New York Law Review

Tag: 1988

  • People v. Romero, 70 N.Y.2d 941 (1988): Preserving Claims of Prosecutorial Misconduct on Appeal

    People v. Romero, 70 N.Y.2d 941 (1988)

    To preserve a claim of prosecutorial misconduct during summation for appellate review, a defendant must make a timely objection; unpreserved claims will only warrant reversal if the misconduct is so egregious as to deprive the defendant of a fair trial; curative instructions, if given and not objected to, can neutralize potential prejudice.

    Summary

    The defendant appealed his conviction, arguing that the prosecutor made improper comments during summation. The New York Court of Appeals affirmed the Appellate Division’s order, holding that the defendant failed to preserve many of his claims of error by not objecting during trial. For the comments to which objections were made, the trial court ruled correctly. Furthermore, the trial court provided curative instructions to neutralize any potential prejudice from the prosecutor’s statements, and the defendant did not object to these instructions or request additional ones. The court also found no indication that the Appellate Division failed to properly consider the weight of the evidence.

    Facts

    The specific facts of the underlying crime are not detailed in the Court of Appeals memorandum. The appeal centered solely on the conduct of the District Attorney during summation at trial, and whether objections to those comments were properly preserved for appellate review.

    Procedural History

    The defendant was convicted at trial. He appealed to the Appellate Division, arguing prosecutorial misconduct during summation. The Appellate Division affirmed the conviction. The defendant then appealed to the New York Court of Appeals, raising the same arguments, along with a claim that the Appellate Division failed to properly consider the weight of the evidence.

    Issue(s)

    1. Whether the defendant preserved his claims of error regarding the District Attorney’s comments during summation by making timely objections at trial.
    2. Whether the curative instructions given by the trial court were sufficient to neutralize any prejudice resulting from the District Attorney’s statements, given the lack of objection to said instructions.
    3. Whether the Appellate Division failed to consider the weight of the evidence in reaching its decision.

    Holding

    1. No, because the defendant failed to object to many of the District Attorney’s comments, thus failing to preserve those claims for appeal.

    2. Yes, because the trial court provided curative instructions to address any prejudice and the defendant did not object to these instructions or request additional ones.

    3. No, because there was no indication that the Appellate Division misunderstood its obligation or failed to review the weight of the evidence.

    Court’s Reasoning

    The Court of Appeals emphasized the importance of preserving legal claims by making timely objections at trial. Failure to object generally precludes appellate review. The Court noted that the trial court ruled correctly on the objections that were properly raised. Regarding the unpreserved claims, the Court implied that reversal would only be warranted if the prosecutor’s misconduct was so egregious as to deprive the defendant of a fair trial, which was not the case here.

    The Court also highlighted the effect of curative instructions. By giving such instructions, the trial court attempted to mitigate any potential prejudice stemming from the prosecutor’s remarks. The defendant’s failure to object to the curative instructions or request further instructions further undermined his claim of error on appeal. The court reasoned that by not objecting, the defendant effectively signaled his satisfaction with the curative measures taken.

    Finally, the Court distinguished this case from People v. Bleakley, where it was apparent that the Appellate Division misunderstood its obligation to review the weight of the evidence. In Romero, there was no indication of such a misunderstanding or failure to review.

  • Matter of Taxpayers of Town of Highlands v. Town of Highlands, 72 N.Y.2d 148 (1988): Legislative vs. Judicial Acts in Special Assessment Districts

    Matter of Taxpayers of Town of Highlands v. Town of Highlands, 72 N.Y.2d 148 (1988)

    When a legislature directly establishes the boundaries of a special assessment district, the act is considered legislative, and landowners are not constitutionally entitled to prior notice or a hearing; however, when the legislature delegates this power to a subordinate body, the act is considered judicial and requires notice and an opportunity to be heard.

    Summary

    This case concerns a challenge to a special law passed by the New York State Legislature that redefined the boundaries of a sewer improvement district in the Town of Highlands. Petitioners argued that they were denied due process because they received no notice or hearing before the law was enacted. The Court of Appeals reversed the Appellate Division’s ruling, holding that because the Legislature itself established the district boundaries, the act was legislative, and no prior notice or hearing was required. The Court distinguished this situation from cases where a subordinate body defines the boundaries, which requires due process protections.

