source: Caselaw Access Project

author: Alexander, J. Kaye, J.

license: Public Domain

text:
    In the Matter of Crescent Estates Water Company, Inc., Respondent, v Public Service Commission of the State of New York, Appellant.
    Argued February 7, 1991;
    decided April 4, 1991

      POINTS OF COUNSEL

      Kathryn C. Brown, William J. Cowan and Lawrence G. Malone for appellant.

      Keith J. Roland, Usher Fogel and Emilio Petroccione for respondent.
   OPINION, OF THE COURT

Alexander, J.

The Public Service Commission (PSC or Commission) appeals, by leave of this Court, from an order of the Appellate Division, Third Department, which modified its determination as to revenue requirements and allocation for Crescent Estates Water Company (Crescent or Company) by annulling so much thereof as imputed to Crescent operating revenues from homeowners residing outside the Company’s approved service area and remitted the matter to the Commission for further proceedings not inconsistent with the Court’s decision. For the reasons that follow, we affirm the order of the Appellate Division.

I

Crescent Estates Water Company, Inc. is a privately owned water-works corporation which provides water service to some 1,650 residential customers in the Town of Clifton Park, Saratoga County. As a utility, Crescent is subject to the regulatory jurisdiction of PSC pursuant to which the agency is empowered to fix and determine the rates charged by Crescent for supplying water service to its customers (see generally, Public Service Law § 89-c [10]). The rates and charges for water supplied to Crescent’s customers within its approved service area are set forth in tariffs filed with the PSC. Unless an expansion of its service area is approved and a permit issued therefor by the Department of Environmental Conservation (DEC), Crescent may not supply water to customers outside its service area (see generally, ECL 15-1501 et seq.).

In 1988, Crescent filed with the PSC two joint petitions seeking approval of main extension agreements it had negotiated with certain real estate developers in Clifton Park. These agreements called for an expansion of Crescent’s water service to approximately 110 residential dwellings built by these developers on properties located outside Crescent’s approved service territory. Crescent undertook to secure PSC and DEC approval of the main extensions and the concomitant expansion of its service territory. In exchange, the developers agreed to construct the necessary mains and facilities at their own expense, and convey them to Crescent. In addition to certain other payments, the developers agreed to pay a hook-up fee of $2,000 for each residential unit connected.

Shortly thereafter, Crescent filed tariff revisions with the PSC designed to increase its operating revenues effective April 1, 1988. These revisions were suspended by order of the PSC through January 1989, pending investigation and review. Crescent also sought recovery of $28,471 in rate-case expense, a considerable portion of which reflected fees paid to a consultant in connection with the preparation of its rate case. Included in Crescent’s calculation of its rate-year operating revenue projections was $11,124 in additional revenue expected to be derived from providing the service to new customers in its expanded service territory. This inclusion was predicated upon the anticipated approval of the main extension agreements and the expansion of Crescent’s service territory. It appears that the Commission staff initially agreed with Crescent that in the event the petitions were denied, these anticipated additional revenues should be eliminated from the rate calculations.

The PSC disapproved the joint petitions because Crescent had not obtained the approval of DEC for its proposed service expansion and because the $2,000 per unit hook-up fees, which were to be paid to Crescent’s principals and not the corporation, were deemed to be unjust, unreasonable and discriminatory and not in the best interests of the ratepayers. The PSC indicated however that it agreed with Crescent that the proposed expansion was prudent and that it would give its approval if after DEC authorization, the expansion was undertaken with reasonable and nondiscriminatory rates. The PSC indicated further that the Company’s "prudent expansion of its revenue base or, conversely, the imprudent failure to so expand [would be] one factor” the Commission would consider in determining Crescent’s rate case. Crescent challenged this determination disapproving the main extension agreements in an article 78 proceeding that was transferred to the Appellate Division, Third Department (CPLR 7804 [g]). The challenge was rejected by the Appellate Division and Crescent’s petition dismissed (159 AD2d 765).

In the meantime, in light of the PSC’s disapproval of the main extension agreements, Crescent attempted to exclude the projected $11,124 anticipated new service revenues from its operating revenue forecast in the rate-case proceeding pending before the Administrative Law Judge (ALJ). It appears from the record that both the Company’s expert and the Commission staff had initially agreed that these projections should be excluded if the agreements were disapproved since their inclusion in that circumstance would impact adversely upon the Company’s rate of return. The Commission staff changed its position however after the main extension agreements were disapproved. In his recommended decision, the AU rejected Crescent’s attempt to exclude these anticipated new service revenues and included them in the rate-year revenue projection. Additionally, he allowed recovery of only $11,891 of the requested $28,471 rate-case expense, to be amortized over four years.

The PSC issued its final order in which it approved the inclusion of these anticipated new service revenues in Crescent’s rate-year projection but reduced the allowed rate-case expense recovery to $9,513, to be amortized over a two-year period. As to the imputation of the anticipated new service revenues, the Commission observed that it had strongly urged the Company to expand its territory, that in view of the Company’s excess capacity such an expansion would be prudent and a failure to expand would be imprudent. It concluded that the revenue imputation was clearly reasonable and "provides the company’s managers an incentive to undertake a desirable project and protect ratepayers from the consequences of a failure to do so.” The Commission found that because the Company itself initially set the figure of $11,124 as its anticipated revenue growth, the imputation of that amount represented an "accurate assessment of the revenues to be earned from new customers.”

Crescent challenged this determination in an article 78 proceeding which was transferred to the Appellate Division, Third Department (see, CPLR 7804 [g]). As indicated that court modified the determination insofar as it imputed the anticipated revenues from the additional customers residing outside Crescent’s service area into Crescent’s operating revenue forecast, concluding that such imputation "amount[s] to an indirect order to [Crescent] to expand its service territory and, thus, [PSC] exceeded its authority” (161 AD2d 882, 885).

The PSC argues on its appeal to this Court that its rate-making authority is. necessarily broad and encompasses the authority to impute to Crescent’s operating revenue forecast the available additional income, since it would have been prudent for Crescent’s management to undertake this expansion for the benefit of its ratepayers. Thus, the Commission argues, Crescent’s failure to do so for reasons wholly unrelated to the Company’s best interest and the interest of its ratepayers, was an imprudent management decision which the Commission could consider in setting new rates pursuant to its rate-making authority. The Commission concludes therefore, that the Appellate Division erred in determining that the contested imputation was beyond the PSC’s authority and that the imputation of the projected revenues constituted an indirect order to Crescent to expand its services. The Commission argues that the imputation of these additional, available revenues merely recognizes the "cost of [Crescent’s] imprudence” to the Company’s customers.

II

The Public Service Commission is empowered by the Legislature to assure that "[a]ll charges made or demanded by any * * * water-works corporation for water * * * shall be just and reasonable and not more than allowed by law or by order of the commission” (Public Service Law § 89-b [1]). To this end the Commission has broad discretion to review and determine the reasonableness of any rates or charges sought to be imposed by any water-works corporation (Public Service Law § 89-c [10]), and "unless it is shown that the judgment of the PSC [in the exercise of this discretion] was * * * 'without any rational basis or without any reasonable support in the record’, its determination will not be set aside” (Matter of Abrams v Public Serv. Commit., 67 NY2d 205, 212, citing Matter of New York State Council of Retail Merchants v Public Serv. Commn., 45 NY2d 661, 672).

However, the Commission only "possesses those powers expressly delegated to it by the Legislature, or those incidental to its expressed powers, together with those required by necessary implication to enable the Commission to fulfill its statutory mandate” (Matter of Niagara Mohawk Power Corp. v Public Serv. Comma., 69 NY2d 365, 368-369). Concededly, the Commission has no power to compel a water-works corporation to expand and provide service to customers beyond its approved service area (see, Matter of Utica Tr. Corp. v Feinberg, 277 App Div 464; see also, Rochester Gas & Elec. Corp. v Public Serv. Comma., 71 NY2d 313; Interstate Commerce Comma, v Oregon-Washington R. R. Co., 288 US 14). The issue here, then is whether the imputation of these revenues is a proper exercise of PSC’s rate-making power or an improperly imposed compelled expansion of Crescent’s service area.

In Rochester Gas & Elec. Corp. v Public Serv. Comma. (71 NY2d 313, 326, supra) we noted that the Feinberg court "recognized the general rule that governmental regulation forcing a carrier to extend its operation into previously unserviced area, beyond its commitment, is a taking.” In both Feinberg and Rochester Gas & Elec., however, the courts concluded that the challenged regulatory determinations did not compel the provision of services beyond the company’s original commitment, they did no more than require the companies to extend their services within the areas they had already committed to serve.

PSC argues here that its imputation of the contested revenues does not compel Crescent to extend its water service beyond its approved area, rather the order is merely an appropriate exercise of its rate-making authority pursuant to which it may protect the ratepayers within the approved area (and apparently outside that area, according to the PSC) from the Company’s imprudent failure to take advantage of the opportunity to expand its service.

