New York Law Review

Tag: 1979

  • Matter of Saladeen v. Smith, 46 N.Y.2d 883 (1979): Timely Parole Revocation Hearings

    Matter of Saladeen v. Smith, 46 N.Y.2d 883 (1979)

    A parole eligibility hearing does not substitute for a timely final parole revocation hearing, and failure to hold such a hearing requires dismissal of parole violation charges.

    Summary

    Saladeen commenced an Article 78 proceeding to vacate parole violation charges. Although the violations allegedly occurred in 1973, no final revocation hearing was held by 1977 when the proceeding began. An eligibility hearing on a new conviction occurred in 1977, over four years after the alleged parole violations. The Court of Appeals held that the parole eligibility hearing did not render the failure to hold a final revocation hearing academic, as the eligibility hearing’s nature and scope differed significantly from a revocation hearing, and the failure to hold a timely revocation hearing mandated the dismissal of the parole violation charges.

    Facts

    The petitioner, Saladeen, was accused of parole violations in 1973.

    As of 1977, no final parole revocation hearing had been conducted regarding the 1973 alleged violations.

    In 1977, a parole eligibility hearing was conducted concerning a new conviction, more than four years after the initial alleged parole violations.

    Procedural History

    Saladeen initiated an Article 78 proceeding to vacate the parole violation charges.

    The Appellate Division’s order was appealed to the New York Court of Appeals.

    Issue(s)

    Whether a parole eligibility hearing conducted on a new conviction can serve as a substitute for a final parole revocation hearing regarding earlier alleged parole violations.

    Holding

    No, because the parole eligibility hearing’s nature and scope are different, it cannot serve as a substitute for a final revocation hearing, and the failure to hold a timely revocation hearing requires dismissal of the parole violation charges.

    Court’s Reasoning

    The Court reasoned that the appeal was not moot because the parole violation charges could affect the petitioner’s maximum parole expiration date, even after release from prison. The court emphasized the distinct nature and scope of a parole eligibility hearing compared to a final revocation hearing. The Court stated, “Due to its different nature and scope, the eligibility hearing could not serve as a substitute for the final revocation hearing.” A timely final revocation hearing is crucial for addressing alleged parole violations. The Court relied on precedent, citing Matter of Piersma v Henderson, 44 NY2d 982 and People ex rel. Walsh v Vincent, 40 NY2d 1049, to support the holding that the failure to hold a timely revocation hearing necessitates the dismissal of the parole violation charges. The court also disapproved of any interpretation of People ex rel. Schmidt v La Vallee (39 NY2d 886) suggesting otherwise.

  • Matter of B.C. Restaurant Corp. v. State Liquor Authority, 47 N.Y.2d 459 (1979): Agency Interpretation of Statutes Governing Liquor Sales

    Matter of B.C. Restaurant Corp. v. State Liquor Authority, 47 N.Y.2d 459 (1979)

    The interpretation given a statute by the agency charged with its enforcement will be respected by the courts if not irrational or unreasonable.

    Summary

    This case concerns the State Liquor Authority’s (SLA) refusal to remove retail grocers from the delinquent list after a chain store acquired them and entered into a common-law composition with creditors, offering a fraction of the debt owed to alcoholic beverage suppliers. The SLA determined that the composition, compromising debts and deferring payments, violated the Alcoholic Beverage Control Law. The Court of Appeals reversed the Appellate Division, holding that the SLA’s interpretation of the statute, requiring full payment before credit sales can resume, was rational and not arbitrary, thus reinstating the Special Term’s judgment.

    Facts

    Petitioners, retail grocers with grocery beer licenses, were placed on the retail license delinquent list by the State Liquor Authority (SLA) because they couldn’t pay debts to their suppliers.

    A chain store acquired control of the petitioners and entered a common-law composition with creditors, offering a maximum of 36 cents on the dollar over five years.

    The amount owed to alcoholic beverage suppliers constituted approximately 1% of the total arrangement fund.

    The SLA refused to remove the petitioners from the delinquent list.

