author: Chief Judge Breitel. Cooke, J. Fuchsberg, J.

text:
    Alvord and Swift, Appellant, v Stewart M. Muller Construction Company, Inc., et al., Defendants, and New York Telephone Company et al., Respondents.
    Argued October 19, 1978;
    decided December 21, 1978

      POINTS OF COUNSEL

      Arthur S. Friedman and Peter N. Wang for appellant.
    I. Alvord’s claims against New York Telephone should not have been dismissed. (Frontier Excavating v Sovereign Constr. Co., 30 AD2d 487; North Shore Sewer & Water v Corbetta Constr. Co., 395 F2d 145; E. C. Ernst, Inc. v Manhattan Constr. Co. of Tex., 387 F Supp 1001; Natkin & Co. v Fuller Co., 347 F Supp 17; Data Elec. Co. v Nab Constr. Corp., 52 AD2d 779; Bailey v Diamond Int. Corp., 47 AD2d 363; Andre v Pomeroy, 35 NY2d 361; Falk v Goodman, 7 NY2d 87; Gray v Unigard Mut. Ins. Co., 47 AD2d 691; Southard v Alford, 50 AD2d 664.) II. Summary judgment should not have been granted to New York Telephone before Alvord had any opportunity for discovery. (Terranova v Emil, 20 NY2d 493; Shanks v Eastman Kodak Co., 47 AD2d 999; Krinsky v Winston, 32 AD2d 552; Golini v Nachtigall, 38 NY2d 745.) III. The causes of action asserted against the architect were sufficient. (Rovello v Orofino Realty Co., 40 NY2d 633; Condon v Associated Hosp. Serv. of N. Y., 287 NY 411; Jones v Archibald, 45 AD2d 532; Ramos v Shumavon, 21 AD2d 4, 15 NY2d 610; Aetna Ins. Co. v

      Hellmuth, Obata & Kassabaum, 392 F2d 472; Kiewit Sons’ Co. v Iowa Southern Utilities Co., 355 F Supp 376; Peerless Ins. Co. v Cerny & Assoc., 199 F Supp 951; Detweiler Bros. v Graham & Co., 412 F Supp 416; United States v Rogers & Rogers, 161 F Supp 132; Clemens v Benzinger, 211 App Div 586; E. C. Ernst. Inc. v Manhattan Constr. Co. of Tex., 387 F Supp 1001.)

      Robert W. Gottlieb and Douglas N. Gordon for New York Telephone Company, respondent.
    I. Summary judgment was properly granted dismissing the causes of action alleged against New York Telephone. (Logan v United Interests, 236 NY 194; Data Elec. Co. v Nab Constr. Corp., 52 AD2d 779; Tibbetts Contr. Corp. v O & E Contr. Co., 15 NY2d 324; ATI, Inc. v Ruder & Finn, 42 NY2d 454; Rothschild v World-Wide Autos. Corp., 24 AD2d 861, 18 NY2d 982; Hornstein v Podwitz, 254 NY 443; Campbell v Gates, 236 NY 457; Felsen v Sol Cafe Mfg. Corp., 24 NY2d 682; Knapp v Penfield, 143 Misc 132; Inselman & Co. v FNB Fin. Co., 51 AD2d 924, 41 NY2d 1078.)

      Richard T. Andrias and Andrew P. Davis for Charles S. Haines and others, respondents.
    I. The recent Court of Appeals decision in Underhill Constr. Corp. v New York Tel. Co. (44 NY2d 666), is dispositive of the claims asserted against the architect in this case. (Underhill Constr. Corp. v New York Tel. Co., 44 NY2d .666.) II. The architect is not liable to a subcontractor twice removed from his client for alleged negligent representations (plans) or alleged failure to use care in supervision of construction. (Greco v Levy, 257 App Div 209, 282 NY 575; Christianson v Breen, 288 NY 435; Jones v Archibald, 45 AD2d 532; Clemens v Benzinger, 211 App Div 586; Ramos v Shumavon, 21 AD2d 4, 15 NY2d 610; Aetna Ins. Co. v Hellmuth, Obata & Kassabaum, 392 F2d 472; Peerless Ins. Co. v Cerny & Assoc., 199 F Supp 951; United States v Rogers & Rogers, 161 F Supp 132; Detweiler Bros. v Graham & Co., 412 F Supp 416; Ultramares Corp. v Touche, 255 NY 170.) III. Appellant seeks to make itself a fourth-party beneficiary of the architect’s contract with the owner without basis in law or fact. (Lawrence v Fox, 20 NY 268; Seaver v Ransom, 224 NY 233; Cerp Constr. Co. v J. J. Cleary, Inc., 59 Misc 2d 489, 31 AD2d 784; Snyder Plumbing & Heating Corp. v Purcell, 9 AD2d 505; Santora v Greater N. Y. Mut. Ins. Co., 36 AD2d 929; Data Elec. Co. v Nab Constr. Corp., 52 AD2d 779;
      Matter of Knickerbocker Field Club v Site Selection Bd. of City of N. Y., 41 AD2d 539.)
   OPINION OF THE COURT

Chief Judge Breitel.

Plaintiff Alvord & Swift, subcontractor on a construction project for the renovation of a New York Telephone Company facility, seeks damages due to delays incurred in the performance of its subcontract. Named as defendants were: the general contractor, Stewart M. Muller Construction Co., and Stewart M. Muller; the owner, New York Telephone; and the architects. From two separate orders at Special Term, one granting summary judgment under CPLR 3212 to New York Telephone and the other under CPLR 3211 dismissing two causes of action against the architects, plaintiff appealed to the Appellate Division. That court affirmed, and plaintiff again appeals.

The issues have been extensively treated in two opinions by Mr. Justice Edward J. Greenfield at Special Term. The only issue requiring further discussion is whether summary judgment was properly granted defendant on plaintiff’s sixth cause of action, alleging that defendant New York Telephone actively interfered with performance of plaintiff’s work. The issue raises two questions: first whether summary judgment may be granted to defendant where plaintiff, in its submissions, has made out a cause of action not contained in its pleadings; and second, whether a tort cause of action for interference with contractual relations is established when the only interference asserted is not intentional, but only incidental to another legitimate business purpose of the defendant.

The order of the Appellate Division should be affirmed. Modern principles of procedure do not permit an unconditional grant of summary judgment against a plaintiff who, despite defects in pleading, has in his submissions made out a cause of action. But in this case, because no facts establishing intentional interference with plaintiff’s contractual relations have ever been alleged or proved, plaintiff has failed to demonstrate the existence of a triable issue of fact. Summary judgment was, therefore, properly granted (CPLR 3212).

On October 17, 1969 the contractor Muller and the owner New York Telephone contracted for improvements on a New York Telephone building. Later, plaintiff Alvord and Swift subcontracted to perform the heating, ventilating, and air-conditioning work. The prime contract, between Muller and New York Telephone, provided that "[n]othing contained in the Contract Documents shall create any contractual relation between the Owner * * * and any Subcontractor”. Alvord’s subcontract, by its terms, incorporated the terms of the prime contract, and also provided Alvord with "the benefits of all rights, remedies and redress against the Contractor which the Contractor * * * has against the Owner”. Thus, Alvord had no contractual relationship with New York Telephone; its contractual recourse was against Muller only.

Construction did not proceed on schedule, despite contractual provisions providing that time was of the essence. The project was not completed until almost three years after the originally scheduled completion date, and the delay entailed significant additional expense to plaintiff subcontractor. As a consequence, this action was brought, with plaintiff seeking damages of $847,559. The general contractor, however, because of insolvency, is apparently incapable of satisfying plaintiff’s claim. Thus, various claims were interposed against the owner and the architects as well, despite the explicit language in the prime contract and the subcontract.

Plaintiff’s sixth cause of action alleges, in essence, that the owner failed to supervise the project and the general contractor "with the consequence that Alvord was disrupted and delayed in the orderly and timely performance of its work under the Alvord subcontract.” From the language of the complaint, this cause of action appears to be for breach of the prime contract between New York Telephone and Muller. So reading the complaint, Special Term granted summary judgment, emphasizing Alvord’s lack of privity.

On appeal, however,- plaintiff contends that the sixth cause of action is one for tortious interference with Alvord’s performance of its contract with Muller. Since the memoranda of law submitted to Special Term are not included in the record on appeal, it is not possible with certainty to conclude that plaintiff did not argue a tort theory in support of its sixth cause of action. In any event, because this case involves summary judgment, not sufficiency of the complaint, failure to state a tort cause of action in pleadings would not be sufficient to permit unconditional summary judgment in favor of defendant, as a matter of law, if plaintiff’s submissions provided evidentiary facts making out a cause of action (see, e.g., Irving Fin. Corp. v Wegener, 30 AD2d 958; see, also, 4 Weinstein-Korn-Miller, NY Civ Prac, par 3212.10).

Long before enactment of the CPLR, on motion for summary judgment courts looked beyond the pleadings to discover the nature of the case (see, e.g., Curry v Mackenzie, 239 NY 267, 272). Even when deficiencies in the plaintiff’s complaint have induced courts to grant summary judgment in favor of defendant, amendment of the complaint has frequently been permitted or directed, even by appellate courts (see, e.g., Potolski Int. v Hall’s Boat Corp., 282 App Div 44, 48 [Bergan, J.]; Elsfelder v Cournand, 270 App Div 162, 165; cf. Babtkis Assoc. v Tarazi Realty Corp., 34 AD2d 754, 755). It has only been the dead hand of a criticized case that influenced courts to grant summary judgment for defendant when a plaintiff’s submissions, but not its pleadings, made out a cause of action (see Cohen v City Co. of N. Y., 283 NY 112, 117; but see, in criticism, Shientag, Summary Judgment, pp 67-73; see, also, Diemer v Diemer, 8 NY2d 206, 211-212 [Fuld, J.]). With the advent of the modern principles underlying the CPLR, application of the archaic rule is no longer merited. It must be admitted, of course, that the archaic rule, although theoretically unsound, produces no pernicious harm so long as plaintiff may in a proper case be permitted to amend its complaint to allege the cause of action proved in its submissions, the applicable Statute of Limitations not barring the late amendment.

