New York Law Review

Tag: personal property

  • People ex rel. McDonough v. Buzzetti, 57 N.Y.2d 615 (1982): Rational Basis for Real vs. Personal Property Bail Bond Requirements

    People ex rel. McDonough v. Buzzetti, 57 N.Y.2d 615 (1982)

    A statute requiring real property securing a bail bond to have a net value of at least twice the undertaking amount, while requiring personal property to only equal the undertaking, is rationally based and does not violate equal protection.

    Summary

    This case addresses the constitutionality of New York Criminal Procedure Law (CPL) 500.10(17), which distinguishes between real and personal property used to secure bail bonds. The statute requires real property to have a net value twice the bond amount, while personal property only needs to equal the bond. The New York Court of Appeals found this distinction rationally based, considering the potential for title problems, hidden defects affecting real property value, and the costs associated with foreclosure. The court rejected arguments that the law disproportionately affects minorities and upheld the higher court’s decision.

    Facts

    The defendant sought to post a bail bond secured by real property. The aggregate value of the real property was insufficient to satisfy the double equity requirement of CPL 500.10(17)(b). He argued that the double equity requirement for real property was unconstitutional.

    Procedural History

    The Supreme Court rejected the defendant’s constitutional arguments. The defendant then commenced a habeas corpus proceeding in the Appellate Division, Second Department, renewing his constitutional arguments and seeking a reduction in bail. The Appellate Division dismissed the proceeding without opinion. The case was then appealed to the New York Court of Appeals.

    Issue(s)

    1. Whether the double equity requirement for real property bonds in CPL 500.10(17)(b) is unconstitutional as a violation of equal protection.
    2. Whether the defendant’s bail should be reduced.

    Holding

    1. No, because the double equity requirement is rationally based on legitimate state interests.
    2. No, because the initial bail determination was a rational exercise of discretion.

    Court’s Reasoning

    The court held that the double equity requirement is rationally based on the State’s legitimate interest in ensuring adequate security for bail bonds. The court reasoned that real property is more susceptible to title problems and hidden defects than personal property, which can affect its value. It stated, “To a greater extent than personal property, real property is subject to title problems and other hidden defects that can affect value, but which cannot readily be ascertained without expensive and time-consuming procedures.” The court also considered the costs and difficulties associated with foreclosure, justifying the need for real property to have a value greater than the bond amount. The court noted that even commercial lenders rarely accept real property as collateral for its full market value. Additionally, the court addressed the argument that the law disproportionately affects minorities, finding no evidence of discriminatory intent or disproportionate impact on racial or ethnic minorities: “Relator has made ho showing that the double equity requirement, which is applicable only to those who seek to use real property as security, has a disproportionate impact on racial or ethnic minorities or that the Legislature harbored any discriminatory intent.” Finally, the court rejected the argument for bail reduction, stating that the Supreme Court’s initial bail determination was a rational exercise of discretion.

  • Southeast Bank, N. A. v. Lawrence, 66 N.Y.2d 910 (1985): Choice of Law for Right of Publicity Determined by Domicile

    Southeast Bank, N. A. v. Lawrence, 66 N.Y.2d 910 (1985)

    The right of publicity is considered personal property, and therefore, questions concerning it are governed by the substantive law of the decedent’s domicile.

    Summary

    Southeast Bank, acting as the personal representative of Tennessee Williams’ estate, sought to prevent the owners of a New York theater from renaming it the “Tennessee Williams.” The bank argued this violated the playwright’s descendible right of publicity. The New York Court of Appeals reversed the lower courts’ decisions, holding that Florida law, as the domicile of Tennessee Williams at the time of his death, governed the right of publicity claim. Under Florida law, because Williams had no surviving spouse or child and had not issued a license during his lifetime, the bank had no enforceable right of publicity. The court did not address whether a common-law descendible right of publicity existed in New York.

    Facts

    Tennessee Williams, a playwright, was domiciled in Florida at the time of his death. Southeast Bank, a Florida-based bank, served as the personal representative of Williams’ estate. The owners of a theater in Manhattan planned to rename it the “Tennessee Williams Theatre.” The bank, acting on behalf of the estate, sought to enjoin the theater owners from doing so, arguing that it violated Williams’ descendible right of publicity.

