author: Fuchsberg, J.

text:
    In the Matter of Westinghouse Electric Corporation, Respondent-Appellant, v James H. Tully, Jr., et al., Constituting the Tax Commission of the State of New York, Appellants-Respondents.
    Argued February 9, 1982;
    decided April 1, 1982

      POINTS OF COUNSEL

      Robert Abrams, Attorney-General (Francis V. Dow and Shirley Adelson Siegel of counsel), for appellants-respondents.
    I. The inclusion subject to franchise tax under article 9-A of the Tax Law of the apportioned income of a sales subsidiary not doing business in New York is the apportioned entire net income of a corporation doing business in New York and does not violate the due process or commerce clause of the New York Constitution and the United States Constitution. (People ex rel. Conway Co. v Lynch, 258 NY 245; Matter of Ebling Co. v Graves, 259 App Div 427; People ex rel. Hatch v Reardon, 184 NY 431, affd sub nom. Hatch v Reardon, 204 US 152; Rice v Santa Fe Elevator Corp., 331 US 218; Ray v Atlantic Richfield Co., 435 US 151; National League of Cities v Usery, 426 US 833; Coyle v Oklahoma, 221 US 559; Northwestern Cement Co. v Minnesota, 358 US 450; Complete Auto Tr. v Brady, 430 US 274.) II. The provisions of section 210 (subd 13, par [a]) of the Tax Law, which limits an export credit to income from the sale of export property shipped from a regular place of business in New York, do not discriminate against taxpayers whose shipments of export property are made outside the State. (Northwestern Cement Co. v Minnesota, 358 US 450; Halliburton Oil Well Co. v Reily, 373 US 64; Boston Stock Exch. v State Tax Comm., 429 US 318.)

      Henry W. de Kosmian and Simon Friedman for respondent-appellant.
    I. The addition of Westinghouse DISC’S accumulated DISC income to that of Westinghouse required under section 208 (subd 9, par [i], cl [B]) of the Tax Law places an impermissible burden on interstate and foreign commerce, invalid under the commerce clause of the Constitution of the United States. (Caterpillar Tractor Co. v United States, 589 F2d 1040; Hines v Davidowitz, 312 US 52; Perez v Campbell, 402 US 637; Rice v Santa Fe Elevator Corp., 331 US 218; Ray v Atlantic Richfield Co., 435 US 151; McGoldrick v Gulf Oil Corp., 309 US 414; Epstein v Lordi, 261 F Supp 921, 389 US 29; Michelin Tire Corp. v Wages, 423 US 276.) II. The addition of Westinghouse DISC’S accumulated DISC income to that of Westinghouse required under section 208 (subd 9, par [i], cl [B]) of the Tax Law violates the due process clauses of the Fourteenth Amendment to the Constitution of the United States and section 6 of article I of the New York State Constitution. (Frick v Pennsylvania, 268 US 473; Miller Bros. Co. v Maryland, 347 US 340; Mobil Oil Corp. v Commissioner of Taxes, 445 US 425.) III. The limitation of the credit-provided by section 210 (subd 13, par [a]) of the Tax Law to income attributable to shipments from a regular place of business in New York is unconstitutional under the commerce clause and the equal protection clauses of the Fourteenth Amendment to the Constitution of the United States and section 11 of article I of the Constitution of New York State. (Western Live Stock v Bureau, 303 US 250; McGoldrick v Berwind-White Co., 309 US 33; Harvester Co. v Department of Treasury, 322 US 340; Harvester Co. v Evatt, 329 US 416; Boston Stock Exch. v State Tax Comm., 429 US 318; Allied Stores of Ohio v Bowers, 358 US 522; Town of Greenburgh v Board of Supervisors of Westchester County, 53 Misc 2d 88; Santa Clara County v Southern Pacific R.R. Co., 118 US 394; Wheeling Steel Corp. v Glander, 337 US 562.) IV. The inclusion of the deemed distributions from Westinghouse DISC in Westinghouse’s income is invalid under the equal protection clauses and due process clauses of the Fourteenth Amendment of the Constitution of the United States and sections 6 and 11 of article I of the New York State Constitution. (Allied Stores of Ohio v Bowers, 358 US 522; Matter of Wurlitzer Co. v State Tax Comm., 35 NY2d 100; Mobil Oil Corp. v Commissioner of Taxes, 445 US 425.)
   OPINION OF THE COURT

Fuchsberg, J.

In an article 78 proceeding to review a determination of the State Tax Commission which sustained corporate franchise taxes imposed pursuant to article 9-A of the Tax Law, we are called upon to pass on the constitutionality of New York statutes which tax income emanating from the earnings of a “domestic international sales corporation” (hereinafter referred to by the acronym “DISC”), a class of corporations newly made eligible for preferential tax treatment by the Federal Revenue Act of 1971.

The primary requirement for qualification as a DISC is that a corporation must derive at least 95% of its income from export sales and related services. The tax advantages it receives are intended to encourage the export of goods manufactured in the United States by compensating for the far lower taxes many foreign subsidiaries of American companies pay to the nations in which they operate (see H Rep No. 92-533, 92d Cong, 1st Sess [1971], reprinted in US Code Cong & Admin News, 1971, pp 1825, 1872; Sen Rep No. 92-437, 92d Cong, 1st Sess [1971], reprinted in US Code Cong & Admin News, 1971, pp 1918,1928,1996). To effect the contemplated tax benefit, the implementing statute, besides exempting a DISC from Federal taxation, permits half of its income to be “accumulated” without subjecting its shareholders to current Federal taxes. On the other hand, the other half is “deemed distributed” to the shareholders even if it in fact is not paid out as a dividend (see US Code, tit 26, § 991 et seq.).

The DISC involved in the present proceeding, a Delaware corporation named Westinghouse Electric Export Corporation, is a wholly owned subsidiary of Westinghouse Electric Corporation (Westinghouse), a Pennsylvania corporation which does business in New York. It is undisputed that all of the DISC’S business income for 1972 and 1973, the years under review here, was earned as commission agent for either Westinghouse or the latter’s affiliates. Moreover, it is agreed that none of the usual incidents of a nexus with New York applied to the DISC, it having operated no office, engaged no employees, conducted no business activities, employed no capital and neither owned nor leased real or tangible personal property. Concordantly, it did not file New York franchise tax returns.

It was against this background that, when Westinghouse filed its own 1972 and 1973 New York franchise tax returns, though it included its “deemed distributions” from the DISC in its “entire net income” (see Tax Law, § 208, subd 9, par [a], cl [1]), it did not charge itself with any portion of the “accumulated” DISC income. Finding these returns deficient, New York State’s Department of Taxation and Finance took the position that Westinghouse, in its treatment of the DISC income, had failed to comply with section 208 (subd 9, par [i], cl [B]) of the Tax Law, which, in essence, requires a reporting corporation to compute its “entire net income” by consolidating its DISC’S receipts, expenses, assets and liabilities with its own, save for transactions between it and its DISC.

Such consolidation, of course, would have added the accumulated DISC income which had been deferred for Federal tax purposes. Against the deficiency assessed on this basis, the department did allow Westinghouse a DISC export credit for merchandise “shipped from a regular place of business of the taxpayer within this state”, all pursuant to a formula set out in section 210 (subd 13, par [a]) of the Tax Law (see infra, p 375).

In its petition for a redetermination, Westinghouse alleged that inclusion of accumulated DISC income in its “entire net income” would impose an undue burden on interstate and foreign commerce (US Const, art I, § 8, cl 3); that, in violation of the due process clauses of the State and Federal Constitutions, New York lacked a jurisdictional nexus upon which to tax the DISC’S income; and that, if the DISC’S accumulated income had to be included in “entire net income”, section 210 (subd 13, par [a]) of the Tax Law, which provides the tax credit, offends the commerce clause because it discriminates against shipments of export property from locations outside the State. In addition, Westinghouse, asserting that State taxation of the deemed distributions of DISC trespassed on due process and equal protection, demanded that the taxes it had paid on such be refunded. The State Tax Commission rejected all of these contentions.

For its part in this proceeding, the Appellate Division, two Justices dissenting, found that section 208 (subd 9, par [i], cl [B]), in requiring the DISC’S accumulated income to be added to the taxpayer’s “entire net income”, constituted an unconstitutional imposition on foreign commerce. Having found that section 208 (subd 9, par [i], cl [B]) violated the commerce clause, the court did not address Westinghouse’s claim that the provision was also invalid for lack of due process. Nor did the court decide the constitutionality of the tax credit of section 210 (subd 13, par [a]), apparently because this section expressly is made dependent on the validity of section 208 (subd 9, par [i], cl [B]). Finally, it rejected Westinghouse’s due process and equal protection contentions regarding the inclusion of the deemed distribution income. For the reasons which follow, we believe none of the constitutional objections has merit.

Turning at once to Westinghouse’s primary argument — that the addition of the accumulated DISC income to Westinghouse’s “entire net income” as called for by section 208 (subd 9, par [i], cl [B]) of the Tax Law frustrates the efficacy of the Federal tax incentive and, therefore, runs counter to the fundamental policy dictates of the commerce clause — we first pay heed to the well-settled proposition that the ultimate power to regulate both foreign and interstate commerce lies with Congress (see, e.g., Gibbons v Ogden, 9 Wheat [22 US] 1, 86-87). However, that a State chooses to act in the same field as does Congress does not . automatically portend judicial nullification of the State law (see Walhalla Assoc. v National Commercial Bank & Trust Co., 54 NY2d 857; see, generally, Tribe, American Constitutional Law, § 6-24, p 379). It all hinges on whether Congress intended to pre-empt State regulation (see Rice v Santa Fe Elevator Corp., 331 US 218, 229-230).

This said, we note that in the present case there is no explicit statement of pre-emption. Nor does the statutory scheme imply any such design. True, it bespeaks a plan to give special tax treatment to DISC’S and their stockholders in order to encourage export sales of goods manufactured in the United States. But that some benefits were extended to accomplish this end does not mean that every possible kind was intended. To the contrary, even as to Federal taxation, the incentives tendered a DISC’S shareholders, the ultimate beneficiaries of a DISC’S tax preferment, are far more limited than those offered to the DISC per se.

