author: Titone, J. Chief Judge Kaye

text:
    [647 NE2d 1308, 623 NYS2d 800]
    In the Matter of Smith Barney, Harris Upham & Co., Inc., Appellant, v Charlie Luckie, Jr., et al., Respondents, and Doris Kahn, Respondent. In the Matter of Merrill Lynch, Pierce, Fenner & Smith, Inc., et al., Appellants, v Margaret B. Manhard, Respondent.
    Argued January 4, 1995;
    decided February 21, 1995

      POINTS OF COUNSEL

      Orrick, Herrington & Sutcliffe, New York City (Lawrence E. Fenster and Francis S. Chlapowski of counsel), and Paul K.

      Barenholtz for appellant in the first above-entitled proceeding.

      Deutsch & Lipner, Garden City (Seth Lipner of counsel), for Doris Kahn, respondent in the first above-entitled proceeding.

      Orrick, Herrington & Sutcliffe, New York City (Lawrence E. Fenster and Francis S. Chlapowski of counsel), for appellants in the second above-entitled proceeding.

      Michael Goergen, of the District of Columbia Bar, admitted pro hac vice, Deutsch & Lipner, Garden City, and Sims, Walker & Stienfeld (John R. Sims, Jr., and Steve Larson-Jackson, of the District of Columbia Bar, admitted pro hac vice, of counsel), for respondent in the second above-entitled proceeding. I.
   OPINION OF THE COURT

Titone, J.

These two appeals arise from controversies concerning separate securities transactions undertaken by two securities brokers on behalf of two unrelated investors. The common issue presented is whether the Appellate Division in each case properly held that the timeliness of claims sought to be arbitrated pursuant to an agreement governed by the Federal Arbitration Act (FAA) is a question reserved to the arbitrators, notwithstanding the facts that each arbitration agreement contained a New York choice of law provision, and that, under New York law, Statute of Limitations questions are properly resolved by the courts (see, CPLR 7502 [b]). In light of the United States Supreme Court’s decision in Volt Information Sciences v Leland Stanford Jr. Univ. (489 US 468), we conclude that a determination by the court on the Statute of Limitations question offends neither the language of the FAA nor its underlying policies where the parties have mutually agreed that New York law shall govern the dispute. Accordingly, we reverse in each case and remit to the Appellate Division for a determination on the previously unaddressed Statute of Limitations questions.

I

Smith Barney

In 1989, respondent Doris Kahn commenced arbitration against petitioner Smith Barney, Harris Upham & Co., a national securities broker-dealer having its principal executive offices in New York, alleging Federal and State claims of fraudulent and unsuitable sale of certain securities. Kahn, a Florida resident, made her Smith Barney investments exclusively through petitioner’s Florida offices, and terminated her account with petitioner in or about August 1984.

The governing customer agreement between Smith Barney and Kahn refers to and incorporates a Securities Account Agreement, which in turn contains an arbitration clause. The parties’ arbitration clause provides that "[a]ny controversy between Smith Barney and [Kahn] arising out of or relating to this contract or the breach thereof shall be settled by arbitration” and specifies the available arbitration fora. The arbitration clause is directly followed in the Securities Account Agreement by a New York choice of law provision, which states that "[t]his agreement and its enforcement shall be governed by the laws of the State of New York.”

The parties subsequently engaged in extensive State and Federal litigation to determine both the appropriate forum for arbitrating their dispute (see, Luckie v Smith Barney, Harris Upham & Co., 766 F Supp 1116 [MD Fla 1991], affd 999 F2d 509) and whether the arbitration is barred by the Statute of Limitations. In 1989, by special proceeding, petitioner Smith Barney sought an order in New York Supreme Court staying the arbitration before the National Association of Securities Dealers (NASD) pursuant to CPLR 7503 and moved to dismiss Kahn’s claims pursuant to CPLR 7502 (b) on the ground, among others, that they were time-barred. Supreme Court granted a temporary stay of arbitration pending determination of the petition. The court ultimately denied the petition for a stay, ruling that Kahn’s claims were governed by New York’s six-year Statute of Limitations for fraud, and were timely filed. The Appellate Division affirmed the denial of the stay of arbitration on different grounds. The Court ruled that the Statute of Limitations question is one to be resolved by the arbitrators rather than the courts. Relying on the fact that "[t]he parties’ intention to resolve all disputes by arbitration [was] clear,” the Court reasoned that "dismissal of respondent’s claims pursuant to CPLR 7502 (b) would defeat the policies of the Federal Arbitration Act.” (198 AD2d 87.) Thus, the Court concluded that "the arbitrators should decide the Statute of Limitations issue, including whether New York or Florida law applies” (id,., at 87). This Court granted Smith Barney’s motion for leave to appeal, but denied its motion for a stay of arbitration pending resolution of this appeal.

Merrill Lynch

In August 1992, respondent Margaret B. Manhard filed a claim in arbitration before the NASD in New York against petitioners Merrill Lynch, Pierce, Fenner & Smith, Inc., a national securities broker-dealer having its principal place of business in New York, and John R. DaCamara, a Merrill Lynch employee. Manhard alleged various Federal and State claims against petitioners arising out of certain investments made by Merrill Lynch on her behalf.

Arbitration was commenced in accordance with the terms of a customer agreement Manhard executed with Merrill Lynch. As in Smith Barney, the agreement provided that any controversy arising from the contract shall be settled by arbitration, and included a choice of law provision stating that "[t]his agreement and its enforcement shall be governed by the laws of the State of New York.”

On October 1, 1992, petitioners commenced this special proceeding in Supreme Court to permanently stay arbitration pursuant to CPLR 7502 and 7503 (b). Supreme Court granted petitioners a temporary stay of the arbitration pending a hearing on the petition. The petition contained allegations that all of Manhard’s claims were either ineligible for submission to arbitration under NASD Code of Arbitration Procedure § 15 — which precludes arbitration of claims based on transactions occurring more than six years prior to commencement of the arbitration — or were time-barred by applicable Federal or State Statutes of Limitations. Petitioners also argued that New York’s borrowing statute — CPLR 202 — required that the shorter of either New York’s or Virginia’s Statutes of Limitation applied. Thereafter, Manhard’s counsel conceded that all claims based upon transactions in her account that occurred more than six years prior to commencement of the arbitration were ineligible for arbitration, but maintained that the timeliness of her remaining claims was an issue reserved for the arbitrators. Manhard additionally argued that the New York borrowing statute was not an available bar to her claims because they "accrued” not in Virginia, the place of economic injury, but in New York, where the claim for arbitration was filed.

Supreme Court granted the petition and permanently stayed the arbitration. The Court ruled that pursuant to New York law, the Court was the proper forum to decide whether the claims were time-barred from arbitration. The Court then determined that New York’s borrowing statute applied, found that Manhard’s claims accrued in Virginia — the place of her economic loss — and held that the remaining claims were all time-barred.

The Appellate Division affirmed so much of Supreme Court’s order holding that claims based on transactions occurring more than six years prior to the filing were ineligible for arbitration pursuant to NASD rules and should be permanently stayed. However, the Court reversed on the Statute of Limitations issue, holding that because the parties made clear their intent to resolve all disputes by arbitration, "the policy of the Federal Arbitration Act requires that the applicability of a statute of limitations be decided by the arbitrators.” (201 AD2d 347.) We granted Merrill Lynch’s motion for leave to appeal, and granted its motion for a temporary stay of the Appellate Division order pending resolution of the appeal.

II

The Federal Arbitration Act (9 USC §§ 1-16) specifies that a written provision to arbitrate any controversy arising out of a "contract evidencing a transaction involving commerce” is valid and enforceable (see, 9 USC § 2). The Act was designed to terminate "the judiciary’s longstanding refusal to enforce agreements to arbitrate” (Dean Witter Reynolds v Byrd, 470 US 213, 219-220). In enacting the FAA, Congress established a Federal policy favoring arbitration agreements, which is to be advanced by rigorous judicial enforcement of arbitration agreements (Shearson/American Express v McMahon, 482 US 220) and by resolution of any "ambiguities as to the scope of the arbitration clause itself * * * in favor of arbitration” (Volt Information Sciences v Leland Stanford Jr. Univ., 489 US 468, 476, supra; Moses H. Cone Hosp. v Mercury Constr. Corp., 460 US 1, 24).

