author: Chief Judge Cooke.

text:
    Webster Associates, Petitioner, and Peter Wahl et al., Appellants, v Town of Webster et al., Respondents.
    Argued May 2, 1983;
    decided June 14, 1983

      POINTS OF COUNSEL

      David Sive, Daniel Riesel and Gail S. Port for appellants.
    I. Plaintiffs’ SEQRA claims were sufficient to state causes of action and raise triable issues of fact. (Matter of Rye Town/King Civic Assn. v Town of Rye, 82 AD2d 474; Schenectady Chems. v Flacke, 104 Misc 2d 1079, 83 AD2d 460; Matter of Harlem Val. United Coalition v Hall, 54 NY2d 977; Matter of Tri-County Taxpayers Assn. v Town Bd. of Town of Queensbury, 55 NY2d 41; I-291 Why? Assn. v Burns, 372 F Supp 223, 517 F2d 1077; Calvert Cliffs’ Coordinating Committee v United States Atomic Energy Comm., 449 F2d 1109; Monroe County Conservation Council v Volpe, 472 F2d 693; Benigno v Cohalan, 49 AD2d 871, 40 NY2d 880; Barry v Town of Glenville, 9 AD2d 822, 8 NY2d 1153; Keeney v Village of LeRoy, 22 AD2d 159.) II. The Webster zoning ordinance required approval of the Expressway Mall preliminary development plan by the town planning board. (Todd Mart v Town Bd. of Town of Webster, 49 AD2d 12; Spinosa v Ackerman, 98 Misc 2d 1073, 72 AD2d 976; Matter of Boxer v Town Bd. of Town of Cortlandt, 60 AD2d 913; Holmes v Planning Bd. of Town of New Castle, 78 AD2d 1; Matter of Stato v Squicciarni, 59 AD2d 718.) III. The court below erred in dismissing plaintiffs’ claims concerning the bias and other misconduct of Supervisor Kent. (Marshall v Jerrico, Inc., 446 US 238; Matter of Tuxedo Conservation & Taxpayers Assn. v Town Bd. of Town of Tuxedo, 96 Misc 2d 1, 69 AD2d 320; Meinhard v Salmon, 249 NY 458; Todd Mart v Town Bd. of Town of Webster, 49 AD2d 12; Citizens to Preserve Overton Park v Volpe, 401 US 402.)

      Robert L. Teamerson for Town of Webster and others, respondents.
    I. Respondent, the Town Board of the Town of Webster, has fully and completely complied with all of the procedural and substantive requirements of SEQRA. (Sierra Club v Morton, 510 F2d 813; Ecology Action v Van Cort, 99 Misc 2d 664; Matter of Rye Town/King Civic Assn.

      v Town of Rye, 82 AD2d 474; Schenectady Chems. v Flacke, 83 AD2d 460; Environmental Defense Fund v Andrus, 619 F2d 1368.) II. The disapproval of the preliminary development plan by the planning board was advisory only. (Todd Mart v Town Bd. of Town of Webster, 49 AD2d 12; Nemeroff Realty Corp. v Kerr, 38 AD2d 437; Spinosa v Ackerman, 98 Misc 2d 1073; Matter of Boxer v Town Bd. of Town of Cortlandt, 60 AD2d 913.) III. Claims of misconduct of Kent are entirely without merit. (Kittinger v Buffalo Traction Co., 160 NY 377; Todd Mart v Town Bd. of Town of Webster, 49 AD2d 12; Matter of City of Rochester, 208 NY 188.)

      William H. Helferich, III, and Neal D. Madden for Expressway Associates, respondent.
    I. The decision of the court below is not in conflict with decisions of either this court or of other Appellate Divisions. (Matter of Rye Town/King Civic Assn. v Town of Rye, 82 AD2d 474; Schenectady Chems. v Flacke, 83 AD2d 460; Natural Resources Defense Council v Callaway, 524 F2d 79; Matter of Concerned Citizens Against Crossgates v Flacke, 89 AD2d 759.) II. The substantive requirements of SEQRA have been met. (Ecology Action v Van Cort, 99 Misc 2d 664; Matter of Town of Henrietta v Department of Environmental Conservation of State of N. Y., 76 AD2d 215; Environmental Defense Fund v Andrus, 619 F2d 1368; Sierra Club v Adams, 578 F2d 389; County of Suffolk v Secretary of Interior, 562 F2d 1368; Sierra Club v Morton, 510 F2d 813; Strycker’s Bay Neighborhood Council v Karlen, 444 US 223; H.O.M.E.S. v New York State Urban Dev. Corp., 69 AD2d 222; Matter of Tuxedo Conservation & Taxpayers Assn. v Town Bd. of Town of Tuxedo, 69 AD2d 320; Warm Springs Dam Task Force v Gribble, 565 F2d 549.) III. The procedural requirements of SEQRA have been met. (Ecology Action v Van Cort, 99 Misc 2d 664; Trout Unlimited v Morton, 509 F2d 1276; Westside Prop. Owners v Schlesinger, 415 F Supp 1298; Sierra Club v Morton, 510 F2d 813; Natural Resources Defense Counsel v Callaway, 524 F2d 79; Life of Land v Brinegar, 485 F2d 460; Matter of Concerned Citizens Against Crossgates v Flacke, 89 AD2d 759; Roosevelt Campobello Int. Park Comm. v United States Environmental Protection Agency, 684 F2d 1041; Environ

      mental Defense Fund v Hoffman, 566 F2d 1060.) IV. Planning board approval of the preliminary development plan is not a condition precedent to the authority of the town board to enact legislation rezoning the subject property. (Matter of Darswan, Inc. v Capellini, 58 AD2d 892, 42 NY2d 810; Matter of Boxer v Town Bd. of Town of Cortlandt, 60 AD2d 913; Spinosa v Ackerman, 98 Misc 2d 1073, 72 AD2d 976; Nemeroff Realty Corp. v Kerr, 38 AD2d 437, 32 NY2d 873; Matter of Thurman v Snowden, 28 AD2d 705; Matter of Anderson v Lockhardt, 62 Misc 2d 815; Matter of Stateline Plaza v Lehrecke, 87 Misc 2d 234; Todd Mart v Town Bd. of Town of Webster, 49 AD2d 12; Matter of Stato v Squicciarini, 59 AD2d 718.) V. An elected member of a local legislative body may not be disqualified from acting on a rezoning application on the basis of alleged partiality where there are neither allegations nor proof of conflict of interest. (Todd Mart v Town Bd. of Town of Webster, 49 AD2d 12; Matter of City of New York [Ely Ave.], 217 NY 45; Kittinger v Buffalo Traction Co., 160 NY 377; Kenford Co. v County of Erie, 62 AD2d 1176; Sloane v Weber, 52 AD2d 1055; Burack v Town of Poughkeepsie, 32 AD2d 806; Nappi v La Guardia, 184 Misc 775, 269 App Div 693, 295 NY 652; Homefield Assn. of Yonkers, N. Y. v Frank, 273 App Div 788, 298 NY 524; Matter of Tuxedo Conservation & Taxpayers Assn. v Town Bd. of Town of Tuxedo, 69 AD2d 320.) VI. There are no triable issues of fact. (Oriental Blvd. Co. v Heller, 27 NY2d 212; Matter of Battaglia v Schuler, 60 AD2d 759; Hamilton Mut. Realty Fund v Band Realty Co., 41 NY2d 936; Ecology Action v Van Cort, 99 Misc 2d 664; Environmental Defense Fund v Andrus, 619 F2d 1368; Sierra Club v Adams, 578 F2d 389; Friends of Earth v Coleman, 513 F2d 813; Citizens to Preserve Overton Park v Volpe, 401 US 402; United States v Morgan, 313 US 409.)

      JohnM. Wilson, II, for Bruce C. Hegedorn, respondent.
    I. The town board lawfully exercised the zoning power. (Todd Mart v Town Bd. of Town of Webster, 49 AD2d 12; Matter of Golden v Planning Bd. of Town of Ramapo, 30 NY2d 359; Janas v Town Bd. of Town of Fleming, 51 AD2d 473; Dodge Mill Land Corp. v Town of Amherst, 61 AD2d 216; Rodgers v Village of Tarrytown, 302 NY 115; Nemeroff Realty Corp.

      v Kerr, 38 AD2d 437, 32 NY2d 873; Matter of Sarah Lawrence Coll. v City Council of City of Yonkers, 48 AD2d 897; Marshall v Village of Wappinger Falls, 28 AD2d 542; Tarry Corp. v Friedlander, 103 Misc 2d 435, 78 AD2d 546; Town of Gardiner v Stanley Orchards, 105 Misc 2d 460.) II. There are no grounds shown for disqualifying town board members. (Todd Mart v Town Bd. of Town of Webster, 49 AD2d 12; Kittinger v Buffalo Traction Co., 160 NY 377; Kenford Co. v County of Erie, 62 AD2d 1176; Sloane v Weber, 52 AD2d 1055; Burack v Town of Poughkeepsie, 32 AD2d 806; Matter of City of New York [Ely Ave.], 217 NY 45; Center Sq. Assn. v Corning, 105 Misc 2d 6; Matter of Morgenthau v Cooke, 56 NY2d 24; Sharkey v Thurston, 268 NY 123; Matter of Eigo v Wheeler, 248 App Div 53.) III. The town board fairly and adequately met its duties under SEQRA. (Bliek v Town of Webster, 104 Misc 2d 852; Ecology Action v Van Cort, 99 Misc 2d 664; Town of Henrietta v Department of Environmental Conservation of State of N. Y., 76 AD2d 215; Matter of Concerned Citizens Against Crossgates v Flacke, 89 AD2d 759; H.O.M.E.S. v New York State Urban Dev. Corp., 69 AD2d 222; Matter of Tri-County Taxpayers Assn. v Town Bd. of Town of Queensbury, 55 NY2d 41; Sierra Club v Adams, 578 F2d 389; 300 Gramatan Ave. Assoc. v State Div. of Human Rights, 45 NY2d 176; National Helium Corp. v Morton, 486 F2d 995, 416 US 993; Environmental Defense Fund v Andrus, 619 F2d 1368.)
   OPINION OF THE COURT

Chief Judge Cooke.

