possession. After the Superintendent had rejected the claim upon the ground that applicable law did not authorize its recognition, plaintiff brought suit in August, 1943, for an adjudication that his claim was one “ arising out of a transaction ” with the New York Agency and entitled to preference under this State’s Banking Law (§ 606, subd. 4).

The lower courts awarded summary judgment in defendant Superintendent’s favor. It was their view that the New York Agency, never having promised to pay Standard, had never incurred binding liability, and, since that was so, they concluded that plaintiff’s claim did not arise out of a transaction ” with the Agency within the meaning of the Banking Law provision.

On appeal, the Superintendent urged that this was the correct construction of State law; and, joined by the United States as amicus curies, also contended that Federal law, as embodied in the freezing controls, barred judicial recognition of plaintiff’s claim, for the reason that such recognition would ¿ffect a prohibited transfer of blocked assets. We reversed on the question of State law, holding that plaintiff would — if he proved his allegations — establish an enforcible legal obligation by the New York Agency ”, entitled to preference under the Banking Law (293 N. Y., supra, at pp. 549-550). However, impressed with the arguments advanced by defendant and the Government, based upon the effect of the freezing regulations, we were careful'to provide that plaintiff’s payment was to he conditional upon his obtaining a Treasury license. On that point, our opinion brooks no argument. We recognized, we said, that 1 ‘ Federal regulations governing transactions in foreign exchange prevent the payment to Standard until a license under Executive Order No. 8389 * * * is procured ”, and we went on to say that “ Any payment of funds by Yokohama Specie’s New York Agency to Standard as an incident of such transaction is subject to the provisions of Executive Order No. 8389, as amended ” (293 N. Y., supra, at p. 550).

At that time, there were in the record before us certain documents, bearing both generally and specifically upon the question of Federal clearance of this transaction. Among them were two papers which are now relied upon by plaintiff as establishing Treasury approval. We certainly did not at the time accord those documents that effect, as the language quoted from our decision clearly demonstrates. Indeed, it is interesting to note that plaintiff himself did not so regard them, for he flatly declared that, if his claim were recognized as one entitled to a preference under State law, he would “ thereafter ” apply for the necessary Treasury clearance before he sought to enforce payment. Accordingly, when the Superintendent, on motion for reargument, maintained that our decision had flouted and violated Federal freezing controls, we could not agree. Reasoning that payment of plaintiff’s claim remained conditional upon, and subject to, his “ thereafter ” procuring authorization in accordance with those regulations, we refused a rehearing (294 N. Y. 689).

The net effect of our decision was to deny the Superintendent’s motion for summary judgment and to remit the matter for trial. That trial has now been held, and plaintiff’s proof has satisfied both lower courts that the matters which we had earlier assumed to be true were true and that plaintiff has a claim entitled to recognition under the Banking Law. The record unquestionably sustains that finding.

In addition, the lower courts have now gone further and have held that plaintiff is entitled to immediate payment of his claim, with interest from October 29, 1942.

We believe that this conclusion is erroneous. If payment is to be ordered, it can only be done — and plaintiff acknowledges this — on the basis of proof that plaintiff’s claim has been licensed by Federal authorities; otherwise, the combined result of our decisions in this and the earlier Singer appeal (supra) would be to set at naught the Federal freezing controls program. We find no evidence of the necessary authorization. Not only is plaintiff unable to point to any treasury communication which is specifically addressed to his claim and authorizes its payment, but all the papers which relate in express terms to his claim explicitly withhold Treasury clearance. Nor, in our judgment, do the generally-worded documents upon which plaintiff relies license payment.

The first document to be considered is a communication, labeled a “ License ”, dated January 14, 1942. Neither of the courts below found authorization in this letter, and, as already indicated, we agree with that conclusion. With the Superintendent of Banks in control of the branches of various foreign banks in New York State, including the New York Agency, the Federal Reserve Bank, on behalf of the Secretary of the Treasury, issued a general license, authorizing the Superintendent to make payment to depositors and to perform all other acts appropriate to orderly liquidation of the local assets of the Agency and nine other foreign banking corporations. The license expressly excluded from its scope transactions ‘ ‘ involving a blocked national other than the bank in liquidation ’ ’. Both the Yokohama office of Yokohama Specie Bank, Ltd., and Standard’s branch office in Japan fell within that description: both were Japanese corporations and were, therefore, “ blocked nationals.” As a consequence, the transmittal of funds which they directed constituted a prohibited transfer and could be effected — we quote from the letter —1 ‘ only as authorized by a general or specific license.” Plaintiff, claiming under such a transfer, was not freed from the necessity of showing that consummation of the transfer was elsewhere authorized.

If there could be the least doubt that the January 14th license was not intended to clear plaintiff’s claim, that doubt is laid at rest by consideration of a few of the attendant circumstances. On the day before the license was issued — January 13, 1942 — the Treasury Department specifically and in so many words denied the application for a clearance which Standard submitted on December 29, 1941. And, on the very same day that the letter was issued — January 14th — the Treasury again notified Standard that its request for payment was rejected, this time in explicit denial of Standard’s first application for clearance, dated August 29, 1941.

As noted, the lower courts did not read the January 14th paper as authorizing payment of plaintiff’s claim. They did, however, take the view that payment was permitted by a second letter sent by the Federal Reserve Bank to the Yokohama Specie Bank, Ltd., New York Agency, c/o Supt. of Banks of the State of New York ”. That letter read in this way:

“ Reference is made to Supervisory Order No. 27, executed on September 23,1942, by the Alien Property Custodian.
In view of such order, you are authorised by the Treasury Department, so far as Executive Order No. 8389, as amended, is concerned, to engage in any transaction on or after October 29, 1942, ivhich might be engaged in without a specific license of the Treasury Department by a person who is not a national of any blocked country.
License No. NY 338836-SU is hereby revoked insofar as it applied to Yokohama Specie Bank, Ltd., New York Agency.
“ It is suggested that you communicate with the office of the Alien Property Custodian concerning the applicability to your enterprise of any orders, rulings or regulations of such office.” (Emphasis supplied.)

In claiming that the italicized sentence constitutes the essential authorization, plaintiff has misconstrued the letter’s purpose and has misread its language. At the very most, the communication authorized the Superintendent to engage in noncontrolled transactions that came into existence “ on or after October 29, 1942,” not before that date. The letter is prospective; it looks to the future, not to the past. Indeed, it could not retroactively authorize past transactions, for General Ruling No. 4 of the Treasury Department (Code of Fed. Reg., 1943 Supp., tit. 31, p. 1307) expressly provided that no license or other authorization issued by the Treasury should be deemed to authorize or validate any transaction effected prior to the issuance thereof, unless such license or other authorization specifically so provides.” There is, of course, no suggestion that the October 29th letter came within the exception to the ban on retroactive licenses; it contains nothing which can be read as a specific exemption from the coverage of the quoted provision. It follows that the maximum effect of the October 29th letter was to license otherwise uncontrolled transactions which occurred thereafter.