There is of course, no gainsaying the PSC’s broad rate-making powers, which are sufficient to allow it generally to assess the prudence of a utility’s actions as those actions impact upon the ratepayers. Indeed, a specific function of the rate-making power is to protect the utility’s ratepayers (Matter of Niagara Mohawk Power Corp. v Public Serv. Comma., 69 NY2d 365, 369, supra; Matter of General Tel. Co. v Lundy, 17 NY2d 373, 382). Thus in its review of the utility’s operating expenses, the Commission may act to "prevent unreasonable costs for materials and services from being passed on to ratepayers.” (Matter of General Tel. Co. v Lundy, supra, at 378.)

The Commission acknowledges that no New York case has specifically addressed the issue we now consider. The reported New York cases have dealt primarily with instances where there has been a disallowance of a utility’s costs or the exercise of the Commission’s authority in respect to matters involving affiliates of the regulated utility (see, e.g., Matter of National Fuel Gas Distrib. Corp. v Public Serv. Commn., 66 NY2d 956, affg for reasons stated at 107 AD2d 357; Matter of General Tel. Co. v Lundy, 17 NY2d 373, supra; Matter of Port Chester Water Works v Public Serv. Commn., 84 AD2d 898, lv denied 56 NY2d 504; Matter of New York Water Serv. Corp. v Public Serv. Commn., 72 AD2d 841, lv denied 49 NY2d 706, appeal dismissed 49 NY2d 799, cert denied 449 US 844; Matter of Spring Val. Water Co. v Public Serv. Commn., 71 AD2d 55, lv denied 49 NY2d 706; Matter of Long Is. Water Corp. v Public Serv. Commn., 49 AD2d 392). The Commission argues however, that its power to set reasonable rates necessarily includes the ability to adjust the Company’s claimed revenue forecast through revenue imputations. In support, the Commission points to one of its prior determinations (apparently not challenged by the utility there involved) in which it imputed to the utility revenues that could be derived from its excess capacity. The Commission concluded in that case, that inasmuch as the excess capacity had been built by the utility, the burden of carrying the costs of that excess plant should be shared between the shareholders and the ratepayers (see, Matter of Central Hudson Gas & Elec. Corp., Case 27032, 17 NY PSC 401 [July 8, 1977]). The Commission also relies upon a decision of the Second Circuit in Rochester Gas & Elec. Corp. v Public Serv. Commn. (754 F2d 99), which upheld the imputation of revenues from the company’s incidental sale of electricity for resale in interstate commerce, in computing the rate adjustment necessary to permit the utility to earn its authorized rate of return. However, neither of these cases, nor any of the other cases cited by PSC support its position here. None of the determinations in those cases involved the imputation of revenues deriving from sources outside the utility’s authorized service area.

In the Central Hudson Gas & Elec, case relied upon by the Commission, the imputed revenue was that which the utility would have received had it utilized its excess capacity to make sales within its approved territory. In Rochester Gas & Elec. Corp. v Public Serv. Commn. (754 F2d 99, supra), the issue was whether, in computing the company’s authorized rate of return, it was permissible for the PSC to include estimated revenues from incidental sales actually being made by the company, in light of the fact that these sales are interstate sales regulated by the Federal Energy Regulatory Commission (FERC) and thus beyond PSC’s jurisdiction. The court rejected Rochester Gas & Electric’s claim that the imputation of an estimated level of sales "compelled” those sales or constituted an attempt to "regulate” in a preempted field. The court observed that the imputation was not an attempt to regulate those sales and that the reasonableness of the level of imputation was not questioned. The court concluded that "[w]hile [the imputation] may provide some incentive to operate efficiently, * * * PSC’s recognition that [the company] will make incidental sales and its inclusion of a reasonable estimate of those sales in [its] revenue base [would not] materially affect [the company’s] incidental sales decisions.” (Id., at 102 [emphasis added].) The court noted further that "[i]ndeed * * * [the company does not argue] that but for the imputation policy it would engage in a lesser level of incidental sales.” (Id.) Because incidental sales in that case were in fact being made by the company it could not be Said that the imputation of a reasonable level of revenue from those sales "compelled” such sales.

Here, of course, Crescent has not made any of the imputed sales and cannot make them and realize the revenue therefrom, unless it expands its approved area of service. These cases then, do not support PSC’s contention that its rate-making authority authorizes it to impute revenue from sales outside a utility’s territory into that utility’s revenue projections.

We find no express or implied legislative authority empowering the PSC to impute income derived from sources outside the utility’s authorized service area in computing its rate-year projections. Such authority may not be implied as necessarily incidental to the rate-making power since the ineluctable effect of such an imputation here, is to compel the utility to expand its services in order to actually receive that projected income or suffer a deprivation of a fair return on its investments through the rate set.

Indeed, Crescent contends, and the PSC does not dispute that the 15% rate of return which the Commission has approved as being a just and reasonable return can only be achieved if the disputed $11,124 of imputed revenue is actually received. Should these revenues not be actually realized, according to Crescent, its actual rate of return would be only 10.76%. While the specific function of the PSC’s rate-making power is to protect the utility’s ratepayers (see, Matter of Niagara Mohawk Power Corp. v Public Serv. Commn., 69 NY2d 365, 369, supra; Matter of General Tel. Co. v Lundy, 17 NY2d 373, 380, supra) the PSC may not deny a utility a reasonable rate of return on its investment (see, Matter of New Rochelle Water Co. v Public Serv. Commn., 31 NY2d 397, 407). Under the facts of this case, the only way in which Crescent can realize these revenues and thus enjoy the 15% just and reasonable return, would be to expand its service to the additional customers.

Thus we conclude that the imputation of these projected revenues in Crescent’s rate-year projections was unauthorized, was beyond PSC’s rate-making power and therefore was arbitrary and capricious.

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

Kaye, J.

(dissenting). A prime function of the Commission, as a regulatory body, is to separate costs which should be borne by a utility’s ratepayers from costs properly chargeable to its owners (see, Matter of Consolidated Edison Co. v Public Serv. Commn., 66 NY2d 369, 372, appeal dismissed 475 US 1114, reh denied 476 US 1179; Rochester Gas & Elec. Corp. v Public Serv. Commn., 51 NY2d 823, 825, appeal dismissed 450 US 961). In that the Commission properly determined that the economic effects of Crescent’s decision to forego the revenue from its planned expansion should be absorbed by the company’s two principals, not the residential consumers it serves, I would reverse the Appellate Division order and reinstate the Commission’s determination imputing $11,124 of lost revenues to the utility.

As the majority acknowledges, review of Commission determinations begins with several fundamental propositions. First, although not without limit, the authority of the Commission is very broad, in that it must protect the public interest in what is essentially a government-licensed monopoly (see, Matter of Niagara Mohawk Power Corp. v Public Serv. Commn., 69 NY2d 365, 368-369, rearg denied 69 NY2d 1038). Second, the scope of judicial review is very narrow: unless it is shown that the Commission’s determination lacked any rational basis or had no reasonable support in the record, that determination must be sustained (majority opn, at 616). Third, the combination of broad Commission authority and limited judicial authority has particular significance in the area of rate setting by the Commission, which generally involves analysis of technical data within the Commission’s expertise (see, Abrams v Public Serv. Comma., 67 NY2d 205, 211-212).

Applying these propositions to the facts before us, the Commission’s determination should be sustained.

This dispute centers on Crescent’s request for tariff revisions designed to increase its annual operating revenues by 59.9%. In arriving at this figure, Crescent excluded from its pro forma revenues the sum of $11,124, representing projected revenues of its planned but unrealized expansion of service to 110 new residential customers. Crescent argues that the Commission cannot impute these revenues because to do so would be tantamount to coercing expansion outside its service area.

Taking up Crescent’s argument, the majority opinion from start to finish sounds just one note: that the Commission’s imputation of the projected revenues to the utility was unlawful because it in effect compelled Crescent to expand services beyond its territory. No one disputes that the Commission is without authority to force a utility to expand its business operations outside its authorized territory (see, Rochester Gas & Elec. Corp. v Public Serv. Commn., 71 NY2d 313, 325-326). But that principle does not resolve this case.

This is not a case where the Commission has decided that expansion into a new territory would be in the best interests of ratepayers and is penalizing the utility for failing to implement the Commission’s business judgment. Rather, Crescent itself, having excess capacity, filed petitions seeking main extensions into new territories, and Crescent itself included $11,124 of projected revenues from such service. Moreover, Crescent has never argued that it would not make $11,124 if it expanded according to its original plan; at no time has it advanced any reason related to its cost of services, or business operations, for its decision not to pursue the planned expansion.

Also included in Crescent’s petitions was a $2,000 "connection capacity” fee for each new residential unit, which was to go not to the utility but directly into the pockets of Crescent’s two principals.

The petitions were denied by the Commission on the procedural ground that Crescent had failed to obtain the prior approval of the Department of Environmental Conservation, but it noted that the petitions would in any event have been rejected because the $2,000 per-unit connection fee was "unjust and unreasonable.” In rejecting the petitions, the Commission stated:

"Here, the company is attempting to circumvent the statutory scheme by seeking Commission approval of its 'special agreements’ as a condition precedent to seeking DEC approval of the extension in order to secure a fee that would otherwise be unauthorized. It understands that once it obtains DEC approval, it is obligated to serve pursuant to the tariff, but it has indicated that it will not seek approval unless its terms are met.” (Commission Order Denying Petitions, Case 21656, Sept. 28, 1988, at 4.)