This litigation arises out of a controversy between two developers over the right to build a shopping center in the Town of Webster, Monroe County. The developers sought to construct large shopping malls on parcels of nearly 100 acres each, located within one-half mile of each other. The developers — Webster Associates and Expressway Associates — both applied in 1979 for the necessary rezoning of their respective sites. The town planning board approved the Webster Associates application in November, 1979 and, on December 27, rezoned the Webster Associates site to create a Planned Shopping Commercial District within an existing Commercial Shopping Center District, thus permitting Webster Associates to construct its mall. Supreme Court vacated the town board’s action, however, as taken in violation of the provisions of the State Environmental Quality Review Act (SEQRA) (ECL 8-0101 et seq.) and of the due process rights of local residents and property owners (Bliek v Town of Webster, 104 Misc 2d 852).

As a result of the November, 1979 election, the town board’s membership changed, and on January 1, 1980, a new majority took control. Irving Kent, a respondent herein, had been elected supervisor and thus presided over the new town board. The board began consideration of the Expressway Associates plan a short time later. The town planning board disapproved Expressway Associates’ proposal in August, 1980. Notwithstanding this rejection, on October 23, 1980, the town board approved Expressway Associates’ preliminary development plans and passed a declaration of intent to rezone the site, the final step in the rezoning process required for approval of the Expressway Associates proposal.

Webster Associates and various local residents and landowners then brought separate lawsuits, under CPLR article 78 and for declaratory relief, which were consolidated. Supreme Court granted summary judgment dismissing the proceeding and action. The court also held that, although the individual petitioners-plaintiffs (hereinafter “plaintiffs”) had standing to bring both the action and proceeding, Webster Associates did not. The Appellate Division affirmed (Webster Assoc. v Town of Webster, 85 AD2d 882). This court dismissed plaintiffs’ appeal taken as of right on constitutional grounds (56 NY2d 644), and granted plaintiffs leave to appeal (57 NY2d 606). For the reasons that follow, this court now reverses.

On this appeal, plaintiffs assert three bases for reversal and invalidation of the town board’s action. First, they allege that the chairman of the town board should have been disqualified from voting on the rezoning because of his bias in favor of the proposal. Second, they claim that the provisions of SEQRA were not satisfied. Finally, plaintiffs argue that the planning board’s disapproval of the Expressway Associates proposal barred the town board from later approving the rezoning.

In claiming that the new chairman of the town board, Irving Kent, was biased, plaintiffs point to public statements by Kent before and after his election to the town board expressing support for the Expressway Associates project and criticism of the Webster Associates proposal. Plaintiffs rely on Matter of Tuxedo Conservation & Taxpayers Assn. v Town Bd. of Town of Tuxedo (69 AD2d 320) for the proposition that the prohibition against “conflicts of interest” outlined in article 18 of the General Municipal Law should be construed broadly to ensure fair determinations by public officials. The conflicts encompassed by article 18, however, involve pecuniary and material interests rather than expressions of personal opinion (see General Municipal Law, § 800, subd 3). Indeed, Tuxedo involved a town board member who voted to approve construction of a housing project while he was an officer of the advertising agency employed by the developer’s parent company. No such financial interest was alleged here. Moreover, Kent’s statements allegedly indicating bias in favor of the Expressway Associates plan actually show more that he was upset at the hasty manner in which, during its final days in office, the prior town board approved Webster Associates’ proposal. In addition, although Kent spoke in favor of the Expressway Associates plan, he also repeatedly stated that he would act in an objective manner and in the best interest of the town when passing on zoning matters as a member of the town board. The courts below were correct in concluding that plaintiffs failed to show any action on the part of Kent, individually, that would provide a basis for setting aside the action of the town board.

Plaintiffs also allege that Expressway Associates’ proposal failed to comply with the requirements of SEQRA. The only contention meriting discussion is that the draft environmental impact statement (EIS) submitted by Expressway Associates was fatally defective because it failed to discuss Webster Associates’ proposal as an alternative. SEQRA requires that an EIS discuss “alternatives to the proposed action” (ECL 8-0109, subd 2, par [d]). This discussion, in both the draft and final EIS, must contain “a description and evaluation of reasonable alternatives to the action which would achieve the same or similar objectives” (6 NYCRR 617.14 [f] [5]). It is undisputed that Expressway Associates did not include a discussion of Webster Associates’ proposal in its draft EIS, although it did include such a discussion in its final EIS.

In rejecting plaintiffs’ contention, the Appellate Division relied in part on its conclusion that inclusion of the alternative proposal in the final EIS cured its omission in the draft EIS. This conclusion is questionable. It is true that SEQRA requires that a final EIS be made available to the public at least 10 days before the subject proposal is acted upon (see ECL 8-0109, subd 6; 6 NYCRR 617.9 [a]). This abbreviated waiting period, however, is not a substitute for the extended period and comprehensive procedures for public and agency scrutiny of and comment on the draft EIS (see ECL 8-0109, subd 4; 6 NYCRR 617.8). Thus, the omission of a required item from a draft EIS cannot be cured simply by including the item in the final EIS.

Nonetheless, on the particular facts of this case, the Appellate Division was correct in holding that the omission of the Webster Associates alternative was not fatal. The purpose of requiring inclusion of reasonable alternatives to a proposed project is to aid the public and governmental bodies in assessing the relative costs and benefits of the proposal. To be meaningful, such an assessment must be based on an awareness of all reasonable options other than the proposed action. The degree of detail with which each alternative must be discussed will, of course, vary with the circumstances and nature of each proposal. With respect to the Webster Associates alternative, however, it is clear from the record that both the general public and the relevant public officials were thoroughly familiar with this alternative. The issue of which shopping center project should be constructed was central to the 1979 town board elections, which saw a new majority elected. The relative merits of the two proposals had been the subject of extensive publicity and of debate by public officials and the general public. Moreover, in its draft EIS, Expressway Associates stated that the primary issue of controversy was whether its proposal or that of Webster Associates should be approved. Finally, Webster Associates itself attended every public hearing on the EIS and commented extensively on it. Under these circumstances, the failure to discuss Webster Associates’ proposal in the draft EIS was not a fatal defect.

Plaintiffs’ final contention is that the town board was precluded from reviewing Expressway Associates’ rezoning application by the planning board’s earlier rejection of the proposal. The planning board disapproved the preliminary development plan for Expressway Associates’ shopping mall proposal on August 5, 1980. Notwithstanding this disapproval, the town board thereafter approved the preliminary development plan and passed a declaration of intent to rezone the Expressway Associates site to permit construction of the shopping center.

Once the planning board disapproved the preliminary development plan, the town board was without authority to subsequently approve the plan. The Town of Webster zoning ordinance expressly conditions town board consideration of such plans on the prior approval of the planning board. Section 59-26 (D) of the ordinance sets forth the procedures to be followed by the town board in considering a proposed planned unit development “[i]f the Planning Board approves the preliminary development plan.” If the planning board, after considering various technical factors set forth in the ordinance, rejects the proposed plan, no further consideration by the town board is authorized. The ordinance, in effect, establishes planning board approval as a condition precedent to town board action. Todd Mart v Town Bd. of Town of Webster (49 AD2d 12) does not dictate a contrary conclusion. In Todd Mart, the court held that the town board’s disapproval of a planned unit development after approval by the planning board was a legislative rather than administrative action. This holding in no way prevents the town board from conditioning its own consideration of a planned unit development on prior approval of the proposal by the planning board. Similarly, there is no statutory bar to the establishment of such a condition (see Town Law, § 274-a).

Thus, the town board’s action here was taken in violation of the town’s zoning ordinance and must be vacated. The planning board’s disapproval of Expressway Associates’ proposal foreclosed consideration of the proposal by the town board.

Accordingly, the order of the Appellate Division should be reversed, with costs, and judgment granted in favor of appellants declaring invalid the action of the Town Board of the Town of Webster approving the preliminary development plan of Expressway Associates and declaring its intent to rezone the site of the proposal.

Judges Jasen, Jones, Wachtler and Meyer concur; Judge Simons taking no part.