Clearly, then, it constitutes no authorization, for payment may not be treated as “ a transaction ” separate and apart from the dealings which brought' the claim into being. Payment is but “ an incident ” of the transaction (293 N. Y., supra, at p. 550). The “ transaction ”, having occurred in 1941, was, of necessity, “ engaged in ” before October 29,1942. It is of more than passing significance that the plaintiff had unsuccessfully applied for payment on two separate occasions in 1941; the circumstance that payment was again sought after October, 1942, could not, in any event, bring the matter within the coverage or the effect of that communication.

We go further, however. Even if we were to assume that payment could constitute a “ transaction * * * after October 29, 1942,” it is not of the type which is sanctioned by the Treasury letter. The Superintendent was thereby empowered to engage only in those transactions which might be carried on without a specific license of the Treasury Department by a person who is not a national of any blocked country. ’ ’ Patently, payment of plaintiff’s claim does not fall within that category. Since the transfer of funds involved the foreign office of the Yokohama bank and Standard’s Japanese office, both nationals of Japan, and was to be performed at the direction of the foreign bank, it was a prohibited transfer and not a “ transaction * * * which might be engaged in without a specific license * * * by a person who is not a national of any blocked country.”

This conclusion, it is evident, is required by the October 29th letter itself. The patent purpose of that communication was to place the New York Agency, with respect to transactions covered by the Executive Order, in the same position as any domestic bank. Let us assume, for instance, that the Yokohama bank in Japan had instructed, not its New York Agency but some domestic bank to pay out to Standard funds of the Japanese bank there deposited. In such a case, we unquestionably would have a transaction to be performed at the direction ” of an enemy national, the Yokohama bank, and refusal of a license would plainly have been dictated (General Ruling No. 12, supra). Since, obviously, the Agency was in no better position than a domestic bank, and since the transaction could not have been performed ” by a national of this country without a specific license ’ ’, it inevitably follows that payment could not be made by the Agency without such explicit authorization.

The effect of the October letter was but to advise the Superintendent that the Alien Property Custodian had taken control of enemy business enterprises and banks on behalf of the Federal Government and that thenceforward the Custodian would have primary responsibility for Federal supervision of the Agency. It did not eliminate plaintiff’s need for clearance and that view, it may be repeated, was clearly reflected in our utterances on the prior appeal.

The other documents upon which plaintiff relies as authorizing his payment may be dismissed with but passing mention.

A supervisory order ■ — issued on September 28, 1942, by the Alien Property Custodian — was merely a recital that, ‘ to the extent deemed necessary or advisable ”, the New York Agency was to be supervised in its dealings and payments by the Custodian. Nothing in the order intimated that it was intended to license or to authorize a transaction prohibited generally by the Executive Order. On the contrary, instead of relaxing restrictions, it made liquidation of the New York 'Agency subject to further regulatory authority. Only by doing violence to both the language of the order and the spirit of the Federal controls system and its regulations, could we conclude that the surrender of Treasury supervision to the Custodian was intended to defrost, at one stroke, all of the frozen accounts of enemy nationals.

Indeed, the Custodian made this plain by a letter of the same date, the next of the papers referred to by plaintiff. In essence, it instructed the Superintendent to continue liquidation of the New York Agency, subject to the additional controls outlined in the supervisory order. This was accomplished by requiring that there be submitted to the Custodian, in his discretion, any claims then before the Superintendent. Far from constituting blanket authority to the Superintendent to pay all and sundry claims pending, the letter was an affirmation that the Custodian •would thereafter reserve a veto power, even as to those claims which the Superintendent himself recognized. It is upon this ground that the United States Government presses its further point, which we neither pass upon nor consider, that not only a Treasury license but an authorization from the Custodian as well is necessary before plaintiff’s claim may be paid.

The final document to which plaintiff points is Vesting Order No. 915 of February 15, 1943. The Custodian, by that order, vested in the United States “ The excess proceeds of the business and property in the State of New York of The Yokohama Specie Bank, Ltd.,” with the explicit proviso that it did not affect the Superintendent’s power to continue liquidation. Of course, this vesting order did not authorize the Superintendent to do anything new; it merely reaffirmed his existing power, and that, we have seen, did not include authority to pay plaintiff’s claim.

The conclusion which we thus reach — that payment of plaintiff’s claim has not been licensed — is compelled, then, not only by the theory and rationale of our earlier decision in this matter, not only by the tenor of the orders and communications of the Treasury Department and of the Custodian, but also by the basic scheme and the ultimate objectives of the program carefully Avorked out by the Federal Government for the control of enemy alien and other foreign funds. The consistent design of that program is to prevent the fruits of prohibited transactions from being harvested until the underlying dealings are screened and found to be tionsonant with the national interests.

The entire program, its purpose and its design, would be completely upset and nullified if we were to give to the documents before us the carte blanche licensing effect sought by plaintiff. Such a decision would place in the same category, on a par, all sorts of foreign exchange contracts emanating from blocked nations during the prehostilities period, and it would validate, willy-nilly and in gross, all such transfers, irrespective of how illegal may have been their source, regardless of how illicit may have been their purpose. Manifestly, the language of the papers before us cannot be read to produce such a result.

And, since payment has not yet been licensed, plaintiff is not entitled either to the principal of the claim or to the accrual of interest thereon. (See, e.g., Moscow Fire Ins. Co. v. Heckscher & Gottlieb, 285 N. Y. 674, affg. 260 App. Div. 646, 650; Donnelly v. City of Brooklyn, 121 N. Y. 9, 19-20; McCloskey v. Brown, 271 App. Div. 772.)

The judgments should be reversed, without costs, and the case remitted to the Trial Term for the entry of judgment in accordance with this opinion. [See 299 N. Y. 791.]

Loughran, Ch. J., Lewis, Conway, Desmond and Dye, JJ., concur.

Judgments reversed, etc.


source: Caselaw Access Project

author: Loughran, Ch. J. Desmond, J. Fuld, J.

license: Public Domain

text:
    The People of the State of New York, Respondent, v. William J. Dessaure, Appellant.
    Argued October 11, 1948;
    decided April 14, 1949.

      Stanley Faulkner and Franklin H. Williams for appellant.
    I. The County Court erred in denying appellant’s motion to vacate the indictment returned by an all-white jury from which all qualified Negroes were and had been for a long period of years intentionally and systematically excluded in violation of the equal protection clause of the Fourteenth Amendment to the Federal Constitution. The systematic and intentional exclusion of qualified Negroes from a grand jury service over a long period of years is a denial of equal protection of the laws to a Negro defendant. (Strauder v. West Virginia, 100 U. S. 303; Ex parte Virginia, 100 U. S. 339; Neal v. Delaware, 103 U. S. 370; Hollins v. Oklahoma, 295 U. S. 394; Hale v. Kentucky, 303 U. S. 613; Pierre v. Louisiana, 306 U. S. 354; Smith v. Texas, 311 U. S. 128; Hill v. Texas, 316 U. S. 400; Patton v. Mississippi, 332 U. S. 463.) II. The record of the hearing before the court in this case upon appellant’s motion to vacate the indictment clearly established a systematic and intentional exclusion of qualified Negroes from grand jury service in Nassau County solely because of race and color. (Norris v. Alabama, 294 U. S. 587; Patton v. Mississippi, 332 U. S. 463.) III. When a defendant takes the witness stand for the sole purpose of being examined concerning the voluntariness of a statement made by him, cross-examination cannot proceed beyond that adduced on direct examination. (People v. Creasy, 236 N. Y. 205; People v. Wright, 133 App. Div. 133; People v. Freeman, 203 N. Y. 267; People v. Crapo, 76 N. Y. 288.) IV. There can be but one recorded verdict in a case. (People v. Faber, 199 N. Y. 256; Wilkins v. Abbey, 168 Misc. 416; People v. Moore, 261 App. Div. 876; People v. Saitta, 170 App. Div. 665.) V. The verdict was contrary to the law and against the weight of the evidence.

