author: Chief Judge Cooke.

text:
    The People of the State of New York, Respondent, v Frank Valenza, Appellant. The People of the State of New York, Respondent, v Proof of the Pudding, Inc., Appellant.
    Argued October 18, 1983;
    decided December 1, 1983

      POINTS OF COUNSEL

      Paula Schwartz Frome for appellant in the first above-
    entitled action.
    I. Evidence of failure to pay sales taxes to the State will not support a conviction of larceny. (People v Lyon, 82 AD2d 516; Matter of Travers v Prudential Ins. Co., 177 Misc 1044; Matter of Interstate Record Distrs., 307 F Supp 1142, 430 F2d 1017; Teledyne Inds. v Eon Corp., 373 F Supp 191; Matter of Chicago Express Co., 222 F Supp 566, 332 F2d 276, 379 US 879; Canale v New York State Dept. of Taxation & Fin., 84 Misc 2d 786; People v Epstein, 245 NY 234; Matter of Ames Volkswagen v State Tax Comm., 47 NY2d 345;. Matter of Grant Co. v Joseph, 2 NY2d 196.) II. The court’s precipitous taking of a partial verdict, at a time when there was a question outstanding from the jury, and its declaration of a mistrial one-half hour later, vitiate the verdict. (People v Gezzo, 307 NY 385; Matter of Tartt v Browne, 48 AD2d 900; People v Jackson, 20 NY2d 440; People v Tanner, 30 NY2d 102; People v Stanard, 32 NY2d 143; People v Zavarro, 26 NY2d 846; People v Owens, 22 NY2d 93; Matter of Adamo v Justices of Supreme Ct., 28 AD2d 653; People ex rel. Schlessinger v Glick, 38 AD2d 35;
      United States v Gordy, 526 F2d 631.) III. The People are collaterally estopped from retrying Mr. Valenza on the larceny because of his acquittal on the failure to file sales tax returns. (People v Plevy, 52 NY2d 58; United States v Mespoulede, 597 F2d 329.)

      John Laurence Kase and Paula Schwartz Frome for appellant in the second above-entitled action.
    I. The evidence of failure to pay sales taxes to the State will not support a conviction of larceny. (People v Lyon, 82 AD2d 516; Matter of Traverso Prudential Ins. Co., 177 Misc 1044; Matter of Interstate Record Distrs., 307 F Supp 1142, 430 F2d 1017; Teledyne Inds. v Eon Corp., 373 F Supp 191; Matter of Chicago Express Co., 222 F Supp 566, 332 F2d 276, 379 US 879; Canale v New York State Dept. of Taxation & Fin., 84 Misc 2d 786; People v Epstein, 245 NY 234; Matter of Ames Volkswagen v State Tax Comm., 47 NY2d 345; Matter of Grant Co. v. Joseph, 2 NY2d 196; Matter of Merchant’s Refrig. Co. v Taylor, 275 NY 113.) II. The court’s precipitous taking of a partial verdict, at a time when there was a question outstanding from the jury, and its declaration of a mistrial one-half hour later, vitiate the verdict. (People v Gezzo, 307 NY 385; Matter of Tartt v Browne, 48 AD2d 900; People v Jackson, 20 NY2d 440; People v Tanner, 30 NY2d 102; People v Stanard, 32 NY2d 143; People v Zavarro, 26 NY2d 846; People v Owens, 22 NY2d 93; Matter of Adamo v Justices of Supreme Ct., 28 AD2d 653; People ex rel. Schlessinger v Glick, 38 AD2d 35; United States v Gordy, 526 F2d 631.) III. The People failed to prove that Proof of the Pudding, Inc., failed to file a sales tax return within the meaning of the law. (People v Hislop, 77 NY 331; People v Sullivan, 244 App Div 469; People v Carillo, 42 Misc 2d 74; People ex rel. Childs v Knott, 104 Misc 378,187 App Div 604.) IV. The People failed to prove that Proof of the Pudding, Inc., did not file its tax returns with intent to evade the payment of sales tax, as charged in the indictment herein. (People v Spinelli, 47 AD2d 769.)

      Robert Abrams, Attorney-General {Andrew Kosloff and William F. Dowling of counsel), for respondent in the first above-entitled action.
    I. Defendant committed larceny by embezzlement when he withheld sales tax revenues from the State of New York. (People v Robinson, 284 NY 75;
      People v Yannett, 49 NY2d 296; People [Belecci] v Klinger, 164 Misc 530; Mallory Assoc. v Barving Realty Co., 300 NY 297, 680; People v Valenza, 108 Misc 2d 86; Canale v New York State Dept. of Taxation & Fin., 84 Misc 2d 786; Matter of Ames Volkswagen v State Tax Comm., 47 NY2d 345; Matter of Grant Co. v Joseph, 2 NY2d 196; People v Lyon, 82 AD2d 516; People v Felber, 264 App Div 181.) II. Defendant’s guilt was proven beyond a reasonable doubt. III. The trial court (a) properly directed the jury to render a partial verdict after the jury foreman told the court that the jury had reached a verdict on some counts of the indictment and (b) properly discharged the jury and declared a mistrial after the jury informed the court that it could not reach a verdict on the remaining counts of the indictment. (People v Cooke, 292 NY 185; People v La Marca, 3 NY2d 452; People v Jackson, 20 NY2d 440, 391 US 928; People v Pressly, 22 AD2d 151, 16 NY2d 738; Matter of Bisceglia v County Ct., 44 AD2d 619.) IV. Defendant may be retired on counts Nos. 1 through 4 of the indictment. (Matter of Wiley v Altman, 76 AD2d 701; Matter of Nolan v Court of Gen. Sessions, 15 AD2d 78, 11 NY2d 114.)

      Robert Abrams, Attorney-General (Andrew Kosloff and William F. Dowling of counsel), for respondent in the second above-entitled action.
    I. Defendant committed larceny by embezzlement when it withheld sales tax revenues from the State of New York. (People v Robinson, 284 NY 75; People v Yannett, 49 NY2d 296; People [Belecci] v Klinger, 164 Misc 530; Mallory Assoc. v Barving Realty Co., 300 NY 297, 680; People v Valenza, 108 Misc 2d 86; Canale v New York State Dept. of Taxation & Fin., 84 Misc 2d 789; Matter of Ames Volkswagen v State Tax Comm., 47 NY2d 345; Matter of Grant Co. v Joseph, 2 NY2d 196; People v Lyon, 82 AD2d 516; People v Felber, 264 App Div 181.) II. The trial court (a) properly directed the jury to render a partial verdict after the jury foreman told the court that the jury had reached a verdict on some counts of the indictment and (b) properly discharged the jury and declared a mistrial after the jury informed the court that it could not reach a verdict on the remaining counts of the indictment. (People v Cooke, 292 NY 185; People v La

      Marca, 3 NY2d 452; People v Jackson, 20 NY2d 440, 391 US 928; People v Pressly, 22 AD2d 151, 16 NY2d 738; Matter ofBisceglia v County Ct., 44 AD2d 619.) III. Defendant’s intentional failure to file sales tax returns in a timely manner properly subjected it to the charge of violating subdivision (b) of section 1145 of the Tax Law. IV. Defendant’s guilt of failing to file a sales tax return in violation of subdivision (b) of Section 1145 of the Tax Law was proved beyond a reasonable doubt. (People v Bland, 37 NY2d 858; People v Thomas, 53 NY2d 983.)
   OPINION OF. THE COURT

Chief Judge Cooke.

A vendor who collects sales taxes from customers, but fails to remit the sales taxes due the State under circumstances indicating an intent to permanently deprive the State of the taxes, may not be subjected to criminal prosecution for larceny by embezzlement. In creating the Tax Law, the Legislature provided an integrated statutory regulation that includes a comprehensive scheme of civil and criminal penalties. However, in doing so, the Legislature has excluded failure to pay over sales taxes collected by a vendor from the criminal penalties provision and, instead, has seen fit to impose a substantial civil penalty. The structure of the penalties provision of article 28 of the Tax Law and the Legislature’s failure to deem a withholding of sales tax collected as criminal conduct must be construed as a legislative intention to provide the civil penalty as the exclusive means of prosecuting this conduct.

Defendants are an incorporated restaurant business located in Manhattan and its sole owner. In June, 1980, defendants were indicted for seven felony counts of grand larceny in the second degree (see Penal Law, § 155.35) and six misdemeanor counts of failure to file a New York State and local sales and use tax return (see Tax Law, § 1145, subd [b]). The larceny charges stemmed from events during 1976 through 1979, when defendants allegedly withheld sales tax revenues that had been collected in connection with the redemption of gift certificates. The other counts arose from allegations that, for the period from June, 1978 through July, 1979, no sales tax returns had been filed with the New York State Tax Commission on behalf of the Proof of the Pudding Restaurant.

Prior to trial, defendants moved to dismiss the larceny counts on the ground that the facts alleged did not constitute larceny. Supreme Court denied the motion, holding that the Tax Law imposes a fiduciary duty on vendors to collect sales taxes, that the taxes collected by the vendor are the property of the State, and, therefore, a willful withholding of sales taxes collected may give rise to a prosecution under the larceny statute on an embezzlement theory. The court further held that the civil and criminal penalties set forth in the Tax Law do not comprise the exclusive basis of prosecution for failure to pay sales taxes (108 Misc 2d 86).

After trial, both defendants were convicted of one count of grand larceny in the second degree. A mistrial was declared as to the remaining larceny counts because the jury was unable to reach a verdict. Defendant Proof of the Pudding was convicted of and defendant Valenza was acquitted of all six counts relating to failure to file sales tax returns. The Appellate Division affirmed the convictions. This court now dismisses the counts of the indictment charging grand larceny in the second degree.

“The essence of the crime of larceny by embezzlement is the conversion by the embezzler of property belonging to another which has been entrusted to the embezzler to hold on behalf of the owner” (People v Yannett, 49 NY2d 296, 301). Article 28 of the Tax Law imposes a duty on “every vendor of tangible personal property or services” to collect from customers a sales tax, measured as a percentage of the receipts from a wide variety of sales (see Tax Law, §§ 1105, 1131, 1132). When a vendor complies with its statutory duty and for each relevant transaction collects sales tax from customers, it does so “as trustee for and on account of the state” (Tax Law, § 1132, subd [a]; see Matter of Ames Volkswagen v State Tax Comm., 47 NY2d 345).

The State has proceeded on the theory that sales taxes collected by a vendor are and remain the property of the State. It is contended that the vendor, as trustee for these funds, owes a duty to the State to withhold and account for sales taxes collected on behalf of the State. In the instant case, the State argues that defendants failed to remit sales taxes under circumstances indicating an intent to permanently deprive the State of the tax. Therefore, the State submits, the elements of embezzlement have been established.

