author: Hancock, Jr., J.

text:
    The People of the State of New York, Respondent, v Frank Magliato, Appellant.
    Argued June 2, 1986;
    decided July 8, 1986

      POINTS OF COUNSEL

      Leon B. Polsky for appellant.
    The defense was improperly restricted in its summation by the court’s erroneous ruling it would charge justification and "duty to retreat” if counsel argued the weapon was drawn in fear or defensively but the discharge was accidental. (People v Mann, 31 NY2d 253; People Martin, 66 AD2d 995; Lowery v Cardwell, 575 F2d 727.)

      Robert M. Morgenthau, District Attorney (Arthur G. Weinstein and Mark Dwyer of counsel), for respondent.
    Defendant was not entitled to argue that his conduct was justified under the law while at the same time insisting that the court not instruct the jury on the law of justification. (People v Dingley,
      42 NY2d 888; People v Huntley, 59 NY2d 868; People v Rodwell, 100 AD2d 772; People v May, 55 AD2d 739.)
   OPINION OF THE COURT

Hancock, Jr., J.

Conduct intended merely to scare off an assailant or to keep him at bay may place the assailant in such imminent danger of grave bodily injury or death that the conduct, without more, constitutes the "use of deadly physical force” to which the defense of justification applies (see, Penal Law § 10.00 [11]; § 35.15). Where such conduct is the basis of a criminal charge and the defendant argues that it was justified by the menacing actions and threats of the assailant, the court must instruct the jury on the elements of the defense of justification set forth in Penal Law § 35.15.

I

Defendant was convicted in a jury trial of depraved indifference murder (Penal Law § 125.25 [2]) for the shooting death of one Giani. The shooting was the culmination of a series of events which began when the station wagon in which Giani was a passenger rammed defendant’s Ferrari and sped away. The jury acquitted defendant of intentional homicide (Penal Law § 125.25 [1]) and the lesser included offense of manslaughter in the first degree (Penal Law § 125.20), and the Appellate Division reduced the depraved indifference conviction to manslaughter, second degree (Penal Law § 125.15 [l]). On this appeal, defendant argues that his allegedly protective conduct in drawing and aiming a loaded and cocked weapon at Giani— but not firing it intentionally — is not governed by the law of justification for the use of deadly physical force (Penal Law § 35.15 [2]). He sought to argue to the jury that his actions in preparing to shoot were a reasoned response to Giani’s threatening conduct, and he contends that the court should have permitted him to make such argument without charging the jury on the elements of the statutory defense including, specifically, the duty to retreat (Penal Law § 35.15 [2] [a]). For reasons which will appear, we disagree with these contentions. There should be an affirmance.

II

The relevant facts, as related by defendant at trial, are these. On September 6, 1983 defendant’s leased Ferrari was struck in the rear while stopped at the intersection of Houston and Wooster Streets in Manhattan in preparation for making a left hand turn. The car which struck him, a Chevrolet station wagon, pulled around and drove off. Defendant, angered, gave chase and overtook the station wagon at the corner of Spring and Thompson where it was blocked by a van. As defendant started to get out of the car, holding a tennis racket given him by his passenger Klaris, Giani stepped out of the station wagon. He was brandishing a "very large black club” — holding it over his head and shaking it. Defendant described him as "ranting and raving and screaming, 'I’m going to kill you, get back in the car, I’m going to kill you, you mother f — , get in the car’. He just went on and on. He was wild, he was crazed.” The station wagon drove off leaving Giani in the street.

Defendant reentered his car and pulled around Giani to follow the station wagon. With the Ferrari in pursuit, the station wagon proceeded on an irregular course and returned to Spring Street where Giani was still standing. It passed Giani without stopping and, as defendant drove by, Giani moved to the middle of the street shaking the club, yelling and cursing. Defendant continued behind the station wagon narrowly missing Giani.

Defendant and Klaris, driving about the area in search of a police officer, stopped at defendant’s apartment on Mercer Street where defendant went inside to pick up his wallet, car registration and other papers. Upon emerging from his apartment, defendant carried a bolstered gun for which he had a permit. En route to the police station to report the incident, defendant saw the station wagon parked on Broome Street between Wooster and West Broadway and stopped to call the police from a telephone booth. As defendant started to cross Broome Street, he heard a shout and saw Giani pulling the club out of the station wagon. Defendant described what happened as Giani started to cross the street in his direction:

"As he was coming at me — I just said 'Oh, my God’, and drew my gun and cocked it and held it in front of me.
"I put the hammer back [and] held the gun like this [with two hands clasped together and arms extended] in front of me.”

A car passed by Giani, backing him toward the curb. As it did so, the pistol fired. The bullet struck Giani between the eyes. Defendant stated he did not remember pulling the trigger. He panicked, and he and Klaris drove off. Giani died two days later of massive brain damage.

At trial, defendant did not dispute that he drew his weapon and cocked it. However, he contended that his pistol had a hair trigger and that he accidentally exerted enough pressure to fire it. The defense adduced expert testimony describing the operation of a colt .38 pistol such as defendant’s. In "single action” position, the shooter manually cocks the hammer, as defendant did here. Only &V2 pounds of pressure are required to move the trigger the remaining .012 to .015 inch. A second defense expert characterized defendant’s pistol as having a "hair trigger” in such "single action” position, explaining that the "slightest movement”, "extremely light” pressure would cause the weapon to discharge.

At the charging conference, defense counsel stated that he "definitely” did not want the court to charge on the defense of justification under Penal Law § 35.15. Nevertheless, defendant sought to argue that he was justified in drawing the weapon, but not in firing it. The court informed defense counsel that if he made such an argument, the justification defense would be charged.

Defendant argued, in his summation, that the shooting was a tragic accident, but he made no specific argument that the weapon was drawn in self-defense. Accordingly, the People, in their summation, did not argue duty to retreat, and the court did not give a charge on the statutory defense of justification.

Ill

On this appeal defendant argues that, because he claimed the discharge of his pistol was accidental, and did not claim that he fired it in self-defense, the justification defense is inapplicable. He maintains that justification does not apply to an unintentional crime, and that drawing his pistol did not constitute a "use of deadly physical force” within the meaning of Penal Law § 35.15. These arguments are without merit.

Defendant’s contention that the law of justification has no bearing on his conduct, solely because the discharge of his pistol was accidental, requires little comment. It is settled that the defense of justification applies fully to a defendant’s risk-creating conduct, even though it had unintended consequences (see, People v McManus, 67 NY2d 541; People v Huntley, 59 NY2d 868). That a defendant causes injury or death, not deliberately, but recklessly or negligently, does not remove his conduct from the scope of Penal Law article 35. As we explained in People v McManus (supra, at p 547), "there is no basis for limiting the application of the defense of justification to any particular mens rea or to any particular crime involving the use of force.” Hence, in a prosecution for any "crime involving the use of force, a charge on justification is warranted whenever there is evidence to support it.” (Id., at p 549.) Indeed, in People v Huntley (supra) we specifically held the defense applicable to a charge of reckless homicide (Penal Law § 125.15 [1]), the very crime at issue here (see also, People v Torre, 42 NY2d 1036; People v Rodwell, 100 AD2d 772).

Nor, under these circumstances, can we accept defendant’s contention that his allegedly defensive drawing of the pistol did not constitute the "use of deadly physical force” and, therefore, that his actions are not governed by Penal Law § 35.15 (2). "Deadly physical force” is defined in Penal Law § 10.00 (11) as that which is "readily capable of causing death or other serious physical injury” (emphasis added). That definition, adopted primarily for the statutory defense of justification (see, Hechtman, Practice Commentaries, McKinney’s Cons Laws of NY, Book 39, Penal Law § 10.00, p 21), hinges on the nature of the risk created — i.e., its imminence or immediacy, as well as its gravity. The risk of serious injury or death and the capacity presently to inflict the same are central to the definition, not the consequence of defendant’s conduct or what he intended.

Viewing the evidence in the light most favorable to the defendant (see, People v Torre, 42 NY2d 1036, 1037, supra), his use of the pistol to "scare off” Giani unquestionably placed Giani in the imminent risk of grave danger and, therefore, constituted the "use of deadly physical force.” According to the testimony of defendant’s own experts, the pistol, in a cocked position, was deadly. It was "extremely dangerous” with a "hair trigger”. The pistol "could easily be accidentally discharged” with the "slightest movement” or the application of "extremely light” pressure. Clearly, it was "readily capable” of causing death or physical injury within the meaning of Penal Law § 10.00 (11).

