PEOPLE v. STEVENS (2006)

In this case the defendant has been charged under PL 165.00(1)(b) misapplication of property alleging that she violated her contracts with Rentway to return a bedroom set and a TV wall unit entered into on 3/5/04 and 10/14/04.

The defense has moved to dismiss this case due to facial insufficiency because the accusatory instrument and none of the supporting documents filed with it includes a copy of these two rental agreements.   The People oppose the defense motion on the grounds “the accusatory information and the papers filed therewith are sufficient”.

In this case, unlike two other cases involving PL 165.00(1)(b) recently decided by this Court People v. Sagesse, 13 Misc.3d 435, 816 N.Y.S.2d 902 and People v. Compeau Docket No. 35864 in which a copy of the lease contract was filed with the accusatory instruments, no copies of the Rentway contracts with the defendant were filed.

The Court in Sagesse and Compeau, because a copy of the agreement signed by the defendants was affixed as part of the accusatory instrument, was able to conclude that based upon the terms of those contracts both were clearly not “rental agreements” subject to PL 165.00(1)(b) defined at General Business Law 399-w(1)(c) per PL 165.00(1)(c), but rather, were “rental purchase agreements ․ regulated by article eleven of the personal property law” specifically excepted from the purview of GBL 399-w at subdivision 3(a) ( Sagesse, supra, at p. 440, 816 N.Y.S.2d 902) and both cases were dismissed.

In this case because the Rentway agreement was not included as part of the accusatory instrument, the issue of whether the People would be required to allege as an element of the crime of PL 165.00(1)(b) that the agreement was not a “rental purchase agreement” defined at Personal Property Law Article 11 and by supporting said allegation by making a copy of it part of the pleadings showing by its terms it was a “rental agreement” (GBL 399-w [1][c] ), must be addressed by the Court.

Exemption Issue

The question is whether there is an “exception” in the law concerning misapplication of property (PL 165.00[1][b][c] and [3] ) making it “necessary for the ․ People in an action based upon the statute to negative both by pleadings and by proof” that the exception to the law did not apply in the case (People v. Kollender, 169 Misc. 995, 998, 10 N.Y.S.2d 252).

In 1995 the legislature enacted two statutes PL 165.00(1)(b)(c) and (3) (L.1995, C. 372, Section 1) and GBL 399-w (L.1995, C. 372, Section 3) on the same day.

PL 165.00 and GBL 399-w, then, having been enacted at the same time as part of the legislature's effort to criminalize certain rental agreements if the property “rented” was not returned are in pari materia and shall be read together (McKinney's Cons.Laws of NY, Statutes, Book 1, Section 221, p. 375).

PL 165.00(1)(c) states that the “rental agreement” ․ as used in paragraph (b) ․ shall be defined as in [GBL 399-w (1)(c) ]. GBL 399-w (1)(c) defines a “rental agreement” as “the total legal obligation that results from a written rental contract between a person and the owner for the rental of personal property.”

PL 165.00(3) states “[I]n any prosecution under paragraph (b) of subdivision one of this section, it is a defense that at the time the prosecution was commenced ․ (c) the owner failed to comply with the provisions of Section [399-w of the GBL].”

That being the case, it is reasonable to observe that an exception to PL 165.00 are rental contracts of $100 or less as spelled out in the opening sentence of subdivision (1)(b) and it applies to “rental contracts” as “shall be defined as in” [GBL 399-w(1)(c) ] (PL 165.00[1][c] ).

So if a contract is valued at $100 or less and/or is not defined as a “rental contract” at GBL-399-w(1)(c), the criminal sanctions under 165.00(1)(b) would not be applicable when the rented property is not returned under that contract i.e. a DVD rented valued at less than $100 which has not been returned to the local rental store-a rental contract for an item valued at more than $100 that is not in writing (GBL 399-w[1][c] ).

Furthermore, as the type of “rental contract” subject to prosecution under PL 165.00(1)(b) “shall be defined as in” GBL 399-w (1)(c) (PL 160.00[1][c] ) and since GBL 399-w (3)(a) states “this section [and therefore its definitions at GBL 399-w(1)(a), (b) and (c) ] shall not apply to:  (a) rental purchase agreements as regulated by article eleven of the personal property law,” a “rental agreement” defined at GBL-399-w (1)(c) is not one to which GBL “Section” 399-w would apply if it is a rental purchase agreement “ regulated by Article 11 of the Personal Property Law” (GBL 399-w [3][a] ).

