text:
    In the Matter of Children of Bedford, Inc., et al., Appellants, v Angelo Petromelis et al., Constituting the Crime Victims Board of the State of New York, Respondents.
    Argued March 26, 1991;
    decided May 7, 1991

      POINTS OF COUNSEL

      Leon Friedman, Jan F. Constantine and Arthur Eisenberg for appellants.

      Robert Abrams, Attorney-General (Susan L. Watson, O. Peter Sherwood and Howard L. Zwickel of counsel), for respondents.
   OPINION OF THE COURT

Simons, J.

Jean Harris is the author of a book entitled "Stranger in Two Worlds”. She has assigned the royalties due from her publisher, petitioner MacMillan, Inc., to petitioner Children of Bedford, Inc., a not-for-profit corporation organized under New York law. Respondents are the chair and members of the Crime Victims Board of the State of New York. On October 26, 1987 respondents issued an order declaring that royalties for Harris’s book must be deposited in escrow because the book contains her version of the killing of Dr. Herman Tarnower, a crime which resulted in her conviction of second degree murder (see, People v Harris, 57 NY2d 335), as well as expressions of her "thoughts, feelings, opinions or emotions” regarding the crime (see, Executive Law § 632-a [1]).

Consequently, petitioners instituted this CPLR article 78 proceeding asserting that the book was not subject to the statute, that the proceedings judging it so violated Federal due process guarantees and that the statute abridged Federal and State guarantees of free speech (US Const 1st, 14th Amends; NY Const, art I, § 8). Supreme Court converted the proceeding to a declaratory judgment action and, after examining the book’s contents, found that the statute applied to the work and that respondents had not violated petitioners’ due process rights. The court held further that the statute was constitutional because it had only an incidental effect on speech and because the governmental interest addressed by the statute outweighed petitioners’ State and Federal rights (see, 143 Misc 2d 999). The Appellate Division affirmed on Supreme Court’s opinion.

We agree that the book is subject to the statute and that the proceedings did not violate petitioners’ due process rights. We also agree petitioners’ free speech claims should be rejected. Our analysis differs from that of Supreme Court, however. We conclude that the statute is content-based and imposes a direct burden on speech: it singles out a category of speech based on subject matter and imposes special burdens on that category. Thus, the statute must be strictly scrutinized and unless it serves a compelling governmental purpose and is narrowly tailored to accomplish that purpose, it is invalid.

I

In 1966 the Legislature enacted article 22 of the Executive Law to establish the Crime Victims Board (L 1966, ch 894, § 1). Recognizing that many victims of crime and their dependents suffer disability, incur financial hardship or become dependent upon public assistance as a result of criminal acts, the Legislature enacted the statute to establish a mechanism whereby the State would provide victims with financial assistance. It has since been extensively amended to provide crime victims and witnesses with rehabilitation programs, crisis intervention and other counseling services, and to facilitate funding from other sources, both public and private (see, Executive Law § 631-a; L 1985, ch 688, § 12; L 1986, ch 263, § 6). The statute authorizes respondent Board to investigate and determine claims of crime victims, to grant them emergency awards before final determination of the claims (Executive Law § 630) and grant final awards not to exceed $30,000 (§ 631). A victim is defined as a person who suffers "personal, physical, mental, or emotional injury, or pecuniary loss as a direct result of the crime” (§ 621 [5]; § 632-a [10] [a]) and payment to them is authorized even though the criminal is not apprehended or convicted (§ 631). The awards are free from execution or attachment by creditors, except those having claims for treating injuries resulting from the crime (§ 632). Upon payment, the State is subrogated, to the extent of the award, to any right of action against the criminal (§ 634). Decisions of the Board are subject to judicial review pursuant to CPLR article 78 (§ 629).

Section 632-a, the subject of this proceeding, was originally enacted in 1977 (L 1977, ch 823) and has been amended several times to narrow and clarify its scope and establish the priority of claims. The section provides that those contracting with "any person or the representative or assignee” of any person accused or convicted of a crime in New York, "with respect to the reenactment of such crime” or for "the expression of such * * * person’s thoughts, feelings, opinions or emotions regarding such crime” shall submit a copy of the contract to the Crime Victims Board. If the Board determines that the criminal’s work comes within the statute, any moneys owing under the contract must be paid to the Board. The funds are deposited in escrow for the benefit of the victims or legal representatives of the victims of the crime. An expanded Statute of Limitations is necessary because the tort Statute of Limitation might expire before the work is undertaken or generates income. Thus, section 632-a provides that claims may be asserted at any time within five years after the escrow is established. To be entitled to funds the claimant/victim must institute an action in a civil court, recover a judgment for damages and then apply to the Board for satisfaction of it from the escrowed moneys. Upon dismissal of the criminal charges or acquittal, the Board must immediately pay over any funds in the escrow to the accused.

The statute strictly regulates the disbursement of the proceeds. They are to be used, first, to pay for the criminal’s legal representation and, in the discretion of the Board and after notice to the victims of the crime, for the necessary expenses for producing the moneys. The total amount disbursed for such purposes may not exceed 20% of the amount in the fund available to satisfy civil judgments obtained by victims of the crime. The balance of the fund is payable, in order of priority, to satisfy subrogation claims of the State (not exceeding one half of the civil judgment obtained by the victims), the civil judgment of the victims and finally, other creditors of the criminal. The remainder, if any, is paid to the criminal at the end of five years. Moneys in the fund are not subject to execution, attachment, levy or lien except as provided in the statute and certain actions taken by the criminal to avoid the statute’s provisions are declared void.

The statute was enacted in response to public outrage over the 1977 Son of Sam murders and news reports that the killer was being offered substantial sums of money for the exclusive rights to his story. The bill set up the procedures described to ensure that criminals would not profit from their crimes before the victims of those crimes had an opportunity to obtain compensation (see, Mem of Senator Emmanuel R. Gold, 1977 NY Legis Ann, at 267; Assembly Bill Mem Re: A 9019, Bill Jacket, L 1977, ch 823).

II

"Stranger in Two Worlds” was written by Harris after her conviction and imprisonment in Bedford Hills Correctional Facility. During her term, she worked at the Children’s Center of the prison with the children of the inmates in that facility and decided that it would be important to bring to the attention of the public the problem of imprisoned mothers trying to maintain the bonds with their offspring. Accordingly, she suggested that the mothers collect some of the letters written by the children and publish them. Eventually she put the collection together and enlisted the services of a book agent to help her sell the project to a publisher. The publishers were not interested in a book containing only the letters, however, and some suggested that the project would be more salable if Harris were to write her own story as well. She then expanded the book to include the story of her life, including her life with Tarnower, his murder, and her prison experiences. On March 19, 1985, MacMillan signed an agreement with Harris to publish the proposed work and paid her an advance of $50,000. She used the money for taxes and attorneys’ fees connected with her criminal trial and donated the balance to charitable programs at Bedford. Subsequently, after the book was completed and published, she established Children of Bedford, Inc. and assigned all future royalties to it for the benefit of the children of women in prison. Neither she nor the foundation have been paid any royalties for the book other than those originally advanced.

Before publication, MacMillan submitted a copy of the agreement and the book to the Crime Victims Board and on July 28, 1986, the Board issued a proposed order declaring the book subject to Executive Law § 632-a. At petitioners’ request, an adjudicatory hearing was held after which the Board upheld its proposed order and determination and issued a final order, now under challenge, determining that the book was within the statute and requiring all moneys due under the agreement to be paid into escrow.

¡II

Petitioners contend first that the Board erred in determining that "Stranger in Two Worlds” was subject to the statute because the material in the book relating to the reenactment of the crime constitutes only a small portion of the book and consists primarily of reprinted transcripts of trial testimony.

In its final determination, the Board found that the book "contains both the author’s version of the re-enactment of her crime of which she was convicted as well as expressions of Jean Harris’ thoughts, feelings, opinions and emotions regarding the crime.” It cited specifically two chapters dealing with the Tarnower homicide and the trial, "Harrison, New York: The End of the Line” and "Westchester: The People vs. Jean Harris”. The Supreme Court agreed with the Board’s determination, finding that these two chapters make up the core of the work around which the narrative of Harris’s life story is structured — preceding chapters describe the forces and events leading up to the crime and following chapters tell of Harris’s experiences as a consequence of her conviction for Tarnower’s murder. We agree that respondents reasonably concluded the book was within the statute. Indeed, it is apparent from the preliminary negotiations between MacMillan and Harris and from the publicity surrounding publication that MacMillan believed the book’s commercial value rested on subject matter within the statute. Before accepting the book, MacMillan urged Harris to expand it to include the crime and, before publishing it, MacMillan advised the trade that Harris’s soon to be released book was "a spellbinding story of her life in and out of prison,” that the author kept a diary in prison "full of new facts about her relationship with Hy Tarnower, her lover for over a decade whom she ultimately murdered,” and stated that "Ms. Harris comes to terms with herself [in prison] and recounts why she murdered her lover.” Press reports originating from MacMillan characterized the book as "the crime of the century — by the woman convicted of committing it.”