Moreover, defendant’s conduct in drawing the pistol, cocking it, holding it with two hands and arms extended, and aiming it at Giani as he was approaching cannot, contrary to defendant’s contention, be deemed a mere display, threat, or preparation for the use of deadly physical force. It was the actual "use” of such force under any meaningful sense of the word. It would be illogical to restrict the meaning of the "use of deadly physical force” to the deliberate discharge of a weapon or the intentional infliction of bodily injury, and to characterize as mere "preparation” all other conduct with a deadly instrumentality which falls short of that. The mere display or brandishing of a pistol may, perhaps, create an insufficiently imminent threat to life to be considered the "use” of deadly physical force. But, leveling a loaded pistol, with the cocked hammer set to release under the slightest pressure, and pointing it at another approaching from across the street is conduct well beyond a warning or preparation for a deadly act. Such conduct, itself, constitutes a deadly act regardless of how or why the final bit of pressure is applied. Indeed, it creates a danger so nearly approximating the discharge of a pistol as to be reasonably deemed its equivalent for the purpose of the law of justification.

Hence, in People v Huntley (supra), where the defendant was charged with committing murder with a knife, we held the defense of justification to be available even though defendant claimed that the stabbing was accidental. We agreed with the Appellate Division that Penal Law § 35.15 was applicable to the defendant’s use of deadly physical force, whether or not the stabbing was deliberate and whether or not he intended the ultimate consequences of his conduct. Similarly, in People v McManus (supra), we held the defense of justification available to a defendant who used a firearm to "scare off” a group of individuals. The law of justification for the use of deadly physical force was applicable to defendant’s conduct, even though he claimed that his shooting one of the group was an unintended consequence.

Finally, there is no justification under the law for the use of deadly physical force in self-defense except that contained within the statutory defense in Penal Law § 35.15 (2). The statute unambiguously states that "[a] person may not use deadly physical force upon another person * * * unless” certain specified conditions are met (emphasis added). Penal Law § 35.15 is the operative law of self-defense and there is simply no basis for justifying defendant’s conduct by any other standard (see, People v Goetz, 68 NY2d 96 [decided herewith]; People v Dingley, 42 NY2d 888).

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

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

Order affirmed.

      . We dismissed the People’s appeal (67 NY2d 829) because the Appellate Division’s determination was based in part on its analysis of the facts (CPL 450.90 [2] [a]). Defendant was granted leave to appeal from the reduced conviction by a Judge of this court (67 NY2d 653).

      . Penal Law § 35.15 (2) provides in pertinent part, as follows:
      "A person may not use deadly physical force upon another person under circumstances specified in subdivision one unless:
      "(a) He reasonably believes that such other person is using or about to use deadly physical force. Even in such case, however, the actor may not use deadly physical force if he knows that he can with complete safety as to himself and others avoid the necessity of so doing by retreating.” (Emphasis added.)


source: Caselaw Access Project

author: Meyer, J.

license: Public Domain

text:
    In the Matter of Multiple Sclerosis Service Organization of New York, Inc., et al., Appellants. New York City Chapter of the National Multiple Sclerosis Society et al., Respondents.
    Argued May 28, 1986;
    decided July 8, 1986

      POINTS OF COUNSEL

      Gary P. Naftalis, Mayrose Friedman, Lynn R. Saidenberg
      and Emanuel J. Greenwald for appellants.
    The court below erred in failing to give effect to the plain language of N-PCL § 1005 (a) (3) (A). (Sega v State of New York, 60 NY2d 183; Matter of Richmond Constructors v Tishelman, 61 NY2d 1; New York State Bankers Assn. v Albright, 38 NY2d 430; Matter of Wilson, 87 AD2d 98, 59 NY2d 461; Matter of New York State Dept. of Mental Hygiene v County of Broome, 63 AD2d 1076; Alco Gravure, Inc. v Knapp Found., 64 NY2d 458; Matter of Goehringer, 69 Misc 2d 145.)

      Michael J. Chepiga and Timothy V. Smith for New York City Chapter of the National Multiple Sclerosis Society, respondent.
    I. The court below correctly construed N-PCL § 1005 (a) (3) (A). (Alco Gravure, Inc. v Knapp Found., 64 NY2d 458; Matter of Richmond Constructors v Tishelman, 61 NY2d 1; Gaden v Gaden, 29 NY2d 80; Cass v United States, 417 US 72; Matter of Carr v New York State Bd. of Elections, 40 NY2d 556; United States v American Trucking Assns., 310 US 534; Sega v State of New York, 60 NY2d 183; New York State Bankers Assn. v Albright, 38 NY2d 430.) II. Every possible remaining consideration requires affirmance. (Alco Gravure, Inc. v Knapp Found., 64 NY2d 458; Sherman v Richmond Hose Co., 230 NY 462; Matter of Richmond County Socy. for Prevention of Cruelty to Children, 8 Misc 2d 123, 11 AD2d 236, 9 NY2d 913, 368 US 290.)

      Robert Abrams, Attorney-General (Charles Brody, Pamela A. Mann and David G. Samuels of counsel), for Ultimate Charitable Beneficiaries.
    I. The court below properly held that MSSO was required, pursuant to N-PCL § 1005 (a) (3) (A), to distribute its assets on dissolution to organizations having a nexus with Multiple Sclerosis. (St. Joseph’s Hosp. v Bennett, 281 NY 115; Butterworth v Keeler, 219 NY 446; Sherman v Richmond Hose Co., 230 NY 462; Hayes v Davidson, 98 NY 19; Burnside v Whitney, 21 NY 148; Alco Gravure, Inc. v Knapp Found., 64 NY2d 458; Matter of Martin Found., 73 Misc 2d 985, 41 AD2d 905, 33 NY2d 514; Matter of Goehringer, 69 Misc 2d 145; Matter of Richmond County Socy. for Prevention of Cruelty to Children, 11 AD2d 236, 9 NY2d 913, 368 US 290; Matter of Potter, 307 NY 504.) II. The lower court properly determined that the assets of MSSO should be distributed to the New York City Chapter.
   OPINION OF THE COURT

Meyer, J.

The standard governing distribution of the assets of a charitable corporation being dissolved under the Not-For-Profit Corporation Law (N-PCL § 1005 [a] [3] [A]; § 1008 [a] [15] ["engaged in activities substantially similar to”]) is less restrictive and accords greater authority to the corporation’s board of directors and the courts than governs the distribution of the assets held by a trustee under a will or other instrument making a disposition for charitable purposes (EPTL 8-1.1 [c] ["will most effectively accomplish its general purposes”]) or the assets held by the officers and trustees of a voluntary association which has received by public subscription a fund for charitable purposes from more than 1,000 contributors (EPTL 8-1.1 [j] ["will most effectively accomplish the general purpose for which such fund was collected”]) or than was the cy pres standard at common law ("as nearly as possible”). Under the quasi cy pres standard of the Not-For-Profit Corporation Law, a Supreme Court Justice in determining whether to approve the plan of distribution proposed by the corporation’s board, and if not to what other charitable organizations distribution should be made, should consider (1) the source of the funds to be distributed, whether received through public subscription or under the trust provision of a will or other instrument; (2) the purposes and powers of the corporation as enumerated in its certificate of incorporation; (3) the activities in fact carried out and services actually provided by the corporation; (4) the relationship of the activities and purposes of the proposed distributee^) to those of the dissolving corporation, and (5) the bases for the distribution recommended by the board. The order of the Appellate Division should, therefore, be reversed, with costs to appellants, and the matter remitted to Supreme Court for a hearing in accordance herewith.

I

Petitioner, the Multiple Sclerosis Service Organization of New York, Inc. (MSSO), was incorporated in 1965 under the Membership Corporations Law. After adoption of the N-PCL it filed an amended certificate of incorporation which, among other things, declared it to be a type B corporation under that law. It was formed in 1965 by a group of volunteers who had been associated with the Kings County Multiple Sclerosis Society (Kings County Chapter), a chapter of the National Multiple Sclerosis Society (National Society), but who withdrew from the chapter in 1965 because they wished to focus primarily upon rehabilitation — helping MS victims to function in society to their maximum potential — while the National Society focused primarily upon research. It has neither been affiliated with nor has it had financial assistance from the National Society or any of its chapters. Its purposes, as stated in its amended certificate of incorporation, are to operate a recreational center for the use of MS victims and provide means of recreation and snacks and lunch to them while at the center; to transport them to and from medical, hospital and other service appointments and to and from restaurants and places of entertainment; to provide them with and keep in repair the specialized equipment needed by such victims, including walkers, hospital beds, controls for motor vehicles and exercise equipment; to furnish counseling services to them relating to their conditions; to make grants to those engaged in MS research and to solicit and receive funds for the purposes mentioned and for the benefit of said victims. The petition in the instant proceeding explained MSSO’s function as an attempt "to create and service a community where multiple sclerosis victims could again engage in the business of life, which had all but ended for them in the outside world.”

