author: Jasen, J. Wachtler, J. Fuchsberg, J.

text:
    In the Matter of Additional January 1979 Grand Jury of the Albany Supreme Court, Respondent, v Jane Doe, Appellant.
    Argued February 12, 1980;
    decided April 1, 1980

      POINTS OF COUNSEL

      Arthur H. Grae and James M. Rose for appellant.

      Charles J. Hynes, Deputy Attorney-General (Arthur Weinstein of counsel), for respondent.
   OPINION OF THE COURT

Jasen, J.

On this appeal, we are asked to review an order directing a Grand Jury witness to answer questions propounded by a Special Assistant Attorney-General in proceedings being conducted by him pursuant to an executive order of superseder which defines the subject matter of the Attorney-General’s authority only by reference to a numbered file of a pending investigation in the office of the Special State Prosecutor for Nursing Homes.

On December 20, 1978, the Governor, in response to calls of concern expressing the possibility that various crimes may have been committed by public officials in Albany County, issued Executive Order No. 78 (9 NYCRR 3.78) directing the Attorney-General to appear before a term of Supreme Court and a Grand Jury in Albany County for the purpose of managing and conducting proceedings "concerning or relating to any and all unlawful acts or omissions or alleged unlawful acts or omissions by any person arising out of, relating to, or in any way connected with the subject matter of an investigation presently pending in the Office of the Special State Prosecutor for Nursing Homes, Health and Social Services, entitled: People v John Doe, Special Prosecutor’s File Number N Y 9-41” and to supersede the District Attorney of Albany County in such proceedings. The Governor’s authority to issue this executive order has its genesis in his constitutional duty to "take care that the laws are faithfully executed” (NY Const, art IV, § 3) and is specifically provided in an express statutory grant (Executive Law, § 63, subd 2).

Thereafter, a subpoena was issued commanding appellant Jane Doe to attend as a witness before the Grand Jury on January 18, 1979. The record reveals that her testimony would be vital to the successful execution of the Grand Jury’s function, inasmuch as appellant’s prior testimony before a Westchester County Grand Jury indicated her familiarity with the facts and circumstances underlying the Albany County investigation.

Appellant did appear before the Grand Jury on January 18 and was granted full transactional immunity. (See CPL 190.40, subd 2.) Although she answered some of the inquiries addressed to her, numerous lines of questioning were rebuffed with an unequivocal refusal to respond. Faced with this recalcitrance, the special prosecutor applied for an order directing appellant to reappear before the Grand Jury and to answer the questions put to her, or, in the alternative, for an order holding appellant in contempt. By cross motion, appellant sought various relief, including an order quashing the subpoena or directing disclosure to her of documents and papers held by the special prosecutor. Special Term granted an order directing appellant to answer the questions asked of her before the Grand Jury under pain of contempt, and denied appellant’s cross motion.

After remitting this matter twice for further development of the record and additional findings by Special Term, the Appellate Division unanimously affirmed the order of Special Term. That court rejected appellant’s contention that Executive Order No. 78 is so vague and obscure to be deficient on its face, reasoning that "the statute [Executive Law, § 63, subd 2] does not mandate the form such a specification must take.” (69 AD2d 955.) Further, the Appellate Division held that the original subpoena and a subsequent subpoena directing appellant’s appearance before the Grand Jury were properly issued in accordance with the executive order. (71 AD2d 1038.)

Leave to appeal was granted by this court to examine the novel issues raised herein. We conclude that there should be an affirmance.

Although appellant urges reversal by raising numerous contentions on this appeal, we believe only two such arguments have sufficient merit to require discussion. Appellant first challenges the validity of Executive Order No. 78 by claiming that it fails to comply with the specificity requirement embodied in subdivision 2 of section 63 of the Executive Law. That section provides, in pertinent part, that the Attorney-General shall "[w]henever required by the governor, attend in person, or by one of his deputies, any term of the supreme court or appear before the grand jury thereof for the purpose of managing and conducting in such court or before such jury criminal actions or proceedings as shall be specified in such requirement; in which case the attorney-general or his deputy so attending shall exercise all the powers and perform all the duties in respect of such actions or proceedings, which the district attorney would otherwise be authorized or required to exercise or perform; and in any of such actions or proceedings the district attorney shall only exercise such powers and perform such duties as are required of him by the attorney-general or the deputy attorney-general so attending.”

It cannot be disputed that this statutory language contemplates a degree of specificity for it is stated expressly that the criminal actions sought to be investigated "shall be specified in such requirement”. Indeed, this mandate of specificity serves a vital purpose. The grant of authority to the Attorney-General pursuant to subdivision 2 of section 63 of the Executive Law is neither self-executing nor boundless. Rather, the Attorney-General’s authority and that of the special prosecutor designated by him extend only to those matters set forth in the Governor’s order. (Matter of Dondi v Jones, 40 NY2d 8, 19; see Matter of Turecamo Contr. Co., 260 App Div 253, 259.)

In our opinion, this requirement of specificity is satisfied by the Governor’s reference to a numbered file of a pending investigation in the office of the special State prosecutor. The underlying purpose of such requirement — to inform the Attorney-General of the range of his anticipated duties — is fully satisfied inasmuch as the Attorney-General is made aware of the scope of his authority in superseding the local District Attorney. The scope of his authority is limited to those matters relating to, or in any way connected with, the subject matter contained in the investigatory file referred to in the executive order.

Nor can it be said that the Governor’s order of superseder is rendered less specific because the contents of such file are subject to almost inevitable flux. Investigatory or prosecutorial files are, without doubt, everchanging. While the Attorney-General or his designated special prosecutor should never be permitted to expand unilaterally the scope of his authority by increasing the file to encompass matters not included therein at the time the executive order was issued, this is not to say that the file must remain static. Rather, subdivision 2 of section 63 of the Executive Law should be interpreted as limiting the Attorney-General’s authority to those matters relating to, or in any way connected with, the subject matter contained in the special prosecutor’s investigatory file at the time the executive order was issued. A mere change in the contents of the file by adding additional information concerning the matter under investigation does not trigger automatically an increase in authority when so limited.

Further, it should be stressed that the authority exercised by the Attorney-General or his designee is not immune from scrutiny. Such authority can be challenged in the courts and it is within the constant control of the Governor. As Chief Judge Breitel stated when characterizing the nature of an executive order: "An Executive Order is ambulatory, and is alterable or revocable at the pleasure of the Governor. Indeed, on numerous occasions, three Governors have seen fit to reaffirm, amend, or limit the scope of the original Executive Order for various purposes”. (Matter of Dondi v Jones, 40 NY2d 8, 29, supra [dissenting opn].)

In short, we find no impropriety in defining the scope of the Attorney-General’s authority only by reference to a fictitious name and the number of a confidential file. Such reference is not lacking in specificity and serves the demand of subdivision 2 of section 63 of the Executive Law where the subject matter ordered to be investigated is contained in the numbered confidential file.

Underlying appellant’s attack is the more fundamental question whether the executive order must be phrased in such language so as to inform both a prospective witness and his attorney as to the scope of the investigation. Appellant argues, in essence, that given the enigmatic description of the scope of the Attorney-General’s authority embodied in Executive Order No. 78 — subject matter of the investigation entitled "People v John Doe, Special Prosecutor’s File Number N Y 9-41” — no witness summoned before the Grand Jury would be able even to guess at the propriety of the questions asked of him.

Analysis of this issue must commence with the recognition of the function of a Grand Jury. Obviously, the Grand Jury is not charged with the responsibility of determining the guilt or innocence of the accused, but, rather, its primary function "is to investigate crimes and determine whether sufficient evidence exists to accuse a citizen of a crime and subject him or her to criminal prosecution”. (People v Calbud, Inc., 49 NY2d 389, 394.) In this sense, the Grand Jury serves a dual responsibility. As we have only recently observed: "[The Grand Jury] functions to protect the community from disruption by those who elevate and obtain their purely personal desires in ways not sanctioned by society-at-large, while, at the same time, protecting persons from unfounded accusations.” (Matter of Keenan v Gigante, 47 NY2d 160, 167-168; see People v Calbud, Inc., 49 NY2d 389, 396, supra; People v Woodruff, 26 AD2d 236, 238-239, affd 21 NY2d 848; Branzburg v Hayes, 408 US 665, 686-688.)

Also well settled is the rule of law that every person owes a duty to give evidence before the Grand Jury when requested to do so. (Matter of Keenan v Gigante, 47 NY2d, at p 168, supra; People v Woodruff, 26 AD2d 236, 238-239, supra; Matter of Manning v Valente, 272 App Div 358, 364, affd 297 NY 681; see CPL 190.40, subd 1.) The Grand Jury, as an arm of society and the court, can only fulfill its essential function when members of the community are willing to co-operate fully with its requests. As has been observed, "[t]he community is entitled to the assistance and information of its members in seeking out and controlling the commission of crime.” (People v Woodruff, 26 AD2d, at p 238, supra.)