    Procedural History

    The Special Term granted the bank’s motion for a preliminary injunction and denied the theater owners’ cross-motion to dismiss the complaint. The Appellate Division, First Department, affirmed this order and granted leave to appeal to the Court of Appeals on a certified question. The New York Court of Appeals reversed the Appellate Division’s order, dismissed the complaint, vacated the preliminary injunction, and answered the certified question in the negative.

    Issue(s)

    Whether the right of publicity claim should be governed by the law of New York, where the theater was located, or by the law of Florida, the domicile of the deceased playwright.

    Holding

    No, because questions concerning personal property rights are determined by reference to the substantive law of the decedent’s domicile.

    Court’s Reasoning

    The Court of Appeals determined that the choice of law principle dictates that questions concerning personal property rights are governed by the law of the decedent’s domicile. The court cited EPTL 3-5.1(b)(2) and (e), as well as relevant case law, to support this principle. The court explicitly stated, “[Q]uestions concerning personal property rights are to be determined by reference to the substantive law of the decedent’s domicile.” The court acknowledged that for choice of law purposes, rights of publicity constitute personalty, citing several federal cases. Applying Florida law, the court found that Florida Statutes Annotated § 540.08 limits the descendible right of publicity to licensees, surviving spouses, and children. Since Tennessee Williams had none of these, the bank possessed no enforceable property right. The court declined to rule on whether a common-law descendible right of publicity exists in New York, and it did not reach the merits of other causes of action because the plaintiff lacked standing. The decision emphasizes the importance of choice-of-law rules and the significance of domicile in determining property rights related to deceased individuals. The court’s decision reinforces the principle that “rights of publicity constitute personalty,” which influences how such rights are treated in multi-state legal contexts.

  • Guggenheim v. Guggengeim, 48 N.Y.2d 615 (1979): Discretion to Require Bond for Delivery of Property

    Guggenheim v. Guggenheim, 48 N.Y.2d 615 (1979)

    Under CPLR 2701, a court has the discretion to require a party seeking the delivery of personal property held by another to post a bond, especially when special circumstances warrant such security.

    Summary

    This case addresses the court’s discretion under CPLR 2701 to require a party seeking the return of personal property to post a bond. The plaintiff sought the return of artwork held by the defendants, and the lower courts required him to post a bond. The New York Court of Appeals affirmed, holding that the lower courts did not abuse their discretion. The court reasoned that CPLR 2701 authorizes the court to order the delivery of personal property with such security as the court directs when special circumstances exist. The court also rejected the argument that the bond requirement constituted a de facto attachment violating due process.

    Facts

    The plaintiff sought to compel the defendants to return artwork held by them. The artwork was held in conjunction with a contractual relationship that was in dispute between the parties. The lower court, finding special circumstances, required the plaintiff to post a bond to secure the delivery of the property.

    Procedural History

    The plaintiff appealed the lower court’s decision requiring him to post a bond. The Appellate Division affirmed the lower court’s decision. The case then went to the New York Court of Appeals, which affirmed the Appellate Division’s order.

    Issue(s)

    1. Whether the lower courts abused their discretion in requiring the plaintiff to post a bond pursuant to CPLR 2701, given the facts of the case.
    2. Whether the requirement of a bond transforms the court’s action into a de facto attachment, thereby violating the plaintiff’s due process rights.

    Holding

    1. Yes, because the court found that special circumstances existed, which is a factor that allows a court to exercise its discretion.
    2. No, because the bond afforded the defendants nothing more than something analogous to a possessory lien, and it was not the lien itself, but the subsequent ex parte sale executed pursuant to that lien which violated the requirements of due process.

    Court’s Reasoning

    The court found no abuse of discretion by the lower courts in requiring the plaintiff to post a bond under CPLR 2701. CPLR 2701 allows a court to order personal property delivered to a party with security as the court directs if, among other reasons, “a party has such property in his possession, custody or control and it belongs or is due another party, where special circumstances make it desirable that payment or delivery to such other party should be withheld”. Since the lower courts found “special circumstances” existed, the Court of Appeals deferred to their discretion.