For 17 years MSSO operated a center in Brooklyn to which its members brought patients three times a week, providing them while there with snacks, lunch and recreational and social activities. They also provided transportation, equipment, counseling services and other therapies as envisioned by the corporation’s certificate. In 1982, however, dwindling finances and the advancing age of its members resulted in the determination that MSSO could no longer continue its activities. According to the affidavit of its president accompanying the petition, the New York City Chapter was asked to take over the service center but declined to do so. The board then determined, after a meeting on notice to all members of the corporation, to sell the Brooklyn service center — its principal asset — pay its debts and select recognized charities to receive any assets remaining.

Sale of the center was approved by Supreme Court, its order providing that any money remaining after payment of obligations be donated to "recognized charities.” A committee was then appointed to find distributees engaged in substantially similar activities. Those organizations the committee deemed likely candidates it inspected, making unannounced visits at irregular hours. Four organizations were selected primarily because of their emphasis upon on-site care and service to clients suffering from irreversible and chronic medical conditions requiring expensive long-term treatment: Blueberry Treatment Centers, Inc. (Blueberry), Adult Retardates Center, Inc. (ARC), Vacations and Community Services for the Blind (Vacations and Community Services) and Children’s Oncology Society of New York, Inc. (Children’s Oncology). After the board adopted a resolution providing for distribution of the approximately $155,000 remaining, 40% to Blueberry, 25% to ARC, 25% to Vacations and Community Services and 10% to Children’s Oncology, the petition in the present proceeding seeking Supreme Court approval of the proposed distribution was filed, on notice to the Attorney-General, as required by N-PCL § 1002 (d).

The New York City Chapter sought leave to intervene, asserting that its activities were "more akin” to those of MSSO than the four distributees selected and that it expends a substantial portion of its annual budget on direct services to MS victims, including patients formerly serviced by MSSO. Pursuant to stipulation, it and the four proposed distributees were permitted to intervene. New York City Chapter then filed an answer which included an objection in point of law that funds donated to MSSO were specifically donated for aid to victims of multiple sclerosis and would be improperly diverted if distributed to other than MS-oriented charities. The Attorney-General’s answer stated as an affirmative defense that the proposed distributees are not engaged in activities substantially similar to those of MSSO.

Petitioner and the proposed distributees other than Children’s Oncology, which did not appear, moved to strike New York City Chapter’s answer and the Attorney-General’s affirmative defense. Special Term, finding that the distributees were engaged in activities substantially similar to those of MSSO "in that each renders services to permanently disabled people which enable them to function to their maximum potential”, struck the objection in point of law from the chapter’s answer and the affirmative defense from the Attorney-General’s answer and approved the proposed distribution.

The Appellate Division unanimously reversed. Concluding that despite its use of "substantially similar” the N-PCL provisions incorporated the "as nearly as possible” cy pres standard of the common law and emphasizing the presumed intent of donors to MSSO to benefit MS victims, it remitted to Special Term for a factual hearing. No formal evidentiary hearing was held, however, the parties having stipulated concerning the services rendered by New York City Chapter and the four distributees as set forth in specified portions of the record, and specifically that New York City Chapter provides services exclusively to MS victims but that the four distributees do not provide services to MS patients unless they suffer from disabilities other than MS as well. On the basis of that stipulation and of the Appellate Division’s decision, Special Term concluded that the distributees did not meet the statutory requirement and that New York City Chapter did.

From the judgment entered on that decision petitioner appeals to us pursuant to CPLR 5601 (d), bringing up for review the Appellate Division’s prior nonfinal order. We conclude that in equating "substantially similar” with "as near as possible,” the Appellate Division erred. We, therefore, reverse and remit to Supreme Court for a hearing.

II

The question before us is not whether principles of a cy pres nature apply to the distribution of the assets of a dissolving charitable corporation but what the governing principle is. There is no question that the common-law cy pres standard was "as near as possible,” that being the literal translation of the Anglo-French from which the words were taken (Bogert, Trusts and Trustees § 431, at 490 [2d ed rev]; 4 Scott, Trusts § 399, at 3084 [3d ed]). There likewise is no question that the Memorandum of the Joint Legislative Committee to Study Revision of Corporation Laws referred to the provision now contained in N-PCL § 1005 (a) (3) (A) as "a codification of the 'cy-pres’ doctrine” (1969 NY Legis Ann, at 139, reprinted in McKinney’s Cons Laws of NY, Book 37, p xxii). But in concluding that, as to the distribution by such a corporation of assets other than those received through a will or similar instrument, the common-law standard applies notwithstanding the substantially different language of N-PCL § 1005 (a) (3) (A), the Appellate Division failed to consider the history of cy pres in New York, its statutory development in this State generally and in relation to charitable corporations, and the very different wording of the N-PCL standard from that of related statutes and that used to express the common-law rule and thus fell into error.

A

A nonjudicial dissolution of a type B corporation, such as is here involved, is governed by N-PCL article 10. It begins with the adoption by the board of directors of a plan for dissolution and distribution of the corporation’s assets (§ 1001). After submission to and approval by members of the corporation entitled to vote, the plan must be submitted to the Supreme Court in the judicial district in which the office of the corporation is located (§ 1002). The first sentence of section 1005 (a) (3) (A) requires distribution, after payment of liabilities, of "[assets received and held by the corporation for a purpose specified as Type B * * * or which are legally required to be used for a particular purpose * * * to one or more domestic or foreign corporations or other organizations engaged in activities substantially similar to those of the dissolved corporation pursuant to a plan of distribution adopted as provided in section 1001 * * * or as ordered by the court to which the plan is submitted for approval under section 1002.” Finally section 1008 (a) (15) authorizes the Supreme Court to order distribution of assets received and held by the corporation for a type B purpose or which are "legally required to be used for a particular purpose * * * to one or more domestic or foreign corporations or other organizations engaged in activities substantially similar to those of the dissolved corporation”.

Apparent from those provisions is the Legislature’s intention to require that assets given to a charitable corporation for a particular purpose be used by the corporation while it is in existence for the purpose specified by the donor, unless the restriction is released by the donor or by a court (N-PCL § 522) or, circumstances having so changed as to make impracticable or impossible the literal carrying out of the purpose, a court (with the consent of the donor if living) permits otherwise (EPTL 8-1.1 [c]). But it is also apparent, for the reasons hereafter set forth, that the Legislature did not intend the stringent "as near as possible” standard of the common law to govern distribution of assets of a dissolving charitable corporation received other than through a will or other limiting instrument, but rather provided for distribution to corporations or organizations engaged in substantially similar activities and left it to the board of directors in the first instance to determine to whom distribution should be made.

B

The common-law cy pres doctrine, or "ancient doctrine of approximation” as it has been termed (Greenfield, Practice Commentary, McKinney’s Cons Laws of NY, Book 17B, EPTL 8-1.1, 1986 Cum Ann Pocket Part, p 175; see, Williams v Williams, 8 NY 525), embodies the English concept that when a donor parts with his property for a charitable purpose it shall be forever devoted to that purpose, whether or not the particular donee continues to exist (Sherman v Richmond Hose Co., 230 NY 462). If the donee ceases to exist, the property may be devoted to a kindred charity; one that is, "as near as may be” to the charity contemplated by the donor (id.; see also, Matter of Goehringer, 69 Misc 2d 145, 146-147; Restatement [Second] of Trusts § 399 comment a, at 297-298). The purpose of the doctrine was to prevent the failure of a charitable trust (see, e.g., Matter of Bowne, 11 Misc 2d 597).

The common-law doctrine was, however, held not to prevail in New York (Tilden v Green, 130 NY 29, 45; Holland v Alcock, 108 NY 312; see, Trustees of Sailors’ Snug Harbor v Carmody, 211 NY 286, 297). By the so-called "Tilden” Law (L 1901, ch 291), which was thereafter incorporated in Personal Property Law § 12 and Real Property Law § 113 (Trustees of Sailors’ Snug Harbor v Carmody, 211 NY, at p 299, supra), New York courts were given cy pres power over charitable trusts. The statute, however, authorized the court having jurisdiction over the trust when it appeared that "circumstances have so changed * * * as to render impracticable or impossible a literal compliance with the terms of such instrument [of gift]” to direct that the property "be administered or expended in such manner as in the judgment of the court will most effectually accomplish the general purpose of the instrument” pursuant to which the gift, grant, devise or bequest was received, but "without regard to and free from any specific restriction, limitation or direction contained therein” (emphasis supplied).

