Pearson v. National Budgeting Systems, Inc. Respondents' Brief and Appendix
Public Court Documents
April 19, 1968
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Brief Collection, LDF Court Filings. Pearson v. National Budgeting Systems, Inc. Respondents' Brief and Appendix, 1968. 9e3764f5-c09a-ee11-be36-6045bdeb8873. LDF Archives, Thurgood Marshall Institute. https://ldfrecollection.org/archives/archives-search/archives-item/4a2fb257-101d-48e3-89f9-b7910ab99bba/pearson-v-national-budgeting-systems-inc-respondents-brief-and-appendix. Accessed November 23, 2025.
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To be argued by
P h ilip G. S chrag, Esq.
New York County Clerk’s Index No. 2721— Year 1968
iuuu fork # u|iituuv (tart
A ppellate D ivision— F irst D epartment
W illie P earson and G eraldine P earson,
Plaintiff s-Respondents,
— against—
N ational B udgeting S ystems, I n c .,
a corp ora tion ,
D efendant-A ppellant.
RESPONDENTS’ BRIEF AND APPENDIX
J ack Greenberg
P h il ip G. S chrag
Attorneys for Plaintiff s-Respondents
10 Columbus Circle
Suite 2030
New York, New York 10019
JU 6-8397
TABLE OF CONTENTS
BRIEF PAGE
The Nature of the Case 1
The facts 2
Argument
I. The Conduct Charged is Tortious 3
A. Under case law as well as U.C.C. §2-302,
gross overpricing of consumer goods is
unconscionable conduct 3
B. Under the circumstances charged in the
complaint, unconscionable overpricing
is tortious 7
II. A Finance Company Which as a Regular Business
Practice Purchases Unconscionable Contracts,
With Knowledge or Notice of the Wrong Being
Perpetrated, Should Be Liable Along With the
Seller of the Merchandise 13
Conclusion 16
RESPONDENTS' APPENDIX
Consent Judgment in Peoples v. Peoples' Food, Inc.,
Index No. 41938/66 (S. Ct., N. Y. Co.) RA-1
Consent and Stipulation in above case RA-9
Consent Judgment in People v. Natpac et. al.,
Index No. 40719/68 (S. Ct., N. Y. Co.) RA-13
SUPREME COURT OF THE STATE OF NEW YORK
APPELLATE DIVISION - FIRST JUDICIAL DEPARTMENT
— — — — — — — — — — — — — — — — — — — — — x
WILLIE PEARSON and GERALDINE PEARSON :
Plaintiffs-Respondents, :
- against - :
NATIONAL BUDGETING SYSTEMS, INC., :
a corporation,
Defendant-Appellant.
— — — — — — — — — — — — — — — — — — — — — x
RESPONDENTS 1 BRIEF
THE NATURE OF THE CASE
Defendant-appellant's motion for a protective
order, denied below, was really in the nature of a
motion to dismiss plaintiff-respondent's second cause
of action. Appellant contended unsuccessfully that
the tort charged by plaintiffs' complaint is unknown
to the law, and that therefore the documents which
might prove commission of the tort were irrelevant to
the case and could not be inspected. Plaintiffs-
1
respondents believe that the documents sought to be
inspected are relevant because they are necessary to
proof of a widespread pattern of conduct which is an
essential element of the tort charged.
The facts:
Appellant's statement of facts and description
of the amended complaint does not list all six com
ponents of the conduct charged. These are
(a) that appellant, a sales finance company,
as part of its general business, finances
many contracts made between retail dealers
and the buying public, for the purchase
of freezers at inflated and unconscion
able prices, and respondents' contract
is merely typical of this practice
(Complaint % 18; A-7);
(b) that appellant has notice and/or knowledge
that the purchasers of the freezers- so
financed are for the most part poor persons
residing in poor neighborhoods, and has
notice that sales of said merchandise to
said persons at unconscionable prices is
a rampant abuse (Complaint f 18; A-7);
(c) that appellant purchased the unconscion
able contracts pursuant to a course of
dealing with the merchants who made the
sales, and according to a pre-existing
agreement (Complaint 13-14, A-5);
(d) that it appears on the faces of said con
tracts that they are either unconscion
able or executed in violation of Personal
Property Law §402, which requires a
2
detailed description of the goods to
appear on contracts, so that potential
assignees are on notice if the under
lying sale was unconscionable
(Complaint f 15, A-7);
(e) that the guilty merchant, Peoples' Food,
has gone out of business, so that
respondent has no recourse except against
appellant, which was so bound up with the
execution of these unconscionable con
tracts as to be jointly liable (Complaint
n 6, 13, 14, 15, 18, 19, A-4 — A-8) ;
(f) that despite Peoples' Food having gone
out of business, appellant continued, at
least untir this action was commenced,
to purchase unconscionable contracts for
the sale of freezers from other retail
dealers (Complaint f 18, A-7 — A-8).
THE CONDUCT CHARGED IS TORTIOUS
A. Under case law as well as U.C.C. § 2-302, gross
overpricing of consumer goods is unconscionable conduct.
It is now a familiar fact that "the poor pay
more" for consumer goods. In fact, the title of Prof.
Caplovitz1 book THE POOR PAY MORE has become a popular
slogan, reflecting widespread public recognition that
those who can least afford it are most victimized by
high pricing. Of course, these are the consumers who
cannot shop comparatively, because they lack transportation
3
"downtown" and because they are afraid to deal with
strangers. Note, Consumer Legislation and the Poor,
76 Yale L.J. 745, 751 (1967). "Low income neighborhood
stores usually price durables 50 per cent to 100 per
cent above the going rate in more affluent areas,
employing markups of 300 or 400 per cent and giving
commissions running as high as 100 per cent of the
value of the goods." Ibid. at 757.
Outrageous overpricing is particularly pre
valent in sales made through installment sales contracts.
The Federal Trade Commission recently found in the
District of Columbia that "on the average, goods pur
chased for $100 at wholesale sold for $255 in the low
income market stores, compared with $159 in general
market stores." Federal Trade Comm., Economic Report
on Installment Credit and Retail Sales Practices,
p. x (1968) .