      James N. Gehrig, District Attorney (Philip Huntington of counsel), for respondent.
    I. Denial of defendant’s motion to vacate the indictment, on the ground of alleged discrimination, was correct on both the facts and the law. II. A public board or officer is presumed to have proceeded regularly. (Rugg v. Spencer, 59 Barb. 383; People ex rel. Langdon v. Dalton, 46 App. Div. 64; Remington v. State of New York, 116 App. Div. 522; Wolfe v. Burke, 56 N. Y. 115; People ex rel. Wiesenthal v. Dunne, 195 App. Div. 225; Matter of McLean, 138 N. Y. 158; Matter of Marcellus, 165 N. Y. 70; Hamilton v. Erie R. R. Co., 219 N. Y. 343, 248 U. S. 369; Matter of Richmond Rys. v. Gilchrist, 225 App. Div. 371; Matter of Scahill v. Drzewucki, 244 App. Div. 530.) III. Defendant failed to meet or overcome the presumption of regularity. (People v. Weiss, 290 N. Y. 160; People v. Paige, 283 N. Y. 479.) IV. The selection of grand jurors in Nassau County necessarily involves the exercise of judicial discretion, and the established rule is that the exercise of judicial discretion may not be disturbed unless an abuse of such discretion is clearly and positively shown. (Nann v. Raimist, 255 N. Y. 307; Steinkritz Amusement Corp. v. Kaplan, 257 N. Y. 294; Clark v. Delaware & Hudson R. R. Corp., 245 App. Div. 447.)
   Loughran, Ch. J.

On July 30,1946, a Grand Jury, sitting with the County Court of Nassau County indicted the defendant for assault in the second degree and subsequently a trial jury found him guilty of that crime. The defendant is a Negro. Both before the trial and after it, he moved “ for an order vacating the indictment herein found July 30, 1946 by the Grand Jury of Nassau County, on the ground that the said Grand Jury was unconstitutionally formed in that there was a systematic and intentional exclusion of Negroes from said Grand Jury”. The Acting County Judge of Nassau County held a hearing on that motion and denied it (193 Misc. 381); the order for denial thereof as well as the judgment of conviction were affirmed on an appeal taken by the defendant to the Appellate Division (273 App. Div. 984); and the defendant thereafter brought the case here when a Judge of this court certified that a question of law was involved which ought to be reviewed by us (see Code Crim. Pro., § 520, subd. 3).

Pursuant to statute, the list of grand jurors in Nassau County has long contained 600 names (McKinney’s Unconsol. Laws, § 3813). From 15 to 60 vacancies which have occurred therein annually through death, removal from the county, and disability for age or physical condition have been filled each December by the County Commissioner of Jurors and the Board of Judges of the County out of 60 to 100 names taken by the commissioner from the county trial jury list (see McKinney’s Unconsol. Laws, §"§ 3802, 3813).

The case for the defendant rests upon two circumstances: (1) The Commissioner of Jurors of the County submitted to prospective jurors a questionnaire which required them to indicate thereon their color, sex, weight, height and color of eyes and hair. (2) For a period found by the County Judge to have been ten years or so ” (193 Misc. 381, 385), no Negro has been selected for service as a grand juror in Nassau County, though numbers of Negroes who were qualified for such service resided in that county during that period.

The first of these two circumstances was accounted for by the commissioner in these words: Well, every juror that" we qualify in Nassau County, the name is submitted to the Identification Bureau of the Police Department in Nassau County, to be checked against their files of criminal records, which comes from the F.B.I. office in Washington. * * *

Sometimes we got eight or ten convictions against a fellow by the name of Harry Jones, all different people, all different places, at different times, so, in order to eliminate that, when the new questionnaires were printed I had this identification put in there, so when the Police Department reported to me that a person of such a name had a criminal record and his history was such and such, his hair was such a color, his eyes was such a color, and. he was either a white man or a colored man or an Indian or a Chinaman or something, I can identify the man, there is no chance of confusion or mistake.” This testimony of the commissioner was credited by the County Judge who saw and heard him, and that determination is for us the end of this part of the case, because we have here no power to deny the right of the trier of the fact so to believe a creditable witness (People v. Scheinman, 295 N. Y. 142).

Hence we pass to the second of the two circumstances on which the defendant relies, i.e., no Negroes had been selected for grand jury service in Nassau County for a period of ten years or so ”, as the County Judge found (193 Misc. 381, 385). In this connection, the Judge said: “ There are no lists kept separately of Negroes placed upon the trial jury list of 18,000, nor is there any record kept of the number of jurors who are called for trial jury duty; but the proof sufficiently shows that Negroes are constantly serving on petit juries in the courts of this county. * * * Indeed, it may be taken as established and it is conceded that such is the case. That fact would seem to demonstrate that Negroes have their proportionate representation upon the trial jury list and to substantiate the testimony of the Commissioner of Jurors that such list is formed from the lists of registered voters throughout the county without regard to color.” (193 Misc. 381, 383.) This finding of the County Judge has not been challenged.

In 1946, when the indictment in question was returned, the Board of Judges of Nassau County was composed of the four Supreme Court Justices then resident in the county and the County Judge (see McKinney’s Unconsol. Laws, § 3802). There is evidence, and the County Judge found, that some names of trial jurors were added to the grand jury list by the Board of Judges of their own motion and without- submission thereof by the Commissioner of Jurors. (193 Misc. 381, 384.) Under the statute, the certification of that grand jury list has over the years been the responsibility of the Judges alone (McKinney’s Unconsol. Laws, § 3813). No charge of discrimination has here been made against them nor has anyone imputed to them a failure in perception of their plain statutory and constitutional duty. (Cf. Civil Rights Law, § 13; N. Y. Const., art. I, § 11; U. S. Const., 14th Amendt.)

The controversy is reduced, then, to a claim that the commissioner systematically and intentionally kept the names of Negroes off the lists of trial jurors from which vacancies on the grand jury list were filled each December. In respect of that reproach, the commissioner was not silent. He said: “ Well, the only thing I can say on that, when I recommend them I don’t know their color, I don’t refer to their color in selecting the names. I mean, when I am selecting those names or getting those names out of the files or taking it from the files, I don’t know what their color is or their religion or their political affiliations.” This testimony, too, was credited by the County Judge who had the commissioner before him.