Assuming, without deciding, that a vendor’s failure to pay over sales taxes constitutes conduct that, on its face, is within the purview of this State’s larceny statute (see Penal Law, § 155.05), the Legislature has not acted to render such conduct criminal. Careful examination of the structure of the “Penalties and interest” provision of article 28 of the Tax Law reveals a legislative intent to subject certain violations to both criminal and civil sanctions, but to restrict punishment for other violations, such as the failure to remit sales taxes, to civil penalties only.

Subdivision (a) of section 1145 of the Tax Law prescribes civil penalties for “[a]ny person failing to file a return or to pay or pay over any [sales] tax to the tax commission” (Tax Law, § 1145, subd [a], par [1], cl [i]). Such failures by a vendor are subject to a penalty of 5% of the taxes due with an additional penalty of 1% levied for every month payment remains outstanding after the first month (id.). Fraudulent failure to pay or pay over sales taxes is also covered by the civil penalties provision, where imposition of a 50% penalty plus interest is authorized (see Tax Law, § 1145, subd [a], par [2]).

Subdivision (b) of section 1145 of the Tax Law sets forth violations'of the sales tax article that will constitute criminal acts. This section provides that a vendor who fails to perform any one of a long list of specific acts “shall, in addition to any other penalty herein or elsewhere prescribed, be guilty of a misdemeanor” (Tax Law, § 1145, subd [b]). The enumerated acts are generally concerned with violations of the vendor’s duties to file accurate returns, to obtain licenses, and to collect sales taxes from customers in a lawful manner. In only one limited circumstance is the failure to pay over taxes collected included in this criminal penalties section. When the financial condition of a vendor is such that it is unable to pay over sales taxes collected, the Tax Commission may give notice to the vendor and require it to deposit all sales taxes collectible after the date of the notice in a separate account payable to the Tax Commissioner (see Tax Law, § 1137, subd [e], par [3]). Failure to comply with this requirement has been expressly included in the criminal penalties provision (see Tax Law, § 1145, subd [b]). Paying or paying over sales taxes is not otherwise referred to in this criminality provision, nor is there any other item that directly relates to the withholding of sales taxes.

It must be concluded that, in drafting section 1145, the Legislature intended that, except in the one narrow instance mentioned above, the failure to pay over sales taxes may not be considered criminal conduct and is subject to civil penalties only. In closely analogous situations, when the Legislature has intended to make criminal conduct such as that engaged in by defendants here, it has done so clearly. Article 22 of the Tax Law regulates the withholding and payment of personal income taxes. As with sales taxes, funds withheld are deemed to be held in trust by the employer for the State (see Tax Law, §§ 675, 1132, subd [a]). Civil penalties for violating article 22 may be imposed for willful failure to pay over taxes imposed by that article (see Tax Law, § 685, subd [g]). Unlike article 28, however, article 22, provides that one “who willfully fails to * * * pay over any withholding tax as required, shall, in addition to other penalties provided by law, be guilty of a misdemeanor” (Tax Law, § 695, subd [c]). When it enacted section 1145 (L 1965, ch 93, § 1), the Legislature had in the previously enacted section 695 (L 1962, ch 1011, § 1) a model of how to ascribe criminality to a failure to pay over taxes.

In other similar situations, when the Legislature has desired to make the breach of a statutorily imposed duty punishable under the Penal Law, it has done so in an unambiguous manner. For example, article 3-A of the Lien Law imposes on a contractor a fiduciary duty over funds received for the improvement of real property (see Lien Law, §§ 70, 71, 71-a). When a “trustee of a trust arising under this article” misappropriates trust funds, the Legislature has provided that the trustee may be “guilty of larceny and punishable as provided in the penal law” (Lien Law, § 79-a, subd 1; see People v Chester, 50 NY2d 203).

The State argues that the general rule that a prosecution may be maintained under any penal statute proscribing certain conduct, notwithstanding that it overlaps with a more specific statute, should apply to this case (see People v Eboli, 34 NY2d 281; People v Lubow, 29 NY2d 58, 67; People v Bergerson, 17 NY2d 398). Although it is true that when two or more statutes make punishable the same conduct, a prosecutor may generally choose among the statutes when initiating a prosecution, that discretion may be limited by a legislative intention to make a specific statute the exclusive means of punishing particular conduct (see, e.g., People v Costello, 305 NY 63; Hazak, Inc. v Robertson Goetz Bldg. Co., 289 NY 478; People v Bloom, 248 NY 582; People v Knott, 156 NY 302; People v Hislop, 77 NY 331). On this basis, cases that uphold a prosecutor’s discretion to maintain prosecutions under the more general of two overlapping criminal statutes are readily distinguishable from the case at bar.

In those cases, the prosecutors chose among general and specific statutes, which were found within the Penal Law or even within the same provision of the Penal Law. The prosecutorial action was sustained because there was deemed to be no mutual exclusivity in the statute’s application and, therefore, “ ‘the duty devolves upon the grand jury and the district attorney to determine under which of the applicable sections of the statute an indictment should be found’ ” (People v Florio, 301 NY 46, 53, quoting People v Malavassi, 248 App Div 784, affd 273 NY 460). In the instant case, the Legislature has provided in the Tax Law an integrated scheme of duties on vendors to collect, record, and pay sales tax, and for penalties to be imposed for certain breaches of those duties. The State seeks to maintain a criminal prosecution under a statute outside that integrated scheme under circumstances in which great doubt is cast on whether such power has been vested in the prosecutor. The Legislature’s structuring of section 1145 to provide substantial civil penalties for failing to pay over sales tax and to exclude this conduct from the criminal penalties section must be deemed to manifest an intent to exclude such conduct from criminal prosecution under either the Tax Law or the Penal Law (cf. People v Lewis, 29 NY2d 923).

Defendant Proof of the Pudding asserts error with respect to its conviction for failure to file sales tax returns. Proof of the Pudding was charged with failure to file sales tax returns with intent to evade the payment of the tax. It is noted on behalf of the corporate defendant that for the relevant period sales tax returns had been filed and that they were merely filed late. It is also argued that even if a failure to file returns was properly found, the State has failed to prove that the failure was accompanied by an intent to evade paying taxes.

The State counters that no tax returns for the period had been filed until after defendant had been officially notified that it was under investigation by the State Tax Commission. The State also notes that defendant made no effort to reduce tax liability due on those returns until nearly two years after the returns had been filed, and then only a nominal sum had been paid. Viewing the record in a light most favorable to the prosecution, a rational trier of fact could have found beyond a reasonable doubt that that defendant had both failed to file a sales tax return within the meaning of the law and did so with intent to evade payment of the taxes (see People v Contes, 60 NY2d 620, 621).

Accordingly, on the appeal by Frank Valenza, the order of the Appellate Division should be reversed and the indictment dismissed.

On the appeal by Proof of the Pudding, Inc., the order of the Appellate Division should be modified by vacating the conviction for grand larceny in the second degree, dismissing the counts of the indictment charging defendant with grand larceny in the second degree, vacating the sentence imposed and remitting the matter to Supreme Court, New York County, for resentence on the remaining counts and, as so modified, said order should be affirmed.

Judges Jasen, Jones, Wachtler, Meyer, Simons and Kaye concur.

On appeal by defendant Valenza: Order reversed and indictment dismissed.

On appeal by defendant Proof of the Pudding, Inc.: Order modified and case remitted to Supreme Court, New York County, for resentence in accordance with the opinion herein and, as so modified, order affirmed.

       The Legislature has not, however, seen fit to ascribe criminal sanctions generally for failure to pay over sales tax. Defendants point out and the State acknowledges that the Legislature has declined to enact proposed legislation that would enhance the criminal sanctions for conduct that now constitutes a misdemeanor to felony status, and would for the first time include and ascribe as a felony the failure to pay over sales tax (see, e.g., Assembly Intro No. 632-A [1979]). We note that the Legislature, while providing for the imposition of a substantial civil penalty for a failure to pay over sales tax, has declined to include such conduct in the criminal penalties provision with its incorporation by reference of all other statutes that would be applicable (see New York State Bankers Assn. v Albright, 38 NY2d 430, 438).


source: Caselaw Access Project

author: Meyer, J.

license: Public Domain

text:
    The People of the State of New York, Respondent, v Kaydon Baskerville, Appellant.
    Argued October 20, 1983;
    decided December 1, 1983

      POINTS OF COUNSEL

      Penelope D. Clute for appellant.
    I. Defendant was denied due process of law by the court’s instruction to the jury on the element of “[displays what appears to be a * * * firearm”. (Matter of Winship, 397 US 358; Sandstrom v Montana, 442 US 510; Morissette v United States, 342 US 246; People v Holmes, 71 AD2d 904; People v Grillo, 15 AD2d 502,11 NY2d 841; People v Williams, 61 AD2d 992; People v Santucci, 48 AD2d 909; People v Fwilo, 47 AD2d 727; People v Siler, 76 AD2d 938; People v Johnson, 64 AD2d 613.) II. The trial court’s jury instruction on the “recent fruits inference” denied defendant due process of law. (People v Moro, 23 NY2d 496; Barnes v United States, 412 US 837.) III. There was no proof beyond a reasonable doubt that defendant committed the, crimes charged and he was seriously prejudiced by the court’s erroneous charge on circumstantial evidence. (People v Piazza, 48 NY2d 151; People v Von Werne, 41 NY2d 584.) IV. There was no proof beyond a reasonable doubt of a forcible theft. V. Defendant was denied a fair trial by the prosecution’s tactic of repeatedly characterizing defendant as a liar and his summation which far exceeded the bounds of the evidence. (People v Fielding, 158 NY 542; People v Ashwal, 39 NY2d 105;
      Williams v Brooklyn El. R.R. Co., 126 NY 96; United States v Modica, 663 F2d 1173; Berger v United States, 295 US 78; People v Jones, 44 NY2d 76.) VI. The sentences imposed upon defendant were excessive under all the circumstances of this case. (People v Lewis, 66 AD2d 702; People v White, 83 AD2d 668; People v Notey, 72 AD2d 279; People v Hardy, 34 AD2d 843.) VII. The court erred in denying defendant’s motion for a hearing on the validity of the search. (United States v Jaramillo, 380 F Supp 1375; Laird v Tatum, 408 US 1; United States v Red Feather, 392 F Supp 916, 541 F2d 1275; United States v Walden, 490 F2d 372; Wrynn v United States, 200 F Supp 457.) VIII. The court erred in denying defendant’s motion to suppress the oral statements he made to the police. (Davis v Mississippi, 394 US 721; Brown v Illinois, 422 US 590; Dunaway v New York, 442 US 200; United States v Mendenhall, 446 US 544; People v Henley, 53 NY2d 403; People v De Bour, 40 NY2d 210.)

