author: Kaye, J.

text:
    Prudential-Bache Securities, Inc., Appellant, v Citibank, N. A., Respondent.
    Argued January 11, 1989;
    decided February 23, 1989

      POINTS OF COUNSEL

      William R. Mait for appellant.
    I. The complaint states recognizable common-law causes of action against Citibank sounding in commercial bad faith, money had and received and conversion. (Ward v City Trust Co., 192 NY 61; Fidelity & Deposit Co. v Queens County Trust Co., 226 NY 225; In re Legel Braswell Govt. Sec. Corp., 695 F2d 506; Savings Banks Trust Co. v Federal Reserve Bank, 738 F2d 573; Chartered Bank v American Trust Co., 47 Misc 2d 694; Sanders v

      Winship, 57 NY2d 391; Underpinning & Found. Constructors v Chase Manhattan Bank, 46 NY2d 459; New York Tel. Co. v Mobil Oil Corp., 99 AD2d 185; De Pan v First Natl. Bank, 98 AD2d 885; Wiltshire v Robins Co., 88 AD2d 1097.) II. The Uniform Commercial Code defenses raised by defendant Citibank do not immunize it from liability for the wrongful acts alleged in the complaint. (Merrill Lynch, Pierce, Fenner & Smith v Chemical Bank, 57 NY2d 439; Federal Ins. Co. v Groveland State Bank, 37 NY2d 252; Holland Am. Cruises v Carver Fed. Sav. & Loan Assn., 60 AD2d 545; National Bank v Gregory, 85 AD2d 839; Madaro Trading Corp. v National Bank, 64 AD2d 977.) III. The finding by the court below that Reyes and Hutchinson, as well as any other employees of Citibank who participated in and/or had knowledge of the money laundering scheme were, as a matter of law, adverse agents, is reversible error. (Friedman v New York Tel. Co., 256 NY 392; Lippes v Atlantic Bank, 69 AD2d 127; Otsego Mut. Fire Ins. Co. v Darby, 79 Misc 2d 80; Center v Hampton Affiliates, 66 NY2d 782; Hewett v Marine Midland Bank, 86 AD2d 263; Bertran Packing v Transworld Fabricators, 50 AD2d 542; Amigo Foods Corp. v Marine Midland Bank, 39 NY2d 391; Peterson v Spartan Indus., 33 NY2d 463; Cosmos Mason Supplies v Lido Beach Assocs., 95 AD2d 818; Wiltshire v Robins Co., 88 AD2d 1097.)

      Donald L. Cuneo, Henry Weisburg and Sharon Schroer for respondent.
    I. Prudential-Bache, the drawer of a check, may not maintain an action against Citibank, the depositary bank. (Trojan Publ. Corp. v Manufacturers Trust Co., 298 NY 771; Titan Air Conditioning Corp. v Chase Manhattan Bank, 61 AD2d 764; Chartered Bank v American Trust Co., 48 Mise 2d 314, 26 AD2d 623; Underpinning & Found. Constructors v Chase Manhattan Bank, 46 NY2d 459; Spielman v Manufacturers Hanover Trust Co., 60 NY2d 221.) II. The complaint was properly dismissed under the New York Uniform Commercial Code. (Merrill Lynch, Pierce, Fenner & Smith v Chemical Bank, 57 NY2d 439; Underpinning & Found. Constructors v Chase Manhattan Bank, 46 NY2d 459; Western Cas. & Sur. Co. v Citizens Bank, 676 F2d 1344; Prudential Ins. Co. v Marine Natl. Exch. Bank, 371 F Supp 1002; Spielman v Manufacturers Hanover Trust Co., 60 NY2d 221; Central Cadillac v Stern Haskell, Inc., 356 F Supp 1280; Hechter v New York Life Ins. Co., 46 NY2d 34.) III. This court should not recognize a new cause of action for "commercial bad faith” on behalf of drawers against depositary banks. (Ward v City Trust Co., 192 NY 61; Fidelity & Deposit Co. v Queens County Trust Co., 226 NY 225, 711; In re Legel Braswell Govt. Sec. Corp., 695 F2d 506; Savings Banks Trust Co. v Federal Reserve Bank, 738 F2d 573; Chartered Bank v American Trust Co., 48 Misc 2d 314, 26 AD2d 623; Williams v Upjohn Health Care Servs., 119 AD2d 817.) IV. Under the doctrine of respondeat superior, Citibank is not liable to Prudential-Bache because of the actions of its two faithless employees. (Manhattan Life Ins. Co. v Forty-Second & Grand St. Ferry R. R. Co., 139 NY 146; Bertran Packing v Transworld Fabricators, 50 AD2d 542; Wagner v Nichols, 5 AD2d 191; Lippes v Atlantic Bank, 69 AD2d 127; Benedict v Arnoux, 154 NY 715; People v Kirkup, 4 NY2d 209; Martin v Xarin Real Estate, 703 F2d 883; American Natl. Bank v Miller, 229 US 517; Friedman v New York Tel. Co., 256 NY 392; Lippes v Atlantic Bank, 69 AD2d 127.)
   OPINION OF THE COURT

Kaye, J.

