author: Meyer, J.

text:
    Ludwig Hammelburger et al., Appellants, v Foursome Inn Corp., Respondent, et al., Defendants.
    Argued October 15, 1981;

    decided December 23, 1981

      POINTS OF COUNSEL

      Isaac Anolic for appellants.
    I. The estoppel certificate estops the defense of usury not by reason of waiver but by the doctrine of equitable estoppel. (Spatz v Aetna Cas. & Sur. Co., 36 Misc 2d 950; Werking v Amity Estates, 2 NY2d 43; New York Rubber Co. v Rothery, 107 NY 310; Matter of Watson, 177 Misc 308; Davison v Klaess, 280 NY 252; Ahern v Goodspeed, 72 NY 108; Weyh v Boylan, 85 NY 394; Morrill Realty Corp. v Rayon Holding Corp., 254 NY 268; Zendman v Harry Winston, Inc., 305 NY 180; Metropolitan Life Ins. Co. v Childs Co., 230 NY 285.) II. Usury has always been against public policy yet it was always a personal defense which could be waived and against which estoppel may be invoked. (People v Young, 207 NY 522; Curtiss v Teller, 157 App Div 804,217 NY 649; Union Dime Sav. Inst, of City of N.Y. v Wilmot, 94 NY 220; Bennis v Thomas, 14 AD2d 895; Rothschild v Title Guar. & Trust Co., 204 NY 458; Arnold v Angeli, 62 NY 508; Long Is. Bank v Boynton, 105 NY 656; Sayers v Watson, 52 AD2d 802; Baldwin v Doying, 114 NY 452; Whitehead v Heidenheimer, 57 App Div 590.) III. The dismissal of the complaint precluded plaintiff from proving that the mortgage was not criminally usurious. (Phillips v Mackellar, 92 NY 34; St. John v Fowler, 229 NY 270; Fellows v Longyor, 91 NY 324; Flanagan v Shaw, 74 App Div 508, 174 NY 530; Terminal Bank v Dubroff, 66 Misc 100.)

      Bernard P. McSherry and Christopher J. Allwarden for respondent.
    I. The court below properly ruled that the mortgage loan was criminally usurious and illegal as a matter of law. (418 Trading Corp. v Oconefsky, 37 Misc 2d 745, 19 AD2d 593, 14 NY2d 676; Braine v Rosswog, 13 App Div 249, 153 NY 647; Dunlap v Toy, 19 Misc 627; Bliss v Sherrill, 24 App Div 280; Robertson v Merwin, 154 App Div 723.) II. The court below properly ruled that the mortgagor’s execution of an estoppel certificate could not operate to prevent it from raising the criminal and illegal nature of the mortgage loan. (Union Dime Sav. Inst, of City of N. Y. v Wilmot, 94 NY 220; Bennis v Thomas, 14 AD2d 895; Sperling v Babian, 227 App Div 53; People v Luongo, 39 Misc 2d 905; People v Fernandez, 93 Misc 2d 127; Hadden v Consolidated Edison Co. of N. Y., 45 NY2d 466; Matter of Hills, 264 NY 349; Matter of Abramovich v Board of Educ., 62 AD2d 252, 46 NY2d 450, 444 US 845; Matter of Allerton Constr. Corp. v Fairway Apts. Corp., 49 Misc 2d 525, 26 AD2d 636; Parthey v Beyer, 228 App Div 308.) III. The court below properly ruled that plaintiffs’ status as third-party assignees did not insulate them from the originally void effect of the mortgage transaction. (Euclid Holding Co. v Schulte, 153 Misc 455; Sirkin v Fourteenth St. Store, 124 App Div 384; Landau v Percacciolo, 66 AD2d 80, 50 NY2d 430; Kommel v Herb-Gner Constr. Co., 256 NY 333; Rapps v Gottlieb, 142 NY 164; Sabine v Paine, 223 NY 401; Claflin v Boorum, 122 NY 385.)

      Michael Permut and John J. Boyle for The New York State Land Title Association, amicus curiae.

    I. An innocent assignee may rely on an estoppel certificate executed by a mortgagor in a criminally usurious transaction. (Sperling v Babian, 227 App Div 53; Wilcox v Howell, 44 NY 398; Rothschild v Title Guar. & Trust Co., 204 NY 458.) II. The public policy nature of the usury statutes does not prohibit the imposition of estoppel.
   OPINION OF THE COURT

Meyer, J.

A mortgagor, who has given an estoppel certificate stating that there are no defenses or offsets to the mortgage or to the bond which the mortgage secures, will be estopped from asserting the defense of criminal usury unless it be shown that (1) the mortgagor executed the estoppel certificate under duress or other basis for invalidation, or (2) the assignee took with knowledge of the criminally usurious nature of the transaction or of the fact that duress (or other invalidating circumstances) was exerted in obtaining execution of the estoppel certificate. The papers on the motion and cross motion in the foreclosure action which is the subject of this appeal having raised issues of fact concerning whether the transaction was criminally usurious, concerning what, if anything, the assignees were aware of with respect to the nature of the transaction and concerning duress, it was error for the Appellate Division, in reversing Special Term’s denial of the defendant mortgagor’s motion to amend to allege criminal usury and grant of the assignees’ cross motion for summary judgment, to grant to defendant summary judgment declaring the mortgage void as a matter of law and dismissing the complaint. The order of the Appellate Division should, therefore, be modified to delete so much thereof as grants judgment to defendant declaring the mortgage void and dismissing the complaint, and to remit the matter to Supreme Court, Suffolk County, for further proceedings, and, as so modified, should be affirmed, with costs.

I

In 1974, the Foursome Inn Corp., owner of the Surf and Sand Inn, in Montauk, New York, borrowed $35,000 from Broadhollow Funding Corporation secured by a mortgage on the inn premises. The mortgage was for a three-year term at an interest rate of 24% per annum and contained a provision that the mortgage principal and interest “shall become due at the option of the mortgagee *** after default * * * in furnishing a statement of the amount due on the mortgage and whether any offsets or defenses exist against the mortgage debt.” Only $32,900 was paid at closing to Foursome or for closing costs, however, the remaining $2,100 having been paid to Ira S. Schwartz, then secretary-treasurer of Broadhollow.

At Schwartz’ examination before trial, conducted at Foursome’s instance and a copy of which was annexed to Foursome’s moving papers on the first motion hereafter referred to, he testified that he was a licensed real estate broker, that the mortgage lender was in fact Stallone Enterprises Corporation (SECO) though the mortgage was taken in Broadhollow’s name because of marital problems of SECO’s owner, that the $2,100 represented a 6% commission to Schwartz pursuant to a commission agreement with Foursome, and that Broadhollow serviced the mortgage for SECO before its assignment to plaintiffs and continued to do so for plaintiffs after that assignment.

The assignment to plaintiffs was made in October, 1975, 10 days after Beatrice Reilly, the president of Foursome, executed on its behalf an estoppel certificate stating that “there are no defenses or offsets to said mortgage, nor to the bond which it secures.” Negotiations with Mrs. Reilly for the certificate were engaged in by both Ira Schwartz and his father, Abraham, then president of Broadhollow. Mrs. Reilly’s affidavit, submitted in support of the third motion by defendant hereafter referred to, sets forth facts concerning both threats to foreclose and cajoling by the Schwartzes which suggest that she may have been misled concerning the nature of her default, the offer of a proposed extension of the mortgage, or both.

In July, 1976, Foursome defaulted on its payments. Plaintiffs then declared the entire principal balance due and instituted, this foreclosure action. Foursome’s answer was no more than a general denial but, subsequently, it moved for leave to amend the answer to assert the affirmative defense of criminal usury. As already noted, its moving papers on that motion included a copy of Ira Schwartz’ deposition. Plaintiffs, relying on the estoppel certificate, cross-moved for summary judgment. Special Term denied the motion to amend and granted plaintiffs’ cross motion for summary judgment, holding the defense not available to Foursome because waived by its execution of the estoppel certificate delivered to plaintiffs. On motion for reargument Special Term adhered to that ruling. A referee to compute was then appointed and after receipt of his report judgment of foreclosure and sale was entered. On the eve of sale, however, defendant having obtained additional counsel moved to vacate the judgment on papers, including the affidavit of Mrs. Reilly above referred to, which reiterated the criminal usury involved and set forth facts suggesting, as above noted, that she signed the estoppel certificate as. a result of threats or of being misled, or both. That motion, too, was denied.

On appeal to the Appellate Division that court reversed, on the law, the orders denying the motions to amend the answer and to vacate the judgment, granted both motions, denied plaintiffs’ motion for summary judgment and, acting pursuant to CPLR 3212 (subd [b]), granted Foursome summary judgment declaring the mortgage void and dismissing the complaint. It reasoned that the societal interests protected by the public policy declared in the criminal usury statute could not be affected by estoppel based on conduct of the parties to the mortgage and, therefore, did not reach the question of duress. We conclude that (1) an estoppel certificate may waive criminal as well as civil usury; (2) duress, other invalidating circumstances, or knowledge on the part of the assignee before he takes the assignment of the criminal nature of the transaction or of the exertion of duress may, however, invalidate or negate the estoppel certificate; and (3) there are in the instant case issues of fact which cannot be resolved on motion for summary judgment. We, therefore, modify as above indicated.

II

Though he be a bona fide holder, an assignee of a nonnegotiable bond and mortgage takes subject to any defense that would have prevailed against his assignor (Beck v Sheldon, 259 NY 208, 211; Kommel v Herb-Gner Constr. Co., 256 NY 333, 336). The rule is different, however, when the mortgagor gives the assignee an estoppel certificate (Riggs v Purssell, 89 NY 608, 610; see Real Property Law, §254, subds 2, 7) or with notice of his rights and of the facts “does what amounts to a recognition or adoption” of the transaction “although it was originally void or voidable” (Rothschild v Title Guar. & Trust Co., 204 NY 458, 464; Ann., 110 ALR 451, 452, 457). The assignee’s right of recovery does not depend upon the title or interest of his assignor, but upon the mortgagor’s representation by his certificate or by his conduct that the mortgage is valid and existing (Miller v Zeimer, 111 NY 441, 444; Weyh v Boylan, 85 NY 394, 397; Payne v Burnham, 62 NY 69, 72; see Union Dime Sav. Inst. of City of N. Y. v Wilmot, 94 NY 221; Ann., 165 ALR 626, 717).

The basis for the latter rule is, of course, the doctrine of estoppel in pais (Payne v Burnham, supra, at p 73; Ferguson v Hamilton, 35 Barb 427, 437). It turns not upon any view of the negotiability of the certificate (Weyh v Boylan, supra, at p 399) or the validity of the mortgage (Valentine v hunt, 115 NY 496, 504), but upon the fact that the mortgagor would, if allowed to urge the defense, “obtain an unconscientious advantage at the expense of an innocent person” (Weyh v Boylan, supra, at p 398; see, also, Rothschild v Title Guar. & Trust Co., 204 NY 458, 464, supra; Restatement, Contracts 2d, §90, Comment a), and the long-established principle that “where one of two innocent persons must suffer by the acts of a third, he who has enabled such third person to occasion the loss, must sustain it” (National Safe Deposit Co. v Hibbs, 229 US 391, 394, quoted with approval in Bunge Corp. v Manufacturers Hanover Trust Co., 31 NY2d 223, 228). Estoppel does not render the mortgage valid but prevents “one who has represented it to be valid from asserting that it is void, to the injury of those who have acted in reliance upon the representation” (Claflin v Boorum, 122 NY 385, 389; Valentine v hunt, supra). The policy of the usury statute is not, however, ignored, for the innocent assignee is permitted to recover only the amount advanced with interest, rather than to enforce the mortgage for its face amount (Miller v Zeimer, supra, at p 446; Payne v Burnham, supra, at p 74; Bennis v Thomas, 14 AD2d 895; Klein v Meisels, 254 App Div 603; see Osborne, Mortgages, § 111, p 273; Ann., 165 ALR 626, 717).