This obligation to come forth with evidence before the Grand Jury is not dependent upon a prospective witness or his attorney being informed of the scope of the investigation. (See, generally, 38 CJS, Grand Juries, § 41, p 1051, n 99.) Certainly, the Governor is not required to broadcast publicly the purpose of the investigation in his executive order, nor is the special prosecutor required to inform a witness of the Grand Jury’s underlying purpose. As explained by then Judge Lehman when writing for this court in Matter of Spector v Allen (281 NY 251, 257): "The grand jury must often conduct investigations to determine whether a crime has been committed, before it is possible for the District Attorney to formulate a charge or to point to any particular person. The successful prosecution of crime would be intolerably impeded if a District Attorney could be compelled to divulge, before he is ready, the nature of an investigation by the grand jury or the name of the person or persons suspected.” Stated another way, "[t]he grand jury is an arm of the court. Its subpoenas are presumptively valid and can only be challenged by an affirmative showing of impropriety. The People are not required to make public disclosure of the purpose of the inquiry in order to obtain compliance with its mandates. No witness may avoid obedience to the directions of the court without establishing by concrete evidence that the subpoena was issued in bad faith or that it is for some other reason invalid. These rules inhere in the very nature of the grand jury’s functions and of its authority.” (Matter of Manning v Valente, 272 App Div 358, 361, supra; see People v Doe, 247 App Div 324, 326, affd 272 NY 473.)

The reason for not requiring public disclosure of the purpose of a Grand Jury’s investigation is both simple and direct, and is indeed analogous to the reasons cited for maintaining the secrecy of Grand Jury minutes, to wit: "(1) prevention of flight by a defendant who is about to be indicted; (2) protection of the grand jurors from interference from those under investigation; (3) prevention of subornation of perjury and tampering with prospective witnesses at the trial to be held as a result of any indictment the grand jury returns; (4) protection of an innocent accused from unfounded accusations if in fact no indictment is returned; and (5) assurance to prospective witnesses that their testimony will be kept secret so that they will be willing to testify freely.” (People v Di Napoli, 27 NY2d 229, 235.) It should be abundantly clear that if public disclosure of the nature of an investigation by the Grand Jury or the identity of the persons under investigation were mandated, the very function of the Grand Jury would be undermined. ,

This is not to say, or even imply, that a witness is required to answer questions having no bearing on the subject matter of the investigation, for it has been consistently recognized that a witness has a right to refuse to answer irrelevant inquiries. (People v Ianniello, 21 NY2d 418, 425; see Matter of Koota v Colombo, 17 NY2d 147, 150.) In a situation where a witness or his attorney harbors a reasonable suspicion that a line of questioning has no bearing on the subject of the investigation, the witness can invoke the assistance of the court to insure the questions’ relevancy. At that point, it is incumbent upon the special prosecutor to demonstrate relevancy. Of course, "the relevancy of the questions need not be conclusively established. It is enough if the 'bearing [of the questions] on the subject of the investigation was susceptible of intelligent estimate’ (Matter of Spector v. Allen, 281 N. Y. 251, 258, supra) or if there was a 'justifiable suspicion that the former is related to the latter’ (People v. Doe [Byk], 247 App. Div. 324, 326, affd. 272 N. Y. 473, supra).” (Matter of Koota v Colombo, 17 NY2d 147, 150, supra.)

A few concluding remarks are necessary. It must be stressed that appellant was granted complete transactional immunity upon testifying before the Grand Jury. She could not be criminally prosecuted as a result of any illegal transaction to which she testified, nor could any of appellant’s responses be used against her in a criminal proceeding, except in a prosecution for perjury or criminal contempt. Further, appellant’s contentions are, as a practical matter, without merit for a review of the transcript of the Grand Jury minutes reveals that appellant was informed as to the nature of the Grand Jury’s inquiry before testifying.

In sum, we hold that the subpoenas were properly issued in accordance with Executive Order No. 78 and that the questions asked of appellant by the special prosecutor would indeed be relevant to the subject matter of the inquiry.

In response to the dissent, only limited observations are required. Referring to a special prosecutor as a power-ladened official whose investigatory and prosecutorial powers are unchecked and whose success "may be measured in the public eye in terms of whether the inquiry results in the filing of criminal charges” is totally inappropriate, and any general characterization in this regard is not accepted by this court. As noted, the authority exercised by the Attorney-General or his appointed prosecutor can be challenged in the courts and is within the constant control of the Governor. Of course, the Governor is directly accountable to the general public for his actions when ordering that a local District Attorney be superseded.

Nor is the single legal authority (People ex rel. Osborne v Board of Supervisors of County of Westchester, 168 App Div 765) cited by the dissent, persuasive or applicable. That case dealt with the limited issue whether an attorney appointed orally by the Governor as a Special Deputy Attorney-General to investigate improprieties relating to the conduct of a State prison could compel the board of supervisors of a local county to pay him for services rendered. In short, we will not read into subdivision 2 of section 63 of the Executive Law a requirement of public disclosure of the purpose of a Grand Jury’s investigation which neither the statute nor any recognized principle of law requires.

Further, dictates of common sense require that we not now depart from the time-tested rule that a special prosecutor need not divulge publicly the purpose of a Grand Jury’s inquiry. To bootstrap the right of a witness not to answer irrelevant inquiries to justify public disclosure of the purpose of an inquiry would unduly hamper investigations and ignores the responsibility of the courts to check the power of the special prosecutor when such authority is, in fact, abused. Relief lies in the courts, and the existence of this independent forum to air claimed wrongs renders any change in the law unnecessary. (See, e.g., Mann Judd Landau v Hynes, 49 NY2d 128; People v Rosenberg, 45 NY2d 251; Matter of Friedman v Hi-Li Manor Home for Adults, 42 NY2d 408; Matter of Dondi v Jones, 40 NY2d 8, supra; Matter of Sigety v Hynes, 38 NY2d 260.)

A concluding remark is necessary in response to both the concurrence and dissent. We refuse to engage ourselves in an academic debate concerning the relative merits of the Grand Jury system in this State. Suffice it to say that such discussion is irrelevant to the issues before us, and any reservations or suspicions individual Judges of this court may harbor with respect to the Grand Jury’s vitality are of no moment, for the Grand Jury is expressly mandated by our Constitution. (NY Const, art I, § 6.)

For the above-stated reasons, the order of the Appellate Division should be affirmed, without costs.

Wachtler, J.

(concurring). Compelling a witness to appear blind and unaided before a secret tribunal is difficult to reconcile with a judicial system which prides itself on having long rejected the methods of the inquisition. Even more disturbing is the fact that the Grand Jury which was originally created to protect the presumably innocent citizen from unfair prosecution has, in modern practice, almost invariably served as an investigative agent for the prosecutor.

The witness in this case has been directed to appear, without counsel, at a Grand Jury proceeding, not open to the public, in order to be questioned about certain unspecified events by a special prosecutor whose authority is cryptically described as extending to matters contained in "File Number N Y 9-41”. This intentionally mystifying procedure is said to be justified by the need for maintaining secrecy in a pending criminal investigation. The witness argues, however, that the degree of secrecy observed in this case undermines her rights to such an extent that the subpoena should be quashed.

There is, of course, no risk that the witness will be compelled to incriminate herself in view of the fact that she has been granted full transactional immunity (CPL 190.40, subd 2). The primary question is whether concealing the scope of the special prosecutor’s authority by reference to a secret file, supplemented only by vague generalization, effectively deprives her of the right to refuse to answer questions which are irrelevant to the matter under investigation (see, e.g., People v Ianniello, 21 NY2d 418, 425; Matter of Koota v Columbo, 17 NY2d 147, 150).

Although the exercise of that right has obviously been made more difficult in this case, I am impelled to concur with the result reached by the majority because there is no showing that the witness has been denied access to the court to be heard on questions to which she objects, or that the prosecutor has in fact exceeded his authority by posing those questions. Should the witness refuse to answer questions held to be relevant, the fact that she was not aware of the scope of the prosecutor’s authority, and thus could not fully argue the relevance issue, would weigh heavily against the prosecutor if he seeks to charge her with contempt. At this stage, however, there is no indication that the refusal to disclose the prosecutor’s authority, although inconvenient, has actually prejudiced the witness’ rights.

That is not to say that the procedure adopted in this case contributes to the public image of a fair and impartial judicial System. This procedural unfairness, however, is a problem best addressed to the Legislature which has prescribed the existing practices. The Legislature should also give serious consideration, as have many of our sister States, toward the eventual elimination of the Grand Jury as a prosecutorial tool to fashion felony indictments.

Fuchsberg, J.

(dissenting). Right from the outset I would stress the compelling fact that the Grand Jury proceedings with which we are concerned here were properly denominated "extraordinary”. They were not undertaken under the auspices of a District Attorney acting within the mainstream of the system on which we rely for enforcement of our criminal law — as were those in all the cases in the majority opinion— but rather by a special prosecutor designated by the Attorney-General at the behest of the Governor pursuant to subdivision 2 of section 63 of the Executive Law. Given that the nature of the special prosecutor’s office subjects him, as hereinafter indicated, to less restraint than a District Attorney, it is especially important in relation to citizens’ rights that his authority be spelled out with clarity.

