author: Alexander, J. Chief Judge Wachtler and Hancock, Jr., J.

text:
    Chinese Staff and Workers Association et al., Appellants, v City of New York et al., Respondents.
    Argued September 10, 1986;
    decided November 18, 1986

      POINTS OF COUNSEL

      Mitchell S. Bernard and Margaret Fung for appellants.
    Respondents violated SEQRA by failing to consider the effects of Henry Street Tower on existing population patterns and community character within Chinatown. (H.O.M.E.S. v New York State Urban Dev. Corp., 69 AD2d 222; Matter of Jackson v New York State Urban Dev. Corp., 110 AD2d 304; Aldrich v Pattison, 107 AD2d 258; Matter of Nielsen v Planning Bd., 110 AD2d 767; Matter of Soule v Town of Colonie, 95 AD2d 979; Matter of Save the Pine Bush v Planning Bd., 96 AD2d 986, 61 NY2d 668; Matter of Badura v Guelli, 94 AD2d 972; Matter of Town of Henrietta v Department of Envtl. Conservation, 76 AD2d 215; Inland Vale Farm Co. v Stergianopoulos, 104 AD2d 395, 65 NY2d 718; Matter of Environmental Defense Fund v Flacke, 96 AD2d 862.)

      Frederick A. O. Schwarz, Jr., Corporation Counsel (Pamela

      Seider Dolgow and Fay Leoussis of counsel), for respondents.
    Respondents identified the relevant areas of environmental concern caused by the Henry Street project, took a "hard look” at them, and then made a reasoned elaboration of the basis for their determination that the project would not cause a significant impact on the environment once specified mitigating measures are undertaken. Thus, the Board of Estimate did not violate the requirements of SEQRA or CEQR in approving the project without requiring an environmental impact statement. (Matter of Jackson v New York State Urban Dev. Corp., 67 NY2d 400; Aldrich v Pattison, 107 AD2d 258; Matter of Sun Beach Real Estate Dev. Corp. v Anderson, 98 AD2d 367; Allen v City of Poughkeepsie Planning Bd., 113 AD2d 911; H.O.M.E.S. v New York State Urban Dev. Corp., 69 AD2d 222; Vermont Yankee Nuclear Power Corp. v Natural Resources Defense Council, 435 US 519; Matter of Bishop v Board of Trustees, 81 AD2d 1009; Matter of Kravetz v Plenge, 102 Misc 2d 622; Southampton Assn. v Planning Bd., 109 AD2d 204.)

      Kenneth Kimerling for The Association for Neighborhood and Housing Development, Inc., and others, amici curiae.

    I. Gentrification is a growing problem that transforms the socioeconomic character of neighborhoods and disproportionately affects minorities and low-income people. (Business Assn. of Univ. City v Landrieu, 660 F2d 867; Matter of Jackson v New York State Urban Dev. Corp., 110 AD2d 304.) II. The socioeconomic impacts of Henry Street Tower and other luxury developments can be measured.
   OPINION OF THE COURT

Alexander, J.

The regulations promulgated by the City of New York (Executive Order No. 91, Aug. 24, 1977, entitled City Environmental Quality Review [CEQR]) as authorized by and in implementation of the State Environmental Quality Review Act (ECL art 8 [SEQRA]) require lead agencies to consider both the short- and long-term and primary and secondary effects of a proposed action in determining whether the action may have a significant effect on the environment so as to require the preparation of an Environmental Impact Statement (EIS). Since respondents’ environmental analysis failed to consider the environmental effects required by the regulations, the order of the Appellate Division should be reversed.

I

This controversy arises out of the proposed construction of Henry Street Tower, a high-rise luxury condominium, on a vacant lot in the Chinatown section of New York City. This building is to be the first construction in the Special Manhattan Bridge District (SMBD), a special zoning district created by the City of New York designed to preserve the residential character of the Chinatown community, encourage new residential development on sites requiring minimal relocation, promote the rehabilitation of existing housing stock, and protect the scale of the community (see, New York City Zoning Resolution § 116-00 et seq.; Asian Am. for Equality v Koch, 129 Misc 2d 67, 71-74). An application for a special permit for Henry Street Tower was submitted by the developer, Henry Street Partners, to the Department of City Planning and the Department of Environmental Protection, the colead agencies responsible for implementing SEQRA in the City of New York (see, CEQR 1 [k]). Following a thorough environmental review of the effects of the project on the physical environment, the agencies issued a conditional negative declaration asserting that the project will not have any significant effect on the environment if certain modifications were adopted by the developer (see, CEQR 1 [d]; 7 [b] [2]). The modifications were accepted by the developer and the application for a special permit was thereafter approved by the City Planning Commission and the Board of Estimate.

A combined plenary action and article 78 proceeding was commenced by various members of the Chinatown community challenging the Board of Estimate approval of the special permit. Their verified complaint and petition alleged violatians of SEQRA and CEQR, the SMBD regulations, the Uniform Land Use Review Procedure (ULURP), and the due process clause of the New York State Constitution and sought, among other things, a declaration that the special permit was null and void. After joinder of issue, respondents’ motion for summary determination (CPLR 409 [b]) and for summary judgment (CPLR 3212) was granted and petitioners’ cross motion for summary judgment was denied. The Appellate Division affirmed and petitioners were granted leave to appeal by this court.

As limited by their brief to this court, petitioners argue that the city’s environmental review was arbitrary and capricious because of the failure of the lead agencies to consider whether the introduction of luxury housing into the Chinatown community would accelerate the displacement of local low-income residents and businesses or alter the character of the community. Respondents contend that absent a determination that the proposed action will have a significant adverse impact on an area’s physical environment, SEQRA and CEQR do not require consideration of any social or economic impacts such as those asserted by petitioners.

II

In reviewing administrative proceedings in general and SEQRA determinations in particular, we are limited to considering "whether a determination was made in violation of lawful procedure, was affected by an error of law or was arbitrary and capricious or an abuse of discretion” (CPLR 7803 [3]). As we stated in Matter of Jackson v New York State Urban Dev. Corp. (67 NY2d 400, 416), "it is not the role of the courts to weigh the desirability of any action or choose among alternatives, but to assure that the agency itself has satisfied SEQRA, procedurally and substantively”. Thus, we do not decide here whether an EIS is required prior to the construction of Henry Street Tower or what environmental impacts may flow from that construction. The limited issue presented for our review is whether the respondents identified the relevant areas of environmental concern, took a "hard look” at them, and made a "reasoned elaboration” of the basis for their determination (Matter of Jackson v New York State Urban Dev. Corp., supra, at p 417; Aldrich v Pattison, 107 AD2d 258, 265; H.O.M.E.S. v New York State Urban Dev. Corp., 69 AD2d 222, 232). A conditional negative declaration is properly issued when the agencies have made a thorough investigation of the problems involved and reasonably exercised their discretion (Matter of Cohalan v Carey, 88 AD2d 77, 79, appeal dismissed 57 NY2d 672; H.O.M.E.S. v New York State Urban Dev. Corp., supra, at p 231).

SEQRA requires agencies subject to its provisions to adopt procedures necessary to implement the requirements of the statute provided that such "procedures shall be no less protective of environmental values [than the procedures provided in SEQRA]”, although procedures more protective of the environment can be adopted (see, ECL 8-0113 [3] [a]). Thus, the propriety of respondénts’ determination must be judged not only according to the requirements of SEQRA but also according to the regulations promulgated by the City of New York in CEQR to the extent those regulations are more protective of the environment.

The initial determination to be made under SEQRA and CEQR is whether an EIS is required, which in turn depends on whether an action may or will not have a significant effect on the environment (ECL 8-0109 [2]; CEQR 7 [a]). In making this initial environmental analysis, the lead agencies must study the same areas of environmental impacts as would be contained in an EIS, including both the short-term and long-term effects (ECL 8-0109 [2] [b]) as well as the primary and secondary effects (CEQR 1 [g]) of an action on the environment. The threshold at which the requirement that an EIS be prepared is triggered is relatively low: it need only be demonstrated that the action may have a significant effect on the environment (see, Oak Beach Inn Corp. v Harris, 108 AD2d 796, 797; H.O.M.E.S. v New York State Urban Dev. Corp., 69 AD2d 222, 232, supra).

