author: Bellacosa, J. Hancock, Jr., J.

text:
    Phillip B. Ingle, Appellant, v Glamore Motor Sales, Inc., et al., Respondents. (Action No. 1.) Phillip B. Ingle, Appellant, v James H. Glamore et al., Respondents. (Action No. 2.)
    Argued January 12, 1989;
    decided February 21, 1989

      POINTS OF COUNSEL

      Frederic Block and Lane T. Maxson for appellant.
    I. As an employee-minority stockholder of a close corporation, Ingle’s employment rights more appropriately should be measured in the context of the high degree of trust, loyalty and good faith owed to him by Glamore as his fellow stockholder and "partner”. (Fender v Prescott, 101 AD2d 418, 64 NY2d 1077; Matter of Ronan Paint Corp., 98 AD2d 413; Matter of Gordon & Weiss [Weiss — Gordon], 32 AD2d 279; Matter of Kemp & Beatley [Gardstein] 64 NY2d 63; Alpert v 28 Williams St. Corp., 63 NY2d 557; Landorf v Glottstein, 131 Misc 2d 432, 127 AD2d 1016; Brown Bros. Elec. Contrs. v Beam Constr. Corp., 41 NY2d 397.) II. Implicit in the parties’ stockholders’ agreement is a covenant of fair dealing and good faith that precludes the termination of plaintiff’s employment for the purpose of triggering the purchase of his stock. (Kirke La Shelle Co. v Armstrong Co., 263 NY 79; Van Valkenburgh, Nooger & Neville v Hayden Publ. Co., 30 NY2d 34; Rowe v Great Atl. & Pac. Tea Co., 46 NY2d 62; Murphy v American Home Prods. Corp., 58 NY2d 293; Downey v General Foods Corp., 37 AD2d 250, 31 NY2d 56; Outlet Embroidery Co. v Derwent Mills, 254 NY 179; Spear v Plaza Sound Studios, 59 AD2d 778; Zimmer v Wells Mgt. Corp., 348 F Supp 540; Carter v Bradlee, 245 App Div 49, 269 NY 664.) III. Should the court determine that the covenant of fair dealing and good faith cannot properly be invoked in the present case to preclude the corporation and Glamore from terminating Ingle’s employment for the purpose of triggering the repurchase of his stock, the agreement, taken as a whole, is sufficiently unclear as to the parties’ intent to allow for the introduction of extrinsic evidence. (Web Transmissions v Marcus, 54 AD2d 901.) IV. Regardless of whether Ingle can be lawfully terminated at the will of his employer, defendants, by reason of their special trust relationship, can nonetheless be accountable for wrongfully interfering with plaintiffs employment. (Levine v Styleart Press, 31 Misc 2d 106; Schwartz v Marien, 37 NY2d 487; Case v New York Cent. R. R. Co., 15 NY2d 150; Kavanaugh v Kavanaugh Knitting Co., 226 NY 185; Foley v D’Agostino, 21 AD2d 60; Bevilacque v Ford Motor Co., 125 AD2d 516; Fells v Katz, 256 NY 67; A. S. Rampell, Inc. v Hyster Co., 3 NY2d 369; Federal Waste Paper Corp. v Garment Center Capitol, 268 App Div 230, 294 NY 714; Guard-Life Corp. v Parker Hardware Mfg. Corp., 50 NY2d 183.)

      Bradley E. Rock and Patricia C. Delaney for respondents.
    I. Where an employee is allowed to purchase a minority stock interest in his corporate employer, and there was never any express promise made to the employee regarding the term of his employment, and the employee repeatedly signs a written stockholders’ agreement stating that his shares can be repurchased if his employment ceases "for any reason”, there is no fiduciary duty which prevents the majority shareholder from causing the corporation to discharge the employee but for good cause. (Bevilacque v Ford Motor Co., 125 AD2d 516; Coleman v Taub, 638 F2d 628; Jenkins v Haworth, Inc., 572 F Supp 591; Sabetay v Sterling Drug, 69 NY2d 329.) II. Even if the majority shareholder in this case owed some kind of fiduciary duty to plaintiff, the scope of that duty could not be such that any of the facts alleged here could amount to a breach of that duty. (Percival v General Motors Corp., 539 F2d 1126.) III. No "implied covenant of good faith” can be read into the repurchase agreement to defeat defendants’ contractual right to repurchase plaintiffs shares in the event plaintiff "shall cease to be an employee of the Corporation for any reason”. (Murphy v American Home Prods. Corp., 58 NY2d 293.) IV. The parol evidence rule bars plaintiffs claims for breach of the repurchase agreement because the terms of the written agreement are clear, the written agreement plainly constitutes the parties’ entire agreement on the subject of the repurchase of plaintiffs stock, and plaintiff has failed to offer any additional terms which are consistent with those of the writing. (Fogelson v Rackfay Constr. Co., 300 NY 334; Higgs v de Maziroff, 263 NY 473; Plum Tree v Winston Corp., 351 F Supp 80; Zugarek v Walck, 54 AD2d 1074; Broten v Bankers Trust Co., 60 NY2d 155; Farm Stores v School Feeding Corp., 79 AD2d 504; Horyczun v County of Nassau, 39 AD2d 705; Katz v American Tech. Indus., 96 AD2d 932; Sutton v East Riv. Sav. Bank, 55 NY2d 550; Schmidt v Magnetic Head Corp., 97 AD2d 151.) V. If plaintiffs causes of action for breach of contract fail, then so must his claim for wrongful inducement of the alleged breach. (Inselman & Co. v FNB Fin. Co., 41 NY2d 1078; Zimmerman v Batz, 59 AD2d 712; Krim Cartage Co. v Courier Servs., 52 AD2d 831; Citera v Chemical Bank, 105 AD2d 636; NRT Metals v Laribee Wire, 102 AD2d 705; A. S. Rampell, Inc. v Hyster Co., 3 NY2d 369; Citicorp Retail Servs. v Wellington Merchantile Servs., 90 AD2d 532; Noah v Daitch & Co., 22 Misc 2d 649; Landorf v Glottstein, 131 Misc 2d 432.)
   OPINION OF THE COURT

Bellacosa, J.

Without a contract for a definite period of employment or some other legally recognized limitation on an employer’s unqualified right to discharge an at-will employee who also happens to be a minority shareholder in a close corporation, there is no insulation under the contractual and employment relationships alleged in this case from being fired or from having invoked a stock-repurchase option.

In 1964, plaintiff-appellant Ingle sought to purchase an equity interest in respondent Glamore Motor Sales, Inc. from its then sole shareholder, respondent James Glamore. Ingle was not sold an interest in the corporation initially, but he was hired as sales manager. There was no express agreement between the parties establishing either the duration or conditions of employment.

In 1966, Glamore and Ingle entered into a written shareholders’ agreement which provided that Ingle would purchase 22 of Glamore’s 100 shares in the corporation, that Ingle would have a five-year option to purchase an additional 18 shares, and that Glamore would nominate and vote Ingle as a director and secretary of the corporation. The agreement also gave Glamore the right to repurchase all of Ingle’s stock if "Ingle shall cease to be an employee of the Corporation for any reason” (emphasis added). Ingle later purchased the 18 additional shares and the parties executed a new shareholders’ agreement, which updated some facets and eliminated outdated ones. The repurchase provision of the 1973 agreement tracked identically the 1966 version.

On January 1, 1982, the corporation issued 60 additional shares of stock. Glamore purchased 22 shares of the new issue and his two sons (respondents William and Robert Glamore) each purchased 19 shares. The three Glamores and Ingle, the only four shareholders, entered into a third agreement reflecting the corporate relationship. The repurchase provision pertinent to this litigation is: "(b) Termination of employment. In the event that any Stockholder shall cease to be an employee of the Corporation for any reason, Glamore shall have the option, for a period of 30 days after such termination of employment, to purchase all of the shares of stock then owned by such Stockholder” (emphasis supplied).

At a special meeting of the board of directors held on May 9, 1983, Ingle was voted out of his corporate posts and fired from his employment as operating manager of the business. The termination was effective May 31, 1983. On June 1, Glamore notified Ingle that he was exercising the repurchase-upon-termination-of-employment option and in due course paid Ingle $96,000 for his 40 shares in the corporation.

Plaintiff argues that as a minority shareholder of a closely held corporation, employed without the benefit of a contract containing a durational employment protection and without any limitation on the employer’s right to discharge, he is nevertheless entitled by reason of his minority shareholder status to a fiduciary-rooted protection against being fired. His theory is that his employment status should not be governed by the employment at-will doctrine but, rather, that as a minority shareholder in a close corporation he should be treated as a co-owner, equivalent to a partner, whose employment rights flow from a special duty of loyalty and good faith. He next urges that an implicit covenant of good faith and fair dealing under the shareholders’ agreement precluded his termination without cause, despite the express language and nature of the agreement in that regard. He concludes that even if he is an at-will employee, an action properly lies for the respondents’ breach of fiduciary duties and for wrongful interference with his employment. Ingle started two separate actions seeking damages via seven causes of action alleging breach of fiduciary duty and of contract. Eventually all causes of action were dismissed — we believe correctly.

A minority shareholder in a close corporation, by that status alone, who contractually agrees to the repurchase of his shares upon termination of his employment for any reason, acquires no right from the corporation or majority shareholders against at-will discharge. There is nothing in law, in the agreement, or in the relationship of the parties to warrant such a contradictory and judicial alteration of the employment relationship or the express agreement. It is necessary in this case to appreciate and keep distinct the duty a corporation owes to a minority shareholder as a shareholder from any duty it might owe him as an employee.

Both lower courts agree, as do we, that Ingle did not sufficiently present facts raising a triable issue regarding the existence of either an oral or written employment contract fixing employment of a definite duration (see, Friends of Animals v Associated Fur Mfrs., 46 NY2d 1065). Under the established common-law rule — and without any reference to the shareholders’ agreement — the corporation had the right to discharge plaintiff at will (Sabetay v Sterling Drug, 69 NY2d 329, 333; O’Connor v Eastman Kodak Co., 65 NY2d 724, 725; Murphy v American Home Prods. Corp., 58 NY2d 293, 305; Weiner v McGraw-Hill, Inc., 57 NY2d 458, 465-466; Martin v New York Life Ins. Co., 148 NY 117,121).

The twist in this fact pattern is an asserted liability based on allegations that the corporate officers breached fiduciary duties of good faith and fair dealing arising from the shareholders’ agreement and on tortious interference with Ingle’s employment. The twist does not support a deviation from the governing principle in this case.