Order reversed, with costs, and judgment granted in favor of appellants in accordance with the opinion herein.

      . Webster Associates has not appealed to this court, and the determination that it did not have standing to bring the action and proceeding is therefore not reached.

      . Section 59-26 (D) states: “If the Planning Board approves the preliminary development plan, the Town Board shall hold a public hearing upon a proposition to zone the applicant’s lands for the proposed planned unit development. If after the public hearing the Town Board shall determine that the proposed development conforms to applicable state, county and town laws, ordinances and regulations, and is in the public interest, it shall adopt a resolution declaring its intention to zone the applicant’s property for the proposed planned unit development upon the applicant receiving approval of final plans therefor from the Planning Board and upon the developer meeting such additional conditions as the Town Board shall deem appropriate in each case and shall set forth in such resolution.”


source: Caselaw Access Project

author: Per Curiam.

license: Public Domain

text:
    Worth Distributors, Inc., Respondent, v Gertrude G. Latham et al., Appellants, et al., Defendants. (And a Third-Party Action.) (And 42 Other Actions.)
    Argued May 5, 1983;
    decided June 14, 1983

      POINTS OF COUNSEL

      Sheldon D. Camhy, Milton S. Gould and Willis H. Stephens, Jr., for Matilda Edwards, appellant.
    I. Liability imposed under section 78 of the Multiple Dwelling Law does not extend to property damage on or to the premises of commercial subtenants used exclusively for business purposes. (Fitzgerald v 667 Hotel Corp., 103 Misc 2d 80, mod sub nom. Worth Distrs. v Latham, 88 AD2d 814; Hollman v Kayell Realty Co., 120 Misc 546; Sticker v Seril Realty Corp., 256 NY 687; Schauf v City of New York, 23 Misc 2d 585; Robinson v Shapiro, 484 F Supp 91, 646 F2d 734; Al's 334 9th Ave. Corp. v Herbener, 275 App Div 904; Creston Burnside Holding Corp. v Ken-Ross Assoc., 47 Misc 2d 759; People v Scott, 26 NY2d 286; Altz v Leiberson, 233 NY 16.) II. The City of New York is not entitled to indemnification from the owners. (Green Bus Lines v Consolidated Mut. Ins. Co., 74 AD2d 136; Westchester Light. Co. v Westchester County Small Estates Corp., 278 NY 175; Putvin v Buffalo Elec. Co., 5 NY2d 447; McFall v Compagnie Maritime Belge [Lloyd Royal], 304 NY 314; Mauro v McCrindle, 70 AD2d 77, 52 NY2d 719; Dole v Dow Chem. Co., 30 NY2d 143; Kelly v Long Is. Light. Co., 31 NY2d 25; Rogers v Dorchester Assoc., 32 NY2d 553; Riviello v Waldron, 47 NY2d 297; Malette v Loblaws, Inc., 61 AD2d 1054.)

      William H. Morris and Gerald P. McMorrow for Gertrude G. Latham, appellant.
    I. Section 78 of the Multiple Dwelling Law is not applicable to property damage and loss of business use claims arising out of commercial occupancies. (Altz v Leiberson, 233 NY 16; Emigrant Ind. Sav. Bank v One Hundred Eight West Forty-Ninth St. Corp., 255 App Div 570, 280 NY 791; Gold v Springer, 206 NY 641; Weiner v Leroco Realty Corp., 279 NY 127.) II. There was a breach of duty by the city towards parties in a special relationship to it and such breach of duty constituted active negligence precluding common-law indemnification against Latham-Edwards. (Glanzer v Shepard, 233 NY 236; Florence v Goldberg, 44 NY2d 189; Motyka v City of Amsterdam, 15 NY2d 134; Schuster v City of New York, 5 NY2d 75; Smullen v City of New York, 28 NY2d 66; De Long v County of Erie, 89 AD2d 376; Dole v Dow Chem. Co., 30 NY2d 143; Rogers v Dorchester Assoc., 32 NY2d 553; McFall v Compagnie Maritime Beige [Lloyd Royal], 304 NY 314.)

      Frederick A. O. Schwarz, Jr., Corporation Counsel (Stephen J. McGrath and Leonard Koerner of counsel), for City of New York, appellant.
    The acts for which the City of New York was found liable in negligence may not form a predicate for liability against it; the judgment should be reversed, and all claims against the city should be dismissed. (Weiner v Metropolitan Transp. Auth., 55 NY2d 175; Riss v City of New York, 22 NY2d 579; Messineo v City of Amsterdam, 17 NY2d 523; Motyka v City of Amsterdam, 15 NY2d 134; Steitz v City of Beacon, 295 NY 51; Infosino v City of New York, 25 AD2d 841, 18 NY2d 583; Whitney v City of New York, 27 AD2d 528; Rivera v City of Amsterdam, 5 AD2d 637; Stranger v New York State Elec. & Gas Corp., 25 AD2d 169; Garrett v Town of Greece, 78 AD2d 773, 55 NY2d 774.)

      Stephen W. O’Leary for Worth Distributors, Inc., plaintiff-respondent.
    I. The city was properly held liable for the collapse resulting from gross negligence in performance of mandatory statutory duties conferred upon it in a situation where the city had actual knowledge of a hazardous and dangerous condition which would worsen if steps were not taken to correct it and where the city undertook to advise and act in the premises. (Matter of Alva S. S. Co. v City of New York, 405 F2d 962; Mazelis v Wallerstein, 51 AD2d 579; Gannon Personnel Agency v City of New York, 55 AD2d 548.) II. The owners are liable to Worth Distributors, Inc., at common law and pursuant to the Multiple Dwelling Law. (Lieberman v Washington Sq. Hotel Corp., 40 AD2d 647; Appel v Muller, 262 NY 278; Weiner v Leroco Realty Corp., 279 NY 127.)

      William C. Viets and Gary Alexander Stahl for Mercer Arts Center, Inc., plaintiff-respondent.
    I. Tort liability is imposed where a municipal corporation with actual knowledge of a specific dangerous condition fails to act in accordance with the duty of care it has specifically assumed. (Fitzgerald v 667 Hotel Corp., 103 Misc 2d 80, mod sub nom. Worth Distrs. v Latham, 88 AD2d 814; Riss v City of New York, 22 NY2d 579; Moch Co. v Rensselaer Water Co., 247 NY 160; Runkel v City of New York, 282 App Div 173; Glanzer v Shepard, 233 NY 236; Wolfv City of New York, 39 NY2d 568; Smullen v City of New York, 28 NY2d 66; Schuster v City of New York, 5 NY2d 75; Gannon Personnel Agency v City of New York, 103 Misc 2d 60.) II. The owners are liable to Mercer Arts Center under the Multiple Dwelling Law. (Altz v Lieberson, 233 NY 16; Matter of Roosevelt Raceway v Monaghan, 9 NY2d 293; Bender v Jamaica Hosp., 40 NY2d 560; Hollman v Kayell Realty Co., 120 Misc 546; Sticker v Seril Realty Corp., 256 NY 687; Creston Burnside Holding Corp. v Ken-Ross Assoc., 47 Misc 2d 759; Robinson v Shapiro, 484 F Supp 91, 646 F2d 734; Schauf v City of New York, 23 Misc 2d 585; Al’s 334 9th Ave. Corp. v Herbener, 275 App Div 904; Rogers v Dorchester Assoc., 32 NY2d 553.)

      Edgar T. Schleider for other plaintiffs-respondents.
    I. The facts support liability of defendant owners, Edwards and Latham, to all plaintiffs under the Multiple Dwelling Law. (Weiner v Leroco Realty Corp., 279 NY 127; Tkach v Montefiore Hosp. for Chronic Diseases, 264 App Div 135, 289 NY 387; Robinson v Shapiro, 484 F Supp 91; Hollman v Kayell Realty Co., 120 Misc 546; Sticker v Seril Realty Corp., 256 NY 687; Al's 334 9th Ave. Corp. v Herbener, 275 App Div 904.) II. Apart from statute, defendants Edwards and Latham, as owners, had a common-law duty of maintenance because of the reservation in the lease of the right to enter, inspect and repair the premises. (Antonsen v Bay Ridge Sav. Bank, 292 NY 143; Noble v Marx, 298 NY 106; Reische v Montgomery, 273 App Div 824; Abrams v Manhattan Dial Mfg. Co., 190 Misc 106; Guinee v Estate of Hoffman, Inc., 283 App Div 691; Swords v Edgar, 59 NY 28; Cullings v Goetz, 256 NY 287; People v Scott, 26 NY2d 286.) III. Appellant City of New York was clearly negligent in the performance of the duties of its building department; no unreasonable burden would be imposed by requiring due care in the facts of this case; the decisions denying duty are inapplicable to these facts. (Smullen v City of New

      York, 28 NY2d 66; Schuster v City of New York, 5 NY2d 75; Gannon Personnel Agency v City of New York, 103 Misc 2d 60, 81 AD2d 755.)