IV

Petitioners further contend that the Board violated procedural due process by failing to give them proper notice of the offending passages and because the investigative and adjudicative functions are improperly joined in the Crime Victims Board.

The procedures established by the Board, and followed in this case, are set forth in 9 NYCRR part 526. The Board first investigates to determine if the contract at issue comes within the statute. The results of the preliminary investigation are then incorporated into a proposed determination and notice is served upon the parties to the contract. An interested party has 30 days to request a hearing to challenge the proposed finding. If a hearing is requested, the chair assigns one or more Board members to conduct it and report to the full Board on the matter. The report and written findings of the Hearing Officer are considered by the Board and it issues a final determination containing the findings of fact and conclusions of law which support its decision.

Addressing petitioners’ notice claim first, due process requires that the parties be afforded reasonable notice of the claims against them and an opportunity to be heard on those claims (see, Mullane v Central Hanover Trust Co., 339 US 306, 313-314; Matter of Fitzgerald v Libous, 44 NY2d 660, 661). The proposed determination issued by the Board on July 29, 1986, contained a statement of the issues involved in the controversy, a detailed account of the facts which formed the basis for the Board’s proposed determination, including page references to various passages in the book, and stated that the passages were found to contain "both detailed reenactment as well as numerous expressions of Jean Harris’s thoughts, feelings, opinions and emotions regarding the crime for which she was convicted.” These preliminary findings were made available to petitioners prior to the administrative hearing and were sufficient to apprise them of the Board’s claims.

Petitioners’ remaining due process claim rests on their contention that the Board improperly acted as both prosecutor and Judge by investigating the facts, issuing a proposed determination and order, holding a hearing on that determination and ultimately, upholding it. The practice of combining investigative, prosecutorial and adjudicative functions in a single administrative agency or board is not improper, however; statutes doing so are common (see, e.g., Alcoholic Beverage Control Law § 119; Civil Service Law § 75 [2]; Labor Law § 100). Such arrangements do not, without more, violate due process by creating an unconstitutional risk of bias (Withrow v Larkin, 421 US 35; Matter of Beres & Sons Dairy v Barber, 75 AD2d 930, 931, affd 52 NY2d 1026; see also, Matter of Buffalo Teachers’ Fedn. v Helsby, 35 AD2d 318, 322). The petitioners must demonstrate that because of the practice the Board has been prejudiced by its investigation or for some reason is disabled from hearing and deciding the matter on the basis of the evidence (Withrow v Larkin, supra, at 55). The record in this case contains no such evidence.

V

Having concluded the statute was properly applied to the Harris book and the proceedings before the Board were regular, we turn to petitioners’ free speech claims.

A

The Board does not dispute that the book is protected speech under the First Amendment (see, Cox Broadcasting Corp. v Cohn, 420 US 469, 492 ["the commission of crime(s) * * * are without question events of legitimate concern to the public”]; cf., Chaplinsky v New Hampshire, 315 US 568). It contends, however, that section 632-a has only an incidental effect on speech because the restrictions imposed do not prohibit criminals from speaking about their crimes nor do they prohibit publishers from publishing the criminal’s reenactment or discussion of the crimes. They merely insure that profits received by the criminal from doing so are first made available to compensate the victims of the crime — a purpose unrelated to the suppression of free expression (see, United States v O’Brien, 391 US 367, 377).

We conclude that the statute is content-based and imposes a direct burden on speech. Harris may write, and her publisher may publish, any literary work written by her without regulation unless the subject matter of the work deals with the crime of which she stands convicted (Executive Law § 632-a [1]). Because of that exception, however, both the publisher and the Board must scrutinize the work to determine whether the subject matter being addressed falls within the terms of the statute. If it does, the statute imposes a burden on the criminal’s speech by regulating the financial aspects of it (see, Meyer v Grant, 486 US 414).

In Meyer v Grant, the Supreme Court examined a Colorado statute that prohibited the payment of persons to circulate petitions for ballot initiatives. The Court concluded that the statute was subject to strict scrutiny because it imposed financial limitations which directly burdened political speech. It did so by limiting the number of voices who would convey the message expressed in the petitions and making it less likely that the number of signatures necessary to place the issue on the State ballot would be obtained. Parties were free to use volunteers to circulate their petitions, but they were prohibited from paying people to do so and that restriction, the Court held, limited their ability to make the issue the focus of State-wide discussion (Meyer v Grant, supra, at 422-423). A similar result follows for nonpolitical speech (see, Village of Schaumburg v Citizens for Better Envt., 444 US 620 [regulation of the financial aspects of charitable solicitation]; Riley v National Fedn. of Blind, 487 US 781; Secretary of State of Md. v Munson Co., 467 US 947 [same]; Buckley v Valeo, 424 US 1 [contribution limitations under Election Campaign Act constitutional but expenditure limitations violated First Amendment]).

Executive Law § 632-a has a similar effect on speech by requiring the escrow of any profits paid to criminals for reenactment or depiction of their crimes and regulating distribution of those profits according to the statutory formula. Although the law does not foreclose the speaker’s message, it imposes an economic disincentive or penalty for delivering it (cf., Miami Herald Publ. Co. v Tornillo, 418 US 241).

Because the statute singles out a category of speech based on subject matter and imposes special burdens on that category, respondents must demonstrate that it serves a compelling State interest and is narrowly tailored to achieve that purpose (see, Arkansas Writers’ Project v Ragland, 481 US 221, 231; Perry Educ. Assn. v Perry Local Educators’ Assn., 460 US 37, 45; Consolidated Edison Co. v Public Serv. Commn., 447 US 530, 540; First Natl. Bank v Bellotti, 435 US 765, 786).

B

It is the declared policy of this State that financial assistance, counseling and retraining should be made available to crime victims to rehabilitate them physically, emotionally and occupationally for the injuries they have sustained at the hands of a criminal (see, Executive Law art 22). Executive Law § 632-a serves this compelling interest by facilitating compensation for victims directly injured by the crime and also to victims of other crimes by freeing up public funds which would otherwise be used to compensate these victims under the general provisions of article 22. A corollary to this interest in ensuring victim compensation, is the State’s interest in having criminals, rather than taxpayers, bear the burden of compensating their victims whenever possible. Section 632-a furthers these interests by ensuring that in cases falling within its provisions the criminal will bear the financial burden of compensating the victim.

If the only purpose of section 632-a was to compensate victims, however, petitioners’ contention that the State’s needs could be met by other, less burdensome means would be more persuasive. Manifestly, article 22 and the general civil procedures address that need. Section 632-a provides not only a method for victims to obtain compensation, however, it also meets other compelling governmental interests. First, it preserves the victim’s equitable right to assets earned by a criminal as a result of the victimization (compare, Executive Law § 631, with § 632-a). If there is no victim a necessary requirement for implementation of the statute is lacking, section 632-a does not apply and the criminal may discuss the crime without restraint (e.g., compare, Halmi v Crime Victims Bd., NYLJ, June 5, 1986, at 12, col 3 [Sup Ct, NY County], affd on opn below 128 AD2d 411 [prostitution is victimless crime]; and St. Martins Press v Zweibel, NYLJ, Feb. 26, 1990, at 25, col 1 [Sup Ct, NY County] [securities fraud based on leaking market information]; with Simon & Schuster v Fischetti, 916 F2d 777, and this case). But if there are victims and the criminal profits from reenactment or depiction of the crime, then the victims who have been injured by the criminal act, and the State, which has been called upon to render aid to those victims, should have the first claim to that money. They should be compensated before the criminal.

Section 632-a also addresses another concern. Our laws are formulated to express not only the community’s standards of right and wrong, but also its views on the nature and the gravity of the wrong. To the extent that the law manifests those standards, respect for it is maintained. To that end, our statutes impose punishment and disabilities on those convicted of crime which reflect the nature and extent of the community’s denunciation of particular conduct (see, Gregg v Georgia, 428 US 153, 184, n 30; for illustrations of disabilities see, e.g., Election Law § 5-106; Public Officers Law § 30 [1] [e]). Section 632-a embodies the community’s belief that it is not only wrong for criminals to commit crimes and profit from them but also wrong for criminals to salt their victims’ wounds by profiting from the victimization without recompense to the victims.

