Opinion
Argued May 3, 1978
Decided June 15, 1978
Appeal from the Supreme Court in the First Judicial Department, JAMES G. STARKEY, J.
Copal Mintz for appellant. Robert M. Morgenthau, District Attorney, (Brian Rosner and Robert M. Pitler of counsel), for respondent.
After a nonjury trial in the Criminal Court of the City of New York, appellant Walter Sakow was convicted on two counts of violation of the fire code, section 488-1.0 of the Administrative Code of that city, in that he willfully neglected and refused to comply with violation orders issued by the fire department directing the correction of hazards in the twin buildings located at 154-160 East 91st Street in Manhattan. The judgment has been upheld by the Appellate Term, First Department.
On the present appeal, aside from questions he raises about the propriety of the sentence, his argument revolves about two assertions: (1) that he could not be held criminally liable because title to the buildings was not held in his name but in that of corporations of which he was merely a stockholder and (2) that delivery of the violation orders had not been effected in a manner consistent with the requirement of the Administrative Code. On the ensuing analysis, we find these contentions without merit.
At the outset, we note that the existence of the violations covered by the fire department orders appears to have been incontestable. The largely unoccupied buildings had been the scene of at least a dozen fires, in one of which two fatalities had occurred. Their dilapidated and dangerous condition clearly posed a risk to public safety. Nevertheless, despite the violation orders, and in the face of a plea of guilty accepted on an earlier charge in which a corporation was permitted to be substituted for Sakow as the pleading defendant, the conditions had remained uncorrected.
It is also scarcely open to serious dispute that, in the context of this prosecution, the trial court could conclude, as it did, that Sakow was the owner of the property on May 29, 1975, when the violation orders were issued, and on December 26, 1975 and January 10, 1976, when further inspection by the fire department indicated that they had been ignored. During the trial, at which he did not take the stand, there was adequate proof from which it could be inferred that, during the years 1972 through 1975, he was the active manager and dominant controlling force in a group of corporations among whom title to the buildings was shuffled — "Wama Property, Inc.", "Mawash Realty Corp.", "Justin Property, Inc.", and "Lescal Realty Corp." In each he was also principal and, at times, sole shareholder. Whenever Sakow acted for the corporations, he did so in the absence of minutes and without a meeting of the board of directors; for three corporations, minute books and stock certificates had not even been issued at the time of formation. Moreover, the court had before it both an agreement dated February 13, 1975, by the terms of which the "joint venturer", with whom the appellant previously had shared his corporate stock interest in the buildings, transferred his holdings to Sakow. There was also evidence of such continued ownership by Sakow at the time of trial and nothing to controvert the plain implication that on all the intermediate dates this interest had remained unchanged.
Section 20.25 of the Penal Law provides that "[a] person is criminally liable for conduct constituting an offense which he performs or causes to be performed in the name of or in behalf of a corporation to the same extent as if such conduct were performed in his own name or behalf." It follows that the corporate barriers on which the appellant relies need not have been accepted as an effective screen behind which Sakow could succeed in shielding himself from culpability for omission to take safety precautions necessary for the welfare of the buildings' remaining residents and visitors, the occupants of neighboring structures, jeopardized firefighters and others within the range of danger (see People v Dean, 48 A.D.2d 223; People v Alrich Rest. Corp., 53 Misc.2d 574; cf. People v Trapp, 20 N.Y.2d 613; People v Knapp, 206 N.Y. 373).
It goes without saying that a web of obscurity woven by the interplay of a number of corporations is no more impervious to penetration by the law than is a facade-like single corporation. For, under a statute enforcing the State's police power to protect life and property, the concern is with substance not form. And, since the essence of the offense here charged was the appellant's failure to correct hazards after being ordered to do so by the fire department, his culpability was not dependent on affirmative conduct (see Penal Law, § 15.00, subd 4).
