author: Titone, J. Bellacosa, J.

text:
    [650 NE2d 1303, 627 NYS2d 302]
    The People of the State of New York, Appellant, v Robert L. Norman, Respondent. The People of the State of New York, Respondent, v John King, Appellant.
    Argued March 23, 1995;
    decided May 9, 1995

      POINTS OF COUNSEL

      James T. King, District Attorney of Jefferson County, Water-town (Dennis A. Germain and Jane G. LaRock of counsel), for appellant in the first above-entitled action.

      John A. Cirando, Syracuse, and Ivette Iza Zenner for respondent in the first above-entitled action.

      Perini & Hoerger, Hauppauge (Maureen S. Hoerger of counsel), for appellant in the second above-entitled action.

      James M. Catterson, Jr., District Attorney of Suffolk County, Riverhead (Glenn Green of counsel), for respondent in the second above-entitled action.
   OPINION OF THE COURT

Titone, J.

In each of these cases, the defendants were convicted of larceny after selling goods to customers, taking the customers’ money and then failing to deliver the promised goods. Their appeals from the judgments of conviction require us to revisit the specialized requirements for the crimes that were known as larceny by false promise and larceny by false pretenses before the adoption of the Penal Law.

I.

People v Norman

In 1989, according to the trial evidence, defendant entered into a one-year lease on an old sawmill in South Colton, New York, opened a business office in the City of Watertown and began selling kits to individuals wishing to build their own log homes. In June of 1990, Joseph and Sharon Gana, responding to a newspaper advertisement, contacted defendant and expressed an interest in purchasing one of his log home kits. During their discussions, defendant offered the Ganas the opportunity to become dealers for his product. As dealers, the Ganas would be responsible for allowing prospective customers to see their own log home and would receive a 15% commission on any home they sold or on any sale defendant made as a result of their referral.

On July 19, 1990, the Ganas signed a contract to purchase a log home kit for $20,325. The delivery date was left open because the Ganas needed to dig a foundation before they would be ready to receive their logs. Payment was to be made upon delivery, which, according to defendant, would occur within two weeks of the Ganas’ request.

Approximately three weeks after the Ganas signed their contract, defendant called them and stated that he had another couple from their area, the Mikels, who were interested in a dealership. Defendant was prepared to give the Ganas’ dealership to this couple unless the Ganas paid for the log home kit by August 9th. According to Sharon Gana, defendant was quite insistent on that date. Anxious not to lose their dealership opportunity, the Ganas obtained a loan and wired defendant the full amount of the purchase price on August 8, 1990. No arrangements for delivery were made at that time, since the Ganas’ foundation was still not ready.

In mid-September of 1990, the Ganas told defendant that they were ready for their kit, but, despite defendant’s promise to deliver at least part of the material, several weeks passed without a delivery. In the ensuing weeks, defendant offered the Ganas a series of excuses for his failure to deliver, including problems with truckers, problems with the mill, a death in the family, a need for new equipment and a claim that the logs milled for the Ganas had turned black. In the end, the Ganas travelled to defendant’s office, arriving just in time to see him packing up his telephone, office items and books. At that point, defendant told the Ganas that he had spent their money and was unable to obtain further materials or supplies without new financing.

A subsequent investigation revealed that defendant’s bank account had been overdrawn during the first week in August and that he had used the Ganas’ money to pay his personal bills and overdue business debts. Defendant admitted to investigators that none of the money had been used to purchase materials for the Ganas’ log home kit. When asked whether he intended to compensate the Ganas, defendant first told investigators that he was trying to obtain financing based on the equity he had in the mill. He said nothing further on this subject, however, when confronted with the fact that he did not have an ownership interest in the mill.

In addition to the testimony of the Ganas and several investigators, the People elicited testimony from other customers who had purchased log home kits from defendant and had had similarly unsatisfactory experiences. The evidence furnished by these witnesses, which was admitted primarily on the question of defendant’s larcenous intent, demonstrated that defendant had several other unfilled orders outstanding at the time he accepted the Ganas’ money. It was undisputed that defendant had laid off all of his mill workers and had "shut down” operations at the mill some two weeks before he asked for the Ganas’ money.

In opposition to the People’s case, the defense called two individuals who had purchased log homes from defendant and were completely satisfied with his services. The defense also produced Laurie Mikels, who confirmed that she and her husband had expressed an interest in becoming log home kit dealers for defendant. One additional witness stated that the mill had a small inventory of logs in the early part of the summer of 1990. Two others described the movement of logs on the mill property and the shipment of several truckloads of logs away from the property.

Testifying on his own behalf, defendant described how his business operated and discussed his dealings with the Ganas. According to defendant, he had used the Ganas’ money to buy logs for their kit and, in fact, their logs remained, already milled, on the South Colton property. Responding to testimony from the Ganas and other customers, defendant denied having given them a series of false excuses for his failure to deliver kits that had been ordered and paid for. Defendant further stated that he had been in the process of attempting to obtain financing for his ailing business at the time he was arrested for stealing from the Ganas. Defendant acknowledged having been convicted of two prior crimes: grand theft arising out of a 1984 Florida incident and a Virginia felony.

At the close of the evidence, the trial court, echoing the language of Penal Law § 155.05 (2) (d), instructed the jury on the elements of larceny by false promise and the special burden of proof associated with that crime. The jury thereafter found defendant guilty of third degree grand larceny (Penal Law § 155.35) and third degree criminal possession of stolen property (Penal Law § 165.50). On defendant’s appeal from the judgment of conviction, however, the Appellate Division reversed and dismissed the indictment, holding that the evidence had been insufficient "to show guilty intent on the part of defendant.” (202 AD2d 1013, 1014.) In so ruling, the Court stressed that defendant’s intent not to keep his promise "may not be inferred from the mere nonperformance of the promise” (see, Penal Law § 155.05 [2] [d]). The People now appeal from that Court’s order.

People v King

The incident out of which the charges against defendant King arose began when defendant, who owned a used car business, engaged in a conversation with Carol Bondy, a local print shop owner with whom he had dealt on several occasions. According to the People’s trial evidence, Bondy expressed an interest in buying a small Bronco or Jeep for her son, who would soon be returning home after a stint with the Marines. Within a month, defendant called Bondy to tell her that he had seen a Bronco and planned to acquire it for her at an auction. A few weeks later, defendant drove a two-tone Bronco to Bondy’s shop and offered to sell it to her. With defendant’s permission, Bondy’s boyfriend, Karl Rohrbaugh, took the vehicle for a test drive and pronounced it sound. Bondy then agreed to pay $4,977.50 for the vehicle and gave defendant a $2,000 down payment. This transfer of funds was witnessed by an individual named Fred Peterson, who was in Bondy’s shop to transact business of his own. Peterson, who testified for the People at trial, recalled talking to Bondy about her purchase of the Bronco. According to Peterson, Bondy pointed to the Bronco, which was parked in the parking lot, and he noted that the vehicle, a 1988 bronze and beige model, was the same as the one he had.

The following week, defendant told Bondy that he would need the rest of the money for the Bronco "to get the title processed.” Bondy met with defendant and, in Rohrbaugh’s presence, gave him the additional $2,977.50. Papers, including one for the Department of Motor Vehicles, were signed.

Despite repeated inquiries, defendant failed to deliver the Bronco to Bondy, instead giving her and Rohrbaugh a series of excuses over the course of some 25 conversations. Finally, approximately four months after Bondy had paid defendant for the car, Rohrbaugh confronted him, demanding that he either deliver the vehicle or return the purchase price. At that point, defendant denied having received the full $4,977.50 from Bondy. In a subsequent telephone conversation, defendant told Rohrbaugh that he had spoken to an attorney and had been advised not to say anything else. Shortly thereafter, Bondy received a notice that defendant had brought an action against her in Small Claims Court for $2,000 for "monies due on car deal.” At that point, Bondy contacted the District Attorney’s office to report what she believed to be a crime. Subsequent investigation revealed that no vehicle meeting the description of the two-tone Bronco was ever registered or titled to defendant.

Testifying on his own defense, defendant stated that he had shown Bondy a 1987 black vehicle and agreed to sell it to her for $5,800. According to defendant, he and Bondy later quarreled about the price of magnetic signs that he had ordered from her. Several visits and phone calls failed to bring a resolution to the dispute. After Bondy refused either to refund his deposit or give him the signs, defendant decided to bring an action in Small Claims Court. He identified the action as one for "monies due on car deal” because the magnetic signs that were the subject of the dispute referred to "car deals.” Defendant’s fiancé corroborated his testimony by stating that she had once taken a message from Bondy about the magnetic signs.

At the close of the evidence, defense counsel argued that the jury should be instructed on the elements of larceny by false promise. The prosecutor opposed this request, stressing that the People were alleging that defendant was guilty of larceny by false pretenses. In view of the People’s position, the trial court charged the jury only on the elements of the latter crime. The jury ultimately found defendant guilty of third degree grand larceny. The Appellate Division upheld the resulting judgment of conviction, and defendant King has taken a further appeal by permission of a Judge of this Court.

II.

On this appeal, defendant Norman argues that the trial evidence established that he was guilty of no more than an ordinary civil breach of contract and that the exacting requirements for proving criminal larceny by false promise were not satisfied. Defendant King, who was also convicted of larceny, contends that the case against him was erroneously submitted as a larceny by false pretenses rather than a larceny by false promise and that, accordingly, he was wrongly deprived of the benefit of the higher burden of proof that is required in connection with the latter crime. An assessment of the merits of these claims requires a review of the common-law history and contemporary application of these two types of larceny.