The conduct or certificate must, however, have influenced the assignee to accept the mortgage to his injury (Payne v Burnham, supra, at p 73). That means not just reliance upon the existence of the certificate, but on the facts expressed by or implicit in it (Wilcox v Howell, supra, at p 403; see Claflin v Boorum, supra; Weyh v Boylan, supra; Hyde Park Terrace Co. v Jackson Bros. Realty Co., 161 App Div 699; Ann., 110 ALR 451, 462). An assignee who takes with knowledge can no more enforce the mortgage, whether as to principal or interest, than could the usurer. Knowledge by the assignee of the usurious nature of the transaction will, therefore, defeat an estoppel claim (Riggs v Purssell, supra; Gleason v O’Neill, 234 App Div 264; Merwin v Romanelli, 141 App Div 711).

The rules thus developed concern, it is true, so-called civil usury, as the Appellate Division noted, but were developed in relation to a statute (3 Revised Statutes [5th ed], part 2, ch 4, tit 3, § 5, now part of General Obligations Law, § 5-511, subd 1), which provided that a transaction in which interest in excess of the prescribed rate was taken “shall be void.” Moreover, they became the established rules not without some hesitation and the realization that they trenched upon the policy of the usury law (Miller v Zeimer, supra, at p 445; Payne v Burnham, supra, at p 72; Ferguson v Hamilton, supra, at p 439).

Ascertainment of the legislative intent behind enactment of section 190.40 of the Penal Law and subdivision 3 of section 5-521 of the General Obligations Law upon the policy behind which the Appellate Division relied, requires consideration of the decisional law background above set forth, of which it may be presumed the Legislature was aware and, to the extent it left it unchanged, that it accepted (Transit Comm, v Long Is. R. R. Co., 253 NY 345, 354-355; Orinoco Realty Co. v Handler, 233 NY 24, 30; People v Colozzo, 54 Misc 2d 687, affd on opn below 32 AD2d 927). Also to be considered are the facts that for 115 years, from the passage of chapter 172 of the Laws of 1850 until 1965, corporations were prohibited from interposing “the defense of usury in any action” (see Rosa v Butterfield, 33 NY 665) and that until 1965 there existed, for practical purposes, no criminal sanction whatsoever for usury, whatever the effective rate of interest charged (Seventh Ann Rep of Temporary Commission of Investigation, Legis Doc, 1965, No. 100, p 72; Hechtman, Practice Commentaries, McKinney’s Cons Laws of NY, Book 39, Penal Law, § 190.40; Note, 66 Col L Rev 167, 170). The April, 1965 Report of the New York State Commission on Investigation entitled An Investigation of the Loan-Shark Racket (particularly pp 22, 29, 82-84) brought to the attention of the Governor and the public the need for change in both, as well as for change in the immunity statute, and for provisions making criminal the possession of loan-shark records and increasing the grade of assault with respect to the “roughing up tactics” used by usurious lenders to enforce payment (id., at p 84). That report was studied by the Attorney-General, the Superintendent of Banks and the Governor’s counsel, who, working with the State Commission of Investigation (see the Governor’s Message of Approval, NY Legis Ann, 1965, pp 509-510), prepared an administration memorandum (NY Legis Ann, 1965, pp 46-50) which was sent to the Legislature with the bill which ultimately became chapter 328 of the Laws of 1965. With respect to the provision which became subdivision 3 of section 5-521 of the General Obligations Law, that memorandum stated: “The bill would also provide that corporations may interpose the defense of usury in actions to collect principal or interest on loans given at interest greater than twenty-five percent per annum. This measure is vital in curbing the loan-shark racket as a complement to the basic proposal creating the crime of criminal usury. As noted above, loan-sharks with full knowledge of the present law, make it a policy to loan to corporations. The investigation also disclosed that individual borrowers were required to incorporate before being granted a usurious loan. This is a purely artificial device used by the loan-shark to evade the law — an evasion which this proposal would prevent. Furthermore, it would be most inappropriate to permit a usurer to recover on a loan for which he could be prosecuted.” (Italics supplied.)

Noteworthy is the fact that though the Legislature authorized the pleading of criminal usury as a defense by a corporation (General Obligations Law, § 5-521, subd 3), it made no change in the provisions of section 5-511 declaring “void,” as to individuals and other entities as well as corporations, any instrument reserving interest in excess of the legal rate although it must be deemed to have been aware of prior decisional law holding such an instrument enforceable, as above set forth, when an estoppel certificate has been given. It could, of course, in light of that case law, have abolished estoppel in pais as related to an estoppel certificate given to a criminal usurer by a mortgagor, or limited the effect of such a certificate as it had done in the second unnumbered paragraph of subdivision 2 of section 5-521 of the General Obligations Law. It made no mention of estoppel certificates and limited its statement of the civil purpose of the amendments made to proscription of recovery by “a usurer *** on a loan for which he could be prosecuted.” Its failure to close off the estoppel certificate avenue as a means for a usurer to realize on his illegal loan may have been an oversight, though in view of the case law history above detailed that hardly seems likely. Equally probable is it that the Legislature, recognizing the “two innocent persons” rule, was unwilling to penalize by the loss of both principal and interest an assignee who in good faith-reliance on the mortgagor’s assurance of the absence of any defense had purchased the obligation, because the Legislature believed limitation of the assignee’s recovery to what he paid plus legal interest to be a sufficient deterrent to make purchasers of mortgages wary of professional usurers and a sufficient protection to the mortgagor who by certifying the absence of a defense has made transfer of the mortgage by the usurer possible.

So to suggest is not, as the concurrence and the Appellate Division indicate, abhorrent to public policy in any way. To the contrary, it is abhorrent to the policy of the law in the name of public interest to make an innocent assignee pay for the crime of the usurer in order to protect the borrower who, by his conduct or estoppel certificate, has misled the assignee. It is, moreover, wholly unnecessary to do so. People v Young (207 NY 522) makes clear that the victim of criminal usury cannot by accepting restitution affect in any way the People’s power to prosecute and that rule applies as well to estoppel by conduct or by certificate. The criminal usurer continues, therefore, to be subject to prosecution for a class E felony, the maximum prison term for which is four years. He remains subject also to civil liability for his criminal act; to the assignee who has been defrauded through the usurer’s obtention of a false estoppel certificate for the difference between the face amount of the bond transferred and what he has been able to collect on it from the debtor; to the debtor from whom the usurer could have collected neither principal nor interest for the principal and interest which the debtor has been required to pay to the innocent assignee, the debtor not being in pari delicto with the usurer. Neither public welfare nor the public policy declared by chapter 328 of the Laws of 1965 is denigrated one whit by the limited recovery permitted to an innocent assignee; to the contrary, the public interests are vindicated fully, both civilly and criminally. Indeed, to relegate the assignee to an action against the usurer, as the concurrence suggests, is to denigrate the two innocent persons policy by turning that long-respected rule completely on its head.

Nor by so holding do we infer from legislative silence alone the adoption of decisional law (cf. Boys Market v Clerks Union, 398 US 235, 241), for there is here clear and vigorous legislative action addressing the criminal usury problem in all aspects but this one. It is, rather, a recognition of the principle that “the intention to change a long-established rule or principle is not to be imputed to the legislature in the absence of a clear manifestation” (Matter of Delmar Box Co. [Aetna Ins. Co.], 309 NY 60, 66; accord Shapira v United Med. Serv., 15 NY2d 200, 218; see McKinney’s Cons Laws of NY, Book 1, Statutes, § 153), especially when the change affects title to property or rules of liability (Seligman v Friedlander, 199 NY 373, 376). Public policy determined by the Legislature is not to be extended by a court by reason of its notion of what the public policy ought to be (Waddey v Waddey, 290 NY 251, 256; see Straus & Co. v Canadian Pacific Ry. Co., 254 NY 407, 413-414). Moreover, though estoppel in pais is a doctrine of judicial rather than legislative origin and thus subject to change by us, we do not believe that we would be justified in making a change predicated upon the criminal usury provisions of chapter 328 of the Laws of 1965, when the Legislature itself did not see fit to do so and the result would be unfair to an assignee who has acted in good faith reliance on an estoppel certificate (cf. Codling v Paglia, 32 NY2d 330, 344-345). The Legislature may, of course, still change the decisional rule should it deem that desirable or wise.

Accordingly, we reject the Appellate Division’s basic premise and hold that, until the Legislature otherwise provides, a valid estoppel certificate executed by a mortgagor and relied upon in good faith by the assignee of the mortgage will preclude the assertion of usury, whether civil or criminal, as a complete defense.

Ill

We are thus brought to consideration of the issue of duress which the Appellate Division found it unnecessary to decide. What we consider, of course, is duress as it affects execution of the estoppel certificate, and the first thing to be noted is that duress in obtaining the certificate is irrelevant unless the mortgage itself is found to be usurious and, therefore, void and unenforceable but for the estoppel. This means that the provisions of the mortgage permitting the mortgagee to accelerate principal and interest for failure to give an estoppel certificate, though sanctioned by subdivisions 2 and 7 of section 254 of the Real Property Law, will not obviate the claim that the certificate was obtained by duress.

In Wilcox v Howell (44 NY 398, 402, supra) we held that estoppel does not operate to preclude an obligor from asserting that the instrument claimed to estop him was obtained by fraud (accord Laurel Realty Co. v Galasso, .6 AD2d 889; see Weyh v Boylan, supra, at p 401), and the applicability of that rule to duress has been recognized in Oleet v Pennsylvania Exch. Bank (285 App Div 411; see, also, Uniform Commercial Code, § 3-305, subd [2], par [b]). Those holdings having been part of the decisional law complex in light of which chapter 328 of the Laws of 1965 was enacted, and the strong-arm tactics of loan-shark enforcers having played such a prominent part in the Report of the State Investigation Commission, the conclusion must be that the Legislature intended no change of prior law in this respect.

Duress in obtaining the estoppel certificate will, therefore, invalidate it. We are not unaware of the effect of that holding upon the marketability of mortgage assignments, but conclude that estoppel being essentially a doctrine arising from inequitable action or conduct, the rule should not, absent legislative change, be applied when the mortgagor’s action or conduct has been coerced (cf. Mandelino v Fribourg, 23 NY2d 145, 148). Whether an estoppel certificate has been obtained by duress will generally be a question of fact, turning not just upon whether there was a threat to foreclose, but upon whether the trier of fact concludes from the circumstances surrounding the bargaining between the parties to the giving of the certificate or to the conduct relied upon and relative to the bargaining positions of both that the mortgagor acted under the influence of fear and would not have done so otherwise (see Restatement, Contracts 2d, §§ 174-175; 13 Williston, Contracts [3d ed], § 1604; 2 NY PJI 900-901).