A like provision was added to Personal Property Law § 12 by Laws of 1911 (ch 220), with respect to a voluntary association or committee which "shall have received by public subscription from contributors exceeding one thousand in number a fund for a charitable or benevolent purpose,” authorizing Supreme Court when "it shall appear that a literal compliance with the terms of the subscription is impracticable” to order that the balance of the fund "be transferred for administration to such domestic corporation as in the judgment of the court will most effectually accomplish the general purpose for which the fund shall have been collected, without regard to and free from any express or implied limitation, restriction or direction upon which the subscription shall have been made” (emphasis supplied).

And essentially the same provision was incorporated in Membership Corporations Law § 56 (5) by Laws of 1928 (ch 476). That provision authorized the court to order distribution of the property of a dissolved corporation "to such other corporation or association as shall be specified, to be administered or used in such manner as in the judgment of the court will best accomplish the general purposes for which the corporation so dissolved was organized or for which the property or funds are legally required to be used, without regard to and free from any express or implied restriction, limitation or direction imposed upon such corporation” (emphasis supplied).

It is, thus, apparent that for more than half a century the criterion governing distribution or dissolution has been not that the particular purpose of the donor be carried out "as near as possible,” but that the general purpose of the donor, or for which the corporation was organized or the fund collected be "most effectively [or best] accomplished[ed] * * * free from any express or implied restriction” and that the same standard has governed distribution of both the unexpended funds received for a charitable purpose by a membership corporation about to be dissolved, and the unexpended funds raised by a voluntary association through public subscription for a charitable purpose which has been accomplished.

C

The most immediately noticeable difference between N-PCL § 1005 (a) (3) (A) and the statutes we have so far considered is the changed standard governing distribution. The revision from "best accomplish the general purposes” to "engaged in activities substantially similar to those of the dissolved corporation” is not discussed in the legislative history of the N-PCL, but in light of the almost uniform standard of the various statutes discussed above and the provision of the Membership Corporations Law that distribution was to be "free from any express or implied restriction” imposed on the dissolving corporation, it is apparent that the "codification of the 'cypres’ doctrine” to which the Joint Legislative Committee Memorandum referred was to the doctrine as spelled out in the Membership Corporations Law (and other statutes referred to above) rather than to the common law "as near as possible” principle. But beyond that the change to "substantially similar activities” from "best accomplishes” or "most effectively accomplishes” cannot be ignored, for, as the words are commonly understood, "substantially similar” is broader in scope and less limiting than "most effectively accomplishes” (cf. Matter of Falk, 110 Misc 2d 104, 110).

Of importance also is the fact that whereas the common-law rule was phrased in terms of the original purpose of the testator, grantor or donor (Bogert, op. cit. § 431, at 490; Restatement [Second] of Trusts § 399 comment b; 4 Scott, Trusts, op. cit. § 399, at 3084), as were all of the statutes referred to above, it is not the "purposes” but the "activities” of the dissolving corporation which under N-PCL § 1005 (a) (3) (A) governs the choice of recipient charities. Of course, that does not mean that a charitable corporation is not limited by the statement of purposes set forth in its charter (Alco Gravure, Inc. v Knapp Found., 64 NY2d 458); rather it means that to the extent that its activities have been more limited than the statement in its charter, the latter rather than the former must be taken into consideration in determining whether a proposed distributee meets the statutory test.

Nor does respondents’ argument that the Joint Legislative Committee’s statement that section 1005 "makes very important innovations with respect to the distribution of corporate assets upon dissolution by adopting a 'cy-pres’ provision to regulate the distribution” (1969 NY Legis Ann, at 138; McKinney’s Cons Laws of NY, Book 37, pp xxi-xxii) establish the Legislature’s intent to adopt the common-law standard. As noted above, that standard in modified form had been applicable to membership corporations engaged in charitable pursuits as well as to voluntary associations since 1948 or earlier. Thus the innovation was not that for the first time cy pres became applicable but that the standard to be applied to property other than particular purpose assets of a type B not-for-profit corporation was whether the recipient charities were "engaged in activities substantially similar” rather than the modified common-law standard — "best accomplish the general purposes.”

It follows that, as was held in Matter of Goehringer (69 Misc 2d, at pp 146-147, supra), statutes under which the assets of charitable corporations are distributed upon dissolution, such as N-PCL § 1005 (a) (3) (A) and Education Law § 220, are not quite like cy pres statutes such as EPTL 8-1.1 in that "[i]n ordering distribution under the dissolution statutes, the Supreme Court is not concerned with the directions or intentions of the creator or testator but only that the funds be transferred to a charitable recipient having similar purposes to the dissolved charitable corporation.” Although a cy pres concept is involved, it is not the strict standard of the common law that applies to distribution of the assets of a corporation being dissolved under the N-PCL, but a "quasi cy pres” standard (cf. Alco Gravure, Inc. v Knapp Found., 64 NY2d 458, supra).

Ill

The Appellate Division having used an improper standard, there must be a reversal, and because that improper standard resulted in a limited stipulation of fact rather than an evidentiary development of the factors involved in whether the plan for distribution should be approved, we remit to Supreme Court for such a hearing.

In that connection we note the further substantial change made by the N-PCL in according the board of the dissolving charitable corporation a substantial role in the selection of the corporations or organizations to which distribution is to be made. At common law, framing the scheme for application or distribution of the property was a matter for the court, which could apply cy pres and frame a scheme to which the trustees did not consent (cf. L 1942, ch 535, McKinney’s Uncons Laws of NY § 4261), although the court would usually give weight to the wishes of the trustees (Restatement [Second] of Trusts § 399 comment f). And under Personal Property Law § 12 and Real Property Law § 113, that was true not only where a trust existed but also as to property held by a charitable corporation. "Over such gifts it [the court] is given general control and while it is said the court may make such an order 'on the application of the trustee or the person or corporation having the custody of the property’ the language should not be construed as limiting the power of the court to act only when application is so made. It may act on information by the state. It may act on its own motion” (Sherman v Richmond Hose Co., 230 NY, at p 473, supra). But, as already noted, under N-PCL § 1005 (a) (3) (A), it is the board of directors which adopts the plan of distribution pursuant to which the successor corporation or organization will receive the property and the plan is not submitted to the court for approval until after it has been submitted to and approved by the members entitled to vote.

The approval of the court is not under the statute to be perfunctory, but in enacting N-PCL article 10, the Legislature "substantially revise[d] the existing law governing membership corporations” (1969 NY Legis Ann, at 138; McKinney’s Cons Laws of NY, Book 37, p xxi), "require[d] a board resolution recommending the plan” (1969 NY Legis Ann, at 139; McKinney’s Cons Laws of NY, Book 37, p xxiii) and that "the plan of distribution * * * be approved by a justice of the supreme court” (id). It intended also that not-for-profit corporations have "a strong board of directors” (1969 NY Legis Ann, at 135; McKinney’s Cons Laws of NY, Book 37, p xviii). Although a court, asked to approve a plan of distribution, acts in a discretionary capacity, so likewise does the board in carrying out its more formal role in devising a plan which the N-PCL has given it. Therefore, its choice of acquiring organizations and corporations should not be lightly set aside.

A further factor to be considered in assessing the propriety of the plan is how the funds, of which the moneys now in the hands of the board are the residue, were acquired. It has already been noted (n 5 above) that there is no record evidence of any "particular purpose” gifts by will or other instrument. There are in the record letters and petitions addressed to the Attorney-General or the New York City Chapter stating the signers’ belief that distribution should be to the chapter, but nothing to establish that any limitation other than the MSSO charter applied to their gifts when made. Was a public solicitation made and, if so, what was said about use of the funds by MSSO or by the donor? (Cf N-PCL § 102 [a] [14].) Absent an express or implied representation by MSSO, no "particular purpose” is established (Lefkowitz v Cornell Univ., 28 NY2d 876, affg on App Div opn 35 AD2d 166) and it will be assumed that contributions made voluntarily and without restriction are general gifts for use by the charitable corporation for any of its general corporate purposes (Cadman Mem. Cong. Socy. v Kenyon, 306 NY 151, 166). A "particular purpose” may also be established by the donor but it will usually be the case that, as noted in Loch v Mayer (50 Misc 442, 448, dealing with a disaster relief fund solicited by a church), "[f]cw donations were accompanied with writings of any kind, and no such writing, so far as the evidence shows, states with any attempt at precision the terms of the trust.” As to any contribution found to have been made for a restricted purpose, it will also be of importance whether it has been fully expended.