      Joseph W. Kelley, District Attorney (Steven J. Greenblatt and Michael A. Gross of counsel), for respondent.
    I. Defendant’s guilt was proved beyond a reasonable doubt by overwhelming evidence. (People v Pena, 50 NY2d 400; People v Galbo, 218 NY 283; United States v Marshall, 427 F2d 434; People v Clark, 41 NY2d 612; People v Felder, 39 AD2d 373,32 NY2d 747; People v Lockwood, 52 NY2d 790.) II. Defendant received a fair trial. (People v Clark, 41 NY2d 612; People v Felder, 39 AD2d 373, 32 NY2d 747; People v Kapp, 55 AD2d 779; People v Cwikla, 54 AD2d 80; People v Archie, 85 Misc 2d 243; United States v Marshall, 427 F2d 434; People v Knowles, 79 AD2d 116; People v Pena, 50 NY2d 400; People v Lockwood, 52 NY2d 790; People v Jenkins, 118 Misc 2d 530.) III. The motion for a hearing on the validity of the search warrant was properly denied. (United States v Mihileas, 333 F Supp 231; People v Wicker, 72 AD2d 611; United States v Red Feather, 392 F Supp 916, 541 F2d 1275; United States v McArthur, 419 F Supp 186, affd sub nom. United States v Casper, 541 F2d 1275; United States v Jaramillo, 380 F Supp 1375; United States v Wolffs, 594 F2d 77; United States v Walden, 490 F2d 372; Wrynn v United States, 200 F Supp 457.) IV. Defendant’s motion to suppress oral statements was properly denied.
      (United States v Boston, 508 F2d 1171, 421 US 1001; People v Stanton, 54 AD2d 527; North Carolina v Butler, 441 US 369; People v Greenridge, 46 AD2d 947; People v Harvey, 34 AD2d 857; Dunaway v New York, 442 US 200.) V. Defendant’s sentence is statutorily authorized and as imposed not an abuse of discretion. (People v Lewis, 66 AD2d 702.)
   OPINION OF THE COURT

Meyer, J.

A robber who holds and uses a black object covered by a towel in such manner as to give his victims the impression that he is threatening them with a gun “[displays what appears to be a * * * firearm” within the meaning of subdivision 4 of section 160.15 of the Penal Law, and an instruction to the jury to that effect is not erroneous. It is error, however, in a case in which the jury could conclude from the explanation offered by defendant for his possession of part of the proceeds of a recent robbery, that he was one of the robbers, that he was simply a possessor of stolen property or that he was guilty of neither crime, to charge only that the jury could, if it found defendant’s explanation false, infer that he was “the criminal.” The recent possession charge must be related to the facts of the particular case. There should, therefore, be a reversal and a new trial.

I

On the morning of Saturday, April 11, 1981, the base exchange at the United States Air Force Base in Plattsburgh was robbed. The robber took nearly $30,000 from the cashier’s safe, which he stuffed into a plastic bag taken from a trash can near the cashier’s cage. None of the five witnesses to the robbery who testified at defendants trial could identify the robber, who wore a hooded sweatshirt and used a towel to conceal the lower half of his face. Another towel was wrapped around the robber’s arm, but one of the witnesses testified that she saw a black object inside the towel, which she thought was a gun. Another witness testified that when a woman approached the cashier’s window in the exchange office, the robber raised his towel-wrapped arm, pointed it at the woman and threatened to kill her.

Within half an hour after the robbery, defendant, an airman at the base, remarked to an acquaintance that the base exchange had been robbed. Less than three hours later, defendant paid a Plattsburgh car dealer almost $6,000 in cash as a down payment on a new car, using money which was still bundled in wrappers that were dated, initiated and stamped with an official seal of the base exchange, and during that weekend spent close to an additional $2,000 on other purchases.

Defendant was arrested the following Monday morning and his locker and dormitory room were searched pursuant to a military warrant. The search turned up an additional $1,100 in defendant’s locker and in defendant’s room a plastic bag of the type used to carry away the money as well as clothing which matched that described by the witnesses to the robbery, including sneakers with a green stripe. Expert testimony was presented at the trial that the design and wear characteristics of one of defendant’s sneakers closely conformed to those of a footprint found in a sandy area adjacent to the exchange shortly after the robbery and that the plastic bag in defendant’s room was of the identical formula and manufacturer used by the exchange.

Questioned by investigators after his arrest about the down payment on the car, defendant first said the money had been obtained from the settlement of an accident claim. When confronted with the exchange money wrappers, however, defendant related an entirely different story, which became the theory of his defense at trial. He had, he said, borrowed $5,540 in cash from a loanshark who delivered the money to him behind the gas station on the base during the late morning of the robbery. Although such a loan was consistent with evidence introduced at trial that during the two days preceding the robbery defendant had sought to obtain money from various financial institutions and charities in the Plattsburgh area by stating that he needed the money to ransom his niece, who had purportedly been abducted, he conceded at trial that he had concocted that story in order to obtain money for the down payment on the car.

The Trial Judge charged, over objection, that defendant could not be convicted of robbery in the first degree unless the jury found that he had displayed what appeared to be a firearm but that “It is sufficient * * * if the victim is made to believe the object to be such a weapon or if the defendant holds or wraps the object in such a way as to create the impression that he is holding a pistol, revolver or other firearm.” He also charged, again over objection, that there is “a rule of law in this State pertaining to larcenies” which the jury could apply which was “that the recent exclusive possession of fruits of a crime if unexplained or falsely explained, will justify the inference that the possessor is. the criminal.”

The jury found defendant guilty of both robbery in the first degree and criminal possession of stolen property in the first degree. The Appellate Division affirmed in a memorandum. On appeal to our court defendant raises numerous issues, but only those relating to the instructions to the jury warrant discussion. As to those, we agree that the charge as to the display of what appears to be a firearm was proper, but conclude that the recent possession charge as given was erroneous..

II

Both subdivision 4 of section 160.15 of the Penal Law, defining robbery in the first degree, and section 160.10 (subd 2, par [b]) of the Penal Law, defining robbery in the second degree, require that in the course of forcibly stealing property the perpetrator “[displays what appears to be a pistol, revolver * * * or other firearm”. As to the first degree offense, it is, however, an affirmative defense that the object displayed was not an operable firearm and if defendant so proves by a preponderance of the evidence he may only be convicted of robbery in the second degree (Penal Law, § 25.00, subd 2; § 160.15, subd 4; see People v Lockwood, 52 NY2d 790; People v Felder, 32 NY2d 747, affg 39 AD2d 373, app dsmd 414 US 948).

In either case, the Legislature has denominated the display of “what appears to be” a firearm an aggravating factor which increases the degree of the crime over forcible stealing without such a display (Penal Law, § 160.05). The apparent justification for differentiating the situations is the difficulty of proving when no shot was fired that what appeared to be a weapon was in fact a weapon (Hechtman, Practice Commentaries, McKinney’s Cons Laws of NY, Book 39, Penal Law, § 160.15, p 205) and the effect upon the victim put in fear of his or her life by the display of what appeared to be a weapon. Bearing in mind that provisions of the Penal Law are to be “construed according to the fair import of their terms to promote justice and effect the objects of the law” (Penal Law, § 5.00) and the Legislature’s purpose in increasing the penalty for displaying what appears to be a firearm, we conclude that display of anything that appears to be such, though held inside a coat or otherwise obscured, is covered by sections 160.10 and 160.15.

This does not mean that the test is primarily subjective. The defendant must consciously display something that could reasonably be perceived as a firearm with the intent of compelling an owner of property to deliver it up or for the purpose of preventing or overcoming resistance to the taking (Penal Law, § 160.00; see People v Chessman, 75 AD2d 187, 193-194, app dsmd 54 NY2d 1016). Furthermore, the display must actually be witnessed in some manner by the victim, i.e., it must appear to the victim by sight, touch or sound that he is threatened by a firearm (see People v Jenkins, 118 Misc 2d 530). When both of these requirements are satisfied, however, the true nature of the object displayed is, as concerns criminality, irrelevant. Thus, in People v Lockwood (52 NY2d 790, 791-792, supra), we recognized that even if defendant’s statement that he committed the robbery by holding a toothbrush in his coat pocket to simulate a gun were accepted as true, he could still be guilty of displaying what appears to be a firearm, and would succeed only in reducing his liability from first degree robbery to second degree.

The evidence in the present case that the towel wrapped around the robber’s arm concealed a black object that appeared to one of the persons threatened to be a gun, and that the robber raised his arm toward a person and threatened to kill the person his arm was pointed at, was clearly sufficient to establish that the robber displayed what appeared to be a firearm. Nor was there any error in the trial court’s charge that the statutory requirement had been satisfied if the object displayed was held or wrapped in such a way as to create the impression that it was a gun.

Ill

The recent possession charge given by the Trial Judge is a quotation from People v Galbo (218 NY 283, 290) and is, as Justice Francis Bergan (as he then was) put it in Stryzinski v Arnold (285 App Div 780, 783), “a good illustration of the problem of words taken out of decisional context to frame a request which in turn would throw out of focus the instructions designed to guide the jury.” The rule that an inference of guilt may be drawn from recent and exclusive possession of the fruits of a crime is an ancient one (see Barnes v United States, 412 US 837, 843-844), long recognized in this State (Knickerbocker v People, 43 NY 177). Under it evidence of unexplained or falsely explained possession of recently stolen property is sufficient to establish a prima facie case and to enable a jury to find guilt beyond a reasonable doubt (People v Sim, 44 NY2d 758, affg 53 AD2d 992; Knickerbocker v People, supra; Barnes v United States, 412 US, supra, at pp 845-846).

But the words charged to the jury in the present case — “that the possessor is the criminal” — do no more, as Judge Cardozo noted in Galbo (218 NY, supra, at pp 290-291), than fix “the identity of the offender. There remains the question of the nature of his offense. Here again the facts must shape the inference. Is the guilty possessor the thief, or is he a receiver of stolen goods? Judges have said that if nothing more is shown, we may take him to be the thief [citation omitted]. But as soon as evidence is offered that the theft was committed by someone else, the inference changes, and he becomes a receiver of stolen goods”.

Thus, the charge to the jury must be tailored to the facts of the particular case. If a defendant is found in exclusive possession soon after the crime and there is no evidence indicating that he may have received the stolen property from someone else, the only inference that can be drawn is that defendant is the thief. In such a case the charge here given would not be error (see People v Howard, 60 NY2d 999; People v Everett, 10 NY2d 500, 508-510, cert den 370 US 963), though even in such a case the Trial Judge retains discretion not to invoke the common-law inference, lest undue emphasis be given to a point within the common sense and experience of the average juror (see Barnes v United States, 412 US, supra, at p 845, n 8).

