author: Froessel, J.

text:
    In the Matter of Barton Trucking Corp., Respondent-Appellant, against Bernard J. O’Connell, as Commissioner of Licenses of the City of New York, Appellant-Respondent.
    Argued November 18, 1959;
    decided December 30, 1959.

      Charles H. Tenney, Corporation Counsel (Edward A. Doberman and Seymour B. Quel of counsel), for appellant-respondent.
    I. Power to grant a license implies power to withhold it for cause, particularly the character or unfitness of the applicant, in the exercise of a reasonable discretion, at least where the licensing statute is a police or regulatory measure. In such a case the ordinary rule requiring statutory delegation to the licensing officer accompanied by guiding standards is impracticable and does not apply. The power to consider character is not legislative but administrative and delegation is unnecessary. The Commissioner’s discretion is not confined to instances in which the use of the license would be illegal or in violation of public policy. The public cart licensing statutes are regulatory in purpose. Their scope is not limited as suggested by the Appellate Division but is broad enough to warrant .the exercise of discretion. (Matter of Marburg v. Cole, 286 N. Y. 202; Matter of Pieone v. Commissioner of Licenses of City of N. Y., 241 N. Y. 157; People ex rel. Schwab v. Grant, 126 N. Y. 473; People v. Ringe, 197 N. Y. 143; Matter of Arroyo v. Moss, 269 App. Div. 824, 295 N. Y. 754; Matter of Dorf v. Fielding, 20 Misc 2d 18; Librizzi v. Plunkett, 126 N. J. L. 17; Matter of Small v. Moss, 279 N. Y. 288.) II. Subdivision a of section 773 of the New York City Charter endows the Commissioner of Licenses with broad discretion in the selection of the criteria for the granting or refusal of a license, in inverse proportion to the generality of the licensing statute. (People ex rel. Schwab v. Grant, 126 N. Y. 473; Matter of Larkin Co. v. Schwab, 242 N. Y. 330; Matter of Baldi v. Gilchrist, 204 App. Div. 425; Matter of Barresi v. Biggs, 203 App. Div. 2; Matter of Dr. Bloom Dentist, Inc., v. Cruise, 259 N. Y. 358; Matter of Rosenberg v. Moss, 266 App. Div. 845, 296 N. Y. 595.) III. The license was properly denied upon the ground that a principal stockholder, officer and director of petitioner was unfit because of his criminal record. That determination was not arbitrary or capricious, especially where the criminal activities occurred in the very industry in which the corporation would, if licensed, conduct its business. (Matter of Schachne v. McCaffrey, 1 Misc 2d 748.) IV. The statute is not mandatory so as to deprive the Commissioner of discretion because it contains a provision that, upon payment of the license fee, he “ shall ” issue a public cart license. Neither is it a revenue measure so that a license must be issued upon tender of the prescribed fees. (Matter of New York Ambassador v. Board of Standards & Appeals, 281 App. Div. 342, 305 N. Y. 791; Matter of Moore v. Gallup, 267 App. Div. 64, 293 N. Y. 846; People ex rel. Schwab v. Grant, 126 N. Y. 473; People v. Horton Motor Lines, 281 N. Y. 196; Sperling v. Valentine, 176 Misc. 826; City of Buffalo v. Lewis, 192 N. Y. 193.) V. Petitioner could not have been “ exempted ” from the requirements of law. In any event, it was not among those considered to be exempt by the former Commissioner. (Marcus v. Village of Mamaroneck, 283 N. Y. 325; People v. Santa Clara Lbr. Co., 213 N. Y. 61.) VI. Petitioner may not escape the requirement of a license on the ground that the regulatory field is occupied by Federal and State legislation, or that it is a private carrier, or that it is engaged in interstate commerce. There is no support in the record for such claims. (People v. Horton Motor Lines, 281 N. Y. 196; People v. Lewis, 295 N. Y. 42; People ex rel. Dady v. Coler, 171 N. Y. 373; Reed v. McConnell, 133 N. Y. 425; Puget Sound Co. v. Tax Comm., 302 U. S. 90; Savage v. Jones, 225 U. S. 501; Sherlock v. Alling, 93 U. S. 99; Pennsylvania R. R. Co. v. Knight, 192 U. S. 21; Interstate Pipe Line Co. v. Stone, 337 U. S. 662; New State Ice Co. v. Liebmann, 285 U. S. 262; Nebbia v. New York, 291 U. S. 502.)

      Asher Marcus and Irving Bick for respondent-appellant.
    I. The provisions of the charter upon which the Commissioner relies for his implied powers have no bearing on the issues in this case. In dealing with petitioner, the Commissioner was limited to the provisions contained in the public cart ordinance. That ordinance neither authorized the Commissioner to make the inquiry he did make nor the one which the Appellate Division has declared he may make. (Romaine v. Sweet, 57 App. Div. 613; Continental Cas. Co. v. United States, 314 U. S. 527; Hollerbach v. United States, 233 U. S. 165; Hunyadi Janos Corp. v. Stoeger, 10 F. 2d 26; World Exhibit Corp. v. City Bank Farmers Trust Corp., 270 App. Div. 654, 296 N. Y. 586; Mitchell v. Mitchell, 170 App. Div. 452; Lehman v. Reiner, 126 Mise. 465; Matter of Savage v. Commissioner of Licenses, 3 A D 2d 717; Matter of Small v. Moss, 277 N. Y. 501; Matter

      of Picone v. Commissioner of Licenses of City of N. Y., 241 N. Y. 157; Matter of Seignious v. Rice, 273 N. Y. 44; Matter of Small v. Moss, 279 N. Y. 288; Matter of Elite Dairy Prods. v. Ten Eyck, 271 N. Y. 488; Matter of Fink v. Cole, 302 N. Y. 216; Matter of Goelet v. Moss, 248 App. Div. 499, 273 N. Y. 503; Matter of Executive Serv. Corp. v. Moss, 256 App. Div. 345; Matter of Brooklyn Parking Corp. v. Cannella, 193 Misc. 811.) II. Furthermore, the investment of any discretion in the Commissioner to deny public cart licenses to petitioner makes the power to exercise such discretion unconstitutional power. (Chicago v. Atchison, T. & S. F. Ry. Co., 357 U. S. 77; Matter of Motor Haulage Co. v. Maltbie, 293 N. Y. 338; Gerhard & Hey v. Cattaraugus Tanning Co., 241 N. Y. 413; People v. Horton Motor Lines, 281 N. Y. 196; United States v. Women’s Sportswear Assn., 336 U. S. 460; Buck v. Kuykendall, 267 U. S. 307; Bush Co. v. Maloy, 267 U. S. 317.) III. Regardless of its status as an interstate carrier, petitioner has an absolute, unqualified and constitutional right to engage in the business for which it was duly incorporated and to use its trucks in the conduct of that business. (Matter of Wignall v. Fletcher, 303 N. Y. 435; Yick Wo v. Hopkins, 118 U. S. 356; New State Ice Co. v. Liebmann, 285 U. S. 262; Matter of Mandell v. Board of Regents, 250 N. Y. 173; People ex rel. Schwab v. Grant, 126 N. Y. 473; Matter of Arroyo v. Moss, 295 N. Y. 754.) IY. There is no merit to the Commissioner’s claim that petitioner was in violation of the public cart ordinance when it applied for the licenses and that on that account alone he possessed implied or administrative power to deny the licenses sought by petitioner. (Matter of Motor Haulage Co. v. Maltbie, 293 N. Y. 338; Gerhard & Hey v. Cattaraugus Tanning Co., 241 N. Y. 413.) Y. This court is bound by the Appellate Division’s finding that the evidence was insufficient to support the Commissioner’s conclusion. In any event, the Commissioner’s conclusion was unreasonable, capricious and un-American. (Matter of Falvey v. Hays, 205 Misc. 546, 285 App. Div. 879, 309 N. Y. 1034; Linehan v. Waterfront Comm., 347 U. S. 439; Schware v. Board of Bar Examiners, 353 U. S. 232; People v. Robinson, 141 App. Div. 656; Matter of Carroll ex rel. Cosby v. Knickerbocker Ice Co., 218 N. Y. 435; Matter of Kate v. Moss, 184 Misc. 133, 269 App. Div. 854.)
   Froessel, J.

Petitioner is a domestic trucking corporation with offices in midtown Manhattan, and its trucking services are carried on in New York City’s garment industry. It was incorporated in 1955, and consists of four persons who are its officers and directors, each of whom owns 25% of the corporate stock. Petitioner employs nine persons, other than its principals, and does a gross annual business of $90,000.

In July, 1957 petitioner filed an application for public cart licenses for its five trucks, pursuant to section B32-93.0 of article 15 (ch. 32) of the Administrative Code of the City of New York, which makes it “ unlawful for any person to operate or cause the operation of any public cart without a license therefor ”, A “public cart” is defined as “every vehicle, either horse-drawn or motor driven, which is kept for hire or used to carry merchandise, household or office furniture or other bulky articles within the city, for pay ” (§ B32-92.0). The annual license fee for a motor-driven public cart is $5 (§ B32-94.0). Section B32-96.0 regulates the rates to be charged by public cartmen and the number of persons to be employed on a particular hauling job. It provides that the rates may be agreed upon in advance, provided the public cartman furnishes his customer with a written memorandum — upon blanks to be furnished by the Department of Licenses — which clearly sets forth the terms of the contract. In the absence of a special agreement, a schedule of controlling rates is provided. The code further limits the number of men to be employed on any one job to four, including the driver, “except when specially agreed upon by the person hiring the public cart ’ ’. A violation of any of the provisions of article 15 is made punishable by a $25 fine, a 30-day jail term, or both (§ B32-96.1).

The licensing of public cartmen and the regulation of their rates is deeply rooted in the Charter of New York City (L. 1897, ch. 378, § 49, subd. 20, re-enacted as L. 1901, ch. 466, § 51, p. 30) and in the ordinances passed in pursuance thereof (see Code of Ordinances, 1914, ch. 7, tit. II, §§ 305-314, pp. 69-71), and antedates the unification in 1897 of the present five boroughs of New York City into one municipality (L. 1854, ch. 384, tit. II, § 13, subd. 4, p. 840; Ferdon v. Cunningham, 20 How. Prac. 154 [1860]; City of Brooklyn v. Breslin, 57 N. Y. 591 [1874]). The present provisions of article 15 of title B of chapter 32 of the code are drawn almost verbatim from a city ordinance passed in 1914 (see Cosby’s Code of Ordinances, 1915, eh. 14, art. 11, pp. 246-248).