The alternate prop on which appellant posits his prayer that his conviction be overturned is his argument that unless the delivery of the violation orders was made in conformity with the requirements of section 491a1-2.0 of the code, no conviction could result from his failure to eradicate the conditions they described. The pertinent portions of this section provide that "[o]rders of the department * * * shall be addressed to the owner or owners, lessees or occupants of the building * * * affected thereby. It shall be unnecessary to designate such owner or owners, lessees or occupants, by name * * * but the premises shall be designated in the address, so that the same may be readily identified. Service of any such order may be made by delivery of a copy thereof to the owner or any one of several owners, to a lessee or any one of several lessees, or to any person of suitable age and discretion in charge or apparently in charge of the premises, or if no person be found in charge of the premises then by affixing a copy of such order prominently upon the premises" (emphasis added).
Appellant insists that section 491a1-2.0 constitutes a service of process statute whose terms must be strictly complied with before a criminal prosecution may be commenced. We do not so read it. It is obvious that the purpose of the provision for issuing violation orders is to effect prompt prevention of conflagrations which may be precipitated by delay in the removal of the known hazards rather than to lay a foundation for criminal prosecution. This may be readily inferred from the code's concern for the specification of the address rather than the identity of the individuals involved, its inclusion of service upon "any person * * * apparently in charge of the premises" and its provision, as one of the alternative forms of service, for the affixing of a copy to the building. Indeed, as the word "may" indicates, the enumerated forms of service are not necessarily exclusive. Its options for service on those whose relationship to the property, though not an ownership interest, is likely to cause them to act swiftly to ameliorate the condition is not lost on us. To read its language as though validity of service under it is dependent on the minutiae of the listed forms of notice runs counter to its intendment. In short, section 491a1-2.0 is to be viewed as a permissive notice section from the service of which other than criminal consequences could flow, such as, for example, direct action by the Fire Commissioner to remove the hazards (§ 491a2-1.0). It is not a condition precedent to prosecution.
It may be noted that, as distinguished from the violation orders, the present criminal cases were initiated by due service of a summons upon Sakow personally. They were based on accusatory instruments filed against him on January 16, 1976 and February 3, 1976.
Needless to say, the notice could help to establish a defendant's actual knowledge of the violations of which it complains and whose elimination it seeks. Once brought to his personal attention, it tends to establish the willfulness of a defendant's conduct. On that subject, the facts relating to the service of the violation orders involved in this case are most instructive.
On May 29, 1975, Edwin Frederick, an attorney, was in the Manhattan Criminal Courts Building representing Sakow and some of the corporations in a related case involving fire violations in the same buildings. Sakow was not present. At that time Frederick had a discussion with Captain Richard Travis, who commanded the fire company responsible for the area where the property was located. The record indicates that, during this discussion, Frederick stated that Sakow wished to clear up the fire department's complaints, but that he did not have a current list of the violations. Travis thereupon had one of his subordinates compile such a list; these were embodied in the three violation orders on which the present prosecution was predicated.
As permitted by section 491a1-2.0, the front of the violation order forms named "Mawash" as "Owner" of the property; on their backs were listed, as "Name of person who received this order", "Mr. Edwin Frederick for Walter Sakow", "Owner/Agent/Occupant". It is conceded that Frederick did not delay in reading the orders to Sakow over the telephone. Thus, while the code's notice provision is largely one allowing for constructive notice, in this case in fact there was actual notice.
For that matter, Frederick's role did not have to be regarded as simply that of an attorney at law representing a client. Among other things, he had organized the corporations, had been designated as the person (and his office as the place) to whom service of process on the corporations was to be sent by the New York Secretary of State, had at Sakow's instance handled the business transactions involved in securing financing for the buildings and had played an active part in shifting the title from corporation to corporation. Where, as here, it was difficult to ascertain who, if anyone, had been put in charge of the buildings, and where efforts to serve Sakow as owner at his listed place of business had been unavailing, in the spirit of the code provision it could be held that Frederick was the person other than the appellant himself most closely approximating one "apparently in charge of the premises". Though his self-description as one authorized to receive the notice and relay it to Sakow did not constitute proof of that authorization, the fact that he made that representation and that he actually did report it to Sakow forthwith would be further proof consistent with being "apparently in charge" (cf. duPont, Glore Forgan Co. v Chen, 41 N.Y.2d 794). The code itself contemplates exactly such a communication, going so far as to provide that, if such report is not rendered, the one served is liable to indemnify the owner for the consequences (§ 491a1-3.0).