Respondents' contract called for them to pay
$914.03 for a freezer, plus $249.08 in service charges,
for a total of $1163.11 (A-4) . Respondents allege
that this price was so high in relation to the freezer's
value as to render the contract void for unconscionability
4
(A-5). At the time that respondents were sold the
merchandise, freezers were commonly being sold to
unsophisticated poor persons at 167% to 300% over their
retail market value. N.Y. Bureau of Consumer Frauds
and Protection, Annual Report 7 (1965). These figures
do not even take into account the credit service charges
added onto the inflated cash prices.
Exorbitant pricing of consumer goods is not
only a problem for the poor and for minority groups, but
is of national concern, for the President's Commission
on Civil Disorders found that rioters focused on stores
believed to be charging much more than a fair price.
Report of the Commission on Civil Disorders 274 (1968).
In recent years, the law has been evolving
orderly devices to help protect poor consumers from
exorbitant overpricing. An early development was the
development of the equity doctrine of unconscionability.
See, e.g., Campbell Soup Co. v. Wentz, 172 F.2d 80
(3rd Cir. 1948), and other cases cited in the Official
Comments to Section 2-302 of the Uniform Commercial Code.
Courts could void contracts grossly unfair to one side,
particularly where one party was a commercial entity and
the other an individual consumer.
5
This doctrine led to the enactment of Section
2-302 of the Uniform Commercial Code. In New York and
other states, the Code section has been interpreted to
permit courts to void contracts where the buyer was
charged an exorbitant price for the goods. Frostifresh
Corp. v. Reynoso, 274 N.Y.S. 2d 757 (Dist. Ct. Nassau
Co. 1966), modified on appeal 54 Misc. 2d 119 (App.
Term, 2d Dept. 1967); Central Budget Corp. v. Sanchez,
53 Misc. 2d 620, 279 N.Y.S. 2d 391 (Civ. Ct. 1967);
American Home Improvement, Inc., v. Maclver, 105 N.H.
435, 201 A. 2d 886 (1964). The doctrine of unconscionability,
derived from case law, is by no means wholly statutory;
in fact, the most famous unconscionability case, Judge
Skelly Wright's decision in Williams v. Walker-Thomas
Furniture Co., 350 F.2d 445 (D.C. Cir. 1965), arose
before the Code went into effect in the District of
Columbia.
Appellant maintains that the New York uncon
scionability cases, Frostifresh, supra, and Central
Budget, supra, involved not only grossly exorbitant
pricing, but oppressive selling methods. However, the
Court in Frostifresh (sale of freezer to low-income
6
consumer for $1146) noted that "no defense of fraud
was set forth...the court finds that the sale of the
appliance at the price and terms indicated in this
contract is shocking to the conscience.... it was 'too
hard a bargain1". 274 N.Y.S. 2d at 759. And in Central
Budget (sale of seven year old car in poor condition
for $1182), no charge was made of oppressive sales
tactics, and the Court held simply that "[e]xcessively
high prices may constitute unconscionable contractual
provisions..." 279 N.Y.S. at 392; see American Home
Improvement Inc. v. Maclver, supra.
B. Under the circumstances charged in the complaint,
unconscionable overpricing is tortious.
We do not dispute appellant's argument that the
Uniform Commercial Code does not provide for damages
in the case of an unconscionable sale. Respondents do
not look to the Code for the damages they demand.
Rather, they rely upon the common law doctrine that
"the infliction of intentional harm, resulting in damage,
without legal excuses or justification" is tortious.
Penn-Ohio Steel Corp. v. Allis-Chalmers Mfg. Co., 7 App.
Div. 2d 441, 443, 184 N.Y.S. 2d 58 (1st Dept. 1959).
7
Respondents refer to the traditional doctrines of
unconscionabil-ity for guidelines as to wrongful con
duct; they refer to tort law for their remedy.
Respondents have not sought to attach a label
to the tort of persistently and regularly financing
unconscionable contracts. "[I]t is impossible to
tabulate the infinite varieties of misconduct that
give rise to actionable wrongs. It is generally
accepted that 'There is no necessity that a tort must
have a name. New and nameless torts are being recognized
constantly.' (Prosser, Torts [2d ed.], p. 3)" Penn-
Ohio Steel, supra., 7 App. Div. 2d at 441.
Fraud, like unconscionability, is usually
merely a defense to a contract. But under some condi
tions, it is also a tort, rendering the guilty party
liable for punitive damages. Walker v. Sheldon, 10
N.Y. 2d 401 (1961) .
Fraud is a tort and not merely a contract defense
in New York when it is a general practice of the per
petrator, aimed at the public generally. Ibid.
Respondents submit that it is under precisely those
conditions that unconscionability is also a tort: where
it is a regular and knowing practice.
8
The reason for this is clear. Consumer con
tracts rarely involve more than a few hundred dollars
each, and often involve less than a hundred dollars.
The small amount at stake in each case inevitably means
that few, if any, consumers can afford to bring a law
suit for recision of a contract infected with fraud or
unconscionability. The cost of litigation will almost
always exceed the amount of money at stake. Private
attorneys cannot afford bo take such cases; they are not
economical. Nor can the legal aid societies, staffed by
salaried attorneys, afford to expend hundreds of man-hours
*
bringing such cases for low-income consumers; they are all
understaffed in relation to the need of the poor for legal
services, to the point where the Chairman of the American
Bar Association's committee on legal aid has estimated
that there are potentially 14 million indigent cases annually,
although only half a million clients are served each year
by such offices at present. The New York Times, August
7, 1967, p. 11, col 1 (late city ed.).
*Legal Aid attorneys had to spend 210 man hours to void
two contracts in Williams v. Walker—Thomas Furniture Co.,
supra. Dostert, "Appellate Restatement of Unconscionability,"
54 A.B.A.J. 1183 (December, 1968). And in this very case,
attorneys for plaintiffs-respondents had to expend seventy-
two man-hours merely to defeat appellants' motion to dis
miss the complaint on the ground of improper service of
process. See decision of Mr. Justice Markowitz, N.Y.L.J.,
Sept. 12, 1968, p. 2, col. 1.