Thus, the statute is a codification of the fundamental equitable principle that criminals should not be permitted to profit from their wrongs (see, Caplin & Drysdale v United States, 491 US 617; Petrie v Chase Manhattan Bank, 33 NY2d 846; Riggs v Palmer, 115 NY 506, 511) and also an expression of the penological concept which provides that victims expect and are entitled to "retributive satisfaction” from our criminal justice system (see, Schafer, Restitution to Victims of Crime— An Old Correctional Aim Modernized, 50 Minn L Rev 243, 244; see also, Landau v Vallen, 895 F2d 888, 891 [recognizing equitable interest of victim to proceeds of crime]). The sponsor of the New York statute, expressed these interests well when he stated that: "[i]t is abhorrent to one’s sense of justice and decency that [a criminal] can expect to receive large sums of money for his story once he is captured — while [his victims] are dead [or] injured * * *. [T]he victim must be more important than the criminal” (Mem of Senator Emmanuel R. Gold, 1977 NY Legis Ann, at 267).

These governmental interests have been recognized and implemented by similar statutes in approximately 40 American jurisdictions.

c

Although the State has identified compelling reasons for imposing restrictions on the category of speech at issue here, this does not end the inquiry. We must determine whether New York’s statute is narrowly tailored to achieve these interests.

Petitioner contends the governmental purposes are adequately fulfilled by existing tort laws and provisional remedies, particularly the attachment laws. The tort laws do not satisfactorily address the need, however. They require the commencement of an action within three years, a period during which there may be no assets to satisfy a judgment. Although a judgment once secured may remain in effect for 20 years, the victim has little incentive to seek relief if the criminal has no assets. Moreover, if the criminal does have assets, or subsequently acquires them, the victim would be required, if limited to tort remedies, to share those assets with general creditors.

Nor do the existing attachment procedures solve the problem. CPLR article 62 provides that attachment is available upon commencement of an action, or immediately before it, if the debtor is either outside the State, or otherwise not amen.able to service, or if he has taken steps to defraud his creditors or frustrate the enforcement of a judgment (see, CPLR 6201). Because the remedy is prejudgment, an undertaking may be required of the plaintiff (CPLR 6212 [b]). These provisions address concerns wholly irrelevant to crime victims and the requirements for their use make them unsuitable to protect the needs of the crime victims now covered by Executive Law § 632-a. Even if the attachment laws were expanded to provide a remedy for crime victims, the provisions necessarily would operate much like Executive Law § 632-a if the statute was to serve the compelling State interests identified above.

Petitioners also contend that the statute is underinclusive because it does not reach income earned from writing generally, income earned from other crime-related activities such as wages received by a convicted computer expert who subsequently obtains profitable employment as a result of illegally "bugging” computer networks, or after-acquired property of the criminal. Their argument misses the point. The statute was never intended to reach profits received solely as a result of the criminal’s notoriety. A criminal may earn income from writings on such subjects as prison life in general, as Harris has (see, Harris v Abate, NYLJ, Apr. 2, 1990, at 25, col 3 [Sup Ct, NY County]), or may subsequently obtain employment as an "expert”, as petitioners’ hypothetical computer expert might. That financial success is the result of their newly advertised prominence or expertise, not their illegal act. By contrast, criminals covered by the statute had no marketable asset before the crime: they create, by illegal activity, a new product — a story — which becomes profitable in the retelling.

Petitioners’ reference to after-acquired property fails for the same reason. Moneys received by a criminal from inheritance or other sources do not relate to the crime in which a victim has been injured. Manifestly, these assets are available to victims by the customary legal remedies, but they do not come within the purpose of Executive Law § 632-a which is intended to protect the victim’s equitable claim to profits earned by a criminal from speech made possible by reason of their victimization.

Finally, petitioners contend that the law is unconstitutional because it excessively inhibits other contracting parties, such as publishers, who want to publish material about the crimes. But there is nothing in the law which prohibits noncriminal authors from writing about the crime or publishers from publishing their works. They may write and publish about the crime in general or from the perspective of the perpetrator. Nor is there anything in the statute which prevents publishers from profiting in full from publishing any work about the crime. No moneys are withheld from its earnings. The publisher is required only to submit a copy of the contract to the Board, and once it is finally determined that the statute applies, it must turn over moneys owed to the criminal under that contract to prevent the dissipation of the profits (Executive Law § 632-a [1]).

We conclude that section 632-a is narrowly tailored to meet the State’s compelling interest in securing a victim’s equitable right to be compensated from moneys earned by a criminal as a result of the victimization. It creates a unique and identifiable resource and preserves it for the benefit of victims directly injured by a crime to compensate them for the damages sustained, gives them priority over the criminal’s other creditors and extends the time within which a claim to the proceeds may be asserted by a victim. The statute regulates only the criminal’s receipt of money, not the right to speak about the crime and it does not impose a forfeiture of all profits — it merely delays payment (§ 632-a [11] [e]). Indeed, the statute provides an incentive to speak about the crime by granting the criminal first priority to the funds for legal fees and production expenses (§ 632-a [8]) and directing payment of the balance remaining to the criminal after other authorized claims are satisfied. Moreover, the statute does not prohibit anyone else from telling or publishing the criminal’s story. The reach of the law is limited to its purpose.

D

Petitioners further assert that the law is void for vagueness. An enactment is void for vagueness if its prohibitions are not clearly defined. The Constitution does not require " '[M]eticulous specificity’ ”, however (see, Grayned v City of Rockford, 408 US 104,110, quoting from Esteban v Central Mo. State Coll, 415 F2d 1077, 1088). As long as the law provides fair warning to those within its scope, clear standards for the enforcement of the law, and is not so uncertain in terms as to lead to self-censorship it will be upheld (see, Grayned v City of Rockford, supra, at 108-109; see also, Ward v Rock Against Racism, 491 US 781, 793-794; Kovacs v Cooper, 336 US 77, 79).

The terms of Executive Law § 632-a are sufficiently clear to meet this standard. Persons accused of or convicted of a crime and individuals contracting with those persons are covered by the statute (see, Executive Law § 632-a [1], [10] [b]). It applies to any contract involving "the reenactment of such crime, by way of a movie, book, magazine article, tape recording, phonograph record, radio or television presentation, live entertainment of any kind, or from the expression of such accused or convicted person’s thoughts, feelings, opinions or emotions regarding such crime” (§ 632-a [1]). A person complies with its requirements by submitting a copy of the contract to the Board and, once the Board determines that the contract falls within the purview of the statute, by paying over to the Board any moneys which would otherwise, by terms of such contract, be owing to the criminal or his representatives. The scope of the Board’s enforcement powers are limited both by statute and regulation (see, § 632-a [1]-[12]; 9 NYCRR part 526). Thus, the statute clearly delineates the class of individuals within its scope, the events that trigger its application, and the acts required for compliance and enforcement.

Petitioners nevertheless attempt to illustrate the statute’s vagueness by questioning the applicability of the statute to victimless crimes or to material which contains only a fleeting reference to the crime. They maintain that publishers do not have a clear idea from the language of the statute whether these circumstances would be covered by it. Such questions are matters for interpretation. Indeed, the courts have already resolved some of them (see, ante, at 726). The Constitution does not require that a law be drafted with such specificity that it leaves no room for interpretation nor is it void for vagueness merely because situations may exist in which it should not be applied (see, Grayned v City of Rockford, supra, at 108-110).

VI

Finally, petitioners claim that the statute violates the free speech provision contained in the State Constitution. Inasmuch as we conclude the statute does not unconstitutionally abridge petitioners’ Federal rights, we are obliged to examine the State Constitution to determine whether it provides greater protections (see, Town of Islip v Caviglia, 73 NY2d 544, 555-556).

New York’s Free Speech Clause is embodied in article I, § 8. It contains language that is more expansive than its Federal counterpart and we have at times interpreted it in a manner that is more protective of free expression than the First Amendment to the Federal Constitution (see, e.g., O’Neill v Oakgrove Constr., 71 NY2d 521, 528-529; People ex rel. Arcara v Cloud Books, 68 NY2d 553; see generally, Bellanca v New York State Liq. Auth., 54 NY2d 228, 234-235). Petitioners assert that we should do so here because where free expression is at stake, article I, § 8 of the New York Constitution demands a genuinely close fit between the asserted State interest burdening free speech and the restrictions imposed by law (citing People ex rel. Arcara v Cloud Books, 68 NY2d 553, supra). They maintain that Executive Law § 632-a does not meet this standard because it is seriously underinclusive and inadequately designed to address the general problem of victim compensation. As we have noted, petitioners’ basic premise is erroneous. The statute is not designed to compensate all victims, only those who possess claims to the proceeds earned by the criminal as a result of their victimization. Moreover, assuming without deciding, that article I, § 8 does require some type of "genuinely close fit” between the statute and its purpose, this requirement is no more burdensome than requiring that the statute be narrowly tailored to meet its objective and section 632-a satisfies this test. .