Even under the most modern principles, on any view summary judgment in this case was properly granted, not because of any defects in pleading, but because plaintiff’s submission in opposition to the motion for summary judgment raised no unresolved issue of fact with respect to the purported tortious interference (see CPLR 3212, subd [b]; see, e.g., Capelin Assoc. v Globe Mfg. Corp., 34 NY2d 338, 341, 343).

Intentional interference with contractual relations is, of course, recognized as a tort (see, e.g., Hornstein v Podwitz, 254 NY 443, 448). But the interference must be intentional, not merely negligent or incidental to some other, lawful, purpose (see Rockaway Blvd. Wrecking & Lbr. Co. v Raylite Elec. Corp., 26 AD2d 9, 11-12, and cases cited; see, generally, Prosser, Torts [4th ed], pp 938-946, esp pp 941-942). On this view, to survive a motion for summary judgment, plaintiff was obliged to produce evidence, not just unsubstantiated allegations or assertions, that the owner intentionally and unjustifiably interfered with the work to be done by the subcontractor. This plaintiff has failed to do. In fact, even on appeal plaintiff’s contention, in substance, is that, because of the alleged breach of contract between owner and contractor, there was incidental interference with its work. There has never been any indication that an intentional tort was committed in the sense of an intention to harm plaintiff without economic or other lawful excuse or justification.

Of course, a property owner may often have a legal obligation not to interfere with the work of subcontractors, whether the interference be intentional or otherwise. But such an obligation would be contractual in nature, and barred in this case by the absence of privity between owner and subcontractor. Plaintiff, in reliance on Special Term’s unreported opinion in a companion case, apparently contends that an owner’s obligation not to interfere has been recognized "no matter what the contract” (Underhill Constr. Corp. v New York Tel. Co., Sup Ct, New York County, Sept. 9, 1976, Greenfield, J., pp 17-18, affd 56 AD2d 760, affd 44 NY2d 666). In this context, "no matter what the contract” must be read to mean only that the obligation may be implied by law into an existing contract, whatever the express terms of the contract (see Peckham Rd. Co. v State of New York, 32 AD2d 139, 141, affd 28 NY2d 734; Johnson Drake & Piper v State of New York, 29 AD2d 793, 794-795; cf. Cauldwell-Wingate Co. v State of New York, 276 NY 365, 376; in all of which the litigating parties were in privity of contract). There exists, however, no tort liability to incidental beneficiaries not in privity.

In sum, plaintiff has produced no evidence in support of its sixth cause of action.

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

Cooke, J.

(concurring). It is agreed that the order of the Appellate Division should be affirmed — but on the opinions of Mr. Justice Edward J. Greenfield at Special Term (see, also, Underhill Constr. Corp. v New York Tel. Co., 44 NY2d 666, affg 56 AD2d 760). With respect to plaintiff’s sixth cause of action, it is also agreed that summary judgment dismissing said cause was properly granted.

The majority, however, observes that said sixth cause appears to be for breach of contract and that plaintiff on appeal contends that said cause is one for tortious interference with its performance of the contract (p 280). It then holds: "In any event, because this case involves summary judgment, not sufficiency of the complaint, failure to state a tort cause of action in pleadings would not be sufficient to permit unconditional summary judgment in favor of defendant, as a matter of law, if plaintiffs submissions provided evidentiary facts making out a cause of action” (p 280). It is this holding and its serious implications that cause concern. Only the CPLR and post-CPLR authorities will be cited in this discussion.

It is respectfully submitted that the majority confuses a defect or deficiency in a cause of action, as actually pleaded, with a cause which might have been asserted but was not. The distinction is crucial.

"While the pleadings are part of the record of a CPLR 3212 motion, a defective complaint or a deficient answer does not sanction an automatic grant or denial of the motion, where the entire record before the court presents facts curing the defect or supplying the deficiency” (4 Weinstein-Korn-Miller, NY Civ Prac, par 3212.10, p 32-168; see, also, Irving Fin. Corp. v Wegener, 30 AD2d 958, 959; 6 Carmody-Wait 2d, NY Prac, Summary Judgment, § 39:13, pp 452-453). That rule applies where the facts presented are within the ambit of the cause of action or defense defectively or deficiently pleaded in the complaint or answer. More pertinent to our inquiry, however, is the basic rule that a party may not defeat a motion for summary judgment on the ground that he or she may have a good cause of action other than as alleged in that party’s pleading (Lefft v Canada Life Assur. Co., 40 AD2d 641; Babtkis Assoc. v Tarazi Realty Corp., 34 AD2d 754, 755; Central State Bank v American Appraisal Co., 33 AD2d 1009, 1010, affd 28 NY2d 578; 4 Weinstein-Korn-Miller, NY Civ Prac, par 3212.10, pp 32-168 to 32-169; 6 Carmody-Wait 2d, NY Prac, Summary Judgment, § 39:13, p 455). That rule applies precisely to the instant situation and, consequently, plaintiff should in no event be permitted to defeat the right of the moving defendant, the New York Telephone Company, to summary judgment upon the pleaded cause merely by contending or even showing that plaintiff has a different and unpleaded cause of action.

Pleadings, although protected by the mandate of liberal construction (CPLR 3026), obviously serve an essential function (see, generally, Wachtell, New York Practice Under the CPLR [5th ed], p 147; see, also, CPLR 3011 to 3026, inclusive). CPLR 3013, referred to variously as the "heart” and "soul” of the pleading requirement under the CPLR provides: "Statements in a pleading shall be sufficiently particular to give the court and parties notice of the transactions, occurrences, or series of transactions or occurrences, intended to be proved and the material elements of each cause of action or defense.” The basic requirement of this section is that the pleadings give adequate " 'notice of the transactions * * * intended to be proved and the material elements of [the] cause of action”’ (Spano v Perini Corp., 25 NY2d 11, 18 [Fuld, Ch. J.]; Jerry v Borden Co., 45 AD2d 344, 347 [Hopkins, J.]; 3 Weinstein-Korn-Miller, NY Civ Prac, par 3013.03; Siegel, New York Practice, p 245; First Preliminary Report of NY Adv Comm on Practice and Procedure, 1957, p 63). The cause of action or defense is the thing of which the pleading must give notice (Siegel, Practice Commentaries, McKinney’s Cons Laws of NY, Book 7B, CPLR 3013:3, p 612). Of course, the form of the complaint and the label attached by the pleader are not to be exalted to a position of control (Van Gaasbeck v Webatuck Cent. School Dist., No. 1, 21 NY2d 239, 245, 246), but the notice requirement of the statute "must be accomplished with sufficient precision and specificity to enable the court to control the case and to permit the parties to prepare for trial” (3 Weinstein-Korn-Miller, NY Civ Prac, par 3013.03, p 30-216; see Wool-ridge v Rosen, 35 AD2d 714; Meltzer v Klein, 29 AD2d 548). The purpose of the statute is to prevent surprise (Matter of Pittsford Gravel Corp. v Zoning Bd. of Town of Perinton, 43 AD2d 811, 812, mot for lv to app den 34 NY2d 618; Foley v D’Agostino, 21 AD2d 60, 62-63) and, thus, to avoid confusion, delay and injustice.

"[I]t is still essential * * * that the pleading enable the defendant to determine the nature of the plaintiffs grievances and the relief he seeks in consequence of the alleged wrongs” (Shapolsky v Shapolsky, 22 AD2d 91). The giving of notice is the key, and the lack of it either as to the event out of which the grievance arises or as to a material element of each cause of action or defense creates prejudice and violates CPLR 3013 (Siegel, New York Practice, p 246). It is conceded by the majority that the complaint fails to state a tort cause of action for interference with contractual relations (pp 281-282); that is the underlying tenor of its position. Thus, at the very least, a material element of such a cause is lacking and no notice of it was furnished. That being so, in the event plaintiff had submitted on the motion evidentiary facts making out such a cause of action (see pp 279, 281-282), it would be improper for this .court to deny summary judgment to the moving defendant on the theory that plaintiff possesses a tort cause of action.

Fuchsberg, J.

(concurring in part and dissenting in part). As I see it, the motion for summary judgment should have been denied as to plaintiff’s sixth cause of action and I therefore dissent from so much of the disposition of this appeal as is to the contrary. In arriving at their result, I suggest the majority and concurring opinions beg the true question here: Was it an abuse of discretion as a matter of law to grant defendant’s motion on the sixth cause of action before the scheduled discovery could be conducted?

We all apparently agree that, any impressions to the contrary notwithstanding, liberal construction of pleadings is the accepted rule in New York. There is nothing "modern” about that. Our statutes have mandated it for the entire 130 years since the enactment of section 136 of the Code of Procedure of 1848 (see, e.g., Clark v Dillon, 97 NY 370, 373; 3 Weinstein-Korn-Miller, NY Civ Prac, par 3026.01). Nor do I contest the correctness of looking to a plaintiff’s summary judgment submission as supplementary material on which to determine whether a cause of action has been made out.

But it is inconsistent to speak of liberal construction of a litigant’s papers while narrowly limiting its ability to garner the facts upon which its case must rest. That is the situation here.

This case is not complex. Defendant Muller, as general contractor engaged in the reconstruction of New York Telephone’s building, awarded a subcontract to plaintiff, a mechanical contractor. Progress on the project was impeded by almost endless disruptions, delays and changes of specifications to a point where the work was not completed until nearly three years beyond its scheduled date. At one point, the Telephone Company informed the subcontractors that it had assumed direct control in place of Muller. It was to recover the damages it claims the disruptions and delays imposed upon its own ability to perform that plaintiff brought this suit against Muller, New York Telephone and the latter’s architects.

The sixth cause of action speaks for itself: "Telephone endeavored to take over direct supervision of the scheduling, coordination and installation of construction work with the result that rather than completing the Project with the services of a competent general contractor, Telephone actively interfered with and disrupted job progress and caused delays and damage to Alvord” (emphasis mine). By lany rule of liberal pleading, this language may be read to include a connotation of intentionally tortious conduct. Certainly, in the context of the construction project out of which this suit arises and of the intimate relationship which each of the parties bore to it, the idea of surprise is alien and, moreover, was not urged by Telephone. Nor is it suggested that any uncertainties were not resolvable by a bill of particulars.