9
Therefore, were it not for a tort remedy, a
merchant or finance company participating in a wide
spread practice of fraudulent or unconscionable con
sumer sales could go right ahead with his scheme,
knowing that he would have to refund a buyer's money
on perhaps one-fourth of one per cent of the voidable
contracts he owned, while collecting time payments on
the other 99 3/4% of the contracts. "In many instances
fraudulent operators carefully avoid cheating individuals
out of large sums of money because they realize that
'no one bilked out of fifty dollars is going to pay a
lawyer to get his money back.' Thus, the only cases
lawyers are willing to handle are those brought either
by the unusual individual who will pay more than the
amount of his claim in order to see justice done, or by
those defrauded out of amounts large enough to justify
the expenditure for legal fees. The number of consumers
having no redress because the amount lost is not com
mensurate with the attorney's fee constitutes the vast
majority." Note, 114 U. Pa. L. Rev. 395, 409 (1966).
It should be noted also that class actions are of
no help to the injured consumers because it is possible
10
that under New York law up the present time, con
sumers who sign separate though identical standard form
contracts may not enforce their rights by a class
action. Hall v. Coburn Corp., N.Y.L.J. Aug. 8, 1968
(Spec. Term, Sup. Ct. N.Y. County), now on appeal to
this Court.
The power of the Attorney General to enjoin
fraudulent or unconscionable selling or financing, see
Lefkowitz v. ITM Corp., 52 Misc. 2d 39, 275 N.Y.S. 2d
303 (Sup. Ct. 1966), is not a sufficient deterrent to
such conduct, because the mere threat of being enjoined
creates no financial risk for a company. A seller or
finance company may knowingly participate in uncon
scionable sales, aware that if he is someday required
to mend his ways, he will not have to disgorge the
fruits of his unconscionable activities.
Indeed, this Court may take judicial notice that
Peoples' Food, appellant's erstwhile assignor, was en
joined on December 28, 1966, from selling freezers for more
than 100% more than the wholesale cost. People v. Peoples1
Food, Inc, et, al., Index No. 41938/66 (Sup. Ct. N.Y.
Co.). A copy of the consent judgment is annexed in
the Appendix to this brief. Two months later,
11
Peoples went out of business (Complaint f 19, A-8).
Yet appellee found other freezer sellers to cooperate
with in the sale of freezers at unconscionable prices
(Complaint 18, A-7, A-8), so that on April 19, 1968
(three months after this case was commenced) appellee
had to be enjoined from selling freezers at more than
100% over cost. People v. Natpac, Inc, et al.. Index
No. 40719/68 (Sup. Ct. N.Y. Co.). A copy of the
consent judgment is annexed in the Appendix to this
brief.
The possibility that a few contracts, out of
thousands, will be contested and voided, or that the
state might prospectively enjoin consumer abuses, is
obviously no real deterrent to the wrongdoer. Walker
v. Sheldon, 10 N.Y. 2d 401 (1961), provided such a
real deterrent in the case of fraud. By that decision,
the would-be perpetrator of fraud upon the public
generally knows that he may be held liable for an
unknown amount of punitive damages. It is but a small
step to apply the principle of Walker by analogy to
the companion wrong of exorbitant overpricing (uncon-
scionability), where that too, is done knowingly to
the public at large.
12
A FINANCE COMPANY WHICH AS A REGULAR BUSINESS
PRACTICE PURCHASES UNCONSCIONABLE CONTRACTS
WITH KNOWLEDGE OR NOTICE OF THE WRONG BEING
PERPETRATED, SHOULD BE LIABLE ALONG WITH THE
SELLER OF THE MERCHANDISE
Appellant strenuously argues that even if the
conduct alleged is tortious, only the seller and not
the finance company is liable. But the complaint does
not describe an "innocent" third party buyer of an
installment sales contract. Plaintiffs-respondents
allege an extreme degree of finance company partici
pation in the creation of these unconscionable contracts
It is alleged (1) that defendant had notice and/or knowl
edge that the buyers of the merchandise were mostly poor
persons, and that the contracts were unconscionable;
(2) that it appears on the face of the contracts that
•k
they were unlawfully executed or unconscionable and
that the defendant bought the contract pursuant to a
course of dealing and a pre-existing arrangement between
itself and the selling merchant. In fact, appellant
admits to having purchased 750 freezer contracts from
* Respondents1 contract contains no model number or brand
name, in violation of P.P.L. §402. The statute requires
such information on the face of a contract in part so
that a would-be assignee is on notice of the price in
relation to the precise goods sold. Cf. Lefkowitz v.
ITM Corp., supra. 275 N.Y.S. 2d 303 at 323 (1966) .
13
the seller from 1965 to March 1967, a rate of almost
two per day. Affidavit of Martin Schwartz, sworn to
the 6th day of August, 1968 (A-15).
But the appellant must be liable along with
the seller not only because of their close mutual con
nection. Appellant's alleged Knowledge or notice of
the unconscionability is the most important factor.
The fact is that finance companies such as defendant
are relatively stable, whereas in the ghetto, sellers
such as the one in this case — Peoples Food go in
and out of business with lightning speed. They sell
for a year or two, and then disappear, either going
into bankruptcy or abandoning their operation and
going into business elsewhere, in another state, or
under a different corporate name. Peoples' Food went
into bankruptcy only a few weeks after its methods of
selling freezers were enjoined by the New York State
Attorney General. And this pattern is typical. There
fore, a tort remedy will not prevent the mass induce
ment of unconscionable transactions if it is available
against sellers alone. These sellers will not remain
solvent or in business long enough for their assets
14
really to be in jeopardy. The remedy must run also
against finance companies working with the sellers,
where the finance companies have knowledge or notice
of the illegality in the contract.
Joint liability is by no means unfair to the
finance companies, where the finance companies:
a. have notice or knowledge of the wrong and
also,
b. by extending a line of credit to the seller,
are providing the means whereby the seller
can stay in business and continue to induce
buyers to sign the unconscionable contracts.
The merchants who sell goods to the poor by
means of installment sales contracts could not do so
without assurance that they will be able to sell the
obligations to a finance company. The finance company
bankrolls the seller; the finance company is the seller's
lifeline. As the New York courts perceived thirty years
ago, "Looking, without the distortion of ancient notions,
at the picture thus presented, we find the actual control
and management of the credit and finance of sellers do
ing a conditional sale business in the hands of these
finance corporations. It is obvious that here we have
a factual joint enterprise in which, so far as condi
15
tional sales are concerned, the management rests in
the far larger part in the hands of the finance com
panies. The finance company and the merchant-seller
are as a fact engaged in one business, like Longfellow's
description of man and woman, useless one without the
other." Buffalo Industrial Bank v. DeMarzio, 296 N.Y.S.