For more than two years, a massive fraud went undetected within Prudential-Bache, involving the issuance of firm checks that were regular on their face but improperly made payable to fictitious customers actually under the control of a Prudential-Bache employee. This case is an attempt by Prudential-Bache to recoup a portion of its losses from defendant, Citibank, one of the banks through which the employee laundered the proceeds of those checks. On Citibank’s motion to dismiss the complaint, we conclude that no cause of action has been stated for conversion or money had and received, but that plaintiff has sufficiently pleaded a cause of action for "commercial bad faith” against the bank. We therefore modify the Appellate Division order that dismissed the entire action.

For purposes of this pleading motion, we accept as true the facts recited in plaintiff’s complaint and other submissions. Beginning about the summer of 1981, John Filer, former section manager of Prudential-Bache’s Dividend Department (which made dividend payments to record owners of securities held by the firm) caused the issuance of Prudential-Bache checks drawn on its account at Banker’s Trust Company, and made payable to companies that were not actual PrudentialBache customers but had names like them. Filer apparently accomplished this by creating false records, misinforming coemployees that proper claims had been presented, himself both requisitioning and approving the checks, and violating other Prudential-Bache procedures. For approximately two years, the checks were processed through Bank Leumi and then, beginning in May 1983, through defendant Citibank. Efler succeeded in embezzling approximately $18.9 million before the scheme was uncovered in October 1983. In two separate actions, Prudential-Bache has sought to recover its losses from the banks. At issue in this case is the approximately $3.7 million channeled through Citibank (see also, Prudential-Bache Sec. v Bank Leumi, Sup Ct, NY County, May 20, 1985 [Wallach, J.], affd without opn 125 AD2d 1016).

Between May and September 1983 — the final months of the fraud — Efler induced Prudential-Bache to issue checks to M.N. Corporation and Harvard Corporation. M.N. and Harvard were not actual Prudential-Bache customers entitled to the dividends requisitioned for them by Efler, but shell corporations set up and controlled by Efler and his coconspirator, Lawrence Artese. Artese, not a Prudential-Bache employee, opened and maintained the accounts in the names of M.N. and Harvard at Citibank’s Hudson Street branch for the purpose of depositing the checks and laundering the proceeds through them. To effect the scheme, the conspirators bribed two Citibank employees, Robert Hutchinson, an assistant manager, and Juanita Reyes, a customer service representative. Hutchinson was paid $65,000 in bribes and Reyes approximately $100,000, in return for which they set up the checking accounts at Citibank without proper opening account records and corporate resolutions, and with fictitious corporate officers; they further agreed not to prepare currency transaction reports, which must be filed with the Internal Revenue Service for cash transactions in excess of $10,000 (see, 31 USC § 5311 et seq.; 31 CFR 103.22 [a]).

Once the accounts were activated at Citibank’s Hudson Street branch, Artese began a pattern of laundering funds there. Within the span of a few months at the branch, he personally moved more than $3.7 million in Prudential-Bache checks into the accounts and removed the funds in cash. Between May and September 1983, Artese deposited about $2.3 million to the account of M.N. and $1.4 million to the account of Harvard, and as soon as the checks cleared he drew out the funds. In all, Artese wrote some 100 checks, payable to cash, payroll or a nominal payee, often cashing several checks on a single day and leaving the branch with large quantities of currency or cashiers’ checks. More than 20 of the checks were in amounts of $10,000 or just under (called "niners” because they skirted the requirement of currency transaction reports), and 40 or more were for larger amounts, some even exceeding $50,000; no currency transaction reports were prepared. Prudential-Bache asserts that other Citibank employees, including managers, were aware of these activities, through conversations with Artese on his near-daily visits to the branch and through cash distributions at teller windows.

In October 1983, Efler’s supervisor conducted a review of account records and the scheme was exposed. PrudentialBache testimony in another action, made part of the record before us, indicated that this review was precipitated by a tip, and that no internal audit of the Dividend Department had been conducted during the entire period of the fraud. On pleas of guilty, Hutchinson and Reyes were convicted in Federal court of conspiring to make false entries on the books of Citibank with intent to injure and defraud Citibank, conspiring to defraud Citibank of their loyal and honest services as its employees through the payment of bribes, conspiring to cause the bank to fail to file currency transaction reports, and making false entries on the books of Citibank with intent to injure and defraud Citibank.