To unearth the facts bearing on Telephone’s role in the events at issue, plaintiff served notice to examine that defendant before trial. Telephone had served a like notice on plaintiff. However, the taking of the depositions was aborted when Telephone made its motion for summary judgment, which was granted over the plaintiff’s protests that, among other things, the motion was brought so precipitously in order to cut off discovery.

CPLR 3212 (subd [fj), which presumably was not intended to be an empty exercise in legislative legerdemain, explicitly provides that: "Should it appear from affidavits submitted in opposition to the motion that facts essential to justify opposition may exist but cannot then be stated, the court may deny the motion or may order a continuance to permit affidavits to be obtained or disclosure to be had and may make such other order as may be just”.

Plaintiffs affidavit in opposition to the motion contained an express and timely request for such a deferment as an alternative disposition of the motion and demonstrated enough to indicate that facts to justify its suit "may exist”. In making such a request it should be unnecessary at that stage to convince a court that such facts do exist. That would put the cart before the horse. Here plaintiffs affirmation was that defendant, inter alia, “hinder[ed] or imped[ed] the subcontractor from being able to work” and for a time had taken over direct control of the project. (See Peterson v Spartan Inds., 33 NY2d 463; Siegel, Practice Commentaries, McKinney’s Cons Laws of NY, Book 7B, CPLR 3211:49, p 53.)

As a harsh and drastic remedy, the power to grant summary judgment should be exercised sparingly (Rotuba Extruders v Ceppos, 46 NY2d 223; Andre v Pomeroy, 35 NY2d 361, 364). In the present case, the need for circumspect application of the doctrine was particularly acute. The indirect nature of the relationship between the defendant, as owner, and the plaintiff, as subcontractor, created an informational barrier the piercing of which was obviously crucial. Moreover, evidence of defendant’s intent — an essential element of the cause of action — was predominantly, if not exclusively, within defendant’s control (see Siegel, Practice Commentaries, McKinney’s Cons Laws of NY, Book 7B, CPLR 3211:49, p 53). To limit the availability of discovery here is to penalize the plaintiff for not knowing what he could not know before he had conducted the discovery to which he was entitled.

It is only in exceptional cases that a plaintiffs right to present his claims to a court of law should be cut off by a premature motion for summary judgment (see 4 Weinstein-Korn-Miller, NY Civ Prac, par 3212.18, p 32-195). This was not such a case. Plaintiffs claim was by no means frivolous. Nor is it inconsequential; as the majority opinion tells us, the damages at stake come to $847,559. The plaintiff, almost concededly, was an innocent victim of the way in which that job was run on behalf of, and, as alleged without denial, by the defendant.

I would therefore hold that Special Term’s refusal to exercise its power under CPLR 3212 (subd [f]) constituted an abuse of discretion as a matter of law (see Cohen and Karger, Powers of the New York Court of Appeals, § 158).

Judges Jasen, Jones and Wachtler concur with Chief Judge Breitel; Judge Cooke concurs in a separate opinion in which Judge Gabrielli concurs; Judge Fuchsberg concurs in part and dissents in part and votes to modify in a separate opinion.

Order affirmed.

      . (See First Preliminary Report of NY Adv Comm on Practice and Procedure, 1957, p 63; 3 Weinstein-Korn-Miller, NY Civ Prac, par 3013.01.)

      . (See Siegel, Practice Commentaries, McKinney’s Cons Laws of NY, Book 7B, CPLR 3013:1, p 610.)

      . The record indicates that the action was commenced against the New York Telephone Company on April 23, 1976. Said party contends that all alleged interferences took place prior to April, 1973 — beyond the three-year period of CPLR 214 (subd 4). If said defendant had known that plaintiffs sixth cause sounded in tort rather than- contract, undoubtedly it would have raised the Statute of. Limitations as e defense at an appropriate time.

       The facts on which a Statute of Limitations defense could be premised also had to await discovery. Plaintiffs action was commenced within three years, the statutory tort limitations period, from the time work on Telephone’s project was completed. Discovery would have developed the facts as to the nature and timing of Telephone’s activity in the interval preceding the termination of the job.


source: Caselaw Access Project

author: Fuchsberg, J.

license: Public Domain

text:
    The People of the State of New York, Respondent, v William Maerling, Appellant.
    Argued September 12, 1978;
    decided December 21, 1978

      POINTS OF COUNSEL

      Jane E. Berger and Pierce Gerety, Jr., for appellant.
    I. Because Anne Marie Paixao had two strong motives to misrepresent the facts, and because it was plainly in her interest to give a statement which would help her negotiate a favorable plea on the kidnapping indictments pending against her, the admission of her statement as a declaration against interest was a violation of the New York Rules of Evidence and of appellant’s right of confrontation under the State and Federal Constitutions. (People v Brown, 26 NY2d 88; Kittredge v Grannis, 244 NY 168; People v Wolzer, 41 AD2d 679; Ellwanger v Whiteford, 15 AD2d 898; United States v Marquez, 462 F2d 893; United States v McKee, 462 F2d 275; United States v Seyfried, 435 F2d 696.) II. Because the Suffolk County Jail officer knew that appellant was represented by counsel and that he wanted to speak about a crime or crimes, the officer violated appellant’s right to counsel by continuing the conversation without first contacting the lawyer. (People v Arthur, 22 NY2d 325; People v Hetherington, 27 NY2d 242; People v Vella, 21 NY2d 249; People v Kaye, 25 NY2d 139; People v Hobson, 39 NY2d 479; People v Townes, 41 NY2d 97; People v Roberson, 41 NY2d 106; Massiah v United States, 377 US 201; United States v Satterfield, 558 F2d 655; People v Ramos, 40 NY2d 610.) III. Assigned counsel demonstrated an indifference toward his responsibilities and an ignorance of elementary principles of criminal law when he informed the jury that appellant owned a gun, when he failed to prevent the introduction of false evidence of propensity, when he informed the jury that an alleged accomplice had confessed, when he failed to object to a series of instructions which destroyed the jury’s ability to make factual findings in favor of the defense, when he failed to request disclosure of Rosario materials with respect to any witness, when he failed to make any effort to obtain potentially important evidence suggested by appellant, when he failed to submit a memorandum of law at the close of the Huntley hearing, as promised, and when he ignored appellant’s sound objection to the misconduct of a juror, and he thus deprived appellant of effective assistance of counsel under the State and Federal Constitutions. (People v Droz, 39 NY2d 457; United States v De Coster, 487 F2d 1197; Bruton v United States, 391 US 123; People v Di Biasi, 7 NY2d 544.)

      Patrick Henry, District Attorney (Joyce G. Friedman of counsel), for respondent.
    I. Anne Marie Paixao’s statements constituted declarations against interest which, because of their inherent reliability, were not violative of appellant’s right to confrontation and were properly admitted into evidence. (People v Brown, 26 NY2d 88; Chambers v Mississippi, 410 US 284; California v Green, 399 US 149; People v Harding, 37 NY2d 130; People v Riccardi, 73 Misc 2d 19, 40 AD2d 1083, 414 US 827; United States v Harris, 403 US 573; Livingston v Arnoux, 56 NY 507; People v De Tore, 34 NY2d 199; People v Patterson, 39 NY2d 288; People v Johnson, 40 NY2d 882.) II. Appellant’s right to counsel was not violated when he voluntarily and spontaneously confessed to Lieutenant Cannatella. (People v Hobson, 39 NY2d 479; People v Ramos, 40 NY2d 610; People v Singer, 44 NY2d 241; People v Pinson, 44 NY2d 458; People v Clark, 41 NY2d 612; People v Arthur, 22 NY2d 325; People v Townes, 41 NY2d 97; People v Kaye, 25 NY2d 139; People v McKie, 25 NY2d 19; People v Roberson, 41 NY2d 106; People v Jackson, 41 NY2d 146.) III. Appellant’s legal representation at trial was not constitutionally inadequate. (People v Bennett, 29 NY2d 462; People v Droz, 39 NY2d 457; People v La Bree, 34 NY2d 257; People v. Bowden, 48 AD2d 962; People v Williams, 34 AD2d 695; People v Watson, 53 AD2d 576; Bruton v United States, 391 US 123; People v Davenport, 57 AD2d 656; People v Smith, 31 AD2d 847.)
   OPINION OF THE COURT

Fuchsberg, J.

On the night of April 14, 1972, two masked men forced their way into the Huntington, Suffolk County, home of Jerry Lo Basso, a reputed bookmaker. Besides Lo Basso, only his wife and his sister-in-law were present. Before leaving, the intruders ransacked the house, took possession of all the jewelry and cash they could lay their hands on, and, angered that the location of additional money in the house may not have been revealed, one of them killed Lo Basso by shooting him in the head. Mrs. Lo Basso, who also received a bullet wound and thereafter suffered a stroke and memory loss, was never able to testify as to these events.

For eight months, despite intensive investigation by over 100 police officers, no clues to the identity of the perpetrators were unearthed. The first lead came that December, when the police were informed that 19-year-old Anne Marie Paixao, who, along with one Tony Franciotti, her employer and lover, had been arrested and indicted on an unrelated kidnapping charge in both Queens and Nassau Counties, had knowledge of the Lo Basso murder. Detectives Rafferty and Rosenthal, in charge of the Lo Basso case for the Suffolk County police, then interviewed her.

As Rafferty was later to testify at trial, Anne Marie told him that, while pretending to be asleep in Franciotti’s apartment during the early morning hours after the Lo Basso murder, she overheard a conversation among the defendant, William Maerling, Maerling’s brother-in-law, Robert Ragonese, and Franciotti in the course of which Ragonese is supposed to have stated that he had shot "the old man”, Maerling said he had shot "the old lady”, and Franciotti mentioned that he had remained in a car outside the Lo Basso home after having told the other two only to "rob them” and "not to shoot anybody”. Rafferty also related how Anne Marie went on to tell him that Franciotti gave her $25 the day after the robbery and that, though nothing was said about its source, when she had had occasion to ask for money several days earlier, he replied he did not have any, but planned to "rip off a bookie” in a few days.