Historically, the crime of larceny, which was created by English Judges rather than Parliament, was narrowly circumscribed to encompass only trespassory takings, most of which entailed some threat to the public peace (People v Olivo, 52 NY2d 309, 315; see, 2 LaFave & Scott, Substantive Criminal Law § 8.1 [a], at 328; 4 Blackstone’s Commentaries, at 229-250; Bassett v Spofford, 45 NY 387; see also, 3 Torcia, Wharton’s Criminal Law § 354, at 298 [14th ed]). As trade and business expanded, however, the English legal system became more sensitive to the need to protect property owners’ interests in personalty. As a consequence, the courts began to create legal fictions which treated certain types of takings as "trespassory” even though the owner had voluntarily relinquished actual physical possession of the property (id.).

For example, a bailee who opened closed bales and misappropriated some or all of the contents was deemed to have committed a "trespassory” taking either because the bailee’s possessory right terminated upon the "breaking of the bulk” or because the package’s contents, as distinguished from its covering, were deemed to continue in the possession of the bailor (id.; see, Carrier’s Case, YB Pasch 13 Edw IV, f 9, pi 5 [1473]). A second category of fictitious "trespassory” takings involved situations in which property that had been entrusted to a person in a special relationship to the owner was nonetheless deemed to have constructively remained in the owner’s possession (2 LaFave & Scott, op. cit., at 329; see, Bazeley’s Case, 2 East PC 571 [Cr Cas Res 1799]; 3 Holdsworth, A History of English Law, at 365 [3d ed 1923]; cf., 39 Geo III, ch 85 [1799] [creating crime of embezzlement]).

The third historical category of larceny, larceny by false pretenses, was originally created as a matter of legislative decree rather than judicial prescription (2 LaFave & Scott, op. cit., at 331-332; see, 30 Geo II, ch 24 [1757]). The gravamen of that offense was obtaining property, with the intent permanently to deprive the owner, by fraudulently inducing the owner to part with both possession and title through the use of false statements about some prior or existing facts. As adopted in New York and many other jurisdictions, the crime of larceny by false pretenses did not apply to the act of obtaining money or property by a false promise to do something (such as repaying a loan or delivering goods) in the future (see, e.g., People v Miller, 169 NY 339, 351-353; Ranney v People, 22 NY 413). Although a promise accompanied by an intention not to perform could theoretically have been viewed as a false statement of an existing fact (see, Chaplin v United States, 157 F2d 697, 700 [Edgerton, J., dissenting]), most courts, including this one, took the narrowest possible view and held that such conduct did not constitute the crime of larceny by false pretenses (People v Blanchard, 90 NY 314, 325). The judicial reluctance to criminalize such conduct was principally derived in concerns about jailing individuals for mere nonpayment of debt and in the courts’ sensitivity to the potential chilling effect that criminalizing such conduct might have on business (see, e.g., People v Churchill, supra, at 156; Chaplin v United States, supra; 2 LaFave & Scott, op. cit., § 8.7, at 387).

It was not until 1965, when the present Penal Law was adopted, that this State recognized the making of a dishonest promise as a crime (Penal Law § 155.05 [2] [d]; see, Third Interim Rep, Temporary State Commn on Revision of Penal Law and Criminal Code, Feb. 1, 1964, at 25). Since that time, the statute defining the crime of larceny has criminalized both wrongful takings by "false promises” and wrongful takings by "false pretenses” (Penal Law § 155.05 [2] [a], [d]).

With regard to larceny by false pretenses, the Penal Law incorporates the historical elements that were applied at common law, i.e., a false material statement about a past or presently existing fact (Penal Law § 155.05 [2] [a]; see, People v Churchill, supra). With regard to larceny by false promises, Penal Law § 155.05 (2) (d) provides that the crime occurs "when, pursuant to a scheme to defraud, [a person] obtains property of another by means of a representation, express or implied, that he * * * will in the future engage in particular conduct, and when he does not intend to engage in such conduct.” Thus, as adopted in New York, the crime of larceny by false promise is limited to situations in which an individual has made a promise while harboring a present intention not to perform.

While the two crimes have considerable overlap (see, 2 LaFave & Scott, op. cit., at 387), it is important not to lose sight of the distinction between them, particularly in light of the special burden of proof that the Legislature has imposed in prosecutions for larceny by false promise. Because of continuing concerns about the need to avoid prosecution for conduct constituting only civil breach of contract, the Legislature has specifically provided that the inference of guilty intent may not be drawn solely from the fact that the defendant’s promise was not performed (Penal Law § 155.05 [2] [d]; see, People v Churchill, supra; People v Ryan, 41 NY2d 634, 640). Moreover, the Legislature has provided that a conviction of larceny by false promise "may be based only upon evidence establishing that the facts and circumstances of the case are wholly consistent with guilty intent or belief and wholly inconsistent with innocent intent or belief, and excluding to a moral certainty every hypothesis except that of the defendant’s intention or belief that the promise would not be performed” (Penal Law § 155.05 [2] [d]). That evidentiary standard parallels the burden associated with criminal prosecutions involving wholly circumstantial proof (see, e.g., People v Ford, 66 NY2d 428; see also, People v Geraci, 85 NY2d 359, 371-372).

III.

The Appellate Division concluded that the evidence against defendant was legally insufficient to establish that he acted with larcenous intent under the strict standard set forth in Penal Law § 155.05 (2) (d). The Court’s application of that standard and the dissenter’s comments on the subject here suggest the need for further discussion about the proper standard for appellate review.

Although the trier of fact in the Norman case was bound to consider the evidence in light of the statutory "moral certainty” standard, the function of an appellate court reviewing the record for legal evidentiary sufficiency under Penal Law § 155.05 (2) (d) is limited to assessing whether the inference of wrongful intent logically flowed from the proven facts and whether any valid line of reasoning could lead a rational trier of fact, viewing the evidence in the light most favorable to the People, to conclude that the defendant committed the charged crime (People v Williams, 84 NY2d 925; see, People v Wong, 81 NY2d 600, 608; People v Jennings, 69 NY2d 103; People v Deegan, 69 NY2d 976; see also, People v Geraci, supra, at 371-372). At this level of inquiry, Penal Law § 155.05 (2) (d)’s "moral certainty” standard is not an appropriate criterion for measuring the sufficiency of the People’s proof.

Contrary to the dissenter’s contention, the standard of review we are applying here is not a sudden departure from precedent, but rather is a reflection of well-established principles that have regularly been reiterated in our recent case law. In People v Deegan (69 NY2d 976, 978-979, supra) and People v Jennings (69 NY2d 103, 114-115, supra), we stated that the "moral certainty” standard is only for the trier of fact and that the proper measure of legal sufficiency is whether the facts and the inferences that flow therefrom support a finding for the People on every element of the charged crime. We also stated in Deegan that the availability of innocent inferences is not relevant to the sufficiency inquiry. In so holding, we expressly overruled an older case, People v Eckert (2 NY2d 126, 129), in which the Court stated that the legal sufficiency of circumstantial evidence is determined, at least in part, by whether the facts and inferences "exclude to a moral certainty every other reasonable hypothesis but guilt.” We subsequently made clear that the principles articulated in Deegan and Jennings, both of which involved sufficiency review of indictments-, apply equally to appellate review of legal sufficiency after trial (People v Wong, 81 NY2d 600, 608; see also, People v Geraci, 85 NY2d 359, supra; People v Williams, 84 NY2d 925, 926, supra). The dissenter’s suggestion that the Jennings principle is limited to review of the sufficiency of Grand Jury evidence may be maintained only if this subsequent line of cases is ignored.

To the extent that the dissenter posits a heightened standard of review for all cases in which the moral certainty standard is relevant, the validity of his position is belied by the recent case law. To the extent that the dissenter’s argument is premised on the unique character of larceny-by-false-promise prosecutions, his position cannot withstand analysis. Contrary to the dissenter’s novel construction, Penal Law § 155.05 (2) (d) does not purport to modify or affect the judicially developed standards for appellate review. Rather, the statute’s reference to the "moral certainty” standard merely serves to ensure that the fact finder will be required to utilize that more exacting test in all prosecutions for larceny by false promise, regardless of whether or not the particular prosecution rests on wholly circumstantial proof. As such, the statute mandates no more than that which this State’s application of the constitutional reasonable-doubt standard mandates in wholly circumstantial cases, i.e., that the trier of fact refrain from finding guilt unless it is satisfied that the proof excludes all innocent hypotheses "to a moral certainty.”

Similarly, the older line of cases which the dissenter cites does not provide persuasive support for the theory that legal sufficiency review is different in appeals involving larceny-by-false-promise prosecutions than it is in all other cases in which the moral certainty standard is pertinent. People v Ryan (supra, at 640), People v Churchill (47 NY2d, at 158, supra) and People v Luongo (47 NY2d 418, 429), were all decided before the clarifying holdings in Jennings, Deegan and their progeny — at a time when the Court frequently intermingled "moral certainty” verbiage with its legal sufficiency analysis. Indeed, during the same era, moral certainty verbiage was also injected into sufficiency decisions in appeals involving prosecutions based on wholly circumstantial proof (see, e.g., People v Montanez, 41 NY2d 53; People v Benzinger, 36 NY2d 29; People v Cleague, 22 NY2d 363). Just as this Court would now avoid that type of fact-based analysis in circumstantial-evidence sufficiency appeals, so too must we avoid engaging in such fact-based analysis in sufficiency appeals from convictions for larceny by false promise.