    Facts

    In 1981, the Town of Highlands established a sewer improvement district. In 1983, the Town realized that the district boundaries were incorrectly drawn, splitting some properties. The Town sought a special law from the State Legislature to correct the boundaries, including the petitioners’ property fully within the district. The Legislature enacted Chapter 755 of the Laws of 1983 to redefine the boundaries. Subsequent public hearings addressed costs and assessments. Petitioners then challenged the assessment, claiming the legislation was invalid and the assessment disproportionate.

    Procedural History

    Petitioners initiated an Article 78 proceeding against the Town, challenging the assessment. The Supreme Court dismissed the petition. The Appellate Division reversed, declaring the statute unconstitutional, reasoning petitioners were denied due process due to lack of notice and hearing prior to the statute’s enactment. The Town appealed to the New York Court of Appeals.

    Issue(s)

    Whether landowners are entitled to notice and a hearing before the boundaries of an improvement district are fixed when the district boundaries are established directly by the state legislature.

    Holding

    No, because when a legislature directly establishes the boundaries of a special assessment district, the act is considered legislative, and landowners are not constitutionally entitled to prior notice or a hearing.

    Court’s Reasoning

    The Court of Appeals distinguished between legislative and judicial acts in the context of special assessment districts. When the legislature itself fixes the boundaries, it is a legislative act, and notice/hearing are not required. The Court reasoned that the Legislature is presumed to have made proper inquiry and conclusively determined the benefits to the land within the district. Quoting Fallbrook Irrigation Dist. v Bradley, the court stated, “[T]he citizen has no constitutional right to any other or further hearing upon that question.” The court cited Embree v Kansas City Rd. Dist., stating, “A legislative act of this nature can be successfully called in question only when it is so devoid of any reasonable basis as to be essentially arbitrary and an abuse of power.”
    By contrast, when the legislature delegates boundary-setting to a subordinate body, it is a judicial-type inquiry, and landowners must receive notice and an opportunity to be heard. The Court distinguished the case from Stuart v Palmer, which involved a commission determining both the improvement area and the assessments. The Court also addressed the petitioners’ argument that the Town Board’s request to the Legislature was based on “illicitly conjured up” facts. The Court cited Municipal Home Rule Law § 40 and Legislative Law § 56, which preclude judicial review of the Legislature’s determination of necessity in enacting special laws pursuant to a home rule request. As the court stated, “[T]he enactment of a special law pursuant to NY Constitution, article IX, § 2 (b) (2) ‘shall be conclusive as to the facts that (1) a necessity as set forth in the request existed at the time of enactment and (2) that sufficient facts were set forth in such request to establish such necessity.’”

  • Matter of Richard C. Muller, 72 N.Y.2d 205 (1988): Agency Authority and Implied Powers

    Matter of Richard C. Muller, 72 N.Y.2d 205 (1988)

    An administrative agency only possesses the powers expressly conferred by its authorizing statute and those required by necessary implication to carry out its statutory duties.

    Summary

    This case addresses whether the Office of Professional Medical Conduct (OPMC) has the implied power to obtain an ex parte “inspection” warrant to seize a physician’s patient records during a misconduct investigation. The New York Court of Appeals held that the OPMC lacked such implied power. While the Public Health Law grants OPMC subpoena power, the court found no basis to imply a further power to obtain warrants for seizing patient files, especially given the existing subpoena process that includes physician notification and opportunity to challenge. The Court emphasized that the Legislature is the proper body to grant such broad powers.

    Facts

    The OPMC initiated an investigation into Dr. Muller based on a patient complaint of professional misconduct. After obtaining some records, the OPMC requested additional patient records from Dr. Muller, who, on advice of counsel, refused due to pending litigation. Subsequently, instead of issuing a subpoena, the OPMC obtained an ex parte inspection warrant from the Supreme Court based on concerns that Dr. Muller might alter the records. The warrant authorized the OPMC to inspect the premises, question patients, and seize records. The warrant was executed, and the records of eight patients were seized.

    Procedural History

    Dr. Muller moved to vacate the inspection warrant and suppress the seized material. The Supreme Court denied the motion. The Appellate Division reversed, holding that the OPMC lacked the statutory authority to obtain the warrant. The New York Court of Appeals affirmed the Appellate Division’s decision.

    Issue(s)

    Whether the Office of Professional Medical Conduct (OPMC), an investigative branch of the State Department of Health (DOH), has implied power to obtain an ex parte “inspection” warrant for the sole purpose of seizing a physician’s patient records during a targeted investigation of professional misconduct.