In these circumstances, the Commission’s determination that Crescent should not imprudently abandon its decision to expand has both reasonable support in the record and a rational basis.

Unlike a private company, a public utility enjoys a municipally awarded franchise, and therefore is " 'clothed with a public interest.’ ” (Rochester Gas & Elec. Corp. v Public Serv. Commn., supra, at 322, quoting Munn v Illinois, 94 US 113, 126.) The public interest requires that the Commission, by exercising its broad powers under the Public Service Law, guard against abuses in what is essentially a marketplace of monopolies — acting in effect as a "surrogate for competition” (see, Comment, Utility Rates, Consumers and the New York State Public Service Commission, 39 Alb L Rev 707, 709 [1975]; see also, Public Service Law § 89-c).

As the majority notes, the Commission’s rate-setting powers necessarily include assessment of "the prudence of a utility’s actions as those actions impact upon the ratepayers.” (Majority opn, at 617; see also, Matter of Abrams v Public Serv. Commn., supra, at 216-217 [upholding application of the "prudent investment” test for determining if utility could pass along cost of abandoned facility]; Matter of Long Is. Light. Co. v Public Serv. Commn., 134 AD2d 135, 143 [upholding decision to charge utility with costs associated with Shoreham nuclear power plant based on "imprudent management” analysis].) In effect, the Commission, in looking to the consequence of management decisions, is acting to replace absent market forces that would ordinarily guide those decisions.

Nor has the Commission’s rate-setting authority been so stringently restricted to consideration of forces that operate inside a utility’s territory (see, e.g., Matter of General Tel. Co. v Lundy, 17 NY2d 373 [adjustment of operating expenses to reflect excessive payments to affiliates]; see also, Rochester Gas & Elec. Corp. v Public Serv. Commn., 754 F2d 99 [2d Cir] [Commission’s decision to impute revenues from incidental sales upheld, although deemed interstate transactions and therefore subject to Federal regulation]). In concluding that there is "no express or implied legislative authority empowering the PSC to impute income derived from sources outside the utility’s authorized service area” (majority opn, at 619) the majority neglects the Commission’s authority to take such extraterritorial factors into account when fixing a fair rate of return.

The majority’s mechanical rule — strictly limiting the Commission’s rate-setting jurisdiction by the boundaries of the utility’s service area, whatever the circumstances — impairs the ability of the Commission to act in the public interest, and allows a utility to manipulate the regulatory system at the expense of the ratepayers. Without a guarantee that it will be paid the $2,000 per-unit fee — which the Commission has concluded is improper — Crescent has no incentive to make the proper filing with the DEC. Instead, it can simply continue to pass off the cost of its unused capacity to the ratepayers.

Under these circumstances, the Commission acted within its authority in allocating the lost revenues to Crescent’s two shareholders, rather than its 1,650 ratepayers.

Chief Judge Wachtler and Judges Simons, Titone and Hancock, Jr., concur with Judge Alexander; Judge Kaye dissents and votes to reverse in a separate opinion in which Judge Bellacosa concurs.

Order affirmed, with costs.

      . Crescent did not appeal the Appellate Division’s affirmance.

        . This portion of the Commission’s determination was confirmed by the Appellate Division and Crescent’s cross motion for leave to appeal was denied (76 NY2d 708).


author: Bellacosa, J.

text:
    The People of the State of New York, Respondent, v China Mitchell, Appellant.
    Argued March 21, 1991;
    decided April 25, 1991

      POINTS OF COUNSEL

      Joseph O. Holmes and Philip L. Weinstein for appellant.

      Robert M. Morgenthau, District Attorney (Nancy J. Dunn and Norman Barclay of counsel), for respondent.
   OPINION OF THE COURT

Bellacosa, J.

Defendant, acting as a "stall” in a pickpocketing ploy on the steps of the Metropolitan Museum of Art on Fifth Avenue in Manhattan on July 5, 1987, feigned illness and grabbed the "mark’s” arm while the "dip” lifted the wallet, containing a credit card, from the "mark’s” purse and slipped it to the defendant. The victim, holding on to her purse, grappled with defendant and regained possession of the wallet. Defendant then fled. She was pursued by bystanders and was quickly apprehended and arrested by a nearby police officer.

Defendant was convicted after a jury trial of grand larceny in the fourth degree (Penal Law § 155.30 [4] [stealing property consisting of a credit card]) and criminal possession of stolen property in the fourth degree (Penal Law § 165.45 [2] [posses-, sion of stolen property consisting of a credit card]). The trial court overruled defendant’s objection to its instruction to the jury that "a person who steals a credit card need not even be aware of the precise nature of what [she] has stolen to be charged with the full consequences of [her] criminal act”. The Appellate Division affirmed and a Judge of this Court granted leave to appeal.

Defendant argues that the evidence of the possession count was insufficient because the People failed to prove that she knew the stolen wallet contained a credit card. We agree with the courts below and affirm the order of the Appellate Division upholding the conviction.

Penal Law § 165.45 (2) provides, in part, that a person is guilty of criminal possession of stolen property "when [she] knowingly possesses stolen property, with intent to benefit [herself] or a person other than an owner thereof or to impede the recovery by an owner thereof, and when: * * * 2. The property consists of a credit card” (emphasis supplied). The offense at issue thus plainly contains two culpable mental states — "knowingly” which is tied to the possession of stolen property, and "intent” which modifies "to benefit” or "to impede” (Penal Law §§ 15.10, 15.15). Neither of these culpable mental states, by law or syntax, relates to any of the several aggravating factors tacked onto the definition of the offense (compare, People v Register, 60 NY2d 270, 276, 278, cert denied 466 US 953). The unmistakable effect and location of the adverb "knowingly” is to pinpoint the primary culpable mental state component only on the criminal possessory act. That culpable mental state does not also arc over to the particular aggravating characterization of the property stolen — here, a credit card.

The statute, in its traditional composition, forbids defendants from knowingly possessing stolen property, adding that the criminal possession be accompanied by an unlawful intent to benefit the wrongdoer or to impede recovery. The degree of the crime is elevated if the stolen property is a credit card or one of several other things. The People must prove defendant knew the property was stolen but are not required to prove that she was cognizant of the precise and usually varying nature of the property she possessed in order to support an indictment and sustain a conviction for the full consequences of the criminal act, i.e., at the highest degree of crime committed. "Knowledge of the existence of a specific article is not required if the defendant unlawfully acquires possession of a container [wallet] in which the article [credit card] is thereafter found” (3 Wharton’s Criminal Law § 360, at 320 [Torcia 14th ed 1980]; see also, People v Timmons, 124 Misc 2d 766, 767 [Sup Ct, NY County]; see also, People v Boyajian, 148 AD2d 740, 741-742, lv denied 74 NY2d 661; People v Burgin, 135 AD2d 1106, lv denied 71 NY2d 893; People v Magee, 98 AD2d 874).

Our interpretation is consistent with the statutory interpretation in several of the cited lower court cases and is further buttressed by the Legislature’s ensuing amendments to Penal Law § 165.45, which did not disturb that extant interpretation (see, L 1990, ch 450, § 2; L 1987, ch 556, § 11; L 1986, ch 515, § 5; see also, Lucenti v Cayuga Apts., 48 NY2d 530, 541; Matter of Trosk v Cohen, 262 NY 430, 435-436).

Defendant concedes that aggravating factors — such as the value of the property stolen — are factors to which a culpable mental state does not ordinarily attach. She contends, nevertheless, that the character of credit card stolen property is so integral to this offense that a culpable mental state must be judicially incorporated. The theory is that this particular factor elevating her possession to a felony range is so unique and different that it cannot be sustained without a culpable mental state element being added. Defendant is incorrect. This credit card factor is not essentially different in kind or effect from a host of other aggravating factors, and her proffered distinction or uniqueness does not warrant judicial engraftment of a culpable mental state that the Legislature chose not to insert in the statute as to any of the listed aggravating factors in Penal Law § 165.45 (2).

That the Legislature declined to attach any culpable mental state to this aggravating circumstance is not unusual. The Penal Law is replete with offenses which contain aggravating factors which elevate the degree of criminal responsibility without coupling a requirement of proof of a culpable mental state (see, e.g., Penal Law §§ 140.30, 155.42, 160.15, 165.54). If the Legislature had intended that the People must prove a culpable mental state in relation to the aggravating factor, it could have done so simply by direct expression, and by proper placement in the particular provision, as it has done elsewhere (see, e.g, Penal Law § 220.21 [criminal possession of a controlled substance in the first degree requires knowing possession of a narcotic]; see also, Penal Law § 165.17 [unlawful use of a credit card requires display of a card known to be revoked or canceled, in course of obtaining or attempting to obtain property or service]).