Significantly, the discussion in Jennings on which the dissenter relies (dissenting opn, at 629) did not distinguish at all between the "Ryan line of cases” and the cases in which the moral certainty standard was pertinent because of the circumstantial nature of the proof. On the contrary, Ryan was cited interchangeably with the latter class of cases (see, 69 NY2d, at 114, citing People v Ryan, supra; People v Borrero, 26 NY2d 430; People v Cleague, supra; People v Bearden, 290 NY 478; People v Newman, 80 Misc 2d 975, affd 85 Misc 2d 761), thereby confirming that this Court has not previously viewed Penal Law § 155.05 (2) (d) as requiring a unique level of sufficiency review.

Finally, we eschew the "moral certainty” standard as an appropriate measure for legal sufficiency review because its application would blur the important distinction between the role of the fact finder and that of the reviewing court. Evaluating the evidence to determine whether it is "wholly inconsistent with innocent intent or belief’ and whether it "excludes] to a moral certainty every hypothesis except that of [guilty] intention” (Penal Law § 155.05 [2] [d]) requires such mental operations as sifting through the proof, drawing the plausible inferences and, most critically, weighing the strength of those inferences. The very term "moral certainty” connotes that the decision-maker must possess a particular degree of conviction about the correctness of its conclusion, thereby demonstrating the test’s unsuitability for the more objective legal sufficiency inquiry. In the absence of a clear indication of a contrary legislative intent, we decline to construe Penal Law § 155.05 (2) (d) as modifying the concept of "legal sufficiency” — a concept that has its roots in the constitutional and statutory limitations on our review powers.

IV.

People v Norman

Viewed under the prism of the appropriate appellate review standard, the evidence against this defendant was sufficient to establish his guilt of larceny by false promise on the theory that he took the Ganas’ money at a time when he had no intention of delivering the log cabin kit he had promised them. The jury was entitled to believe the evidence that defendant had pressured the Ganas into giving him the full purchase price of the kit they had ordered and had then spent all of their money on past-due personal and business bills without using any of it to purchase materials for their kit. There was also evidence that defendant had laid off his mill workers approximately one week before he took the Ganas’ money, that he had closed his bank account shortly after paying his bills and that he was unable to obtain more suppliers or services without new financing. This evidence that, at the time he took the Ganas’ money, defendant lacked the wherewithal to perform and had no realistic prospect of changing the situation in the near future provided ample ground for a jury to “[exclude] to a moral certainty every hypothesis except that of defendant’s intention or belief that [his] promise would not be performed” (Penal Law § 155.05 [2] [d]).

The additional evidence that defendant had offered a series of dubious excuses for failing to deliver the victims’ logs, that he had business dealings with other customers with similar results and that he had been caught packing up his office equipment when the Ganas went to his office to confront him lent further support to the inference that defendant had intended to bilk the Ganas from the outset (see, People v Rolchigo, 33 AD2d 1060, affd 28 NY2d 644). Finally, defendant’s patently false statement to investigating officers that he planned to compensate the Ganas by using his equity in the mill — a property he did not own — furnished additional circumstantial proof of his criminal intent at the time he took the Ganas’ payment.

In this regard, we note our rejection of defendant’s suggestion that his guilty intent not to perform should be assessed solely on the evidence concerning the situation on July 19, 1990, the date he and the Ganas entered into a formal contract for the purchase of a log home kit. Under the circumstances of this case, an equally and perhaps even more relevant point for the jury to consider defendant’s intent was August 8, 1990, the date on which defendant received and accepted the Ganas’ money.

We further note that this Court’s holding in People v Churchill (supra) does not require a rejection of the sufficiency of the People’s case here. While the Churchill Court held that the accused’s failure to perform as promised coupled with his use of the customer’s down payment for personal expenses did not suffice to establish larceny by false promise, the Court also went on to note that “the record [wa]s devoid of any proof that defendant would require additional funds for the completion of the work remaining to be done on the contracts” (id., at 158). Here, in contrast, there was evidence that defendant himself had admitted that, having spent the Ganas’ money on his own expenses, he would need additional funds to obtain materials and supplies for their log home. Further, there was proof from which the jury could infer that, unlike the Churchill defendant, this defendant, whose mill was already closed and without a crew of workers by the time he took the money, could not have performed even if he had had the necessary materials and supplies.

Finally, the legal sufficiency of the People’s trial evidence was not negated by defendant’s efforts to show through his own testimony and that of his witnesses that there were prepared logs for the Ganas at the mill, that he had an adequate inventory of logs on the premises and that the mill was shipping logs to other destinations during the summer of 1990. The jury was entitled to reject defendant’s attempt to establish his ability to perform, particularly in light of the tentative and somewhat inconsistent nature of the evidence he presented. Accordingly, the Appellate Division erred in holding that defendant’s conviction for larceny by false promise should be vacated.

People v King

Defendant King, who was convicted of larceny by false pretenses, failed to preserve his present claim that the evidence against him was insufficient because it failed to demonstrate the existence of a false representation concerning a presently existing fact. Although at the close of the evidence defense counsel made a motion to dismiss for failure of the prosecution’s proof, his arguments were confined to a claim that the People’s witnesses were not credible. Counsel did not argue, as appellate counsel argues now, that an essential element of the crime had not been proven. Accordingly, the present sufficiency argument cannot be reviewed in this Court (see, People v Bynum, 70 NY2d 858).

Defendant’s remaining claim seeks to capitalize on the similarity between the crimes of larceny by false pretenses and larceny by false promise. Reiterating the contention his attorney made at trial, defendant argues that the People’s case against him was actually one for larceny by false promise rather than larceny by false pretenses and that the former crime should have been submitted to the jury in place of the latter. The erroneous refusal to submit the case as a larceny by false promise prosecution was highly prejudicial, defendant contends, because it deprived him of the opportunity to have the jury consider the evidence of his intent under the far more exacting standard of proof prescribed for that crime (see, Penal Law § 155.05 [2] [d]).

To the extent that this claim does not overlap with defendant’s unpreserved sufficiency argument and is therefore reviewable, it is utterly lacking in merit. In addition to showing that defendant had made an unfulfilled promise to deliver a particular car, the trial evidence supported the inference that defendant had made a material misrepresentation of fact to Bondy, namely that he owned the vehicle in question and therefore had the power to sell it to her. While defendant never made a specific oral claim that the bronze and beige Bronco was his to sell, his conduct conveyed as surely as a direct statement that he had an interest in the Bronco sufficient to enable him to transfer ownership to her (see, 2 LaFave & Scott, op. cit., at 384 [a conviction for larceny by false pretenses can rest on unwritten expression or unspoken conduct]). This conduct included his first telling Bondy that he had seen a particular Bronco and planned to acquire it for her at auction and then bringing a Bronco to Bondy’s shop for a test drive. It also included his telling Bondy he needed the rest of her money "to get the title processed” and giving her Department of Motor Vehicle forms to sign.

In sum, there was more to the case against defendant King than a simple false promise made with an intent not to perform. Accordingly, the prosecution was entitled to choose to prosecute him for larceny by false pretenses rather than for larceny by false promise. The fact that the evidence might have also supported a false promise theory is of no moment, since, as long as their theory was supported by the adduced facts, the People had the right to have the case submitted to the jury under the Penal Law subdivision they had chosen.

Accordingly, in People v Norman, the order of the Appellate Division should be reversed and the case remitted to that Court for a review of the facts (see, CPL 470.25 [2] [d]; 470.40 [b]); in People v King, the order of the Appellate Division should be affirmed.

Bellacosa, J.

(dissenting). I respectfully dissent in each case, and vote to affirm in People v Norman and to reverse in People v King. Both criminal actions should be dismissed.

In Norman, defendant failed to deliver logs to a purchaser who paid the price for a kit and materials to build a house in the Adirondacks. In King, defendant on Long Island failed to deliver a promised and paid-for used vehicle. Both defendants acted wrongly. However, in my view and on the respective records, their transgressions are not criminal. Instead, the cases reflect quintessentially civil transactions gone awry. Moreover, the standard of appellate review for the sufficiency issue in this unique larceny classification may engender confusion with respect to well-settled principles and protections.

Thus, I conclude that in addition to criminal prosecutions for these derelictions being counter-intuitive, defects in the statutory-policy analysis and appellate review lead to false positives concerning the satisfaction of the high hurdle set by the Legislature and this Court for the successful prosecution of such woebegone civil bargains and transactions (see, e.g., People v Luongo, 47 NY2d 418; People v Churchill, 47 NY2d 151; People v Ryan, 41 NY2d 634, 639-640; Penal Law § 155.05 [2] [d] ["a finding (of larceny by false promise) may be based only upon evidence establishing that the facts and circumstances of the case are wholly consistent with guilty intent * * * and wholly inconsistent with innocent intent * * * and excluding to a moral certainty every hypothesis except that of the defendant’s intention or belief that the promise would not be performed”]).