Relevant also, as already noted, will be the activities of the corporation in fact carried out under its charter, and to a lesser extent the corporate purposes stated in the charter. Specifically, in terms of the present case has the emphasis of MSSO as shown by its creation and its activities been on the disease or on service? Both are specifically mentioned in its name and both are referred to in the statement of its purposes contained in its amended certificate of incorporation.

For the foregoing reasons, the judgment appealed from and the order of the Appellate Division brought up for review should be reversed, with costs to appellants, and the matter remitted to Supreme Court, Kings County, for further proceedings in accordance with this opinion.

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

Judgment appealed from and order of the Appellate Division brought up for review reversed, etc.

      . N-PCL § 201 (b) provides that a type B corporation "may be formed for any one or more of the following non-business purposes: charitable, educational, religious, scientific, literary, cultural or for the prevention of cruelty to children or animals.”

      . The New York City Chapter in an affidavit of its executive director disputes that allegation.

      . Blueberry assists mentally disturbed and multihandicapped children between the ages of 3 and 18. It provides a day-care and service center as well as a residential program for the most seriously afflicted. ARC serves mentally retarded adults through three programs which include residential care, a sheltered workshop where job skills are taught, and weekend education and recreation programs. Vacations and Community Services helps those suffering from blindness and visual loss in both community-based programs in metropolitan New York and at an upstate vacation camp. Children’s Oncology services children who suffer from cancer, providing a residence where children can live with their families while undergoing treatment at two New York hospitals.

      . Judicial dissolution is governed by article 11, but section 1115 of the article makes sections 1005 through 1008 of article 10 applicable also to a judicially dissolved corporation.

      . Assets legally required to be used for a particular purpose are those received pursuant to a will or other instrument limiting the purpose for which the assets may be used. N-PCL § 513 provides that although a type B corporation holds full ownership rights in property received in trust for, or with direction to apply the same to, a purpose specified in its certificate of incorporation, it "shall not be deemed a trustee of an express trust of such assets” (§ 513 [a]) but is required to "apply all assets thus received to the purposes specified in the gift instrument” (§ 513 [b]) except as permitted by EPTL article 8 or N-PCL §522. The record does not indicate that MSSO holds any "particular purpose” assets.

      . The second sentence of section 1005 (a) (3) (A) permits a receiving corporation to take as successor of the dissolved corporation property given by will or other instrument to the dissolved corporation, but consistently with § 513 requires that the property "shall be devoted by the acquiring corporation or organization to the purposes intended by the testator, donor or grantor.” The New York City Chapter and the Attorney-General argue that the second sentence (and the similar provision of EPTL 8-1.1) must be read to restrict the meaning of "substantially similar” as used in the first sentence. They reason that otherwise a corporation or organization selected as distributee of property other than "particular purpose” assets will also receive "particular purpose” assets despite the fact that they do not meet the more restrictive standard applicable to them. The provisions can, however, be harmonized (see, McKinney’s Cons Laws of NY, Book 1, Statutes § 98) by construing the first sentence as permitting distribution to one or more organizations "engaged in activities substantially similar” to those of the dissolving corporation but free from any express or implied restriction imposed upon that corporation (cf. Membership Corporations Law § 56 [5]), but the second sentence as requiring that with respect to a gift or bequest by will or other instrument the intent of the testator, donor or grantor be preserved in the selection of a substitute recipient of a "particular purpose” gift or bequest. Under that construction the gift or bequest will not pass automatically to a corporation simply because it has previously received a distribution on dissolution from the corporation named as recipient in the will or other instrument. Rather, the Supreme Court or Surrogate’s Court administering the estate or trust from which comes the gift or bequest, applying the provisions of the second sentence and of EPTL 8-1.1, will direct that the property pass to a charitable corporation that meets the more restrictive cy pres standard of those provisions (see, Matter of Goehringer, 69 Misc 2d 145, 147-148). As to a distribution or dissolution under the first sentence, however, the recipient organization is, as was the case under the Membership Corporations Law, permitted to use the property free of restriction, it being sufficient that its activities are substantially similar to those of the original recipient.

      . The provisions of the Personal Property Law and Real Property Law dealing with charitable trusts and charitable subscription to voluntary associations are now contained in EPTL 8-1.1 (c) and (j), with but slight change in language (among the changes, the substitution of "effectively” for "effectually”).

      . The subdivision was amended by Laws of 1948 (ch 788) to include a last sentence preserving for the receiving corporation bequests and grants, whether made before or after dissolution, intended for the benefit of the dissolved corporation. Except for the deletion of the word "all” before "such” and the substitution of "disposition” for "devises, bequest, gifts or grants,” the proviso of the last sentence of N-PCL § 1005 (a) (3) (A) and that of Membership Corporations Law § 56 (5) are worded identically.

      . The N-PCL § 513 (b) reference to EPTL article 8, which contains, although for a different purpose, language paralleling that of the Membership Corporations Law, supports that inference.


author: Simons, J.

text:
    Michael S. Gruen, Respondent, v Kemija Gruen, Appellant.
    Argued May 28, 1986;
    decided July 8, 1986

      POINTS OF COUNSEL

      Paul G. Whitby and Helen J. Williamson for appellant.
    I. Victor Gruen did not intend to make a present gift. (Martin v Funk 75 NY 134; McCarthy v Pieret, 281 NY 407, 282 NY 800; Deyo v Adams, 178 Misc 859; Young v Young, 80 NY 422; Matter of Clark, 16 Misc 405; Matter of Abramowitz, 38 AD2d 387, 32 NY2d 654.) II. Delivery of the painting was not effected. (Matter of Van Alstyne, 207 NY 298; Matter of Szabo, 10 NY2d 94; McGavic v Cossum, 72 App Div 35; Matter of Nolan, 61 NY2d 856; Matter of Seyffert, 20 Misc 2d 799; Vincent v Rix, 248 NY 76.) III. Acceptance by the donee was not proven. (Beaver v Beaver, 117 NY 421; Matter of Kelsey, 29 AD2d 450, 26 NY2d 792; Matter of Kelly, 285 NY 139; Matter of Mahlstedt, 140 Misc 245; American Church Missionary Socy. v Griswold Coll., 27 Misc 42.) IV. Respondent failed to prove his case by clear and convincing evidence. (Matter of Nolan, 97 AD2d 940; Matter of Abramowitz, 38 AD2d 387; Baird v Mayor of City of N. Y., 96 NY 567; Billington v State of New York, 33 AD2d 822; Smith v Smith, 273 NY 380; Mansbacher v Prudential Ins. Co., 273 NY 140, 274 NY 487; Amend v Hurley, 293 NY 587; Boyd v Boyd, 252 NY 422; Kelly v Watson Elevator Co., 309 NY 49; 63 Bldg. Corp. v Schlacter, 11 AD2d 743.)

      Michael S. Gruen, pro se, and Victor P. Muskin for Michael S. Gruen, respondent.
    I. Victor Gruen intended to make a present and valid gift. (Matter of Brady, 228 App Div 56, 254 NY 590; Berkey v Third Ave. Ry. Co., 244 NY 84; Wellisch v John Hancock Mut. Life Ins. Co., 293 NY 178; Nirenstein v George A. Horvath, Inc., 286 App Div 409; Elyachar v Gerel Corp., 583 F Supp 907; Gannon v McGuire, 160 NY 476; Matter of Hendrick, 163 App Div 413, 214 NY 663.) II. The gift was validly delivered. (Matter of Roosevelt, 190 Misc 341; Matter of Palmer, 117 App Div 360; Matter of Kaphan, 176 Misc 228; Matter of Shelley, 134 Misc 265; Benson v Blue Ridge Coal Corp., 197 Misc 475, 278 App Div 681; Carroll v Smith, 229 App Div 286; Matter of Brandreth, 169 NY 437; Matter of Valentine, 122 Misc 486.) III. The gift was accepted. IV. The factual findings of the court below should not be disturbed. (People ex rel. MacCracken v Miller, 291 NY 55.) V. California law sustains the validity of the gift. (Intercontinental Planning v Daystrom, Inc., 24 NY2d 372; Miller v Miller, 22 NY2d 12; Babcock v Jackson, 12 NY2d 473; Matter of Crichton, 20 NY2d 124; Industrial Credit Co. v J. A. D.