    Procedural History

    Special Term confirmed the State Liquor Authority’s determination to keep the petitioners on the delinquent list.

    The Appellate Division reversed, holding that the composition constituted payment in full as a matter of law.

    The Court of Appeals granted leave to appeal.

    Issue(s)

    Whether the State Liquor Authority’s interpretation of Section 101-aa of the Alcoholic Beverage Control Law, requiring full payment of debts to alcoholic beverage suppliers before a delinquent retailer can be removed from the delinquent list and receive credit, is irrational or unreasonable.

    Holding

    Yes, because the interpretation given a statute by the agency charged with its enforcement will be respected by the courts if not irrational or unreasonable, and the SLA’s interpretation of subdivision 7 of section 101-aa of the Alcoholic Beverage Control Law is not irrational or unreasonable.

    Court’s Reasoning

    The Court of Appeals emphasized that a primary goal of the Alcoholic Beverage Control Law is to ensure the orderly sale and distribution of alcoholic beverages in New York, preventing economic control of retailers by manufacturers and wholesalers.

    The Court cited subdivision 7 of section 101-aa, which allows the SLA to permit credit sales to a delinquent retailer “who has actually made payment for alcoholic beverages, or on good cause shown”.

    The Court deferred to the SLA’s interpretation that this provision requires *completed* payments, not merely commenced payments, before credit deliveries can resume, stating, “By now it is settled law that the interpretation given a statute by the agency charged with its enforcement will be respected by the courts if not irrational or unreasonable”. Citing Matter of Howard v Wyman, 28 NY2d 434; Matter of Bernstein v Toia, 43 NY2d 437.

    The Court found the SLA’s interpretation reasonable and its application in this case not arbitrary, thus supporting the decision to keep the petitioners on the delinquent list despite the composition agreement.

    The Court reversed the Appellate Division’s order and reinstated the Special Term’s judgment, confirming the SLA’s determination.

  • Gross v. Sweet, 49 N.Y.2d 102 (1979): Enforceability of Exculpatory Clauses for Negligence

    Gross v. Sweet, 49 N.Y.2d 102 (1979)

    An exculpatory agreement, intended to release a party from liability for their own negligence, must clearly and unequivocally express such intent to be enforceable; ambiguous or broad language will be strictly construed against the drafter.

    Summary

    Bruce Gross signed a “Responsibility Release” before enrolling in William Sweet’s parachute jumping school. After being injured during his first jump, Gross sued Sweet for negligence, breach of warranty, and gross negligence, alleging inadequate training and unsafe equipment. Sweet argued the release barred the suit. The court held the release unenforceable because it did not explicitly release Sweet from liability for his own negligence. The agreement’s ambiguous language failed to clearly convey that Gross was waiving claims arising from Sweet’s potential carelessness.

    Facts

    Bruce Gross enrolled in Stormville Parachute Center Training School, owned and operated by William Sweet. As a condition of enrollment, Gross paid a fee and signed a “Responsibility Release.” He received an introductory lesson, including instruction and jumps from a low table. Gross was then taken for a practice jump from 2,800 feet, during which he sustained serious injuries upon landing.

    Procedural History

    Gross sued Sweet for negligence, breach of warranty, and gross negligence. Sweet pleaded the release as an affirmative defense and moved for summary judgment. Gross cross-moved to strike the defense. Special Term granted Sweet’s motion and dismissed the complaint. The Appellate Division reversed, reinstating the complaint and granting Gross’s motion. The New York Court of Appeals then reviewed the Appellate Division’s order based on a certified question.

    Issue(s)

    Whether the exculpatory agreement signed by the plaintiff barred his suit for personal injuries allegedly incurred as a result of the defendant’s negligence.

    Holding

    Yes, the Appellate Division’s order was correct as a matter of law because the release did not clearly and unequivocally express an intent to exempt the defendant from liability for his own negligence.