    The court dismissed the plaintiff’s argument that the bond requirement was a de facto attachment. It reasoned that “The greatest right this bond could be construed to afford to the defendants would be something analogous to a possessory lien.” Citing Sharrock v Dell Buick-Cadillac, 45 NY2d 152, the court noted that due process violations occur when an ex parte sale is executed pursuant to that lien, not the lien itself. The court concluded that the plaintiff received adequate due process during the court’s consideration of his motion under CPLR 2701.

  • Fidelity Nat. Bank v. Kuehne, 469 N.Y.S.2d 559 (1983): Co-op Ownership as Personal Property for Judgment Liens

    Fidelity Nat. Bank v. Kuehne, 469 N.Y.S.2d 559 (1983)

    A tenant-shareholder’s interest in a cooperative apartment, consisting of a stock certificate and proprietary lease, is considered personal property rather than a chattel real for the purpose of determining judgment creditor priorities under CPLR 5203.

    Summary

    This case addresses whether a judgment creditor obtains a lien on a debtor’s co-op apartment merely by docketing the judgment, treating the co-op interest as a chattel real and thus real property under CPLR 5203. The Court of Appeals held that a co-op apartment interest (stock and proprietary lease) is personal property for purposes of judgment liens. Therefore, Fidelity National Bank’s docketed judgment did not automatically create a lien with priority over other creditors who had taken steps to secure their interests as personal property. This decision emphasizes the practical realities of co-op ownership and subsequent legislative actions.

    Facts

    Shor owned a co-op apartment, evidenced by a stock certificate and proprietary lease. The lease granted the lessor a “first lien” on Shor’s shares for monetary obligations. Shor defaulted on maintenance charges. Chase obtained a security interest in Shor’s assets, including the co-op shares and lease, as collateral for a loan guarantee, taking possession of the stock certificate and proprietary lease. Fidelity obtained and docketed a judgment against Shor before Chase obtained its judgment, before Shor’s default on maintenance, and before the State Tax Commission filed warrants.

    Procedural History

    Chase moved to sell the co-op, with consent from other creditors except Fidelity, who insisted on payment for consent. The sale occurred, and proceeds were held in escrow. Chase interpleaded other creditors, seeking to distribute funds according to a stipulation with the Tax Commission and 480 Park Avenue Corp. Special Term granted the motion for distribution of proceeds, which the Appellate Division affirmed.

    Issue(s)

    Whether Shor’s interest in his cooperative apartment (stock certificate and proprietary lease) is a “chattel real” and thus real property under CPLR 5203, entitling Fidelity to a lien merely upon docketing its judgment.

    Holding

    No, because a cooperative apartment leasehold, inseparable from cooperative shares, is not a chattel real for purposes of CPLR 5203.

    Court’s Reasoning

    The court recognized the unique nature of co-op ownership, acknowledging that it possesses characteristics of both real and personal property. The court emphasized that neither the stock certificate nor the lease can be viewed in isolation. The court considered the 1971 amendments to the Banking Law (§ 235, subd 8-a; § 380, subd 2-a; § 103, subd 5), which allow loans to finance co-op purchases secured by assignment or transfer of the stock and proprietary lease, without requiring recording as with real property mortgages. This indicated a legislative intent to treat co-op interests under principles governing personal property, where a possessory security interest in the stock and lease is akin to a possessory security interest in chattel paper, requiring no filing for perfection under the Uniform Commercial Code. The court distinguished Matter of Lacaille (Feldman), noting the enormous expansion in co-op ownership since that decision and the legislative confirmation in the Banking Law amendments that co-op tenancies are not treated as chattels real. The court highlighted that co-op tenants, corporations, and third parties generally do not treat co-op tenancies as chattels real. As stated by the court, “the common-law process does not drag unwillingly the people it serves into a rigidly fenced corral, kicking, but reflects the fair conduct and expectations of fair, reasonable persons.”

  • Szemko v. General Cas. Co. of America, 36 N.Y.2d 43 (1974): Insurable Interest of a Good Faith Purchaser of Stolen Property

    Szemko v. General Cas. Co. of America, 36 N.Y.2d 43 (1974)

    A purchaser of stolen property, who buys it in good faith and for value, has an insurable interest in the property up to its value, based on their right to possess the property against all but the true owner.