      Frederick A. O. Schwarz, Jr., Corporation Counsel (Stephen J. McGrath and Leonard Koerner of counsel), for City of New York, respondent.
    I. As this court held in O’Connor v City of New York (58 NY2d 184), a municipality may not be cast in liability for breach of a general statutory duty. As thé city did not have a special relationship with any party to this action, all claims against it must be dismissed. (Gannon Personnel Agency v City of New York, 81 AD2d 755, revd sub nom. O’Connor v City of New York, 58 NY2d 184; Sanchez v Village of Liberty, 42 NY2d 876, 44 NY2d 817; Smullen v City of New York, 28 NY2d 66; Garrett v Holiday Inns, 58 NY2d 253; Motyka v City of Amsterdam, 15 NY2d 134; Garrett v Town of Greece, 55 NY2d 774; Florence v Goldberg, 44 NY2d 189.) II. Should this court determine that the city may be held liable to plaintiffs, the trial court’s award of indemnification to the city against defendant owners Edwards and Latham, which was affirmed by the court below, should not be disturbed. (Mazelis v Wallerstein, 51 AD2d 579; McDermott v City of New York, 50 NY2d 211; Runkel v Homelsky, 286 App Div 1101, 3 NY2d 857; Dole v Dow Chem. Co., 30 NY2d 143; Rogers v Dorchester, 32 NY2d 553; Crawford v Blitman Constr. Corp., 1 AD2d 398; D’Ambrosio v City of New York, 55 NY2d 454.)
   OPINION OF THE COURT

Per Curiam.

This case arose out of the collapse of a portion of the Broadway Central Hotel building in lower Manhattan on August 3, 1973. Four persons were killed, many others were injured, and a number of businesses suffered extensive property damage.

Forty-three actions to recover for wrongful death, personal injury, and property damage were consolidated. After a nonjury trial, Supreme Court held that the owners of the building were 25% liable, the net lessee was 45% liable, and the City of New York was 30% liable. The city was held to be entitled to indemnification by the owners, and its liability for property damage limited to the value of the property that could have been removed from the building had the city taken prompt action. The court found the city liable because of its department of buildings’ failure to ensure that the building’s dangerous condition was remedied before it collapsed. The Appellate Division modified by granting the city judgment on its indemnification cross claim against the net lessee.

The city should not have been held liable. As this court recently reaffirmed, “it has long been the rule in this State that, in the absence of some special relationship creating a duty to exercise care for the benefi t of particular individuals, liability may not be imposed on a municipality for failure to enforce a statute or regulation” (O’Connor v City of New York, 58 NY2d 184, 192). Here the city building department failed to enforce provisions of the city’s Administrative Code relating to building safety, even though its employees knew of the dangerous structural conditions in the building. These regulations were designed to protect the general public, however, and no special relationship has been shown that would establish a municipal duty to the instant plaintiffs in particular. Thus, the complaints should be dismissed as against the City of New York, and apportionment of liability among the remaining defendants redetermined accordingly.

Appellants Latham and Edwards, the building’s owners, assert that it was also error to impose liability against them. They argue that violation of section 78 of the Multiple Dwelling Law, which requires an owner of a multiple dwelling to keep its building in good repair, cannot form the basis for liability to commercial tenants in the building. It is not disputed that the building, which contained residential units, was a multiple dwelling. Section 78 places on the owner the duty to see that “[ejvery multiple dwelling, including its roof or roofs, and every part thereof and the lot upon which it is situated, shall be kept in good repair.” The defect in this case involved a structural problem — an ever-widening crack in a major weight-bearing wall — that was central to the entire building. Likewise, the resulting collapse obviously affected the structure as a whole. The dangerous condition had a direct and unquestionable “relation to the maintenance of the building as a tenantable habitation” (Altz v Leiberson, 233 NY 16, 18). In such a case, the owner’s duty to repair the defect is not affected by the use for commercial purposes of portions of the structurally unsafe building (see Sticker v Seril Realty Corp., 256 NY 687).

Although an owner will not be held liable under section 78 where it has completely parted with possession and control of the building, the owners here reserved the right under the terms of the net lease to enter for inspection and repairs. This reservation constituted a sufficient retention of control to subject the owners to liability (see Tkach v Montefiore Hosp. for Chronic Diseases, 289 NY 387, 390; Weiner v Leroco Realty Corp., 279 NY 127, 130; Appel v Muller, 262 NY 278, 283-284). In addition, there was an affirmed finding below that the owners had both constructive notice of the long-standing defect and, through their agent, the husband of one of the owners, actual notice of the dangerous condition. There was, therefore, a sufficient basis for the trial court’s finding of liability against the owners.

Accordingly, the order of the Appellate Division should be modified, with costs to the City of New York against plaintiffs, and the case remitted to Supreme Court, New York County, for further proceedings in accordance with this opinion and, as so modified, affirmed, with costs to plaintiffs against appellants Latham and Edwards. The question certified is answered in the negative.

Chief Judge Cooke and Judges Jasen, Jones, Wachtler, Meyer and Simons concur in Per Curiam opinion.

Order modified, etc.

       Subdivision 4 of section 4 of the Multiple Dwelling Law defines a “dwelling” as “any building or structure or portion thereof which is occupied in whole or in part as the home, residence or sleeping place of one or more human beings.” Subdivision 7 of section 4 defines a “multiple dwelling”, in relevant part, as follows: “a dwelling which is either rented, leased, let or hired out, to be occupied, or is occupied as the residence or home of three or more families living independently of each other * * * A ‘multiple dwelling’ shall not be deemed to include a hospital, convent, monastery, asylum or public institution, or a fireproof building used wholly for commercial purposes except for not more than one janitor’s apartment and not more than one penthouse occupied by not more than two families” (emphasis supplied).


author: Simons, J. Jasen, J. Jones, J.

text:
    Otto F. Schumacher et al., Appellants, v Richards Shear Company, Inc., Appellant, and Logemann Brothers Company, Inc., Respondent.
    Argued March 24, 1983;
    decided June 14, 1983

      POINTS OF COUNSEL

      James L. Chivers and James S. Gleason for Otto F. Schumacher and another, appellants.
    I. The rule of the Hartford Acc. case relied upon by the court below should not be applied to a personal injury products liability action. (Hartford Acc. & Ind. Co. v Canron, Inc., 43 NY2d 823; Codling v Paglia, 32 NY2d 330.) II. By purchasing Richards Shear’s product line, Logemann incurred strict products liability for personal injury claims arising from sales prior to the purchase thereof. (Cyr v Offen & Co., 501 F2d 1145; Milan Assoc. v North Ave. Dev. Corp., 42 NY2d 482; Bichler v Lilly & Co., 55 NY2d 571; Caprara v Chrysler Corp., 52 NY2d 114; Knapp v North Amer. Rockwell Corp., 506 F2d 361, 421 US 965.) III. The court should adopt the definition of “continuation” under the traditional approach to successor liability. (Cyr v Offen & Co., 501 F2d 1145.) IV. Logemann should be estopped from denying liability for plaintiff’s injuries. V. Logemann had a duty to warn of the foreseeable dangers involved in the use of the shear and did not give any such warnings. (Prata v National R. R. Passenger Corp., 70 AD2d 114; Shane v Hobam, Inc., 332 F Supp 526; Gee v Tenneco, Inc., 615 F2d 857; Trans Caribbean Airways v Lockheed Aircraft Service-International, 14 AD2d 749.)

      James C. Gocker for Richards Shear Company, Inc., appellant.
    I. The policies underlying strict products liability require that Logemann be held responsible, as a successor corporation, for plaintiff’s injuries. (Hartford Acc. & Ind. Co. v Canron, Inc., 43 NY2d 823; Martin v Dierck Equip. Co., 43 NY2d 583; Victorson v Bock Laundry Mach. Co., 37 NY2d 395; Codling v Paglia, 32 NY2d 330; Caprara v Chrysler Corp., 52 NY2d 114; Bichler v Lilly & Co., 55 NY2d 571.) II. Logemann is liable for failure to warn of the dangerous condition of the shears, irrespective of its liability as a successor corporation. (McLaughlin v Mine Safety Appliances Co., 11 NY2d 62; Genesee County Patrons Fire Relief Assn. v Sonneborn Sons, 263 NY 463; Young v Elmira Tr. Mix, 52 AD2d 202; Torrogrossa v Towmotor Co., 44 NY2d 709; Micallef v Miehle Co., Div. of Miehle-Goss Dexter, 39 NY2d 376; Leannais v Cincinnati, Inc., 480 F Supp 286; Tucker v Paxson Mach. Co., 645 F2d 620; Gee v Tenneco, Inc., 615 F2d 857; Travis v Harris Corp., 565 F2d 443; Shane v Hobam, Inc., 332 F Supp 526.)