Prudential-Bache thereafter commenced the present action against Citibank, asserting claims of conversion, money had and received, and commercial bad faith, based on the bank’s alleged facilitation of the scheme by enabling the conspirators to launder the proceeds. Citibank denied the material allegations of the complaint and asserted various affirmative defenses as well as three counterclaims. After submissions in which Prudential-Bache and Citibank each accused the other of gross supervisory failures and superior ability to thwart the scheme, Supreme Court granted both plaintiffs motion to dismiss the counterclaims and defendant’s cross motion to dismiss or for summary judgment.

Supreme Court concluded that Prudential-Bache’s complaint should be dismissed because the claims were barred by UCC 3-405 (1) (c) and the common-law causes of action were insufficient in law. With respect to Prudential-Bache’s cause of action sounding in "commercial bad faith,” the court found that Citibank could not be held liable for the wrongdoing of Hutchinson and Reyes, because they were "adverse agents,” as a matter of law; other Citibank employees would either be adverse agents as a matter of law if they participated with Hutchinson and Reyes, or merely negligent if they did not participate — in either event, not subjecting the bank to liability. A divided Appellate Division affirmed for the reasons stated by Supreme Court (141 AD2d 353). On PrudentialBache’s appeal, we now modify the Appellate Division order by restoring the cause of action for "commercial bad faith,” and otherwise affirm.

Uniform Commercial Code § 3-405

We first consider UCC 3-405 (1) (c), which was a basis for dismissal of the complaint.

The Uniform Commercial Code, in its rules governing check fraud, assigns losses by the relative responsibility of the parties for the loss. Losses arising out of forged indorsements are allocated to the party best able to take precautions to prevent them (see generally, McDonnell, Bank Liability for Fraudulent Checks: The Clash of the Utilitarian and Paternalist Creeds Under the Uniform Commercial Code, 73 Geo LJ 1399 [1985]; Comment, Allocation of Losses from Check Forgeries Under the Law of Negotiable Instruments and the Uniform Commercial Code, 62 Yale LJ 417 [1953]).

Ordinarily, an unauthorized indorsement — that is, either a forged indorsement or one made by an agent exceeding authority (UCC 1-201 [43]) — is ineffective to pass title or authorize the drawee bank to pay (see, 1 White & Summers, Uniform Commercial Code § 16-4, at 793 [Practitioner’s — 3d ed]). The check is not properly payable because an unauthorized signature is inoperative as that of the person whose name is signed (UCC 3-404; see also, Merrill Lynch, Pierce, Fenner & Smith v Chemical Bank, 57 NY2d 439, 444-445; Tonelli v Chase Manhattan Bank, 41 NY2d 667, 669-670). Consequently, the drawee bank generally may not debit the drawer’s account when it pays such a check. A drawee can, however, shift its loss to prior indorsers by way of an action for breach of warranty of good title (see, UCC 3-417, 4-207), with the loss ultimately placed on the forger or the party taking from the forger — that party being best positioned to identify the transferor as a wrongdoer, protect its own interests, and prevent the fraud (see, Underpinning & Found. Constructors v Chase Manhattan Bank, 46 NY2d 459, 468).

UCC 3-405 (1) (c) creates an exception to the general principle that a drawer is not liable on an unauthorized indorsement. Known as the "fictitious payee” or "padded payroll” rule, UCC 3-405 (1) (c) provides that an "indorsement by any person in the name of a named payee is effective if * * * an agent or employee of the maker or drawer has supplied him with the name of the payee intending the latter to have no such interest.” Thus, in the very particular factual circumstances described by UCC 3-405 (1) (c), the indorsement is treated as effective even though it is technically unauthorized, and the loss is allocated to the drawer-employer. (See generally, 1 White & Summers, op. cit., § 16-4; Triantis, Allocation of Losses From Forged Indorsements on Checks and the Application of § 3-405 of the Uniform Commercial Code, 39 Okla L Rev 669 [1986]; Comment, The Effect of Bank Misconduct on the Operation of the Padded Payroll Preclusion of U.C.C. § 3-405, 27 UCLA L Rev 147 [1979].)