The application for the licenses was denied by the Commissioner of Licenses of the City of New York (hereinafter called the Commissioner) on the ground that petitioner was not a fit and proper party to be licensed to operate public carts. The finding of unfitness was based on the fact that petitioner’s treasurer, James Plumeri, had been convicted of extortion in 1937 in connection with garment trucking racketeering and sentenced to 5 to 10 years’ imprisonment, together with the fact “ that the carting intended to be carried on is in the garment center district which has been under investigation with reference to the racketeering that has been alleged to be rampant in that district ’ ’. The act of extortion for which Plumeri was convicted was connected with his activities as business agent of a garment center trucking association. The Commissioner took the position that it was his duty to require that licensees be of good and reputable character to insure the public safety and morals of the public with whom such individuals do business and come in contact by reason thereof ”, and that in refusing to issue the licenses he acted in good faith for the safety and welfare of the general public”.

In sustaining the Commissioner’s determination, Special Term held: Implicit in the requirement of a license, there is not only an authorization but a command to take reasonable steps to see that the applicant is a fit and proper person to engage in the licensed business ”. The court dwelt at length on the infiltration of criminal elements into New York City’s garment industry, and concluded that the Commissioner’s “ refusal of a license to this applicant, far from being capricious and unreasonable, is sound and salutary. * * * It is manifest that the license commissioner has acted with propriety and within his competence; his action must be sustained ’ ’.

In reversing Special Term, the Appellate Division reasoned that any discretionary powers exercised by a licensing official must be delegated by statute, expressly or by clear implication, and must be accompanied by express or implied standards to guide the administrator’s exercise of discretion. The court recognized “ certain special circumstances in which an administrative official charged with the duty of granting licenses may nevertheless deny the license even though delegations and standards of the kind just referred to have not been expressly provided ’ ’, namely, where the license would be used in violation of law, or 11 where the use would patently deny a public policy for which the licensing statute is evidently, from its history or from its face, the implement of execution (Matter of Rosenberg v. Moss, 296 N. Y. 595; People ex rel. Schwab v. Grant, 126 N. Y. 473 * * * However, it felt that “ the statutes applicable to public cartmen suggest licensing only for * * * identification, collection of revenue, and control of the stipulated fees chargeable to the public ” (emphasis supplied), and that the Commissioner had no power to withhold public cart licenses “ on the basis of general character and fitness of the applicant or for other arrogated qualifications ” in the absence of express statutory authority.

Even assuming that the Commissioner did have power to pass upon character and fitness, the court felt that “the evidence before him was utterly insufficient to sustain his conclusion of present unfitness. An old conviction and some old arrests, without more, does not establish unfitness.” It reasoned, however, that the Commissioner “ might have the power ” to withhold the license if petitioner were likely to use it to engage in illegal activities, and hence concluded: “ Because the commissioner may be able, with diligent effort, to establish the fact of recent relevant illegal activity by applicant, and the likelihood of such activity in the future, if it should obtain a license, the proceeding should be remanded to him for appropriate action rather than to direct the granting of a license forthwith.” The Commissioner appeals from “each and every part” of the Appellate Division’s order, whereas petitioner appeals from only that part of the order which remanded the proceedings and failed to direct the Commissioner “ to forthwith issue the public cart licenses ”.

The issue before us on this appeal, as framed by the Appellate Division, is ‘ ‘ whether the Commissioner of Licenses, under the city statutes which apply to him, has the power to consider the character of an applicant for a cartman’s license, and whether, if he has such power, the information adduced supported his determination.” There can be no disputing the general rule that any discretionary powers exercised by an administrative officer must be delegated to him by statute, and that such delegation must be accompanied by standards to guide the exercise of administrative discretion. With respect to licensing officials, however, it is equally well settled that the power to withhold a license for good cause, as well as the standards defining good cause, need not be expressly delegated where, by fair implication, in light of the statutory purpose, such power has been implicitly delegated. As this court noted in People ex rel. Schwab v. Grant (126 N. Y. 473, 481), in construing a provision of the New York City Consolidation Act authorizing the Mayor of New York to grant licenses to auctioneers upon the filing of a bond (L. 1882, ch. 410, ch. Y, § 113, pp. 29-30), “ The * * * act does not, in terms or by fair implication, require the mayor to grant such licenses, but, by necessary implication, confers the power to refuse them when, in his judgment, he thinks the public interest requires it. A power to grant a privilege to one is inconsistent with the possession on the part of another of an absolute right to exercise such privilege.” (Emphasis supplied.) (See, also, People ex rel. Cumisky v. Wurster, 14 App. Div. 556, 561; Matter of Barresi v. Biggs, 203 App. Div. 2, 4-5.)

In addition to the general proposition that power to grant a license necessarily implies power to withhold it for good cause, a further source of discretionary power implicitly delegated to the Commissioner is to be found in the general licensing provisions of the City Charter and the Administrative Code. Section 773 of the charter vests in the Commissioner “ cognizance and control of the granting, issuing, transferring, renewing, revoking, suspending and cancelling of all licenses and permits ”, except insofar as such powers have been placed within the jurisdiction of other officials, and subdivision c of section 773a-7.0 of the Administrative Code authorizes him “in his discretion to take such testimony as may be necessary on which to base official action * * * when investigating any matters pertaining to” the above. Applications to the Commissioner for licenses must be made “in such form and detail as he shall prescribe” (§ 773a-2.0); the term of all licenses is generally limited to one year (§ 773a-3.0); and the Commissioner “is empowered to hear and determine complaints against licensees, and to suspend or revoke any license or permit issued by him ’ ’ (§ 773a-7.0).

In Matter of Rosenberg v. Moss (N. Y. L. J., Aug. 14, 1941, p. 343, col. 7 [Sup. Ct., N. Y. County], affd. 266 App. Div. 845, affd. 296 N. Y. 595) the license statute (Administrative Code, ch. 32, art. 7, § B32-46.0) made it unlawful for the keeper of a public bowling alley to allow persons under 16 years of age to bowl therein, and the moral danger, particularly to children, was strongly emphasized. It was squarely held that, in determining whether to issue a license to a bowling alley, the Commissioner was not limited to the formal requirements for a license specified in the code, to wit, citizenship, filing of a bond, and payment of the license fee, but had implied power, pursuant to the general grant of authority to take “ cognizance and control of the granting * * * of all licenses ”, to consider what effect the granting of the license would have on the public health, safety, or morals of the community. The Commissioner’s exercise of discretion in refusing to license the bowling alley at the premises for which it was sought was upheld, notwithstanding the “ bareness ’ ’ of the provisions of the Administrative Code with respect to bowling alleys.

The real question, then, is not the existence of discretionary power in the Commissioner above and beyond the mechanical requirements for a license specified in the code, but the extent of that discretionary power, i.e., what factors the Commissioner may properly consider in determining whether or not to issue a license. The Commissioner’s exercise of discretion in refusing to grant a license, if not otherwise arbitrary or capricious, may be interfered with by the courts “ only when it is clearly shown that refusal is based solely upon grounds which as matter of law may not control [his] discretion ” (Matter of Larkin Co. v. Schwab, 242 N. Y. 330, 335). Or, stated somewhat differently, ‘ ‘ Before a court may direct that a license shall be issued, it must appear, as matter of law, that no valid ground exists for its denial.” (Matter of Elite Dairy Prods, v. Ten Eyck, 271 N. Y. 488, 493.)

So far as the character and fitness of the proposed licensee is concerned, all the relevant case law in this State expressly or impliedly holds that the licensing official has implicit discretion to pass upon the fitness of the applicant. In the Schwab case (126 N. Y. 473, supra), where the statute did not expressly empower the Mayor to evaluate the character and fitness of an applicant for an auctioneer’s license, as it did with respect to hotel, steamboat and railroad solicitors (L. 1882, ch. 410, ch. V, § 117, p. 30), and petitioner argued that he was entitled to a license as a matter of right upon filing the requisite bond, this court, in holding that the Mayor, in the exercise of discretion, could refuse to issue the license, wrote (126 N. Y., p. 480): “ The plain and obvious purpose of this act was to cure the evil produced by the indiscriminate admission of citizens, o'f whatever character, to pursue the business of auctioneers * # * by providing a limitation upon the number of such persons and subjecting them to a preliminary scrutiny as to their character and qualifications. The limitation upon the duration of the license [one year], and the requirement for an annual renewal of the bond, indicate an intention to bring the qualifications of the applicant under the frequent scrutiny of the mayor in order to prevent any abuses of the privileges of such license. * * * under the practical construction given to the act for nearly forty years by the authorities of the city * * * it was held that the act imposed duties upon the mayor to be performed, as well as powers to be exercised, and, by necessary implication, authorised him to protect the community by a refusal to license persons whose character and qualifications were not satisfactory to him. If this had not been effected, the act would have been inoperative and powerless for any remedial purpose.” (Emphasis supplied.)

In Matter of Picone v. Commissioner of Licenses of City of N. Y. (241 N. Y. 157) an application for a junk boat license had been denied on the grounds that the applicant had no license for a land-based junk shop and that it was desirable to limit the number of junk boat licenses since, among other things, various complaints had been made of thefts committed by licensed junk boats from vessels in the harbor. In reversing the Commissioner’s determination, this court noted (p. 161): “If an applicant for a license can show that he is a fit and proper person to engage in a licensed business under the provisions of the licensing statute the licensing officer may not arbitrarily impose limitations not contained in the statute upon his right to do business” (emphasis supplied), and held (p. 162): “As the commissioner does not deny that petitioner is a fit and proper person to operate a junk boat, it follows that his action in refusing a license to the appellant was, however well intentioned, in a legal sense an abuse of discretion.” (Emphasis supplied.) It should here be noted that the ordinance did not expressly require applicants for junk boat licenses to be of good moral character (Cosby’s Code of Ordinances, 1924, ch. 14, art. 9, pp. 360-362).

In Matter of Arroyo v. Moss (269 App. Div. 824, affd. 295 N. Y. 754) petitioner’s barber license was suspended shortly after it was issued on the grounds that he had failed to disclose three misdemeanor convictions for unlawful possession of policy slips in his application for the license (he disclosed one such conviction), and had failed to appear, as directed, before the Commissioner. The applicable statute prohibited issuance or renewal of a barber’s license to felons, unless otherwise determined by the Commissioner. A rehearing was had, at which petitioner admitted all four convictions, but the Commissioner refused to reinstate the license on the principal ground that his illegal and criminal activities made him an unfit person to be the holder of a barber license, and his determination was upheld by this court.