Most persuasive is the relevant legislative history. This leaves little to implication. On September 8, 1971, shortly before the DISC legislation was enacted, John S. Nolan, Deputy Assistant Secretary of the Treasury for Tax Policy, spokesman for the sponsoring department, in the company of then Secretary of Treasury John B. Connally, officially appeared at a hearing before the Committee on Ways and Means of the House of Representatives. There, Mr. Nolan, in response to an expression of committee concern that the proposal might “prohibit States from levying corporate income taxes on a DISC”, was unequivocal in his declaration that the proposed bill would leave the States “free to impose the tax, if they choose to do so” (see Hearings before House Committee on Ways and Means on the Tax Proposals Contained in the President’s New Economic Policy, 92d Cong, 1st Sess, Part I, pp 170-171). Moreover, not without significance, proposed legislation which might have preempted the States from taxing DISC’S was considered by the same committee in 1980, only to be permitted to die without any action (see H Rep No. 5076, 96th Cong, 2d Sess; Hearing before Committee on Ways and Means on State Taxation of Foreign Source Income, pp 29, 326). Overall, then, our State is far from constrained by a clear statement that Congress intended to exercise its commerce power in full (see Tribe, American Constitutional Law, § 5-8, p 243).

On this point, comments also are in order on McGoldrick v Gulf Oil Corp. (309 US 414) to which Westinghouse adverts to support its position. There, a Federal statute permitted the importation of crude petroleum into the United States free of import duty. However, the statute specified that the petroleum be imported, converted into fuel oil and then sold solely for fuel in propelling foreign-bound vessels in foreign commerce, all while in bond. These congressionally designed conditions prevented the segregated oil from ever becoming a part of “the common mass of property in the state” (McGoldrick, supra, at p 423). The Supreme Court emphasized that it was this integrated structure for assuring that the oil, never left the stream of foreign commerce, which has no parallel in this case, that compelled the conclusion that “while in bonded warehouse, [the oil is] free from state taxation” (McGoldrick, supra, at pp 428-429).

The second prong of Westinghouse’s constitutional attack on section 208 (subd 9, par [i], cl [B]) is that, since neither the DISC nor any of Westinghouse’s affiliates for which it acted as export commission agent were engaged in business in New York, the State lacked the jurisdictional nexus to satisfy the minimal due process standards on which the right to tax must be predicated. We find this assertion equally without merit. Revealing in this connection is the recent decision in Mobil Oil Corp. v Commissioner of Taxes (445 US 425). In the context of a challenge to Vermont’s taxation of dividend income received by a taxpayer from foreign subsidiaries and affiliates, the court reminded us that in such a case, due process mandates can be met by a State’s apportionment formula so long as it is reasonably designed to reflect the percentage of a unitary business’ profits connected with the State (see Mobil Oil, supra, at pp 436-440; cf. American Ins. Assn. v Lewis, 50 NY2d 617, 623-624).

Here the record shows that Westinghouse and its DISC were operating a unitary business. Not all the accumulated DISC income was subjected to taxation, but rather only that part allocable to New York (Tax Law, § 208, subd 9, par [i], cl [B]; § 210, subd 1, par [a]; § 210, subd 3; cf. Matter of Fischbach & Moore v State Tax Comm., 36 NY2d 605, 607). Moreover, there is nothing in the record to show that the income was improperly apportioned to business done in New York; nor does the taxpayer question our State’s allocation formula.

This brings us to the Westinghouse argument that, even if the inclusion of the accumulated DISC income required by section 208 (subd 9, par [i], cl [B]), standing alone, does not contravene the commerce clause, an infringement occurs when it is acted upon by the tax credit provided for in section 210 (subd 13, par [a]). It reasons that the effect of the credit is impermissibly to subject its export sales from a non-New York “place of business” to a higher rate of tax than comparable sales “shipped from a regular place of business” within New York.

The credit was devised, by the State on its own, to provide shareholders of DISC’S with State tax incentives akin to those which had been enacted by the Federal Government (see Letter from Norman F. Gallman, Comr of Taxation and Finance to Governor Nelson A. Rockefeller in Bill Jacket [at p 3-4] of L 1972, ch 778; Memorandum of Dept of Commerce in Bill Jacket [at p 12] of L1972, ch 778; Division of Budget Report in Bill Jacket [at p 19] of L 1972, ch 778). Such credit was intended to ensure that New York would not lose its competitive position vis-á-vis other States which were also expected to offer tax benefits to DISC owners (see Letter from Arthur M. Arnold, Director of Taxation and Governmental Affairs of Empire State Chamber of Commerce in Bill Jacket [at p 28] of L 1972, ch 778; Memorandum in Support by New York Chamber of Commerce in Bill Jacket [at p 29] of L 1972, ch 778). While Congress chose to provide the benefit in the form of a tax deferral, our State Legislature elected to use a tax credit.

That a State’s tax structure is so used hardly requires an ipso facto finding that we have discriminated against multistate enterprises in favor of intrastate corporations. Rather, States are free to use their taxing power “to encourage the growth and development of intrastate commerce and industry * * * [and to] compete with other States for a share of interstate commerce; such competition lies at the heart of a free trade policy” (Boston Stock Exch. v State Tax Comm., 429 US 318, 336-337). That this is what the credit allowed by section 210 (subd 13, par [a]) accomplishes, and no more, is demonstrated by a review of how it is calculated.

The first step to be taken to arrive at the amount of such tax credit is to multiply the taxpayer’s share of the accumulated DISC income by the taxpayer’s New York “business allocation percentage” (Tax Law, § 210, subd 3). This yields the dollar value of the accumulated DISC income allocable to New York as in-State earnings. This amount is then multiplied by that percentage which the taxpayer’s receipts from export property on which the DISC earned commissions and which was shipped from a regular place of business in New York bears to the taxpayer’s total receipts from the sale of export property on which the DISC earned commissions. The product of this calculation is the amount eligible for the credit; it is merely a subdivision of the accumulated DISC income allocable to New York.

Obviously, the business allocation percentage plays an integral role in computing the tax credit. It determines what amount of the taxpayer’s income has a jurisdictional nexus with the State. The result is that, when the State exercises its taxing power, it does so consistently with due process mandates (Northwestern Cement Co. v Minnesota, 358 US 450; Wisconsin v Penney Co., 311 US 435).

But New York need not tax all it has the right to tax. The credit here simply forgives a portion of that income which New York may tax by reference to shipments of export property from a regular place of business in New York, an additional New York relationship. Such a method clearly satisfies due process, and any effect on interstate commerce is too indirect to run afoul of the commerce clause.

Now, having disposed of the arguments on which Westinghouse seeks to overturn the Tax Commission’s assessment, we treat with its claim for reimbursement of its allegedly mistaken paymept of tax on the deemed distributions. Its position, again cast in constitutional terms, is that taxation of such income infringes upon both due process and equal protection.

This due process position is no different from the one it took regarding taxation of accumulated DISC income, i.e., New York lacks a sufficient nexus with the DISC to tax its income. But, since Westinghouse and the DISC are parts of a unitary business and there is an apportionment of the income allocable to New York, there is no due process violation (Mobil Oil Corp. v Commissioner of Taxes, 445 US 425, supra).

As for equal protection, Westinghouse would have us hold that, since New York law provides that the income from all non-DISC subsidiaries is exempt from the State’s franchise tax (Tax Law, § 208, subd 9, par [a], cl [1]), it is irrational to tax it on the deemed distribution income of its wholly owned DISC subsidiary (Tax Law, § 208, subd 8-A, par [b]). But, if the DISC had not elected to be treated as a domestic international sales corporation, the intercompany transactions in which it engaged would have compelled the commissipn to require it and Westinghouse to file a combined report (see Tax Law, § 211, subd 4). In that event, the allocated income of the DISC would be combined with the allocated income of Westinghouse (see Matter of Wurlitzer Co. v State Tax Comm., 35 NY2d 100). As the Appellate Division correctly observed, "[tihere is nothing in the record to indicate that petitioner’s tax liability resulting from a combined report * * * would be less than that which was in fact imposed” (82 AD2d 988, 989).

For all these reasons, the judgment of the Appellate Division should be modified by reinstating the determination of the State Tax Commission.

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

Judgment modified, with costs to the State Tax Commission, in accordance with the opinion herein and, as so modified, affirmed.

      . Since no questions are raised as to the tax ramifications of an actual distribution of DISC income or the eventual taxability of the accumulated DISC income, we do not treat with such issues in this opinion. *

      . None of the affiliates did business in New York.

      . Section 208 (subd 9, par [i], cl [B]) of the Tax Law, ip pertinent part, reads: “[A]ny taxpayer required to compute a tax under this article, which during the taxable year being reported was a stockholder in any DISC * * * shall * * * adjust each item of its receipts, expenses, assets and liabilities, as otherwise computed under this article, by adding thereto its attributable share of each such DISC’S receipts, expenses, assets and liabilities *** provided, however, (1) that all transactions between the taxpayer and each such DISC shall be eliminated from the taxpayer’s adjusted receipts, expenses, assets and liabilities; (2) that the taxpayer’s entire net income as otherwise computed under this section, shall be reduced by subtracting the amount of the deemed distribuí tion of cprrent income, if any, from each such DISC already included in the entire net income of such taxpayer by virtue of having been included in its entire taxable income for that taxable year as reported to the United States Treasury Department”.

      . The commerce clause provides that “The Congress shall have Power * * * To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes”.

      . Westinghouse also contended that the State Tax Commission had transposed certain numbers creating an arithmetical miscalculation of the tax. In its answer, the commission conceded this error.

      . We also observe that even accumulated DISC income is taxable to the shareholders when it is distributed, when a shareholder sells his stock or when the corporation no longer qualifies as a DISC (see US Code, tit 26, § 995).

      . Subdivision 3 of section 210 of the Tax Law provides for an allocation of a taxpayer’s total business income from all sources by the application of a three-factor formula, the three factors being the fractions represented by a taxpayer’s property within New York over all its property, a taxpayer’s payroll within New York over its total payroll and a taxpayer’s receipts from within New York over its total receipts.

      . The dollar value of the credit is then determined by multiplying the amount available for the credit by 70% and then by the tax rate (Tax Law, § 210, subd 13, par [a]). According to a memorandunj prepared by the State Department of Commerce before the DISC legislation was enacted “[t]he 70 percent factor included in the export credit formula [was] apparently designed to minimize revenue loss while still providing some tax incentive for the export business” (Memorandum of Dept of Commerce in Bill Jacket [at p 12] of L 1972, ch 778).


source: Caselaw Access Project

author: Jones, J.

license: Public Domain

text:
    Jeanette Tucker, Appellant-Respondent, v Spencer Tucker, Respondent-Appellant.
    Argued February 15, 1982;
    decided April 6, 1982

      POINTS OF COUNSEL

      Kenneth Koopersmith, Alexander Potruch, Michael K. Feigenbaum and Bernard E. Stamler for appellant-respondent.
    Under the facts and circumstances herein. Special Term acted properly and within its discretion in permitting a discontinuance of the action. (Louis R. Shapiro, Inc. v Milspemes Corp., 20 AD2d 857; Schimansky v Nelson, 50 AD2d 634; Matter of Butler, 101 NY 307; Rosen Trust v Rosen, 53 AD2d 342; Winans v Winans, 124 NY 140; Cooper v Cooper, 103 Misc 2d 689; Plohn v Plohn, 282 App Div 1107; Schneider v Schneider, 32 AD2d 630; Landsman v Landsman, 278 App Div 214.)