UCC 3-405 (1) (c) expresses a fundamental public policy determination. As explicated in the Comment, the principle embodied by UCC 3-405 (1) (c) is that losses arising in the specific manner described by the statute are more business risks than banking risks. "[T]he employer is normally in a better position to prevent such forgeries by reasonable care in the selection or supervision of his employees, or, if he is not, is at least in a better position to cover the loss by fidelity insurance; and that the cost of such insurance is properly an expense of his business rather than of the business of the holder or drawee.” (UCC 3-405, Comment 4; Farnsworth, Insurance Against Check Forgery, 60 Colum L Rev 284 [I960].)

These assumptions evidence the degree to which the section was calculated by the Legislature "to shift the balance in favor of the bank 'in situations in which the drawer’s own employee has perpetrated the fraud or committed the crime giving rise to the loss.’ ” (Merrill Lynch, Pierce, Fenner & Smith v Chemical Bank, 57 NY2d 439, 445, supra [quoting 1 Hawkland, A Transactional Guide to the Uniform Commercial Code, at 391-394].) As has been widely acknowledged, UCC 3-405 is "a banker’s provision intended to narrow the liability of banks and broaden the responsibility of their customers.” (1 White & Summers, op. cit., § 16-5, at 804; see also, Merrill Lynch, Pierce, Fenner & Smith v Chemical Bank, supra; Stinn Chevrolet v National City Bank, 28 Ohio St 3d 221, 503 NE2d 524, 532; General Acc. Fire & Life Assur. Corp. v Citizens Fid. Bank & Trust Co., 519 SW2d 817, 819 [Ky].)

The facts of this case fit comfortably within UCC 3-405 (1) (c). It is undisputed that an "employee” (Efler) supplied the "maker or drawer” (Prudential-Bache) with the name of a "payee” (M.N. and Harvard). The payees, who were fictitious customers not entitled to the dividend payments, were intended "to have no such interest” in the instruments issued (UCC 3-405 [1] [c]; see also, UCC 3-405, Comment 3 [c], [e]). Contrary to plaintiffs assertion, the subsection is not limited to forged indorsements; it plainly covers situations, as here, where "an employee starts the wheels of normal business procedure in motion to produce a check for a non-authorized transaction.” (New Amsterdam Cas. Co. v First Pa. Banking & Trust Co., 451 F2d 892, 897 [3d Cir]; Continental Bank v WaHo Truck Brokerage, 122 Ariz 414, 421, 595 P2d 206, 213 [Ct App].) Moreover, the practical, policy considerations that motivated UCC 3-405 (1) (c) are evident in the facts of this case. There was no indebtedness from Prudential-Bache to M.N. or Harvard when the firm issued checks naming those entities as payees. As is plain simply from the chronology of undisputed facts, Prudential-Bache was in a position to prevent the massive losses in issue here, by supervising its employees, enforcing its rules and examining records relating to a fraud that had been in progress for nearly two years. Under UCC 3-405 (1) (c), the loss occasioned by Efler’s wrongdoing should thus fall to plaintiff, not Citibank.

In an effort to avoid this result, Prudential-Bache advances two contentions: first, that the Code defense is inapplicable in this action at common law and second, that a standard of care for banks should be read into UCC 3-405 (1) (c) and Citibank failed to meet it. Each will be considered in turn.

The Relationship of UCC 3-405 to Plaintiff’s Claims

Prudential-Bache contends that its complaint states viable common-law causes of action, which persist outside the UCC. As to Prudential-Bache’s claims for conversion and money had and received, we agree with Supreme Court and the Appellate Division that Prudential-Bache cannot sidestep the Code in this fashion, and these claims must be dismissed as insufficient in law. The cause of action for "commercial bad faith” will be treated separately.

As plaintiff concedes, the common-law rule in this State before enactment of the Code was that a drawer had no direct action against a depositary bank; its remedy was against the drawee bank (see, Trojan Publ. Corp. v Manufacturers Trust Co., 298 NY 771). The Code itself did not change the rule, and indeed added defenses that make it even more difficult for a drawer to recover against a depositary bank (see, e.g., UCC 3-405, 3-419 [3]; 3-406, 4-406; see also, Hillman, McDonnell and Nickles, Common Law and Equity Under the Uniform Commercial Code If 14.01 [3]).