      Constr. Corp., 29 AD2d 952; Levey v Saphier, 83 Misc 2d 146; Matter of Bulova, 14 AD2d 249; James v Powell, 19 NY2d 249; Petrobras Comercio Internacional v Intershoe, Inc., 77 AD2d 546; Haag v Barnes, 9 NY2d 554; Franklin Natl. Bank v Feldman, 42 Misc 2d 839.) VI. Trial Term materially erred in evidentiary rulings. (Croker v New York Trust Co., 245 NY 17; Nay v Curly, 113 NY 575; Matter of Anooshian, 13 AD2d 626; Matter of Berardini, 238 App Div 433, 263 NY 627; Matter of Wood, 52 NY2d 139; Stoppick v Goldstein, 174 App Div 306; O’Hearn v O’Hearn, 55 AD2d 766; Napiearlski v Pickering, 278 App Div 456; Stutsman v Black, 244 App Div 764; Ranofsky v Frank, 208 App Div 213.) VII. Trial Term erred in denying the motion for a mistrial. (Jacobsen v Jacobsen, 205 Misc 798.)
   OPINION OF THE COURT

Simons, J.

Plaintiff commenced this action seeking a declaration that he is the rightful owner of a painting which he alleges his father, now deceased, gave to him. He concedes that he has never had possession of the painting but asserts that his father made a valid gift of the title in 1963 reserving a life estate for himself. His father retained possession of the painting until he died in 1980. Defendant, plaintiff’s stepmother, has the painting now and has refused plaintiff’s requests that she turn it over to him. She contends that the purported gift was testamentary in nature and invalid insofar as the formalities of a will were not met or, alternatively, that a donor may not make a valid inter vivas gift of a chattel and retain a life estate with a complete right of possession. Following a seven-day nonjury trial, Special Term found that plaintiff had failed to establish any of the elements of an inter vivas gift and that in any event an attempt by a donor to retain a present possessory life estate in a chattel invalidated a purported gift of it. The Appellate Division held that a valid gift may be made reserving a life estate and, finding the elements of a gift established in this case, it reversed and remitted the matter for a determination of value (104 AD2d 171). That determination has now been made and defendant appeals directly to this court, pursuant to CPLR 5601 (d), from the subsequent final judgment entered in Supreme Court awarding plaintiff $2,500,000 in damages representing the value of the painting, plus interest. We now affirm.

The subject of the dispute is a work entitled "Schloss Kammer am Attersee II” painted by a noted Austrian modernist, Gustav Klimt. It was purchased by plaintiffs father, Victor Gruen, in 1959 for $8,000. On April 1, 1963 the elder Gruen, a successful architect with offices and residences in both New York City and Los Angeles during most of the time involved in this action, wrote a letter to plaintiff, then an undergraduate student at Harvard, stating that he was giving him the Klimt painting for his birthday but that he wished to retain the possession of it for his lifetime. This letter is not in evidence, apparently because plaintiff destroyed it on instructions from his father. Two other letters were received, however, one dated May 22, 1963 and the other April 1, 1963. Both had been dictated by Victor Gruen and sent together to plaintiff on or about May 22, 1963. The letter dated May 22, 1963 reads as follows:

"Dear Michael:
"I wrote you at the time of your birthday about the gift of the painting by Klimt.
"Now my lawyer tells me that because of the existing tax laws, it was wrong to mention in that letter that I want to use the painting as long as I live. Though I still want to use it, this should not appear in the letter. I am enclosing, therefore, a new letter and I ask you to send the old one back to me so that it can be destroyed.
"I know this is all very silly, but the lawyer and our accountant insist that they must have in their possession copies of a letter which will serve the purpose of making it possible for you, once I die, to get this picture without having to pay inheritance taxes on it.
"Love,
"s/Victor”.

Enclosed with this letter was a substitute gift letter, dated April 1, 1963, which stated:

"Dear Michael:
"The 21st birthday, being an important event in life, should be celebrated accordingly. I therefore wish to give you as a present the oil painting by Gustav Klimt of Schloss Kammer which now hangs in the New York living room. You know that Lazette and I bought it some 5 or 6 years ago, and you always told us how much you liked it.
"Happy birthday again.
"Love,
"s/Victor”.

Plaintiff never took possession of the painting nor did he seek to do so. Except for a brief period between 1964 and 1965 when it was on loan to art exhibits and when restoration work was performed on it, the painting remained in his father’s possession, moving with him from New York City to Beverly Hills and finally to Vienna, Austria, where Victor Gruen died on February 14, 1980. Following Victor’s death plaintiff requested possession of the Klimt painting and when defendant refused, he commenced this action.

The issues framed for appeal are whether a valid inter vivas gift of a chattel may be made where the donor has reserved a life estate in the chattel and the donee never has had physical possession of it before the donor’s death and, if it may, which factual findings on the elements of a valid inter vivas gift more nearly comport with the weight of the evidence in this case, those of Special Term or those of the Appellate Division. Resolution of the latter issue requires application of two general rules. First, to make a valid inter vivas gift there must exist the intent on the part of the donor to make a present transfer; delivery of the gift, either actual or constructive to the donee; and acceptance by the donee (Matter of Szabo, 10 NY2d 94, 98; Matter of Kelly, 285 NY 139,150 [dissenting in part opn]; Matter of Van Alstyne, 207 NY 298, 306; Beaver v Beaver, 117 NY 421, 428). Second, the proponent of a gift has the burden of proving each of these elements by clear and convincing evidence (Matter of Kelley, supra, at p 150; Matter of Abramowitz, 38 AD2d 387, 389-390, affd on opn 32 NY2d 654).

Donative Intent

There is an important distinction between the intent with which an inter vivas gift is made and the intent to make a gift by will. An inter vivas gift requires that the donor intend to make an irrevocable present transfer of ownership; if the intention is to make a testamentary disposition effective only after death, the gift is invalid unless made by will (see, McCarthy v Pieret, 281 NY 407, 409; Gannon v McGuire, 160 NY 476, 481; Martin v Funk, 75 NY 134, 137-138).

Defendant contends that the trial court was correct in finding that Victor did not intend to transfer any present interest in the painting to plaintiff in 1963 but only expressed an intention that plaintiff was to get the painting upon his death. The evidence is all but conclusive, however, that Victor intended to transfer ownership of the painting to plaintiff in 1963 but to retain a life estate in it and that he did, therefore, effectively transfer a remainder interest in the painting to plaintiff at that time. Although the original letter was not in evidence, testimony of its contents was received along with the substitute gift letter and its covering letter dated May 22, 1963. The three letters should be considered together as a single instrument (see, Matter of Brandreth, 169 NY 437, 440) and when they are they unambiguously establish that Victor Gruen intended to make a present gift of title to the painting at that time. But there was other evidence for after 1963 Victor made several statements orally and in writing indicating that he had previously given plaintiff the painting and that plaintiff owned it. Victor Gruen retained possession of the property, insured it, allowed others to exhibit it and made necessary repairs to it but those acts are not inconsistent with his retention of a life estate. Furthermore, whatever probative value could be attached to his statement that he had bequeathed the painting to his heirs, made 16 years later when he prepared an export license application so that he could take the painting out of Austria, is negated by the overwhelming evidence that he intended a present transfer of title in 1963. Victor’s failure to file a gift tax return on the transaction was partially explained by allegedly erroneous legal advice he received, and while that omission sometimes may indicate that the donor had no intention of making a present gift, it does not necessarily do so and it is not dispositive in this case.

Defendant contends that even if a present gift was intended, Victor’s reservation of a lifetime interest in the painting defeated it. She relies on a statement from Young v Young (80 NY 422) that " '[a]ny gift of chattels which expressly reserves the use of the property to the donor for a certain period, or * * * as long as the donor shall live, is ineffectual’ ” (id., at p 436, quoting 2 Schouler, Personal Property, at 118). The statement was dictum, however, and the holding of the court was limited to a determination that an attempted gift of bonds in which the donor reserved the interest for life failed because there had been no delivery of the gift, either actual or constructive (see, id., at p 434; see also, Speelman v Pascal, 10 NY2d 313, 319-320). The court expressly left undecided the question "whether a remainder in a chattel may be created and given by a donor by carving out a life estate for himself and transferring the remainder” (Young v Young, supra, at p 440). We answered part of that question in Matter of Brandreth (169 NY 437, 441-442, supra) when we held that "[in] this state a life estate and remainder can be created in a chattel or a fund the same as in real property”. The case did not require us to decide whether there could be a valid gift of the remainder.