    Holding

    No, because the OPMC’s power is limited to that expressly granted by statute or necessarily implied to carry out its duties, and the power to obtain an ex parte warrant to seize patient files is neither expressly granted nor necessarily implied, especially given the existing subpoena power which provides for physician notification and an opportunity to challenge the request.

    Court’s Reasoning

    The Court of Appeals reiterated the principle that administrative agencies possess only the powers expressly conferred by statute and those required by necessary implication. While Public Health Law § 230 (10) (k) explicitly grants the OPMC subpoena power, the Court found no basis to imply a further power to obtain warrants for seizing patient files. The court distinguished between typical administrative inspections aimed at general compliance and the seizure of confidential patient files for targeted misconduct investigations. The Court noted that the existing subpoena process provides physicians with notice and an opportunity to be heard before records are turned over, safeguarding their rights. The Court found the OPMC’s justification—potential alteration or destruction of documents—insufficient to justify the extraordinary power of an ex parte warrant. The court emphasized that granting such broad powers is a legislative function, referencing other instances where the Legislature expressly authorized civil search warrants. The court stated: “We are not now passing on the ultimate wisdom of permitting an ex parte inspection warrant for the purpose of investigating professional misconduct. Such a determination is best left for the Legislature, not this court.”

  • New England Mutual Life Insurance Company v. Caruso, 73 N.Y.2d 74 (1988): Incontestability Clause Bars Insurer’s Challenge to Insurable Interest

    New England Mutual Life Insurance Company v. Caruso, 73 N.Y.2d 74 (1988)

    Under New York law, an incontestability clause in a life insurance policy bars the insurer from contesting the policy based on a lack of insurable interest after the specified contestability period has expired.

    Summary

    New England Mutual Life Insurance Company sued its policyholder, Caruso, seeking a declaration that it wasn’t obligated to pay life insurance benefits because Caruso lacked an insurable interest in the deceased. Caruso argued that the policy’s incontestability clause barred the challenge. The New York Court of Appeals held that the incontestability clause prevented the insurer from challenging the policy based on lack of insurable interest after the contestability period expired, adhering to prior New York precedent and balancing public policy considerations of preventing wagering against the policyholder’s justified expectations.

    Facts

    Dean Salerno and Caruso, business associates in a restaurant, obtained a life insurance policy on Salerno’s life in 1984. Caruso was the owner and beneficiary. The policy was intended to protect Caruso in case of default of a loan they anticipated securing with Caruso’s assets for their restaurant. Salerno died in December 1986. Caruso claimed the policy proceeds, prompting the insurer to sue to invalidate the policy based on a lack of insurable interest.

    Procedural History

    The trial court denied Caruso’s motion to dismiss the complaint based on the incontestability clause. The Appellate Division reversed, granting summary judgment to Caruso, holding the insurer’s claim was barred. The New York Court of Appeals granted leave to appeal and affirmed the Appellate Division’s order.

    Issue(s)

    Whether the incontestability clause in a life insurance policy bars the insurer from asserting the policyholder’s lack of an insurable interest in the insured’s life after the contestability period has expired.

    Holding

    Yes, because the legislative history and statutory scheme of New York’s Insurance Law do not make life insurance policies void ab initio when the policyholder lacks an insurable interest, and because public policy considerations favor enforcing the incontestability clause under these circumstances.

    Court’s Reasoning

    The Court of Appeals reasoned that New York’s Insurance Law doesn’t explicitly void life insurance contracts for lack of insurable interest. Section 3205 states such contracts shall not be “procured” unless benefits are payable to someone with an insurable interest. The court contrasted this language with other sections where policies are explicitly deemed “void” or “unenforceable.” The Court also highlighted that the legislature chose not to enact a provision that would have allowed insurers to contest policies after the incontestability period based on lack of insurable interest during recodification of the Insurance Law in 1939.

    The court balanced the public policy concerns of preventing gambling against the interests of enforcing contracts freely entered into by parties. The court emphasized the policyholder’s justified expectation that the policy would be enforced if premiums were paid and the incontestability period elapsed without challenge. The Court acknowledged precedent in Wright v. Mutual Benefit Life Assn., 118 N.Y. 237 (1890), which had been the law in New York for nearly a century. The court further reasoned that public safety is protected by penal statutes, decisions preventing unjust enrichment, and Section 3205(b)(3), which allows the insured or their representative to recover proceeds paid to a policyholder lacking an insurable interest.