The Arroyo decision (supra) clearly indicates that the phrase “ fit and proper person” in the Picone case (supra) was not meant to be limited to the specific provisions of the licensing statute, but encompassed the character and fitness of the applicant, as properly evaluated by the Commissioner (see, also, Matter of Larkin Co. v. Schwab, supra, p. 335). The Arroyo decision was unanimously followed in Matter of De Stasio v. Fielding (295 N. Y. 903) which involved similar facts. We reversed the lower courts “ on the authority of Matter of Arroyo v. Moss (295 N. Y. 754) ” (295 N. Y. 904), and sustained the Commissioner’s refusal to renew petitioner’s barber license because of his criminal record (seven convictions for bookmaking). It should be noted that the principal ground for the Commissioner’s refusal to renew Arroyo’s and De Stasio’s barber licenses was not because they had initially failed to disclose most of their convictions (which concealment lead to the initial suspension of licenses), but because of the particular convictions themselves. It would seem to go without saying that had the Commissioner lacked power to pass upon the applicant’s personal fitness, then he would have been equally powerless to withhold licenses for a failure to disclose information relating to personal fitness.

Petitioner seeks to distinguish the Schwab and Arroyo cases (as well as other cases relied upon by the Commissioner) upon the ground that they dealt with the licensing of an individual, whereas the Public Cart Ordinance ‘ ‘ merely concerns itself with the registration of property [i.e., the trucks] rather than the licensing of the individual into a profession or skilled or unusual trade or calling. ’ ’ This is apparently what the Appellate Division had in mind when it spoke of the ‘1 bareness of the statutes with regard to the qualifications of a public cartman ”, and the lack of “ any legislative history which has been made available ”, which might suggest that the purpose of licensing cartmen ‘ ‘ was more than merely to license for purposes of identification, collection of revenue, or control of the licensees’ activities under specific regulations governing their conduct ”.

We find no merit in this argument. In People v. Horton Motor Lines (281 N. Y. 196, 203) this court pointed out that this same Public Cart Ordinance “ is one which attempts to license the occupation of public cartmen. * * * The ordinance in question is not a tax measure, but is a comprehensive scheme to license the calling of public cartmen.” (Emphasis supplied.) As previously noted, the early legislative history of New York City and its boroughs demonstrates that the calling of public cartmen has always been regarded as a vocation not open to all but subject to special license and authority, and it seems apparent that the ordinance in question was designed to license the individual cartmen and to regulate the rates they could charge, in the public interest. In City of Brooklyn v. Breslin (57 N. Y. 591, supra) the 1854 Charter of the City of Brooklyn (L. 1854, ch. 384, tit. II, § 13, subd. 4, p. 840) invested the Common Council with power to regulate the rates chargeable by public cartmen for the transportation of merchandise, and “to prohibit unlicensed persons from acting ” as public cartmen. The Common Council was further empowered to authorize the Mayor to grant licenses to cartmen, and the council thereafter passed an ordinance granting such licensing power to the Mayor. In upholding a penalty assessed against a coal dealer for carting coal without having obtained a license, the Commission of Appeals, in answer to the argument that the ordinance was void “as being ‘in restraint of trade and unreasonable, unjust, restrictive, arbitrary and oppressive ’ ”, held (57 N. Y., p. 596): “ it cannot be said that the ordinance was more than a proper regulation of a particular branch of business for the good order of the city and the protection of the persons and property of its citizens and the advancement of its prosperity ”. (See, also, City of Buffalo v. Hill, 79 App. Div. 402, 406.)

The ordinance involved in the Breslin case expressly provided that applicants for a public cartman license had to be “ of good moral character ” (57 N. Y., p. 594). The ordinance here in question does not expressly require this, as it does not in the case of auctioneers (art. 21), junk dealers — including junk boats — (art. 18), or dealers in secondhand articles (art. 19), among other callings requiring a license. For the foregoing reasons, however, we think such a requirement is implicit in the necessity for a license, particularly in light of the fact that the ordinance regulates rates for the apparent purpose of preventing price gouging and related abuses. It seems clear to us that the Commissioner is not only empowered, but indeed is duty bound, to inquire into the character and personal fitness of the proposed licensee. As the court said in Matter of Dorf v. Fielding (20 Misc 2d 18, 20 [Sup. Ct., N. Y. County]), in answer to the argument that the Commissioner could not inquire into the character of an applicant for a license to deal in secondhand articles, but was limited to the facts of the applicant’s citizenship, the giving of a bond, and the payment of the license fee, ‘ ‘ A Commissioner with no more power and discretion than that would be a useless figurehead, and under such a rule the system of licensing would become, not a protection to the public, as it obviously was designed' to be, but a dangerous delusion and a snare, because it would create the impression that there had been investigation as to the fitness of licensees when, in fact, there had been no such investigation.”

With reference to the standards by which the Commissioner is to be guided, it would be “ difficult or impractical for the Legislature to lay down a definite, comprehensive rule ” by which he could determine an applicant’s character and personal fitness (Matter of Marburg v. Cole, 286 N. Y. 202, 211-212; see, also, Libriszi v. Plunkett, 126 N. J. L. 17; 42 Am. Jur., Public Administrative Law, § 45, p. 345). Where, as here, the Commissioner had made a finding of personal unfitness, the scope of judicial inquiry is limited to the question of whether there is substantial evidence in the record to support his determination, or whether, on the other hand, his action is tantamount to an arbitrary or capricious abuse of discretion.

The license was denied in the instant case because a principal stockholder, officer and director of petitioner was found to be personally unfit. It cannot seriously be doubted, as noted by Special Term, that “ The character and reputation of the officers of the petitioner are decisive elements in the appraisal of the character of the corporation”, since licensing of a corporate applicant necessarily entails consideration of the qualifications of the principals through which the corporation will act. The determination of unfitness was, as noted, based on Plumeri’s conviction for extortion in 1937 “in connection with garment trucking racketeering” and his sentence to 5 to 10 years’ imprisonment. When the nature and locale of this conviction are viewed in the context of the apparent purpose of the licensing statute and the industry in which petitioner seeks to operate its trucks, it cannot be said as a matter of law that the Commissioner acted arbitrarily or capriciously in refusing to issue the licenses.

In our opinion, the Appellate Division placed undue emphasis on the age of the conviction, while the Commissioner more properly focused on the nature and locale of the crime. The conviction was for a felony, not a misdemeanor or an offense, and, more important, for the crime of extortion. When one considers that the licensing ordinance regulates the rates chargeable by public cartmen for the apparent purpose of preventing price gouging and related abuses, and hence is specifically directed against a class of offenses comprehending extortion, the- relationship between the statutory design and the integrity and trustworthiness of the proposed licensee is apparent.

Moreover, the conviction was not for criminal activities remote from the licensed business but was linked to the very industry in which petitioner seeks licenses to pursue its calling — an industry which, as both courts below have emphasized, has been infiltrated by criminal elements. The Appellate Division recognized that ‘ ‘ The garment industry, and particularly the trucking aspect of it, has been a continuing source of concern to law enforcement officials in this community” (emphasis supplied), and even went so far as to say that “ The commissioner may be right ” in regarding petitioner as unfit or as presenting a great risk of unfitness to function as a licensed public cartman in the garment trucking business Yet the court subsequently concluded — a conclusion admittedly ‘ ‘ rendered academic ’ ’ by its holding that the Commissioner lacked power to evaluate character — that ‘ ‘ the evidence before him was utterly insufficient to sustain his conclusion of present unfitness ’ ’, notwithstanding the well-established rule that an administrative determination “ is not to be disturbed by the courts if it has ‘ warrant in the record ’, ‘ a reasonable basis in law ’ and is neither arbitrary nor capricious. * * * The ‘ judicial function is exhausted when there is found to be a rational basis for the conclusions approved by the administrative body. ’ * * *” (Matter of Park East Land Corp. v. Finkelstein, 299 N. Y. 70, 75.)

Once it is conceded that the Commissioner can properly evaluate an applicant’s character and fitness for a public cart license, it cannot be held as a matter of law that there was no reasonable basis for [his] considered judgment ” that Plumeri’s past criminal record “ was incompatible and inconsistent with the responsibilities assumed by a licensed [cartman] under the [Public Cart Ordinance] ” (Matter of Wager v. State Liq. Auth., 4 N Y 2d 465, 468). As this court noted in the Schwab case (126 N. Y., supra, p. 482): In the government of the affairs of a great municipality many powers must necessarily be confided to the discretion of its administrative officers, and it can be productive only of mischief in the treatment of such questions to substitute the discretion of strangers to the power in place of that of the officers best acquainted with the necessities of the case and to whom the legislature has specially confided their exercise.”

Petitioner makes several other contentions, not discussed by the Appellate Division, which may be briefly disposed of. It first contends that the language used in the ordinance that the Commissioner “ shall issue a license to the owner of the public cart together with a plate ” upon payment of the license fee (§ 3332-95.0, entitled ‘1 License plates; term”) constitutes a mandatory legislative direction. This argument assumes the answer to the very question at issue, namely, whether the Commissioner has been impliedly vested with discretionary powers above and beyond the mechanical requirements for a license prescribed by the licensing ordinance. As this court noted in Matter of Dr. Bloom Dentist, Inc., v. Cruise (259 N. Y. 358, 362, 364, appeal dismissed 288 U. S. 588), where the applicable ordinance provided ‘1 All permits for illuminated signs shall be issued by the City Clerk, upon application therefor * * * ”:

“In issuing permits under section 215 of the municipal ordinance, the City Clerk is not intended invariably to act as an automaton. If a permit may lawfully be issued, he is the officer designated for that purpose. Here is an instance where the word ‘ shall ’ ought not to he interpreted in a mandatory sense. (Matter of Thurber, 162 N. Y. 244; Matter of State of New York, 207 N. Y. 582.) ” (Emphasis supplied.) It seems apparent that the word “ shall ” merely empowers the Commissioner to issue a license, and does not mandate him to do so in the case of an applicant found unfit.

Petitioner also contends that, since it has obtained State registration plates for its trucks pursuant to the Vehicle and Traffic Law, a city official cannot deny a State-licensed truck the right to operate on city streets. In effect this argument is but an elaboration of the contention previously considered that the Public Cart Ordinance deals merely with the registration of property, and not with the licensing of an applicant into a trade or calling. As noted, the ordinance in question “ is a comprehensive scheme to license the calling of public cartmen ” (People v. Horton Motor Lines, 281 N. Y., supra, p. 203), and there can be no question as to the city’s power to license particular vocations “ for the good order of the city and the protection of the persons and property of its citizens and the advancement of its prosperity ” (City of Brooklyn v. Breslin, 57 N. Y., supra, p. 596). The complete answer to petitioner’s argument is section 54 of the Vehicle and Traffic Law which expressly provides that “the power given to local authorities to license and regulate vehicles offered to the public for hire * # * and all ordinances * # * enacted in pursuance of such powers shall remain in full force and effect” (emphasis supplied).

