author: Levine, J. Titone, J.

text:
    [658 NE2d 1012, 635 NYS2d 139]
    The People of the State of New York, Respondent, v John B. Allen, Jr., Appellant.
    Argued September 20, 1995;
    decided November 2, 1995
    POINTS OF COUNSEL

      Vincent F. Gugino, Buffalo, Linda S. Reynolds and Barbara J. Davies for appellant.
    I. Appellant did not validly waive appeal of the issue of constitutional double jeopardy. (People v Callahan, 80 NY2d 273; People v Seaberg, 74 NY2d 1; People v Michael, 48 NY2d 1; Benton v Maryland, 395 US 784; Griffin v

      Illinois, 351 US 12; People v Cousart, 58 NY2d 62; Menna v New York, 423 US 61; People v Patterson, 39 NY2d 288; People v La Rujfa, 37 NY2d 58.) II. The trial court’s finding of manifest necessity for mistrial was erroneous; further prosecution of appellant is, therefore, barred by the Double Jeopardy Clauses of the New York and United States Constitutions. (Arizona v Washington, 434 US 497; United States v Dinitz, 424 US 600; People v Baptiste, 72 NY2d 356; Hall v Potoker, 49 NY2d 501; Crist v Bretz, 437 US 28; United States v Jorn, 400 US 470; Wade v Hunter, 336 US 684; Matter of Dickson v Morgenthau, 102 AD2d 168; Downum v United States, 372 US 734; Matter of Respeto v McNab, 90 AD2d 308, 60 NY2d 739.)

      Kevin M. Dillon, District Attorney of Erie County, Buffalo (Denise C. Hochul and John J. DeFranks of counsel), for respondent.
    I. Defendant’s waiver of appeal inclusive of his explicit waiver of any double jeopardy claim forecloses appellate review of the double jeopardy issue. (People v Seaberg, 74 NY2d 1; People v Michael, 48 NY2d 1; Menna v New York, 423 US 61; Johnson v Zerbst, 304 US 458; People v Piazza, 48 NY2d 151; People v Rodriguez, 50 NY2d 553; People v Blakley, 34 NY2d 311; People v Francabandera, 33 NY2d 429; People v Armlin, 37 NY2d 167; United States v Broce, 488 US 563.) II. Defendant has no valid double jeopardy claim since the mistrial declaration was based upon the physical impossibility of continuing the trial. (Matter of Enright v Siedlecki, 59 NY2d 195; Hall v Potoker, 49 NY2d 501; People v Kelly, 9 NY2d 697; Arizona v Washington, 434 US 497; Gori v United States, 367 US 364; People v Michael, 48 NY2d 1; Matter of Napoli v Supreme Ct. of State of N. Y., 40 AD2d 159, 33 NY2d 980; Matter of Nolan v Court of Gen. Sessions, 11 NY2d 114.)
   OPINION OF THE COURT

Levine, J.

After a jury was selected and sworn and opening arguments scheduled in defendant’s trial on charges of attempted murder, attempted aggravated assault upon a police officer, weapons possession, and various drug possession charges, the prosecutor requested and was granted a one-day continuance because his first witness had suffered a heart attack that morning and was hospitalized. The next day, after speaking with the witness’ physician, the court informed counsel and the defendant that the heart attack had been massive and the witness would be unavailable for at least seven weeks. The prosecutor requested a second continuance which was denied by the court. The People then moved for a mistrial, which was granted over objection by the defense. In granting the motion for a mistrial, the court found that a mistrial was manifestly necessary owing to the critical nature of the witness’ testimony.

On the day defendant’s second trial was scheduled to begin, defendant entered a plea of guilty to two counts each of weapons possession, drug possession, and criminal use of drug paraphernalia. As a condition of the plea to the lesser charges, defendant waived his right to appeal, and expressly waived any claim of double jeopardy.

After sentencing, defendant appealed the judgment of conviction to the Appellate Division, arguing that his purported waiver of his right to appeal on the constitutional double jeopardy ground was invalid, and that the trial court erred in finding manifest necessity for a mistrial. The Appellate Division affirmed the conviction holding that although the waiver was invalid, the trial court properly granted the motion for a mistrial based on manifest necessity (204 AD2d 973). Leave was granted to defendant by a Judge of this Court and, for a reason different from that stated by the Appellate Division, we affirm.

Defendant asserts that as a matter of State double jeopardy law (NY Const, art I, § 6) the double jeopardy defense is among the categories of defenses that are not waivable as part of a plea bargain, and thus, that he may raise his double jeopardy claim on this appeal despite his express waiver of the claim as part of his plea bargain. He contends that because the double jeopardy defense has such strong ties with the concept of jurisdiction (see, People v Michael, 48 NY2d 1, 7 [double jeopardy claims need not be preserved to be raised on appeal]), it goes directly to the power of the courts to prosecute the defendant. Thus, he argues, a court has no jurisdiction over a defendant who has objected to a mistrial and, therefore, like other defenses that are fundamental to the integrity of the criminal process, a double jeopardy defense cannot be validly waived.

Defendant’s claims are unsupported by our precedents and are otherwise unpersuasive. Thus, we expressly recognized in Michael that "a double jeopardy objection may be waivable * * * in certain unusual cases, as where a defendant explicitly consents to retrial despite a double jeopardy defense” (id., at 7; see also, United States v Scott, 437 US 82, 93 [the Double Jeopardy Clause does not ordinarily bar a second trial when the defendant requests or consents to a mistrial]). Moreover, we later held that when a defendant by the conduct of counsel impliedly consents to a retrial after a mistrial, double jeopardy does not bar a retrial (People v Ferguson, 67 NY2d 383; see also, People v Coppa, 45 NY2d 244, 247). We can discern no substantive basis to make a distinction between an implied consent to retrial, as in Ferguson, and the express waiver of a double jeopardy defense to retrial presented here.

A defendant’s claim of double jeopardy is different from those narrow categories of appellate claims that cannot be waived as part of a plea bargain. "Plea bargaining is now established as a vital part of our criminal justice system” (People v Seaberg, 74 NY2d 1, 7). It "enables the parties to avoid the delay and uncertainties of trial and appeal and permits swift and certain punishment of law violators with sentences tailored to the circumstances of the case at hand * * *. The pleading process necessarily includes the surrender of many guaranteed rights but when there is no constitutional or statutory mandate and no public policy prohibiting it, an accused may waive any right which he or she enjoys” (id., at 7).

To be sure, we have recognized narrow exceptions to the general rule that an accused may waive any right he or she enjoys as part of a plea bargain; certain categories of appellate claims may not be waived. "These include the constitutionally protected right to a speedy trial (see, People v Blakley, 34 NY2d 311, 314-315 * * *), challenges to the legality of court-imposed sentences (see, People v Francabandera, 33 NY2d 429, 434, n 2), and questions as to the defendant’s competency to stand trial (see, People v Armlin, 37 NY2d 167, 172)” (People v Callahan, 80 NY2d 273, 280). These appellate claims cannot be waived "because of a larger societal interest in their correct resolution” (id., at 280).

"Society has a recognized interest in speedy trials because trial delay may result in the loss of evidence or an accused’s inability to respond to criminal charges, thereby compelling innocent persons to plead guilty out of necessity. Because of this societal interest, a defendant may not waive such claims * * *. Similarly, a defendant may not waive the right to challenge the legality of a sentence * * * or his competency to stand trial * * *. These rights are recognized as a matter of fairness to the accused but they also embrace the reality of fairness in the process itself ” (People v Seaberg, 74 NY2d, at 9, supra [emphasis supplied]).

None of the societal interests which formed the basis of our decisions in the cases holding that a certain appellate claim is nonwaivable is presented in the case of double jeopardy. For although double jeopardy has jurisdictional overtones (see, People v Michael, 48 NY2d, at 7, supra), the purpose of applying the double jeopardy bar to situations in which no final determination of guilt or innocence has been made is to protect " 'the valued right of a defendant to have his trial completed by the particular tribunal summoned to sit in judgment on him’ ” (United States v Scott, 437 US 82, 92, supra [quoting Downum v United States, 372 US 734, 736]; see, People v Ferguson, 67 NY2d, at 388, supra).

The defendant who expressly waives a double jeopardy defense as part of a plea bargain after a mistrial may forgo the right to be tried by a particular tribunal in exchange for a definite sentence and protection against the possibility of conviction on the highest counts because such waiver does not implicate a larger societal value. The bargain made here is indistinguishable from the "inherent duality in requesting or consenting to a mistrial: the defendant gives up his right to be tried by a particular tribunal, and subjects himself to a second trial, yet also avoids a verdict in a trial which may have been proceeding very poorly for him” (People v Ferguson, 67 NY2d 383, 390, supra).

We note further that our holding today is consistent with waiver of double jeopardy cases from the United States Supreme Court. In Menna v New York (423 US 61, 62), the United States Supreme Court held that a counseled guilty plea does not waive a double jeopardy defense. However, the Court left the door open to an express waiver of double jeopardy protection. The Court qualified its holding: "We do not hold that a double jeopardy claim may never be waived. We simply hold that a plea of guilty to a charge does not waive a claim that — judged on its face — the charge is one which the State may not constitutionally prosecute” (id., at 63, n 2). Indeed, the Supreme Court has, since Menna, held that a voluntary and intelligent guilty plea forecloses a double jeopardy challenge to those pleas where the double jeopardy problem is not evident on the face of the indictment (United States v Broce, 488 US 563, 573). Even more significantly, the Supreme Court has also held that a plea agreement can by its terms expressly waive, for purposes of a subsequent prosecution, a claim of double jeopardy if the agreement is violated (Ricketts v Adamson, 483 US 1).

As the foregoing discussion demonstrates, no policy or societal interest requires us to place double jeopardy in a category with other nonwaivable defenses. Thus, the general rule applies and the defendant is bound by his express waiver of his double jeopardy claim.

Because we hold that defendant validly waived his right to raise his double jeopardy claim, we need not reach the merits of that claim.

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

Titone, J.

(concurring). I concur in the majority’s result, but only because in my view defendant’s double jeopardy claim lacks merit. Unlike the majority, I would hold that double jeopardy claims such as this one fall within the narrow class of issues that cannot be waived as a part of a plea bargain.