In sum, we find "Stranger in Two Worlds” is a publication subject to the provisions of Executive Law § 632-a, that respondent Board properly found it to be such and that the statute does not violate petitioners’ rights to free speech under either the Federal or State Constitution.

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

Chief Judge Wachtler and Judges Alexander, Hancock, Jr., and Bellacosa concur; Judges Kaye and Titone taking no part.

Order affirmed, with costs.

      . As such, the statute is but another manifestation of the constitutionally imposed obligation of the State and its subdivisions to aid the needy (NY Const, art XVII, § 1).

      . The statute’s purpose is to compensate crime victims not to protect their sensibilities or those of the public by restricting offensive speech (cf., Texas v Johnson, 491 US 397; Hustler Mag. v Falwell, 485 US 46).

      . The Federal statute is found in 18 USC §§3681, 3682. The Senate report supporting the Federal statute, after noting the statute was patterned after New York’s law, identified a similar policy supporting the Federal law; the purpose is "to preclude criminals from profiting from the glorification of their misdeeds * * *. Any profits reaped from illegal acts are more appropriately used to provide restitution to the direct victim of the crime, or, alternatively, to victims of crime in general” (S Rep No. 98-497, reprinted in 1984 US Code Cong & Admin News, at 3612-3613).
      Respondents’ brief identifies the following States as having similar laws: Ala Code §§ 41-9-80 — 41-9-84; Alaska Stat § 12.61.020; Ariz Rev Stat Annot § 13-4202; Ark Stat Annot § 16-90-308; Cal Civ Code § 2225; Colo Rev Stat §§ 24-4.1-201 — 24-4.1-207; Conn Gen Stat Annot § 54-218; Del Code Annot, tit 11, §§ 9101-9106; Fla Stat Annot § 944.512; Ga Code Annot §§ 17-14-30 — 17-14-32; Haw Rev Stat Annot §§ 351-81 — 351-88; Idaho Code § 19-5301; Ill Annot Stat, ch 70, para 411; Ind Code Annot §§ 16-7-3.7-1 — 16-7-3.7-6; Iowa Code Annot § 910.15; Kan Stat Annot §§ 74-7319 — 74-7321; Ky Rev Stat Annot § 346.165; La Rev Stat Annot §§ 46:1831-46:1839; Md Annot Code, art 27, § 764; Mass Gen Laws Annot, ch 258A, § 8; Mich Comp Laws Annot § 780.768; Minn Stat Annot § 611A.68; Miss Code Annot §§ 99-38-1 — 99-38-11; Mo Annot Stat § 595.045 (14); Mont Code Annot § 53-9-104 (1) (d); Neb Rev Stat §§ 81-1836 — 81-1842; Nev Rev Stat Annot § 217.265; NJ Stat Annot §§ 52:4B-26 — 52:4B-30; Ohio Rev Code Annot §§ 2969.01-2969.06; Okla Stat Annot, tit 22, § 17; Ore Rev Stat § 147.275; Pa Stat Annot, tit 71, § 180-7.18; RI Gen Laws §§ 12-25.1-1 — 12-25.1-12; SC Code Annot §§ 15-59-40 — 15-59-80; SD Code Annot § 23A-28A-1; Tenn Code Annot §§ 29-13-201 — 29-13-208 (1990); Tex Civ Code Annot, art 8309-1, §§ 1-18; Wash Rev Code Annot §§ 7.68.200-7.68.280; Wis Stat Annot § 949.165 (2); Wyo Stat § 1-40-112 (d).


source: Caselaw Access Project

author: Alexander, J.

license: Public Domain

text:
    The People of the State of New York, Respondent, v Richard Schreiner, Appellant.
    Argued March 21, 1991;
    decided May 7, 1991

      POINTS OF COUNSEL

      Joel Atlas and Philip L. Weinstein for appellant.

      John J. Santucci, District Attorney (Gary Fidel of counsel), for respondent.
   OPINION OF THE COURT

Alexander, J.

Defendant appeals his conviction, by jury verdict, of second degree murder (Penal Law § 125.25 [1]) and fourth degree criminal possession of a weapon (Penal Law § 265.01). He contends that his statement made during a psychiatric examination pursuant to CPL 330.20 (11) in which he confessed to the murder, had been hypnotically induced and thus was improperly received in evidence against him. Specifically, relying on our decision in People v Hughes (59 NY2d 523), he argues that the statement was inherently unreliable because it was the product of hypnotic therapy and thus was hypnotically induced. He contends that our decision in Hughes established the rule that all hypnotically induced testimony is per se inadmissible. He argues further that because the unwarned statement (see, Miranda v Arizona, 384 US 436) was elicited during a compelled psychiatric examination, its use for a purpose beyond that intended in connection with the examination was grossly unfair and improper.

Defendant asks that we reverse the Appellate Division’s affirmance of his conviction, vacate that conviction and dismiss the indictment because without the challenged statement, the evidence was legally insufficient to sustain his conviction. The People argue that the "findings” of the courts below that defendant’s statement was not the product of hypnosis is not reviewable by this Court and that in any event, none of the reasons for precluding the introduction of hypnotically induced recollection articulated in Hughes are present here, thus Hughes is inapplicable. Therefore, they contend, the statement made by defendant during his psychiatric examination was properly admitted against him. We disagree and now reverse.

I

In September 1979, the body of one Jamie Amsterdamer was found in an alley in Jackson Heights, Queens County. An "angle-iron” pipe, the instrument apparently used in causing Amsterdamer’s death, was found nearby. The ensuing police investigation determined that on the previous night the deceased was seen in two bars accompanied by defendant. Defendant told the investigating detective during an interview at the local police station that he had left the "Betsy Ross” bar with decedent in the early hours of the day on which the body was found, but that they had then traveled separate ways. Although initially questioned in respect to the Amsterdamer death, defendant was not considered a suspect, nor was he charged.

The following year, defendant was arrested and charged with attempted murder in an unrelated homicide. At his trial in 1981, he was found not responsible by reason of mental disease or defect and was committed to Mid-Hudson Psychiatric Center (Mid-Hudson) where he underwent hypnotic therapy. In March 1986, application was made, pursuant to CPL 330.20 (11), to transfer defendant to a nonsecure facility, it being the medical consensus of the doctors at Mid-Hudson that he no longer had a dangerous mental disorder. The District Attorney of Queens County was notified of the application and obtained a court order authorizing an examination of defendant by a psychiatrist nominated by that office.

Dr. Lawrence Siegel was designated to conduct the examination, and he did so with the consent of an attorney of the Mental Hygiene Legal Service, the agency responsible for the provision of legal services to persons such as defendant (see, Mental Hygiene Law art 47). Notwithstanding that Dr. Siegel had advised him that their conversation could not be kept confidential and that a report based on the interview would be forwarded to the District Attorney, during the course of the examination defendant recounted that some three years previously following a self-hypnotic episode, he had "remembered that” he had caused Jamie Amsterdamer’s death in 1979 by striking him in the head with a steel fence post. Dr. Siegel again advised defendant that this information was not confidential and that it would be reported to the District Attorney. Defendant was thereafter arrested and indicted for the murder of Jamie Amsterdamer.

Prior to trial, defendant sought to suppress the statements made to the investigating detective in 1979 and the statements made to Dr. Siegel during the psychiatric examination. Following a Huntley hearing (People v Huntley, 21 NY2d 659) the court denied the motion, concluding that defendant was not "in custody” when being interviewed by the detective in 1979 and therefore was not entitled to Miranda warnings, and further, that the examination by Dr. Siegel was ancillary to a civil proceeding, not involving any past or pending criminal matter in respect to which Miranda warnings were required to be given. Defendant also sought in limine to suppress the statements made to Dr. Siegel on the ground that they were the . product of posthypnotic suggestion. A hearing on this motion was ordered by the trial court.

At the hearing, Emmy Stanley, a Mid-Hudson psychologist who served as defendant’s therapist between 1981 and 1983, testified that when defendant first arrived at Mid-Hudson he did not recall having killed anyone. During their therapy sessions Stanley and defendant explored things that were bothering him, including events that took place during his childhood. Defendant told Stanley that he “wanted to get rid of anything that might come up in the future so that when and if he was ever released to the community, he would have everything behind him.” He also mentioned that he had been troubled by an incident that occurred in an alley. Although Stanley did not know the details of the Amsterdamer killing, defendant had told her previously that he had been questioned about the murder before coming to Mid-Hudson. He told her, however, that he thought he hadn’t committed the murder. Stanley testified that in response to defendant’s statement, she said, “You know Rick, I think you probably did.”

