text:
    Schenck and another v. Naylor.
    In an action to recover damages for the breach of a covenant, if the complaint does not show, either by express words, or by a necessary implication, that the covenant is broken by the defendant, it is bad upon demurrer.

      (October Special Term, 1853.)
    The defect is not cured by a general allegation, that the acts set forth were “a violation of the defendant’s covenant,”
    This action was brought by tne plaintiffs as tenants, against the defendant as landlord, for a breach of a covenant contained in an agreement for the letting of the basement of the premises known as Ho. 464 Pearl street, New York.
    The covenant alleged to be broken, is as follows: “ The plaintiffs show, that in said lease it is further agreed on the part of defendant, that the defendant should not let, of allow to be undeflet, any other part of the building Ho. 464 Pearl street, for a festaurant or porter-house.”
    The breach of the covenant is alleged as follows: “ The plaintiffs show that on or about June 1st, 1853, a porter-house was opened on the first floor above the basement, so let by defendant to plaintiffs, which porter-house is still occupied as such to the great damage of plaintiffs, and in violation of defendant’s agreement, as above stated.”
    The defendant demurred to the complaint, as not containing facts sufficient to constitute a cause of action, because the plaintiff had not averred, of shown, that the defendant let, of allowed to be underlet, any part of the building Ho. 464 Pearl street for a porter-house.

      Barnard & Parsons, for the defendant.
    I. It is certain that the breach alleged is not in the words of the covenant. It does not appear that the defendant had anything to do with the porter-house which was opened on the 1st of June. He has agreed not to let; or allow to be underlet, any other part of the building Ho. 464 Pearl street; and if a porter-house is kept there without being allowed by the defendant, he has not broken his covenant.
    II. The breach alleged is not tantamount to following the words of the covenant. If a porter-house was opened on the premises, it does not follow that the defendant let, or allowed to be underlet, the premises for that purpose. A porter-house may be there without any privity or consent of the defendant, and to allow the breach alleged to be good, would change the covenant from its clear terms to a covenant that a porter-house shall not be opened in any other part of the premises, without reference to any act or permission of the defendant.
    III. If the plaintiff cannot aver, or prove, that the defendant let, or allowed the premises to be underlet, for a porter-house, they cannot recover in this action, although they may be able to prove that a porter-house was opened there. /
    IV. The words in the averment of the breach, that said porter-house “ is in violation of defendant’s agreement,” is a conclusion of law from the facts previously stated. If these facts do not amount to a breach, the conclusion is no more correct than to allege that a dry-goods store was kept there “ in violation of defendant’s agreement.”

      J. Aitkins, for plaintiffs, contra.

    I. By the defendant’s agreement, as averred, it was understood that no porter-house or restaurant should be kept at any other part of the building. The breach is therefore sufficiently averred.
    II. The averment that a porter-house was opened in violation of defendant’s agreement, and the fact that it was so opened, requires the defendant to show some defence in mitigation, or otherwise, for the non-fulfilment of the agreement on his part.
    III. The defendant here puts himself on his own literal construction of the language of the agreement, and claims to be excused from the fair interpretation or meaning of the agreement. The plaintiffs have no control of any other part of the premises except the part hired by them from defendant, and there is no doubt that the defendant is bound in good faith to fulfil his agreement to the extent claimed by plaintiffs.
   Duer, J.

I cannot give that construction to the covenant in the lease which was insisted on by the counsel for the plaintiffs ; and giving the proper construction to the covenant, I cannot say that the complaint alleges a breach. The covenant is not general, but is limited to the personal acts of the defendant. It is not, that during the continuance of the lease no restaurant, or porter-house, shall be opened in any other part of the premises, but that the defendant will not let, nor allow to be under-let, any part of the premises for such a purpose. The complaint does not allege that either of these acts has been done by him, but merely, that in a certain part of the premises a porter-house has been opened. It is true, the words, “ in violation of the defendant’s agreement,” are added, but these words aver only a conclusion of law, and as the conclusion is not justified by any facts stated in the complaint, the averment is irrelevant and nugatory.

It may not be necessary that the exact words of a covenant . should be followed in assigning a breach, but it must distinctly appear, by express words, or by a necessary implication, that, admitting the truth of the facts stated in the complaint, the defendant has broken the covenant in its true sense and meaning; The words of the covenant need not be literally, but must, in all cases, be substantially followed.

If the defendant is the sole owner of the building described in the lease, it is difficult to believe that any part of it can be occupied as a porter-house, unless let by him, or by one of his tenants, for that purpose. Still such may be, and I have no right to say, is not the fact. It may be, that the occupant is a mere intruder and trespasser, or he may have entered, and claim to hold the possession, under a paramount title.

I am therefore forced to say, that as the facts set forth in. the complaint do not show, expressly, or by a necessary inference, a breach of the defendant’s covenant, they are not sufficient to constitute a cause of action.

Demurrer allowed, with liberty to the plaintiffs to amend upon the usual terms.

Approved upon consultation.


source: Caselaw Access Project

license: Public Domain

text:
    Riggins v. Williams.
    (October Special Term, 1853.)
    Where, under an order upon the plaintiff to file security for costs, an undertaking executed by two sureties is filed, the justification of one of the sureties, upon exceptions, is sufficient.
   So held by all the judges consulted by Dues, J., and held to apply to all cases when the terms of an order, requiring security to be filed for any purpose, are general.


author: By the Court. Bosworth, J.

text:
    George C. Genet and Charles H. Parmlee, respondents, v. Mary E. Dusenbury, appellant.
    (Before Oakley, Ch. J., Duer, Campbell, and Bosworth, J.J.)
    November General Term, 1853.
    If a married woman is sued alone, on a contract made by her during coverture, and does not plead the coverture, but allows judgment to pass by default, and subsequently applies, on motion, to the discretion of the court, to set aside the judgment, and execution issued thereon, the court will not interfere, when it appears, in answer to the motion, that she obtained the credit by representing herself to be a widow, and that the plaintiffs had no notice to the contrary, but will leave her to her remedy by appeal, or to other remedies that may exist, for enforcing strictly legal rights.
    This was an action against the defendant, as maker of a promissory note. Judgment m personam had been entered against her, for want of an answer, for $349.87, the amount of the note and interest, with costs of the action.
    The defendant moved to set aside the judgment for irregularity, and for other relief, on affidavits, showing that at the time she made the note she was, since has been, and still is, a married woman. The alleged irregularity consists in not having made her husband a party defendant. The motion was denied, and from the order denying it, the defendant appealed to the general term.
    The affidavits on which the motion was opposed, showed, among other things, that the note was given for goods sold and delivered to the defendant, on the representation that she was a widow woman; that she was worthy of credit; that she had up a sign with her name upon it, and made many of her purchases and transacted portions of her business by one L T. Munson, as her agent.

      Seeley and Cheny, for defendant.

      C. P. Kirkland, for plaintiffs.
   By the Court. Bosworth, J.

In King v. Jones (2 Lord Raym. 1525), it was said, that if an action against a fime covert be prosecuted against her alone to judgment, it is error, for which it may be reversed on writ of error brought by the husband. In Milner et al. v. Milnes et al. (3 Term B. 627), the Court of King’s Bench assented to the correctness of this position.

But it is said that, unless he brings error, the judgment will stand good, for the wife alone cannot bring error (Bro. Abr. Tit. Error, fol. 173, and Tit. Joinder in Action, fol. 88).

Such a case was expressly provided for by the Revised Statutes (2 R. S. 592, § 5).

It is undoubtedly true, that a fime covert cannot regularly be sued as a fime sole: her contracts made during coverture create no personal obligation on which a judgment inpersonam can be recovered against her (Hookham v. Chambers, 3 Bro. and Bing. 92; Marshall v. Rutton, 8 T. R. 546; 2 Kent’s Com. 161).

Although this be so, the question is still left, in what way is the nonjoinder of the husband to be made available to the wife, and what are the legal consequences of her suffering judgment to be taken against her by default ?

It has been held, that the coverture cannot be pleaded in bar of the action, but only in abatement of it (Milner v. Milnes, 3 T. R. 627). That this plea can only be pleaded by her in person (2 Sand. 209, a.; Graham’s Pr. 229, 2d edit).

That if the fact of coverture be doubtful, the court will not relieve her on motion, summarily, but will leave her to her plea of coverture, in the ordinary course of proceeding (Partridge v. Clarke, 5 T. R. 194).

It has also been held, that where a married woman has been sued and arrested as a fime sole, the court will not, as a matter of course, discharge her, on motion, on filing common bail, if she obtained the credit pretending she was a single woman, or is sued as an acceptor of a bill of exchange (Pearson v. Meadon, W. Bl. R. 904; Partridge v. Clarke, supra: Richardson v. Cowlan, 2 Marsh. 40; Jones v. Lewis, 7 Taunt. 55).

The principle of these decisions covers the merits of this motion, so far as it is to he treated as one addressed merely to the discretion of the court.

It appearing, in answer to the motion, that a fraud has been committed in procuring the credit, that the defendant is sued as the maker of a note, the court is not bound to interfere, as a matter of course, in a summary way, to give relief.

The Code has enacted nothing substantially new, by providing that in an action against a married woman, to charge her in personam, her husband shall also be a party defendant (Code, § 114 ; 2 R. S. 597, § 5; Morse v. Earle & Jackson, 13 Wend. 271).