We have held that most appellate issues may effectively be waived as part of a plea bargain, but that some are too consequential to permit waiver (see, People v Callahan, 80 NY2d 273; People v Seaberg, 74 NY2d 1). The issues that have previously been included in this category are the constitutional right to a speedy trial (see, People v Blakley, 34 NY2d 311, 314-315), the legality of an imposed sentence (see, People v Francabandera, 33 NY2d 429, 434, n 2) and the competency of the accused to stand trial (see, People v Armlin, 37 NY2d 167, 172). Although Blakley, Francabandera and Armlin predate our holdings in Seaberg and Callahan, the Court used the opportunity presented by those cases to reaffirm the vitality of these categorical exceptions (see, People v Callahan, supra, at 280; People v Seaberg, supra, at 9). Further, the Court has never suggested that the class of nonwaivable issues is limited to the ones that were identified in Blakley, Francabandera and Armlin. Thus, the possibility of other nonwaivable issues remains open.

In my view, if any additional rights are to be added to the already existing list of nonwaivable ones, the right not to be twice placed in jeopardy for the same crime is among them. Certainly, the right is one that has always been assigned special importance in our jurisprudence. We have said that "[t]he constitutional prohibition against double jeopardy is fundamental not only to the process of criminal justice, but to our system of government itself” (People v Michael, 48 NY2d 1, 7 [emphasis supplied]). It not only has "strong ties to the concept of jurisdiction,” but also represents "a bulwark against governmental overbearing” (id., at 7). Moreover, we have characterized the right as one "going to the very organization of the court” and have said that a deprivation of the right constitutes such a "basic variance with the mode of procedure mandated by law that [it] impair[s] the essential validity of the criminal proceedings” (People v Voliton, 83 NY2d 192, 195, citing People v Michael, supra). Significantly, these formulations are not mere judicial embellishments; rather, they were used as a basis for distinguishing the double jeopardy right and elevating it above many of the other constitutional guarantees that, notwithstanding their acknowledged importance, are unavailable for appellate review in the absence of a timely and specific assertion (see, People v Voliton, supra; People v Michael, supra).

Manifestly, the Court’s characterizations establish the existence of a "larger societal interest” in the "correct resolution” of double jeopardy claims (People v Callahan, 80 NY2d 273, 280, supra; see, People v Seaberg, supra, at 9). Indeed, if the competency of an individual defendant to stand trial (see, People v Armlin, supra), the prompt commencement of trial (see, People v Blakley, supra) and the legality of an individual’s sentence (see, People v Francabandera, supra) meet that description (see, majority opn, at 602), it would seem to follow that, a fortiori, the right not to be twice placed in jeopardy for the same crime fits it to a tee. At the very least, this Court’s testimonials to the significance of the double jeopardy right make clear that the right is one "recognized as a matter of fairness to the accused” as well as one that "embrace[s] the reality of fairness in the process itself” (People v Seaberg, supra, at 9 [emphasis added]). Thus, the majority’s rationale here is out of harmony with our prior case law.

The majority’s rationale also falls short when it relies on the waiver analysis in People v Ferguson (67 NY2d 383; see also, United States v Scott, 437 US 82, 93; People v Michael, supra, at 7; People v Coppa, 45 NY2d 244, 247; cf., United States v Broce, 488 US 563, 573; Ricketts v Adamson, 483 US 1) to diminish the preeminence of the double jeopardy right. In Ferguson, the Court was merely called upon to determine whether the defendant had validly consented to a mistrial. Here, in contrast, the defendant most definitely did not consent to a mistrial and consequently, unlike in Ferguson, this defendant’s double jeopardy claim had risen to the level of one that was fully ripe. The extent to which such a fully matured double jeopardy claim may be insulated from appellate review by a waiver is an entirely different question on which Ferguson has little to say.

Finally, a rule that withholds recognition of bargained-for waivers of double jeopardy claims is necessary to ensure that the core constitutional right is adequately protected. We have treated the constitutional speedy trial right as a nonwaivable issue because trial delay may diminish the accused’s ability to defend thereby prompting the defendant to plead guilty "out of necessity” (People v Seaberg, supra, at 9). Similarly, a defendant who wishes to avoid the expense and discomfort of an unwarranted second trial may also plead guilty out of a sense of compulsion. To allow the People to force a defendant to choose between an unwarranted second trial and a guilty plea accompanied by a waiver of appellate double jeopardy review is to give the People the power to vitiate the right itself. Such a result is not in keeping with the highly protective manner in which we have previously treated double jeopardy.

For all of the foregoing reasons, I would hold that double jeopardy claims such as defendant’s cannot effectively be waived through an express condition to a plea bargain. Accordingly, the double jeopardy claim defendant now raises was not forfeited and should be considered on its merits. As to those merits, however, I would further conclude that the right was not violated when the trial court declared a mistrial because of the sudden and unexpected unavailability of a prosecution witness. Although defendant contends that the unavailable witness’s testimony was cumulative and that there was therefore no "manifest necessity” for the court’s action (United States v Perez, 9 Wheat [22 US] 579, 580; Matter of Nolan v Court of Gen. Sessions, 11 NY2d 114, 119, supra), the witness in question did, in fact, have important evidence — i.e., a statement by defendant elucidating intent— that only that witness was in a position to offer. Thus, the declaration of a mistrial was appropriate despite the defense’s objection and the judgment resulting from the continuation of the prosecution was properly affirmed. On that basis and that basis alone, I concur in the Court’s affirmance.

Chief Judge Kaye and Judges Simons, Bellacosa, Smith and Ciparick concur with Judge Levine; Judge Titone concurs in result in a separate opinion.

Order affirmed.

       The availability of CPLR article 78 review in the nature of prohibition (see, Matter of Nolan v Court of Gen. Sessions, 11 NY2d 114) does not furnish much comfort to defendants who are unable to afford the expense of additional collateral litigation.


source: Caselaw Access Project

author: Levine, J.

license: Public Domain

text:
    [658 NE2d 1017, 635 NYS2d 144]
    The People of the State of New York, Respondent, v First Meridian Planning Corporation et al., Appellants, et al., Defendants.
    Argued September 12, 1995;
    decided November 2, 1995

      POINTS OF COUNSEL

      O’Connell and Aronowitz, Albany (Gloria Herron Arthur and Stephen R. Coffey of counsel), for First Meridian Planning Corporation and others, appellants.
    I. The Court below erred as a matter of law in reinstating count 1 of the indictment on the ground that it was not duplicitous in violation of CPL 200.30 (1). (United States v Rodolitz, 786 F2d 77, 479 US 826; People v Beauchamp, 74 NY2d 639; People v Vogt, 172 AD2d 864; People v Keindl, 68 NY2d 410, 69 NY2d 823; People v MacAfee, 76 AD2d 157; People v Davis, 72 NY2d 32; Toussie v United States, 397 US 112; People v Rosich, 170 AD2d 703, 77 NY2d 1000; People v Eastern Ambulance Serv., 106 AD2d 867; People v Gold Key Club, 2 Misc 2d 380, 3 AD2d 740.) II. The Court below erred in determining that numismatic coins are "securities” for purposes of General Business Law § 352-c (6).

      Borstein, Sheinbaum & Lurie, New York City (Leon Baer Borstein and James B. Sheinbaum of counsel), for Donald Kagin, appellant.
    I. The Court below erred by not dismissing counts 3, 6, 10, 15, 17, 21, 23, 27, 33 and 35 because "numismatic coins” are not "securities” under General Business Law § 352-c (6). (Matter of Mobil Intl. Fin. Corp. v New York State Tax Commn., 117 AD2d 103; Matter of Howard Johnson Co. v State Tax Commn., 105 AD2d 948, 65 NY2d 726; Matter of Waldstein, 160 Misc 763; People v Allied Health Care Prods., 81 NY2d 27.) II. General Business Law § 352-c (6) is unconstitutionally vague. (People v Bright, 71 NY2d 376; People v New York Trap Rock Corp., 57 NY2d 371; People v Firth, 3 NY2d 472; People v Berck, 32 NY2d 567; People v Allied Health Care Prods., 81 NY2d 27; People v Fleishman, 163 AD2d 148, 76 NY2d 939; All Seasons Resorts v Abrams, 68 NY2d 81.) III. The Court below’s Howey test for determining a "security” is not within section 352-c (6) and should not be followed for public policy reasons. (All Seasons Resorts v Abrams, 68 NY2d 81; People v Fleishman, 163 AD2d 148, 76 NY2d 939; Securities & Exch. Commn. v Howey Co., 328 US 293; United Hous. Found, v Forman, 421 US 837; Reves v Ernst & Young, 494 US 56; Landreth Timber Co. v Landreth, 471 US 681; Marine Bank v Weaver, 455 US 551; Teamsters v Daniel, 439 US 551; Tcherepnin v Knight, 389 US 332.) IV. Counts 3, 6, 10, 15, 17, 21, 23, 27, 33 and 35 were improperly reinstated because the charge concerning "securities” was improper. (People v Caracciola, 78 NY2d 1021; Securities & Exch. Commn. v Howey Co., 328 US 293; State of New York v Rachmani Corp., 71 NY2d 718; People v Batashure, 75 NY2d 306; People v Lancaster, 69 NY2d 20; United States v Regan, 937 F2d 823, 946 F2d 188.) V. Counts 3, 6, 10, 15, 17, 21, 23, 27, 33 and 35 must be dismissed because they are jurisdictionally defective. (People v Kohut, 30 NY2d 183; People v Best, 132 AD2d 773; People v Newell, 95 AD2d 815.)

      Howard B. Arber, Hempstead, and Gregg Roth for Neil Berman, appellant.
    I. Count 1 of the indictment is duplicitous. (People v Keindl, 68 NY2d 410; Cowley v People, 83 NY 464; People v Davis, 72 NY2d 32.) II. Count 1 should be dismissed against appellant as it fails to allege or establish the elements of the crime. (United States v Rodolitz, 786 F2d 77; People v Kaminsky, 127 Misc 2d 497.) III. The coins involved herein are not, as a matter of law, securities. (Securities & Exch. Commn. v Howey Co., 328 US 293; Securities & Exch. Commn. v Turner Enters., 474 F2d 476; Salcer v Merrill Lynch, Pierce, Fenner & Smith, 682 F2d 459; Union Planters Natl. Bank v Commercial Credit Bus. Loans, 651 F2d 1174; Hirk v Agri-Research Council, 561 F2d 96; Securities & Exch. Commn. v Continental Commodities Corp., 497 F2d 516; Meyer v Thomson & McKinnon Auchincloss Kohlmeyer, 686 F2d 818, 460 US 1023; In re Energy Sys. Equip. Leasing Sec. Litig., 642 F Supp 718; People v Thomas, 134 Misc 2d 649; Matter of Gardner v Lefkowitz, 97 Misc 2d 806.) IV. General Business Law § 352-c (6) is unconstitutional. (People v Bright, 71 NY2d 376; Kolender v Lawson, 461 US 352; United States v Harriss, 347 US 612; Lanzetta v New Jersey, 306 US 451.) V. There is no evidence to support the counts of grand larceny. (State of New York v Rachmani Corp., 71 NY2d 718.)