Stanley subsequently received permission to hypnotize defendant and hypnotized him every few weeks. The hypnotic sessions initially addressed defendant’s smoking problem, but Stanley also hoped to relieve defendant of his feelings of guilt and repression. She eventually taught him self-hypnosis and encouraged him to use self-hypnosis, presumably to aid in ridding himself of his feelings of guilt. She told him, “when he was ready to deal with the events of whatever night it was, he would begin to remember them.” Shortly thereafter, while under self-hypnosis, defendant "recalled” the murder of Jamie Amsterdamer. He later told Stanley about the Amsterdamer killing. Stanley testified that although defendant was not under hypnosis when he told her of these events, his statement resulted from the "therapy or post-hypnotic suggestion.”

Defendant’s expert psychologist, Dr. Stanley Fischer, who had an “interest in hypnotic recall”, had taught courses in hypnosis at Columbia University College of Physicians and Surgeons, and had published articles on hypnosis, concluded, on the basis of his examination of a tape of a hypnotic therapy session conducted by Emmy Stanley, and others, with defendant, that there was a “high probability of confabulation.” He explained "confabulation” as being a process by which a person under hypnotic therapy creates material to fulfill a demand of the hypnotist in order to please her. He observed that in the session he reviewed the hypnotist emphasized demands for defendant to produce details, which is exactly the structure that leads to confabulation. He noted, however, that a person would not be "confabulating” if their account of the incident were true and the information recounted was not available from any other source.

The hearing court denied the in limine motion, concluding that there was no proof “that anybody implanted anything into defendant’s mind about the particular acts involving [the] homicide.” Defendant’s subsequent conviction was affirmed by the Appellate Division (159 AD2d 737). That court held that the hearing court properly determined that defendant’s statements regarding the Amsterdamer homicide "were not the product of hypnotic suggestion or confabulation.” (Id,., at 738.) For the reasons that follow, we now reverse the order of the Appellate Division.

II

A

At the outset, we reject the People’s contention that there is a factual finding that defendant’s statement was not the product of hypnosis, which is beyond our power of review. Although this Court is not empowered to review questions of fact, we may examine the legal sufficiency of the evidence purporting to support that determination (see, People v Cosme, 48 NY2d 286, 292; People v Jackson, 36 NY2d 922). Whether evidence is legally sufficient to sustain the findings of a trial court concerning the admissibility of a confession presents a question of law for this Court’s review (see, People v Leonti, 18 NY2d 384, cert denied 389 US 1007; NY Const, art VI, § 3 [a]; Cohen and Karger, Powers of the New York Court of Appeals § 198, at 744-745 [rev ed]). Thus, we may determine whether this record contains any evidence sufficient to support the conclusion that defendant’s confession was "not the product of hypnotic suggestion or confabulation.”

B

In People v Hughes (59 NY2d 523, supra), although we recognized the utility and the benefits of hypnosis as an investigative tool, we concluded that because hypnosis had not been generally accepted in the scientific community as reliable (id., at 543), hypnotically induced testimony was inadmissible as direct evidence. In People v Hults (76 NY2d 190) we extended the Hughes rule to bar the defendant’s use of statements made under hypnosis for cross-examination purposes because the probative value of the hypnotic statement is directly related to its reliability and the dangers inherent therein relate to all hypnotic statements (People v Hults, supra, at 197). Hypnotically refreshed recollections are deemed unreliable because hypnosis "affects the subject in at least three ways: (1) the subject may be susceptible to suggestions given intentionally or unintentionally by the hypnotist or others present during the session; (2) the subject may confabulate or intentionally fabricate events in order to fill in memory gaps; and (3) a witness who has been hypnotized may experience an enhanced confidence in his or her memory of an incident, thereby unfairly impairing a defendant’s ability to cross-examine the witness about the event” (People v Hults, 76 NY2d 190, 197, supra; see also, People v Hughes, supra, at 534-535; People v Tunstall, 63 NY2d 1, 7).

We rejected the approaches used in some jurisdictions in determining the admissibility of hypnotically induced recollections (see, e.g., Harding v State, 5 Md App 230, 246 A2d 302, cert denied 395 US 949 [use of hypnosis affects weight of testimony, not its admissibility]; State v Armstrong, 110 Wis 2d 555, 329 NW2d 386 [case-by-case determination of the suggestibility and reliability of the recall under the totality of the circumstances]; State v Hurd, 86 NJ 525, 432 A2d 86 [holding hypnotically refreshed recollections admissible where prescribed series of standards and safeguards are observed by those administering the hypnosis]; People v Hughes, supra, at 538-540) and instead, adopted the test of Frye v United States (293 F 1013). Employing that test, we concluded that hypnotically induced recall was not admissible since hypnosis had not yet gained general acceptance in the scientific community as a reliable means of restoring recollections. We noted that "it has been scientifically demonstrated that [hypnosis] produces recollections which may contain a mixture of accurate recall, fantasy or pure fabrication in unknown quantities” (People v Hughes, supra, at 543) and that there is no scientifically accepted method for determining whether the subject himself has fabricated or confabulated the events recalled under hypnosis (id., at 539).

The People contend here, however, that defendant’s statement was not hypnotically induced because he was not under hypnosis when he related to Emmy Stanley his recollections of the events in the alley. They argue that because neither Emmy Stanley nor Dr. Siegel knew anything about the Amsterdamer homicide, there could not have been any suggestiveness in their conversations with defendant. They rely upon the hearing court’s conclusion that there was no proof "that anybody implanted anything into defendant’s mind about the particular acts involving [the] homicide.” Contrary to this contention, the record supports no other inference than that defendant’s statement was hypnotically induced. The evidence was that he initially thought he hadn’t committed the Amsterdamer murder about which he had been questioned and that he "remembered” his involvement following an episode of self-hypnosis. The conclusion is thus inescapable that his recollection was the result of hypnotic therapy and posthypnotic suggestion. Because such recollections are inherently unreliable, the defendant’s statement should not have been admitted in evidence against him.

In view of this conclusion, we need not consider defendant’s alternative argument that the statement should have been excluded because it was made without benefit of Miranda warnings and was utilized for a purpose other than a CPL 330.20 (11) transfer determination.

Accordingly, the order of the Appellate Division should be reversed, the confession suppressed and the case remitted to Supreme Court, Queens County, for a new trial should the People be so advised.

Chief Judge Wachtler and Judges Simons, Kaye, Titone, Hancock, Jr., and Bellacosa concur.

Order reversed and case remitted to Supreme Court, Queens County, for further proceedings in accordance with the opinion herein.

      . Defendant does not contest the suppression ruling respecting the statement to the investigating detective. He argues, however, that the statements made to Dr. Siegel were pursuant to a "compulsory psychiatric examination”, were "unwarned” and therefore should not have been used against him.

      . Although a witness’s prehypnotic recollection may be admissible if it is established, pretrial, that the hypnotic process has not been so impermissibly suggestive as to taint that recollection (see, People v Tunstall, 63 NY2d 1; People v Hughes, 59 NY2d 523, 546), there is no claim here that defendant had any prehypnotic recollection of the Amsterdamer killing.


author: Titone, J.

text:
    In the Matter of Robert Abrams, as Attorney-General of the State of New York, Appellant, and Harry B. Frank, Respondent, v Nicholas F. Brady, as Secretary of the Treasury, United States Department of the Treasury, Respondent.
    Argued March 21, 1991;
    decided May 9, 1991

      POINTS OF COUNSEL

      Robert Abrams, Attorney-General (Pamela A. Mann, O. Peter Sherwood, Lawrence S. Kahn, Susan Scheid and Susan A. Glover of counsel), appellant pro se.

      Richard W. Mark, Otto G. Obermaier and Edward T. Ferguson, III, for Nicholas F. Brady, respondent.
   OPINION OF THE COURT

Titone, J.

Federal tax refunds that are owed but have remained unclaimed have traditionally been held for the taxpayer in the general fund of the United States Treasury. In this proceeding, the New York State Attorney-General seeks to recover from the United States Government those unclaimed refunds which, he alleges, have escheated or will escheat to the State by operation of article XII-A of the Abandoned Property Law. The focus of this appeal in what has become a protracted and complex intergovernmental litigation is the constitutionality and effect of a statute recently enacted by Congress that, by its terms, would nullify New York’s statutory right of escheat with respect to citizens’ unclaimed income tax refunds. We now conclude that the challenged Federal law was within Congress’s constitutional powers and that Congress’s evident intention broadly to override the States’ rights of escheat without reservation ought to be given full effect.