Some legislative history and context are also useful here. The Legislature in 1969 forbade criminal possession of stolen property particularly consisting of a credit card (Penal Law § 165.45 [2]) — as well as grand larceny of a credit card (Penal Law § 155.30 [4]) — to combat growing credit card theft and abuse. It decided to elevate theft and possession of stolen credit cards to felony grade to combat the then growing and now worse problem of credit card theft and forgery (Governor’s Mem, 1969 NY Legis Ann, at 543; Mem of Senator Dunne, 1969 NY Legis Ann, at 43-44). A thief who gains possession of stolen property, especially credit cards, does so in anticipation of its fungible or utilitarian value or character and not ordinarily with prior knowledge of its precise nature, value or character because that is typically unknowable until the theft is completed. This is especially so when one considers how and where credit cards are carried by people and the locations where the crimes are usually committed. To read into the statute by judicial concoction a culpable mental state element of coextensive knowledge of the precise character of the stolen property would sap the statute of its intended purpose, so it is not surprising that the Legislature refrained from such a vain exercise. Inasmuch as the Legislature did not protect professional pickpockets from the full consequences of their criminal acts by adding the extra ingredient of a specific culpable mental state as to the credit card aggravating circumstance, we certainly should not do so contrary to the plain expression of its enactment. Such syntactical and creative interpretation would contradict the special legislative effort to deal with credit card abuse and theft.

Defendant also contends that the statutory presumption embodied in Penal Law § 165.55 (3), which presumption imposes knowledge of theft on a person who possesses two or more stolen credit cards, leads also to the conclusion that knowledge of the credit card character of the stolen property is an element of Penal Law § 165.45 (2). However, that precise statutory presumptive attribution of knowledge that the property is stolen does not create an additional presumption of knowledge also that the stolen property consists of credit cards. Moreover, it certainly does not, by further leap and operation of law, incorporate into Penal Law § 165.45 (2) a culpable mental state element of knowledge of the credit card nature of the possessed stolen property in relation to that aggravating circumstance, which often happens to be the ultimate object of the Fagin-like flimflam.

The courts below properly determined that the People are not required to prove that defendant was cognizant that the stolen property she possessed was a credit card because the statute imposes no such burden. Rather, the correct burden, satisfied by the evidence and instruction to the jury, was only that she knowingly possessed stolen property which, in fact, consisted of a credit card, and which she intended for her own benefit.

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

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

Order affirmed.


author: Simons, J.

text:
    In the Matter of Daniel J., an Infant, by His Mother and Natural Guardian, Ann Mary J., Respondent, v New York City Health and Hospitals Corporation, Appellant.
    Argued February 7, 1991;
    decided April 30, 1991

      POINTS OF COUNSEL

      Victor A. Kovner, Corporation Counsel (Ellen B. Fishman and Stephen J. McGrath of counsel), for appellant.

      David Jaroslawicz, Seymour Berger and Richard L. Goldberg for respondent.

      Marvin Wexler and Mark Platt for FOJP Service Corporation, amicus curiae.

   OPINION OF THE COURT

Simons, J.

Petitioner instituted this proceeding on behalf of an infant allegedly injured as a result of the inadequate diagnosis and treatment by respondent hospital. The issue is whether the maximum 10-year extension of the Statute of Limitations afforded to infants by CPLR 208 runs from the initial negligent act or from the end of any period of subsequent continuous treatment.

On November 17, 1978 petitioner Ann Mary J. gave birth to Daniel J. at Cumberland Hospital, an institution operated by respondent New York City Health and Hospitals Corporation. On December 4, 1978 Daniel underwent emergency surgery there to correct a strangulated hernia. After two follow-up visits to the hospital’s out-patient clinic in December 1978, Daniel was readmitted with a diagnosis of inguinal hernia and undescended left testis. Additional surgery was performed, followed by continued treatment at the hospital for the next three months. Daniel presently does not have either testicle and will require lifelong hormonal treatment.

Petitioner commenced this proceeding seeking leave to serve a late notice of claim pursuant to General Municipal Law § 50-e (5) and also "immediate leave” to serve a summons and complaint. She claims respondent was guilty of malpractice because of its doctors’ initial failure to diagnose the undescended testicle problem immediately after Daniel J.’s birth and based on a notation in respondent’s records indicating that the infant’s right testicle may have subsequently been compromised during the December 4, 1978 surgery. In support of her request to serve a late notice of claim, petitioner contended that Daniel J. had received "continuous treatment” for his hernia and testicle problems until March 15, 1979 and, accordingly, that the action commenced December 12, 1988 was timely filed under the applicable 10-year period allowed infants by CPLR 208. Supreme Court agreed and granted the petition. The Appellate Division affirmed and we granted respondent leave to appeal.

Service of a notice of claim is required in personal injury actions against respondent (New York City Health and Hospitals Corporation Act [L 1969, ch 1016, § 1, as amended] § 20 [2]; McKinney’s Uncons Laws of NY § 7401 [2]). Such notices are governed by the provisions of section 50-e of the General Municipal Law which provides that the notice of claim must ordinarily be served within 90 days after the cause of action accrues. The court may extend the time to serve for the period of the applicable Statute of Limitations, however, including any particular tolls or extensions (see, General Municipal Law § 50-e [5]; Cohen v Pearl Riv. Union Free School Dist., 51 NY2d 256, 262-263). Thus, the question of whether the courts below had discretion to grant petitioner’s application turns on whether the notice was served within the applicable Statute of Limitations.

CPLR 208 provides in pertinent part: "[i]f a person entitled to commence an action is under a disability because of infancy * * * at the time the cause of action accrues, and * * * the time otherwise limited [for commencing the action] is less than three years, the time shall be extended by the period of disability.” Where medical malpractice actions accrue during infancy, the extension is limited to 10 years from the time of accrual. This 10-year "cap” was added in 1975 as part of a comprehensive package of special procedural rules designed to ameliorate a perceived medical malpractice insurance crisis. Among other provisions, the bill reduced the Statute of Limitations for malpractice claims generally from 3 to 2 V2 years and limited the infancy toll to 10 years (L 1975, ch 109; see, Mem of State Executive Dept, 1975 McKinney’s Session Laws of NY, at 1599; McLaughlin, Practice Commentaries, McKinney’s Cons Laws of NY, Book 7B, CPLR C208:l, at 386; CPLR C214-a:l, at 592).

Petitioner contends that the action accrued at the end of Daniel J.’s continuous treatment on March 15, 1979 and that the 10-year statutory toll for infancy began to run at that time. She maintains, therefore, that the Supreme Court had discretion to allow filing of the service of a late notice of claim on December 12, 1988 (see, General Municipal Law § 50-e [5]). An action in medical malpractice "accrues” at the date of the original negligent act or omission, however; subsequent continuous treatment does not change or extend the accrual date but serves only to toll the running of the applicable Statute of Limitations (McDermott v Torre, 56 NY2d 399, 407; see also, Rizk v Cohen, 73 NY2d 98, 103; Suria v Shiffman, 67 NY2d 87, 95). Petitioner’s claim, based on the initial failure to diagnose an undescended testicle problem at birth and the loss of the right testicle, accrued no later than December 4, 1978. Inasmuch as a medical malpractice must be commenced within 10 years from the date of accrual under CPLR 208, the period of limitations expired on December 4, 1988 and the courts below erred in granting leave to serve a late notice of claim (General Municipal Law § 50-e [5]).

Petitioner acknowledges the McDermott rule but notes that at the time CPLR 208 was enacted the cause of action in continuous treatment actions accrued at the end of the treatment, not the beginning (see, Borgia v City of New York, 12 NY2d 151,155). She contends that rule should be applied here and that when it is applied, the 10-year infancy toll under CPLR 208 did not begin to run until the end of Daniel J.’s continuous treatment.

In Borgia v City of New York (supra), we stated that in continuous treatment cases the cause of action accrued at the conclusion of treatment. It appears from the legislative history that in explaining the proposed amendment of the infancy toll the sponsor used our decision to illustrate how the 10-year provision would operate. There is no indication that the reference was intended as other than illustrative, however. The sponsor’s memorandum did not suggest tacking the infancy toll onto any continuous treatment toll; it noted only that the infancy toll would run from the "accrual” of the cause of action and referred to the definition of accrual under existing law (Borgia v City of New York, 12 NY2d 151, 155, supra). Nor did the Legislature otherwise manifest any intention to codify the Borgia definition of accrual in CPLR 208 or limit this Court’s consideration of the Borgia rule. Indeed, the accrual date fixed in McDermott is consistent with the primary purpose of the bill, "to assure prompt disposition of medical malpractice claims” (Bill Jacket, L 1975, ch 109, Governor’s Program Bill Mem, at 1). To apply the Borgia definition of accrual to CPLR 208 now would perpetuate the illogical consequences of the rule we corrected in McDermott (56 NY2d 399, 407, supra) and create an unwarranted exception for accrual applicable only to infants’ claims.

Accordingly, the order of the Appellate Division should be reversed, with costs, and petitioner’s application to serve a late notice of claim denied.

Chief Judge Wachtler and Judges Kaye, Alexander, Ti-tone, Hancock, Jr., and Bellacosa concur.

Order reversed, etc.


author: Per Curiam.

text:
    Leslie Rowell, Respondent, v Utica Mutual Insurance Company, Respondent, and Motor Vehicle Accident Indemnification Corporation, Appellant.
    Argued March 20, 1991;
    decided May 2, 1991

      POINTS OF COUNSEL

      Richard M. Schaus for appellant.