    Court’s Reasoning

    The court emphasized that the law disfavors contracts that exculpate a party from their own negligence, requiring such agreements to be closely scrutinized. While such agreements are not per se invalid, they are subject to a stringent standard of clarity. The court noted, “the fairest course is to provide explicitly that claims based on negligence are included.” The court found the release in this case lacked the requisite clarity, stating that it did not “express any intention to exempt the defendant from liability for injury or property damages which may result from his failure to use due care either in his training methods or in his furnishing safe equipment.” The court distinguished the case from indemnity agreements between sophisticated business entities. Instead, the court applied the general rule requiring unequivocal terms. The court reasoned that the defendant “seems to have preferred the use of opaque terminology rather than suffer the possibility of lower enrollment,” but emphasized that such exculpatory clauses require clear and unequivocal language. The court cited previous cases, like Boll v. Sharp & Dohme, where similar language was deemed insufficient to bar claims based on negligence. The court quoted Van Dyke Prods. v Eastman Kodak Co., stating the intention to waive negligence liability must be expressed clearly and in “unequivocal terms.”

  • Gordon v. City of New York, 48 N.Y.2d 874 (1979): Establishing Constructive Notice of Dangerous Conditions on City Streets

    Gordon v. City of New York, 48 N.Y.2d 874 (1979)

    A municipality can be held liable for injuries resulting from a dangerous condition on its streets if it had constructive notice of the condition, meaning the condition existed for a sufficient period that the city should have discovered and corrected it.

    Summary

    Plaintiff Gordon sued the City of New York and several contractors for injuries sustained when she tripped on a misaligned catch basin cover. The Court of Appeals affirmed the dismissal of the claims against the contractors due to lack of evidence linking them to the specific barricade that caused the injury. However, the court upheld the verdict against the City, finding sufficient evidence for the jury to conclude that the City had constructive notice of the dangerous condition. The court reasoned that the jury could infer constructive notice from the duration and nature of the defect, as well as the City’s awareness of ongoing street work in the area.

    Facts

    Plaintiff tripped and fell due to a misaligned catch basin cover on a New York City street. The cover was depressed relative to the surrounding pavement. Weber Construction Co. had performed work in the area months prior to the accident, but other contractors, Hanson Plumbing and Heating and Fane Construction Company, were also working in the vicinity under permits issued by the city. A witness, Johnson, testified to observing the condition weeks before the accident. A rolling machine bearing Weber’s name was seen in the area two days after the accident.

    Procedural History

    The plaintiff sued the City of New York, Niagara Mohawk Power Corporation, UTEC Constructors, Inc., and Weber Construction Co. The trial court found in favor of the plaintiff against all defendants. The Appellate Division reversed the judgment against the contractors but upheld the verdict against the City. The Court of Appeals affirmed the Appellate Division’s order.

    Issue(s)

    1. Was the evidence connecting Weber Construction and, through it, Niagara Mohawk and UTEC, with the accident sufficient to support verdicts against them?
    2. Was there enough proof that the city had notice of the defect to ground the finding that it was liable?

    Holding

    1. No, because the evidence that Weber erected the roadway blockade which diverted the plaintiff was speculative at best.
    2. Yes, because the jury could have inferred constructive notice based on the condition’s duration, the city’s duty to maintain streets, and its awareness of ongoing street work in the area.

    Court’s Reasoning

    Regarding the contractors, the court found insufficient evidence to prove that Weber Construction Co. erected the specific barricade that caused the plaintiff’s injury. The court noted that other contractors were working in the area, and the presence of Weber’s equipment nearby after the accident was insufficient to establish liability. The court cited Kelly v Otis Elevator Co., 283 App Div 363, 367, stating the case against the contractors was “speculative”.

    Regarding the City, the court acknowledged the absence of direct proof of actual notice. However, it emphasized that constructive notice, arising from a negligent failure to discover a discoverable condition, could establish liability. The court reasoned that the jury could infer constructive notice from the depressed state of the catch basin cover, suggesting a long-standing condition. Additionally, the witness’s testimony of observing the condition weeks prior supported the inference of constructive notice. Further, the city’s issuance of permits for street work and the regular visits by field inspectors reinforced the idea that the city should have been aware of the dangerous condition. The court cited Putnam v Stout, 38 NY2d 607, 612, for the principle that the city’s awareness of ongoing special street work provides a basis for determining that it was or should have been aware of the danger. The court stated, “a negligent failure to discover a condition that should have been discovered can be no less a breach of due care than a failure to respond to actual notice”. The court referred to Batton v Elghanayan, 43 NY2d 898, where a jury found constructive notice from photographs showing the condition of a concrete floor. The court found the jury could reasonably conclude that the City had constructive notice and failed to remedy the dangerous condition.