This is not to say that criminal liability is to be imposed on a landlord simply because violation orders have come to his attention. Such liability can, under these sections, only fall on one "who shall wilfully, violate, or neglect, or refuse to comply" (Administrative Code, § 488-1.0). In the present case the facts with regard to the service of the violation orders were relevant to willfulness because at trial these constituted proof on which prior knowledge in Sakow could be grounded. However, since their existence was not a condition precedent to the successful prosecution of the appellant, we are not called upon to decide whether the fashion in which the orders here were served through Frederick was within the scope of the code provisions. Nor is it necessary for us to say whether the Trial Judge's conclusion that Frederick was actually Sakow's agent was borne out by the record; for the reasons already indicated, such a finding was unnecessary to the court's decision.
Finally, having determined that there was a sound legal and factual basis for the conviction, some comments on the sentence are in order. On each count, the court imposed three years' probation, conditioned on payment of a $1,000 fine and a $250 penalty, correction of the violations and resolution of the appellant's outstanding traffic summonses. The challenge to these sanctions is based in the main on reiteration of the already rejected argument that "wilfulness" was not established and the sentence was, therefore, illegal. The answer is to be found in the statutes themselves. The Administrative Code denominates the offenses in this case misdemeanors, but it does not specify "the classification thereof or * * * the sentence therefor". In these circumstances, each is "deemed a Class A misdemeanor" (Penal Law, § 55.10, subd 2, par [b]). One convicted of a class A misdemeanor may be sentenced to three years' probation and fined $1,000 (Penal Law, § 65.00, subd 3, par [b]; § 80.05). In addition, section 488-1.0 of the Administrative Code authorizes the imposition of a $250 penalty each time a person "knowingly" fails to obey a fire department order. The sentences therefore are within the compass of the law.
For all these reasons, the order of the Appellate Term should be affirmed.
There is no disagreement in the court with the issues discussed in the majority opinion other than with the threshold issue: whether the prescribed manner of serving a violation order of the New York City Fire Commissioner is indispensable to conviction for the misdemeanor of willful refusal to comply with the order (Administrative Code of City of New York, § 488-1.0). Assuming service as prescribed is required, also at issue is whether defendant's lawyer was his agent for accepting service of the order.
The prescribed manner of service of the order is indispensable, and there was insufficient proof to establish that defendant's lawyer was his agent for accepting service. I therefore dissent and vote for reversal and dismissal of the complaints.
It is not willful failure to correct fire hazards that amounts to a misdemeanor under the Administrative Code. The conduct penalized is willful noncompliance with a fire department violation order. Unless proper service of the order is established, actual notice notwithstanding, it cannot be said that defendant committed the offense.
Defendant landlord, evidently in the business of rebuilding and rehabilitating run-down tenements, appeals from a unanimous affirmance by Appellate Term of his conviction, after a nonjury trial in the Criminal Court of the City of New York, of willful noncompliance with orders of the Fire Commissioner (Administrative Code, § 488-1.0).
The fire department violation orders, issued after a number of inspections in early 1975, direct defendant to correct specified hazards existing in twin multistory apartment buildings located on the upper east side of Manhattan. Defendant, for all practical purposes, became sole operator of the buildings in February, 1975, at which point title was in Mawash Realty, one of a number of close corporations in which defendant had an interest. By the end of 1975 at least a dozen fires in the buildings were reported, and by 1976 only three of 120 apartments were still occupied.
