People v. Yonkers Contracting Co., 17 N.Y.2d 322 (1966)

To establish larceny based on overbilling, the prosecution must prove that the defendant knowingly made false claims with the intent to steal; mere negligence or opportunity to overbill is insufficient.

Summary

This case concerns indictments for grand larceny and bribery against Yonkers Contracting Co. and its officers, as well as members of the engineering firm, Briggs, Blitman, and Posner. The indictments stemmed from alleged overpayments for “unsuitable material” removed during a Thruway construction project. The Court of Appeals held that while there was sufficient evidence to sustain charges against the corporation, Yonkers, the evidence was insufficient to establish that individual defendants or the engineering firm knowingly participated in a scheme to defraud the State. The Court emphasized that proof of intent to steal is a necessary element of larceny.

Facts

Yonkers Contracting Co. was awarded a contract to construct a portion of the New York State Thruway. The State contracted with Briggs, Blitman, and Posner to supervise Yonkers’ work, including certifying the quantities of excavated material, which were paid at a unit price. The dispute arose over item 2BX, “Unclassified Excavation,” specifically concerning “unsuitable material.” The State alleged Yonkers was overpaid for excess unsuitable material removed. The engineering firm’s supervision was neglected, and they often relied on figures provided by Yonkers without independent verification.

Procedural History

The Grand Jury indicted Yonkers and its officers, as well as members of the Briggs, Blitman, and Posner firm, for grand larceny. Yonkers and two of its officers were also indicted for bribery. The Appellate Division held that the Grand Jury minutes disclosed sufficient evidence to sustain the charges. However, they also found that the individual defendants had acquired immunity, except for certain defendants on the grand larceny charge and the bribery charges against Yonkers. The defendants appealed, arguing insufficient evidence. The People appealed the dismissal of indictments against the individual defendants.

Issue(s)

1. Whether the evidence before the Grand Jury was sufficient to establish that Yonkers knowingly overstated the quantity of unsuitable material excavated, thus committing grand larceny.

2. Whether the evidence was sufficient to establish that the engineers, Posner and Snook, knowingly participated in the alleged larceny by certifying false quantities and receiving additional fees.

Holding

1. Yes, because there was prima facie evidence that the quantity of unsuitable material for which Yonkers was paid was knowingly overstated.

2. No, because the evidence did not establish that the engineers knowingly participated in the scheme or were aware that the contractor had inflated the quantities of excavated material.

Court’s Reasoning

The Court reasoned that to establish grand larceny, the prosecution must prove that Yonkers knowingly claimed and received payment for more excavation work than was actually done, with the intent to steal. The Court found that evidence suggested Yonkers overstated the quantity of unsuitable material. However, the Court held that evidence of opportunity to steal does not equate to evidence of actual theft. Concerning the engineers, the Court emphasized that neglect of duty or laxity is not equivalent to larceny. To be guilty of larceny, the engineers had to have knowledge that the contractor had inflated the quantities of excavated material. The Court noted, “In certifying to the correctness of the contractor’s, figures and receiving the additional engineering fees, the engineers, in order to be guilty of larceny, had to have notice that the contractor had inflated the quantities of excavated material. Insofar as the engineers are concerned, neglect of duty is not equivalent to theft nor is laxity equivalent to larceny.”

The Court acknowledged that Posner should have informed the State about his firm’s failure to independently verify the quantity of excavated material. However, the central question was whether there was prima facie evidence that he was guilty of grand larceny. The Court emphasized that the engineers were not charged with receiving money from the contractor in a nefarious joint enterprise. Though the engineers may have been derelict in their duties, they were not guilty of grand larceny unless they knew that the quantity of unsuitable material had been inflated. The court found no evidence that the engineers knew the quantities were exaggerated. The court quoted the County Court’s finding that there was no testimony that whoever changed the lines in the engineer’s diagrams “intended to defraud the State or harbored any such criminal purpose or criminal consciousness.”

The Court also noted that the State had withheld payment from the Briggs firm more than the amount the indictment charged the firm with stealing, which undermined the claim that the engineers had received ill-gotten gains. The court emphasized that “Receipt of money may be larcenous where no services have been rendered or for goods sold that have never been delivered, where the whole transaction is fictitious.” This was not such a case.