Finally, petitioner argues that it is engaged in interstate commerce and hence the cartman licensing statute cannot eonstitutionally apply to it. There is. no factual basis in the record for this claim, and in any event petitioner has no standing to raise it in this proceeding. It is seeking to compel the Commissioner to issue it public cartmen licenses, and the necessary theory of the proceeding is that the city ordinance applies to it. If it is not required to be licensed, then it cannot compel the Commissioner to perform an idle act. The same may be said of its contention that it is a contract — not a common — carrier, and hence is not required to be licensed (see People v. Horton Motor Lines, supra, and cases cited therein). Petitioner concedes that it did not institute this proceeding “ to prove that [it] was not required (for one reason or another) to obtain public cart licenses for its trucks ” and that it accepts the Commissioner’s claim “ that public cart licenses-were required for its trucks ”. The only reason it assigns for arguing that it is a contract carrier engaged in interstate commerce is to rebut the Commissioner’s “makeweight argument” before the Appellate Division “ that he was entitled to deny the license on the ground that the applicant has already been engaged illegally in conducting a carting business without having first obtained a license. ’ ’ As noted by the Appellate Division, in dismissing this argument of the Commissioner, ‘ ‘ there is insufficient support in the record for the contention and it was never a part of the assigned bases for his determination, or of the pleaded answer in this proceeding”, and the Commissioner has not advanced the argument on this appeal.

The order appealed from should be reversed, and the order of Special Term dismissing the petition reinstated, without costs to either party.

Chief Judge Conway and Judges Desmond and Burke concur with Judge Froessel; Judges Dye, Fuld and Van Voorhis dissent and vote to affirm and to direct the issuance of cartmen’s licenses to petitioner.

Order reversed, etc.


source: Caselaw Access Project

author: Per Curiam.

license: Public Domain

text:
    The People of the State of New York, Respondent, v. Thomas Patrick Hannigan, Appellant.
    Argued January 5, 1960;
    decided January 14, 1960.

      Barbara G. Hering and Florence M. Kelley for appellant.
    I. Appellant is entitled to the writ if, as he alleges, the sentencing court deprived him of the right to counsel of his own choosing. (People v. Sullivan, 3 N Y 2d 196; Matter of Bojinoff v. People, 299 N. Y. 145.) II. Informal assignment of counsel without appellant’s authorization or ratification is a clear deprivation of the right. (People v. Price, 262 N. Y. 410; People v. Silverman, 3 N Y 2d 200; People v. McManus, 17 Misc 2d 247; People v. Guariglia, 303 N. Y. 338; People v. Canizio, 282 App. Div. 955.) III. Denial of a defendant’s right to counsel at any stage of a criminal proceeding is ground for coram nobis. (Matter of Bojinoff v. People, 299 N. Y. 145; People v. Silverman, 3 N Y 2d 200; People v. Lain, 309 N. Y. 291; People v. Guariglia, 303 N. Y. 338; People v. De Maio, 303 N. Y. 939;
      People v. Hasenstab, 283 App. Div. 433; People v. Martin, 1 Misc 2d 76.) IV. Neither the presumption of regularity nor res judicata is a viable issue on the facts herein alleged. (People v. Langan, 303 N. Y. 474; People v. Richetti, 302 N. Y. 290; People v. Dosztan, 286 App. Div. 1151; People v. Canizio, 282 App. Div. 955; People v. Kosloski, 281 App. Div. 890.)

      Daniel V. Sullivan, District Attorney (Walter E. Dillon of counsel), for respondent.
    Even if it were to be assumed that the facts alleged by defendant were true, coram nobis could not be invoiced. (People v. Sullivan, 3 N Y 2d 196; People v. Eastman, 306 N. Y. 658; People v. Gersewitz, 294 N. Y. 163; People v. Sidoti, 1 A D 2d 232; People v. O’Connor, 2 A D 2d 833.)
   Per Curiam.

Although it is the general rule that coram nobis will not lie to correct errors appearing on the face of the record (People v. Sullivan, 3 N Y 2d 196), this court recognized an exception in a case where the trial court denied to a defendant his right to counsel of his own choice (People v. Silverman, 3 N Y 2d 200, 202). Thus we wrote in the Silverman case: “ Judicial interference with the right to counsel guaranteed to defendant by law may warrant the extraordinary remedy of coram nobis, even though the error appears on the face of the record ” (p. 202).

If the petitioner in this case was, as he asserts, deprived of counsel of his choice at the time of sentence, such deprivation would be violative of the rights secured to the petitioner under the State Constitution (N. Y. Const., art. I, § 6; People v. Price, 262 N. Y. 410; see, also, People ex rel. Miller v. Martin, 1 N Y 2d 406), notwithstanding the absence of any mandate in this jurisdiction, constitutional or otherwise, which requires that an accused should have counsel at the time sentence is imposed (People v. De Maio, 279 App. Div. 596, affd. 303 N. Y. 939).

Where, as here, there are no minutes, court documents or other incontrovertible evidence presented to rebut the claim of the petitioner, the petition may not be dismissed without a hearing at which evidence may be submitted which should show whether or no counsel of petitioner’s choice has been ousted.

As the record before us raises questions of fact and credibility which can only be resolved after a hearing, the determination of the County Court was incorrect. (People v. Langan, 303 N. Y. 474; People v. Richetti, 302 N. Y. 290.)

The order appealed from should be reversed and the case remitted to the County Court, Bronx County, for a hearing.

Chief Judge Desmond and Judges Fuld, Burke and Foster concur in Per Curiam opinion; Judges Dye, Froessel and Van Voorhis dissent and vote to affirm in the following memorandum : Both defendant and the District Attorney have submitted their conflicting verified statements. Neither party asserts that he has any additional evidence. The record shows the defendant made his present application about seven years after his earlier conviction, following his later conviction for second degree manslaughter and after he had ascertained that the sentencing minutes with respect to the earlier conviction were no longer available. The courts below had the right to disbelieve his claim that a County Judge had substituted an Assistant District Attorney in place of his own attorney — then present in court — at the time of receiving a suspended sentence.

Order reversed, etc.


text:
    The People of the State of New York, Respondent, v. Louis Marilla, Appellant.
    Argued January 4, 1960;
    decided January 14, 1960.

      Herald P. Fahringer, Jr., for appellant.
    I. The mandatory provisions of section 433 of the Code of Criminal Procedure are applicable to Courts of Special Sessions. (People v. Wallens, 297 N. Y. 57; People v. Giles, 152 N. Y. 136; People v. Omans, 306 N. Y. 375.) II. Section 433 deals with an aspect of trial procedure separate and distinct from that of section 714. III. Noncompliance with section 433 of the Code of Criminal Procedure deprives a defendant of an important and fundamental right and results in an incomplete verdict. (People v. Light, 285 App. Div. 496; People ex rel. Meers v. Martin, 4 A D 2d 659; People v. Zambounis, 251 N. Y. 94.)

      Carman F. Ball, District Attorney (Leonard F. Walentynowics of counsel), for respondent.
    I. A Court of Special Sessions does not have to comply with section 443 of the Code of Criminal Procedure. (People v. Wallens, 297 N. Y. 57; People v. Light, 285 App. Div. 496; People v. Albro, 8 Misc 2d 670.) II. No substantial right of defendant was violated. (People v. Light, 285 App. Div. 496; People ex rel. Mault v. Jackson, 3 A D 2d 688.)
   Per Curiam.

This court has several times held — contrary to the view expressed in People v. Light (285 App. Div. 496) — that a defendant, prosecuted by indictment, may not on appeal avail himself of the trial court’s alleged failure to comply with section 433 of the Code of Criminal Procedure if he did not call such omission to the court’s attention. (See, e.g., People v. Manfredi, 1 N Y 2d 743; People v. Baumgart, 5 N Y 2d 874; see, also, People ex rel. Meers v. Martin, 4 N Y 2d 898.) The rationale underlying these decisions is that, if the defendant had alerted the trial judge to the possibility that a juror was missing or that the verdict announced was not that of all the jurors, the judge, so alerted, could have readily removed any doubt on these scores by having a roll call and a polling of the jury (Code Crim. Pro., §§ 433, 450).

Consequently, even if we were to assume that section 433 of the Code applies to proceedings in courts of special sessions, and this is extremely doubtful (Code Crim. Pro., §§ 712-714), the defendant herein may not now raise the question in view of the fact that at the trial he neither voiced an objection nor requested that the jury be polled or their names called.

The judgment of conviction should be affirmed.

Chief Judge Desmond and Judges Dye, Fuld, Froessel, Van Voorhis, Burke and Foster concur.

Judgment affirmed.


author: Desmond, Ch. J. Foster, J.

text:
    Yorktown Homes, Inc., Appellant, v. County of Westchester et al., Respondents.
    Argued January 7, 1960;
    decided January 21, 1960.

      Irwin M. Taylor and Shephard S. Miller for appellant.
    I. The court erred in failing to direct a verdict for plaintiff. (Bank of United States v. Manheim, 264 N. Y. 45.) II. The trial court erred in its charge to the jury that, before applying the rule that rejection by a third-party beneficiary of the benefits of a contract relieves the promisor, it was necessary the jury ‘‘ find that the contract which lies at the base of this action was solely for the benefit of the home owners ”. III. As a matter of law, the court should have ruled that plaintiff was excused from performance by the rejection of the benefits by the property owners. IV. The court erred in failing to set aside the verdict as against the weight of the evidence. V. The existence of a third-party beneficiary contract appears when, among other things, there is an intention to confer some benefit upon a third party. The third party need not be the sole beneficiary of such contract. (Seaver v. Ransom, 224 N. Y. 233; Robinson v. Chamberlain, 34 N. Y. 389; Rochester Tel. Co. v. Ross, 195 N. Y. 429; Farnsworth v. Boro Oil & Gas Co., 216 N. Y. 40; Matter of International Ry. Co. v. Rann, 224 N. Y. 83; German Alliance Ins. Co. v. Home Water Supply Co., 226 U. S. 220; New York Pneumatic Serv. Co. v. Cox Contr. Co., 201 App. Div. 33; Wolcott v. Johnson, Drake & Piper, 198 Misc. 874; Rigney v. New York Cent. & H. R. R. R. Co., 217 N. Y. 31; Coley v. Cohen, 289 N. Y. 365.) VI. Where the third-party beneficiaries under a contract prevent performance thereof, they thereby render impossible performance by the promisor, and he is relieved from his promise. (Patterson v. Meyerhofer, 204 N. Y. 96; United States v. Peck, 102 U. S. 64; MacKnight Flintic Stone Co. v. Mayor, 160 N. Y. 72; Village of Argyle v. Plunkett, 175 App. Div. 751; Mosler Safe Co. v. Maiden Lane Safe Deposit Co., 199 N. Y. 479; Weeks v. Little, 89 N. Y. 566; Dolan v. Rodgers, 149 N. Y. 489.)