The dispute here concerns the reach of the term "environment”, which is defined as "the physical conditions which will be affected by a proposed action, including land, air, water, minerals, flora, fauna, noise, objects of historic or aesthetic significance, existing patterns of population concentration, distribution, or growth, and existing community or neighborhood character” (ECL 8-0105 [6]; CEQR 1 [¶] [emphasis supplied]). Petitioners argue that the displacement of neighborhood residents and businesses caused by a proposed project is an environmental impact within the purview of SEQRA and CEQR, and the failure of respondents to consider these potential effects renders their environmental analysis invalid. Respondents contend that any impacts that are not either directly related to a primary physical impact or will not impinge upon the physical environment in a significant manner are outside the scope of the definition of "environment”, and that the lead agencies were therefore not required to investigate the potential effects alleged by petitioners.

Respondents’ limited view of the parameters of the term "environment” is contrary to the plain meaning of SEQRA and the city’s regulations and must be rejected. Initially, we note that there is no basis here to rely on any special expertise of the agency since all that is involved is the proper interpretation of statutory language (Matter of Trump-Equitable Fifth Ave. Co. v Gliedman, 62 NY2d 539, 545; Kurcsics v Merchant Mut. Ins. Co., 49 NY2d 451, 459). It is clear from the express terms of the statute and the regulations that environment is broadly defined (ECL 8-0105 [6]; 6 NYCRR 617.2 [k]; CEQR 1 [f]; see, Matter of Jackson v New York State Urban Dev. Corp., 67 NY2d 400, 414, supra; Weinberg, Practice Commentary, McKinney’s Cons Laws of NY, Book 11V2, ECL 8-0105, p 66) and expressly includes as physical conditions such considerations as "existing patterns of population concentration, distribution, or growth, and existing community or neighborhood character”. Thus, the impact that a project may have on population patterns or existing community character, with or without a separate impact on the physical environment, is a relevant concern in an environmental analysis since the statute includes these concerns as elements of the environment. That these factors might generally be regarded as social or economic is irrelevant in view of this explicit definition. By their express terms, therefore, both SEQRA and CEQR require a lead agency to consider more than impacts upon the physical environment in determining whether to require the preparation of an EIS. In sum, population patterns and neighborhood character are physical conditions of the environment under SEQRA and CEQR regardless of whether there is any impact on the physical environment (see, Ulasewicz, Department of Environmental Conservation and SEQRA: Upholding Its Mandates and Charting Parameters For The Elusive Socio-Economic Assessment, 46 Alb L Rev 1255, 1266, 1282).

Turning to the specific allegations in this case, we conclude that under CEQR the potential displacement of local residents and businesses is an effect on population patterns and neighborhood character which must be considered in determining whether the requirement for an EIS is triggered. A significant effect on the environment may be found if a proposed project impairs "the character or quality of * * * existing community or neighborhood character” (CEQR 6 [a] [5]) or impacts upon "existing patterns of population concentration, distribution, or growth” (ECL 8-0105 [6]; see, CEQR 6 [a] [10]). It is not relevant whether the proposed project may effect these concerns primarily or secondarily or in the short term or in the long term since the regulations expressly include all such effects (CEQR 1 [g]).

The potential acceleration of the displacement of local residents and businesses is a secondary long-term effect on population patterns, community goals and neighborhood character such that CEQR requires these impacts on the environment to be considered in an environmental analysis. The fact that the actual construction on the proposed site will not cause the displacement of any residents or businesses is not dispositive for displacement can occur in the community surrounding a project as well as on the site of a project. Indeed, this project is to be constructed on one of seven sites available for development in the SMBD and three of these sites are within one square block of the site of Henry Street Tower. As we have indicated in a related context, land development impacts not only on the actual property involved but on the community in general (Berenson v Town of New Castle, 38 NY2d 102, 110). CEQR does not merely require that the displacement caused by the actual physical construction on this one site be considered. In fact, it specifically requires that "[f]or the purpose of determining whether an action [may have a significant effect on the environment], the action shall be deemed to include other contemporaneous or subsequent actions which are included in any long-range comprehensive integrated plan of which the action under consideration is a part” (CEQR 6 [b]; see, 6 NYCRR 617.11 [a] [11] [b]). Furthermore, as noted above, the statutory scheme requires the consideration of both secondary and long-term effects. Thus, in considering the secondary and long-term effects of this project on population patterns and neighborhood character, respondents must look to more than the potential effects of this one parcel and must consider the potential impacts on the surrounding community.

We do not decide whether these impacts will in fact flow from the construction of Henry Street Tower nor do we express any opinion on the merits of the proposed project. Our holding is limited to a determination that existing patterns of population concentration, distribution or growth and existing community or neighborhood character are physical conditions such that the regulations adopted by the City of New York pursuant to SEQRA require an agency to consider the potential long-term secondary displacement of residents and businesses in determining whether a proposed project may have a significant effect on the environment. Since respondents did not consider these potential effects on the environment in their environmental analysis, their determination does not comply with the statutory mandate and therefore is arbitrary and capricious.

Ill

Having concluded that the environmental analysis of respondents was arbitrary and capricious, it is necessary, to consider the appropriate remedy for their violation of the statutory mandate imposed by SEQRA. Although this issue was neither briefed nor argued in this court, we conclude, contrary to the conclusion tendered by the dissenters, that this issue is squarely governed by our recent decision in Matter of Tri-County Taxpayers Assn. v Town Bd. (55 NY2d 41, modfg 79 AD2d 337).

In that case, the Town of Queensbury adopted three resolutions to establish a local sewer district as part of a larger sewer system, subject to the approval of voters at a special election. After the election, which resulted in a vote in favor of the proposition, a SEQRA challenge was commenced. The Appellate Division was unanimous in determining that there was a violation of SEQRA but was divided as to the appropriate remedy. The majority declined to annul the resolutions and the special election because "it would serve no useful purpose to undo what has already been accomplished” (79 AD2d 337, 339) and deemed it sufficient to direct the municipality to comply with SEQRA before proceeding with the project.

On appeal to this court, where the only issue raised was the appropriate remedy, we reversed and declared the resolutions and special election null and void (55 NY2d 41, 43). This was required, we held, in order to not "clearly frustrate the objectives of SEQRA” (id., at p 47) and to further its "objectives and enforcement of [its] provisions” (id., at p 43) in accordance with the legislative direction to administer SEQRA to " 'the fullest extent possible’ ” (id., at p 46). Moreover, we noted that a disposition which would eliminate consideration of the required environmental effects by the town board at the time the action is initially authorized would relegate SEQRA’s mandates for environmental protection to an afterthought in contravention of the express legislative purposes (id., at p 47; see, Ruzow, SEQRA in the Courts, 46 Alb L Rev 1177, 1181-1182).

The instant case presents no different issue. Respondents have failed to comply with the requirements of SEQRA and CEQR and the appropriate remedy is to grant petitioners’ motion for summary judgment declaring the special permit null and void. The suggestion in the dissenting opinion that the omission here can be cured by "an amended negative declaration” (dissenting opn, at p 371) finds no support in the carefully drafted procedures of the statute and would effectively allow the municipality to comply with SEQRA and CEQR only as an afterthought following a successful challenge to their prior action. Such a result is directly contrary to our holding in Matter of Tri-County Taxpayers Assn. v Town Bd. (supra) and moreover, would contravene the important purposes underlying SEQRA. Indeed, it would allow a project to be initially approved without the benefit of a valid environmental review. In order to further the strong policies served by SEQRA and to not frustrate its important objectives, we hold that the appropriate remedy here is the annulment of the special permit.

IV

Accordingly, the order of the Appellate Division affirming Supreme Court’s grant of summary judgment to respondents is reversed and petitioners’ cross motion for summary judgment granted.

Chief Judge Wachtler and Hancock, Jr., J.

(concurring and dissenting in part). We concur with the majority to the extent that it holds that "under CEQR the potential displacement of local residents and businesses is an effect on population patterns and neighborhood character” (majority opn, at p 366) which should have been considered by the lead agency before it issued the conditional negative declaration. This holding, it must be emphasized, is not predicated on the requirements of SEQRA. It is based solely on "the rules, procedures, criteria and guidelines” adopted by the City of New York pursuant to ECL 8-0113 (3) in Executive Order No. 91, known as City Environmental Quality Review (CEQR) and, specifically on the definition found in CEQR (but not in SEQRA or any of its implementing regulations) that: "Environmental analysis means the lead agencies’ evaluation of the short and long term, primary and secondary environmental effects of an action [in determining] whether an action under consideration may or will not have a significant effect on the environment” (CEQR 1 [g] [emphasis added]).