The doctrine of escheat has its origin in feudal notions of real property rights, which were deemed to derive, directly or indirectly, from the king or the mesne lord (see, 1 Pollock & Maitland, History of English Law, at 232-240, 351 [2d ed]; Note, Origins and Development of Modern Escheat [hereinafter Modern Escheat], 61 Colum L Rev 1319). In the United States, the reversionary rights of the sovereign have devolved upon the States rather than the Federal Government, and each of the 50 States has enacted specific legislation implementing the common-law doctrine of escheat (see, Hodgson v Wheaton Glass Co., 446 F2d 527, 535; Modern Escheat, op. cit., at 1327 [and authorities cited therein]). In New York, the State’s escheat rights were initially embodied in the State Constitution (see, NY Const of 1894, art I, § 10, repealed by amendment Nov. 6, 1962). However, they are now codified in the Abandoned Property Law (L 1943, ch 697).

Enacted in 1969 (L 1969, ch 581), article XII-A of the Abandoned Property Law now "extend[s] the declared policy of the state with respect to unclaimed or abandoned property to all such property in the possession, custody or control of the United States of America.” Under Abandoned Property Law § 1215, property held by the United States escheats to the State of New York if "the rightful owner * * * shall have been * * * unknown for seven consecutive years * * * or * * * shall have abandoned * * * such property, and either * * * the last known address of such rightful owner, as it appears from the records of the United States is in this state” or certain other conditions establishing substantial contact with the State are satisfied. Such property, if unclaimed by the rightful owner for seven consecutive years, is presumed abandoned and escheats by operation of law (Abandoned Property Law § 1216).

In 1980, in an effort to bring some of the unclaimed funds held in the United States Treasury within the State’s control pursuant to article XII-A, the New York State Attorney-General commenced the present proceeding against the Secretary of the Treasury, alleging that New York’s right of escheat entitled it to the proceeds of some of its citizens’ unclaimed income tax refunds. Specifically, the Attorney-General sought to recover on behalf of the State the amounts represented by undeliverable and uncashed refund checks held by the United States for New York residents for more than seven years.

The litigation proceeded through a number of early skirmishes, including unsuccessful efforts by respondent to remove the case to Federal court (see, In re Petition of Abrams, 80 Civ 718, US Dist Ct, SD NY, Oct. 21, 1980) and to secure a dismissal on grounds of sovereign immunity (see, Matter of Abrams v Miller, 134 Misc 2d 841). Following the latter judicial loss, Congress intervened by enacting the Omnibus Budget Reconciliation Act of 1987 (Pub L 100-203 [the Omnibus Act]), the statute challenged here. The Omnibus Act, which is codified at 26 USC § 6408 and took effect on December 22, 1987, provides, in pertinent part, that "[n]o overpayment of any tax * * * shall be refunded (and no interest with respect to any such overpayment shall be paid) if the amount of such refund (or interest) would escheat to a State or would otherwise become the property of a State under any law relating to the disposition of unclaimed or abandoned property.”

Relying on this new statute, respondent again moved to dismiss the Attorney-General’s petition oh the ground that the State’s escheat rights to unclaimed tax refunds under its Abandoned Property Law had now been overridden. In response, the Attorney-General argued that the Omnibus Act was unconstitutional because it was not a "necessary and proper” exercise of Congress’s taxing power. Alternatively, he argued that, even if constitutional, the statute should not be applied "retroactively” so as to defeat New York’s right to claim funds that had escheated before its effective date. By interim order dated July 25, 1988,..the trial court converted respondents’ motion to dismiss to one for summary judgment.

On the merits, the trial court held that it could not "substitute its judgment for that of the Congress in determining whether the law is a necessary and proper exercise of its undisputed powers to enforce the Internal Revenue Code and * * * to administer undeliverable refunds.” (Matter of Abrams v Baker, 141 Misc 2d 882, 887.) Thus, in the court’s view, there was no legal basis for invalidating the Omnibus Act as an ultra vires congressional enactment. With respect to the Attorney-General’s alternative argument, however, the court ruled that partial relief should be afforded to the State. Reasoning that the Act "cannot operate retroactively to cut off any matured substantive rights,” the court held that, pursuant to the self-executing escheat provisions contained in Abandoned Property Law § 1223, the State was entitled to "any tax refunds held by respondent, which would otherwise be subject to escheat under article XII-A * * * to which the rightful owner has not made claim for seven years prior to [the Omnibus Act’s] effective date” (141 Misc 2d, at 888-889, supra).

On cross appeals by both parties, the Appellate Division agreed that the Omnibus Act was a valid exercise of congressional authority, but concluded that the trial court’s holding on the retroactivity question was in error. Taking note of the general rule that requires courts to apply the substantive law in effect at the time their decisions are rendered (citing United States v Schooner Peggy, 1 Cranch [5 US] 103), the court utilized the Federal three-factor analysis for determining whether "retroactive” application of the new statutory rule should be forbidden here (see, Bradley v Richmond School Bd., 416 US 696; Chevron Oil Co. v Huson, 404 US 97). Since the "step-by-step analysis” set forth in the Federal case law did not suggest otherwise, the Appellate Division held that the Omnibus Act could be applied "retroactively” to preclude all recovery by the State. On the Attorney-General’s appeal from the Appellate Division’s order, we now affirm.

Although the Federal Government does not itself possess a generally applicable right of escheat analogous to that possessed by the States, it is well established that the Government can override the States’ escheat rights through affirmative legislation and that the Tenth Amendment, which reserves certain spheres of power to the States (US Const 10th Amend), does not operate as an impediment to Congress’s authority in this area (see, United States v Oregon, 366 US 643; see also, Garcia v San Antonio Metro. Tr. Auth., 469 US 528). Indeed, Congress has previously enacted laws designed to defeat certain specific escheat powers possessed by the States (see, e.g., Pub L No. 868, ch 819, 70 US Stat 785 [1956], repealed by Pub L 95-598 [unclaimed bankruptcy dividends]; Pub L 92-117, codified at 31 USC § 1322 [unclaimed deposits in Postal Savings System]), and the Attorney-General does not here dispute Congress’s power to do so, at least in principle. Instead, the Attorney-General contends, the particular enactment he challenges, which purports to affect the States’ rights with respect to unclaimed tax refunds, is impermissible because it is not a "necessary and proper” incident to the exercise of a power that has expressly been given to the Federal Government, i.e., the power to lay and collect income taxes. It is to this narrow contention that we now turn our attention.

The Attorney-General’s argument rests on the premise that the Federal Government has no interest in funds collected by its Internal Revenue Service once it determines that those funds represent overpayments that should be refunded to the individual taxpayers. Based on this assumption, the Attorney-General contends that the Omnibus Act bears no rational relationship to the power to impose an income tax that has been conferred on Congress by the Sixteenth Amendment (US Const 16th Amend) and that, accordingly, even the minimal level of scrutiny that is applied when considering the scope of Congress’s powers under the Necessary and Proper Clause (US Const, art I, § 8, cl 18) is unsatisfied (see, Legal Tender Case, 110 US 421, 440; Ex parte Curtis, 106 US 371, 372).

However, the fact that the Federal Government may have no revenue-based interest in the retained funds is not dispositive. The enumerated power to lay and collect taxes certainly includes, as a "necessary and proper” incident, the power to establish an administrative framework for the collection of taxes.

That an ongoing administrative interest does, in fact, exist is apparent from even the most cursory examination of the system Congress has devised for the collection of income taxes. Since World War II, the complex task of collecting Federal income tax from each citizen has been facilitated by a system of payroll withholding, in which the taxpayer’s annual tax obligation is estimated and an appropriate amount deducted from his or her paycheck. This withholding system represents a congressional decision concerning the most effective method of assuring prompt payment and, as such, is not subject to judicial challenge (see, McCulloch v Maryland, 4 Wheat [17 US] 316, 421).

The need for a system of refunding overpayments is a natural corollary to a collection system based on withholding, since there will inevitably be instances in which the total amount of the taxpayer’s annual tax obligation has been overestimated and, consequently, a payment in excess of the amount due has been made. Manifestly, the method and manner of making these refunds are as much a congressional prerogative as are the method and manner of collecting citizens’ tax payments in the first instance. In both instances, Congress’s freedom to make choices is circumscribed only by the requirements that they be "conducive or adapted to the end to be accomplished” (Legal Tender Case, 110 US, at 440, supra) and that the end be "legitimate” as well as "within the scope of the constitution” (McCulloch v Maryland, supra, at 421).

The broad end to be served in this instance is the fair administration of a national system of income taxation, an end that is plainly within the scope of the constitutional power to "lay and collect” income taxes. The more immediate end to be served by the Government’s system of tax refunds, i.e., to preserve a Federally administered fund against which taxpayers or their heirs may claim refunds of their overpayments at any time, is also one that is plainly within the scope of the power to tax.