      Harry G. Herman, County Attorney (Arthur T. Connick of counsel), for respondents.
    I. Plaintiff was not prevented by property owners from performing under the terms of the agreement between plaintiff and the Commissioner of Health. II. The homeowners in plaintiff’s realty subdivision did not disclaim benefits under the agreement between plaintiff and the Commissioner of Health. (Cameron-Hawn Realty Co. v. City of Albany, 207 N. Y. 377.)
   Desmond, Ch. J.

Plaintiff, a builder and seller of homes in Westchester County, brought this suit against the County Health Department to recover back $10,000 which plaintiff had deposited with the department as a guarantee of performance of plaintiff’s December, 1955 agreement with the department to do certain remedial work in connection with surface water drainage and as a guarantee of the septic tank installations on the properties, “ against failure of workmanship and construction, for the period of one year of continued normal use The theory of suit was not that plaintiff’s promise had in fact been fully performed but that the doing of the work had been made impossible by the refusal of the purchasers of the houses to let plaintiff enter on their lands. Plaintiff’s position is that its covenants, while in form running to the Health Commissioner, were primarily for the benefit of the houseowners and that, since the latter made execution impossible, the collateral fund must be returned to plaintiff. In other words, plaintiff relies on a rule of law that, when a third-party beneficiary refuses to accept the tendered benefits, the promisor is excused from performance (4 Corbin, Contracts, § 811, p. 237). For present purposes we will assume that the rule of Patterson v. Meyerhofer (204 N. Y. 96) applies to hindrance by one who is not a party but a third-party beneficiary. The county has successfully defended on the ground that plaintiff was not prevented by the property owners from carrying out its stipulations and that the property owners had never rejected the promised benefits. The Trial Justice sent those questions of fact to the jury and the jury answered them in favor of the defense. We think that the verdict was justified by the proof and that there were no errors at the trial.

The situation which produced the contract in suit came about in late 1955 when defendant Health Commissioner filed, against 76 one-family homes built by plaintiff during the preceding two years, notices of violations consisting of alleged defective drainage and faulty septic tanks. Plaintiff had conveyed some, but not all, of these properties to its customers. There had been many complaints about the working of the surface and sanitary disposal systems. There had been flooding and seepage. It was important to all concerned that these matters be put to rights but, because of winter weather and of the necessity for making plans and surveys, the work could not be done immediately. Plaintiff, however, wished the violations removed so that it could convey good title to the (about a dozen) properties not yet deeded out by it. To protect all interests plaintiff and the Commissioner worked out the agreement sued upon. In substance, the Commissioner agreed to (and did) withdraw the notices of violations, and plaintiff: (1) agreed to have a survey and plan made by a competent engineer as to the surface drainage requirements and to carry out the engineer’s recommendations, and (2) guaranteed the septic tank installations against failure of workmanship and construction ’ ’ for one year of continued normal use. Plaintiff covenanted to, and did, put up $10,000 as assurance of performance.

Plaintiff hired its engineer and in due course received the latter’s report but, despite demands from the Health Department and the owners, never did the corrective work recommended by the engineer. Plaintiff’s only excuse for its nonfeasance is that the homeowners refused to allow plaintiff’s representatives to come onto their lands for inspection and remedial work. There is nothing in the agreement as to such consents but the necessity thereof must have been apparent to plaintiff. Plainly, it was not the county’s obligation to procure those easements. Yet plaintiff — or so the jury could have found — did nothing about it beyond sending out letters to the householders in August or September, 1956, several months after the signing of the agreement. Meanwhile, the residents had become embittered against plaintiff. There Was testimony by several homeowners that, after they had many times demanded of plaintiff that their septic tanks be corrected and after plaintiff had made some ineffectual efforts at correction, each owner had the work done at his own expense.

We think the testimony above summarized set up a jury question as to whether plaintiff made reasonable efforts to get the consents and, if so, whether the houseowners by their refusals made performance impossible. The jury’s negative ansAvers were justified and we find no errors in the court’s charge to the jury. As to the denied request for an instruction that this agreement was for the benefit not of the Commissioner but of the landowners, the court had already clearly described the purpose and meaning of the contract.

There is before us no question as to what ultimate use or disposition is to be made of this fund. That will have to await future developments. Since there were questions of fact on tlris record as to how much it will cost to do the work, plaintiff was not entitled to the return of any amount.

The judgment should be affirmed, with costs.

Foster, J.

(dissenting). I am impelled to disagree Avith the vícavs and conclusions expressed in the majority opinion. It is true that the notices of violations of the Westchester Sanitary Code had been filed with respect to drainage and septic tank failures on properties developed by plaintiff, but such notices by no means constituted conclusive proof of fault. The Director of Sanitation for the county admitted in his testimony that some of such failures were probably due to improper overloading on the part of the homeowners themselves. It seems rather clear that plaintiff entered into the agreement in question rather than litigate the issue of fault as to the septic tank failures, and also to release the notices of violations for the purpose of selling other properties. It is equally clear that the county, represented by its Director of Sanitation, was willing to adopt the same course.

The agreement executed by the parties provided for certain specific action on the part of plaintiff: (1) to engage a qualified engineer to make an examination of the drainage swale problem and to follow his recommendations in connection therewith; (2) to guarantee septic tank installations for one year of normal use, and, in connection therewith, to follow the findings of the engineer subject to the concurrence of the Director of Sanitation; and (3) to deposit about $10,000 in escrow as a guarantee of performance. Upon the execution of the agreement, the notices of violations were released.

It is conceded that plaintiff engaged a competent engineer to make an examination of the problems involved and suggest corrective procedures. There is proof, and indeed the defendant so admits, that the engineer retained submitted four plans, one of which, ‘ ‘ Plan D ’ ’, was satisfactory to both parties to the agreement. Implicit must have been the understanding of the parties, although not expressed in the agreement, that no corrective action could be undertaken unless the property owners consented, for the obvious reason that any plan would involve a trespass on their properties. While there is some haggling over the matter, the overwhelming weight of the proof is to the effect that plaintiff sent a letter to each property owner outlining the proposed corrective plan and asking for individual consents. Before these letters were sent out the form thereof was submitted to the Director of Sanitation, and he not only approved of the form but suggested a cutoff date. Consents from the property owners were never received and in some instances they were refused.

Plaintiff thereafter sought, by this action, to recover back its deposit of $10,000 on the ground that, since the property owners, as third-party beneficiaries, refused their consent to the proposed corrective plan, it was relieved from its obligations under the agreement because performance was impossible. This is a commonly accepted principle of contractual law as exemplified by citations in the majority opinion, but the trial court refused to charge it clearly and specifically, and hedged it about with the restriction that before applying the rule the jury had to find that the agreement was made solely for the benefit of the property owners. This, in my opinion, was erroneous. It was sufficient for the application of the rule if the jury found that the property owners, as primary beneficiaries, refused consent. I can find no authority which holds that where a third-party beneficiary frustrates the performance of an agreement that the promisee is not bound thereby and the promisor released.

Plaintiff is denied the return of its deposit on the ground that it was a jury question whether it made reasonable efforts to get the consent of the property owners, and, if so, whether the houseowners, by their refusals, made performance impossible. It would seem, of necessity, that the answer to the last issue must be in the affirmative. No one has suggested how the work could be done without the consents of the property owners. As to reasonable effort to get the consents, it is difficult to see what more the plaintiff should or could have done. It submitted “ Plan D ” approved by the defendant and, having done so, it was not obliged under any direct or implied obligation of the agreement to cajole or persuade the owners to accept it.

The use of letters, with the approval of the Director of Sanitation, for the purpose of obtaining consents was not only proper but eminently desirable since the nature of the corrective work proposed had to be stated with some precision.

As the situation now stands, plaintiff has lost its deposit and has no guarantee whatever that actions may not be taken against it by the property owners, for the county could not bar their rights, if any, by the agreement in question. And, by the same token, plaintiff may be faced with a renewal of charges of sanitary violations, for the power of the defendant to barter off such charges for the sum of $10,000 is dubious indeed.

The order should be reversed and a new trial granted.

Judges Dye, Fuld and Burke concur with Chief Judge Desmond; Judge Foster dissents in an opinion in which Judges Froessel and Van Voorhis concur.

Judgment affirmed.


author: Burke, J.

text:
    Harry J. Gerbig et al., Respondents, v. Rose Zumpano, Appellant.
    Argued January 6, 1960;
    decided January 21, 1960.

      Pierce V. Brennan for appellant.
    I. An easement over the lane in dispute was created when Charles Drake filed the subdivision map and sold the adjoining lots by reference to the map and to the lane. (Lord v. Atkins, 138 N. Y. 184.) II. Such an easement is created whether there is other access or not and is not an easement by necessity. (Cox v. James, 45 N. Y. 557.) III. An easement created by grant, express or implied, can only be destroyed by grant, condemnation or adverse possession. (Johnson & Co. v. Cox, 196 N. Y. 110; Fiebelkorn v. Rogacki, 280 App. Div. 20, 305 N. Y. 725.) IV. As no intention to limit the duration of the easement can be implied from the manner of its creation, it is of perpetual duration. (Wiggins v. McCleary, 49 N. Y. 346; Matter of Opening of Eleventh Ave., 81 N. Y. 436.)

      S. Peter La Rosa and William J. Kalt for respondents.
    I. No easement by specific grant exists in the case at bar. (Mittnacht v. Montana, 205 App. Div. 643; Haight v. Littlefield, 147 N. Y. 338; Keefe v. Annpaul Realty Co., 215 App. Div. 301, 243 N. Y. 647; Morrison v. Fellman, 150 Misc. 772; Scrum v. Davis, 141 Misc. 46, 235 App. Div. 879; Matter of City of New York [North

      ern Blvd.], 258 N. Y. 136; Tarolli v. Westvale Genesee, 6 N Y 2d 32; Heyman v. Biggs, 223 N. Y. 118; Lord v. Atkins, 138 N. Y. 184; Cox v. James, 45 N. Y. 557; Johnson & Co. v. Cox, 196 N. Y. 110.) II. Implied easements of necessity are extinguished when the necessity ceases. (Palmer v. Palmer, 150 N. Y. 139; Heart v. Kruger, 121 N. Y. 386; Ogden v. Jennings, 62 N. Y. 526; Sauchelli v. Fata, 306 N. Y. 125; Bauman v. Wagner, 146 App. Div. 191; Paine v. Chandler, 134 N. Y. 385; Smith v. New York Cent. R. R. Co., 235 App. Div. 262; Zeiger v. Interborough R. T. Co., 254 App. Div. 908, 280 N. Y. 516; Van Roo v. Van Roo, 268 App. Div. 170; Root v. Wadhams, 107 N. Y. 384; Root v. Conkling, 199 App. Div. 90.) III. The actions of defendant-appellant are wholly inconsistent with her purported claim of an implied easement. (Roby v. New York Cent. & H. R. R. R. Co., 142 N. Y. 176; Foote v. Metropolitan El. Ry. Co., 147 N. Y. 367; Finch v. Unity Fee Co., 211 App. Div. 430.)
   Burke, J.