At the other end of the spectrum are theft cases in which possession is so far removed in time from the taking or the evidence of shared rather than exclusive possession so strong that no inference instruction would be proper (People v Schillaci, 68 AD2d 124; see People v Mobley, 33 AD2d 888). Between those two extremes fall cases such as the present in which there is evidence from which the jury could conclude that defendant was the thief, but there is also a reasonable view of the evidence under which the jury could find that defendant acquired possession after the theft. In such a case the jury must be charged that if they find that defendant had possession of recently stolen property for the possession of which he has offered no explanation or an explanation which they find to be untrue, they may, although they are not required to, infer that defendant was guilty of a crime and must then weigh the evidence before them to determine whether it establishes beyond a reasonable doubt that the defendant participated in the theft of the property or received it after it was stolen with knowledge of that fact (see People v Batten, 31 NY2d 737, affg 40 AD2d 549, 550; People v Dobbins, 92 AD2d 593, 594; People v Zada, 75 AD2d 77).

Here defendant offered as his explanation for possession of part of the robbery proceeds the loan of the money to him by the alleged loanshark. In light of his knowledge of the robbery within less than half an hour after it occurred, the clothing and other items found in his room that matched what the robber had worn and used, and the admittedly false story first told to the investigator, that explanation was not strong enough to render the People’s evidence insufficient (cf. People v Volpe, 20 NY2d 9, 13). Moreover, in view of defendant’s knowledge of the robbery before the alleged loan transaction and the markings on the wrappers in which the money was contained when he paid it over to the car dealer, the jury could reasonably conclude that defendant was aware that he possessed stolen money even if he did not steal it (see People v Batten, 31 NY2d 737, supra; People v Zada, 75 AD2d 77, supra). It was not, therefore, a case such as People v Everett (10 NY2d 500, 510, supra) in which the jury was compelled to choose between convicting defendant of participation in the robbery and acquittal.

Nevertheless, defendant was entitled to have his position submitted to the jury under proper instructions in light of all the evidence. To charge only that from unexplained or falsely explained possession of part of the robbery proceeds the jury could infer that defendant was the criminal without explaining to them further that defendant, if guilty at all, could be found guilty of either robbery or possession of stolen property was reversible error.

The order of the Appellate Division should, therefore, be reversed and a new trial ordered.

Chief Judge Cooke and Judges Jasen, Jones, Wachtler, Simons and Kaye concur.

Order reversed, etc.


author: Per Curiam.

text:
    In the Matter of Joseph Wiggins, Respondent, v Board of Education of the City of New York et al., Appellants.
    Decided December 1, 1983

      APPEARANCES OF COUNSEL

      Frederick A. O. Schwarz, Jr., Corporation Counsel CAaron I. Blinder of counsel), for appellants.

      Paula J. Omansky for respondents.
   OPINION OF THE COURT

Per Curiam.

A hearing officer’s failure to include recommendations as to discipline when preparing his or her report after a disciplinary hearing pursuant to subdivision 2 of section 75 of the Civil Service Law, does not strip the appropriate body of jurisdiction to impose sanctions upon an employee. It was error, therefore, for the Appellate Division to order petitioner’s reinstatement on this ground.

Petitioner was hired as a motor vehicle operator by the board of education’s Office of Food Services on November 5, 1975. About two years later, respondent chancellor preferred charges against petitioner, suspended him, and ordered him to report for reassignment. On June 8, 1978, petitioner was served with a notice of charges and specifications.

A full hearing was held over six days in June, July, and October, 1978. The hearing officer prepared a report on the evidence and his findings, but omitted any recommendation as to the sanction to be imposed. The board made some different factual findings not relevant to this appeal and ordered that petitioner be dismissed from employment.

Petitioner commenced this article 78 proceeding for review of the board’s action, asserting that it had no jurisdiction to consider the matter because of the omission in the hearing officer’s report, and that the sanction imposed was arbitrary and capricious. Special Term rejected the jurisdictional argument, but reduced the penalty to 30 days’ suspension without pay.

The Appellate Division reversed, granted the petition, and ordered petitioner reinstated. It concluded that the hearing officer’s failure to make any recommendation as to discipline prevented the board from obtaining jurisdiction and removing petitioner.

Subdivision 2 of section 75 of the Civil Service Law prescribes the basic procedure for hearing charges of misconduct levied against a civil servant. Among other things, it allows the officer or body having power to remove an employee to designate in writing a deputy or other person for the purpose of conducting the hearing. In addition, it provides that “[i]n case a deputy or other person is so designated, he shall * * * make a record of such hearing which shall, with his recommendations, be referred to such officer or body for review and decision” (Civil Service Law., § 75, subd 2).

In the absence of a written delegation authorizing a deputy or other person to conduct the hearing, the removing board or officer has no jurisdiction to discipline an employee (see Matter of Blount v Forbes, 250 App Div 15; Locust Club v City of Rochester, 48 Misc 2d 763, 767; Matter of Morrison v Moses, 172 Misc 129; cf. Matter of Klein v Department of Mental Hygiene, 15 AD2d 562 [matter remanded for evidence of written designation]). This is the logical conclusion of the fact that, in the absence of a written designation, the deputy or other person has no power to conduct the hearing and, consequently, his or her report is a nullity. Without a report or other factual findings, the removing board or officer has no basis upon which to act and its determination, therefore, would unavoidably be arbitrary.

On similar reasoning, the complete absence of recommendations by the hearing officer would also render the removing entity powerless to impose sanctions (see Matter of Blount v Forbes, supra). Although there may have been a proper written designation, the removing board or officer would have no report on which to act and, again, its action would necessarily be arbitrary.

A different situation prevails when there is a valid delegation of power and the deputy or other person submits a report on all aspects of the matter except for recommending a penalty. Initially, it must be noted that the removing board or officer is free, within the confines of the evidence, to make new findings and to impose discipline other than that recommended by the hearing officer (see Matter of Simpson v Wolansky, 38 NY2d 391, 394). Consequently, the failure to recommend discipline is important only to the extent that it omits a suggested starting point from which the removing entity may begin to fashion the appropriate sanction. This “defect” is hardly serious enough to warrant annulling the entire proceeding and directing reinstatement.

To contrast the situation, reference is made to subdivision 4 of section 3020-a of the Education Law, which requires the employing board to implement the recommendations of the hearing panel, including any penalty or punishment that the panel deems should be imposed. Inasmuch as an employing board has no discretion under that statute, the failure to include a recommendation for punishment would be jurisdictionally fatal to any attempt by the board to impose a penalty.

A disciplinary proceeding will be voided and the status quo ante restored when there has been some error that taints the entire proceeding. This would not be an isolated mistake, but rather would strike at fundamental concerns such as jurisdiction or bias of the presiding officers (see, e.g., Matter of Sinicropi v Milone, 80 AD2d 609; Matter of Klein v Department of Mental Hygiene, 15 AD2d 562, supra; Matter of Blount v Forbes, 250 App Div 15, supra; Locust Club v City of Rochester, 48 Misc 2d 763, supra; see, also, People ex rel. Hayes v Waldo, 212 NY 156, 173). In other words, these are errors that undermine the validity of the whole proceeding because they call into question the power or neutrality of the hearing officer or removing entity or because they effectively preclude any meaningful judicial review. This situation simply does not arise when a hearing officer acts pursuant to a valid delegation, prepares a detailed report, and provides it along with a transcript to the removing board or officer, but omits including recommendations as to discipline.

Accordingly, the judgment appealed from and the order of the Appellate Division brought up for review should be reversed, without costs, and the matter remitted to the Appellate Division for determination of the issues not reached in the appeal to that court.

Chief Judge Cooke and Judges Jasen, Jones, Wachtler, Meyer, Simons and Kaye concur in Per Curiam opinion.

On review of submissions pursuant to rule 500.2 (b) of the Rules of the Court of Appeals (22 NYCRR 500.2 [g]), judgment appealed from and order of the Appellate Division brought up for review reversed, without costs, and matter remitted to the Appellate Division, Second Department, for further proceedings in accordance with the opinion herein.


author: Meyer, J. Wachtler, J.

text:
    Ace Wire & Cable Co., Inc., et al., Respondents, v Aetna Casualty & Surety Company, Appellant.
    Argued October 26, 1983;
    decided December 1, 1983

      POINTS OF COUNSEL

      Michael A. Maillet and Jerome Murray for appellant.
    I. Plaintiffs’ proof, limited to an inventory computation and evidence purporting to show limited access to their premises, is insufficient under New York law to support a claim under a policy insuring against employee dishonesty. (Teviro Casuals v American Home Assur. Co., 54 NY2d 915; De Mayo v Yates Realty Corp., 35 AD2d 700, 28 NY2d 894; Dunlop Tire & Rubber Corp. v Fidelity & Deposit Co., 479 F2d 1243; Kaplan Jewelers v Insurance Co., 86 Misc 2d 334; Kernwood Mfg. Corp. v Home Ind. Co., 65 Misc 2d 354, 67 Misc 2d 888; Gillette Co. v Travelers Ind. Co., 365 F2d 7; York Lbr. Co. v Fidelity & Deposit Co., 331 F Supp 1131; Ford v McAdoo, 231 NY 155; American Thermostat Corp. v Aetna Cas. & Sur. Co., 59 AD2d 965; Spenge, Inc. v Aetna Ins. Co., 58 AD2d 1026.) II. Plaintiffs’ proof that it had a loss is wholly dependent upon a unit reconciliation of stock, which is nothing more than an inventory computation. (Teviro Casuals v American Home Assur. Co., 81 AD2d 814, 54 NY2d 915; Dunlop Tire & Rubber Corp. v Fidelity & Deposit Co., 479 F2d 1243; United States Smelting Refining & Min. Co. v Aetna Cas. & Sur. Co., 372 F Supp 489; American Thermostat Corp. v Aetna Cas. & Sur. Co., 59 AD2d 965; Spenge, Inc. v Aetna Ins. Co., 58 AD2d 1026; Kaplan Jewelers v Insurance Co., 86 Misc 2d 334; Kernwood Mfg. Corp. v Home Ind. Co., 65 Misc 2d 354; Andrews v Travellers Ins. Co., 269 App Div 1011, 296 NY 600; Breed v Insurance Co., 46 NY2d 351.) III. The issues presented on this appeal are questions of law which should not be resolved by a jury. (Mallad Constr. Corp. v County Fed. &

      Loan Assn., 32 NY2d 285; Federal Deposit Ins. Corp. v Herald Sq. Fabrics Corp., 81 AD2d 168; Friedkin v Harry Walker, Inc., 90 Misc 2d 680; Teviro Casuals v American Home Assur. Co., 54 NY2d 915; Gray Mfg. Co. v Pathe Inds., 33 AD2d 739, 26 NY2d 1045; Dunlop Tire & Rubber Corp. v Fidelity & Deposit Co., 479 F2d 1243; Kaplan Jewelers v Insurance Co., 86 Misc 2d 334; Kernwood Mfg. Corp. v Home Ind. Co., 65 Misc 2d 354; Spenge, Inc. v Aetna Ins. Co., 58 AD2d 1026; Hartwig v Three F. Conservation Soc., 49 AD2d 678.)