      Dennis C. Vacco, Attorney-General, New York City (David Forman, Victoria A. Graffeo, John H. Carley, Rebecca Mullane, Ray Cerreta and Christine Duisin of counsel), for respondent.
    I. Count 1 properly pleads a single scheme to defraud and the evidence before the Grand Jury was legally sufficient to support the charge. (People v Keindl, 68 NY2d 410; People v Iannone, 45 NY2d 589; People v Palmer, 108 AD2d 545; People v White, 101 AD2d 1037; People v Block & Kleaver, 103 Misc 2d 758; People v Kaminsky, 127 Misc 2d 497; United States v Morse, 785 F2d 771; United States v Melton, 689 F2d 679; Reuben v United States, 86 F2d 464, 300 US 671; United States v Mastelotto, 717 F2d 1238.) II. The evidence in the Grand Jury amply supports the charges of grand larceny in the third degree and fraud in the sale of securities. (People v Jennings, 69 NY2d 103; People v Sullivan, 68 NY2d 495; People v Martin, 181 AD2d 401; People v Soto, 76 Misc 2d 491;
      TSC Indus. v Northway, Inc., 426 US 438; People v Jones, 104 AD2d 330.) III. Defendants’ sale of numismatic coins constituted the sale of securities. (Securities & Exch. Commn. v Joiner Corp., 320 US 344; Matter of Gardner v Lefkowitz, 97 Misc 2d 806; People v Thomas, 134 Misc 2d 649; Kemmerer v Weaver, 445 F2d 76; Miller v Central Chinchilla Group, 494 F2d 414; Glen-Arden Commodities v Costantino, 493 F2d 1027; Securities & Exch. Commn. v Brigadoon Scotch Distribs., 388 F Supp 1288; Matter of Waldstein, 160 Misc 763; People v Landes, 84 NY2d 655.) IV. General Business Law § 352-c (6) is not unconstitutionally vague. (People v Swartz, 130 AD2d 288; People v Bright, 71 NY2d 376; People v Berck, 32 NY2d 567; People v Thomas, 134 Misc 2d 649; People v Pagnotta, 25 NY2d 333; People v Illardo, 48 NY2d 408; People v Allies Blvd. Book Store, 125 AD2d 910; People v Florentino, 116 Misc 2d 692.) V. The Grand Jury proceeding was free of defects. (People v Batashure, 75 NY2d 306; People v Calbud, Inc., 49 NY2d 389; People v Darby, 75 NY2d 449; Securities & Exch. Commn. v Howey Co., 328 US 293; Matter of Waldstein, 160 Misc 763; Securities & Exch. Commn. v Brigadoon Scotch Distribs., 388 F Supp 1288; State of New York v Rachmani Corp., 71 NY2d 718; People v Hunter, 34 NY2d 432; People v Valles, 62 NY2d 36.)

      Ganz, Hollinger & Towe, New York City (David L. Ganz of counsel), and George D. Hatie, of the Michigan Bar, admitted pro hac vice, for Industry Council for Tangible Assets and another, amici curiae.

    Rare coins are generally not securities; the coin dealer defendants did not sell a security. No registration was required for a supplier of a coin resold by another. The coin dealer defendants were not selling commodities and should not have been required to undertake registration under the law. (United States v Kail, 804 F2d 441; Securities & Exch. Commn. v Brigadoon Scotch Distribs., 480 F2d 1047, 415 US 915; Copeland v Hill, 680 F Supp 466; Morgan v Financial Planning Advisors, 701 F Supp 928.)
   OPINION OF THE COURT

Levine, J.

The 39-count indictment in this case arose out of an investigation by the Attorney-General of the investment promotional activities, commencing in 1982, of defendant First Meridian Planning Corp. (First Meridian), its officers and sales personnel. First Meridian portrayed itself to the investing public as a knowledgeable, experienced financial planning enterprise competent to advise clients on investment decisions through the formulation of a personalized investment plan tailored to the individual financial needs and objectives of each investor. In fact, however, First Meridian’s plans invariably were limited to three highly leveraged investment vehicles — numismatic coin portfolios, art portfolios and condominiums in Florida and Indiana — in which First Meridian or, in coin portfolio purchases, its codefendant coin dealers, would arrange for the financing of the borrowed portion of the investment acquisitions.

Appellant Roger V. Sala was president and chief operating officer of First Meridian. Appellants Roger C. Sala and Meridian Arts (a First Meridian subsidiary) worked with First Meridian in promoting investments in the works of a group of local artists they had assembled. All of those appellants will be collectively referred to as the First Meridian defendants. Appellants Donald Kagin and Neil Berman were principals in four corporate coin dealerships who were codefendants in the indictment (hereinafter the coin dealer defendants).

The first count of the indictment charged all but one of the defendants with the crime of scheme to defraud in the first degree (Penal Law § 190.65). In addition, various defendants were charged with counts of fraud in the sale of securities (General Business Law § 352-c [6]), and grand larceny in the second or third degrees (in connection with sales of coins, artworks and condominiums to individual investors), failure to register as a commodity broker-dealer (General Business Law § 359-e [14] [k]) and failure to register as a commodity investment advisor (id..).

Following defense motions to dismiss, County Court dismissed the first count of the indictment as duplicitous. The court also dismissed all of the remaining counts of the indictment against the coin dealer defendants. It held that the evidence before the Grand Jury was insufficient to show their criminal responsibility for the larcenies allegedly committed against individual investors. County Court further held, as a matter of law, that the sale of numismatic coins did not constitute the sale of securities and, therefore, it granted the motions by defendants Kagin, Berman and several other coin dealer defendants to dismiss the counts of fraud in the sale of securities. Finally, the Trial Judge dismissed all counts against the coin dealer defendants charging them with failure to register as a commodity broker-dealer.

The Appellate Division reinstated count 1 of the indictment, concluding that it appropriately alleged and the Grand Jury could infer from the evidence, a single continuing scheme to defraud; thus, count 1 was not duplicitous (201 AD2d 145). The Appellate Division further held that there was sufficient evidence presented to the Grand Jury to support a prima facie finding that the sale of numismatic coin portfolios for investment purposes in this case constituted the sale of securities. Therefore, the Appellate Division reinstated the counts of fraud in the sale of securities against the coin dealer defendants. The Court also found the evidence sufficient to support a reasonable inference that the coin dealer defendants shared the larcenous intent of the First Meridian personnel and, hence, reinstated the larceny counts of the indictment against those defendants. As to two larceny counts, however, the Court found the proof of the value of the property taken insufficient to sustain charges higher than grand larceny in the fourth degree and modified those counts accordingly. Finally, the Appellate Division sustained County Court’s dismissal of counts 38 and 39 of the indictment charging defendants with failing to register as a commodity broker-dealer, and the Attorney-General has not sought to cross-appeal from that ruling.

I

We agree with the Appellate Division that count 1 of the indictment is not invalid for facial duplicity, that is, charging in a single count the commission of more than one offense (see, CPL 200.30 [1]). Duplicitous indictments are disallowed because of the danger that a jury may vote to convict on a count without having reached a unanimous verdict on the charges pleaded therein, and because it may undermine a subsequent double jeopardy defense (see, People v Keindl, 68 NY2d 410, 418).

Where, however, a crime by its nature as defined in the Penal Law may be committed either by one act or by multiple acts and can be characterized as a continuing offense over time, the indictment may charge the continuing offense in a single count (see, id., at 421; see also, People v Shack, 86 NY2d 529, 540 [decided today]; People v Sanchez, 84 NY2d 440, 448). Undoubtedly, the crime charged in count 1 of the indictment, scheme to defraud in the first degree, can by its very nature be committed by multiple acts and permits, if not requires, characterization as a continuing offense committed over time. Thus, a person is guilty of a scheme to defraud when "he [or she] * * * engages in a scheme constituting a systematic ongoing course of conduct with intent to defraud ten or more persons or to obtain property from ten or more persons by false or fraudulent pretenses, representations or promises, and so obtains property from one or more of such persons” (Penal Law § 190.65 [1] [a] [emphasis supplied]). Accordingly, count 1 of the indictment is not facially duplicitous. To avoid the danger that defendants may be convicted on count 1 with less than a unanimous verdict, the trial jury in this case should be instructed that they must all agree upon the existence of the same single scheme to defraud and must also be unanimous as to each defendant found guilty that he or she participated in that same over-all fraudulent scheme alleged in the indictment (see, United States v Mastelotto, 717 F2d 1238, 1247).

We likewise reject appellants’ alternative contention that count 1 is fatally duplicitous because the evidence before the Grand Jury would not support the existence of a single scheme to defraud but, at most, the existence of disparate, multiple schemes to defraud involving unrelated participants (i.e., separate conspiracies to fraudulently induce investments in coins, artworks and condominiums, respectively). As the Appellate Division correctly recognized, the Legislature in amending the Penal Law to add crimes based on a scheme to defraud (Penal Law §§ 190.60, 190.65; L 1976, ch 384), modeled the offenses upon the Federal mail fraud statute (see, Donnino, Practice Commentary, McKinney’s Cons Laws of NY, Book 39, Penal Law § 190.60, at 423). Therefore, we may look to Federal precedents applying similar statutory language which hold that, despite the presence of some diversity of criminal actors, modalities and victims, the evidence may yet support the existence of a single, unitary over-all scheme to defraud.