      Joel R. Brandes for respondent-appellant.
    I. In view of the expressed legislative intent, the prejudice to defendant and plaintiff’s stated purpose to commence a new action for divorce under the Equitable Distribution Law, the court below properly denied plaintiff leave to discontinue her action for divorce, without prejudice. (Sharp v Kosmalski, 40 NY2d 119; Kay v Kay, 37 NY2d 632; Winans v Winans, 124 NY 140; Gellman v Gellman, 80 AD2d 735; Goding v Goding, 106 Misc 2d 423; Mercier v Mercier, 103 Misc 2d 1029; Laxer v Bergen & Zaager, 178 Misc 391; Bateholts v Russell, 35 AD2d 761; Landsman v Landsman, 278 App Div 214; Schneider v Schneider, 32 AD2d 630.) II. It was an abuse of discretion for the court below to grant defendant’s motion for leave to interpose a counterclaim on condition that he stipulate that plaintiff’s rights not be affected by a finding of misconduct. III. The equitable distribution provisions of part B of section 236 of the Domestic Relations Law as applied to respondent, deny him due process and equal protection of the l§rws and impair the obligation of contract in violation of his constitutional rights. (Emmer v Emmer, 69 AD2d 850; Orr v Orr, 440 US 268; Childs v Childs, 69 AD2d 406; Royster Guano Co. v Virginia, 253 US 412; McGowan v Maryland, 366 US 420; Gleason v Gleason, 26 NY2d 28; Matter of Chrysler Props. v Morris, 23 NY2d 515; Coffman v Coffman, 60 AD2d 181.)

      Robert Abrams, Attorney-General (Robert J. Schack and Shirley Adelson Siegel of counsel),
    in his statutory capacity under section 71 of the Executive Law. I. If the court finds that this action is governed by part A of section 236 of the Domestic Relations Law and that discontinuance was properly denied, then respondent’s constitutional challenges to part B of section 236 of the Domestic Relations Law should not be reached due to lack of case or controversy, for lack of standing and because there is an adequate nonconstitutional ground for decision. (New York Public Interest Research Group v Carey, 42 NY2d 527; Matter of State Ind. Comm., 224 NY 13; Chicot County Dist. v Bank, 308 US 371; United States v Herrera, 584 F2d 1137; New York Tr. Auth. v Beazer, 440 US 568; People v Mobil oil Corp., 48 NY2d 192; Matter of Peters v New York City Housing Auth., 307 NY 519; Matter of Sylvia M., 82 AD2d 217; Comiskey v Arlen, 55 AD2d 304.) II. Respondent’s vested rights would not be impaired in violation of due process by the application of part B of section 236 of the Domestic Relations Law. Any property rights he has during marriage are already subject to the claims of his family and can be modified prospectively before divorce is finally entered herein. In any event, even vested interests may be overridden to require an equitable distribution of marital property, in accordance with the spouses’ respective contributions, resources and needs, where respondent has an opportunity to contest the fairness of the award in court and equitable distribution serves the substantial public interest in familial support. (I. L. F. Y. Co. v Temporary State Housing Rent Comm., 10 NY2d 263; People v Blume, 12 NY2d 705; Matter of Berkovitz v Arbib & Houlberg, 230 NY 261; Matter of McGlone, 284 NY 527, affd sub nom. Irving Trust Co. v Day, 314 US 556; Nebbia v New York, 291 US 502; Grossman v Baumgartner, 17 NY2d 345; Health Ins. Assn. of Amer. v Harnett, 44 NY2d 302.) III. Respondent’s equal protection claims are based on false distinctions between classes. The differences in rights of persons in cases before and after chapter 281’s effective date are rationally related to the statute’s purpose. (New Orleans v Dukes, 427 US 297; Geduldig v Aiello, 417 US 484; Loomis v Civetta Corinno Constr. Corp., 54 NY2d 18.) IV. Respondent’s challenge to part B of section 236 of the Domestic Relations Law for impairing the obligations of contract should not be reached because he lacks standing and because his claim was not raised in trial court and is presented here on a theory that was not passed on by the court below. The claim is, in any event, meritless. (Tumolillo v Tumolillo, 51 NY2d 790; Di Bella v Di Bella, 47 NY2d 828; Hamilton Mut. Realty Fund v Bank Realty Co., 41 NY2d 936.)
   OPINION OF THE COURT

Jones, J.

A plaintiff who has commenced a matrimonial action prior to the effective date of the “Equitable Distribution Law” may not discontinue that action for the purpose of instituting a second action after that date in order to obtain benefits under the broader provisions relating to distribution of marital property applicable in actions commenced after the statute became effective.

On December 12, 1978 plaintiff wife commenced the present action for divorce; after the pleadings had been served, in April, 1980 the case was assigned a trial date which was later adjourned. On July 3,1980, approximately two weeks before the effective date of the amendment to section 236 of the Domestic Relations Law incorporating what has come to be known as the “Equitable Distribution Law,” the husband began a separate action for divorce. On August 5, 1980, after the effective date of the statute, the wife moved to discontinue her action for the announced purpose of instituting a second divorce action in which, because of its having been commenced after July 19,1980, she might obtain the benefits of the expanded property distribution provisions contained in part B of section 236. In the alternative she requested leave to amend her complaint in the pending action to include in the relief sought equitable distribution of the marital property of the parties in accordance with the provisions of part B. The husband opposed his wife’s application and also moved for leave to amend his answer to set up counterclaims for divorce.

Supreme Court granted the wife’s motion to discontinue her pending action with the statement that “In the interest of public policy the Court will not direct that an action for divorce be continued against the wishes of the plaintiff”, and denied the husband’s cross motion. The Appellate Division unanimously reversed on the law and denied the wife’s motion in its entirety; the husband’s cross motion to amend his answer was granted “upon condition that he stipulates that plaintiff’s rights will not be affected if she is found guilty of misconduct, and upon any other conditions which Special Term deems just” with a reference to CPLR 3025 (subd [b]). The case is before us on cross appeals. The wife contends that the Appellate Division erred in holding, as a matter of law, that Supreme Court could not exercise its discretion to grant her application to discontinue the action she began before the Equitable Distribution Law became effective; the husband challenges the lower court’s authority to condition amendment of his answer on the stipulation described above.

We consider first the Appellate Division’s ruling with respect to the wife’s motion.

While the authority of a court to grant or to deny an application made to it pursuant to CPLR 3217 (subd [b]) by a party seeking voluntarily to discontinue litigation is within its sound discretion, ordinarily a party cannot be compelled to litigate and, absent special circumstances, discontinuance should be granted (4 Weinstein-Korn-Miller, NY Civ Prac, par 3217.06). Particular prejudice to the defendant or other improper consequences flowing from discontinuance may however make denial of discontinuanee permissible or, as the Appellate Division correctly held in this case, obligatory.

There is no question as to the purpose for which this plaintiff sought to abandon her action instituted in December, 1978; with commendable candor she stated in her supporting affidavit that she sought discontinuance of her pending action in order that she might commence a new action, also seeking dissolution of her marriage, in which, by virtue of the action’s having been commenced after the effective date of the Equitable Distribution Law, she could assert a demand for the more liberal property distribution provided by part B of section 236 of the Domestic Relations Law. Otherwise stated, she sought to avoid restriction to the economic powers conferred by part A of the statute on the court which would hear her pre-July, 1980 divorce action and, by jettisoning her pending action and resurrecting its predicate in a second action, thereby to evade the legislative mandate that the rights and obligations of the parties in actions commenced prior to the effective date of the statutory amendment shall be determined in accordance with the provisions of part A. Prevention of such intentional frustration of the considered decision by the Legislature as to which actions are to be governed by the two, quite different, constituent parts of the statute (cf. Valladares v Valladares, 55 NY2d 388, decided herewith) is an objective which mandates denial as a matter of law of the discontinuance requested in the present case. The Legislature fixed a categorical line of demarcation; in actions commenced prior to July 19, 1980 the substantive provisions of part A of new section 236 will apply; in actions commenced on or after that date the substantive provisions of part B apply. And in assigning individual cases to the one category or the other the phrase “an action commenced” refers to the commonly understood initial institution of the action whereby the court first obtains jurisdiction of both husband and wife.

Further pragmatic justification for the categorical distinction drawn by the Legislature and implemented by the Appellate Division and now confirmed by this court in the present case lies in the fact that it will preclude variegated treatment of plaintiffs who, having commenced matrimonial actions before July 19,1980, thereafter seek to discontinue and then to recommence and might otherwise receive disparate treatment at the hands of Judges who exercise even a reasonable discretion in ruling on their applications. In view of the clear intent expressed in the statute as to the applicability of parts A and B, there is no room for the exercise of judicial discretion to vary what has been prescribed by the Legislature.

Concluding, as we do, that the Appellate Division’s reversal of the. order granting plaintiff’s motion to discontinue should be affirmed, we turn to consideration of the husband’s appeal taken from so much of the order of the court below as conditioned the grant of his application to amend his answer to plead counterclaims for divorce on a stipulation by him that plaintiff wife’s rights would not be affected if she should be found guilty of misconduct.

Because the condition of which the husband complains was improperly imposed, the order must be modified in this regard. The statutory provision authorizing amendment of pleadings reflects a liberal attitude in its direction that leave to amend “shall be freely given” (CPLR 3025, subd [b]). Permission to amend is to be restricted only by the imposition of “such terms as may be just”. The portion of the opinion of the Appellate Division in which it addressed its disposition of the husband’s motion to amend his answer fails to disclose any proper justification for the condition imposed and indeed reveals that the objective sought to be accomplished runs counter to what the Legislature provided when it amended section 236 of the Domestic Relations Law. The court first recognized that the wife’s continuing pre-July, 1980 action would be governed by the provisions of part A of the statute and that under that part her right to alimony would be cut off if the husband established her misconduct by proof offered in support of his counterclaims for divorce based on cruel and inhuman conduct and on abandonment. The condition, by which the husband would be required to stipulate that the wife’s rights would not be affected by a finding of misconduct, was then imposed for the purpose of “averting any prejudicé to [the Wife]”.