Because this project consists of one high-rise apartment — to be constructed on a vacant lot — which adds no more than 400 persons to an existing area population of approximately 40,000, it cannot be said that under SEQRA standards it has any discernible present effect on population patterns or community or neighborhood character (ECL 8-0105 [6]) which could constitute "a significant effect on the environment” (ECL 8-0109 [2]; 6 NYCRR 617.11). Nothing in Matter of Jackson v New York State Urban Dev. Corp. (67 NY2d 400) (which concerns a project which concededly has an immediate impact on "existing patterns of population concentration” and on "existing community or neighborhood character” [ECL 8-0105 (6) (emphasis added)]) suggests that under SEQRA the potential long-term or secondary effects on population and neighborhood character would, without more, require consideration before issuance of a negative declaration. Indeed, in Jackson we cautioned that (at p 417): "[A]n agency’s substantive obligations under SEQRA must be viewed in light of a rule of reason. 'Not every conceivable environmental impact, mitigating measure or alternative must be identified and addressed before a FEIS will satisfy the substantive requirements of SEQRA’ (Aldrich v Pattison, 107 AD2d 258, 266, supra; Coalition Against Lincoln W. v City of New York, 94 AD2d 483, 491, affd 60 NY2d 805, supra). The degree of detail with which each factor must be discussed obviously will vary with the circumstances and nature of the proposal (see, Webster Assoc. v Town of Webster, 59 NY2d 220, 228). Second, the Legislature in SEQRA has left the agencies with considerable latitude in evaluating environmental effects and choosing among alternatives (see, e.g., ECL 8-0109 [8]). Nothing in the law requires an agency to reach a particular result on any issue, or permits the courts to second-guess the agency’s choice, which can be annulled only if arbitrary, capricious or unsupported by substantial evidence (Aldrich v Pattison, 107 AD2d 258, 267, supra; see also, Vermont Yankee Nuclear Power Corp. v Natural Resources Defense Council, 435 US 519, 555).”

We note, moreover, that the majority opinion carefully avoids any implication that an Environmental Impact Statement (EIS) may be called for even under the more stringent requirements of CEQR. Thus, the court’s ruling does not preclude the possibility that the omission under CEQR can be readily cured by the lead agency’s preparation and submission of an amended negative declaration after it has given due consideration to the potential impact on population patterns and neighborhood character. We must, therefore, strongly disagree with so much of the majority decision as may have the effect of invalidating the special permit. Such a result is not mandated by our decision in Matter of Tri-County Taxpayers Assn. v Town Bd. (55 NY2d 41) where the court determined specifically that "an environmental impact statement [under SEQRA] should have been prepared and made available to the members of the town board and the public prior to the adoption of the resolutions” (id., at p 46). Here, under CEQR, we hold merely that certain potential effects should have been considered before the lead agency decided that an EIS was unnecessary. It is not at all certain that these effects will ultimately require anything other than a reiteration that they have no significant effect on the environment as defined in CEQR 1 (g). The invalidation of a project, even at great loss to the sponsors, is warranted when, as in Matter of Tri-County Taxpayers Assn. v Town Bd. (supra), it is clear that the public has been improperly deprived of the "detailed information about the effect which [the] proposed action is likely to have on the environment” (ECL 8-0109 [2]) which an EIS would have provided and that the project has proceeded in outright violation of SEQRA. It by no means follows, however, that a project should be nullified when, as here, it may well be concluded that a negative declaration rather than an EIS is the proper course.

Judges Meyer, Simons, Kaye and Titone concur with Judge Alexander; Chief Judge Wachtler and Judge Hancock, Jr., concur in part and dissent in part and vote to grant the petition conditionally in a memorandum.

Order reversed, with costs, and petitioners’ cross motion for summary judgment granted.

      . In an unrelated action, we held the adoption of the SMBD regulations did not violate procedural due process or the notice provisions of the Uniform Land Use Review Procedures (see, Lai Chun Chan Jin v Board of Estimate, 62 NY2d 900, affg 92 AD2d 218). A separate constitutional challenge to the SMBD regulations and the special permit for Henry Street Tower is sub judice in the Appellate Division, First Department (see, Asian Am. for Equality v Koch, 129 Misc 2d 67).

      . The modifications concerned noise mitigation measures, including closed windows and alternative means of ventilation, to reduce indoor noise levels and certain construction conditions to protect a designated landmark church located across the street from the project site.

      . The plaintiffs-petitioners include the Chinese Staff and Workers Association, a nonprofit corporation whose members are Chinese restaurant and garment workers who live and work in Chinatown, the New York Chinatown History Project, a nonprofit organization dedicated to preserving the unique historical resources of Chinatown and several individuals who live and work in Chinatown. For ease of reference, the plaintiffs-petitioners will be referred to as "petitioners”.

      . Although the dissenting opinion correctly points out that our holding "is not predicated [solely] on the requirements of SEQRA” (dissenting opn, at p 370), we do not decide whether a like result would ensue were SEQRA the controlling authority. That issue is simply not before the court in this case.

      . ECL 8-0109 (2) provides, as relevant here:
      "All agencies * * * shall prepare, or cause to be prepared * * * an environmental impact statement on any action * * * which may have a significant effect on the environment. Such a statement shall include a detailed statement setting forth the following:
      "(b) the environmental impact of the proposed action including short-term and long-term effects” (emphasis supplied; see, 6 NYCRR 617.14 [Q [3]).

      . In this regard, it is interesting to compare the parallel provision of the National Environmental Policy Act of 1969, which requires the preparation of an impact statement if the proposal will "significantly [affect] the quality of the human environment” (42 USC § 4332 [2] [C]), a demonstrably higher threshold requirement (see, Orloff, SEQRA: New York’s Reformation of NEPA, 46 Alb L Rev 1128). Additionally, an earlier proposed version of SEQRA would have required an EIS for an action likely to have a significant effect on the environment (see, Stevenson, Early Legislative Attempts At Requiring Environmental Assessment and SEQRA’s Legislative History, 46 ALB L Rev 1114, 1118).

      . Again, comparison with the National Environmental Policy Act (NEPA) is instructive. An EIS is required under NEPA when a proposed Federal action will affect the quality of the "human environment” (42 USC § 4332) which has been interpreted to be limited to effects on the natural or physical environment (see, Image of Greater San Antonio v Brown, 570 F2d 517; Breckinridge v Rumsfeld, 537 F2d 864 cert denied 429 US 1061; Ulasewicz, Department of Environmental Conservation and SEQRA: Upholding its Mandates and Charting Parameters for the Elusive Socio-Economic Assessment, 47 Alb L Rev 1255, 1266). In contrast, specific elements of SEQRA’s definition of environment go beyond effects on the physical environment (see, infra, at pp 365-366).

      . We find no statutory support for the proposition advanced in the dissenting opinion that there must be a "present effect on population patterns or community or neighborhood character” (dissenting opn, at p 370; emphasis in original). Rather, SEQRA’s requirement of the consideration of long-term effects (see, ECL 8-0109 [2] [b]) indicates that more than immediate or present effects on the environment must be considered. Nor is our recent opinion in Matter of Jackson v New York State Urban Dev. Corp. (67 NY2d 400) authority to the contrary for the agency there expressly considered the "potential displacement” (id., at p 420) of residents in both the actual construction sites and in "the surrounding area” (id., at p 412).

      . In the environmental analysis of the zoning change to create the Special Manhattan Bridge District, a negative declaration was issued on the ground that each project would be subject to CEQR.

      . In this regard, the dissenters’ observation that this "project consists of one high-rise apartment — to be constructed on a vacant lot — which adds no more than 400 persons to an existing area population of approximately 40,000” (dissenting opn, at p 370) fundamentally disregards the clear requirement of the statutory scheme to consider more than short-term and primary effects on the environment.

