82 A.D.2d 516 | N.Y. App. Div. | 1981
OPINION OF THE COURT
This case poses the question, inter alia, of whether a larceny indictment will lie against the named defendants for their alleged failure to remit sales taxes and/or employees’ personal withholding taxes collected by them on behalf of the State of New York. We answer this question in the affirmative, and therefore reverse so much of the order of Criminal Term as granted, in part, the defendants’ motions to dismiss.
On or about June 20,1980,12 indictments were returned against defendant-respondent Charles L. Lyon, individually and as a codefendant with 11 closely held corporations (the corporate defendants) of which he is an officer. Lyons, a Suffolk County entrepreneur, had apparently come under investigation for various tax offenses arising out of his multifaceted business operations, and the State Department of Taxation and Finance had apparently compiled sufficient evidence against the several codefendants to warrant presentation of the case before a Grand Jury. After hearing the evidence (which included Lyons’ testimony) the Suffolk County Grand Jury returned indictments against the various codefendants for (1) larceny (founded upon the defendants’ intentional failure to pay over sales and withholding tax revenues belonging to the State), (2) the failure to file corporate franchise tax reports, and (3) the evasion of personal income taxes. On the defendants’ motions to dismiss, Criminal Term dismissed each of the counts against the individual defendant on the ground that his voluntary appearance before the Grand Jury pursuant to a knowingly executed waiver of immunity rendered him immune from prosecution since “the transcript unequivocally shows that the waiver [of immunity] was not in fact
Defendants were indicted for varying degrees of larceny on the theory that they had collected withholding and sales tax revenues as trustees for the State of New York, and that their subsequent failure to remit said revenues constituted a theft of property within the meaning of section 155.05 of the Penal Law. This statute provides, in pertinent part:
“1. A person steals property and commits larceny when, with intent to deprive another of property or to appropriate the same to himself or to a third person, he wrongfully takes, obtains or withholds such property from an owner thereof.
“2. Larceny includes a wrongful taking, obtaining or withholding of another’s property, with the intent prescribed in subdivision one of this section, committed in any of the following ways:
“ (a) By conduct heretofore defined or known as common law larceny by trespassory taking, common law larceny by trick, embezzlement, or obtaining property by false pretenses”.
The term “owner” is defined in subdivision 5 of section 155.00 of the Penal Law as: “any person who has a right to [the] possession [of property] superior to that of the taker, obtainer or withholder [thereof] ”. Clearly, the State can qualify as an “owner” of property, as subdivision 7 of section 10.00 of the Penal Law includes the “government” within its definition of “person”. However, while the State may qualify as an “owner” of property in the general sense,
Importantly for present purposes, these are not the only
In Canale v New York State Dept. of Taxation & Fin. (84 Misc 2d 786), the plaintiff, the receiver of an inn during the pendency of a mortgage foreclosure action, sought to obtain a refund from the State Department of Taxation and Finance upon surrender of the inn’s liquor license, but the State refused on the ground, inter alia, that since the inn still owed sales and franchise taxes to the State, the latter, by virtue of such indebtedness, had the undoubted right to offset the amount of that refund against the taxes which were owing to it. The Court of Claims ultimately agreed with the State, stating (pp 789-790): “The court notes that sales taxes are collected by a vendor or retailer as a trustee (Tax Law, § 1132, subd [a]), and as such, the moneys so collected do not become the vendor’s property, but rather belong to the State as the legal beneficiary of the trust. Accordingly, by vitrue of the trust character of the sales tax aspect here, the State’s right to setoff is ob
In reaching the opposite conclusion, i.e., that the State
Clearly, when a sale is made, both the vendor and the vendee know that the State, not the vendor, is imposing the sales tax. Pursuant to statute, the amount of the tax must be shown separately on the sales receipt (Tax Law, § 1132, subd [a]), and accurate records of all transactions are required to be maintained by the vendor (Tax Law, § 1135). In addition, the taxes must be reported and paid over to the government at specified intervals of time (Tax Law, §§ 1136, 1137). Similarly, a detailed scheme for the withholding and paying over of personal income taxes has been created by section 674 of the Tax Law, and no one could feign surprise at the proposition that the money collected pursuant to its provisions is the property of the State.
In construing section 675 and subdivision (a) of section 1132 of the Tax Law, it is perhaps profitable to note that analogously with section 675 of the Tax Law, section 7501 of title 26 of the United States Code provides, inter alia, that “the amount of [income] tax[es] * * * collected or withheld [on behalf of the Federal Government] shall be held to be a special fund in trust for the United States.” Kalb v United States (505 F2d 506, cert den 421 US 979) is instructive in this regard, as the matter there in suit included a claim by a former corporate officer that he could not be held responsible for the failure to remit Federal withholding taxes after a bankruptcy petition has been filed. The officer asserted that under such circumstances remitting the taxes would constitute the impermissible payment of a pre-existing debt, but the Second Circuit disagreed, stating (p 509): “ [W] ithholding taxes are not sim
People v Keeffe (50 NY2d 149) is not to the contrary and is, in fact, supportive of the proposition that a larceny indictment will lie under the facts at bar. In Keeffe, the Court of Appeals addressed the question of whether an attorney who holds the proceeds of the settlement of a personal injury action in his special account may be convicted of larceny when he withdraws from that account a sum sufficient to reduce the remaining balance below the amount to which his predecessor attorney is entitled as his fee. The court therein reversed the defendant’s larceny conviction, holding (p 153) that “the predecessor attorney did not * * * have ‘property’ in or ownership of the money held by the successor attorney,” but merely a contractual claim against him.