The day after she was interviewed by Rafferty and Rosenthal, Anne Marie went to the Queen’s District Attorney’s office, told them about the information she had supplied and began plea negotiations on the kidnapping indictment. However, she never testified at any stage of the Lo Basso case. Some months after her disclosure and before there was occasion to call her to repeat her information on the stand, she committed suicide. Instead, at trial, Rafferty, over objection, was permitted to recite her revelations to him as a declaration against her penal and pecuniary interest.

Conversations between Anne Marie and her mother, Barbara Paixao, testified to by the mother, were also admitted into evidence on the same theory. According to Mrs. Paixao, at about the time of the murder, the daughter, in refusing the mother’s request for $15, told her she would be able to comply in a few days since Franciotti was going to use a gun to make sure he collected money owed him by "a bookie on Long Island”. The mother also swore that Anne Marie gave her the $15 that weekend; that, upon hearing of the murder and asking whether Franciotti had committed it, Anne Marie replied that he had not; that, at about the time of Anne Marie’s meeting with Rafferty, the daughter repeated to her mother the substance of the statements the detective described on the stand; that Anne Marie had also stated that she herself was not in trouble; and that, when Anne Marie would, as she at times did, mention the names of people involved in other criminal activities in which she or Franciotti participated, neither Maerling’s nor Ragonese’s name ever came up.

In any event, after the January 31 meeting between Anne Marie and Rafferty, things moved rapidly. Fifteen days later William Maerling and Robert Ragonese were arrested, and the next day the Grand Jury indicted Maerling, Ragonese and Franciotti for murder, burglary, and robbery.

On the day of his arrest, Maerling, who could neither read nor write, signed a statement which in substance was consistent with the information received from Anne Marie Paixao; the statement was in Rafferty’s handwriting and witnessed only by him and Detective Rosenthal. Maerling later testified at a Huntley hearing that he was never informed of his Miranda rights, that the statement was false and that he affixed his signature after hours of coercion accompanied by beatings and threats. These claims, vigorously litigated by both sides, presented sharp issues of fact which the suppression court later resolved in favor of the People. The result was that the statement was ultimately received at trial.

Two weeks after his arrest, in the absence of counsel, who had been assigned to him sometime earlier, an oral statement, different in content from the first, but still inculpatory since it did place Maerling in the car outside the Lo Basso house, was taken from Maerling by Lieutenant Cannatella, a Suffolk County Jail officer, under circumstances hereinafter described. After hearing Cannatella and the defendant, the Trial Judge was to rule this statement voluntary and spontaneous and deny defendant’s motion to suppress.

In October, 1973, Maerling’s case was severed from the others and he was brought to trial alone. No identification evidence linked him to the crime. Neither Ragonese nor Franciotti testified. The People’s case rested entirely on out-of-court statements: those of Anne Marie Paixao to Rafferty and to her mother, the one made the day of the arrest by Maerling to Rafferty, and the one taken from him in the county jail. It was on this evidence that he was found guilty on one count of each of the offenses charged and subsequently sentenced to 20 years to life on the murder conviction and to lesser terms to be served concurrently on the other charges. Six months after the Maerling sentence, the indictments against Ragonese and Franciotti were dismissed "in the interest of justice” after the District Attorney had filed an affirmation in which he stated that Anne Marie’s death had made it impossible for the prosecution to establish a prima facie case. The Appellate Division has affirmed Maerling’s judgment of conviction.

For the reasons which follow, we believe. the judgment should be set aside and a new trial ordered. Though, in appropriate circumstances, declarations against penal interest may be admitted to incriminate an accused in a criminal case, on no reasonable view of the evidence were those of Anne Marie Paixao admissible. On the record here it was also reversible error to hold that defendant’s jailhouse statement was made so spontaneously that the absence of counsel may be disregarded.

Turning immediately to the declaration against interest question, we begin our analysis by emphasizing that the admission of such evidence, as an exception to the hearsay rule, may be said to be dependent, as in general are all out-of-court statements offered to prove the truth of the matter they assert, on a satisfactory showing (1) that resort to such proof is necessary to the discovery of truth and (2) that the proffered evidence is reliable (McCormick, Law and the Future: Evidence, 51 Nev L Rev 218, 219). Simply stated, in the case of declarations against interest, the theory is that such assurance flows from the fact that a person ordinarily does not reveal facts that are contrary to his own interest. Therefore, the reasoning goes, absent other motivations, when he does so, he is responding to a truth-revealing compulsion as great as that to which he would likely be subjected if cross-examined as a witness.

But, in New York, and in many other jurisdictions, for a long time a declaration that would subject the declarant to criminal, as distinguished from pecuniary or proprietary, liability did not suffice (see People v Brown, 26 NY2d 88, 91-93). In Brown, however, we joined the growing trend favoring the admissibility of declarations against penal interest. In that case, we held it reversible error to exclude a third party’s self incriminating statement that tended to exculpate the defendant by supporting his affirmative defense of self-defense. In an uncomplicated illustration, the court suggested that "to receive proof that a man admitted he never had title to an Elgin watch, but not to receive proof that he had admitted striking Jones over the head with a club * * * does not readily withstand analysis” (26 NY2d, at p 91).

But Brown did not deal with the admissibility of a declaration offered by the prosecution to incriminate a defendant. Offering few criteria as to how necessity and reliability are to be evaluated in the case of an exculpatory declaration, it offered none specifically attuned to an inculpatory one. On reliability, it confined itself to a statement that the declaration against penal interest must be material. As to necessity, it stated three circumstances in which there would be a satisfactory showing of the declarant’s unavailability — death, absence from the jurisdiction or invocation of the privilege against self incrimination (26 NY2d, at p 94).

Today, confronting the question of the admissibility of an inculpatory declaration as res nova (see, however, People v Harding, 37 NY2d 130, 135 [Cooke, J., concurring]; People v Cepeda, 61 AD2d 962, mot for lv to app den 44 NY2d 952), we have no occasion to tarry on the question of necessity. Both sides, apparently accepting the idea that no one can be less available than one who is deceased, do not contest the issue.

Proceeding then to the matter of reliability, we note immediately that the court’s holding that the statement in Brown was admissible was not made to turn on the fact that it was offered for the defendant rather than against him, but on the unlikelihood, given the potentially serious consequences to the declarant of his revelation, that he would have admitted to the crime were it not true. In short, it was the inherent trustworthiness of the statement itself that was crucial to its admission (People v Harding, 37 NY2d 130, 135, supra (Cooke, J., concurring); see, also, People v Spriggs, 60 Cal 2d 868; Fine, Declarations Against Penal Interest in New York: Carte Blanche?, 21 Syracuse L Rev 1095, 1120; McCormick, Evidence [2d ed], § 278).

We see no reason to depart from that view. The nature of the ultimate use to which a declaration against interest is put, especially when that use is anticipatable by the declarant, is a factor to be considered in deciding whether the declarant was in a truth-telling frame of mind, but it need not be determinative. One thing is clear: the severe sanctions potentially attendant upon a conviction for crime, whether by way of imprisonment or fine or both, make admissions of guilt among the most disserving of declarations. We therefore conclude that, conceptually, declarations against penal interest may be admissible against an accused. The correctness of this view finds confirmation in its incorporation in respected recent evidence codes (Uniform Rules Evidence, rule 63, subd [10] [1953 version]; Fed Rules Evidence, rule 804, subd [b], par [3]). Indeed, Congress specifically rejected a proposal to exclude from the ambit of Federal rule 804 (subd [b], par [3]) "a statement or confession offered against the accused in a criminal case, made by a codefendant or other person implicating both himself and the accused” (compare HR Rep No. 93-650, 93d Cong, 2d Sess, pp 21-22 [1973], reprinted in 1974 US Code Cong & Admin News, pp 7051, 7068, with Fed Rules Evidence, rule 804, subd [b], par [3]).).

All this still leaves open the criteria by which a Trial Judge is to be guided in reaching a conclusion that the assurances of truthfulness of a particular statement are adequate or inadequate to warrant admission. Or, put another way, since, as hearsay, the statement is not subject to cross-examination, how do we otherwise insure its reliability? Obviously, a declaration against interest should not be admissible under all circumstances. In a criminal case, reconciliation of the search for truth with concern for fairness to the defendant must proceed with great care. And, where the declaration is inculpatory in character, scrutiny of its reliability should, if possible, be even more circumspect because of the due process protections afforded those charged with crime, including, of course, the requirement that guilt be proved beyond a reasonable doubt.

These caveats in mind, it is clear that the interest which the declaration compromises must be one of sufficient magnitude or consequence to the declarant to all but rule out any motive to falsify. Naturally, for it to have that effect, the declarant must actually be conscious of the adversity. Such knowledge may be the subject of direct proof or may be inferred from the nature of the adverse matter declared and its relationship to the declarant (see 5 Wigmore, Evidence [Chadbourn rev, 1974], § 1461; Richardson, Evidence [10th ed], § 263; Comment, 39 Fordham L Rev 136; Note, Declarations Against Penal Interest: Standards of Admissibility Under an Emerging Majority Rule, 56 BU L Rev 148, 155). And, needless to say, the making of the declaration, the knowledge of the facts on which its adversity hangs and the awareness of the adversity must act on one another and therefore must be contemporaneous (cf. Hutchins v Hutchins, 98 NY 56, 64).

