28 A.D.2d 517, 279 N.Y.S.2d 774
Application of FREEDOM DISCOUNT
CORP., Petitioner, for a judgment under
Article
78 of the Civil Practice Law and Rules in
the nature of prohibition
v.
Hon. Hyman KORN, Justice of the
Supreme Court of the State of New
York, Hon.
Louis J. Lefkowitz, Attorney General of
the State of New York and Mark T.
Walsh, Esq., Assistant Attorney
General, Respondents.
Supreme Court, Appellate Division, First
Department.
May 11, 1967.
Before STEVENS, J.P., and
CAPOZZOLI, RABIN, McNALLY and
McGIVERN, JJ.
PER CURIAM.
Petitioner applies for an order in the
nature of prohibition enjoining a Justice of
the Supreme Court from signing a
proposed judgment. The judgment was
submitted by the Attorney General, after
decision made and filed, in a proceeding
commenced by him pursuant to Section
63, subdivision 12 of the Executive Law.
Its purpose was an injunction, restraining
named respondents from engaging in and
continuing illegal and fraudulent practices
in connection with what is commonly
known in the retail trade as 'referral
selling'. Respondents cross-move for
dismissal of the petition in point of law.
Petitioner was one of a group of finance
companies, to whom assignments of retail
installment contracts were made, in
violation of Personal Property Law, s 402,
subd. 2 (Retail Installment Sales Act); this
section prohibits separate documents
from evidencing a single transaction; the
violation of this section has resulted in
gross frauds upon consumervictims. The
trial court found that the respondents
therein carried on an operation which not
only constituted 'a public fraud calculated
to entrap gullible consumers in a financial
morass' but was a fraudulent scheme
constituting a lottery within the meaning of
Penal Law s 1370, and a public nuisance
under Penal Law s 1371.
[1] The gravamen of petitioner's claim is
that three decretal paragraphs in the
proposed judgment affect its substantial
rights and that the court will exceed its
jurisdiction if it signs the judgment. Its
claimed substantial rights are predicated
upon the retail installment contracts
ostensibly complete on their face and
assigned to it, allegedly without
knowledge that they were improperly
severed from portions of entire
agreements, which agreements had been
found to be illegal and unenforceable by
the trial court. Two of the decretal
paragraphs (second and fifth) enjoin only
the named respondents from the
prohibited conduct. The third (eleventh)
provides for service or a copy of the
judgment upon the consumers defrauded
and upon finance companies, including
petitioner, which had purchased any note
or retail installment contract arising from
the referral sales program found to be
illegal. However, service of a copy of the
judgment upon petitioner and the
consumers whose contracts it bought
does not make petitioner an aggrieved
party. The obvious purpose of this
paragraph is to put all persons connected
with the illegal transactions and relevant
documents on notice that they are part of
a lottery, and thus, a public nuisance. If
petitioner had no knowledge that the
contracts assigned to it were fraudulently
procured **776 and had purchased them
in the belief that they were complete on
their face, before they were negotiated to
petitioner as certified to it, the judgment
derogates in no way from the petitioner's
rights. Nor does it affect any claim which
may be validly asserted by petitioner on
the representation it was a bona fide
purchaser for value. Petitioner was fully
aware of the proceedings below. The
attorney who now acts on its behalf, and
is its President, and also its majority
stockholder, testified at the trial. It made
no application to intervene at the trial. It
made no application to intervene for the
protection of its alleged interests upon
learning of the proposed judgment. It now
does not ask for leave to intervene.
[2][3][4] Petitioner, being neither a party
to the action in which the challenged
judgment is proposed, nor an intervenor,
nor an aggrieved party, lacks standing to
support prohibition, which in any *518
event does not lie in the absence of a
showing tha the subject officer is 'about to
proceed without or in excess of
jurisdiction'. CPLR 7803, subd. 2. The
petition fails to disclose any factual or
legal basis for petitioner's assumption that
the respondent Justice at Trial Term is
"about to proceed without or in excess of
jurisdiction". Lefkowitz v. Justices of the
Supreme Court, of State of New York,
Albany County, 27 A.D.2d 757, 278
N.Y.S.2d 181. Petition unanimously
dismissed, with $50 costs and
disbursements to the respondents.
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