The issues thus decided have a background that remains to be noticed. The County Judge said:“ Here it is beyond question that the petit jury list of 18,000 is chosen without discrimination, that Negroes and whites are placed upon it without any question of color, and that the Negroes from the trial jury list are constantly serving as trial jurors in the courts of this county. The grand jury percentage of the trial jury list of 18,000 is so small * * * that it would permit the choosing of only 3 men from the list out of 100 for grand jury service, and in the case of selecting 45 to make up the 600 for the year 1946 the choice would be limited to only 1 out of 400.” (193 Misc. 381, 387.) According to the 1940 census, there was 1 Negro to every 33 white persons in Nassau County. If that ratio had been applied to the 45 grand jurors selected in the year 1946, the naming of 1 Negro would have afforded proportionate representation to his race among those added to the general grand jury list for that year, assuming, of course, that all Negroes then resident in the county were duly qualified. The relevant statutes, however — here unchallenged by the defendant —■ required no fixed representation of racial or other groups on the grand jury list in question. Those statutes authorized the Board of Judges to certify as grand jurors only persons found by them to be Free from all legal exceptions; of fair character; of approved integrity; of sound judgment; and well informed ’ ’ (see Judiciary Law, § 502, subd. 5; Code Crim. Pro., § 229-b; McKinney’s Unconsol. Laws, § 3813; cf. Code Crim. Pro., § 223).

The conclusion of the County Judge was that no prima facie case of discrimination had been established. The Appellate Division unanimously affirmed. We cannot announce a contrary decision as matter of law on this record.

Other points, involving the sufficiency of the proof, the breadth of the prosecutor’s cross-examination and the regularity of the verdict, are raised by the defendant. These have been examined and found to be without merit.

The judgment should be affirmed.

Desmond, J.

(dissenting). If the question here was whether those who chose this Nassau County Grand Jury had deliberately, consciously, and eonspiratorially in the manner of the Ku Klux Klan, refused to let Negroes sit as grand jurors, I would, respecting the limits of our jurisdiction, have to agree that we are bound by the findings below that nothing of the sort was here proven. But that is not the question at all. We are bound, by the Federal Constitution as interpreted in Smith v. Texas (311 U. S. 128) in many other Supreme Court decisions, and in our own People v. Prior (294 N. Y. 405, 411, 422) to strike down an indictment when there has been systematic exclusion from the grand jury of any identifiable special group. Invalidity of an indictment, under those cases, results not only from active, conscious-planned exclusion but from following, or failing to change, for any reason or no reason at all, a “ course of conduct ” which in fact and whatever be the actual intent of its administrators, operates ‘ ‘ to discriminate in the selection of jurors on racial grounds ” (Hill v. Texas, 316 U. S. 400, 404). That there were in Nassau County numerous Negroes qualified for grand jury service is here admitted. That the system followed in Nassau County for decades kept all such Negroes off grand juries, including the grand jury which indicted appellant, is plain from this record. This indictment was therefore void and the judgment should be reversed and the indictment dismissed (see Patton v. Mississippi, 332 U. S. 463, 466, 468, 469; 58 Yale L. J. 283; 49 Col. L. Rev. 211). Only by so holding, I believe, can we obey the Federal Constitution and our own State’s fixed policy (see Civil Rights Law, § 13).

Fuld, J.

(dissenting). In my view, the indictment against defendant, a Negro, cannot stand; as I read the récord before us, it permits no conclusion other than that there was systematic and purposeful exclusion of members of his race from the Nassau County Grand Jury. (See, e.g., Patton v. Mississippi, 332 U. S. 463, 465; Hill v. Texas, 316 U. S. 400; Smith v. Texas, 311 U. S. 128; Pierre v. Louisiana, 306 U. S. 354; Norris v. Alabama, 294 U. S. 587; Garter v. Texas, 177 U. S. 442; Neal v. Delaware, 103 U. S. 370; Strauder v. West Virginia, 100 U. S. 303.)

Traditional in our jury system is the concept that the jury, petit or grand, be a democratic and representative body drawn impartially from a cross section of the community to assure that it reflects the interest and viewpoints of all races, classes and groups. (See, e.g., Thiel v. Southern Pacific Co., 328 U. S. 217, 220; Smith v. Texas, 311 U. S. 128, supra; Pierre v. Louisiana, 306 U. S, 354, 358, supra.) The best guarantee of an equal and impartial choice is, of course, selection entirely by lot, and such a design — though not required by the Federal or State Constitutions — is apparent in. the statutes which establish the grand jury machinery in this State. (Code Crim. Pro., §§ 223, 224; see, e.g., People v. Prior, 294 N. Y. 405, 409, 413; People v. Naughton, 7 Abb. Prac. [N. S.] 421, 426.) The present attack, however, is based not upon any claim that the statute or policy of this State was violated, but rather upon the - argument that defendant was deprived, by the system practiced in Nassau County, of the equal protection of the laws;guaranteed by the Federal Constitution.

■ Unquestionably, .exclusion of qualified persons from service on-a. grand jury on the ground of either race or color invades the realm of the equal protection clause and impinges on basic rights. “ Indictment by Grand Jury and trial by jury ”, the Supreme, Court declared not long ago, cease to harmonize with, our traditional concepts of justice at the very moment particular groups, classes or races — otherwise qualified to serve as jurors in a community — are excluded as such from jury, service.” (Pierre v. Louisiana, supra, p. 358.)

The facts and figures- before us tell the story." Nassau County contains within its boundaries an appreciable Negro population, with a fairly heavy concentration in several of its towns. It is conceded that many Negroes were qualified (and thát is demonstrated beyond peradventure, I suggest, by the circumstance that two Negroes were selected and placed on the grand jury list but a short time after the court below denied defendant’s motion to set aside his indictment). In spite of all this, the sorry fact emerged at the hearing that no Negro had ever been called for service on that county’s grand jury within the memory of witnesses or officials, a period of almost twenty years. That proof, particularly in the light of further evidence that each prospective juror was required to answer a question as to his Color ” in the qualifying questionnaire, made out a substantial prima facie case which the People, in my opinion, failed to meet. (See Patton v. Mississippi, 332 U. S. 463, supra; Hill v. Texas, 316 U. S. 400, supra; Smith v. Texas, 311 U. S. 128, supra; Pierre v. Louisiana, 306 U. S. 354, supra; Carter v. Texas, 177 U. S. 442, supra.)