Thus, PL 165.00(1)(b) does not apply to a contract to rent a item that is valued at $100 or less, that is not in writing as defined at GBL 399-w (1)(c) and/or is a “rental purchase” agreement “regulated” by PPL Article 11-as GBL Section 399-w by its own terms excludes its application to such agreements (GBL 399-w [3][a] )-it is also to be noted that Section 506 of the Personal Property Law, Exempted Transactions, states “This article (11) does not apply to:  (1) Agreements for rental of merchandise in which the person who rents ․ has no legal right to become the owner of the property at the end of the rental period.”

PL 165.00(3) states that “[I]n any prosecution under ․ (b) ․, it is a defense that at the time the prosecution was commenced, ․ (c) the owner failed to comply with the provisions of [GBL 399-w].”  This means that because rental purchase agreements regulated by PPL Art. 11 are excluded from the application of GBL 399-w by its own terms at GBL 399-w (3)(a) no “prosecution” could commence based on a rental purchase agreement because “the owner failed to comply with the provisions of [GBL 399-w]” not only because he did not have to in such case, but also because he could not as GBL-399-w does not apply to a “rental purchase contract” excluded therein at GBL 399-w (3)(a).

In light of the above, the question is whether the People must show in the pleadings that the “rental contract” in PL 165.00(1)(b) which “shall be as defined at GBL 399-w (1)(c) per PL 165.00(1)(c)” is not one “excepted” from GBL 399-w application by subdivision 3(a) of that law and as such must be “plead and proved inapplicable,” that is, “negatived by the prosecution” (Kollender, supra, at p. 998, 10 N.Y.S.2d 252).

In People v. Campbell, the Court ruled that “․ a true exception which prohibits enforcement in a defined class of cases, and which, as an element of the offense, The People must plead and prove inapplicable” (id.), a failure to plead this “element of the offense” would leave the accusatory instrument facially deficient as a complaint or information, a jurisdictional defect under Alejandro for a failure to allege any facts to support this element that the contract was not a “rental agreement” at GBL 399-w (1)(c).

In People v. Sylla, 7 Misc.3d 8, 792 N.Y.S.2d 764, the Court outlined the “general rule” and how to “distinguish between exceptions and provisions” observing that “in applying the above rule, courts have generally held that when a statute contains as part of its enacting clause an exception to the effect that under certain circumstances the offense is not to be considered as having been committed, that constitutes a true exception which must be negated by the prosecution” (id. p. 12, 792 N.Y.S.2d 764).

The Campbell Court went on to observe and then concluded about the “exemption” issue in that case:  “[T]hus, it is not conclusive that the statute invokes the exemption (e.g. People v. Bull, 5 Misc.3d 39, 41, 784 N.Y.S.2d 270 [App. Term 1st Dept.2004] ).   Rather, the issue is whether the exemption on its face exhausts the limitations on enforcement, and if not, whether the result fairly apportions the burden of proof and comports with rational pleading requirements, for example, that the accusatory instrument be not so drawn out to intolerable lengths' ( [People v. Devinny] 227 N.Y. [397] at 401[, 125 N.E. 543] ) as to defy reason and common sense (see People v. Konieczny, 2 N.Y.3d 569, 575, 813 N.E.2d 626, 780 N.Y.S.2d 546 [2004];  People v. Casey, 95 N.Y.2d 354, 360, 740 N.E.2d 233, 717 N.Y.S.2d 88 [2000] ).   Here, the exemption, invoked only by reference, provides no information as to the enforcement limitations as set forth in a nearly 300-word compilation located outside the Penal law (see Judiciary Law Section 753-a).   It would be unduly burdensome to require that the People allege the absence of the numerous exclusions from prosecution enumerated therein, and if they need not allege the whole, there is little utility in a rule requiring that they allege the exemption as conclusorily referenced in the statute.   It suffices that the People plead and prove a basis for the charge ․” (id.).

In People v. Flowers, 8 Misc.3d 516, 797 N.Y.S.2d 853, after citing the same guidelines the Court went on to conclude the exception had to be negatived in the pleading in that case.