783 (1937), rev. other grounds 7 N.Y.S. 2d 568 (1937).
The merchants operate under the finance companies'
umbrellas of protection, and the finance companies
should be jointly liable at least where they have notice
or knowledge of abuses in the merchants' selling
practices.
CONCLUSION
For the above reasons, the conduct attributed
to appellant in the complaint is tortious, and if
plaintiffs-respondents prove their allegations, they
may be entitled to punitive damages. Respondents must
inspect the other food freezer and combination con
tracts which defendant purchased from Peoples' Food
in order to prove the persistent course of conduct and
knowledge or notice that are, by analogy to Walker v .
Sheldon, supra, essential elements of the tort.
16
Therefore, the inspection demanded by respondents'
notice to inspect is relevant, both on the issues of
liability and damages, and Special Term properly
ordered production of the contracts (leaving appellant
free to object to the inspection of any particular
contracts, presumably on grounds of privilege) .
Its order should be affirmed.
Respectfully submitted,
JACK GREENBERG
PHILIP G. SCHRAG ^
10 Columbus Circle
Suite 2030
New York, New York 10019
Tel: No.: JUdson 6-8397
Attorneys for
Plaintiffs-respondents
17
RESPONDENTS' APPENDIX
At a Special Term, Part II of the
Supreme Court of the State of
New York, held in and for the
County of New York, at the
Courthouse at Pearl and Centre
Streets, Borough of Manhattan,
City and State of New York on
the 28th day of December, 1966
P R E S E N T :
HON. George Tilzer
Justice
In the Matter of the Application of the
PEOPLE OF THE STATE OF NEW YORK by
LOUIS J. LEFKOWITZ, Attorney General
of the State of New York,
Petitioner, CONSENT JUDGMENT
for an order enjoining and restraining : Index No.
PEOPLES FOOD, INC., PEOPLES FOOD
PACKAGING CORP., L. & S. CREDIT CORP.,
SAM BRISKMAN, ARNOLD BARRY BRISKMAN AND
LILLIAN BRISKMAN,
:
41938/ 66
Respondents. :
pursuant to Section 63, subd. 12 of the
Executive Law from carrying on, conduct- m
ing and transaction their business in
a persistently fraudulent and illegal
manner.
RA 1
The Attorney General having commenced a special
proceeding pursuant to Section 63 subdivision 12 of the
Executi\^ Law against the above named respondents by
notice of application, verified petitioner and affidavit
of Assistant Attorney General James Princiotta, all
dated October 18, 1966, the supplemental affidavit of
Assistant Attorney General Princiotta verified the 24th
day of November, 1967, the verified answer of the respond
ents dated October 31st, 1966 and the matter having duly
been come on to be heard at Special Term, Part I of this
Court on October 31, 1966 and the matter having been
adjourned to November 21, 1966, November 22, 1966,
November 28, 1966, December 6, 1966, December 13, 1966,
December 15, 1966, December 22, 1966 and then to January
5, 1967 upon a stipulation placed on the record on
November 22, 1966 that the respondent would not sell or
advertise for sale the freezers or freezer combination
during and throughout the period of adjournment, and
upon the subjoined stipulation and consent.
NOW, on motion of LOUIS J. LEFKOWITZ, Attorney
General of the State of New York (Assistant Attorney
General James Princiotta of counsel) it is
RA 2
ORDERED, ADJUDGED and DECREED, that the answer
of the respondents be withdrawn without prejudice to
any of the respondents and respondents shall not be
deemed to be in default
ORDERED, ADJUDGED and DECREED that the respond
ents named in the said petition ARNOLD BRXSKMAN, and
LILLIAN BRISKMAN be served from the said petition and
discontinued as against said parties for all purposes
ORDERED, ADJUDGED and DECREED that the respond
ents, their servants, agents and employees in any
further business transactions are hereby enjoined,
restrained and prohibited from:
a. Representing that the food freezer which is
sold by Peoples Food is a commercial model.
b. Representing that the freezer is reasonably
priced unless such is the fact.
c. Stating that the respondents are interested
solely in selling a food program without mentioning the
sale of a freezer.
RA 3
d. Stating that the food freezer is guaranteed
for 20 years both as to parts and labor.
e. Setting forth that the food freezer will
"pay for itself" out of the savings realized on the
food purchased.
f. Claiming that the food supplied by Peoples
Foods Packaging Corp. is adequate in amount to fulfill
the needs of the buyer's family for any particular
length of time or that said food will last for any
particular amount of time.
g. Representing that the price of the food sold
by Peoples Foods Packaging Corp. is at wholesale or is
lower than comparable retail supermarket prices.,
h. Stating that the food supplied is from
respondents' own food depot unless this is in fact the
truth.
i. Setting forth that respondents supply famous
brand foods without stating exactly which brands are
supplied.
j. Raising the cash selling price of a freezer
to absorb any allowances given on a trade-in.
RA 4
k. Failing to provide an adequate description
of the freezers sold which complies with Personal Pro
perty Law, Section 402 (3) (a).
l. Permitting customers to sign contracts which
contain black spaces if such practice would violate
Personal Property Law, Section 402 (4) .
m. Failing to set forth the net weight and price
charged for meat, poultry and fish as required by the
Agriculture and Markets Law, Sections 193 and 196-a and
the regulations of the New York State Department of
Agriculture and Markets promulgated hereto (1 NYCRR 221.1(c).
n. Operating L & S Credit Corp. without first
obtaining a license from the Superintendent of Banking
if such a license is required by the Banking Department.
o. Setting forth that a freezer is supplied
rather than sold, and it is further
ORDERED, ADJUDGED and DECREED that the respondents
in any further business transactions:
a. specify as closely as possible the percentage
of prime and choice meats that are supplied to sub
scribers of the Peoples Foods Packaging Corp. food program
RA 5
b . expand the one-year guarantee on parts and
labor to three years, without further expense to the
customer.
c. put in their freezer contracts, at no extra
charge, a food spoilage program which will guarantee to
the consumer replacement, at no charge, of all spoiled
foods, providing the food spoiled was sold by respond
ents, or by respondents through their subcontractor food
companies who have been assigned and sold the food order.
d. pay the expenses of moving the freezer for
any customer who, within three years after purchase,
changes his place of residence to any point within 75
miles of New York City, providing the customer is
current in his payments.
e. supply with each food delivery a list reflect
ing unit price or cost per pound for the food delivered
therein.