Prudential-Bache, however, points to Underpinning & Found. Constructors v Chase Manhattan Bank (46 NY2d 459, supra) as support for its contention that a drawer can maintain a direct action against a depositary bank outside the Code. In Underpinning, a faithless employee forged indorsements on his employer’s checks by using stamps similar to those used by the payees. The indorsements specified that they were "for deposit only,” but the banks permitted the forger to cash some of the checks and deposit others in his own accounts. On discovery of the fraud, the employer sought recovery from the depositary banks. We denied the banks’ motions to dismiss the complaint, recognizing that the employer could maintain an action against the depositary banks for conversion and money had and received, because the banks had committed a gross violation of banking practice by paying out funds in violation of a restrictive indorsement. But we made clear that the exception to the common-law prohibition was a narrow one, noting that had the embezzler indorsed the check in blank, the employer-drawer could not have sued the depositary banks. It was only the restrictive indorsement that shifted liability to the depositary banks, because it placed the banks in a better position to avoid the loss caused by the forgery (id.) at 468-469; see also, Spielman v Manufacturers Hanover Trust Co., 60 NY2d 221, 224-228; Merrill Lynch, Pierce, Fenner & Smith v Chemical Bank, 57 NY2d, at 447-448, supra).

Thus, contrary to Prudential-Bache’s assertion, Underpinning is inapplicable here. The checks drawn by PrudentialBache to M.N. and Harvard were deposited in full compliance with the drawer’s instructions. Underpinning does not permit Prudential-Bache to maintain an action against Citibank for conversion or money had and received.

Furthermore, to permit resort to such common-law claims in instances where the Code unmistakably precludes recovery would be to contradict and effectively nullify 3-405 (1) (c). "It is inconceivable that those who drafted the UCC intended to forbid recovery under the Code, but to permit the same remedy for the same wrong outside the Code. Section 1-103 intended the common law to supplement, not contradict, the other provisions of the UCC.” (Consolidated Pub. Water Supply Dist. v Farmers Bank, 686 SW2d 844, 853 [Mo Ct App] [citing Western Cas. & Sur. Co. v Citizens Bank, 676 F2d 1344, 1347-1348 (10th Cir)]; see also, Stone & Webster Eng’g Corp. v First Natl. Bank & Trust Co., 345 Mass 1, 184 NE2d 358.)

We therefore conclude that UCC 3-405 (1) (c) cannot be circumvented by claims for conversion and money had and received. Given this conclusion, we need not and do not reach Citibank’s alternative arguments that UCC 3-406 and 3-419 provide independent grounds for dismissal of these claims.

Standard of Care Required of Depositary Banks

Plaintiff’s cause of action for "commercial bad faith” raises different considerations: what standard of care, if any, is required of banks under UCC 3-405 (1) (c), and does plaintiff’s complaint sufficiently charge Citibank with a failure to meet that standard so as to withstand a motion to dismiss?

True to its characterization as a banker’s provision, UCC 3-405 (1) (c) itself specifies no duty of care. Although the Code elsewhere provides that a drawer can defeat the bank’s defenses to a forgery by showing that the bank did not observe reasonable commercial standards (see, e.g., UCC 3-406, 4-406), no analogous provision was made by the Legislature in UCC 3-405 (1) (c). As we have noted, the history of the subsection demonstrates that the "failure to delineate a standard of care, to which a bank itself must adhere if it is to advantage itself of this section, was no oversight.” (Merrill Lynch, Pierce, Fenner & Smith v Chemical Bank, 57 NY2d 439, 446, supra.) While the Legislature might have opted for a statutory standard that apportioned liability according to each party’s actual fault in a particular transaction — as it did elsewhere in the Code — it chose instead in UCC 3-405 (1) (c), as a policy matter, to allocate the loss to the drawer-employer because it perceived that party was in a better position to prevent such loss from occurring in the first instance.

In Merrill Lynch, we recognized that a bank’s negligence is irrelevant under UCC 3-405 (1) (c). Even though the drawer-employer may itself be blameless, the bank’s failure to use ordinary care in handling a check within the purview of UCC 3-405 (1) (c) will not subject a bank to liability. Indeed, a pointed plea for statutory reform to preclude invocation of UCC 3-405 (1) (c) by transferees who failed to exercise due care evoked no response from the Legislature (see, 57 NY2d, at 451 [Cooke, Ch. J., concurring]). Plaintiff urges, however, that an action lies outside the Code for "commercial bad faith”, and it supports this contention by reliance on Brighton, Inc. v Colonial First Natl. Bank (176 NJ Super 101, 422 A2d 433), affirmed by the New Jersey Supreme Court "substantially for the reasons” expressed by the lower court (86 NJ 259, 430 A2d 902).