“[W]here as here, the statu[t]e (or regulation) which defines the violation contains the exception within it, it is generally held that the burden is upon the people to prove that the defendant's actions are not within the exception.”  (People v. Kohut, 30 N.Y.2d 183, 282 N.E.2d 312, 331 N.Y.S.2d 416 [1972];  People v. Sylla, 7 Misc.3d 8, 792 N.Y.S.2d 764 [App. Term, 2d Dept.2005] ). When the exception is found outside of the statute it is usually termed a “proviso” and is a matter for the defendant to raise as a defense.   (Kohut, supra;  People v. D'Angelo, 284 A.D.2d 146, 728 N.Y.S.2d 132 [1st Dept.2001], affd. on other grounds 98 N.Y.2d 733, 780 N.E.2d 496, 750 N.Y.S.2d 811 [2002] ).   However, this distinction should not be so mechanically applied that substance yields to form.  (People v. Campbell, 6 Misc.3d 139(A), 800 N.Y.S.2d 352, 2005 N.Y. Slip Op. 50064[U], 2005 WL 263722 [App. Term, 2d Dept.2005] ).

As the court in Campbell, supra at *1 explains:  “[I]t is not conclusive that the statute invokes the exemption ․ rather, the issue is whether the exemption on its face exhausts the limitations on enforcement, and if not, whether the result fairly apportions the burden of proof and comports with rational pleading requirements ․”

“Requiring that the People prove the defendant lacked authorization to engage in the activity alleged would not impose an undue burden.”  Id. p. 519, 797 N.Y.S.2d 853.

This Court concludes that PL 165.00(1)(c) defines a “rental agreement” in subdivision (1)(b) “shall be defined as in [GBL 399-w (1)(c) ] and as section 399-w shall not apply to (a) rental purchase agreements as regulated by [PPL Art. 11]”, then “this exemption on its face exhausts the limitations on enforcement” (Campbell, supra,) to only “rental contracts” defined at GBL 399-w(1)(c) subject to the terms of that section while specifically excluding “rental purchase agreement” regulated exclusively by PPL Art. 11 (GBL 399-w [3] [a] ).

To paraphrase Campbell while “here, the exemption, invoked only by reference [does] provide ․ information as to the enforcement limitations as set forth” at PL 165.00(1)(c) and GBL 399-w (a)(c) and (3), unlike in Campbell where such limitations were referenced to a “nearly 300-word compilation located outside the Penal Law [making it] unduly burdensome to require that the People allege the absence of the numerous exclusions from prosecution enumerated therein” (id.), in the case of PL 165.00(1)(b) the rental contract excluded is limited by a single reference to a single section of the GBL 399-w “located outside the Penal Law” that excludes from Section 399-w rental purchase agreements regulated by PPL Art. 11.

In the Flowers case, the Court found that the exemption requirement it found in that case “fairly [apportioned] the burden of proof and [comported] with rational pleading requirements' [Campbell, supra],” concluding that to require “․ the People prove the [contract was not a rental purchase agreement' excluded from rental agreements' subject (PL 165.00[1][b] ) ] would not impose an undue burden” (id. p. 519, 797 N.Y.S.2d 853) to paraphrase Flowers.

The People, then, when preparing an accusatory instrument alleging a violation of PL 165.00(1)(b)to be sufficient on its face “․ must contain a factual allegation of every element of a crime charged ․, it must allege that the crime is not within any exception to the offense contained within the statute defining the offense” (People v. First Meridian Planning Corp., 201 A.D.2d 145, 154, 614 N.Y.S.2d 811).

The accusatory instrument “․ if the offense charged has an exception, ․ must contain an allegation that defendant's conduct does not come within the reach of the exception [citations omitted],' ” (People v. Struts, 281 A.D.2d 655, 656, 721 N.Y.S.2d 425) and where the accusatory instrument fails “․ to state that defendant's conduct does not come within reach of the exception' ” (id.), which in this case a contract for a rental purchase agreement regulated by PPL Art. 11, the accusatory must be dismissed “as facially invalid” (id.).

Conclusion

The Court finds that because the People to have alleged as an element of its pleading that the “rental Contract” at issue was not a “rental purchase agreement” and by affixing a copy of the agreement signed by the defendant to its pleadings, the accusatory instrument was a facially insufficient information (CPL 100.40[1][a][b] and [c] and Alejandro ).

The defense motion is granted and the charge is dismissed without prejudice to the People to file a new accusatory instrument if the action is not time barred.   This shall serve as the decision and order of the Court.

JAMES C. HARBERSON, J.