The Code provides (§ 144), that the defendant may demur to the complaint, when it shall appear on the face thereof, that there is a defect of parties plaintiff or defendant; that if such matter does not appear on the face of the complaint, the objection may be taken by answer (§ 147); and that, if such objection be taken neither by demurrer nor answer, the defendant shall be deemed to have waived the same (§ 148).

The published abstract of the decisions made by the Court of Appeals, in October, 1853, represents that court to have decided, in Hastings v. McKinley & Thomas, that where an action concerning her separate property is commenced by a married woman in her own name only, if no objection on that account was taken, by answer or demurrer, such objection is waived.”

If that rule is equally applicable to a ftme covert defendant, then the mere objection of the non-joinder of the husband is waived, by omitting to take it by answer.

The only objection that would remain, relates to the merits of the action.

If, as is contended by the defendant’s counsel, the judgment is void, she needs no aid from the court. In an action of trespass for taking her property, the plaintiffs cannot protect themselves by the judgment and execution issued thereon, if tire judgment is void.

If not void, but merely erroneous, and the error is one which entitles the defendant to have the judgment reversed, as a matter of strict legal right, then she will have a perfect remedy by appealing from the judgment.

The defendant’s counsel supposes, that no appeal can be had from a judgment entered by default, and therefore insists that it is the duty of the court to relieve her upon motion. The case does not require the decision of the question, whether an appeal will lie in such a case. The only substantial question presented by this appeal, is simply this: Is such a defendant, on such a state of facts, entitled to relief, on motion, as a matter of strict legal right 1

In addition to the cases cited, in which the court refused, under similar circumstances, to discharge a married woman from arrest, on filing common bail, Mores v. Richardson (8 Barn, and Cres. 421) is an authority for the position, that, after judgment by default against a married woman, and her arrest upon ca. sm, the court will not discharge her from custody, as a matter of course, on motion, notwithstanding the fact of her coverture may be incontestable.

In that case, which was decided in 1828, such a motion was denied, and she was left to her remedy by writ of error.

In Bignon v. Jones (15 Mes. and Wels. 566), after a judgment had passed against husband and wife, and her body had been taken in execution, the court refused to discharge her from custody, for the reason that she did not swear that she had no separate estate. The reason of discharging a married woman from custody in such cases, is said to be, that her imprisonment will not be continued as a means of coercing payment, inasmuch as, in judgment of law, she is incapable of acquiring property.

But if she has dealt as a feme sole, and has obtained credit on the representation of her being a single woman, it is equitable that she should apply her property to pay debts which were contracted under such circumstances. As the justice of the plaintiffs’ claim is not controverted, as the most they can effect with their execution is to reach sufficient of her separate property to pay the judgment, they will not acquire any inequitable advantage, and she will not be deorived of any equitable right, if the judgment and execution are allowed to stand. If, as her counsel seems to suppose, an appeal from the judgment will not lie, the only consequence will be, that the plaintiffs will obtain what in equity they are entitled to, if they have levied on sufficient property to satisfy the judgment.

We are of the opinion, that the defendant is not entitled to the relief sought, upon a summary application to the discretion of the court. There are no equitable considerations requiring its interference.

The order appealed from must be affirmed, with costs ; and the defendant must be left to obtain such strictly legal relief as she may be entitled to, by such ordinary proceedings as she may be advised.


author: Oakley, Ch. J.

text:
    Bridges and others v. Miller.
    (November Special Term, 1853.
    Before Oakley, Ch. J.)
    The words, “proceedings to compel the determination of claims to real estate," in § 808 of the Code, refer only to the special proceedings authorized by the revised statutes.
    In an action to set aside a conveyance of real estate, an extra allowance can only be made when the case upon the trial appears to be “difficult or extraordinary,"’ or “ the prosecution or defence has been unreasonably or unfairly conducted.”
    Tup, complaint was filed to set aside a conveyance of real estate, in the city of New York, upon the grounds of the incompetency of the grantor, and the exercise of undue influence. Upon the coming in of the answer, issues were directed, which were found by the jury in favor of the defendant. Subsequently, at a special term, a new trial was refused, and the complaint finally dismissed. The defendant now moved for an allowance under § 308 of the Code.
   Oakley, Ch. J.

As it does not appear that the judge who tried the issues, deemed the case to be “ difficult or extraordinary,” and there is no evidence that the prosecution of the suit has been “ unreasonably or unfairly conducted,” I am satisfied, that I have no power to make any additional allowance. It is a mistake to suppose that this action is a proceeding to compel the determination of a claim to real property, within the meaning of the Code. The proceedings to which alone § 308 refers, are those specially authorized hy the revised statutes (2 R. S, or p. 312), and the provisions ip relation to which, although modified in form, the Code, hy an express provision, has retained in force (§ 449). The motion is denied without costs.

Approved on consultation.


text:
    Crocker and another v. Claughly.
    (November Special Term, 1853,
    Before the Chief Justice,)
    The defendant in an action, will be allowed to set off a judgment in his favor for costs, against a judgment upon a verdict, in favpr of the plaintiffs, when the latter are shown to be insolvent, notwithstanding they had previously assigned the verdict to their attorney.
   The plaintiffs, in an action for the recovery of money, only obtained a verdict for $35,.which they immediately assigned to their attorney. Judgment was subsequently entered and perfected, and was, that the plaintiffs should recover the $35, and the defendant his costs, amounting to $65.56. The defendant, upon an affidavit of the facts, and of the insolvency of the plaintiffs, moved that the judgment of the plaintiffs should be satisfied by a set-off of an equal amount of the costs which he had recovered.

The Chief Justice, without passing upon other questions which were raised, held that the insolvency of the plaintiffs was not only a sufficient, but a conclusive reason for granting the motion.

Approved on consultation.


author: By the Corner. Hoffman, J.

text:
    Hubbard & Willis v. Guild.
    (General Term,
    December, 1853.)
    When judgment dreditors have acquired a lien upon a fund in the hands of a receiver, the court will not, upon their petition, make an order upon the receiver to satisfy the judgment out of the nioneys in his hands; until a decree has been made in the action in which the receiver was appointed, and notice has been given to all other creditors interested in the distribution of the fund. But in order to protect the petitioners, an order will be made upon the receiver, forbidding him to make any payments but of the fund withddt notice to the petitioners, or their attorney, and alltiwing the petitioners to institute such an action against the receiver and other parties, as they may be advised,

    Appeal from an order at special term. All the material facts are stated in the opinion of the court.

      Evarts, for plaintiffs and appellants.

      Dodge for petitioners.
   By the Corner. Hoffman, J.

This is an appeal from an order made at the special term, declaring that the petitioners, George Gardiner and Joseph P. Gardiner, had acquired a Hen for the payment of the judgment stated therein, upon the fund in the hands of the receiver, before his appointment; that such fund came into his hands subject to such Hen, and that the receiver satisfy such judgment with interest, out of the assets received, and to be received by him, before payment of any other claims.

In order to understand the grounds of the decision we have made of this case, it will only be necessary to state the following facts :—On the 22d of January, 1852, the petitioners, G. & J. P. Gardiner, named in the order, brought their action in the supreme court of this state, against the two plaintiffs in this suit, Walworth & Nason, with the defendant, Guild, comprising the firm of Walworth, Nason & Guild, and doing business in New York. A judgment appears to have been regularly obtained in that suit on the 21st of April, 1852. On the 2d of July, 1852, the plaintiffs instituted a creditors’ suit on that judgment, and an execution thereon returned unsatisfied for a residue. They procured the appointment of a receiver, on the 21st of September, 1852, and no further steps have been taken in that suit.

On the 22d of May, 1852, the present action was commenced. The plaintiffs are Walworth and Mason, residents of Massachusetts, with Hubbard and Willis, their assignees under the proceedings against them as insolvents, taken in that state; the effect of which, as stated in the complaint, has been to vest all the property of Walworth and Mason in them. The defendant, Guild, is the other partner of the firm of Walworth, Mason, and Guild.

The prayer of this complaint is for an account of the assets of the firm, their application to the debts of the firm without preference, an injunction and receiver, and payment to the plaintiffs, Hubbard and Willis, as assignees, of any amount which may appear due to them, as representing Walworth and Mason.

An injunction issued against the defendants the 29th of May, 1852, restraining him from intermeddling with the partnership property in the usual form; and on the 4th of Movember, 1852, a receiver was appointed, who took possession.

It should also be noticed that a certain amount was collected under the Gardiners’ execution, by the sheriff, and that the funds in the hands of the receiver in this action, have resulted chiefly from debts due to the firm; and such is the nature of the assets remaining under his control.

The Gardiners presented their petition to this court, setting forth the above facts, as well as others not now material to be stated, gave notice to the parties in the action, and the receiver; and upon that petition the order appealed from was made.

We do not intend to express an opinion upon the legal rights of the petitioners, on the facts as presented, further than to say, that they are plainly not so untenable as to justify a dismissal of the petition, and vacating the order on the merits. But we are of opinion that in the present state of the proceedings in this suit, and upon this petition, an order for declaring the priority of the claim, and adjudging payment cannot he made.

Although the applicants have not proceeded in their suit upon the judgment, and obtained the usual order for payment, out of the funds collected by their receiver, yet they are entitled to institute a suit here to reach other equitable assets in other hands. (Greenwood v. Broadhead, 8 Barb. S. C. Rep. 596; see also Sale v. Lawson, 4 Sand. S. C. Rep. 718.) Supplemental, or further bills to reach other property, which could not be reached by a previous creditor’s bill, were of frequent occurrence.