Any attempt to explain the Negro’s complete and long-continued "absence from the grand jury as a product of chance dr accident, or as the' result of heedlessness or inattentiveness, strikes me as not only unreasonable but as incredible. And, in any event, the thrust of the equal protection clause deprives such an explanation of either validity or force by imposing an active duty upon jury selection officials. We have been told in unmistakable terms that “ What the Fourteenth Amendment prohibits is racial discrimination in the selection of grand juries ”, and that it matters not whether the discrimination is ‘ ‘ accomplished ingeniously or ingenuously ’ ’— actively by outright elimination on the ground of. color, or passively by failure to take affirmative action to insure that the jury be democratically and representatively chosen. (See Smith v. Texas, 311 U. S., supra, at pp. 131-132; Hill v. Texas, 316 U. S., supra, at p. 404.) In Hill v. Texas (supra), for instance, wherein the jury commissioners had “ made no effort to ascertain whether there were within the county members of the colored race qualified to serve as jurors,” the Supreme Court made it clear that those officials “ thus failed to perform their constitutional duty6 * * * not to pursue a course of conduct in the administration of their office which would .operate to discriminate in the selection of jurors on racial grounds.” That attitude of indifference and complacency was deemed sufficient to point to unconstitutional exclusion and to require reversal of the conviction. “ Discrimination ”, the court went on to say, 1 ‘ can arise from the action of- commissioners who exclude all negroes whom they do not know to be qualified and who neither know nor seek to learn whether there are in fact any qualified to serve. In such a case, discrimination necessarily results where there are qualified negroes available for jury service.”

It is no answer, as the majority opinion suggests, that the jury commissioner claimed that he was not motivated by any design to discriminate against members of the Negro ■ race. Such testimony has been uniformly rejected on the ground that general protestations, bland professions, as to a lack of deliberate design, are insufficient in the face of figures establishing the total absence of Negroes from the jury list. (See, e.g., Norris v. Alabama, 294 U. S. 587, supra.) As the Supreme Court wrote in the Norris case, ‘ ‘ That showing as to the long-continued exclusion of negroes from jury service, and as to the many negroes qualified for that service, could not be met by mere generaliities. If * * * the mere general assertions by officials, of their performance of duty were to be accepted as an adequate justification for the complete exclusion of negroes from jury service, the constitutional provision — adopted with special reference to their protection — would be but a vain and illusory requirement ” (294 U. S., at p. 598).

In sum, the record establishes that there was systematic and purposeful exclusion of Negroes, and that, as a result, defendant was denied the equal protection of the laws guaranteed by the Federal Constitution. Since his objection was timely, I see no alternative but reversal of the conviction and setting aside of the indictment. [See 299 N. Y. 682.]

Lewis, Conway and Dye, JJ., concur with Loughran, Ch. J.; Desmond and Ftjld, JJ., dissent in separate opinions.

Judgment affirmed.


author: Per Curiam.

text:
    Florence Hansen, as Administratrix of the Estate of John A. Hansen, Deceased, Appellant, v. City of New York et al., Respondents.
    Argued February 22, 1949;
    decided April 14, 1949.

      Paul O’Dwyer for appellant.
    The motion presented a question of fact as to what actually occurred at the trial. The Trial Justice was logically and pre-eminently the one to decide that question. His recollection and finding that the dismissal at the trial was, in fact, without prejudice, and his failure to so specify at the time, an inadvertency, are conclusive. (Morlock v. Hamilton, 226 App. Div. 222; Cabang v. United States Shipping Bd. Merchant Fleet Corp., 227 App. Div. 751; Matter of Shultz, 254 App. Div. 228; Matter of Welch, 256 App. Div. 1040; Farmers’ Nat. Bank v. Underwood, 12 App. Div. 269; Ditmas v. McKane, 87 App. Div. 54; Hall v. Gilman, 87 App. Div. 248 ; Burke v. Baker, 104 App. Div. 26; Conlon v. Kelly, 126 App. Div. 624; Thomas v. American Molasses Co., 158 App. Div. 692; Solomon v. Jacfin Co., 147 Misc. 215.)

      John P. McGrath, Corporation Couiisel (Fred Iscol and Seymour B. Quel of counsel), for respondents.
    Special Term lacked power to amend the judgment since (1) it was entered in conformity with the disposition of the case by the Trial Justice and in accordance with the provisions of section 482 of the Civil Practice Act, and (2) the asserted intention of the Trial Justice to dismiss the complaint without prejudice is irrelevant in the absence of any indication of such intent at the time defendant’s motion was granted. (Herpe v. Herpe, 225 N. Y. 323; People ex rel. Hirschberg v. Orange Co. Ct., 271 N. Y. 151; United Appraisal Co. v. Fuca, 277 N. Y. 726; Schenectady Trust Co. v. Emmons, 290 N. Y. 225; Kagan v. Avallone, 243 App. Div. 437; Tanner v. Tennenbaum, 235 App. Div. 173; Caruso v. Metropolitan 5 to 50 Cent Store, 214 App. Div. 328; Hollenbeck v. Aetna Cas. & Sur. Co., 215 App. Div. 609, 243 N. Y. 540; Ziegler v. International Ry. Co., 232 App. Div. 43; Cabang v. United States Shipping Bd. Merchant Fleet Corp., 227 App. Div. 751.)
   Per Curiam.

In this action for damages for personal injuries suffered by decedent in his lifetime, but unrelated to his later death, the plaintiff’s complaint was dismissed at the close of her case for failure to establish his freedom from contributory negligence. The judgment of dismissal thereafter entered did not contain a recital that it was made “ without prejudice ” the effect of which was to make it a final determination on the merits and to bar the commencement of another action. (Civ. Prac. Act, § 482.) Later a motion made by plaintiff to amend and correct the judgment nunc pro tunc by inserting the words “ without prejudice, and not on the merits ” was granted at Special Term by the Justice who had presided at the trial. Upon appeal the Appellate Division reversed on the law and the facts and denied the plaintiff’s motion. The plaintiff appeals to this court by permission of the Appellate Division and upon two certified questions inquiring whether the Special Term had the power to so amend and correct its order and secondly, whether its exercise constituted an abuse of discretion. In any event, whether the Appellate Division order be treated as a new final judgment or as a new final order, it nevertheless is a final determination appealable as of right. (Civ. Prac. Act, § 588; S. J. E. Bldg. Corp. v. Matt O. M. Constr. Co., 265 N. Y. 282.) Moreover, the Appellate Division must "be taken to have denied the plaintiff’s motion in the exercise of discretion and not as a matter of law, with the result that no question is presented which we can reach. (Schenectady Trust Co. v. Emmons, 290 N. Y. 225.)

The order appealed from should be affirmed, with costs, and the questions certified not answered.

Loughran, Ch. J., Lewis, Conway, Desmond, Dye, Fuld and Bromley, JJ., concur.

Order affirmed, etc.


text:
    Banque Mellie Iran, Appellant and Respondent, v. Yokohama Specie Bank, Ltd., et al., Defendants, and Elliott V. Bell, Superintendent of Banks of the State of New York, as Liquidator of Yokohama Specie Bank, Ltd., Respondent and Appellant.
    Argued January 11, 1949;
    decided April 14, 1949.