In Murphy v American Home Prods. Corp. (58 NY2d 293, supra), we concluded that there is no implied obligation of good faith and fair dealing in an employment at will, as that would be incongruous to the legally recognized jural relationship in that kind of employment relationship (id., at 304-305; see, Sabetay v Sterling Drug, 69 NY2d 329, 335-336, supra). In holding that there is no cause of action in tort for abusive or wrongful discharge of an at-will employee, we declined to allow the use of substitute nomenclature or causes, such as a prima facie tort or intentional infliction of emotional distress, to bootstrap the threshold deficiency in a wrongful discharge claim (Murphy v American Home Prods. Corp., supra, at 303-304; see, James v Board of Educ., 37 NY2d 891, 892). Similarly, the plaintiff here cannot be allowed to evade the employment at-will rule and relationship by recasting his cause of action in the garb of a tortious interference with his employment (see, Inselman & Co. v FNB Fin. Co., 41 NY2d 1078,1080).

Plaintiff confuses and tries to avoid the sequential relationship of his employment status to his shareholders’ agreement by extracting an obligation from the agreement to manufacture a legally unrecognized employment security. Divestiture of his status as a shareholder, by operation of the repurchase provision, is a contractually agreed to consequence flowing directly from the firing, not vice versa. The dissent similarly confuses and inverts the Appellate Division’s and our holding (dissenting opn, at 195).

As noted, Ingle argued that the corporation discharged him because James Glamore would then have a right to repurchase his shares under the terms of the shareholders’ agreement. Notably, however, Ingle never asserted that the $2,400 per share paid to him upon termination was not fairly representative of his equity interest in the corporation. He does not contend that the corporation undervalued his shares, and he accepted payment from Glamore without reservation. Indeed, that, too, was fixed by the parties’ buy-out agreement. We have no occasion to address issues involved in cases where the minority shareholders may be discharged solely to avoid assertion of the legal rights afforded to them under Business Corporation Law §§ 1104-a and 1118 and our decision in Matter of Pace Photographers (Rosen) (71 NY2d 737), because no such matter has been pleaded and that is not this case.

Ingle’s and the dissent’s reliance on Fender v Prescott (101 AD2d 418, 422, expressly affirmed on grounds other than the corporate relationship discussion 64 NY2d 1077, 1078-1079) for an exception based on the close corporate form in which this employer and employee find themselves is unavailing. No duty of loyalty and good faith akin to that between partners, precluding termination except for cause, arises among those operating a business in the corporate form who "have only the rights, duties and obligations of stockholders” and not those of partners (see, Weisman v Awnair Corp., 3 NY2d 444, 449-450).

Finally, the dissent essentially invokes an equity appeal. While we have no quarrel whatsoever with that magnificent juridical jewel applied in its proper setting, this lawsuit does not qualify. Here, fair principles of well-settled law, affecting employment and contractual relationships between private parties, govern and are entitled to respect and efficacy from this court. We cannot merely substitute our preferred notions for those of the parties themselves in such matters.

The pleading here does not support the conclusion that respondents breached a fiduciary duty as corporate officers by dismissing an at-will employee and exercising an agreed-upon repurchase-upon-termination clause (see, Bevilacque v Ford Motor Co., 125 AD2d 516, 519-520). "[Tjhere is no reason why an appeal to general fiduciary law should be used * * * as a pretext for evading * * * contractual obligations” (see, Coleman v Taub, 638 F2d 628, 636; Jenkins v Haworth, Inc., 572 F Supp 591, 601).

If there was no protection against discharge of an at-will employee in Murphy (supra) and Sabetay (supra), where there was no contractual arrangement at all, there surely can be none here where the related contract expressly confirms the unavailability of that protection. Moreover, to hold otherwise on the facts and pleadings of this case would confuse our recent holdings in an area of the law where certainty, predictability and reliability are highly prized common-law goals.

We have carefully and thoroughly considered all of appellant’s arguments and additionally conclude that his remaining arguments are also unavailing.

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

Hancock, Jr., J.

(dissenting). This appeal presents a clear-cut legal question: whether plaintiff’s status as an officer, director, substantial part owner and active participant in the affairs and management of Glamore Motor Sales, a close corporation, gives him equitable rights and remedies which are not subject to the ordinary legal rules of master and servant? The majority answers "no” and writes off the case as a routine application of New York’s employment at-will rule. Because this produces a result which is egregiously unfair and one which, I am convinced, is not warranted under existing case law, I respectfully dissent.

By treating the essence of plaintiff’s complaints as a claimed breach of a hiring contract by the employer rather than an unfair squeeze-out of a minority shareholder in a close corporation by the majority, the court simply concludes that plaintiff has no rights at all. It does so by applying the rule of Martin v New York Life Ins. Co. (148 NY 117), "that where an employment is for an indefinite term it is presumed to be a hiring at will which may be freely terminated by either party at any time for any reason or even for no reason [emphasis added]” (Murphy v American Home Prods. Corp., 58 NY2d 293, 300; see, Sabetay v Sterling Drug, 69 NY2d 329, 333; Weiner v McGraw-Hill, Inc., 57 NY2d 458). These cases, in my view, are totally inapposite. But in reliance on Martin, Weiner, Murphy and Sabetay, plaintiffs complaints are dismissed in their entirety, without a trial, on motions for summary judgment and dismissal (CPLR 3212, 3211 [a] [7]).

It is not disputed that plaintiff had, since joining the corporation in 1966, been a joint principal and codealer with defendant James Glamore in the Ford agency; was, for most of his association with the corporation, an owner of 40% of its shares and, at the time of termination, an owner of 25%; was, when terminated, a director, first vice-president and secretary of the corporation; and was, throughout his association, an active participant in the direction and management of the corporation as one of two codealers who obligated himself personally for corporate indebtedness. Nevertheless, the majority of the court holds that the corporation may, with impunity, terminate plaintiff as a director, officer and employee; it may do so because there is no employment contract between plaintiff and the corporation and the hiring is, therefore, presumptively at will; and it may do so, the majority holds, solely for the purpose of enabling the controlling stockholders to exercise their option to purchase plaintiff’s 25% stock interest at $2,400 per share, and for no other reason.

The majority’s decision summarily rejects, without discussion, plaintiff’s underlying theory which is rooted in his equitable rights as a minority shareholder and principal in a close corporation and the fiduciary duty of fair dealing owed him by the majority shareholders — rights and duties which have been widely recognized in statutory and decisional law in this and other jurisdictions (see, e.g., Matter of Pace Photographers [Rosen], 71 NY2d 737, 745-747; Matter of Kemp & Beatley [Gardstein] 64 NY2d 63, 69-73; Wilkes v Springside Nursing Home, 370 Mass 842, 353 NE2d 657 [1976], and cases and authorities cited in part II, infra).

Moreover, in dismissing the causes of action against the individual defendants for wrongfully inducing the corporation to terminate plaintiff as officer, director and employee, the majority, in my opinion, disregards established precedent (see, e.g., Guard-Life Corp. v Parker Hardware Mfg. Corp., 50 NY2d 183, 194; A. S. Rampell, Inc. v Hyster Co., 3 NY2d 369, 375, 377; Federal Waste Paper Corp. v Garment Center Capitol, 268 App Div 230, affd 294 NY 714; see also, Minda, The Common Law of Employment At-Will in New York: The Paralysis of Nineteenth Century Doctrine, 36 Syracuse L Rev 939, 954-963).

What is remarkable about the majority opinion is that it appears to treat the employment at-will rule as a sort of categorical imperative which necessarily dictates the result in this case. There can be no question about the harshness of the outcome — assuming plaintiffs allegations to be true: the controlling shareholders are permitted to have the corporation fire plaintiff arbitrarily and in bad faith solely for the purpose of getting rid of him as a 25% stock owner. Nevertheless, the decision that the case is governed by Sabetay, Murphy, Weiner and Martin is reached almost perfunctorily, without addressing the reasons underlying the rule’s application in this case, the good to come of it, or how it can be applied fairly. The sole justification seems to be in the rule itself; that its application is dictated by established law. In my opinion, the law clearly does not require it; nor should it.

I

An understanding of the case requires some discussion of the facts. Plaintiff’s claim is that the majority shareholders— in violation of their fiduciary duty owed to him, a minority shareholder — have caused Glamore Motor Sales to terminate him unlawfully from his positions as officer, director and employee of the corporation. This they have done, he maintains, for their personal gain and solely to effectuate the buyback provision so as to eliminate him as a stockholder. Plaintiff’s claim, very simply, is one of an abuse of corporate power by the majority resulting in an unlawful squeeze-out of a minority shareholder.

Many of the facts giving rise to plaintiff’s claim are historical and matters of record: e.g., that plaintiff owned 22% of the stock of Glamore Motor Sales in 1966, 40% in 1973 and 25% in 1983 when he was terminated; that he became a codealer of the Ford agency in 1966 with James H. Glamore, the majority shareholder, under an agreement with Ford in which Glamore Motor Sales acknowledges that plaintiff "substantially participate^] in the ownership” of the corporation and that plaintiff, along with James H. Glamore, has "full managerial authority and responsibility for the operating management” of the dealership; that in 1966 he became an officer (first vice-president and secretary) and a director of the corporation and remained in these positions until terminated in 1983; that throughout his association with the corporation plaintiff was active in the management and daily operations of the business and personally guaranteed bank loans (maintained at a level between $750,000 and $1,000,000) made in connection with the agency’s car and truck inventories; that, in addition to his investment of $75,000 for purchase of his stock shares, plaintiff, from time to time, made advances of his own personal funds when the business was in need of working capital; that at a special , meeting of the board of directors on May 9, 1983, over plaintiff’s objection, he was removed as an officer of the corporation and in his place William Glamore and Robert Glamore, sons of James H. Glamore, were elected vice-president and secretary-treasurer, respectively; and that, thereafter, upon exercise of the purchase option in the shareholders’ agreement, plaintiff was compelled to deliver his shares for the sum of $2,400 per share. About these facts there is no dispute.