Of course it should be made to appear that the claim was unsatisfied; and it might be that they could not get a decree for actual payment here, until the suit was closed in the supreme court. The completion of the proceedings in the supreme court, would, however, leave the petitioners exactly where they are now, as to the fund under the control of this court. An application must be made here.

If again, the present action had proceeded to a decree, directing accounts to be taken, and all creditors to be called in, in the usual form, the present mode of proceeding might be proper. This was the course pursued in the important case of Elliot v. The United Insurance Company (7 Gill’s Maryland Reports, 387), a case bearing much upon the question of right here presented, as well as that of form. A petition was there filed, after a decree, in a creditor’s suit against the corporation, was answered by the receiver, and the point raised thus settled.

The reason for allowing such proceeding after a decree was obvious. The cause is then no longer under the control of the parties; but what is of more importance, every creditor has an opportunity of being heard, to establish his own demand, and contest that of others. Those who appear are quasi parties to the suit, and must have notice of eveiy material proceeding.

But in the present case, even allowing that the receiver may be treated as representing the creditors, and even if, in strictness, a power resides in this court to make the order in this form, we should deem it inexpedient to do so.

The creditors, if'fully represented by him, should have the receiver a formal party to a record; and called upon to set up' every justifiable defence to the claim, or to bring superior or equal rights of others before the court. This was done in Waring v. Robinson, referred to. The defendant, Miller, the receiver, was united with the partners in a bill to test the validity of a confession of judgment íñade after his appointment.

We have seen & similar course pursued in the Maryland case; although a petition was there justifiable.

In several cases in which the receivers of the Life and Fire Insurance Company were concerned, as representing the interests of creditors and stockholders, bills were filed against them.

In one case; Conducted by the late eminent counsel, Mr. P. A. Jay, commenced before their appointment, he filed a supplementary bill to bring them ins In no case while they were common law receivers, was any demand or claim affecting the property of the company, litigated, by petition, in the suit in which they were appointed. Bills were always brought; After 1830, they became receivers under the revised statutes, upon application of the attorney-general; and then the adjustment of claims was made under the statutory provisions.

The court of chancery does; indeed, sometimes pass upon rights in a summary way, by an examination pro inter esse suo ; but it will be found that in general this is allowed only to settle a right of possession, such as where a mortgage is interfered with by the possession of the receiver, very frequently an ejectment is ordered to be brought or defended (Smith on Receivers).

It is urged by the counsel of the applicants, and there is force in the argument, that they should riot be left for the assertion of their rights, to the Contingency of a decree beirig had in this suit, over which they hake not the slightest control, and which may be abandoned by the parties, or even the plaintiff, at his will. That the dismissal of the suit would regularly supersede the receiver, and the funds would go among the parties to the record.

We can so far take notice of the petitioners’ intervention in this cause, and their rights, as to protect them from this result. The cases of Langan v. Bowen, 1 Sch. & Lefroy, 295; White v. Lord Westmeath, 2 Molloy, 128, and Beatty Rep. 180; and Murrough v. French, 2 Molloy, 497, afford authority enough for restricting a receiver from paying out the funds without the priority of the claimant.

In the above cited cases orders to such an effect were made upon terms of the parties filing bills immediately.

We are of opinion, that the order of the 28th day of October, 1853, made at special term, must be vacated. And that an order be entered, directing the receiver appointed in this cause, not to pay out any moneys in his hands, without notice to the attorney of the petitioners, George Gardiner and Joseph P. Gardiner ; that such petitioners have liberty to institute such action against the receiver in this cause as they may be advised, making such other persons parties as they shall see fit; and that neither party he allowed costs as against the other, for the petition, or the proceedings thereupon, or upon this appeal.


author: Chief Judge Kaye.

text:
    [801 NE2d 395, 769 NYS2d 175]
    John M. Bansbach, Appellant, v Michael F. Zinn et al., Respondents.
    Argued September 16, 2003;
    decided October 30, 2003

      POINTS OF COUNSEL

      Harold B. Obstfeld, P.C., New York City (Harold B. Obstfeld of counsel), for appellant.
    I. The standard to be applied on a motion for summary judgment is stated in the following cases. (Ugarriza v Schmieder, 46 NY2d 471; Sillman v Twentieth Century-Fox Film Corp., 3 NY2d 395; Zuckerman v City of New York, 49 NY2d 557; Kuehne & Nagel v Baiden, 36 NY2d 539; Merritt Hill Vineyards v Windy Hgts. Vineyard, 61 NY2d 106; Dampskibsselskabet Torm A/S v Thomas Paper Co., 26 AD2d 347; Alvord & Swift v Muller Constr. Co., 46 NY2d 276; Afco Time Payment v Security Ins. Co. of Hartford, 111 AD2d 634.) II. Plaintiff was excused from making a demand on the Besicorp board under Business Corporation Law § 626 (c). (Barr v Wackman, 36 NY2d 371; Marx v Akers, 88 NY2d 189; Auerbach v Bennett, 47 NY2d 619; Biondi v Beekman Hill House Apt. Corp., 94 NY2d 659; Diamond v Diamond, 307 NY 263; People v Uran Min. Corp., 13 AD2d 419; Broome v Biondi, 17 F Supp 2d 211; Pilipiak v Keyes, 286 AD2d 231, 97 NY2d 653; In re Landmark Land Co. v Cone, 76 F3d 553; People v Knapp, 206 NY 373.) III. The Appellate Division erred in granting summary judgment dismissing this action. (Schwartz v Public Adm’r of County of Bronx, 24 NY2d 65.) IV The Appellate Division erred in failing to grant summary judgment to plaintiff. (Marx v Akers, 88 NY2d 189; Buggie v Cutler, 222 AD2d 640, 88 NY2d 807; Bellino v Bellino Constr. Co., 75 AD2d 630; Howard v Carr, 222 AD2d 843.) V At the least, plaintiff should have been allowed to re-plead. (Alvord & Swift v Muller Constr. Co., 46 NY2d 276; Herrick v Second Cuthouse, 64 NY2d 692; Rossignol v Silvernail, 185 AD2d 497; Rainbow v Rosenberg, 54 AD2d 1121; Loudin v Mohawk Airlines, 27 AD2d 517; Hunsdorfer v West Side Structural Co., 284 App Div 1084; Health-Loom Corp. v Soho Plaza Corp., 209 AD2d 197.)

      Robinson Brog Leinwand Greene Genovese & Gluck EC., New York City (David C. Burger of counsel), for respondents.
    I. Bansbach is collaterally estopped not only on the issue of demand futility but also as to his challenge to the business judgment of the Besicorp directors. (Alvarez v Prospect Hosp., 68 NY2d 320; Amatulli v Delhi Constr. Corp., 77 NY2d 525; Zuckerman v City of New York, 49 NY2d 557; Pinnacle Consultants v Leucadia Natl. Corp., 94 NY2d 426; Auerbach v Bennett, 47 NY2d 619; 40 W. 67th St. Corp. v Pullman, 100 NY2d 147.) II. Bansbach’s appeal seeks to have this Court rewrite the Business Corporation Law. (Biondi v Beekman Hill House Apt. Corp., 94 NY2d 659; Pilipiak v Keyes, 286 AD2d 231; Haenel v Epstein, 88 AD2d 652; Diamond v Diamond, 307 NY 263; People v Uran Min. Corp., 13 AD2d 419; Schmidt v Magnetic Head Corp., 97 AD2d 151.) III. Bansbach’s postdecision request for leave to replead was properly denied, since the proposed amendment failed to add anything of substance to the dismissed complaint. (Alvord & Swift v Muller Constr. Co., 46 NY2d 276; Herrick v Second Cuthouse, 64 NY2d 692; Rainbow v Rosenberg, 54 AD2d 1121; Loudin v Mohawk Airlines, 27 AD2d 517; Rossignol v Silvernail, 185 AD2d 497; Health-Loom Corp. v Soho Plaza Corp., 209 AD2d 197; Hunsdorfer v West Side Structural Co., 284 App Div 1084.)
   OPINION OF THE COURT

Chief Judge Kaye.

This is a shareholder derivative action brought to recover damages allegedly suffered by Besicorp Group Inc., a public company, as a result of illegal conduct by defendant Michael Zinn—its founder, majority stockholder, board chairman, chief executive officer and president. Because a derivative action is brought on the corporation’s behalf, the law generally requires that demand first be made on the board of directors to pursue the claim. Here, plaintiff made no prelitigation demand on the Besicorp board, contending that demand was futile both because the board was dominated and controlled by Zinn and because a decision to indemnify Zinn was so egregious it could not have been the product of the directors’ business judgment. At issue in this appeal is whether a prior litigation collaterally estops plaintiff from raising futility; if not, whether demand was in fact futile; and whether plaintiff is entitled to summary judgment.

I. Facts

In 1996, the federal government began a criminal investigation into defendant Zinn’s involvement in the congressional campaign of Maurice Hinchey. The government issued subpoenas to Besicorp and others for documents and testimony before a grand jury concerning contributions by individuals associated with Besicorp in the 1992 and 1994 Hinchey campaigns and the use of Besicorp’s assets in connection with those campaigns.