In Brighton, a faithless employee repeatedly cashed checks over the forged indorsements of numerous payees; the employee himself was neither payee nor indorsee, but apparently was able to procure large amounts of cash at one depositary bank even without identification. While the opinion does not set forth just how this was accomplished, the courts’ writings paint the bank’s behavior as egregious and outrageous dereliction (86 NJ, at 261-263, 430 A2d, at 904 [Handler, J., concurring in part, dissenting in part]; 176 NJ Super, at 121, 422 A2d, at 443, supra). The drawer’s claims of negligence, conversion, and money had and received were rejected, as barred by UCC 3-405 (1) (c). However, the court allowed the drawer to maintain its claim against a depositary bank "for a cause of action sounding in conspiracy or actual fraud by the principals of that bank in alleged confederation with [the wrongdoer]. ” (176 NJ Super, at 121, 422 A2d, at 443 [emphasis added], supra.) The court emphasized that the surviving cause of action hinged on the bank’s actual complicity and deliberate conspiracy to inflict such losses, which conduct falls outside Code concerns. The concurring opinion of a single Justice of the New Jersey Supreme Court, advocating an extra-Code cause of action for reckless and wanton bank conduct, underscores the narrowness of the surviving cause of action that was recognized by the full court in that case (86 NJ, at 260, 430 A2d, at 904 [Handler, J., concurring in part, dissenting in part]).

There is nothing novel in the proposition that a depositary bank cannot use UCC 3-405 (1) (c) to shield its own out-and-out dishonesty. In Merrill Lynch, we noted that "a drawee bank surely is not immunized by section 3-405 when it acts dishonestly.” (57 NY2d 439, 447, supra; see also, Underpinning & Found. Constructors v Chase Manhattan Bank, 46 NY2d 459, 466, supra.) Other courts have concluded that a depositary bank cannot rely on UCC 3-405 as a defense against a drawer where the bank acts dishonestly (see, e.g., Hicks-Costarino Co. v Pinto, 23 UCC Rep Serv 680, NYLJ, Feb. 23, 1978, at 13, col 3 [Kunzeman, J.]; British Caledonian Airways v First State Bank, 819 F2d 593 [5th Cir]; Western Cas. & Sur. v Citizens Bank, 676 F2d 1344 [10th Cir], supra; General Acc. Fire & Life Assur. Corp. v Citizens Fid. Bank & Trust Co., 519 SW2d 817 [Ky], supra; City of Phoenix v Great W. Bank & Trust, 148 Ariz 53, 712 P2d 966 [Ct App]; Prudential Ins. Co. v Marine Natl. Exch. Bank, 371 F Supp 1002 [ED Wis]). Where a depositary bank acts dishonestly — where it has actual knowledge of facts and circumstances that amount to bad faith, thus itself becoming a participant in a fraudulent scheme — such conduct falls wholly outside the allocation of business risks that was contemplated by UCC 3-405 (1) (c). (See, UCC 1-203, 3-405, Comment 4; Triantis, op. cit., 39 Okla L Rev, at 683.)

The question at hand is whether Prudential-Bache’s complaint alleges such a cause of action against Citibank. It bears emphasis that we answer this question in the context of a motion to dismiss the complaint, where courts are obliged to view plaintiff’s assertions most favorably because the motion would terminate the action before there has been any opportunity for discovery. A court therefore must assume the truth of the facts asserted in the complaint and the affidavits opposing dismissal (see, Credit Alliance Corp. v Andersen & Co., 65 NY2d 536, 541, n 1; Rovello v Orofino Realty Co., 40 NY2d 633), and accord plaintiff the benefit of all favorable inferences that may be drawn from its pleadings (see, CPC Intl. v McKesson Corp., 70 NY2d 268, 284-285; Underpinning & Found. Constructors v Chase Manhattan Bank, supra, at 462). Applying these standards to plaintiff’s contentions, we conclude that a cause of action has been stated.

Plaintiff’s cause of action for "commercial bad faith” rests on allegations that Citibank, through its officers, agents and employees, actually knew of and thereby itself became a participant in the unlawful scheme to launder plaintiff’s funds. Citibank vigorously protests its liability for the criminal conduct of its employees Hutchinson and Reyes, branding them "adverse agents” as a matter of law, and insists that any other bank officers, agents or employees who knew of the scheme would themselves either be adverse agents as a matter of law or merely negligent.

A legal entity, of course, necessarily functions through human actors — its officers, agents and employees — whose knowledge and conduct may be imputed to the entity under the doctrine of respondeat superior (see, e.g., Riviello v Waldron, 47 NY2d 297, 302-303). But an employer may not be held accountable to third persons for the conduct of employees who, while ostensibly acting for their employer, in fact totally abandon the employer’s interests and act entirely for their own or others’ purposes (see, Center v Hampton Affiliates, 66 NY2d 782, 785; Marine Midland Bank v Russo Produce Co., 50 NY2d 31, 43-44; Farr v Newman, 14 NY2d 183, 190-191; Lippes v Atlantic Bank, 69 AD2d 127, 134-135).