In the Keeffe case, an intermediate order had been made by the Surrogate’s Court upon the settlement of a wrongful death action, which order provided, inter alia, that “ ‘the administrator be permitted to withdraw and pay out the amount of $2,500 to Alfred L. D’lsernia, Esq. [said sum] representing the fee to which he is entitled as former attorney for the petitioner, and that said amount shall be charged against the balance of counsel fees due to the attorneys for the estate.’ ” (People v Keeffe, supra, p 154.) Subsequently, however, and prior to the date of the final decree, the account containing the proceeds of the tentative settlement was depleted by the defendant. On these facts, the Court of Appeals held that the predecessor attorney had merely obtained a contractual claim to the money, as the intermediate order did not allow him a charging lien. Thus, while noting that the court rules of both the First and Second Departments require that the proceeds from the settlement of a personal injury or wrongful death action
In direct contrast to the situation in Keeffe (supra), section 675 and subdivision (a) of section 1132 of the Tax Law both provide that the tax money collected thereunder is to be held in trust on behalf of the State, i.e., the alleged victim herein. Moreover, the Tax Law provides a detailed scheme regarding the time and the manner of payment (see, e.g., Tax Law, §§ 674, 1135, 1136, 1137). In light of all of the foregoing, we conclude that a viable, statutory trust relationship has been created by the Tax Law, and that a larceny indictment will therefore lie to redress the alleged wrongful obtaining or withholding of personal income and sales tax revenues belonging to the State.
" Contrary ..to the defendants’ alternate contention, we do not believe that the so-called “criminal” provisions of the Tax Law operate to bar the instant prosecution, as subdivision (c) of section 695 specifically provides that “[a]ny individual [or] corporation * * * who willfully fails to collect or pay over any [personal income] withholding tax [es] * * * shall * * * be guilty of a misdemeanor” punishable by a fine of not more than $5,000 or imprisonment for not more than a year, or both, and that the foregoing is “in addition to other penalties provided by law” (emphasis supplied). Although it has been argued that this latter provision refers simply to the “civil” penalties found in other parts of the Tax Law (see, e.g., Tax Law, § 685), it should be noted that section 685 authorizes the State to seek civil penalties in the redress of certain failings punishable, as well, under other subdivisions of the criminal penalty provision, e.g., subdivision (a) of section 695 of the Tax Law, and that sub
“1. A waiver of immunity is a written instrument subscribed by a person who is or is about to become a witness in a grand jury proceeding, stipulating that he waives his privilege against self-incrimination and any possible or prospective immunity to which he would otherwise become entitled, pursuant to section 190.40, as a result of giving evidence in such proceeding.
“2. A waiver of immunity is not effective unless and until it is sworn to before the grand jury conducting the proceeding in which the subscriber has been called as a witness.” (Emphasis supplied.)
In the case before us, the individual defendant (Charles L. Lyon) requested an appearance before the Grand Jury, and pursuant to that request he was notified, inter alia, of a time at which to appear before that body. Upon his appearance, the following exchange occurred between himself, his attorney (Thomas Watson) and the Assistant District Attorney (Moses Weintraub) in the presence of the Grand Jury and prior to his testimony:
“Mr. Lyon, is it your request that you appear this morning before the Grand Jury?
“MR. lyon : It is.
“MR. weintraub: Before you appear before the Grand Jury, are you aware that you are required to sign a waiver of immunity?
“MR. lyon : I am.
“mr. weintraub : And that anything you testify to under this waiver can be used against you at any trial or any future proceedings in this matter?
“MR. lyon : I understand that.
*527 “MR. weintraub : Do you also understand that, by signing this waiver of immunity, you must answer each and every question I put to you, and you cannot claim your privilege against self-incrimination as to any question I put forth to you?
“MR. LYONS: I do.
“mr. weintraub : Do you also understand that any untruthful answers by you could result in an indictment for perjury?
“MR. LYONS: I do.
“MR. weintraub : First, I want to mark the letter from your attorney as Grand Jury Exhibit Number 52 in evidence.
“(The above-referred to letter was received and marked as Grand Jury Exhibit Number 52 in evidence; 6-20-80, J.D.)
“(Mr. Watson entered the Grand Jury Chamber.)