The plaintiffs-respondents and the defendant-appellant are owners of residential property which abuts Heath Avenue in the Borough of The Bronx and is separated by a lot formerly called a “ lane ”, The action is brought to extinguish defendant’s claimed easement of ingress and egress over the lane, and for the removal of incumbrances erected by the defendant. A judgment in favor of the plaintiffs has been unanimously affirmed by the Appellate Division.

The properties now owned by defendant and plaintiffs were formerly a portion of an entire unit which was subdivided into numbered lots, together with vertical and horizontal “ lanes ” running north and south and east and west. A map of this subdivision was filed and the land was subsequently conveyed by reference to this map. The land in question (described as lot 166) is a segment of one of these “ lanes ” and separates the property now owned by the parties to this action. When originally subdivided this “ lane ” was the only possible avenue to a public street from the property presently owned by the defendant. In 1912 Heath Avenue, which borders on the property in question, was opened as a public highway thereby making unecessary the use of lot 166 as a means of ingress and egress to a public street. Prior to 1955, but subsequent to 1912, the defendant acquired the property via a deed which described the property by reference to the original map. By deed dated December 28, 1955 the plaintiffs acquired title to tax lot 166 from New York City. The city had previously acquired the fee as the result of an in rem tax foreclosure proceeding (Dec. 3, 1953). Defendant has constructed a patio and built fences and enclosures on this land. When defendant failed upon demand to remove these incumbrances the plaintiffs brought this action.

The trial court, recognizing the appropriate circumstances, found that an implied easement by grant was in fact originally created in favor of the land now owned by the defendant. (See Matter of City of New York [Northern Blvd.], 258 N. Y. 136; Lord v. Atkins, 138 N. Y. 184; Fiebelkorn v. Rogacki, 280 App. Div. 20, affd. 305 N. Y. 725; Weil v. Atlantic Beach Holding Corp., 1 N Y 2d 20; Rose v. Indian Park Assn., 3 A D 2d 274; 3 Powell, Real Property, par. 409). However, while aware of the legal distinction, the court equated this easement by grant with an easement by necessity, and held that: “ [L]and titles should not be subject to implied, as distinguished from express, encumbrances unless such burdens are reasonably necessary for the enjoyment and use of neighboring properties * * * Since the easement was implied so that purchasers of interior lots may have access to and from their land, the implication ceases where a public highway has been built affording both parties free and untrammeled approach to and from that highway.”

We reach a different conclusion. It is the law of this State that an easement created by grant, express or implied, can only be extinguished by abandonment, conveyance, condemnation, or adverse possession. (See, e.g., Holloway v. Southmayd, 139 N. Y. 390, 402; Johnson & Co. v. Cox, 196 N. Y. 110, 121; Fiebelkorn v. Rogacki, supra, pp. 21-22).

The mere fact that this easement might originally have been created out of necessity does not alter the means by which it was created, i.e., by grant, and as such it remains as inviolate as the fee favored by the grant, unless, of course, conveyed, abandoned, condemned or lost through prescription.

The plaintiffs raise, for the first time on this appeal, an issue (i.e., abandonment) which may possibly have some merit. Although the record presented does indicate a long period of nonuse together with acts which may or may not imply an abandonment, it is not sufficiently clear for us to rule as a matter of law. It is clear that nonuser alone, no matter how long continued, can never in and of itself extinguish an easement created by grant (Welsh v. Taylor, 134 N. Y. 450; 3 Powell, Real Property, par. 423, p. 491; Walsh, The Law of Property [2d ed.], § 305). In order to prove an abandonment it is necessary to establish both an intention to abandon and also some overt act or failure to act which carries the implication that the owner neither claims nor retains any interest in the easement (Loening v. Red Spring Land Co., 198 Misc. 151, affd. 277 App. Div. 1050, motions for reargument and for leave to appeal denied 277 App. Div. 1151, affd. 302 N. Y. 934). Furthermore, acts evincing an intention to abandon must be unequivocal. They must clearly demonstrate the permanent relinquishment of all right to the easement (Welsh v. Taylor, supra).The mere use of the easement for a purpose not authorized, the excessive use or misuse, or the temporary abandonment thereof, are not of themselves sufficient to constitute an abandonment.” (Roby v. New York Cent. & H. R. R. R. Co., 142 N. Y. 176, 181.) In Josh v. Nobile (1 Misc 2d 396) for example the court refused to find an abandonment although there was a long period of nonuse coupled with obstructions placed on the property.

In this case the encroachments may either be found to show a present intention not to use the easements so as to unequivocally demonstrate an abandonment or a deferred use which would be consistent with a reliance upon the continued existence of a property right of way.

Since there are no findings before us on this issue in the courts below, and since the stipulated facts are insufficient to allow us to find them as a basis of abandonment as a matter of law, the judgment should be reversed and a new trial granted.

Accordingly, the judgment below should be reversed and a new trial granted, with costs to abide the event.

Chief Judge Desmond and Judges Dye, Fuld, Froessel, Van Voorhis and Foster concur.

Judgment reversed, etc.


text:
    Pearl Major, Appellant, v. Waverly & Ogden, Inc., Respondent.
    Argued January 6, 1960;
    decided January 21, 1960.

      Morris Bloch for appellant.
    The gravamen of the complaint herein was the breach of a statutory duty, i.e., article 18 of the Executive Law, also known as the State Building Code Law and the State Building Construction Code. Accordingly, the court erred in charging the jury that the action is one in negligence wherein plaintiff must prove the negligence of defendant and freedom from contributory negligence. (Koenig v. Patrick Constr. Corp., 298 N. Y. 313; Schmidt v. Merchants Desp. Transp. Co., 270 N. Y. 287; Stern v. Great Is. Corp., 250 App. Div. 115.)

      William F. McNulty and Stanley D. Hicks for respondent.
    I. The court properly charged the jury that plaintiff’s action was ‘1 in negligence ’ ’ and that her own contributory negligence would defeat her right of recovery therein. (Koenig v. Patrick Constr. Corp., 298 N. Y. 313; Schmidt v. Merchants Desp. Transp. Co., 270 N. Y. 287; Teller v. Prospect Heights Hosp., 280 N. Y. 456; Schumer v. Caplin, 241 N. Y. 346; Vallina v. Wright & Kremers, 7 A D 2d 101; Utica Mut. Ins. Co. v. Mancini & Sons, 9 A D 2d 116.) II. If the court committed any error in its charge, it was in instructing the jury that ‘ ‘ if you' find that these rules or any of them (referring to the rules of. the State Building Code Commission) were violated and you further find that such violation was a proximate cause of this accident, then such violation constitutes negligence on the part of the owner of the dwelling ”. (Schumer v. Caplin, 241 N. Y. 346; United States v. Grimaud, 220 U. S. 506; Fluker v. Ziegele Brewing Co., 201 N. Y. 40; Knupfle v, Knickerbocker Ice Co., 84 N. Y. 488; Briggs v. New York Cent. & H. R. R. R. Co., 72 N. Y. 26; McGrath v. New York Cent. & H. R. R. R. Co., 63 N. Y. 522; Rufo v. Orlando, 309 N. Y. 345; Walters v. Rao Elec. Equip. Co., 289 N. Y. 57; Semanchuck v. Fifth Ave. & 37th St. Corp., 290 N. Y. 412; Vallina v. Wright & Kremers, 7 A D 2d 101; Utica Mut. Ins. Co. v. Mancini & Sons, 9 A D 2d 116.)
   Froessel, J.

Plaintiff, while visiting at the apartment of friends in a two-story building owned by defendant, fell down a flight of stairs and sustained the injuries of which she complains in this action. She testified that she had been watching a picture on television and got up “ in a rush ” to go to the bathroom. The living room was dark at the time except for the light from the television screen, and she went through the wrong opening, thus falling down a flight of stairs, which was not equipped with a light or handrail. The jury returned a verdict of no cause of action, and her complaint was accordingly dismissed.

The failure of defendant to provide a light and handrail for the staircase is said to be in violation of the State Building Construction Code (§§ A 105-5, A 205-6, A 205-7), promulgated by the State Building Code Commission under the provisions of section 374, article 18, of the Executive Law. The Village of Mamaroneck, in which defendant’s building is located, accepted the construction code in accordance with the provisions of section 374-a of the Executive Law, thereby making it applicable to defendant’s premises (see McKinney’s Cons. Laws of N. Y., Book 18, Executive Law, § 374-a, 1959 Supp., pp. 50-51). Plaintiff, therefore, contends on this appeal that the trial court erred when it charged the jury that this action was in ‘1 negligence ”, and that in order for plaintiff to recover she must establish her freedom from contributory negligence. She claims that violation of the aforesaid code “ is conclusive evidence of negligence ”, and that “ contributory negligence ” is not “ a bar to recovery”.

In support of her position, plaintiff relies upon our decision in Koenig v. Patrick Constr. Corp. (298 N. Y. 313). There, defendant failed to provide a safety device — in contravention of section 240 of the Labor Law — for a ladder which the plaintiff workman was directed to use in the course of his work. We held that the resulting injury to the workman gave rise to a statutory liability, to which contributory negligence could not be asserted as a defense. We stressed that section 240 of the Labor Law, from which the statutory liability derived, provided that “ the employer or one directing the work ‘ shall furnish ’ or cause to be furnished equipment or devices 1 which shall be so constructed, placed and operated as to give proper protection ’ to the one doing the work ” (p. 318). As a result of this forceful expression of the legislative mandate, we concluded that a “ flat and unvarying duty ’ ’ was imposed upon employers, or those directing the particular work to be done (ibid.). In other words, their violation of the statute was conclusive evidence of negligence, and constituted a statutory liability irrespective of an employee’s contributory negligence.

By way of contrast, section 370 of the Executive Law, which sets forth the legislative 1 ‘ findings and purposes ’ clearly shows that the primary purpose of the formulation of a building construction code was not to impose an unvarying duty for the protection of a particular class against a defined hazard, but rather to provide ‘ ‘ basic and uniform performance standards ’ thereby reducing excessive construction costs which the Legislature found threatened “ the health, safety, welfare, comfort and security of the people of the state”. Section 375 of the Executive Law prescribes standards for the code following closely the purposes described in section 370 (see particularly subds. 3 and 5 of § 375).