      John J. Flynn for Utica Mutual Insurance Company, respondent.
   OPINION OF THE COURT

Per Curiam.

Zolene Garner owned a 1975 Chrysler which was insured through defendant Utica Mutual Insurance Company. In March 1985 she gave her brother, plaintiff Leslie Rowell, permission to drive the vehicle. While plaintiff was stopped at a delicatessen, a man attempted to steal the vehicle. Plaintiff ran from the store, opened the driver’s side door and tried to prevent the thief from driving away. In doing so, plaintiff caught his foot in the door of the moving vehicle and was dragged alongside it, sustaining injuries as a result. Under the policy, a standard uninsured motorist endorsement provided that Utica Mutual would pay all amounts which the "insured” shall be legally entitled to recover as damages from the owner or operator of an "uninsured automobile” due to injury sustained by the insured.

Plaintiff commenced this declaratory judgment action against defendants Utica Mutual and the Motor Vehicle Accident Indemnification Corporation seeking a determination of the respective rights and obligations of the parties. Two questions are presented: whether plaintiff was an "insured” and whether the vehicle was "an uninsured” automobile.

Insurance Law § 3420 (f) (1) mandates that an insurer cover, up to certain limits, injuries "to the insured, as defined in [the policy]” resulting from actions taken by certain uninsured motorists. Utica Mutual’s policy defines "insured” as:

"the named Insured and * * * any other person while occupying an automobile owned by the named Insured * * * and used by or with the[ir] permission”.

MVAIC contends that plaintiff was an "insured” as defined by Utica Mutual’s endorsement because he had been "occupying” the automobile and it was "used” with the "permission” of the named insured at the time of the injury.

The uninsured motorist endorsement in the Utica Mutual policy and section 3420 (f) (3) of the Insurance Law both define "occupying” as "in or upon or entering into or alighting from”. The term has received a liberal interpretation because of the expansive definition in the statute and in standard policy endorsements (see, State-Wide Ins. Co. v Murdock, 31 AD2d 978, 979, affd 25 NY2d 674; Matter of Allstate Ins. Co. v Flaumenbaum, 62 Misc 2d 32, 47). Similarly, "use” of an automobile encompasses more than simply its driving and includes all necessary incidental activities such as entering and leaving its confines (see, Nassau County Ch. of Assn. for Help of Retarded Children v Insurance Co., 59 AD2d 525, 526; Glouzwski v Ruback, 3 AD2d 692). Plaintiff’s act of opening the car door and trying to enter fits within the broad definition of those terms under the endorsement, statute and case law.

The only remaining question in determining if plaintiff is an "insured” under the uninsured motorist endorsement is whether plaintiff had his sister’s "permission” to use the car in the manner he did at the time of the injury. A reasonable interpretation of the scope of permission to use the car includes plaintiff’s attempt to stop a thief from stealing the car while it was in his trust. Accordingly, plaintiff is an "insured” under the policy and is entitled to recover from Utica Mutual if, at the time of the injury, the vehicle causing his injuries was an "uninsured” automobile.

Utica Mutual’s uninsured motorist endorsement reads:

"[Utica Mutual] will pay all sums which the insured * * * shall be legally entitled to recover as damages from the owner or operator of an uninsured automobile because of bodily injury * * * caused by accident arising out of the ownership, maintenance or use of such uninsured automobile”.

The policy further states: "the term 'uninsured automobile’ shall not include an automobile owned by the named insured or spouse”. MVAIC argues that this exclusion is "invalid” in these circumstances because an insurer may not lawfully exclude coverage for damages caused by the automobile insured under the policy.

Insurance Law § 3420 (f) (1) requires every motor vehicle insurance policy to contain an uninsured motorist endorsement under which the insurer agrees that it will pay to an insured any damages caused by an owner or operator of an uninsured motor vehicle, a stolen vehicle and a motor vehicle operated without permission of the owner. "The purpose of the endorsement [is] to help effectuate the scheme of compulsory automobile liability insurance * * * by providing coverage to insured persons who suffer automobile accident injuries at the hands of financially irresponsible motorists” (Matter of Country-Wide Ins. Co. v Wagoner, 45 NY2d 581, 586). Thus, the statutorily required endorsement is remedial in nature and should be liberally construed to afford a person injured in an accident involving an uninsured driver the same protection that such a person would have had if involved in an accident caused by a legally insured motorist (see, Matter of Knickerbocker Ins. Co. [Faison], 22 NY2d 554, 558, cert denied 393 US 1055; Matter of Neals v Allstate Ins. Co., 34 AD2d 265, 266). Additionally, Utica Mutual’s endorsement must be construed as if all the "provisions [of Insurance Law § 3420 (f) (1)] were embodied therein” (Insurance Law § 3420 [f] [1]).

Utica Mutual’s endorsement provides coverage generally to an insured for all sums the insured is legally entitled to recover as damages from the owner or operator of an uninsured auto but then excludes coverage for damages caused by "an automobile owned by the named insured”. The statute, however, contains no such exclusion from coverage and expressly requires uninsured motorists coverage in cases involving "a stolen vehicle” and "a motor vehicle operated without permission of the owner.” Reasonably interpreted, both terms necessarily include the car insured under the policy if it is stolen or used without permission. Thus, Utica Mutual’s endorsement impermissibly attempts to exclude plaintiff from uninsured motorist coverage where the Legislature has expressly required it (see, Matter of Carmichael [Government Employees Ins. Co.] 54 AD2d 140, 142). In these circumstances, where the insured is injured by a stolen vehicle, which coincidentally is the vehicle insured under the policy in question, the endorsement required by the Insurance Law should be considered to be embodied in the policy (Insurance Law § 3420 [f] [1]; cf., Matter of Knickerbocker Ins. Co. [Faison], 22 NY2d 554, 558, supra).

Accordingly, the order of the Appellate Division should be reversed, with costs, defendant Utica Mutual’s motion to dismiss denied, defendant MVAIC’s motion for summary judgment granted, and plaintiff declared entitled to make a claim only against Utica Mutual.

Chief Judge Wachtler and Judges Simons, Kaye, Alexander, Titone, Hancock, Jr., and Bellacosa concur in Per Curiam opinion.

Order reversed, etc.


author: Kaye, J.

text:
    In the Matter of Victor Bryant, Appellant, et al., Petitioners, v Thomas A. Coughlin, III, as Commissioner of the Department of Correctional Services, Respondent. In the Matter of Roberto Suvill et al., Petitioners, and Sandy Serrano, Appellant, v Thomas A. Coughlin, III, as Commissioner of the Department of Correctional Services, Respondent.
    Argued March 26, 1991;
    decided April 30, 1991

      POINTS OF COUNSEL

      Lois Goland and David C. Leven for appellant in the first above-entitled proceeding.

      Lee A. Davis, Karen L. Murtagh-Monks and David C. Leven for appellant in the second above-entitled proceeding.

      Robert Abrams, Attorney-General (Martin A. Hotvet, O. Peter

      Sherwood, Peter H. Schiff and Joseph Koczaja of counsel), for respondent in the first and second above-entitled proceedings.
   OPINION OF THE COURT

Kaye, J.

At issue in these appeals by two petitioner-inmates is the sufficiency of written reports — offered as substantial evidence of petitioners’ violation of a disciplinary rule prohibiting participation in violent group conduct — charging that all inmates present in the mess hall at dinnertime actively participated in a riot. We conclude that, without some specificity as to the offensive conduct attributed to petitioners, these reports alone did not constitute substantial evidence of guilt, and the orders confirming the administrative determinations should therefore be reversed.

I.

Petitioners were inmates at Great Meadow Correctional Facility in Washington County when, during dinner on July 31, 1988, a disturbance broke out in the north mess hall. Correction officers who were present later estimated that 130 to 140 inmates were in the mess hall at the time; petitioner Serrano estimated more. Officers and inmates were injured, and tear gas was used to regain control.

Among the inmates subsequently charged with infractions of prison disciplinary rules for their alleged participation in the disturbance were petitioners, Sandy Serrano and Victor Bryant. Both were charged with violating prison disciplinary rule 104.10 ("Riot, Disturbances and Demonstrations”) (7 NYCRR 270.2 [B] [5] [i]), which provides that inmates "shall not conspire or take any action which is intended to or results in the takeover of any area of the facility, or, acting in a group, engage in any violent conduct or conduct involving the threat of violence.”

Facts Relating to Serrano

Petitioner Serrano’s hearing was held on August 15, 1988 at Attica Correctionál Facility, to which he had been transferred following the disturbance. The Hearing Officer’s statement lists the following as the evidence on which he relied in reaching the determination of guilt: a written inmate misbehavior report prepared by Sergeant Smith, who was present during the incident; a written report prepared by Lieutenant Phillips for the Deputy Superintendent of Security describing the results of his investigation; a written statement by Edward Ross, a civilian cook who was present during the incident; information from a "confidential inmate informant” that petitioner was seen throwing trays and plates at officers, as noted both in a written report from Phillips and by him in telephone testimony at the hearing; and written statements by Officers Adams and Beecher, who were also present during the disturbance. Although not mentioned by the Hearing Officer in the statement of evidence relied upon, an additional written report by Smith was also read into the record. Except for the inmate informant, none of the reports mentions petitioner.