The distinction is of paramount importance. For, in contrast to a District Attorney, a constitutional officer who must be chosen by the electors of a county (NY Const, art XIII, § 13), the appointed special prosecutor, on statutory authority only, carries out an ad hoc assignment for the conduct of which he is not subject to popular review. The lines of accountability, of course, run, in fact if not always in form, to the Governor, a purely executive and by no means judicial officeholder. So, in other than a Panglossian world, there will generally be perceived a risk that the supersedure will carry in its train no guarantee that politics may not intrude on the prosecutory function (see Note, The Common Law Power of State Attorneys General to Supersede Local Prosecutors, 60 Yale LJ 559, 563).

Relevant also to the nature of the power wielded in this case is the difference between the office of District Attorney, pregnant with quasi-judicial obligations, including the wide latitude to determine whom whether and how to prosecute (see People v Fielding, 158 NY 542, 547; Matter of Hassan v Magistrates’ Ct. of City of N. Y., 20 Misc 2d 509, 511-512 [Shapiro, J.]), and that of the special prosecutor, charged as he is with a particular mission. Indeed, typically, the appointment of the special prosecutor occurs only under extraordinary circumstances which point to some identifiable subject that the appointing authority decides to make the object of probing investigation. In such a targeted inquiry, human experience teaches that, since the success of the appointed prosecutor in some instances may be measured in the public eye in terms of whether the inquiry results in the filing of criminal charges (cf. Matter of Cunningham v Nadjari, 39 NY2d 314, 318; People v Mackell, 47 AD2d 209, affd 40 NY2d 59), he may be tempted, perhaps subconsciously, not to exercise, on sense-of-justice considerations, that degree of discretion to decline to prosecute which is the normal prerogative of any District Attorney. (See Frampton, Some Practical and Ethical Problems of Prosecuting Public Officials, 36 Md L Rev 5, 15.)

So, although the appointment of a special prosecutor has many real advantages — for example, when accusations of corruption taint the investigatory ability of the District Attorney or when the manpower or other resources of individual District Attorneys are inadequate to deal with multicounty criminal activity — his position is simply not subject to the same restraints that act on the District Attorney. Coupled with this are the aggregate of State resources which the special prosecutor will have at his disposal and the everpresent potential that the tremendous investigatory power of the Grand Jury may be employed in derogation of that body’s coordinate function as a shield for individual rights (see Abuse of Power, Staff Report of the Codes Committee of the NY State Assembly [1976], pp 47-50, reprinted in 11 Trial Lawyers Q 99-110). In short, it must always be borne in mind, as the majority seems to forget, that, because of these differences, the substitution of supersedure for the regular channels of prosecution may at times provide occasion for what Justice Brandéis labeled "[t]he greatest dangers to liberty”, namely, the "insidious encroachment by men of zeal, well-meaning but without understanding” (Olmstead v United States, 277 US 438, 479 [dissenting opn]).

Hence, given that concerns of this nature will attend every invocation by the executive of his supersedure power, and that perception may be nearly as important as reality, legislative recognition of the need for some meaningful circumscription on the scope of that authority comes as no surprise. This is reflected in the cautionary provision of subdivision 2 of section 63, which expressly requires that the special prosecutor’s jurisdiction be limited to such "criminal actions and proceedings as shall be speciñed” in the Governor’s executive order (emphasis mine).

It therefore is regrettable that the majority, while conceding that the statutory wording was aimed at delimiting the compass of the authority of the Attorney-General and his designee, the special prosecutor, simultaneously deprives the "specificity” requirement of all practical force by holding that it is satisfied as long as it "inform[s] the Attorney-General of the range of his anticipated duties” (p 18). Thus, goes the majority opinion, the executive order’s reference merely to a confidential numbered file in the office of the Special Nursing Home Prosecutor suffices to make the Attorney-General aware of the scope of the supersedure. Quite clearly, however, this interpretation leaves the statute’s language without meaning since the Governor would, perforce, convey at least this degree of information by the very act of transferring the authority. In other words, the Attorney-General (and the special prosecutor) will always know the range of their powers because at least the substance and, in almost every case, presumably the contents of the file will have been made available to them.

In my view the wording of the statute has a much more reasonable meaning and that is to apprise not only the special prosecutor, but the superseded District Attorney and Judges, Grand Jurors and witnesses of the transfer of authority as well as its boundaries (People ex rel. Osborne v Board of Supervisors of County of Westchester, 168 App Div 765, 767). Without at least some knowledge by the parties of the area of interest in which the special prosecutor has been authorized to act, the extent of his powers cannot be readily ascertained nor, concomitantly, can the invasion of rights be detected. Noteworthy in this regard is the authoritative recommendation of the American Bar Association Project on Standards for Criminal Justice that, to safeguard against arbitrariness, the grounds for a supersedure should be placed on the record by filing them with an official such as the Secretary of State (ABA Standards Relating To The Prosecution Function [Approved Draft], § 2.10, subd [a], Commentary, at p 75). However, we need only say that here it is all too clear that the enigmatic reference in Executive Order No. 78 to a confidential case file identified only by number is not a device calculated to set meaningful limits on the special prosecutor’s power.

For one thing, as the majority candidly admits, the contents of such an investigative file are "subject to almost inevitable flux” (p 18). This makes well-nigh impossible any intelligent scrutiny — except by those acting at the behest of the special prosecutor himself — directed at distinguishing the contents of the file as of the time of the executive order from any post hoc additions or deletions that could conceivably expand the nature of the investigation, even as to persons who were in no way connected with the one against whom the investigation was originally authorized.

But, as most pertinent here, the specification requirement imposed by the statute serves another, albeit related, purpose: to inform the witness summoned before the Grand Jury of the nature of the investigation. To do so is also consonant with the long-standing principle that a Grand Jury witness has the right to refuse in good faith to answer inquiries that have no bearing on the subject matter of the investigation (People v Ianniello, 21 NY2d 418, 425; see Matter of Koota v Colombo, 17 NY2d 147, 150). It cannot be gainsaid that this right takes on added importance in the context of this extraordinary Grand Jury proceeding, conducted under a special prosecutor who purports to act pursuant to a supersedure order.

Yet, how is it that the mere citation to a confidential prosecutor’s file can be thought to afford the witness the means of ascertaining the propriety of the questions asked? The obvious answer is that it cannot. For, how indeed will the witness, informed only in such arcane terms, as a practical matter ever possess what the majority apparently characterizes as the necessary precondition for invoking the assistance of the court to safeguard this right — "a reasonable suspicion” that the line of questioning is irrelevant (p 21)? Certainly, it is no answer to say that the witness at her peril must hazard a guess at the relevancy of a particular question or series of questions and, if she chooses to refuse to respond, be forced, under pain of contempt, to await judicial review after the court’s in camera inspection of the authority-defining file. Moreover, to the extent that the witness must testify "in the dark”, so to speak, her right to consult with counsel in the Grand Jury room (see CPL 190.52) is made nugatory, a result that can only be viewed as completely at odds with the thrust of our Legislature’s recent efforts to enhance the Grand Jury’s historic role as a bulwark against prosecutory abuse (see, generally, Abuse of Power, Staff Report of the Codes Committee of the NY State Assembly [1976]).

Nor may the defective specification in the executive order be cured, as the majority seems to suggest, by the special prosecutor’s recitation, in advance of the witness’ testimony, of his construction of the nature and scope of his authority. While, admittedly, it may be good practice to so advise a witness before even an ordinary Grand Jury (see ABA Standards Relating To The Prosecution Function [Approved Draft], § 3.6, subd [d]; cf. People v Ianniello, 21 NY2d 418, 426, supra), the supersedure statute’s special requirement for "specificity” is telling in the command it exacts as to the contents of the order of appointment. And, even if the prosecutor could permissibly remedy the defect by some preliminary disclosure of the bounds of the inquiry before the Grand Jury, the statement he made to the witness in this case was so vague as to be utterly useless. While, in deference to the constraints imposed by the confidential character of an ongoing Grand Jury investigation, this dissent refrains from setting out the special prosecutor’s statement either in substance or in haec verba, examination of its text reveals that, in generalities which could hardly be more sweeping, it was only incrementally more informative than the terse reference to the numbered case file. Suffice it to say that its statement of geographical location was so hedged with words of limitation as to be practically meaningless, that it specified no time frame and that it provided no particularization of the claimed area of criminal activity (compare People v Ianniello, 21 NY2d 418, 426, supra [purpose of Grand Jury investigation described to witness as to " 'determine if there was in existence a conspiracy to bribe or give unlawful fees to public officials of the City of New York, to wit, the Police Department’ ”]).

True, there is a need for secrecy in what at times may be politically sensitive investigatory proceedings, both to safeguard the reputations of as yet uncharged persons and to protect the integrity of the inquiry itself (see CPL 190.50, subd 7; and Supplementary Practice Commentary, McKinney’s Cons Laws of NY, Book 11 A; Frampton, Some Practical and Ethical Problems of Prosecuting Public Officials, 36 Md L Rev 5, 10-15). Thus, the requirement of specificity imposed by subdivision 3 of section 63 should not be construed to compel the framing of the special prosecutor’s authority in terms of evidentiary material, for instance. However, some reasonable accommodation may be arrived at that will at once preserve the confidentiality of the investigation yet define the confines of the special prosecutor’s authority with sufficient clarity so that "the subject of the investigation [is] susceptible of intelligent estimate” by both the witness and the Judge (Matter of Spector v Allen, 281 NY 251, 258). Notably, in the case before us, there was no claim of a need for secrecy so extraordinary as to justify (if, indeed, there could be justification for) the total absence of any specification of the nature of the inquiry. Nor was any urged to this court or the courts below.