What was perceived as prejudice, however, was simply the operation of the statutory provisions which, in denying her motion to discontinue, the court had properly held were applicable to the determination of the rights and obligations of the parties in her action for divorce begun before July 19,1980. As the wife herself acknowledges — again to her credit — the effect of the condition was to disregard both the mandate of the statute and the existence of the husband’s own independent action for divorce instituted on July 3, 1980 in which proof of the wife’s misconduct would bar her recovery of an award of alimony.

The Appellate Division was not at liberty, in granting the husband’s application to interpose counterclaims for divorce in his wife’s part A action, to require his consent to a variation of the substantive provisions which by legislative fiat are applicable to that action. As we have indicated, the Legislature determined that in all actions commenced prior to July 19, 1980 the provisions of part A apply. The condition attached by the Appellate Division would be incompatible with that determination. The order should therefore be modified to delete the condition imposed on the grant of the husband’s motion to amend his answer.

In disposing of these cross appeals we do not reach the argument tendered by the husband that the equitable distribution provisions of part B of section 236 of the Domestic Relations Law as applied to him are violative of his constitutional rights to due process and equal protection and unconstitutionally impair contract obligations. Inasmuch as we have determined that his wife’s application to discontinue her prestatutory-amendment action was properly denied in consequence of which she is precluded from receiving benefits under part B, the husband is not aggrieved by the enactment of the segment of the statute that incorporates the equitable distribution provisions; it will have no application to the determination of his obligations or rights. He therefore lacks standing to challenge that portion of section 236 of the Domestic Relations Law.

For the reasons stated, the order appealed from should be modified to delete the condition attached to the grant of the husband’s motion to amend his answer, and, as so modified, should be affirmed, with costs to the husband.

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

Order modified, with costs to defendant, in accordance with the opinion herein and, as so modified, affirmed. Question certified answered in the negative.

      . The new section 236 was accomplished by section 9 of chapter 281 of the Laws of 1980, which carried an effective date of July 19,1980. The substantive provisions of the section are set out in two parts. Part A, which provides for alimony and financial disclosure, is essentially similar to prior section 236, except that it is gender-neutral. Part B incorporates new equitable distribution provisions for property held during marriage. As to applicability of the parts, the first sentence in the amendment provides: “Except as otherwise expressly provided in this section, the provisions of part A shall be controlling with respect to any action or proceeding commenced prior to the date on which the provisions of this section as amended become effective and the provisions of part B shall be controlling with respect to any action or proceeding commenced on or after such effective date.” In a similar vein, subdivision 2 of part B provides in part: “Except as provided in subdivision five of this part [not affecting application as to time], the provisions of this part shall be applicable to actions for an annulment or dissolution of a marriage,' for a divorce, for a separation, for a declaration of the nullity of a void marriage, for a declaration of the validity or nullity of a foreign judgment of divorce, for a declaration of the validity or nullity of a marriage, and to proceedings to obtain maintenance or a distribution of marital property following a foreign judgment of divorce, commenced on and after the effective date of this part.”

      . It may be inquired what the rule should be in an instance in which the plaintiff is less open in disclosing the objective behind his or her motion to discontinue, or even affirmatively masks its ulterior purpose. In such a case the court might assure accomplishment of the legislative intent by exercising its statutory authority to impose appropriate terms and conditions on a discontinuance (CPLR 3217, subd [b]), as for example, by granting the application to discontinue with prejudice to institution of a subsequent matrimonial action based on any conduct which might have been the basis for an action prior to July 19, 1980.

      . Inasmuch as the only grounds advanced by the wife or considered by the Appellate Division in opposition to the husband’s motion to amend relate to the application of new section 236 (and we hold that the specificity of the legislative enactment forecloses the exercise of any judicial discretion in that regard) and in view of the statutory prescription that leave to amend “shall be freely given” (CPLR 3025, subd [b]), we conclude that to deny the husband’s motion would be error as a matter of law. Accordingly, we see no useful purpose to be served in this instance in remitting the case to the Appellate Division (as we would otherwise be disposed to do) to permit that court to reconsider disposition of the husband’s motion, deprived of its power to attach the impermissible condition.


author: Jones, J. Meyer, J.

text:
    Steven Valladares, Respondent, v Anne B. Valladares, Appellant.
    Argued February 15, 1982;
    decided April 6, 1982

      POINTS OF COUNSEL

      Daniel D. Abramtsov and Jacob Rabinowitz for appellant.
    I. The equitable distribution statutes should be applied retroactively to pending actions. (Gleason v Gleason, 26 NY2d 28; Hessen v Hessen, 33 NY2d 406; Christian v Christian, 42 NY2d 63; Deschamps v Deschamps, 103 Misc 2d 678; Walker v Walker, 155 NY 77; Smith v Smith, 55 Misc 2d 172; Packer v Packer, 55 Misc 2d 74; Taplinger v Taplinger, 55 Misc 2d 103.) II. The lower court erred in prohibiting the application of equitable distribution in light of poststatute pleading amendments. (Bilhorn v Farlow, 60 AD2d 755; Cerrato v Crown Co., 58 AD2d 721; Trybus v Nipark Realty Corp., 26 AD2d 563; Jagoda v City of Dunkirk, 43 AD2d 795; Guntzer v Westchester County, 273 App Div 902, 298 NY 755; Edelman v Edelman, 88 Misc 2d 156.)

      Alan Paul Ansell and Jay J. Davis for respondent.
    I. The equitable distribution provision of the newly enacted amendment of section 236 of the Domestic Relations Law expressed in subdivision 2 of part B applies only to actions commenced after the July 19, 1980 effective date of the legislation. (People v Florus, 67 Misc 2d 809; Goding v Goding, 106 Misc 2d 423; Cooper v Cooper, 103 Misc 2d 689; Matter of Gramott Corp. v Graves, 255 App Div 255.) II. The court below correctly concluded that respondent commenced the action prior to the July 19, 1980 effective date of the equitable distribution provisions pursuant to section 211 of the Domestic Relations Law and CPLR 304, thereby precluding appellant from coverage under the equitable distribution provisions. (Caffaro v Trayna, 35 NY2d 245.)
   OPINION OF THE COURT

Jones, J.

A defendant in an action for divorce commenced prior to the effective date of the amendment to the Domestic Relations Law which enacted the “Equitable Distribution Law”, was properly denied leave to amend her answer after that date to demand property distribution in accordance with the amended statute as an incident to a counterclaim for divorce set out in the proposed pleading.

On April 2, 1980 plaintiff husband commenced this action for divorce on the ground of cruel and inhuman treatment. The wife’s answer, in addition to denials, contained an affirmative defense of adultery on the part of the husband. At the time of service of the foregoing pleadings there had not yet been enacted the amendment to section 236 of the Domestic Relations Law, which was to incorporate in that statutory section a part B, commonly known as the “Equitable Distribution Law”, enlarging substantially the power of the court to distribute property held during marriage in certain matrimonial actions (L 1980, ch 281, § 9).

After the effective date of the statutory amendment (July 19, 1980) the husband amended his complaint, pursuant to a court order granted without opposition, to add a second cause of action, predicated on adultery alleged to have been committed by the wife in June, 1980. Following service of an answer to the amended complaint, on October 2, 1980 the wife moved to amend that answer to assert a counterclaim for divorce on the ground of adultery and to demand equitable distribution of the marital property pursuant to part B of section 236 of the Domestic Relations Law, as amended. Her husband opposed the application. Supreme Court granted only a portion of the relief requested, permitting the wife, if she so chose, to amend her answer to add the counterclaim for divorce, but denying permission to add a request for equitable distribution. On her appeal the Appellate Division unanimously affirmed the determination of Supreme Court. We now affirm the determination of the appellate court.

In so doing, we call attention at the outset to the circumstance that the granting of permission to amend a pleading when, as here, a motion for such relief is made under CPLR 3025 (subd [b]), normally lies within the sound discretion of the court. In order to disturb the exercise of that power as both courts below have exercised it — adversely to the request to amend — we would have to conclude that, as a matter of law, defendant wife had an undeniable right to add to her answer a demand for marital property distribution pursuant to part B of section 236 of the Domestic Relations Law, as amended effective July 19, 1980. No such conclusion is compelled by the statute in question; indeed, it is the contrary conclusion (reached by both courts below) which is supported by and conforms to the mandate of new section 236.

The Legislature was meticulous in making explicit provision within its enactment of the 1980 amendment to the statute as to the applicability of the two substantive parts of amended section 236. The language employed is unequivocal — “part A shall be controlling with respect to any action or proceeding commenced prior to the date on which the provisions of this section as amended become effective”; “part B shall be controlling with respect to any action or proceeding commenced on or after such effective date”. On approval of the legislation by the Governor, July 19, 1980 became the watershed; property rights in actions commenced prior to that date are to be resolved in accordance with the law as set out in part A; only actions commenced subsequent to that date are subject to the equitable distribution provisions contained in part B. Because the present action was initiated when the summons was served on April 2, 1980 (Domestic Relations Law, § 211; CPLR 304), part B of section 236 of the Domestic Relations Law, as amended has no application to it and defendant wife’s request in this action for relief pursuant to part B was properly barred from inclusion in her proposed amended answer. Accordingly, denial of her motion to amend in that respect was mandated as a matter of law.

The argument is made that, although the present action was begun before July 19,1980, the wife’s claim for divorce and for equitable distribution must be deemed to be interposed when her amended answer containing the counterclaim incorporating them would be served, which, because her motion to amend was made on October 2, 1980, would necessarily fall after the critical July date. Reliance for this proposition is placed by the wife on CPLR 203 (subd [c]) (counterclaim interposed when pleading containing it is served) and CPLR 203 (subd [e]) (claim asserted in amended pleading not deemed to be interposed when original pleading served if original pleading did not give notice of transactions to be proved under amended pleading) — two practice statute sections prescribing when claims are to be regarded as having been asserted for purposes of determining whether they are time barred.

Acceptance of the proposition behind CPLR 203 (subds [c], [e]) does not assist defendant wife in the present case, however, for the determinative time for applicability of part B of section 236 of the Domestic Relations Law is not when her claim was interposed but when the action in which it was interposed was commenced. Had the Legislature intended to draw a finer line and to differentiate, or to permit the courts to differentiate, between multiple claims asserted in a single matrimonial action (with respect to the applicability of the substantive provisions of part B of new section 236) language was available for it to do so. It did not elect to use such language, however, but designated commencement of the action as the critical event.