      Thomas J. Hickey for respondent.
    I. The traditional successor corporation criteria for liability should be maintained in the State of New York and under those criteria Logemann Brothers Company, Inc., is not responsible to either of appellants. (Sawyer v New York Seven-up Bottling Co., 63 AD2d 893; Codling v Paglia, 32 NY2d 330; Hartford Acc. & Ind. Co. v Canron, Inc., 43 NY2d 823; Bichler v Lilly

      & Co., 55 NY2d 571; Leannais v Cincinnati, Inc., 565 F2d 437; Travis v Harris Corp., 565 F2d 443; Woody v Combustion Eng., 463 F Supp 817.) II. Any change in the traditional rule should be made by the Legislature. (Codling v Paglia, 32 NY2d 330; Leannais v Cincinnati, 565 F2d 437; Travis v Harris Corp., 565 F2d 443.) III. Fairness requires that any change in the traditional successor corporation liability rule be prospective in nature. IV. An application of the “continuation of enterprise”, “product line”, and “estoppel” criteria to the facts of this case show that Logemann Brothers is not liable to appellants. (Hartford Acc. & Ind. Co. v Canron, Inc., 43 NY2d 823; Cyr v Offen & Co., 501 F2d 1145; Gee v Tenneco, Inc., 615 F2d 857; Jacobs v Lakewood Aircraft Serv., 512 F Supp 176; Savini v Kent Mach. Works, 525 F Supp 711; Tucker v Paxson Mach. Co., 645 F2d 620.) V. Logemann Brothers had no duty to warn in this case. (Leannais v Cincinnati, Inc., 565 F2d 437; Shane v Hobam, Inc., 332 F Supp 526; Travis v Harris Corp., 565 F2d 443; Gee v Tenneco, Inc., 615 F2d 857; Chadwick v Air Reduction Co., 239 F Supp 247.) VI. There is no need for further discovery.
   OPINION OF THE COURT

Simons, J.

Plaintiff Otto F. Schumacher was blinded in one eye when he was struck by a scrap of flying metal ejected by a model 300-ton shearing machine he was operating at work. He and his wife sue defendant Richards Shear Company, Inc., who manufactured and sold the machine to his employer, and defendant Logemann Brothers Company, Inc., who subsequently purchased substantially all of Richards’ assets. They seek to recover compensatory and derivative damages for the injury on theories of strict products liability and negligence. Richards Shear has interposed a cross claim against Logemann. The issue on this appeal is whether defendant Logemann is liable to plaintiff for the tortious conduct of Richards Shear or for its own conduct subsequent to acquiring Richards Shear’s assets.

Defendant Logemann maintains that it is not liable in an action in strict products liability as a successor of Richards Shear under the rule of Hartford Acc. & Ind. Co. v Canron, Inc. (43 NY2d 823) or under extensions of that rule recognized in other jurisdictions (see Ray v Alad Corp., 19 Cal 3d 22; Ramirez v Amsted Inds., 86 NJ 332 [the product line theory]; and see Turner v Bituminous Cas. Co., 397 Mich 406 [the “continuity of enterprise” theory]), and that it cannot be held liable for its own nonfeasance because it had no common-law duty to warn plaintiff of any defect in the machine. It moved for summary judgment dismissing the complaint and the cross claim. Special Term granted the motion and the Appellate Division affirmed with two Judges dissenting. The dissenters found factual issues warranting a trial on whether defendant Logemann’s failure to warn plaintiff’s employer of danger from the machine constituted negligence.

There should be a modification. Defendant Logemann’s motion for summary judgment should be granted dismissing the first cause of action in strict products liability and denied insofar as it seeks dismissal of the cause of action alleging a negligent failure to warn. We hold that the rule in Hartford Acc. & Ind. Co. v Canron, Inc. (supra) applies to personal injury cases and bars recovery from defendant Logemann for any fault of Richards Shear. Moreover, there are no facts alleged which warrant our consideration or application of the “product line” or “continuity of enterprise” theories extending liability to a successor corporation. The court is also unanimous in its recognition that a negligence cause of action for failure to warn may exist on behalf of an employee injured by an unsafe machine against a manufacturing corporation which subsequently acquires all or part of the assets of the manufacturer of the machine. The duty arises because of the relationship between the acquiring corporation and the purchaser of the machinery, plaintiff’s employer in this case, and because of the knowledge which the acquiring corporation possesses or has reason to possess concerning the risk of personal injury created by operation of the machine without a safety guard. We disagree only on whether evidence submitted by plaintiff in response to defendant’s motion for summary judgment is sufficient to create an issue of fact. A majority of the court believes it is. Accordingly, Logemann’s motion for summary judgment should have been denied as to the failure to warn cause of action.

Plaintiff, an employee of Wallace Steel and Supply Company, was injured on April 17,1978 when he was struck by a piece of metal thrown from a hydraulic shearing machine while he was operating it. The machine was purchased by plaintiff’s employer from Richards Shear in January, 1964. It is plaintiff’s contention that the machine was defective in design and manufacture because it did not have a guard to deflect metal ejected from the machine, and that Richards Shear and Logemann should have taken measures to correct the existing dangerous condition or have alerted users of it.

Logemann’s status as a “successor” arises principally from a “License and Sales Agreement” dated January, 1968 in which Richards Shear granted to Logemann, among other things, the exclusive right to manufacture and sell Richards Shear products, improvements, and inventory, and to use the trade name “Richards”. In substance, the transaction was a sale of all assets because thereafter Richards Shear discontinued its business of selling, manufacturing and servicing shears. Currently, it has no liability insurance, employees, or business volume and it has few assets.

In February, 1968, approximately four years after plaintiff’s employer purchased the machine from Richards Shear, Logemann contacted plaintiff’s employer, Wallace Steel, and notified it of the acquisition of the Richards Shear product line along with the inventories and blueprints for new shears. In July, 1968, a former Richards Shear serviceman was sent by Logemann to service and check Wallace Steel’s machine. Thereafter, in April, 1976, Logemann again contacted Wallace Steel and solicited business with respect to the shear machine, made assurances concerning service, and notified Wallace Steel of its acquisition of another former Richards Shear serviceman. Logemann also supplied Wallace Steel with replacement parts for the machine.

It is the general rule that a corporation which acquires the assets of another is not liable for the torts of its predecessor (19 CJS, Corporations, § 1380; 15 Fletcher’s Cyclopedia Corporations [rev ed], § 7122). There are exceptions and we stated those generally recognized in Hartford Acc. & Ind. Co. v Canron, Inc. (43 NY2d 823, 825, supra). A corporation may be held liable for the torts of its predecessor if (1) it expressly or impliedly assumed the predecessor’s tort liability, (2) there was a consolidation or merger of seller and purchaser, (3) the purchasing corporation was a mere continuation of the selling corporation, or (4) the transaction is entered into fraudulently to escape such obligations. Nothing in the record suggests liability under any of these theories. The only arguable basis upon which plaintiffs can predicate a finding of successor liability is to characterize Logemann as a “mere continuation” of Richards Shear Company. The exception refers to corporate reorganization, however, where only one corporation survives the transaction; the predecessor corporation must be extinguished (see McKee v Harris-Seybold Co., 109 NJ Super 555; Ladjevardian v Laidlaw-Coggeshall, Inc., 431 F Supp 834, 839). The cases cited by plaintiff do not hold otherwise (Cyr v Offen & Co., 501 F2d 1145; Turner v Bituminous Cas. Co., 397 Mich 406, supra). Since Richards Shear survived the instant purchase agreement as a distinct, albeit meager, entity, the Appellate Division prop^ erly concluded that Logemann cannot be considered a mere continuation of Richards Shear.

Plaintiffs also contend that liability may be imposed on defendant Logemann for strict products liability based upon recent decisions in other jurisdictions which have extended. successor liability. The courts that have addressed the issue impose strict products liability on a successor corporation, based upon a balancing approach, where there has been a basic “continuity of the enterprise” of the seller corporation (Turner v Bituminous Cas. Co., 397 Mich 406, supra), an expansion of the traditional merger or consolidation exceptions, or where the successor corporation continues to produce the predecessor’s product in the same plant (Ray v Alad Corp., 19 Cal 3d 22, supra, [“product line” exception]). We do not adopt the rule of either case but note that both are factually distinguishable in any event. Applying the test adopted by the Michigan Supreme Court in Turner to the instant facts, plaintiffs would have no claim against defendant Logemann as a matter of law because the factors manifesting continuity of corporate responsibility, such as continuity of management, key personnel, and physical location are not present in this case. Logemann did not purchase the manufacturing plant or equipment of Richards Shear and except for the hiring, of two servicemen, no employees of Richards Shear became employees of Logemann. A stronger claim may be based upon the “product line” theory developed by the California Supreme Court in Ray v Alad Corp. (supra). In Ray, the court, noting its rule on successor liability (which is the same as New York’s), stated that where none of the four exceptions for imposing liability were present, it would consider the policies underlying strict tort liability for defective products to determine whether an exception to the general rules insulating the defendant therein from liability were warranted. These policies included the availability of remedies for the injured plaintiff as well as the fairness of requiring the successor to assume a responsibility for defective products. However, the Ray case presented unique facts which are clearly distinguishable from the present case and the California court’s policy decision was obviously influenced by them. Those circumstances, the dissolution of the prior corporation shortly after the purchase of its equipment and the use by the successor corporation of essentially the same factory, name and office personnel after the transactions to produce the same product, are not present in this case.