  • Matter of Levy, 48 N.Y.2d 860 (1979): Automatic Disbarment for Federal Felony Conviction

    48 N.Y.2d 860 (1979)

    An attorney is automatically disbarred in New York upon conviction of a federal felony, even if that felony lacks a direct analogue in New York law, regardless of whether the conviction resulted from an admission of guilt or a plea entered pursuant to North Carolina v. Alford.

    Summary

    This case concerns the automatic disbarment of an attorney following a federal felony conviction. Levy was convicted of a federal felony under 15 U.S.C. § 645. The Appellate Division subsequently struck his name from the roll of attorneys. The Court of Appeals affirmed, holding that Section 90(4) of the Judiciary Law mandates automatic disbarment upon felony conviction, irrespective of whether the federal felony has a direct counterpart in New York law or whether the plea was entered without admitting guilt under North Carolina v. Alford. The court clarified that while the recent amendment to Section 90 does not apply, Levy could seek relief from the Appellate Division under the amended statute.

    Facts

    Appellant Levy, an attorney, was convicted of a felony under Section 645 of Title 15 of the United States Code. Levy entered his plea pursuant to North Carolina v. Alford, meaning he did not explicitly admit guilt but acknowledged that the prosecution had sufficient evidence to convict him.

    Procedural History

    The Appellate Division struck Levy’s name from the roll of attorneys following his federal felony conviction. Levy appealed to the New York Court of Appeals. The Court of Appeals affirmed the Appellate Division’s order.

    Issue(s)

    Whether an attorney is subject to automatic disbarment in New York State pursuant to Judiciary Law § 90(4) upon conviction of a federal felony, regardless of whether the federal felony has a direct analogue in New York law or whether the plea was entered pursuant to North Carolina v. Alford.

    Holding

    Yes, because Subdivision 4 of section 90 of the Judiciary Law mandates automatic disbarment upon conviction of a felony, and this applies to federal felonies even without a New York analogue, and regardless of whether the plea was entered pursuant to North Carolina v Alford.

    Court’s Reasoning

    The Court of Appeals based its decision on the clear mandate of Judiciary Law § 90(4), which requires automatic disbarment upon conviction of a felony. The court emphasized that prior interpretations of this section established that an attorney is disbarred upon conviction of a federal felony, even if that felony does not have a direct equivalent under New York law. The court cited Matter of Thies, 45 NY2d 865 and Matter of Chu, 42 NY2d 490 to support this interpretation.

    The court rejected Levy’s argument that the North Carolina v. Alford plea should preclude automatic disbarment. The court reasoned that, regardless of whether Levy admitted guilt, the conviction itself triggered the statutory sanction. The court stated: “Although appellant did not admit his guilt, nonetheless he stood convicted of a felony.”

    While the court acknowledged a recent amendment to Section 90, it clarified that the amendment did not apply to this specific appeal. However, the court noted that Levy could petition the Appellate Division for relief under the amended statute if he so chose.

    The court explicitly declined to address the issue of whether the federal offense had a New York counterpart, deeming it unnecessary to the disposition of the case and suggesting the Appellate Division should consider the question anew if a proper application were made.

  • Salla v. County of Monroe, 48 N.Y.2d 514 (1979): State Residency Requirements for Public Works Violate Privileges and Immunities Clause

    Salla v. County of Monroe, 48 N.Y.2d 514 (1979)

    A state law requiring preferential employment of state residents on public works projects violates the Privileges and Immunities Clause of the U.S. Constitution if it unduly infringes on the right of non-residents to pursue a livelihood and the discrimination is not closely related to a substantial state interest.