Moreover, it must be borne in mind that the legislation with which we are concerned was not the result of casual, pro forma enactment, but was the subject of intensive study, discussion and comment by a variety of groups across the State prior to its adoption. In view of the extensive and considered attention given this significant statutory amendment at the time of its drafting, debate and approval we cannot conclude that the choice of words was inadvertent or that the phraseology employed was intended to have other than its plain meaning. Nothing in the submission of the wife is to the contrary, and legislative history to which our attention has been invited is consistent with the view we take. It is not the function of this court to discard the clear language adopted by the Legislature and, by a process of judicial legislative revision based on notions of procedural refinements, to substitute for it other words which, as CPLR 203 (subd [c]) and CPLR 203 (subd [e]) demonstrate, were known to the Legislature but were not employed in the statute as enacted.

Defendant’s argument that, to accomplish the objective of the Legislature in amending section 236 of the Domestic Relations Law thereby to meet current social values in fairly distributing property accumulated during the course of a marriage, part B should be applied to litigation pending at the time of adoption, is one more properly addressed to that body — which made a determination to the contrary in the statute as enacted — rather than to this court.

Because there was no error in the disposition by the Appellate Division the order appealed from should be affirmed, with costs.

Meyer, J.

(dissenting). The majority’s seductively simple semantic solution is, in my view, both so unfair as to be presumptively contrary to the Legislature’s intent, if not unconstitutional, and unrealistic in its analysis of that intent.

Its unfairness is revealed more by what it does not say than by what it does, for it makes no mention at all of what the result would be had Mrs. Valladares commenced an independent action rather than asserted a counterclaim. Clearly such an action would be, within the language of part A of section 236, an “action commenced on or after such effective date” and, within the language of part B, an action “for a divorce * * * commenced on and after the effective date of this part,” notwithstanding that her husband may thereafter have been successful in obtaining an order consolidating or requiring joint trial of her action with his (see Berger v Berger, 84 AD2d 545). To make the power to award the increased share of marital property provided for in part B turn on whether the spouse to whom the award would be made served a counterclaim in the other spouse’s earlier commenced action or began a separate and independent action after the effective date of part B is wholly unreasonable as a matter of both procedure and substance.

It is unreasonable as a matter of procedure because CPLR 3019 (subd [d]) mandates that “A cause of action contained in a counterclaim * * * shall be treated, as far as practicable, as if it were contained in a complaint, except that separate process, trial or judgment may not be had unless the court so orders” (italics supplied). Section 211 of the Domestic Relations Law and CPLR 304, relied on by the Appellate Division to fix when a matrimonial action is commenced, speak to how jurisdiction is acquired and clearly were not written with a view to determining when the action commenced within the meaning of parts A and B of section 236 of the Domestic Relations Law. CPLR 203 (subd [c]) to which the majority refers is confirmatory of the direction in CPLR 3019 (subd [d]), for together they establish that, though no summons need be served for a counterclaim, the cause of action it states will be treated as if it were contained in a complaint, that is, as CPLR 203 (subd [c]) states “is interposed when a pleading containing it is served.” In light of those provisions, and particularly of CPLR 3019 (subd [d]), there was no reason for the Legislature, in amending section 236 of the Domestic Relations Law, to speak specifically to an action for divorce commenced by the service of an answer containing a counterclaim.

The majority’s conclusion is unreasonable as a matter of substance because it makes the right to equitable distribution turn on the form of the pleading by which the divorce action is begun, a consideration that is entirely without significance in relation to the substantial property interests that in many cases will be involved and which serves no rational legislative purpose. Counterclaims were unknown to the procedural law of New York until introduced by chapter 392 of the Laws of 1852 (see Second Ann Report of NY Judicial Council, NY Legis Doc, 1936, No. 48, pp 124-129; 3 Weinstein-Korn-Miller, NY Civ Prac, par 3019.01). Their addition to our procedural law was essentially for the convenience of the courts, which would otherwise have to try some of the same issues twice (Second Ann Report of NY Judicial Council, p 123 [“the avoidance of multiplicity of suits”]), and of the defendant who by pleading his claim as a counterclaim could avoid the expense of two trials and the possibility of conflicting decisions. It was never intended to award a substantive benefit to a plaintiff against, whom it is asserted, as the majority now holds it does. How egregiously wrong is its substantive result is graphically illustrated when one considers that the rule now adopted forecloses equitable distribution without regard to fault or the merit of the counterclaim: a spouse further above suspicion than Caesar’s wife can, therefore, be deprived of equitable distribution benefits by a mate living in open adultery if only the mate’s attorney had the foresight to serve a summons on or before July 18, 1980 in a wholly unjustified and unjustifiable divorce action, provided only the spouse’s attorney, seeking to save his client’s money and the court’s time, makes the fatal mistake of pleading the spouse’s divorce for adultery cause of action as a counterclaim rather than in a separate action.

The majority’s result is unrealistic in its analysis of legislative intent, as well. First, the Legislature must be presumed to have been aware of the definition and direction of CPLR 3019 and, therefore, to have regarded it as wholly unnecessary to speak of “an action or counterclaim” in the 1980 amendment, because it had already defined one as included within the other. Second, though it is true, as the majority notes, that the section was the subject of intensive study not only by a number of. legislative com-. mittees but by a number of Bar associations, individually and in consortium (Foster & Freed, Law & the Family [1982 Supp], § 33:1, pp 798-799), nothing in any of the literature generated during the six years that equitable distribution bills were before the Legislature prior to adoption of the 1980 bill suggests that either the proponents or the opponents of the concept intended to make, or argued for making, the availability of equitable distribution benefits turn on the form in which the matrimonial claim was, presented to the court rather than the date on which it was presented by the proponent of the claim. Any realistic appraisal of the legislative process must recognize that what the enacting bodies react to is the recommendations of its own committees and legislative drafting service and the pressures brought to bear by interested outside groups, and that its reaction is at times the compromise of deliberate obscurity, leaving to the courts the divination of what was intended. Here, however, it is the court that obscures the legislative intent by reading the word “action” without reference to CPLR 3019 and then insisting that the “plain meaning” of the word excludes a counterclaim, even though CPLR 3019 says the exact contrary.

The order of the Appellate Division should be reversed, the question certified should be answered in the negative, and the matter should be remitted to Supreme Court with directions to grant defendant’s motion to amend including the demand for equitable distribution.

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

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

      . Section 236 of the Domestic Relations Law, as amended, states its substantive provisions in two parts. Part A, providing for alimony and financial disclosure, is essentially similar to prior section 236 except that it is gender-neutral. Part B incorporates new, equitable distribution provisions for property held during marriage. As to applicability of the parts, the first sentence in the amendment provides: “Except as otherwise expressly provided in this section, the provisions of part A shall be controlling with respect to aiiy action or proceeding commenced prior to the date on which the provisions of this section as amended become effective and the provisions of part B shall be controlling with respect to any action or proceeding commenced on or after such effective date.” In a similar vein, subdivision 2 of part B provides in part: “Except as provided in subdivision five of this part [not affecting application as to time], the provisions of this part shall be applicable to actions for an annulment or dissolution of a marriage, for a divorce, for a separation, for a declaration of the nullity of a void marriage, for a declaration of the validity or nullity of a foreign judgment of divorce, for a declaration of the validity or nullity of a marriage, and to proceedings to obtain maintenance or a distribution of marital property following a foreign judgment of divorce, commenced on and after the effective date of this part.”

      . Based on the diction of the opinion at the Appellate Division it might be said that its affirmance of the denial of the wife’s motion was based on a determination of law rather than an exercise of discretion.

      . As the dissenter notes, we do not reach or consider the contention that had Mrs. Valladares commenced an independent action after July 19,1980 (rather than interposing a counterclaim in the pending action, as she did), the rights of the parties in the independent action should then be determined under the provisions of part B of new section 236. That issue is not now before us. Whether, when the marital status of the parties has been placed in issue in an action commenced by one of them prior to July 19, 1980, the other, by instituting an independent post-July 19,1980 action, may avoid the effect of the legislatively fixed cut-off date remains to be adjudicated when the issue is properly raised before us.

      . That the counterclaim was asserted after July 19, 1980, the effective date of the 1980 amendments tó section 236 of the Domestic Relations Law, distinguishes this case from those such as Gellman v Gellman (80 AD2d 735) and Goding v Goding (106 Misc 2d 423), in which it was sought to amend or discontinue an action or counterclaim begun prior to July 19, 1980.

      . (See Urbanski v Urbanski, 107 Misc 2d 215; Bofinger v Bofinger, 107 Misc 2d 573; Miller v Miller, NYLJ, Dec. 24, 1980, p 15, col 5.)

      . The CPLR applies to matrimonial actions except as specific provisions of the Domestic Relations Law otherwise provide (cf. Domestic Relations Law, § 232, subd a; and see CPLR 105, subd [a]; 4312, subds [2], [5]; 4502). That this is true as to a counterclaim in a matrimonial action is established beyond cavil by the repeal on the recommendation of the Judicial Council (Fourteenth Ann Report of NY Judicial Council, NY Legis Doc, 1948, No. 14, pp 53-55, 223-227) of section 1168 of the Civil Practice Act, which had contained special provision for a matrimonial counterclaim, on the ground that the section was unnecessary in light of the provisions of that act concerning counterclaims generally contained in section 266 of the Civil Practice Act (the predecessor of CPLR 3019), and the failure to include in either article 11-A or article 13 of the Domestic Relations Law any provision regulating matrimonial counterclaims. Nor is there anything in the legislative history or wording of the 1980 amendment to section 236 of the Domestic Relations Law which suggests that CPLR 3019 (subd [d]) was not intended to apply to a matrimonial counterclaim, as there was, for example, when CPLR 3212 (former subd [d]) was repealed and section 211 of the Domestic Relations Law was amended to permit unlimited summary judgment in a matrimonial action.

      . No argument has been made that it would be impracticable, either generally or in this particular case, to treat defendant’s counterclaim as if contained in a separate complaint (see Bofinger v Bofinger, 107 Misc 2d 573, supra; Foster & Freed, Law & the Family [1982 Supp], § 33:3, p 802).

      . Section 211 of the Domestic Relations Law provides that “A matrimonial action shall be commenced by the service of a summons * * * or a summons and verified complaint.” CPLR 304 states that “An action is commenced and jurisdiction acquired by service of a summons.” (Emphasis added.)