The history and development of the distinct varieties of larceny in criminal jurisprudence, while fascinating, are enmeshed in arcane nuance, sophistication and technicality. Nevertheless, there is something to be said for an overarching, simplified approach. These cases qualify for the simpler approach and, thus, my analysis in each case does not reach or require discussion of the fine distinctions between larceny by false promise or false pretenses and the like. Indeed, in the King case, I find that the particular record satisfies the threshold preservation prerequisite as well.

The controlling guidepost for these cases should be the recognition of the steadfast reluctance, resistance and barriers established by the Legislature and the courts against authorizing the transmutation of civil mishaps into felonious inflations. To obscure the central demarcation, that for centuries has marked the boundary between civil and criminal matters in the myriad of ordinary commercial transactions, trivializes true criminality, diverts attention and resources away from victims of true crimes against "the People,” and engenders opportunistic manipulation of the criminal processes by unhappy civil suitors for redress of private wrongs and harms. My direct-line approach to the disposition of these two cases and others like them would accord greater respect and adherence to the important differences inherent in the distinct hemispheres of civil and criminal disputes.

Moreover, the majority is imposing for the first time a significantly switched and more forgiving standard of review in favor of the People with respect to the "moral certainty” element of larceny by false promise (Penal Law § 155.05 [2] [d]). This Court’s consistent methodology, mandated by the pertinent and unique penal statute (Penal Law § 155.05 [2] [d]), is found in People v Ryan (41 NY2d 634, 640-642, supra), People v Churchill (47 NY2d 151, 158-159, supra), People v Luongo (47 NY2d 418, 428-429, supra), and even People v Jennings (69 NY2d 103, 114), so heavily and curiously relied on by the majority for the opposite view.

In People v Ryan (41 NY2d 634, supra), this Court considered the proof for larceny by false promise and stated that "[t]he standard in the statute equates to the rule used in circumstantial evidence cases” (id., at 640). The Court added that "we must conclude that the proof has failed to exclude to a moral certainty every hypothesis except a guilty intent” (id., at 642 [emphasis added]; see also, id., at 641 [stating that "it cannot be said with any moral or reliable degree of certainty that * * * defendant did not intend to complete the transaction”]).

Similarly, in People v Churchill (47 NY2d 151, supra), this Court again applied the moral certainty standard, with no mention of the more generally applicable deferential standard of review at the appellate level. Significantly, in finding for the defendant in Churchill, this Court emphasized:

"The inferences to be drawn from this record certainly do not exclude to a moral certainty every hypothesis but that at the time he entered into the contracts defendant had no intention of meeting his obligations. Indeed, equally strong is the inference that defendant was simply an inexperienced, uneducated tyro whose talents of salesmanship surpassed his ability to manage a business” (id., at 158).

This Court, on review, explicitly and faithfully applied the heightened statutory canon, holding that it was "impossible [for it] to conclude that the proof exclud[ed] to a moral certainty every hypothesis except guilty intent” (id., at 159).

Again, in People v Luongo (47 NY2d 418, supra), the Court reiterated the Ryan and statutory standard of proof, stating that a finding of larcenous intent "may be made only where that determination flows naturally and reasonably from the facts in evidence and must exclude to a moral certainty any implication that the defendant has committed a mere civil wrong” (People v Luongo, 47 NY2d 418, 428, supra).

Thus, as has been demonstrated, this Court has consistently used the "circumstantial evidence/moral certainty standard” as the appropriate level of scrutiny for appellate review in larceny by false promise cases (see, People v Jennings, 69 NY2d, at 114, supra; People v Luongo, 47 NY2d 418, supra; People v Churchill, 47 NY2d 151, supra; People v Ryan, 41 NY2d 634, supra). Contrary to the majority’s view, the moral certainty standard articulated by this Court for reviewing legal sufficiency of larceny by false promise convictions is not mere "verbiage” (majority opn, at 621), which can be summarily cast aside (see, People v Luongo, supra; People v Churchill, supra; People v Ryan, supra). This heightened standard of scrutiny on appellate review is compelled by the Legislature’s explicit and unique inclusion of this terminology in the very definition of the crime of larceny by false promise (see, Penal Law § 155.05 [2] [d]). Indeed, it is this statutory, definitional distinction, ignored by the majority’s analysis, that for purposes of appellate review, distinguishes the larceny by false promise line of cases from the circumstantial evidentiary-ruletype cases on which the majority relies (majority opn, at 622), where deferential appellate review is proper.

In formulating the modern, non-common-law brand of larceny by false promise provision, the Commission on Revision of the Penal Law warned "that an unqualified larceny by false promise 'might result in an avalanche of criminal prosecutions based upon conduct essentially civil in character and constituting little more than breach of contract’ ” (Donnino, Practice Commentary, McKinney’s Cons Laws of NY, Book 39, art 155, at 103, quoting Staff Notes of Commn on Revision of the Penal Law and Criminal Code, Proposed New York Penal Law, McKinney’s Spec Pamph, at 351-352 [1964]). To implement the ensuing, explicit legislative directive, this Court, therefore, has consistently applied the more exacting "moral certainty” standard at the appellate review phase (see, People v Churchill, supra; People v Luongo, supra; People v Ryan, supra). That careful practice and protection, strictly followed in People v Ryan, People v Churchill, and People v Luongo, cannot be undone by the majority’s bare assertion that, in these cases, "the Court frequently intermingled 'moral certainty’ verbiage with its legal sufficiency analysis” and that "moral certainty verbiage was also injected into sufficiency decisions [in other contexts]” (majority opn, at 621).

Further and notwithstanding the majority’s conclusory assertions, People v Jennings (69 NY2d 103, supra) did not depart from the approach adopted in our earlier precedents, nor did it, in my view, effect a wholesale sub silentio overruling of cases and what they stand for. To the contrary, Jennings — an indictment/Grand Jury review case — implicitly continues support for the view that traditional, deferential appellate review is not enough in the larceny-by-false-promise-trial context (see, People v Jennings, 69 NY2d 103,114, supra).

In People v Jennings, this Court considered the issue of the proper standard for reviewing the sufficiency of larceny evidence before a Grand Jury (id., at 114 [emphasis added]). In finding that the lower court had erred in dismissing the indictment after applying the higher moral certainty standard of proof of larcenous intent (id., at 114), this Court expressly distinguished the Grand Jury indictment cases:

"The cases cited to justify this heightened scrutiny, however, only addressed the question whether the circumstantial evidence of larcenous intent adduced at trial supported a petit jury’s finding that guilt was established beyond a reasonable doubt. Manifestly, such cases are not controlling on a motion to dismiss an indictment prior to trial” (People v Jennings, 69 NY2d 103, 114 [emphasis in original and added]).

Not only was the question we face today not before us in Jennings, but we explicitly limited the reach of the Jennings holding to the indictment phase of the larceny prosecution (id., at 114). Consequently, if People v Jennings (supra) is now declared to have overruled the consistent, long-standing, prior approach adopted by this Court in People v Ryan (41 NY2d 634, 640-642, supra) and reaffirmed in its progeny (see, People v Churchill, 47 NY2d 151, 158, supra; People v Luongo, 47 NY2d 418, 428-429, supra), it comes as a surprise to me — and may, perhaps, to scrutinizing interpreters and observers of this Court’s works.

In sum, in my view, these cases do not meet the necessary hurdles of review and sufficiency and, in any event, do not merit prosecutorial cognizance in the criminal hemisphere.

Chief Judge Kaye and Judges Simons, Smith, Levine and Ciparick concur with Judge Titone; Judge Bellacosa dissents and votes to reverse in a separate opinion.

In People v Norman: Order reversed and case remitted to the Appellate Division, Fourth Department, for further proceedings in accordance with the opinion herein.

In People v King: Order affirmed.

      . It has been suggested that the early treatment of all felonies as capital offenses was responsible, at least in part, for the English courts’ confinement of the crime of larceny to a relatively narrow class of cases (People v Churchill, 47 NY2d 151, 155; ALI, Model Penal Code § 223.1, Commentary, at 128-129 [1980]; 3 Torcia, op. cit., § 354, at 300; but see, People v Olivo, supra, at 315, n 1, citing Fletcher, Metamorphosis of Larceny, 89 Harv L Rev 469, 483-484).

      . This shift in the law-making initiative from the judiciary to the legislative body occurred as part of an over-all trend that arose toward the end of the 18th century as a result of a number of factors, including the expansion of the prestige and power of Parliament and a change in the perceived role of Judges from policy-makers to interpreters of "natural law” (see, ALI, Model Penal Code § 223.1, Commentary, at 128-129 [1980]).

      . The common-law crime of "larceny by trick,” which had been created by the courts at an earlier point in history, was limited to situations in which possession of, but not title to, the property had been obtained by the wrongdoer’s false statements (see, People v Olivo, supra, at 316; 2 LaFave & Scott, op. cit, at 331; 3 Torcía, op. cit, § 355, at 301).


source: Caselaw Access Project

author: Ciparick, J.

license: Public Domain

text:
    [651 NE2d 869, 628 NYS2d 1]
    In the Matter of Neftali D., a Person Alleged to be a Juvenile Delinquent, Appellant.
    Argued March 22, 1995;
    decided May 2, 1995

      POINTS OF COUNSEL

      George E. Reed, Jr., White Plains, for appellant.