Defendant Zinn was finance chairman of the 1992 Hinchey campaign. In order to circumvent the Federal Election Campaign Act’s prohibitions on corporate campaign contributions, Zinn allegedly arranged that he and certain Besicorp officers and employees would make contributions to the campaign and the company would reimburse them with raises or cash bonuses, deducted as business expenses by the corporation on its federal income tax returns; Zinn allegedly also solicited contributions from others and caused Besicorp to reimburse him by way of a bonus. On May 22, 1996, weeks after the subpoenas were issued, defendants Gerald A. Habib, Harold Harris and Richard E. Rosen convened a special board meeting and determined that the corporation would indemnify Zinn (and certain others) for legal fees and expenses in connection with the subpoenas, and that the corporation would be reimbursed if indemnification was unwarranted. According to plaintiff, the corporation immediately began making substantial payments for legal fees and other charges associated with the government investigation.

One year later, on May 15, 1997, Zinn and Besicorp were indicted for their participation in the illegal scheme. The following month, they each agreed to plead guilty to aiding and abetting the submission of false statements to the Federal Election Commission; Besicorp agreed to plead guilty to the charge of making and signing a false corporate income tax return, and Zinn to aiding and abetting the preparation and presentation of a false federal income tax return. During the plea allocution on June 19, 1997, Zinn acknowledged in open court, under penalty of perjury, that he knowingly and willfully violated the law. In his words:

“I made funds available to certain employees of my company through bonuses and advances so that their contributions to the 1992 congressional campaign of Maurice Hinch[e]y were in fact contributions of Besicorp. I knew the campaign would be reporting those contributions to the Federal Election Commission and I intended the campaign not identify the true source of the contribution. I was also aware and intended that those bonuses and advances be deducted in the ordinary course of events on Besicorp’s tax return.”

Plaintiff complains that the board took no action at that time to seek reimbursement, but instead during June and July 1997 authorized additional payments by the corporation for Zinn’s legal fees and expenses.

On August 13, 1997, plaintiff commenced this derivative action alleging that defendants breached their fiduciary duties and wasted corporate assets by authorizing the use of Besicorp funds to pay legal costs in the federal investigation and by not seeking reimbursement from Zinn. On October 22, 1997, Zinn was sentenced to a six-month term of imprisonment with two years of supervised release, and fined $36,673; Besicorp was fined $36,400. As the sentencing court observed: “Mr. Zinn took advantage of the fact that he was the chief executive officer of a public corporation and he dipped into the corporate treasury to pay for his own political goals at the expense of the minority shareholders, many of whom did not share his political interest. . . . This is a case where in order to commit the election law violation, the person perpetrating the offense engaged in a fraud on his own shareholders and his own company and a breach of his duty of undivided loyalty and also in a tax fraud.” After October 22, Besicorp made no further payments for Zinn’s defense costs. Up to that time, Besicorp had allegedly advanced $273,010.99 for Zinn’s defense, a fraction of the total legal costs the corporation incurred in connection with the illegal scheme.

Zinn resigned as an officer and director on November 11, 1997, and Daley succeeded him. On January 23, 1998—more than six months after Zinn pleaded guilty to knowingly violating the law and several months after plaintiff brought this lawsuit—the corporation’s Legal Defense Management Committee, which consisted of Daley, Habib and Rosen, sought partial reimbursement from Zinn of the expenditures the corporation incurred on his behalf ($186,000). The Committee (Daley abstaining) agreed to accept a $161,000 seven percent interest-bearing promissory note from Zinn (crediting him with a $25,000 bonus), payments to begin on June 1, 1998.

Defendants moved to dismiss plaintiffs action for failure to make a demand on the board of directors pursuant to section 626 (c) of the Business Corporation Law. In April 1998, Supreme Court granted defendants’ motion and dismissed the action. With dismissal of the case in hand, on January 19, 1999 Besicorp’s Legal Defense Management Committee—company counsel, officers and directors (including Habib, Rosen, Daley and Zinn)—met by telephone to continue their discussion regarding indemnification. By this time Zinn had been released from prison, and was reinstated as a Besicorp officer and director. The minutes recite that the Committee reviewed a report of independent counsel retained to advise whether the corporation could indemnify Zinn for his costs and expenses, and whether the corporation was obligated to seek reimbursement from him. That report is not part of the record before us. The minutes also reflect that Zinn attended virtually the entire meeting.

The Committee found that Zinn’s conduct relating to the 1992 Hinchey campaign was “undertaken in good faith,” that he “reasonably believed at the time to be in the best[ ] interests of the Company” and that he “had no reasonable cause to believe that his conduct was unlawful.” The Committee unanimously voted that the corporation indemnify Zinn for all legal costs and expenses related to his defense, subsequent guilty plea, sentencing and incarceration, and also indemnify him for any covered costs he previously paid. As revealed in Besicorp’s March 2, 1999 proxy statement, this action authorized payment of Zinn’s $36,673 fine, acknowledged that he had no further obligation on the $141,000 balance remaining on the promissory note, and authorized repayment of approximately $39,180 of legal fees and expenses incurred by third parties that Zinn had paid. The minutes of the board meeting do not reflect what consideration, if any, the board gave to Zinn’s sworn admissions to having knowingly violated the law, thus exposing the corporation to criminal penalties and other harm.

Shortly after the Committee’s action, the Appellate Division reversed Supreme Court’s dismissal of plaintiff’s complaint, concluding that for purposes of a CPLR 3211 (a) (7) motion, the allegations of business dealings among the board members indicating a lack of independence were sufficient to excuse demand as futile. The Court rejected plaintiff’s proffered alternative ground—that the conduct was so egregious that it could not have been the product of sound business judgment (258 AD2d 710 [3d Dept 1999]).

In April 2000, after obtaining dismissal of another derivative suit brought against the corporation, defendants moved for summary judgment dismissing plaintiffs derivative suit. Defendants argued that, based on Lichtenberg v Zinn (260 AD2d 741 [3d Dept 1999], lv denied 94 NY2d 754 [1999])—decided by the Appellate Division just after its reinstatement of plaintiff’s complaint—plaintiff was collaterally estopped from claiming that demand on the corporation was excused by the directors’ personal and business dealings. Plaintiff opposed defendants’ motion and cross-moved for summary judgment. Supreme Court denied defendants summary judgment on collateral estoppel grounds, finding the Lichtenberg challenge different from the present complaint, and granted plaintiff summary judgment with respect to Zinn’s liability based on his guilty plea admissions. The Appellate Division reversed and dismissed the action, concluding that “the precise issue” being litigated here was litigated in Lichtenberg, and that plaintiff could not rely on facts occurring after commencement of his action to excuse demand on the alternative ground (294 AD2d 762, 763 [3d Dept 2002]). In this posture the case now reaches us.

II. The Requirement of Demand

Central to this appeal is the requirement of demand, which is the starting point for our analysis.

Derivative actions brought by minority shareholders vindicate the corporation’s rights (Marx v Akers, 88 NY2d 189, 193 [1996]). On the one hand, derivative actions are not favored in the law because they ask courts to second-guess the business judgment of the individuals charged with managing the company. On the other hand, derivative actions serve the important purpose of protecting corporations and minority shareholders against officers and directors who, in discharging their official responsibilities, place other interests ahead of those of the corporation.

A balance of these considerations is maintained by the requirement that a plaintiff shareholder set forth in the complaint—with particularity—an attempt to “secure the initiation of such action by the board or the reasons for not making such effort” (Business Corporation Law § 626 [c]). The demand requirement rests on “basic principles of corporate control— that the management of the corporation is entrusted to its board of directors, who have primary responsibility for acting in the name of the corporation and who are often in a position to correct alleged abuses without resort to the courts” (Barr v Wackman, 36 NY2d 371, 378 [1975] [citation omitted]; see also Auerbach v Bennett, 47 NY2d 619, 630-631 [1979]). The demand requirement thus relieves courts of unduly intruding into matters of corporate governance by first allowing the directors themselves to address the alleged abuses. The requirement also provides boards with reasonable protection from harassment on matters clearly within their discretion, and it discourages “strike suits” commenced by shareholders for personal rather than corporate benefit (Marx v Akers, 88 NY2d at 194).

Demand is futile, and excused, when the directors are incapable of making an impartial decision as to whether to bring suit. That occurs in three circumstances:

“(1) Demand is excused because of futility when a complaint alleges with particularity that a majority of the board of directors is interested in the challenged transaction. Director interest may either be self-interest in the transaction at issue, or a loss of independence because a director with no direct interest in a transaction is ‘controlled’ by a self-interested director. (2) Demand is excused because of futility when a complaint alleges with particularity that the board of directors did not fully inform themselves about the challenged transaction to the extent reasonably appropriate under the circumstances. The ‘long-standing rule’ is that a director ‘does not exempt himself from liability by failing to do more than passively rubber-stamp the decisions of the active managers’. (3) Demand is excused because of futility when a complaint alleges with particularity that the challenged transaction was so egregious on its face that it could not have been the product of sound business judgment of the directors” (Marx v Akers, 88 NY2d at 200-201 [citations omitted]).

If demand is excused—as plaintiff alleges it should be, on the first and third grounds—it then becomes the court’s role to chart the course for the corporation which the directors should have selected (id. at 194).

III. Collateral Estoppel

Defendants argue that plaintiff is collaterally estopped from asserting that demand is futile because the issue has already been conclusively litigated in Lichtenberg. If Lichtenberg is determinative, this suit ends.