IV

The Appellate Division, applying the formula set forth in Band Realty Co. v North Brewster (37 NY2d 460), concluded that the true interest rate was 27.7% per annum and, therefore, clearly in excess of the maximum prescribed by section 190.40 of the Penal Law. However, in concluding as a matter of law that the mortgage was criminally usurious, it overlooked the facts, outlined above, testified to by Ira Schwartz, that raised a triable issue of fact concerning whether the $2,100 was in fact a legitimate commission. True, the finder’s fee is a device often resorted to by unscrupulous lenders (1965 Report of State Investigation Commission, Investigation of Loan-Shark Racket, pp 73-75). But a commission payable to Schwartz as agent for Foursome (with whom he testified he had an agreement) would not necessarily make the transaction usurious (Salvin v Myles Realty Co., 227 NY 51; Guardian Mut. Life Ins. Co. of N. Y. v Kashaw, 66 NY 544; cf. General Obligations Law, § 5-531; see Ann,, 52 ALR2d 703; 32 NY Jur, Interest & Usury, §§67-69). Usury must be proved by clear evidence as to all its elements and will not be presumed (Giventer v Arnow, 37 NY2d 305; Brown v Robinson, 224 NY 301; Grannis v Stevens, 216 NY 583). Whether the commission was a cover for usury was, therefore, a question of fact (London Realty Co. v Riordan, 207 NY 264, 266) which the Appellate Division could neither assume nor decide. An additional reason why summary judgment should not have been granted to defendant is that, defendant’s motion to amend its answer to assert criminal usury having been denied by Special Term, plaintiffs had neither reason nor opportunity to submit proof on the question whether the $2,100 paid to Ira Schwartz was a true commission. Fortuitously defendant’s papers on the motion to amend supplied the omission by annexing Schwartz’ deposition, but had that not been so it would, nevertheless, have been improper to grant summary judgment to defendant under CPLR 3212 (subd [b]) in view of the state of the pleadings as the matter reached the Appellate Division. The papers before that court were also sufficient to require plaintiffs to come forward with more than the bare statement that an estoppel certificate had been given, to show that they acted in reliance upon the facts it stated and without knowledge of the commission deduction which defendants allege made the transaction usurious, and to respond to defendants’ claim of duress.

For the foregoing reasons, the order of the Appellate Division should be modified and affirmed, with costs, as above indicated.

Chief Judge Cooke (concurring). A lender who may be criminally prosecuted for a particular loan should not be permitted to avoid the civil consequence of this wrong through the simple expedient of obtaining a waiver from the borrower. As a matter of public policy, I would hold that criminal usury is not waivable outside a judicial proceeding.

Two aspects of criminal usury are abhorrent to public policy. First, the excessive interest charged is considered repulsive to our values. It is nothing more than a thoroughly unscrupulous exploitation of another’s vulnerability. Society will not condone one person’s taking unfair advantage of another’s weaker position (see, e.g., Barnard v Gantz, 140 NY 249 [undue influence]; Restatement, Contracts 2d, § 177). Second, the exaction of criminally excessive interest is, in the public’s mind, inextricably linked with violent methods of collecting delinquent debts.

In response to these problems, the Legislature in 1965 made criminal those loans that bear interest exceeding 25% per annum (L 1965, ch 328, § 1; see Penal Law, § 190.40). At the same time, the Legislature also empowered corporations to assert criminal usury as an affirmative defense (L 1965, ch 328, § 6; see General Obligations Law, § 5-521), in part to eliminate the lenders’ practice of requiring individual borrowers to incorporate so that the defense of usury could not be raised at all (NY Legis Ann, 1965, p 50).

The majority notes the long-standing rule that civil usury can be waived as a defense. The majority then concludes that the Legislature intentionally adopted this rule in reference to criminal usury out of solicitude for the innocent assignee, although the majority admits that the omission may have been mere oversight (at p 590). So reasoning, the majority refrains from “extending” public policy as determined by the Legislature (id., at pp 590-591). Today’s decision is not only not reflective of public policy but, on the contrary, destroys it. If the lender can compel the individual to incorporate, there is no reason why that same individual cannot be compelled to sign a waiver of defenses. And this “compulsion” need not amount - to legal duress — the same circumstances which drove the borrower to the usurious lender in the first place will also serve to motivate the execution of the waiver. With the waiver in hand, the lender may now freely negotiate the illegal contract to third parties.

The problems inherent in permitting waiver of criminal usury may be best observed by use of a hypothetical. Needing $5,000 and unable to obtain a loan from a legitimate lender, A borrows the money from B, who requires that A sign a note for $10,000 and a certificate disavowing any defenses. The note is for one year and bears interest at 22%. On its face, the note evidences a noncriminal loan. Of course, in reality the loan is criminally usurious, requiring payment of $7,200 interest on a $5,000 loan, a rate of 144% (see Band Realty Co. v North Brewster, 37 NY2d 460). B does not wish to carry the loan and therefore discounts it to C for $8,500. C is unaware of the true transaction and so takes the note as a holder in due course. Given today’s result, A is barred from asserting any defense and the court is required to enforce an illegal contract proscribed by penal sanction. This is untenable.

Prohibiting the waiver of criminal usury does not leave the assignee without any recourse. The assignor warrants the validity of the instrument, including that there is no defense good against him (see Uniform Commercial Code, § 3-417, subd [2], par [d]; Restatement, Contracts 2d, § 333, subd [1], par [b]). Thus, the assignee may recover from the lender, the party who should properly bear the burden for violating the law. No great procedural difficulties are presented, either. Once the borrower raises the affirmative defense, the assignee may amend the complaint to include a claim against the assignor. In this way, all parties to the instrument will be before the court and all will be bound by the determination of the nature of the transaction. In short, the assignee will recover — either from the borrower or the assignor.

The majority equates civil usury and criminal usury in reaching its conclusion. There is, however, a critical distinction that may be succinctly stated. Civil usury, although illegal, violates private law only. Criminal usury, however, has been deemed an injury to the public welfare as well as to private rights. The usurer who can be jailed should not be allowed to profit from the wrong by simply obtaining a waiver.

It is difficult also to accept the majority’s discussion of duress. It first suggests that duress is available only if the underlying mortgage is illegal (at pp 592-593). Duress, however, is a real defense which always follows the document (see Uniform Commercial Code, § 3-305, subd [2], par [b]; Restatement, Contracts 2d, §336, subd [1]). Consequently, the legality of the underlying transaction should have no bearing on the validity of the waiver if the latter were obtained through duress.

More noteworthy, because inconsistent with the rule announced, is the implication that the certificate will be invalid if it was obtained by threatening to enforce the legal rights set forth in the mortgage (at p 593, n 4). The majority would hold that these threats constitute duress if the mortgage is usurious so that no legal rights are provided. In so arguing, the majority has gone full circle: the borrower is estopped from asserting against an assignee the defense of criminal usury unless the waiver was obtained by threatening to enforce the usurious contract, in which case the waiver is invalid and the defense may be asserted against the assignee so as to void the contract. Thus, the borrower is allowed to do indirectly what the majority declares he or she cannot do directly — defeat the waiver and avoid the contract by raising the defense of criminal usury.

I concur, however, with the majority’s conclusion that summary judgment was improperly granted. There exists a question of fact as to the legitimacy of the commission paid to Ira Schwartz. If the commission was proper, then the loan was not usurious. For that reason, the Appellate Division’s order should be modified and the case remitted for trial. It cannot be overemphasized, however, that public policy as expressed by the Legislature demands that all waivers of criminal usury be declared ineffective per se.

Judges Jones, Wachtler and Fuchsberg concur with Judge Meyer; Chief Judge Cooke concurs in result in a separate opinion in which Judges Jasen and Gabrielli concur.

Order modified, with costs to appellants, and case remitted to Supreme Court, Suffolk County, for further proceedings in accordance with the opinion herein, and, as so modified, affirmed.

      . Clark v Sisson (22 NY 312, 316) held the words “value received” in a bill of exchange not to estop defenses of usury, fraud or duress and Wilcox v Howell (44 NY 398, 402) states in dictum that certification of validity in the mortgage itself will not bar a defense of fraud. (See, also, Ferguson v Hamilton, 35 Barb 427, 439.) Weyh v Boylan (85 NY 394, 401), however, distinguished both and held a certificate executed at the same time as the mortgage, though separate from it, sufficient to bar a defense of usury. It is not clear, therefore, whether certification in the mortgage or bond will bar a defense of usury, but the certificate in the present case having been executed long after the mortgage, we need not resolve the question.

      . The suggestion in footnote 2 of the concurrence that such recovery may not be had from the usurer overlooks the change wrought by chapter 328 of the Laws of 1965. It constitutes no stretch of statutory intent or of the language of sections 5-511, 5-513 and 5-519 of the General Obligations Law to recognize a disqualification of the criminal usurer to recover any part of the money loaned, and a corresponding right of the borrower to get back whatever he has paid, even though prior law would not have required that result as to a civil usurer (see Schwartz v Userowitz, 56 Misc 2d 1016, affd 31 AD2d 1010). The cases relied upon in the concurrence do not speak to the legislative intent behind outlawing interest in excess of 25% and in any event so far as relied on are either dictum or are distinguishable on their facts. Not to recognize such an action is, in the name of deterring criminal usury, to protect the criminal usurer against civil liability, an obviously inconsistent and inequitable result.

      . Respondent suggests that subdivision 3 of section 13-101 of the General Obligations Law is such a provision, but it speaks to a transfer forbidden by statute or which would contravene public policy. Here the Legislature has forbidden usury but has failed to forbid or declare contrary to public policy the transfer of a criminally usurious mortgage and that failure, for the reasons set forth in the text, cannot be deemed simply an oversight.

      . Were the mortgage not void they would nullify any claim of duress because it is not duress to threaten to take action which is legally permissible (Muller Constr. Co. v New York Tel. Co., 40 NY2d 955; Avey v Town of Brant, 263 NY 320).

      . The term of the mortgage being three years, one third of the $2,100 discount or $700 is added to the interest payable annually on the note (24% times $35,000 equals $8,400). The total interest of $9,100 compared to the principal actually received ($35,000 minus $2,100 or $32,900) establishes the true interest rate as 27.7%.

      . Plaintiffs note that Schwartz has never produced the writings referred to in his testimony, but that furnishes no ground for disregarding his oral testimony, though, if not remedied at trial, it will furnish a basis for an adverse inference as to his credibility (Mullen v Quinlan & Co., 95 NY 109; see 1 NY PJI2d 78-81).

      . It should be noted that in criminalizing these usurious practices, the Legislature was not only concerned with the stereotypical loan shark accompanied by a strong-arm enforcer. The Legislature specifically recognized that the criminal usurer often “conducts his business wholly within the law” (as it then existed), taking advantage of legal loopholes, and relying on reputation rather than actual intimidation to collect loans (NY Legis Ann, 1965, p 48). Thus, it can only be concluded that the Legislature intended to penalize those usurious lenders who operate “under high-sounding business names, with offices and other trappings of legitimacy” (id.).