    Summary

    The New York Court of Appeals held that Section 222 of the New York Labor Law, which mandated preferential employment of New York citizens on public works projects, violated the Privileges and Immunities Clause of the U.S. Constitution. Two Pennsylvania residents employed by a Pennsylvania contractor were terminated from a Monroe County sewer project due to the statute’s enforcement. The court applied the two-prong test from Toomer v. Witsell, finding that the state’s asserted interest in combating unemployment was not closely related to the discrimination against non-residents, and the statute was not narrowly tailored to address the specific problem.

    Facts

    David S. Salla and Robert W. Keppley, Pennsylvania residents, were employed as equipment operators by Lisbon Contractors, Inc., a Pennsylvania corporation. Lisbon was awarded a contract to construct a sanitary sewer line for Monroe County, New York, with 75% of the funding from federal sources. Salla and Keppley were assigned to the project and leased local living quarters. Their employment was terminated when Monroe County insisted on strict enforcement of Section 222 of the New York Labor Law, which required preference in employment to New York residents on public works projects.

    Procedural History

    Salla, Keppley, and Lisbon brought an action seeking a declaration that Section 222 was unconstitutional and an injunction against its enforcement. The Attorney General intervened on behalf of the state to defend the statute. Special Term granted summary judgment in favor of the plaintiffs, finding the statute unconstitutional under the Privileges and Immunities Clause, the Commerce Clause, and the Equal Protection Clause. The Appellate Division affirmed, relying on the Privileges and Immunities and Commerce Clauses. The New York Court of Appeals then reviewed the case.

    Issue(s)

    Whether Section 222 of the New York Labor Law, mandating preferential employment of New York citizens on public works projects, violates the Privileges and Immunities Clause of the U.S. Constitution.

    Holding

    Yes, because Section 222’s potentially absolute barrier to out-of-state contractors and workers conflicts with the national policy of economic unity, and the state’s interest in allocating funds to its citizens is insignificant in comparison to the constitutional concern for the right of a citizen of one state to pursue their vocation in another.

    Court’s Reasoning

    The court applied the two-part test from Toomer v. Witsell. First, the court acknowledged that the right to pursue one’s trade in any state is a fundamental right protected by the Privileges and Immunities Clause, citing Hicklin v. Orbeck. The court then examined whether there were “perfectly valid independent reasons” for the disparate treatment. The state argued that a high rate of unemployment justified preferring New York residents for public works jobs. However, the court found no evidence to connect nonresident employment on public works projects with unemployment rates in New York. The court found the statute was not precisely tailored to address unemployment, as it did not prefer unemployed residents over employed residents and made no distinction between supervisory and non-supervisory employees. The court noted the statute’s “blunderbuss overbreadth.” The court rejected the argument that the “public ownership exception” applied, stating that the modern jurisprudence, stemming from Toomer, requires a balancing of local and national priorities. The court stated that the increasing interdependence of states outweighs the state’s interest. Ultimately, the court concluded that Section 222 created a potentially absolute barrier to out-of-state contractors and workers, conflicting with the national policy of economic unity. The court stated that it does not outweigh “the constitutional concern for the right of a citizen of one State to pursue his vocation in another.”

  • Harcel Liquors, Inc. v. New York State Liquor Authority, 48 N.Y.2d 503 (1979): Liability for Seller’s Unpaid Taxes in Bulk Sales

    Harcel Liquors, Inc. v. New York State Tax Commission, 48 N.Y.2d 503 (1979)

    A purchaser in a bulk sale who fails to notify the State Tax Commission of the proposed sale, as required by Tax Law § 1141(c), becomes personally liable for the seller’s unpaid sales and use taxes, regardless of any affidavit from the seller stating the business is free of debt.