Collateral estoppel rests on considerations of fairness and efficiency. Where a pending issue was raised, necessarily decided and material in a prior action, and where the party to be estopped had a full and fair opportunity to litigate the issue in the earlier action, fairness and efficiency dictate that the party should not be permitted to try the issue again (Pinnacle Consultants v Leucadia Natl. Corp., 94 NY2d 426, 431-432 [2000]). Collateral estoppel is inapplicable here.

Lichtenberg v Zinn was a derivative action brought in 1993 on behalf of Besicorp against its board members, including Zinn, charging that they caused the corporation to grant board members substantial stock options and warrants for little or no consideration, thereby wasting Besicorp’s assets, increasing their control of the company and diminishing the minority interest. Just after Lichtenberg was filed, in May 1994 Besicorp constituted a Special Litigation Committee made up of new board members Harris, Habib and Rosen, to determine if continuation of the action was in the best interest of the corporation. After a lengthy, comprehensive investigation—including the retention of independent legal counsel and three experts, document inspection and interviews summarized in a 24-page report to the board—the Committee concluded that defendants had acted reasonably, that there was no breach of fiduciary duty or waste of corporate assets and that continuation of the action was not in the best interest of the corporation. Harris, Habib and Rosen also separately submitted detailed affidavits in Lichtenberg, attesting to their independence from Zinn, their comprehensive investigation and their lengthy deliberative process.

Supreme Court dismissed Lichtenberg, and the Appellate Division affirmed, concluding that the Committee’s determination was the result of sound business judgment, supported by a thorough investigation conducted by the defendant directors as well as independent counsel. The Court rejected the argument that the directors were “interested” by reason of prior personal relationships and prior business dealings with Zinn or Besicorp: “the record established] that neither Harris, Habib nor Rosen were named as defendants in the underlying action nor implicated in the alleged corporate wrongdoing and, further, that they were not members of Besicorp’s board of directors at the time that the challenged transactions [were] alleged to have occurred” (id. at 742). In the Appellate Division’s view, each director demonstrated substantial relevant business experience and was not merely one of Zinn’s “cronies” (id. at 743).

Defendants correctly observe that, like plaintiff in the present case, Lichtenberg challenged the “interest” of Harris, Habib and Rosen on grounds of personal and business connections to Zinn. That the Appellate Division in Lichtenberg concluded these defendants were not subject to Zinn’s domination and control with respect to the stock options and warrants, however, does not for all time and in all circumstances insulate their conduct from similar claims. Significantly, in the present action Harris, Habib and Rosen were personally implicated in the alleged wrongdoing; they were board members at the time of the events in issue and they are named defendants in the suit, themselves subject to liability. Moreover, in Lichtenberg both Supreme Court and the Appellate Division had before them affidavits and other materials evidencing the directors’ independence. Here, by contrast, the record before us contains no evidence of defendants’ motivation, investigation or deliberative process with respect to indemnification and reimbursement, and no evidence of independent counsel’s efforts apart from mention of a report. Defendants merely rely on the proof they put before the court in Lichtenberg, which does nothing to substantiate their claims that in this case they acted with integrity and independence, in the interest of the corporation rather than the interest of Zinn.

In short, there being no identity of issue, Lichtenberg does not estop plaintiff from litigating the futility of demand.

IV Futility of Demand

As noted earlier, demand is futile when the board itself has an interest in the matter at issue and therefore cannot objectively determine if it should continue the suit (see generally Dennis J. Block et al., The Business Judgment Rule: Fiduciary Duties of Corporate Directors, at 1467-1468 [5th ed 1998]). As we recognized in Marx v Akers, director “interest” for this purpose may be either a director’s self-interest in the matter or a loss of independence owing to domination and control by a self-interested director. A charge of interest must be made with particularity. Simply naming a majority of the board as defendants with conclusory allegations of wrongdoing or control is insufficient to circumvent the requirement of demand (Barr v Wackman, 36 NY2d 371, 379 [1975]).

In Barr, interest was found and demand excused where the board approved an offer less favorable to the company but more beneficial to board members personally (36 NY2d at 380). Similarly, in Marx self-interest was shown by allegations that the outside directors comprised a majority of the board and therefore received a personal benefit in fixing their own excessive compensation (88 NY2d at 202).

Here, the claim is different. Plaintiff alleges that the board was dominated and controlled by Zinn, who by reason of his position and associations with defendants caused them to place his interests above those of the corporation. That interest is exemplified by the board’s immediate action covering Zinn’s fees upon issuance of the subpoenas, yet delaying reimbursement—indeed, continuing to advance defense costs—after Zinn in open court admitted having implicated the corporation in his criminal conduct. Evidence of postlitigation events confirms plaintiffs assertions that demand on these directors was futile. When certain of the defendants ultimately decided to seek reimbursement from Zinn months later, they sought only partial repayment in the form of a promissory note. And after Supreme Court’s dismissal of plaintiffs action (but before reinstatement by the Appellate Division), they voted to indemnify Zinn for all legal costs and expenses associated with his defense, plea bargain, sentencing and incarceration—including costs previously paid and the fine assessed against him.

We agree with plaintiff that it was futile to ask this board to initiate action to recover the losses allegedly suffered by the corporation.

V Summary Judgment

Plaintiff contends that he is entitled to summary judgment against all defendants because, in contravention of New York’s indemnification laws, the board indemnified Zinn even after he pleaded guilty to knowing and willful criminal conduct implicating the corporation. We agree with Supreme Court that the motion should have been granted as to the liability of Zinn and otherwise denied.

New York’s Business Corporation Law sets forth a “good faith” standard for indemnification. A corporation may indemnify an officer or director “if such director or officer acted, in good faith, for a purpose which he reasonably believed to be in . . . the best interests of the corporation and, in criminal actions or proceedings, in addition, had no reasonable cause to believe that his conduct was unlawful” (Business Corporation Law § 722 [a]). Indemnification is prohibited, however, if a judgment or other final adjudication adverse to the director establishes that his acts were committed “in bad faith or were the result of active and deliberate dishonesty and were material to the cause of action so adjudicated, or that he personally gained in fact a financial profit or other advantage to which he was not legally entitled” (Business Corporation Law § 721). Termination of a legal proceeding by “judgment, settlement, conviction or upon a plea of nolo contendere, or its equivalent, shall not in itself create a presumption that any such director or officer did not act, in good faith, for a purpose which he reasonably believed to be in . . . the best interests of the corporation or that he had reasonable cause to believe that his conduct was unlawful” (Business Corporation Law § 722 [b]).

Here, Zinn’s illegal scheme resulted in a five-count felony indictment against him and the company. In his plea allocution, Zinn admitted under oath in open court that he made company funds available to employees so that they might contribute to a congressional campaign in violation of the Federal Election Campaign Act, and that he was aware and intended that bonuses and advances to reimburse them would be deducted in the ordinary course of events on Besicorp’s tax returns. When asked by the court if his acts were knowing and willful, Zinn answered, “Yes, Your Honor.” In response to the question, “Did you know it was a violation of law to do them?” Zinn stated, “I believe I did, Your Honor.” We cannot agree with defendants that the conduct at issue—punished with a sentence of fines and imprisonment—was little more than a “technical violation of an obscure malum prohibitum statute.” Zinn’s sworn admissions leave no room for finding that he was entitled to indemnification by Besicorp because he acted in good faith, for a purpose he reasonably believed to be in the best interest of the corporation and had no reasonable cause to believe that his conduct was unlawful (see Biondi v Beekman Hill House Apt. Corp., 94 NY2d 659 [2000]; see also Pilipiak v Keyes, 286 AD2d 231 [1st Dept 2001]).

As to the remaining defendants we deny plaintiffs motion for summary judgment. Factual issues remain as to the motivation for their actions, particularly in light of their failure to do more than note the existence of a report of independent legal counsel, upon which they place heavy rebanee (see Business Corporation Law § 723 [b] [2] [A]).

Accordingly, the order of the Appellate Division should be modified, without costs, by reinstating the order of Supreme Court, Ulster County, and, as modified, affirmed.

Judges G.B. Smith, Ciparick, Rosenblatt, Graffeo and Read concur.

Order modified, etc.

      . Since this action was initiated, Besicorp’s rights regarding this action were assigned to WOM, Inc., Besicorp’s successor-in-interest, and WOM was substituted as the real party in interest.

      . Habib, Harris and Rosen became directors in May 1994, after the campaign contributions were made. Harris resigned in November 1997 and defendant Michael J. Daley (chief financial officer) was elected to complete his term. The board during certain relevant times apparently consisted of three “outside” directors (Habib, Harris and Rosen), and two “inside” directors (Zinn and Daley).

      . Because demand was excused on this ground, we need not address the egregiousness issue.


author: Rosenblatt, J.

text:
    [801 NE2d 382, 769 NYS2d 162]
    The People of the State of New York, Respondent, v Jacqueline Mendez, Appellant.
    Argued September 17, 2003;
    decided October 23, 2003

      POINTS OF COUNSEL

      Gerald E. Bodell, Westport, Connecticut, for appellant.
    I. The court below erred in ruling that defendant was competent to stand trial because she had a mental illness that caused her to disassociate her mind and person from a rational understanding of the proceedings against her and had no ability to recall facts relevant to time, place and circumstances and was unable to assist counsel. (Bishop v United States, 350 US 961; Dusky v United States, 362 US 402; People v Francabandera, 33 NY2d 429; Pouncey v United States, 349 F2d 699; Wilson v United States, 391 F2d 460; People v Tortorici, 249 AD2d 588, 92 NY2d 757.) II. The trial of defendant was a violation of her due process rights because she was tried without a jury without an understanding of what it meant because of her mental illness and the court failed to hear and determine or find that defendant could or did in fact receive a fair trial as required by law when the record shows that a fair trial was not given. (Drope v Missouri, 420 US 162; Johnson v Keane, 974 F Supp 225; People v Vallen, 128 Misc 2d 397; Wilson v United States, 391 F2d 460; People v Francabandera, 33 NY2d 429.) III. It was error to convict defendant of manslaughter in the first degree because the State did not prove that defendant had the requisite intent to commit that crime.