      Leonard M. Simon and Jeffrey M. Schwartz for respondents.
    I. Respondents’ establishment of their loss is not dependent upon any inventory computation. (Sun Ins. Co. v Cullum’s Men Shop, 331 F2d 988; Atlanta Coca-Cola Bottling Co. v Transamerica Ins. Co., 61 FRD 120; J.G.A. Constr. Corp. v Charter Oak Fire Ins. Co., 66 AD2d 315; Fort Smith Tobacco & Candy Co. v American Guar. & Liab. Ins. Co., 208 F Supp 244; United States Smelting Refining & Min. Co. v Aetna Cas. & Sur. Co., 372 F Supp 489; Dunlop Tire & Rubber Corp. v Fidelity & Deposit Co., 479 F2d 1243; Kaplan Jewelers v Insurance Co., 86 Misc 2d 334; Teviro Casuals v American Home Assur. Co., 81 AD2d 814.) II. The statements contained in the affidavits of Louis Deutsch reflect personal knowledge and observations which establish respondents’ loss. (People v Weinberger, 239 NY 307; Ettleson v Metropolitan Life Ins. Co., 164 F2d 660; Howard v McDonough, 77 NY 592.) III. The circumstantial evidence submitted by respondents is sufficient to show the loss in question was occasioned by a theft by employees. (People v Benzinger, 36 NY2d 29; People v Wachowicz, 22 NY2d 369.) IV. The proof submitted by respondents satisfies the burden of proof set forth in the policy reasonably showing the loss resulted from employee fraud or dishonesty. (Dunlop Tire & Rubber Corp. v Fidelity & Deposit Co., 479 F2d 1243; Camp v Pitts, 411 US 138; First Fed. Sav. & Loan Assn. v Federal Home Loan Bank, 426 F Supp 454, 570 F2d 693; First Nat. Bank v Camp, 326 F Supp 541, 465 F2d 586,409 US 1124; Jackson v Virginia, 443 US 307.) V. Respondents should be granted summary judgment as a matter of law as no triable issues of fact exist. (Wiseman v Knaus, 24 AD2d 869; Dunlop Tire & Rubber Corp. v Fidelity & Deposit Co., 479 F2d 1243.)
   OPINION OF THE COURT

Meyer, J.

The comparison of inventory records kept on a unit basis with a physical count of items on hand is not an “inventory computation” within the meaning of the exclusion in section 2(b) of a comprehensive dishonesty, disappearance and destruction policy of insurance. Moreover, because section 4 of the policy requires only evidence which “reasonably proves” employee dishonesty, the insurer is not entitled to summary judgment in an action on the policy if the insured presents some independent evidence from which employee dishonesty can be reasonably inferred, even though that evidence is less than would be required to make out a prima facie case were the preponderance of evidence standard applicable. There should, therefore, be an affirmance.

I

Plaintiff sues on the comprehensive dishonesty policy issued to it by defendant to recover the value of 116 reels of wire and cable determined to be missing when its June, 1979 physical inventory was taken. On plaintiff’s motion for summary judgment and defendant’s cross motion for like relief, the papers present evidentiary proof from which could be found the facts which follow.

Plaintiff manufactures and sells wire and cable products. It maintains a sales office in Woodside, New York, and, through a wholly owned subsidiary, a warehouse on Staten Island where wire and cable not needed in day-to-day sales activity is stored. The warehouse is used exclusively for storage of plaintiff’s property and is under the control of a manager, under whose supervision warehouse employees remove wire or cable from the warehouse for delivery either to the Woodside office or to a customer of plaintiff. The warehouse is protected by an alarm system installed and monitored by Honeywell, Inc.

Plaintiff’s secretary, Louis Deutsch, maintains the stock records of all wire and cable stored in the warehouse and has done so for the past 30 years. Upon receipt of wire or cable, entries are made on stock record cards showing the total received, the manufacturer or supplier and the date of delivery; each reel is separately listed with a notation of the exact footage on the reel; and on many items a specific control number is assigned to the reel. A physical stock inspection of the warehouse is conducted by Mr. Deutsch in June of each year. On the physical inspection made by Mr. Deutsch on June 30, 1979, he found that 116 reels of wire and cable which had been in the warehouse at the time of the June 30,1978 inspection were missing. He had personally reviewed each reel in the warehouse in June, 1978 and verified that the reels shown on his stock record were then present.

No reel is removed from the warehouse without Mr. Deutsch’s authority and when a reel is removed it is deleted from the stock record card. During the period between June 30, 1978 and June 30, 1979, none of the missing reels had been sold nor was removal of any of them authorized by Deutsch or any other officer of plaintiff, nor was there any break-in or burglary of the warehouse during that time.

The missing reels were all acquired by plaintiff prior to 1976. The majority of them were at least four feet in diameter and weighed over 5,000 pounds each and could be moved only with a high-lo machine by a person experienced in doing so. Many were stored by stacking one on top of another. All of the missing reels were either items for which there was little demand or of which substantial quantities were maintained. Selection of reels in those two categories for removal required knowledge as to which items were slow moving and which were stored in quantity and of the warehouse location of each, knowledge which was limited to employees of the warehouse. On an afternoon in late December, 1978, the warehouse manager quit his job without explanation and without notice.

Defendant’s policy, by insuring agreement I, insures plaintiff and its warehouse subsidiary against “any fraudulent or dishonest act or acts committed by any of the Employees acting alone or in collusion with others.” By section 2(b) of the policy conditions, it excludes from that coverage “loss, or * * * that part of any loss, as the case may be, the proof of which, either as to its factual existence or as to its amount, is dependent upon an inventory computation or a profit and loss computation”, but section 4 of the conditions provides that “If a loss is alleged to have been caused by the fraud or dishonesty of any one or more of the Employees and the insured shall be unable to designate the specific Employee or Employees causing such loss, the Insured shall nevertheless have the benefit of Insuring Agreement I, subject to the provisions of Section 2(b) of this Policy, provided that the evidence submitted reasonably proves that the loss was in fact due to the fraud or dishonesty of one or more of the said Employees”.

Special Term concluded that stock records comparison and inventory computation were indistinguishable and that the circumstantial proof presented was insufficient, apart from the inventory computation, to establish that the loss was due to employee dishonesty and, therefore, denied plaintiff’s motion and granted defendant’s cross motion, dismissing the complaint. The Appellate Division, finding the loss sufficiently established by such personal observation and knowledge as was detailed by Deutsch rather than by inventory computation, modified by denying defendant’s cross motion and, as so modified, affirmed. On defendant’s appeal we conclude that the claim is not barred by the inventory computation provision of section 2(b) and that plaintiff has sufficiently met the “reasonably proves” standard of section 4 to withstand a summary judgment motion.

II

The standard exclusion contained in section 2(b) has been through a number of formulations. Originally the standard policy required conclusive proof that an inventory shortage was caused by employee fraud or dishonesty. After that provision was interpreted to require only proof by a preponderance of the evidence, the standard policy was revised to omit reference to proof from the insuring agreement but to state as section 2 an exclusion in essentially the same language as section 2(b) set forth above, with an added “provided” clause.* * The “conclusively establishes” language of former section 3 was dropped and the remainder of former section 3, modified to make clear that it was “subject to the provisions of Section 2(b) of this Policy” and to use the words “reasonably proves” in place of “reasonably establishes,” became the present section 4.

The courts split over whether section 2 in that form was ambiguous and over the meaning of “inventory computation”. The “provided” clause of section 2 having played a part in some of the ambiguity holdings, that clause was dropped from section 2 sometime prior to 1976, in an apparent effort to remove the ambiguity. In our view the policy draftsmen still have not found Ariadne’s thread.

The problem is in the words “inventory computation” as used in section 2(b). Defendant would read that phrase to cover any loss the proof of which requires reference to inventory records. Such a reading, however, ignores the fact that the word “computation” carries more than one connotation. Thus, it may mean “the result of computation: amount computed” (Webster’s Third New International Dictionary, p 468). It may, however, also mean “the act or action of computing: calculation, reckoning” or “a way or system of reckoning” (id.) or “The act of computing, numbering, reckoning, or estimating” (Black’s Law Dictionary [5th ed], p 261). Thus, it involves concepts of both mathematical exactness and of probability or estimation.

To construe it in the first sense would be to make it all but impossible for an insured to recover under the policy for, except in situations in which an employee is caught in the act with the stolen goods in his possession, it will always be necessary in order to prove the amount of a loss to ascertain the number of units involved through an inventory count. To construe it in that fashion is also inconsistent with section 6 of the policy, which requires the insured to “keep records of all insured property in such manner that the Company can accurately determine therefrom the amount of loss” (see Tri-Motors Sales v Travelers Ind. Co., 19 Wis 2d 99, 106).

The tests to be applied in construing an insurance policy are common speech (Lewis v Ocean Ace. & Guar. Corp., 224 NY 18, 21) and the reasonable expectation and purpose of the ordinary businessman (Bird v St. Paul Fire & Mar. Ins. Co., 224 NY 47, 51). The ambiguities in an insurance policy are, moreover, to be construed against the insurer, particularly when found in an exclusionary clause (see Breed v Insurance Co., 46 NY2d 351, 353). We conclude, therefore, that section 2(b) should be read to exclude only losses the proof of which, as to factual existence or amount, turns upon probabilities deduced or estimations made from comparison of posttheft-discovery dollar, as distinct from unit, inventory amounts with a prediscovery dollar amount, or of a posttheft unit number with a pretheft number calculated from a pretheft dollar inventory amount, but not to exclude a loss which can be established by showing that a particular item or unit of goods observed and identified as present at one physical inventory count is not present at the next.

To conclude otherwise would produce absurd results. Thus, an insured, able to meet the reasonable proof requirement of section 4 (as, for example, by eyewitness testimony of a person who could identify as an employee of the insured one of a group he observed loading merchandise on a truck in the middle of the night and his own testimony that the employee had not been authorized to do so and had not since the taking returned to work), could not recover because he could not use pre and posttaking unit inventory records to establish what had been taken and in what quantity.