Notwithstanding the Federal policy favoring liberal enforcement of agreements to arbitrate, the FAA should not be construed to "confer a right to compel arbitration of any dispute at any time; it confers only the right to obtain an order directing that 'arbitration proceed in the manner provided for in [the parties’] agreement’ ” (Volt Information Sciences v Leland Stanford Jr. Univ., 489 US, at 474-475, supra, quoting 9 USC §4 [emphasis added by Supreme Court]). In other words, in recognition of the fact that arbitration is manifestly a matter of contract, and that parties to an arbitration agreement — like all contracting parties — are free to select the terms under which they will arbitrate, the policy established by the FAA is to ensure that private agreements to arbitrate are enforced according to their terms (id., at 476). Accordingly, the parties are at liberty to include a choice of law provision in their agreement, and the parties’ choice will be honored unless the chosen law creates a conflict with the terms of, or policies underlying, the FAA (id.).

The parties to each of the appeals before us do not dispute that the customer agreements governing the securities transactions at issue are contracts "involving commerce” within the realm of the FAA (see, Corey v New York Stock Exch., 493 F Supp 51, affd 691 F2d 1205, 1210 [6th Cir 1982]). The question we must resolve is whether New York arbitration law conflicts with the FAA on the question of the arbitrability of these Statute of Limitations disputes such that its application must be preempted.

Generally, under New York statutory and case law, a court may address three threshold questions on a motion to compel or to stay arbitration: (1) whether the parties made a valid agreement to arbitrate; (2) if so, whether the agreement has been complied with; and (3) whether the claim sought to be arbitrated would be time-barred if it were asserted in State court (see, CPLR 7502 [b]; 7503; Matter of County of Rockland [Primiano Constr. Co.], 51 NY2d 1, 9, n 2). Clearly, under New York law, statutory time limitations questions such as those presented on these two appeals — as opposed to contractual time limitations agreed upon by the parties — are for the courts, not the arbitrators (see, Rockland, 51 NY2d, at 9, supra).

Undeniably, in the absence of an explicit choice of law provision, governing Federal law would have precluded the courts in the appeals before us from addressing the Statute of Limitations issue (see, Conticommodity Servs. v Philipp & Lion, 613 F2d 1222, 1224-1225 [2d Cir 1980]) or from issuing stays under our arbitration act (see, Matter of Rederi [Dow Chem. Co.] 25 NY2d 576, 585). However, the parties’ choice that New York law would govern "the agreement and its enforcement” (emphasis added) indicates their "intention to arbitrate to the extent allowed by [this State’s] law,” even if application of the State law — and an adverse ruling on a Statute of Limitations claim — would relieve the parties of their responsibility under the contract to arbitrate (Armco Steel Co. v CSX Corp., 790 F Supp 311, 318 [D DC 1991]; see also, Saturn Distrib. Corp. u Williams, 905 F2d 719 [4th Cir 1990] [parties are entitled to incorporate State law restrictions into their arbitration agreement that would otherwise be preempted by the FAA], cert denied 498 US 983; Flight Sys. v Laurence Co., 715 F Supp 1125 [D DC 1989]). Although the parties broadly agreed to arbitrate "any controversy” arising from the customer agreements, that clause — like all other provisions in the contract — was subject to the parties’ additional qualification that New York State law provides the basis of decision for questions concerning not only the agreement, but more critically, its enforcement. Accordingly, we conclude that under this agreement the parties agreed to refer questions of timeliness to the courts by incorporating New York law. In other words, when the parties chose to apply New York law, "without excluding its arbitration rules” from that general condition (Mastrobuono v Shearson Lehman Hutton, 20 F3d 713, 717 [7th Cir 1994], cert granted 514 US —, 115 S Ct 305), the parties adopted as binding New York’s rule that threshold Statute of Limitations questions are for the courts.

In light of our conclusion that the parties intended that New York law govern the arbitration, the dispositive question for resolution of these appeals becomes whether, under standard Federal preemption analysis, the Federal Arbitration Act’s compulsory arbitration provisions and its underlying policies require that even those questions normally reserved to the courts pursuant to New York law must be resolved by the arbitrators, notwithstanding the presence of a New York choice of law provision in the agreement to arbitrate.

First, the provisions of CPLR 7502 (b) and 75Q3 authorizing the courts to consider a time limitation asserted as a bar to arbitration in connection with an application to compel or stay arbitration do not expressly conflict with any provision of the FAA (see, 9 USC §§ 1-16). Additionally, Congress did not intend "to occupy the entire field of arbitration” in enacting this statutory scheme (Volt Information Sciences v Leland Stanford Jr. Univ., 489 US 468, 477, supra). In the absence of any express conflict between the provisions of the FAA and New York’s arbitration law or some express congressional intent to occupy the entire field of arbitration in commercial disputes, the FAA will be found to preempt State law only to the extent that the State law " 'stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress’ ” (id., at 477, quoting Hines v Davidowitz, 312 US 52, 67). Accordingly, the dispositive inquiry before us is whether application of New York arbitration law in this context "undermine[s] the goals and policies of the FAA” (Volt Information Sciences, supra, at 478). We conclude that it does not.

Our point of departure on this aspect of the preemption analysis is the United States Supreme Court’s decision in Volt Information Sciences v Leland Stanford Jr. Univ. (489 US 468, supra). In Volt, the Supreme Court held that a California statute permitting a court to stay arbitration pending resolution of related litigation was not preempted by the FAA where the parties included a clause in their arbitration agreement stating that the agreement will be governed by California law. The Court first concluded that it would not disturb the California Court of Appeal’s conclusion that the parties had incorporated California’s arbitration rules into their agreement, since the interpretation of a private contract is "ordinarily a question of state law” (id., at 474). The Court next concluded that "[tjhere is no federal policy favoring arbitration under a certain set of procedural rules; the federal policy is simply to ensure the enforceability, according to their terms, of private agreements to arbitrate” (id., at 476). The Court went on to note that "[interpreting a choice-of-law clause to make applicable state rules governing the conduct of arbitration — rules which are manifestly designed to encourage resort to the arbitral process — simply does not offend the rule of liberal construction set forth in Moses H. Cone [460 US 1, supra], nor does it offend any other policy embodied in the FAA” (id., at 476).

Turning its focus to preemption, the Supreme Court addressed whether the State law, which authorized a stay of arbitration where no Federal counterpart was available, created a conflict with Federal law which "would undermine the goals and policies of the FAA” (id., at 478). Concluding that it would not, the Court reasoned that the FAA "simply requires courts to enforce privately negotiated agreements to arbitrate, like other contracts, in accordance with their terms” (id., at 478). Applying ordinary contract principles, the Court con-eluded that parties are not only free to limit by agreement the issues to be arbitrated, but also to "specify by contract the rules under which that arbitration will be conducted” (id., at 479). Finally, in key language, the Court explained that where "the parties have agreed to abide by state rules of arbitration, enforcing those rules according to the terms of the agreement is fully consistent with the goals of the FAA, even if the result is that arbitration is stayed where the Act would otherwise permit it to go forward” (id., at 479 [emphasis added]).

In the aftermath of Volt, the courts have divided on whether New York’s rule permitting the court to address a Statute of Limitations question conflicts with the compulsory arbitration provisions of the FAA and is thus preempted (compare, Chemical Futures & Options v Resolution Trust Corp., 832 F Supp 1188, 1194 [ND Ill 1993] [New York choice-of-law clause in arbitration agreement makes State arbitration rules applicable; under New York law, courts, not arbitrators, decide Statute of Limitations questions]; Seaboard Sur. Co. v Cates, 604 So 2d 570 [Fla Dist Ct App 1992] [same], with Merrill Lynch, Pierce, Fenner & Smith v Shaddock, 822 F Supp 125 [SD NY 1993] [time-bar defenses are for arbitrators, despite New York choice of law clause]; Merrill Lynch, Pierce, Fenner & Smith v Gregg, 1993 WL 616691 [US Dist Ct, MD Fla 1993] [same]; Victor v Dean Witter Reynolds, 606 So 2d 681 [Fla Dist Ct App, 5th Dist, 1992] [same], review denied 614 So 2d 502 [Fla 1993]). Those courts opting for preemption generally rely on Shearson Lehman Hutton v Wagoner (944 F2d 114 [1991]). We are not persuaded by the Wagoner court’s analysis, however, which did not cite or address the significance of the previously decided Volt case, and instead relied on two pre-Volt precedents which, critically, lack any reference to a contractual choice of law provision (Conticommodity Servs. v Philipp & Lion, 613 F2d 1222, 1224-1225 [2d Cir 1980], supra; Reconstruction Fin. Corp. v Harrisons & Crosfield, 204 F2d 366 [2d Cir], cert denied 346 US 854 [1953]). Indeed, one of those cases, Conticommodity, involved the very different situation where the time limitation was contained within the body of the contract — a matter for the arbitrator even under New York law (see, Matter of County of Rockland [Primiano Constr. Co.], 51 NY2d 1, supra).