      . The majority’s suggestion that the borrower may sue the usurer is unpersuasive. Although the Legislature has recognized that a borrower may sue a usurious lender (see General Obligations Law, §§ 5-513, 5-515), I do not believe that it intended this to be the sole source of relief. Nor can the public policy against criminal usury be advanced by imposing this burden upon the borrower. This is particularly true when the lender is one who employs intimidation and physical assault to enforce loans. The proper goal is to deter the activity altogether, not merely to afford relief to those borrowers bold enough to sue the lender.
      In any event, even if the majority’s version of public policy were acceptable, I find no authority for the proposition that the usurer would be civilly liable to the borrower for the principal as well as the interest paid (at p 591). To the contrary, the law until now has been that the borrower’s recovery is limited only to the excess interest paid (General Obligations Law, § 5-513; see, also, Pisano v Rand, 30 AD2d 173,178 [citing Patterson v Birdsall, 64 NY 294; 32 NY Jur, Interest and Usury, § 84; Ann., 59 ALR2d 522, 527,534, 544-545] [citing Palen v Johnson, 50 NY 49]). Whether the cause of action envisioned by the majority should be recognized is not properly before this court. The majority is, in iffect, creating an action in 1981 to justify its view of the Legislature’s intent in 1965.


source: Caselaw Access Project

license: Public Domain

text:
    In the Matter of the Arbitration between Delaware Valley Central School District, Respondent, and Delaware Valley Faculty Association, Appellant. (And Three Other Proceedings.)
    Decided June 16, 1981

      APPEARANCES OF COUNSEL

      Bernard F. Ashe for appellant.

      Edward J. Sarzynski for respondent.
   OPINION OF THE COURT

On summary consideration, order reversed, with costs, and the applications to stay arbitration denied. It does not alter the classification of articles XXV(F), XXV(E) and III (A) as “substantive” provisions of the contract that their interpretation will determine the duration of the agreement to arbitrate. They are nonetheless “provisions of the agreement” other than the arbitration clause itself and as such are the proper subject of a grievance, and thus of arbitration within the explicit agreement of the parties. (Matter of Windsor Cent. School Dist. v Windsor Teachers Assn., 52 NY2d 734.)

Concur: Chief Judge Cooke and Judges Jasen, Gabrielli, Jones, Wachtler, Fuchsberg and Meyer.


text:
    George G. Mulligan, Appellant, v Leona A. Mulligan, Respondent.
    Decided June 16, 1981

      APPEARANCES OF COUNSEL

      Peter K. Levine and Robert W. Kahn for appellant.

      Evariste G. Lavigne and Arnold W. Proskin for respondent.
   OPINION OF THE COURT

On summary consideration, order affirmed, with costs, for reasons stated in the memorandum at the Appellate Division (79 AD2d 721).

Concur: Chief Judge Cooke and Judges Jasen, Gabrielli, Jones, Wachtler, Fuchsberg and Meyer.


author: Wachtler, J.

text:
    The People of the State of New York, Appellant, v Michael Miller, Respondent.
    Argued April 27, 1981;
    decided June 16, 1981

      APPEARANCES OF COUNSEL

      Kenneth Gribetz, District Attorney (John S. Edwards and James H. Mellion of counsel), for appellant.

      Peter Branti, Jr., Public Defender (William K. Nelson of counsel), for respondent.
   OPINION OF THE COURT

Memorandum.

The order of the Appellate Division should be affirmed.

Sometime before noon on August 24, 1977, “Ms. McE” reported to both the Spring Valley and the Clarkstown police that she had been raped earlier that morning. On September 26, approximately one month after the alleged incident, the District Attorney of Rockland County sought an order in the Clarkstown Village Court directing defendant to appear for a corporeal lineup in connection with the investigation of the matter. The application was denied, as was a similar application made in the Spring Valley Justices’ Court on September 27, 1977. For the purpose of opposing both applications, defendant was repesented by the Rockland County Public Defender’s office.

On August 24,1978 at 5:45 a.m. “Ms. P” reported to the Spring Valley police that earlier that morning she had been raped by a man in a Cadillac Eldorado. She remembered the license plate number, a check on which revealed that the car had been stolen. Shortly thereafter, at about 8:00 A.M., the car was located with defendant asleep inside. He was arrested, advised of his constitutional rights and taken to the Spring Valley police station. Later that morning he was arraigned on the charge of criminal possession of stolen property. Although advised by the court of his right to counsel, defendant was not represented by an attorney at that arraignment.

Subsequently, defendant was turned over to the Clarkstown police. Again advised of his rights, he was questioned by Detective Hewitt and Rockland County Assistant Dis-r trict Attorney Stephen Lowe for over two hours concerning the theft of the Cadillac and the rapes of both “P” and “McE”, during the course of which defendant made incriminating statements with respect to all three offenses.

Defendant was thereafter indicted on two counts of rape in the first degree and one count of criminal possession of stolen property in the first degree. County Court granted defendant’s suppression motion to the extent of suppressing those statements relating to the charge of criminal possession of stolen property and those relating to the 1978 rape of “Ms. P”. It found admissible, however, the statements concerning the 1977 rape of “Ms. McE”. On appeal from the judgment of conviction, the Appellate Division reversed and granted the suppression motion in its entirety. We now affirm.

Concerning statements relating to the stolen car: Defendant having been previously arraigned on the count of criminal possession of stolen property and thus his right to counsel having “indelibly” attached, he could not be interrogated concerning that charge in the absence of counsel. The questioning by the police was therefore improper and all inculpatory statements made concerning the stolen car were properly suppressed.

Concerning statements relating to the “McE” rape: The Rockland County Public Defender represented defendant at judicial proceedings directly related to the “McE” rape in September, 1977, a fact of which both the police and the District Attorney’s office were aware. Counsel having once entered the proceedings in connection with the charge under investigation, defendant could not waive his right to counsel in the absence of the attorney, and thus the uncounseled admissions related to the “McE” rape must be suppressed.

Concerning statements relating to the “P” rape: The courts below properly found the postarraignment interrogation an integrated whole, in which the impermissible questioning as to the criminal possession of the stolen vehicle was “so interrelated and intertwined” with, and not fairly separable from, the questioning on the “P” rape that suppression of the latter was required (cf. People v Ermo, 47 NY2d 863). Moreover, as defendant was known to be represented by counsel in connection with the “McE” rape charge, questioning on other matters was precluded (People v Rogers, 48 NY2d 167).

Inasmuch as the plea to the “McE” rape count was based on an erroneous denial of suppression that plea must be vacated. Additionally, we agree with the Appellate Division, and for the reasons stated in the opinion of Justice Guy T. Mangano, that, although the plea to the “P” rape count was made after suppression, nonetheless the plea agreement with respect to the two rape counts was integrated and vacatur of one plea requires vacatur of both.

Wachtler, J.

(concurring). Because the right to counsel had formally attached on the stolen property charge, and because the courts below properly found the rape of Ms. P. interrelated with that charge, I agree with the court that no questioning on any of the three offenses was permissible and therefore concur in the result reached by the majority.

Chief Judge Cooke and Judges Jones, Fuchsberg and Meyer concur in memorandum; Judge Wachtler concurs in a concurring memorandum in which Judges Jasen and Gabrielli concur.

Order affirmed.


text:
    Hertz Corporation, Respondent, v Dahill Moving and Storage Co., Inc., Defendant and Third-Party Plaintiff-Respondent. W. M. Ross and Co., Inc., Third-Party Defendant-Respondent; North River Insurance Company, Third-Party Defendant-Appellant, et al., Third-Party Defendant.
    Decided June 16, 1981

      APPEARANCES OF COUNSEL

      Roger P. McTiernan for third-party defendant-appellant.

      Stanley Roth for plaintiff-respondent.

      Robert A. Levy for defendant and third-party plaintiff-respondent.

      Saul Goldstein and Steven B. Prystowsky for third-party defendant-respondent.
   OPINION OF THE COURT

On summary consideration, order, insofar as appealed from, affirmed, with costs. The claim of third-party defendant North River Ins. Co. that it was not apprised of the pendency of a motion for summary judgment against it is without merit. Having moved for summary judgment against the defendant and third-party plaintiff, Dahill Moving and Storage Co., Inc., North River exposed itself to an award of summary judgment in favor of Dahill. Moreover, North River was apprised of a motion by third-party defendant, W. M. Ross and Co., Inc., for summary judgment declaring that North River was solely liable and obligated to Dahill under the terms of the insurance policy issued by North River to Dahill. In these circumstances, it cannot be said that the award of summary judgment against North River was affected by an error of law.

Concur: Chief Judge Cooke and Judges Jasen, Gabrielli, Jones, Waghtler, Fughsberg and Meyer.


author: Gabrielli, J.

text:
    The People of the State of New York, Respondent, v Kevin Charleston, Appellant.
    Argued May 7, 1981;
    decided June 16, 1981
    APPEARANCES OF COUNSEL

      Thomas J. Snider for appellant.

      William H. Power, Jr., District Attorney (Robert M. Pitler and Vivian Berger of counsel), for respondent.
   OPINION OF THE COURT

Memorandum.

The order of the Appellate Division should be affirmed.

True it is, as defendant contends, that deprivation of counsel issues need not be preserved (People v Carmine A., 53 NY2d 816; People v Samuels, 49 NY2d 218, 221; People v Ermo, 47 NY2d 863). However, in this case that question is academic. Defendant pleaded guilty in County Court before the trial commenced without having made a motion to suppress the statements which he now contends were elicited in violation of his right to counsel. Since there is, therefore, neither a trial nor a suppression record, nor, for that matter, any factual record on this subject, appellate review is precluded (People v De Mauro, 48 NY2d 892, 893).

Gabrielli, J.

(concurring). I concur in the result reached by the majority, but I base my conclusion on a slightly different rationale. Inasmuch as the defendant in this case did not move to suppress the statement in question before he entered his plea of guilty, he must be deemed to have “waive [d] his right to a judicial determination of any contention” relating to the admissibility of the statement (CPL 710.70, subd 3; see 60.45, subd 2, par [b], cl [ii]; 710.20, subd 3). To be distinguished, of course, are situations in which the defendant actually does make a motion to suppress a statement under CPL article 710, but fails to raise a claimed violation of his State constitutional right to counsel as a potential ground for suppression. In such cases, the State constitutional right to counsel question is deemed “preserved” even though it was not raised below and it may thus properly be entertained by this court as a basis for suppression (e.g., People v Samuels, 49 NY2d 218, 221; People v Dean, 47 NY2d 967; compare People v Ermo, 47 NY2d 863 [State constitutional right to counsel issue “preserved” although not raised during suppression hearing], with People v Tutt, 38 NY2d 1011 [Federal constitutional right to specific Miranda warning not “preserved” because it was not raised during suppression hearing]).

Judges Jones, Wachtler, Fuchsberg and Meyer concur; Judge Gabrielli concurs in a separate opinion in which Chief Judge Cooke and Judge Jasen concur.