Thus it cannot reasonably be said that the statute discloses an intention express or implied that from disregard of a statutory command a liability for resultant damages shall arise ‘ which would not exist but for the statute. ’ (Shepard v. Taylor Pub. Co., 234 N. Y. 465, 468.) ” (Schmidt v. Merchants Desp. Transp. Co., 270 N. Y. 287, 305; emphasis supplied.) Or, in the language of the Koenig case (supra), a “ flat and unvarying duty ” is not made crystal clear” by the language of the Executive Law (see 298 N. Y., p. 318).

Another aspect of our reasoning in the Koenig decision is also significant on this appeal. The Labor Law was designed to afford the workman protection against the unavoidable hazards of his occupation. The workman, we noted, usually ha[s] no choice but to work with the equipment at hand, though danger looms large” (298 N. Y., pp. 318-319). These elements of unavoidable hazards and lack of choice, and the occupational context of plying a livelihood, which figured so prominently in our decision in Koenig, are absent in the instant case. The sphere in which the Executive Law operates and the conditions which it purports to remedy cannot be so construed.

Were we to hold otherwise in this case, and fashion the liability for which plaintiff contends, we would be setting precedent for manifold statutory liabilities not only as to violations of the Executive Law but as to violations of countless other statutes as well, such as by way of illustration, the Vehicle and Traffic Law. There would be danger indeed that our common law of negligence would be substantially recast.

In. addition to the foregoing, a second and equally important reason is here present which compels the denial of plaintiff’s claim. Defendant is charged with having violated rules prescribed by the State Building Code Commission, adopted by the Village of Mamaroneck. It is well established that such a violation cannot give rise to statutory liability without regard to negligence (Schumer v. Caplin, 241 N. Y. 346; Teller v. Prospects Heights Hosp., 280 N. Y. 456, 460). The Schumer case declares that a liability without regard to negligence can derive only from a statute duly enacted by the State Legislature. The rules of an administrative body or even the ordinances of a municipality lack the force and effect of a substantive legislative enactment. This principle is a salutary one. If the Legislature desires to change the prevailing rules of the common law, it must do so itself and not by virtue of authority delegated to a subordinate rule-making body. The State Commission, under section 377 of the Executive Law, is empowered to modify, amend or repeal its rules and regulations. As we noted in the Schumer case, ‘ ‘ This cannot be done with a statute. A constitutional statute, once passed, cannot be changed or varied according to the whim or caprice of any officer, board or individual. It remains fixed until repealed or amended by the Legislature ” (241 N. Y., p. 351).

The fact that the Legislature in the Executive Law has delegated the rule-making power to the State Commission only because of practical necessity (see § 370, last par.) does not help plaintiff. ‘ ‘ A legislative declaration that a rule has the force and effect of law does not make it so, if by that is meant that it is the equivalent of or equal to a legislative enactment. The Constitution of the State commits to the Legislature alone the power to enact a statute ” (Schumer v. Caplin, supra, p. 351). It is only to such an enactment that liability without regard to negligence may attach.

For the foregoing reasons, the defendant’s violation of the provisions of the building code did not subject it to absolute statutory liability. The failure to comply, in the instant case, was, as the trial court correctly noted in its charge, simply some evidence of negligence which the jury could take into consideration with all other evidence on the subject (Teller v. Prospect Heights Hosp., supra, pp. 460-461; Schumer v. Caplin, supra, pp. 351-352, collecting cases). Accordingly, the judgment appealed from should be affirmed, without costs.

Chief Judge Desmond and Judges Dye, Fuld, Van Voorhis, Burke and Foster concur.

Judgment affirmed.


author: Van Voobhis, J. Burke, J.

text:
    Chemical Corn Exchange Bank, Appellant, v. Walter Wassung, Respondent.
    Argued January 6, 1960;
    decided January 22, 1960.

      Barney B. Fensterstock and Sherwin A. Rodin for appellant.
    The Appellate Division erred in reversing the finding of fraud by the trial court. (Ochs v. Woods, 221 N. Y. 335; Nasaba Corp.
      v. Harfred Realty Corp., 287 N. Y. 290; White v. Benjamin, 150 N. Y. 258; First Nat. Bank v. Miller, 163 N. Y. 164; State St. Trust Co. v. Ernst, 278 N. Y. 104; Laska v. Harris, 215 N. Y. 554; Hotaling v. Leach & Co., 247 N. Y. 84; Albany City Sav. Inst. v. Burdick, 87 N. Y. 40; Wilcox v. American Tel. & Tel. Co., 176 N. Y. 115; Angerosa v. White Co., 248 App. Div. 425, 275 N. Y. 524; Sease v. Central Greyhound Lines, 281 App. Div. 192, 306 N. Y. 284; Gould v. Flato, 170 Misc. 378; Nonantum Inv. Co. v. Maryland Cas. Co., 56 F. 2d 329.)

      Paul H. Riess and Jay Genzer for respondent.
    I. The decision of the Appellate Division is supported by the overwhelming weight of the evidence. (Harrington v. Harrington, 290 N. Y. 126; Matter of Lindquist v. Swanson, 273 App. Div. 802; First Nat. Bank v. Miller, 163 N. Y. 164; Crim v. Starkweather, 136 N. Y. 635; White v. Benjamin, 150 N. Y. 258.) II. The reversal of the Appellate Division upon the law and the facts was proper. (Fein v. Starrett Tel. Corp., 280 App. Div. 670, 305 N. Y. 856; La Barr v. La Barr, 282 App. Div. 583; Matter of Osborne v. Hayes, 284 App. Div. 143, 307 N. Y. 940.)
   Van Voobhis, J.

Between October 17 and December 21, 1956 appellant discounted for respondent five promissory notes totaling $5,250 face amount, each made by Michael R. Stein. Respondent is a plumber by trade, and received these notes from Stein for plumbing work performed for him by respondent. Stein later was adjudicated bankrupt and discharged. Respondent likewise went through bankruptcy, receiving his discharge December 6, 1957. Prior to respondent’s bankruptcy, appellant entered judgment against him on these promissory notes. The indebtedness was listed in his bankruptcy schedules.

Now that this judgment has been discharged by bankruptcy, • appellant has brought this action upon the same indebtedness on a theory that the bank was induced by fraud to discount the notes on which the judgment was obtained. Appellant avers that it was ignorant of the alleged fraud when judgment was entered upon the same indebtedness in the former action, and that it should, therefore, be allowed to prosecute this action in fraud so as to escape the bar of bankruptcy.

However that may be, the Appellate Division dismissed the complaint on the facts and the law in this memorandum:

‘ ‘ Fraud will not be presumed and he who alleges fraud must prove it by a fair preponderance of the credible evidence. There is neither proof of deliberate concealment of material facts with intent to defraud nor, as we view the record in light of some of the findings stated in the opinion, is there evidence of reckless disregard of the truth.”

We think that the Appellate Division was correct in reaching this conclusion. The basis for the charge of fraud is a financial statement which respondent filled out under the supervision of the bank manager when three other notes were discounted seven months earlier. Those notes were paid. No new statement was obtained when the notes in suit were discounted. The evidence conflicts concerning whether the old financial statement was mentioned when the new notes were discounted. In reversing the findings of fact contained in the opinion of Special Term to the effect that respondent intended to conceal information concerning his financial condition, the Appellate Division probably included reversal of the finding that respondent stated that there had been no material change in his financial condition. In either event, appellant did not sustain the burden of establishing fraudulent intent. Special Term found no fraud in the listing of respondent’s life insurance policies, and that finding was affirmed by the Appellate Division. The only basis on which any fraud was found by Special Term is in the listing of respondent’s real estate, which was carried in the asset column in the form of two items of $3,500 each. The detailed explanation subjoined to the statement supports only one item of $3,500. Since this appears on the face of the statement, it is curious that the bank manager, if he examined the statement, made no inquiry concerning the other $3,500 item. Respondent testified that the other item represented a separate holding in another real estate corporation. He did say that, six months after the statement had been given to the bank, he sold his interest in both real estate holding corporations for $2,500. The resulting discrepancy between the latter sum and the $7,000 carried on the statement made half a year before these properties were sold has given rise to this charge of fraud in obtaining the later loans. Assuming that the remark which respondent denies was made, that his financial condition had not materially changed between the date of the statement and the discounting of these later notes, it does not follow that he intended to defraud. Respondent had recently completed plumbing work for which he had received $5,200 in notes which was an asset not listed on the statement. For aught that appears to the contrary, his condition had improved in the meantime. It has to be borne in mind that, as the Appellate Division said, fraud must be proved and is not presumed. Respondent is clearly not a bookkeeper. It does not follow that he has been guilty of a fraud.

The judgment appealed from should be affirmed, with costs.

Burke, J.

(dissenting). The question presented is whether, in the circumstances hereinafter disclosed, there was proof of concealment of material facts with intent to defraud. Since the Appellate Division and the trial court differ, we must decide whether the Trial Judge’s reasoned judgment is so at variance with the conclusion to which the evidence should have led a prudent trier of the facts that the Appellate Division was required to reverse the trial court.

From the record on appeal it appears that defendant, on March 22, 1956, submitted a statement of his financial condition to the plaintiff bank which showed a net worth of $13,950. Defendant admits that real estate assets were overstated to the extent of $3,500 and the insurance assets overstated in the amount of at least $1,000. After adjustment, the actual undisclosed net worth amounted to $9,450. At that time the defendant requested the bank to discount notes aggregating $3,000 in principal face amount made payable to his order by one Stein. The bank, relying on the financial statement, since the notes were not secured, discounted the notes which were paid at maturity and are not involved in the present suit. In September, 1956 the defendant sold all his interests in real estate for the sum of $2,500. Immediately after the sale, as the defendant admitted, his net worth “ started to slide down ” not only below the fictitious figure shown on the statement but the actual net worth of $9,450, which the statement should have shown. In September, 1956, then, the true net worth of defendant was about one half the net worth claimed by the defendant on the statement given several months earlier to the bank.

Between October and December, 1956 the defendant requested the bank to discount five additional notes made to his order by Stein, four in the face amount of $1,000 and the fifth in the face amount of $1,250, or a total of $5,250. In connection with the discount of these unsecured notes in the Fall of 1956, the bank officer testified that the defendant stated expressly that there was no important change in his financial condition from that shown on the statement given by him to the defendant in the latter part of the Winter of 1955-1956. The defendant’s denial of this reaffirmation of his financial condition was not credited by the trial court.

The trial court has found that the defendant had made certain representations concerning his financial condition on a statement submitted by him to the bank; that he had subsequently renewed these representations when requesting the bank to discount certain unsecured notes made by a third party to his order; that the bank had relied upon such renewed representations; that those representations as renewed were knowingly false, and that the resultant damage to the bank was in the sum of $5,263.18.

We believe that the determination of the Trial Justice is in accord with the evidence and that the conclusion that the plaintiff had proved its case by the fair preponderance of the evidence deserves affirmance.