Citibank urges that by secretly accepting bribes to open and service the accounts improperly and illegally, Hutchinson and Reyes totally abandoned the object of their employment and acted entirely for their own or others’ purposes, and that neither their wrongful conduct nor their guilty knowledge can be imputed to Citibank. Our acceptance of these contentions as a matter of law is central to the success of this motion. The motion must fail unless this court would declare as a matter of law that any wrongdoing by any Citibank employees was either too adverse for the imputation of fault or too benign for the imposition of liability under UCC 3-405 (1) (c) — as a practical matter foreclosing the cause of action for bad faith we now recognize. At this juncture, on this record, we cannot adopt those conclusions.

What plaintiff has pleaded is not merely a lapse of "wary vigilance” (Hall v Bank of Blasdell, 306 NY 336, 341; Spielman v Manufacturers Hanover Trust Co., 60 NY2d 221, supra), or even "suspicious circumstances which might well have induced a prudent banker to investigate”. (Chemical Bank v Haskell, 51 NY2d 85, 93; see also, British Caledonian Airways v First State Bank, supra, at 597.) Such assertions of bank negligence by a drawer would be insufficient to state a cause of action against a depositary bank. Instead, plaintiff has portrayed an embezzlement scheme of massive dimension accomplished in part through a pattern of money-laundering conducted on a near-daily basis by a single individual, concentrated within a few months, at one bank branch.

Apart from the Federal crimes to which they have pleaded guilty, two Citibank employees allegedly failed to follow bank procedures in preparing proper account records; plaintiff asserts that these employees had conversations with others at the bank about Artese. The alleged activities of Hutchinson and Reyes in this matter have not yet been the subject of discovery by plaintiff, who insists that they were also promoting the bank’s interests and therefore not truly "adverse agents.” We cannot conclude now that any and all misconduct of Hutchinson and Reyes with respect to the laundering scheme was necessarily selfish and antagonistic to their employer, so as to insulate Citibank from any imputation of their wrongdoing. But even if the full dealings of Hutchinson and Reyes with the conspirators were known and determined to meet the "adverse agent” test, plaintiff points to certain Grand Jury testimony and asserts that other managerial employees of the bank knew of and thus participated in the scheme. Additionally, plaintiff argues that, for present purposes, we must infer the participation of other employees from the frequency of Artese’s visits to the branch, his repeated large cash withdrawals at teller windows, and his conversations with other Citibank employees.

There may well prove to be merit in Citibank’s contentions that all involved employees were either adverse agents or at most negligent; indeed, the issues may even be subject to resolution by way of motion, short of trial. Moreover, plaintiff bears a heavy burden to sustain its assertions of bank dishonesty or — to use the Brighton test plaintiff advocates — of complicity by principals of the bank in alleged confederation with the wrongdoers. A showing short of the bank’s bad faith will not suffice to shift the loss from plaintiff, where it has been squarely placed by the Legislature in UCC 3-405 (1) (c). Great though plaintiff’s burden may be, however, its assertions of bad faith are sufficient at this time to withstand dismissal of the complaint.

Accordingly, the order of the Appellate Division should be modified by reinstating plaintiff’s third cause of action and, as so modified, affirmed, with costs.

Chief Judge Wachtler and Judges Simons, Alexander, Titone, Hancock, Jr., and Bellacosa concur.

Order modified by reinstating plaintiff’s third cause of action and, as so modified, affirmed, with costs to plaintiff.

       A motion to dismiss Prudential-Bache’s complaint in its related action against Bank Leumi was denied by the trial court and unanimously affirmed by the Appellate Division (see, Prudential-Bache Sec. v Bank Leumi, Sup Ct, NY County, May 20, 1985 [Wallach, J.], affd without opn 125 AD2d 1016).


source: Caselaw Access Project

author: Alexander, J. Bellacosa, J.

license: Public Domain

text:
    Donald R. Dillenbeck, as Administrator of the Estate of Tonia R. Dillenbeck, Deceased, et al., Appellants, v Sherry L. Hess et al., Respondents.
    Argued January 11, 1989;
    decided February 23, 1989