      Jeanine Pirro, District Attorney, White Plains (Lisa Colosi Florio, Richard Longworth Hecht and Richard E. Weill of counsel), for respondent.
    I. The finding that defendant was competent, affirmed by the court below, is supported by uncontroverted hearing testimony, and is thus beyond further review by this Court; fit to proceed, defendant was necessarily fit to waive her right to a jury trial. (Matter of Francis S., 87 NY2d 554; Matter of George L., 85 NY2d 295; People v Gensler, 72 NY2d 239, 488 US 932; People v Howard, 87 NY2d 940; People v Bleakley, 69 NY2d 490; People v Beasley, 114 AD2d 415; People v Santos, 43 AD2d 73; People v Miller, 84 Misc 2d 310; People v Bisnett, 144 AD2d 567, 73 NY2d 889; People v Ferguson, 248 AD2d 725, 92 NY2d 981.) II. The thrust of the defense at trial was that defendant acted under extreme emotional disturbance, rendering untenable her present claim that the manslaughter verdict, which credited that defense, was unanticipated. Defendant’s challenge to the proof of her intent to kill Cabrero is unpreserved and flatly refuted by the record. (People v Van Norstrand, 85 NY2d 131; People v Contes, 60 NY2d 620; People v Turriago, 90 NY2d 77; People v Gray, 86 NY2d 10.)
   OPINION OF THE COURT

Rosenblatt, J.

After an argument, defendant killed her boyfriend with a kitchen knife, resulting in her conviction for manslaughter in the first degree and criminal possession of a weapon in the fourth degree. We are confronted with the question of her competency to stand trial, given her long history of mental illness and hospitalizations.

Supreme Court ordered competency examinations in which defendant was examined by three psychiatrists, all of whom declared defendant competent to undergo trial. After a hearing, the court ordered the case to trial, determining that the People had established defendant’s competence by a preponderance of the evidence. The Appellate Division, with one Justice dissenting, affirmed defendant’s conviction, holding that Supreme Court correctly determined that defendant was fit to stand trial. A Justice of the Appellate Division granted leave, and we affirm.

L

On the morning of the crime, defendant telephoned 911, saying “I think I killed my boyfriend.” She gave her address, an apartment house in Yonkers. When the police arrived at the scene, defendant directed them to her boyfriend, Gustavo Cabrero, who was lying in bed with a puncture wound in his chest. Defendant said, “I killed him, didn’t I?” The authorities took Cabrero to a nearby hospital where he was later pronounced dead.

The police arrested defendant and took her statement after administering Miranda warnings. Defendant said that she was angered by what she felt was Cabrero’s infidelity and his bad attitude toward her son. She said that after she and Cabrero returned to bed, she arose, went to the kitchen and got a serrated knife with a six-inch blade. As Cabrero lay in bed, defendant asked him if he was tired. He said he was, and defendant stated, “Don’t worry about it because you are going to rest for a long time.” She then stabbed him in the chest.

The police transcribed defendant’s statement and asked her to sign it, but she refused, saying it contained mistakes. Defendant then gave another statement which differed only in inconsequential detail as to the sequence of events that led to the stabbing. She refused to sign the second statement. “If you sign the papers,” she said, “you can get yourself into trouble.” Defendant then asked for a lawyer and the interview came to an end.

After a grand jury indicted defendant for murder, County Court ordered that she undergo a competency examination pursuant to Criminal Procedure Law § 730.30. The court and the parties received the results, by which defendant was found competent to stand trial. Several weeks later, when the case was called for conference, defendant made a written request for a change of counsel. When the court told her she needed a reason, she gave the court another writing explaining that her attorney had previously represented Gustavo Cabrero. The court at first denied the motion, but yielded after defendant persisted and claimed that her lawyer was interested only in getting her to plead guilty.

Based on the newly assigned attorney’s request, the court ordered another competency hearing to be performed by three certified psychiatrists. They reported defendant competent to stand trial. After granting defendant’s motion for a hearing (CPL 730.30 [2]), the court took testimony from Drs. Abraham Halpern, Norman Weiss and Alan Tuckman. All three testified that defendant was competent.

Dr. Halpern, a Board-certified psychiatrist, discussed the nature of dissociative personality disorder and observed that a person in defendant’s condition could have lapses of judgment. He maintained, however, that defendant was much improved since he last examined her and that she seemed generally in contact and oriented. He stressed that she was aware of the plea negotiations and appropriately sought a new attorney when she perceived that she was being pressured to plead guilty. Dr. Halpern stated that when examining defendant he did not encounter multiple personalities in her and had no reason to believe that she was speaking as another person.

Dr. Tuckman, a forensic psychiatrist, testified that during his examination defendant revealed another personality. Defendant told him that there were three people inside her: an adult woman named Jackie, a seven-year-old child and a teenager named Karla. During the examination, defendant was able to present herself as Karla and then revert to Jackie. Dr. Tuckman concluded that defendant was suffering from dissociative personality disorder, and acknowledged that her dissociative episodes could take place during the trial. He added, however, that because defendant was aware of her other personalities, she had the ability to bring them out or “close them down.” He rejected the theory that defendant was acting as an alternate personality when she stabbed her boyfriend, basing this opinion, in part, on her detailed and accurate statements to the police.

Finally, Dr. Weiss testified that defendant was able to respond properly to questions about the role of the judge, jury, defense counsel and prosecutor. He added that defendant could relate the nature of the charges facing her.

Based on the hearing testimony, the court found defendant fit to stand trial. At the nonjury trial, defendant advanced the affirmative defense of extreme emotional disturbance (Penal Law § 125.25 [1] [a]), which, if credited, reduces murder to manslaughter in the first degree. The defense called Dr. Alan Gold-stein, a clinical psychologist, who stated that defendant was overwhelmed by her emotions and that the defense of extreme emotional disturbance was consistent with her mental condition at the time of the crime.

The court found defendant guilty of manslaughter in the first degree.

IL

The test for competence is set forth in CPL 730.10 (1): “Incapacitated person means a defendant who as a result of mental disease or defect lacks capacity to understand the proceedings against him or to assist his own defense.” For purposes of due process, the United States Supreme Court has explained that the defendant must have “sufficient present ability to consult with his lawyer with a reasonable degree of rational understanding—and ... a rational as well as factual understanding of the proceedings against him” (Dusky v United States, 362 US 402, 402 [1960]; see also Preiser, Practice Commentaries, McKinney’s Cons Laws of NY, Book 11A, CPL 730.10 at 442).

Article 730 makes no mention of who has the burden of proving or disproving competency and by what standard. We have concluded that the burden should be on the prosecution to establish the defendant’s competency by a preponderance of the evidence (see People v Christopher, 65 NY2d 417 [1985]), even though a state is free to place the burden on defendant to prove incompetency by a preponderance of the evidence (see Cooper v Oklahoma, 517 US 348 [1996]).

The dissenting Justice at the Appellate Division cogently pointed out the problems in prosecuting someone whose personalities are “walled off from each other” (297 AD2d 291, 293). There are, however, several reasons warranting affirmance.

Here, the prosecution has carried the burden by a preponderance. All three psychiatrists found defendant competent. Although their analyses and emphases varied, they reached the same conclusion, independently. In essence, they found that defendant was adequately oriented, that she grasped the nature and thrust of the proceedings and that she could assist in her own defense. Defendant points out, correctly, that a competency inquiry involves a legal and not a medical determination (see People v Tortorici, 92 NY2d 757 [1999]). While the court was empowered to override the psychiatric opinion, it found no basis to do so.

Nor do we. The Appellate Division majority concluded that the hearing court’s determination was correct. Under these circumstances, our review is limited, and defendant may prevail only if we conclude that she was incompetent as a matter of law. In People v Jordan (35 NY2d 577 [1974]), we made such a determination, but it was based on a record that included three judicial determinations and psychiatric testimony that defendant was unfit for trial. Here, by way of contrast, the expert testimony was unanimous, concluding that defendant was competent. Moreover, the trial court had the opportunity to observe defendant’s behavior and to evaluate the testimony of the psychiatrists in that context.

Critically, the psychiatric testimony does not support defendant’s claim that her dissociative personality disorder rendered her incompetent to stand trial. This is not a case in which there is evidence that one personality would have to understand and defend charges arising out of an alleged crime committed by another personality. The trial court concluded that defendant had sufficient insight and recall to understand the charges and assist in her defense. Were we to adopt defendant’s argument, we would have to hold that any defendant with dissociative disorder is incompetent as a matter of law. We are unwilling to lay down such a rule. In this case we have no cause to disturb the findings of the trial court and Appellate Division.

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

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

Chief Judge Kaye and Judges G.B. Smith, Ciparick, Graffeo and Read concur.

Order affirmed.