Order affirmed in a memorandum.


text:
    Dorothy S. Levin, as Executrix of Pauline Spanierman, Deceased, et al., Appellants, v 40 Realty, Inc., Respondent.
    Decided June 16, 1981

      APPEARANCES OF COUNSEL

      Michael A. Richman for appellant.

      Alvin P. Bluthman and Nathan Cyperstein for respondent.
   OPINION OF THE COURT

On summary consideration, order affirmed, with costs. It cannot be said, as a matter of law, that the Appellate Division abused its discretion in granting the motion to dismiss the action unconditionally pursuant to CPLR 3216 (Pennisi v City of New York, 53 NY2d 779).

Concur: Chief Judge Cooke and Judges Jasen, Gabrielli, Jones, Wachtler, Fuchsberg and Meyer.


text:
    The People of the State of New York, Respondent, v Stacy Seppinni, Appellant.

      Argued June 11, 1981;
    decided June 16, 1981
   Appeal dismissed upon the ground that the Appellate Division’s reversal was not “on the law alone or upon the law and such facts which, but for the determination of law, would not have led to reversal” (CPL 450.90, subd 2, par [a]).


text:
    In the Matter of James Dudley, Appellant, v Robert Kerwick, as Assessor of the Town of Hardenburgh, et al., Respondents. (Proceeding No. 1.) In the Matter of the State of New York, Appellant, v Robert Kerwick, as Assessor of the Town of Harden-burgh, et al., Respondents. (Proceeding No. 2.)
    Submitted June 8, 1981;
    decided June 16, 1981
   Motion for reargument or, in the alternative, for amendment of the remittitur denied, with $20 costs and necessary reproduction disbursements.

Chief Judge Cooke taking no part. [See 52 NY2d 542.]


text:
    Bertha M. Herrington, Appellant, v Paul N. Herrington, Respondent.
    Submitted May 4, 1981;
    decided June 16, 1981
   Motion for leave to appeal denied upon the ground that an appeal lies as of right (CPLR 5601, subd [a], par [iii]).


text:
    I.J.S. Fabrics, Inc., Appellant, v Dan River, Inc., Respondent.
    Submitted May 18,1981;
    decided June 16, 1981
   Motion for a stay of arbitration pending the determination of the appeal herein denied.


text:
    Kenneth Johnson, Appellant, v Bloomingdale’s, Respondent
    Submitted April 27, 1981;
    decided June 16, 1981
   Motion for leave to appeal dismissed upon the ground that this court does not have jurisdiction to entertain the motion (NY Const, art VI, § 3, subd b, par [7]).


text:
    In the Matter of Eugene Gold, as District Attorney of Kings County, Respondent, v Stanley Gartenstein, as Judge of the Criminal Court, Respondent, and Darry P., Appellant.
    Argued May 5, 1981;
    decided June 18, 1981

      APPEARANCES OF COUNSEL

      Bennett M. Lincoff and Caesar D. Cirigliano for appellant.

      Eugene Gold, District Attorney (Lois M. Raff of counsel), respondent pro se.

      Robert Abrams, Attorney-General (Leslie B. Neustadt and Shirley Adelson Siegel of counsel), in his statutory capacity pursuant to section 71 of the Executive Law.
   OPINION OF THE COURT

Memorandum.

The order of the Appellate Division should be reversed, without costs, and the petition dismissed. It was error for Supreme Court to have entertained the application for article 78 relief in the nature of prohibition since that extraordinary remedy may ordinarily be employed only when a court acts or threatens to act “without jurisdiction in a matter over which it has no power over the subject matter or where it exceeds its authorized powers in a proceeding over which it has jurisdiction” (Matter of State of New York v King, 36 NY2d 59, 62). Our determination today should not be read as an approval of respondent’s conclusion that CPL 340.40 (subd 7) is unconstitutional, for we merely hold that the extraordinary writ of prohibition is an inappropriate means to address the claimed error in the ruling at Criminal Court in this instance.

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

Order reversed, etc.


text:
    In the Matter of Douglas Ritter, Appellant, v City of Binghamton et al., Respondents.
    Decided June 18, 1981

      APPEARANCES OF COUNSEL

      Douglas Ritter, appellant pro se.

      Kenneth Auerbach, Corporation Counsel, for respondent.
   OPINION OF THE COURT

On summary consideration, order affirmed, with costs, for reasons stated in the memorandum at the Appellate Division.

Concur: Chief Judge Cooke and Judges Jasen, Gabrielli, Jones, Wachtler, Fuchsberg and Meyer.


text:
    Dolores Noia, Appellant v Gilda De Rosa et al., Respondents.
    Argued May 8, 1981;
    decided June 18, 1981

      APPEARANCES OF COUNSEL

      Brian J. Shoot for appellant.

      Philip Hoffer, Rose L. Hoffer and Raymond J. MacDonnell for respondents.
   OPINION OF THE COURT

Memorandum.

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

We find no error of law in the charge to the jury given by the trial court, and the order of the Appellate Division should not be reversed on that ground.

Insofar as the determination of the Appellate Division to reverse the Trial Term’s order for a new trial and to reinstate the jury verdict was based on that court’s evaluation of the weight of the evidence it is not subject to our review (Donigi v American Cyanamid Co., 43 NY2d 935; Pfohl v Wipperman, 34 NY2d 597).

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

Order affirmed, with costs, in a memorandum.


text:
    Deborah Pescetti, Appellant, v James Mastrodominico, Respondent.
    Decided June 18, 1981

      APPEARANCES OF COUNSEL

      Bernard Meyerson for appellant.

      Lois F. Freedman for respondent.
   OPINION OF THE COURT

On summary consideration, order affirmed, with costs. The determination of the Appellate Division reversing the Trial Term’s order for a new trial and reinstating the jury verdict, although appealable, is not subject to our review (Noia v De Rosa, 54 NY2d 631, decided herewith; Donigi v American Cyanamid Co., 43 NY2d 935; Pfohl v Wipperman, 34 NY2d 597).

Concur: Chief Judge Cooke and Judges Jasen, Gabrielli, Jones, Wachtler, Fuchsberg and Meyer.


text:
    Gregoris Motors, Inc., Appellant, v Nissan Motor Corporation in U. S. A., Defendant, and Curwood Pontiac-Datsun, Inc., Respondent.
    Decided June 18, 1981

      APPEARANCES OF COUNSEL

      Nicholas J. Damadeo for appellant.

      Ira Greenhill for respondent.
   OPINION OF THE COURT

On summary consideration, order affirmed, with costs, for reasons stated in the memorandum at the Appellate Division.

Concur: Chief Judge Cooke and Judges Jasen, Gabrielli, Jones, Wachtler, Fuchsberg and Meyer.


text:
    In the Matter of the Arbitration between Florida Union Free School District, Appellant, and Eastern Electrical Contracting Corp., Respondent.
    Argued May 1, 1981;
    decided June 18, 1981

      APPEARANCES OF COUNSEL

      Michael M. Platzman for appellant.

      Charles A. Goldberger for respondent.
   OPINION OF THE COURT

Order reversed, with costs, and matter remitted to the Appellate Division, Second Department, for review of the facts (see Matter of Geneseo Cent. School [Perfetto & Whalen Constr. Corp.], 53 NY2d 306).

Concur: Chief Judge Cooke and Judges Jasen, Gabrielli, Jones, Wachtler, Fuchsberg and Meyer.


text:
    Avon Products, Inc., Appellant, v Sheldon H. Solow, Doing Business as Solow Building Company, Respondent.

      Decided June 18, 1981
    APPEARANCES OF COUNSEL

      Herbert M. Wachtell, Peter D. McKenna and Richard B. Skaff for appellant.

      Joel M. Miller, Robert J. McDonald, Martin D. Edel and Arline Mann for respondent.
   OPINION OF THE COURT

On summary consideration, order affirmed, with costs, and question certified answered in the affirmative. The arbitration clause at issue is broad enough to embrace all disputes concerning the correctness of the rental increase notice given by defendant to plaintiff.

Concur: Chief Judge Cooke and Judges Jasen, Gabrielli, Jones, Wachtler and Meyer. Taking no part: Judge Fuchsberg.


text:
    In the Matter of Albert Breuer, Appellant. State of New York, Respondent.
    Submitted June 1, 1981;
    decided June 18, 1981
   Motion for leave to appeal dismissed upon the ground that the Court of Appeals does not have the power to entertain a motion for leave to appeal in a criminal case (see CPL 460.10, 460.20, 470.60, subd 3).


text:
    The People of the State of New York, Appellant, v Eugene Grant, Respondent.
    Submitted June 8, 1981;
    decided June 18, 1981
   Motion by respondent for release on his own recognizance pending determination of the appeal herein dismissed upon the ground that such motion does not lie (see CPL 460.60, subd 1, par [a]).


text:
    In the Matter of Dean E. Higgins, Appellant.
    Submitted May 26, 1981;
    decided June 18, 1981
   Judge Jasen taking no part.


text:
    In the Matter of Franchise Realty Interstate Corporation, Appellant, v Peter F. Cohalan et al., Constituting the Town Board of the Town of Islip, Respondents.
    Argued June 11, 1981;
    decided June 29, 1981

      APPEARANCES OF COUNSEL

      Patrick M. Murphy, Jr., for appellant.

      William R. Bennett, Town Attorney (Edward S. Raskin of counsel), for respondents.
   OPINION OF THE COURT

Order affirmed, with costs, for reasons stated in the memorandum at the Appellate Division (78 AD2d 552).

Concur: Chief Judge Cooke and Judges Jasen, Gabrielli, Jones, Wachtler, Fuchsberg and Meyer.


text:
    The People of the State of New York ex rel. Walter Jones by Steve Sandler, Respondent, v New York State Board of Parole et al., Appellants.
    Argued June 8, 1981;
    decided June 29, 1981

      APPEARANCES OF COUNSEL

      Robert Abrams, Attorney-General (Alan Adolph and Shirley Adelson Siegel of counsel), for appellant.

      Steve Sandler, William E. Hellerstein and Donald H. Zuckerman for respondent.
   OPINION OF THE COURT

Order affirmed, without costs, for reasons stated in the memorandum at the Appellate Division (76 AD2d 782).

Concur: Chief Judge Cooke and Judges Jasen, Gabrielli, Jones, Wachtler, Fuchsberg and Meyer.


text:
    In the Matter of Robert E. Keating, Appellant, v Frank J. Rogers, as Commissioner of the New York State Division of Criminal Justice Services, et al., Respondents.
    Argued June 10, 1981;
    decided June 29, 1981

      Matter of Keating v Rogers, 77 AD2d 694, affirmed.
    APPEARANCES OF COUNSEL

      Robert E. Harris for appellant.

      Robert Abrams, Attorney-General (William J. Kogan and Shirley Adelson Siegel of counsel), for respondents.
   OPINION OF THE COURT

Order affirmed, with costs, for reasons stated in the memorandum at the Appellate Division (77 AD2d 694).

Concur: Chief Judge Cooke and Judges Jasen, Gabrielli, Jones, Wachtler, Fuchsberg and Meyer.


text:
    Frederick Faro, Respondent, v Transamerica Insurance Company, Appellant.
    Decided June 29, 1981

      APPEARANCES OF COUNSEL

      Victor Bleiwas for appellant.