      Marilyn J. Slaatten, County Attorney of Westchester County, White Plains (Peter A. Carbone and Carol L. Van Scoyoc of counsel), for Westchester County — Presentment Agency, respondent.
   OPINION OF THE COURT

Ciparick, J.

The issue presented in this juvenile delinquency proceeding is whether a certified, but unverified, police report satisfies the jurisdictional dictates of Family Court Act § 311.2. We conclude that the petition is legally insufficient, mandating a reversal.

A juvenile delinquency petition was filed against appellant charging that on February 6, 1993 he committed acts, which if committed by an adult, would constitute the crimes of assault in the second degree (Penal Law § 120.05 [3]), assault in the third degree (Penal Law § 120.00 [1]) and resisting arrest (Penal Law § 205.30). The police report annexed to the petition relates that the juvenile verbally assaulted two police officers as they were exiting the building in which they had just responded to a report of a burglary. Although the officers proceeded past the juvenile, he continued to taunt them, prompting the officers to order him to cease such behavior. The juvenile responded by challenging the officers to a fight, flailing his arms at them. A scuffle ensued, resulting in the juvenile’s arrest. Both officers were treated for injuries sustained while attempting to subdue the juvenile.

After entering his denials at the initial appearance on February 10, 1993, the juvenile was released into the custody of his mother, pending a fact-finding hearing. Prior to the hearing but 34 days after the initial filing of the petition, the juvenile moved to dismiss alleging that the petition was jurisdictionally defective because it did not contain any non-hearsay supporting depositions as required by the Family Court Act and was erroneously dated the previous year, before the alleged incident even occurred. The relevant supporting document annexed to the petition was the police report that contained the signature of the reporting officer and the signature of another individual, apparently a police sergeant, who signed in a box marked "certified by.”

Family Court denied the motion, finding the supporting deposition, i.e., the police report, sufficient and in compliance with CPL 100.30 (1) (b). The court indicated it looked to CPL 100.30 (1) (b) for interpretive assistance in construing Family Court Act §§311.2 and 311.3, even though neither of these provisions specifically references the CPL. (See, Family Ct Act § 303.1 [1].) Family Court further held that the incorrect date recited on the face of the petition was an insignificant, nonprejudicial error capable of correction by amendment, which it directed to reflect the proper date, and that the juvenile waived any objection to this defect by failing to timely file his motion.

Subsequent to a fact-finding hearing at which the two police officers testified, Family Court adjudged the juvenile a delinquent and placed him with the Division for Youth for 18 months. Family Court stated that the juvenile exhibited "an escalating pattern of dangerous delinquent behavior, marked by multiple arrests for a variety of crimes which, if committed by an adult, would constitute these crimes together with a [drug] problem.”

In a unanimous decision, the Appellate Division affirmed, ruling that the petition was sufficient on its face and properly supported by the nonhearsay allegations in the police report, signed by the officer-victim and certified by a police sergeant (see, Matter of Neftali D., 204 AD2d 319). The Appellate Division noted that at the time the motion to dismiss was made, the fact-finding stage of the proceeding had commenced and "there was no longer a pressing need for an accusatory instrument that complied with Family Court Act § 311.2 (3) (see, Matter of Edward B., 80 NY2d 458, 464; Matter of David T., 75 NY2d 927, 929)” (id., at 319). We granted leave, and now reverse the order of the Appellate Division and dismiss the petition. Compliance with the dictates of Family Court Act § 311.2 (3) is a formal prerequisite to a juvenile delinquency proceeding in the first instance and a condition precedent to a fact-finding hearing. Therefore, the unsworn police report attached to the instant petition was legally insufficient, depriving the court of a jurisdictional predicate to entertain the proceeding.

The sufficiency requirements set forth in Family Court Act § 311.2 are not simply technical pleading requirements but are designed to ensure substantive due process protection to an alleged juvenile delinquent, who can be arrested and deprived of liberty based on the petition. Like a criminal information, the juvenile delinquency petition is the sole instrument for the commencement, prosecution and adjudication of the juvenile delinquency proceeding and, therefore, must comport with the statutory jurisdictional requisites of the Family Court Act (see, Matter of Jahron S., 79 NY2d 632, 636; Matter of Detrece H., 78 NY2d 107, 110).

Family Court Act § 311.2 measures the sufficiency of a petition by the sum of its two parts: the verified petition (see, Family Ct Act § 311.1; Matter of Jahron S., 79 NY2d, at 636, supra; CPLR 3020, 3021) and any supporting depositions filed with the petition. We now determine that the nonhearsay allegations contained in the supporting depositions of the petition must be sworn to satisfy the facial sufficiency requirements of the Family Court Act.

Family Court Act § 303.1 (2) contemplates reference to judicial interpretations of relevant provisions of the criminal procedure law where "such interpretations may assist the court in interpreting similar provisions of [the Family Court Act].” In Matter of Jahron S., we construed the sufficiency of a petition that did not contain a laboratory report identifying the controlled substance the juvenile was charged with criminally possessing, with reference to the parallel CPL provision even though there was no specific statutory direction to do so (see, Matter of Jahron S., 79 NY2d, at 638, supra; see also, Family Ct Act § 303.1 [1]). There, we determined that CPL 100.20, which defines and identifies the form and content of supporting depositions filed with a criminal information, simplified information, misdemeanor complaint or felony complaint, was instructive for evaluating the substance of a Family Court petition because the supporting deposition serves the same function — supplementing the factual allegations of the petition — in both proceedings (see, Matter of Jahron S., 79 NY2d, at 638, supra).

In this case, we find CPL 100.30 (1) (b) instructive with regard to verification of supporting depositions accompanying juvenile delinquency petitions. In pertinent part, CPL 100.30 (1) (b) provides that a supporting deposition may properly be verified when it is "sworn to before a desk officer in charge at a police station or police headquarters or any of his superior officers” (see also, CPL 100.15 [specifying verification requirements for certain accusatory instruments]). A verification attesting to the truth of the contents of a document on penalty of perjury is of the same effect as a testimonial oath, which at once alerts a witness to the moral duty to testify truthfully and establishes a legal basis for a perjury prosecution (see, People v Parks, 41 NY2d 36, 45; Matter of Brown v Ristich, 36 NY2d 183, 189). This verification procedure is intended to assure a measure of reliability regarding the contents of the petition.

A sworn recital that the factual allegations are accurate is particularly significant in the context of a delinquency petition not only because it is the sole accusatory instrument used to prosecute the juvenile but, also because there is no independent prior review of the evidence by a Grand Jury-like body (see, Matter of Edward B., 80 NY2d 458, 464-465; People v Alejandro, 70 NY2d 133, 137-138). In this regard, we have applied a stringent test when construing challenges to the facial sufficiency of a juvenile delinquency petition to assure that there is a valid and documented basis for subjecting the juvenile to prosecution (see, Matter of Rodney J., 83 NY2d 503; Matter of Edward B., 80 NY2d 458, supra; Matter of Jahron S., 79 NY2d 632, supra; Matter of Detrece H., 78 NY2d 107, supra; Matter of David T., 75 NY2d 927).

Here, the certification signature contained in the police report filed in support of the petition bears none of the attributes of a duly sworn testament (see, Matter of Rodney J., 83 NY2d, at 507, supra). Indeed, not even the title or authority of the individual who certified the report is provided next to the signature, which itself is illegible. In Matter of Rodney J., we determined that the delinquency petition and its supporting documents were jurisdictionally defective because they failed to contain a nonhearsay allegation of one of the elements of the crime charged against the juvenile. There, the certified but unverified ballistics report annexed to the delinquency petition was insufficient because the person who certified it did not attest to any personal knowledge which would have established the nonhearsay nature of the document. Similarly, the facial insufficiency of the instant police report, which was intended to comprise the nonhearsay allegations of a supporting deposition that is required to be verified, renders the petition jurisdictionally defective, subjecting it to dismissal (see, Matter of Detrece H., 78 NY2d, at 109-110, supra; Matter of David T., 75 NY2d, at 929, supra).

That this proceeding was about to enter the fact-finding stage at the time appellant moved to dismiss is not an impedíment to dismissal since a viable, facially sufficient petition is a predicate to the court’s jurisdiction. The failure to comply with the statutory sufficiency requirements is a nonwaivable jurisdictional defect that can be raised at any stage of the proceeding.

We have considered appellant’s remaining contention and find it devoid of merit.

Accordingly, the order of the Appellate Division should be reversed, without costs, appellant’s motion to dismiss granted and the petition dismissed.

Chief Judge Kaye and Judges Simons, Titone, Bellacosa, Smith and Levine concur.

Order reversed, etc.


text:
    [651 NE2d 872, 628 NYS2d 4]
    In the Matter of George Hanchard, Appellant, v Facilities Development Corporation, Respondent.
    Argued March 28, 1995;
    decided May 4, 1995

      POINTS OF COUNSEL

      Steven U. Teitelbaum, Albany, for appellant.

      Dennis C. Vacco, Attorney-General, Albany (John McConnell, Jerry Boone and Peter H. Schiff of counsel), for respondent.
   OPINION OF THE COURT

Titone, J.

In this CPLR article 78 proceeding, petitioner claims that his termination from employment was arbitrary and capricious because respondent failed to follow its own pretermination procedures established in its Employee Handbook. Because respondent has substantially complied with its stated policies, and any departure therefrom is attributable to petitioner’s own failure to cooperate, we affirm the Appellate Division’s order dismissing the petition.