      . It is difficult to understand how an "amended negative declaration”, even if authorized, can retroactively validate an invalid environmental review without a subsequent review and determination in respect thereto by the City Planning Commission and the Board of Estimate. The dissenters would in effect uphold a special permit issued by the Board of Estimate on the basis of an invalid environmental analysis if the agency subsequently performs a valid environmental analysis even though the later valid environmental analysis is never presented to the Board of Estimate.


source: Caselaw Access Project

author: Chief Judge Wachtler.

license: Public Domain

text:
    Maxton Builders, Inc., Respondent, v Richard Lo Galbo et al., Appellants. (And a Third-Party Action.)
    Argued September 10, 1986;
    decided November 18, 1986

      POINTS OF COUNSEL

      John F. Haggerty and Joseph A. Baum for appellants.
    I. The seller’s failure to disclose to the buyer the fact that he knew that the term of the contract relating to the determination of what the real estate taxes would be could not in fact be determined within the three-day period provided in the contract was a material misrepresentation, misunderstanding or mistake sufficient to void the contract. (Seneca Wire & Mfg. Co. v Leach & Co., 247 NY 1; Russo v Friscia, 15 AD2d 516; Goldstein v Stern, 32 Misc 2d 779, 18 AD2d 672; Rosenchein v McNally, 35 Misc 2d 97, 17 AD2d 834.) II. The cases cited by the court below all support a conclusion opposite to the conclusion that court reached. (Sy Jack Realty Co. v Pergament Syosset Corp., 27 NY2d 449; Johnson v Werner, 63 AD2d 422; Silverstein v United Cerebral Palsy Assn., 17 AD2d 160; Poggioli v Liebegott, 77 Misc 2d 449.) III. The conceded actual notice received by plaintiff and his attorney was adequate notice of cancellation under the circumstances. (Matter of Agar v Board of Estimate, 52 Misc 2d 285; Mishkind-Fernberg Realty Co. v Sidorsky, 189 NY 402.) IV. The granting of summary judgment was particularly inappropriate in this case. (Lawrence v Miller, 86 NY 131; Truck Rent-A-Center v Puritan Farms 2nd, 41 NY2d 420.)

      Murray Seeman for respondent.
    I. The deposit on contract is not a penalty. (Knight v Carter, 1 Misc 2d 351; Lawrence v Miller, 86 NY 131; Fingerhut v Kralyn Enters., 71 Misc 2d 846, 40 AD2d 595; Leading Bldg. Corp. v Segrete, 60 AD2d 907; Silverstein v United Cerebral Palsy Assn., 17 AD2d 160; Palmer v Golden, 221 App Div 360; Loper v O’Rourke, 86 Misc 2d 441; LaRocca v Campisi, 82 Misc 2d 271; Poggioli v Liebegott, 77 Misc 2d 449.) II. The option to rescind clause in the contract was not effectively exercised by defendant vendees.
      (Grace v Nappa, 46 NY2d 560; Rodolitz v Neptune Paper Prods., 22 NY2d 383; Morlee Sales Corp. v Manufacturers Trust Co., 9 NY2d 16; Mallad Constr. Corp. v County Fed. Sav. & Loan Assn., 32 NY2d 285; 805 Third Ave. Co. v M. W. Realty Assoc., 58 NY2d 447; Miller v Continental Ins. Co., 40 NY2d 675; Clement v Cash, 21 NY 253; Beakes v DaCunha, 126 NY 293; Kantrowitz v Dairymen’s League Co-op. Assn., 272 App Div 470; Peabody v Satterlee, 166 NY 174.) III. The deposit of a check on contract was equivalent to a deposit of cash. Plaintiff can recover the amount of the check on its dishonorment by vendees. (Leading Bldg. Corp. v Segrete, 60 AD2d 907; Silverstein v United Cerebral Palsy Assn., 17 AD2d 160; Palmer v Golden, 221 App Div 360.) IV. The third-party action against Murray Seeman, attorney for Maxton Builders, Inc., and Scott Seeman, president of Maxton Builders, Inc., individually, should be dismissed because it does not state facts sufficient to constitute a cause of action. (Lincoln First Bank v Siegel, 60 AD2d 270; Curiano v Suozzi, 63 NY2d 113; Matter of Smith, 91 AD2d 789.) V. The vendees have shown lack of good faith. VI. The claim of misrepresentation is unfounded. (Orellano v Samples Tire Equip. & Supply Corp., 110 AD2d 757; Rentways, Inc. v O’Neill Milk & Cream Co., 308 NY 342; Nelson v Times Sq. Stores Corp., 110 AD2d 691; Fisher v Wakefield Park Realty Co., 203 NY 539; People v Thomas, 50 NY2d 467; Matter of Star Leslie W., 63 NY2d 136.)
   OPINION OF THE COURT

Chief Judge Wachtler.

The plaintiff contracted to sell a house to the defendants and accepted a check for the down payment. When the defendants canceled the contract and stopped payment on the check, the plaintiff sued for a breach claiming a right to the down payment — a right traditionally allowed in this State under the rule set forth in Lawrence v Miller (86 NY 131). The trial court denied plaintiff’s motion for summary judgment holding that a fact question was presented as to whether recovery of the down payment would constitute a penalty under the circumstances. The Appellate Division modified and granted summary judgment to the plaintiff for the amount of the down payment.

The defendants appealed claiming there was no breach because they effectively exercised a contractual right to cancel. In the alternative, defendants urge that plaintiff’s recovcry should be limited to actual damages, and that we should, therefore, reexamine the rule of Lawrence v Miller (supra), which permits a vendor on a real estate contract to retain the down payment when the purchaser willfully defaults.

I.

In 1983 the defendants contracted to purchase a newly constructed house from the plaintiff for $210,000. At the contract signing on August 3, the defendants gave the plaintiff a check for $21,000 as a down payment to be held in escrow. A handwritten rider, included in the contract at the defendants’ request, provided: "If real estate taxes are in excess of $3,500 based on a full assessment of house sold for $210,000.00, buyer shall have the right to cancel this contract upon written notice to the seller within three days of date and escrow funds to be returned.”

The following day defendant Cynthia Lo Galbo and plaintiff’s president, Scott Seeman, went to the county tax assessor’s office to obtain an estimate of the taxes on the new house. The assessment was in excess of $3,500.

The defendants’ attorney then called the plaintiff’s counsel and informed him that the defendants had decided to exercise their option to cancel. He also sent a certified letter to the defendants’ attorney informing him in writing of the defendants’ decision to cancel. The letter was mailed on Friday August 5 and was received by plaintiff’s attorney on August 9. Several days later plaintiff’s attorney also received a bank notice that defendants had stopped payment on their check.

On September 20, 1983, the plaintiff commenced this action against the defendants to recover the amount of the down payment claiming that the defendants breached the contract when they stopped payment on the check. In their answer the defendants contended that they had properly exercised their right to cancel in accordance with the rider. On December 20, 1983, the plaintiff sold the house to another purchaser for the same amount the defendants had agreed to pay. However this sale, unlike the contract with the defendants, was arranged by a real estate broker who charged the plaintiff a fee of $12,000 for finding the new purchaser.

Both sides subsequently moved for summary judgment on the complaint, the defendants asserting their right to cancel, and the plaintiff claiming the cancellation was ineffective because it was not made in the time or manner prescribed by the contract. Relying on Lawrence v Miller (86 NY 131, supra), the plaintiff urged that the defendants had lost the right to the down payment by defaulting on the contract. Plaintiff also alleged that although it was not seeking actual damages, it had suffered real financial losses in excess of the down payment. Plaintiff contended that as a result of the defendants’ breach, it had incurred additional carrying charges for mortgage, interest, taxes and insurance, as well as other losses including the $12,000 fee paid to the real estate broker for bringing about the second contract.

Special Term found that the defendants’ cancellation was ineffective primarily because it had not been received by the plaintiff within the three-day period stated in the contract. However, on the damages issue the court denied the plaintiff summary judgment concluding that the "substantial amount of the deposit, namely, $12,000, coupled with the fact that plaintiff was successful in selling the subject premises to another purchaser, albeit with the incurring of certain losses, creates a question of fact as to whether plaintiff’s claim to the deposit constitutes the seeking of a penalty”.

The Appellate Division modified and granted summary judgment to the plaintiff for the amount of the down payment. The court agreed with Special Term that there had been a breach but stated: "Where there is a willful default by the vendee or a repudiation of the contract of purchase upon which a down payment has been made, it is settled in this State that the vendee may not recover his down payment even though the vendor resells the premises for a sum equal to or greater than the contract price”. (113 AD2d 923, 924.)