We hold that the phrase “inventory computation” is to be construed to proscribe proof of the fact or amount of loss through a generalized estimate, calculated, for example, from sales records and average markup, of what the dollar value of inventory on hand should be. It does not, however, preclude proof of the fact or amount of loss through inventory records (whether perpetual or periodically made) detailing the actual physical count of individually identifiable units such as are described in the Deutsch affidavits. That conclusion finds support in Popeo v Liberty Mut. Ins. Co. (369 Mass 781, 785 [“Where the missing items are identified from such records (unit-type or perpetual inventory records), it has been held that there is no ‘inventory computation’ within the meaning of the inventory exclusion clause”]); Paramount Paper Prods. Co. v Aetna Cas. & Sur. Co. (182 Neb 828, 839 [“the exclusionary clause does not bar an inventory made upon a unit basis, but does bar inventories which require computation to reduce them to some other basis, or, where when one inventory is compared with a later one, it is necessary to compute and allow for sales and purchases made in the interim”]); and Sun Ins. Co. v Cullum’s Men Shop (331 F2d 988, 991 [“proof of the amount of the loss did not depend upon an inventory computation * * * but on the contrary consisted of an enumeration of each missing item, suit by suit, based upon a check of the stock record, the swatch book, against the stock actually on hand”]); see, also, Hoboken Camera Center v Hartford Acc. & Ind. Co. (93 NJ Super 484, 496); Stadham Co. v Century Ind. Co. (167 Pa Super Ct 268, 273-274); Atlanta Coca-Cola Bottling Co. v Transamerica Ins. Co. (61 FRD 120,124-125); Kurland, Claims For Inventory Shortage Resulting From Employee Dishonesty Under Fidelity Insurance Bonds — A Present Appraisal (33 Ins Counsel J 397); Bunge, Inventory Shortages (20 Ins Counsel J 271); Bunge, Inventory Shortages (11 Ins Counsel J [No. 2] 32). Though there are contrary decisions of other State and Federal courts, in our opinion the cases cited state the better rule. Moreover, it is not inconsistent with the holdings in Teviro Casuals v American Home Assur. Co. (54 NY2d 915) and American Thermostat Corp. v Aetna Cas. & Sur. Co. (59 AD2d 965, mot for lv to app den 43 NY2d 647), on which the carrier relies, both of which turned on the failure of the insured to present sufficient proof that the loss claimed was due to employee dishonesty and did not take a clear position on the meaning of inventory computation.

Ill

To defeat defendant’s motion for summary judgment, plaintiff must come forward with evidentiary proof “sufficient to require a trial of any issue of fact” (CPLR 3212, subd [b]). Of importance in that connection, however, is the fact that section 4 of the policy requires only that plaintiff’s “evidence * * * reasonably proves that the loss was in fact due to the fraud or dishonesty of one or more” of its employees. That “requires more than ‘some independent evidence’ but less than a prima facie case as a condition to the use of inventory” records of the type above referred to (Dunlop Tire & Rubber Corp. v Fidelity & Deposit Co., 479 F2d 1243, 1246; United States Smelting Refining & Min. Co. v Aetna Cas. & Sur. Co., 372 F Supp 489, 494; Popeo v Liberty Mut. Ins. Co., 369 Mass 781, 786, supra; Travelers Ind. Co. v Davis Wholesale Drug Co., 234 So 2d 604, 605 [Miss]; National Shirt & Hat Shops v American Motorists Ins. Co., 234 NC 698, 707).

The Deutsch affidavits clearly meet that test, even if the abrupt departure of the warehouse manager be disregarded. They establish that only plaintiff’s property was stored in the warehouse, that only plaintiff’s employees had access to the warehouse, that it was protected by a security service when plaintiff’s employees were not present, that during the period between the 1978 and 1979 inventories there had been no break-in or burglary, that nothing was permitted to be removed from the warehouse without Mr. Deutsch’s authorization and that a record is made of what is removed, that a total of 116 reels were missing, most of which were over four feet in diameter, weighed in excess of two tons and required a fork lift to move (and inferentially a truck to cart away), and that the missing reels were of two categories the absence of which would not be likely to be detected until a physical inventory was taken, knowledge available only to warehouse employees.

It is a reasonable inference from those facts that plaintiff’s loss was due to the dishonesty of one or more of its employees (see Wolf v Aetna Acc. & Liab. Co., 183 App Div 409, affd 228 NY 524; Aronow Bros. v United States Cas. Co., 35 NYS2d 75, affd 265 App Div 992, mot for lv to app den 265 App Div 1052). Whether a jury will so conclude or, indeed, whether the evidence as presented at trial will sufficiently match that detailed in the affidavits to present a jury question are matters to be determined upon trial. We decide only that the evidentiary proof in the Deutsch affidavits is not barred by section 2(b) of the policy and measures up to the reasonable proof standard of its section 4 and that, therefore, defendant was not entitled to summary judgment.

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

Wachtler, J.

(dissenting). The comprehensive employee dishonesty insurance policy issued by defendant specifically excludes from its coverage any loss “the proof of which, either as to its factual existence or as to its amount, is dependent upon an inventory computation or a profit and loss computation”. Plaintiff’s claim is based upon the disappearance of 116 reels of wire and cable. The loss was discovered during a physical inspection of stock in the warehouse. I cannot perceive any difference in the ascertainment of a loss solely by reference to inventory records which detail the physical count of individually identifiable units and one which is based simply upon a before and after calculation of inventory. In the former case, we have proof as to which of the items are missing, but it remains true in both cases that the existence of a loss is based solely upon an unexplained reduction in inventory. The purpose of the exclusion is to prevent recovery for stock losses from many other possible causes, including the possibility of dishonesty or carelessness on the part of the insured. Accordingly, it is not so unreasonable, as the majority seems to feel, that the policy’s coverage is limited to situations where employee theft is proved by more than unexplained loss.

Further, plaintiff has clearly failed to set forth sufficient proof, independent of the reduction in stock, that employee dishonesty was responsible for the loss, and its complaint should be dismissed on this basis alone. Although plaintiff could not identify the dishonest employee it believed to be responsible for the disappearance, the policy nevertheless permits recovery if the insured proves the loss and that the cause is employee dishonesty. Insofar as allegations of employee dishonesty are concerned, at best plaintiff has alleged limited access to the premises, difficulty in removing the stock, an elaborate security system which was not triggered during the 12-month period in which the loss must have occurred and the unexplained resignation of the supervisor, who had access to the stock and knowledge that its loss would not be noticed except at inventory. These allegations do no more than to raise a suspicion concerning the cause of the loss.

In Teviro Casuals v American Home Assur. Co. (54 NY2d 915, affg on opn below 81 AD2d 814), an employee was caught in the act of stealing four garments from his employer’s inventory. We held that this limited evidence of employee dishonesty was insufficient to permit recovery under the policy for the loss of thousands of garments (the loss of which was proved only by inventory computation). Yet in the instant case on much less proof of actual employee dishonesty, the majority allows the use of inventory records to demonstrate the extent of the loss. It appears that recovery upon such speculative proof is exactly the situation that the insurer sought to avoid by insertion of this exclusion in the policy.

Chief Judge Cooke and Judges Jasen and Jones concur with Judge Meyer; Judge Wachtler dissents and votes to reverse in a separate opinion in which Judges Simons and Kaye concur.

Order affirmed, etc.

      . The words “conclusively prove” appeared in the insuring agreement (Kurland, Claims For Inventory Shortage Resulting From Employee Dishonesty Under Fidelity Insurance Bonds — A Present Appraisal, 33 Ins Counsel J 397, 398) and in section 3, which provided that if the loss was “disclosed by an inventory computation” the insured could recover for only so much of the loss “as the evidence submitted conclusively establishes was in fact due” to employee dishonesty (Stadham Co. v Century Ind. Co., 167 Pa Super Ct 268, 272; see, also, Hoboken Camera Center v Hartford Acc. & Ind. Co., 93 NJ Super 484, 491, n 3).

      . (Hoboken Camera Center v Hartford Acc. & Ind. Co., 93 NJ Super 484; National Shirt & Hat Shops v American Motorists Ins. Co., 234 NC 698; Stadham Co. v Century Ind. Co., 167 Pa Super Ct 268; Savannah Wholesale Co. v Continental Cas. Co., 279 F2d 706; see Bunge, Inventory Shortages, 20 Ins Counsel J 271, 276; Bunge, Inventory Shortages, 11 Ins Counsel J [No. 2] 32, 38; Kurland, supra, n 1, 33 Ins Counsel J., at p 398.)

      . That clause read: “provided, however, that this paragraph shall not apply to loss of Money * * * or other property which the Insured can prove, through evidence wholly apart from such computations, is sustained by the Insured through any fraudulent or dishonest act or acts committed by any one or more of the Employees”.

      . The cases are collected in Dunlop Tire & Rubber Corp. v Fidelity & Deposit Co. (479 F2d 1243, 1246, n 5).

      . Indorsement 200, which is part of plaintiff’s policy, deleted former section 2(b) from the policy and substituted the language quoted in the body of this opinion, page 395, supra.

      . Kaplan Jewelers v Insurance Co. (86 Misc 2d 334) and Kernwood Mfg. Corp. v Home Ind. Co. (65 Misc 2d 354, affd 67 Misc 2d 888), to the extent that they reject the distinction here drawn between unit inventory and inventory computations based on estimation, are not to be followed.

       I note that this appears to be exactly the absurd result the majority seeks to avoid by its holding in this case (supra, at p 398).


text:
    The People of the State of New York, Respondent, v Guillermo Guzman, Appellant. The People of the State of New York, Respondent, v Robert Wells, Appellant.
    Argued October 26, 1983;
    decided December 1, 1983

      POINTS OF COUNSEL

      Brian Sheppard and William E. Hellerstein for appellant in the first above-entitled action.
    I. Respondent’s evidence was insufficient as a matter of law to rebut appellant’s prima facie showing that, as a result of intentional discrimination, Hispanics are substantially underrepresented in the Kings County Grand Jury pool in violation of equal protection. (Castaneda v Partida, 430 US 482; People v Wilson, 56 NY2d 692; Hernandez v Texas, 347 US 475; People v Havelka, 45 NY2d 636; Test v United States, 420 US 28; Davis v Alaska, 415 US 308.) II. Appellant was deprived of his due process right to a fair trial when the court refused to submit the lesser included offense of attempted robbery in the first degree. (People v Discala, 45 NY2d 38; People v Henderson, 41 NY2d 233; People v Scarborough, 49 NY2d 364.)