      . That the Legislature so considered when enacting the CPLR is borne out by its notation with respect to now repealed CPLR 3212 (subd [d]) governing summary judgment in a matrimonial action. Subdivision 4 of prior rule 113 of the Rules of Civil Practice had authorized summary judgment on the basis of documentary evidence or official records with respect to “an action or counterclaim” in a matrimonial action. The revisers stated with respect to CPLR 3212 (subd [d]) (then designated as 3252, subd [d]) that the 1960 bill had been amended in that “ ‘Cause of action’ substituted for ‘action or counterclaim’ with no change in meaning” (Fifth Prelim Report of Advisory Comm on Practice & Procedure, NY Legis Doc, 1961, No. 15, p 490 [italics supplied]).


author: Chief Judge Cooke.

text:
    Francis V. Manion et al., Plaintiffs, and Robyn G. Haggard et al., Appellants, v Pan American World Airways, Inc., Respondent.
    Argued February 16, 1982;
    decided April 6, 1982

      POINTS OF COUNSEL

      Rudolph V. Pino, Jr., CharlesF. Krause, Frank H. Granito and Lawrence B. Goldhirsch for appellants.
    I. The absence, irregularity, or loss of the passenger ticket shall not affect the existence of the validity of the contract of transportation, which shall nonetheless be subject to the rules of this Convention. Nevertheless, if the carrier accepts a passenger without a passenger ticket having been delivered he shall not be entitled to avail himself of those provisions of this Convention which exclude or limit his liability. (Emphasis added.) (Wyman v Pan Amer. Airways, 181 Misc 963, 267 App Div 983, 324 US 882; Garcia v Pan Amer. Airways, 183 Misc 258, 269 App Div 287, 338 US 824; Egan v American Airlines, 21 NY2d 160; Maugnie v Compagnie Nationale Air France, 549 F2d 1256; Block v Compagnie Nationale Air France, 386 F2d 323; Lisi v Alitalia-Linee Aeree Italiane, S.p.A., 370 F2d 508, 390 US 455; Mertens v Flying Tiger Line, 341 F2d 851, 382 US 816; De Marines v KLM Royal Dutch Airlines, 433 F Supp 1047, 580 F2d 1193; Warren v Flying Tiger Line, 352 F2d 494; Boryk v Argentinas, 332 F Supp 405.) II. Defendant air carrier has the burden of proving those facts which entitle it to avail itself of the liability limitations of the Warsaw Convention. (Ross v Pan Amer. Airways, 299 NY 88, cert den sub nom. Froman v Pan Amer. Airways, 349 US 947; American Mach. & Foundry Co. v Santini Bros., 54 Misc 2d 886; Gardner v Roosevelt Hotel, 263 App Div 268; Grun v Sportsman, Inc., 58 AD2d 802; Moncel Realty Corp. v Whitestone Farms, 188 Misc 431, 272 App Div 899; Grey v American Airlines, 227 F2d 282.) III. If the ruling of the court below regarding the receipt of a ticket in Rome is correct, then the court should have ordered a new trial. (Millheiser v Beau-Site Co., 129 Misc 855, 244 App Div 594, 251 NY 290; Swetlow v Zindorest Park, 201 Misc 116, 202 Misc 628, 281 App Div 369; Gardner v Roosevelt Hotel, 263 App Div 268, 953; Holland v Blake, 31 NY2d 734; Varkonyi v S.A. Empresa De Viacao Airea Rio Grandense [Varig], 22 NY2d 333.)

      William J. Junkerman, Randal R. Craft, Jr., John M. Toriello and Reynold H. Lewke for respondent.
    I. The Warsaw Convention is a treaty of the United States, and the Convention should be construed in accordance with the ordinary accepted meaning of its words and in a manner which furthers its purposes. (Rosman v Trans World Airlines, 34 NY2d 385; Eck v United Arab Airlines, 15 NY2d 53; Ross v Pan Amer. Airways, 299 NY 88, cert den sub nom. Froman v Pan Amer. Airways, 349 US 947; Block v

      Compagnie Nationale Air France, 386 F2d 323, 392 US 905; Reed v Wiser, 555 F2d 1079, 434 US 922; Young Jewelry Mfg. Co. v Delta Air Lines, 67 AD2d 148; Day v Trans World Airlines, 528 F2d 31.) II. Plaintiffs bear the burden of proving that the carrier accepted plaintiff Robyn Haggard without the delivery of a passenger ticket. (De Marines v KLM Royal Dutch Airlines, 580 F2d 1193; Grey v American Airlines, 227 F2d 282, 350 US 989; Mertens v Flying Tiger Line, 341 F2d 851, 382 US 816; Ross v Pan Amer. Airways, 299 NY 88; Rosman v Trans World Airlines, 34 NY2d 385; Reed v Wiser, 555 F2d 1079, 434 US 922; Block v Compagnie Nationale Air France, 386 F2d 323; Rymanowski v Pan Amer. World Airways, 70 AD2d 738, 49 NY2d 834; Goepp v American Overseas Airlines, 281 App Div 105, 305 NY 830, 346 US 874; Froman v Pan Amer. Airways, 284 App Div 935, 308 NY 1050, 349 US 947.) III. No matter who has the burden of proof, the uncontroverted delivery of a ticket in Rome satisfied the Warsaw delivery requirement. (Day v Trans World Airlines, 528 F2d 31; Egan v American Airlines, 21 NY2d 160; American Airlines v Egan, 390 US 1039; Mertens v Flying Tiger Line, 341 F2d 851, 382 US 816; Warren v Flying Tiger Line, 234 F Supp 223, 352 F2d 494; Lisi v Alitalia-Linee Aeree Italiane, S.p.A., 253 F Supp 237, 370 F2d 508, 390 US 455.) IV. The evidence compels the conclusion that a ticket was delivered in New York. (Rudman v Cowles Communications, 30 NY2d 1; Skelka v Metropolitan Tr. Auth., 76 AD2d 492, 51 NY2d 1008.) V. Defendant’s right to fair procedure was violated by the amendment of the complaint at trial to raise the issue of ticket delivery. (Cullen v Naples, 31 NY2d 818; Matter of Dolgin Eldert Corp., 31 NY2d 1; Di Benedetto v Lasker-Goldman Corp., 46 AD2d 909; Lake v Lake, 63 AD2d 960; Murray v City of New York, 43 NY2d 400; Poitier v American Broadcasting Cos., 61 AD2d 905; Bochory v Pan Amer. World Airways, 3 AD2d 1009, 4 AD2d 862; Schwall v Ambrosio, 45 AD2d 732; Garden Hill Estates v Bernstein, 24 AD2d 512, 17 NY2d 525.) VI. Plaintiffs are not entitled to a new trial. (Nasser v Isthmian Lines, 331 F2d 124; Bochory v Pan Amer. World Airways, 3 AD2d 1009; Vichnes v Transcontinental & Western Air, 173 Misc 631; Joseph v Schatzkin,
      259 NY 241; Egan v Kollsman Instrument Corp., 21 NY2d 160; American Airlines v Egan, 390 US 1039.)
   OPINION OF THE COURT

Chief Judge Cooke.

This case involves the limitations of carriers’ liability to international air passengers under the Warsaw Convention, and the conditions that an airline must meet to be protected by those limitations. The court holds that, if the defendant airline failed to deliver a ticket to plaintiff when the airline accepted her as a passenger at the outset of her trip, the airline may not invoke the liability ceilings of the Convention. The order of the Appellate Division therefore should be reversed.

Robyn Haggard, then 16 years old, was a passenger on a Pan American World Airways airplane that was attacked by terrorists at Fiumicino International Airport in Rome on December 17, 1973. She suffered second and third degree burns over 30% of her body in the firebomb attack, which killed or seriously injured many of the other passengers. Robyn, with other members of a charter group, was on the second stage of a journey from New York City to Dhahran, Saudi Arabia. The airplane had been awaiting departure for Beirut, Lebanon.

Robyn sued Pan Am for her injuries, and the airline asserted the $75,000 liability limitation of the Warsaw Convention. In the first part of a bifurcated nonjury trial, Supreme Court found that Pan Am did not deliver a ticket to Robyn until she reached Rome. The court held that Pan Am’s failure to deliver a ticket to Robyn when she embarked at Kennedy Airport in New York City rendered inapplicable the $75,000 limitation. It dismissed the airline’s affirmative defenses based upon the Convention and permitted amendment of plaintiff’s ad damnum clause from $75,000 to $1 million.

The Appellate Division modified, on the law, by reinstating Pan Am’s affirmative defenses and limiting the ad damnum clause to $75,000. The Appellate Division did not address the trial court’s finding that no ticket was delivered in New York, but held as a matter of law that even if no ticket was given to plaintiff in New York, delivery of the ticket in Rome sufficed to give Pan Am protection under the Warsaw Convention’s liability limitations.

Under the Warsaw Convention of 1929 (49 US Stat 3000 et seq.), as modified by the Montreal Agreement of 1966 (31 Fed Reg 7302), participating airlines are absolutely liable to passengers for injuries suffered during air travel, up to a maximum of $75,000 per person (see Evangelinos v Trans World Airlines, 550 F2d 152, 154). Subdivision 2 of article 3 of the Convention, however, states explicitly that “if the carrier accepts a passenger without a passenger ticket having been delivered he shall not be entitled to avail himself of those provisions of this convention which exclude or limit his liability.” The defendant argues, and the Appellate Division agreed, that any failure to deliver the ticket to Robyn at Kennedy Airport was cured by her receipt of a ticket in Rome. This court cannot agree.

The requirement that the carrier deliver the ticket for it to avail itself of the Convention’s limitations is based on the contractual nature of the passenger-carrier relationship. “The contract plays a role fundamental to the objectives of the Warsaw Conference. The obligations arising from the contract between the carrier and the passenger carry out the Conference goal that the rules of limited liability be known to both parties” (Block v Compagnie Nationale Air France, 386 F2d 323, 333-334, cert den 392 US 905).

Pan Am maintains that delivery of the ticket in Rome was sufficient to permit the airline to assert the Convention’s limitations on liability. Such a contention, however, does not comport with the language of subdivision 2 of article 3 or with judicial interpretation of that subdivision. The subdivision states that the liability limitations shall not apply “if the carrier accepts a passenger without a passenger ticket having been delivered” (emphasis added). We hold that delivery of the ticket, to invoke the liability limitations of the Convention, must have been made by the carrier prior to the initiation of the first leg of the trip.

This court reached a similar conclusion in Egan v American Airlines (21 NY2d 160, cert den 390 US 1039). There, a passenger purchased from Northwest Airlines a ticket for a round trip from New York City to Vancouver, British Columbia, with stopovers in Seattle and Chicago. On her return, she took a bus from Vancouver to Seattle rather than her scheduled flight, then took her Northwest flight from Seattle to Chicago. When she arrived too late in Chicago to catch her scheduled flight to New York, Northwest booked her onto an American Airlines flight. The American plane crashed, killing the passenger. Her administrators argued that the Warsaw Convention’s liability limitations did not apply because the American flight did not constitute “international travel.” In concluding that the Convention did apply, the court emphasized that the bus trip had not altered the fact that the Seattle to Chicago and Chicago to New York return flights were nonetheless “performed under the original contract” for round trip travel from New York to Vancouver and back and therefore constituted “international transportation” {id., at p 167).