    Summary

    Harcel Liquors purchased a liquor store from Evsam Parking, Inc. without notifying the New York State Tax Commission as required by law. Evsam’s president provided an affidavit stating the corporation had no debts. The Tax Commission later audited Evsam and determined it owed sales and use taxes. The Commission then notified Harcel that, as the purchaser, it was liable for Evsam’s unpaid taxes. Harcel sued, seeking a declaration that it was not liable and an injunction against the Commission collecting the taxes. The New York Court of Appeals held that Harcel was liable for the taxes because it failed to comply with the notice requirement, irrespective of the seller’s affidavit. The Court emphasized the State’s right to collect taxes and the purchaser’s ability to avoid liability by providing notice.

    Facts

    Evsam Parking, Inc. sold its liquor store to Harcel Liquors, Inc. on February 28, 1974.

    Samuel Karpoff, Evsam’s president, provided an affidavit stating the corporation was not indebted to anyone and had no creditors.

    Harcel Liquors did not notify the New York State Tax Commission of the proposed sale before taking possession of the business.

    The Tax Commission learned of the sale nine months later and audited Evsam’s books, which were in Harcel’s possession.

    The Commission determined that Evsam owed $6,216.23 in sales and use taxes for the period from February 29, 1972, to February 28, 1974.

    The Commission notified Harcel that it was liable for these back taxes under Tax Law § 1141(c).

    Procedural History

    Harcel Liquors sued the New York State Tax Commission, seeking a declaration that it was not liable for the taxes and an injunction against their collection.

    The lower courts ruled against Harcel.

    The New York Court of Appeals reviewed the case.

    Issue(s)

    Whether a purchaser in a bulk sale is liable for the seller’s unpaid sales and use taxes under Tax Law § 1141(c) when the purchaser fails to notify the State Tax Commission of the proposed sale, despite possessing an affidavit from the seller stating the business has no debts.

    Holding

    No, because Tax Law § 1141(c) unequivocally states that a purchaser who fails to give notice of the proposed sale to the tax commission becomes personally liable for the payment of the seller’s unpaid sales and use taxes, irrespective of any affidavit from the seller attesting to the lack of debt.

    Court’s Reasoning

    The court reasoned that Tax Law § 1141(c) clearly makes a purchaser who fails to notify the Tax Commission liable for the seller’s unpaid taxes. The court stated, “[T]o exempt any purchaser who has failed to comply with the clear notice requirements of this section would work to deprive the State of a means of collecting taxes duly imposed pursuant to the State’s taxing power.”

    The court rejected the argument that the seller’s affidavit absolved the purchaser of liability, emphasizing that the statutory notice requirement is paramount. The court emphasized the importance of allowing the state to collect duly owed taxes. The court stated, “[T]he State merely preserves its indisputable right to collect taxes which could otherwise be extinguished by the simple expedient of a taxpayer transferring its assets.”

    The court also noted that the statute provides adequate protection for purchasers, who can avoid liability by simply notifying the Tax Commission of the sale.

    The court concluded that Harcel’s failure to exhaust administrative remedies to challenge the tax assessment required dismissal of the complaint against the New York State Department of Taxation and Finance. Because the statute applied to Harcel, the failure to seek administrative review was fatal to their claim.

  • U.S. Fidelity & Guaranty Co. v. Copfer, 48 N.Y.2d 871 (1979): Insurer’s Bad Faith Failure to Settle

    48 N.Y.2d 871 (1979)

    An insurer’s liability for bad faith failure to settle a claim against its insured requires a showing that the insured lost an actual opportunity to settle within the policy limits due to the insurer’s conduct.

    Summary

    This case addresses the circumstances under which an insurer can be held liable for bad faith failure to settle a claim against its insured. The Court of Appeals affirmed the Appellate Division’s decision, holding that while the insurer breached its duty to defend and indemnify the insured, the insured failed to demonstrate that the insurer’s alleged bad faith caused him to lose an actual opportunity to settle the underlying negligence claim within the policy limits. Speculation about potential settlement opportunities is insufficient to establish a claim for excess liability damages against the insurer.

    Facts

    Thomas Copfer was involved in a negligence action. His insurance company, United States Fidelity and Guaranty Company (USF&G), initially disclaimed coverage and refused to defend him. Copfer retained his own counsel and defended himself. The underlying complaint against Copfer alleged only negligence. Copfer’s private attorney informed USF&G that a co-defendant had settled with the plaintiff for $15,000, and Copfer’s policy limit was $25,000. Copfer later claimed USF&G acted in bad faith by not attempting to settle the claim.

