People v. Sacks

• Decision Date: 11 January 1938
• Citation: 276 N.Y. 321,12 N.E.2d 425
• Parties: PEOPLE v. SACKS et al.
• Court: New York Court of Appeals Court of Appeals

276 N.Y. 321

12 N.E.2d 425

PEOPLE

v.SACKS et al.

Court of Appeals of New York.

Jan. 11, 1938.

Irving Sacks and another were convicted of violating section 340 of the Banking Law, Consol.Laws, c. 2, and section 580 of the Penal Law, Consol.Laws, c. 40. From a judgment of the Appellate Division, First Department, -- App.Div. --, 300 N.Y.S. 1332, which affirmed a judgment of the Court of Special Sessions convicting the defendants, named defendant appeals.

Judgment of named defendant's conviction reversed, and information dismissed. Appeal from Supreme Court, Appellate Division, First department.

Harold H. Corbin and Edward J. Bennett, both of New York City, for appellant.

William Copeland Dodge, Dist. Atty., of New York City (James J. Wilson, of New York City, of counsel), for the People.

CRANE, Chief Judge.

The defendants have been convicted of the crime of violating section 340 of the Banking Law (Consol.Laws, c. 2), and the judgment has been affirmed by the Appellate Division on the ground that the evidence was sufficient to sustain the conspiracy count in the information, thereby indicating that as to the other count the evidence was insufficient in the opinion of that court. The information is in two counts: The first charges the crime of violating section 340 of the Banking Law, in that the defendants did unlawfully engage in the business of making loans ‘of money, credit, goods and things in action in the amount of three hundred dollars or less and charging, contracting for and receiving a greater rate of interest therefor than permitted by law without being lawfully authorized by article 9 of the said Banking Law.’ The second count charges the defendants with the crime of conspiracy in that they conspired with each other and with divers other persons to commit a crime, ‘to wit, the crime of violating sections 340 and 357 of the said Banking Law * * * that is to say, unlawfully to engage in the business of making loans of money in amounts of three hundred dollars or less without being duly licensed so to do.’

Section 340 of the Banking Law reads: ‘No person * * * shall engage in the business of making loans of money, credit, goods, or things in action in the amount or of the value of three hundred dollars or less and charge, contract for, or receive a greater rate of interest, discount, or consideration therefor than the lender would be permitted by law to charge if he were not a licensee hereunder except as authorized by this article and without first obtaining a license from the superintendent of banks.’

Section 357 of the Banking Law refers to loans made by those not engaged in the business.

The dominant fact, upon which the crime of violating these sections must be based, is a loan-a loan for which excessive interest is received. The transaction may take many forms. For the purpose of evading the statute it may have the appearance of a legal transaction but, if in essence or in fact, the transaction be a loan, and excessive interest taken, a crime has been committed.

The defendant Irving Sacks has been in the installment business in the city of New York for 30 years. His place of business at the time of the trial was 100 West Forty-Second street, on the fourth floor. He testified: ‘I sell clothing, jewelry, radios, haberdashery, almost anything anybody could use for personal use, electrical appliances or furniture and so on, etc., on installment plan. I occupy approximately at 100 West 42nd Street, four thousand square feet for showrooms and stockrooms. My inventory value of all kind of merchandise amounts from fifty to sixty-five thousand dollars. I have another place of business at 1370 Broadway, where I have been thirteen or fourteen years.’ In the latter store Sacks sold jewelry and novelties for cash and on installment, as the case might be, and his average stock in that store for a number of years had been inventoried at $40,000. The method of the installment business is to require security, and Sacks described it as follows: ‘Selling on installment, we must have for our protection when a man buys anything such as an assignment of wages or a mortgage or a confession. It all depends upon the customer. Sometimes a promissory note, whatever the case may be.’ The business was transacted in the name of the Metropolitan Credit Company, and employed 15 to 20 salesmen, with an office staff of approximately 25 employees. The company paid its salesmen a commission of 20 per cent. Collections required 1 1/2 to 2 years before the final payment was made.

The defendant Samuel M. Morton had been selling jewelry on the installment plan for years. He had been sales manager for O. F. Bale & Co., 21 Maiden lane, and said that his duties were ‘capacity as outside sales manager, meaning I trained salesmen how to sell merchandise on installment such as clothing, watches, etc. to people that held a job, industrial workers, factory workers, chain store operators, etc., elevator operators, also city employees.’ He met Mr. Sacks at the jewelers' convention at the McAlpin Hotel in 1932, and thereafter, in 1935, went with Sacks as a salesman to concentrate on a special type of business, ‘city employees exclusively.’ Sacks said to him: ‘city employees, if they miss payments we put the garnishee in against them and I receive my money.’

Morton pleaded guilty and turned state's evidence. He was the first witness called by the People, and his description of the scheme as planned I now outline. Sacks showed him a letter and said: “This is the proposition that brings the people to your place; you will be astonished to see the amount of response. Take a copy of this letter, have the letters printed, take an office space so you may have privacy to yourself, operate at the place of business wherever you may find the location. I will advance all your expenses that may be involved in respect to the office space. When a customer comes into your place, well, you know and I know that they are not going to come in for merchandise. What they want is loans. This letter is going to bring the people to your office. The rest of that is up to you to handle then. When they come to your office with this particular letter asking you for a loan, you will switch them, in a scientific way. Tell them you are not a finance company, tell them you are not in the loan business or banking business, but you can give them something in merchandise to hold or satisfy their demands. You get the name of the prospective buyer. Call me up at the office. I will have that person cleared for you within a few minutes. I have a connection,...