In his verified complaints, his affidavits opposing defendants’ motions, and his deposition, plaintiff alleges that he became sales manager of Glamore Motor Sales in 1964 and later a co-owner of the business as a means of achieving his objective of becoming a franchised Ford dealer in the Long Island area; that from 1966 until 1982 he ran the business, supervising, and hiring and firing the employees and making the day-today. business decisions; that by terminating him from his position at Glamore Motor Sales at the age of 61 and forcing him out of the business through exercise of the purchase option, the majority not only deprived him of his continued employment and salary as an executive, director, and manager of the business, but denied him "the opportunity to realize some profit on [his] investment” and precluded him "from all the benefits and equities [he] had built up through years of devotion and dedication to the business”; and that he would never have made the sacrifices and investments of time, effort and money in the business had he known that the buyback provision would be interpreted to make him subject to summary firing at the whim of the co-owner. For the purpose of this appeal, of course, these latter allegations must be read in the light most favorable to the plaintiff consistent with the rule that in opposing motions to dismiss for failure to state a cause of action and motions for summary judgment the plaintiff’s submissions must be accepted as true (see, e.g., Myers v Fir Cab Corp., 64 NY2d 806; Rovello v Orofino Realty Co., 40 NY2d 633; Sillman v Twentieth-Century Fox Film Corp., 3 NY2d 395, 404).

The Appellate Division, in dismissing plaintiff’s complaints, and the majority of the court, in its affirmance, have adopted defendants’ literal interpretation of the phrase in paragraph 7 (b) of the stockholders’ agreement — "cease to be an employee of the Corporation for any reason” — as giving defendants the unfettered right to repurchase plaintiff’s shares by firing him, even if arbitrarily or in bad faith.

The plain wording of the buy-back provision and its sense, when read in the context of the entire agreement and the circumstances surrounding its execution, by no means unequivocally support this interpretation. Plaintiff states that the purpose and intent of paragraph 7 (b) was to protect James Glamore in case plaintiff chose to leave the business, not to give Glamore the right — at any time, for any reason or for no reason — to deprive plaintiff of all expectancies as coprincipal in the agency. He points to the other two contingencies giving Glamore the right to repurchase his shares: plaintiff’s decision to sell his stock (para 7 [a]) and plaintiff’s death (para 7 [c]); he argues that the purpose of paragraph 7 (b) like that of the other provisions was solely to protect Glamore by giving him the right to repurchase upon the happening of a contingency beyond Glamore’s control — i.e., in paragraph 7 (b), plaintiffs voluntary decision to leave. The very choice of the wording to describe the contingency of plaintiffs leaving — i.e., "ceases to be an employee” rather than "is terminated” — tends to support plaintiffs argument. The word "ceases” suggests that it was action by plaintiff not by the employer in ending the relationship which was contemplated. Thus, in my opinion the repurchase option of 7 (b) is not free from ambiguity.

The circumstances under which the option was signed, including the fact that plaintiff was not represented by counsel when he executed the agreement, and plaintiff’s sworn statements that the agreement was not intended to authorize James Glamore to terminate the business relationship on a whim without cause in order to force a buy out of his interest, I believe, present factual issues requiring a trial and a denial of the dismissal and summary judgment motions. The majority, however, rejects this view. Thus, we proceed to the central legal question: whether, assuming defendants’ literal interpretation of the repurchase option to be correct, they may cause the corporation to discharge plaintiff as an officer, director and managerial employee solely for the purpose of triggering the option and forcing him out as a part owner.

Preliminarily, it must be emphasized that the phrase "cease to be an employee of the Corporation for any reason” appears only in the stockholders’ agreement and pertains exclusively to the conditions under which the majority may exercise its right to repurchase plaintiff’s stock. Contrary to what the majority claims the agreement "expressly confirms” (see, majority opn, at 190), this contractual provision clearly says nothing about the conditions under which the corporation may terminate plaintiff’s employment.

There is no employment agreement between plaintiff and the corporation. Nothing in the original stockholders’ agreement between plaintiff and James Glamore or in the subsequent agreement between plaintiff and the additional members of the Glamore family as stockholders purports to set the terms of plaintiffs relationship with the corporation or to state when or under what circumstances it may be terminated. Thus, Bevilacque v Ford Motor Co. (125 AD2d 516), Coleman v Taub (638 F2d 628) and Jenkins v Haworth, Inc. (572 F Supp 591), cited by the majority (majority opn, at 190), are not in point, since they involve employment contracts in which the stockholder-employee expressly agreed with the corporate employer that the hiring was at will. Upholding the corporation’s right to discharge plaintiff here, therefore, must rest squarely on the application of the employment at-will doctrine, "that where an employment is for an indefinite term it is presumed to be a hiring at will which may be freely terminated by either party at any time for any reason or even for no reason” (Murphy v American Home Prods. Corp., 58 NY2d, supra, at 300). Whether this rule may be properly and fairly applied in this case is the central issue on which we disagree.

II

New York, like many other States, unquestionably recognizes that the status of a minority shareholder in a close corporation requires special protection from the courts. Indeed, in Matter of Kemp & Beatley (Gardstein) (64 NY2d 63, 71), Chief Judge Cooke, speaking for a unanimous court stated: " 'Unlike the typical shareholder in a publicly held corporation, who may be simply an investor or a speculator and cares nothing for the responsibilities of management, the shareholder in a close corporation is a co-owner of the business and wants the privileges and powers that go with ownership. His participation in that particular corporation is often his principal or sole source of income. As a matter of fact, providing employment for himself may have been the principal reason why he participated in organizing the corporation. He may or may not anticipate an ultimate profit from the sale of his interest, but he normally draws very little from the corporation as dividends. In his capacity as an officer or employee of the corporation, he looks to his salary for the principal return on his capital investment, because earnings of a close corporation, as is well known, are distributed in major part in salaries, bonuses and retirement benefits’ (O’Neal, Close Corporations [2d ed], § 1.07)” (see, Fender v Prescott, 101 AD2d 418, 421, 424; Matter of Ronan Paint Corp., 98 AD2d 413; Matter of Gordon & Weiss [Weiss — Gordon], 32 AD2d 279, 281; Matter of Topper v Park Sheraton Pharmacy, 107 Misc 2d 25, 32-34; Matter of Pivott Punch & Die Corp., 15 Misc 2d 713, 715-717 [Sup Ct, Erie County, Jasen, J.]; see also, Wilkes v Springside Nursing Home, 370 Mass 842, 353 NE2d 657 [1976], supra; Hallaban v Haltom Corp., 7 Mass App 68, 385 NE2d 1033 [1979]; Notzke v Art Gallery, 84 111 App 3d 294, 405 NE2d 839 [1980]; Exadaktilos v Cinnaminson Realty Co., 167 NJ Super 141, 400 A2d 554).

Thus, for purposes of asserting rights as a minority shareholder under Business Corporation Law § 1104-a, we have held that a shareholder "who reasonably expected that ownership in the corporation would entitle him or her to a job, a share of corporate earnings, a place in corporate management, or some other form of security, would be oppressed in a very real sense when others in the corporation seek to defeat those expectations and there exists no effective means of salvaging the investment” (Matter of Kemp & Beatley [Gardstein], supra, at 72-73).

The singular vulnerability of the minority in a close corporation has prompted courts of equity to impose fiduciary obligations on the majority shareholders in their dealings with the minority and to require "a high degree of fidelity and good faith” (Fender v Prescott, supra, at 422). This same need for protection from the majority is reflected in the "solicitude toward the rights of minority shareholders” (Matter of Kemp & Beatley [Gardstein], supra, at 70) shown by our Legislature in enacting Business Corporation Law §§ 1104-a, 1118 (see, Matter of Pace Photographers [Rosen], 71 NY2d 737, 744-745, supra) and by Legislatures in other jurisdictions in enacting similar statutes (see, Kendrick, The Strict Good Faith Standard-Fiduciary Duties to Minority Shareholders in Close Corporations, 33 Mercer L Rev 595, 599-600; O’Neal, Close Corporations: Existing Legislation and Recommended Reform, 33 Bus Lawyer 873, 880-888; 1 O’Neal & Thompson, Oppression of Minority Shareholders [2d ed] §§ 1:03, 3:02 ["Squeeze techniques in general”]; § 3:05 ["Remedies of the squeeze”]; § 3:06 ["Eliminating minority shareholders from directorate and excluding them from company employment”]; 1 O’Neal & Thompson, Close Corporations § 1.07, at 25-27 [3d ed]; After-man, Statutory Protection for Oppressed Minority Sharehold ers: A Model for Reform, 55 Va L Rev 1043). The need for special protection of a minority shareholder could not be better illustrated than in the case at bar.

A person who, like plaintiff, buys a minority interest in a close corporation does so not only in the hope of enjoying an increase in value of his stake in the business but for the assurance of employment in the business in a managerial position. In addition to the security of long-term employment and the prospect of financial return in the form of salary, his expectancy includes a voice in the management and operation of the business and in the formulation of its plans for future development and growth (see, e.g., Matter of Kemp & Beatley [Gardstein], supra, at 71-72). The anticipated rewards for his efforts differ markedly from those of the typical salaried corporate employee in a large company (see, e.g., Sabetay v Sterling Drug, supra; Murphy v American Home Prods. Corp., supra) and encompass much more than the promised salary or other immediate remuneration: e.g., the prospect of participating in the growth and the increased value of the business, and the challenge, the independence, the prestige, the feeling of achievement, and the other intangible benefits of being part of the management of a successfully run small company (see, e.g., 1 O’Neal & Thompson, Close Corporations § 1.07; 1 O’Neal & Thompson, Oppression of Minority Shareholders § 3:06).

Not surprisingly, the losses which a minority shareholder in a close corporation may suffer in a squeeze-out by the majority have been characterized as "catastrophic” (1 O’Neal & Thompson, Oppression of Minority Shareholders § 1:03). It is because of the difficulty in valuing these expectancies and the inadequacy of an action at law for damages as a remedy for their loss and the fact that the majority may inflict such losses on a minority shareholder through the sheer exercise of voting power, that resort to equitable remedies is necessary (see, e.g., Matter of Kemp & Beatley [Gardstein] supra, at 69-70; Wilkes v Springside Nursing Home, 353 NE2d, supra, at 662, 664; Donahue v Rodd Electrotype Co., 367 Mass 578, 328 NE2d 505, 512-518 [1975]; Exadaktilos v Cinnaminson Realty Co., 400 A2d, supra, at 559-562; and see, 1 O’Neal & Thompson, Oppression of Minority Shareholders § 3:06 [2d ed]).

Thus, the relationship of a minority shareholder to a close corporation, if fairly viewed, cannot possibly be equated with an ordinary hiring and, in the absence of a contract, regarded as nothing more than an employment at will. But this is exactly how the majority of the court has treated plaintiiFs association with Glamore Motor Sales. And it has done so by not addressing the multiple relationships and the expectancies and vulnerabilities peculiar to the status of a minority shareholder in plaintiiFs position — those very considerations which call for the relief that only a court of equity can give. By simply considering the case as one at law for breach of contract, the majority makes defendants impervious to suit by placing them under the protective mantel of the Sabetay, Murphy, Weiner and Martin rule. This result, I submit, is not only unfair but amounts to an extension of the employment at-will doctrine over a situation which, I believe, it was never intended to cover.