Defendant recognizes that a valid inter vivas gift of a remainder interest can be made not only of real property but also of such intangibles as stocks and bonds. Indeed, several of the cases she cites so hold. That being so, it is difficult to perceive any legal basis for the distinction she urges which would permit gifts of remainder interests in those properties but not of remainder interests in chattels such as the Klimt painting here. The only reason suggested is that the gift of a chattel must include a present right to possession. The application of Brandreth to permit a gift of the remainder in this case, however, is consistent with the distinction, well recognized in the law of gifts as well as in real property law, between ownership and possession or enjoyment (see, Speelman v Pascal, 10 NY2d 313, 318, supra; McCarthy v Pieret, 281 NY 407, 409-411, supra; Matter of Brandreth, 169 NY 437, 442, supra). Insofar as some of our cases purport to require that the donor intend to transfer both title and possession immediately to have a valid inter vivas gift (see, Gannon v McGuire, 160 NY 476, 481, supra; Young v Young, 80 NY 422, 430, supra), they state the rule too broadly and confuse the effectiveness of a gift with the transfer of the possession of the subject of that gift. The correct test is " 'whether the maker intended the [gift] to have no effect until after the maker’s death, or whether he intended it to transfer some present interest’ ” (McCarthy v Pieret, 281 NY 407, 409, supra [emphasis added]; see also, 25 NY Jur, Gifts, § 14, at 156-157). As long as the evidence establishes an intent to make a present and irrevocable transfer of title or the right of ownership, there is a present transfer of some interest and the gift is effective immediately (see, Matter of Brady, 228 App Div 56, 60, affd no opn 254 NY 590; In re Sussman’s Estate, 125 NYS2d 584, 589-591, affd no opn 283 App Div 1051; Matter of Valentine, 122 Misc 486, 489; Brown, Personal Property § 48, at 133-136 [2d ed]; 25 NY Jur, Gifts, § 30, at 173-174; see also, Farmers’ Loan & Trust Co. v Winthrop, 238 NY 477, 485-486). Thus, in Speelman v Pascal (supra), we held valid a gift of a percentage of the future royalties to the play "My Fair Lady” before the play even existed. There, as in this case, the donee received title or the right of ownership to some property immediately upon the making of the gift but possession or enjoyment of the subject of the gift was postponed to some future time.

Defendant suggests that allowing a donor to make a present gift of a remainder with the reservation of a life estate will lead courts to effectuate otherwise invalid testamentary dispositions of property. The two have entirely different characteristics, however, which make them distinguishable. Once the gift is made it is irrevocable and the donor is limited to the rights of a life tenant not an owner. Moreover, with the gift of a remainder title vests immediately in the donee and any possession is postponed until the donor’s death whereas under a will neither title nor possession vests immediately. Finally, the postponement of enjoyment of the gift is produced by the express terms of the gift not by the nature of the instrument as it is with a will (see, Robb v Washington & Jefferson Coll., 185 NY 485, 493).

Delivery

In order to have a valid inter vivas gift, there must be a delivery of the gift, either by a physical delivery of the subject of the gift or a constructive or symbolic delivery such as by an instrument of gift, sufficient to divest the donor of dominion and control over the property (see, Matter of Szabo, 10 NY2d 94, 98-99, supra; Speelman v Pascal, 10 NY2d 313, 318-320, supra; Beaver v Beaver, 117 NY 421, 428-429, supra; Matter of Cohn, 187 App Div 392, 395). As the statement of the rule suggests, the requirement of delivery is not rigid or inflexible, but is to be applied in light of its purpose to avoid mistakes by donors and fraudulent claims by donees (see, Matter of Van Alstyne, 207 NY 298, 308, supra; Matter of Cohn, supra, at pp 395-396; Mechem, Requirement of Delivery in Gifts of Chattels and of Choses in Actions Evidenced by Commercial Instruments, 21 111 L Rev 341, 348-349). Accordingly, what is sufficient to constitute delivery "must be tailored to suit the circumstances of the case” (Matter of Szabo, supra, at p 98). The rule requires that " '[t]he delivery necessary to consummate a gift must be as perfect as the nature of the property and the circumstances and surroundings of the parties will reasonably permit’ ” (id.; Vincent v Rix, 248 NY 76, 83; Matter of Van Alstyne, supra, at p 309; see, Beaver v Beaver, supra, at p 428).

Defendant contends that when a tangible piece of personal property such as a painting is the subject of a gift, physical delivery of the painting itself is the best form of delivery and should be required. Here, of course, we have only delivery of Victor Gruen’s letters which serve as instruments of gift. Defendant’s statement of the rule as applied may be generally true, but it ignores the fact that what Victor Gruen gave plaintiff was not all rights to the Klimt painting, but only title to it with no right of possession until his death. Under these circumstances, it would be illogical for the law to require the donor to part with possession of the painting when that is exactly what he intends to retain.

Nor is there any reason to require a donor making a gift of a remainder interest in a chattel to physically deliver the chattel into the donee’s hands only to have the donee redeliver it to the donor. As the facts of this case demonstrate, such a requirement could impose practical burdens on the parties to the gift while serving the delivery requirement poorly. Thus, in order to accomplish this type of delivery the parties would have been required to travel to New York for the symbolic transfer and redelivery of the Klimt painting which was hanging on the wall of Victor Gruen’s Manhattan apartment. Defendant suggests that such a requirement would be stronger evidence of a completed gift, but in the absence of witnesses to the event or any written confirmation of the gift it would provide less protection against fraudulent claims than have the written instruments of gift delivered in this case.

Acceptance

Acceptance by the donee is essential to the validity of an inter vivas gift, but when a gift is of value to the donee, as it is here, the law will presume an acceptance on his part (Matter of Kelsey, 26 NY2d 792, affg on opn at 29 AD2d 450, 456; Beaver v Beaver, 117 NY 421, 429, supra). Plaintiff did not rely on this presumption alone but also presented clear and convincing proof of his acceptance of a remainder interest in the Klimt painting by evidence that he had made several contemporaneous statements acknowledging the gift to his friends and associates, even showing some of them his father’s gift letter, and that he had retained both letters for over 17 years to verify the gift after his father died. Defendant relied exclusively on affidavits filed by plaintiff in a matrimonial action with his former wife, in which plaintiff failed to list his interest in the painting as an asset. These affidavits were made over 10 years after acceptance was complete and they do not even approach the evidence in Matter of Kelly (285 NY 139, 148-149 [dissenting in part opn], supra) where the donee, immediately upon delivery of a diamond ring, rejected it as "too flashy”. We agree with the Appellate Division that interpretation of the affidavit was too speculative to support a finding of rejection and overcome the substantial showing of acceptance by plaintiff.

Accordingly, the judgment appealed from and the order of the Appellate Division brought up for review should be affirmed, with costs.

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

Judgment appealed from and order of the Appellate Division brought up for review affirmed, with costs.


text:
    In the Matter of First Energy Leasing Corporation et al., Appellants, v Attorney-General of the State of New York, Respondent.
    Argued June 3, 1986;
    decided July 10, 1986

      POINTS OF COUNSEL

      Irving P. Seidman and Lawrence H. Silverman for appellants.
    I. In any proceeding brought by the Attorney-General pursuant to General Business Law § 354, a Justice of the Supreme Court or Referee must be designated to preside over proceedings thereunder. (Moss v Ward, 450 F Supp 591; Accardi v Shaughnessy, 347 US 260; Kentucky Corp. v Paramount Exch., 262 US 544; Matter of Sacharoff v Corsi, 294 NY 305; Matter of Abrams v Bronstein, 33 NY2d 488.) II. In a proceeding brought by the Attorney-General pursuant to General Business Law § 354, the transcribed testimony of each witness must be promptly filed in the office of the clerk of the county in which the order for examination is filed.

      Robert Abrams, Attorney-General (Mark A. Tepper, O. Peter Sherwood, Harvey M. Berman and Rebecca Mullane of counsel), respondent pro se.

    I. A Supreme Court Justice need not be physically present at a General Business Law § 354 examination. (People v Federated Radio Corp., 244 NY 33; People v Lexington Sixty-First Assoc., 38 NY2d 588; Matter of Gardner

      v Lefkowitz, 97 Misc 2d 806.) II. The time for filing the transcribed testimony of witnesses in a General Business Law § 354 investigation is properly left to the discretion of the Attorney-General.
   OPINION OF THE COURT

Hancock, Jr., J.