The order itself both provides notice of the violations and orders their correction. A copy of one of the orders involved is annexed as an appendix.
Defendant was ordered, among other things, to remove accumulations of inflammable rubbish from all floors and the cellar, to maintain the cellar floors clean of waste oils, and to provide covered receptacles for rubbish. It is not disputed that the orders, for the most part, went unheeded.
Service of the orders was not made on defendant personally or by the alternative substituted service authorized by the Administrative Code (§ 491a1-2.0). Instead, on May 29, 1975, the papers were given to defendant's lawyer, Frederick. Frederick, together with three members of the fire department, was in court that day in relation to other charges against defendant, not involved on this appeal, stemming from noncompliance with still other orders to correct violations in the Manhattan twin buildings.
Frederick assertedly told Captain Travis of the fire department that defendant wished to comply with the outstanding violation orders, but that he did not have a list of the violations. According to Travis, Frederick asked for duplicates, stating, in response to Travis, that he was authorized to accept the orders on his client's behalf. Frederick, on the other hand, denies having claimed authorization to accept the orders for defendant Sakow. While Travis' men went outside to obtain a violation order book, Frederick complained to Travis about the prohibitive cost of making the repairs and Sakow's unsuccessful efforts to evict the few remaining tenants. Upon return of the firemen, copies of the existing violation orders were made, at the bottom of each "Mr. Edwin Frederick for Walter Sakow" was written, and the orders were handed to Frederick.
Frederick testified that either later that day or the following he read the violations to Sakow over the telephone.
By June, 1975 title to the twin buildings had been transferred from Mawash to Justin Properties and Lescal Realty, corporations formed by Frederick at defendant's request and in which defendant was a shareholder. The violations, as noted however, went uncorrected. Finally, in two complaints sworn to in early 1976, Sakow was charged, under section 488-1.0 of the Administrative Code, with willful failure to comply with the orders given to Frederick the previous May. The complaints were based on inspection of the buildings in December, 1975 and January, 1976.
The complaints were consolidated for trial together with a third later dismissed with the prosecutor's consent. Defendant waived a jury trial and did not testify. Following conviction, he was fined and sentenced to three years' probation. Except for the requirement that the fire hazards be corrected, a requirement stayed pending this appeal, the conditions of the probation apparently have been satisfied.
To ensure compliance with the laws the fire department is charged with enforcing, the Administrative Code authorizes the issuance of orders directing building owners or occupants to correct violations (§ 491a1-1.0). Directly following the code section authorizing issuance of violation orders is a section captioned "Service of orders": "Service of any such order may be made by delivery of a copy thereof to the owner or any one of several owners, to a lessee or any one of several lessees, or to any person of suitable age and discretion in charge or apparently in charge of the premises, or if no person be found in charge of the premises then by affixing a copy of such order prominently upon the premises." (§ 491a1-2.0.)
Failure to comply with violation orders may result not only in civil fines and penalties, but in criminal liability as well (Administrative Code, § 488-1.0). Thus, "[a]ny person who shall wilfully violate, or neglect, or refuse to comply with any provision or requirement of this chapter or any regulation, order or special direction duly made thereunder, shall also be guilty of a misdemeanor" (§ 488-1.0).
The violation orders were not delivered to Sakow personally. They were not delivered to one of the remaining tenants. There is no proof that Frederick was responsible for operation of the buildings; he was not found on the premises; and hence by no stretch of the statutory language in context can he be treated as "apparently in charge of the premises". Most important, no finding below was made or can support the view that Frederick was "apparently in charge". Nor were the violation orders affixed to the twin buildings. It is argued that the orders may serve as a predicate for a misdemeanor conviction nonetheless, for it was proved that Sakow had actual notice of the outstanding violations.