    Summary

    Szemko purchased a car later discovered to be stolen and insured it with General Casualty Co. After the car was stolen from Szemko, General Casualty refused to pay, arguing Szemko lacked an insurable interest. The New York Court of Appeals held that a good faith purchaser for value has an insurable interest in the stolen property because they have a right to possession against all but the true owner, and would suffer direct pecuniary loss if the property were damaged or destroyed. This decision upholds the principle that insurance should cover genuine economic interests and not be used for wagering.

    Facts

    • Plaintiff Szemko purchased an automobile.
    • Szemko insured the automobile with General Casualty Company of America.
    • The automobile was later stolen from Szemko.
    • It was subsequently determined that the automobile had been stolen prior to Szemko’s purchase.
    • General Casualty refused to pay out on the insurance policy, asserting Szemko lacked an insurable interest in the vehicle.
    • The lower courts affirmed that Szemko was a purchaser for value without knowledge that the car was stolen.

    Procedural History

    • The trial court found in favor of Szemko.
    • The Appellate Term affirmed the trial court’s decision.
    • The Appellate Division also affirmed.
    • The case was appealed to the New York Court of Appeals.

    Issue(s)

    Whether a purchaser of a stolen automobile, who buys it in good faith and for value, has an insurable interest in that automobile.

    Holding

    Yes, because the purchaser has a right to possession of the car against any contrary assertion except that of the true owner, and would sustain a direct pecuniary loss if the car were destroyed.

    Court’s Reasoning

    • The court relied on the precedent set in National Filtering Oil Co. v. Citizens’ Ins. Co. of Mo., 106 N.Y. 535, which stated that a legal or equitable interest in the property is not necessary to support insurance, only that the assured is “so situated as to be liable to loss if it be destroyed by the peril insured against”.
    • The court stated that an insurable interest exists when “there be a right in or against the property which some court will enforce upon the property, a right so closely connected with it and so much dependent for value upon the continued existence of it alone, as that a loss of the property will cause pecuniary damage to the holder of the right against it, he has an insurable interest”.
    • The court addressed the concern that insurance contracts should not be wagering contracts, emphasizing that Szemko had a genuine economic interest in the car.
    • The court cited decisions in other states (New Jersey and Washington) that held a good faith purchaser of a car has an insurable interest.
    • The court distinguished Nieschlag & Co. v. Atlantic Mut. Ins. Co., 43 F. Supp. 797, where the insured had no possession or right to possession of the goods represented by a fraudulent receipt, giving them nothing to assert against anyone.
    • The court concluded that Szemko’s right to possession, though limited, was insurable, solidifying the idea that insurance should cover genuine economic interests.

  • Bulova v. Manufacturers Hanover Trust Co., 301 N.Y.S.2d 359 (1969): Determining Ownership of Personal Property After Purchase

    Bulova v. Manufacturers Hanover Trust Co., 301 N.Y.S.2d 359 (1969)

    When a person independently contracts to purchase property, their subsequent payment by another party does not automatically transfer ownership to the payor, but can be construed as a gift or loan.

    Summary

    Mrs. Bulova purchased a sculpture at auction. Mr. Bulova, her husband, paid for it. After their separation, Mr. Bulova gifted the sculpture to the Guggenheim Museum. Mrs. Bulova sued the estate and the museum, claiming ownership. The court held that Mrs. Bulova owned the sculpture because she initially contracted to buy it. Mr. Bulova’s payment was considered either a gift or a loan, neither of which transferred title to him. This case clarifies that the act of initially contracting for a purchase is a key factor in determining ownership, even if another party provides the funds.

    Facts

    • December 7, 1955: Mrs. Bulova bid on and won a Brancusi sculpture at an auction.
    • Mrs. Bulova was listed as the purchaser in the auction records, and the invoice was sent to her.
    • Mr. Bulova, upon learning of the purchase, expressed surprise at the cost but paid the invoice two weeks later.
    • The sculpture was delivered to their apartment.
    • October 1957: The couple separated, and Mrs. Bulova demanded the return of the sculpture.
    • March 18, 1958: Mr. Bulova died, leaving his estate to his sisters.
    • March 28, 1958: One of Mr. Bulova’s sisters, acting as executrix, donated the sculpture to the Guggenheim Museum.