Likewise, in this case the trip to Saudi Arabia and return was contracted for as a whole. As Supreme Court found, one ticket was purchased, containing coupons for each leg of the journey. Although at each stop plaintiff might have been subject to check-in and related procedures, no new contract had to be entered into before she could board for the next portion of her journey. When this contract was made and plaintiff was accepted as a passenger by Pan Am on a round trip journey from New York to Saudi Arabia, the airline was required to deliver a ticket to her containing notice of the Warsaw Convention’s liability limitations. If it failed to deliver the ticket within a reasonable time before plaintiff’s airplane left Kennedy Airport, it cannot find protection under the liability limitations of the Convention.

In determining that no ticket was delivered in New York, the trial court placed the burden of proving delivery upon the defendant airline. Pan Am argues that this was error and that the burden should have been placed upon plaintiff. This argument is unpersuasive.

As the parties in this case recognize, assertion of the Convention’s liability limitations is an affirmative defense (see Block v Compagnie Nationale Air France, 386 F2d 323, cert den 392 US 905, supra; Lisi v Alitalia-Linee Aeree Italiane, S.p.A., 370 F2d 508, affd 390 US 455). The party asserting an affirmative defense generally bears the burden of proof on that issue (Farmers’ Loan & Trust Co. v Siefke, 144 NY 354; Blunt v Barrett, 124 NY 117; see 3 Weinstein-Korn-Miller, NY Civ Prac, par 3018.14; McCormick, Evidence [2d ed], § 337, p 785).

Although one Federal court has opined that there was “considerable merit” to the argument that the plaintiff should bear the burden of demonstrating nondelivery of the ticket (De Marines v KLM Royal Dutch Airlines, 580 F2d 1193), this court is unpersuaded. As was recognized in Ross v Pan Amer. Airways (299 NY 88, 97, cert den 349 US 947), inasmuch as the Warsaw Convention “Mandates the limitation unless ‘the carrier accepts a passenger without a passenger ticket having been delivered’, there is no need for a carrier who claims the limitation to show more than the delivery of an appropriate ticket, and travel of the passenger thereunder.” The airline is in the best position to show delivery, having access to its own records and copies of tickets sold and actually used for passenger travel. Its agents and ground personnel will also be available to reconstruct critical events. The passengér, in contrast, may have been severely injured or killed in the accident and his or her belongings destroyed with the airplane. As a practical matter, the passenger’s burden may be nearly insurmountable.

Pan Am argues by analogy that because the burden of demonstrating wilful misconduct by the airline is placed on the plaintiff (see Grey v American Airlines, 227 F2d 282, cert den 350 US 989), plaintiff should also bear the burden of proving delivery of the ticket. This does not follow. Article 25 of the Convention provides that the carrier cannot avail itself of the $75,000 liability limitation “if the damage is caused by [its] wilful misconduct”. Wilful misconduct will be asserted by the plaintiff to render inapplicable the limitation of liability to which the airline would otherwise be entitled under the contract of passage made with the passenger. The question of delivery, however, goes to whether the airline is entitled in the first instance to claim the limitation as a matter of contract. The burden of proving timely delivery of a ticket containing that contractual limitation of liability should therefore rest with the defendant airline.

In light of its conclusion that any defect in delivery was cured, the Appellate Division did not review the trial court’s factual determination that no ticket was delivered to plaintiff until she reached Rome. The matter should therefore be remitted to the Appellate Division for its review of the facts to determine whether a ticket was delivered to plaintiff in New York within the terms of the Warsaw Convention.

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

Judges Jasen, Gabrielli, Jones, Wachtler, Fuchsberg and Meyer concur.

Order reversed, etc.

      . Indeed, under subdivision 3 of article 1, travel on several successive carriers' where some of the flights are entirely within one country will nonetheless be considered international travel “if it has been regarded by the parties as a single operation”. Article 30 requires that each successive carrier who accepts passengers satisfy the Convention’s rules, indicating the obvious intent of the Convention to assure notice. This latter article cannot be read, however, as permitting a single carrier to break up into segments a trip that was conducted entirely on its own aircraft.

      . The Appellate Division considered it significant that plaintiff’s ticket contained coupons for each leg of the trip. In light of the undisputed fact that one ticket was sold to plaintiff for the entire journey, the existence of the coupons was without legal significance.


author: Gabrielli, J.

text:
    The People of the State of New York, Respondent, v Leonard Smalls, Appellant. The People of the State of New York, Respondent, v Anthony De Shawn McGee, Appellant.
    Argued February 11, 1982;
    decided April 6, 1982

      POINTS OF COUNSEL

      Howard B. Comet and William E. Hellerstein for appellant in the first above-entitled action.
    I. Appellant’s constitutional rights to due process and to confront the witnesses against him were violated by the trial court’s denial of his severance motion, the introduction of the codefendant’s confession at their joint trial, the court’s inadequate limiting instructions, and the prosecutor’s use of codefendant’s confession to bolster the case against appellant (US Const, 6th, 14th Amdts; NY Const, art I, § 6). (Bruton v United States, 391 US 123; People v Safian, 46 NY2d 181; People v Baker, 26 NY2d 169; People v McNeil, 24 NY2d 550; Parker v Randolph, 442 US 62; People v Boone, 22 NY2d 476, cert den sub nom. Brandon v New York, 393 US 991; People v La Belle, 18 NY2d 405; People v Rossi, 270 App Div 624; People v Payne, 35 NY2d 22; People v Ligouri, 284 NY 309.) II. Appellant’s right to due process was violated when the court charged that the law says that a person is presumed to intend the natural consequences of his act (US Const, 14th Amdt; NY Const, art I, § 6). (Sandstrom v Montana, 442 US 510; People v Marr, 50 NY2d 456; People v Thomas, 71 AD2d 280, 50 NY2d 467; People v Getch, 50 NY2d 456; Myers v State of Washington, 646 F2d 355; Dietz v Solem, 640 F2d 126; People v Joyner, 26 NY2d 106; People v Torre, 42 NY2d 1036; People v Steele, 26 NY2d 526.)

      Julia Pamela Heit for appellant in the second above-entitled action.
    I. The multiple errors committed during the course of the trial deprived appellant of his due process . right to a fair trial. (People v Mirenda, 23 NY2d 439; People v Mantesta, 27 AD2d 748; Bruton v United States, 391 US 123; People v Boone, 22 NY2d 476; People v Carter, 40 NY2d 933; People v Lovello, 1 NY2d 436; People v Morales, 53 AD2d 517; People v Bonilla, 101 Misc 2d 146; People v Crimmins, 36 NY2d 230; People v Mees, 47 NY2d 997.) II. The court’s charge on the law of intent was constitutionally defective in that it improperly shifted the burden of proving a critical element of the crime to the defense. (Sandstrom v Montana, 442 US 510; People v Getch, 50 NY2d 456.)

      Robert M. Morgenthau, District Attorney (Vivian Berger and Marguerette Hosbach of counsel), for respondent.
    I. Defendants were proven guilty beyond a reasonable doubt. (People v Parks, 41 NY2d 36.) II. Smalls’ motion for a severance was properly denied; although McGee did not take the stand, the introduction at the joint trial of McGee’s confessions implicating both McGee and Smalls did not deprive Smalls of his right to confrontation of witnesses because McGee’s confessions “interlocked” with Smalls’ own confession. (Bruton v United States, 391 US 123; People v Safian, 46 NY2d 181; Parker v Randolph, 442 US 62; People v Berzups, 49 NY2d 417; People v Baker, 26 NY2d 169; People v McNeil, 24 NY2d 550; United States ex rel. Catanzaro v Mancusi, 404 F2d 296; People v Woodward, 50 NY2d 922; Harrington v California, 395 US 250.) III. Neither defendants’ present objections to the trial court’s charge have been preserved as a matter of law for this court to review; in any event, the court correctly instructed the jury concerning the use of defendants’ confessions. (People v Martin, 50 NY2d 1029; People v Tutt, 38 NY2d 1011; People v Robinson, 36 NY2d 224.) IV. McGee was not prejudiced by the redaction of his confessions. (People v Boone, 22 NY2d 476; Parker v Randolph, 442 US 62.) V. The court acted within its discretion in denying defendant McGee’s motion for a mistrial, based on the conduct of the witness Tyler during trial. (Parker v Randolph, 442 US 62; Hall v Potoker, 49 NY2d 501; Matter of Napoli v Supreme Ct. of State of N. Y., 33 NY2d 980.) VI. Defendants’ present contention that the prosecutor became an unsworn witness at trial was never raised in any fashion in the trial court, and hence is not preserved for review by this court; in any event, it is meritless. (People v Carter, 40 NY2d 933; People v Lovello, 1 NY2d 436; People v Paperno, 54 NY2d 294; People v Mandel, 48 NY2d 952; People v Williams, 46 NY2d 1070; People v Ortiz, 54 NY2d 288; People v Marks, 6 NY2d 67.) VII. The prosecutor clearly argued Smalls’ and McGee’s intent to rob Pedro Pratt by reference to each defendant’s own statements. VIII. Neither defendant was prejudiced by the court’s charge on intent. (Sandstrom v Montana, 442 US 510; People v Marr, 50 NY2d 456.)
   OPINION OF THE COURT

Gabrielli, J.

Defendants Smalls and McGee appeal from separate orders of the Appellate Division, affirming their convictions, after a joint trial, of murder in the second degree (Penal Law, § 125.25, subd 3). We conclude that the conviction of defendant Smalls must be reversed, as error was committed as to him both in the admission of the codefendant McGee’s confession on this joint trial and in charging the jury regarding the presumption of intent. While this error in the charge was also committed as against defendant McGee, we hold that under the circumstances of this case, the error was harmless. As we find defendant McGee’s other contentions to be without merit, his conviction should be affirmed.

I

The two defendants were indicted on January 28, 1977, for the crimes of murder in the second degree and attempted robbery in the first degree. Mary Jenkins, who testified at the trial on behalf of the prosecution, was likewise indicted, but pleaded guilty to the attempted robbery charge in satisfaction of the indictment. The indictments arose from an incident occurring on December 7, 1976, during which Mary Jenkins, Phillip Green, defendant Anthony McGee and defendant Leonard Smalls allegedly attempted a robbery of the apartment of Pedro Pratt. During the course of the attempted robbery, Pratt was shot, receiving head wounds from which he died a few days later.