Petitioner George Hanchard, a licensed architect, began his employment with respondent Facilities Development Corporation on September 8, 1982 as an architect holding the title of Development Administrator II. Petitioner was terminated from that position on June 28, 1991. At the time of his termination, petitioner was 57 years old. Petitioner was notified of the termination orally on June 14, 1991, and by letter dated June 13, 1991, which stated: "[tjhis is to notify you that you are being charged with being materially deficient in your work as a result of recurring performance problems.” The letter proceeded to list the areas of deficiency charged against petitioner.

Petitioner instituted this article 78 proceeding to set aside his termination as arbitrary and capricious and for reinstatement and back pay, alleging that respondent failed to follow internal pretermination procedures as outlined in its Employee Handbook and supplements thereto. Specifically, petitioner claimed that respondent failed to give him an opportunity to respond to the charges against him and to provide him with a hearing, which, under company policy, is to be afforded prior to the discipline of "covered employees” such as petitioner who have held full-time employment with respondent for five years or more. Respondent sought dismissal of the petition on the ground, among others, that petitioner failed to exhaust administrative remedies before seeking judicial review and thereby waived his claims. Respondent also claimed that because petitioner was an at-will employee, he could be terminated at any time.

Supreme Court rejected the "exhaustion of administrative remedies” and "waiver” arguments advanced by respondent as misplaced. The court concluded that respondent terminated petitioner without affording him the disciplinary process listed in the Employee Handbook. The court rejected the contention that petitioner was required to pursue further administrative remedies, finding that respondent’s conduct would have rendered such attempts futile. Thus, the court held that respondent’s action in terminating petitioner was arbitrary and capricious, and granted the petition by setting aside the termination and reinstating petitioner with back pay and other incidental benefits.

A divided Appellate Division reversed and dismissed the petition, holding that respondent substantially followed the method of employee performance review outlined in its various policy statements. Specifically, the Court found that respondent’s supervisors attempted to notify petitioner of his deficiencies and to discuss petitioner’s performance with him, but petitioner refused to participate in any constructive performance evaluations. The Court also concluded that petitioner failed to pursue available administrative remedies before seeking judicial relief, and that such efforts would not have been futile.

Two Justices in dissent noted that they did not believe that petitioner was entitled to a hearing pursuant to the 1989 supplemental discipline policies under the circumstances. However, the dissent concluded that, in light of respondent’s claim that petitioner was not entitled to a hearing under the 1987 policies which governed and were followed, respondent could not now benefit by taking the inconsistent position that petitioner failed to exhaust administrative remedies available under the Part II procedures. Citing respondent’s insistence that the 1987 procedures applied, the dissent concluded that petitioner’s attempts to exhaust administrative remedies would have been futile. Petitioner’s appeal to this Court as of right is predicated on the two-Justice dissent at the Appellate Division (see, CPLR 5601 [a]).

Absent an express agreement limiting its duration, an employment relationship is generally presumed to be a hiring at-will, terminable at any time by either party (Sabetay v Sterling Drug, 69 NY2d 329, 333). However, an employer may be bound by express statements in its policy manual limiting its otherwise unfettered right to discharge its employees (see, Weiner v McGraw-Hill, Inc., 57 NY2d 458). A disciplined or terminated employee may seek article 78 review to determine whether the employer contravened any of its own rules or regulations in taking that disciplinary action (see, Matter of Mitchell v Dowdell, 172 AD2d 1032).

The parties here, in effect, agree that respondent did not reserve the right to discharge "covered” employees at any time without cause. The parties also do not dispute that respondent expressly limited its right to discharge members of that group by establishing a mandatory pretermination process in its Employee Handbook and supplements. The primary question facing this Court is whether respondent substantially abided by its own policies in terminating petitioner’s employment.

Our analysis in this case necessarily begins with a review of respondent’s internal disciplinary policies and procedures. In 1987, respondent issued an Employee Handbook containing disciplinary procedures to be followed in the event of an employee’s problematic performance evaluation. Respondent’s stated policy is to assist troubled employees to improve work performance rather than terminate them, where possible. To meet that goal, the handbook sets forth a progressive disciplinary plan, consisting largely of counseling techniques. First, supervisors faced with a problem employee are instructed to hold an informal discussion with the employee and indicate areas needing improvement. The supervisor is advised to keep his or her own supervisor apprised of the employee’s progress. If performance does not improve during the informal stage, more formal steps may be implemented. These may include, where appropriate, counseling with respondent’s Executive Director, legal counsel, or the Affirmative Action Officer. The employee’s supervisor is directed to prepare a memorandum for the Human Resources Manager explaining the problem areas, and a work plan to measure and guide improvement. The employee may also be placed on probation for a 30-day period, and appropriate action, including termination, may be taken, depending on the degree — or lack — of improvement shown. The handbook provisions permit the employee to submit documentation during any of the aforementioned stages, but do not provide for a pretermination hearing or other recourse for an employee who fails to cooperate with the progressive counseling program.

In December of 1988, respondent issued the "Part II Progressive Disciplinary Procedures” which supplement the 1987 Employee Handbook. These policies were again supplemented in 1989. The provisions cumulatively provide that an employee who has completed five years of full-time service with the corporation "shall be designated a 'covered individuar * * * [who] shall [not] be removed from his or her position or subjected to any lesser disciplinary action except for misconduct or insubordination.” The policies establish that while noncovered employees have no right to a hearing prior to discipline or termination, covered employees "shall be entitled to submit an answer” to charges filed pursuant to the Progressive Disciplinary Procedures, and must request a hearing in writing regarding such allegations within five working days. The policies also provide for an appeal of the hearing determination to the corporation’s board of directors at the disciplined employee’s request.

Importantly, a section entitled "Prerequisite Language” states that the supplemental Progressive Disciplinary Procedures "do not exempt covered status employees from discipline in any case in which the employee has been found to be incompetent or materially deficient in performance or insubordinate so long as the [disciplinary] procedures outlined in the [1987 Employee Handbook] are also being utilized” (emphasis added). Respondent’s position on appeal is that this language means that where an employee is charged with materially deficient work performance, as petitioner here was, the Part II protections are not mandatory — even for a covered employee —if the progressive counseling program put in place in 1987 has been followed. Notwithstanding its construction of the "Prerequisite Language”, respondent claims that it applied the Part II procedures to petitioner’s case as well, given its failure to induce petitioner to cooperate with the progressive discipline counseling program. Even assuming that the use of the term "also” in the Prerequisite Language entitled petitioner to the protections afforded by the 1987 and the Part II procedures as the dissent contends (see, dissenting opn, at 648), we conclude that respondent’s actions are not subject to annulment as arbitrary and capricious because respondent afforded petitioner with the process outlined by both sets of policy statements.

Early performance evaluations of petitioner’s work unquestionably reveal that he was a productive member of respondent’s staff and positively contributed to the organization. However, beginning in June of 1987, petitioner’s evaluations began to decline. At that time he was issued a "needs improvement” rating on a performance evaluation prepared by his supervisor. In accordance with respondent’s company policy, the Human Resources Manager reviewed that rating and determined that it was substantiated. Subsequent memoranda drafted by several of petitioner’s supervisors reveal that his projects were largely behind schedule, that he became disruptive, exhibited an insubordinate attitude with superiors, and alienated clients and co-workers.

Significant documentation placed in petitioner’s personnel file by his supervisors attests to the attempts at counseling which petitioner consistently rebuffed. For example, petitioner refused to discuss his performance evaluations with at least two of his supervisors unless they first answered his questions in writing — an unorthodox procedure. When one supervisor refused to proceed in that manner, petitioner responded: "In that case you can go to hell.” The record also reveals that in May of 1991, petitioner refused to accept a copy of his performance evaluation and declined to meet with superiors to discuss it. Indeed, record evidence makes it abundantly clear that petitioner’s effective refusal to cooperate with supervisors who were evaluating his performance rendered further attempts by respondent to resolve petitioner’s performance problems through counseling unproductive and futile. In compliance with the 1987 disciplinary procedures, prior to issuing the letter charging petitioner with materially deficient performance, the Human Resources Manager and the Affirmative Action Officer reviewed and investigated the charges against petitioner. Respondent’s Executive Director accepted the charges and the proposed penalty of termination after consulting with respondent’s counsel. Petitioner did not submit his own documentation at any point along the continuum or in any way challenge or respond to the charges lodged in the letter advising him of his material deficiency. Accordingly, we conclude that respondent substantially conducted all of the evaluative steps delineated in the 1987 policies, and any departure therefrom was due to petitioner’s failure to cooperate in the counseling program with his supervisors.