    The court stated:

    “If it doubted defendant’s interest, the burden rested on it to investigate in a timely manner or ignore the matter at its peril. A failure to enforce the incontestability rule now would result in a forfeiture to defendant (or to the deceased’s estate if the policyholder had no insurable interest [see, Insurance Law § 3205 (b) (3)]) after decedent’s death and an unnecessary advantage to plaintiff by enabling it to avoid a claim it previously accepted.”

  • People v. Williams, 73 N.Y.2d 84 (1988): Limits on Extended Grand Jury Authority

    People v. Williams, 73 N.Y.2d 84 (1988)

    A Grand Jury whose term has been extended under CPL 190.15(1) due to uncompleted business may not consider entirely new matters during its extended term, and an indictment resulting from such a violation must be dismissed.

    Summary

    This case addresses the permissible scope of a Grand Jury’s power when its term has been extended. The Court of Appeals held that a Grand Jury extended to complete unfinished business could not consider new matters. The case stemmed from allegations of witness tampering in a rape case, which were investigated by a Grand Jury whose term was extended. The Court found that because the extended Grand Jury considered new matters unrelated to its original business, the resulting indictment was invalid and must be dismissed without requiring a showing of prejudice to the defendants. The decision emphasizes adherence to statutory limitations on Grand Jury power.

    Facts

    Shelly McClure accused her stepfather, Martin Williams, of rape. Donna Williams, McClure’s mother, urged her to withdraw the charges. McClure recanted her accusation in exchange for $3,000, signing a recantation statement prepared by attorney Michael Barrett. Jeffrey Snyder, McClure’s boyfriend, was also involved. Subsequently, attorney Robert Becher pressured McClure to reaffirm her recantation. These events led to an investigation into bribery, conspiracy, and witness tampering.

    Procedural History

    A Rensselaer County Grand Jury, nearing the end of its term, had its term extended to investigate the witness tampering allegations. The Grand Jury indicted the defendants. The trial court dismissed the indictment, finding the extended Grand Jury exceeded its jurisdiction. The Appellate Division reversed, reinstating the indictment. The Court of Appeals reversed the Appellate Division, reinstating the trial court’s dismissal.

    Issue(s)

    1. Whether a Grand Jury whose term has been extended under CPL 190.15(1) may consider entirely new matters during its extended term.

    2. Whether an indictment resulting from a Grand Jury considering new matters during its extended term must be dismissed.

    Holding

    1. Yes, because CPL 190.15(1) limits Grand Jury extensions to completing unfinished business; considering new matters exceeds this statutory authority.

    2. Yes, because a Grand Jury acting outside its authorized scope is considered “illegally constituted” under CPL 210.35(1), mandating dismissal regardless of prejudice.

    Court’s Reasoning

    The Court reasoned that CPL 190.15(1) explicitly limits Grand Jury extensions to completing unfinished business, curtailing a holdover Grand Jury’s jurisdiction. The Court distinguished its prior holding in People v. Stern, noting that the Criminal Procedure Law now contains specific provisions governing Grand Jury extensions that did not exist previously. The court emphasized that the plain language of the statute limits extensions to those necessary to complete unfinished business. Because the Grand Jury did not begin investigating the McClure matter until after its original term expired, the court found that the extension was improper. The Court also stated, “[T]he statute’s plain language limits Grand Jury extensions to those that are necessary to permit the completion of unfinished business. The statute thus has the substantive effect of curtailing a holdover Grand Jury’s jurisdiction. The apparent purpose was to eliminate the danger of ‘vestpocket’ Grand Juries”. Further, the court reasoned that CPL 210.35 mandates dismissal when the Grand Jury is “illegally constituted.” Because the Grand Jury exceeded its statutory authority, the indictment was invalid, and dismissal was required regardless of whether the defendants suffered prejudice. The Court emphasized that certain improprieties, such as those delineated in CPL 210.35(1)-(3), require automatic dismissal, whereas other, less serious infractions of Article 190 rules require a showing of prejudice to the accused.

  • Petrella v. Board of Education, Community School Board 28, 71 N.Y.2d 672 (1988): Formal Resignation Requirements for School Superintendents

    Petrella v. Board of Education, Community School Board 28, 71 N.Y.2d 672 (1988)

    A school superintendent’s resignation is only effective when it is submitted in writing to the Board of Education, as prescribed by Education Law § 2565(2).