       Some states have required the defense to establish defendant’s incompetency by a preponderance of the evidence (see, e.g., City of Youngstown v Ortiz, 153 Ohio App 3d 271, 793 NE2d 498 [2003]; State v Leming, 3 SW3d 7, 14 [Tenn Crim App 1998]; State v Armstrong, 82 NM 358, 482 P2d 61 [1971]).


author: Graffeo, J.

text:
    [801 NE2d 372, 769 NYS2d 152]
    Beverly Garricks, Respondent, v City of New York, Appellant.
    Argued September 16, 2003;
    decided October 23, 2003

      POINTS OF COUNSEL

      Michael A. Cardozo, Corporation Counsel, New York City (Paul L. Herzfeld and Francis F Caputo of counsel), for appellant.
    I. Plaintiff failed to present a prima facie case that the City failed to act reasonably in removing snow and ice under the circumstances. The record contained no evidence from which a rational jury could conclude that the City’s actions were unreasonable. (Valentine v City of New York, 86 AD2d 381, 57 NY2d 932; Mandel v City of New York, 44 NY2d 1004; Martinez v Columbia Presbyt. Hosp., 238 AD2d 286; Rapoport v City of New York, 281 App Div 33, 306 NY 636; Reutlinger v City of New York, 255 App Div 848, 281 NY 592; Sing Ping Cheung v City of New York, 234 AD2d 91; Yonki v City of New York, 276 App Div 407, 303 NY 852; Taylor v City of Yonkers, 105 NY 202; Weiss v Fote, 7 NY2d 579; McCormack v City of New York, 80 NY2d 808.) II. The trial court erred by not allowing the jury to be informed that under Administrative Code of the City of New York § 16-123, property owners have a duty to remove snow and ice from the sidewalk abutting their property. (Valentine v City of New York, 86 AD2d 381; Kuci v Manhattan & Bronx Surface Tr. Operating Auth., 219 AD2d 486, 88 NY2d 923; Marine Midland Bank v Russo Produce Co., 50 NY2d 31.)

      Pollack, Pollack, Isaac & DeCicco, New York City (Brian J. Isaac and William Peterman of counsel), and Corpina, Piergrossi, Overzat & Klar, LLP, for respondent.
    The City did not, as a matter of law, on this record, comply with its nondelegable duty to maintain its roads and sidewalks in a reasonably safe condition; the City submitted no proof of budgetary constraints that would have prevented it from complying with this duty. (Weiss v Fote, 7 NY2d 579; Annino v City of Utica, 276 NY 192; Lopes v Rostad, 45 NY2d 617; Pettengill v City of Yonkers, 116 NY 558; City of Rochester v Campbell, 123 NY 405; Conrad v Village of Ithaca, 16 NY 158; Harrington v City of Buffalo, 121 NY 147; Taylor v City of Yonkers, 105 NY 202; Williams v City of New York, 214 NY 259; Yonki v City of New York, 276 App Div 407, 303 NY 852.)

      J. Wade Beltramo, Albany, for New York State Conference of Mayors and Municipal Officials, amicus curiae.
    I. The Appellate Division erred in affirming the Supreme Court’s decision because plaintiff did not establish a prima facie case showing that defendant’s snow removal plan was either inadequate or improperly carried out. (Valentine v City of New York, 86 AD2d 381, 57 NY2d 932; Weiss v Fote, 7 NY2d 579; Tuchrello v State of New York, 190 Misc 2d 664; Yonki v City of New York, 276 App Div 407, 303 NY 852; Friedman v State of New York, 67 NY2d 271.) II. The failure to require plaintiff to present a prima facie case essentially makes the City of New York the insurer for plaintiffs injuries. (Tuchrello v State of New York, 190 Misc 2d 664; Tomassi v Town of Union, 46 NY2d 91; Brooks v New York State Thruway Auth., 73 AD2d 767, 51 NY2d 892.)
   OPINION OF THE COURT

Graffeo, J.

In this negligence action arising from plaintiffs fall on an icy sidewalk, defendant City of New York appeals from an Appellate Division order that affirmed a jury verdict in plaintiffs favor. Because we conclude that the City was erroneously precluded from presenting relevant evidence regarding the reasonableness of its response to the snowstorm, we reverse and remit for a new trial.

Plaintiff Beverly Garricks was injured when she slipped and fell on an ice-covered sidewalk near her home in the Bronx. She commenced this personal injury action against the City and the owners of the property abutting the sidewalk where her accident occurred. After plaintiff obtained a default judgment against the property owners, the case against the City proceeded to trial.

Plaintiff presented evidence that at approximately 9:00 a.m. on February 6, 1995, she was walking on a sidewalk accompanied by her two children. Over 10 inches of snow had fallen on February 4, 1995 and, during the two days following the storm, average temperatures were below freezing with wind speeds averaging between 18 and 21 miles per hour. As plaintiff approached the curb to cross the street, she slipped and fell, fracturing her elbow. Plaintiff described the condition of the sidewalk where she fell as covered with hard, thick ice with no cleared path and no salt or sand on the surface.

The City contended at trial that its snow removal efforts following the February 4 storm were reasonable. In order to address public safety, traffic and commerce needs, the City claimed that it prioritized municipal snow removal efforts into three phases: main highways and arteries were cleared first, then streets with bus stops and streets that connect residential areas with main roads and, finally, residential streets. Crosswalk cleaning, which involved the manual shoveling of crosswalks, hydrants and bus stops, was generally not undertaken until completion of snow removal from roadways.

The City offered testimony that its snow removal operations in response to the storm began on February 4 and continued through February 10, 1995. The snow removal district that encompassed the area where plaintiff fell included 308 miles of plow routes and 635 crosswalks. The sanitation supervisor who oversaw operations for this district stated that, during the three days from February 4 to February 6, the City deployed all available workers and equipment, including salt spreaders, plows and front-end loaders. In addition, temporary workers were hired for crosswalk clearing. Streets in all three phases had been cleared by the early morning hours of February 5 (at least 24 hours before plaintiffs sidewalk accident) and work on the crosswalks was ongoing.

When the City’s counsel attempted to question the sanitation supervisor about Administrative Code of the City of New York § 16-123, which imposes a duty on landowners to clear snow from sidewalks abutting their property, Supreme Court sustained plaintiffs objection and a sidebar discussion ensued. The court subsequently reiterated that it sustained the objection.

At the close of proof, the trial court reserved decision on the City’s motions for dismissal of plaintiffs complaint and for a directed verdict. The City renewed its request to submit Administrative Code evidence at the charge conference, indicating that it had intended to elicit testimony to support its position that the ordinance and the City’s necessary reliance on property owners were relevant facts for the jury to consider in assessing the reasonableness of the City’s response. Because it had been unable to offer proof on this issue, the City asked the court to take judicial notice of section 16-123 and inform the jury of its existence. The City further urged that its sole purpose in seeking introduction of the evidence was related to the reasonableness question and suggested that the court issue a limiting instruction to that effect. The court declined the City’s request.

The jury returned a verdict finding the City negligent and awarding plaintiff $50,000 for past pain and suffering, $450,000 for future pain and suffering and $7,800 for lost earnings. The court denied the City’s motion to dismiss or to set aside the verdict as against the weight of the evidence, holding that the testimony presented a question of fact for jury determination as to the reasonableness of the City’s response time and efforts. The court concluded, however, that the award was excessive and ordered a new trial on damages for future pain and suffering unless plaintiff stipulated to a reduction of those damages to $250,000. Plaintiff so stipulated and judgment was entered. A divided Appellate Division affirmed and the City now appeals as of right based on a two-Justice dissent.

In this Court, the City argues that the trial court committed reversible error when it refused to permit the jury to consider the duty of property owners to remove snow and ice from abutting sidewalks in determining reasonableness. The City acknowledges that the Administrative Code provision does not extinguish its obligation to maintain the sidewalks but contends that its reliance on property owners’ compliance with the ordinance was a relevant factor for the jury to weigh in assessing whether the City was liable.

Courts have long recognized that where a municipality has enacted an ordinance requiring abutting landowners to remove snow from sidewalks “it may, before taking any action itself, wait a reasonable time for them to perform their legal duty” (Valentine v City of New York, 86 AD2d 381, 387 [1st Dept 1982], affd 57 NY2d 932 [1982]; see Candelier v City of New York, 129 AD2d 145 [1st Dept 1987]; Taylor v City of Yonkers, 105 NY 202 [1887]). Of course, such an ordinance does not relieve the municipality of its obligation to maintain sidewalks in a reasonably safe condition and, where property owners fail to comply with the ordinance within a reasonable time, the municipality must either enforce the ordinance or undertake the necessary work itself (see Taylor, 105 NY at 205-206; see also Smith v City of New York, 282 App Div 495 [1st Dept 1953], affd 307 NY 843 [1954]; Yonki v City of New York, 276 App Div 407 [1st Dept 1950], appeal dismissed 303 NY 852 [1952]). Evidence of a municipality’s reliance on property owners to perform this duty and of its efforts to enforce the ordinance within a reasonable time is relevant in determining whether the municipality breached its duty (see Smith, 282 App Div at 496; Yonki, 276 App Div at 409-410; see also 1B NY PJI3d 1143 [2003] [municipality’s efforts to enforce such a provision are relevant to determine whether it has acted with reasonable care]).