Respondent additionally complied with its Part II procedures by issuing a charging instrument against petitioner which contained the proposed penalty of termination. The fact that the charging letter represented unequivocally that petitioner’s continued performance problems required termination as the appropriate discipline did not, and could not, "functionally and formally wipe[ ] out Hanchard’s right to a hearing” as the dissent contends (dissenting opn, at 647). Assuming that petitioner was entitled to a disciplinary hearing pursuant to those provisions, under respondent’s policy it is the exclusive responsibility of the employee to request that relief. The employment manual does not require the employer to offer a hearing to the disciplined employee — even in the case of a member of the covered class. Petitioner does not deny receiving copies of the Part II procedures, and thus cannot claim that he was deprived of notice that this administrative remedy was available at his request. In light of the fact that petitioner never sought any relief from respondent, and indeed was the party responsible for frustrating any meaningful counseling through the 1987 progressive disciplinary program, there is no basis to conclude on this record that petitioner’s attempts to cooperate with his employer or to seek administrative review of his work performance or the determination to discharge him would have been rebuffed (cf., Matter of Amsterdam, Nursing Home Corp. v Commissioner of N. Y. State Dept. of Health, 192 AD2d 945, 947).

We have reviewed petitioner’s remaining contentions and conclude that they lack merit.

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

Bellacosa, J.

(dissenting). We respectfully dissent and vote to reverse and reinstate the Supreme Court judgment granting the petition.

Petitioner Hanchard, a licensed architect, was employed as a Development Administrator from 1982 until his termination in 1991 by the Facilities Development Corporation (FDC), a New York State public benefit corporation. In 1987, following a number of favorable review evaluations, Hanchard received a "needs improvement” evaluation for the first time. He received further unfavorable work performance evaluations in 1988 and 1989. Upon receipt of his job evaluation for 1989, Hanchard refused to discuss the matter with his supervisor.

Twice in early 1991, Hanchard’s supervisor sent various reports to FDC’s Human Resources Manager, the Affirmative Action Officer and the Deputy Executive Director, indicating the problems with Hanchard’s work and attitude. Hanchard was notified of the existence of these reports, but refused to accept or discuss the reports. On May 15, 1991, Hanchard’s supervisor prepared a memorandum for her supervisor detailing Hanchard’s work performance and concluded that he was performing unsatisfactorily. She recommended Hanchard’s "immediate termination,” adding that his two-week notice be served as vacation to avoid office disruption by his presence at work. The report was signed and approved by several superiors.

On June 13, 1991, the Human Resources Manager drafted a termination letter charging Hanchard with being "materially deficient in [his] work” and informing him that his employment was being terminated effective June 28, 1991. On June 14, at the close of business, Hanchard was orally notified of the contents of the termination letter and was instructed that his services were no longer desired. He was directed to immediately vacate the premises and informed that he must schedule an appointment to retrieve his personal belongings. Because he refused to accept the termination letter, it was ultimately mailed to his home.

Hanchard promptly commenced this CPLR article 78 proceeding to set aside the determination firing him. He sought reinstatement with back pay and other incidental benefits. Supreme Court granted the petition, finding that Hanchard was a "covered employee” as set forth in the Employee Handbook, and that he was terminated in violation of the employer’s rules and policies "as outlined in the Employee Handbook”. The court also rejected FDC’s assertion that Hanchard had failed to exhaust all administrative remedies by failing to request a hearing. The Appellate Division, by a vote of 3 to 2, reversed and dismissed the petition.

The dispositive focus given to this appeal is "whether respondent substantially abided by its own policies in terminating petitioner’s employment.” (Majority opn, at 642.) The majority additionally or alternatively concludes "that respondent’s actions are not subject to annulment as arbitrary and capricious” (majority opn, at 643).

We respectfully suggest that the dispositive framework is incomplete and fails to take account of the termination procedures that the FDC avoided or evaded in this case. The complete assessment requires examination as to whether the termination procedures actually executed in discharging Hanchard fell materially short of the express limitations and employee protections contained in the written Employee Handbook (see, e.g., Murphy v American Home Prods. Corp., 58 NY2d 293). That is the full issue, in our view.

According to the "Part II Progressive Disciplinary Procedures” contained in FDC’s Employee Handbook, an employee with five years of full-time services is designated a "covered individual”. Hanchard, who worked for FDC for nine years, is unquestionably a "covered individual”. He was thus entitled, at least, to "be advised in writing” of the charges, together with notice of "the penalty the corporation proposes to impose” (emphasis added). The disciplinary procedure further grants a covered, charged employee the opportunity "to submit an answer to such allegations.” The employee has the option to accept the discipline proposed, by writing the word "accepted” on the written charge, dated and signed, or to request a hearing to challenge the charges. If the manual-prescribed hearing is invoked and the employee is then found guilty of the charges, the employee also may appeal the decision to the board of directors.

Not one of those protocols or protections was allowed by the employer in this case. FDC compressed the entire transaction into a one-step event: notice of charges, act of firing and expulsion from the employment premises. The termination notification and expulsion cut off any realistic opportunity for Hanchard to respond to the charges or to the proposed discipline. Specifically, the letter declared that "[t]he gravity of these matters as well as the number of projects where you have exhibited continual performance problems * * * require the termination of your employment effective June 28, 1991.” The letter added that FDC was not in need of Hanchard’s services during his two vacation weeks and functionally fired him on the spot that afternoon in one fell swoop. He was not notified of charges and the "propose[d]” discipline, as required by the progressive disciplinary procedures. Moreover, rather than being simply a charging letter, as the majority has characterized it, the letter functionally and formally wiped out Hanchard’s right to a hearing to challenge any charges and separated him once and for all from his job and the employment site. The Handbook protections and factual circumstances of this case provide no reasonable basis to conclude that FDC came anywhere near compliance with its own written disciplinary procedures.

A word is also necessary on the proposition tendered to exempt FDC from applying the Handbook’s protections to Hanchard at all. The introductory provision of the "Part II Progressive Disciplinary Procedures,” entitled "Prerequisite Language,” states that the procedures "applying to 'covered individuals’ do not exempt covered status employees from discipline in any case in which the employee has been found to be incompetent or materially deficient in performance * * * so long as the procedures outlined in [respondent’s] Disciplinary Procedures dated June 4, 1987, are also being utilized” (majority opn, at 643 [emphasis ours]).

The argument advanced by FDC, that the 1988 and 1989 disciplinary procedures, which entitle a covered employee to prior notice and a hearing before termination, are not applicable to covered employees found to be "materially deficient in performance,” does not withstand analysis. The proper meaning of this provision is that FDC may discipline a covered employee for materially deficient performance only when it has followed both the progressive disciplinary procedures outlined in the 1987 Employee Handbook and the progressive disciplinary procedures contained in the 1988 and 1989 Handbook amendments. Thus, a covered employee, like Hanchard, internally charged with materially deficient performance, is entitled to two distinct disciplinary protocols upon being given notice of disciplinary charges — counseling under the 1987 procedures and notice with a right to a manual-prescribed hearing under the 1988 and 1989 covenants — before discipline can be imposed. FDC failed in all respects, and Supreme Court’s judgment granting Hanchard’s petition should thus be reinstated.

The employer’s June 13 "firing letter” and coordinated actions associated with Hanchard’s expulsion from the employment premises fell materially short of FDC’s own rules of procedure. Invocation of rights by this already fired employee was not only futile at that point, but entirely pointless and frustrated by the fully executed firing. The Handbook’s protections, in word and function, temporally pertain to prefiring circumstances, not postfiring reinstatement. FDC acted definitively to insure that the firing in this case was already a formal fait accompli before Hanchard could do anything but depart.

Chief Judge Kaye and Judges Simons and Levine concur with Judge Titone; Judge Bellacosa dissents and votes to reverse in a separate opinion in which Judges Smith and Ciparick concur.

Order affirmed, with costs.


author: Chief Judge Kaye.

text:
    [651 NE2d 878, 628 NYS2d 10]
    In the Matter of Maryann Cassano, Respondent, v Dominick Cassano, Appellant.
    Argued March 29, 1995;
    decided May 9, 1995

      POINTS OF COUNSEL

      Schapiro & Reich, Lindenhurst (Perry S. Reich of counsel), for appellant.

      Dikman, Dikman & Botter, Jamaica (Michael Dikman and Donna Dubinsky of counsel), for respondent.
   OPINION OF THE COURT

Chief Judge Kaye.

The focus of this appeal is the Child Support Standards Act (Family Ct Act § 413; Domestic Relations Law § 240), which includes a numeric formula for calculating the award of child support, prescribing criteria as to combined parental income under $80,000 and criteria as to income above that amount. We are asked to review an award determined by application of the statutory formula to combined parental income exceeding $80,000. We conclude that the award was proper and affirm the Appellate Division order so holding.

The parties here were divorced in 1986, with two children, one of whom is now emancipated. Plaintiff mother was awarded custody of the children and defendant father was ordered to pay $125 per week in child support. In 1989 plaintiff petitioned for an upward modification of the support award for the nonemancipated child pursuant to the newly enacted child support statute, and defendant cross-petitioned for a downward modification.

After taking evidence in a two-day hearing relating to the family’s income and expenses, the Hearing Examiner found a substantial increase in the parties’ financial circumstances warranting increased child support. On combined parental income of $99,944 (64.4% of it attributable to the father), the Hearing Examiner ordered defendant to pay $218 per week. That amount was determined by multiplying the parents’ total income by the statutory percentage (17%) and then allocating 64.4% of that amount to the father. The Hearing Examiner further ordered defendant to pay his pro rata share of the child’s private school costs and unreimbursed medical expenses.