    Summary

    This case concerns the proper method for a community superintendent to resign from their position within the New York City school system. The superintendent, Petrella, attempted to resign orally, which the Community School Board accepted. However, the Court of Appeals held that under Education Law § 2565(2), a superintendent’s resignation must be in writing to be effective. Because Petrella did not submit a written resignation, the Board’s resolutions accepting his oral resignation and terminating his employment were deemed inoperative. This case underscores the importance of adhering to specific statutory procedures for resignations.

    Facts

    • Petrella was a community superintendent within the New York City school system.
    • Petrella orally communicated his resignation to the Community School Board.
    • The Community School Board passed resolutions accepting Petrella’s oral resignation and terminating his employment.
    • Petrella did not submit a written resignation to the Board.

    Procedural History

    • The lower courts annulled the resolutions of the Community School Board.
    • The case reached the New York Court of Appeals.

    Issue(s)

    1. Whether a community superintendent’s oral resignation, accepted by the Community School Board, is sufficient to terminate their employment under the relevant provisions of the Education Law.

    Holding

    1. No, because Education Law § 2565(2) explicitly requires a superintendent of schools to file a written resignation with the board of education.

    Court’s Reasoning

    The Court of Appeals reasoned that Education Law § 2565(2) mandates a specific procedure for a superintendent’s resignation: a written resignation filed with the board of education. The court stated, “Education Law § 2565 (2) prescribes that the particular method for a superintendent of schools to exercise his or her voluntary choice to vacate that position is ‘by filing a written resignation with the board of education’.” The court emphasized that if the prescribed method were not required, the statute would be rendered meaningless. The Court further clarified that the general exclusion of New York City community superintendents from the definition of “superintendent of schools” in General Construction Law § 47-a does not apply in this instance. This is because the Education Law articles 52 and 52-A, which govern the City of New York and its school administration, specifically define the role and responsibilities of community superintendents. Since Petrella did not file a written resignation, the Board’s resolutions were deemed inoperative. The Court concluded, “Inasmuch as it is undisputed that community superintendent Petrella did not file a written resignation with the board pursuant to Education Law §2565 (2), the resolutions of the community school board purportedly accepting his oral resignation and terminating his employment were inoperative.”

  • People v. Hudy, 73 N.Y.2d 40 (1988): Ex Post Facto Clause and Repeal of Corroboration Requirements

    People v. Hudy, 73 N.Y.2d 40 (1988)

    The Ex Post Facto Clause of the U.S. Constitution does not prevent applying a statute repealing the requirement for corroboration of a victim’s testimony in sex crime prosecutions to crimes committed before the statute’s effective date.

    Summary

    The New York Court of Appeals held that repealing a law requiring corroboration of a minor’s testimony in sex crime cases could be applied retroactively without violating the Ex Post Facto Clause. Hudy was convicted of sexual abuse based largely on the testimony of underage victims for acts committed before the corroboration requirement was repealed. The court reasoned that repealing the corroboration rule was a procedural change, not a substantive one, and did not increase the punishment or alter the elements of the crime. However, the conviction was reversed due to trial errors: the admission of evidence of a prior uncharged crime and the restriction of the defendant’s ability to question investigating officers about suggestive interview techniques.

    Facts

    Defendant Hudy, a remedial math teacher, was accused of sexually abusing several elementary school students. Concerns arose after a student reported that Hudy was putting his hands down boys’ pants. An investigation revealed similar allegations from eight other boys, all students of Hudy. Hudy was indicted on multiple counts of sexual abuse and endangering the welfare of a child, involving incidents both before and after November 1, 1984.

    Procedural History

    The trial court denied Hudy’s motion to dismiss counts related to pre-November 1984 incidents, arguing that the Ex Post Facto Clause prohibited applying the repealed corroboration rules. At trial, nine children testified against Hudy. The prosecution introduced testimony from Domenick M., alleging a prior, uncharged similar crime by Hudy. The defense was restricted from questioning the police investigators about suggestive interview tactics. The jury convicted Hudy on all charges. The Appellate Division affirmed. The Court of Appeals granted leave to appeal.

    Issue(s)

    1. Whether the application of a statute repealing the corroboration requirement for sex offenses to crimes committed before the statute’s enactment violates the Ex Post Facto Clause of the U.S. Constitution.
    2. Whether the trial court erred in admitting evidence of a prior uncharged crime.
    3. Whether the trial court erred in restricting the defendant’s ability to cross-examine the investigating officers regarding potentially suggestive interview techniques.