Logemann may be answerable to plaintiffs, however, apart from liability resting 'on its status as a successor corporation. Under general tort rules, a person may be negligent because he or she fails to warn another of known dangers or, in some cases, of those dangers which he had reason to know. The duty commonly is imposed because of some special relationship, frequently economic, not only for those bearing special responsibilities such as common carriers and innkeepers, but on defendants generally, e.g., owners and occupiers of land (see Restatement, Torts 2d, § 356 [landlord and tenant]; Krause v Alper, 4 NY2d 518; Restatement, Torts 2d, § 373 [vendor and vendee]; Velez v City of New York, 45 AD2d 887 [duty of owner to warn one on premises]; and see, generally, 2 Harper and James, Torts, §§ 27.15, 27.16; Prosser, Torts [4th ed], § 57 et seq.), on operators of motor vehicles to their passengers (see Higgins v Mason, 255 NY 104, 109), bailors to their bailees (see Knapp v Gould Auto. Co., 252 App Div 430, 433), and suppliers and manufacturers of chattels (see, generally, Restatement, Torts 2d, § 388; 2 Harper and James, Torts, §28.7; 1 Weinberger, NY Products Liability, § 18.18 et seq.; 1 NY PJI2d, p 364). As Professor Prosser has stated: “[d]uring the last century, liability for ‘nonfeasance’ has been extended still further to a limited group of relations, in which custom, public sentiment and views of social policy have led the courts to find a duty of affirmative action. It is not likely that this process of extension has ended. For the most part such a duty has been imposed where the relation is of some actual or potential economic advantage to the defendant, and the expected benefit justifies the requirement of special obligations” (Prosser, Torts [4th ed], § 56, p 339). Consistent with that observation, several recent Federal cases have recognized that a successor corporation may have an independent duty to warn under circumstances similar to those present in this case (see Leannais v Cincinnati, Inc., 565 F2d 437; and cf. Tucker v Paxson Mach. Co., 645 F2d 620; Gee v Tenneco, Inc., 615 F2d 857; Travis v Harris Corp., 565 F2d 443). The courts focused upon the relationship between the defendant “successor” corporation and the customers of the predecessor and the actual or potential economic advantage to the defendant successor corporation. Several factors may be considered in determining whether there exists a sufficient link to create a duty to warn, among them “[succession to a predecessor’s service contracts, coverage of the particular machine under a service contract, service of that machine by the purchaser corporation, [and] a purchaser corporation’s knowledge of defects and of the location or owner of that machine” (Travis v Harris Corp., 565 F2d 443, 449, supra).

In Travis, plaintiff was injured in 1973 by a die press machine which his employer had purchased a year before the injury. The machine had been manufactured in 1957 by C. B. Sheridan Company (Old Sheridan), sold to Inland Container Corporation in that year, and then purchased by plaintiff’s employer. Defendant Harris Corporation purchased all the assets of Old Sheridan Company in 1964. When plaintiff sued defendant Harris Corporation, the court acknowledged his theory of liability based upon a duty to warn but rejected his contention that Harris had such a duty to his employer (565 F2d 443, 448). The only fact offered in support of the claim was a single service call by defendant’s employee to Inland, a prior purchaser of the machine, not plaintiff’s employer. In Leannais v Cincinnati, Inc. (supra), however, the same court found a duty to warn when the machine which injured plaintiff was manufactured and sold by defendant’s predecessor in 1964, defendant acquired the assets in 1967, and plaintiff was injured in 1973. Despite the expressed refusal of the successor to assume liability for the predecessor’s torts, the court found an issue of fact on the relationship of the successor to the predecessor’s customers, the knowledge of their identity and the equipment they possessed and the economic benefit to the successor.

The Appellate Division here ruled as a matter of law that no duty to warn should be imposed upon Logemann as a purchaser corporation. Applying traditional common-law tort concepts, it noted that 14 years had elapsed between the purchase and the date of plaintiff’s injury and that there was a lack of foreseeability because of this lapse of time. Thus, it held that there was no lack of reasonable care under the circumstances. Certainly, the passage of time is relevant to the duty issue, but it is not dispositive (see Leannais v Cincinnati, Inc., 565 F2d 437, 442, supra).

There is sufficient evidence in this record of contacts between Logemann and Wallace Steel to defeat the motion for summary judgment (see Wilson v Fare Well Corp., 140 NJ Super 476; Shane v Hobam, Inc., 332 F Supp 526). Other than the single service call (which, standing alone, might not be enough to create a duty to warn), Logemann knew of the location and owner of the machine and actively offered to service it. Moreover, Logemann held itself out on at least two occasions as having expertise in the product line it had acquired from Richards Shear. Although Logemann apparently did not formally assume Richards Shear’s service contracts, it did, in fact, offer to service the machine to the potential economic advantage of both parties. On the trial plaintiff will be required to establish that a duty to warn existed based upon these contacts between defendant Logemann and plaintiff’s employer. Its liability, if any, arises out of this relationship, not because of any “successor” liability or because it acted as a serviceman or repairman for the machine.

On the issue of knowledge, Logemann claims that an isolated service call did not bring the absence of a protective guard to its attention. However, there is evidence on the record to indicate that this defect was open and notorious based on prevailing industry standards. This was sufficient to create a jury question on the issue of what Logemann knew or had reason to know (see Restatement, Torts 2d, § 401, Comment i).

One of the dissenters contends that as a matter of law there was no duty to warn because the alleged defect was open and notorious and that fact alone negated the duty to warn (at p 254). That theory of liability rests upon the distinction between latent and patent defects which we rejected in Micallef v Miehle Co., Div. of Miehle-Goss Dexter (39 NY2d 376).

The order of the Appellate Division should be modified by denying defendant’s motion to grant summary judgment as to plaintiff’s second cause of action sounding in negligence and as so modified affirmed.

Jasen, J.

(dissenting). The court today has fashioned a remedy for a person injured due to an allegedly defectively designed product against a corporation acquiring the assets of the manufacturer of the product on the theory of negligence by imposing upon the successor corporation an independent duty to warn based upon a “special relationship”. Inasmuch as I do not believe that the plaintiff has established any cause of action against the successor corporation, even under common-law negligence principles, I must respectfully dissent.

I do, however, agree with the majority that none of the four exceptions to the general rule that a corporation acquiring the assets of another does not acquire the tort liability of the predecessor corporation are applicable in this case. (At pp 242-243, 245; Hartford Acc. & Ind. Co. v Canron, Inc., 43 NY2d 823; Leannais v Cincinnati, Inc., 565 F2d 437, 439.) Similarly, on the facts as presented, I agree that there is no basis for adopting either the continuation of enterprise theory (at pp 243, 245; Turner v Bituminous Cas. Co., 397 Mich 406; Travis v Harris Corp., 565 F2d 443, 446-447; Tucker v Paxson Mach. Co., 645 F2d 620, 625-626) or the products line exception to impute liability to Logemann as a successor corporation (at pp 242-243, 245-246; Ray v Alad Corp., 19 Cal 3d 22; Leannais v Cincinnati Inc., supra, at p 440; Tucker v Paxson Mach. Co., supra, at pp 624-625; Phillips, Products Liability of Successor Corporations: A Corporate and Commercial Law Perspective, 11 Hofstra L Rev 249.)

While I am also in agreement with the majority that “[u]nder general tort rules, a person may be negligent because he or she fails to warn another of known dangers or, in some cases, of those dangers which he had reason to know” (at p 246), I do not believe the rule should be applied to this case where the plaintiff has failed to allege, as required under general tort principles, that the alleged breach of duty to warn was the proximate cause of his injury. Under general tort law, it is necessary to allege and establish all the elements of a cause of action sounding in negligence — that is, that the defendant owed the plaintiff a duty which it breached and that that breach was the proximate cause of plaintiff’s injury. (Dillard & Hart, Product Liability: Directions for Use and the Duty to Warn, 41 Va L Rev 145.)

First, I address the majority’s imposition of a duty to warn of the dangers inherent in the shearing machine involved in this case on defendant Logemann because of what it terms a special relationship. While the majority concludes that the “plaintiff will be required to establish that a duty to warn existed. based upon these contacts between defendant Logemann and plaintiff’s employer” (at p 249), the factors cited also relate to the relationship between the successor and predecessor corporation. (Leannais v Cincinnati, Inc., supra, at p 442; Note, Products Liability: Successor Corporations: Liability for Defective Products, 35 Okla L Rev 846, 857.) An inquiry based on those factors appears to question whether there was a de facto assumption of the predecessor’s liability by the successor corporation. Two factors are key: (1) whether there was an actual succession to the predecessor’s service contracts, including questioning whether service was done on the machine in question; and (2) whether the successor corporation knew of the design defect and the location and ownership of the machine. (Tucker v Paxson Mach. Co., 645 F2d 620, 626, supra.) The latter is particularly pertinent to the question of duty because, in the words of the Federal courts which have developed this theory: “Absent knowledge of defects, nothing is known to warn against.” (Travis v Harris Corp., 565 F2d 443, 449, supra.)

I recognize that the majority also states that liability is to be imposed only because of the relationship between Logemann and Wallace Steel (plaintiff’s employer) and not on the basis of any successor theory or “because it [Logemann] acted as a serviceman or repairman for the machine.” (At p 249.) But if in fact neither theory will serve to establish the special relationship necessary to impose a duty on Logemann, I fail to perceive what basis there is for creating this special relationship, especially in this case where Logemann’s only direct contact with Wallace Steel was one service call.