Before Family Court, the father contended that the Hearing Examiner erred in applying the statutory percentage to income over $80,000 without setting forth reasons for that particular award. Family Court concluded that the statute permitted that and, absent good cause, refused to interfere with the Hearing Examiner’s exercise of discretion to apply the percentage. The Appellate Division agreed with the father that Family Court was required to state reasons for the award of child support on combined parental income over $80,000 but found that requirement satisfied by the Hearing Examiner’s in-depth consideration of the parties’ circumstances. The Appellate Division additionally affirmed the award of unreimbursed medical expenses. We now affirm.

The Child Support Standards Act, effective September 15, 1989, replaced a needs-based discretionary system with a precisely articulated, three-step method for determining child support. Enactment of this statute after long efforts signalled a new era in calculating child support awards (see generally, Reichler and Lefcourt, The New Child Support Standards Act, NY St BJ 36 [Feb. 1990]; Note, The Child Support Standards Act and the New York Judiciary: Fortifying the 17 Percent Solution, 56 Brook L Rev 1299).

The Act had among its objectives the assurance that both parents would contribute to the support of the children, and that the children would not "unfairly bear the economic burden of parental separation” (Governor’s Program Bill Mem, Bill Jacket, L 1989, ch 567, at 1). Emphasis was to shift "from a balancing of the expressed needs of the child and the income available to the parents after expenses to the total income available to the parents and the standard of living that should be shared with the child” (Reichler and Lefcourt, NY St BJ, op. cit., at 44; see also, Governor’s Approval Mem, 1989 NY Legis Ann, at 250 ["children will share in the economic status of both their parents”]).

Further, the Legislature perceived that the existing system produced inconsistent, unpredictable and often seemingly arbitrary results, which undermined the parties’ confidence in the fairness of the process (see, 1989 NY Legis Ann, at 248, citing Rep of NY Commn on Child Support, at 69). Consequently, the new statute sought to create greater uniformity, predictability and equity in fixing child support awards, while at the same time maintaining the degree of judicial discretion necessary to address unique circumstances (Letter of Assembly Sponsor Helene E. Weinstein to Governor Mario Cuomo, June 30, 1989, Bill Jacket, L 1989, ch 567; Governor’s Program Bill Mem, Bill Jacket, L 1989, ch 567, at 5).

As the statute directs, step one of the three-step method is the court’s calculation of "combined parental income” in accordance with Family Court Act § 413 (1) (b) (4)-(5) (see, Domestic Relations Law § 240 for analogous provisions). Second, the court multiplies that figure, up to $80,000, by a specified percentage based upon the number of children in the household — 17% for one child — and then allocates that amount between the parents according to their share of the total income (Family Ct Act § 413 [1] [b] [3]; [c]).

Third, where combined parental income exceeds $80,000— the situation at issue in this case — the statute provides that "the court shall determine the amount of child support for the amount of the combined parental income in excess of such dollar amount through consideration of the factors set forth in paragraph (f) of this subdivision and/or the child support percentage” (Family Ct Act § 413 [1] [c] [3]). The "paragraph (f)” factors include the financial resources of the parents and child, the health of the child and any special needs, the standard of living the child would have had if the marriage had not ended, tax consequences, nonmonetary contributions of the parents toward the child, the educational needs of the parents, the disparity in the parents’ incomes, the needs of other nonparty children receiving support from one of the parents, extraordinary expenses incurred in exercising visitation and any other factors the court determines are relevant (Family Ct Act § 413 [1] [f]).

Whenever the basic child support obligation derived by application of the formula would be "unjust or inappropriate,” the court must consider the "paragraph (f)” factors. That is so whether parental income is above or below $80,000 (Family Ct Act § 413 [1] [b] [1]; [c] [2], [3]). If the formula is rejected, the statute directs that the court "set forth, in a written order, the factors it considered” — an unbending requirement that cannot be waived by either party or counsel (Family Ct Act §413 [1] [g]).

The question now before us is whether the court must articulate a reason for its award of child support on parental income exceeding $80,000 when it chooses simply to apply the statutory percentage. Defendant urges not only that there must be a stated reason but also that the stated reason must relate to the needs of the child, much as under prior law.

That question has generated uncertainty. Some courts have calculated child support awards simply by applying the statutory percentages to parental income over $80,000 (see, e.g., De Bernardo v De Bernardo, 180 AD2d 500, 502-503; Rosen v Rosen, NYU, Oct. 9, 1990, at 31, col 5; Brown v Brown, NYU, July 16, 1990, at 30, col 2; Steel v Steel, 152 Misc 2d 880, 884). Others have rejected a "blind application” of the child support percentage to income over $80,000, requiring express findings as to the child’s actual needs (Harmon v Harmon, 173 AD2d 98, 111 ["a child is not a partner in the marital relationship, entitled to a 'piece of the action’ ”]; see also, Chasin v Chasin, 182 AD2d 862, 863; Colley v Colley, 200 AD2d 839, 841; Panossian v Panossian, 201 AD2d 983; Slankard v Chahinian, 204 AD2d 529, 531 [all reversing trial court as to child support]). The case law has even been read to limit the application of the percentages to income below $80,000 (see, Florescue, Relocation of Custodial Parent, NYU, June 14, 1993, at 4, col 6).

Obviously, determining what the Child Support Standards Act requires begins with the statute itself.

Where combined parental income is less than $80,000 the statute plainly directs that the court apply the formula percentages (Family Ct Act § 413 [1] [c] [2]) — thus implementing the objectives of uniformity and predictability. Only where that amount would be "unjust or inappropriate” does the Act require the court to set forth reasons.

As to combined parental income over $80,000, the statute explicitly affords an option: the court may apply the factors set forth in section 413 (1) (f) "and/or the child support percentage” (Family Ct Act § 413 [1] [c] [3]; see also, 1 Tippins, New York Matrimonial Law and Practice § 5A:20; Reichler and Lefcourt, NY St BJ, op. cit, at 40). Pertinent as well to income above $80,000 is the provision that the court may disregard the formula if "unjust or inappropriate” but in that event, must give its reasons in a formal written order, which cannot be waived by either party (Family Ct Act § 413 [1] [g]).

The parties’ arguments for and against requiring an elaboration of reasons where the statutory percentage is applied to income exceeding $80,000 center on the term "and/or” — a term that has long irked grammarians (see, e.g., Fowler, A Dictionary of Modern English Usage 29 [2d ed]). In that legislative purpose, not linguistic perfection, guides our determination, we must seek to give meaning to the term "and/or,” in the context of the statute’s over-all objective. Defendant’s insistence on an elaboration of needs-based reasons reads the word "or” out of the section and rolls back the calendar to pre-1989 law. In our view, "and/or” should be read to afford courts the discretion to apply the "paragraph (f)” factors, or to apply the statutory percentages, or to apply both in fixing the basic child support obligation on parental income over $80,000. That interpretation is consistent with the language of the section and with the objectives of the Child Support Standards Act.

That conclusion does not, however, end our analysis. Given that the statute explicitly vests discretion in the court and that the exercise of discretion is subject to review for abuse, some record articulation of the reasons for the court’s choice to apply the percentage is necessary to facilitate that review (see, CPLR 4213 [b]; Siegel, Practice Commentaries, McKinney’s Cons Laws of NY, Book 7B, CPLR 4213:2, at 336 [meaningful review is futile if court does not state facts upon which its decision rests]; see also, 4 Weinstein-Korn-Miller, NY Civ Prac |f 4213.07 [court must provide the ultimate facts which support its conclusions of law "in order to enlighten the parties and to make more effective the review of judgments on appeal”]). The stated basis for an exercise of discretion to apply the formula to income over $80,000 should, in sum and substance, reflect both that the court has carefully considered the parties’ circumstances and that it has found no reason why there should be a departure from the prescribed percentage.

In the present case, the Hearing Examiner conducted a two-day inquiry into the parties’ circumstances and set forth her findings in detail. The Appellate Division was satisfied, as are we, that there was sufficient record indication that no extraordinary circumstances were present, and application of the statutory 17% to the $19,214 income above $80,000 was therefore justified and not an abuse of discretion.

Finally, we affirm as well the Appellate Division’s conclusion that the father is required to pay his pro rata share of the child’s unreimbursed medical expenses. The statute specifies that the court "shall prorate each parent’s share of future reasonable health care expenses of the child not covered by insurance” (Family Ct Act § 413 [1] [c] [5]). Defendant’s insistence that this order constitutes an impermissible open-ended obligation, as the Second Department earlier held (see, e.g., Chirk v Chirk, 170 AD2d 641) is meritless in light of the Act.

Accordingly, the order of the Appellate Division, insofar as appealed from, should be affirmed, with costs.

Judges Simons, Titone, Bellacosa, Smith, Levine and Ciparick concur.

Order, insofar as appealed from, affirmed, with costs.

      . The propriety of the award of private school costs was before Family Court and the Appellate Division, but is not before us on this appeal.

      . The theory underlying the percentage-of-parental-income approach (rather than allocating the cost of providing for the child’s needs) is that expenses of children tend to vary according to parents’ income (see, 2 New York Practice Guide, Domestic Relations § 31.03 [3] [a] [ii] [Sovronsky & Jorgensen ed 1995]). The actual percentages can be traced to a study of the typical portion of household income generally devoted to the child (see, Note, 56 Brook L Rev, op. cit., at 1316-1319, citing Van der Gaag, On Measuring the Costs of Children, in III Child Support: Technical Papers [Institute for Research on Poverty, Special Rep Series No. SR32C]).