Finally, a word about the concurrence. We cannot accept its concept that the witness is sufficiently protected because she has transactional immunity and will have an eventual right to be heard on the issue of relevance when she is charged with contempt. In view of the fact that the Legislature’s requirement of specificity necessarily had as one of its purposes the protection of a witness against just such burdens, it is neither fair nor proper to impose the fiscal and mental, if not physical, expenditure of human and material resources that such a test of relevancy involves. And, in light of the fact that the concurring opinion takes note of widespread criticism of the Grand. Jury system per se, in circumstances manifesting one of that system’s greatest potentials for abuse it seems to me particularly appropriate that the statutory prescription for specificity be taken at its word.

In sum, because the use of the extraordinary supersedure mechanism carries very real risk, it is of the utmost importance that the procedural safeguards contemplated by subdivision 2 of section 63 of the Executive Law be respected in substance and not merely in form. Since the executive order here is inconsonant with the specificity requirement, in the absence of appropriate and timely definition of its prosecutory authority to the witness, vindication of the statutory safeguards mandates quashing the subpoena. The order of the Appellate Division therefore should be modified to accomplish that result.

Chief Judge Cooke and Judge Gabrielli concur with Judge Jasen; Judge Wachtler concurs in result in a separate opinion; Judge Fuchsberg dissents and votes to reverse in another opinion in which Judges Jones and Meyer concur.

Order affirmed.

      . The record reveals that the District Attorney of Albany County was informed of the contents of Special Prosecutor’s File No. N Y 9-41, and, in fact, joined in the request for a superseder.

      . A review of the transcript of appellant’s testimony before the Grand Jury indicates that she refused to answer some of the questions posed to her on the advice of counsel. We would note that contrary to appellant’s claim, she was afforded ample opportunity to consult with counsel, and, indeed, the record reveals that the special prosecutor was co-operative in this regard.

      . Appellant’s motion for a stay of enforcement of Special Term’s order was granted by the Appellate Division pending the determination of the appeal in that court. This court, upon granting appellant leave to appeal from the unanimous disposition below, also granted appellant’s motion to stay all steps and/or proceedings pursuant to the order of the Appellate Division.

       I am also impelled to note that we could not agree if Judge Jasen’s opinion were to be read as expressing a blanket approval of the Grand Jury system.


source: Caselaw Access Project

author: Fuchsberg, J.

license: Public Domain

text:
    Marine Midland Bank, Appellant, v John E. Russo Produce Co., Inc., et al., Respondents.
    Argued February 4, 1980;
    decided April 3, 1980

      POINTS OF COUNSEL

      Richard W. Cook and John F. Gates for appellant.
    I. A new trial should have been granted on the basis of the jury’s inconsistent finding and failure to render a general verdict. (Hennig v Crocker, 40 AD2d 582; Crawford v Town of Hamburg, 14 AD2d 482; Vathy v Rupp Rental Corp., 43 AD2d 892; Ortiz v Wood, 30 AD2d 636; Reilly v Shapmar Realty Corp., 267 App Div 198; Perez v City of New York, 58 Misc 2d 555; Coulter v Pomeroy, 265 App Div 51; Bergman v Scottish Union & Nat. Ins. Co., 264 NY 205.) II. A new trial should be granted against defendants Canestraro Produce, Andrew and Joseph Russo on the theory of money had and received. (Smith & McCrorken v Chatham Phenix Nat. Bank & Trust Co., 239 App Div 318; Manufacturers Trust Co. v Diamond, 17 Misc 2d 909; Freistat v Industrial Bank of Commerce, 18 Misc 2d 420; Diemer v Diemer, 8 NY2d 206; Dittmar Explosives v A. E. Ottaviano, Inc., 20 NY2d 498; Tinkess v Burns, 24 AD2d 545.) III. There is sufficient evidence in the record to find that Canestraro, Joseph and Andrew Russo are bound by Rita Russo’s acts in signing checks for Canestraro. (Heuertematte v Morris, 101 NY 63; Sam & Sons Produce Co. v Campese, 14 AD2d 487; Lippman Packing Corp. v Rose, 203 Misc 1041; Title Guar. & Trust Co. v Pam, 232 NY 441; B. G. Equip. Co. v American Ins. Co., 41 AD2d 247, 46 NY2d 811; Rockey Riv. Dev. Co. v German Amer. Brewing Co., 193 App Div 197; People v Dean, 48 AD2d 223.)

      Minna R. Buck and Harold P. Goldberg for Canestraro Produce, Inc., and another, respondents.
    I. There was no error in entering judgment for respondents: (a) the jury’s answers to written interrogatories were not inconsistent with each other; (b) the jury’s failure to render a general verdict does not require a new trial. (Vathy v Rupp Rental Corp., 43 AD2d 892; Hennig v Crocker, 40 AD2d 582; Crawford v Town of Hamburg, 14 AD2d 482; Coulter v Pomeroy, 265 App Div 51; Dreyer v Tishman Realty & Constr. Co., 52 AD2d 76; Jacques v Sears, Roebuck & Co., 37 AD2d 121, 30 NY2d 466.) II. The court did not err in refusing to charge the jury on the theory of money had and received. (Dittmar Explosives v A. E. Ottaviano, Inc., 20 NY2d 498; Di Benedetto v Lasker-Goldman Corp., 46 AD2d 909; Westmoreland v Wilgo Realty Corp., 45 AD2d 887; Princiotto v Materdomini, 45 AD2d 883; Motyl v Motyl, 35 AD2d 1051; Breitman v General Motors Corp., 65 Misc 2d 689; Southwick v First Nat. Bank of Memphis, 84 NY 420;
      Loomis v City of Binghamton, 43 AD2d 764, 34 NY2d 537.) III. There is sufficient evidence in the record to support a finding that Rita Russo’s relationship with Canestraro did not charge Canestraro or Joseph Russo with her knowledge about Russo Produce’s accounts. (Simon v Electrospace Corp., 28 NY2d 136; Rudeman v Cowles Communications, 30 NY2d 1; Corrigan v Bobbs-Merrill Co., 228 NY 58; Carpenter v Weichert, 51 AD2d 817; Rudy v Metropolitan Commuters Transp. Auth., 42 AD2d 910; Cone v Acme Markets, 41 AD2d 409; Crowell Corp. v Merrie Paper Co., 35 AD2d 803; Title Guar. & Trust Co. v Pam, 232 NY 441, 233 NY 530; Merchants’ Nat. Bank of Gardner v Clark, 139 NY 314; Brooklyn Distilling Co. v Standard Distilling & Distributing Co., 120 App Div 237, 193 NY 551.)
   OPINION OF THE COURT

Fuchsberg, J.

On this appeal in a suit brought by a bank to impose liability on two of its corporate customers and their officers, we are called upon to pass on issues involving (1) the inference, if any, a trier of the facts in a civil case may draw from a party’s assertion of his Fifth Amendment right to refuse to answer questions posed by his adversary; (2) the imputation of a bookkeeper’s knowledge of a fraudulent scheme to her corporate employer under the principles of the law of agency; (3) the procedures to be employed in moving to amend the pleadings to conform to the proof; and (4) alleged defects in a jury’s verdict in the context of a trial court’s direction that the jury not only return a general verdict but also supply written answers to interrogatories.

Defendant John E. Russo Produce Company, Inc. (Produce), and defendant-respondent Canestraro Produce, Inc. (Canestraro), are engaged in the wholesale and retail produce business in the City of Syracuse. If it be possible for two corporations to be closely related by blood as well as business, these are. Defendants John E. Russo and Rita Russo are the sole shareholders of Produce and the parents of defendant-respondents Joseph Russo and Andrew Russo, who control Canestraro. The firms had common offices and shared produce storage space in the Regional Market in Syracuse, and Canestraro was a principal supplier for Produce. In addition, Rita, the mother, was a salaried, part-time bookkeeper on Canestraro’s payroll, as well as an authorized signatory — along with her sons Joseph and Andrew — on the checking account Canestraro maintained with plaintiff-appellant Marine Midland Bank.

The bank has accused the defendants of "check kiting”, a practice in which checks are drawn against deposits which have not yet cleared through the bank collection process (see Black’s Law Dictionary [5th ed], p 783). The specific transactions that led to this suit allegedly commenced in July of 1976. At that time Produce had checking accounts at Marine Midland and Citibank, both of which were set up on a "pay and refer” basis, under which any item that would create an overdraft in the account was not immediately dishonored, but held until the bank’s branch manager received assurances from Produce that an adequate deposit to cover had been made. If such assurances were forthcoming before the bank’s "midnight deadline” arrived (see, generally, David Graubart, Inc. v Bank Leumi Trust Co. of N. Y., 48 NY2d 554, 556-558), the item would be paid.