In contrast to Wagoner and its progeny, we conclude that this State’s body of arbitration law — including the rule that courts may consider threshold Statute of Limitations claims— is not inimical to the policies of the FAA. Significantly, the FAA was modeled after New York’s arbitration law (see, Prima Paint v Flood & Conklin, 388 US 395, 405, n 13; Matter of Weinrott [Carp], 32 NY2d 190, 198-199). Accordingly, no significant distinction can be drawn between the policies supporting the FAA and the arbitration provisions of the CPLR. New York’s rule permitting the courts to address Statute of Limitations defenses to arbitration where the parties so choose in no way interferes with the parties’ contractual freedom to choose arbitration or even to choose arbitration "under applicable state rules”&emdash;the overarching goal of the FAA (Empire Blue Cross & Blue Shield v Greeson’s A Place for Us, 985 F2d 459, 462 [9th Cir 1993]). In fact, by honoring the parties’ selection of New York law to govern their agreement and its enforcement, our holding advances the Federal policy of "ensuring] the enforceability according to their terms, of private agreements to arbitrate” (Volt, 489 US, at 476, supra).

Both sets of petitioners attempt to distinguish Volt on the grounds that the California law at issue there merely permitted imposition of a temporary stay of the arbitration, while an adverse ruling on the Statute of Limitations issue by the courts in these cases would result in a permanent stay of arbitration. That interpretation of the Supreme Court precedent is belied by the unqualified conclusion reached by the Court that enforcing State rules of arbitration "according to the terms of the agreement is fully consistent with the goals of the FAA, even if the result is that arbitration is stayed where the Act would otherwise permit it to go forward” (id., at 479). Contrary to petitioners’ position, the Supreme Court did not rest its decision on the fact that the Court-issued stay in Volt was only temporary. Indeed, the Court consistently referred to the entire body of California’s statutory arbitration rules, and concluded without circumscription that "state rules of arbitration” may be incorporated into an agreement to arbitrate without offending the policies underlying the FAA (id., at 479). Accordingly, the potential permanency of the stay granted pursuant to New York law does not alter our conclusion that application of New York law to permit court determination of statutory timeliness issues does not conflict with the underlying policies of the FAA.

III

When making a threshold Statute of Limitations determination under New York law, the courts must apply the same period of limitations in arbitration that would govern if an action were brought on the claim being arbitrated (Matter of SCM Corp. [Fisher Park Lane Co.], 40 NY2d 788). Under the New York borrowing statute (CPLR 202), a securities fraud claim arising outside this State is subject to the limitations periods of the jurisdictions where the injury occurred — generally, the place where the investors resided and sustained the economic impact of the loss (see, Dymm v Cahill, 730 P Supp 1245 [SD NY 1990]). In borrowing the foreign statute, "[a]ll the extensions and tolls applied in the foreign state must be imported with the foreign statutory period, so that the entire foreign statute of limitations * * * applie[s], and not merely its period” (McLaughlin, Practice Commentaries, McKinney’s Cons Laws of NY, Book 7B, CPLR C202:3, at 109 [emphasis in original]). Since the Appellate Division in each case before us did not address the Statute of Limitations arguments, including applicability of the borrowing statute, relevant accrual dates, tolls and extensions by virtue of each panel’s conclusion that the question was for the arbitrators, we remit in each case for such a determination.

Accordingly, in each case, the order of the Appellate Division should be reversed, with costs, and each case remitted to the Appellate Division, First Department, for further proceedings in accordance with this opinion.

Chief Judge Kaye

(concurring). I concur in the Court’s opinion and conclusion that because the form arbitration agreements at issue plainly provide that New York law governs the "agreement and its enforcement” (emphasis added), the parties can fairly be understood to have agreed that all of New York arbitration law (including the provisions of CPLR article 75 which allow a party to first litigate Statute of Limitations issues in court) would apply. I write separately, however, to make two somewhat related points concerning what I fear may be the continuing erosion of the pro-arbitratian policy originally expressed by Congress in the Federal Arbitration Act (FAA).

First, I remain troubled by the practical effect for respondents — residents of the States of Florida and Virginia — who now have to litigate the brokerage firms’ Statute of Limitations defenses in New York State court before ever reaching the arbitrators’ door. Because of the Supreme Court’s direction in Volt Information Sciences v Leland Stanford Jr. Univ. (489 US 468, 479) that "private agreements to arbitrate [be] enforced according to their terms,” and the explicit terms of the agreements before us, however, I feel compelled to join the Court in reversing here.

Second, I think it useful to underscore the distinctly different interpretive choices made by the Court in this case and in Salvano v Merrill Lynch, Pierce, Fenner & Smith (85 NY2d 173 [decided today]).

In the present case, the Court concludes that the express language of the parties’ agreements contemplated that the whole of New York arbitration law would apply, and following Volt we give force to the parties’ agreement. In Salvano, by contrast, the arbitration agreements and New York Stock Exchange rules are silent as to the availability of expedited arbitration. Nonetheless, the majority concludes that the parties, by their silence, implicitly agreed that an expedited process was not permissible and thus, the Court lacked the authority to expedite the arbitration. As my dissent reflects, since the applicable agreements and rules in Salvano were silent as to the issue of expedition, it is incumbent upon the Court to vindicate the underlying policy of the FAA and affirm the issuance of an order expediting the arbitration during the pendency of the preliminary injunctions.

The difference between my vote to reverse in the present case and my dissenting vote to affirm in Salvano thus results from the difference between the agreements themselves.

Chief Judge Kaye and Judges Simons, Bellacosa, Smith and Ciparick concur with Judge Titone; Chief Judge Kaye concurs in a separate concurring opinion; Judge Levine taking no part.

In each case: Order reversed, etc.

      . Petitioner is now known as Smith Barney, Inc.

      . As directed by the 11th Circuit Court of Appeals, respondent pursued her arbitration claims before the NASD (see, Luckie v Smith Barney, Harris Upham & Co., 999 F2d 509 [11th Cir 1993], supra). Arbitration was held in the fall of 1994, and respondent was awarded $360,098.62 plus costs.

      . CPLR 202 provides: "An action based upon a cause of action accruing without the state cannot be commenced after the expiration of the time limited by the laws of either the state or the place without the state where the cause of action accrued, except that where the cause of action accrued in favor of a resident of the state the time limited by the laws of the state shall apply.”

      . Section 2 of the FAA, entitled "Validity, irrevocability, and enforcement of agreements to arbitrate,” provides: "A written provision in any maritime transaction or a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction, or the refusal to perform the whole or any part thereof, or an agreement in writing to submit to arbitration an existing controversy arising out of such a contract, transaction, or refusal, shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.”

        . The commercial transactions subject to the FAA’s dictates are defined in section 1 of that Act as: "commerce among the several States or with foreign nations, or in any Territory of the United States or in the District of Columbia, or between any such Territory and another, or between any such Territory and any State or foreign nation, or between the District of Columbia and any State or Territory or foreign nation”. (9 USC § 1.)

      . CPLR 7502 (b), entitled "Limitation of time”, provides: "If, at the time that a demand for arbitration was made or a notice of intention to arbitrate was served, the claim sought to be arbitrated would have been barred by limitation of time had it been asserted in a court of the state, a party may assert the limitation as a bar to the arbitration on an application to the court * * *. The failure to assert such bar by such application shall not preclude its assertion before the arbitrators, who may, in their sole discretion, apply or not apply the bar.”