Smith’s misbehavior report contains the following description of the conduct that was the basis for the disciplinary charge:

"On 7/31/88, at approximately 3:42 p.m., a riot situation erupted in the North Messhall. This incident included numerous assaults on staff by participants. The assaults included use of weapons, throwing of objects (trays, water pitchers, dishes, etc.) and striking with fists. Subject inmate was identified as being in the messhall during this riot. Employees on the scene verified that all inmates in the Messhall were actively participating in this riot. This situation necessitated the discharge of chemical agents to regain control. Upon discharge, several inmates did flee the area. Those remaining were placed in a prone position on the floor. Identification of subject inmate was by departmental I.D. card and during the chemical agent decontamination process.”

Phillips’ written report stated that he had received information that the disturbance was a "well planned attack against staff,” and that inmates had actively sought participants during the afternoon prior to the disturbance. His conclusion that this was a well-planned attack was further buttressed by his own observations on the scene; he stated, moreover, that he "personally observed all inmates in the mess hall participating in this disturbance, by throwing objects (pitchers, trays, utensils, etc.) yelling, screaming and rushing towards officers in the mess hall.”

The remaining three brief eyewitness reports are virtually identical. Ross, the civilian cook, reported that "every inmate in the mess hall at this time was participating in the riot by throwing utensils, pitchers, trays or food.” Adams reported that to his "observation every inmate in the messhall was in full participation of the riot,” and Beecher reported that to his "observation every inmate in the messhall was in full participation of the riot.”

The remaining evidence was conveyed by Phillips from a confidential inmate informant. In a report to the Hearing Officer, Phillips reported that during his investigation "it has been learned that inmate S. Serrano, 86A1666, was observed throwing trays and plates at officers. This information was received through a confidential inmate informant.” During the hearing, Phillips by telephone stated that he and his staff had previously received confidential information from this informant that had proven correct, and that he then considered the source reliable. Phillips further noted that the informant had been present in the mess hall, and that he had identified Serrano from an array of 100 to 150 photos.

Though Serrano admitted his presence in the mess hall for food, he denied any participation in the riot, or any knowledge of a planned incident.

Based on this evidence, the Hearing Officer found Serrano guilty of violating disciplinary rule 104.10, and imposed a penalty of 365 days’ confinement in his cell, loss of privileges, and loss of 365 days’ good time.

Facts Relating to Bryant

Petitioner Bryant’s hearing was conducted on August 8, 1988 at Great Meadow Correctional Facility. The same evidence was offered against him, with two exceptions: no statement was submitted by Beecher, and there was no confidential inmate information. Like Serrano, Bryant admitted he was in the mess hall but denied participation in, or prior knowledge of, the disturbance.

At the conclusion of the hearing, the Hearing Officer found Bryant guilty, expressing disbelief of his claim that he "sat there calmly, while things were being thrown over [his] head.” The penalty imposed was 365 days in the special housing unit, loss of privileges, and loss of one year of good time, which was modified on administrative appeal to five months in the special housing unit and five months’ loss of good time.

After exhausting administrative remedies, petitioners brought separate article 78 petitions challenging the determinations as unsupported by substantial evidence. While excluding from its consideration any information provided against Serrano by the confidential informant, the Appellate Division confirmed both findings of guilt. The court concluded that the reports of individuals with firsthand knowledge, coupled with petitioners’ admitted presence on the scene, provided substantial evidence supporting the determinations. We granted leave and now reverse.

II.

We begin our analysis with several well-settled propositions. A prison disciplinary determination must be supported by substantial evidence, meaning that in order to sustain a determination of guilt, a court must find that the disciplinary authorities have offered such relevant proof as a reasonable mind may accept as adequate to support a conclusion or ultimate fact (People ex rel. Vega v Smith, 66 NY2d 130, 139). Equally well settled is the proposition that a written misbehavior report meeting the requirements spelled out in the Department of Correctional Services regulations may alone constitute substantial evidence (id., at 140). Finally, it is fundamental that the Commissioner must follow his own regulations (see, Matter of Garcia v LeFevre, 64 NY2d 1001, 1003).

This case presents the question whether misbehavior reports that do not satisfy the Department’s requirements may nevertheless constitute substantial evidence. We conclude that here they do not.

The regulations of the Department of Correctional Services contain two separate provisions concerning reports of inmate misconduct. The first, titled "Reports of misbehavior,” requires that every incident of inmate misbehavior involving danger to life, health, security or property be reported as soon as practicable, in writing, by employees who observed the incident or have ascertained the facts (7 NYCRR 251-1.4 [a], [b]). The same regulation stipulates that in "any case where more than one inmate was involved in any such incident, the report shall indicate the specific role played by each inmate, or if the specific role of each is unknown the report shall so indicate.” (7 NYCRR 251-1.4 [c].) "Where an employee suspects, but is not reasonably sure that an inmate was involved in any such incident, the report should so indicate and set forth the facts that give rise to said suspicion.” (7 NYCRR 251-1.4 [d].)

The second regulation concerning inmate misconduct reports is titled "Misbehavior report” (7 NYCRR 251-3.1). That regulation provides that the "misbehavior report shall consist of a written specification of the particulars of the alleged incident of misbehavior involved, a reference to the inmate rule book number and a brief description of the violated rule, and the date, time and place of such incident.” Two or more incidents may be incorporated into a single report but must be separately stated, and the report must advise inmates that their statements cannot be used against them and that (in Tier II and Tier III proceedings) they have the right to call witnesses. The misbehavior reports described in this section function as charging instruments (7 NYCRR 252.3, 253.3, 254.3). Unlike charging instruments, however, where misbehavior reports in form and substance comply with the requirements of the regulations, they may alone constitute substantial evidence of guilt (People ex rel. Vega v Smith, 66 NY2d 130, 140, supra; see also, Matter of Vogelsang v Coombe, 66 NY2d 835).

The two categories of misconduct reports described by the regulations correspond to the two categories of written reports that constituted the evidence against petitioners. The written reports prepared by Phillips, Smith, Adams, Beecher and Ross are narrative accounts of the type described in section 251-1.4. By contrast, the inmate misbehavior report by Smith alleging misconduct in identical terms as to each petitioner is a printed form with typewritten additions and is of the type contemplated by section 251-3.1.

The narrative eyewitness reports of misbehavior introduced as evidence against petitioners do not satisfy the plain letter of 251-1.4. Each of these reports contains only conclusory statements that all inmates present in the mess hall participated in the disturbance, with no reference to either petitioner. Thus, the reports fail to indicate the "specific role played by each inmate,” and they contain no acknowledgement that the petitioners’ specific roles were unknown, or that petitioners’ involvement in the incident was not certain but was suspected based on specific facts.

Respondent argues that the failure of the reports to specify the precise degree of each inmate’s participation is inconsequential, because the disciplinary rule prohibiting violent group conduct by inmates proscribes any degree of inmate involvement in such activity. The reports, however, do not particularize any degree of involvement at all. Assuming that even minimal participation in a riot justifies a finding that disciplinary rule 104.10 has been violated, still no specificity as to even minimal participation by either petitioner is alleged in the reports of their misbehavior.

Nor is this deficiency cured by reliance on section 251-3.1, which also requires a "written specification of the particulars of the alleged incident of misbehavior involved,” and separate statements of two or more incidents of an inmate’s misbehavior. The misbehavior reports, like the several eyewitness reports, do not specify any particulars of petitioners’ misconduct, alleging only a mass incident in the mess hall during dinnertime, and leaving it for each person present to disprove actual participation in the disturbance. These misbehavior reports fall well below the particularized individual descriptions of misconduct held sufficient in Vega to constitute proof of the charges. And they fare no better when compared with the report held sufficient in Vogelsang — also charges growing out of a prison riot — where the report clearly spelled out the particulars of the offensive conduct attributed to petitioner (66 NY2d, at 837, supra).

In the cases before us, the failure of the Commissioner to follow his own regulations in the reports by specifying an inmate’s misconduct must be considered a material defect (see also, Matter of Garcia v LeFevre, 64 NY2d, at 1003, supra). Both petitioners admitted their presence in the mess hall during the dinnertime disturbance, but denied any participation in the group action. The issue concerning which the reports are silent — the individuals’ participation in a riot during which more than 130 other inmates also were present —was thus the very issue in question at the disciplinary hearings. Thus, the misbehavior reports cannot by themselves be considered substantial evidence that petitioners participated in the riot. Since the determination of petitioner Bryant’s guilt rests solely upon these reports, we conclude that that determination must be annulled.

There remains for consideration, as to Serrano only, the information received from the inmate informant, who stated that he had seen Serrano throw trays and plates at officers. The Appellate Division declined to rest its conclusion as to Serrano’s guilt on this evidence, and dismissed such information with respect to the other inmates who were also before the court, noting that "[t]his is precisely the kind of third-party credibility assessment that we have repeatedly held insufficient to support a determination (see, Matter of Kalonji v Coughlin, 157 AD2d 941 [whether confidential informants were indeed credible, as the witness maintains, is an assessment to be made by the Hearing Officer, not the witness]; Matter of Nelson v Coughlin, 148 AD2d 779, 780).” (160 AD2d 1160, 1161.)