ORDERED, ADJUDGED and DECREED that Peoples Foods,
Inc. insert into its contracts a clause providing that if,
at any time within 10 days after delivery by Peoples Foods,
Inc. of a freezer to his home, a customer is dissatisfied
he may, without stating any reason, return that freezer
RA 6
to respondent, Peoples Foods, Inc. and cancel his con
tract; that at the time of the delivery of the freezer
the consumer shall be given a copy of the 10-day pro
vision and sign an original of same: that in the event
of cancellation under this provision the respondents
will pick up the freezer and assume the trucking costs;
and that the copy of such notice shall state that
written notice of dissatisfaction be given to the
respondents at their specified address, and it is
further
ORDERED, ADJUDGED and DECREED that the respondents
sell the freezers or refrigerator freezer combinations
to the general public at a reasonable price which shall
be in no event in excess of 100% over the actual cost
to respondents for the freezer or refrigerator, and it
is further
ORDERED, ADJUDGED and DECREED that the respond
ent SAM BRISKMAN, be and he is hereby ordered to pay
to the petitioner the sum of $500 cost pursuant to
CPLR § 8308; that the respondent PEOPLES FOOD, INC.
be and it is hereby ordered to pay to the petitioner
the sum of $500 cost pursuant to CPLR § 8308; that the
RA 7
respondent PEOPLES POOD PACKAGING CORP be and it is
hereby ordered to pay to the petitioner the sum of
$500 cost pursuant to CPLR § 8308; that the respondent
L. & S. CREDIT CORP. be and it is hereby ordered to pay
to the petitioner the sum of $500 cost pursuant to
CPLR § 8308; and it is further
ORDERED, ADJUDGED and DECREED that the petitioner
may make such further application under the provisions
herein on five days notice as it deems proper and
necessary for the enforcement of this order and judgment.
E N T E R
GT
J . S . C .
BA 8
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
x
In the Matter of the Application of
the PEOPLE OF THE STATE OF NEW YORK, :
by LOUIS J. LEFKOWITZ, Attorney
General of the State of New York,
Petitioner,
For an Order enjoining and restraining :
PEOPLE'S FOOD INC., PEOPLE'S FOOD CONSENT AND
PACKAGING CORP., L. S. CREDIT CORP- STIPULATION
ORATION, SAM BRISKMAN, ARNOLD BARRY :
BRISKMAN and LILLIAN BRISKMAN,
Respondents, :
Pursuant to Section 63, Subdivision
12 of the Executive Law from carrying :
on, conducting and transacting their
business in a persistently fraudulent
and illegal manner. :
x
It is hereby acknowledged, stipulated, consented
to and agreed by and between the respondents and LOUIS
J. LEFKOWITZ Attorney General of the State of New York,
attorney for the petitioner herein, as follows:
1. That the respondents herein have each re
ceived a copy of the verified petition and affidavit in
this proceeding and know the contents thereof.
RA 9
2. That the within stipulation and consent is
entered into by the respondents as their own free will
and voluntary act with full knowledge and understanding
of the nature of the proceeding commenced and the
obligations and duties imposed upon them by the order
consented to be entered herein and that no further
agreement or inducement of any nature whatsoever have
been made to them by the petitioner herein or its
attorney or any employee of the Attorney General's
office to procure this consent and stipulation.
3. That the respondents acknowledge receipt
of a copy of the annexed papers and judgment and hereby
consent to the making and the entering thereof without
further notice and hereby waive notice of any applica
tion for the entry thereof.
4. It is further submitted by the respondents
that the following is a general breakdown of costs with
respect to the sale of a freezer selling to the general
public for the sum of $799.95:
Approximately $135.00 for salesman's commission
on the original sale and revisit to consumer;
RA 10
Approximately $35.00 for trucking and a
service guarantee;
Approximately $120.00 as a discount to the
finance companies purchasing the freezer contract;
Approximately $100.00 for the cost of advertising
in various media in an attempt to secure the
customer's interest; and
Approximately $300.00 as the cost of the freezer
unit itself.
In addition there are various administrative
expenses which are impossible to determine at this time.
Dated: New York, New York
December 27, 1966
PEOPLES FOOD INC.
BY SAM B R I S K M A N ______
PEOPLES FOOD PACKAGING CORP.
BY SAM BRISKMAN_________
L. S. CREDIT CORP.
BY SAM BRISKMAN_________
SAM BRISKMAN_______ __
SAM BRISKMAN
LOUIS J. LEFKOWITZ
Attorney General of
the State of New York
Attorney for
Petitioner
By________________ _
JAMES PRINCIOTTA
Assistant Attorney
General
PHILLIPS, NIZER, BENJAMIN,
KRIM & BALLON, ESQS.
At a Special Term, Part II of
the Supreme Court of the State
of New York, held in and for
the County of New York, at the
Courthouse at Pearl and Centre
Streete, Borough of Manhattan,
City and State of New York,
on the 19th day of April, 1968.
P R E S E N T :
HON. George Postel
Justice.
— — x
In the Matter of the Application of
THE PEOPLE OF THE STATE OF NEW YORK
by LOUIS J. LEFKOWITZ, Attorney General
of the State of New York,
Petitioner,
for an order enjoining and restraining
NATPAC, INC., NATPAC OF NEW YORK, INC.,
NATPAC OF LONG ISLAND, INC., GUARANTEED
HOME FOOD SERVICE, INC., QUALIFIED HOME
FOOD SERVICE, INC., FOOD FINANCIERS, INC.,
ASSOCIATED BUDGETING CORP., NATIONAL
BUDGETING SYSTEMS, INC., and MARTIN
SCHWARTZ,
Respondents,
pursuant to Section 63, subd. 12 of the
Executive Law from carrying on, conducting
and transacting their business in a
persistently fraudulent and illegal
manner.