      Allen T. Klots, Walter J. Holska and Merrell Clark, Jr., for plaintiff, appellant and respondent.
    I. Plaintiff is entitled to a preference under the statute because the payment to the New York agency of the moneys sought to he recovered was a transaction out of which plaintiff’s claim arose. (Cable & Wireless,

      Ltd., v. Yokohama Specie Bank, Ltd., 191 MisC. 567; Singer v. Yokohama Specie Bank, Ltd., 293 N. Y. 542.) II. Plaintiff is also entitled to a preference under the authority of Singer v. Yokohama Specie Bank, Ltd. (293 N. Y. 542). III. Executive Order No. 8389 does not invalidate plaintiff’s claim. (Clark v. Propper, 169 F. 2d 324; Bernstein v. N. V. Nederlandsche-Amerikaansche, 76 F. Supp. 335, 79 F. Supp. 38; Miyuki Okihara v. Clark, 71 F. Supp. 319.) IV. The courts below erred in dismissing the third cause of action covering the amount of $3,701. V. Plaintiff is entitled to interest on its claim from December 8, 1941. (Lafayette Trust Co. v. Beggs, 213 N. Y. 280; Northern Bank of N. Y. v. Drury, 152 App. Div. 64; People v. Merchants’ Trust Co., 187 N. Y. 293; Matter of People [First Russian Ins. Co.], 253 N. Y. 365; Matter of People [Norske Lloyd Ins. Co.], 249 N. Y. 139.) VI. The requirement of a license under Executive Order No. 8389 before payment of the claim could be made does not justify the denial of interest. (Cable & Wireless, Ltd., v. Yokohama Specie Bank, Ltd., 191 Misc. 567; Cameron-Hawn Realty Co. v. City of Albany, 207 N. Y. 377; Kiyoichi Fujikawa v. Sunrise Soda Water Works Co., 158 F. 2d 490, 331 U. S. 832.)

      Edward Feldman, Henry L. Bayles and Daniel Gersen for defendant, respondent and appellant.
    I. The prohibitions of Executive Order No. 8389 and of the Treasury Supervisor in charge of the agency prevented the creation of any claim in favor of plaintiff. II. Executive Order No. 8389 prohibits the payment of plaintiff’s claim until licensed. No such license has ever been issued. It follows that plaintiff is not entitled to any interest whatsoever upon its claim. (McCloskey v. Brown, N. Y. L. J., April 20,1946, p. 1548, col. 6, 271 App. Div. 772; Moscow Fire Ins. Co. v. Heckscher & Gottlieb, 260 App. Div. 646, 285 N. Y. 674.) III. Section 627 of the Banting Law prevents payment of interest upon delayed dividends. IV. The decision of Singer v. Yokohama Specie Bank, Ltd. (293 N. Y. 542) requires that judgment be rendered for the Superintendent. V. Even if a promise is unnecessary, the court below in any event erred in granting summary judgment as to items aggregating $6,689.53. VI. Only creditors of the New York agency of a foreign banking corporation may participate in the liquidation of such agency under subdivision 4 of section 606 of the Banking Law. (Clinton Trust Co. v. Compania Azucarera Central Mabay, S. A., 172 Misc. 148, 258 App. Div. 780; Bluebird Undergarment Corp. v. Gomez, 139 Misc. 742; Matter of Harris, 27 F. Supp. 480; Pan-American Bank & Trust Co. v. National City Bank, 6 F. 2d 762; Chrzanowska v. Corn Exch. Bank, 173 App. Div. 285, 225 N. Y. 728; Marboro Trust Co. v. Elliott, 86 F. 2d 315; Dean v. Eastern Shore Trust Co., 159 Md. 213.) VII. The courts below properly dismissed the third cause of action for $3,701. VIII. Plaintiff is not entitled to interest on his claim. (Moscow Fire Ins. Co. v. Heckscher & Gottlieb, 260 App. Div. 646, 285 N. Y. 674; McCloskey v. Brown, N. Y. L. J., April 20, 1946, p. 1548, col. 6, 271 App. Div. 772.)

      David L. Bazelon, John F. X. McGohey, James L. Morrisson and J. Boger Wollenherg for United States, amicus curiae, in support of defendant, respondent-appellant’s position.
    I. In the absence of an appropriate Federal license, Executive Order No. 8389 and rulings issued pursuant thereto prohibited not only the payment of plaintiff’s claim but also the creation of any obligation to pay on the part of the agency. . II. No interest should have been awarded. (Moscow Fire Ins. Co. v. Heckscher & Gottlieb, 260 App. Div. 646, 285 N. Y. 674; Donnelly v. City of Brooklyn, 121 N. Y. 9; McCloskey v. Brown, N. Y. L. J., April 20, 1946, p. 1548, col. 6, 271 App. Div. 772; Silesian-American Corp. v. Clark, 332 U. S. 469; Great Northern Ry. Co. v. Sutherland, 273 U. S. 182; Matter of Daly, 189 Misc. 680; Alexewicz v. General Aniline & Film Corp., 181 Misc. 181; Wageck v. Travelers Ins. Co., 108 Misc. 65.)
   Fuld, J.

Disposition of this appeal is controlled by our two decisions in Singer v. Yokohama Specie Bank, the one decided today (299 N. Y. 113), the other in 1944 (293 N. Y. 542).

The facts are undisputed. During the first' half of 1941, plaintiff, the Central Bank of Iran, seeking- to create credits in favor of certain exporters in Japan, ordered a New York City bank, the Irving Trust Company, to pay to the New York Agency of Yokohama Specie Bank, Ltd., various sums of money, totaling $117,162.27. These funds were transmitted by the Agency to Japanese branches of Yokohama Specie Bank, Ltd., and stood to the credit of plaintiff’s Japanese shippers. The credits were to expire on a date fixed, with the proviso that the unused balances were to be returned to plaintiff.

The onset of freezing controls in July, 1941, found the original totals intact, except for a single withdrawal of $1,000 and, when the credits expired shortly thereafter, a balance of $116,162.27 remained for refund to plaintiff. On December 2, 1941, a few days before Pearl Harbor, the home office of the Yokohama Specie Bank, Ltd., notified its New York Agency of the amount of the unutilized credits and, except as to items totaling $3,956.97, directed it to refund that amount to plaintiff. Since compliance with those directions would have involved a transfer of funds which were subject to Federal freezing controls, the New York Agency, in advising the Irving Trust Company of its instructions from the home office, declared that it would hold the funds pending receipt of a Federal Treasury license clearing payment. Before such a license was procured, war broke out and the Superintendent of Banks took over the assets of the New York Agency, as liquidator. In that capacity, he rejected plaintiff’s claim as a preferred creditor of the New York Agency.

In the present action against Yokohama Specie Bank, Ltd., and the Superintendent, as its liquidator, plaintiff sues for $116,162.27, the alleged balance of the moneys originally remitted to Japan, with interest from December 2,1941, the date of the letter by which the New York Agency advised that it was in funds belonging to plaintiff. The complaint contains three causes of action. The first seeks recovery of specified sums which total $112,461.27, and the third involves an item of $3,701; the second cause of action may be disregarded, since the amount therein sought is included in the first cause of action.

The court at Special Term, concluding that plaintiff’s proof established a preferred claim under Section 606, subdivision 4(a), of the Banking Law ”, awarded plaintiff partial summary judgment for $112,205.30 — the amount in the first cause of action less an item of $255.97 — with interest on that amount from December 2,1941. It was explicitly adjudged, however, that payment of that claim was “ subject to the provisions of Executive Order of the President of the United States No. 8389 as amended ”. As to the remaining causes of action and the balance of the money sued for, the court granted the Superintendent’s cross motion for summary judgment. Both parties appealed to the Appellate Division, which modified the judgment by providing that interest should run from October 29,1942, rather than from December 2, 1941, and now both parties appeal to us from that determination.