Before this Court, respondent urges only that there was substantial evidence apart from the confidential material, and that any error in considering that evidence was harmless. In that we disagree with the first proposition — the other reports of Serrano’s misconduct do not constitute substantial evidence of guilt — we need not and do not address the further proposition that the admission of the confidential information against Serrano was harmless error.

Accordingly, in each case, the Appellate Division judgment should be reversed, without costs, respondent’s determination annulled, and respondent directed to expunge all references to the proceeding from petitioner’s files.

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

In each case: Judgment reversed, etc.


author: Per Curiam. Kaye, J.

text:
    In the Matter of Alison D., Appellant, v Virginia M., Respondent.
    Argued March 20, 1991;
    decided May 2, 1991
    POINTS OF COUNSEL

      Paula L. Ettelbrick, Marian Rosenberg and Debra L. Rothberg for appellant.

      Anthony G. Maccarini for respondent.

      William B. Rubenstein, of the Pennsylvania and District of Columbia Bars, admitted pro hac vice, Nan D. Hunter and Robert Levy for The American Civil Liberties Union and another, amici curiae.

      Conrad K. Harper, Jane E. Booth, Janice Goodman and Carol R. Sherman for The Association of the Bar of the City of New York, amicus curiae.

      Lynn Hecht Schafran, Alison Wetherfield and Sally F. Goldfarb of the District of Columbia and Wisconsin Bars, admitted pro hac vice, for NOW Legal Defense and Education Fund and another, amici curiae.

      Janet E. Schomer and Susan R. Keith for The Gay and Lesbian Parents Coalition International and others, amici curiae.

      Jane A. Levine, David Chambers and Martha Minow for Deborah A. Batts and others, amici curiae.

      Loren M. Warboys for Youth Law Center, amicus curiae.

   OPINION OF THE COURT

Per Curiam.

At issue in this case is whether petitioner, a biological stranger to a child who is properly in the custody of his biological mother, has standing to seek visitation with the child under Domestic Relations Law § 70. Petitioner relies on both her established relationship with the child and her alleged agreement with the biological mother to support her claim that she has standing. We agree with the Appellate Division that, although petitioner apparently nurtured a close and loving relationship with the child, she is not a parent within the meaning of Domestic Relations Law § 70. Accordingly, we affirm.

I

Petitioner Alison D. and respondent Virginia M. established a relationship in September 1977 and began living together in March 1978. In March 1980, they decided to have a child and agreed that respondent would be artificially inseminated. Together, they planned for the conception and birth of the child and agreed to share jointly all rights and responsibilities of child-rearing. In July 1981, respondent gave birth to a baby boy, A.D.M., who was given petitioner’s last name as his middle name and respondent’s last name became his last name. Petitioner shared in all birthing expenses and, after A.D.M.’s birth, continued to provide for his support. During A.D.M.’s first two years, petitioner and respondent jointly cared for and made decisions regarding the child.

In November 1983, when the child was 2 years and 4 months old, petitioner and respondent terminated their relationship and petitioner moved out of the home they jointly owned. Petitioner and respondent agreed to a visitation schedule whereby petitioner continued to see the child a few times a week. Petitioner also agreed to continue to pay one half of the mortgage and major household expenses. By this time, the child had referred to both respondent and petitioner as "mommy”. Petitioner’s visitation with the child continued until 1986, at which time respondent bought out petitioner’s interest in the house and then began to restrict petitioner’s visitation with the child. In 1987 petitioner moved to Ireland to pursue career opportunities, but continued her attempts to communicate with the child. Thereafter, respondent terminated all contact between petitioner and the child, returning all of petitioner’s gifts and letters. No dispute exists that respondent is a fit parent. Petitioner commenced this proceeding seeking visitation rights pursuant to Domestic Relations Law § 70.

Supreme Court dismissed the proceeding concluding that petitioner is not a parent under Domestic Relations Law § 70 and, given the concession that respondent is a fit parent, petitioner is not entitled to seek visitation pursuant to section 70. The Appellate Division affirmed, with one Justice dissenting, and granted leave to appeal to our Court.

II

Pursuant to Domestic Relations Law § 70 "either parent may apply to the supreme court for a writ of habeas corpus to have such minor child brought before such court; and [the court] may award the natural guardianship, charge and custody of such child to either parent * * * as the case may require”. Although the Court is mindful of petitioner’s understandable concern for and interest in the child and of her expectation and desire that her contact with the child would continue, she has no right under Domestic Relations Law § 70 to seek visitation and, thereby, limit or diminish the right of the concededly fit biological parent to choose with whom her child associates. She is not a "parent” within the meaning of section 70.

Petitioner concedes that she is not the child’s "parent”; that is, she is not the biological mother of the child nor is she a legal parent by virtue of an adoption. Rather she claims to have acted as a "de facto” parent or that she should be viewed as a parent "by estoppel”. Therefore, she claims she has standing to seek visitation rights. These claims, however, are insufficient under section 70. Traditionally, in this State it is the child’s mother and father who, assuming fitness, have the right to the care and custody of their child, even in situations where the nonparent has exercised some control over the child with the parents’ consent (see, Matter of Ronald FF. v Cindy GG., 70 NY2d 141, 144, citing People ex rel. Kropp v Shepsky, 305 NY 465, 468-469). "It has long been recognized that, as between a parent and a third person, parental custody of a child may not be displaced absent grievous cause or necessity” (Matter of Ronald FF. v Cindy GG., supra, at 144; see also, Matter of Bennett v Jeffreys, 40 NY2d 543, 549). To allow the courts to award visitation — a limited form of custody —to a third person would necessarily impair the parents’ right to custody and control (id.). Petitioner concedes that respondent is a fit parent. Therefore she has no right to petition the court to displace the choice made by this fit parent in deciding what is in the child’s best interests.

Section 70 gives parents the right to bring proceedings to ensure their proper exercise of their care, custody and control (see, Matter of Roland F. v Brezenoff, 108 Misc 2d 133, 134-135). Where the Legislature deemed it appropriate, it gave other categories of persons standing to seek visitation and it gave the courts the power to determine whether an award of visitation would be in the child’s best interests (see, e.g., Domestic Relations Law §71 [special proceeding or habeas corpus to obtain visitation rights for siblings]; § 72 [special proceeding or habeas corpus to obtain visitation rights for grandparents]; see, Lo Presti v Lo Presti, 40 NY2d 522, 526-527). We decline petitioner’s invitation to read the term parent in section 70 to include categories of nonparents who have developed a relationship with a child or who have had prior relationships with a child’s parents and who wish to continue visitation with the child (accord, Nancy S. v Michele G., 228 Cal App 3d 831, 279 Cal Rptr 212 [1st Dist, Mar. 20, 1991]). While one may dispute in an individual case whether it would be beneficial to a child to have continued contact with a nonparent, the Legislature did not in section 70 give such nonparent the opportunity to compel a fit parent to allow them to do so (see, Matter of Ronald FF. v Cindy GG., 70 NY2d 141, supra; compare, Oregon Rev Stat Ann § 109.119 [1] [giving "(a)ny person including but not limited to a foster parent, stepparent, grandparent * * * who has established emotional ties creating a child-parent relationship with a child” the right to seek visitation or other right of custody]).

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

Kaye, J.

(dissenting). The Court’s decision, fixing biology as the key to visitation rights, has impact far beyond this particular controversy, one that may affect a wide spectrum of relationships — including those of longtime heterosexual stepparents, "common-law” and nonheterosexual partners such as involved here, and even participants in scientific reproduction procedures. Estimates that more than 15.5 million children do not live with two biological parents, and that as many as 8 to 10 million children are born into families with a gay or lesbian parent, suggest just how widespread the impact may be (see, Polikoff, This Child Does Have Two Mothers: Redefining Parenthood to Meet the Needs of Children in Lesbian-Mother and other Nontraditional Families, 78 Geo LJ 459, 461, n 2 [1990]; Bartlett, Rethinking Parenthood as an Exclusive Status: The Need for Legal Alternatives When the Premise of the Nuclear Family has Failed, 70 Va L Rev 879, 880-881 [1984]; see generally, Developments in the Law — Sexual Orientation and the Law, 102 Harv L Rev 1508, 1629 [1989]).

But the impact of today’s decision falls hardest on the children of those relationships, limiting their opportunity to maintain bonds that may be crucial to their development. The majority’s retreat from the courts’ proper role — its tightening of rules that should in visitation petitions, above all, retain the capacity to take the children’s interests into account— compels this dissent.

In focusing the difference, it is perhaps helpful to begin with what is not at issue. This is not a custody case, but solely a visitation petition. The issue on this appeal is not whether petitioner should actually have visitation rights. Nor is the issue the relationship between Alison D. and Virginia M. Rather, the sole issue is the relationship between Alison D. and A.D.M., in particular whether Alison D.’s petition for visitation should even be considered on its merits. I would conclude that the trial court had jurisdiction to hear the merits of this petition.