On this appeal the defendants again urge that their refusal to perform did not constitute a breach because they had reserved and adequately exercised a right to terminate. Although the plaintiff did not receive written notice of termination within three days, as the contract required, the defendants contend that this is not fatal when, as here, the contract does not provide that time is of the essence. The defendants argue that under these circumstances all that is required is reasonable notice and that this requirement was met here when the defendants mailed the notice and gave the plaintiffs attorney actual oral notice within the three-day period. It is settled, however, that when a contract requires that written notice be given within a specified time, the notice is ineffective unless the writing is actually received within the time prescribed (see, Peabody v Satterlee, 166 NY 174; Kantrowitz v Dairymen’s League Co-op. Assn., 272 App Div 470, affd 297 NY 991; cf. Sy Jack Realty Co. v Pergament Syosset Corp., 27 NY2d 449). In short, the defendants bargained for and obtained a limited right to cancel which they failed to exercise within the time agreed upon. The cancellation was, therefore, ineffective and the defendants’ refusal to perform constituted a breach (Morgan & Brother Manhattan Stor. Co. v Balin, 39 NY2d 848).

The defendants’ alternative argument is that the Appellate Division erred in permitting the plaintiff to recover the entire down payment, and should instead have limited recovery to actual damages. On the basis of existing law it is clear that the defendants cannot prevail. For more than a century it has been well settled in this State that a vendee who defaults on a real estate contract without lawful excuse, cannot recover the down payment (Lawrence v Miller, supra; Steinhardt v Baker, 163 NY 410; Cohen v Kranz, 12 NY2d 242; 32 Beechwood Corp. v Fisher, 19 NY2d 1008; Sommer v General Bronze Corp., 21 NY2d 775; Laba v Carey, 29 NY2d 302; Morgan & Brother Manhattan Stor. Co. v Balin, 39 NY2d 848, supra; Willard v Mercer, 58 NY2d 840; 62 NY Jur, Vendor and Purchaser, § 137). The rule, however, has been criticized as being out of harmony with the general principle that actual damages is the proper measure of recovery for a breach of contract and, it has been abandoned by several jurisdictions (Freedman v Rector, Warden & Vestrymen, 37 Cal 2d 16, 230 P2d 629; Perillo, Restitution in the Second Restatement of Contracts, 81 Colum L Rev 37, 50; Friedman, Contracts and Conveyances of Real Property, at 931 [4th ed]). The defendants’ argument on this appeal presents the question as to whether the longstanding rule should be retained in this State.

II.

In the leading case, Lawrence v Miller (86 NY 131, supra), decided by this court in 1881, we denied the assignee of the defaulting vendee recovery of a $2,000 down payment, reasoning that the vendor acquired the money rightfully, failed in no duty to the vendee, and the money would have been his but for the vendee’s breach. We stated (at p 140): "To allow a recovery of this money would be to sustain an action by a party on his own breach of his own contract, which the law does not allow * * * Nor can the specious view be taken, presented by the plaintiff, that the defendant is entitled to no more than he has actually been damaged.”

Much of the criticism of Lawrence v Miller (supra) is directed at the rule on which it is based, which broadly holds that a party who defaults on a contract cannot recover the amount or value of part performance (Corbin, Right of a Defaulting Vendee to the Restitution of Installments Paid, 40 Yale LJ 1013; 1942 Report of NY Law Rev Commn, at 179). This parent rule is applicable to contracts generally, and has been applied to a wide variety of circumstances including the sale of goods, employment contracts for a fixed term, construction contracts, and installment land sales (Corbin, op. cit). In all of these cases the common law would deny any relief to the defaulting party even when there had been substantial, or nearly complete performance. It was these holdings especially which prompted the criticism calling for reform of the parent rule on the ground that it produced a forfeiture "and the amount of the forfeiture increases as performance proceeds, so that the penalty grows larger as the breach grows smaller.” (Corbin, ibid., at 1029; also see, Act, Recommendation and Study Relating to Installment Land Contracts, 1937 Report of NY Law Rev Commn, at 343; Act and Recommendation Relating to Installment Land Contracts, 1938 Report of NY Law Rev Commn, at 47; Act, Recommendation and Study Relating to Recovery for Benefits Conferred by Party in Default Under Contract, 1942 Report of NY Law Rev Commn, at 179; Act, Recommendation and Study Relating to Right of Buyer of Goods to Restitution for Benefits Conferred Under a Contract of Sale on Which He Has Defaulted, 1952 Report of NY Law Rev Commn, at 83.)

The "modern rule” advocated by the critics permits the party in default to recover for part performance in excess of actual damages, but places the burden on him to prove the net benefit conferred (see, Perillo, op. cit, at 49-50; Corbin, op. cit., at 1023-1024; Restatement [Second] of Contracts § 374; Friedman, op. cit., at 931). The rule was designed primarily to protect the party who had made a number of payments or substantial performance before default, and provides little relief to the defaulting purchaser seeking to recover a down payment or first installment. Corbin notes: "In such cases, it is unlikely that the amount retained by the vendor was greater than the injury suffered by the plaintiff’s breach. Whatever the amount, the plaintiff must show that it is greater than the injury done. In most cases that injury is wholly unliquidated and difficult of accurate estimation; and in few cases does the plaintiff attempt to show how much it was.” (Corbin, op. cit., at 1024-1025.)

The Restatement (Second) of Contracts adopts the "modern rule”, but recognizes an exception for liquidated damages, and also for "money paid” under an understanding or "usage” that it be retained in the event of a breach (§ 374 comment c). The illustration involves the right of a seller on a real estate contract to retain the first installment equal to 10% of the contract price, upon the buyer’s default.

In 1834 New Hampshire became the first State to reject the parent rule and permit a defaulting party to recover for part performance in a case involving a laborer who had defaulted on a one-year employment contract after working for nine and one-half months (Brittan v Turner, 6 NH 481). In most areas of the law the Legislature and the courts, have now adopted rules generally permitting a party in default to recover for part performance to the extent of the net benefit conferred (see, e.g., Williston, Contracts § 1473; Amtorg Trading Corp. v Miehle Print. Press & Mfg. Co., 206 F2d 103 [summarizing New York law]; Jacob & Youngs v Kent, 230 NY 239 [permitting contractor to recover for substantial performance]; UCC 2-718; Act, Recommendation and Study Relating to Recovery for Benefits Conferred by Party in Default Under Contract, 1942 Report of NY Law Rev Commn, at 179; but also see, Comment, Forfeiture: The Anomaly of the Land Sale Contract, 41 Alb L Rev 71). However in cases dealing with recovery of down payments on real estate contracts, a majority of jurisdictions still follow the principle of Lawrence v Miller (supra), especially where the down payment does not exceed 10% of the contract price (see, Modern Status of Defaulting Vendee’s Right to Recover Contractual Payments Withheld by Vendor as Forfeited, Ann., 4 ALR4th 993; Friedman, op. cit, at 928; 77 Am Jur 2d, Vendor and Purchaser, § 499).

Several years ago the Law Revision Commission proposed that the Legislature of this State abrogate Lawrence v Miller (supra), and adopt a "more equitable” rule (Act, Recommendatian and Study Relating to Recovery for Benefits Conferred by Party in Default Under Contract, 1942 Report of NY Law Rev Commn, at 179, 188, 237-239). The proposed law was not adopted. It is interesting to note, however, that although the proposed reform would generally have permitted the defaulting buyer to recover the net benefit conferred, it would also have allowed the seller, in any event, to retain "twenty percent of the value of the total performance for which the buyer is obligated under the contract” (ibid., at 183). A similar proposal was later made, and adopted by the Legislature, with respect to the right of a buyer to recover for part performance after defaulting on a contract for the sale of goods (Act, Recommendation and Study Relating to Right of Buyer of Goods to Restitution for Benefits Conferred Under a Contract of Sale on Which He Has Defaulted, 1952 Report of NY Law Rev Commn, at 83, 643; Personal Property Law former § 145-a, now UCC 2-718 [2] [permitting seller to withhold 20% of the value of the total performance up to a limit of $500]).

III.

We have previously noted that a court should not depart from its prior holdings "unless impelled by 'the most cogent reasons’ ” (Baker v Lorillard, 4 NY 257, 261). This standard is particularly apt in cases involving the legal effect of contractual relations. In fact, when contractual rights are at issue, "where it can reasonably be assumed that settled rules are necessary and necessarily relied upon, stability and adherence to precedent are generally more important than a better or even a 'correct’ rule of law” (Matter of Eckart, 39 NY2d 493, 500). The rule permitting a party in default to seek restitution for part performance has much to commend it in its general applications. But as applied to real estate down payments approximating 10% it does not appear to offer a better or more workable rule than the long-established "usage” in this State with respect to the seller’s right to retain a down payment upon default.