The purported kite had its genesis in Produce’s practice of covering its Marine Midland overdrafts by depositing checks drawn on its Citibank account. For its part, Canestraro, too, allegedly would, on occasion, cover overdrafts on its own account with a Produce Citibank check. The plot thickens with the detail that the Citibank account itself was often low on funds, a problem Produce would patch up by, in turn, giving Citibank a check drawn on its Marine Midland account. The essence of plaintiff’s contentions, then, is that Produce was banking on the lag time in the check collection process and did so successfully until January of 1977, when, Citibank having had occasion to dishonor several checks made out by Produce to itself, this checking house of cards collapsed. In the aftermath, Marine Midland, which had already paid out the items the Citibank checks were intended to cover, found itself with a deficit that had snowballed to $309,800.

This action for fraud and conversion followed. In the ensuing 21-day jury trial, as part of its own case Marine Midland called John and Rita Russo, in turn, to the stand. Upon the advice of their own counsel, and in light of an ongoing FBI investigation of the transactions, however, each invoked the privilege against .self incrimination when queried about whether he or she had signed any of the checks, had directed others to do so or had known there were then insufficient funds in the accounts to cover them. Over objection, the court later charged the jury that no inference adverse to these defendants could be drawn from their refusal to answer.

Exception was also taken to the court’s failure to charge that the bank could recover on a theory of "money paid out by mistake”. In this connection, it is relevant, that though, as indicated, the pleadings asserted causes of action in fraud and conversion only, at the close of the bank’s case the court granted its unparticularized motion to conform the pleadings to the proof.

The verdict’s form also gave rise to controversy. Pursuant to CPLR 4111 (subd [c]), the jury had been directed not only to return a general verdict but also to supply written answers to 12 interrogatories, the first 10 of which were to specify whether each of the five remaining defendants — John, Rita, Produce, Canestraro and Joseph — were liable, first in fraud and then in conversion. The eleventh inquired in what amount, if any, the jury determined that Marine Midland had been injured, and the last whether the bank’s claims had been satisfied by a demand note of Produce personally indorsed by John and Rita.

The answers to each of the first 10 interrogatories found the defendants free from liability, while the eleventh, in an answer the bank insists was inconsistent with the first 10, nevertheless fixed its loss at $309,800. The twelfth interrogatory went unanswered, and the clerk never inquired of the jury whether it had reached a general verdict.

When the jury announced these conclusions, and before it was discharged, the bank, in moving to set aside the verdict, in essence confined itself to arguing that the answers to the interrogatories were inconsistent with one another. It did not object to disbanding the jury. It was not until two days later, when Marine Midland tendered its formal postverdict motions under CPLR article 44, that it also contended that the jury should have been asked to clarify its answers and that the absence of a general verdict was a fatal defect. The Trial Judge denied the motions in their entirety.

However, the Appellate Division reversed the judgment in favor of John, Rita and Produce and ordered a new trial as to these defendants, primarily on the ground that the trial court had erred in charging the jury that the invocation of the Fifth Amendment was not to be taken into account in weighing the evidence. On the other hand, the judgment was affirmed as to the Canestraro corporation and Joseph individually, the court finding that "there was sufficient evidence for the jury to conclude” that Rita performed only "mechanical” bookkeeping tasks for Canestraro and that, therefore, her awareness of the kite was not to be imputed to it or its managing officer (65 AD2d, p 952). For the reasons that follow, we conclude that the bank is also entitled to a new trial against Canestraro.

We begin by observing that the trial court acted well within its power in posing the interrogatories it submitted to the jury. Doing so, it employed a technique especially well suited to cases with multiple parties and legal theories (see, e.g., Dore v Long Is. R. R. Co., 23 AD2d 502; cf. People v Piazza, 48 NY2d 151, 165).

Moreover, the options available to a Judge who has followed such a course, when confronted with apparent inconsistencies in a jury’s determinations under this hybridization of general and special verdicts, are controlled by CPLR 4111 (subd [c]). The design of this section was alleviation of injustices not infrequently produced by the prior ad hoc approach to inconsistent verdicts (see, generally, Kennard v Welded Tank & Constr. Co., 25 NY2d 324; Siegel, Supplementary Practice Commentaries [1969], McKinney’s Cons Laws of NY, Book 7B [Supplementary Pamphlet, 1964-1979], CPLR 4111, pp 85-86). In the main, it provides that, if a jury’s answers to interrogatories are consistent with one another, but one or more is in conflict with the general verdict, the court has discretion to order a new trial or require the jury to reconsider or enter judgment according to the answers. But, if answers are inconsistent with one another and one or more conflicts with a general verdict, the court’s alternatives are limited to ordering reconsideration or a new trial.

In terms of the case before us, while, of course, an explicit direction to the jury that it render its general verdict on the basis of its answers to the interrogatories might have been a wise precaution militating against inconsistency, Marine Midland’s challenge to the result is ultimately defeated in any event on the threshold ground that the answers were in fact completely consistent. The jury unequivocally found no liability on the part of any defendant. And, its answer to question 11, while fixing the amount of the bank’s loss, was by no means to be taken as an allocation of responsibility to the defendants, an assumption that would have been at odds with the definitive determinations that preceded it.

Nor was the jury’s failure to report a general verdict fatal. Even if the bank had timely complained of its absence and a verdict adverse to the defendants had thereafter been pronounced, CPLR 4111 (subd [c]) would still have permitted the court to prefer the specific over the general by entering judgment in accordance with the answers the interrogatories had induced. Even more dispositively, we need not dwell on these hypotheses, for Marine Midland must be deemed to have waived its objections by failing to press them when it would have been possible to prevent or correct the "error”. For, as indicated earlier, the bank neither pointed out the probably inadvertent failure to state a general verdict on the record nor requested that the jury be instructed to reconsider the case before it was discharged and beyond recall.

Similarly unavailing to Marine Midland is its assertion that the court should have instructed the jury on the theory of money paid out by mistake. No retreat from the policy of liberality in allowing pleadings to be conformed to proof (see, e.g., Diemer v Diemer, 8 NY2d 206; Dittmar Explosives v A. E. Ottaviano, Inc., 20 NY2d 498) is sounded by our insistence that such a request — and any objection to its denial — be sufficiently focused to permit the Trial Judge and opposing parties to do more than guess at the precise nature of the change to be effected. In the case before us, plaintiff neither specified in what manner the proof varied from the pleadings nor suggested the alternative theories in its favor to which the defendants would now need to be alert. Rather, silence reigned supreme until the requests to charge were submitted, and very few decibels were registered when, after the jury had been instructed, plaintiff summarily and uninformatively asked that the court "charge in the language of what we [sic] requested and those requests which are not charged”. Surely, a court need not reroute the course of an entire trial without being given a chance to take a look at the pig in a poke it is being asked to buy. And, since there is to be a new trial, we add that the legal merits of such a cause of action will, we assume, be delved into at nisi prius on a motion to amend made anew by the plaintiff, if it be so advised, in the context of whatever proof or offer of proof it then relies on.

This said, our concurrence in the rationales adopted by the Appellate Division ends when we turn to the court’s charge on the Fifth Amendment. Whether a jury in the context of a conventional civil case may be instructed to consider a party’s invocation of the privilege against self incrimination when called to the stand has not previously been addressed by this court. Nonetheless, rulings on closely related issues trace a well-marked path to the answer. So, we have long held that an attorney’s failure to testify in his own behalf in a disciplinary proceeding may count against him (Matter of Randel, 158 NY 216, 219; see, also, Matter of Gelman, 28 AD2d 1211), and we have even concluded that a grant of immunity coextensive with the privilege will not preclude the use of Grand Jury testimony in a disbarment proceeding (Matter of Anonymous Attorneys, 41 NY2d 506).

If the underlying policy of the privilege — to protect the individual from oppression at the hands of a State exercising its awesome powers of investigation to ferret out wrongdoing (see Baxter v Palmigiano, 425 US 308, 334-335 [Brennan, J., dissenting in part]) — may not shield one who is the target of a quasi-criminal disciplinary proceeding which may bring on the penalty of disbarment, simple logic leads to the conclusion that a like result would obtain in a purely civil case (cf. Lefkowitz v Turley, 414 US 70 [cancellation of government contracts]). That is certainly so here where the parties are on an equal footing and the only disadvantage threatened is liability to compensate an adversary for damages. We therefore decline to extend to civil cases a rule originally designed as a safeguard in criminal prosecutions (see, e.g., Griffin v California, 380 US 609; see, also, 8 Wigmore, Evidence [McNaughton rev, 1961], § 2272, subd [e], p 439, n 14).

Essentially, then, the issue becomes one akin to that arising when a party fails or refuses to produce a material witness who is within his control (see Richardson, Evidence [10th ed— Prince], § 534). It is now well established that such an event may be considered by a jury in assessing the strength of evidence offered by the opposite party on the issue which the witness was in a position to controvert (People v Rodriguez, 38 NY2d 95, 101; cf. Matter of Cohen, 7 NY2d 488, 501, affd sub nom. Cohen v Hurley, 366 US 117, overruled on other grounds in Spevack v Klein, 385 US 511). Accordingly, we conclude that the court’s charge was in error.

