New York Law Review

Tag: tolling

  • Barchet v. New York City Transit Authority, 20 N.Y.2d 1 (1967): Tolling Statute of Limitations When Court Leave Is Required

    Barchet v. New York City Transit Authority, 20 N.Y.2d 1 (1967)

    When a plaintiff must obtain leave of court to file a late notice of claim against a public authority, the statute of limitations is tolled from the commencement of the proceeding seeking such leave until the order granting the relief takes effect.

    Summary

    Elizabeth Barchet sued the New York City Transit Authority (NYCTA) for injuries sustained due to alleged negligence. The NYCTA moved to dismiss because the action was brought after the one-year statute of limitations under Public Authorities Law § 1212. Barchet argued the statute was tolled while she sought leave to file a late notice of claim under General Municipal Law § 50-e(5). The Court of Appeals held that the statute of limitations was tolled during the period when Barchet was required to obtain leave of the court, reversing the Appellate Division’s dismissal and reinstating the Special Term’s order.

    Facts

    Elizabeth Barchet was injured on December 23, 1963, allegedly due to the NYCTA’s negligent operation of its transit lines.
    Almost a year later, on December 18, 1964, Barchet sought leave of court to serve a late notice of claim, with a motion returnable on January 18, 1965, and submitted on January 22, 1965.
    On February 15, 1965, an order was signed granting Barchet leave to file a late notice of claim, giving her ten days from February 19, 1965 (when the order appeared in the New York Law Journal) to file.
    Barchet filed the late notice of claim on February 23, 1965, and commenced the action on March 22, 1965.

    Procedural History

    Barchet commenced an action against the NYCTA.
    The NYCTA asserted the statute of limitations as a defense, arguing the action was time-barred.
    Special Term granted Barchet’s motion to dismiss the NYCTA’s defense.
    The Appellate Division reversed the Special Term’s order and dismissed the complaint.
    The Court of Appeals granted leave to appeal.

    Issue(s)

    Whether the statute of limitations was tolled during the period in which the plaintiff was required to obtain leave of the court to bring her action, pursuant to CPLR 204(a)?

    Holding

    Yes, because the statute was tolled from the time the plaintiff commenced the proceeding to obtain leave of the court to file a late notice of claim until the order of Special Term granting that relief appeared in the New York Law Journal, the date upon which it was to take effect.

    Court’s Reasoning

    The court reasoned that CPLR 204(a) tolls the statute of limitations when the commencement of an action has been stayed by a court. While filing a notice of claim within 90 days is typically a condition precedent within the plaintiff’s control, Barchet couldn’t comply due to legally recognized reasons, necessitating court leave. Obtaining court leave was a prerequisite effectively prohibiting the action until consent was granted. The court distinguished this from simply alleging 30 days elapsed since serving the notice of claim; both prescribe procedures affecting prosecution.

    The court rejected tolling from the 90th day’s passing, presuming Barchet’s disability prevented filing the notice and commencing the action. Once the disability ceased, obtaining court leave became the impediment. The court stated, “From the date when she commenced the proceeding for leave to file a late notice of claim, December 18, 1964, until the order granting the relief requested appeared in the New York Law Journal… the plaintiff was prohibited from commencing her action and, by virtue of the provisions of CPLR 204 (subd. [a]), the Statute of Limitations was tolled for that period.”

    A contrary ruling would limit the one-year period to obtain leave, disadvantaging plaintiffs with legally recognized disabilities. The court distinguished Christian v. Village of Herkimer, emphasizing it involved a different question. The court emphasized that when the proceeding to file a late notice of claim was commenced on December 18, 1964, five days remained in which to commence the action. The order granting leave took effect February 19, 1965, so the Statute of Limitations then commenced to run again. The notice was filed on February 23, 1965, within the five-day period remaining. Once the notice was filed, the plaintiff was entitled to an additional 30 days in which to commence the action. The action was timely commenced on March 22, 1965.

  • Matter of Feinberg, 18 N.Y.2d 498 (1966): Filing Tax Claim Tolls Federal Statute of Limitations in Estate Cases

    18 N.Y.2d 498 (1966)

    Under New York law, the filing of a notice of claim for unpaid federal taxes with the representatives of an estate constitutes the commencement of a ‘proceeding in court’ for purposes of tolling the federal statute of limitations on tax collection.

    Summary

    These consolidated cases address whether the filing of a notice of claim for unpaid taxes with estate representatives constitutes commencing a ‘proceeding in court’ under the Internal Revenue Code, thus tolling the statute of limitations. The New York Court of Appeals held that under New York law, it does. The court reasoned that filing a claim is the initial step toward judicial settlement, effectively pausing the statute of limitations. This decision hinges on interpreting federal law in light of state procedural rules, affirming the Appellate Division’s order.

    Facts

    In Matter of Feinberg, the administratrix of the estate filed an income tax return for the decedent. The IRS assessed a deficiency and filed a verified proof of claim with the administratrix, who neither paid nor rejected it. Years later, the government sought to compel an accounting, but the administratrix argued the claim was time-barred.

    In Matter of Field, the executors reported an estate tax. The IRS claimed a deficiency, which was later reduced. An assessment was made, and the District Director filed a verified proof of claim with the executors, who did not pay or reject it. The government later sought to compel an accounting and distrained the estate’s bank account. The executors argued the government’s application was untimely.

    Procedural History

    In both cases, the Surrogate’s Court initially ruled that the Government’s tax claims were time-barred. The Appellate Division reversed these decisions, granting leave to appeal to the Court of Appeals.

    Issue(s)

    Whether, under federal law, the Government instituted a ‘proceeding in court’ within six years after the tax assessment against each estate by merely filing a notice of claim with the estate representatives, thereby tolling the federal statute of limitations for tax collection.

    Holding

    Yes, because under New York law, filing a verified claim with the representatives of an estate is considered the first step toward having the claim determined upon judicial settlement, and thus constitutes the commencement of a special proceeding that tolls the statute of limitations.

    Court’s Reasoning

    The court reasoned that while federal law governs the timeliness of federal tax claims, the determination of what constitutes commencing a ‘proceeding in court’ depends on state law. Citing Herb v. Pitcairn, the court emphasized that the critical factor is whether the process employed would, without more, bring the parties into court. The court acknowledged the diversity of legal proceedings and procedures across jurisdictions and inferred that Congress intended to adopt the appropriate local rule as the applicable federal law, as long as it does not discriminate against the Government. The court referred to United States v. Saxe, noting that the effect of a notice of claim is dependent on State law.

    Under New York law, as established in Matter of Schorer, filing a verified claim with the estate representatives is the first step toward having the claim ‘tried and determined upon the judicial settlement.’ This is viewed as commencing a special proceeding that tolls the statute of limitations. The court rejected the argument that rejection of the claim is a prerequisite to jurisdiction, stating that timeliness depends on when a claim is filed rather than when it is rejected. The purpose of the statute of limitations is to penalize claimants for sleeping on their rights, and there is no such procrastination when a claim is presented within the prescribed limitations period. The court stated that the short Statute of Limitations on litigating rejected claims outside the Surrogate’s Court did not apply to tax claims asserted by the Federal Government, since “the United States is not bound by state statutes of limitations.”

    Therefore, the Government commenced a special proceeding by filing the tax claims, tolling the statute of limitations. Subsequent actions, such as abandoning an earlier attempt to compel an accounting or distraining the estate’s checking account, are merely proceedings within the special proceeding. The court also held that the fact the claims were filed by the District Director of Internal Revenue does not violate section 3740 of the Internal Revenue Code of 1939, as that section does not apply to communications between parties which are not filed in court, according to Taylor v. United States.