Our decision on the first Singer appeal (293 N. Y. 542, supra) dictated both the recognition of plaintiff’s claim as a preferred one under the Banking Law and the direction that its principal amount be paid on condition that a license authorizing such payment be obtained from the Federal Government. The amount of $112,205.30 awarded represented the aggregate of the sums which the New York Agency, in its letter of December 2, 1941, acknowledged were due to plaintiff upon its obtaining Treasury authorization. Underlying plaintiff’s claim for that amount was a course of dealings which culminated in the advice by the Agency that it was in funds which it was obligated to pay to plaintiff. These dealings constituted, to use the language of our decision in the earlier Singer appeal (293 N. Y., supra, at p. 550), “ a transaction had by a creditor ”, plaintiff Banque Mellie, “ of a foreign corporation ”, Yokohama Specie Bank, Ltd., “ ‘ with its Nev York agency, ’ ” and, pro tanto, entitled plaintiff to a preference under subdivision 4 of section 606 of the Banking Law.

The same cannot, however, be said of the remaining items, aggregating $3,956.97, which were not mentioned in the Agency’s letter to Irving Trust Company. There is entirely lacking, as to those sums, the essential acknowledgment by the New York Agency that it was under any obligation to pay plaintiff. It follows that plaintiff’s claim to those items does not arise out of a transaction ” with the Agency and is not entitled to recognition as a preferred claim.

Of course, even the amount to which plaintiff has established an accrued claim is not yet ripe for payment. Recognize plaintiff’s claim we may, but its payment must await authorization by the Treasury Department in accordance with Executive Order No. 8389 (Code of Fed. Reg., Cum. Supp., tit. 3, p. 645). As we held in the Singer appeal (supra), none of the documents relied upon by plaintiff may be accorded that effect. The result is that, in this case, just as in the Singer case, plaintiff may not, until it produces the necessary Federal clearance, collect the principal of its claim.

From this conclusion it flows as an inevitable corollary that plaintiff’s claim for interest must fail. In the absence of Treasury authorization, the Superintendent was under no obligation, certainly under no absolute or unconditional obligation, to pay the principal of plaintiff’s claim. A settled principle of law prohibits the running of interest upon such an obligation. Indeed, for more than half a century this court has viewed as self-evident the proposition that interest does not accumulate upon an obligation to pay unless it is unconditional. (See, e.g., Moscow Fire Ins. Co. v. HecJcscher <& Gottlieb, 285 N. Y. 674, affg. 260 App. Div. 646, 650; Donnelly v. City of Brooklyn, 121 N". Y. 9, 19-20; McCloskey v. Brown, 271 App. Div. 772.) 11 It is obvious ”, we declared in 1890, “ that if the duty to pay has not become absolute, the liability for interest does not arise ”. (Donnelly v. City of Brooklyn, supra, 121 N. Y. at p. 20.) That precisely describes the situation before us, for payment of plaintiff’s claim has expressly been made conditional upon Treasury authorization, “ subject to the provisions of Executive Order * * * No. 8389 ”. That being so, liability for interest does not arise.

The judgments should be modified,, by eliminating the provisions adjudging that plaintiff is entitled to interest upon his claim and, as so modified, affirmed, without costs. [See 299 N. Y. 790.]

Loughran, Ch. J., Lewis, Conway, Desmond and Dye, JJ., concur.

Judgment accordingly.


author: Dye, J.

text:
    In the Matter of Methodi Bojinoff, Appellant, against The People of the State of New York, Respondent.
    Submitted January 11, 1949;
    decided April 14, 1949.

      John P. Lomenzo for appellant.
    I. Full compliance with section 308 of the Code of Criminal Procedure is required by the courts. (Johnson v. Zerbst, 92 F. 2d 748; People ex rel. Moore v. Hunt, 258 App. Div. 24; People v. McLaughlin, 291 N. Y. 480; People ex rel. Bernoff v. Jackson, 184 Misc. 85; Tomkins v. Missouri, 323 U. S. 485; Rice v. Olson, 324 U. S. 786.) II. The constitutional and statutory provisions relative to the requirement that a court upon arraignment and . prior to a plea advise and inform the accused of his right to. the aid of counsel must be complied with fully, otherwise the .court does not acquire jurisdiction and subsequent proceedings are void. (Johnson v. Zerbst, 92 F. 2d 748; People v. McLaughlin, 291 N. Y. 480.) III. A subsequent motion may be allowed if presented on a new set of facts and such motion may be made on such new facts and granted, although no relief to renew has been obtained. (Erie Ry. Co. v. Ramsey, 45 N. Y. 637; Riggs v. Pursell, 74 N. Y. 370; Webb v. Buckelew, 82 N. Y. 555; Matter of Tredwell, 85 App. Div. 570; Humboldt Exploration Co. v. Fritsch, 150 App. Div. 90.) IV. While a motion once denied at a Special Term may not be renewed on the same papers, yet where the new motion is made on new facts, no leave to renew is necessary and a new motion may be made as a matter of right. (De Lacy v. Kelly, 147 App. Div. 37.)

      Daniel J. O’Mara, District Attorney (Anthony Miceli of counsel), for respondent.
    I. The decision rendered on the previous application for a writ of error coram nobis is res judicata and the present motion was properly dismissed. (Pray v. Hegeman, 98 N. Y. 351.) II. Appellant has failed to meet the burden of overcoming the presumption of regularity which attaches to the two convictions questioned by a fair preponderance of the evidence. (People ex rel. Kruger v. Hunt, 257 App. Div. 917; People ex rel. Asaro v. Morhous, 268 App. Div. 1016; People ex rel. Kennedy v. Hunt, 257 App. Div. 1039; Gayes v. New York, 332 U. S. 145; Commonwealth v. Harris, 351 Pa. 325; People v. Crispell, 185 Misc. 800.) III. The recent case of Gayes v. New York (332 U. S. 145) determined that failure of appellant to take advantage of the provisions of law to contest any infirmities which are claimed to exist preclude appellant’s obtaining that form of consideration in a writ of error coram nobis. (People v. Gayes, 190 Misc. 865.)
   Dye, J.

The petitioner-appellant here is presently confined in the Attica State Prison serving a sentence imposed by the Monroe County Court following his conviction as a second offender (Penal Law, § 1941). He has brought this proceeding in the nature of a writ of coram nobis to vacate and expunge from the records of the Monroe County Court two prior judgments of conviction, one filed January 15, 1936, and the other June 12,1936, both following a plea of “ guilty ” to indictments for the crime of grand larceny, second degree. In support of his petition, he alleges that at the time of his arraignment he was then sixteen years of age and was not asked if he desired the aid of counsel and no counsel was assigned to him (Code Crim. Pro., § 188, 308); that he entered his plea of “ guilty ” in each instance in ignorance of his rights and protection afforded by the State and Federal Constitutions (N. Y. Const., art. I, § 6; U. S. Const., 6th and 14th Amendts.) which statutory and constitutional rights he never waived or intended to waive.