Ill

Assuming for the moment that the case could properly be viewed merely as one at law for breach of a hiring contract, the application of the employment at-will rule in this context would still be particularly inappropriate and unfair. Nor is such application supported by our precedents.

There can be little question that the basis for the traditional employment at-will rule is in the contractual principle of mutuality of obligation, "that if the employee can quit his job at will, then so, too, must the employer have the right to terminate the relationship for any reason or no reason” (Blades, Employment At Will vs. Individual Freedom on Limiting the Abusive Exercise of Employer Power, 67 Colum L Rev 1404, 1419; Minda, The Common Law of Employment At-Will in New York: The Paralysis of Nineteenth Century Doctrine, 36 Syracuse L Rev 939, 975-978). Indeed, the Supreme Court, in Adair v United States (208 US 161), stated the general rule thus: "the right of the employee to quit the service of the employer, for whatever reason, is the same as the right of the employer, for whatever reason, to dispense with the services of such employee” (208 US, supra, at 174-175).

To be sure, this court in recent years has shied away from the "mutuality” doctrine in favor of the doctrine of contractual consideration as the basis (see, Weiner v McGraw-Hill, Inc., supra, at 463-464) for its "sharply scrutinized” employment at-will rule (see, Sabetay v Sterling Drug, 69 NY2d 329, 333, supra; Murphy v American Home Prods. Corp., supra, at 308-309, and n 4 [Meyer, J., dissenting in part]). Nevertheless, in adhering to the principle that "the law accords the employer an unfettered right to terminate the employment at any time” (see, Murphy v American Home Prods. Corp., supra, at 304), rejecting the tort of abusive discharge (id., at 300-301), and declining to read into an indefinite employment contract an implied obligation of fair dealing (id., at 304, 305), the decisions have done so in recognition of the continued vitality of "the freedom of contract underpinnings of the [employment at-will] rule” (id., at 301). And it has been observed that any modification of the rule should be left to the Legislature, because "stability and predictability in contractual affairs is a highly desirable jurisprudential value” (Sabetay v Sterling Drug, supra, at 336). Thus — despite recent pronouncements (see, e.g., Weiner v McGraw-Hill, Inc., supra, at 463) — there clearly remains at the core of the employment at-will rule at least a hard residue of the mutuality notion — the idea, simply, that if the employee can quit at any time for any reason he can be discharged at any time for any reason.

But whether it be lack of mutuality or lack of consideration, the rationale for the employment at-will rule does not fit the situation of the typical minority shareholder-participant in a close corporation. For such participant is not truly free to quit at any time; and there is consideration which would support an implied understanding that, at least, the majority owner will not discharge him arbitrarily or in bad faith and without some legitimate business reason. Unlike the employee of a large corporation, the minority shareholder in a close corporation has typically invested a large percentage of his financial wherewithal in the business. He has been willing to do so because of what he expects will be his long-term association with the business and his ability to protect his investment and, he hopes, to make it grow. The same features of the minority owner-participant’s status which make him particularly vulnerable to action by the majority obviously work to compel him to stay on the job. He needs to do so to protect his investment and to share in any increase in its value.

In short, there are strong financial and other pressures operating to prevent a minority shareholder from deciding to leave voluntarily. To treat plaintiffs position in Glamore Motor Sales as though it entailed the same freedom to leave as that of the large company mid-level employees in Murphy, Weiner and Sabetay is to ignore the substantially different factors in plaintiffs situation which curtailed his freedom to leave and which, as a practical matter, bound him to the job. Thus, application of the employment at-will rule in this case would, I submit, be clearly inconsistent with its "freedom of contract underpinnings” (Murphy v American Home Prods. Corp., supra, at 301), whether those "underpinnings” are lack of mutual promises or want of consideration.

IV

In concluding that plaintiff has no basis for a claim against the individual defendants for interference with plaintiffs employment by unlawfully inducing the corporation to discharge him, the majority reasons that to allow him to recast his claim "in the garb of a tortious interference” would permit him to "evade the employment at-will rule and relationship” (majority opn, at 189). This court has long held, however, that a cause of action for tortious interference with contract may exist even where the underlying contract is terminable at will (see, Guard-Life Corp. v Parker Hardware Mfg. Corp., 50 NY2d 183, supra; A. S. Rampell, Inc. v Hyster Co., 3 NY2d 369, supra). Although interference with a terminable at-will contract, like interference with a prospective contract, requires proof that wrongful means were used (see, Guard-Life Corp. v Parker Hardware Mfg. Corp., supra, at 190-191), such wrongful means include "violation of a duty of fidelity owed to the plaintiff by the defendant” (id., at 194, citing A. S. Rampell, Inc. v Hyster Co., supra; and Duane Jones Co. v Burke, 306 NY 172; see, Federal Waste Paper Corp. v Garment Center Capitol, 268 App Div 230, 234, affd 294 NY 714, supra; Minda, The Common Law of Employment At-Will in New York: The Paralysis of Nineteenth Century Doctrine, 36 Syracuse L Rev 939, 978-981 [and cases cited therein]). Here it is alleged that the individual defendants, as majority shareholders, acted in violation of their fiduciary duty to plaintiff as a minority shareholder. Thus, even if it is assumed that plaintiff’s relationship with Glamore Motor Sales amounted to no more than a legal hiring at will, his causes of action against the individual defendants for inducing his discharge willfully and in bad faith for the purpose of triggering the buy-back provision should not have been dismissed.

V

In sum, I believe that plaintiff has valid claims arising out of his discharge in bad faith by the controlling shareholders in violation of their fiduciary duty owed to him as a minority shareholder in a close corporation. Also, plaintiff has valid claims against the individual defendants for wrongfully inducing the corporation to terminate his employment. The record demonstrates clearly that there are factual issues requiring that plaintiff be given the opportunity to prove these claims at trial. The order should, therefore, be reversed, the motions denied, and plaintiff’s complaints reinstated.

Chief Judge Wachtler and Judges Simons, Alexander and Titone concur with Judge Bellacosa; Judge Hancock, Jr., dissents and votes to reverse in a separate opinion in which Judge Kaye concurs.

Order affirmed, with costs.

      . The notion that plaintiffs loss must somehow be viewed as less onerous because he is not contesting the $2,400 per share cash-out price (see, majority opn, at 189) misses the point of the lawsuit. Plaintiff wants to keep his stock — not to sell it. The injury to plaintiff is that he is being involuntarily cashed out as a stockholder through the buy-back agreement and forced out of his investment and participation in Glamore Motor Sales, Inc. Obviously, if the buy-back agreement is held to be enforceable against plaintiff, he is precluded from complaining about the amount. He has agreed to it.
      Moreover, it cannot seriously be suggested that plaintiff should be pleased with being repaid a total of $96,000 in 1983 for his $75,000 cash outlay made 17 to 15 years earlier, particularly in light of the high risk he assumed in guaranteeing the corporation’s loans up to $1,000,000. That he agreed to such buy-back figure, of course, supports his contention that he thought the buy-back agreement was intended to protect Glamore’s control over plaintiff’s stock by giving Glamore the right to repurchase the stock in the event that plaintiff died, wished to sell or transfer his shares, or voluntarily decided to quit; and that it was never in plaintiff’s contemplation that the clause was to apply as the price for his shares in the event that he was involuntarily terminated (see, point I, at 194-195, infra).

        . Coleman v Taub (638 F2d 628) involved the claim of plaintiff, a 1% stockholder employee, that the majority stockholders, in violation of their fiduciary duty under Delaware law, forced through a "freeze-out” merger for the sole purpose of getting rid of plaintiff as a stockholder. Despite the specific language in plaintiff’s employment contract, giving the corporation the right to "buy-back” his stock upon "termination of [his] employment * ** * for any reason whatsoever” and the corporation’s claim that plaintiff had by agreeing to this provision, bargained away his right to complain about the merger, the court found triable issues of fact and declined to grant summary judgment to the corporation. Plaintiff’s additional claim— analogous to the claim of plaintiff here — that the corporation had unlawfully terminated his employment for the sole purpose of effectuating the buyback remained unresolved and not addressed in the decision.

      . Professor O’Neal refers to the device allegedly improperly employed by the majority here — discharging the minority shareholder as employee for the purpose of triggering the buy-out option — as one of the methods used to eliminate a minority shareholder as an owner of the business (see, 1 O’Neal & Thompson, Oppression of Minority Shareholders § 3:06, at 37 [2d ed]).

      . In Adair v United States (208 US 161), a Lochner-era decision (see, Lochner v New York, 198 US 45), the Supreme Court struck down a statute making it a Federal offense to fire a worker because of his union membership upon the ground that the statute interfered with the employer’s constitutional substantive due process and contractual rights to discharge an at-will employee at any time for any reason. Professor Blades cites Adair, the first case in which the Supreme Court addressed the employment at-will rule, as illustrative of the traditional basis for the rule in the common law of contracts (see, Blades, Employment At Will vs. Individual Freedom on Limiting the Abusive Exercise of Employer Power, 67 Colum L Rev 1404, 1416-1417, 1419-1421). Commenting on the freedom of contract underpinnings of the employment at-will rule, Justice Holmes, in dissent, stated: "I confess that I think that the right to make contracts at will that has been derived from the word liberty in the amendments has been stretched to its extreme by the decisions; but they agree that sometimes the right may be restrained” (208 US, at 191).