As the Attorney-General himself recognizes, Congress has long chosen to implement this goal through a policy of holding the proceeds of undeliverable or uncashed refund checks in trust for the benefit of the taxpayer indefinitely (see, Pub L No. 473, ch 756, 48 US Stat 1224 [1934], codified at 31 USC former § 725 [as amended periodically]; Pub L No. 171, ch 222, §§ 1, 2, 61 US Stat 308 [1947], codified at 31 USC former §§ 132, 133 [as amended periodically]; 31 USC §§ 1324, 3328 [a] [as amended by Pub L 100-86, tit X, § 1002]). Thus, although it conceivably could have elected a number of other courses, Congress has opted for a system in which the taxpayer, or the taxpayer’s estate, will receive full credit for his or her overpayments, whenever a claim therefor is made. The Omnibus Act, the statute at issue here, merely represents a further step to implement this policy by overriding the State escheat laws that would otherwise operate to defeat it. Indeed, this purpose is apparent from the legislative history of the Omnibus Act itself. The report issued by the House Conference Committee with regard to the statute states:

"Although under present law unclaimed Federal tax refunds remain in the General Fund of the Treasury, no provision of the Code expressly requires that such unclaimed refunds escheat (revert) to the Federal Government. Some States have sued the Federal Government, asserting that unclaimed Federal tax refunds escheat to the State. If the States win these cases, the Federal Government would be required to pay these amounts out of the General Fund of the Treasury”. (HR Conf Rep No. 100-495, 100th Cong, 1st Sess, at 1006, reprinted in 1987 US Code Cong & Admin News, at 2313-1752.)

Thus, the clear purpose of the Omnibus Act was to prevent the States from obtaining custody of the unclaimed refund moneys in the Federal Treasury. While the Attorney-General regards this purpose as "confiscatory” and impermissible, it is, in fact, nothing more than a congressional effort to avoid State interference with the Federal policy of preserving the taxpayer’s right to recover the unclaimed funds directly from the Government at any time.

The Attorney-General’s claim that the Government cannot demonstrate any need related to the taxing system "to control the refund process on a permanent basis” is similarly unavailing. This aspect of the Attorney-General’s argument is flawed because it is, admittedly, based on the circular premise that "refunds which have been unclaimed for seven years lose any relationship they may have had to the administration of the tax system.” The premise is correct only to the extent that the taxpayers’ interests in the refund moneys, which the Government seeks to protect, are immutably defined and circumscribed by the State’s escheat laws. As we have previously noted, however, there is nothing in the Tenth Amendment, or in any other provision of the United States Constitution, that prevents the Federal Government from overriding the States’ escheat laws to effectuate congressional policies that are within the scope of Congress’s powers under the Necessary and Proper Clause. Since that is precisely what Congress has done here, it cannot be said that the unclaimed moneys the State seeks have lost their character as unpaid tax refunds belonging to citizens and no longer have any relationship to the administration of the Federal tax system.

Having concluded that Congress acted within the scope of its powers to administer the Federal income tax system when it enacted the Omnibus Act, we turn now to the question of whether that enactment cut off the State’s right to all of its citizens’ unclaimed refunds presently held in the United States Treasury or is instead limited in effect to those refunds that had not yet escheated at the time the statute became effective. On this question, we stress at the outset that the Attorney-General does not claim any constitutionally protected "vested” interest in any of the unclaimed funds (see, South Carolina v Katzenbach, 383 US 301, 323-324 [Fifth Amendment’s Due Process Clause does not protect States]; see also, South Carolina v Baker, 485 US 505). Rather, his argument focuses on Congress’s intentions and the propriety of what he characterizes as "retrospective” application of the statute in light of those intentions. However, the Attorney-General’s arguments on the question of retrospectivity do not withstand close analysis.

The Omnibus Act prohibits Federal authorities from refunding any overpayment of income tax if the payment would escheat to a State. Thus, the statute is, by its terms, directed at the future conduct of public officers, and no real question of retroactive effect on past conduct or events is presented. Indeed, given the clarity of the simple legislative directive, there is no need to look beyond the well-established rule that a court should decide controversies on the basis of the substantive law as it exists at the time of the decision (e.g., United States v Schooner Peggy, 1 Cranch [5 US] 103, supra). Under that rule, the Attorney-General’s efforts to recover unclaimed tax refunds that he asserts have escheated to the State would have to fail because the Omnibus Act explicitly prohibits Federal officials from paying over such funds under these circumstances.

Furthermore, even if the language of the statute itself were less clear, the legislative history demonstrates beyond peradventure that application to all of the unclaimed refunds now held in the United States Treasury was precisely what Congress intended. As is evident from the House Report quoted above, Congress was concerned that moneys currently being held in the Treasury in trust for taxpayers would have to be paid out if the “States [that] have sued the Federal Government * * * asserting that unclaimed Federal tax refunds escheat to the State * * * win these cases” (HR Conf Rep No. 100-495, op. cit, at 2313-1752). The Omnibus Act was adopted specifically to obviate this result. And, since Congress’s intent with regard to the application of the statute is clear from both the language and the history of the statute, there is no need for us to consider whether application of the Omnibus Act to this case would result in "manifest injustice” (see, Bradley v Richmond School Bd., 416 US 696, supra; see also, Chevron Oil Co. v Huson, 404 US 97, supra).

In sum, the Omnibus Act, which operates to nullify the States’ formerly existing escheat rights to certain unclaimed income tax refunds was a permissible exercise of Congress’s powers under the Necessary and Proper Clause of the United States Constitution (US Const, art I, § 8, cl 18), since it implements Congress’s authority under the Sixteenth Amendment "to lay and collect” income taxes. Accordingly, under the Supremacy Clause of the Constitution, we are bound to recognize this Federal statute as a valid limitation on the escheat rights established by article XII-A of the Abandoned Property Law. Inasmuch as the statute does not, by its terms, admit of any exception for unclaimed refunds that may have already become subject to the State’s escheat laws, the Appellate Division was correct in concluding that the Attorney-General’s petition should have been dismissed in its entirety.

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

Chief Judge Wachtler and Judges Simons, Kaye, Alexander, Hancock, Jr., and Bellacosa concur.

Order affirmed, with costs.

      . The expressed policy of the State under the Abandoned Property Law is "to utilize escheated lands and unclaimed property for the benefit of all the people of the state” "while protecting the interest of the owners thereof’ (Abandoned Property Law § 102 [emphasis supplied]). Thus, the present law permits the true owner, upon a proper showing, to reclaim property that has been taken as abandoned by the State (see, Abandoned Property Law §§ 1404, 1406). This "marks a change from many existing provisions of law which escheat such property to the state and wipe out the rights of the owner * * * after a specified period of time” (Joint Statement by Senator Wicks and Assemblyman Moffat, issued Feb. 28, 1943, reprinted in McKinney’s Cons Laws of NY, Book 2 Vi, Abandoned Property Law § 102, Historical Note, at 2).

      . Under the present system, the proceeds from undelivered refund checks are placed in a general fund account within the Treasury and the taxpayer’s "account” with the Internal Revenue Service is posted with a permanent credit. Where the refund check has been delivered but not cashed for more than a year, the check itself becomes invalid but the taxpayer retains a continuing right to claim payment from a special account for outstanding governmental obligations. Credits held in the taxpayer’s Internal Revenue Service account are held against the possibility that the taxpayer, or the taxpayer’s estate, will seek payment of the refund at some time in the future. Alternatively, the credit may be applied to offset certain of the taxpayer’s obligations, such as unpaid Federal tax or child support (see, 26 USC § 6402). In at least one instance, a tax refund was paid in the early 1980’s based upon a return that had been filed in the 1940’s.


text:
    In the Matter of Betsy V. Scherbyn, Appellant, v Wayne-Finger Lakes Board of Cooperative Educational Services et al., Respondents.
    Argued March 27, 1991;
    decided May 9, 1991

      POINTS OF COUNSEL

      Kevin H. Harren and Bernard F. Ashe for appellant.

      Samuel G. Brundage for Wayne-Finger Lakes Board of Cooperative Educational Services, respondent.

      John W. Park, County Attorney, for Georgia Delaney, respondent.
   OPINION OF THE COURT

Alexander, J.

Petitioner Betsy Scherbyn appeals by leave of this Court from an order of the Appellate Division which affirmed Supreme Court’s dismissal of her CPLR article 78 proceeding seeking review of the determination of respondent Wayne-Finger Lakes Board of Cooperative Educational Services (BOCES) dismissing her from a probationary typist position.

In affirming the determination below, the Appellate Division characterized this proceeding as in the nature of "mandamus to compel petitioner’s reinstatement to [the position of typist]” and concluded that petitioner failed to demonstrate her entitlement to reinstatement. That court observed, as did Supreme Court, that she was not entitled to reinstatement because by operation of Civil Service rules, she had resigned from her position (162 AD2d 967). We now reverse.