    Holding

    1. No, because the repeal of the corroboration requirement is a procedural change, not a substantive one, and does not violate the Ex Post Facto Clause.
    2. Yes, because the evidence of the prior uncharged crime was irrelevant and served only to demonstrate Hudy’s general criminal propensity.
    3. Yes, because the trial court’s restriction on questioning the investigating officers violated Hudy’s constitutional right to present a defense and confront his accusers.

    Court’s Reasoning

    The Court of Appeals addressed the Ex Post Facto Clause, noting that such laws are unconstitutional if they are retrospective and detrimental to the accused. The court distinguished between procedural and substantive changes in the law, stating that procedural changes, even if disadvantageous to the defendant, are generally not ex post facto. The repeal of corroboration laws was deemed a procedural change affecting the rules of evidence rather than the definition of the crime or its punishment. The court reasoned that the Ex Post Facto Clause is intended to protect against arbitrary and oppressive legislation, not to limit legislative control over remedies and procedures that do not affect matters of substance.

    The court found that the trial court erred in admitting the testimony of Domenick M., regarding a prior uncharged sexual offense. The court stated that such evidence is only admissible if it is logically linked to a specific material issue in the case and does not merely demonstrate a general criminal propensity. In this case, the court found that the testimony only served to show that Hudy had a propensity to commit such crimes, and thus, it was inadmissible.

    The court also held that the trial court erred in restricting the defense’s ability to cross-examine the investigating officers regarding suggestive interview techniques. The court stated that a defendant has a constitutional right to present a defense and confront his accusers, and that extrinsic proof tending to establish a reason to fabricate is never collateral and may not be excluded on that ground. Here, the court found that the defense had a good-faith basis for the proposed line of questioning, and that the trial court’s restriction violated Hudy’s rights.

    “[T]he constitutional provision was intended to secure substantial personal rights against arbitrary and oppressive legislation * * * and not to limit the legislative control of remedies and modes of procedure which do not affect matters of substance” (Beazell v. Ohio, 269 U.S. 167, 171).

  • Gillman v. Chase Manhattan Bank, N.A., 73 N.Y.2d 1 (1988): Enforceability of Security Agreements and Bank’s Right to Set-Off

    Gillman v. Chase Manhattan Bank, N.A., 73 N.Y.2d 1 (1988)

    A security agreement granting a bank a security interest in a customer’s deposit accounts, allowing the bank to segregate funds without notice if it deems itself insecure, is enforceable absent procedural and substantive unconscionability and does not constitute a preferential transfer under Debtor and Creditor Law § 15 (6-a) when the segregation is involuntary.

    Summary

    Gillman, the assignee for the benefit of creditors of Jamaica Tobacco, sued Chase Manhattan Bank, arguing that Chase illegally segregated Jamaica Tobacco’s bank deposit. Chase had issued a letter of credit to Jamaica Tobacco and claimed a security interest in its deposits based on an agreement. Chase segregated $372,920.57 from Jamaica Tobacco’s checking account due to the company’s financial difficulties. The New York Court of Appeals held that the security agreement was not unconscionable and that Chase’s actions were permissible under the agreement. The court found no bad faith on Chase’s part and determined that the segregation of funds did not constitute a preferential transfer.

    Facts

    Jamaica Tobacco obtained a $400,000 letter of credit from Chase to secure a surety bond required for purchasing cigarette stamps on credit. The application included a security agreement granting Chase a lien on all Jamaica Tobacco’s deposit accounts. The agreement allowed Chase to deem itself insecure and apply the deposits to Jamaica Tobacco’s obligations without notice. After the letter of credit was renewed, Chase learned Jamaica Tobacco had violated loan restrictions and subordination agreements. Deeming itself insecure, Chase transferred funds from Jamaica Tobacco’s checking account to another account inaccessible to Jamaica Tobacco, leading to dishonored checks. Aetna eventually drew on the letter of credit.

    Procedural History

    The Supreme Court found the security agreement unconscionable and awarded damages to the assignee. The Appellate Division reversed, finding the agreement conscionable, no bad faith by Chase, and no preferential transfer. The Court of Appeals granted leave to appeal.

    Issue(s)

    1. Whether the security agreement granting Chase a lien on Jamaica Tobacco’s deposit accounts was unconscionable and therefore unenforceable.

    2. Whether Chase acted in bad faith by segregating Jamaica Tobacco’s checking account without notice and dishonoring checks drawn thereon.

    3. Whether Chase’s segregation of the checking account constituted a preferential transfer in violation of Debtor and Creditor Law § 15 (6-a).