“MR. weintraub: Mr. Lyon, I am going to hand you a waiver of immunity before the Grand Jury and ask you to read it and consult with your attorney before you sign it (handing).
“MR. WATSON: Do you have any questions?
“MR. lyon : I want to talk to you.
“a juror : Any consultation between the attorney and the witness—they will have to retire to consult and then come back.
“mr. watson : Fine. Thank you.
“(Mr. Watson and Mr. Lyon left the Grand Jury Chamber and subsequently returned.)
“MR. weintraub : Mr. Lyon, you have had an opportunity to consult with your attorney; is that correct?
“MR. lyon : That’s true, sir.
“MR. weintraub: He has explained to you the consequences of your signing this waiver of immunity?
“MR. lyon : He has.
“MR. weintraub : Do you still wish to sign this waiver of immunity?
“MR. lyon : I do.
*528 “MR. WEINTRAUB: Please sign it.
“(Witness signed document.)
“MR. weintraub : Mr. Lyon, you have signed this waiver of immunity, and you are fully cognizant of what your rights are as a result of the signing of this waiver; is that correct?
“MR. LYON: Yes.
“Mr. weintraub : Your attorney has fully conferred with you as to what your rights and liabilities are as a result of your signing this waiver?
“mr. LYON: He has.
“mr. weintraub: Is it still your desire to testify pursuant to this waiver?
“MR.'LYON: It is.
“mr. weintraub : Kindly mark the waiver of immunity as Grand Jury Exhibit Number 53 in evidence.
“(Waiver of immunity before Grand Jury signed by Charles Lyon was received and marked as Grand Jury Exhibit Number 53 in evidence; 6-20-80, J.D.)
“mr. weintraub: Mr. Lyon, will you kindly raise your right hand and be sworn in by the Foreman.
“(The witness complied.)
“the foreman : Do you swear in the presence of the everliving God that the evidence you shall give to the Grand Jury upon this Complaint shall be truth, the whole truth, and nothing but the truth, so help you God?
“the witness : I do.
“the foreman : Please be seated.”
The record therefore clearly indicates that the individual defendant willingly signed the waiver of immunity in the presence of the Grand Jury, with the assistance of counsel, and only after being fully apprised of his rights. In addition, there appears above the foreman’s signature on the actual waiver document a printed jurat bearing the notation “subscribed and sworn to before me this 20th Day of June, 1980”, although the record reveals that the defendant did not formally raise his right hand and recite that he swore to the waiver in the Grand Jury chamber. In our view,
The statute in question (CPL 190.45; subd 2) does not prescribe a specific ceremony for swearing to the waiver of immunity before the Grand Jury. This being so, the decision of the Court of Appeals in Bookman v City of New York (200 NY 53, 56) takes on significance, for the court there stated with regard to the form of an oath in general that “ [w]hatever the form adopted, it must be in the presence of an officer authorized to administer it, and it must be an unequivocal and present act by which the affiant consciously takes upon himself the obligation of an oath.”
In our view, the first Bookman requirement was satisfied in the case at bar by the signing of the waiver instrument in the presence of the Grand Jury foreman (see CPL 190.25, subd 2). In addition, we believe the defendant’s signature on a document bearing the printed legend “subscribed AND SWORN TO BEFORE ME THIS .... DAY OF........,19 ” evinces an intention that the document in question operate as a sworn statement, so that by the signing of the instrument in the presence of the Grand Jury the defendant satisfied the second Bookman requirement of taking upon himself “the obligation of an oath” (Bookman v City of New York, supra, p 56). Especially is this so in light of the fact that a defendant’s right to appear and give testimony before a Grand Jury is expressly conditioned upon his “signing and submitting to the grand jury a waiver of immunity pursuant to” CPL 190.45 (CPL 190.50, subd 5, par [b]; see People v Ellwanger, 99 Misc 2d 807; People v Rodriguez, County Ct., Montgomery County, Feb. 1, 1979, White, J., affd 77 AD2d 820, mot for lv to app den 51 NY2d 884), and that the defendant herein had the benefit of counsel during his Grand Jury appearance, a benefit specifically conferred by CPL 190.52 (subds 1,2) in exchange for the execution of a waiver of immunity (see Matter of Lief v Hynes, 98 Misc 2d 817; see, also, Bellacosa, Practice Commentary, McKinney’s Cons Laws of NY, Book 11 A, CPL 190.52, 1972-1980 Supp Pamphlet, pp 111-112). Thus, the defendant fully expected to waive immunity in exchange for the opportunity to appear and"testify before the Grand Jury.
The order of the Supreme Court, Suffolk County, should therefore be reversed insofar as appealed from and the affected counts of the various indictments reinstated as against each of the several defendants.
Damiani, J. P., Mangano and Rabin, JJ., concur.
Order of the Supreme Court, Suffolk County, dated October 20,1980, reversed insofar as appealed from, on the law, the affected counts of the indictments are reinstated and the cases are remitted to Criminal Term for further proceedings on the indictments.