In cases, as here, where the property is sold to another after the breach, the buyer’s ability to recover the down payment would depend initially on whether the agreement expressly provides that the seller could retain it upon default. If it did, the provision would probably be upheld as a valid liquidated damages clause in view of the recognized difficulty of estimating actual damages and the general acceptance of the traditional 10% down payment as a reasonable amount.

If the contract itself is deemed to pose no bar, then the buyer would bear the burden of proving that the amount retained exceeded the actual damages. As the authorities note, this is a difficult burden in any case involving real estate sales, and is not likely to be met in suits on down payments or first installments where the actual damages will generally be very close to the amount of the traditional 10% retained. Thus, in most cases, a change in the law will provide a forum for the disputants to further dispute their differences, but cannot be reasonably expected to save any party from true financial loss. Indeed in the case now before us the defendants made no effort to show that the actual damages were less than the plaintiff alleged or that there was, in fact, a net benefit conferred.

Finally, real estate contracts are probably the best examples of arm’s length transactions. Except in cases where there is a real risk of overreaching, there should be no need for the courts to relieve the parties of the consequences of their contract. If the parties are dissatisfied with the rule of Lawrence v Miller (supra), the time to say so is at the bargaining table.

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

Judges Meyer, Simons, Kaye, Alexander, Titone and Hancock, Jr., concur.

Order affirmed, with costs.

      . The parties also moved for summary judgment on a cross complaint brought by the defendants. Special Term granted Maxton’s motion to dismiss the cross complaint and that determination is no longer in issue.

      . On this point, the report states (at p 188): "While it may be argued that the defaulting buyer should be allowed complete restitution for the benefit conferred, the Commission recognizes the practical difficulties which would result from the adoption of such a principle. Because of the difficulty of establishing the damages in many cases or because provable injury is sometimes not included within the rules of damages, and because a rule permitting complete restitution would encourage the breaking of contracts, the seller should be allowed to retain in any event a reasonable part of the net benefit conferred.”

      . It should be emphasized that we do not have before us any question concerning installment payments beyond a 10% down payment and thus we express no view concerning the parties’ rights with respect to such payments following the vendee’s default.


author: Alexander, J.

text:
    The People of the State of New York, Respondent, v Sylvia Winograd, Appellant.
    Argued October 16, 1986;
    decided November 20, 1986

      POINTS OF COUNSEL

      Malvina Nathanson for appellant.
    I. The People having provided no reasonable explanation for the failure to immediately seal the tapes obtained from the August 11 or August 26 orders, the tapes and all fruits must be suppressed. (People v Gallina, 66 NY2d 52; People v Basilicato, 64 NY2d 103; People v Edelstein, 54 NY2d 306; People v Washington, 46 NY2d 116.) II. The video camera surveillance of the hallway and interior of the Winograd premises without a warrant violated appellant’s Federal and State constitutional rights against unreasonable search and seizure. (Berger v New York, 388 US 41; People v Gallina, 95 AD2d 336, 66 NY2d 52; People v Teicher, 52 NY2d 638; People v Hailstock, 54 Misc 2d 952; United States v Penco, 612 F2d 19; United States v Patino-Zambrano, 482 F Supp 245; People v McGee, 49 NY2d 48; People v Cosme, 48 NY2d 286; People v Spinelli, 35 NY2d 77; People v Volpe, 89 AD2d 510; People v Clark, 103 Misc 2d 498.) III. The warrants for the investigation of usury and preservation of conversations concerning usury were illegal since usury is not a crime "dangerous to life, limb, or property”. (People v Shapiro, 50 NY2d 747; People v Principe, 102 AD2d 762, 65 NY2d 33; People v Schipani, 56 AD2d 126; People v Lagano, 105 Misc 2d 665; People v Ardito, 106 Misc 2d 100, 86 AD2d 144.) IV. The warrant amendments allowing preservation of previously intercepted conversations about usury and interception of future conversations were illegal since these conversations should have been anticipated and amendment was not sought as soon as practicable. (People v Di Stefano, 38 NY2d 640; People v Basilicato, 64 NY2d 103; People v OMeara, 70 AD2d 890, 52 NY2d 990; People v Rodriguez y Paz, 58 NY2d 327.) V. The court’s failure to determine the loss or damage suffered by the victims renders the restitution portion of the sentence illegal. (Szerdahelyi v Harris, 67 NY2d 42; People v Kom, 120 Misc 2d 630; People v Thigpen, 60 AD2d 860; People v Ramirez, 98 AD2d 985.)

      Robert Morgenthau, District Attorney (Beth D. Jacob and Norman Barclay of counsel), for respondent.
    I. The tapes obtained from the August 11 and August 26 eavesdropping orders were timely sealed. (People v Gallina, 66 NY2d 52; People v Basilicato, 64 NY2d 103; People v Edelstein, 54 NY2d 306.) II. No court authorization was required to install a video camera in a common hallway of the commercial building housing the Winograd’s business. (People v Teicher, 52 NY2d 638; United States v Patino-Zambrano, 482 F Supp 245, 633 F2d 208, cert denied sub nom. Patino v United States, 449 US 841; United States v Penco, 612 F2d 19; People v Farenga, 42 NY2d 1092; People v Spinelli, 35 NY2d 77; People v Volpe, 89 AD2d 510; People v Clark, 103 Misc 2d 498, 100 AD2d 982, 64 NY2d 938; People v Cosme, 48 NY2d 286; People v Hailstock, 54 Misc 2d 952.) III. The eavesdropping warrant was properly issued to further the investigation of criminal usury. (People v Principe, 65 NY2d 33; People v Shapiro, 50 NY2d 747; People v Lagano, 105 Misc 2d 665; People v Tamao, 121 Misc 2d 399.) IV. The amendments to the eavesdropping warrant to preserve intercepted conversations about criminal usury were proper. (Coolidge v New Hampshire, 403 US 443; People v Di Stefano, 38 NY2d 640; People v Barber, 113 Misc 2d 365; United States v Liberti, 616 F2d 34; United States v Antill, 615 F2d 648; United States v Bolts, 558 F2d 316, cert denied sub nom. Hicks v United States, 434 US 930; United States v Ortega, 644 F2d 512; United States v Spencer, 522 F Supp 463, 684 F2d 220, 459 US 1109; United States v Medows, 540 F Supp 490; Adams v Williams, 407 US 143.) V. Defendant’s sentence was fair and proper and the record supports the restitution imposed.
   OPINION OF THE COURT

Alexander, J.

On this appeal, we are called upon to determine whether the People have complied with the mandates of CPL article 700 in their conduct of a wiretap investigation. For the reasons that follow, we conclude that the People have failed to satisfy various statutory requirements and accordingly, the order of the Appellate Division affirming defendant’s conviction must be reversed and a new trial ordered.

I

Defendant and her husband, who operated a furrier business in Manhattan, were suspected of conducting a fencing operation from their place of business. A police investigation ensued, in which numerous wiretaps and other surveillance techniques were utilized. An informant of demonstrated reliability passed ostensibly stolen fur pelts to an intermediary who, under police surveillance, apparently sold the pelts to the Winograds. This intermediary subsequently identified the Winograds as his fence, but refused to cooperate with the police any further.

The police, aware that the Winograds had previously been convicted of extortion, criminal usury and related crimes, sought and obtained permission from the landlord of the building where the Winograds maintained their place of business to install a video camera in the hallway opposite the doorway to defendant’s establishment. For six weeks, police officers were able to observe the hallway area in front of the door and the immediate interior when the door was opened but were not able to overhear any conversations. Although the police observed people visiting the Winograds, some carrying fur pelts and some apparently delivering money to the Wino-grads, this investigative technique was considered inadequate to gather sufficient evidence for a successful prosecution.