    Holding

    1. No, because the agreement was not procedurally or substantively unconscionable.

    2. No, because Chase acted within the terms of the security agreement and had a valid security interest in the account.

    3. No, because the transfer was not voluntary, as required by Debtor and Creditor Law § 15 (6-a).

    Court’s Reasoning

    The court found no procedural unconscionability, noting that Frohlich signed the application with a bold-faced legend referencing the security agreement. The court stated that under general contract law, Jamaica Tobacco was bound by the agreement regardless of Frohlich’s claim that he didn’t read it. The court reasoned that the terms were not substantively unconscionable given Chase’s obligations under the letter of credit and the typical practice of requiring security interests in bank deposits. The court emphasized the importance of allowing the bank to act without notice to protect its security interest. The court stated, “The aim of the Uniform Commercial Code unconscionability provision (UCC 2-302), it has been said, is to prevent oppression and unfair surprise, not to readjust the agreed allocation of the risks in the light of some perceived imbalance in the parties’ bargaining power.” The court found that paragraph 7 of the security agreement granted chase a security interest in the checking account. The court rejected the claim of commercial bad faith, because there was no commercial bad faith in Chase’s actions in segregating the account. The court held that Debtor and Creditor Law § 15 (6-a) applied only to voluntary transfers. The court reasoned that because the segregation was done without knowledge or consent of Jamaica Tobacco, it was not a voluntary transfer.

  • Kalisch-Jarcho, Inc. v. City of New York, 72 N.Y.2d 727 (1988): Enforceability of ‘Disputed Work’ Clause in Public Contracts

    Kalisch-Jarcho, Inc. v. City of New York, 72 N.Y.2d 727 (1988)

    A ‘disputed work’ clause in a public construction contract, requiring the contractor to perform work directed by the municipality and postpone claims for additional compensation until project completion, is enforceable so long as the disputed work is arguably within the contract and the municipality’s directive is made in good faith.

    Summary

    Kalisch-Jarcho, a plumbing contractor, disputed whether it was responsible for installing concrete pads under fuel tanks in a project for New York City. The city insisted it was. Instead of following the contract’s ‘disputed work’ clause, Kalisch-Jarcho sought a declaratory judgment. The Court of Appeals reversed the lower courts, holding that the clause was enforceable. The court distinguished this case from Borough Constr. Co. v. City of New York, emphasizing that the disputed work was arguably within the contract’s scope, and the city acted in good faith. The court upheld the contract’s procedure for resolving disputes, designed to prevent project delays while preserving the contractor’s right to seek compensation later.

    Facts

    The City of New York contracted with Kalisch-Jarcho for plumbing work on a new sanitation depot. A dispute arose immediately regarding the responsibility for excavating and installing concrete pads beneath underground fuel tanks. Kalisch-Jarcho argued this fell under the general construction contract, while the City insisted it was the plumbing contractor’s duty. The project architect and the Commissioner of the Department of Sanitation both determined the work was Kalisch-Jarcho’s responsibility, directing them to proceed under the contract’s dispute resolution clause.

    Procedural History

    Kalisch-Jarcho bypassed the contract’s dispute resolution mechanism and filed a lawsuit seeking a declaratory judgment that it was not obligated to perform the disputed work. The trial court granted summary judgment to Kalisch-Jarcho. The Appellate Division affirmed. The New York Court of Appeals reversed the Appellate Division’s order, holding that Kalisch-Jarcho was obligated to comply with the contract’s dispute resolution clause.

    Issue(s)

    Whether a ‘disputed work’ clause in a municipal contract, requiring a contractor to perform disputed work and postpone claims for additional compensation, is enforceable, or whether it violates public policy as articulated in Borough Constr. Co. v. City of New York.

    Holding

    No, because the public policy concerns defined in Borough Constr. Co. v City of New York are not implicated when the disputed work is arguably within the contract’s scope and the municipality is acting in good faith.

    Court’s Reasoning

    The Court of Appeals reasoned that while declaratory judgment actions are generally permissible for settling contract disputes, they are inappropriate when the contract specifies a different, reasonable means for resolution. Article 27 of the contract outlined such a procedure. The court distinguished this case from Borough Constr. Co. v City of New York, which protected against collusive claims for extra work. Here, the work was arguably within the contract, the City acted in good faith, and the contract provision served the legitimate public interest of avoiding project delays. The court emphasized the importance of honoring contracts negotiated at arm’s length by sophisticated parties. The court stated: “The principle is surely fundamental that a rule developed to govern a situation not addressed in the parties’ contract does not ordinarily preclude parties from agreeing in a contract to resolve the problem in a different manner from the rule that would otherwise apply.” The court also noted that concerns about Administrative Code of the City of New York § 6-110 and article 25 of the contract prohibiting extra work increasing the price by more than 10% do not apply because the Commissioner determined the work was required by the contract, not extra work.