Belief must be granted when the proof supports the allegations of irregularity. There is no question that compliance with the mandatory provisions of the statute and observance of the constitutional safeguards surrounding a fair trial is such a basic jurisdictional requirement that when absent, a conviction must be set aside. (Johnson v. Zerbst, 304 U. S. 458; People v. McLaughlin, 291 N. Y. 480.)

The petitioner so far has failed because the courts below have regarded his proof as insuEcient to overcome the presumption of regularity attending judgments of conviction. This is the second time the petitioner has made application to the Monroe County Court for the relief herein sought. The first application was made July 10, 1944, based on the same supporting facts as are here alleged and was denied on the general ground of failure of proof. An appeal to the Appellate Division from such order of denial was later dismissed for failure to prosecute, which failure was no doubt due to the circumstance that at that time no authority,existed for such an appeal. (Code Crim. Pro., § 517, as amd. by L. 1947, ch. 706; People v. Gersewitz, 294 N. Y. 163.)

In this, the second application, relief has again been denied because petitioner’s proof was insuEcient and for the further reason that the alleged new material consisting of aEdavits of court attaehés as to custom and practice of the court without connecting it to the arraignments now being challenged, had no probative value and did not justify reversal of the previous determination which it regarded as res judicata.

The lapse of time has placed the petitioner at a disadvantage. In the meantime the sentencing Judge has died and the stenographer’s minutes are no longer available, presumably having-been destroyed as authorized by law. There is, however, another element which may be considered. The Monroe County Court keeps as part of its routine administration, a permanent record of judgments of conviction on a printed form with appropriate blanks for the insertion of essential information. The forms used to record the within challenged judgments of conviction are the same and contain as part of the printed material the following: “ was asked if he desired the- aid of counsel, to which he answered-”. In each instance the space allowed for his answer is blank. It is said this satisfies the statutory preliminary as to inquiry for the answer, even if “ no ” would not destroy the inference that he was asked whether he desired the aid of counsel. Such omission does not impress us that way. It is significant for the inquiry and, unless answered, is meaningless. The inquiry goes to the very essence of according due process. Without a definite answer, we cannot be sure that the question was asked and the inference normally attending regularity is open to doubt. It is in this connection that the affidavits of the attaches serving at the time of arraignment are offered as new material to show that it was the general practice of the court upon arraignment to ask the accused if he desired counsel only in the event he entered a plea of ‘£ not guilty ’ ’. These affidavits, while not incompetent, constitute in substance a mere expression of opinion and in the absence of any reference to the circumstances attending the arraignment of this petitioner have little or no evidentiary weight and must be disregarded except that the existence of such a practice is established by another and more reliable means. Here by a peculiar coincidence, the sentencing Judge expressed his view on this very question in an opinion rendered in a contemporary case where a conviction was challenged because had without benefit of counsel, he having been recorded as saying: “ ‘ Doubtless this was true, as it has been [the] invariable custom to assign counsel only when the defendant pleaded not guilty, as, obviously, it is only upon a plea of not guilty that the defendant requires a defense.’ ” (People ex rel. Moore v. Hunt, 258 App. Div. 24, 26.) (Emphasis supplied.)

That such practice existed and was followed is not controverted by the People who merely say that it is not available to the defendant here because he has not connected it with certainty to his case. We recognize that there is a technical validity to such a view. However, when such practice is considered in the light of the present circumstances, including the unexplained omission appearing in the record of conviction, we think an inference is raised sufficient to rebut the presumption of regularity and shift back to the People the burden of establishing compliance with the mandatory provision of the statute. The People offer no such affirmative proof but prefer to rely on the failure of the defendant-appellant to raise the alleged invalidity of his prior convictions at the time of his conviction and sentence as a second offender as constituting a waiver and forfeiture of such right. In support thereof our attention is called to the fact that at the time of his conviction and sentence as a second offender Vn June 17, 1938, for which he is presently confined, he was represented by counsel on arraignment and entered a plea of “ not guilty ”. Later he asked permission to withdraw such plea and to substitute a plea of “ guilty ”, which was allowed. When he appeared for sentence on the appointed day with counsel and was asked about the previous convictions, which are the ones now being challenged, he admitted that he was the same person so convicted and neither he nor his counsel made mention of the fact that such prior convictions were attended by any irregularity nor did he raise the issue of lack of due process.

In the first application for writ of coram nobis (1944) to set aside such convictions, the petitioner was represented by the same counsel as appeared for him at the time of his (1938) conviction and sentence as a second offender. The application, as we have seen, was denied. Such order of denial in the 1944 proceeding is not res judicata in the proceeding now under review. It is true leave was not obtained to renew the within motion which seeks the same relief as in the 1944 motion and is based on the same grounds except for the affidavits as to custom and practice. Ordinarily, a motion may not be renewed without first obtaining permission (Mutual Life Ins. Co. of N. Y. v. 160 East 72nd St. Corp., 272 App. Div. 48). This, however, is not an ordinary situation. It involves the petitioner’s present liberty, of which he is being deprived, in reliance upon a void prior conviction. I am satisfied that had leave for renewal of the motion been asked it would have been granted because refusal to grant must have been deemed an abuse of discretion (Code Crim. Pro., § 517). It is also well established that waiver of such statutory and constitutional rights is occasioned only when the accused acts understandinglv, competently and intelligently (Rice v. Olson, 324 U. S. 786), the valúation of the competent evidence being for the court (Hawk v. Olson, 326 U. S. 271). In the face of the record, it cannot be said that the defendant’s silence on the occasion of the 1938 conviction, constituted a waiver and forfeiture of his existing but unknown rights which accrued to him in 1936. Such prior convictions under the circumstances were a nullity and afforded no basis for sentence as a second offender. This view is not contrary to Gayes v. New York (332 U. S. 145), which was also a coram nobis proceeding based on almost identical facts and was reviewed by the United States Supreme Court under writ of certiorari (Canizio v. New York, 327 U. S. 82), there being at that time no right to appeal in the State court (People v. Gersewitz, supra; Code Crim. Pro., § 517). The denial was affirmed for the reason that having failed to raise the invalidity of the prior conviction when being sentenced as a second offender constituted a waiver so as to prevent the later assertion of a Federal constitutional right.

This does not prevent us from holding as a matter of State law that the defendant may at any time, by writ of coram nobis, attack the validity of a judgment of conviction that has been obtained contrary to statute and in violation of the protection afforded by the State and Federal Constitutions and that the time for so doing is not limited to raising the point when being sentenced thereafter as a second offender.

The orders should be reversed and the matter remitted to the Monroe County Court with directions to vacate and set aside the convictions of January 15, 1936, and June 12, 1936, and to take such further proceedings as may be necessary, not inconsistent with this opinion.

Lotjghban, Ch. J., Lewis, Conway, Desmond and Fuld, JJ.. concur.

Orders reversed, etc.