Thus, in United States v Morse (785 F2d 771 [9th Cir]), the court was presented with parallel facts to the instant case— the bilking of investors through the promotion of several different investment vehicles as income-producing tax shelters, in which the codefendants played differing roles with respect to different victims and investment programs at different times. The court nonetheless ruled that such factors did not negate the existence of a single scheme (see, id., at 774). In Owens v United States (221 F2d 351 [5th Cir]), the court similarly held that "the defrauding of different people over an extended period of time, using different means and representations, may constitute but one scheme” (id., at 354). That court found that "the necessary unity deriv[ed] from the fact that the technique planned and used in each transaction is of the same general type” (id., at 355). An additional factor the court in Owens relied upon as pointing to a unitary scheme was that a single corporation controlled by the defendants played some role in defrauding all of the victims (id.). The Second Circuit in United States v Crosby (294 F2d 928, cert denied sub nom. Meredith v United States, 368 US 984) held a single conspiracy could be inferred from "[a] mail fraud scheme consisting of a large number of similar transactions, conducted by a constant nucleus with differing subordinates” (id., at 945).

Under the foregoing precedents, the evidence before the Grand Jury in the instant case was prima facie sufficient to permit the Grand Jury reasonably to infer the existence of a unitary scheme to defraud. First, the proof disclosed, and the indictment alleged, common techniques, misrepresentations and omissions of material facts employed in all transactions. These included: the invariable sales methodology used with all First Meridian potential clients of a series of home visits in which investors were led to believe that an individualized investment plan was to be prepared; misrepresentations that leveraged purchases of numismatic coin portfolios, artworks and condominiums were each low-risk, high-yield, highly liquid investments (the coin dealer defendants participated in these misrepresentations as to coin portfolio purchases); assurances as to all three investment vehicles that the value of the investments would be monitored by experts in the field; the furnishing of false updated appraisals; and the concealment of material fact that First Meridian and the coin dealer defendants would be superimposing substantial commissions paid to them as additional transactional costs upon acquisition of the asset, making it even more remote that investors would ever realize a profit upon eventual resale. These common aspects of all transactions, through which some 800 First Meridian clients were induced to part with more than $64 million, strongly support the existence of a unitary scheme to defraud.

A second factor militating in favor of a single scheme to defraud was the pivotal role played by First Meridian in all of the transactions, as a "constant nucleus” through whom the contacts with all investors were initiated and maintained (see, United States v Crosby, supra; see also, United States v Zemek, 634 F2d 1159, 1168, cert denied sub nom. Carbone v United States, 450 US 916 [in finding a single fraudulent scheme, a court looks for "a rim sufficient to connect the various spokes of a single conspiratorial wheel”]). Thus, the claim of the coin dealer defendants of unawareness of and the absence of any participation in First Meridian promotions of investments in artworks and condominiums is unavailing to negate the existence of a single over-all scheme to defraud. "[W]hen a conspirator 'embarks upon a criminal venture of indefinite outline, he takes his chances as to its content and membership, so be it that they fall within the common purposes as he understands them’ ” (United States v Crosby, 294 F2d, at 945, supra, quoting United States v Andolschek, 142 F2d 503, 507).

II

The Appellate Division, in our view, also correctly concluded that, based upon the evidence concerning the conduct of the promotions, the nature of the offers made and the promised results, the Grand Jury could find that the sale of numismatic coin portfolios here constituted the sale of securities so as to support the validity of the counts of the indictment charging the First Meridian and coin dealer defendants with fraud in the sale of securities. Under the Martin Act (General Business Law, art 23-A, § 352 et seq.) criminal liability may be imposed upon "[a]ny person * * * who intentionally engages in fraud * * * while engaged in inducing or promoting the * * * sale * * * within or from this state of any securities * * * as defined in this article” (General Business Law § 352-c [6] [emphasis supplied]). The Martin Act defines securities as "stocks, bonds, notes, evidences of interest or indebtedness or other securities” (General Business Law § 352 [1] [emphasis supplied]). In All Seasons Resorts v Abrams (68 NY2d 81), we expressly adopted as one set of criteria for "other securities” under the Martin Act the tripartite test enunciated in Securities & Exch. Commn. v Howey Co. (328 US 293) to determine whether a given property interest constituted a "security” when offered or sold. In Howey, the Supreme Court broadly equated securities under the Federal securities laws with investment contracts, holding that "an investment contract * * * means a contract, transaction, or scheme whereby a person [1] invests his money [2] in a common enterprise and [3] is led to expect profits solely from the efforts of the promoter or a third party” (id., at 298-299). In People v Landes (84 NY2d 655), this Court also expressly held that, in criminal prosecutions under the Martin Act, investment contracts are "other securities” (id., at 660, n 1).

The primary argument of the First Meridian defendants and defendants Kagin and Berman is that the sale of numismatic coins cannot be the sale of a security because the phrase "other securities” takes its meaning from the specific types of securities set forth in General Business Law § 352 (1), that is, "stocks, bonds, notes, evidences of interest or indebtedness”. They claim that "other securities” must therefore refer to some document, akin to a bond, note, etc., evidencing an interest in tangible or intangible property, and cannot refer to the property or commodity itself, in this case numismatic coins. We disagree. In Securities & Exch. Commn. v Howey (supra), the Supreme Court in articulating its three-fold functional test for an investment contract/security, specifically eschewed requiring the existence of some "paper” formally evidencing the interest offered or sold, "it being immaterial whether the shares in the enterprise are evidenced by formal certificates or by nominal interests in the physical asset employed in the enterprise” (328 US, at 299 [emphasis supplied]). In Securities & Exch. Commn. v Joiner Corp. (320 US 344), the Court rejected the same ejusdem generis argument appellants make here in their attempt to restrict the meaning of "other securities” (id., at 349; see also, id., at 351, n 8). The Court in Joiner also rejected a strict construction narrowly limiting the meaning of "security”, even in criminal prosecutions under the Federal securities laws (see, id., at 354-355) and held that these canons of construction will not be followed when their application would conflict with the general remedial purposes of the securities laws.

The Federal courts have repeatedly applied the teachings of Howey and Joiner to find that arrangements for the purchase of various tangible properties or commodities, under circumstances paralleling the sale of coin portfolios here, constituted the sale of securities (see, Miller v Central Chinchilla Group, 494 F2d 414 [chinchillas]; Glen-Arden Commodities v Costantino, 493 F2d 1027 [casks of scotch whiskey]; Kemmerer v Weaver, 445 F2d 76 [beavers]; Jenson v Continental Fin. Corp., 404 F Supp 792 [gold and silver coins]; Securities & Exch. Commn. v Brigadoon Scotch Distribs., 388 F Supp 1288 [rare coin portfolios]).

Moreover, in People v Landes (84 NY2d, at 660, n 1, supra), we upheld a conviction under the Martin Act despite defendant’s contention that his failure to issue certificates evidencing the promised corporate stock precluded criminal liability based upon a sale of securities. Thus, to require in all Martin Act prosecutions that a fraudulently induced investment contract result in the issuance of some formal instrument evidencing the interest in the property sold would be inconsistent with the functional approach of the Howey case and would permit manipulation of investment transactions so as to thwart the protective and remedial purposes of the Act.

The evidence here was sufficient to meet the three elements of the Howey test. Uncontestably, the First Meridian clients were induced to purchase numismatic coin portfolios for the purpose and in the expectation of making a profit from ultimate resale, an investment of money satisfying the first prong of Howey. That investment was in a common enterprise, as the second element of Howey has been construed by the courts. It is not required that the investor acquires a share in a common fund. Rather, the common enterprise factor can be established by proof that "the fortunes of all investors are inextricably tied to the efficacy [of those seeking the investment or a third party]” (Securities & Exch. Commn. v Koscot Interplanetary, 497 F2d 473, 479; see, Securities & Exch. Commn. v Turner Enters., 474 F2d 476, 482, n 7, cert denied 414 US 821; see also, Glen-Arden Commodities v Costantino, 493 F2d, at 1035, supra). We note in this regard that in the Howey case itself, the Court found that the common enterprise factor was established although investors purchased individual orange grove lots, rather than an interest in an undivided entire grove (see, Securities & Exch. Commn. v Howey Co., 328 US, at 295, supra).

There was also evidence in the record before the Grand Jury to establish the final factor in the Howey definition of security, that the profits are expected to be derived "solely from the efforts of the promoter or a third party” (id., at 299, supra). In applying this element of the Howey test, the courts have not construed it literally, but realistically. It is sufficient if the promoter’s (or third person’s) efforts are "the undeniably significant ones, those essential managerial efforts, which affect the failure or success of the enterprise” (Securities & Exch. Commn. v Turner Enters., 474 F2d, at 482, supra). The representations made personally by First Meridian sales personnel and by the coin dealer defendants in their sales literature assured investors that a critically important guarantee of the profitability of the numismatic coin portfolio investments was the expertise of the dealers in selecting the coins to be purchased, monitoring their value in a fluctuating market, aiding in making resale decisions and providing assistance with resales. Thus, the evidence easily suffices to prima facie satisfy the third prong of a Howey test.

To conclude on this issue, a prima facie case was established before the Grand Jury that the sales of numismatic coins by the coin dealer defendants, through First Meridian, constituted the sales of securities, thus supporting the validity of the counts of the indictment charging fraud in the sale of securities. The counter argument of defendants Kagin, Berman and First Meridian, that they merely sold a commodity, the tangible coin portfolio itself, is unpersuasive. The sales pitch used to induce these purchases offered a package which included not only the tangible coins but a spectrum of supposedly profit-enhancing services, all part of an investment plan. The Second Circuit’s rejection of a similar claim in Glen-Arden Commodities v Costantino (supra) is especially apt here: "it ill behooves appellants, after enticing their customers with fancy brochures, touting their investment plan, now to claim that there was no investment plan but the mere sale of an unadorned commodity” (493 F2d, at 1034-1035, supra). At the trial, of course, the People will have the burden of establishing beyond a reasonable doubt under jury instructions based on the criteria herein discussed, that defendants’ sales of coin portfolios constituted the sales of securities (Securities & Exch. Commn. v Joiner Corp., 320 US 344, 355, supra; United States v Morse, 785 F2d, at 775-776, supra; Roe v United States, 287 F2d 435, 440, cert denied 368 US 824).