On July 12, 1983, the New York County District Attorney, using information obtained from informants and the video surveillance, applied for and was issued an eavesdropping warrant authorizing interception of conversations inside the Winograd’s place of business and in the hallway outside the place of business, concerning criminal possession of stolen property and conspiracy to commit that crime (wiretap No. 1). Even though the affidavit submitted in support of the warrant recited that an informant had exchanged fur pelts as collateral against a usurious loan transacted with the Winograds, the People did not seek authorization to intercept conversations relating to criminal usury. However, shortly after the wiretap was in place, the police intercepted conversations concerning usurious loans on July 14, 15, 18, 19, 20, 21, 22 and 29. Thereafter, on August 1, 1983, the District Attorney applied for an amendment to the eavesdropping warrant to preserve the conversations relating to criminal usury intercepted on July 14, 15, 18, 19 and 21. No effort was made at this time, however, to amend the warrant to permit prospective interception of conversations concerning usurious loans. One week later, however, on August 8, 1983, the District Attorney sought a further amendment to both preserve the conversations relating to criminal usury intercepted on July 20, 22 and 29 and to permit prospective interception of conversations regarding criminal usury.

On August 11, the warrant issued on July 12 and amended August 1 and August 8 was extended for 30 days (wiretap No. 2). On September 7, two days prior to the expiration of the warrant, the supervising Justice, who had been designated by the issuing Justice then on vacation to supervise execution of the warrant, informed the People that he would be unavailable for all purposes until September 12, due to religious observance. Thus, the tapes of the seized conversations authorized by the August 11 extension (wiretap No. 2) were not presented to a Justice for sealing until September 12 and in fact, were not sealed until September 13.

On August 26, the People obtained a warrant authorizing interception of conversations over the Winograd’s business telephone relating to the crimes of criminal possession of stolen property, criminal usury and conspiracy to commit those crimes (wiretap No. 3). This warrant expired on Saturday, September 24, and the tapes were sealed on the following Monday, September 26.

The investigation continued throughout the fall. A new eavesdropping warrant was issued on September 12 and extended for an additional 30 days on October 11, and search warrants were issued on September 16 and October 29, based in part on information obtained through the July 12 eavesdropping warrant and the September 12 eavesdropping warrant as extended on October 11.

In October 1983, the Winograds were arrested and indicted for 51 counts of criminal usury (Penal Law § 190.42) and 16 counts of criminal possession of stolen property (Penal Law § 165.45). After defendant’s suppression motion was denied without a hearing (125 Misc 2d 754), she was convicted after a trial by jury of 45 counts of criminal usury and 11 counts of criminal possession of stolen property. Defendant was thereafter sentenced to concurrent indeterminate prison terms of 2 to 6 years on each usury count and 1 to 3 years on the stolen property counts and ordered to pay restitution in the amount of $42,950 on the usury counts and $1,955 on the stolen property counts as well as $43,000 in fines on the usury counts. On appeal from the judgment of conviction, which brought up for review the denial of defendant’s motion to suppress the evidence derived from the eavesdropping warrants, the Appellate Division affirmed (114 AD2d 315). The defendant has appealed by leave of a Judge of this court.

II

Defendant’s initial argument that criminal usury is not a crime "dangerous to life, limb, or property” within the reach of the Omnibus Crime Control and Safe Streets Act of 1968 (18 USC § 2516 [2]), the Federal legislation which authorizes States to issue eavesdropping warrants, is patently meritless and requires no extended discussion. We only recently noted in People v Principe (65 NY2d 33, 38), that "it is logical to conclude that in the use of the singular in the 'catch-all’ phrase 'or other crime dangerous to life, limb, or property’ * * * Congress intended the word 'crime’ to be construed generically and did not seek to unreasonably limit the power of a State Legislature to enact enabling legislation”. In Principe, the record demonstrated the presence of an established and pervasive criminal operation involving the corrupt activities of public employees. Relying on our previous decision in People v Shapiro (50 NY2d 747, 764), we said that such an operation portrayed a well-organized criminal enterprise representing major offenses that are " ' "intrinsically serious or * * * [are] characteristic of the operations of organized crime” ’ ” (People v Principe, supra, at p 38, quoting People v Shapiro, supra, at p 764, quoting Sen Rep No. 1097, 90th Cong, 2d Sess, 1968 US Code Cong & Admin News, at 2234), and concluded that court-ordered eavesdropping for evidence of forgery, larceny and related crimes was within the scope of the Federal eavesdropping authorization. So too here, where the defendant is accused of operating a well-organized criminal enterprise engaged in fencing furs and loansharking, intrinsically serious offenses characteristic of the operations of organized crime, we conclude that the designated offense of criminal usury (CPL 700.05 [8] [e]) is within the reach of the Federal enabling legislation sufficient to authorize the eavesdropping warrants (People v Principe, 65 NY2d 33, supra; cf. People v Shapiro, 50 NY2d 747, supra).

Defendant argues further that because the amendments to the warrant authorizing wiretap No. 1 seeking to preserve the previously intercepted conversations relating to criminal usury were not sought "as soon as practicable” (CPL 700.65 [4]) and. because the People failed "[immediately upon the expiration of the period of [the] eavesdropping warrant” to seal the tapes obtained from wiretaps No. 2 and No. 3 (CPL 700.50 [2]), the evidence deriving from those wiretaps should have been suppressed. We agree.

We have consistently emphasized that there must be strict compliance with the provisions of New York’s eavesdropping statute (CPL art 700) and that the burden of establishing such compliance rests with the prosecution (People v Schulz, 67 NY2d 144, 148-149; People v Gallina, 66 NY2d 52, 57; People v Basilicato, 64 NY2d 103; People v Washington, 46 NY2d 116, 121-122; People v Sher, 38 NY2d 600, 603-605). Moreover, " '[I]n the absence of compliance, the State officials lack authority to wiretap, and any interceptions they make are unlawful, and any evidence derived from the wiretap is inadmissible’ ” (People v Schulz, 67 NY2d 144, 149, supra, quoting People v Sher, 38 NY2d 600, 604, supra).

The initial eavesdropping warrant, issued on July 12 (wiretap No. 1), authorized the interception of conversations concerning criminal possession of stolen property and conspiracy to commit that crime. However, as early as July 14, conversations were intercepted which concerned usurious loans, a crime not included in the initial eavesdropping authorization. CPL 700.65 (4), as pertinent, provides: "When a law enforcement officer, while engaged in intercepting communications in the manner authorized by this article, intercepts a communication which was not otherwise sought and which constitutes evidence of any crime that has been, is being or is about to be committed, the contents of such communications, and evidence derived therefrom, may be disclosed or used as provided in subdivisions one and two. Such contents and any evidence derived therefrom may be used under subdivision three when a justice amends the eavesdropping warrant to include such contents. The application for such amendment must be made by the applicant as soon as practicable. If the justice finds that such contents were otherwise intercepted in accordance with the provisions of this article, he may grant the application” (emphasis added).

In People v Di Stefano (38 NY2d 640), we interpreted this provision as engrafting the "plain view” exception on the general constitutional requirement that seized evidence be particularly described in the application to intercept communications (id., at p 648). We noted that the "plain view” exception requires an inadvertent discovery and that this requirement is intended to protect citizens against anticipated discoveries by officers who have probable cause to know the existence and location of tangible evidence (id., at p 649). We further noted that the New York statute was based on a similar Federal provision (see, 18 USC § 2517 [5]) which was "adopted to insure that the original order was lawfully obtained and continued, that the inadvertent interception was overheard in good faith, and that the interception was in fact inadvertent” (38 NY2d, at p 650, citing 1968 US Code Cong & Admin News, at 2189, quoting Sen Rep No. 1097, 90th Cong, 2d Sess, at 12 [1968]). Consequently, we held in Di Stefano that where there has been a claimed inadvertent interception, a "retroactive amendment is required to insure continuous good faith compliance with the original warrant and not to circumscribe the trial use of properly, though accidentally, overheard incriminating conversations” (id.).

As emphasized above however, CPL 700.65 (4) requires that the amendment to a warrant to authorize interceptions relating to crimes inadvertently discovered must be sought "as soon as practicable”. In People v O’Meara (70 AD2d 890, affd for reasons stated below 52 NY2d 990, 991), we held that the police must seek an amendment of the original warrant as soon as practicable after they have obtained "sufficient information which manifests probable cause to believe that a crime not covered in the original warrant has been committed” (70 AD2d, at p 891). Thus, in order to determine whether these intercepted communications relating to the crime of usury should be suppressed, it is necessary to determine when probable cause in respect to that crime first existed, and whether the police sought an amendment as soon as practicable thereafter.

On this record it is clear, as the suppression court found, that the police had probable cause to believe that the Winograds were engaging in criminal usury by July 14, 1983. At that point, the police knew that both Winograds had previously been convicted of criminal usury, that an informant had claimed to have given furs to the Winograds as collateral on usurious loans, and that there had been conversations intercepted between the Winograds which, as the police would later describe in an affidavit seeking preservation of the conversations, made it apparent "that the Winograds [were] together running a business of making and collecting usurious loans”.