In so ruling we are in agreement with the Appellate Division; our paths diverge, however, when we reach the question of how the trial court’s error affects Canestraro and Joseph Russo. The test for determining whether the erroneous instruction was harmless is not whether the jury might possibly have adopted a view of the facts that rendered it legally irrelevant — the thesis apparently propounded by the Appellate Division in concluding that there was sufficient evidence for the jury to say that Rita’s services for Canestraro were too ministerial to serve as a basis for imputing her knowledge of the scheme to it. The correct rule is that an error is only deemed harmless when there is no view of the evidence under which appellant could have prevailed (2A Weinstein-KornMiller, NY Civ Prac, par 2002.03, p 20-12).

That cannot be said to be true here as to Canestraro because its exculpation might have been based on the jury’s conclusion that Rita, who signed most of the checks, was unaware of the deficit balances in the accounts, a determination it might not have reached had there been a correct charge on the consequences of her assertion of her privilege against self incrimination.

Furthermore, no doctrinal obstacle bars Canestraro’s corporate liability as a matter of law. It is the bank’s position that this liability arises from Canestraro’s agents’ drawing of checks on its own account at Marine Midland with knowledge that the balance was composed in part of kited funds. It is fundamental that a knowing misrepresentation is an essential element of a cause of action for fraud (e.g., Jo Ann Homes v Dworetz, 25 NY2d 112, 119).

The means by which scienter may be imputed to Canestraro is crucial here, however. In general, the imputation of knowledge from agent to principal flows naturally from the assumption that the agent will live up to the duty to act in the principal’s interest in light of all the pertinent information he has acquired (see Restatement, Agency 2d, § 272, Comment a; Title Guar. & Trust Co. v Pam, 232 NY 441, 456-457; Corrigan v Bobbs-Merrill Co., 228 NY 58, 67-72). But this premise crumbles when the agent has an interest adverse to the purported principal. Then the knowledge of the agent acting on his or her own behalf or on behalf of a second principal is not imputed to the first (Hartford Acc. & Ind. Co. v Walston & Co., 21 NY2d 219, 225-226; Reuschlein & Gregory, Agency & Partnership, § 62). While, in general, a bookkeeper responsible for the deposit of kited funds into her employer’s account would have a strong enough motive to conceal that fact for her interests to be deemed adverse to that of her principal, the relationship between the corporations and the individuals here was so close that we agree with the trial court that the existence of an informational barrier became an issue of fact. Accordingly, Marine Midland will again be. entitled to have the jury resolve the question at the new trial.

That does not mean that a factual determination that Rita’s interests were adverse to Canestraro’s would necessarily preclude the bank from seeking refuge in the equitable doctrine prohibiting unjust enrichment. A principal that accepts the benefits of its agent’s misdeeds is estopped to deny knowledge of the facts of which the agent was aware (Rockey Riv. Dev. Co. v German Amer. Brewing Co., 193 App Div 197; Restatement, Agency 2d, § 282, subd [2], par [c], Comment 1). Here, though Canestraro contends that it was not unjustly enriched because the funds it received from Produce were in consideration of goods actually sold to the latter, the intimate intertwining of the two firms combines with the permissible inferences that flow from Marine Midland’s analysis of Produce’s and Canestraro’s account books to raise factual questions that are not to be cavalierly ignored.

Joseph Russo’s individual liability is another matter. As a general proposition, corporate officers and directors are not liable for fraud unless they personally participate in the misrepresentation or have actual knowledge of it (see Lippman Packing Corp. v Rose, 203 Misc 1041; 12 NY Jur Rev, Corporations, § 803). Mere negligent failure to acquire knowledge of the falsehood is insufficient (Personal Liability of Officers or Directors of Corporation on Corporate Checks Issued Against Insufficient Funds, Ann., 47 ALR3d 1250, 1254; see Jones v Freeman’s Dairy, 283 App Div 806).

Since the theory that Joseph actually knew of the misrepresentation was necessarily encompassed by the case as presented to the first jury, isolated as it was by the court’s submission of separate interrogatories as to his liability, the answers in his favor must be deemed a finding that he had no such knowledge. If it were reasonable to conclude that this finding might have been induced by the jury’s misperception of the evidence under the guidance of the court’s erroneous charge, a reversal would, of course, be mandated. Such is not the case here, however, because there could have been no causal relationship between error and finding. Under proper instructions the jury would have been informed it could consider John’s and Rita’s refusals to answer in evaluating the other evidence against them. Since the privilege is personal to witnesses who assert it, they, and they alone, would have to bear the consequences of their own decisions (see Richardson, Evidence [10th ed — Prince], § 533). But, Joseph is immune from such a burden because he did not invoke the Fifth Amendment or direct his parents to do so (2 Wigmore, Evidence [Chadbourn rev, 1979], § 286, pp 199-201).

Moreover, John’s and Rita’s refusals were interposed to questions that essentially related to their personal knowledge of the kite. Since the fact that checks were drawn against artificially inflated balances was undenied and undeniable, it cannot be argued that the jury was misled into exculpating Joseph by an erroneous charge on an issue relating solely to the liability of other defendants in the case. While Joseph’s knowledge would have been sufficient to cast him in liability irrespective of the culpability of any other party, the jury having found as a fact — and the Appellate Division having since affirmed — that this prerequisite to his personal accountability for acts on behalf of the corporation he owned and managed was not met, it is now beyond our review (NY Const, art VI, § 3, subd a; Estate of Canale v Binghamton Amusement Co., 37 NY2d 875).

Accordingly, the order of the Appellate Division should be modified in accordance with this opinion and, as so modified, affirmed.

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

Order modified, with costs to plaintiff against defendant Canestraro Produce, Inc., and to defendants Andrew and Joseph Russo against plaintiff, in accordance with the opinion herein and, as so modified, affirmed.

      . The court dismissed the complaint as to Andrew for failure of proof, and the bank does not now argue that its case against Andrew was any stronger than that against Joseph, which is discussed infra.

      . In addition, the court ruled that a cause of action in conversion did not lie against the defendants, a determination we have no occasion to review since Marine Midland does not challenge it.


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

text:
    Thomas E. Malloy, Appellant, v Douglas A. Trombley, Respondent.
    Argued February 14, 1980;
    decided April 3, 1980

      POINTS OF COUNSEL

      Victor A. Rossetti for appellant.
    The Court of Claims finding of contributory negligence on the part of plaintiff after a full and fair opportunity to litigate that issue is a bar to .plaintiff’s action. (Gross & Son v State of New York, 243 NY 629; Matter of Tierney v State of New York, 55 AD2d 158; Planty v Potter De Witt Corp., 27 AD2d 401; Hires v New York Cent. R. R., 24 AD2d 1075.)

      Morgan L. Jones, Jr., for respondent.
    I. The issue of claimant Malloy’s possible contributory negligence was not "necessarily” decided in the Court of Claims. (Schwartz v Public Administrator of County of Bronx, 24 NY2d 65; Vincent v Thompson, 50 AD2d 211; Serrano v Flight Motel, 95 Misc 2d 669.) II. In the Court of Claims action, the claimants did not have a full and fair opportunity to litigate their causes of action vis-á-vis each other.
   OPINION OF THE COURT

Jones, J.

The finding by the Court of Claims, when it dismissed his claim against the State of New York, that plaintiff was contributorily negligent and that his negligence was a substantial factor in causing the accident, bars recovery by him in the present action.

On the evening of October 13, 1974, Douglas A. Trombley, defendant herein, was driving north on Purdy Road, a two-lane, unlighted rural highway in Niagara County, New York. At about 10:30 p.m. he stopped his automobile either on the easterly shoulder of the road or partially on the shoulder and partially in the northbound lane, turned off the lights and began a conversation with his passenger who later became his wife. Shortly thereafter, Trooper Britt, on routine patrol traveling south on Purdy Road, noticed the unlit vehicle and brought his patrol car to a stop opposite the Trombley car, partially on the highway. The trooper left his headlights on and may have activated his emergency lights. He left the patrol car, approached the Trombley car and began questioning its occupants. He then observed an automobile, driven by Thomas E. Malloy, plaintiff herein, approaching from the south in the northbound lane at what he later testified was a normal, although constant, rate of speed, apparently not going to stop or otherwise avoid a collision with the Trombley automobile. The trooper shouted to the passengers in the Trombley car to "get down” and ran for cover behind his patrol car. The Malloy vehicle continued in the northbound lane, its driver unaware of the presence of the Trombley car, and struck the rear of the Trombley car. Both Trombley and Malloy suffered serious injuries.

Malloy and Trombley sued each other in Supreme Court and both filed claims against the State of New York in the Court of Claims, based on alleged negligence on the part of Trooper Britt. The two claims against the State were tried jointly, and after a five-day trial before The Honorable Jeremiah J. Moriarty, the court, which was aware of the pending Supreme Court actions, held both that each claimant had failed to prove negligence on the part of the State and that each was guilty of contributory negligence barring recovery against the State. No appeal was taken by either claimant from the decision of the Court of Claims.

Defendant Trombley thereafter served a supplemental answer in the Supreme Court action against him and moved for summary judgment on the ground that the finding of contributory negligence on the part of Malloy by Judge Moriarty barred recovery by him as plaintiff in his Supreme Court action. Supreme Court denied the motion, but the Appellate Division unanimously reversed and granted summary judgment dismissing the complaint. We now affirm that disposition.