We also reject defendant Kagin’s claim that, if General Business Law § 352-c (6) is so construed to include the sale of numismatic coins as a sale of securities for purposes of criminal prosecution, the statute is unconstitutionally vague. The "void for vagueness” doctrine requires that a penal statute "provide the ordinary citizen with adequate notice of the exact conduct prohibited” (People v Bright, 71 NY2d 376, 384), while at the same time affording law enforcement officials some objective standard to avoid "the possibility that the law will be arbitrarily enforced” (id.). Of these dual purposes of the doctrine, the provision of minimal guidelines to discourage arbitrary or discriminatory enforcement is the more important objective (see, Kolender v Lawson, 461 US 352, 358). The doctrine, however, recognizes that some forms of conduct which a State may validly make subject to penal sanctions cannot, and need not, be defined with precision (United States v Petrillo, 332 US 1, 7-8). Of special significance here, the vagueness doctrine does not adjudge the language of a criminal statute in the abstract, but rather in the "animating context of well-defined usage * * * and * * * court construction which determines its meaning” (Beauharnais v Illinois, 343 US 250, 253).

As discussed above, well before defendants engaged in the conduct which is the subject of this indictment, the New York courts adopted the Howey test for determining whether the sale or offer to sell an interest in property constitutes the sale of a security. Moreover, as has been amply demonstrated, also well before defendants embarked on their investment promotion activities, an extensive body of precedent construing and applying the Howey definition of security had held that commodities and other forms of tangible personal property or even real property could constitute securities, if the circumstances of the offer or sale thereof met the three-pronged Howey test.

Thus, judicial construction of "other securities” was amply sufficient to meet the requirements of the void for vagueness doctrine in enforcing the Martin Act by providing adequate notice to the public, and objective standards for law enforcement officials. The vagueness doctrine is "not a principle designed to convert into a constitutional dilemma the practical difficulties in drawing criminal statutes both general enough to take into account a variety of human conduct and sufficiently specific to provide fair warning that certain kinds of conduct are prohibited” (Colten v Kentucky, 407 US 104, 110).

We have considered the remaining contentions of the First Meridian defendants and defendants Kagin and Berman, including their claims regarding the sufficiency of the evidence to establish complicity in the larceny counts of the indictment, and the adequacy of the Grand Jury instructions, and find them also unpersuasive.

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

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

Order affirmed.

       Defendant Donald Kagin, an officer of defendants Kagin’s Numismatic Investment Corp. and Kagin’s Numismatics Inc., was not charged under count 1 of the indictment. He, however, was named as a defendant in various counts charging fraud in the sale of securities in violation of General Business Law § 352-c (6) and grand larceny, third degree, in connection with the sale of numismatic coin portfolios to individual investors.


author: Bellacosa, J.

text:
    [658 NE2d 1025, 635 NYS2d 152]
    In the Matter of Emma Walker, Respondent, v Fred Walker, Appellant.
    Argued October 24, 1995;
    decided November 29, 1995

      POINTS OF COUNSEL

      Edward J. Nowak, Public Defender of Monroe County, Rochester (Elizabeth C. Clarke of counsel), for appellant.
    I. The Family Court’s imposition of consecutive terms of incarceration was not authorized under statute. (Matter of Thomson, 79 AD2d 880; Kleila v Kleila, 50 NY2d 277; Matter of Fish v Horn, 14 NY2d 905; Matter of Borkowski v Borkowski, 38 AD2d 752; Matter of Vitti v Vitti, 202 AD2d 917; Doctors Council v New York Employees’ Retirement Sys., 71 NY2d 669; Matter of Alonzo M. v New York City Dept. of Probation, 72 NY2d 662; Eaton v New York City Conciliation & Appeals Bd., 56 NY2d 340; People v Smith, 79 NY2d 309; Carmille A. v David A., 162 Misc 2d 22.) II. The Family Court’s imposition of consecutive sentences of incarceration violates the Sixth Amendment of the United States Constitution and the New York State Constitution. (Duncan v Louisiana, 391 US 145; Matter of Morgenthau v Erlbaum, 59 NY2d 143; Bloom v Illinois, 391 US 194; Codispoti v Pennsylvania, 418 US 506; United States v Martin, 409 F2d 1300; Matter of Ciaravino v Ciaravino, 38 AD2d 722.)

      Carla M. Palumbo, Rochester, and Alan S. Harris for respondent.
    I. The Family Court has the statutory authority to impose consecutive jail sentences when separate violation petitions filed pursuant to Family Court Act §§ 846 and 846-a are sustained. (United States v American Trucking Assns., 310 US 534; Matter of Vitti v Vitti, 202 AD2d 917; Matter of Patterson v Daystrom Corp., 17 NY2d 32; Matter of Book Ctr. v Tax Appeals Tribunal, 83 NY2d 240; Eaton v New York City Conciliation & Appeals Bd., 56 NY2d 340; People v Zimmer, 51 NY2d 390; New York State Bankers Assn. v Albright, 38 NY2d 430.) II. Consecutive sentences pursuant to Family Court Act §§ 846 and 846-a do not violate the right to a jury trial as contained in the State or Federal Constitutions. (Matter of Murray, 98 AD2d 93; Matter of Wilson, 98 AD2d 666; Duncan v Louisiana, 391 US 145; Bloom v Illinois, 391 US 194; Codispoti v Pennsylvania, 418 US 506; Matter of McCormick v Axelrod, 59 NY2d 574; Gompers v Buck Stove & Range Co., 221 US 418; Matter of Department of Envtl. Protection v Department of Envtl. Conservation, 70 NY2d 233; Matter of Schmerer v McElroy, 105 AD2d 840; United States v Martin, 409 F2d 1300.)
   OPINION OF THE COURT

Bellacosa, J.

The sole issue in this case is the discretionary authority of the Family Court to impose consecutive six-month incarcerations for three separate violations of an order of protection. The respondent former husband in the Family Court proceeding is the appellant before this Court on an appeal as of right taken on the dissent of two Justices at the Appellate Division.

By a dispositional order in 1993, Family Court committed appellant to jail for multiple violations of a Family Court order of protection secured by his former wife. In the same order, the court suspended an additional nine-month commitment for other discrete violations. The court then issued a new order of protection, essentially directing Fred Walker to refrain from any contact whatsoever with Emma Walker. While jailed, he nevertheless sent three separate written communications to her. As the protected and aggrieved party, she filed two further petitions alleging these three new, willful failures to obey the latest order of protection and seeking appropriate relief. After a hearing, Family Court found that appellant disobeyed the new order by the three separate acts of communication.

In adjudicating the latest round of violations, Family Court issued a dispositional order revoking the suspension of the prior commitment and, pursuant to Family Court Act § 846-a, also ordered defendant jailed for six months for each of the new violations. The combined period of incarceration accumulated to 27 months. Only the consecutive six-month jail commitments imposed by Family Court for these three violations are at issue here. The dispositive legal question on this appeal emanates from the commitment authorization in Family Court Act § 846-a and particularizes to whether Family Court is authorized to impose consecutive commitments for separate, multiple violations of one order of protection.

The Appellate Division, with two Justices dissenting in part, affirmed Family Court’s dispositional order, holding that consecutive periods of incarceration are authorized. In affirming, we hold that the Family Court is not generally precluded from imposing, in the exercise of prudent and appropriate discretion, a maximum six-month jail commitment for each separate and distinct violation of an order of protection, to be served consecutively.

While appellant failed to preserve the objection to the consecutive jail terms, we may nevertheless consider the issue because it involves a court’s "essential” authority to incarcerate, as legally prescribed (see, e.g., People v Fuller, 57 NY2d 152, 156). The alternative constitutional argument addressing limitations on lengths of incarceration relative to the right to a jury trial was also not preserved, but no recognized exception permits review by this Court of that issue under these circumstances (see, Lichtman v Grossbard, 73 NY2d 792, rearg denied 73 NY2d 912; Melahn v Hearn, 60 NY2d 944, 945).

Sections 841 and 842 of the Family Court Act authorize the inclusion of orders of protection as part of dispositional orders in family offense proceedings. Family Court Act § 846-a prescribes the procedure and penalty for failure to obey such an order:

"If a respondent is brought before the court for failure to obey any lawful order issued under this article and if, after hearing, the court is satisfied by competent proof that the respondent has willfully failed to obey any such order, the court may * * * commit the respondent to jail for a term not to exceed six months.”

Appellant claims that the statute allows a maximum of six months’ incarceration only, regardless of the number of willfui acts of disobedience against the same order. That limitation finds no support, however, in the statute or its purpose.

Under appellant’s argument, a violator already penalized for willfully failing to obey an order of protection would garner immunity from further official sanction for persistent, separate violations (see, Carmille A. v David A., 162 Misc 2d 22, 26). Such an approach is in no way compelled or warranted by the governing statutes, sentencing principles or reasonable statutory analysis. Its incongruous and untenable result would also constitute an invitation to violate and no incentive to obey.

That appellant disobeyed the court’s order from jail serves only to underscore the need for an effective judicial option for appropriate punishment and deterrence. To disallow consecutive penalties under these circumstances would also elevate form over substance and frustrate the core purpose of Family Court Act article 8, which is designed to provide reasonable means and methods of protection and enforcement for victims of domestic violence. We thus reject this construction and constriction of the statutory authority of Family Court Judges in dealing with such situations and agree with the resolution of this matter by both courts below.

In 1980, the Legislature amended the Family Court Act to provide new focus and direction for more aggressive measures that would protect victims of domestic violence (L 1980, ch 530; Besharov, Practice Commentary, McKinney’s Cons Laws of NY, Book 29A, Family Ct Act art 8, at 128). The statute unequivocally and firmly declares that a proceeding under article 8 "is for the purpose of attempting to stop the violence, end the family disruption and obtain protection” (Family Ct Act § 812 [2] [b]; see also, Governor’s Prog Mem, L 1980, ch 530, 1980 Legis Ann, at 212; L 1994, ch 222). Indeed, victims are given the option of proceeding in Family Court or Criminal Court (Family Ct Act §§ 812, 813 [1]). Private aggrieved parties may petition for protection by way of a violator’s incarceration for violations of Family Court orders under the corresponding punishment section, section 846-a (L 1980, ch 530, § 10; Family Ct Act §§ 846, 846-a [as renum]; see also, L 1994, ch 222). Stricter enforcement of orders of protection thus became the statutory order of the day and continues as the prevailing policy today. Importantly, no restriction on consecutive punishment for separate acts is statutorily expressed. We conclude also that no such limitation may be reasonably inferred from the diametrically opposite thrust of the legislative intent.