      . In A. S. Rampell, Inc. v Hyster Co. (3 NY2d 369), plaintiff distributor sued one of its suppliers (Hyster), the supplier’s district manager (Shaffer), and one its own salesmen (Chester) for tortious interference with contracts. The contracts in question — a dealer-manufacturer relationship between plaintiff and Hyster and several employment contracts between plaintiff and its salespeople — were all terminable at will (3 NY2d, at 374). The court held that there could be tortious interference with these at-will contracts if, as was asserted, the interferers owed the plaintiff a duty of trust or confidence (3 NY2d, at 376-377 [see, discussion and cases cited]).


source: Caselaw Access Project

author: Titone, J.

license: Public Domain

text:
    In the Matter of Gregory B. Shankman, Respondent, v David Axelrod, as Commissioner of the New York State Department of Health, Appellant.
    Argued January 10, 1989;
    decided February 23, 1989

      POINTS OF COUNSEL

      Robert Abrams, Attorney-General (Clifford A. Royael, O. Peter Sherwood and Peter H. Schiff of counsel), for appellant.
    I. The Office of Professional Medical Conduct has authority to seek an inspection warrant to gain access to petitioner’s office premises. (Matter of R & L Distribs. v Wickham, 36 AD2d 884; Camara v Municipal Ct., 387 US 523; See v City of Seattle, 387 US 541; People v Laverne, 14 NY2d 304; Matter of Memorial Hosp. v Axelrod, 68 NY2d 958; Matter of City of New York v State of New York Commn. on Cable Tel., 47 NY2d 89; Matter of Axelrod [Ulster County Med. Socy.], 99 AD2d 531; Matter of B. T. Prods. v Barr, 44 NY2d 226; Della Pietra v State of New York, 71 NY2d 792; Herkimer Corp. v Village of Herkimer, 38 AD2d 456.) II. There was, as a matter of law, probable cause to justify the issuance of an inspection warrant. (Matter of R & L Distribs. v Wickham, 36 AD2d 884; Matter of Levin v Murawski, 59 NY2d 35; Matter of Sinha v Ambach, 91 AD2d 703; People v Ost, 121 AD2d 571.)

      Dean L. Gordon for respondent.
    There were no compelling circumstances to justify the issuance and execution of the inspection warrant. (Boreali v Axelrod, 71 NY2d 1; Rapp v Carey, 44 NY2d 157; Matter of Axelrod [Ulster County Med. Socy.] 99 AD2d 531; Matter of Levin v Murawski, 59 NY2d 35; Monserrate v Upper Ct. St. Book Store, 49 NY2d 306.)

      Thomas G. Rohback and Donald Moy for The Medical Society of the State of New York, amicus curiae.

    It was improper for the OPMC’s board to seize a private physician’s records on ex parte inspection warrant rather than through a subpoena which would first provide that physician with notice and an opportunity to quash. (Matter of Shankman v Axelrod, 137 AD2d 255; Matter of Axelrod [Ulster County Med. Socy.] 99 AD2d 531.)

      Martin Schaum for New York State Society of Orthopedic Surgeons, Inc., amicus curiae.

    The Department of Health acted in an unlawful manner in obtaining Dr. Shankman’s records through the use of an ex parte inspection warrant as opposed to following the procedure designated in section 230 (10) (k) of the Public Health Law.
   OPINION OF THE COURT

Titone, J.

The issue in this appeal is whether the Office of Professional Medical Conduct (OPMC), an investigative branch of the State Department of Health (DOH), has implied power to obtain an ex parte “inspection” warrant for the sole purpose of seizing a physician’s patient records during a targeted investigation of professional misconduct. We conclude that such implied power does not exist under the current statutory scheme.

Early in 1985, OPMC received a patient complaint of alleged professional misconduct on the part of petitioner, an orthopedic surgeon. As required by statute, the complaint served as the basis for a formal investigation of petitioner by OPMC (Public Health Law § 230 [10] [a]). The complaining patient’s hospital records were obtained and petitioner voluntarily turned over a copy of his office records with respect to the patient. The investigation proceeded with OPMC obtaining hospital records of several other patients that petitioner had treated. When a medical consultant obtained by OPMC opined that the records indicated evidence of negligence and/or incompetence on the part of petitioner, OPMC wrote to petitioner’s attorney to request the medical records of six additional patients. Petitioner’s attorney advised OPMC that he had instructed petitioner not to surrender the requested records because of pending litigation involving such patients. In addition, the attorney informed the DOH that petitioner would move to quash any subpoena served on him.

Subsequently, on October 15, 1985, OPMC obtained authorization pursuant to Public Health Law § 230 (10) (k) to serve a subpoena duces tecum on petitioner (see also, Public Health Law § 230 [10] [e]; [a] [i]). The subpoena was never issued. Instead, approximately a year later, OPMC applied ex parte for an inspection warrant indicating to Supreme Court that OPMC was concerned that petitioner might alter the records it sought.

Supreme Court, finding probable cause, issued the requested warrant authorizing OPMC to inspect the premises, identify employees, question patients and remove and copy records. The warrant was executed on October 21, 1986 at approximately 10:00 p.m., and the records of eight patients were seized during the search.

By order to show cause, petitioner moved to vacate the inspection warrant, and suppress the use of the material seized. In addition, petitioner sought the return of the documents. Supreme Court denied the motion. The Appellate Division reversed concluding that OPMC lacked the statutory authority to obtain an inspection warrant for the purpose of seizing a physician’s patient records. We now affirm.

The law in New York is clear. An administrative agency " 'is clothed with those powers expressly conferred by its authorizing statute, as well as those required by necessary implication’ ” (Matter of Memorial Hosp. v Axelrod, 68 NY2d 958, 959, quoting Matter of City of New York v State of New York Commn. on Cable Tel., 47 NY2d 89, 92 [emphasis added]; see also, Finger Lakes Racing Assn. v New York State Racing & Wagering Bd., 45 NY2d 471, 480). OPMC has been given the explicit power to "issue subpoenas requiring persons to appear before the board and * * * produce books, papers, records or documents” (Public Health Law § 230 [10] [k]). The additional power to obtain patient records via an ex parte "inspection” warrant is clearly not expressly delegated. Nor is there anything in the language of the Public Health Law from which such power can be fairly implied as necessary for OPMC to carry out its statutory duties.

At the outset, we note that respondent’s reliance on Public Health Law § 206 (2), which allows the Commissioner and any person authorized by him to "enter, examine and survey all grounds, erections, vehicles, structures, apartments, buildings and places”, is misplaced. The power to enter and inspect buildings, a "typical” administrative inspection where the goal is to ensure statutory or regulatory compliance (see, e.g., Public Health Law § 2803 [1] [a]; Matter of Memorial Hosp. v Axelrod, 68 NY2d 958, supra), is fundamentally different from the seizure of confidential patient files, for the purpose of obtaining evidence to prove a targeted professional misconduct case (see, Public Health Law § 230 [10] [k]). Therefore, the power to obtain an ex parte warrant to seize patient files, as was done here, cannot be inferred from Public Health Law §206(2).

Moreover, there does exist express statutory authority to subpoena such records. Section 230 provides for a committee of two physicians and one lay member (Public Health Law § 230 [6]) who must approve any subpoena before it is formally issued by the executive secretary (Public Health Law § 230 [10] [k]). Once issued, the receiving physician may move to quash the subpoena pursuant to CPLR 2304, and the subpoena will be upheld only if there is "a minimal threshold showing that the complaint is authentic and that it is of sufficient substance to warrant investigation” (Matter of Levin v Murawski, 59 NY2d 35, 38; see, Matter of Axelrod [Ulster County Med. Socy.J, 99 AD2d 531, 532). Thus, the target physician is provided with notice and an opportunity to be heard prior to turning over the requested documents.

In the face of the subpoena authority, respondent has simply failed to demonstrate the necessity in this case for any other potent investigatory tool. The sole justification proffered is the possibility that documents will be altered or destroyed before they are turned over to OPMC. This reason alone is insufficient.

We are not now passing on the ultimate wisdom of permitting an ex parte inspection warrant for the purpose of investigating professional misconduct. Such a determination is best left for the Legislature, not this court. Indeed, the Legislature has not hesitated to expressly authorize other forms of civil search warrants when it deemed necessary (see, Agriculture and Markets Law § 20-a; ECL 71-0525; Family Ct Act § 1034; General Business Law § 279-g). We simply conclude that no implied power to obtain an ex parte warrant, in this case, can be inferred from the present statutory scheme.

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

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

Order affirmed, with costs.


author: Bellacosa, J.

text:
    The People of the State of New York, Respondent, v Raymond Day, Appellant.
    Argued January 4, 1989;
    decided February 23, 1989

      POINTS OF COUNSEL

      Amy Donner and Philip L. Weinstein for appellant.
    The court illegally ordered sentences imposed on counts relating to possession of the forged, stolen check to run consecutively to the sentence imposed for the larcenous attempt to cash that check, where both crimes were part of the same act. (People ex rel. Maurer v Jackson, 2 NY2d 259; People v Tanner, 30 NY2d 102; People v Truesdell, 70 NY2d 809; People v Brathwaite, 63 NY2d 839; People v Christman, 23 NY2d 429; People v Underwood, 52 NY2d 882; People v Mancuso, 22 NY2d 679, cert denied sub nom. Morganti v New York, 393 US 946; People v Birmingham, 16 NY2d 984; People v Walsh, 44 NY2d 631.)

      Robert M. Morgenthau, District Attorney (Donald J. Siewert and Mark Dwyer of counsel), for respondent.
    Day’s consecutive sentences for criminal possession of forged and stolen checks and attempted grand larceny are lawful. (Matter of Abraham v Justices of N. Y. Supreme Ct., 37 NY2d 560; People ex rel. Maurer v Jackson, 2 NY2d 259; People v Brathwaite, 63 NY2d 839; People v Truesdell, 70 NY2d 809; People v Tanner, 30 NY2d 102; People v Baker, 27 AD2d 269, 19 NY2d 982; Morgan v Devine, 237 US 632; People ex rel. Hardin v Jackson, 8 AD2d 575; People v Boyce, 133 AD2d 164; People ex rel. Sams v Murphy, 8 AD2d 460, 7 NY2d 978.)
   OPINION OF THE COURT

Bellacosa, J.

After a jury trial and conviction, the Trial Justice sentenced defendant on four counts of criminal possession of a forged instrument and of stolen property to four concurrent terms, and on one count of attempted grand larceny to a term consecutive to the other terms. Defendant argues that the trial court was precluded by Penal Law § 70.25 (2) from imposing a consecutive sentence because the crimes of conviction were all part of the same act or, as the statute alternatively proscribes, because the possessory offenses were a material element of the attempted grand larceny count.

We hold that the criminal venture constituted more than a single act, and that by the terms of and within the clear meaning of the pertinent statutes, the possessory counts do not constitute material elements of the larceny count.

Trial testimony established that defendant Day, formerly a broker of precious metals and president of Morgan Numismatic Rarities, Inc. (MNR), received at least two checks with a value of approximately $221,000 from a "business associate”. The checks, which were originally drawn to the "City Collector”, had been stolen on March 29, 1985 by a bank employee and sold to Day’s "associate”. The payee in each instance was altered to "Intercity Collector’s Ent. Inc.” and the checks were endorsed, "Pay to the order of Morgan Numismatic Rarities, Inc.” They were deposited on April 2, 1985 in MNR’s bank account, at which point it was discovered they were stolen. On April 11, Day was arrested as he attempted to withdraw the entire balance of the MNR account.