      Elizabeth Holtzman, District Attorney {Allan P. Root, Barbara D. Underwood and Holly L. Siegel of counsel), for respondent in the first above-entitled action.
    I. The record amply supports the affirmed finding of fact that the under-representation of Hispanics on Kings County Grand Juries was caused by nondiscriminatory factors; thus, defendant’s equal protection claim must be denied. (People v Chestnut, 26 NY2d 481; Castaneda v Partida, 430 US 482; People v Rizzo, 40 NY2d 425; People v Dessaure, 299 NY 126, 337 US 949; Folston v Allsbrook, 691 F2d 184; United States v Perez-Hernandez, 672 F2d 1380; United States ex rel. Barksdale v Blackburn, 639 F2d 1115, 454 US 1056.) II. Defendant lacks standing to litigate the propriety of the rulings on Best’s discovery motions. Furthermore, these rulings were correct. (People v Gissendanner, 48 NY2d 543.) III. The trial court properly declined to charge the lesser included offense of attempted robbery where no reasonable view of the evidence would support a finding that defendant committed the lesser offense. (People v Glover, 57 NY2d 61; People v Scarborough, 49 NY2d 364; People v Discala, 45 NY2d 38; People v Shuman, 37 NY2d 302; People v Rice, 81 AD2d 515; United States v Busic, 592 F2d 13.)

      Brian Sheppard and William E. Hellerstein for appellant in the second above-entitled action.
    I. Respondent’s evidence was insufficient as a matter of law to rebut appellant’s prima facie showing that, as a result of intentional discrimination, Hispanics are substantially underrepresented in the Kings County Grand Jury pool in violation of due process and equal protection. (Peters v Kiff 407 US 493; United States v Perez-Hernandez, 672 F2d 1380; United States v Holman, 510 F Supp 1175, 680 F2d 1340; United States v Breland, 522 F Supp 468; United States v Jenison, 485 F Supp 655; Castaneda v Partida, 430 US 482; United States v Coletta, 682 F2d 820.) II. Where the existence of a door was a critical issue, appellant was denied due process when the court ruled that his counsel (a) could attempt to prove the door’s existence only by recalling complainant’s friend to the stand and (b) could not first examine that witness outside of the presence of the jury. (Chambers v Mississippi, 410 US 284.) III. Appellant was denied due process when the court excluded evidence which would have demonstrated the scientific impossibility of complainant’s testimony, and which would have substantially corroborated appellant’s testimony. (Chambers v Mississippi, 410 US 284; People v Mandel, 48 NY2d 952, 446 US 949.)

      Elizabeth Holtzman, District Attorney {Allan P. Root, Barbara D. Underwood and Nikki Kowalski of counsel), for respondent in the second above-entitled action.
    I. Defendant’s equal protection claim provides no ground for dismissing his indictment. (Castaneda v Partida, 430 US 482; Rose v Mitchell, 443 US 545; People v Chestnut, 26 NY2d 481; People v Horton, 18 NY2d 355, 387 US 934; People v Agron, 10 NY2d 130, 368 US 922; People v Dessaure, 299 NY 126, 337 US 949; Duren v Missouri, 439 US 357; Taylor v Louisiana, 419 US 522; Peters v Kiff, 407 US 493; Duncan v Louisiana, 391 US 145.) II. Defendant lacks standing to litigate the propriety of the rulings on Best’s discovery motions. Furthermore, these rulings were correct. (People v Gissendanner, 48 NY2d 543.) III. The trial court properly denied defendant’s motion for an inspection of the premises during trial because the existence of a door in the victim’s apartment was a collateral issue and because the condition of the apartment had been altered since the date of the crime charged. (People v Davis, 43 NY2d 17, 435 US 998.) IV. Evidence of the rape victim’s prior sexual conduct was irrelevant to the issues in dispute at trial and was properly excluded pursuant to CPL 60.42. (People v Mandel, 48 NY2d 952, 446 US 949.)
   OPINION OF THE COURT

Per Curiam.

These appeals concern challenges that the under-representation of Hispanics in the Kings County Grand Jury pool denied defendants their rights to due process and equal protection. Inasmuch as there was no proof, on this record, of systematic exclusion of Hispanics or of intentional discrimination, defendants’ motions to dismiss their respective indictments were properly denied.

x

Defendants were independently convicted of unrelated crimes committed in Kings County. Prior to their respective trials, defendants each moved to dismiss his indictment on the ground that Hispanics were unlawfully underrepresented in the Grand Jury pool in Kings County, as a result of discrimination in the selection process of potential jurors. Both defendants asserted violations of their statutory right to a Grand Jury selected from a fair cross section of the community (see Judiciary Law, § 500). In addition, each raised constitutional arguments. Defendant Guzman, an Hispanic, argued that the discrimination violated his right to equal protection. Defendant Wells, a Black, argued that this underrepresentation of Hispanics in violation of equal protection violated his right to due process.

In Kings County, the selection process for jury service begins with a random computer selection of a predetermined number of prospective jurors who are mailed subpoenas, in race-blind notices, requiring them to report to the commissioner for an examination regarding their qualifications for jury service. There is an attempt to follow-up on summonses returned because of a wrong address. When a recipient answers the subpoena, he or she is given a questionnaire, requesting such information as residence, date of birth, marital status, extent of education, number and age of children, and prior convictions (see Judiciary Law, § 513). An oral examination of the applicant is then conducted to determine the veracity of the responses. Those persons whose answers indicate that they are not qualified under the criteria set forth in sections 510 and 511 of the Judiciary Law are rejected. The reason for rejection — e.g., foreign citizenship, age, prior felony conviction, lack of good character, inability to read and write English with a sufficient degree of proficiency, or inability to speak English in an understandable manner (see Judiciary Law, § 510) — is noted on the questionnaire. Qualified persons are then fingerprinted (see Judiciary Law, § 514) on cards that do not include any information as to race or color. These qualified prospective jurors are then added to the master pool of grand and petit jurors. Names for the Grand Jury pool are drawn therefrom and placed in a sealed drum, from which names are removed in the ensuing year as required.

Guzman and the prosecutor stipulated, with the court’s approval, that they would rely on the minutes of the record in the then pending case of People v Best (Kings County, Ind No. 869/1978), which had raised an identical charge of intentional, substantial underrepresentation of Hispanics in the Grand Jury pool of Kings County. Wells’s motion requested a hearing or, in the alternative, that the court adopt the record.in Best. The request for a hearing de novo was denied.

The motion challenging the Grand Jury pool in People v Best was denied. Likewise, the defendants’ motions were summarily denied by Supreme Court. The Appellate Division affirmed in both cases. In Guzman, the court held that the defendant had suffered no violation of his right to equal protection because the People adequately rebutted the presumption of intentional discrimination. Nor did the court find any violation of due process or of defendant’s statutory right under section 500 of the Judiciary Law, reasoning that the jury was drawn from a fair cross section of the community because there was no proof of systematic exclusion of Hispanics from the Grand Jury pool. The Appellate Division affirmed in Wells, relying on the reasons set forth in People v Guzman.

The questions presented here are whether the underrepresentation of Hispanics in the Kings County Grand Jury pool was caused by the systematic exclusion of Hispanics in violation of defendant Wells’s right to due process or by intentional discrimination in violation of Guzman’s right to equal protection. This court now affirms.

On appeal, defendants no longer argue that their statutory right to a Grand Jury drawn from a fair cross section of the community was violated (see Judiciary Law, § 500). Thus, these claims are not addressed. As to the constitutional claims, each defendant has the initial burden of establishing a prima facie case. If this condition is satisfied, the burden of proof shifts to the People to rebut the claim of unconstitutionality. Inasmuch as the elements of a prima facie case differ under due process and equal protection analyses, defendants’ claims are discussed separately.

JL

The due process clause of the Fourteenth Amendment protects a defendant from “indictment or trial by a jury that has been selected in an arbitrary and discriminatory manner, in violation of the Constitution and laws of the United States” (Peters v Kiff, 407 US 493, 502). Any person may challenge the exclusion of “any distinct group” from Grand Jury service because regardless of a person’s race, he or she “has standing to challenge the system used to select his grand or petit jury, on the ground that it arbitrarily excludes from service the members of any race, and thereby denies him due process of law” {id., at p 504). “[T]he exclusion of a discernible class from jury service injures not only those defendants who belong to the excluded class, but other defendants as well, in that it destroys the possibility that the jury will reflect a representative cross section of the community” (id., at p 500).

In order to establish a violation of due process based on the absence of a fair cross section of the community in the jury pool, a defendant must demonstrate that a substantial and identifiable segment of the community was not included in the Grand Jury pool because the process used to select grand jurors “systematically excluded” that group from service (Peters v Kiff, 407 US 493, 503-504, supra; see Duren v Missouri, 439 US 357, 364). Once defendant has made this prima facie showing, the State “bears the burden of justifying this infringement by showing attainment of a fair cross section to be incompatible with a significant state interest” (Duren v Missouri, supra, at p 368; see Peters v Kiff, supra, at p 500, n 10). To justify the exclusion, the State interest must be “manifestly and primarily advanced by those aspects of the jury-selection process, such as exemption criteria, that result in the disproportionate exclusion of a distinctive group” (Duren v Missouri, supra, at pp 367-368).

The People do not controvert that Hispanics are a substantial and identifiable group in the community of Kings County. In addition, the People do not dispute and the evidence bears out that the number of Hispanics in the Grand Jury pool is not “reasonably representative” of the number of Hispanics in the community (see Duren v Missouri, 439 US 357, 364, supra). Thus, defendant Wells established the first part of his claim.

But, in order for defendant to have completed his prima facie case establishing a violation of due process, he must have further demonstrated that the underrepresentation was caused by the “systematic exclusion” of Hispanics in the jury selection process (see Peters v Kiff, 407 US 493, 500, 504-505, supra; People v Parks, 41 NY2d 36, 43; see, also, Duren v Missouri, 439 US 357, 366, supra; Taylor v Louisiana, 419 US 522, 531-533). This has been interpreted to mean that the challenge to the jury selection process must show that the exclusion of a particular group is “inherent in the particular jury-selection process utilized” (Duren v Missouri, 439 US 357, 366, supra).

The record does not reflect that the underrepresentation of Hispanics was caused by any aspect of the selection process, so as to amount to “systematic exclusion.” Two points in the procedure were identified as the times at which the number of Hispanics decreased significantly: after receipt of the qualification subpoenas, and during the qualification interviews. There was, however, nothing about these procedures that caused the particular exclusion of Hispanics. All jurors were summoned by the mailed subpoenas, which were sent to Hispanics in proportion to their percentage in the population. No different response procedures were established for Hispanics as compared to any other group or individuals; all were to report for an interview with the commissioner. The fact that a much lower percentage of Hispanics responded to the summonses was not caused by the system and cannot be considered an inherent defect in the process. Hispanics also were disqualified and exempted from service in a greater percentage than non-Hispanics. The reasons — English literacy difficulties and responsibility for children — for these actions would apply to any person regardless of his or her race, sex, or ethnicity (cf. Duren v Missouri, 439 US 357, supra [special exemption criteria and response rules applicable only to women]; Taylor v Louisiana, 419 US 522, supra [same]).