Our conclusion drawn from direct statutory analysis is supplemented and supported by common-law principles dealing with consecutive punishments in the criminal realm. The familiar canon of construction that "legislative enactments in derogation of common law * * * are deemed to abrogate the common law only to the extent required by the clear import of the statutory language” is a useful directional signal (Morris v Snappy Car Rental, 84 NY2d 21, 28; see, McKinney’s Cons Laws of NY, Book 1, Statutes § 153). The Family Court, as a court of limited jurisdiction created by constitutional amendment effective in 1962 (NY Const, art VI, § 1 [a]), does not enjoy our customary common-law tradition and building blocks (see, Besharov, Practice Commentary, McKinney’s Cons Laws of NY, Book 29A, Family Ct Act § 115, at 23). In light of the punitive nature of Family Court Act § 846-a, however, it is helpful to look to analogous common-law rules relating to concurrent and consecutive sentencing regimens for penal violations (see, McKinney’s Cons Laws of NY, Book 1, Statutes § 273).

Courts have long enjoyed sentencing discretion to impose consecutive penalties for multiple crimes (see, People v Ingber, 248 NY 302, 305 [Cardozo, Ch. J.]). In upholding this general power when a pertinent sentencing statute neither specifically authorizes nor prohibits consecutive sentences, Chief Judge Cardozo declared that "[w]e think the discretionary power of the court to impose a cumulative [consecutive] sentence in cases not covered by the mandatory statute remains, undiminished, as it was at common law” (id., at 304-305; see also, Matter of Browne v New York State Bd. of Parole, 10 NY2d 116, 120; Ponzi v Fessenden, 258 US 254, 265). Indeed, at the time of Ingber and still today, when the Legislature intends to circumscribe judicial authority to impose consecutive punishments, it does so explicitly (see, e.g, Penal Law § 70.25 [2]; compare, People ex. rel Maurer v Jackson, 2 NY2d 259, 264).

Instead of appellant’s inverted focus — that section 846-a does not specifically authorize consecutive sentences — we advert to Chief Judge Cardozo’s teaching that "[njothing short of obvious compulsion will lead us to a reading of the statute whereby the pains and penalties of crimes are shorn of all terrors more poignant than a form of words” (People v Ingber, 248 NY 302, 306, supra). That reasoning and eloquent expression apply with equal force to the Family Court’s enforcement and punishment authority with respect to orders of protection pursuant to section 846-a. The three consecutive penalties imposed on appellant for his willful flouting (from jail, while serving time for prior violations of an earlier order of protection) of the most recent order of protection fit within the authorization of Family Court Act § 846-a. That also helps to insure that the statute and the order are not "shorn of all terrors” and relegated to merely "a form of words” (People v Ingber, supra, at 306).

Accordingly, the order of the Appellate Division should be affirmed, without costs.

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

Order affirmed, without costs.


author: Simons, J.

text:
    [658 NE2d 1028, 635 NYS2d 155]
    The People of the State of New York, Respondent, v William Maldonado, Appellant.
    Argued October 24, 1995;
    decided November 29, 1995

      POINTS OF COUNSEL

      Diane Pazar, New York City, Philip L. Weinstein and Daniel L. Greenberg for appellant.
    The trial court correctly dismissed the indictment charging appellant with escape in the first degree, where the People presented no proof of the underlying B felony and, indeed, it was uncontested that appellant did not commit a B felony, and where, in any event, the arresting officer’s testimony failed to establish probable cause to arrest appellant for a B felony. (People v Batashure, 75 NY2d 306; Theriault v United States, 434 F2d 212; People v Warren, 103 AD2d 760; People v Ryan, 82 NY2d 497; People v Santorelli, 80 NY2d 875; People v Outley, 80 NY2d 702; People v Drummond, 40 NY2d 990; People v Swamp, 84 NY2d 725; People v Eiffel, 81 NY2d 480; People v Dodt, 61 NY2d 408.)

      Robert M. Morgenthau, District Attorney of New York County, New York City (Morrie I. Kleinbart and Mark Dwyer of counsel), for respondent.
    At the time of defendant’s arrest for a class B felony, there was probable cause to believe that he had committed a class B felony. Consequently, the elements of escape in the first degree were fully satisfied. (Regan v Heimbach, 91 AD2d 71; People v Ryan, 82 NY2d 497; People v Allah, 111 Misc 2d 516; People v Lyke, 72 Misc 2d 1046;
      People v Barton, 30 AD2d 726; People v Peacock, 68 NY2d 675; People v Thompson, 83 NY2d 477; Chapman v United States, 500 US 453; People ex rel. Dixon v Snyder, 259 App Div 760; People v Carroll, 158 AD2d 704.)
   OPINION OF THE COURT

Simons, J.

The Penal Law provides that a person is guilty of escape in the first degree when "[h]aving been arrested for * * * a class A or class B felony, he escapes from custody” (Penal Law § 205.15 [2]). Lower degrees of escape are predicated on an arrest for lesser charges. In this case, defendant has been charged with escape in the first degree following his arrest for selling narcotics, a B felony (see, Penal Law § 220.39 [1]). The question submitted is whether the People presented sufficient evidence of the underlying narcotic crime to support the indictment for escape, first degree.

Supreme Court dismissed the indictment, holding that the People failed to establish a prima facie case of criminal sale of narcotics to support a charge of escape in the first degree. The Appellate Division reversed and reinstated the indictment, concluding that the People need establish only that there was probable cause for the underlying narcotics arrest and that this burden had been satisfied. We now affirm.

I

The charges arise from events during a buy and bust operation. An undercover police officer, after negotiating a purchase of drugs, advised his backup team that there had been a "positive buy” and gave a description of the seller. Based on this radio transmission, Officer Gary Combs arrested defendant for criminal sale of a controlled substance in the third degree, a class B felony (see, Penal Law § 220.39 [1]). The police rear-cuffed the defendant and placed him in the back of a police van. While being transported to the station, defendant managed to open the rear door of the van and disappeared into a nearby apartment complex. He remained at large for five days until he was again arrested.

In the interim, a laboratory analysis of the substance sold by defendant tested negative for narcotics and accordingly, the People presented only the escape charge to the Grand Jury. The Grand Jury indicted defendant for escape in the first degree (Penal Law § 205.15 [2]).

II

Section 205.15 (2) of the Penal Law provides that escape in the first degree is committed when a person escapes from custody after "[h]aving been arrested for, or charged with” an A or B felony (Penal Law § 205.15 [2]). A person is in custody when he is restrained by a public officer following an authorized arrest (Penal Law § 205.00 [2]). The only element in question in this appeal, and the focus of our inquiry, is the sufficiency of the evidence supporting the existence of the underlying crime, i.e., whether the People established that the police made an authorized arrest for a B felony. If the arresting officer had probable cause to arrest defendant for an A or B felony, defendant’s subsequent escape from custody constituted first degree escape.

Defendant maintains that the People have a greater burden, that they must prove the A or B felony. He points out that the sole difference among the three degrees of escape is the basis for the arrest: a defendant who escapes from general custody is guilty of third degree escape, a class A misdemeanor (Penal Law § 205.05); a defendant who escapes from custody after being arrested for a class C, D or E felony is guilty of second degree escape (Penal Law § 205.10 [2]); and a defendant who escapes from custody after being arrested for a class A or B felony is guilty of first degree escape (Penal Law § 205.15 [2]). Thus, he urges a showing of the defendant’s actual culpability for the underlying crime is necessary to justify the imposition of enhanced punishment for the escape crime. In his view a simple showing of probable cause satisfies the requirement that the custody was lawful, and may demonstrate that the defendant committed escape, third degree, but it does not supply the evidence required to establish the aggravating element, an A or B felony arrest, necessary to subject defendant to enhanced punishment for the escape.

We hold the People need not prove to the Grand Jury’s satisfaction that the underlying crime was actually committed or even establish, prima facie, that a narcotic was sold (see, People ex rel. Dixon v Snyder, 259 App Div 760). The statute is satisfied if the People establish that the police had reasonable cause to believe at the time of the arrest that an A or B felony has been committed. The ultimate disposition of the underlying charge is irrelevant (cf., People v Eiffel, 81 NY2d 480; People v Williams, 25 NY2d 86).

Defendant’s argument assumes that the enhancement of the crime of escape is based upon the arrestee’s blameworthiness. The conduct involved in escaping, however, is equally culpable regardless of the severity of the underlying charge. The crime increases in degree, not because of the arrestee’s blameworthiness, but because of the impact an escaped prisoner charged with an underlying crime of greater severity has on society. A similar degree structure, supported by similar policy concerns, is found in the bail jumping statutes (Penal Law § 215.55 et seq.).

Nor do we find persuasive defendant’s reliance on cases such as People v Warren (103 AD2d 760) and People v Jeffries (129 AD2d 962). The Courts in those cases construed the statute as we do to require probable cause for the arrest for the underlying felony. The arrests in both those cases were for grand larceny, a crime which is defined in terms of the value of the property. Inasmuch as value is an element of the crime of grand larceny, the Courts held the People had failed to establish probable cause for the arrests for grand larceny because they had failed to establish the value element. There is no similar requirement that the police know the kind or amount of the narcotics involved before making an arrest for criminal sale of a controlled substance in the third degree (see, People v Williams, 205 AD2d 567; People v Hernandez, 189 AD2d 634; People v Acevedo, 179 AD2d 465, 467).

Ill

The inquiry, then, is whether Officer Combs possessed probable cause to arrest defendant for selling narcotics.

A police officer may arrest for an offense without a warrant if he has reasonable cause to believe that a person has committed that offense in his presence (CPL 140.10 [1] [b]). Reasonable cause means probable cause (see, People v Johnson, 66 NY2d 398, 402, n 2). Probable cause exists when an officer has knowledge of facts and circumstances "sufficient to support a reasonable belief that an offense has been or is being committed” (People v Bigelow, 66 NY2d 417, 423; People v McRay, 51 NY2d 594, 602). Moreover, under the fellow officer rule, an arresting officer is deemed to act with probable cause when acting at the direction of another law enforcement officer who has the requisite probable cause (People v Rosario, 78 NY2d 583, 588-589; People v Petralia, 62 NY2d 47, 51-52). Thus, Combs, as the arresting officer, could rely on information supplied him by another officer, and if the evidence on which he acted gave probable cause to believe defendant had committed a B felony, the crime of escape, first degree, has been established.