      . CPLR 7503 (a), entitled "Application to compel arbitration; stay of action”, provides: "A party aggrieved by the failure of another to arbitrate may apply for an order compelling arbitration. Where there is no substantial question whether a valid agreement was made or complied with, and the claim sought to be arbitrated is not barred by limitation under subdivision (b) of section 7502, the court shall direct the parties to arbitrate. Where any such question is raised, it shall be tried forthwith in said court. If an issue claimed to be arbitrable is involved in an action pending in a court having jurisdiction to hear a motion to compel arbitration, the application shall be made by motion in that action. If the application is granted, the order shall operate to stay a pending or subsequent action, or so much of it as is referable to arbitration.”

      . FAA § 3 provides for a judicial stay of court proceedings "brought in any of the courts of the United States” where an issue raised therein is referable to arbitration. Additionally, section 4 of the Act authorizes "[a] party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration [to] petition any United States district court * * * for an order directing that such arbitration proceed in the manner provided for in such agreement” (9 USC § 4 [emphasis supplied]). These sections generally provide tools to enforce arbitration agreements and do not purport to circumscribe the issues that a State court may consider in staying or compelling arbitration where the parties’ agreement contemplates that its enforcement will be governed by the law of a particular State.


source: Caselaw Access Project

author: Bellacosa, J. Simons, J.

license: Public Domain

text:
    [647 NE2d 1317, 623 NYS2d 809]
    In the Matter of Thomas J. Scotto, as President of the Detectives’ Endowment Association, et al., Respondents, v David N. Dinkins, as Mayor of the City of New York, et al., Appellants.
    Argued November 29, 1994;
    decided February 23, 1995

      POINTS OF COUNSEL

      Paul A. Crotty, Corporation Counsel of New York City (Janet L. Zaleon, Barry P. Schwartz and Bruce Rosenbaum, of counsel), for appellants.

      Vincent D. McDonnell, New York City, and O’Dwyer & Bemstien (Brian O’Dwyer and Gary Silverman of counsel), for respondents.

      Donna M. C. Giliberto, Albany, for the New York State Conference of Mayors and Municipal Officials, amicus curiae.

   OPINION OF THE COURT

Bellacosa, J.

The purely statutory construction issue in this CPLR article 78 proceeding was resolved by Supreme Court granting the petition. The Appellate Division affirmed and certified to us the question of the propriety of its ruling. The affirmed judgment directed appellants-respondents to comply with the appointment directive of section 14-103 (b) (2) of the Administrative Code of the City of New York (as amended by L 1990, ch 755) by officially designating petitioners as detectives. Petitioners are police officers performing duties in four different categories of investigative functions. The judgment also declared that New York City Police Department Interim Order 61 and related departmental directives, restricting the applicability of section 14-103 (b) (2), are null and void and enjoined their implementation.

The dispositive inquiry devolves to whether the Legislature, in enacting the 1990 amendment to section 14-103 (b) (2) of the Administrative Code, intended to provide the Police Commissioner of the New York City Police Department with the discretion to define the statute’s operative term and, by so doing, to countermand or curtail the remedial sweep of the statutory amendment itself. We conclude that the Legislature’s intent was to eliminate the very discretion which the Commissioner now seeks to reclaim. Consequently, the order of the Appellate Division upholding the invalidation of the Department’s contrary directives should be affirmed and the certified question answered in the affirmative.

As amended (L 1990, ch 755), section 14-103 (b) (2) of the Administrative Code directs:

"Any person who has received permanent appointment as a police officer and is temporarily assigned to perform the duties of a detective shall, whenever such assignment exceeds eighteen months in duration, be appointed as a detective and receive the compensation ordinarily paid to a detective performing such duties” (emphasis added).

Thus, the provision, by its terms, mandates that any police officer who has been temporarily assigned to perform the "duties of a detective” for more than 18 months "be appointed as a detective” and receive commensurate compensation, rank, and other benefits. This provision was enacted to remedy morale and inequity problems resulting from indefinitely assigning officers to detective/investigative duties without providing proportionate benefits and security (Mem in Support of Legislation, Bill Jacket, L 1990, ch 755; see also, 1988 NY Legis Ann, at 359, 360; 1985 NY Legis Ann, at 348, 349 [both discussing intention behind similarly structured precursor bills which were vetoed]).

To countermand this amendment, the Police Department of the City of New York issued Interim Order 61, which restricted the coverage of chapter 755 to only certain specified types of investigative assignments. Subsequently, the Department issued Interim Order 60-3, applicable to certain other investigative tracks, which provided for assignments as detectives, but only after more than 26 months of service in those temporary assignments.

The substance of appellants’ argument, adopted by the dissenters, is that the meaning of the term "duties of a detective” is not plain on the face of the statute (see, Administrative Code § 14-103 [b] [2]), and that, therefore, the Police Commissioner retains the discretion to reasonably interpret the phrase and determine what investigative duties fall within the statute’s protective mandate (see, Matter of New York State Assn. of Life Underwriters v New York State Banking Dept., 83 NY2d 353, 359-360). They point to the historically broad discretion that the Commissioner has been accorded in the area of designating police officers to the status of detective (see, Administrative Code § 14-103 [a], [b]; see generally, McGowan v Mayor of City of N Y., 53 NY2d 86, 94, 95; People ex rel. O’Connor v Girvin, 227 NY 392, 394, 396). On this basis, they maintain that the Commissioner retains the power to fill gaps in the statute and determine which "investigative duties” constitute "detective duties”, and that judicial deference is due the agency’s reasonable interpretation of the statute’s operative term and durational requirement (see, Matter of Moran Towing & Transp. Co. v New York State Tax Commn., 72 NY2d 166, 173; Matter of Trump-Equitable Fifth Ave. Co. v Gliedman, 62 NY2d 539, 545).

Notwithstanding the Legislature’s failure to define the statute’s operative term, we cannot agree that deference is due the Commissioner in the respects sought. Under the circumstances of this case, the Commissioner functionally seeks to draw discrete classifications and, thus, to exert a legislative function, cutting directly against the purpose of the very statutory amendment at issue.

Appellants’ argument is equally flawed because it contradicts the legislative history of the amendment. It was precisely because of the Police Commissioner’s unbridled discretion in making such indefinite designations to the detective rank that the Legislature was repeatedly importuned to make changes to curtail that power and eventually interposed its policy choice (Mem in Support of Legislation, Bill Jacket, L 1990, ch 755). In matters of statutory construction, "legislative intent is 'the great and controlling principle’ ”, and our proper judicial function is to "discern and apply the will of the Legislature” (Matter of Sutka v Conners, 73 NY2d 395, 403).

The claim of a distinction between the terms "investigative duties” and "detective duties” in the interpretation of section 14-103 (b) (2) is also unavailing. The legislative history of chapter 755 demonstrates that the terms were used interchangeably (see, Mem in Support of Legislation, Bill Jacket, L 1990, ch 755 [stating that morale will suffer "if a police officer is required to perform investigative duties side-by-side with a detective without there being any mandatory period after which time he (or she) must be re-designated as a detective” (emphasis added)]; Budget Report on Bills, Bill Jacket, L 1990, ch 755 [stating that one of the arguments in support of the bill is that "work performed by police officers assigned investí gative duties * * * and detectives * * * is not * * * distinguishable” (emphasis added)]). For all these reasons, we reject appellants’ appeal and are not persuaded by the views expressed by the dissenting opinion. Thus, we affirm the lower courts’ determination.

We note, too, that appellants’ claim that section 14-103 (b) (2) violates the Merit and Fitness Clause of the New York Constitution (art V, § 6) is not properly before this Court and agree unanimously that the issue should not be decided here. To be sure, the claim was pleaded, but appellants abandoned this argument in the lower courts and did not advance it before us (contrast, Matter of Wood v Irving, 85 NY2d 238 [decided today, on constitutional grounds only, involving a parallel statutory mechanism applicable solely outside New York City]). Moreover, under the procedural circumstances presented here, we all agree it would not be prudent or appropriate to recognize and determine such an issue at the urging solely of an amicus curiae.