      Martin Rosen for respondent.
   OPINION OF THE COURT

On summary consideration, order affirmed, with costs. It cannot be said that the arbitrator’s award was without basis in the evidence or was not otherwise grounded in reason (see Matter of Furstenberg [Aetna Cas. & Sur. Co.], 49 NY2d 757).

Concur: Chief Judge Cooke and Judges Jasen, Gabrielli, Jones, Waghtler, Fuchsberg and Meyer.


text:
    J. Roger Barber, as Commissioner of Agriculture and Markets of the State of New York, Respondent, v Joseph J. Dembroski et al., Appellants.

      Argued June 9, 1981;
    decided June 29, 1981

      APPEARANCES OF COUNSEL

      Bernard Evans Harwith and Norman Kellar for appellants.

      Dennis P. Buckley and Thomas G. Conway for respondent.
   OPINION OF THE COURT

Memorandum.

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

Appellants’ contentions that the statute and implementing order violates the First Amendment of the United.States Constitution and section 7 of article VII of the New York Constitution were not raised in his answer and thus are not reviewable in this court. We find no merit to the appellant’s other contentions.

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

Order affirmed, with costs, in a memorandum. Question certified answered in the affirmative.


text:
    In the Matter of Elm Realty, Inc., et al., Respondents, v Office of Rent Control, Appellant.
    Argued June 10, 1981;
    decided June 29, 1981

      APPEARANCES OF COUNSEL

      Alan W. Ginsberg and Harry Michelson for appellant.

      John V. Salierno and Martin A. Wein for respondents.
   OPINION OF THE COURT

Memorandum.

The order of the Appellate Division should be modified by reinstating the rent commissioner’s determination relating to Elm Realty, Inc., and the petitioner Visco insofar as the commissioner directed Visco to repay illegally collected rent.

With respect to Elm Realty, Inc., the commissioner did not misconstrue the statute (Administrative Code of City of New York, § Y51-11.0, subd b, par [2], cl [a]) or abuse his discretion as a matter of law by imposing a penalty for each monthly overcharge of rent.

With respect to petitioner Visco the Appellate Division erred in holding that he could not be held personally responsible for his acts or be required to make restitution. The applicable section of the Administrative Code (Y5110.0) expressly provides that “any person” may be subject to civil penalties for violating the law and, of course, he can be compelled to refund the sums unlawfully obtained. However, the civil penalties which are penal in nature and would go to the governing body rather than a private litigant (cf. Carr v Rischer, 119 NY 117), must be held to have abated upon the death of the petitioner (cf. People v Mintz, 20 NY2d 753, 770).

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

Order modified, with costs to appellant, in accordance with the memorandum herein and, as so modified, affirmed.


text:
    Grossman Steel and Aluminum Corporation, Respondent, v Samson Window Corporation et al., Appellants.
    Argued June 11, 1981;
    decided June 29, 1981

      APPEARANCES OF COUNSEL

      Michael C. Silberberg, Rodney A. Brown, Robert E. Pershes and Michael R. Sutton for appellants.

      Joel M. Leifer for respondent.
   OPINION OF THE COURT

Memorandum.

The order of the Appellate Division should be affirmed.

The disputed language in paragraph 9 of the contract did not create a condition precedent to payment to the subcontractor, but rather established a time for payment (cf. Schuler-Hass Elec. Corp. v Aetna Cas. & Sur. Co., 40 NY2d 883). Moreover, since the defendant insisted on trying the counterclaims on the merits, despite Special Term’s express offer to sever them because of possible prematurity, we cannot say as a matter of law that the Appellate Division abused its discretion in dismissing with prejudice when, as it eventuated there was “insufficient evidence in the record that the delay in payment was in fact due to any acts or omissions on the part of plaintiff” (see CPLR 5013).

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

Order affirmed, with costs, in a memorandum.


text:
    In the Matter of Brandt H. Doscher, Appellant, v Sondra D. Doscher, Respondent.
    Decided June 29, 1981

      APPEARANCES OF COUNSEL

      Harold B. Saftler for appellant.

      Benjamin Shedler for respondent.
   OPINION OF THE COURT

On summary consideration, order affirmed, with costs. There was no error of law in the disposition at the Appellate Division (see Hickland v Hickland, 39 NY2d 1, cert den 429 US 941; and Kay v Kay, 37 NY2d 632).

Concur: Chief Judge Cooke and Judges Jasen, Gabrielli, Jones, Wachtler, Fuchsberg and Meyer.


text:
    Mary McAulay, Individually and on Behalf of All Other Teachers and Counselors Employed by the Board of Education of the City of New York for the School Years 1977-1978 and/or 1978-1979 and Who Are Nonmembers of the United Federation of Teachers, Similarly Situated, Appellant, v Board of Education of the City of New York et al., Respondents.
    Argued June 9, 1981;
    decided June 29, 1981

      APPEARANCES OF COUNSEL

      Thomas R. Figart for appellant.

      Allen G. Schwartz, Corporation Counsel (Trudi Mara Schleifer and Francis F. Caputo of counsel), for Board of Education of City of New York, respondent.

      Paul Henry Janis and James R. Sandner for United Federation of Teachers, respondent.
   OPINION OF THE COURT

Order affirmed, with costs, for reasons stated in the memorandum at the Appellate Division (76 AD2d 779).

Concur: Chief Judge Cooke and Judges Jasen, Gabrielli, Jones, Wachtler, Fuchsberg and Meyer.


text:
    In the Matter of the Claim of Ian Cohen, Respondent. New York City Board of Education, Appellant. Philip Ross, as Industrial Commissioner, Respondent.
    Argued June 11, 1981;
    decided June 29, 1981

      APPEARANCES OF COUNSEL

      Allen G. Schwartz, Corporation Counsel (Fay Leoussis, Leonard Koerner and Carolyn E. Demarest of counsel), for appellant.

      Ian Cohen, pro se, and Murray Shactman for Ian Cohen, respondent.

      Robert Abrams, Attorney-General, for Industrial Commissioner, respondent.

      James R. Sandner and Nancy E. Hoffman for United Federation of Teachers, Local 2, AFT, AFL-CIO, amicus curiae.

      Beverly Gross and Joel Giller for District Council 37, American Federation of State, County and Municipal Employees, AFL-CIO, amicus curiae.

   OPINION OF THE COURT

Memorandum.

The order of the Appellate Division should be reversed, without costs, and the decision of the Unemployment Insurance Appeal Board reinstated.

The board’s decision had. a rational basis. What constitutes vacation pay is determined by the collective bargaining agreement. The fact that that agreement called for both “vacation pay” and “summer pay” and that the summer pay did not equal claimant’s prior rate of pay could, considered alone, lead to the conclusion that the summer pay was deferred compensation. There are, however, counterbalancing factors which furnish a rational basis for the board’s holding. First, summer pay is paid for a period during which the employee is not working (i.e., during the school vacation period); the difference in appellations for the two categories of pay is essentially historical. Secondly, nothing in the negotiations for “summer pay” suggests that the negotiators intended it as deferred compensation. To the contrary, the arbitration award which was part of the negotiating process expressly states that “employees shall not be entitled to receive unemployment insurance during the summer periods”. Finally, subdivision 3 of section 591 of the Labor Law, requires only that there be a “payment or allowance” not that it be computed in the same manner as regular pay, and expressly excludes as a determining factor the fact that “such payment or allowance be deemed to be remuneration for prior services rendered as an accrued contractual right”.

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

Order reversed, etc.


text:
    In the Matter of the Claim of Herbert Raff, Appellant, v Upson Co. et al., Respondents. Workers’ Compensation Board, Respondent.
    Decided June 29, 1981

      APPEARANCES OF COUNSEL

      Richard C. Southard for appellant.

      Peter M. Pryor for respondents.

      Robert Abrams, Attorney-General, for Workers’ Compensation Board, respondent.
   OPINION OF THE COURT

On summary consideration, order affirmed, with costs.

There having been no claim for a new injury in 1966, the board’s decision was erroneous as a matter of law.

Concur: Chief Judge Cooke and Judges Jasen, Gabrielli, Jones, Wachtler, Fuchsberg and Meyer.


text:
    In the Matter of Diane Vailes, on Behalf of Herself and Her Three Minor Children, Appellant, v Joseph D’Elia, as Commissioner of the Nassau County Department of Social Services, et al., Respondents.
    Argued June 9, 1981;
    decided June 30, 1981

      APPEARANCES OF COUNSEL

      Kathleen Whelan, Leonard S. Clark and Richard Gabrielle for appellant.

      Robert Abrams, Attorney-General (Clifford A. Royael and Shirley Adelson Siegel of counsel), for State Commissioner of Social Services, respondent.
   OPINION OF THE COURT

Memorandum.

The order of the Appellate Division should be reversed insofar as appealed from, with costs, and the determination of the State Commissioner of Social Services annulled.

In this case, the Commissioner of Social Services has calculated the income exemption of Medicaid applicants— i.'e., the amount of income which is exempt for Medicaid eligibility purposes — by counting as members of the household individuals other than the spouse, parent or person legally responsible for supporting the applicants. The Appellate Division upheld the commissioner’s determination, reasoning that since the income exemption is determined by-reference to the amount of ADC the Medicaid applicant would receive were he or she an ADC recipient, the household size too should be calculated as if the applicant were a “fictitious” ADC recipient. We disagree.

Although the applicable Federal regulation bases the amount of the income exemption upon ADC maintenance level (42 CFR 448.3 [c] [1]), it does not address the question of household size. Therefore, the regulation cannot be read to authorize the commissioner’s determination. Indeed, Federal and State law expressly provide that only the income and resources of a spouse or a parent may be deemed available to the applicant (42 CFR 435.602; Social Services Law, § 366, subd 2, par [b]). To include an individual as a member of the applicant’s household is to consider that individual’s financial resources as available to the applicant (see Genin v Toia, 47 NY2d 959, 960). Inclusion of any other person as a member of the household is therefore impermissible.

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

Order, insofar as appealed from, reversed, etc.


text:
    In the Matter of William Burk, Individually and on Behalf of His Dependent Spouse, Irene Burk et al., Appellants, v Barbara Blum, as Commissioner of the New York State Department of Social Services, et al., Respondents.
    Argued June 9, 1981;
    decided June 30, 1981

      APPEARANCES OF COUNSEL

      Richard Peyton Whiteley for appellants.

      Robert Abrams, Attorney-General (Clifford A. Royael and Shirley Adelson Siegel of counsel), for State Commissioner of Social Services, respondent.
   OPINION OF THE COURT

Memorandum.

The order of the Appellate Division should be reversed, with costs, and the determination of the State Commissioner of Social Services annulled.

It was impermissible for the commissioner to include petitioners’ self-supporting adult child as a member of the household for Medicaid eligibility purposes (Matter of Vailes v D’Ella, 54 NY2cl 663 [decided herewith]). Indeed, even under the commissioner’s own “fictitious” ADC recipient rationale, which we have today rejected, the child could not be deemed a household member (Matter of Genin v Tola, 47 NY2d 959).

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

Order reversed, etc.


text:
    In the Matter of the City of New York, Respondent, Relative to Acquiring Title to Real Property in Richmond Parkway, Section II, in the Borough of Richmond. Fred P. Goldhirsch et al., Appellants.
    Argued June 11, 1981;
    decided June 30, 1981

      APPEARANCES OF COUNSEL

      Robert J. Randell for appellants.