This is a case where the utmost consideration should be given to the sophistication and sagacity of the trial judge ” (Boyd v. Boyd, 252 N. Y. 422, 429). The members of the Appellate Division never heard the witnesses, nor observed their demeanor on the stand. The question of credibility of witnesses is usually reserved to the trier of the facts. “ The advantages of the trial court who saw and heard the witnesses should be considered and, when truth hangs upon the credibility of witnesses, his decision should be given the greatest weight”. (Amend v. Hurley, 293 N. Y. 587, 594.)

The defendant shows a lack of feeling for reality in contending that the findings of the trial court are not supported by substantial evidence. The defendant’s denial of any material change in his financial condition leaves no room for an inference of honest intent. Inasmuch as he, prior to that occasion, had disposed of all his real estate interests, the withholding of knowledge of the sale of the real estate interests which were valued on the statement at $7,000 is clear evidence of fraud. The value of the real estate interests as set forth on the statement constituted about one half of the defendant’s claimed net worth of $13,950. Therefore, defendant knew that substantial changes had occurred in his financial condition. His representation of no change in his financial state which the bank relied upon was, of course, undeniably false. Even if the inflated values of the real estate and insurance assets are considered as thoughtless errors, the concealment of the disposition of valuable assets was a deliberate decision, and it is on that that judgment must be rendered. “ Concealment with intent to defraud of facts which one is duty-bound in honesty to disclose is of the same legal effect and significance as affirmative representations of fact ”. (Nasaba Corp. v. Harfred Realty Corp., 287 N. Y. 290, 295.)

The essential elements of a cause of action for fraud, namely a representation, its falsity, scienter, reliance and damage were established by ample proof. Therefore, the judgment entered upon the order of the Appellate Division should be reversed and the Special Term judgment reinstated, with costs in all courts.

Chief Judge Desmond and Judges Dye, Fuld and Foster concur with Judge Van Voorhis; Judge Burke dissents in an opinion in which Judge Froessel concurs.

Judgment affirmed.


text:
    The People of the State of New York ex rel. Joseph Emanuel, Appellant, against Daniel McMann, as Acting Warden of Clinton Prison, Dannemora, New York [Joseph E. La Vallee, Warden], Respondent.
    Argued January 7, 1960;
    decided January 22, 1960.

      Frances Kahn for appellant.
    Since respondent was improperly sentenced in 1928, he should now be resentenced on his 1932 conviction as a first offender. (People v. Nesce, 201 N. Y. 111; Messner v. People, 45 N. Y. 1; People ex rel. Miller v. Martin, 1 N Y 2d 406; People v. Sullivan, 3 N Y 2d 196; People v. De Groat, 5 A D 2d 927; People v. Kaminsky, 208 N. Y. 389; People v. Craig, 295 N. Y. 116; People ex rel. Naumo v. Jackson, 1 A D 2d 743; People ex rel. Egitto v. Jackson, 7 A D 2d 808.)

      Louis J. Lefkowitz, Attorney-General (Joseph J. Rose and Paxton Blair of counsel), for respondent.
    I. As a matter of law, there is no evidence in the record to support a finding that relator has sustained the burden of proving noncompliance with section 480. (People ex rel. Albanese v. Hunt, 292 N. Y. 528.) II. A violation of section 480 of the Code of Criminal Procedure affects only the validity of the sentence and does not vitiate the judgment of conviction. At best, therefore, appellant is entitled to be remanded for imposition of his first sentence in compliance with section 480. (People ex rel. Miller v. Martin, 1 N Y 2d 406; Messner v. People, 45 N. Y. 1; People ex rel. Egitto v. Jackson, 7 A D 2d 808, 5 N Y 2d 711, 360 U. S. 906; People v. Sullivan, 3 N Y 2d 196.)
   Per Curiam.

Relator, on November 14, 1932, was sentenced by the Court of General Sessions as a second felony offender upon a jury verdict convicting him of first degree manslaughter. Relator was paroled in 1951 but was later declared delinquent and returned to prison on September 16, 1957 to serve the unexpired term of 4 years, 3 months and 27 days.

Relator instituted this habeas corpus proceeding, attacking the jurisdiction of the court to impose sentence upon him as a second offender. He contends that, since the Court of General Sessions failed to comply with the requirements of section 480 of the Code of Criminal Procedure in sentencing him on his plea of guilty to a reduced count of robbery, third degree, in 1928, this conviction cannot be the predicate for second offender punishment. He seeks the vacation of the first sentence and conviction, and remand for resentence as a first felony offender. The Clinton County Court sustained the writ and the Appellate Division has reversed on the law and the facts and remanded the relator to the custody of the Warden of Clinton Prison.

An examination of the original minutes of the sentence imposed at the time of the 1928 conviction discloses the absence from the record of the allocution called for by the terms of the statute. Evidence of such an omission is sufficient to overcome the presumption of regularity (People ex rel. Sheehan v. Murphy, 6 N Y 2d 238).

The question is whether a violation of section 480 of.the Code of Criminal Procedure works a vacatur of both the sentence and the conviction so as to preclude consideration of the conviction in imposing second offender treatment pursuant to section 1941 of the Penal Law. We think the answer should be in the negative.

Although the sentence is sometimes said to be the judgment of the court (see People ex rel. Miller v. Martin, 1 N Y 2d 406; People v. Cioffi, 1 N Y 2d 70; People v. Shaw, 1 N Y 2d 30; People v. Harcq, 292 N. Y. 321), “ the judgment embraces the adjudication of guilt of the crime charged and the penalty imposed or sentence.” (People v. Sullivan, 3 N Y 2d 196, 198.)

The requirement that a defendant be asked prior to sentencing “ whether he have any legal cause to show, why judgment should not be pronounced against him ” (Code Grim. Pro., § 480) is, as this court has stated on numerous occasions, a substantial legal right that cannot be waived (People ex rel. Miller v. Martin, 1 N Y 2d 406, supra; People v. Nesce, 201 N. Y. 111; Messner v. People, 45 N. Y. 1). The sole relief, however, to which a defendant is entitled is to be remanded to the sentencing court and to be resentenced on his plea of guilty (People v. Sullivan, 3 N Y 2d 196, supra; People ex rel. Miller v. Martin, 1 N Y 2d 406, supra; People v. Craig, 295 N. Y. 116).

In People v. Sullivan (3 N Y 2d 196,199, supra), for instance, we recognized that the court’s failure to comply with section 480 did not affect the validity of the judgment of conviction, but merely the validity of the sentence and, therefore, “When an improper sentence is the sole basis of the complaint, no vacatur of the judgment of conviction or adjudication is necessary, since justice may be done by correction of the sentence ”. (Emphasis added.)

Although, upon a proper application directed to the first sentence, relator would be entitled to a remand for resentencing at which time he may be able to establish one of the grounds set forth in section 481 of the Code of Criminal Procedure requiring the court to set aside the conviction, nevertheless, until the prior convictibn is vacated, this prior adjudication may properly be considered under section 1941 of the Penal Law in sentencing relator as a second offender (People ex rel. Miller v. Martin, supra; People ex rel. Egitto v. Jackson, 7 A D 2d 808, motion for leave to appeal denied 5 N Y 2d 711, cert, denied 360 U. S. 906; People ex rel. Naumo v. Jackson, 1 A D 2d 743).

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

• Chief Judge Desmond and Judges Dye, Fuld, Froessel, Van Voorhis and Burke concur; Judge Foster taking no part.

Order affirmed.


text:
    The People of the State of New York ex rel. Ralph La Shombe, Appellant, against J. Vernel Jackson [Joseph E. La Vallee], as Warden of Clinton Prison, Dannemora, New York, Respondent.
    Argued January 7, 1960;
    decided January 22, 1960.

      Frances Kahn for appellant.
    Since appellant was improperly sentenced in 1947, he should now be resentenced on his 1955 conviction as a first felony offender. (People ex rel. Ingber v. Jackson, 5 A D 2d 1019 ; People ex rel. Miller v. Martin, 1 N Y 2d 406; People v. De Groat, 5 A D 2d 927; People ex rel. Egitto v. Jackson, 7 A D 2d 808.)

      Louis J. Lefkowits, Attorney-General (Joseph J. Rose and Paxton Blair of counsel), for respondent.
    I. As a matter of law, there is no evidence in the record to support a finding that appellant has sustained the burden of proving noncompliance with section 472. (People ex rel. Albanese v. Hunt, 292 N. Y. 528.) II. A violation of section 472 of the Code of Criminal Procedure affects only the validity of the sentence and does not vitiate the judgment of conviction. At best, therefore, appellant is entitled to be remanded for imposition of the 1947 sentence after compliance with section 472. (People ex rel. Miller v. Martin, 1 N Y 2d 406; Messner v. People, 45 N. Y. 1; People ex rel. Ingher v. Jackson, 5 A D 2d 1019.)
   Per Curiam.

Relator, on October 15, 1947, pleaded guilty in County Court, St. Lawrence County, to assault in the second degree, receiving a prison sentence which was served. Subsequently, on May 23, 1955, relator pleaded guilty to four counts of an indictment and received consecutive sentences as a second offender.

On this habeas corpus application, relator contends that he was improperly sentenced in 1955 as a second offender because, on the prior conviction in 1947, the court failed to accord him a two-day delay prior to pronouncing sentence as required by section 472 of the Code of Criminal Procedure. Accordingly the contention here (as in People ex rel. Emanuel v. McMann [La Vallee], 7 N Y 2d 342, decided herewith) is that such omission requires the vacatur of the original sentence and conviction and that he be remanded for resentencing on the 1955 convictions as a first felony offender. The Clinton County Court sustained the writ and the Appellate Division has reversed on the law and facts and dismissed the writ.

The original minutes of the 1947 sentencing discloses that sentence was pronounced immediately following acceptance of the plea of guilty. This fact is sufficient, prima facie, to overcome the presumption of regularity (People ex rel. Sheehan v. Murphy, 6 N Y 2d 238).

Even if we assume, however, that this omission would affect the validity of the original sentence, the right afforded by section 472 of the Code of Criminal Procedure being analogous to the right protected by section 480, relator would only be entitled upon an application made in that case to a vacatur of the original sentence and to be remanded for resentencing on his plea of guilty. (People ex rel. Emanuel v. McMann [La Vallee], 7 N Y 2d 342, supra, decided herewith; People v. Sullivan, 3 N Y 2d 196; People ex rel. Miller v. Martin, 1 N Y 2d 406; People ex rel. Egitto v. Jackson, 7 A D 2d 808, motion for leave to appeal denied 5 N Y 2d 711, cert, denied 360 TJ. S. 906.)

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

Chief Judge Desmond and Judges Dye, Fuld, Froessel, Van Voorhis and Burke concur; Judge Foster taking no part.

Order affirmed.