Moreover, since a statement may in part be disserving and in part self-serving, ideally courts should only admit that portion of an inculpatory statement which is opposed to a declarant’s interest. However, in certain instances, as when an out-of-context admission of the disserving portion will be unfairly prejudicial to the party against whom it is offered, so much of the remainder as places it in an accurate perspective should, in the sound discretion of the court, not be excluded. Except in such cases, consonant with the caution to be exercised when the object of the offer is to incriminate, we do not adopt the view that it is enough for the self-serving matter merely to be closely connected with the disserving portion (cf. in civil cases Livingston v Arnoux, 56 NY 507; but see McCormick, Evidence [2d ed], § 279, p 677). Declarations against interest are not admitted on the credit of their makers, but on their highly disserving nature. It follows that neutral and self-serving statements do not bear the same guarantee of reliability as do the disserving ones contained in the same declaration. It is because, without that guarantee, the trustworthiness of collateral statements may be expected to be open to question, that it generally is preferable to avoid the risk that a defendant’s liberty will be endangered by the jury receiving false hearsay (Jefferson, Declarations Against Interest: An Exception to the Hearsay Rule, 58 Harv L Rev 1, 57-62).

In addition, upon appropriate showing that such evidence is available, the trial court should also exercise a sound discretion to allow proof of the circumstances in which the declaration was made in order that apparent compliance with the criteria for admission may be demonstrated to be illusory. Such an inquiry would be geared to allow opposing counsel to prove that, because it was fueled by mental illness, sensation-seeking, or some other aberrant condition or motive, the declaration’s "hallmark of trustworthiness” was misleading (see Brady v State, 226 Md 422, 429, affd sub nom. Brady v Maryland, 373 US 83; Weinstein & Berger, Weinstein’s Evidence, par 804[b][3][02]). Or, the inquiry might reveal that, though sincerely made, the declaration was the result of an error in perception, memory, language or the like (see Hinton, Changes in the Exceptions to the Hearsay Rule, 29 Ill L Rev 422, 431-432; Note, 62 Nw U L Rev 934, 940).

Applying these criteria to the case before us, we con-elude that it was an abuse of discretion as a matter of law to admit the hearsay statements of Anne Marie Paixao as declarations against interest.

First, Mrs. Paixao’s version of the conversations she had. with her daughter at about the time of the Lo Basso murder contains no declarations against interest. There was no admission that Anne Marie participated in the Lo Basso crimes. The insinuation that she would receive some money after Franciotti went with a gun to collect a debt owed him by a "bookie” at most indicated no more than knowledge on her part of his intention to carry a gun when he did so. The only other relevant statement Anne Marie made at the time was that Franciotti had not been involved in the Lo Basso murder. And, in so far as she confided in her mother as to unrelated crimes in which Franciotti and she had participated, the matter was not only irrelevant but unquestionably collateral as well. Accordingly, none of this testimony should have been admitted into evidence.

Second, even if we were to assume that the statements Anne Marie made to Detective Rafferty (and later repeated to her mother) otherwise satisfied the rule, the "self incriminating” matter in her declarations was, when one considers the insignificance of the amount of money she received as against the immensity of the crime of which it allegedly was part of the avails, too tenuous and too trivial to guarantee their trustworthiness. In fact, although the prosecution characterized the $25 Franciotti gave Anne Marie as a receipt of stolen property, there was no showing that the money was actually the proceeds of the robbery rather than cash he had acquired from another source. Without such an identification, since they were living together and he apparently was her source of support, the inconsequential amount of $25 can hardly be tagged as coming from one source rather than another. Detective Rafferty did offer the conclusory statement that it was "obvious” to Anne Marie that the money was stolen, but it was her conception of whether she had engaged in wrongdoing and not his that governs. He conceded that she had said she never actually asked Franciotti whether it was stolen or not. Furthermore, the record also indicates that Anne Marie told her mother that she was not in any trouble after Detective Rafferty questioned her. Significantly, the Trial Judge made no finding that Anne Marie was aware that the statements she made to Detective Rafferty were against her interest when she made them.

Beyond that, the circumstances under which the declarations were made reveal that Anne Marie may have had motives to fabricate that far outweighed the paltry proof offered to establish their reliability. Her statements were neither spontaneous nor promptly made. They came many months later at a time when the possibility that her help in solving the Lo Basso murder case would win her leniency on the fresh kidnapping indictment had to have been ever-present, if not uppermost, in her mind. Furthermore, her romantic ties to Franciotti, who was also her employer and at least a sometime comrade in crime, presented a strong ulterior motive for her to cast him rather than Maerling in the more limited and less culpable role of an aider and abetter who sat outside in the car and expected that his accomplice would heed his admonition to engage in no gunplay. In the face of this positive and undisputed proof of untrustworthiness, it hardly seems necessary to dwell on Anne Marie’s lifestyle, Detective Rafferty’s description of her as one who, despite her youth, had "street moxie” and knew "all the ins and outs of the [criminal] trade”, and other evidences of her instability, of which her suicide may not have been the least. All or any of these strongly suggest a personality whose statements were by no means to be accepted as reliable merely because they were self-denigrating.

This brings us to the second and independent ground on which we reverse, the admission in evidence of the defendant’s jailhouse confession. Maerling claims that the statement was taken in violation of his right to counsel. As indicated earlier, the trial court decided that it was "spontaneous” and therefore within the ambit of People v Kaye (25 NY2d 139), a "narrow” exception to the rule enunciated in People v Hobson (39 NY2d 479). (People v Tompkins, 45 NY2d 748, 750.)

Of course, if the record contained factual support for the Trial Judge’s finding, we could not interfere (People v Anderson, 42 NY2d 35, 38-39; People v Leonti, 18 NY2d 384, 390). However, that is not the case here, since under no view of the facts can it be said that defendant’s statement was unsolicited (People v Esposito, 37 NY2d 156).

The record, and indeed the Judge’s findings of fact, indicate that the statements must be deemed the product of deliberate elicitation. Relying on the trial court’s findings of fact, we start with the initiation of the episode when Maerling told a guard he wanted to see the duty officer. When Lieutenant Cannatella responded, Maerling told him, "I want to talk to you about something * * * that no one else knows”. As Cannatella testified at the Huntley hearing, he then realized the prisoner was not going to discuss conditions relating to the jail and drew out the fact that Maerling, to quote the court’s findings, "wanted to talk to him about 18 or 19 robberies, get immunity and make a deal”. At no time did the defendant indicate that the crime for which he was then being held was not one of the robberies of which he was offering to talk. The officer did advise him of his Miranda rights, including his right to an attorney. But the defendant, who then had had an attorney for some time, responded that he nevertheless "wanted to talk and tell his attorney about it later”. Cannatella then informed Maerling that he could not give him a deal or immunity and that he would prefer that Maerling speak to someone in the District Attorney’s office. However, when the defendant asked to see an Assistant District Attorney, Cannatella "said he would have to know what it was about”. Maerling then allegedly confessed to the Lo Basso murder, saying that he waited in the car while Ragonese and Franciotti went into the Lo Basso home. Before engaging in this conversation, Cannatella took the defendant into an unoccupied room and closed the door. The conversation lasted 40 minutes.

The principles guiding our protection of a defendant’s right to counsel were unequivocally stated in Hobson: "The rule that once a lawyer has entered the proceedings in connection with the charges under investigation, a person in custody may validly waive the assistance of counsel only in the presence of a lawyer breathes life into the requirement that a waiver of a constitutional right must be competent, intelligent and voluntary [citing cases]” (People v Hobson, supra, at p 484; see, also, People v Arthur, 22 NY2d 325).

True, in People v Kaye (supra), the court nevertheless permitted the prosecution to use a confession blurted out by a mentally unstable defendant after he had been arrested and the police had been instructed by his lawyer to conduct no interrogation. It did so because it found that the confession was spontaneous. But to come within the rule of that case, the spontaneity has to be genuine and not the result of inducement, provocation, encouragement or acquiescence, no matter how subtly employed. For such interrogation tactics often may be more destructive of a defendant’s rights than are blatantly coercive techniques.

The unequivocal trend of our decisions has been to guard with increasing zeal the defendant’s precious right to the advice of counsel in deciding whether to waive his equally valuable right not to incriminate himself when confronted with the power and authority of the State in the person of police interrogators.

Thus, in People v Townes (41 NY2d 97) and People v Roberson (41 NY2d 106), we ruled that statements made during interview sessions voluntarily initiated by the defendants were inadmissible because an attorney was not present during the questioning. In Townes, the defendant had complained of police brutality to a civilian review board; this led to an interview in his cell by a police investigator, who asked the defendant to describe what had happened at this arrest. In Roberson, the defendant voluntarily appeared at offices of the civilian review board and police internal affairs division to complain about police brutality and made incriminating statements to police investigators when asked to describe the events surrounding his arrest. And, most recently, in People v Tompkins (45 NY2d 748, supra), we held a waiver of counsel’s presence ineffective and a statement obtained in his absence inadmissible where a defendant insisted on talking to the police in the face of a telephone conversation in which his lawyer had advised him to remain silent.

There is far less evidence of a valid waiver of counsel in the present case. Maerling never talked to his lawyer before his waiver at all. It is one thing for a police officer unavoidably to hear and thereafter to report a statement which in effect is forced on him. It was quite another for Cannatella to engage in the long, two-way conversation whose direction became apparent almost from the beginning. In doing so, he trespassed on the spirit, if not on the letter, of the principles we have reviewed. It follows that Maerling’s statement should be suppressed.

Accordingly, the order of the Appellate Division must be reversed and, because the statement made by the defendant the day after his arrest coupled with the corpus delicti made out a prima facie case, a new trial should be ordered.

Chief Judge Breitel and Judges Jasen, Gabrielli, Jones, Wachtler and Cooke concur.

Order reversed and a new trial ordered.

      . (See People v Huntley, 15 NY2d 72.)

      . (See Miranda v Arizona, 384 US 436.)

      . Defendant raised, and both sides have also argued, a claim that he was deprived of effective assistance of counsel. In view of our disposition on the other issues, and since we are advised that the counsel in question is no longer assigned to this case, we do not reach that issue.