The majority’s emphasis on service contracts I find all the more troublesome because Logemann is claimed to have negligently carried out its duty to warn of a design defect. A relationship established by a service contract would, I believe, more properly impose liability for detecting and warning of a manufacturing defect which might be detected during service work. To impose liability for detecting and warning of design defects may well have the effect of imposing a greater liability on a serviceman, whose knowledge and familiarity with the product is much more limited, than on the manufacturer which designed the machine and in the course of re-evaluating and improving its product line is more likely to become aware of defects and methods to improve or correct them. To impose a continuing duty to warn on the manufacturer is consistent with the theory behind strict products liability of imposing liability on the party which is most capable of correcting the defect and is in a position to keep defective products off the market. Imposing a duty to «warn based on negligence on a party in Logemann’s position, on the other hand, will not make the manufacturer more responsible or keep defective products off the market. Instead, it will put those who service machines under a continuing duty to warn of defects which may only be learned of through extensive and continuing studies in the current state of the art in any industry in which it services products produced by that industry. There is no rationale for imposing a duty to become and remain aware of all the technical developments in a given industry merely because one has assumed the responsibility of servicing another’s product. (Bichler v Willing, 58 AD2d 331; Restatement, Torts 2d, § 402A, Comment j.)

The majority appears to hold that a special relationship may exist on the basis of public sentiment or social policy. (At p 247, citing Prosser, Torts [4th edj, § 56, p 339.) I assume that the majority is reacting to its perception of public sentiment or out of concerns of social policy, apparently on a theory that parties like Logemann derive significant benefit from their economic relationship with companies like Wallace Steel which justifies imposing liability. I cannot agree with this for two reasons. First, as to social policy, I assume the concern would be that the plaintiff may be left completely without a remedy if the successor corporation is not liable under some theory. (Ray v Alad Corp., 19 Cal 3d 22, supra.) That reasoning I find unpersuasive in this case because plaintiff as an employee injured while performing his job is clearly eligible for workers’ compensation benefits, as well as any benefits from accident, health and disability insurance policies which may be available to compensate him for his injury. In addition, plaintiff’s claims against the manufacturer of the machine involved, Richards Shear, which sound in both strict products liability and negligence, remain pending and will provide plaintiff recourse regardless of the disposition of this appeal.

Secondly, I find it unreasonable because the clear implication of this decision is that any economic relationship will be sufficient to impose liability, rather than a significant economic relationship. Certainly a mere economic exchange would be insufficient to establish a special relationship; otherwise all vendors and patrons could be said to have a special relationship. Indeed, the very words “special relationship” indicate that a unique situation of economic interrelation must exist before a special relationship will arise. As noted in Gee v Tenneco, Inc. (615 F2d 857, 866), “[t]he rationale of these decisions is consistent with a benefit/burden analysis, and also imposes a burden which the manufacturer can realistically bear.” So, too, before the burden should be placed on one in Logemann’s position, a substantial showing of benefit should be required. Thus, in deciding whether a special relationship exists on the basis of an economic interrelation, courts have so held only in situations evidencing an on-going relationship which was of both immediate and potentially greater future economic advantage to the party which would be held liable. (Compare Leannais v Cincinnati, Inc., 565 F2d 437, supra, with Tucker v Paxson Mach. Co., 645 F2d 620, supra.)

Accepting arguendo the concept of a special relationship, I do not believe the facts as alleged support the conclusion that a special relationship existed in this case. The affidavits indicate at best an extremely limited relationship between Logemann and the plaintiff. On two occasions, Logemann wrote to plaintiff’s employer, Wallace Steel, soliciting any service work on Richards Shear produced equipment. There was only one actual service call by Logemann and that was not related to the cutting device involved in this lawsuit, but to repairs on the power unit of the hydraulic shears. Unlike the situation in Leannais v Cincinnati, Inc. (supra), there was no assumption of service obligations by Logemann and no indication that the knowledge Logemann had of where Richards Shear’s former customers were and the age of any customers’ machinery had or would, in any way, aid Logemann in obtaining future business. This is especially so because Logemann never undertook to produce machines in the Richards Shear line and there is no indication that any inventory of this type of machine was turned over pursuant to the agreement between Logemann and Richards Shear. I find it difficult to agree that such limited contact is sufficient, as a matter of law, to establish a special relationship based on economic interrelation. Even assuming that Logemann should incur some liability for its failure to warn, certainly the liability imposed under a negligence cause of action should be no greater than that which would have been imposed on the original manufacturer.

At common law, the duty to warn reached only to hidden dangers or because the product was inherently dangerous in a way which would likely remain undetected by the consumer. On the other hand, if the danger was generally known or obvious to an observer, there was no duty to warn imposed at common law. (Rosebrock v General Elec. Co., 236 NY 227, 238; Thomas v Winchester, 6 NY 397; Ann., 76 ALR2d 9, § 9, pp 28-37.)

This basic rule was incorporated in section 388 of the Restatement of Torts, Second. The rule as stated by the Appellate Division in Young v Elmira Tr. Mix (52 AD2d 202, 204-205) is that “a supplier is subject to liability where the supplier has reason to know that the product he furnishes is likely to be dangerous for the use for which it is supplied; has no reason to believe the user will realize its dangerous condition; and fails to exercise reasonable care to inform the user of the facts which make the product likely to be dangerous.”

Comment k under section 388 of the Restatement further clarifies this rule by stating that the duty to warn exists “only if [the supplier] has no reason to expect that those for whose use the chattel is supplied will discover its condition and realize the danger involved. It is not necessary for the supplier to inform those for whose use the chattel is supplied of a condition which a mere casual looking over will disclose” unless the supplier has reason to believe that even a casual observation will not be made or that special expertise would be required to perceive the danger. As even the majority described the failure to include a safety guard on this machine was an “open and notorious” danger, I believe this is a case in which the court could properly conclude, as a matter of law, that there was no duty to warn. (Lancaster Silo & Block Co. v Northern Propane Gas Co., 75 AD2d 55, 65.)

Indeed, causes of action for failure to warn are so similar, whether sounding in negligence or strict products, one Appellate Division court held that liability even under strict products would not exist unless the plaintiff would not have discovered the defect and apprehended its danger. (Wolfgruber v Upjohn Co., 72 AD2d 59, affd 52 NY2d 768, citing Codling v Paglia, 32 NY2d 330.)

Moreover, it is precisely because the cause of action being recognized is failure to warn that the majority’s reliance on the abandonment by this court of the latent and patent defect distinction is misplaced. Micallef v Miehle Co., Div. of Miehle-Goss Dexter (39 NY2d 376) addresses itself to the manufacturer’s duty to design a reasonably safe machine. (Supra, at pp 385-386.) Because the issue in a design defect case is whether the “product, as designed, was not reasonably safe” (Voss v Black & Decker Mfg. Co., 59 NY2d 102), the distinction between latent and patent defects was no longer viable once strict products liability was recognized as a cause of action in this State.

So, too, the advent of comparative negligence, still a valid concern even under strict products liability, eroded the rationale behind latent and patent defects because even if the plaintiff could be found to have been aware of the risk and assumed it or to have caused in part his injury by his misuse of the product, recovery against the manufacturer would not be barred. (Micallef v Miehle Co., Div. of Miehle-Goss Dexter, supra, at p 384.)

Duty to warn, on the other hand, is imposed in order to provide some protection when a product must remain dangerous in order to retain its utility. The function of the warning is to make the product reasonably safe by alerting the user to the inherent danger of the product or the danger in misuse of the product. To say that there is no duty to warn when the defect is obvious does not conflict with the obligation imposed by Codling v Paglia (32 NY2d 330, supra) on the manufacturer “to exercise that degree of care in his plan or design so as to avoid any unreasonable risk of harm to anyone who is likely to be exposed to the danger when the product is used in the manner for which the product was intended * * * as well as an unintended yet reasonably foreseeable use”. (Micallef v Miehle Co., Div. of Miehle-Goss Dexter, 39 NY2d 376, 385-386 supra [citations omitted].) The duty to warn being conceptually different from the duty to properly design or manufacture a product, it does not necessarily follow that the elimination of the latent and patent defect distinction for causes of action based on negligent design or manufacture imposes a duty to warn when a defect is obvious, as I believe recent decisions have held. (Wolfgruber v Upjohn Co., 72 AD2d 59, affd 52 NY2d 768, supra.) This is all the more so when the cause of action alleged is negligence, rather than strict products liability.

Even if it were to be assumed that the alleged facts did justify finding a special relationship between the plaintiff and defendant Logemann and that the defect was not so open and notorious so as to negate the duty to warn, I would still be compelled to disagree with my colleagues because, as stated before, I do not believe proximate cause, another necessary element to establish liability under the common-law theory of a duty to warn, has been pleaded or could be established. (Ann., 76 ALR2d 9, at pp 66-72.) Liability at common law was imposed for failure to warn about an inherently dangerous product or of hidden dangers on the theory that this was the only means of making a dangerous product safe. (Ann., 76 ALR2d 9.) Once the manufacturer had issued the warning properly, he would no longer be considered negligent and was thus relieved of liability. If those to whom the warning was given failed to heed it, their failure would likely constitute a supervening cause because it was not considered reasonably foreseeable that the warnings once given would be ignored. (McLaughlin v Mine Safety Appliances Co., 11 NY2d 62, 68-71; Sider v General Elec. Co., 203 App Div 443, 448-450, affd 238 NY 64.)

