Opinion
May 11, 1967
Petitioner applies for an order in the nature of prohibition enjoining a Justice of the Supreme Court from signing a proposed judgment. The judgment was submitted by the Attorney-General, after decision made and filed, in a proceeding commenced by him pursuant to subdivision 12 of section 63 Exec. of the Executive Law. Its purpose was an injunction, restraining named respondents from engaging in and continuing illegal and fraudulent practices in connection with what is commonly known in the retail trade as "referral selling". Respondents cross-move for dismissal of the petition in point of law. Petitioner was one of a group of finance companies, to whom assignments of retail installment contracts were made, in violation of subdivision 2 of section 402 Pers. Prop. of the Personal Property Law (Retail Instalment Sales Act); this section prohibits separate documents from evidencing a single transaction; the violation of this section has resulted in gross frauds upon consumer-victims. The trial court found that the respondents therein carried on an operation which not only constituted "a public fraud calculated to entrap gullible consumers in a financial morass" but was a fraudulent scheme constituting a lottery within the meaning of section 1370 of the Penal Law and a public nuisance under section 1371 of the Penal Law. The gravamen of petitioner's claim is that three decretal paragraphs in the proposed judgment affect its substantial rights and that the court will exceed its jurisdiction if it signs the judgment. Its claimed substantial rights are predicated upon the retail installment contracts ostensibly complete on their face and assigned to it, allegedly without knowledge that they were improperly severed from portions of entire agreements, which agreements had been found to be illegal and unenforcible by the trial court. Two of the decretal paragraphs (second and fifth) enjoin only the named respondents from the prohibited conduct. The third (eleventh) provides for service of a copy of the judgment upon the consumers defrauded and upon finance companies, including petitioner, which had purchased any note or retail installment contract arising from the referral sales program found to be illegal. However, service of a copy of the judgment upon petitioner and the consumers whose contracts it bought does not make petitioner an aggrieved party. The obvious purpose of this paragraph is to put all persons connected with the illegal transactions and relevant documents on notice that they are part of a lottery, and thus, a public nuisance. If petitioner had no knowledge that the contracts assigned to it were fraudulently procured and had purchased them in the belief they were complete on their face, before they were negotiated to petitioner as certified to it, the judgment derogates in no way from the petitioner's rights. Nor does it affect any claim which may be validly asserted by petitioner on the representation it was a bona fide purchaser for value. Petitioner was fully aware of the proceedings below. The attorney who now acts on its behalf, and is its president, and also its majority stockholder, testified at the trial. It made no application to intervene at the trial. It made no application to intervene for the protection of its alleged interests upon learning of the proposed judgment. It now does not ask for leave to intervene. Petitioner, being neither a party to the action in which the challenged judgment is proposed, nor an intervenor, nor an aggrieved party, lacks standing to support prohibition, which in any event does not lie in the absence of a showing that the subject officer is "about to proceed without or in excess of jurisdiction". (CPLR 7803, subd. 2.) The petition fails to disclose any factual or legal basis for petitioner's assumption that the respondent Justice at Trial Term is "'about to proceed without or in excess of jurisdiction'". ( Matter of Lefkowitz v. Justices of the Supreme Court, 27 A.D.2d 757.) Petition unanimously dismissed, with $50 costs and disbursements to the respondents.
Concur — Stevens, J.P., Capozzoli, Rabin, McNally and McGivern, JJ.