The question before us is one of issue preclusion, sometimes referred to as collateral estoppel, inasmuch as the disposition in the Court of Claims was not made in the course of prior litigation between the same parties but in prior litigation between one of those parties, Malloy, and a third party, the State of New York. The critical question is what effect should be given in the present action to the finding in the Court of Claims action of contributory negligence on the part of Malloy.

Appellant Malloy and the dissenters would invoke the recognized principle that conclusive effect is not to be accorded a finding which is but an alternative ground for the prior court’s decision because it cannot be said to have been essential to the judgment rendered (see Restatement, Judgments 2d, § 68, especially Comment i [Tent Draft No. 4 (April 15, 1977)], pi et seq., pp 11-13), and would apply that principle rigidly to deny issue preclusion in the present instance. We are persuaded that to do so would be improperly to ignore the substantive worth of the finding of the Court of Claims in this instance.

It is entirely accurate to observe that the disposition in the Court of Claims was predicated both on its conclusion that there had been no proof of negligence on the part of the State of New York and on its further finding that claimant Malloy had been contributorily negligent. Indeed in introducing that portion of his decision dealing with contributory negligence on the part of the two claimants, Judge Moriarty forthrightly noted that he proceeded to those issues, "Although unnecessary to a decision herein”. Under a strict application of the alternative determination exception to the rule of issue preclusion, neither the finding of no negligence on the part of the State nor the finding of contributory negligence on the part of the claimant would subsequently be given conclusive effect, for in a logical analysis either finding standing independently would have been sufficient to support the decision of the court; each was a literal alternative. Mechanical application on the basis of such analysis would fail to take into account the vitality of the rationale behind the doctrine of issue preclusion.

There can be no doubt in this instance that the issue of Malloy’s contributory negligence was actually and fully litigated. Although it is true that Malloy and Trombley did not stand toe-to-toe in the Court of Claims, Malloy’s incentive vigorously to oppose a finding of contributory negligence was no less there than it would be in the present Supreme Court action. No suggestion is now advanced that he was in any way handicapped or inhibited in his address to the issue in the Court of Claims; he had full opportunity there and no heavier burden to establish his freedom from contributory negligence with respect to defendant State in that action than with respect to defendant Trombley in the present action. None of the grounds recognized for other exceptions to the general rule of issue preclusion are to be found in this case (see op. tit., § 68.1, p 27 et seq.).

The justification for the alternative determination exception to the general rule is said to be that "the determination in the alternative may not have been as carefully or as rigorously considered as it would have been if it had been necessary to the result, and in that sense it has some of the characteristics of dicta” (op. tit., § 68, Comment i, p 12). The care and attention devoted to the issue by Judge Moriarty in this instance saps such a contention of any vitality. "Although unnecessary to a decision herein, we note that, based upon the evidence presented at trial, neither claimant appears to have established the requisite freedom from culpable conduct necessary for success in a cause of action for negligence which accrued prior to September, 1975. * * * Insofar as the conduct of Mr. Malloy is concerned, there is little direct evidence, apart from the testimony of Trooper Britt as to his brief observations of the approaching vehicle just prior to the collision and the demonstrative photos of the condition of the vehicles thereafter, from which we can infer what observations Mr. Malloy made or actions he took as he approached the scene. Mr. Malloy did not testify at the trial since he is a man of advanced years and has been institutionalized continually since the accident. We are aware that, under the evidentiary rules of Noseworthy v City of New York, 298 NY 76, 80 NE2d 744, and Schechter v Klanfer, 28 NY2d 228, 321 NYS 2d 99, while the burden of proof does not shift on the issue of contributory negligence, the degree of proof necessary to make out a prima facie case on that issue is diminished in a situation such as the one at bar. Nevertheless, it is clear that the tremendous impact with which Mr. Malloy collided with the Trombley vehicle indicates that he proceeded at a high rate of speed towards the scene despite the warning lights from Trooper Britt’s car which should have prompted Mr. Malloy to proceed with caution. Therefore, Mr. Malloy’s conduct on the night of October 13, 1974, can hardly be characterized as reasonable, and he also was chargeable with contributory negligence which bars recovery.”

No persuasive argument is now put forward to support the relevance to this case of the suggestion in the Restatement that, inasmuch as a losing party might be dissuaded from taking an appeal because of the likelihood that an appellate court would sustain at least one of two or more alternative grounds on which the decision below had been predicated, such alternative determinations might not be exposed to appellate review (a safeguard as to their correctness), and therefore the rule of issue preclusion should not be applied to them. Nor is any argument now based on the related notion that there might similarly be little motivation to take an appeal from an alleged error which had no effect on the judgment. Indeed in the context of negligence litigation involving interrelated fact situations these suppositions may be unrealistic. As to the suggestion that to require Malloy to have appealed would be to waste judicial time, it appears that an appeal would be less time consuming and at a less beleaguered level of our court system than would be true in consequence of the new trial which the dissenters would grant.

But there is another element of validating authenticity to Judge Moriarty’s alternative finding of contributory negligence on the part of each claimant. It is accurate to observe, of course, that the dismissal of the claims could have been upheld on appeal had the appellate court affirmed the trial court’s finding of no negligence on the part of the State. That, however, in the circumstances presented could not be considered a foregone conclusion, especially in view of the broader authority of the Appellate Division to substitute its view of the facts on an appeal from a decision of the court following a nonjury trial in the Court of Claims than would be true on appeal from the verdict of a jury. From all that appears, it seems likely that Judge Mori arty thought it prudent in the discharge of his judicial responsibility, following the five-day trial, to make full-blown findings both on the issue of negligence and on the issue of contributory negligence. In the event that the Appellate Division were to disagree on the finding of no negligence, the appeal could still be properly disposed on the basis of the court’s finding of contributory negligence, without the necessity of remittal for a new trial.

For the reasons stated, and without intending to enunciate any broad rule, we hold in this instance that the rule of issue preclusion is applicable notwithstanding that in a precise sense the issue precluded was the subject of only an alternative determination by the trial court. The issue was fully litigated, and the party precluded had full opportunity to be heard and was in no way, motivationally or procedurally, restricted or inhibited in the presentation of his position. Additionally, and critically in our view, the decision of the trial court gives significant internal evidence of the thorough and careful deliberation by that court, both in its consideration of the proof introduced and of the applicable law, and the determination made, although recognized to be an alternative, served a substantial operational purpose in the judicial process, thus negativing any conclusion that the trial court’s resolution was casual or of any lesser quality than had the outcome of the trial depended solely on this issue. (Sheldon v Edwards, 35 NY 279.) We distinguish Halpern v Schwartz (426 F2d 102, 106) in which it was held that "when a prior judgment adjudicating one a bankrupt rests on two or more independent alternative grounds, it is not conclusive as to issues in trial of objections to discharge which issues were necessarily found in order to establish only one of those grounds”. The court reasoned that it would be particularly unwise to apply the rule of issue preclusion to determinations made in the predischarge stages of bankruptcy litigation. (See, also, Developments in the Law — Res Judicata, 65 Harv L Rev 818, 845-847.)

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

Fuchsberg, J.

(concurring). As my colleagues’ comments note, the conclusiveness of the effect to be accorded alternative determinations has long been the subject of debate. And, since it is agreed that resolution of this issue should turn on considerations of fairness and justice, it seems to me that an inflexible or, as Judge Jones would term it, a "mechanical” rule in such cases would be undesirable. Instead, while it seems fair to say that any serious doubt that a party has had his day in court ordinarily should be resolved to defeat a claim of estoppel, where it is clear that an alternative issue has been the beneficiary of all the advantages the litigation and decisional processes intend, collateral estoppel effect should not be withheld.

As I read the majority opinion, it lays down no broader rule and, consistent with its import, ties the result to the particular facts and circumstances in this case. My own analysis of these facts, in which I find cause to underline Judge Jones’ own emphasis on the interrelatedness of the role of the three participants and the inevitability of the Trial Judge’s need to evaluate the conduct of each, brings me to the same point. Some elaboration of the considerations which here informed my judgment follow.

The first of these is the unhurried and painstaking care with which, as the record reveals, the Judge conducted all phases of this five-day trial. Moreover, there was nothing complex about the case, centering as it did on a garden variety collision between two motor vehicles in circumstances that left little room for factual dispute. One of the vehicles had been parked, lights out, along an unlit country road in the dead of night; struck from the rear, its driver observed little that preceded the impact. The second automobile, without its driver having slowed its speed or otherwise maneuvered to avoid what its headlights presumably revealed in its path, struck the first car with great force; its driver’s infirmities later would render him unavailable to testify. The chief eyewitness therefore was the State trooper who, in the course of his patrol in the opposite direction, had stopped to investigate the presence of the parked car.