        . At least seven States have adopted evidence codes admitting declarations against penal interest (Cal Evidence Code, § 1230; Kan Stat Ann, § 60-460, subd [j]; Nev Rev Stat, § 51.345, subd 1, par [b]; NM Stat Ann, § 20-4-804, subd [b], par [4]; Wis Stat Ann, § 908.045, subd [4]; NJ Rules Evidence, rule 63, subd [10]; Utah Rules Evidence, rule 63, subd [10]). The courts of at least 13 other States have held declarations against penal interest admissible without legislative authorization. (Deike v Great Atlantic & Pacific Tea Co., 3 Ariz App 430; State v Chong Sing Leong, 51 Hawaii 581; State v Larsen, 91 Idaho 42; People v Lettrich, 413 Ill 172; Brennan v State, 151 Md 265; State v Higginbotham, 298 Minn 1; Sutter r Easterly, 354 Mo 282; State v Williams, 43 Ohio St 2d 88 [semble]; Howard v Jessup, 519 P2d 913 [Okla]; Commonwealth v Hackett, 225 Pa Super Ct 22; McClain v Anderson Free Press, 232 SC 448; Cameron v State, 153 Tex Crim 29; Newberry v Commonwealth, 191 Va 445.) In addition, the courts of Maine and Washington have indicated a willingness to adopt the rule if presented with an appropriate case. (State v Gervais, 317 A2d 796 [Me]; State v Garrison, 71 Wn 2d 312; State v Gardner, 13 Wash App 194.) Scholarly commentary favoring the exception includes Wigmore on Evidence (vol 5 [Chadbourn rev, 1974], §§ 1476, 1477); Fine, Declarations Against Penal Interest in New York: Carte Blanche? (21 Syracuse L Rev 1095); Note, Declarations Against Penal Interest: Standards of Admissibility under an Emerging Majority Rule (56 BU L Rev 148); Comment (39 Fordham L Rev 136).

      . For an interesting discussion of a trend towards a principle of "practical unavailability” see Wigmore on Evidence (vol 5 [Chadboum rev, 1974], § 1456); Note, Declarations Against Interest: A Critical Review of the Unavailability Requirement (52 Cornell LQ 301, 305-306).

      . In Dutton v Evans (400 US 74), the Supreme Court sanctioned the use at trial against a criminal defendant of an extrajudicial statement it claimed could be characterized as a declaration against penal interest. Nevertheless, overall, the court has been less than definitive in spelling out the relationship between hearsay and the confrontation clause (Weinstein & Berger, Weinstein’s Evidence, par 804[b][3][02]; Fine, 21 Syracuse L Rev 1095, 1120-1134A; Younger, Confrontation and Hearsay: A Look Backward, A Peek Forward, 1 Hofstra L Rev 32). In the light of our disposition of the present case, we do not now reach the constitutional confrontation question.

      . In Chambers v Mississippi (410 US 284), a case involving an exculpatory declaration by a declarant who thereby confessed to a murder for which the defendant was being prosecuted, the Supreme Court, in holding that the statement carried sufficient credentials of trustworthiness to warrant admission, laid stress on the presence of "corroborating” circumstances in the form of evidence that the declarant was at the scene of the crime, that he possessed a firearm of the sort used in the killing and that he had admitted his guilt soon after the criminal event had occurred.


author: Jones, J. Gabrielli, J. Fuchsberg, J.

text:
    Ransford D. Triggs, Respondent, v David W. Triggs, as Executor of Frederick Triggs, Sr., Deceased, Appellant, et al., Defendant.
    Argued November 30, 1978;
    decided December 27, 1978

      POINTS OF COUNSEL

      Thomas D. Green for appellant.
    I. A contract between a majority, but not all of the voting shareholders of a corporation that fetters the authority of its board of directors to manage and control its business and, in particular, to select its officers and to fix their compensation is illegal and unforceable. (Manson v Curtis, 223 NY 313; McQuade v Stoneham, 263 NY 323; Matter of Hirshon, 13 NY2d 787.) II. The provision for an option in the March 19, 1963 contract is unambiguous, and under it respondent does not have the option right he claims. (Bethlehem Steel Co. v Turner Constr. Co., 2 NY2d 456; West, Weir & Bartel v Carter Paint Co., 25 NY2d 535; Rodolitz v Neptune Paper Prods. Co., 22 NY2d 383; Williams v Barkley, 165 NY 48; Gaines v Jacobsen, 308 NY 218.) III. The proof does not show that Triggs, Sr., interpreted the March 19, 1963 contract as giving respondent an option to purchase his 113 voting shares on his death. (Zogby v State of New York, 53 Misc 2d 740.) IV. The performance due Triggs, Sr., by the terms of the March 19, 1963 contract hot having been fulfilled, an action for specific performance may not be maintained by respondent. (Paolucci v Damini, 55 AD2d 820.) V. Respondent’s motion for a posttrial hearing should have been denied as untimely. VI. Respondent having prior to and at the trial wittingly advanced and adhered to the use of only the corporation’s voting shares to determine per share book value, he is bound by that method of valuation. (Martin v City of Cohoes, 37 NY2d 162.)

      William G. O’Donnell for respondent.
    I. Respondent is entitled to specific performance. (Niemann v Cohen, 22 AD2d 770; Willard v Tayloe, 8 Wall [75 US] 557; Baltimore Realty Corp. v Alman, 282 App Div 714; Matter of Galewitz, 3 AD2d 280, 5 NY2d 721; Matter of Ahern v South Buffalo Ry. Co., 303 NY 545; Mosler Safe Co. v Maiden Lane Safe Deposit Co., 199 NY 479; Stern v Gepo Realty Corp., 289 NY 274; Alleghany Coll. v National Chautaugua County Bank of Jamestown, 246 NY 369; Matter of Field, 11 Misc 2d 427; I & I Holding Corp. v Gainsburg, 251 App Div 550, 276 NY 427.) II. Appellant’s belated effort to set aside the agreement as illegal and unenforceable is without basis. (Fellner v Marino, 4 Misc 2d 16; Jones v Bluestone, 28 Misc 2d 441, 14 AD2d 549, 10 NY2d 940; Bisbing v Sterling Precision Corp., 34 AD2d 427; Cicero Ind. Dev. Corp. v Roberts, 63 Misc 2d 565; Allegheny Coll. v National Chautaugua County Bank of Jamestown, 246 NY 369; Matter of Field, 11 Misc 2d 427; I & I Holding Corp. v Gainsburg, 251 App Div 550, 276 NY 427; Manson v Curtis, 223 NY 313; McQuade v Stoneham, 263 NY 323; Clark v Dodge, 269 NY 410; Matter of Feinson, 196 Misc 590.) III. The court below was correct in ordering the posttrial hearing as to the value of the stock.
   OPINION OF THE COURT

Jones, J.

That an agreement between corporate shareholders includes illegal provisions with respect to the election of corporate officers and the fixation of their compensation does not preclude enforcement of the provision for a stock purchase option contained in the same agreement where it has been found that over the seven-year life of their agreement there was in fact no intrusion on the unfettered management of corporate affairs by the board of directors because the parties ignored and made no attempt to enforce the illegal portions of their agreement and there the evidence does not show that the parties themselves considered that enforcement of the stock purchase option was contingent on observance of the illegal portions of the agreement.

After a trial without a jury the court granted respondent specific performance of the stock purchase option. A majority at the Appellate Division agreed, and we now affirm. The pertinent facts are recited in the dissenting opinion.

The appellant executor presses one question of law to which no reference was made by either the majority or the dissenters at the Appellate Division; he urges that the agreement of March 19, 1963 was illegal and is thus unenforceable. This contention was advanced on a motion to dismiss the complaint on the ground of illegality, made on the eve of trial and summarily denied by the court at the opening of trial. Although the contention was not expressly addressed at the Appellate Division it must be deemed to have been implicitly rejected in that court as well.

Appellant contends that because the March 19, 1963 agreement was not executed or approved by all of the corporate shareholders, its provisions requiring the election of respondent and his father as officers and fixing their compensation constituted an impermissible restriction of the rights and obligations of the board of directors to manage the business of the corporation under the doctrine of Manson v Curtis (223 NY 313) and related cases (see 3 White, New York Corporations [13th ed], par 620.03, subd [2]). No argument is made that the stock purchase option, standing alone would be invalid; the assertion is that the agreement must be read as a whole and that it must be invalidated in its entirety. The critical issue is whether, because of the initial inclusion of provisions which could have been said to fetter the authority of the board to select corporate officers and to fix their compensation, the stock purchase provision is now unenforceable.

The uncontroverted evidence is that in the years following the signing of the agreement, the assertedly illegal provisions of the agreement were ignored; no attempt was made to observe or enforce them and the management of corporate affairs was in no way restricted in consequence of the 1963 agreement. The evil to which the cited rule of law is addressed was never sought to be achieved nor was it realized. Although Triggs, Sr., and Ransford continued to serve as directors, the record discloses there were also three or four other, independent directors. That Triggs, Sr., continued to be elected chairman of the board (he was also elected corporate treasurer) and Ransford, corporate president and that for several years their salaries were fixed by the board at the figures stated in the March 19, 1963 agreement was in consequence of action freely taken by the entire board of directors and cannot be attributed to the sanction of the March 19, 1963 agreement of which the other directors, constituting a majority of the board, were wholly unaware. Indeed Triggs, Sr., took no exception when, on May 11, 1965, the board reduced his salary from $20,000 (the agreement figure) to $10,800, and when the board later entirely eliminated his salary his complaint in April of 1969 was predicated on the departure from the board’s action of May 11, 1965 rather than on any asserted violation of the provisions of the March 19,1963 agreement.

The legal issue here, too, depends on what is now an affirmed factual determination. The claim of illegality, raised for the first time some 13 years after the agreement had been signed, must fail because, as the trial court concluded, the March 19, 1963 agreement "did not in any way sufficiently stultify the Board of Directors in the operations of this business” within the doctrine on which appellant would rely.