— — — — — — — — — — — — — — — — — — — — — — — x
CONSENT
JUDGMENT
RA 12
Upon reading and filing the verified petition with
exhibits annexed thereto dated February 16, 1968 and the
affidavit of Assistant Attorney General James Princiotta
with exhibits annexed thereto sworn to February 16, 1968
and the stipulation and consent dated April 12, 1968
executed by the respondents, represented by their counsel
Harold E. Horowitz, Esq., and the respondents having
interposed an answer denying any illegal or improper
practices on their part and having expressed to the
petitioner their willingness to comply with all provisions
of law and of the provisions of this judgment relative to
the conduct of their business, and, for the purpose of
setting this case and evidencing their willingness as
aforesaid, having consented to the entry of this judgment
NOW, on motion of LOUIS J. LEFKOWITZ, Attorney
General of the State of New York, attorney for the
petitioner herein (Assistant Attorney General James
Princiotta, of counsel), it is
ORDERED, ADJUDGED and DECREED that Natpac, Inc.,
Natpac of New York, Inc., Natpac of Long Island, Inc.,
Guaranteed Home Food Service, Inc., Qualified Home Food
Service, Inc., Food Financiers, Inc., Associated
RA 13
Budgeting Corp., National Budgeting Systems, Inc., and
Martin Schwartz, the respondents mentioned in the
petition, be and they are hereby enjoined, restrained
and prohibited from engaging in the following business
practices in the State of New York:
(a) Representing the sale of a family food
program without specifying the sale of a freezer, un
less such is a fact. The term "family food program"
shall be deemed to mean the sale of food and freezer.
(b) Representing that the food freezer is a
commercial model.
(c) Representing that the freezer sold is fully
warranteed or guaranteed for 25 years or for life without
specifying the particulars of the coverage as to labor
and parts and the extent pertaining thereto, unless such
is a fact.
(d) Representing that the food freezer purchased
by the consumer "pay for itself" out of the savings to
be realized on the food purchased under the food plan.
(e) Representing that a specified amount of food
RA 14
will fulfill the needs of a family consisting of a
specified number of people for a specified period of time.
(f) 1. Representing that the price of the food
is at wholesale, unless such is a fact.
2. Representing that the price of food is
at discount price, unless such is a fact.
3. Representing that prices charged for food
are lower than prices charged in a retail supermarket,
unless such is a fact.
(g) Representing the sale of prime meat and
choice meat unless it is specified that prime meat is
available to the consumer upon request.
(h) Representing that the food program being
sold is supervised and directed by a food consultant or
home economist, when such is not a fact. A food con
sultant or home economist shall be defined as one who
has expert knowledge of food from the aspects of
calories, nutrition and health.
(i) Representing that the food spoilage certi
ficate issued by the respondents would cover all of the
- m 15
food spoiled, unless the limitations are specifically
stated.
(j) Stating that a specified delivery weight
of meat and groceries would be delivered unless such
be the actual weight received by the consumer, unless
the substitution of food by the consumer with respect
to the original order accounts for the variance in
the weight.
(k) Stating that the food supplied under the
food plan would cost the consumer an average price per
pound, unless such is a fact.
(l) Stating that an itemized list would be
furnished to the consumer that would reflect the weight
and cost per pound with respect to the meat, poultry
and fish, and the cost per unit with respect to the
grocery items, unless such is a fact.
(m) 1. Representing and stating that the
freezer is furnished, unless such is a fact.
2. Representing that the freezer is
supplied, unless such is a fact.
RA 16
3. Representing the providing of a freezer,
unless such is-a fact.
(n)
unless such
Representing the leasing of a freezer,
is a fact.
(o) Representing to the consumer that he has
won a prize in a contest where in fact no contest has
been held.
(p) Consummating the sale of a used or repos
sessed freezer without complying with General Business
Law Section 395.
ORDERED, ADJUDGED and DECREED that respondents
herein be directed to comply with the requirements of
the Agriculture and Markets Law Section 193 and Section
196-a and the regulations of the New York State Depart
ment of Agriculture and Markets promulgated hereto
(1 NYCRR 221.1) and (1 NYCRR 221.9 [c]), and it is further
ORDERED, ADJUDGED and DECREED that the respond
ents be and they hereby are enjoined, restrained and
prohibited from failing to comply with the Agriculture
and Markets Law Section 188, and it is further
RA 17
ORDERED, ADJUDGED and DECREED that the respondents
be and they are hereby enjoined, restrained and prohibited
from writing up any retail installment contracts for the
sale of freezers without specifying the make and model
number of the freezer as required by Personal Property
Law Section 402 (3-a), and it is further
ORDERED, ADJUDGED and DECREED that respondents
be and they hereby are enjoined, restrained and prohibited
from writing up any retail installment contracts for the
sale of freezers in which the contract is in blank or
partially in blank in violation of Personal Property Law
Section 402 (4), and it is further
ORDERED, ADJUDGED and DECREED that the respondents
be and they hereby are enjoined, restrained and prohibited
from stating that respondents Food Financiers, Inc.,
Associated Budgeting Corp., and National Budgeting Systems,
Inc. are unassociated with respondents, and it is further
ORDERED, ADJUDGED and DECREED that the respondents
in any further business transaction:
(a) Whenever the term "delivery weight" is used
by respondents that they shall specifically state that
the delivery weight is to be the actual weight, unless the
substitution of food by the consumer with respect to the
original order accounts for the variance in weight.
RA 18
(b) Will comply with the Agriculture and
Markets Law Section 193 and 196-a and the regulations
of the New York State Agriculture and Markets Law
promulgated hereto (1NYCRR 221.1) and (1 NYCRR 221.9 [c]).
(c) Whenever the term "net weight" is used in
respondent's advertisements they shall specify clearly
the weight reduction with respect to the meats that
are to be trimmed and deboned.
(d) Specify that the prices charged under the
food plan are subject to increase on future orders
depending on the market trend.
(e) Will furnish to the consumer a facsimile
of the food spoilage certificate before the signing of
the freezer contract, if such is represented as part
of the sale.
(f) Will furnish to the consumer, in trans
actions involving the sale of a freezer or refrigerator-
freezer combinations service as specified in manufacturer's
warrantee for the term of one year effective from the date
of delivery of the freezer without charge. It being
understood that the parts required shall be obtained
RA 19
from the manufacturer of the freezer in accordance
with the freezer manufacturer's warrantee to the
consumer.
ORDERED, ADJUDGED and DECREED that the respond
ents sell the freezer or refrigerator-freezer com
binations to the general public at a cash price which
shall be, in no event, in excess of 100% over the
actual cost of the freezer or refrigerator-freezer
combinations. In computing costs, the sum of $35.00
shall be added for trucking.