Day was convicted of second degree attempted grand larceny, and of two counts each of first degree criminal possession of stolen property and second degree criminal possession of a forged instrument. The sentence was composed of four concurrent indeterminate terms of 2 Vs to 7 years for the possessory offenses to run consecutively with an indeterminate term of lJ/á to 4 years for the attempted grand larceny. The sentencing Justice reasoned that the latter was "a completely separate crime * * * that was attempted days after the actual criminal possession of [a] forged instrument and stolen property.”

The Appellate Division affirmed the judgment ensuing from this prosecution in New York County and we affirm that court’s order, sustaining the legality of the sentence rendered.

A sentence imposed upon "a person for two or more offenses committed through a single act or omission, or through an act or omission which in itself constituted one of the offenses and also was a material element of the other * * * must run concurrently” (Penal Law § 70.25 [2]). Former Penal Law § 1938, the predecessor to Penal Law § 70.25, was construed by this court in People ex rel. Maurer v Jackson (2 NY2d 259, 264) as follows: "[T]hat if separate and distinct acts were committed, and that they violated more than one section of the Penal Law, punishment for each of them would be proper although they arose out of a single transaction” (emphasis supplied). We reasoned further that if an act violates one statute and constitutes a legal component of a second crime, then the first offense would be a material element of the second and only single (i.e., concurrent) punishment would be permissible (id., at 264). The concept of a material element for sentencing purposes is thus discrete from its operation in the lesser included offense area (id., at 265; see, e.g., People v Catone, 65 NY2d 1003; People v Di Lapo, 14 NY2d 170; see also, People v Glover, 57 NY2d 61).

The legislative policy choice governing the exercise of judicial sentencing authority is rooted in the statutory words and definitions which prescribe a double disqualification against consecutive punishment. The defendant benefits if either prong is present, and the prosecution’s burden is to countermand both prongs. Reference to the fact-specific circumstances and proof of a crime to determine whether, under the second statutory prong, one offense is a material element of a second is not the test for consecutive sentencing purposes. To state the rule in the affirmative, the commission of one offense is a material element of a second for restrictive sentencing purposes if, by comparative examination, the statutory definition of the second crime provides that the first crime is also a necessary component in the legislative classification and definitional sense (see, People v Catone, 65 NY2d 1003, 1005, supra).

The core elements of the possessory offenses are "knowingly possesse[d] stolen property, with intent to benefit himself” and "with knowledge that it is forged and with intent to defraud, deceive or injure another, he utter[ed] or possesse[d] any forged instrument of a kind specified in section 170.10” (Penal Law former § 165.50; Penal Law § 170.25). Comparatively, for sentencing purposes in this case, a person is guilty of attempted grand larceny when he attempts to steal property over a specified amount (Penal Law § 110.00, former § 155.35). The statutory elements of the possessory offenses are categorically discrete from the larceny offense, and the absence of legislatively declared interdependence in their definitions is evident, compelling an interpretation that consecutive sentences are not forbidden here (People v Di Lapo, 14 NY2d 170, 174, supra; Penal Law § 70.25 [2]).

The court rejects defendant’s argument that a consecutive sentence was barred because the crimes of conviction in this case arose from a single act. " 'The test is not whether the criminal intent is one and the same and inspiring the whole transaction, but whether separate acts have been committed with the requisite criminal intent’ ” (People v Baker, 27 AD2d 269, 272, affd 19 NY2d 982, quoting Morgan v Devine, 237 US 632, 640). Consecutive sentence is available "if the Legislature has seen fit to provide that up to a particular point the acts of the defendant constitute one crime and that the acts of the defendant, committed thereafter, constitute a second crime and that each series of acts constitutive] a separate crime” (People v Snyder, 241 NY 81, 83-84). The possessory offenses and the attempted grand larceny were "successive separate acts” (People v Tanner, 30 NY2d 102, 108; see, People v Underwood, 52 NY2d 882; Matter of Di Lorenzo v Murtagh, 36 NY2d 306).

Inasmuch as the crimes of conviction were the legal consequence of separate criminal acts, a consecutive sentence could be imposed if the alternative statutory hurdle is cleared — the possessory crimes must not be a material element of the larceny one. Objectively and statutorily they are not in this case, so "the converse of the rule specified in subdivision 2 [of Penal Law § 70.25] obtains, [and] consecutive sentences are authorized” (Donnino, Practice Commentaries, McKinney’s Cons Laws of NY, Book 39, Penal Law § 70.25, at 308).

In a complementary view of this situation, it is also significant that factual or evidentiary interdependence of offenses is a discretionary feature which a sentencing court may, and indeed should, weigh in determining whether to forebear the legal and authorized consecutive sentence in favor of a concurrent one where warranted in a given set of individualized circumstances (People v Baker, 27 AD2d 269, 274, affd 19 NY2d 982, supra).

Sentencing courts, in the exercise of their unique judicial function in criminal proceedings, are wisely allocated wide latitude as they are recognized to be in a superior position to dispense proportionate and fair punishment (People v Farrar, 52 NY2d 302, 305-306). It is therefore consistent and compatible with that overarching principle for this court to interpret circumspectly a statute which delimits, in the power connotation as contrasted to the discretionary connotation, what a sentencing Judge can appropriately do. The Legislature did not withhold or withdraw power from the trial court to sentence consecutively in these circumstances, recognizing, of course, that the sentencing court could search beneath the theoretical construct and classification of the statutes to the evidence and factual interrelationship in determining, within its sound discretion, whether to forebear the consecutive sentence and instead impose completely concurrent punishment for all of defendant’s adjudicated criminal liability. Thus, both the trial court and Appellate Division correspondingly possessed discretionary power to render the sentence fully concurrent if the facts had so warranted.

Appellant’s other arguments have been considered and do not warrant further discussion.

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

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

Order affirmed.


author: Chief Judge Wachtler Titone, J.

text:
    The People of the State of New York, Respondent, v Freddie Lopez, Appellant. The People of the State of New York, Respondent, v Hector Mendez, Appellant.
    Argued January 11, 1989;
    decided February 23, 1989

      POINTS OF COUNSEL

      Lawrence K. Marks and Philip L. Weinstein for appellant in the first above-entitled action.
    I. The complainant’s testimony that appellant stated "this is a stickup” and placed his hands inside his vest jacket, without any other evidence that an object was in fact displayed, was insufficient to prove the display element of first degree robbery. (People v Baskerville, 60 NY2d 374; People v Copeland, 124 AD2d 669; People v Bynum, 125 AD2d 207, 70 NY2d 858; People v Lyde, 98 AD2d 650; People v Cassidy, 109 AD2d 747; People v Carrington, 127 AD2d 677.) II. Appellant was denied his due process right to a fair trial by the prosecutor’s summation comment that appellant had listened to the prosecution’s evidence and then had "tailored” his testimony. (People v Rosa, 108 AD2d 531; People v Bolden, 82 AD2d 757; Brooks v Tennessee, 406 US 605; People v Ashwal, 39 NY2d 105; Doyle v Ohio, 426 US 610; People v Al-Kanani, 26 NY2d 473; People v Crimmins, 36 NY2d 230.)

      Robert M. Morgenthau, District Attorney of New York County (Michael Schwartz and Norman Barclay of counsel), for respondent in the first above-entitled action.
    I. The People proved defendant’s guilt of first degree robbery, including the "display” element, beyond a reasonable doubt. (People v Baskerville, 60 NY2d 374; People v Scarborough, 49 NY2d 364; People v Saez, 69 NY2d 802; People v Bynum, 125 AD2d 207, 70 NY2d 858; People v Jenkins, 118 Misc 2d 530; People v Knowles, 79 AD2d 116; People v Hazel, 133 AD2d 847; People v Carrington, 127 AD2d 677; People v Pena, 50 NY2d 400, 449 US 1087; People v Di Girolamo, 108 AD2d 755.) II. Defendant’s claim that he was denied a fair trial by a single remark in the prosecutor’s summation has not been preserved for appellate review. In any event, the remark was wholly proper. (People v Gonzalez, 55 NY2d 720, 456 US 1010; People v Nuccie, 57 NY2d 818; People v Balls, 69 NY2d 641; People v Rodriguez, 38 NY2d 95; People v Conyers, 49 NY2d 174; Doyle v Ohio, 426 US 610; People v Crimmins, 36 NY2d 230.)

      Richard Ware Levitt for appellant in the second above-entitled action.
    I. The People failed to prove appellant’s guilt of robbery in the first or second degrees, as a matter of law, since (a) the court instructed that defendant’s accomplice must himself have "displayed” the gun, which he did not, and (b) even if defendant’s statement to his alleged accomplice, "don’t show him the gun”, were considered together with the evidence that the accomplice’s hand was beneath his shirt, the evidence of display was still insufficient. (People v Malagon, 50 NY2d 954; People v Bell, 48 NY2d 913; People v Baskerville, 60 NY2d 374; People v Carrington, 127 AD2d 677; People v Bynum, 125 AD2d 207, 70 NY2d 858; People v Lyde, 98 AD2d 650; People v Neal, 118 AD2d 815; People v Knowles, 79 AD2d 116; People v York, 134 AD2d 637; People v Jenkins, 118 Misc 2d 530.) II. The trial court erred in permitting the police officers to testify that appellant began walking away when they approached him, and that they thereafter had to "corner” appellant to arrest him. (People v Howard, 50 NY2d 583; People v McLean, 107 AD2d 167.) III. Reversible error was committed when Officer Garcia bolstered the complainant’s identification by testifying that he arrested appellant after having had a conversation with the complainant. (People v Holt, 67 NY2d 819.)