Similarly, it has been held that a manufacturer and retailer’s liability for failure to label dangerous substances might be excused if it was established that the party in a position to avoid the injury was already privy to the knowledge the warnings would have conveyed. (Howard Stores Corp. v Pope, 1 NY2d 110, 115.) The clear implication of that holding is that to establish liability under a negligent failure to warn theory, proximate cause must link the failure to warn with the injury — that is to say, that the injury must be caused because the plaintiff was not warned of the product’s dangers or defects. (De Vito v United Air Lines, 98 F Supp 88.) Thus, in this case, where the open and notorious nature of the danger would undoubtedly become apparent in over 10 years of operating the machine, I fail to understand how the breach of the duty to warn could be the proximate cause of the injury, assuming that the duty to warn could have been established in the first instance.

Undoubtedly, and understandably, strict products liability was formulated to reduce the burden the plaintiff bore in establishing either duty or proximate cause in any negligence based case and thereby to make those who could correct the negligence responsible to do so or bear the costs. Simply because strict products liability does not afford every plaintiff a remedy does not justify the reshaping of long-standing reasonable negligence concepts, as I believe the majority appears to be doing here. Accordingly, I would affirm the order of the Appellate Division.

Jones, J.

(dissenting). We are all in agreement that Logemann’s motion for summary judgment dismissing the first cause of action sounding in strict products liability was properly granted. Our differences arise with respect to the dismissal of the second cause of action alleging negligent failure of Logemann to warn of design defects in the shearing machine that plaintiff was operating when he was injured. In my view the dismissal of this cause of action was proper as well.

I accept the proposition that in some circumstances a servicer of machinery manufactured by another may be liable to the owner or user of machinery if the particular relationship between the servicer and the owner is such as to impose a cognizable duty on the servicer to warn the owner of defects in the design of the machinery of which the servicer has actual knowledge or of which in the exercise of reasonable care he should have knowledge. This liability may arise when the services rendered by the servicer are of such nature and extent as to create a special relation between the servicer and the owner giving rise to a duty on the part of the servicer to warn of such defects (see Restatement, Torts 2d, § 314A), and where the injuries suffered are reasonably foreseeable as a consequence of a failure to give such warning. Evidently, whether in a particular instance the factual aspects of the relationship between the servicer and the owner are such as to give rise to liability of the servicer is a question for determination by the jury, subject, of course, to the obligation of the court to take the question from the jury if the evidence would be insufficient as a matter of law to sustain a verdict for the plaintiff.

I further accept the proposition that, to establish liability on this theory, evidence would be admissible from which it could be found that the owner was aware that the servicer was a commercial successor to the manufacturer as sponsor of the line of products of which the owner’s unit was one and that for that reason the servicer possessed á familiarity and special expertise with respect to maintenance and repair of the unit and evaluation of its possible defects of design.

The determinative issue then, as I see it, is whether the evidence tendered in admissible form on the motion for summary judgment in this instance was sufficient to warrant submission of the pertinent factual questions for jury determination. I am persuaded that the evidence was insufficient to go to a jury and accordingly that the second cause of action was properly dismissed.

The affidavits, including attachments, submitted on the motion show that four years after Wallace Steel and Supply Company had purchased the 300-ton hydraulic shearing machine in question from Richards Shear Company, Inc., Logemann in January, 1968 acquired substantially all the assets of Richards Shear together with the exclusive right to manufacture and sell Richards Shear products, improvements, and inventory and to use the trade name “Richards”. Although Logemann did not continue to manufacture or sell shearing machines of the model which Wallace Steel had purchased, by letter dated February 16, 1968 individually addressed to Wallace Steel, the general sales manager of Logemann advised that the entire inventories of Richards Shear with blueprints for new equipment and repair parts were stocked by Logemann in Milwaukee “where all new Logemann-Richards shears will be built under one roof, tested and shipped.” The letter also advised that “two fine Richards servicemen” had joined Logemann and would be available for service calls, and concluded, “All of us at Logemann sincerely hope that our acquisition of the Richards Shear line will benefit you”. An employee of Logemann thereafter made a service call on Wallace Steel on July 25, 1968 and described the work done: “Power unit Had a Lot of shock. Reset pilot choke on main Directional Valve. Power unit ok. Runs like a normal 300 TON. Checked Machine in General.” By letter dated April 16, 1976, Logemann advised Wallace Steel that it had entered into a servicing agreement with Philip S. Peterson of St. Paul “for servicing of all Richards Shears” and that Peterson would have the full co-operation of Logemann “in engineering assistance and availability of parts”. Finally, it appears that, on order of Wallace Steel, Logemann supplied undescribed replacement parts “at various times”.

In my opinion this evidence, viewed in the perspective most favorable to plaintiff, is not sufficient to warrant submission of the second cause of action to the jury. There is no more than a tender of evidence from which a jury could find that Logemann was the continuing commercial sponsor of the Richards Shear line of products and accordingly offered a familiarity and special expertise in the repair and servicing of such products. The only contact between Logemann and Wallace Steel in addition to the representation of such successorship and expertise was a single service call six months after Logemann took over the Richards’ deal but nearly 10 years before the accident that resulted in plaintiff’s injuries (Travis v Harris Corp., 565 F2d 443, 449). Sending advice of the Peterson servicing arrangement and the supplying of spare parts, although perhaps not wholly irrelevant to the relationship between Logemann and Wallace Steel, would have little if any probative worth on the issue of LogemamTs duty to warn Wallace Steel of design defects in the shearing machine.

If, on the other hand, there were evidence that the servicing relationship between Logemann and Wallace Steel had been of sufficient substance, whether by reason of the all-embracing nature of the services rendered (as, for instance, if Logemann had been engaged to rebuild the shearing machine [see Restatement, Torts 2d, §§ 403-404]) or by reason of their having continued over an extended period of time (during which Logemann had responsibility for maintenance of the machine) or otherwise, it might be that such evidence would support a finding that the obligations of Logemann included a responsibility to alert Wallace Steel to defects in the design of the 300-ton shearing machine of which Logemann had actual knowledge or in the circumstances in the exercise of reasonable care should have had knowledge. No such evidence, however, was tendered in this instance.

As indicated, I recognize that advertising by a successor commercial sponsor of a product line and aggressive solicitation of servicing orders may contribute to exposing it as servicer to liability to which it would not otherwise be exposed. Nonetheless, to impose liability on anything less than the substantial evidence outlined above or its equivalent, would in my opinion, be to recognize another category of the grounds on which liability could be imposed on a corporate successor with respect to products manufactured by its predecessor — however vociferous might be our verbal disclaimers. It would, of course, be classified as a liability based on negligence rather than a strict products liability. But it would be a liability to which, I suggest, every successor commercial sponsor would almost inevitably be exposed. It can scarcely be imagined that the purchaser of the right to continue sponsorship of any product line worth purchasing would not wish to exploit the good will and know-how acquired from the predecessor and in the solicitation of business prominently represent the fact of such successorship — as did Logemann in this instance. If coupled with that fact all that is needed to expose the successor to liability to the owner or user for design defects in a product manufactured by the predecessor is acceptance of a single service order of any nature from that owner or user, the sweep of the possible liability of a successor sponsor would be very greatly enlarged, beyond any point warranted by the cases in New York. No such holding is cited to us.

In sum, in the fact situation presented in this record, in my view, liability, if any, of Logemann would have to be grounded in its responsibility as a servicer, drawn from its servicing obligations to Wallace Steel, with recognition that its responsibilities in this regard might more readily arise or be of greater scope because of its representation of familiarity and expertise in consequence of having taken over the Richards Shear line. On this analysis the determination of liability, as in any servicing situation, should take into account the holding out by the servicer of special expertise but such holding out, standing alone, would not be a sufficient predicate on which to impose liability.

I also observe that as in other instances of determination of liability for negligence plaintiff here must establish proximate causation. On that issue in this case the lapse of nearly 10 years between the date the services were rendered and the date of the accident would be material.

Finally, I would note my agreement that proper evidence of prevailing industry standards would be admissible as evidence on the issue of whether Logemann had actual knowledge or in the exercise of reasonable care should have known of the design defect which was the cause of plaintiff’s injuries.

Chief Judge Cooke and Judges Wachtler and Meyer concur with Judge Simons; Judges Jasen and Jones dissent and vote to affirm in separate dissenting opinions.

Order modified, with costs to plaintiff, in accordance with the opinion herein and, as so modified, affirmed.

      . For present purposes I assume that liability of the servicer, if any, would extend to employees of the owner injured in the course of. their employment. Counsel for Logemann advance no argument based on any distinction between the rights of an owner and those of an employee of the owner.

      . There is no tender of proof that Logemann assumed any of the Richards Shear servicing contracts (contrast Leannais v Cincinnati, Inc., 565 F2d 437, 442; Shane v Hobam, Inc., 332 F Supp 526, 530).