Three weeks after this incident, McGee was taken into custody. After being read his Miranda rights, McGee made a statement to a detective, which was reduced to writing and signed by McGee. McGee later made substantially the same statement to an Assistant District Attorney, which was stenographically recorded. The essence of these statements is that McGee had agreed with Green on a plan to make money. On their way to Jenkins’ house they met a “guy” named “Lenny” (in the handwritten statement, this “guy” was referred to as someone whose name began with an “L”), and told him what they planned to do. The planning of the robbery took place between Jenkins, Green and McGee, although “Lenny” was present for part of the discussion. McGee indicated that after the three men forced their way into Pratt’s apartment, McGee pointed'his gun at Pratt, and although he never intended to harm anyone, Pratt lunged at McGee, hitting the arm holding the pistol. The pistol had a “hair trigger” and went off; Pratt fell to the floor. McGee left immediately and went home where he stayed all night. “Lenny” also left immediately after the shooting.

About two weeks later, Smalls was also apprehended. Having been read his Miranda rights, Smalls made a statement (which he eventually refused to sign), in which he discussed his involvement in the events leading up to the robbery and shooting of Pratt. Smalls made another oral statement to the Assistant District Attorney, which was ultimately suppressed. In his first oral statement, Smalls indicated that he was with McGee and Green on the night of the crimes and went with them to the Jenkins apartment. At one point, he asked Green “what was happening”, to which Green responded that they were “going to do it now”. The essence of Smalls’ statement is that he was present during the planning and execution of the robbery, and was present during the shooting, but nowhere does he indicate that he was aware of what was taking place or that he intended to take part in the robbery. Indeed, while his statement corroborates many of the details of the events leading to the robbery and shooting, it does not speak directly to the criminal aspects of the robbery, nor did Smalls in any way indicate that he actively or knowingly participated in any of these events.

Smalls’ pretrial motion to sever his trial from that of McGee’s was denied. Both defendants moved to suppress their pretrial statements. Smalls’ motion to suppress was granted to the extent of suppressing his second oral statement because the Assistant District Attorney had not given him a new set of Miranda warnings before questioning him. McGee’s motion to suppress his statements was denied.

Smalls then renewed his motion to sever his trial, on the ground that the introduction of McGee’s pretrial statements would prejudice Smalls, since Smalls was implicated in those statements as a participant in the robbery, while Smalls’ pretrial statement merely placed him -at the scene and did not implicate him directly. The motion was denied, the court noting that the portions of McGee’s statements implicating Smalls might be redacted to eliminate such references. Smalls’ counsel and the prosecutor did agree as to which portions of McGee’s statements should be redacted (which were subsequently ordered redacted by the court), although Smalls’ counsel continued to object to the entire procedure. Despite this attempt at redaction, references to Smalls’ guilty knowledge of the robbery were not entirely eliminated.

The evidence at trial, in addition to the statements of the two defendants, consisted primarily of the testimony of Mary Jenkins, who had participated in the planning of the robbery (but, according to her, not in its execution), and two members of the Pratt family and a friend of the deceased, who were present during the course of the robbery and shooting. Jenkins’ testimony describes McGee as an active participant in the planning of the robbery; however, the only reference to Smalls’ participation is that during the planning, he sat with his head down, nodding, and his eyes closed. Smalls’ only comment during the discussion was that he “wasn’t too high to go along with it, that he wanted to go anyway”. Jenkins’ testimony indicates that she was not present during the subsequent robbery and shooting. Shortly afterward, however, McGee told her that he had had to shoot Pratt. Sometime later, McGee told Jenkins that he was a “marksman” and had shot Pratt “directly between the eyes”.

Edward Tyler, a friend of the deceased, and present during the robbery, testified that three men approached him in the hallway of the apartment building, each holding a pistol. One gunman placed a pistol to Tyler’s head, while one of the others pushed open the apartment door and aimed a pistol at Pratt. Tyler was forced into the bathroom by the gunman who first approached him, and stayed there until he heard a shot from the other room. When asked if he saw the gunmen in the courtroom, Tyler responded that Smalls “looks like the man”.

Pratt’s mother, who was present during the shooting, testified that the man who was pointing a gun at Pratt shot him after demanding money. Pratt’s mother and a brother who was also present were unable to identify either of the two defendants as the gunmen. Tyler and the Pratts also testified to the completion of the robbery, indicating that the gunmen continued their efforts to obtain money after Pratt had been shot.

Neither defendant testified or presented any witnesses on his own behalf. Both defendants were convicted of felony murder. These convictions were separately affirmed by the Appellate Division. We now reverse the conviction of defendant Smalls, and affirm the conviction of defendant McGee.

II

The first issue raised on this appeal involves the propriety of admitting McGee’s confession on the joint trial of these two defendants, despite the fact that McGee never took the stand and thus did not become available for cross-examination. In Bruton v United States (391 US 123), the Supreme Court reversed the conviction of a defendant who had been implicated in the crime by the extrajudicial confession of his codefendant. This confession added substantial weight to the case against the defendant, and since the declarant never took the stand at the joint trial and thus was unavailable for cross-examination, the defendant was deprived of his right to confront the witnesses against him. The Bruton rule is tempered, however, by the Supreme Court’s .recognition that where both defendants have made extrajudicial confessions that are “interlocking”, such statements may properly be admitted on the joint trial with appropriate limiting instructions (Parker v Randolph, 442 US 62). The theory behind this “exception” is that where both defendants have made voluntary statements that are substantially similar, the concern expressed in Bruton over the lack of confrontation simply does not exist to the same degree (People v Baker, 26 NY2d 169; People v McNeil, 24 NY2d 550). Whatever danger exists that the jury might use the statements improperly can be dealt with by appropriate limiting instructions.

The basis for the lower courts’ rulings in the present case admitting McGee’s statements on the joint trial was that the extrajudicial statements of Smalls and McGee were “interlocking”. We disagree and conclude that the admission of McGee’s confession on the joint trial constituted error as against Smalls. It is true that the statements corroborate each other on some of the details of the events on the-night the crimes were committed. However, they also differ in a material respect, in that McGee’s confession implicates Smalls directly as a knowing participant in the robbery, while Smalls’ statement merely places him at the scene, but never admits to any participation in, or even awareness of what was transpiring around him. The only statements made by Smalls even arguably indicating such awareness were ambiguous at best. The danger is great that the jury might have resolved these ambiguities by reference-to McGee’s statement and its indication that Smalls was informed of the details of the robbery (see People v Berzups, 49 NY2d 417; People v Safian, 46 NY2d 181, 187). Thus, the admission of McGee’s confessions, having added substantially to the case against Smalls, coupled with the unavailability of McGee for cross-examination, impermissibly deprived Smalls of his right to confront the witnesses against him (see People v Anthony, 24 NY2d 697, 704).

Moreover, we cannot accept the view that any error committed in this regard was harmless. Where an error of constitutional magnitude is involved, it can be deemed harmless only when we are able to “declare a belief that it was harmless beyond a reasonable doubt” (Chapman v California, 386 US 18, 24). In the present case, we are unable to say that there was such overwhelming evidence against Smalls as to render the admission of McGee’s confession on the joint trial harmless beyond a reasonable doubt (see Harrington v California, 395 US 250). Indeed, in our view, the evidence against Smalls was far from overwhelming. While it is true that Smalls admitted to being present during the robbery and shooting, and Jenkins identified him as being present during the planning of the robbery, there is no direct evidence to indicate that Smalls actively and knowingly participated in the crimes that were taking place. Tyler’s identification of Smalls as one of the gunmen actively participating in the robbery was less than positive; the other witnesses were unable to identify Smalls. On this view of the evidence, we are unwilling to conclude that there is no reasonable possibility that the confession of McGee, directly implicating Smalls as a participant, contributed to the guilty verdict against Smalls.

We further reject the argument that, because Smalls’ attorney participated in the redaction of McGee’s confession and failed to assure that all statements implicating Smalls were eliminated, the defect, was waived. Under the circumstances of this case, where the defendant moved for a severance on the precise basis that he would be prejudiced by the admission of a codefendant’s confession, and the motion is denied because prejudice to defendant can, in the court’s view, be avoided by redaction, and counsel, though participating in the redaction process, continues to object to the entire procedure, we cannot say that the defect has been waived. We further note, in this connection, that the burden of “effectively redacting is one which rests heavily upon the prosecution” (People v Boone, 22 NY2d 476, 486).

Ill

Both Smalls and McGee contend that the trial court committed reversible error when it charged the jury that the “law says that a person is presumed to intend the natural consequences of his act”, and later, further charged that “a person is presumed to intend that which he actually does”. We agree that this charge was error (Sandstrom v Montana, 442 US 510; People v Getch, 50 NY2d 456). We conclude, however, that a reversal of McGee’s conviction is not mandated, because the error was harmless beyond a reasonable doubt as to him. Inasmuch as Smalls is entitled to a new trial by reason of the Bruton error, we need not determine whether this error in the charge was harmless as to him. We assume that the error in the charge will not be repeated upon the retrial.

The question whether an error of this nature may ever be deemed harmless was expressly left open by the Supreme Court in Sandstrom v Montana (442 US 510, 525-527, supra) and by our own court in People v Getch (50 NY2d 456, 465, supra). We now hold that harmless error analysis is proper in a case in which a Sandstrom error has occurred, but where there is overwhelming evidence regarding the defendant’s intent to commit the crimes for which he was convicted (McGuinn v Crist, 657 F2d 1107, cert den 455 US ___, 102 S Ct 1614).

We note first that this case does not involve a trial in which defendant’s intent was made a vital issue to be resolved by the jury, on conflicting evidence. We have already noted that in such a case an erroneous charge on intent may not be deemed harmless (People v Getch, 50 NY2d 456, 465, supra). That being so, it remains to be determined whether the proof of McGee’s intent to commit robbery, the predicate felony underlying the charge of felony murder, was overwhelming. We conclude that it was. In addition to the direct testimony of Jenkins to the effect that McGee planned the robbery with her and Green, several of McGee’s own statements in his confession point to his unequivocal intent to perpetrate a robbery in the Pratt apartment. Given this evidence, as well as the nature of the error in the charge, we are convinced that there is no reasonable possibility that the error might have affected the jury’s determination of McGee’s guilt and that the error was therefore harmless beyond a reasonable doubt.

We have considered defendant McGee’s other contentions and find them to be without merit.

Accordingly, in People v McGee, the order of the Appellate Division should be affirmed; in People v Smalls, the order of the Appellate Division should be reversed and a new trial ordered.

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

In People v Smalls: Order reversed and a new trial ordered.

In People v McGee: Order affirmed.