Accordingly, the order of the Appellate Division should be affirmed, with costs, and the certified question answered in the affirmative.

Simons, J.

(dissenting). Prior to the enactment of section 14-103 (b) (2) of the Administrative Code of the City of New York, detective assignments in the New York City Police Department embraced a variety of investigative and administrative duties. Because the amendment by its terms provides that a police officer temporarily assigned to the duties of a detective shall, whenever such assignment exceeds 18 months, be appointed detective, the Department undertook a study of the various duties being performed by its detectives to determine which assignments provided the Department with the best opportunity to assess competence for detective duties within the 18-month period. As a result of that study, the Commissioner issued Interim Order 61, providing that only officers assigned to those specific commands primarily involving investigative rather than administrative duties would come within the scope of the amendment.

The majority concludes that Order 61 is void and that all police officers temporarily assigned as detectives for a period of 18 months as of the date of the statute’s enactment, regardless of the duties performed during that period, were entitled to permanent appointment. The Commissioner contends that the statute was not intended to determine what are and what are not detective duties: it was intended to remedy the problem of indefinite appointments. He notes that the statute does not identify the duties of a detective and contends that he, as the administrative head charged with implementing the statute, is entitled to reasonably define and limit those duties which qualify appointees to become permanent detectives. We agree.

The legislative history makes clear that the 1990 amendment to the Administrative Code was enacted to remedy a specific abuse: the widespread practice of assigning police officers to perform for long periods the same duties as detectives, but never endowing them with either the title or the emoluments of the detective position. Indeed, the memorandum in support of the legislation, relied on by the majority (see, majority opn, at 214), addresses the failure to appoint those performing detective duties and states that the practice sought to be corrected was abusive because it undermines "the spirit and intent of th[e] philosophy” underlying the career path concept. The statute speaks only generally of detectives’ duties, without defining them, and nothing in the history preceding its enactment indicates that the Legislature also sought to curtail the discretion traditionally exercised by the Police Commissioner of the City of New York to determine what assignments make up the "career path” from patrol officer to detective in the NYPD.

Identifying and assigning responsibilities for the various ranks in the police department is a matter requiring experience and expertise in the field of law enforcement and since nothing in the statute attempts to define the duties of a detective, the Commissioner, the administrator obliged to appoint those who will become detectives by operation of law after the passage of 18 months, should have the discretion to determine the duties which will fairly test officers’ qualifications for permanent positions. Former Governor Cuomo acknowledged the desirability of reposing such discretion in the Commissioner when, upon vetoing an earlier version of the statute, he noted that requiring the Commissioner to evaluate an officer’s performance after only six months "would reduce the flexibility the Police Commissioner needs to properly staff the Detective Division” (see, 1985 NY Legis Ann, at 349).

Thus, although the Commissioner must comply with the specified "durational requirements” of the amendment, as head of the agency charged with implementing section 14-103 (b) (2) of the Administrative Code, in the absence of any definition or limiting provisions in the statute, he retains the discretion to define "detective duties” for the purposes of that section. Inasmuch as the classifications contained in Order 61 are reasonable and supported by a comprehensive study of the subject, the court should defer to the Commissioner’s expertise and uphold the order (see, Matter of Teachers Ins. & Annuity Assn. v City of New York, 82 NY2d 35, 41).

It may be argued that the Commissioner abused his discretion when he issued Interim Order 61, if the order’s purpose was to circumvent the mandate of the Legislature, but petitioners did not assert a claim based on an abuse of discretion, and the issue is not properly before us today.

Judges Titone, Smith, Levine and Ciparick concur with Judge Bellacosa; Judge Simons dissents in a separate opinion in which Chief Judge Kaye concurs.

Order affirmed, etc.


author: Titone, J. Bellacosa, J.

text:
    [647 NE2d 1321, 623 NYS2d 813]
    The People of the State of New York, Respondent, v Robert Dixon, Appellant.
    Argued January 12, 1995;
    decided February 23, 1995

      POINTS OF COUNSEL

      Joel Atlas, New York City, and Philip L. Weinstein for appellant.

      Charles J. Hynes, District Attorney of Kings County, Brooklyn (Monique Ferrell, Roseann B. MacKechnie and Richard T. Faughnan of counsel), for respondent.
   OPINION OF THE COURT

Titone, J.

Defendant was identified as a mugger during a canvassing of the crime scene undertaken by the police and the victim in a patrol car for purposes of identifying the perpetrators. The question we must decide is whether the courts below properly concluded that the allegedly spontaneous nature of an identification rendered a Wade hearing regarding the procedure unnecessary. We conclude that the suppression court’s summary denial of defendant’s motion for a Wade hearing was improper, since the canvassing was a police-spansored procedure conducted for the purpose of obtaining an identification. Because the parties’ submissions did not establish, as a matter of law, that the identification was free from the risk of police suggestion, defendant was entitled to a Wade hearing to test the propriety of the procedure and the risk of misidentification.

I

At approximately 11:00 p.m. on September 17, 1990, complainant Harold Knowings was robbed by a group of men as he left a grocery store in Brooklyn. The transit police drove the victim through the streets near the crime scene in a marked police van to search for the perpetrators. During this "canvass,” the victim pointed to defendant on the street and identified him as one of the robbers. Based on this identification, defendant was immediately arrested and charged with second degree robbery, fourth degree grand larceny and second and third degree assault.

The People notified defendant that the complainant had made a "corporeal non-lineup identification” in the presence of the police. Defendant sought omnibus relief, including a Wade hearing to challenge "the propriety of the identification procedures used” to identify him as one of the perpetrators. Defendant alleged that the identification procedure "utilized by law enforcement officials * * * [was] unfair, creating a substantial likelihood of misidentification.” In response to the motion, the People alleged that defendant "was pointed out to the police by the complainant during a canvass of the area surrounding the scene of the crime.” Thus, the People concluded that "there was no police-arranged procedure surrounding the identification in this case, and defendant is therefore not entitled to a hearing on the issue.”

Citing the People’s representation that the complaining witness sua sponte pointed out defendant during an area canvass, the suppression court concluded that the identification was not "police sponsored,” and summarily denied the motion for a Wade hearing. At trial, Knowings, the sole identifying witness, testified as to his out-of-court identification of defendant and identified defendant in court as one of the gang of men who attacked him in the grocery store and stole his bag. Taking the stand in his own defense, defendant testified that he was near the scene of the crime at the time of the incident, but that the complainant had mistakenly selected him as one of the robbers. Defendant was convicted by a jury of second degree robbery.

The Appellate Division affirmed the conviction, holding that defendant’s motion for a Wade hearing was properly denied "because the complainant’s identification of the defendant was made spontaneously and was not the product of an identification procedure arranged by the police.” (201 AD2d 581, 582.) Defendant’s appeal is before us by permission of a Judge of this Court.

II

Our analysis begins with CPL 710.60, the statute which governs suppression motions and their disposition. Subdivisions (2), (3) and (4) together establish that a court must conduct a hearing and make findings of fact in determining the motion, unless a summary grant or denial of the motion is authorized therein. Generally, a suppression motion may be summarily denied "if no legal basis for suppression is presented or if the factual predicate for the motion is insufficient as a matter of law” (People v Rodriguez, 79 NY2d 445, 452, citing CPL 710.60 [3]).

As a preliminary matter, defendant cannot be faulted for failing to allege in his pleadings particularized facts describing the nature and circumstances of the "point-out” in the police car. Alleging facts to support a motion to suppress testimony concerning an out-of-court identification is a burden that a defendant no longer carries on a motion for a Wade hearing (see, CPL 710.60 [3] [b] [1995]). As this Court has previously explained, the 1986 amendments to CPL 710.60 (3) (b) relieved a defendant of the obligation to plead facts concerning a "previous identification of the defendant by the prospective witness” (CPL 710.20 [6]), "likely for the reason that in many instances a defendant simply does not know the facts surrounding a pretrial identification procedure and thus cannot make specific factual allegations” (People v Rodriguez, 79 NY2d 445, 453, supra). That pleading dilemma can be no more apparent than in this case, where defendant was not present in the police car at the time of the identification and could not know whether the witness’ selection of him was due to police commentary or prompting. Indeed, prior to his receipt of the People’s responsive pleadings, defendant may have been unaware that he was apprehended as a result of a "canvass.” Accordingly, a defendant’s failure to plead sufficient facts in support of the motion to suppress testimony of a prior identification is not a proper ground to summarily deny a motion for a Wade hearing (id.).