I

In September 1986, petitioner was appointed by BOCES to a probationary civil service typist position. The following January she applied for and was granted a leave of absence from the typist position so that she could accept a temporary position as a data entry operator. This leave of absence was approved by respondent Georgia Delaney, the Personnel Officer of Ontario County. In August of that year, she was appointed to a probationary position as data entry operator where she remained until January 1988 when she applied for and was granted a leave of absence from the probationary data entry operator position to enable her to accept a provisional appointment as data control clerk. Delaney also approved this leave of absence.

BOCES thereafter, in September 1988, terminated petitioner’s provisional data control clerk appointment, reinstated her as a data entry operator and immediately terminated her from that position. BOCES then reinstated petitioner to her formally held typist position and filed a personnel change with Delaney, requesting approval of petitioner’s reinstatement to the typist position. Upon the advice of the New York State Department of Civil Service, Delaney declined to approve the reinstatement because petitioner “vacated the position of Typist when she accepted a Leave of Absence from her probationary appointment as Data Entry Operator as it is impossible for an employee to encumber two positions.” Delaney stated that she would certify petitioner only if she were reappointed to the data entry operator position but not to the original typist position. Delaney refused BOCES’ request that she exercise her discretion and extend petitioner’s leave of absence, whereupon BOCES terminated petitioner, determining not to retain her in the data entry operator position.

Supreme Court dismissed petitioner’s article 78 proceeding challenging her termination by BOCES. Supreme Court concluded that the stated reason for petitioner’s termination— that she could not encumber two positions simultaneously— was arbitrary and capricious “since there is no provision in either the Civil Service Law or the Ontario County Civil Service Rules prohibiting simultaneous leaves of absence from two positions.” The court nevertheless held that under rule XX (1) of the Ontario County Civil Service Rules, invoked by respondents BOCES and Delaney for the first time in their answers to the petition, petitioner was deemed to have resigned from the typist position and thus was not entitled to be reinstated to that position.

The Appellate Division affirmed. It characterized this article 78 proceeding as in the nature of "mandamus to compel petitioner’s reinstatement to [the position of typist]” and noted that the rule limiting " 'judicial review of an [agency] determination * * * to the grounds invoked by the agency’ * * * is not applicable here” because "it is not a proceeding in the nature of certiorari to review a quasi-judicial determination of a quasi-judicial body following hearing.” (162 AD2d 967, 968.) Thus, the court concluded that Supreme Court properly decided the issues raised by respondents’ answers and correctly dismissed the petition.

II

a

The Appellate Division erred in characterizing this proceeding as in the nature of mandamus to compel. It is, rather, in the nature of mandamus to review, which differs from mandamus to compel in that a petitioner seeking the latter must have a clear legal right to the relief demanded and there must exist a corresponding nondiscretionary duty on the part of the administrative agency to grant that relief (see, CPLR 7803 [1]; Matter of Crain Communications v Hughes, 74 NY2d 626; Matter of Kupersmith v Public Health Council, 63 NY2d 904; Matter of City of Newburgh v Public Employment Relations Bd., 63 NY2d 793; Matter of De Milio v Borghard, 55 NY2d 216; Matter of Legal Aid Socy. v Scheinman, 53 NY2d 12; Matter of Police Conference v Municipal Police Training Council, 51 NY2d 810; see also, McLaughlin, Practice Commentaries, McKinney’s Cons Laws of NY, Book 7B, CPLR C7801:4, at 31).

In a proceeding in the nature of mandamus to review, however, a court examines an administrative action involving the exercise of discretion. Mandamus to review resembles certiorari, except that in a certiorari proceeding a quasi-judicial hearing normally is required and the reviewing court has the benefit of a full record. The standard of review in a certiorari proceeding is "substantial evidence” (see, CPLR 7803 [4]; Matter of 125 Bar Corp. v State Liq. Auth., 24 NY2d 174). In a mandamus to review proceeding, however, no quasi-judicial hearing is required; the petitioner need only be given an opportunity "to be heard” and to submit whatever evidence he or she chooses and the agency may consider whatever evidence is at hand, whether obtained through a hearing or otherwise. The standard of review in such a proceeding is whether the agency determination was arbitrary and capricious or affected by an error of law. (See, CPLR 7803 [3]; Siegel, NY Prac § 558, at 874-875 [2d ed]; see also, Matter of 125 Bar Corp. v State Liq. Auth., supra; Matter of Colton v Berman, 21 NY2d 322; Matter of Ayers v Coughlin, 137 AD2d 300, 306, mod 72 NY2d 346; Carrion v Webb, 131 AD2d 806; Matter of Harlem Val. United Coalition v Hall, 80 AD2d 851, affd 54 NY2d 977; Graca v State Liq. Auth., 32 AD2d 879; Rochester Colony v Hostetter, 19 AD2d 250; see generally, 5 NY Jur 2d, Article 78 and Related Proceedings, § 78).

b

It is the settled rule that judicial review of an administrative determination is limited to the grounds invoked by the agency (Matter of Aronsky v Board of Educ., 75 NY2d 997). We have said that " '[a] reviewing court, in dealing with a determination * * * which an administrative agency alone is authorized to make, must judge the propriety of such action solely by the grounds invoked by the agency. If those grounds are inadequate or improper, the court is powerless to affirm the administrative action by substituting what it considers to be a more adequate or proper basis’ ” (see, Matter of Montauk Improvement v Proccacino, 41 NY2d 913; see also, Matter of Aronsky v Board of Educ., supra; Matter of Consolidated Edison Co. v Public Serv. Commn., 63 NY2d 424, appeal dismissed 470 US 1075; Matter of Parkmed Assocs. v New York State Tax Commn., 60 NY2d 935; Matter of Trump-Equitable Fifth Ave. Co. v Gliedman, 57 NY2d 588; Matter of Barry v O’Connell, 303 NY 46).

Because it concluded that this proceeding is in the nature of mandamus to compel, not a proceeding in the nature of certiorari to review a "quasi-judicial determination of a quasi-judicial body following a hearing”, the Appellate Division did not follow this settled rule. As we have noted, however, this proceeding is in the nature of mandamus to review, which is similar to certiorari. We perceive of no reason why the settled rule which limits judicial review of the determination of an administrative agency in certiorari proceedings to judging " 'the propriety of such [determination] solely by the grounds invoked by the agency’ ” (Matter of Montauk Improvement v Proccacino, supra) should not apply equally to mandamus to review proceedings.

ill

Here, petitioner neither claims a legal right to the typist position nor does she contend that the agency owes her any specific duty. Rather she seeks judicial review of BOCES’ determination removing her from that position, contending that her removal was arbitrary and capricious and affected by an error of law, inasmuch as it was unrelated to the performance of her job as typist and was not for misconduct. She alleges, without contradiction, that under the Civil Service Rules of Ontario County probationary employment may be terminated only "for incompetency or misconduct” (rule XV [8]) or "[i]f the conduct or performance of a probationer is not satisfactory” (rule XV [1] [e]). Although a probationary employee normally may be terminated for any reason, so long as the reason is not arbitrary and capricious (Matter of Talamo v Murphy, 38 NY2d 637), the more stringent and unique Ontario County Civil Service Rules circumscribe this general rule and limit the discharge of a probationary employee to the specific reasons set forth therein. Thus, the inquiry here is to determine whether the stated reason for petitioner’s termination is in accord with those rules.

The record demonstrates that the sole reason advanced by BOCES and the Ontario County Civil Service Personnel Officer for dismissing petitioner was that she "vacated the position of Typist when she accepted a Leave of Absence from her probationary appointment as Data Entry Operator” because it was "impossible for an employee to encumber two positions.”

Supreme Court correctly observed that dismissal for this reason was arbitrary and capricious since there is "no provision in either Civil Service Law or the Ontario County Civil Service Rules prohibiting simultaneous leaves of absence from two positions.” Thus, petitioner’s removal was without sound basis in reason and without regard to the facts (see, Matter of Pell v Board of Educ., 34 NY2d 222, 231; Matter of Rochester Colony v Hostetter, 19 AD2d 250, 253, supra). The alternative ground for her removal belatedly raised by the respondents and relied upon by the courts below may not serve to sustain her dismissal.

Accordingly, the order of the Appellate Division should be reversed, with costs, the petition granted, respondents directed to reinstate petitioner to the position of typist and the matter remitted to Supreme Court, Ontario County, for the computation of back pay and benefits.

Chief Judge Wachtler and Judges Simons, Kaye, Hancock, Jr., and Bellacosa concur; Judge Titone taking no part.

Order reversed, with costs, petition granted, respondents directed to reinstate petitioner to the position of typist, and matter remitted to Supreme Court, Ontario County, with directions to remand to respondents for further proceedings in accordance with the opinion herein.