Here, the trial court precluded the City from introducing testimony as to the existence of the ordinance, the City’s enforcement measures or its reliance on property owners as part of its snow removal response plan. Had such evidence been admitted, it would have been proper for the jury, charged with applying the standard of care and deciding whether the City was reasonable, to consider the ordinance and whatever efforts the City undertook in relation to the ordinance in reaching its verdict. In this case, such evidence, if offered in support of the City’s theory that its response to the storm was reasonable, could have affected the outcome of the trial and exclusion of the evidence was not, therefore, harmless error (see Marine Midland Bank v Russo Produce Co., 50 NY2d 31, 43 [1980]; Kuci v Manhattan & Bronx Surface Tr. Operating Auth., 219 AD2d 486, 487 [1st Dept 1995], affd 88 NY2d 923 [1996]). Hence, reversal is warranted.

The City further contends that it was entitled to a directed verdict dismissing plaintiffs complaint. We disagree. On this record, we cannot say that plaintiffs evidence was insufficient to raise an issue of fact for the jury (see Campbell v City of Elmira, 84 NY2d 505, 509-510 [1994]; Cohen v Hallmark Cards, 45 NY2d 493, 499 [1978]).

Accordingly, the order of the Appellate Division should be reversed, with costs, and a new trial ordered.

Chief Judge Kaye and Judges G.B. Smith, Rosenblatt and Read concur; Judge Ciparick taking no part.

Order reversed, etc.

      . Section 16-123 of the Administrative Code of the City of New York provides, in pertinent part, that “[e]very owner ... or other person, having charge of any building or lot of ground in the city, abutting upon any street where the sidewalk is paved, shall, within four hours after the snow ceases to fall . . . remove the snow or ice . . . from the sidewalk and gutter, the time between nine post meridian and seven ante meridian not being included in the above period of four hours.” (Id., subd [a].)

      . On July 16, 2003, two new Administrative Code provisions were enacted into law that affect property owners’ sidewalk maintenance obligations. One of the amendments, which apply to all residential property of more than three dwelling units, provides that “[i]t shall be the duty of the owner of real property abutting any sidewalk ... to maintain such sidewalk in a reasonably safe condition. . . . Notwithstanding any other provision of law, the city shall not be liable for any injury to property or personal injury, including death, proximately caused by the failure to maintain sidewalks ...” (see Local Law No. 49 [2003] of City of New York). Failure to maintain a sidewalk in reasonably safe condition includes “the negligent failure to remove snow, ice, dirt or other material from the sidewalk” (see id.). Another amendment requires owners of such properties to carry personal injury and property damage liability insurance to compensate for injuries caused by the failure to maintain sidewalks in reasonably safe condition (see Local Law No. 54 [2003] of City of New York § 1). The amendments took effect 60 days after approval and apply to accidents occurring on or after the effective date.


author: Read, J.

text:
    [801 NE2d 385, 769 NYS2d 165]
    In the Matter of Ricky Murray, Respondent, v Glenn S. Goord, as Commissioner of the New York State Department of Correctional Services, et al., Appellants.
    Argued September 10, 2003;
    decided October 28, 2003

      POINTS OF COUNSEL

      Eliot Spitzer, Attorney General, Albany (Eric A. Johnson, Caitlin J. Halligan, Daniel Smirlock and Denise A. Hartman of counsel), for appellants.
    I. The prerogative to decide whether two sentences will run concurrently or consecutively belongs to the judge who imposes the second sentence. (Matter of Muntaqim v Herbert, 277 AD2d 976, 96 NY2d 704; Mullen v State of New York, 122 AD2d 300; Rock v Reed-Prentice Div. of Package Mach. Co., 39 NY2d 34; People v Young, 94 NY2d 171; North Carolina v Pearce, 395 US 711; People v Van Pelt, 76 NY2d 156; Matter of Oquendo v Quinones, 291 AD2d 593; Barnett v Carlson, 744 F2d 1485; People v Bell, 138 AD2d 298, 73 NY2d 153.) II. The Department of Correctional Services did not exceed its authority when it decided which of the two inconsistent directives to implement. (Matter of Muntaqim v Herbert, 277 AD2d 976, 96 NY2d 704; Mullen v State of New York, 122 AD2d 300; Soon Duck Kim v City of New York, 90 NY2d 1.)

      Legal Aid Society, Brooklyn (Andrew E. Abraham and Russell R. Neufeld of counsel), for respondent.
    The Appellate Division’s affirmance of the Supreme Court’s CPLR article 78 order directing the Department of Correctional Services to run petitioner’s sentences concurrently should be affirmed. Once the Appellate Division vacated the original 1996 judgment under indictment No. 5174/94, the directive accompanying his 1997 conviction under indictment No. 121/96 that the sentence imposed should be consecutive to the 1996 judgment, became a nullity, and the subsequent directive when petitioner was sentenced in 2000 under indictment No. 5174/94, that that sentence should run concurrently with the sentence under indictment No. 121/96, was controlling. (Matter of Muntaqim v Herbert, 277 AD2d 976, 96 NY2d 704; People v Bell, 73 NY2d 153; People v Tychanski, 78 NY2d 909; Parochial Bus Sys. v Board of Educ., 60 NY2d 539; People v Robinson, 95 NY2d 179; People v Walker, 81 NY2d 661; People v Evans, 94 NY2d 499; People v Bilsky, 95 NY2d 172; People v Malizia, 62 NY2d 755; People v Leon, 264 AD2d 784.)
   OPINION OF THE COURT

Read, J.

In 1996, petitioner was convicted after a jury trial of both criminal possession of a controlled substance in the third degree and criminal sale of a controlled substance in the third degree. The trial judge sentenced him to concurrent indeterminate terms of imprisonment of 71/2 to 15 years. The next year, a second trial judge sentenced petitioner, upon his plea of guilty to manslaughter in the first degree, to an indeterminate term of imprisonment of 772 to 15 years. Consistent with the discretion afforded by Penal Law § 70.25 (1) and as provided in the negotiated plea, the second trial judge specified that petitioner was to serve his sentence for manslaughter consecutively to the undischarged term of the sentence imposed on him the previous year for the unrelated controlled substance convictions.

Upon petitioner’s appeal, the Appellate Division reversed the controlled substance convictions, and remitted for a new trial. The Appellate Division, however, found “no reason to reverse the unrelated judgment [of conviction for manslaughter], rendered upon [petitioner’s] negotiated plea, where the sentence agreement provided for consecutive sentences” (268 AD2d 349, 350 [2000]).

In lieu of retrial, the People and petitioner negotiated a plea of guilty to criminal sale of a controlled substance in the third degree in exchange for a sentence of 47a to 9 years, to be served concurrently with the sentence previously imposed for the manslaughter conviction. Yet a third trial judge sentenced petitioner in accordance with this plea agreement and issued the commitment order.

After his arrival at prison, petitioner asked the Department of Correctional Services (DOCS) to compute his parole eligibility date (the date when an inmate’s minimum period or minimum aggregate period of imprisonment is satisfied). DOCS, he learned, was computing the time that he owed as though his two sentences were to run consecutively for an aggregate term of 12 to 24 years rather than concurrently for a term of TVs to 15 years. Petitioner’s attorney was subsequently advised of DOCS’ position that the Appellate Division’s decision in Matter of Muntaqim v Herbert (277 AD2d 976 [4th Dept 2000], lv denied 96 NY2d 704 [2001]) dictated that the relationship between petitioner’s sentences remain consecutive because “so ordered” by the second judge in the sentencing chain. This CPLR article 78 proceeding ensued.

The dispute here boils down to the question of whether, when there is a vacated judgment of conviction and subsequent resentencing of someone subject to an undischarged term of imprisonment, the prerogative to decide whether sentences should run consecutively or concurrently always remains with the second judge who acts in the sentencing sequence. We agree with the Appellate Division below that the sentencing discretion afforded by Penal Law § 70.25 (1) devolves upon the last judge in the sentencing chain, who was the third judge here. Penal Law § 70.30 (5) and CPL 430.10, when read together with Penal Law § 70.25 (1), do not require otherwise. Moreover, divesting the last sentencing judge of this discretion would, as an unwise subsidiary consequence, limit the parties’ latitude in negotiating a plea.

Two additional points merit comment. First, Muntaqim, which is indistinguishable from the facts of this case, is no longer good law and is not to be followed. Second, DOCS is not free to disregard a commitment order, as it did here.

DOCS claims to have been forced to choose between inconsistent directives—Penal Law § 70.30 (5) as interpreted in Muntaqim, the sole appellate authority at the time, and the common-law rule of “last in time.” At oral argument, DOCS’ attorney, although expressing a preference for the Muntaqim rule, candidly asked us simply to establish either rule as the certain one going forward. While we appreciate DOCS’ dilemma, “prison officials are conclusively bound by the contents of commitment papers accompanying a prisoner” (Middleton v State of New York, 54 AD2d 450, 452 [3d Dept 1976], affd 43 NY2d 678 [1977] on op below [emphasis added]). DOCS’ only valid option in circumstances such as these is to comply with the plain terms of the last commitment order received.

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

Chief Judge Kaye and Judges G.B. Smith, Ciparick, Rosenblatt and Graffeo concur.

Order affirmed, with costs.

       Penal Law § 70.25 (1) provides, in relevant part, that
      “when a person who is subject to [an] undischarged term of imprisonment imposed at a previous time by a court of this state is sentenced to an additional term of imprisonment, the sentence or sentences imposed by the court shall run either concurrently or consecutively with respect to each other and the undischarged term or terms in such manner as the court directs at the time of sentence.”