      Allen G. Schwartz, Corporation Counsel (Irving Genn and Morris Einhorn of counsel), for respondent.
   OPINION OF THE COURT

Decree appealed from and order of the Appellate Division brought up for review affirmed, with costs, for reasons stated in the memorandum at the Appellate Division (47 AD2d 644). There is nothing in the record to indicate otherwise and claimants conceded on oral argument that the taking was of no more than a slope easement.

Concur: Chief Judge Cooke and Judges Jasen, Gabrielli, Jones, Wachtler, Fuchsberg and Meyer.


text:
    In the Matter of Martin Toomey et al., Respondents, v Barbara B. Blum, as Acting Commissioner of the New York State Department of Social Services, et al., Appellants.
    Argued June 8, 1981;
    decided June 30, 1981

      APPEARANCES OF COUNSEL

      Robert Abrams, Attorney-General (Alan W. Rubenstein and Shirley Adelson Siegel of counsel) for State Commissioner of Social Services, appellant.

      James A. Robinson and Milo I. Tomanovich for Monroe County Department of Social Services, appellant.

      Rene H. Reixach for respondents.
   OPINION OF THE COURT

Memorandum.

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

The decision of the Federal District Court, which denied petitioners’ request for relief for the period from September, 1976 to June 1, 1977, was based exclusively upon that court’s conclusion that it had no authority to award such relief (Greklek v Toia [77 CV-228, NDNY, Sept. 30,1977], affd 565 F2d 1259, cert den sub nom. Blum v Toomey, 436 US 962; see Edelman v Jordan, 415 US 651; but cf. Holley v Lavine, 464 F Supp 718, affd 605 F2d 638, cert den 446 US 913). Thus, the decision has no. preclusive effect in a subsequent State proceeding brought by petitioners (see Restatement, Judgments 2d [Tent Draft No. 1, 1973], § 48.1, subd [1], par [a]), and it was error for the agency to deny petitioners’ application for retroactive benefits on the ground that the issue had previously been determined against them.

Inasmuch as the agency did not predicate its determination upon petitioners’ failure to comply with the requirements of section 135-a of the Social Services Law (repealed L 1978, ch 473, recodified at Social Services Law, § 22, subd 4), we need not consider whether their claim for retroactive benefits was asserted in an untimely manner (see Matter of Harder’s Express v New York State Tax Comm., 50 NY2d 1050). Indeed, the agency did not invoke section 135-a at all, but instead proceeded to hold a fair hearing and determine petitioners’ claim on the merits. It is only that determination on the merits which is before the court in this article 78 proceeding.

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

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


text:
    Eunice F. Shumalski et al., Appellants, v Government Employees Insurance Company, Respondent.
    Decided June 30, 1981

      APPEARANCES OF COUNSEL

      Joseph M. Moriello for appellants.

      Donald D. Brown, Jr., for respondent.
   OPINION OF THE COURT

On summary consideration, order affirmed, with costs. The Appellate Division reversed Special Term’s order granting plaintiffs permission to serve a further bill of particulars 11 months after the 30-day preclusion order “on the law and the facts”. In this circumstance, the disposition at the Appellate Division could be disturbed only if it were concluded that plaintiffs were entitled to be relieved of their delinquency as a matter of law and that the disposition at the Appellate Division therefore was an abuse of discretion (Barasch v Micucci, 49 NY2d 594, 598). The record does not permit that conclusion. In light of the breadth of the preclusion order effectively foreclosing proof of the cause of action sued on, summary judgment dismissing the complaint was properly granted.

Concur: Chief Judge Cooke and Judges Jasen, Gabrielli, Jones, Wachtler, Fuchsberg and Meyer.


text:
    Louis D’Ambrosio, Appellant, v Waterfront Commission of New York Harbor et al., Respondents.
    Argued June 11, 1981;
    decided June 30, 1981

      APPEARANCES OF COUNSEL

      Leonard S. Picariello for appellant.

      Rosemary B. Orr and David B. Greenfield for respondent.
   OPINION OF THE COURT

Judgment affirmed, with costs, for reasons stated in the memorandum at the Appellate Division (76 AD2d 765).

Concur: Chief Judge Cooke and Judges Jasen, Gabrielli, Jones, Wachtler, Fuchsberg and Meyer.


text:
    Eugene W. Bechtle, Jr., et al., Appellants, v Board of Supervisors of the County of Nassau et al., Respondents.
    Decided June 30, 1981

      APPEARANCES OF COUNSEL
    A. Thomas Levin for appellants.

      Edward J. Hart for respondents.
   OPINION OF THE COURT

On summary consideration, order affirmed, with costs (see Franklin v Krause, 32 NY2d 234, app dsmd 415 US 904).

Concur: Chief Judge Cooke and Judges Jasen, Gabrielli, Jones, Wachtler, Fuchsberg and Meyer.


text:
    Agostino G. Paese, Appellant, v Patrick D. Pilla, as Mayor of the Village of Tarrytown, et al., Respondents.
    Argued June 9, 1981;
    decided June 30, 1981

      APPEARANCES OF COUNSEL

      Richard, W. Fulfree for appellant.

      A. Frank Reel, Village Attorney, for respondents.
   OPINION OF THE COURT

Order affirmed, with costs, for reasons stated in the memorandum at the Appellate Division (78 AD2d 677).

Concur: Chief Judge Cooke and Judges Jasen, Gabrielli, Jones, Wachtler, Fuchsberg and Meyer.


text:
    In the Matter of Wesley Herman, Appellant, v Barbara Blum, as Commissioner of the New York State Department of Social Services, et al., Respondents.
    Decided June 30, 1981

      APPEARANCES OF COUNSEL

      Morton B. Dicker, Julian Z. Meltzer and John P. Cunningham for appellant.

      Robert Abrams, Attorney-General (Gerald Slotnik and Arlene Silverman of counsel), for respondent.
   OPINION OF THE COURT

On summary consideration, order affirmed, without costs. There is substantial evidence to support the commissioner’s determination that petitioner’s failure to accept his work referral was without good cause (see Matter of Purdy v Kreisberg, 47 NY2d 354, 358). The asserted evidentiary errors have not been preserved for judicial review because of the absence of a specific objection or request for an adjournment to remedy the asserted defects (Matter of Sowa v Looney, 23 NY2d 329, 333; Matter of Leogrande v State Liq. Auth., 19 NY2d 418, 423).

Concur: Chief Judge Cooke and Judges Jasen, Gabrielli, Jones, Wachtler, Fuchsberg and Meyer.


text:
    Village of Brockport, Appellant, v County of Monroe Pure Waters Division et al., Respondents.
    Argued June 10, 1981;
    decided June 30, 1981

      APPEARANCES OF COUNSEL

      Frank A. Aloi and Samuel F. Prato for appellant.

      John D. Doyle, County Attorney (William D. Sheldon, III, and Sergeant W. Wise of counsel), for respondents.
   OPINION OF THE COURT

Order affirmed, with costs, for reasons stated in the opinion by Justice Richard J. Cardamons at the Appellate Division (75 AD2d 483).

Concur: Chief Judge Cooke and Judges Jasen, Gabrielli, Jones, Wachtler, Fuchsberg and Meyer.


text:
    In the Matter of Villa Maria Institute of Music, Appellant. Philip Ross, as Industrial Commissioner, Respondent.
    Argued June 8, 1981;
    decided July 6, 1981

      APPEARANCES OF COUNSEL

      Raymond, V. Wylegala for appellant.

      Robert Abrams, Attorney-General (Peter Crary, Shirley Adelson Siegel, Paul S. Shemin and Iris A. Steel of counsel), for respondent.
   OPINION OF THE COURT

Memorandum.

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

There was substantial evidence in the record to support the determination of the Unemployment Insurance Appeal Board that an employment relationship existed between the Villa Maria Institute of Music and the instructors. Whether an employment relationship exists necessarily is a question of fact, involving a determination of “the existence of a right of control over the agent in respect of the manner in which his work is to be done” (Matter of Morton, 284 NY 167,172; see Matter of Liberman v Gallman, 41 NY2d 774, 778). All aspects of the arrangement must lie examined to determine whether the degree of control and direction reserved to the employer establishes an employment relationship (Matter of Morton, 284 NY, at p 173, supra; Matter of Liberman v Gallman, 41 NY2d, at p 778, supra; cf. Matter of Wittenstein v Fugazy Cont. Corp., 59 AD2d 249, mot for Iv to app den, 43 NY2d 648).

Contrary to petitioner’s argument, the record as a whole provides sufficient support for the board’s determination. While there was evidence from which a contrary conclusion could have been drawn, the board was not required to accept petitioner’s characterization of the instructors as independent contractors (see Matter of MNORX, Inc. [Ross], 46 NY2d 985, 986; Matter of Liberman v Gallman, supra, at p 779). The conclusion that evidence exists to sustain the determination ends the judicial inquiry (see Matter of Burger [Corsi], 303 NY 654, 656).

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

Order affirmed.


text:
    The People of the State of New York, Respondent, v Joseph De Pasquale, Appellant.
    Argued June 12, 1981;
    decided July 6, 1981

      APPEARANCES OF COUNSEL

      Philip L. Weinstein and William E. Hellerstein for appellant.

      Mario Merola, District Attorney (Charles L. Bach, Jr., Steven R. Kartagener and Thomas L. Gazianis of counsel), for respondent.
   OPINION OF THE COURT

Memorandum.

The order of the Appellate Division should be affirmed.

The sole ground on which defendant maintains that his confession should have been suppressed is that James Turner, defendant’s brother-in-law and a New York City police officer in another precinct, urged him to speak with the authorities after he had invoked his right to remain silent. In defendant’s view, the record shows that the police induced or actively aided Turner’s conduct and thus failed to observe defendant’s decision not to speak. The affirmed findings, however, are to the contrary. On this record, it cannot be said as a matter of law that defendant’s invocation of his right to remain silent was not “scrupulously honored” (Michigan v Mosley, 423 US 96, 104).

Nor was there error in the trial court’s ruling permitting cross-examination of defendant concerning uncharged crimes on the basis of information provided by the victim’s brother. Questioning about uncharged crimes is permissible in the exercise of the court’s discretion so long as there is a good faith basis in fact for the inquiry (People v Sorge, 301 NY 198, 200-202). Here, the trial court was satisfied with the foundation for the prosecutor’s questions and nothing in the record suggests that the basis for the inquiry was inadequate as a matter of law or that the trial court abused its discretion.

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

Order affirmed.


text:
    In the Matter of Phyllis Foreman, Appellant, v Stanley Brezenoff, as Commissioner of the New York City Department of Social Services, et al., Respondents.
    Decided July 6, 1981

      APPEARANCES OF COUNSEL

      Judith L. Carlin and Gerald Schwartz for appellant.

      Allen G. Schwartz, Corporation Counsel (Joseph M. Armstrong of counsel), for respondents.
   OPINION OF THE COURT

On summary consideration, judgment affirmed, without costs. There is substantial evidence in the record to support the determination of the commissioner.