    Procedural History

    The Appellate Division granted summary judgment to USF&G, dismissing Copfer’s claim for additional damages based on the insurer’s alleged bad faith. Copfer appealed to the Court of Appeals.

    Issue(s)

    Whether an insurer can be held liable for bad faith failure to settle a claim against its insured when the insured fails to demonstrate that they lost an actual opportunity to settle the claim within the policy limits due to the insurer’s conduct.

    Holding

    No, because the insured’s speculations about a potential settlement are insufficient to support a claim for excess liability damages against the insurer. The insured must demonstrate a lost opportunity to settle within policy limits due to the insurer’s bad faith.

    Court’s Reasoning

    The Court of Appeals agreed with the Appellate Division. The court acknowledged that USF&G breached its contractual duty to defend and indemnify Copfer, making it liable for his defense expenses and any judgment against him up to the policy limits. However, the court rejected Copfer’s claim for additional damages resulting from USF&G’s alleged bad faith. The court emphasized that there was “no showing whatsoever that the insured lost an actual opportunity to settle the negligence claim against him within the coverage limits of his policy by reason of the insurer’s purported ‘bad faith’.” The court distinguished this case from situations where a formal settlement offer was rejected due to the insurer’s bad faith. Mere speculation that a settlement might have been possible is insufficient to establish a claim for excess liability. The court cited precedent like Gordon v. Nationwide Mut. Ins. Co., stating that an insurer’s failure to actively seek out the injured party to negotiate does not automatically constitute bad faith. Judge Meyer dissented, arguing that USF&G’s disclaimer was unreasonable given the negligence-only complaint and the information about the co-defendant’s settlement, creating a jury issue on bad faith. He emphasized that the insurer has a duty to consider the insured’s interests when settlement is possible.

  • Schubtex, Inc. v. Allen Snyder, Inc., 49 N.Y.2d 1 (1979): Arbitration Agreements Require Express Intent

    Schubtex, Inc. v. Allen Snyder, Inc., 49 N.Y.2d 1 (1979)

    An agreement to arbitrate must be express; it cannot be inferred solely from a prior course of dealing where the arbitration clause was merely printed on the back of order confirmations without explicit negotiation or prior arbitration.

    Summary

    Schubtex, Inc. sought to stay arbitration demanded by Allen Snyder, Inc., arguing there was no express agreement to arbitrate. The trial court found a valid agreement based on the parties’ prior dealings, where order confirmations contained an arbitration clause. The Appellate Division affirmed. The Court of Appeals reversed, holding that an arbitration agreement requires an express intention to be bound, not just repeated inclusion of an arbitration clause in unobjected-to order confirmations. The court emphasized that absent explicit agreement, parties retain the right to litigate disputes in court.

    Facts

    Allen Snyder, Inc. (seller) and Schubtex, Inc. (buyer) engaged in several transactions for synthetic textiles. Orders were taken orally, and Snyder sent written order confirmations containing an arbitration clause on the reverse side. A dispute arose regarding a specific order when Schubtex refused to assort the remaining goods. Snyder demanded arbitration based on the clause in the order confirmation. Schubtex sought a stay of arbitration, denying any agreement to arbitrate.

    Procedural History

    The Supreme Court initially issued a temporary stay of arbitration pending a trial to determine the existence of an arbitration agreement. After the trial, the Supreme Court determined a valid agreement existed and vacated the stay. The Appellate Division affirmed without opinion, but granted leave to appeal to the Court of Appeals.

    Issue(s)

    Whether a valid agreement to arbitrate exists solely based on the prior course of dealings between parties, where the arbitration clause was included on the reverse side of written order confirmations sent after oral agreements, and no prior disputes were arbitrated.

    Holding

    No, because evidence of a prior course of dealing alone is insufficient to establish an express agreement to arbitrate; there must be affirmative evidence that the parties expressly agreed to arbitrate their disputes.