In this factual frame of reference, however it might be legally compartmentalized into elements of negligence and contributory negligence, on liability the Trial Judge’s job was to fix the blame for the accident. In deciding the question— passing on whether any one of the participants had acted without due care and separating out the contribution each had made from that of the others — it is well-nigh inconceivable that he could have arrived at a conclusion as to the existence of negligence or lack of negligence on the part of one of the parties and not done so at the same time as to the others. Thus, absent a more definitive statement to that effect, in the light of his conclusion that the State had not been negligent it is unrealistic to take the Judge’s accurate recital that his findings that Malloy and Trombley were contributorily negligent were "unnecessary to a decision” as any indication that he had not arrived at firm findings of fact on these issues. To the contrary, as I have previously suggested, the qualitatively and quantitatively interrelated conduct of the three participants in the simple event which the Judge was called upon to unravel almost of necessity would have forced him to simultaneously evaluate the negligence of each.

Pragmatically, the Judge’s finding that Malloy and Trombley were each contributorily negligent is not open to any serious dispute. From the beginning, their respective roles in the collision left little question but that each, though perhaps not in equal degree, would not be held blameless. Putting aside their vulnerability to allegations of common-law negligence, motor vehicle code requirements — that cars parked or stopped between sunrise and sunset be lit (e.g., Vehicle and Trafiic Law, § 375, subd 5) and that vehicular headlamps be sufficient to "reveal any person, vehicle or substantial object * * * for a distance of at least three hundred feet” (Vehicle and Trafiic Law, § 375, subd 3) — made the drivers ready prey to the hornbook rule that the violation of a statute or ordinance is at least some evidence of negligence (Martin v Herzog, 228 NY 164, 169 [Cardozo, J.]).

In these circumstances, when Trombley and Malloy each elected to sue the State, they knowingly put these very questions on the line, for, in reason, they could not have assumed these would not be litigated and therefore had to be prepared to meet them with full force in the Court of Claims. In thereby inviting initial determination of the merits of these issues by a Judge sitting without a jury, they had to have understood that the appraisal of the reasonableness of their own conduct conceivably would be made with more, and therefore possibly fatal, meticulousness than perhaps at times might be employed by lay fact finders.

Finally, as to the contention that a decision resting on alternate determinations may discourage dissatisfied litigants from pursuing appeals, putting aside judicial economy (to which, as desirable a goal as it may be, we all agree justice should not defer), suffice it to say that, whatever consideration the practical availability of appeal might deserve in some other factual context, in this case it cannot tip the scales.

Consequently, I vote to affirm.

Gabrielli, J.

(dissenting). I respectfully dissent, for I cannot agree that a factual determination characterized by the finder of fact as "unnecessary to a decision” should be accorded conclusory effect in a subsequent action.

The conclusion reached by the majority of this court is premised upon the perception that the decision of the Court of Claims was grounded upon two alternative determinations: that the State was not negligent, and that both Malloy and Trombley were negligent. Thus, the majority devotes its attention to the question whether issue preclusion principles are applicable to both of two alternative grounds for a decision. Although this question is of considerable academic interest and has been the subject of some dispute (compare Restatement, Judgments, § 68, Comment n, with Restatement, Judgments 2d [Tent Draft No. 4], § 68, Comment i), I do not consider it to be relevant to the disposition of this appeal, for I cannot agree that the Court of Claims decision in the prior case was truly based upon alternative grounds. Rather, as is specifically stated in the opinion of the Court of Claims, the decision in that case was premised upon the determination that the State was not negligent, and the finding of contributory negligence was not necessary to the ultimate result. Thus, the finding of contributory negligence was not an alternative basis for the holding, but rather was a factual determination not essential to the judgment. Accordingly, that determination does not preclude litigation of the contributory negligence issue in the context of the present action (see Restatement, Judgments 2d [Tent Draft No. 4], § 68, Comment h; accord Restatement, Judgments, § 68, Comment o; 5 Weinstein-Korn-Miller, NY Civ Prac, par 5011.28).

It is often rather difficult to determine whether a particular judgment is based upon two alternative grounds, or whether in fact there exists only one ground for the decision and the discussion of other possible routes to the same end is no more than a sort of "factual dicta” (see Developments in the Law— Res Judicata, 65 Harv L Rev 818, 845-847; see, also, Hinchey v Sellers, 7 NY2d 287). In the instant case, however, this potential quandry has been avoided by the frank declaration in the opinion of the Court of Claims that the discussion of contributory negligence was "unnecessary to a decision”. I see no reason to reject that court’s own characterization of its treatment of the contributory negligence issue, for it is the fact finder which is in the best position to know whether it has made a factual determination on the basis of that careful thought and close consideration which is necessary for proper resolution of a dispute, or whether the statement merely serves as an additional justification for a decision actually premised upon other grounds. Since the Court of Claims has specifically declared that its finding of contributory negligence was not the basis of its decision, I see no justification for giving that unnecessary determination conclusory effect in the instant litigation.

Accordingly, I vote to reverse the order appealed from and remit the case to Supreme Court, Niagara County, for further proceedings upon the complaint.

Meyer, J.

(dissenting). Precedent long established gives conclusive effect to prior judgments only where the issue of fact as to which preclusion is sought was essential to the judgment (e.g., Hinchey v Sellers, 7 NY2d 287, 296). On the basis of precedent alone, therefore, reversal is in order.

Reversal is, however, required by logic as well. What the majority is saying, in essence, is that Judge Moriarty’s finding of contributory negligence was essential to the judgment in the sense that it was in the interest of both the parties and the judicial system for him to pass upon the contributory negligence issue even though he could have dismissed the claim solely on the ground that the State was not negligent. Deciding both issues saves the parties and the State the time and money waste of a new trial if the determination on appeal is that he was wrong on the negligence issue. If the only basis for the requirement of essentiality is that dictum may not be carefully considered there is logic in saying that a Judge conscientious enough to decide both issues (and careful enough to label his decision of the contributory negligence issue "unnecessary to a decision herein”) will give no one short shrift.

But the matter does not end there. If well-considered dictum is to be accorded the status of a conclusive finding, then there are here alternate findings of nonnegligence and contributory negligence. The majority, however, rejects the Restatement view (Restatement, Judgments 2d [Tent Draft No. 4], § 68, Comments h, i) that neither alternative finding can be conclusive, reasoning that its predicate, the practical unavailability of an appeal, is "unrealistic” supposition. To me the shoe is on the other foot; it is the majority which indulges unrealistic supposition.

Rules of preclusion, by whatever name, are essentially rules " 'of justice and fairness’ ” (Hinchey v Sellers, supra, at p 294) adopted in furtherance of the policy of conserving judicial resources and protecting the winning litigant against the expense and harassment of relitigating a question already decided. They are, however, a means to an end, not an end in themselves. And because they are rules of policy predicated on fairness, the absence of a right to appeal is held to proscribe preclusion (Restatement, Judgments 2d [Tent Draft No. 4], § 68, Comments h, i; § 68.1, Comment a; Developments in the Law — Res Judicata, 65 Harv L Rev 818, 847). It is the absence of a meaningful appeal upon which the Restatement relies in denying preclusive effect to alternative determinations, reasoning that when the record strongly supports the lower court’s finding on one issue, the losing party will be dissuaded, if not foreclosed, from appealing in order to preserve his position on the (to him) wrongly decided second issue.

Far from being unrealistic, that "supposition” is more than likely why the Court of Claims judgment was not appealed by Malloy, for it was essentially Trombley’s negligence, not any act of the State, which caused Malloy’s injuries. To require Malloy to appeal is to impose upon the court system an appeal destined to failure as to Malloy’s claim against the State, is to waste judicial time and to mandate what appellate counsel generally would consider "unrealistic” action, the deck being as strongly stacked against Malloy as it would be on such an appeal.

Professor Maurice Rosenberg noted in 1969 that "the New York courts have set a hectic pace in expanding the applicability of collateral estoppel” (Rosenberg, Collateral Estoppel in New York, 44 St John’s L Rev 165, 171). In my view our recent decisions have accelerated that expansion until the means threatens to become the end, to the detriment of litigants foreclosed by it, and without reasonable relation to the policy factors giving rise to the doctrine in the first instance.

Whether because the contributory negligence finding was dictum or because it was an alternative finding, I would deny it preclusive effect. I, therefore, vote to reverse and remit for further proceedings.

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

Order affirmed.

      . The accident having occurred on October 13, 1974, the rights of the parties were determined under the law applicable prior to the enactment of CPLR 1411 which adopted the doctrine of comparative negligence (L 1975, ch 69).

      . It is noted that, according to the Restatement, had an appellate court upheld both determinations made by the trial court, notwithstanding that they were no less alternative, the rule of issue preclusion would apply (Restatement, Judgments 2d, § 68, Comment o [Tent Draft No. 4 (April 15, 1977)], p 17).

      . I have not overlooked Sheldon v Edwards (35 NY 279). As Halpern v Schwartz (426 F2d 102, 107, n 4) indicates, it is one of three decisions squarely inconsistent with the Restatement’s position. Furthermore, it did not discuss the appeal limitation.

      . A failure which might only strengthen, as to his claim against Trombley, the preclusive effect of the judgment on the contributory negligence issue (see Restatement, Judgments 2d [Tent Draft No. 4], § 68, Comment o).

      . As noted in Halpern v Schwartz (426 F2d 102, 106), a rule according estoppel effect to alternative findings "at best would preclude some future trial litigation at the expense of currently creating extra appellate litigation.”