      Paul T. Gentile, District Attorney of Bronx County (Lynn M. Talutis and Michael R. Gordon of counsel), for respondent in the second above-entitled action.
    I. Viewing the evidence in the light most favorable to the People, any rational trier of fact could have found appellant’s guilt of robbery in the first degree proven beyond a reasonable doubt. (People v Bleakley, 69 NY2d 490; People v Malizia, 62 NY2d 755, 469 US 932; People v Kennedy, 47 NY2d 196; People v Contes, 60 NY2d 620; Jackson v Virginia, 443 US 307; Matter of Anthony M., 63 NY2d 270; People v Baskerville, 60 NY2d 374; Matter of Wade F., 49 NY2d 730; People v Bynum, 125 AD2d 207, 70 NY2d 858; People v Cassidy, 109 AD2d 747.) II. This court is barred from considering whether the People properly admitted evidence of appellant’s flight. (People v Fleming, 70 NY2d 947; People v Yazum, 13 NY2d 302, 15 NY2d 679; People v Yaghnam, 135 AD2d 763; People v Snyder, 124 AD2d 394; People v Bryant, 60 AD2d 810, 44 NY2d 790.) III. This court cannot pass upon the fact that the prosecutor fairly and properly elicited testimony from Officer Garcia concerning appellant’s arrest. (People v Fleming, 70 NY2d 947; People v Love, 57 NY2d 1023; People v West, 56 NY2d 662; People v Gonzalez, 55 NY2d 720, 456 US 1010; People v Ross, 21 NY2d 258; People v Trowbridge, 305 NY 471; People v Holt, 67 NY2d 819; People v Jackson, 70 NY2d 884; People v Johnson, 57 NY2d 969; People v Mobley, 56 NY2d 584.)
   OPINION OF THE COURT

Chief Judge Wachtler

In these two cases the defendants have been convicted of robbery in the first degree. The question common to the appeals is whether the evidence in each case is sufficient to prove that, during the course of the robbery, the defendant displayed what appears to be a firearm, the element necessary to elevate the crime to the first degree (Penal Law § 160.15 [4]). In each case the Appellate Division found the proof sufficient and the defendant appeals.

In People v Lopez, the robbery took place on a Manhattan street in October 1984. The victim and two female companions were approached by the defendant and another man. The defendant said "this is a stick up” and demanded that the victim hand over the radio he was carrying. The victim testified that as the defendant announced the robbery he put his hand in the right side of his vest "as if he had a gun”. When the victim surrendered his radio, the defendant and the other man entered a car driven by a third man and fled the scene.

The victim was acquainted with the defendant because they had played basketball together several years earlier. The day after the robbery the victim saw the defendant on the street and identified him to the police as the person who had held him up. The defendant was indicted for robbery in the first degree for displaying what appeared to be a firearm during the course of the robbery (Penal Law § 160.15 [4]), as well as robbery in the second degree on the theory that he had been aided by another person actually present (Penal Law § 160.10 [1]). After a jury trial the defendant was found guilty on both counts. However, on the defendant’s motion, the court set aside the verdict on the robbery first degree count, concluding that there was "absolutely no evidence of displaying”. The court noted that there was no proof that when the defendant placed his hand inside his vest he "made the shape of any object or that the victim saw any object displayed”.

On cross appeals by the People and the defendant, the Appellate Division restored the conviction for robbery in the first degree and otherwise affirmed. The court held: "While the display of 'what appears to be’ a firearm test requires a 'display [of] something that could reasonably be perceived as a firearm’ (People v Baskerville, 60 NY2d 374, 381), there is no requirement that the object need be anything other than the defendant’s hand” (135 AD2d 443, 443-444).

In People v Mendez, the robbery occurred in The Bronx in June of 1985. The victim testified that he was walking toward the Hunt’s Point subway station when he saw the defendant standing near a stoop where another man was sitting. As the victim passed, the defendant grabbed him from behind, pushed him against a wall and demanded that he give the defendant everything he had. The defendant then took the victim’s watch, ripped a chain from his neck and removed $80 from his back pocket. The other man sat on the stoop watching the robbery with his right hand under his shirt. According to the victim, at one point during the robbery the defendant said to the man on the stoop "don’t show him the gun” or "[don’t] take out the gun”. When the robbery was complete, both men fled.

The victim had seen the defendant on several occasions before the robbery, near a store where the victim was employed. He recognized him by his distinctive tattoos, including a set of lips tattooed on the defendant’s neck. A few days after the robbery, while the victim was at work, he saw the defendant pass on the street outside the store and reported him to the police, who arrested him.

A jury found the defendant guilty of robbery in the first degree, and the Appellate Division affirmed, without opinion. On this appeal the defendant contends, as he did at the close of the People’s case, that the evidence is insufficient to prove that he or his accomplice displayed what appeared to be a firearm. He therefore urges that the robbery conviction be reduced from first degree to third degree.

I.

The core requirement for all three degrees of robbery under the Penal Law is proof that the defendant forcibly stole property from another (Penal Law §§ 160.05, 160.10, 160.15). If, in addition, the defendant or another participant in the crime "[displays what appears to be a pistol, revolver, rifle, shotgun, machine gun or other firearm”, the offense is elevated to robbery in the first degree (Penal Law § 160.15 [4]). However, if the defendant proves by a preponderance of the evidence that the object displayed "was not a loaded weapon from which a shot, readily capable of producing death or other serious physical injury,” the crime is reduced to robbery in the second degree (Penal Law § 160.15 [4]). Of course, if the evidence would not warrant a finding that the defendant or a confederate made such a display, and no other aggravating factor has been charged or proven, the forceable taking constitutes robbery in the third degree, the lowest robbery offense (Penal Law § 160.05).

The statutory scheme serves two primary purposes. First, it recognizes that the additional fear suffered by a robbery victim confronted by what appears to be a firearm aggravates the nature of the offense and warrants additional punishment (People v Baskerville, 60 NY2d 374, 381, supra). Secondly, it recognizes the difficulty of proving that an object displayed during a robbery, which appears to be a firearm capable of causing death or serious injury, was in fact a loaded, operable gun when it was not fired at the scene or recovered afterwards (People v Baskerville, supra, at 381). The statute assumes that the object consciously displayed as a firearm was what it appeared to be and places on the defendant the burden of showing that it was not, in which case he could only be convicted of the lesser, second degree offense (People v Lockwood, 52 NY2d 790).

Although the display element focuses on the fearful impression made on the victim, it is not primarily subjective. The People must show that the defendant consciously displayed something that could reasonably be perceived as a firearm, with the intent of forcibly taking property, and that the victim actually perceived the display (People v Baskerville, supra, at 381).

However, the object displayed need not closely resemble a firearm or bear a distinctive shape. In light of the purpose of the statutory scheme, the broad wording of the display element, and the obligation to construe the Penal Law fairly to carry out the legislative intent (Penal Law § 5.00), we have held that "the display of anything that appears to be such [i.e., a firearm], though held inside a coat or otherwise obscured, is covered by sections 160.10 and 160.15” (People v Baskerville, supra, at 381). A towel wrapped around a black object (People v Baskerville, supra), a toothbrush held in a pocket (People v Lockwood, supra) or even a hand consciously concealed in clothing may suffice (People v Knowles, 79 AD2d 116; cf., People v Gilliard, 72 NY2d 877), if under all the circumstances the defendant’s conduct could reasonably lead the victim to believe that a gun is being used during the robbery. Indeed, the victim’s perception need not be visual, but may be limited to touch or sound (People v Baskerville, supra, at 381), as when the defendant approaches in the dark or from behind so that the victim may only feel or hear what appears to be a gun (see, e.g., People v Jenkins, 118 Misc 2d 530).

Thus the display requirement has been construed broadly to cover a wide range of actions which might reasonably create the impression in the mind of the victim that the robber is armed with a firearm (People v Baskerville, supra, at 382), but cannot be read so broadly as to include mere statements that a robber is armed with a gun. Informing a robbery victim that a gun is present or even threatening to shoot may be as frightening as displaying a firearm, but under these statutes it is the "display” of what appears to be a firearm, and not the mere threat to use one, which is required (compare, People v Dodt, 61 NY2d 408 [defendant’s statement to victim that he had a gun in pocket sufficient under statute requiring threat of deadly physical force, Penal Law §§ 135.20, 135.25]). The defendant’s statements may give meaning to the actions (People v Baskerville, supra, at 381), but words alone will not constitute a display of what appears to be a firearm within the meaning of the first and second degree robbery statutes (see, People v York, 134 AD2d 637; see also, People v Jennings, supra, at 534 ["mere use of words without some other affirmative action appealing simultaneously to one or another of the victim’s actual senses” would be insufficient]).

II.

In People v Lopez, where the defendant confronted the victim on the street, announced a "stickup” and placed his hand in his vest jacket as he demanded the victim’s radio, there was sufficient evidence that the defendant displayed what appeared to be a weapon within the meaning of the statutes. The defendant’s sole contention is that the evidence is deficient because the victim "only saw appellant move his hand inside the jacket, and [did not see] a gun or any other object or bulge that could reasonably have been perceived as a gun”.

The argument basically is that a hand cannot reasonably be perceived as a firearm; thus, unless the vest appears to conceal some other object or the hand is positioned under the vest in such a way as to suggest a firearm, the defendant cannot be said to have "consciously display[ed] something that could reasonably be perceived as a firearm” (People v Baskerville, supra, at 381). As noted, however, an object can be "displayed” without actually being seen by the victim even in outline (People v Baskerville, supra, at 381; People v Jenkins, supra). All that is required is that the defendant, by his actions, consciously manifest the presence of an object to the victim in such a way that the victim reasonably perceives that the defendant has a gun. Here, the victim testified that he heard the defendant announce a "stickup” and saw him place his hand in his vest "as if he had a gun”. By his gesture the defendant conspicuously and consciously conveyed the impression that he was reaching for something which, under the circumstances, the victim could reasonably conclude was a firearm. Thus, in this case, the evidence was sufficient to sustain the conviction for robbery in the first degree.

III.

In People v Mendez, on the other hand, the conviction for first degree robbery cannot be sustained. Concededly, this defendant made no display during the robbery indicating that he had a firearm. What the People rely on is the fact that the man on the stoop had his hand under his shirt and that the defendant told him not to take out the gun.

A defendant may be held liable for the acts of "another participant” who displays what appears to be a firearm during the robbery (Penal Law § 160.10 [2]; § 160.15 [4]). Here, however, the man on the stoop did not actively participate in the robbery, nor did he display a weapon or take any action indicating that he had one. On the contrary, throughout the robbery he simply sat on the stoop with his hand under his shirt, literally on the sidelines, immobile, inconspicuous and indifferent. Although his actions, more accurately viewed as inaction, indicate that he had no intention of interfering with the defendant, something more is required before he can be said to have also participated in the robbery and displayed what appeared to be a weapon, conspicuously and consciously. It is obvious that the defendant intended his reference to the man on the stoop to create the impression in the mind of the victim that the man was armed, and that the victim interpreted this as a threat. However, as noted, a mere threat without some display is insufficient to establish robbery in the first degree. Thus, the evidence only establishes that the defendant committed a forceable taking, and the conviction should be reduced to robbery in the third degree (Penal Law § 160.05) as the defendant contends.

