Summary
In People v Scanlon (11 N.Y.2d 459, 462), the Court of Appeals held that "[i]t is basic law that `modification of an injunctive decree [may] rest upon a clear showing that the evils which justified the prohibition have vanished'".
Summary of this case from People v. HoneckmanOpinion
Argued May 14, 1962
Decided July 6, 1962
Appeal from the Appellate Division of the Supreme Court in the Second Judicial Department, THOMAS E. MORRISSEY, JR., J.
Raymond J. McGrover for appellant. Louis J. Lefkowitz, Attorney-General ( Daniel M. Cohen and Paxton Blair of counsel), for respondents.
Defendant, who by a judgment entered by consent in 1939 had previously been enjoined under the Martin Act (General Business Law, art. 23-A) from engaging in the securities business except as an employee of a reputable dealer or broker, moved at Special Term to amend and so modify that judgment that it would permit him to become a partner in any reputable stock brokerage firm registered in New York. The order granting this amendment has been reversed by the Appellate Division, Second Department, because in its opinion defendant's subsequent conduct since 1939 which has been shown to be "ethical, exemplary and beyond reproach" is "an inadequate basis for the amendment".
On this appeal defendant contends (1) that Special Term has the power to modify a permanent injunction issued under the Martin Act and (2) that proof of subsequent exemplary conduct for 20 years may, without more, be sufficient to warrant the positive exercise of that discretion.
As to (1): It is basic law that "modification of an injunctive decree [may] rest upon a clear showing that the evils which justified the prohibition have vanished" ( Enterprise Window Cleaning Co. v. Slowuta, 299 N.Y. 286, 288; Drivers Union v. Meadowmoor Co., 312 U.S. 287, 298). There is nothing either in the statute itself or its legislative history tending to indicate an intent by the Legislature to alter the recognized power of an equity court to "change its decrees where there has been a change of circumstances" ( Dictograph Prods. v. Empire State Hearing Aid Bur., 4 A.D.2d 508, 510).
As to (2): The Appellate Division has held that subsequent exemplary conduct is irrelevant as a matter of law. Since the Supreme Court has the power to amend or modify the judgment, the court at Special Term or the Appellate Division may consider as the basis for the modification of the judgment, defendant's proven subsequent praiseworthy conduct in the securities business in the period of time subsequent to the entry of the judgment. The weight to be given such proof, where the public interest is involved, depends in each case on its special facts and the surrounding circumstances. But in no case should the court determine the propriety of the relief sought by the defendant on affidavits alone. Eligibility may be restored only by an order entered after a formal hearing during which the movant and witnesses may be examined.
The order of the Appellate Division, accordingly, should be reversed and the matter remanded to Special Term for a hearing.
The Appellate Division not only reversed on the facts as well as on the law but made it clear in its opinion which is incorporated into its order that even if there is power to amend such an injunction nevertheless "the Special Term improvidently exercised its discretion in amending the judgment so as to permit defendant to resume his activity as a stockbroker". I, too, assume the existence of a power to amend or vacate the Martin Act injunction. But it is the unvarying rule of this court that we will not review an Appellate Division exercise of discretion overruling a Special Term exercise of discretion since "we have no power to review discretionary orders" ( Matter of People [ Second Russian Ins. Co.], 244 N.Y. 606, 607). Where the Appellate Division reverses a Special Term grant of a motion to correct and amend a judgment made in the exercise of discretion "no question is presented which we can reach" ( Hansen v. City of New York, 299 N.Y. 136, 139). The only exception to this is when the Appellate Division's exercise of discretion is so outrageously wrong as to amount to an abuse of discretion as matter of law. Surely this is not such a case. The farthest we can go is to say that the lower courts may exercise their discretion to modify such an injunction as this. But when discretion has been exercised against modification there is nothing for the Court of Appeals to do except affirm. "It is settled that the discretion of the Supreme Court is controlled by the Appellate Division (see specifically as to new trials, O'Connor v. Papertsian, 309 N.Y. 465, 471) and that a revision by the Appellate Division of a discretionary order of this character made at a Trial or Motion Term is accordingly a discretionary decision outside our power of review ( Matter of People [ Second Russian Ins. Co.], 244 N.Y. 606, 607; Hansen v. City of New York, 299 N.Y. 136; Bata v. Bata, 302 N.Y. 213, 215; Cohen and Karger, Powers of the New York Court of Appeals, p. 583)." ( Gutin v. Mascali Sons, 11 N.Y.2d 97, 99.)
I would affirm.
Judges FULD, FROESSEL, VAN VOORHIS, BURKE and FOSTER concur in Per Curiam opinion; Chief Judge DESMOND dissents in an opinion in which Judge DYE concurs.
Order reversed and matter remitted to Special Term for further proceedings in accordance with the opinion herein.