Turning to defendant’s entitlement to a Wade hearing under the allegations before the motion court, we note that the purpose of the Wade hearing is to test identification testimony for taint arising from official suggestion during "police-arranged confrontations between a defendant and an eyewitness” (People v Gissendanner, 48 NY2d 543, 552; People v Newball, 76 NY2d 587, 591). Such suggestion can impair the reliability of the identification and is at odds with the fundamental due process right to a State-sponsored pretrial identification procedure designed to "eliminate or minimize the risk of convicting the innocent” (People v Collins, 60 NY2d 214, 218).

Our precedent does not support a restrictive definition of "police-arranged” procedures (see, dissenting opn, at 228). Drawing the line between State-prompted identification procedures and identifications "resulting from spontaneous and unplanned encounters,” the Court stated in People v Newball (76 NY2d 587, 591), that the due process concerns underlying the notice provisions of the Criminal Procedure Law (see, CPL 710.30) are implicated whenever "identification procedures * * * come about at the deliberate direction of the State.”

Viewed against this backdrop, we reject the conclusion urged by the People and reached by the Appellate Division that the fact that the complaining witness "spontaneously” pointed out defendant removed the identification procedure— here, the canvassing — from the category of police-sponsored viewings that warrant a Wade hearing. That flawed conclusion results from the Court’s confusion of two entirely distinct concepts: witness-initiated procedures and witness-initiated identifications. An identification by a witness may be "spontaneous” in the sense that it is unprompted, yet still be the product of a police-arranged procedure. For example, a victim may reflexively point out the perpetrator during a viewing of a videotape of passersby that was made and supplied by the police (see, People v Edmonson, 75 NY2d 672, 678). In those circumstances, the identification could fairly be characterized as "spontaneous”, but no one would dispute that the procedure was "police-arranged.” In contrast, a true "spontaneous” procedure would exist where a complainant flags down a police officer and then points to the attackers on the street less than two blocks away (see, People v Rios, 156 AD2d 397, 398).

Here, the canvassing of the crime area in the police car was an identification procedure undertaken at the "deliberate direction of the State.” It is undisputed that the victim was escorted to the crime scene by police, indicating that this was a confrontation arranged for the distinct purpose of identifying the perpetrators of the mugging (see, People v Berkowitz, 50 NY2d 333, 338, n 1). This planned identification encounter is distinguishable from those non-police-sponsored identifications resulting from mere happenstance, such as where a witness is present in police headquarters for some purpose other than to effectuate an identification, and by chance views and identifies a suspect who is being processed in another room. Accordingly, based on the pleadings on the motion, the suppression court and the Appellate Division improperly concluded that no Wade hearing was warranted because the procedure employed to gain the identification of defendant was not "police-arranged.”

Indeed, to the extent that this Court has recognized exceptions to the general requirement of a Wade hearing, they have been narrowly confined to those circumstances, not present here, where either the prior identification is merely "confirmatory” (see, People v Wharton, 74 NY2d 921, 922), or where "the protagonists are known to one another” (see, People v Gissendanner, 48 NY2d 543, 552, supra). Confirmatory procedures are not subject to testing in Wade hearings because the risk of misidentification is slight in view of the presence of such factors as the identifying officer’s expertise and the proximity of the identification to the time and scene of the crime (People v Wharton, 74 NY2d, at 922, supra). Likewise, a hearing is not necessary in the case of an identifying witness who is familiar with the perpetrator because that witness will naturally be "impervious to police suggestion” (People v Rodriguez, 79 NY2d, at 452, supra). No similar policy justification supports a summary denial of a Wade hearing, where, as here, no firm prior relationship is established, because in such cases "it would be unrealistic to ignore the possibility that police suggestion may improperly influence the witness in making an identification” (People v Collins, 60 NY2d 214, 219, supra). That the requirement of a Wade hearing remains the rule, and not the exception, corresponds with the belief that " ' "[t]he influence of improper suggestion upon identifying witnesses probably accounts for more miscarriages of justice than any other factor” ’ ” (People v Edmonson, 75 NY2d, at 676, supra).

Without the benefit of a Wade hearing, the courts below could not conclude as a matter of law that the witness’ identification of defendant from the police van was spontaneous and not subject to any degree of police suggestion. Indeed, in their responsive pleadings on the Wade motion, the People did not represent that the victim "spontaneously” identified defendant. Rather, they merely asserted that defendant "was pointed out to the police by the complainant during a canvass”. Clearly, the possibility that the "point out” was preceded or precipitated by police prompting is not foreclosed. Indeed, the circumstances in this case are not different in principle from a traditional lineup, where the police orchestrate the panel to be viewed and accompany the victim while he or she scans the subjects. In sum, nothing about the procedure employed here rendered the witness "impervious to police suggestion” (see, People v Rodriguez, 79 NY2d, at 452, supra) or obviated the need for the courts to closely examine the circumstances surrounding the identification. Thus, a Wade hearing was required to enable the parties to explore the true nature of the facts surrounding the particular identification — circumstances not ascertainable in the absence of a hearing.

Defendant’s remaining contention lacks merit.

The case should be remitted to Supreme Court for a Wade hearing to determine whether any police suggestiveness tainted the identification procedure. If so, defendant is entitled to a new trial and such further proceedings as the circumstances may warrant. If the People are successful at the Wade hearing, the judgment of conviction and sentence should be amended to reflect that result.

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

Bellacosa, J.

(dissenting). We vote to affirm the order upholding defendant’s robbery conviction after a jury trial. Settled precedents and the particular facts, resolved against defendant in both courts below, establish that no Wade hearing should be mandated in this case and all similarly situate street canvass cases (see, United States v Wade, 388 US 218). "[N]o legal basis [or cognizable theory] for suppression is presented” and no sufficient "factual predicate for the motion” to suppress, as a matter of law, is advanced (CPL 710.60; see, People v Rodriguez, 79 NY2d 445, 452; see also, People v Mendoza, 82 NY2d 415, 421). Thus, summary denial is authorized and warranted.

Judge Levine and I respectfully disagree with the majority opinion because it erects a virtual per se pretrial hearing entitlement, contrary to CPL 710.60’s express limitations and prescriptions. It does so, moreover, in an entirely new and inappropriate category of law enforcement investigation of criminal conduct and immediate pursuit of perpetrators. Every noncustodial street canvass by police with crime victims will hereafter be presumptively treated as "police-arranged” and identification-suggestive by its nature. Unnecessary, layered hearings, not constitutionally or statutorily required in fairness, merely provide for indirect discovery, complexity and tactical delay and unjust results.

The victim, Harold Knowings, was walking home in Brooklyn at approximately 11:00 p.m. in 1990 when he was approached by defendant, who offered him marihuana. Knowings identified the area as "well lit”. Although Knowings tried to rebuff defendant’s attempt to sell the drugs, defendant walked along with Knowings for another 10 to 20 seconds until the victim entered a grocery store. When Knowings attempted to leave the store, defendant blocked his path. Knowings reentered the store to telephone the police, but was grabbed by an unknown individual behind the counter and taken outside the store, where he was assaulted and robbed by a group of approximately six individuals, including defendant. Knowings eventually struggled free and fled to a transit police station located approximately two blocks away. The police immediately took Knowings in a marked police vehicle and drove him back towards the crime scene.

The entirety of the original file on this issue shows the following:

A. In defendant’s omnibus motion in support of a Wade hearing, defense counsel affirmed only this:

"It is respectfully submitted that the procedures utilized by law enforcement officials to obtain an identification of the defendant were unfair, creating a substantial likelihood of misidentification. This court should therefore order a hearing to determine the propriety of the procedures used. The procedure utilized by police was a one on one situation and the potential for misidentification was extremely great” (defendant’s appendix, at 16-17).