The relevant facts are amply described in the Court’s opinion. Most significantly, Virginia M. agrees that, after long cohabitation with Alison D. and before A.D.M.’s conception, it was "explicitly planned that the child would be theirs to raise together.” It is also uncontested that the two shared "financial and emotional preparations” for the birth, and that for several years Alison D. actually filled the role of coparent to A.D.M., both tangibly and intangibly. In all, a parent-child relationship — encouraged or at least condoned by Virginia M. —apparently existed between A.D.M. and Alison D. during the first six years of the child’s life.

While acknowledging that relationship, the Court nonetheless proclaims powerlessness to consider the child’s interest at all, because the word "parent” in the statute imposes an absolute barrier to Alison D.’s petition for visitation. That same conclusion would follow, as the Appellate Division dissenter noted, were the coparenting relationship one of 10 or more years, and irrespective of how close or deep the emotional ties might be between petitioner and child, or how devastating isolation might be to the child. I cannot agree that such a result is mandated by section 70, or any other law.

Domestic Relations Law § 70 provides a mechanism for "either parent” to bring a habeas corpus proceeding to determine a child’s custody. Other State Legislatures, in comparable statutes, have defined "parent” specifically (see, e.g., Cal Civ Code § 7001 [defining parent-child relationship as between "a child and his natural or adoptive parents”]), and that definition has of course bound the courts (see, Nancy S. v Michele G., 228 Cal App 3d 831, 279 Cal Rptr 212 [Mar. 20, 1991] [applying the statutory definition]). Significantly, the Domestic Relations Law contains no such limitation. Indeed, it does not define the term "parent” at all. That remains for the courts to do, as often happens when statutory terms are undefined.

The majority insists, however, that, the word "parent” in this case can only be read to mean biological parent; the response "one fit parent” now forecloses all inquiry into the child’s best interest, even in visitation proceedings. We have not previously taken such a hard line in these matters, but in the absence of express legislative direction have attempted to read otherwise undefined words of the statute so as to effectuate the legislative purposes. The Legislature has made plain an objective in section 70 to promote "the best interest of the child” and the child’s "welfare and happiness.” (Domestic Relations Law § 70.) Those words should not be ignored by us in defining standing for visitation purposes — they have not been in prior case law.

Domestic Relations Law § 70 was amended in 1964 to broaden the category of persons entitled to seek habeas corpus relief (L 1964, ch 564, § 1). Previously, only a husband or wife living within the State, and legally separated from the spouse, had standing to bring such a proceeding. The courts, however, refused to apply the statute so literally. In amending the statute to make domicile of the child the touchstone, and eliminate the separation requirement, the Legislature acted to bring section 70 into conformity with what the courts were already doing (see, Mem of Joint Legis Comm on Matrimonial and Family Laws, 1964 McKinney’s Session Laws of NY, at 1880 [amendment deleted "needless limitations which are not, in fact, observed by the Courts”]).

This amendment to bring the statute into line with the practice reflects Supreme Court’s equitable powers that complement the special habeas statute (see, Langerman v Langerman, 303 NY 465, 471; see generally, NY Const, art VI, § 7 [a]). In Finlay v Finlay (240 NY 429, 433), this Court established that where the section 70 writ is denied to the petitioner seeking custody "there would remain his remedy by petition to the chancellor or to the court that has succeeded to the chancellor’s prerogative [and] [n]othing in the habeas corpus act affects that jurisdiction.” In such an action, the Chancellor "may act at the intervention or on the motion of a kinsman * * * but equally he may act at the instance of any one else.” (240 NY, at 434.) Jurisdiction rests on the parens patriae power — concern for the welfare of the child (id.; see also, Matter of Bachman v Mejias, 1 NY2d 575, 581).

As the Court wrote in Matter of Bennett v Jeffreys (40 NY2d 543, 546) — even in recognizing the superior right of a biological parent to the custody of her child — "when there is a conflict, the best interest of the child has always been regarded as superior to the right of parental custody. Indeed, analysis of the cases reveals a shifting of emphasis rather than a remaking of substance. This shifting reflects more the modern principle that a child is a person, and not a subperson over whom the parent has an absolute possessory interest.”

Apart from imposing upon itself an unnecessarily restrictive definition of "parent,” and apart from turning its back on a tradition of reading of section 70 so as to promote the welfare of the children, in accord with the parens patriae power, the Court also overlooks the significant distinction between visitation and custody proceedings.

While both are of special concern to the State, custody and visitation are significantly different (see, Weiss v Weiss, 52 NY2d 170, 175; Matter of Ronald FF. v Cindy GG., 70 NY2d 141, 144). Custody disputes implicate a parent’s right to rear a child — with the child’s corresponding right to be raised by a parent (see, Matter of Bennett v Jeffreys, 40 NY2d, at 546, supra). Infringement of that right must be based on the fitness —more precisely the lack of fitness — of the custodial parent.

Visitation rights also implicate a right of the custodial parent, but it is the right to choose with whom the child associates (see, Matter of Ronald FF. v Cindy GG., 70 NY2d, at 144, supra). Any burden on the exercise of that right must be based on the child’s overriding need to maintain a particular relationship (see, Weiss v Weiss, 52 NY2d, at 174-175, supra). Logically, the fitness concern present in custody disputes is irrelevant in visitation petitions, where continuing contact with the child rather than severing of a parental tie is in issue. For that reason, we refused to extend the Bennett "extraordinary circumstances” doctrine — which relates to the fitness of the custodial parent — to visitation petitions (Matter of Ronald FF. v Cindy GG., 70 NY2d 141, supra).

The Court now takes the law a step beyond Ronald FF. by establishing the Bennett "extraordinary circumstances” test as the only way to reach the child’s best interest in a section 70 proceeding. In that Ronald FF. determined that extraordinary circumstances are irrelevant in the visitation context, our holding today thus firmly closes the door on all consideration of the child’s best interest in visitation proceedings such as the one before us, unless petitioner is a biological parent.

Of course there must be some limitation on who can petition for visitation. Domestic Relations Law § 70 specifies that the person must be the child’s "parent,” and the law additionally recognizes certain rights of biological and legal parents. Arguments that every dedicated caretaker could sue for visitation if the term "parent” were broadened, or that such action would necessarily effect sweeping change throughout the law, overlook and misportray the Court’s role in defining otherwise undefined statutory terms to effect particular statutory purposes, and to do so narrowly, for those purposes only.

Countless examples of that process may be found in our case law, the Court looking to modern-day realities in giving definition to statutory concepts. (See, e.g., People v Eulo, 63 NY2d 341, 354 [defining "death” for purposes of homicide prosecutions].) Only recently, we defined the term "family” in the eviction provisions of the rent stabilization laws so as to advance the legislative objective, making abundantly clear that the definition was limited to the statute in issue and did not effect a wholesale change in the law (see, Braschi v Stahl Assocs. Co., 74 NY2d 201, 211-213).

In discharging this responsibility, recent decisions from other jurisdictions, for the most part concerning visitation rights of stepparents, are instructive (see, e.g., Gribble v Gribble, 583 P2d 64 [Utah]; Spells v Spells, 250 Pa Super 168, 378 A2d 879). For example in Spells (250 Pa Super, at 172-173, 378 A2d, at 881-882), the court fashioned a test for "parental status” or "in loco parentis” requiring that the petitioner demonstrate actual assumption of the parental role and discharge of parental responsibilities. It should be required that the relationship with the child came into being with the consent of the biological or legal parent, and that the petitioner at least have had joint custody of the child for a significant period of time (see, Rethinking Parenthood as an Exclusive Status, op. cit., 70 Va L Rev, at 945-946). Other factors likely should be added to constitute a test that protects all relevant interests — much as we did in Braschi. Indeed, the criteria described by the Court in Braschi to be applied on a case-by-case basis later became the nucleus of formal standards (see, 9 NYCRR 2520.6).

It is not my intention to spell out a definition but only to point out that it is surely within our competence to do so. It is indeed regrettable that we decline to exercise that authority in this visitation matter, given the explicit statutory objectives, the courts’ power, and the fact that all consideration of the child’s interest is, for the future, otherwise absolutely foreclosed.

I would remand the case to Supreme Court for an exercise of its discretion in determining whether Alison D. stands in loco parentis to A.D.M. and, if so, whether it is in the child’s best interest to allow her the visitation rights she claims.

Chief Judge Wachtler and Judges Simons, Alexander, Titone, Hancock, Jr., and Bellacosa concur in Per Curiam opinion; Judge Kaye dissents and votes to reverse in a separate opinion.

Order affirmed, with costs.

       Given the procedural posture of the case, the facts are those alleged by petitioner in her habeas corpus petition.

      . While the opinion speaks of biological and legal parenthood, this Court has not yet passed on the legality of adoption by a second mother.

      . The majority’s opinion rests on a fundamental inconsistency. It cannot be that visitation is the same as custody — "a limited form of custody” (majority opn, at 656) — and yet at the same time different from custody in that the "extraordinary circumstances” doctrine is inapplicable (Matter of Ronald FF. v Cindy GG., 70 NY2d 141; see also, Matter of Mark V. v Gale R, 143 Misc 2d 487, 489).