When the Attorney-General conducts an examination pursuant to the Martin Act (General Business Law art 23-A), and proceeds specifically under General Business Law §§ 354 and 355, he is by express provision of the statute permitted to examine witnesses only before a Justice of the Supreme Court or a designated Referee. We reject the Attorney-General’s argument that the broad powers accorded him under General Business Law § 352 (investigation by Attorney-General) override the explicit requirements of sections 354 and 355.

The Attorney-General made an application pursuant to General Business Law §§ 354 and 355 for an order to examine witnesses allegedly involved in a fraudulent tax shelter scheme and for production of documents. Special Term denied appellants’ motion that the Attorney-General conduct the examination "before the justice of the supreme court or referee” designated in the order and that the witness transcripts be filed immediately. The Appellate Division affirmed, without opinion. We granted leave to appeal. For the reasons hereinafter stated, we conclude that the order should be modified and the motion granted to the extent of directing that the examination of witnesses be conducted before a Justice or Referee.

On April 11, 1984 the Attorney-General obtained an ex-parte "order to appear, be examined and to produce” pursuant to General Business Law § 354, naming 59 parties allegedly involved in promoting energy management systems as a fraudulent tax shelter scheme. Appellant First Energy Leasing Corporation (First Energy) is one of the promoters. James Marci is president and sole stockholder of First Energy. His wife, Virginia Marci, is a principal and member of the Board of Directors of Encon Enterprises, Inc., which supplies the energy management systems to First Energy. In addition to directing appellants to appear before "a Justice of this [Supreme] Court” to be examined under oath, the order also restrained them from conducting their business of selling securities consisting of investments in the equipment leasing of energy management systems. After several preliminary proceedings, appellants refused to submit to examination except in the presence of a Justice of the Supreme Court or designated Referee and brought the instant motion.

General Business Law § 354 (examination of witnesses and preliminary injunction) provides, in pertinent part, as follows:

"Whenever the attorney-general has determined to commence an action under this article, he may present to any justice of the supreme court, before beginning such action, an application in writing for an order directing the person or persons mentioned in the application to appear before the justice of the supreme court or referee designated in such order and answer such questions as may be put to them or to any of them, or to produce such papers, documents and books concerning the alleged fraudulent practices to which the action which he has determined to bring relates, and it shall be the duty of the justice of the supreme court to whom such application for the order is made to grant such application * * * The order shall be granted by the justice of the supreme court to whom the application has been made with such preliminary injunction or stay as may appear to such such justice to be proper and expedient and shall specify the time when and place where the witnesses are required to appear. The justice or referee may adjourn such examination from time to time and witnesses must attend accordingly. The testimony of each witness must be subscribed by him and all must be filed in the office of the clerk of the county in which such order for examination is filed” (emphasis added).

In specific terms the statute requires that examinations be conducted in the presence of a Justice of the Supreme Court or a specifically designated Referee. General Business Law § 355, which sets forth the procedure to be followed in a hearing conducted pursuant to section 354, reconfirms the legislative mandate that a Supreme Court Justice or designated Referee preside over such witness examinations. Section 355 provides in relevant part:

"The order for such examinationtion must be signed by the justice making it and service of a copy thereof with an endorsement by the attorney-general signed by him or his deputy, to the effect that the person named therein is required to appear and be examined at the time and place and before the jus tice or referee specified in such endorsement, shall be sufficient of witnesses” (emphasis added).

Despite the clear import of the foregoing statutory language, the Attorney-General finds legislative authority for an examination without judicial supervision in General Business Law § 352, which permits confidential investigations conducted under compulsion of subpoena. He points to the specific language in the last sentence of section 352 (2) stating that "[s]uch power of subpoena and examination [granted under section 352] shall not abate or terminate by reason of any action or proceeding brought by the attorney-general under this article”, and he contends that by bringing a proceeding under section 354 he has not elected an exclusive remedy or abandoned his right to conduct an investigatorial examination under section 352. The argument, however, is totally beside the point because the Attorney-General has never purported to exercise his investigatorial powers under section 352. Neither the notice or order to appear nor any other papers in the record make reference to section 352. He is proceeding solely by the order granted pursuant to section 354.

The Attorney-General also argues that the last sentence of section 352 (2) in some way augments his powers to conduct examinations in a proceeding commenced under sections 354 and 355 and frees him from the requirement that witness examinations be conducted in the presence of a Supreme Court Justice or Referee. The argument is at odds with the import of that sentence. Its evident purpose is the safeguarding of the investigative "power of subpoena and examination” granted to the Attorney-General under section 352 — not the creation of new powers or expansion of existing powers granted under section 354 or any other section.

Finally, the Attorney-General maintains that, for reasons of policy, the statute should not be read literally — i.e., that a strict construction would limit his broad statutory powers of investigation, increase expense and calendar congestion, and frustrate the remedial purpose of the statute. We agree that the Martin Act should be liberally construed to give effect to its remedial purpose (see, All Seasons Resorts v Abrams, 68 NY2d 81, 86; People v Lexington Sixty-First Assoc., 38 NY2d 588, 595) and that the Legislature has conferred extensive powers on the Attorney-General under section 352 to conduct confidential investigations under compulsion of subpoena. However, these considerations give us no sanction to ignore the plain language of sections 354 and 355 and the significant substantive and procedural differences between section 352 and sections 354 and 355.

Section 352 confers broad investigatory powers on the Attorney-General for the purpose of anticipating and preempting illegal activities. The Attorney-General need not wait for the occurrence of fraudulent acts or practices before commencing a section 352 investigation (see, General Business Law art 23-A; Mihaly & Kaufmann, Practice Commentary, McKinney’s Cons Laws of NY, Book 19, General Business Law, p 20). He may, in his discretion, keep hearings conducted pursuant to section 352 confidential (see, § 352 [5]) in order to avoid unwarranted market reaction if information concerning investigations into particular securities or dealers is publicly disseminated (see, General Business Law art 23-A; Mihaly & Kaufmann, Practice Commentary, op. cit., p 21). Moreover, since a section 352 proceeding is investigative rather than adjudicative in nature, a witness subpoenaed to appear at such a hearing has no constitutional right to the assistance of counsel (see, Matter of Kanterman v Attorney-General, 76 Misc 2d 743, 746).

In contrast, an application made pursuant to sections 354 and 355 presupposes an official determination by the Attorney-General to commence an action under article 23-A. A section 354 witness examination may be conducted only pursuant to court order, a public document open to inspection. In addition, the Attorney-General may secure an ex-parte temporary restraining order under section 354 and effectively close a business pending examination of witnesses and inspection of corporate documents. It is apparent that the Legislature, in granting to the Attorney-General the extraordinary enforcement powers under section 354, found it appropriate to give the subjects of those proceedings the added protection of judicial supervision.

We find no merit in appellants’ contention that section 354 requires immediate filing of witness transcripts. We, therefore, agree that Special Term properly denied appellant Marci’s request to view the testimony of other witnesses prior to his own examination. While the language of section 354 mandates the subscribing and filing of a witness’s testimony, nothing in the statute indicates that witness transcripts must be immediately filed as appellants contend. On the other hand, we reject Special Term’s holding that the intent of section 354 is to leave the time of compliance with the filing requirement entirely within the discretion of the Attorney-General. Implementation of this requirement must be left to the court to determine in its discretion, considering in each instance what is fair and appropriate under the circumstances.

Accordingly, the order of the Appellate Division should be modified, with costs to appellants, by granting appellants’ motion to compel examination before a Supreme Court Justice or Referee, and otherwise affirmed.

Chief Judge Wachtlek and Judges Meyer, Simons, Kaye, Alexander and Titone concur.

Order modified, with costs to appellants, in accordance with the opinion herein and, as so modified, affirmed.

      . General Business Law § 352 (2) provides as follows: "The attorney-general, his deputy or other officer designated by him is empowered to subpoena witnesses, compel their attendance, examine them under oath before him or a magistrate, a court of record or a judge or justice thereof and require the production of any books or papers which he deems relevant or material to the inquiry. Such power of subpoena and examination shall not abate or terminate by reason of any action or proceeding brought by the attorney-general under this article” (emphasis added).

      . That the last sentence of section 352 (2) is intended to apply only to powers granted to the Attorney-General under that section and — not to powers granted to him under other sections — is evidence from the language '[sjuch power of subpoena and examination [i.e., granted in section 352] shall not”.

      . The last sentence of section 354 provides as follows: "The testimony of each witness must be subscribed by him and all must be filed in the office of the clerk of the county in which such order for examination is filed.”