B. The Assistant District Attorney affirmed in response:

"The People oppose both defendant’s request for relief and a hearing on the issue.
"First, although defendant normally need not be very specific in requesting a hearing to determine this issue, defendant’s motion in this case is extremely conclusory and fails entirely to establish a claim.
"Second, the defendant in this case was pointed out to the police by the complainant during a canvass of the area surrounding the scene of the crime. As such, there was no police-arranged procedure surrounding the identification in this case, and defendant is therefore not entitled to a hearing on the issue.
"Accordingly * * * this court should deny both defendant’s request for relief and a hearing on the issue.”

C. Justice Broomer’s pretrial motions’ decision concludes:

"II. The defendants’ motions for a Wade/Dunaway hearing are denied. The People represent that the complaining witness sua sponte pointed out the defendants to the police during a canvass of the area within minutes of the alleged crime. Since these were not police sponsored identifications, they do no warrant a Wade hearing. Even the serving of CPL § 710.30 notice does not generate a hearing where none is warranted (People v Allen, NYU, June 20, 1990, p. 25, col. 5).
* * *
"Although Wade/Dunaway, Mapp and Huntley hearings are denied, they shall be conducted if, at the time of trial, facts appear to be other than stated in the papers (People v Wicker, 72 AD2d 611).”

The Appellate Division, Second Department, affirmed holding that defendant was not entitled to a hearing "because the complainant’s identification of the defendant was made spontaneously and was not the product of an identification procedure arranged by the police” (201 AD2d 581, 582).

The street identification at issue by the mugging victim represents a typical, standard and reasonable police-victim prompt effort to act upon the report of a crime and to search for and apprehend a perpetrator (see, e.g., People v Duuvon, 77 NY2d 541; People v Love, 57 NY2d 1023). It was not, as stated by the majority, "conducted for the purpose of obtaining an identification.” (Majority opn, at 220.) No one could have known that one of the perpetrators was still at or near the crime scene when the normal investigative canvass was undertaken.

Some such situations could warrant a hearing because they are truly "police-arranged” or might qualify as a suggestive showup if they satisfy the prerequisites of CPL 710.60. That, however, is not this case. This record does not support such a conclusion, and all such encounters are not inherently suspect, qualifying for an automatic pretrial Wade hearing.

The action taken here is, on its face, not a "police-arranged” identification procedure. The law enforcement authorities did not initiate or exert this effort with prior knowledge about this or any targeted perpetrator. They were simply responding immediately to a civilian crime victim’s complaint. This is not a situation instinct with suggestibility, such as suggestive or improper bolstering present in showups, lineups and photo identifications. Nor does defendant’s motion for the Wade hearing assert anything like that — in essence, his entire claim is reduced to a nonfactual, conclusory "likelihood of misidentification, ” a very different order of problem from police misconduct of suggestibility. Moreover, this is not the kind of forbidden one-on-one arrangement that we have condemned. Categories and nomenclature should not control these cases. We have to define our terms, especially such important terms of art like these, and then carefully analyze and apply them, case by case, not by per se ukases. In sum, the "police-or-ranged” and "one-on-one” phrases of art and concepts have been developed in our cases for entirely different purposes, serving different underlying policies from that which occurred here and that which the majority transforms into suspect or suppressed investigatory practices.

"Police-arranged” and "one-on-one” identifications, in the identification semantics sense, are not, in our view, contemplated to be so embracive as to cover all street canvasses and engender such automatic legal consequences (People v Rodriguez, 79 NY2d 445, 449, supra; People v Duuvon, 77 NY2d 541, 546, supra; People v Newball, 76 NY2d 587, 590; People v Chipp, 75 NY2d 327, 337, cert denied 498 US 833). It is not logical, nor is it rooted in sound practicality or tested constitutional theory (see, e.g., Stovall v Denno, 388 US 293). As this Court has stated, the identification statutes were " 'a legislative response to the problem of suggestive and misleading pretrial identification procedures’ ” (People v White, 73 NY2d 468, 474, quoting People v Gissendanner, 48 NY2d 543, 552 [emphasis added]). Our judicial purview, thus, has always spotlighted police conduct to expose the danger or potentiality for suggestiveness lurking in the particular kind and mode of law enforcement practices (see, People v Riley, 70 NY2d 523, 529-531). Historically, the precedents have dealt with lineups (People v Chipp, 75 NY2d 327, supra; United States v Wade, 388 US 218, supra), true showups (People v Riley, 70 NY2d 523, supra) and photo identifications (People v Rodriguez, 79 NY2d 445, supra; Simmons v United States, 390 US 377). By contrast, the law enforcement action here was limited to responding promptly and appropriately to a crime victim’s exigent report of a crime committed proximately in time and place. The action is different in kind from the identification techniques, practices and categories that have previously been curtailed or condemned or made subject to per se suppression.

Defendant did not give the trial court in his moving papers actual or even theoretical suggestiveness as a basis for a hearing. Rather, he advanced only a speculative likelihood of misidentification. That is not a cognizable legal or factual predicate sufficient to bar a trial court from exercising its statutorily granted authority to summarily deny a suppression motion under CPL 710.60. The defendant’s claim, accepted by the majority, allows defendant to engage in a fishing expedition pretrial hearing in every case merely for the conclusory asking of it (see, People v Mendoza, 82 NY2d 415, 422, 425, supra). That the police provided the transportation, should not, standing alone, create an issue on this record entitling defendant to a pretrial hearing on suggestiveness on some new, presumptively inherently suspicious theory (see, People v Brnja, 50 NY2d 366). This case drives the phrase "police-arranged” inexorably and inappropriately beyond its categorical, functional and particularized purpose.

The present case is also factually and legally distinguishable from People v Newball (76 NY2d 587, supra). In Newball, the defendant objected to the testimony of an undercover officer claiming that the officer had made a previous identification of defendant and the People did not serve a CPL 710.30 notice. The Court held that the identification was the result of a "police-arranged” identification procedure because another officer previously provided the undercover officer with a detailed description of defendant and specifically pointed to the defendant’s location. The Court specifically distinguished New-ball’s identification procedure from other "spontaneous * * * encounters” and analogized the police procedure to a "street showup[ ] made at the behest of the police” (id., at 591).

Not without significance, and unlike Newball, the victim in the present case directed the police back to the nearby location of the crime scene. The police had not been given a description of the defendant, and the victim’s identification was a spontaneous, noncustodial street spotting. These factors diminish to legal insignificance, unless something more is shown in defendant’s moving papers seeking a hearing, the risks of police suggestiveness, at least as a threshold matter qualifying for an automatic pretrial hearing.

People v Rodriguez (79 NY2d 445, supra) also does not serve as precedential support for the majority’s analysis, rule and result. In Rodriguez, the witness identified defendant from a single photo display (id., at 447), a police identification method long recognized by us and the United States Supreme Court as an inherently suggestive tool (see, Simmons v United States, 390 US 377, 384, supra; see generally, Gilbert v California, 388 US 283; United States v Wade, 388 US 218, supra; Stovall v Denno, 388 US 293, supra). We concluded that defendant was entitled to a Wade hearing and rejected the People’s argument that the witness was "very familiar” with defendant and thus fell within the narrow exception carried out in People v Gissendanner (48 NY2d 543, 552, supra).

The instant case is critically different from the majority’s cited cases and more closely parallels People v Wharton (74 NY2d 921), a case where the Court held that the trial court did not err by denying defendant’s motion for a Wade pretrial hearing. In Wharton, the trial court permitted into evidence identification testimony of a trained undercover officer who had observed the defendant during a face-to-face narcotics sale, knowing that the defendant would shortly be arrested, and who viewed the defendant on the street while he was being arrested, previous to the showup. We concluded that the identification made by the officer was not the kind of identification "ordinarily burdened or compromised by forbidden suggestiveness” necessitating a Wade hearing (id., at 922). By parity of reasoning, the victim’s identification in this case occurred at a place and time sufficiently connected and contemporaneous to the arrest itself so as to reduce the possibility that an innocent individual was being detained by reason of a mistaken arrest, such that a pretrial Wade hearing should not automatically be afforded (id., at 922-923). This analysis illustrates how divergent the majority’s analysis is as to the pretrial hearing rules as applied to this case and as to all the cases that will be forced into its wake. The precedential sweep of the rubric that flows from this case is unwarranted and most unfortunate.