Thus, the disproportionately lower percentage of Hispanics present in the Grand Jury pool was not attributable to any aspect of the system itself. Defendant Wells did not demonstrate systematic exclusion, and thereby did not establish a prima facie case. His motion to dismiss the indictment was, therefore, properly denied.

Ill

It has long been recognized that “ ‘it is a denial of the equal protection of the laws to try a defendant of a particular race or color under an indictment issued by a grand jury * * * from which all persons of his race or color have, solely because of that race or color, been excluded by the State’ ” (Castaneda v Partida, 430 US 482, 492, quoting Hernandez v Texas, 347 US 475, 477). Substantial underrepresentation, in contrast to exclusion of a particular group, is also unconstitutional when it is caused by intentional discrimination {id., at p 493).

A prima facie case of an equal protection violation in the context of a Grand Jury selection is established by showing that the underrepresented group is a “recognizable, distinct class” who has received different treatment under the law. A substantial degree of underrepresentation “over a significant period of time” can be shown through statistical analysis of the disparities between the proportion of the group in the total population and the proportion of the group on the Grand Jury lists (id., at p 494). Moreover, a showing that the selection process is “susceptible of abuse or is not racially neutral supports the presumption of discrimination raised by the statistical showing” (id.; see Rose v Mitchell, 443 US 545, 565). Therefore, unlike a due process challenge, a defendant may establish, a prima facie case without explicitly proving that the discrimination was caused by systematic exclusion (see Duren v Missouri, 439 US 357, 370-371, supra [Rehnquist, J., dissenting]).

To rebut this inference of discriminatory intent, the State has the burden of showing that the underrepresentation has been caused by nondiscriminatory factors or by permissible racially neutral selection criteria and procedures (Castaneda v Partida, supra, at pp 493-494; see Duren v Missouri, 439 US 357, 368, n 26, supra). Simple protestations that racial considerations play no part in the selection process will not constitute an adequate rebuttal (Castaneda v Partida, supra, at p 498, n 19). Nor may the State “rely on a presumption that the officials discharged their sworn duties to rebut the case of discrimination” {id.). Evidence detailing the procedures followed by the Commissioner of Jurors, however, setting forth such facts as the number of the underrepresented group who were not residents of the area, illiterate, not of good moral character, or prior felons, is probative of whether the underrepresentation of the particular group was unlawful.

(A)

On defendant Guzman’s appeal, as in Wells’s appeal, there is no dispute that Hispanics are a “recognizable, distinct class, [which has been] singled out for different treatment under the laws” (Castaneda v Partida, 430 US 482, 494, supra), or that Hispanics have been substantially underrepresented in the Kings County jury pools for a significant period of time. In addition, it was established that there are subjective factors, such as rejection for failure to sufficiently comprehend English, that are injected into the selection system during the qualification interview process. The opportunity for such subjective judgments in the process established that it was “susceptible to abuse,” which supported the presumption of discrimination raised by the statistical showing of underrepresentation. Defendant thus established a prima facie case that his right to equal protection had been violated.

In rebuttal, the People established that the general procedure used in the selection process did not manifest any discriminatory intent on its face. Indeed, the defendant Guzman conceded this but argued that the discrimination occurs during the qualification interviews. The record, however, shows that, proportionately, only about half as many Hispanics as non-Hispanics responded to qualification summonses, which were sent out in proportion to the number of Hispanics in the general population of Kings County in 1978. Of those persons appearing, Hispanics were found to be qualified only about 75% as often as non-Hispanics. The majority of Hispanics who failed to qualify did so because of their inability to read, write and understand the English language with sufficient proficiency to complete the questionnaire. Most of the remainder were women exempted at their own request because they had the responsibility of caring for young children. Over the entire process from summons through qualification and placement in the pool, non-Hispanics were added to the pool at nearly three times the rate of Hispanics.

The record supports the conclusion that the underrepresentation of Hispanics was caused, in part, by their lower response rate to summonses, which cannot be considered a discriminatory factor in the selection process or in any way intentionally caused (cf. United States v Clifford, 640 F2d 150, 156). Nor is the underrepresentation that was caused by lower English literacy and by requests for exemptions based upon responsibilities to young children at home, the result of intentional discrimination. These, too, are nondiscriminatory factors with respect to Hispanics. Nothing in the record suggests that these criteria were applied in a discriminatory fashion.

The affirmed findings of fact that the selection process in general is racially neutral, that Hispanics respond to qualification summonses at a lower rate than non-Hispanics, and that there is a higher incidence among Hispanics of English illiteracy and exemptions based on child-care needs, are supported by sufficient evidence (see People v Rizzo, 40 NY2d 425, 430). Given these facts, this court concludes that the People adequately established that the underrepresentation of Hispanics was not caused by intentional discrimination.

(B)

Defendant argues that Best was improperly denied discovery requests for fingerprint cards and questionnaires that provided the basis for the People’s evidence. It is asserted that this precluded Best from conducting effective cross-examination. This deprivation, it is argued, should have rendered a substantial part of the People’s testimony inadmissible and, thus, the rebuttal evidence insufficient.

Section 509 of the Judiciary Law states that records of persons summoned for juror qualification are confidential and may not be disclosed except to the county jury board or as permitted by the Appellate Division (Judiciary Law, § 509, subd [a]). These confidential records contain many details (e.g., criminal record, occupation, home telephone, extent of education, names and ages of children), of a juror’s private life. To guard against their unrestricted disclosure, a request for their discovery must present some factual predicate which would make it reasonably likely that the records would provide relevant evidence (see People v Gissendanner, 48 NY2d 543, 549-550).

Best was allowed to examine the lists of grand jurors for 1970 through 1978, from which he made his statistical analysis demonstrating underrepresentation of Hispanics. Best twice requested discovery of the fingerprint cards and the qualification questionnaires. When he made these requests, however, he gave no reason to believe that these records would turn up anything relevant other than to provide possible information with which to impeach the commissioner’s credibility during the People’s direct case. Best had been granted access to the individuals who conducted the interviews of the prospective jurors and thus had the opportunity to compare the commissioner’s testimony with that of others involved in the actual selection process. No interviewer was called by Best, nor did he allege any information gained from them in his discovery motion which might indicate that the questionnaire and fingerprint cards would contain information inconsistent with Durso’s testimony. “[NJothing better than conjecture having been presented to the court, it acted well within its range of discretion in rejecting the application” (People v Gissendanner, 48 NY2d 543, 550, supra).

On redirect, the commissioner testified by providing a summary of information obtained through a review of the questionnaires and other documents. Assuming that these new circumstances would have justified requiring the disclosure of the confidential materials to defendant, it is noted that this testimony was given after Best’s second request had been denied by the Appellate Division. Best’s third request was presented only to the trial court. Inasmuch as Best never renewed his request in the Appellate Division, the proper forum (see Judiciary Law, § 509), this issue is not preserved for review.

In sum, the People’s evidence adequately established that the underrepresentation of Hispanics in the Grand Jury pool was not caused by intentional discrimination. Thus, Guzman’s motion to dismiss the indictment on the ground of a violation of his right to equal protection was properly denied.

IV

The defendants’ other arguments have been considered and are found to be without merit.

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

Chief Judge Cooke and Judges Jasen, Jones, Wachtler, Meyer, Simons and Kaye concur in Per Curiam opinion.

In each case: Order affirmed.

      . The hearing held for the motion to dismiss the indictment in People v Best covered 18 days of testimony over an eight-month period and the minutes of the hearing are contained in 13 volumes of transcript.

      . The Appellate Division mischaracterized Wells’s argument as claiming only a violation of equal protection and held that Wells, as a black person, had no standing to raise an equal protection violation relating to Hispanics. On the same reasoning, the People continue to challenge Wells’s standing to raise an equal protection claim as to himself. However, as said defendant points out on appeal, his claim is only for a violation of his right to due process which is caused by the underrepresentation of Hispanics in violation of the equal protection clause. As the question of whether Wells would have standing to challenge the jury selection system as a violation of his own right to equal protection is not before us, we do not decide that issue and do not comment upon the correctness of the Appellate Division’s holding.

      . The court in Peters v Kiff (407 US 493), analyzed the due process deprivation suffered by the defendant as the loss of the right to a Grand Jury drawn from a cross section of the community (id., at pp 500, 503-504). The right to a jury chosen from a fair cross section is also protected by the Sixth Amendment guarantee of an impartial jury trial in the context of a petit jury challenge (Duren v Missouri, 439 US 357, 359; Taylor v Louisiana, 419 US 522, 525-527; Peters v Kiff, 407 US 493, 500, supra; Duncan v

        Louisiana, 391 US 145). The principles governing establishment of .a claim that a petit jury is not drawn from a fair cross section of the community in violation of the Sixth Amendment are the same for showing lack of a fair cross section in Grand Juries in violation of the due process clause (Peters v Kiff, 407 US 493,495-496, supra; see Duren v Missouri, 439 US 357, 358-359, supra; Taylor v Louisiana, 419 US 522, 528, 538, supra; People v Parks, 41 NY2d 36, 42-43). Thus, guidance from the cases dealing with fair cross-section claims with respect to petit jurors under the Sixth Amendment will be applicable in this instance of a fair cross-section challenge to a Grand Jury selection system under the due process clause.

      . [3] There is no merit to the People’s argument that defendant lacks standing to litigate the correctness of the rulings on Best’s discovery motions. The parties here agreed to “incorporate the minutes of the hearing” into their motions and “rest on that.” There can be no reasonable doubt that the meaning of the “minutes of the hearing” or the “record” in the Best hearing would literally include any and all proceedings, including testimony of witnesses, objections to testimony by both sides, motions for discovery, or rulings or comments by the Judge. To hold otherwise would be to presume that defendant in effect waived any meaningful right to appeal by requesting the court to decide his own motion in reliance upon a record in which no errors had been preserved for review. It is highly unlikely that this was the intent or understanding of the parties. It was not necessary for defendant to personally repeat all desired objections and requests made by Best’s attorney, in effect to re-enact the proceeding of the Best hearing. The full record, as it stands from the Best hearing, was made a part of defendant’s own motion to dismiss the indictment and thus all errors preserved on that record are deemed preserved on this appeal in the absence of a stipulation to the contrary.