Despite the existence on July 14 of probable cause to believe that the Winograds were committing criminal usury, the People did not seek to amend the warrant to preserve the interception of conversations relating to criminal usury until August 1, a delay of 18 days. As a matter of law, such a delay under these circumstances violates the requirement of CPL 700.65 (4) that an amendment be sought "as soon as practicable”. Although such a determination necessarily involves consideration of the facts and circumstances of each case, here, where further conversations relating to the unanticipated criminal conduct were continually intercepted, and the People fail to proffer any reason sufficient to justify the lengthy delay or to demonstrate that an earlier application would not have been practicable (People v O’Meara, supra) the conclusion that the People have failed to comply with the requirements of the statute is compelled. Accordingly, the communications relating to criminal usury intercepted prior to the prospective order authorizing such interceptions, and any evidence derived therefrom, should have been suppressed.

In regard to wiretaps No. 2 and No. 3, defendant claims that the sealing requirements of CPL 700.50 (2) were not met. It is well established that the sealing requirement of the statute must be strictly construed to effectuate the purposes of preventing tampering, alterations or editing of the tapes, aiding in establishing a chain of custody and protecting the confidentiality of the tapes (People v Gallina, 66 NY2d 52, 59, supra; People v Basilicato, 64 NY2d 103, 116, supra; People v Nicoletti, 34 NY2d 249, 253). Although we have upheld a one-day delay in sealing (People v Edelstein, 54 NY2d 306, 310, rearg denied 55 NY2d 878), the general rule is that any delay, if not satisfactorily explained, requires suppression (People v Gallina, supra; People v Basilicato, supra; People v Weiss, 48 NY2d 988; People v Washington, 46 NY2d 116, 125). Moreover, when there has been a delay, a defendant is not required to prove that the tapes were in fact tampered with; rather, it is the People’s burden to offer a satisfactory explanation for the delay (People v Gallina, supra; People v Basilicato, supra).

Here, the eavesdropping warrant authorizing wiretap No. 2 was issued on August 11 and expired on September 9 but was not presented to a Justice for sealing until September 12 and not sealed until September 13. The People offer as an explanation and excuse for the delay the fact that the supervising Justice was unavailable due to religious observance. However, the People offer no explanation for their failure to have the supervising Justice transfer authority to an available Justice despite the fact that the supervising Justice had informed them of his anticipated unavailability two days prior to the expiration date. Moreover, it clearly appears that at other times during the investigation the People succeeded in having authority for supervision of the wiretaps transferred from one Justice to another. As we said in People v Gallina (66 NY2d 52, 60, supra), neither "[inadequate police procedures” nor "unavailability of the issuing justice * * * in a county where several justices are present each business day” constitutes a valid excuse for the failure to timely seal tapes. There having been an unjustified delay in sealing, the intercepted communications contained on wiretap No. 2 as well as any evidence derived therefrom are inadmissible and should have been suppressed.

The eavesdropping warrant authorizing wiretap No. 3 expired on September 24, a Saturday and was not sealed until the following Monday, September 26. Here too, the People offer no excuse for this delay but argue that a Saturday to Monday delay satisfies the statute, relying on People v Edelstein (54 NY2d 306, 309-310, supra), where we upheld a Saturday to Monday delay when there was evidence establishing that the issuing Judge was unavailable on the intervening Sunday. More recently, however, in People v Basilicato (64 NY2d 103, 117, supra), we noted that "the immediate sealing requirement of the statute makes no exception for weekends” reasoning that " ' "[l]aw enforcement does not cease on weekends nor holidays” ’ ” (quoting People v Pecoraro, 58 AD2d 462, 470; People v Guenther, 81 Misc 2d 258, 259). Thus, as in Basilicato (supra), where no excuse is offered for the failure to contact the issuing Justice over the weekend, the delay caused solely by an intervening weekend is not a satisfactory explanation for noncompliance with CPL 770.50 (2) and particularly so, in view of the fact that the People have exclusive control over the determination of the expiration date of the warrant. The intercepted communications in wiretap No. 3, as well as evidence derived therefrom, were thereby rendered inadmissible and should have been suppressed.

In sum, the motion of defendant should be granted to the extent of suppressing the communications relating to criminal usury intercepted prior to the August 8 order authorizing prospective interception of conversations relating to that crime, all conversations intercepted pursuant to wiretaps No. 2 and No. 3 and all evidence derived from this suppressed evidence. We cannot determine on this record, however, to what extent, if any, subsequent wiretap authorizations or search warrants derive from the suppressed evidence and are therefore suppressible themselves. That determination should be made by the trial court on remittitur.

Ill

Finally, defendant argues that the restitution ordered by the trial court pursuant to Penal Law § 60.27 on the criminal usury convictions was excessive. Penal Law § 60.27 (2) requires the court to "make a finding as to the fruits of the offense” and to "conduct a hearing upon the issue [upon request by the defendant]” (see, People v Sommer, 105 AD2d 1052, 1053). Here, no such hearing was held despite defendant’s request nor were the required findings made by the trial court. Thus, we are unable to determine on this record whether or not the restitution ordered by the trial court was excessive. Should there be a conviction upon retrial and restitution ordered, the record should reflect the trial court’s findings (Penal Law § 60.27 [2]).

IV

Based upon the foregoing, the order of the Appellate Division should be reversed, the judgment of conviction vacated, the motion to suppress granted in accordance herewith and the case remitted to Supreme Court, New York County, for a new trial after a determination as to what evidence, if any, was derived from the evidence ordered suppressed herein and is therefore inadmissible.

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

Order reversed, etc.

      . Defendant and her husband were arrested and indicted. The case against defendant’s husband was severed because he was too ill to stand trial. He died in February 1986.

      . Defendant’s claim that the video camera surveillance of the hallway and interior of the premises without a warrant was an illegal search is without merit inasmuch as there are affirmed findings of fact that the landlord shared a common right of control to the property and consented to the surveillance (see, People v Cosme, 48 NY2d 286, 290, 292).

      . The People argue that prior to seeking an amendment of the warrant to preserve conversations relating to an unanticipated crime, the prosecution must not only have probable cause to believe the defendant was committing such crime but must also meet all the requirements for the issuance of an eavesdropping warrant (see, CPL 700.15) including a determination that normal investigative procedures had failed or would be unlikely to succeed (CPL 700.15 [4]). The People’s argument fails to distinguish the requirements for an order prospectively authorizing the interception of communications relating to a crime not originally authorized, which must satisfy all the requirements for the issuance of an eavesdropping warrant (CPL 700.15, 700.20) and an order amending a warrant to preserve conversations already intercepted, albeit inadvertently. In regard to the latter, CPL 700.65 (4) plainly requires the application for the amendment to be made "as soon as practicable” after it is determined that the inadvertently intercepted communication relates to a crime not covered in the original warrant. The likelihood of success of other investigative procedures is irrelevant to this latter determination.

      . That portion of the suppression court’s opinion in which this issue is discussed was edited out of the published version.

      . A second amendment to the eavesdropping warrant issued on July 12 to preserve conversations relating to criminal usury intercepted on July 20, 22 and 29 was made on August 8, 25 days after probable cause was established. Because we conclude that the 18-day delay in seeking the initial amendment failed of compliance with the statutory mandate it necessarily follows that the 25-day delay likewise fails. We would note that no issues concerning the propriety of the portion of the August 8 order authorizing prospective interception of conversations relating to criminal usury have been raised in this court.

      . In light of our determination that the amendments to the eavesdropping warrant issued on July 12 preserving the interception of conversations relating to criminal usury were not sought "as soon as practicable” as required by CPL 700.65 (4), we need not and do not reach defendant’s alternative argument that these conversations were not inadvertently intercepted in that they should have been anticipated.

      . CPL 700.50 (2) provides: "Immediately upon the expiration of the period of an eavesdropping warrant, the recordings of communication made pursuant to subdivision three of section 700.35 must be made available to the issuing justice and sealed under his directions.”

      . Although the terms of the warrant indicate that it expired on September 10, an eavesdropping warrant cannot authorize interception for a period of time exceeding 30 days (CPL 700.10 [2]). Thus, the warrant expired as a matter of law on September 9, 30 days after its issuance.