ORDERED, ADJUDGED and DECREED that respondents
pay to the petitioner the sum of $16,000 costs of the
investigation pursuant to CPLR Section 8303(6), and
it is further
ORDERED, ADJUDGED and DECREED that the petitioner
may make such further application under the provisions
herein on five days notice as it deems proper and
necessary for the enforcement of this order and judgment.
E N T E R
J . S . C .
RA 20
r FIRST JUDICIAI
•APPFJI -VTF. n i}4 S X A .V 1 3
•— j~-— 1
«> T '» ofsist:
By Capozzoli, .1.1'.; McGivern, McNally
and Steuer, JJ.
150. PEOPLE, &C. res, v. EARL
CLOUD, def-ap—Judgment of convic
tion unanimously affirmed, No opinion.
Order filed.
By Stevens, P.J.; Eager,, Tiber. .
• and McNally, JJ.
7 PARKE-BERNET GALLERIES,
INC., plf-ap. v. FRANKLYN, def-res
—Order entered May 27. 1968 affirmed,
with $50 costs and disbursements to
the respondent. Opinion by Tilzer, J.
All concur except McNally, J., who
dissents in an opinion.' --
Order filed.
By Stevens, P.J.: Tilzer, McGivern,
; Nunez and Macken, JJ.
106. STATE OF N. Y.. plf-res, v.
SECURITY' ADVERTISING CO., INC.,
def-ap — Judgment unanimously af
firmed, with $50 costs and disburse
ments to the respondent. No opinion.
Order filed.
trig
recover puru-
da’mages from deiendant assert-
a complaint based on Uniform
By Stevens, P.J.; Eager, Marke-svicb.
■ Nunez and Steuer, JJ.
145. PEOPLE, &C., res, v. THEO
DORE SAMUELS, def-ap—Order en
tered May 3. 1968, unanimously
affirmed. No opinion. Order filed.
By Eager, J.P.; Capozzoli, Markewich
and M*Nally, JJ.
130-1. PEOPLE, S:C., res. V. RICH
ARD RIFFON, def-ap—Order entered
Jan. 29, 1968, unanimously affirmed.
No opinion. Order filed.
By Stevens, r.J.; Tilzer, McGivem,
Nunez and Macken, JJ.
103. IN RE BATES, pet-res-xp
(Montes, res-ap-res)—Order, entered
Aug. 14, 1968, unanimously affirmed,
without costs and without disburse
ments. No opinion. Order filed.
107. IN RE KINSELLA. pet-res
(Davis, res-ap)— Decree unanimously
effrmed, with costs and disbursements
to all parties filing briefs payable out
of the estate. No opinion. Order filed.
By Carozzol'-'TT.: McGivern, McNally
and Steuer, JJ.
157. PEOPLE. &C.. res, v. VERNON
•TURNER, def-ap—Judgment of con
viction unanimously affirmed. No opin
ion. Order filed.
156. PEOPLE ex rel. ROBERT VI
DAL. rel-ap, y. THOMAS, res—Order
entered .Jan. 11, 1968. unanimously af
firmed, No opinion. Order filed.
By Eager, j'P .: Capozzoli, Tilzer
and McNally, J.J.
132. PEOPLE ex rel. LUIS MEN
DEZ, rel-ap, v. THOMAS, res—Order
entered Jan. 11, 1968, unanimously af
firmed. No opinion. Order filed.
By Stevens, P.J.; Capozzoli. McGiTcrc,
Markewich and Macken, JJ.
S6N. IN RS SCHRIER, pet-ap-re3
(Schrier, res-res-ap) — Order of the
Family Court, New York County, en
tered April 30, 1958. unanimously
affirmed, without costs and without
disbursements. No opinion. Order filed.
commercial Code section 2-302 in that
plaintiffs were Induced to buy a re
frigerator freezer at an “unconscion
able" price within the meaning of the
said statute. The defendant, a finance
company, purchased the said install
ment sales contract from the seller.
Section 2-302 of the Uniform Com
mercial Code does not provide any
damages to a party who enters into
an unconscionable contract. This sec
tion gives the court the power to re
fuse to enforce such an uncoil,soionable
contract or it may enforce the re
mainder of the contract without the
unconscionable clause or it may so
limit the application of any uncon
scionable clause as to avoid any uncon
scionable result.
The. documents called for under the
notice of inspection are neither ma
terial nor necessary to plaintiff’s cause
of action and their production would
be an undue harassment of defendant.
Under the circumstances, it was an
improvident exercise of discretion not
to grant the motion.
I Order filed,_____ 1_________ _______ .
LEROY FUNNY—Mm i,
appeal as poor person
terms and contUti-..-
orders of this court.' Or ;.
Bv Eager, .? !*.; r.: -
McGivern and .M.uk„
M-167. TELARO v. 1,
tlon granted only t0
staying defendant-;-,-
disposing of the —:un: "
remaining in the jive-'
count 111 the nan-.-"
defendant at Hay.
Inc. on condition t’ ;
respondent have the right
or otherwise trade in" ti
remaining in the joint a -
as the assets of proceed',
or sales remain in said
ing appeal and on the ■
dition that the appellant
appeal for the April, 196:T,
Court. Order filed.
By Stevens, P.J.; Eager, Capozzoli,
McGivern and Babin, JJ.
13543. 13544. 13545. PEOPLE, kC..
res, v. JAMES SMILEY, def ap —
Having reconsidered these appeals
following the submission of supple
mental briefs and the order of this
court dated Oct. 1, 1968 which vacated
its orders of Sept. 19, 1968 which af
firmed these appeals, this court now
affirms the judgment of conviction
rendered Nov. 2, 1967 as also the or
ders entered Aug. 15. 1967 and Oct. 9.
1967 dismissing appellant's writs of
habeas corpus.
Orders filed.
By Eager, J.P.: Capozzoli. Markewich,;
Rabin and Macken, JJ.
55. 53. 57. IN RS CHASE MAN
HATTAN BANK. N.A., res .Miner, f
ep i—Order entered June 23. .9co. ar.lj
two decrees of the Surrogate s Court,
New York County, unanimously af
firmed, with one bill of costs and
disbursements to ail parties filing
briefs, payable out of the trust estate.
No opinion. Order filed.