Analytically we are presented with an agreement which in a single document deals with two different sets of obligations. On the one hand, the agreement contains the stock purchase option exercisable on the death of the father as to which, standing alone, there is no claim of illegality. On the other, there are the provisions with respect to the election of corporate officers and the fixation of their salaries, which are of questionable legality. Any illegality exists, however, only to the extent that the agreement operated to restrict the freedom of the board of directors to manage corporate affairs. There was nothing illegal per se in the election of Triggs, Sr., as chairman of the board or his son Ransford as corporate president or in fixing their annual salaries at $20,000 and $18,000, respectively. There would have been illegality only if the election of those officers or the determination of their compensation had been in consequence of the prior agreement and thus in constraint of the freedom of the board of directors to exercise their responsibilities of management. The finding below, however, was that there had been no such stultification. In that circumstance, the fact that the second portion of the 1963 agreement, if it had been enforced, might have involved illegality provides no compulsion not to enforce the other, legal portion of the agreement where, as here, there has been no factual determination that enforcement of the stock purchase option was dependent on enforcement of the terms with respect to corporate management. The fact is that the courts below have enforced only the stock option provisions of the March 19, 1963 agreement.

As to the other issue, on which there was a division at the Appellate Division, there must be an affirmance. Whether the option granted respondent in the agreement dated March 19, 1963 to purchase the shares in Triggs Color Printing Corporation owned by his father on the latter’s death survived the execution and subsequent cancellation of the agreement with the corporation for repurchase by the latter of the stock depended on the intention of the parties, father and son, as manifested in their agreement and by their subsequent conduct in its performance. Consistent with the trial court’s finding that the stock purchase option did survive is its additional conclusion that when the corporation was experiencing economic difficulty, respondent loaned it $43,000 in the belief "that the operation and control of the business was and would remain in his hands pursuant to the terms of his contract with his father”. The issue of survival, an issue of fact or at least a mixed issue of fact and law, having been determined in favor of respondent in the trial court and then affirmed at the Appellate Division, is now beyond the scope of our review.

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

Gabrielli, J.

(dissenting). I respectfully dissent. Defendant executor appeals from an order of the Appellate Division which affirmed a judgment of Supreme Court, following a nonjury trial, which granted plaintiff specific performance of an option to purchase certain stock from the estate of his deceased father. The order appealed from should be reversed since the underlying agreement is unenforceable in that it improperly sought to limit the powers of the board of directors to manage the corporation. Moreover, even were the agreement itself valid, the option was terminated in accord with its own provisions some time prior to decedent’s death.

The bone of contention in this case is control of Triggs Color Printing Corporation, a small firm founded by decedent in 1925. The firm appears to have prospered for some years and, with the passage of time, decedent’s three sons became involved in the business to varying degrees. As of 1963, the corporation had issued some 254 shares of voting stock. Of these, decedent personally owned 149 shares and the remainder were distributed equally between his three sons, with each son owning 35 shares. At that time, decedent apparently selected his son Ransford, the plaintiff in this action, as the one he deemed best suited to control the business following decedent’s death. To that end, decedent transferred 36 of his shares to plaintiff. Thus, out of the 254 voting shares, decedent owned 113 shares, plaintiff owned 71 shares, and each of the other two sons owned 35 shares.

Shortly thereafter, plaintiff and decedent entered into the written agreement at issue in this case. The two agreed to vote their shares together so as not only to elect both of them as directors, but also to elect decedent chairman of the board at a guaranteed annual salary, and to appoint plaintiff president of the corporation at a guaranteed annual salary. Additionally, the agreement contained the following provision: "It is the present contemplation of Frederick Triggs, Sr. to execute an agreement with the Corporation for the Corporation to repurchase his stock in the event of his death. In the event for any reason that such agreement has not been executed between the said Frederick Triggs, Sr. and the Corporation, then, in that event, the remaining Stockholder, to wit: Ransford D. Triggs, shall have the right and option to purchase the said stock of Frederick Triggs, Sr. for a period of sixty (60) days following the death of Frederick Triggs, Sr.”

A few months later, decedent did enter into a repurchase agreement with the corporation. One year later, in 1964, the repurchase agreement with the corporation was canceled by consent of both decedent and the corporation. During the next few years, plaintiff gradually assumed an ever greater role in corporate affairs, and decedent’s influence waned. Eventually the two had a falling out, and decedent appears to have begun to regret his choice of plaintiff as his successor. The corporation experienced some financial difficulties under plaintiff’s management, and the salary paid to decedent was decreased, at first with his consent and later over his objections. Finally, in February, 1970, decedent executed a codicil to his will by which he bequeathed his 113 shares of voting stock to his other two sons, and declared the 1963 agreement with plaintiff to be null and void. In April, 1970, decedent died.

Following decedent’s death, plaintiff sought to exercise the option to purchase the 113 shares from the estate, but the estate refused to transfer the stock. Some four years later, in September, 1974, plaintiff commenced this action seeking to compel the estate to honor the option. Defendant executor submitted an answer in which he questioned the continuing validity of the option, alleged that even if the option were valid plaintiff was not entitled to specific performance since he had breached that part of the agreement calling for payment of a guaranteed salary to decedent, and counterclaimed for the amount of unpaid salary should the court find that the agreement was valid. Following service of an answer, but some time prior to trial, defendant moved to dismiss the complaint for failure to state a cause of action, alleging for the first time that the agreement was illegal. The court denied that motion on the merits at the beginning of the trial, declaring that the agreement "did not in any way sufficiently stultify the Board of Directors in the operation of this business as to be [illegal]”.

At the conclusion of trial, the court ruled in favor of the plaintiff to the extent of granting him specific performance of the option and ordering the estate to transfer the stock to him upon tender of payment. As to the counterclaim, the court held in favor of defendant, awarding the estate judgment for the amount of unpaid salary owed to decedent. Defendant executor alone appealed, and the Appellate Division affirmed on the opinion by Mr. Justice Nusbaum at Supreme Court. Two Justices dissented, stating that the option had been extinguished by its own terms when decedent entered into the repurchase agreement with the corporation. Defendant now appeals to this court as of right, pursuant to CPLR 5601 (subd [a], par [i]). There should be a reversal.

It has long been the law in this State that a corporation must be managed by the board of directors (Business Corporation Law, § 701) who serve as trustees for the benefit of the corporation and all its shareholders (see, e.g., Billings v Shaw, 209 NY 265). To prevent control of the corporation from being diverted into the hands of individuals or groups who in some cases might not be subject to quite the same fiduciary obligations as are imposed upon directors as a matter of course, the courts have always looked unfavorably towards attempts to circumvent the discretionary authority given the board of directors by law (Manson v Curtis, 223 NY 313; McQuade v Stoneham, 263 NY 323; Long Park, Inc. v Trenton-New Brunswick Theatres Co., 297 NY 174; see, also, Matter of Hirshon, 13 NY2d 787; cf. Matter of Glekel [Gluck], 30 NY2d 93). Such mátters normally arise in the context of an agreement between shareholders to utilize their shares so as to force the board of directors to take certain actions. Unless in accord with some statutorily approved mechanism for shifting power from the board of directors to other parties (e.g., Business Corporation Law, § 620, subd [b]), such agreements have been found valid only where the proponent of the agreement can prove that the violation of the statutory mandate is minimal and, more importantly, that there is no danger of harm either to the general public or to other shareholders (see Clark v Dodge, 269 NY 410).

It is, of course, proper for shareholders to combine in order to elect directors whom they believe will manage the corporation in accord with what those shareholders perceive to be the best interests of the corporation. Thus, an agreement between two shareholders to vote for a particular director or directors is not illegal and may be enforceable in an appropriate case (see Manson v Curtis, supra, pp 319-320; Business Corporation Law, § 620, subd [a]). If some shareholders seek to go beyond this, however, if they agree to vote their shares so as to impose their decisions upon the board of directors, such an agreement will normally be unenforceable. The agreement sought to be enforced in this case is just such an agreement.

In essence, the agreement between decedent and plaintiff consisted of three fundamental provisions: first, decedent promised to vote his shares so as to ensure the election of plaintiff as a director and his appointment as president for a 10-year period at a given salary; second, plaintiff promised to vote his shares so as to ensure the continuation of decedent as chairman of the board at a given salary for at least 10 years; and, third, decedent gave plaintiff a conditional option to purchase decedent’s voting shares after his death. It is beyond dispute that the promises to secure the appointment of each party at a specific position other than director at a guaranteed annual salary are illegal. Plaintiff contends that the agreement is nonetheless enforceable by analogy to our decision in Clark v Dodge (269 NY 410, supra), in which we sustained an agreement between two shareholders who together owned all of the shares in the corporation. This argument is based on a fundamental misinterpretation of the significance of our decision in that case. Rather than illustrating any divergence from the great body of other cases which have found such agreements to be illegal and unenforceable, the Clark decision reflects a reasoned and flexible application of the principles which are in fact common to all such cases.

The dispositive consideration must always be the possibility of harm to either the other shareholders or to the general public either prospectively at the time the agreement was entered into or at the time it is sought to be enforced. In those cases in which the agreement is made by less than all the shareholders, almost any attempt to reduce the authority granted to the board by law will create a significant potential for harm to other shareholders even if the potential for harm to the general public is minimal. This is so because the effect of such an agreement is to deprive the other shareholders of the benefits and protections which the law perceives to exist when the corporation is managed by an independent board of directors, free to use its own business judgment in the best interest of the corporation.

In Clark, the possibility of harm to other shareholders was nonexistent, for in fact there were no other shareholders. In the instant case, in contradistinction, there were and are two other shareholders, not privy to the agreement between plaintiff and decedent. Moreover, the instant agreement for the continuation of plaintiff and decedent in their respective positions is in no way dependent on their performances in those positions, whereas the agreement in Clark provided that Clark was to be continued as manager "so long as he proved faithful, efficient and competent” (Clark v Dodge, 269 NY 410, 417, supra).