In sum, the Court enacts yet another per se rule which will provide the defendant with a hearing " 'merely for the asking’ ” (contrast, People v Mendoza, 82 NY2d 415, 425, supra, quoting People v Gruden, 42 NY2d 214, 217). The majority has failed to consider the competing policies which undergird CPL article 710 and, by presuming suggestiveness, creates a remedy disproportionate to the evil sought to be prevented. The fundamentally flawed premise of the majority’s syllogism is a threshold presumption of official suggestiveness. The rule by statutory prescription in CPL 710.60 still requires some individualized legal theory or fact base, or at least circumstances allowing reasonable inferences of actual or potential suggestive conduct. This case displaces that legislative authorization for judicial officers to summarily deny unsubstantiated suppression motions and substitutes instead conclusory speculation — as occurred here — as a per se basis for a pretrial hearing in every such street canvass identification case (see, CPL art 710).

We respectfully dissent and vote to uphold the conviction.

Chief Judge Kaye and Judges Simons, Smith and Ciparick concur with Judge Titone; Judge Bellacosa dissents in a separate opinion in which Judge Levine concurs.

Order modified by remitting to Supreme Court, Kings County, for further proceedings in accordance with the opinion herein and, as so modified, affirmed.


author: Smith, J.

text:
    [647 NE2d 1329, 623 NYS2d 821]
    General Motors Acceptance Corporation, Appellant, v Clifton-Fine Central School District, Respondent.
    Argued January 4, 1995;
    decided February 23, 1995

      POINTS OF COUNSEL

      Phillips, Lytle, Hitchcock, Blaine & Huber, Buffalo (Paul K. Stecker of counsel), for appellant.

      Belinda A. Wagner, Albany, for respondent.
   OPINION OF THE COURT

Smith, J.

Defendant Clifton-Fine Central School District paid a dealer for two buses even though it had received notice of an assignment of any payment to plaintiff General Motors Acceptance Corp. (GMAC). The principal issue here is whether Uniform Commercial Code § 9-318 (3) renders defendant liable to plaintiff assignee for payment of the two school buses even though it paid the assignor. Since issues of fact exist which preclude summary judgment, we modify the order of the Appellate Division.

In July 1988, defendant Clifton-Fine Central School District contracted to purchase two GMC school buses for $81,242 from Maier-Schule GMC, Inc., a truck and bus dealership located in Buffalo. On December 12, 1988, Maier-Schule assigned to plaintiff General Motors Acceptance Corp. (assignee) "all accounts and sums due and to become due to Dealer from Clifton-Fine Central School (Purchaser) on account of the sale by Dealer to Purchaser from time to time of new GMC motor vehicles.” On January 9, 1989, defendant’s business manager acknowledged in writing receipt of the assignment and agreed to make payments for vehicles purchased from Maier-Schule in accordance with the terms of the assignment. Despite the assignment, on January 23, 1989 defendant paid the invoice for the buses by remitting an $81,242 check to Maier-Schule. The record does not indicate whether the dealer forwarded the proceeds to GMAC. Plaintiff, however, never registered an objection to defendant regarding this method of payment.

On September 7, 1989, defendant again contracted to purchase two GMC school buses from Maier-Schule for $80,318. As before, on January 12, 1990, it paid for the buses by remitting its check to Maier-Schule. Maier-Schule failed to forward the proceeds of the check to plaintiff and it went out of business in March 1990.

Plaintiff commenced this action seeking damages from defendant on the ground that defendant’s January 1990 payment to Maier-Schule constituted a breach of assignment. Following joinder of issue, both parties sought summary judgment. Supreme Court denied plaintiff’s motion, granted defendant’s motion and dismissed the complaint. Citing UCC 9-318 (3), it determined that although the debtor had knowledge of the assignment, the debtor was nonetheless justified in making payment to the assignor with respect to the second purchase contract under a classic "indirect collection” which permitted the assignor to collect moneys as the assignee elected not to enforce its rights under the assignment after purchase of the first set of buses. The Appellate Division affirmed, finding "a previous course of dealing” between the parties when GMAC permitted Maier-Schule to collect the January 23, 1989 payment from defendant without objection (199 AD2d 939, 940). The Court found defendant justified in making payments to Maier-Schule because GMAC never notified defendant of its desire that future payments be made to it.

It is clear that absent notice of an assignment and notice that the debtor should pay the assignee, the account debtor is authorized to pay the assignor (UCC 9-318 [3]). UCC 9-318 (3) provides:

"The account debtor is authorized to pay the assignor until the account debtor receives notification that the amount due or to become due has been assigned and that payment is to be made to the assignee.”

Here the defendant account debtor not only received notice of the assignment but also acknowledged in writing that it had received notice and agreed to make payment to GMAC as called for by the assignment.

Despite defendant’s acknowledgment of the assignment, however, on this record summary judgment cannot be granted to the plaintiff. Because of defendant’s payment for the first two buses to the dealer and not GMAC, and the apparent failure of plaintiff to protest or direct that payment be made to it, issues of fact exist as to whether plaintiff waived its rights under the assignment. Waiver requires the voluntary and intentional abandonment of a known right which, but for the waiver, would have been enforceable (Nassau Trust Co. v Montrose Concrete Prods. Corp., 56 NY2d 175, 184). Waiver may be established by affirmative conduct or by failure to act so as to evince an intent not to claim a purported advantage (Hadden v Consolidated Edison Co., 45 NY2d 466, 469).

Plaintiff apparently never objected to Clifton-Fine’s unauthorized payment of the first contract directly to Maier-Schule nor did plaintiff object when the second contract was executed. If it can be established at trial that plaintiff had notice of this indirect payment to Maier-Schule, plaintiff may have impliedly waived the direct payment requirement under the assignment by permitting the account debtor to remit payment to the assignor over a substantial period of time (see, Allstate Fin. Corp. v Dundee Mills, 800 F2d 1073 [11th Cir] [holding that although assignee established its right to collect all of debtor’s accounts receivable by complying with UCC 9-318 (3) notice requirements, assignee waived its rights by acquiescing in seven payments to assignor and not demanding reimbursement from debtor until later with an uncollectible judgment]; see also, 9 Anderson, Uniform Commercial Code § 9-318:13, at 363 [3d ed]).

Generally, after the account debtor receives notification that the right has been assigned and the assignee is to be paid, and it continues to pay the assignor, the account debtor is liable to the assignee and the fact that payment was made to the assignor is not a defense in an action brought by the assignee. The account debtor has a responsibility to make payment to the assignee after it receives notification that the contract has been assigned and that the payment is to be made to the assignee (9 Hawkland, Lord & Lewis, UCC Series § 9-318:03).

Defendant argues that the facts here represent a classic "indirect collection” situation where an account debtor is permitted to continue making payments to the assignor until it receives notice that payment should be made to the assignee. The Official Comment to UCC 9-318 (3) provides:

”3. Subsection (3) clarifies the right of an account debtor to make payment to his seller-assignor in an 'indirect collection’ situation * * *. So long as the assignee permits the assignor to collect claims * * * the account debtor may pay the assignor even though he may know of the assignment. In such a situation an assignee who wants to take over collections must notify the account debtor to make further payments to him.”

This Comment applies, however, where the account debtor has notice of the assignment, but has not been instructed to make payment directly to the assignee. This situation is classically referred to as indirect collection method. Under an indirect collection method the assignee permits the assignor to collect claims under an assignment and the account debtor is permitted to pay the assignor even though he may know of the assignment. The assignment here gave both the notice of assignment and notice that payments were to be made directly to plaintiff. Thus there was no indirect collection here.

Defendant argues that plaintiff waived its rights under the assignment as plaintiff’s actions established a course of dealing. However, in Rotuba Extruders v Ceppos (46 NY2d 223, 230), this Court held that a single prior purchase cannot establish a course of dealing.

The order of the Appellate Division should be modified, without costs, by denying defendant’s motion for summary judgment and, as so modified, affirmed.

Chief Judge Kaye and Judges Simons, Titone, Bellacosa, Levine and Ciparick concur.

Order modified, etc.