58. 59. HALL, plf-ap. Y. COBURN
CORP. OF AMERICA, def-res—Order
entered Aug. 23. 1968, and judgment,,
nanimouslv affirmed, without cos.s
and without disbursements. No opin
ion. Order filed.
69 61. RUSSELL. HI. p'f-ap. V.
COBURN CORP. OF AMERICA, def-
j-tvij_Order entered Aug. 23, 1968, and
judgment, unanimously affirmed. with
out costs and without disbursements.
Ho opinion. Ore r died.
By Stevens, T.J.; Eager, Capozzoli,
McGivern and Nunez, JJ.
112. NEW YORK S P O R T I N G
ARMS ASSOCIATION, INC., plf-ap,
v. CITY OF HEW YORK, def-res —
Judgment enr^’-ed April 23, 1968,
unanimously modified on the law to
the extent of striking therefrom the
last decretal paragraph dismissing the
complaint as to plaintiffs T. Anthony
Bloch and Jack Appel and substituting
therefor a provision declaring that
Local Law 106 for the year 1967
amending Chapter 18 of the Adminis
trative' Code of the City of New York,
in its general provisions and intend
ment, is constitutional and valid and
that the said plaintiffs are in no way
unconstitutionally aggrieved by any
specific provisions of said law; and
as - so ' modified, affirmed with S50
costs and disbursements to respond
ents. Special Term correctly deter
mined that the ^attack by the said
plaintiffs upon' the constitutionality
and validity cf Local Law 106 had no
merit, and correctly sustained the va
lidity of that law. However, Special
Term erroneously dismissed the com
plaint because plaintiffs were not en
titled # to the declaration sought by
them.' (Lanza v. Waener. 11 N. Y. 2d
317, 334. Park Avenue Clinical Kosci-
tal v. Kramer. 26 A. D. 2d 613. aff’d
19 N. Y. 2d 958; Medical World Pub- j
lishing Co., Inc. v. William J. Kauf- !
man. 29 A. D. 2d 859). A declaration j
should have beer, granted in defend
ants’ favor as indicated hereir.aoove. \
Order ffled.
, By Eager. J.P.; Capo/-
and McGivern. J
! M-130. IN RE LAC: -
rent!)—Motion for a
condition that the apm\.;
for the April, 1969, term .
Order filed.
By Eager, J.P.; Chpor--
McGivern and Mark*---*
' M-153. WAGNER v. Gi
Motion for a stay denied.
M-152. STULBERG v
FASHIONS. INC.—Mo*: ::
appeal granted, with $10 .
filed.
By Stevens, P.J.; Eager, <
McGivern and S'unr.-
M-18. IN RE PATER SO'
polifcan Mutual Insurance
tion to dismiss appeal .
costs. Order riled.
By Eager. J.F.; CapozzG
McGivern and Markc'.
M -lil. RAPP v. RING:.;
—Motion to dismiss apm.
with S10 costs. Order filed.
M-197. PEOPLE. kC . v.
CASELLAS; M-198. Poor
CHARLES CIERS v. TOC
peals withdrawn. Orders ft
M-I45. IN RE MEN
fBerman)—Motion to i.o
party tenant respondent ;
der filed.
.M-124. PEOPLE, kC.. v.
WELLS—Motion granted pr
of this _court. entered on C
Is amended by striking o r
tion of Anthony F. Mr •:
counsel to prosecute the
substituting therefor O "•
Esq., of 22 West Firo -
Vernon. N. Y. The tun: •
appellant shall perfect
hereby enlarged until O
the date of the erd : d
By Stevens. P.J.: Fr
Tilzer and Met,
M-6174. PEC?: ”
BERTO CARS All. O “
kc, v. FRANKLIN
M-6189. People ■ . -■*
l ia m s v. w a t t :■
LAND PENITENT: .
pie. kc.. v. ELS. -
M-l 16, -Peep'' '
LARD v. to '
p e n it e n t : a o v "
V. JOHN l a g :
rel. GILE- OI
d e n . n ̂v. c :r*
PRE5TI:. W-I
CRUE v. T O
ite-ar ichBy Fager, J.P.; Carv-umlf. Mi
Rabin and Macsen, JJ.
62N. M A T T E R OF G O R D O Oh :
claimants-res. v. M. V. A. I. C-. re-t-G : ;
—Order, entered June 24. ItTo, -..an - \
ir.g a temporary stay cf arbitration *
to M. V. a . I. C., unanimously re- ;
versed, on the law. without costs and j
disbursements, id M. V. A. I. GOT ,
motion for a permanent stay granted.;
without costs. The infant claimant j
was allegedly injured on May 22. 1965. j
trh**n «r* automobile in. which he W"
riding a r '’ which was being driven
Stern, ct aided with an automob
5ENAN
Mori'
appe
.*11
driven by Indelicato. The claims
c the. infant and his mother) La.ve„
ieged that they were 'ffnsuroc
sons under the uninsured 4;;
cation indc ■ -■ .
suranee ;s_
in
r.r rv
ta^er, ,?.P.: Tiller, Nl$cr,;
;! RaBia and Mackcn, JJ,
7?n A p e a f e S S . ptf-res. r . “SX*
TIONAL BUDGETING SYSTEMS,
INC., def-ap — Order entered cn
Sept. 15, 1963 denying motion for a
__oteotive order unanimously reversed,
"on th e. law and the facts, without
chats' or disbursements,;; the" motion
granted and the notice is vacated.
Py i t t v " r . h..l.: Eager, C
T it -" a;.1 M cGjierjl, S3,
Y.-'-ANTHOtlTl ' f 13. PEOPLE, &C.
TlDANTELS, JR.; M-6190. People, &c„
v. ANTH&NY DANIELS; M-41. People,
&c., V. 'iFALENTINE A. NEGRON;
M-62. People, &c., V. EDWARD NEE
LEY: M-SS. People, &c., v. RAYMOND
HUARNEGK-.true name Paul Navarro:
M-148. Efeople, lx:, V. RUDOLPH
By StmL J.’’ .;-0
Hofsta'IWr
BETH POWERS, de:-:;
conviction unanimou.-.y
opinion.
584. PEOPLE. S.-C. re
REINHART, def-ap - -
conviction ur.a nirr.ouA /
RUTPINl M-190. People, Lc„ v. opinion.
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