    Procedural History

    • Mrs. Bulova filed a claim against Mr. Bulova’s estate for the sculpture.
    • The claim was rejected, and Mrs. Bulova sued the estate and the Guggenheim Museum.
    • The trial court found for the defendants, stating title resided in the party supplying consideration.
    • The Appellate Division affirmed the judgment in favor of the Guggenheim Foundation.
    • The New York Court of Appeals granted leave to appeal.

    Issue(s)

    Whether a husband’s payment for an item purchased by his wife at auction, without any prior agreement, is sufficient to vest title in the husband.

    Holding

    No, because Mrs. Bulova contracted to purchase the sculpture before Mr. Bulova’s payment, establishing her ownership regardless of the source of funds.

    Court’s Reasoning

    The court reasoned that Mrs. Bulova initiated and completed the purchase contract when her bid was accepted. The auctioneer’s memorandum satisfied the Statute of Frauds, obligating the gallery to deliver the sculpture to Mrs. Bulova, making her solely liable for the price. Mr. Bulova’s payment was construed either as a gift or a loan to his wife. The court emphasized that Mrs. Bulova acted on her own initiative and had a personal connection to the artwork, differentiating her position from one of agency. The court cited Personal Property Law § 31, subd. 6 (now General Obligations Law, § 5.701, subd. 6) regarding the Statute of Frauds. The court also noted the inadmissibility of Mr. Bulova’s self-serving hearsay statements about owning the sculpture, quoting Matter of Berardini, 238 App. Div. 433, 435, stating “'[D]eclarations of a deceased person in his own favor are no more competent than those of a living person, particularly when they relate to a past event such as making a gift; and they are unavailing to divest a title.’” The court concluded that the lower courts erred in presuming title vested in the payor, especially where a prior contract existed. The court further suggested that even if the husband had contracted for the purchase in the wife’s name, the presumption would be a gift to her, absent evidence to the contrary.

  • Menzel v. List, 24 N.Y.2d 91 (1969): Damages for Breach of Warranty of Title

    Menzel v. List, 24 N.Y.2d 91 (1969)

    In cases of breach of warranty of title for personal property, the buyer is entitled to recover the fair market value of the property at the time of dispossession, not merely the original purchase price.

    Summary

    This case concerns the proper measure of damages for breach of an implied warranty of title when a painting, later discovered to be stolen, was sold and subsequently recovered by its rightful owner. The New York Court of Appeals held that the buyer was entitled to recover the present market value of the painting at the time of dispossession, reflecting the buyer’s actual loss and putting them in the position they would have occupied had the title been good, rather than simply refunding the original purchase price.

    Facts

    Erna Menzel purchased a Marc Chagall painting in Belgium in 1932. In 1940, fleeing the German invasion, the Menzel’s left the painting behind. German authorities seized it. In 1955, Klaus and Erna Peris, operating an art gallery in New York, purchased the painting in Paris for $2,800, unaware of its history. They sold it to Albert List in October 1955 for $4,000. In 1962, Mrs. Menzel discovered the painting in List’s possession and demanded its return.

    Procedural History

    Mrs. Menzel sued List in replevin to recover the painting. List, in turn, filed a third-party complaint against the Peris for breach of implied warranty of title. The trial court ruled in favor of Mrs. Menzel, ordering List to return the painting or pay $22,500, its then-current value. The court also found for List against the Peris for $22,500 plus List’s costs in the Menzel action. The Appellate Division modified the judgment, reducing List’s recovery against the Peris to $4,000 (the original purchase price) plus interest. List appealed to the New York Court of Appeals regarding the damage calculation. The Peris cross-appealed concerning the date interest began accruing.

    Issue(s)

    1. What is the proper measure of damages for breach of an implied warranty of title in the sale of personal property?

    2. From what date should interest run on the judgment in favor of List against the Peris?

    Holding

    1. No, the proper measure of damages is the value of the painting at the time of trial of the original action, not merely the original purchase price, because that represents the buyer’s actual loss resulting from the breach of warranty.

    2. No, interest should be included from the date on which Mrs. Menzel’s judgment was entered, because List was not damaged until he was required to surrender the painting or pay its present value.