    Court’s Reasoning

    The court relied on its prior decision in Matter of Marlene Inds. Corp. (Carnac Textiles), which held that an arbitration clause on the back of an acknowledgment of order is a material alteration and not binding unless expressly agreed upon. The court reiterated that parties should not be forced into arbitration without evidence of an express intention to be bound, emphasizing the importance of preserving the right to litigate in court absent clear consent to arbitrate.

    The court acknowledged that prior dealings can be relevant, stating, “evidence of a trade usage or of a prior course of dealings may normally be utilized to supplement the express terms of a contract for the sale of goods.” However, it found no evidence that the parties ever arbitrated a dispute or that the clause was material in their negotiations. The court reasoned that repeated use of an ineffective form (the order confirmation with the arbitration clause) does not create an agreement to arbitrate where none existed initially.

    The court distinguished the case from situations where a course of conduct clearly demonstrates an agreement to arbitrate, such as previous arbitrations or explicit negotiations regarding the clause. The absence of such evidence led the court to conclude that there was no express agreement to arbitrate in this instance. The ruling underscores that while trade usage or prior dealings can supplement a contract, they cannot substitute for an express agreement to arbitrate, protecting parties from unknowingly waiving their right to a judicial forum.

  • People v. Whisby, 48 N.Y.2d 834 (1979): Admissibility of In-Court Identification and Speedy Trial Rights

    People v. Whisby, 48 N.Y.2d 834 (1979)

    An in-court identification is admissible if it is based on an independent source of recollection or if no police identification procedure took place, and a claim of denial of a speedy trial must be raised at trial to be preserved for appellate review.

    Summary

    Defendants Whisby and Price appealed their convictions, arguing that they were denied a speedy trial and that the in-court identification by the victim should have been suppressed. The New York Court of Appeals affirmed the lower court’s decision, holding that the speedy trial issue was not preserved for review because it was not raised at trial. The Court also found that the in-court identification of Price was based on an independent source and that no police identification procedure occurred with respect to Whisby, making the identification admissible. The Court found no merit in the defendants’ remaining contentions.

    Facts

    The victim identified Price in court. Prior to trial, the victim identified Whisby on a public street in White Plains without any police involvement. The defendants were convicted, and on appeal, they argued that their right to a speedy trial had been violated and that the in-court identification by the victim should have been suppressed.

    Procedural History

    The trial court convicted the defendants. The defendants appealed to the Appellate Division, which affirmed the convictions. The defendants then appealed to the New York Court of Appeals.

    Issue(s)

    1. Whether the defendants’ contention that they were denied their right to a speedy trial may be considered on appeal when the issue was not raised at trial.

    2. Whether the in-court identification of defendant Price by the victim ought to have been suppressed.

    3. Whether the in-court identification of defendant Whisby by the victim ought to have been suppressed.

    Holding

    1. No, because defendants failed to raise the issue at trial.

    2. No, because the in-court identification was based upon an independent source of recollection.

    3. No, because the complaining witness identified Whisby on a public street, and no police identification procedures took place.

    Court’s Reasoning

    The Court of Appeals held that a claim of denial of a speedy trial must be raised at trial to be preserved for appellate review, citing People v. Primmer and People v. Adams. The Court stated that it could not consider the defendants’ speedy trial claim because they failed to raise it at trial.

    Regarding Price’s in-court identification, the Court found that there was evidence in the record to support the trial court’s factual finding, affirmed by the Appellate Division, that the identification was based upon an independent source of recollection. The Court emphasized that it cannot disturb such findings of fact, citing People v. Burrows and People v. Peterson.

    As for Whisby’s in-court identification, the Court relied on the affirmed finding of fact that he was identified by the complaining witness on a public street and that “there were no police identification procedures necessary and none, in fact, took place.” The court cited People v. Logan, noting that under such circumstances, the identification was proper. The Court suggested that the lack of police involvement distinguished this case from situations involving potentially suggestive police identification procedures.

    The Court summarily dismissed the defendants’ remaining contentions, finding them to be without merit.