Accordingly, in People v Lopez, the order of the Appellate Division should be affirmed. In People v Mendez, the order of the Appellate Division should be modified by reducing the conviction from robbery in the first degree to robbery in the third degree and the defendant should be resentenced (CPL 470.15 [2] [a]; 470.20 [4]; 470.40 [1]).

Titone, J.

(dissenting in People v Lopez and concurring in People v Mendez). In People v Baskerville (60 NY2d 374), this court held that the "[d]isplay[ing] what appears to be a * * * firearm” element of first and second degree robbery (Penal Law § 160.15 [4]; § 160.10 [2] [b]) has both a subjective and an objective component. Further, the court stated in Baskerville that the objective component has two subparts. First, "[t]he defendant must consciously display something that could reasonably be perceived as a firearm” (60 NY2d, at 381, supra). Second, "the display must actually be witnessed in some manner by the victim” (id.). While alluding to this two-pronged objective analysis, the majority has substantially, and unjustifiably, diluted the showing necessary to establish the first prong. Accordingly, although I concur in the result in People v Mendez, I cannot subscribe to the majority’s rationale and, for the same reason, I dissent from its decision to affirm in People v Lopez.

Initially, it bears emphasis that the "[d]isplay[ing] what appears to be a * * * firearm” element is treated as an aggravating circumstance elevating the crime to first degree robbery not only to increase the penalty for putting the victim in fear for his or her life, but also to ease the People’s burden of proof in cases where no shot was fired and, for a variety of reasons, the weapon used in the crime was unavailable (People v Baskerville, supra, at 380-381, citing Hechtman, Practice Commentaries, McKinney’s Cons Laws of NY, Book 39, Penal Law § 160.15, at 205 [1975 ed]; see also, People v Hedgeman, 70 NY2d 533, 540-542). In such instances, it is impossible for the prosecution to prove that the displayed weapon was "loaded and operable” and was therefore an actual threat to the victim’s safety. Accordingly, the Legislature deemed it appropriate to treat the display of a firearm itself as the aggravating element and to place the burden on the defendant to mitigate culpability by demonstrating that the item displayed was incapable of causing harm (see generally, People v Felder, 39 AD2d 373, affd 32 NY2d 747, appeal dismissed 414 US 948; see also, People v Lockwood, 52 NY2d 790). By allowing for a reduction to second degree robbery upon a showing that the weapon either was not loaded or inoperable, however, the Legislature indicated that the true thrust of the first degree offense remains forceable stealing under conditions creating a genuine risk of death or serious physical injury (cf., Penal Law § 160.15 [1]).

Inasmuch as the "display” element of first degree robbery already takes into account the practical difficulties often involved in proving the crime of armed robbery, its requirements should not be further diluted by constructions that blur the distinctions between the various aspects of the Baskerville test (60 NY2d, at 380-382, supra; see, People v Hedgeman, supra, at 540-541). Such constructions are offensive because they tamper with the balance that the Legislature struck between the defendant’s rights and the People’s interest in obtaining convictions and they give the prosecution an added advantage, even beyond what the Legislature intended.

By permitting a first degree robbery conviction on the basis of the facts proven in Lopez, the majority has drastically redefined the "display” element and, in the process, has stretched that element to encompass situations well beyond its intended reach, effectively eliminate its impact. While Baskerville specifically required that the defendant "consciously display something that could reasonably be perceived as a firearm” (60 NY2d, at 381, supra [emphasis added]), the majority vitiates that requirement by holding that "[a]ll that is required is that the defendant, by his actions, consciously manifest the presence of an object to the victim in such a way that the victim reasonably perceives that the defendant has a gun.” (Majority opn, at 222.) Thus, the majority has replaced the requirement that there be an actual display of some physical object appearing to be a gun (see, People v Lockwood, supra; People v Knowles, 79 AD2d 116) with the far less exacting requirement of some symbolic gesture, other than speech, conveying nothing more than an impression that the robber may have such a physical object.

The standard the majority has adopted permits satisfaction of the "display” element of first degree robbery with proof of facts that establish no more than a threat to use a weapon. Although the majority has emphatically eschewed the use of verbal threats as a means of establishing the "display” element, its conclusion that a gesture "conveying] the impression” that the defendant has a gun will suffice amounts to the same thing. In both instances, the victim’s fear is induced not by an object that is brandished, seen or felt, but rather by a mere communication, in verbal or nonverbal form.

I find this unwarranted reduction in the People’s burden of proof particularly objectionable because it authorizes convictions for first degree robbery on the basis of conduct that is at least one step removed from the type of behavior for which the Legislature intended to impose the highest punishment available within the robbery article. Indeed, equating the "display” of a gun with a mere threatening gesture may prove, in the final analysis, to be even more pernicious than treating a verbal threat as an offense within Penal Law § 160.15 (4), since such gestures are generally more ambiguous than threatening words.

Even more disturbing, the majority has provided prosecutors with a means of circumventing the requirements of Penal Law § 160.15 (3) by permitting first degree robbery convictions under Penal Law § 160.15 (4) upon proof of a mere threatening, gesture. Subdivision (3) of section 160.15 permits a conviction for first degree robbery if the prosecution can prove that the defendant "use[d] or threatened] the immediate use of a dangerous instrument”. It has been held that this subdivision requires proof of the defendant’s actual possession of a dangerous instrument and, in cases involving a gun, proof that the weapon was loaded and operable (see, People v Pena, 50 NY2d 400, 407-408; People v Seabrooks, 120 AD2d 691; People v Stephens, 97 AD2d 523; People v Bonefont, 84 AD2d 844; People v Castaldo, 72 AD2d 568; People v Holmes, 71 AD2d 904, affd on other grounds 52 NY2d 976; People v Johnson, 64 AD2d 907, affd on other grounds 48 NY2d 674; People v Early, 59 AD2d 912; People v Briggs, 52 AD2d 1053; cf., People v Colavito, 126 AD2d 554, affd on other grounds 70 NY2d 996). Thus, a mere threatening gesture suggesting the presence of a gun would not be sufficient to support a conviction for first degree robbery under subdivision (3). Under the majority’s new interpretation of subdivision (4), however, the same facts will support a conviction for first degree robbery under that subdivision, since the "threat” and "display” elements are now virtually indistinguishable and the language of subdivision (4) requiring proof only of "what appears to be a * * * firearm” obviates the need to prove either that the defendant actually possessed a gun or that the gun was loaded and operable.

In sum, each subdivision of Penal Law § 160.15 was enacted to encompass different aggravating circumstances, with subdivision (2) addressed to mere possession of a loaded and operable firearm, subdivision (3) addressed to threats to use actually dangerous weapons of any type and subdivision (4) addressed to displays of objects resembling guns, whether or not they are actually dangerous. The distinctions between the subdivisions should not be blurred by diluting the showing required to establish one or more of their elements and thereby allowing conviction under one when the facts fit within, but fall slightly short of the elements of another (see, People v Briggs, supra). In this case, that is precisely what the majority has done by allowing a conviction for first degree robbery under subdivision (4) when the defendant’s aggravating conduct consists of no more than a threat without the additional element of an actual dangerous instrument, as would be required if he were prosecuted under subdivision (3).

Because the standard the majority has employed represents an unacceptable dilution of the standard previously applied in first degree robbery cases arising under Penal Law § 160.15 (4), I cannot concur. Instead, I would hold, consistent with People v Baskerville (supra) and the plain language of the statute itself, that the "display” element is not satisfied absent proof that "something,” be it a real gun, a toy gun or even a toothbrush or hand concealed in a pocket, has been brandished, pointed or poked at the victim. Because this test has not been met, reversal is required in both People v Lopez and People v Mendez, since in both cases there was no display and, in fact, there was nothing more than a mere gesture.

Accordingly, for all of the foregoing reasons, I dissent from the majority’s affirmance in People v Lopez.

In People v Lopez: Order affirmed.

Judges Simons, Kaye and Bellacosa concur with Chief Judge Wachtler; Judge Titone dissents and votes to reverse in a separate opinion in which Judges Alexander and Hancock, Jr., concur.

In People v Mendez: Order modified by reducing the conviction of robbery in the first degree to robbery in the third degree and case remitted to Supreme Court, Bronx County, for resentence; and, as so modified, order affirmed.

Judges Simons, Kaye and Bellacosa concur with Chief Judge Wachtler; Judge Titone concurs in result in a separate opinion in which Judges Alexander and Hancock, Jr., concur.

      . In response to the dissenters’ discussion of subdivision (3), which is not in issue here, we would simply note that it is an open question in this court as to whether a gun would have to be loaded and operable to be considered a dangerous instrument under that subdivision. In People v Pena (50 NY2d 400), we affirmed a conviction where the defendant gestured and threatened to shoot, but the only dangerous instrument he was found to possess was a knife. In People v Holmes, (71 AD2d 904, affd 52 NY2d 976), where the defendant threatened to shoot but there was no proof that the gun was operable, the Appellate Division reversed the conviction and the only issue considered on the appeal to this court was the corrective action. In People v Colavito (126 AD2d 554, affd 70 NY2d 996), the Appellate Division affirmed a conviction where there was no proof that the gun was operable noting that the gun could have been used as a club, and we affirmed after concluding that the issue had not been preserved for our review.

      . We note that robbery in the second degree is the appropriate offense when, in fact, the defendant has simply used his hand to create the impression he is armed with a gun (see, People v Knowles, 79 AD2d 116; cf., People v Gilliard, 72 NY2d 877). However, the burden is on the defendant to prove this as an affirmative defense at trial (People v Gilliard, supra).

       The basis of the majority’s reversal in Mendez is somewhat unclear. Since the majority stresses that the person on the stoop who held his hand inside his shirt "did not actively participate in the robbery,” "simply sat on the stoop * * * literally on the sidelines, immobile, inconspicuous and indifferent” (majority opn, at 222), it appears that the majority’s holding is premised on a conclusion that there was insufficient proof of that individual’s complicity in the robbery to justify ascribing his potentially threatening gesture to defendant. There is no other principled ground for distinguishing the purported "display” in Mendez from the gesture that was found to be sufficient in Lopez. Indeed, if a mere gesture is sufficient to constitute a "display of what appears to be a * * * firearm” within the meaning of Penal Law § 160.15 (4), the facts in Mendez, which include both a potentially threatening gesture and a verbal reference to a gun, would seem to provide the stronger case for a first degree robbery conviction under the majority’s analysis.