    Court’s Reasoning

    The court reasoned that the measure of damages for breach of warranty should place the injured buyer in as good a position as they would have occupied had the contract been kept. Awarding only the purchase price would merely restore the buyer to the status quo ante, effectively denying any damages for the breach. The court found existing New York case law on the issue to be sparse and inconsistent, treating the issue as one of first impression. It relied on Section 150(6) of the New York Personal Property Law (counterpart to Section 13 of the Uniform Sales Act), stating that damages for breach of warranty should be the loss directly and naturally resulting from the breach. Quoting Williston on Contracts, the court emphasized that the injured buyer should receive “such damages as will put him in as good a position as he would have occupied had the contract been kept.” The court dismissed concerns about potentially ruinous liability for sellers, noting that sellers could protect themselves by investigating title or excluding warranties under Section 94 of the Personal Property Law. Regarding interest, the court held that List was not damaged until the judgment in favor of Mrs. Menzel, and therefore interest should run from that date. As the court stated, “Manifestly, the present-value measure of damages has no necessary connection with the date of purchase and is, in fact, inconsistent with the running of interest from the date of purchase since List’s possession was not disturbed until the judgment directing delivery of the painting to Mrs. Menzel, or, in the alternative, paying her the present value of the painting.”

  • Hawthorne v. Hawthorne, 13 N.Y.2d 82 (1963): Division of Fire Insurance Proceeds for Tenants by the Entirety

    Hawthorne v. Hawthorne, 13 N.Y.2d 82 (1963)

    Proceeds from a fire insurance policy on real property owned by tenants by the entirety are considered personal property and are not subject to the inseverable quality of ownership associated with the real property itself, allowing for division of the proceeds.

    Summary

    The case concerns whether fire insurance proceeds for property owned by a husband and wife as tenants by the entirety should be divided at the request of one owner. The court held that the insurance proceeds, being personal property derived from a contract, are not subject to the same inseverable ownership as the real property. Thus, the proceeds can be divided. The court distinguished this situation from involuntary conversions like condemnation awards, where the substituted property retains the original ownership structure, because the insurance proceeds arose from a voluntary contract.

    Facts

    Plaintiff wife and defendant husband owned real property as tenants by the entirety.
    The property was insured under a standard fire insurance policy.
    The property was damaged by fire, and insurance proceeds were paid out.
    The wife sought to have the proceeds divided, while the husband argued they should be treated as held by the entirety.

    Procedural History

    The Special Term dismissed the wife’s complaint.
    The Appellate Division affirmed the dismissal.
    The wife appealed to the New York Court of Appeals.

    Issue(s)

    Whether the proceeds of a fire insurance policy insuring the interests of a husband and wife as tenants by the entirety are required to be divided at the demand of one owner, or whether they are impressed with the inseverable quality of ownership akin to the real property.

    Holding

    No, because the insurance proceeds are considered personal property derived from a contractual agreement, not an involuntary conversion of the real property itself.

    Court’s Reasoning

    The court reasoned that while the unity of person historically explained entireties in realty, it doesn’t dictate the relationship regarding insurance proceeds. Personal property cannot be held by the entirety.
    The court distinguished this case from condemnation cases where the award substitutes the real property and retains the original ownership structure. Here, the insurance proceeds stem from a personal contract, not an operation of law on the real property.
    “These proceeds have been paid pursuant to a personal contract of insurance entered into between these parties and the insurance company.”
    The court emphasized that the loss of the realty was involuntary, but the draft (insurance proceeds) was the product of a voluntary contractual act.
    The court cited Matter of Blumenthal, where a purchase-money bond and mortgage taken back by a husband and wife on the sale of real property held by them as tenants by the entirety were deemed to be held as tenants in common, not by the entirety. The court in Blumenthal stated, “Estates by entirety are peculiar to real estate. No such thing exists, except by analogy, as to personal property.”
    The court noted that applying the incidents of a tenancy by the entirety to personal property is only by analogy and that considerations of policy and common convenience support the division of the proceeds.
    The court stated: “Therefore, since it is only by analogy that the incidents of a tenancy by the entirety may apply to personal property (Matter of Albrecht, 136 N. Y. 91, supra), considerations of policy and common convenience reinforce the applicability of the reasoning of the Blumenthal case.”
    Therefore, the complaint stated a valid cause of action for the compulsory division of the insurance proceeds.