Officer Combs testified before the Grand Jury that on the day of the arrest he was participating as the backup man in a buy and bust operation. The plan in such operations is for an undercover officer to solicit the sale of narcotics and when the sale is complete, to radio a backup officer to arrest a described seller. Combs testified that he received a radio transmission from the undercover officer that a "positive buy” had been made and giving him a description of the seller’s clothing and physical characteristics. Combs interpreted "positive buy” to mean that narcotics had been sold. Accordingly, he arrested defendant, who matched the description, for violation of section 220.39 (1) of the Penal Law, unlawful sale of a narcotic drug (a B felony), and advised him that he was charged with violating the State narcotic laws. Although it was subsequently revealed that the substance purchased was not a narcotic, the undercover was not required to field test it to determine that it was in fact a narcotic and not some other substance in order to sustain the escape charge. He and the arresting officer could reasonably believe, based upon their experience and all the circumstances surrounding the transaction, that defendant had sold narcotics to the undercover. This evidence, accompanied by evidence that defendant escaped after being arrested, was sufficient to support the indictment for escape, first degree.

To obtain a Grand Jury indictment the People were required to submit "competent” and "admissible” evidence sufficient to establish every element of the crime which, if viewed in the light most favorable to them, provided reasonable cause to believe defendant committed the crime of escape, first degree (see, CPL 190.65 [1]; People v Swamp, 84 NY2d 725, 729-730; see also, People v Galatro, 84 NY2d 160, 163-164). In charging defendant with escape, the People did not seek to establish, nor were they obliged to establish, criminal sale of a controlled substance in the third degree. They were only required to establish that defendant was arrested with probable cause to believe he had sold narcotics and that he subsequently escaped from custody. They did so.

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

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

Order affirmed.


text:
    [658 NE2d 1032, 635 NYS2d 159]
    The People of the State of New York, Respondent, v Raymond Herr, Appellant.
    Argued October 19, 1995;
    decided November 30, 1995

      POINTS OF COUNSEL

      David C. Schopp, Buffalo, Linda S. Reynolds and Barbara J Davies for appellant.
    I. Appellant wras deprived of his constitutional right to the effective assistance of counsel because of his attorney’s concurrent employment as a part-time Village Prosecutor. (People v Shinkle, 51 NY2d 417; Glosser v United States, 315 US 60; People v Di Falco, 44 NY2d 482; Matter of Schumer v Holtzman, 60 NY2d 46; People v Cooper, 156 Misc 2d 483; People v Zimmer, 51 NY2d 390; Mitchell v Maggio, 679 F2d 77; Barrientos v United States, 668 F2d 838; Baty v Balkcom, 661 F2d 391; Goodson v Peyton, 351 F2d 905.) II. The trial court erred in failing to instruct the jury on the issue of the voluntariness of appellant’s statement as required by CPL 710.70 (3). (People v Huntley, 15 NY2d 72; People v Cefaro, 23 NY2d 283; People v Watts, 29 AD2d 878; People v Williams, 62 NY2d 285; People v Matthews, 148 AD2d 272; Jackson v Denno, 378 US 368.) III. The trial court committed reversible error in denying appellant’s request for an expanded identification charge. (People v Whalen, 59 NY2d 273; People v Perez, 77 NY2d 928.)

      Kevin M. Dillon, District Attorney of Erie County, Buffalo (J. Michael Marion and John J. DeFranks of counsel), for respondent.
    I. Concurrent employment by counsel as defense attorney and part-time Village Prosecutor did not create an appearance of impropriety. (People v Shinkle, 51 NY2d 417; Matter of Schumer v Holtzman, 60 NY2d 46; Niesig v Team I, 76 NY2d 363; Matter of Schiff, 83 NY2d 689; Matter of Cunningham, 57 NY2d 270; Matter of 1616 Second Ave. v New York State Liq. Auth., 75 NY2d 158; Matter of Conti, 70 NY2d 416; Matter of Wait, 67 NY2d 15; Matter of Sims, 61 NY2d 349; Matter of Lonschein, 50 NY2d 569.) II. The trial court properly denied defendant’s request to submit to the jury the question of the voluntariness of his statement. (People v Cefaro, 23 NY2d 283; People v Williams, 62 NY2d 285; Colorado v Connelly, 479 US 157.) III. The trial court properly instructed the jury on the People’s burden of proof with respect to the identification. (People v Whalen, 59 NY2d 273; People v Wilson, 156 AD2d 1002.)
   OPINION OF THE COURT

Levine, J.

The Erie County District Attorney’s office prosecuted defendant for various sex offenses. Defendant was represented by Daniel J. Henry, Jr., who was a part-time Village Prosecutor for the Village of Blasdell. Henry was appointed Village Prosecutor by the Village Board and designated as such by the Erie County District Attorney. The designation limited Henry’s authority to the prosecution of all traffic violations except misdemeanors, violations of the Village ordinance, and violations under the Penal Law that did not include felonies and misdemeanors. As Village Prosecutor, Henry was not an employee of the Erie County District Attorney’s office. His salary, office and staff were all supplied by the Village and not the District Attorney’s office. Henry had no access to the District Attorney’s files, investigative personnel or other resources. The District Attorney likewise had no access to Henry’s files, investigative personnel or other resources. Moreover, Henry was not empowered to prosecute the crimes with which defendant was charged and tried.

Despite representation characterized by the trial court as "outstanding and beyond reproach,” (158 Misc 2d, at 308) defendant was convicted on all counts. Subsequently, defendant moved pursuant to CPL 440.10 to vacate his judgment of conviction on several grounds including that it was obtained in violation of his right to counsel as guaranteed under the Federal and State Constitutions. Defendant maintains here, as he did below, that his attorney’s role as a part-time Village Prosecutor created an unacceptable appearance of impropriety thus compromising his right to effective assistance of counsel. Specifically, he points to our language from People v Shinkle (51 NY2d 417) that criminal defendants have "the right to both the fact and appearance of unswerving and exclusive loyalty on the part of attorneys who represent them” (id., at 421). Defendant’s arguments were rejected by both Supreme Court and the Appellate Division, and we now affirm.

In Shinkle we held that a criminal defendant’s right to counsel was violated when a Public Defender, who actively participated in the preliminary stages of a defendant’s defense, became employed as Chief Assistant District Attorney by the office that was prosecuting that defendant’s ongoing case. Although the District Attorney’s office had taken all available precautions to insulate the attorney from the defendant’s case, we concluded that the office should have been disqualified because the facts "inescapably gave both defendant and the public the unmistakable appearance of impropriety and continuing opportunity for abuse of confidences entrusted to the attorney during the months of active representation of defendant” (id., at 420). Thus, the rule of Shinkle is that disqualification is required when there is a "risk of prejudice attendant on the abuse of confidence” (id., at 421). The rule is necessary to prevent situations in which former clients must depend on the good faith of their former lawyers turned adversaries to protect and honor confidences shared during the now extinct relationship. In those situations the risk of abuse is obvious. We have explained, however, that Shinkle does not require disqualification whenever there exists a possible appearance problem: "The courts, as a general rule, should remove a public prosecutor only to protect a defendant from actual prejudice arising from a demonstrated conflict of interest or a substantial risk of an abuse of confidence * * * and the appearance of impropriety, standing alone, might not be grounds for disqualification. The objector should demonstrate actual prejudice or so substantial a risk thereof as could not be ignored” (Matter of Schumer v Holtzman, 60 NY2d 46, 55 [emphasis supplied]; see also, People v Jackson, 60 NY2d 848, 850 [removal unnecessary when "there is no 'significant possibility’ of an actual conflict”]).

Applying the principles enunciated in Shinkle and Schumer, it is clear that defendant’s right to counsel was not violated. There was no opportunity for the abuse of confidences comparable to that which existed in Shinkle, and the appearance of impropriety, if any existed at all, was inconsequential. Henry could not prosecute the crimes with which defendant was charged. He did not try cases in his prosecutorial capacity in the court in which defendant’s trial was held. He did not work with the law enforcement personnel who investigated the case. Nor was he supervised by or even in communication with the District Attorney’s office that conducted the prosecution. In fact, Henry’s employment as a Village Prosecutor had no connection to the office of District Attorney charged with prosecuting defendant except for the pro forma designation required by law (Village Law § 20-2006; County Law § 700). This connection was so tenuous that it did not signal a risk of prejudice to defendant, and in no way compromised his right to "the fact and appearance of unswerving and exclusive loyalty” (People v Shinkle, supra, at 421) on the part of his attorney.

Defendant’s reliance on New York State Bar Association Committee on Professional Ethics Opinion No. 544 (1982) is similarly unavailing. Although defendant’s attorney may have been in technical violation of one part of the five-part test set forth therein, such opinions — like the Code of Professional Responsibility on which they are based — do not have the effect of law (Niesig v Team I, 76 NY2d 363, 369). When a disciplinary rule is "invoked in litigation, which in addition to matters of professional conduct by attorneys, implicates the interests of nonlawyers * * * we are not constrained to read the rules literally or effectuate the intent of the drafters, but look to the rules as guidelines to be applied with due regard for the broad range of interests at stake” (id.). Thus, the test remains the one defined in Shinkle and Schumer and applied here.

We have reviewed defendant’s other contentions and find them also to be without merit. Accordingly, the order of the Appellate Division should be affirmed.

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

Order affirmed.


author: Chief Judge Kaye.

text:
    [658 NE2d 1034, 635 NYS2d 161]
    ALH Properties Ten, Inc., et al., Appellants, v 306-100th Street Owners Corp., Respondent.
    Argued October 18, 1995;
    decided November 30, 1995

      POINTS OF COUNSEL

      Robinson Silverman Pearce Aronsohn & Berman, New York City (Robert A. Wolf and Kenneth H. Amorello of counsel), for appellants.
    I. The order of the court below runs counter to the priority provisions set forth in the recognition agreement between Friesch-Groningsche Hypotheekbank Realty Credit Corporation and Owners Corp. (Midlantic Commercial Leasing Corp. v D.B.A. Knits, 167 AD2d 117; Roemer & Zeller v Ace Transmission Ctr., 114 Misc 2d 415; Commercial Trading Co. v Little N. Parkway Realty Corp., 41 Misc 2d 472.) II. The lien granted Owners Corp. under its bylaws does not encompass the sponsor’s nonmaintenance obligations under the offering plan. (Procopio v Fisher, 83 AD2d 757; Weber v Sidney, 19 AD2d 494, 14 NY2d 929; Fe Bland v Two Trees Mgt. Co., 66 NY2d 556; Vermeer Owners v Guterman, 78 NY2d 1114; Rego Park Gardens Owners v Rego Park Gardens Assocs., 191 AD2d 621; Board of Mgrs. of Fairways at N. Hills Condominium v Fairways at N. Hills, 150 AD2d 38; Central Trust Co., Rochester v Sheahen, 66 AD2d 1015.) III. Owners Corp. does not have an "issuer’s lien” upon the unsold shares that extends to the sponsor’s nonmaintenance obligations. (Silverman v Alcoa Plaza Assocs., 37 AD2d 166; Allen v Biltmore Tissue Corp., 2 NY2d 534; Matter of Carmer, 71 NY2d 781; Matter of State Tax Commn. v Shor, 43 NY2d 151; United Hous. Found, v Forman, 421 US 837; Grenader v Spitz, 537 F2d 612, 429 US 1009; Weiss v Karch, 62 NY2d 849; Friedman v Sommer, 63 NY2d 788.)