  • People v. Flayhart, 72 N.Y.2d 737 (1988): Accomplice Liability for Criminally Negligent Homicide

    People v. Flayhart, 72 N.Y.2d 737 (1988)

    A defendant can be held accessorially liable for criminally negligent homicide under Penal Law § 20.00, not for aiding another to reach a particular mental state, but for intentionally aiding another to engage in conduct constituting the charged offense, while himself acting with the mental culpability required for the commission of that offense.

    Summary

    Richard and Beatrice Flayhart were convicted of criminally negligent homicide in the death of Richard’s brother, Terry Flayhart, who had cerebral palsy, epilepsy and was mentally retarded. The prosecution argued that Terry died of neglect while living with and dependent on the Flayharts. The Court of Appeals affirmed the conviction, holding that accomplice liability can be applied to criminally negligent homicide when the defendant intentionally aids another in conduct that constitutes the offense, while failing to perceive a substantial and unjustifiable risk of death. The court also found no error in the admission of evidence regarding a trust fund for Terry’s care, or in the handling of photographic evidence.

    Facts

    Terry Flayhart, who was mentally retarded and suffered from cerebral palsy and epilepsy, lived with his brother Richard and Richard’s wife, Beatrice. Terry was dependent on the Flayharts for care. He died from malnutrition and lung inflammation, exacerbated by pneumonia, and evidence suggested that he had aspirated food. He weighed approximately 75 pounds at the time of his death. A $122,000 trust fund had been established to pay for Terry’s care, and Terry had not seen his regular doctor in two years.

    Procedural History

    Richard and Beatrice Flayhart were charged with reckless manslaughter and criminally negligent homicide. The trial court instructed the jury on accomplice liability. The jury found them guilty of criminally negligent homicide, and they were sentenced to imprisonment. The Appellate Division affirmed the judgments of conviction. The New York Court of Appeals granted permission for appeal.

    Issue(s)

    1. Whether it is logically possible to “aid and abet” criminally negligent homicide, given that it is an unintentional crime, specifically, whether one can intentionally aid another to fail to perceive a substantial and unjustifiable risk of death?

    2. Whether the trial court committed reversible error by admitting evidence that Richard Flayhart was in line to inherit the trust fund established for Terry’s care?

    3. Whether the trial court erred in the manner in which it handled photographs of Terry’s body during the trial?

    Holding

    1. No, because Penal Law § 20.00 imposes accessorial liability for intentionally aiding conduct that constitutes the charged offense, acting with the required mental culpability, not for aiding another to reach a particular mental state.

    2. No, because the trust fund evidence was relevant to the charge of reckless manslaughter, which includes an element of deliberate conduct, providing a possible motive for disregarding the risk to Terry’s life.

    3. No, because the trial court has discretionary power to manage courtroom proceedings and determine how the jury is exposed to photographic evidence.

    Court’s Reasoning

    The court reasoned that Penal Law § 20.00 imposes liability for intentionally aiding conduct constituting the offense, while the accomplice acts with the mental culpability required for that offense. The defendants were convicted because the jury found that each of them, while failing to perceive a substantial risk of death, intentionally aided the other to engage in conduct, such as failing to provide food and medical care, that brought about Terry Flayhart’s death. The court cited People v. Abbott, 84 A.D.2d 11 in its analysis.

    Regarding the trust fund, the court noted that while the defendants were convicted of criminally negligent homicide, they were also charged with reckless manslaughter. Because reckless manslaughter includes an element of deliberate conduct (conscious disregard for a known risk), evidence of a motive may be relevant. The court stated, “Because reckless manslaughter includes an element of deliberate conduct, the admission of evidence of a motive may be justified in a proper case.” The jury could have considered the trust fund as evidence of Richard Flayhart’s incentive to disregard the risk to his brother.

    Finally, the court determined that the trial court’s handling of the photographs was within its discretionary power to manage courtroom proceedings. The trial court was concerned that the jury would be distracted by the graphic evidence during cross-examination and summations, potentially forming an opinion prematurely. The court cited People v. Pobliner, 32 NY2d 356, affirming the broad discretion afforded to trial courts in managing evidence presentation.