Concur: Chief Judge Cooke and Judges Jasen, Gabrielli, Jones, Wachtler, Fuchsberg and Meyer.


text:
    The People of the State of New York, Respondent, v John Savage, Appellant.
    Argued June 12, 1981;
    decided July 6, 1981
    APPEARANCES OF COUNSEL

      Charles D. Halvorsen, Rose H. Sconiers and Joseph B. Mistrett for appellant.

      Edward C. Cosgrove, District Attorney (John De Franks and Joseph A. Matteliano of counsel), for respondent.
   OPINION OF THE COURT

Memorandum.

The order of the Appellate- Division should be affirmed.

Defendant’s plea of guilty operated as a waiver of his claim that he was entitled to have the indictment dismissed on the ground that the People were not ready for trial within the time prescribed by CPL 30.30 (People v Friscia, 51 NY2d 845). Accordingly, we have no occasion to consider the merits of this statutory “speedy trial” claim in the instant appeal. As to defendant’s claim that his conviction should be reversed because he was denied his constitutional right to a speedy trial, although this claim was not waived by his plea, we note only that defendant has not demonstrated a factual or legal basis for the claim (see People v Taranovich, 37 NY2d 442) and that, consequently, he is not entitled to the relief he seeks.

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

Order affirmed in a memorandum.


text:
    In the Matter of the Arbitration between Peter Ottley, as President of Local 144, Hotel, Hospital, Nursing Home and Allied Health Services Union, SEIU, AFL-CIO, Respondent, and Morris Mostoff et al., Doing Business as Dover Nursing Home, Appellants.
    Decided July 6, 1981

      APPEARANCES OF COUNSEL

      Jeffrey R. Cohn for appellants.

      Daniel Engelstein for respondent.
   OPINION OF THE COURT

On summary consideration, order affirmed, with costs. While we do not agree with the analysis articulated by the Appellate Division, we cannot say on this record that the arbitrator committed misconduct.

Concur: Chief Judge Cooke and Judges Jasen, Gabrielli, Jones, Wachtler, Fuchsberg and Meyer.


text:
    Bargaintown, D.C., Inc., et al., Appellants, v Bellefonte Insurance Company et al., Respondents, et al., Defendants.
    Argued June 10,1981;
    decided July 6, 1981

      APPEARANCES OF COUNSEL

      Steven M. Tarshis for appellants.

      George W. Clark for respondents.
   OPINION OF THE COURT

Memorandum.

The appeal taken by J. Mart, Division of Jeweltown, Inc., should be dismissed, without costs. The order of the Appellate Division is construed as one of modification, and J, Mart is not aggrieved thereby.

The appeal taken by Bargaintown, D.C., Inc., should be affirmed, with costs, for the reasons stated in the opinion of Justice Leonard H. Sandler at the Appellate Division. The court will not read the clause “unless a longer period of time is provided by applicable statute” as manifesting an intent to import the six-year Statute of Limitations applicable to contract actions in general when to do so would necessarily be to ascribe to the parties an intention to include a wholly meaningless reference to a one-year period of limitation. Nor does the dictum with respect to “every casualty insured against” in Proc v Home Ins. Co. (17 NY2d 239, 244) suggest that there should be a reversal in the present case. Proc involved only claims for fire losses under a standard fire insurance policy. Its focus was on the date from which the period of limitation began to run for casualties insured against in such a policy; there was but a single such period and no issue of possible alternative periods of limitation with respect to different risks (the core issue in this case) was there presented or addressed.

Chief Judge Cooke (dissenting in part). The issue is whether this action to recover on an “all risks” property insurance policy is time barred. Because the policy itself, as well as the applicable provisions of the Insurance Law, compels the conclusion that the action was timely commenced, I must disagree with the majority’s affirmance of an order dismissing the complaint.

Plaintiff, Bargaintown, D.C., Inc., purchased an all risk insurance policy from defendants covering property in New York and several other jurisdictions. The policy contains a clause providing that actions for property loss must be commenced “within twelve (12) months next after the happening becomes known to the” insured, “unless a longer period of time is provided by applicable statute”. During the term of the policy, plaintiff allegedly suffered certain burglary and water damage losses. When the defendants refused to bear the losses under the policy, this action was commenced, admittedly more than one year but less than two years after discovery of the damage.

Defendants moved to dismiss the action as untimely under the policy limitation clause. Special Term denied the motion, and the Appellate Division reversed. Plaintiff now appeals to this court. For two distinct reasons, the action is not time barred.

First, the one-year contractual limitation clause is operative “unless a longer period of time is provided by applicable statute.” Read literally, this language would mean that the one-year period gives way when a longer time is provided by the applicable Statute of Limitations. In New York, the Statute of Limitations for contracts is six years— obviously a lengthier period than one year. Under the policy, so read, then, New York’s six-year Statute of Limitations governs this action.

Of course, it may be argued that the clause was intended to impose a one-year limitation period except where a longer period was required by law. But the language selected by the drafter of the policy — the insurer — does not accomplish that result. Had the insurer desired the one-year period to control in all instances except where proscribed by statute, it could have done so in plain, simple terms. Indeed, a slight alteration in the existing clause — changing the word “provided” to “required” — would have been sufficient. As it is, however, the policy negates its own one-year limitation period where, as here, the statutory period is longer.

Second, even if the six-year period did not render the action timely, provisions of the Insurance Law require a two-year Statute of Limitations period. Under that statute, a policy of fire insurance must conform to a standard form (Insurance Law, § 168, subd 2). Among the terms of the standard policy is a clause providing a two-year period of limitations (§ 168, subd 5).

It is true that the policy issued by defendants covers risks in addition to fire. When fire is one of the perils covered, however, the standard form policy is required, unless another form is approved by the Superintendent of Insurance (Insurance Law, § 168, subd 7). And, lest there be any doubt that the limitation period of the standard form is applicable to risks other than fire, this court has pointed out the Legislature’s “unmistakable indication that the period of limitations [in the standard fire policy] encompassed every casualty insured against, including fire” (Proc v Home Ins. Co., 17 NY2d 239, 244 [emphasis added]). Thus, the policy at issue should have contained the two-year limitation clause of the standard form policy. The failure to include the provision, at least without first obtaining the superintendent’s approval of the policy, is a violation of the Insurance Law. But the policy is nonetheless “enforceable as if it conformed with” the requirement of law (Insurance Law, § 143, subd 1).

Finally, defendants’ contention that application of the New York Insurance Law is inappropriate since some of the property is outside this State was not raised at Special Term. Had the question been there raised, it is likely that the record would have been clearer as to location of the property. In any event, the failure to raise the issue prevents this court from considering it on appeal (e.g., De Leon v New York City Tr. Auth., 50 NY2d 176, 179, n 1).

In sum, the terms of the insurance policy at issue render the six-year contract Statute of Limitations applicable. Alternatively, the two-year limitations clause of the standard fire form must be read into the policy. Under either approach, this action was timely commenced.

Accordingly, the order of the Appellate Division should be reversed, and the motion to dismiss denied.

Judges Jasen, Jones, Wachtler, Fuchsberg and Meyer concur in memorandum; Chief Judge Cooke dissents in part and votes to reverse on the appeal by Bargaintown, D.C., Inc., in an opinion in which Judge Gabrielli concurs.

On appeal by plaintiff J. Mart, Division of Jeweltown, Inc.: Appeal dismissed, without costs.

On appeal by plaintiff Bargaintown, D. C., Inc.: Order affirmed, with costs.

      . If it had been the intention of the parties to override the one-year limitation only where a statute mandates a longer period, the language at issue would be superfluous. For, a statute requiring a longer limitation period would itself obviously nullify the shorter contractual period.

      . I do not suggest that the superintendent could approve a form containing less than a two-year limitation period (see Insurance Law, §168, subd 7). That question is not now before the court.


text:
    In the Matter of Staten Island Bus, Inc., Respondent, v Board of Education of the City of New York, Respondent, and Pioneer Transportation Corp., Appellant.
    Decided July 6, 1981

      APPEARANCES OF COUNSEL

      J. Irwin Shapiro for appellant.

      Leonard M. Simon and Peter R. Silverman for Staten Island Bus, Inc., respondent.

      Allen G. Schwartz, Corporation Counsel (Marvin R. Kwartler of counsel), for Board of Education of City of New York, respondent.
   OPINION OF THE COURT

• Order affirmed, with costs, for the reasons stated in the memorandum at the Appellate Division (82 AD2d 891). We would additionally observe that substitution of transportation furnished by private carrier for that previously supplied by the Transit Authority will be of such quantum as to work a substantial change in the character of the transportation system on Staten Island rather than merely an expansion of the services previously furnished by the private carrier.

Concur: Chief Judge Cooke and Judges Jasen, Gabrielli, Jones, Wachtler and Fuchsberg. Taking no part: Judge Meyer.


text:
    In the Matter of Joseph J. Pesale, Appellant, v Augustus A. Beekman, as Fire Commissioner of the Fire Department of the City of New York, et al., Respondents.
    Decided July 6, 1981

      APPEARANCES OF COUNSEL

      Bernard Meyerson for appellant.

      Allen G. Schwartz, Corporation Counsel (Marvin R. Kwartler of counsel), for respondents.
   OPINION OF THE COURT

On summary consideration, order affirmed, with costs, for the reasons stated in the memorandum at the Appellate Division (81 AD2d 590).

Concur: Chief Judge Cooke and Judges Jasen, Gabrielli, Jones, Wachtler, Fuchsberg and Meyer.


text:
    The People of the State of New York, Respondent, v Thomas Layte, Also Known as Robert C. Owens, Appellant.
    Argued June 8, 1981;
    decided July 6, 1981

      APPEARANCES OF COUNSEL

      Reuben Ortenberg for appellant.

      Kenneth Gribetz, District Attorney (John S. Edwards of counsel), for respondent.
   OPINION OF THE COURT

Memorandum.

The order of the Appellate Division should be affirmed.

There was probable cause for the arrest of defendant and codefendant Juniewicz and the arrest was valid whether made by the police officer or a narcotics investigator. As to the contents of the airline bag, defendant has not preserved for our review, and we, therefore, do not reach the question whether the bag being open on the rear seat of the car is sufficient to distinguish People v Roman (53 NY2d 39) and Arkansas v Sanders (442 US 753).

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

Order affirmed in a memorandum.


text:
    In the Matter of Slattery Associates, Inc., Appellant, v James H. Tully, Jr., et al., Constituting the State Tax Commission, Respondents.
    Argued June 9, 1981;
    decided July 6, 1981

      APPEARANCES OF COUNSEL

      Barry J. Byrnes, Ernest J. Williams and William B. Morris for appellant.

      Robert Abrams, Attorney-General (Lawrence J. Logan and Shirley Adelson Siegel of counsel), for respondents.
   OPINION OF THE COURT

Memorandum.

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

With respect to the piping we do not reach any question of inconsistency with other commission rulings since the complaint alleged, petitioner’s expert testified and the hearing officer found that the piping was furnished to petitioner by the owner. As to the piping, therefore, petitioner, having paid no tax, has no right to a credit. As concerns the other materials used to construct the generator foundation, we concur with the reasoning of the Appellate Division memorandum (79 AD2d 761).

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

Order affirmed, with costs, in a memorandum.