      Wolf Haldenstein Adler Freeman & Herz LLP, New York City (Eric B. Levine and Stuart M. Saft of counsel), for respondent.
    I. The apartment corporation’s lien secures all obligations of a shareholder, not only maintenance defaults. (Quatrochi v Citibank, 210 AD2d 53.) II. Since a cooperative sponsor’s unsold shares are "securities” under article 8 of the UCC, the apartment corporation’s "first lien” is valid against plaintiffs under UCC 8-103. (Gross v Vogel, 81 AD2d 576; Matter of State Tax Commn. v Shor, 43 NY2d 151; Fe Bland v Two Trees Mgt. Co., 66 NY2d 556; Matter of Levandusky v One Fifth Ave. Apt. Corp., 75 NY2d 530; Agar v Orda, 264 NY 248; Bache & Co. v International Controls Corp., 339 F Supp 341, 469 F2d 696; United Hons. Found, v Forman, 421 US 837; Lebowitz v Mingus, 100 AD2d 816; Meyer v Nelson, 83 AD2d 422; Rosner v 80 CPW Apts. Corp., 73 AD2d 39.) III. The apartment corporation’s first lien, as to all obligations, was noted on the stock certificates in accordance with UCC 8-103. (Allen v Biltmore Tissue Corp., 2 NY2d 534; Gillman v Chase Manhattan Bank, 135 AD2d 488, 73 NY2d 1.) IV. The parties here did not, through the "recognition agreement,” agree to subordinate the portion of the apartment corporation’s lien that relates to "nonmaintenance” defaults. (Matter of State Tax Commn. v Shor, 43 NY2d 151; Royal Coach Lines v National Labor Relations Bd., 838 F2d 47.)
   OPINION OF THE COURT

Chief Judge Kaye.

In October 1987, Westend Property Associates, a partnership in the business of promoting the conversion of Manhattan apartment buildings from rental to cooperative status submitted an offering plan seeking to convert a residential building located on Manhattan’s Upper West Side. As sponsor for the conversion, Westend, whose general partner was Jerry Donatelli, retained title to 12 of the unsold apartments and defendant, 306-100th Street Owners Corporation, became the owner of the building itself.

A year and a half later, on March 6, 1989, Diversified Realty Financial Partners Limited Partnership — an entity also controlled by Donatelli, and the assignee of Westend’s interest in the 12 unsold apartments — obtained a $12.75 million loan from plaintiff Friesch-Groningsche Hypotheekbank Realty Credit Corporation (FGH), a German bank licensed to do business in New York. Along with a promissory note evidencing the loan, Diversified entered into a security agreement, signed by Donatelli in his capacity as general partner, and dated March 6, 1989, whereby it pledged to plaintiff as collateral for the loan "a first and prior security interest in * * * all of [Diversified’s] right, title and interest” in the 12 cooperative apartments at 306 West 100th Street, along with unsold apartments it owned in 16 other buildings.

After execution of the promissory note, the security agreement and the other related loan documents, plaintiff filed UCC-1 financing statements perfecting its security interest in the 12 apartments (see, UCC 9-304 [7]).

In September 1989, five months after receiving the $12.75 million FGH loan, Diversified began defaulting on its maintenance payments to defendant for the 12 apartments. In order to preserve the value of its collateral, plaintiff began to cure the default by making these monthly payments so that by May of 1995, plaintiff had paid in excess of $630,000 in maintenance arrearages.

By January of 1990, Diversified’s financial situation had further deteriorated and it began defaulting on the interest payable to plaintiff on the $12.75 million loan. On March 7, 1991, in accordance with the applicable provisions of the promissory note and security agreement, plaintiff exercised its right to accelerate the outstanding principal and accrued interest due (then in the range of $12.3 million). When Diversified failed to pay, plaintiff gave notice of its intent to foreclose on the 12 apartments (see, UCC 9-504). An auction took place on May 28, 1991, and plaintiff’s affiliate and designee submitted the highest bid at $498,000.

Defendant, however, refused to transfer title to plaintiff, claiming that it had a senior security interest both as to any unpaid maintenance charges and as to any outstanding non-maintenance obligations resulting from Westend’s failure to perform certain renovation and repair work as agreed under the offering plan. According to defendant, this work — which was to have been completed within six months of the 1989 building conversion — consisted of plumbing, electrical and masonry repairs, as well as installation of a new roof and windows and refurbishment of the building’s elevator.

Plaintiff commenced this action to compel defendant to transfer title to the shares. On the consent of the parties, plaintiff’s motion for a preliminary injunction was converted to one for summary judgment. Supreme Court granted summary judgment in favor of plaintiff and denied defendant’s cross motion, holding that plaintiff is the senior secured party with respect to the apartments. The Appellate Division, however, reversed, reasoning that defendant has the first, or "issuer’s” lien pursuant to UCC article 8 (191 AD2d 1). On remand, the trial court found that the unpaid maintenance obligation for the 12 apartments totalled $84,975 and the nonmaintenance obligation $676,755.

In that the parties do not dispute either the fact that defendant has a senior security interest in outstanding maintenance payments or the accuracy of the amounts found by the trial court, we granted leave to decide the law question of which party has the senior security interest with respect to the nonmaintenance obligations. We now conclude that plaintiffs interest is superior.

UCC 8-103, entitled "Issuer’s Lien,” provides that: "A lien upon a security in favor of an issuer thereof is valid against a purchaser only if * * * the security is certificated and the right of the issuer to such lien is noted conspicuously thereon.”

As support for the proposition that it has an issuer’s lien in the nonmaintenance obligations, defendant points to a legend in the second full paragraph printed on the back of the stock certificates corresponding to the shares in the 12 apartments indicating that the "Corporation, by the terms of said By-laws and the proprietary lease, has a first lien on the shares represented by the certificate for all sums due and to become due under said proprietary lease.”

Even if the coop certificates in question could be considered a "security” for purposes of UCC article — a question we do not reach — no issuer’s lien was created securing defendant’s interest in nonmaintenance obligations arising with respect to the 12 apartments since the statutory predicate for an issuer’s lien under UCC 8-103 is that the alleged lien be "noted conspicuously” on the share certificates. Here, the only lien noted conspicuously on the certificates is one for all sums due under the proprietary lease. These sums, consisting primarily of maintenance and other regular common charges associated with cooperative apartment ownership, are not equivalent to the repair/renovation responsibilities of the sponsor at the time of the original building conversion. Nowhere on the legend is there any reference to defendant’s lien with respect to Westend’s obligations under the offering plan.

In order to overcome the evident failure of the stock certificates themselves to provide adequate notice as to the existence of defendant’s alleged lien for nonmaintenance obligations, defendant points to the fact that the first full paragraph on the back of the stock certificates incorporates by reference the provisions of defendant’s bylaws, which state in pertinent part that defendant has "a first lien * * * for all indebtedness and obligations * * * arising under the provisions of any proprietary lease * * * or otherwise arising” (emphasis added).

Though it is doubtful that the phrase "otherwise arising” is sufficiently specific to encompass the specific repair obligations of the sponsor under the offering plan, the strict notice requirements of UCC 8-103 do not permit a party to create what would essentially be a hidden hen by referring merely to the existence of a separate document on a stock certificate, without specifying in any way the particular language in that document which is applicable (compare, Allen v Biltmore Tissue Corp., 2 NY2d 534). Though the Allen Court noted that "a restriction is sufficiently 'stated’ by a legend noting that the stock is 'issued subject to restriction’ and specifying where its full text may be found” (id., at 540 [citations omitted]), the failure of the share certificates to conspicuously indicate any lien other than that arising under the proprietary lease for unpaid maintenance charges not only fails to inform a potential creditor where to look for the existence of any other lien, but, as noted above, strongly implies that no such lien even exists. "If the issuer may not at the inception of its relation with the registered owner create a secret right in its own favor, much less may the issuer do so after the owner has used his certificates to obtain credit from a lender” (In re Hawaii Corp., 829 F2d 813, 815).

No issuer’s lien having been established with respect to the nonmaintenance obligations under the circumstances presented, the judgment appealed from and the order of the Appellate Division brought up for review should be modified in accordance with this opinion, with costs to appellants, and, as so modified, affirmed.

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

Judgment appealed from and order of the Appellate Division brought up for review modified in accordance with the opinion herein, with costs to appellants, and, as so modified, affirmed.

       The question whether tenant-shareholders’ sui generis ownership interests in cooperative apartments are UCC article 8 securities (Matter of State Tax Commn. v Shor, 43 NY2d 151, 154) has vexed courts — both State and Federal — in varying contexts (see, First Sav. Bank v Barclays Bank, 618 A2d 134 [DC]; Presten v Sailer, 225 NJ Super 178, 542 A2d 7; Silverman v Alcoa Plaza Assocs., 37 AD2d 166 [1st Dept]; In re McNair, 90 Bankr 912 [ND 111]; Superior Fin. Corp. v Haskell, 556 F Supp 199 [SD NY]). Indeed, while not presented by the facts before us, a related issue concerns the proper method for the cooperative corporation to perfect its lien with respect to outstanding maintenance charges (see, e.g., Siegler, Collecting Rental Arrears, NYLJ, Mar. 1, 1995, at 3, col 1; DiLorenzo, Sponsor Defaults, NYLJ, Feb. 23, 1990, at 2, col 3; Saada v Master Apts., 152 Misc 2d 861).