True, Frederick admitted reading the list of violations to Sakow shortly after he received them from Captain Travis. But, especially in treating with a penal sanction, the fact of actual notice should not be substituted for the prescribed manner of serving the underlying violation order. The service provision in the Administrative Code was, undoubtedly, designed to ensure actual notice as a prerequisite to criminal culpability. It does not follow, however, that proof of actual notice may replace the required service (cf. McDonald v Ames Supply Co., 22 N.Y.2d 111, 114-115).
Nowhere in the Administrative Code does it state that actual notice of the order may replace proper service. Actual notice may be difficult to prove. The proof offered to establish actual notice may not be reliable. In the instant case it is the testimony of Frederick, the unofficial communicator of the order, not that of defendant himself, upon which the People rely to prove notice. To avoid uncertainty and unreliability, and to encourage careful practice, the code sets forth how service shall be made. Willful noncompliance with an order, therefore, is not the whole of the crime; it must be proved, beyond a reasonable doubt, that the order and the notice it contains was one properly served.
The majority concedes that criminal liability is not "to be imposed on a landlord simply because violation orders have come to his attention" (p 138). The statement is nullified, however, if actual notice may supplant the statutory service requirements.
It is significant, too, that the service provisions at issue have been on the statute books for over 40 years. They were enacted as part of the 1937 restatement and codification of the Administrative Code, and have remained unaltered since (see L 1937, ch 929; see, generally, 1936 Report of the New York City Charter Revision Commission, ch 19). Yet, no case has been discovered diluting the mandated service provisions with the less stringent actual notice substitute now sanctioned by the majority.
Of course, if there is a fire hazard in violation of the Administrative Code, the imposition of civil penalties is appropriate. Civil penalties, however, are not at issue in this case. Involved instead is a criminal sanction, and, it bears repeating, unless it is proved beyond a reasonable doubt that defendant's willful noncompliance was with an order properly served, he may not stand convicted of the crime.
Nor does the record, contrary to the Trial Judge's conclusion, sustain the People's assertion that Frederick was defendant's agent for accepting service of the violation orders. Even Frederick's purported assertion of authority, as testified to by Captain Travis, is to no avail. An agency may not be self-proving (e.g., Taylor v Commercial Bank, 174 N.Y. 181, 191; 2 N.Y. Jur, Agency, § 29). That Frederick was designated to accept service of process for Lescal Realty and Justin Properties, and that as a lawyer he may have acted for defendant in a number of commercial transactions, including some relating to the twin buildings, does not establish a general authorization to accept service of the violation orders for defendant.
In sum, service on Frederick is not equivalent to service on defendant. No proper service having been made, the charges of willful noncompliance cannot stand. The nature of defendant's business, that of an entrepreneur who profits from the rehabilitation of almost empty decayed buildings, some of them in conditions as dreadful as these twin buildings were, should not impel a court to disregard the traditional distinctions between notice, service of process, and the basis for criminal punishment for willful disobedience of orders requiring affirmative action. The remedy is so easy: correct service of notices and orders upon those who may suffer penal sanctions.
Even if defendant be a malevolent owner of decayed buildings, to deprive him of the due process mandated by statute, or to gloss over or deviate from the statutory requirements applicable to building owners, would not be justified. It appears, however, that this defendant's activities are not wholly without social benefit. He performs, albeit for his own profit, a useful function in rehabilitating properties neglected by others, a task he cannot undertake until the buildings are vacated by lingering tenants, in this case the occupants of two or three apartments out of 120. Whether slumlord or rehabilitator, an owner most certainly should be prosecuted if in willful noncompliance of violation orders he permits dangerous conditions to continue while even one tenant lawfully occupies an apartment. On the other hand, since defendant must live by the letter of the law, he should not be condemned in disregard of the law. The result in this case would allow just that.
Accordingly, I dissent and vote to reverse the order of the Appellate Term and dismiss the complaints.
Judges GABRIELLI, WACHTLER and COOKE concur with Judge FUCHSBERG; Chief Judge BREITEL dissents and votes to reverse in a separate opinion in which Judges JASEN and JONES concur.
Order affirmed.