It has been suggested that even if the agreement is indeed illegal on its face, the defendant, in order to successfully assert the defense of illegality, must prove that the other shareholders did not know of and acquiesce in the agreement. This contention is illogical, and is at any rate inapplicable to the instant case. In this as in all actions the burden of proof is in the first instance always on the plaintiff who must prove his cause of action. Here, plaintiff seeks to meet that burden by proffering the contract itself as the basis for his claim. As is discussed above, however, that contract is illegal on its face and is thus unenforceable. If it is contended there exist circumstances which might prove that an agreement illegal on its face is in fact legal, the burden of proof as to these extrinsic facts must be placed upon the party who asserts the validity of the facially illegal agreement. In the instant case, plaintiff has neither alleged nor introduced any evidence to indicate that the other shareholders either knew of or ratified the agreement between plaintiff and decedent. Indeed, what little evidence does exist on this question would indicate to the contrary. David Triggs, the executor of decedent’s estate and himself a shareholder, testified that he first learned of the agreement around the time of his father’s death. Plaintiff himself testified that he did not know whether David Triggs was aware of the agreement prior to their father’s death. Finally, another director of the corporation, one Bannon, testified that he first became aware of the agreement after decedent’s death. In short, even were the burden with respect to this issue to be improperly placed upon defendant, that burden has been met.

It has also been suggested that the option should be severed from the other provisions of the agreement and separately enforced since it alone would not be illegal. The flaw in this argument is that it improperly assumes that decedent woulcl have given plaintiff this option by itself, without the other parts of their agreement. This assumption is one in which we may not indulge. Indeed, it appears that the illegal parts of the agreement were an intrinsic part of the covenant between these parties. While decedent apparently did wish to allow plaintiff to purchase the stock after his death if certain other possibilities did not eventuate, it is quite clear that decedent also wanted to protect his own position within the corporation from any challenge by plaintiff. Thus, the agreement was comprised of several component factors, and was motivated by complex and potentially conflicting objectives. The parties were concerned not only with control of the corporation following decedent’s demise, but also with the corporate power structure during the remainder of decedent’s life. To conclude that the option alone would have been entered into by the parties would be to engage in untoward speculation. As we have held in another case where a similar argument was made, "[t]he contract was single and indivisible and the illegal part cannot be expunged” (Manson v Curtis, 223 NY 313, 324, supra).

In sum, law and logic both compel the conclusion that the option which plaintiff seeks to enforce was an inseverable part of a basically illegal agreement. As such, it may not be enforced.

Even were the agreement a legally enforceable one, however, the order appealed from should still be reversed, for the option was in fact extinguished in accord with its own terms. The option was to become effective only "[i]n the event for any reason that [a repurchase agreement with the corporation] has not been executed” at the time of decedent’s death. Such an agreement was executed, however, several months after the agreement between plaintiff and decedent was entered into. Thus, the option, the very existence of which was conditioned upon the nonoccurrence of the specified event, never came into existence for the simple and indisputable reason that the specified event did occur.

The courts below avoided this result by concluding that the option was so ambiguous as to permit consideration of extrinsic evidence concerning the parties’ intent. The perceived ambiguity was that the option did not specify the result if the repurchase agreement with the corporation were to be first entered into and later canceled, as did happen. The problem with this analysis is that it equates silence with ambiguity. The option was phrased in clear and lucid language; it provided plaintiff with an option if and only if decedent failed to enter into a repurchase agreement with the corporation. Once that repurchase agreement was entered into, the option became a nullity, and decedent was free to do whatever he wished with his shares, subject to the contract with the corporation. When that contract was canceled, even that limitation was removed. There is no basis, however, for concluding that the cancellation of the repurchase agreement revived the option. The option was conditioned not on the lack of an enforceable repurchase agreement at the time of decedent’s death, but rather on the nonexecution of such an agreement. Had the parties wished to agree otherwise, they were free to do so. They did not do so, and the courts may not now rewrite the contract.

Accordingly, I vote to reverse the order appealed from and to dismiss the complaint.

Fuchsberg, J.

(dissenting). My vote too is for reversal. However, the decisional path that I would take differs appreciably not only from that of the majority but from that of my fellow dissenters as well.

Specifically, unlike the other dissenters, I am of the opinion that the parties entered into an enforceable agreement. But, for the reasons well stated both in Judge Gabrielli’s alternative rationale and in Mr. Justice Lupiano’s dissenting memorandum at the Appellate Division (61 AD2d 911), I conclude that we are required to find that the agreement was not ambiguous and that, as a matter of law, it terminated in accordance with its terms during the father’s lifetime. (See Brown Bros. Elec. Contrs. v Beam Constr. Corp., 41 NY2d 397; Mallad Constr. Corp. v County Fed. Sav. & Loan Assn., 32 NY2d 285, 291.)

I also take issue with the majority’s reasoning that the option was enforceable only because it was separable from an otherwise illegal contract. In my view, the entire agreement is lawful qua agreement, and since it is one entered into between the controlling stockholders of a small, nonpublic corporation, it is not to be scrutinized by a rigid, hypertechnical reading of section 27 of the General Corporation Law, now part of section 701 of the Business Corporation Law.

Small, closely held corporations whose operation is dominated, as its stockholders and creditors usually are aware, by a particular individual or small group of individuals, must be distinguished, legally and pragmatically, from large corporations whose stock is traded on a public securities exchange and where the normal stockholders’ relationship to those managing the corporation is bound to be impersonal and remote. Obviously, the latter’s operations are rarely, if ever, covered by stockholders’ agreements, and the Business Corporation Law itself is the sole restriction on their management.

In the close corporation, investors who themselves are not part of the dominant group commonly rely on the identities of the individuals who run. the business and on the likelihood of their continuance in power. As a practical matter, these individuals will be expected to exercise a broad discretion and considerable informality in carrying out their management functions; this flexibility may be regarded as one of the strengths of a smaller organization. Indeed, faith in the integrity and ability of the managers is what usually motivates the investment. Looked at realistically, such corporations, often organized solely to obtain the advantage of limited personal liability for their principals, to qualify for a particular tax classification, or for some similar reason, are frequently "little more * * * than charter partnerships” (Ripin v United States Woven Label Co., 205 NY 442, 447). Control of such matters as choice of officers and directors, amounts of executive salaries, and options to buy or sell each other’s stock — exactly the sort of things with which the agreement before us dealt — is usually mapped out by agreements among stockholders. (See, generally, Israels, The Close Corporation and the Law, 33 Corn LQ 488.)

In short, so long as an agreement between stockholders relating to the management of the corporation bears no evidence of an intent to defraud other stockholders or creditors, deviations from precise formalities should not automatically call for a slavish enforcement of the statute. For this is the "governing criterion]” by which to test "the validity of a stockholders’ agreement” (Delaney, The Corporate Director: Can His Hands Be Tied in Advance, 50 Colum L Rev 52, 61; see, also, 1 O’Neal, Close Corporations, § 5.08). This would not leave without remedy those minority stockholders in close corporations whose interests may be abused. Available to them and at least equally effective are the equitable remedies by which officers and directors can be made to respond for violations of their trust obligations (Meinhard v Salmon, 249 NY 458).

Analysis of the agreement and its surrounding circumstances here illustrates the wisdom of this approach. The corporation had for a long time been a one-man business in every sense, the man being Triggs, the father. Until he gave a minority interest to each of his sons, he was the owner of all the voting stock; afterwards, it was all owned by the father and his sons, who were preparing to succeed him. At the time of the agreement, the father, together with the son who was the other party to the disputed writing, held the majority of this stock. Given their service in the business, their stockholding, and their relationship to each other and to the history of the corporation, it was to be expected — and not at all extraordinary — that an arrangement for their continuance in office and their compensation would be executed. There is not the slightest indication that, had the parties gone through the routine of presenting the contract to duly called stockholders’ and directors’ meetings, it would not have been rubber-stamped as a matter of course. It is significant that no other stockholder challenged the agreement during the father’s lifetime and that the dispute since then has gravitated only around the son’s insistence that the option to purchase his father’s shares had not expired, a term which in any event, though it found its way into the stockholders’ agreement, related to an essentially personal matter distinct from any corporate management obligations as such.

In sum, given that no other shareholder or member of the general public has been harmed, there is no good reason to measure the agreement by the less sophisticated standards of yesteryear. Tellingly, the often conflicting and unpatterned holdings that characterized our varied decisions on this point in the past (see 3 White, New York Corporations [13th ed], par 620.03; compare Clark v Dodge, 269 NY 410, with Manson v Curtis, 223 NY 313; McQuade v Stoneham, 263 NY 323; and Long Park, Inc. v Trenton-New Brunswick Theatres Co., 297 NY 174) have been overshadowed by the enactment of subdivision (b) of section 620 of the Business Corporation Law. At that time, the Legislature expressly indicated that it intended to overrule, at least in part, many of those decisions that struck down shareholders’ agreements (Legislative Studies and Reports, McKinney’s Cons Laws of NY, Book 6, Business Corporation Law, § 620, p 418). In doing so, it made clear its purpose to approve and expand the ruling in Clark v Dodge (269 NY 410, supra), which upheld a controverted stockholders’ agreement in a close corporation context.

Chief Judge Breitel and Judges Jasen and Wachtler concur with Judge Jones; Judge Gabrielli dissents and votes to reverse in an opinion in which Judge Cooke concurs; Judge Fuchsbeeg dissents and votes to reverse in a separate dissenting opinion.

Order affirmed.

      . The Business Corporation Law did not become effective until September 1, 1963, and accordingly its provisions, e.g., section 620, are not applicable to the March 19, 1963 agreement.

      . That on the cross claim the trial court granted judgment in favor of the father’s estate for some $16,200 for back salary cannot accurately be said to have been in enforcement of the provisions of the March 19, 1963 agreement. The judgment was against the corporation, which was not a part to or in any way obligated under the terms of that agreement, and was not against Ransford Triggs, the only party to the agreement other than his father. Additionally the amount of the judgment was computed on the basis of the $10,800 annual salary set in the corporate resolution of May 11, 1965 and not on the $20,000 figure in the March 19, 1963 agreement.

       It should also be noted, that plaintiff did not fulfill his obligations under the agreement with decedent. That agreement required that decedent be paid a certain minimum salary for at least the first 10 years following the making of the agreement. By deciding the counterclaim in favor of defendant, the trial court necessarily concluded that plaintiff had not performed his part of the bargain. That conclusion is of course binding on plaintiff in the context of this appeal. Since plaintiff did not perform, decedent was justified in repudiating the agreement, which he did by means of the codicil to his will. Accordingly, plaintiff is not entitled to enforce the agreement.