      POINTS OF COUNSEL

      Maurice P. O’Brien for appellants.
    I. The legislative mandate of section 1194 of the Vehicle and Traffic Law that an operator consent to a blood alcohol test transcends any claim of physician-patient privilege and is an exception to CPLR 4504 when there are reasonable grounds to believe the driver was in violation of section 1192 of the Vehicle and Traffic Law. (People v Kates, 53 NY2d 591; People v Hall, 61 NY2d 834; People v Ameigh, 95 AD2d 367; People v Thomas, 46 NY2d 100; Fafinski v Reliance Ins. Co., 106 AD2d 88, 65 NY2d 990; People v Al-Kanani, 33 NY2d 260; Koump v Smith, 25 NY2d 287.) II. In a personal injury action where defendant pleads a general denial without counterclaim, a defendant’s physician-patient privilege precluding discovery of a blood alcohol test in hospital records is waived or forfeited, upon plaintiff producing evidentiary matter sufficient to support a conclusion that defendant’s physical condition as to intoxication at the time of an accident is genuinely in controversy and that the blood test will lend credence to the claim. (Koump v Smith, 25 NY2d 287; Fisher v Fossett, 45 Misc 2d 757; O’Leary v Sealey, 50 Misc 2d 658; Constantine v Diello, 24 AD2d 821; Turner v Town of Amherst, 62 Misc 2d 257; Matter of Patchogue-Medford Congress of Teachers v Board of Educ., 70 NY2d 57; People v Scott, 63 NY2d 518; People v Thomas, 46 NY2d 100; Matter of Abe A., 56 NY2d 288; Williams v Roosevelt Hosp., 66 NY2d 391.) III. A person who intentionally causes harm to another through means of a physical debility places his physical condition in controversy waiving physician-patient privilege, to allow discovery of medical records lending credence to the claim of causal relation of injury to the wrongdoer’s debility. (Matter of Abe A., 56 NY2d 288; Maharam v Maharam, 123 AD2d 165; Shalhoub v Viverito, 133 Misc 2d 765; Delagi v Delagi, 34 AD2d 1005.) IV. Defendant Hess put her own physical condition in controversy by pleading three affirmative defenses to plaintiffs’ complaint.

      Timothy J. Perry for Sherry L. Hess, respondent.
    Defendant Hess’ hospital records are not subject to disclosure in this case. (Koump v Smith, 25 NY2d 287; Matter of City Council v Goldwater, 284 NY 296; Iseman v Delmar Medical-Dental Bldg., 113 AD2d 276; La Fave v McDonald, 112 AD2d 669; Prink v Rockefeller Center, 48 NY2d 309; Frederick v Maslyn, 84 AD2d 888; Hughes v Kackas, 3 AD2d 402; Hadden v Consolidated Edison Co., 45 NY2d 466; Matter of Meachem v New York Cent. R. R. Co., 8 NY2d 293.)

      Kelly E. Fischer for Edward A. Carle and another, respondents.
    I. Plaintiffs have failed to meet their burden of proving, by evidentiary matter in an admissible form, that Hess’ physical condition is in controversy. (Koump v Smith, 25 NY2d 287.) II. Defendant Hess did not affirmatively assert her physical condition by way of a counterclaim or excuse, and therefore did not waive her physician-patient privilege. (Koump v Smith, 25 NY2d 287; Iseman v Delmar Medical-Dental Bldg., 113 AD2d 276; La Fave v McDonald, 112 AD2d 669; Frederick v Maslyn, 84 AD2d 888; Soybel v Gruber, 132 Misc 2d 343; Fischer v Fossett, 45 Misc 2d 757.)
   OPINION OF THE COURT

Alexander, J.

In Koump v Smith (25 NY2d 287), we noted that a litigant does not waive the physician-patient privilege merely by defending a personal injury action in which his or her mental or physical condition is in controversy unless, in so defending, the litigant "affirmatively asserts the condition either by way of counterclaim or to excuse the conduct complained of by the plaintiff” (id., at 294). Today, we hold that where a party defending a personal injury action validly asserts the privilege and has not affirmatively placed his or her medical condition in issue, the plaintiff may not effect a waiver of the privilege merely by introducing evidence demonstrating that the defendant’s physical condition is genuinely "in controversy” within the meaning of the statute permitting discovery of medical records (CPLR 3121 [a]).

I.

The complaint states that on July 13, 1985, Tonia Dillenbeck was killed and her son, Michael Dillenbeck, was seriously injured when their automobile collided head on with another vehicle driven by defendant, Sherry Hess. It is alleged that the accident occurred when defendant, who was traveling north on Route 7 in the Town of Conklin, negligently crossed the center line and struck the Dillenbecks’ vehicle as it was traveling in the southbound lane. The complaint charges that defendant’s intoxicated condition was a proximate cause of the accident and that the codefendants, owners and operators of Red’s Good Luck Tavern and Eddie’s Conklin Inn where defendant allegedly had been drinking throughout much of the afternoon and evening, negligently contributed to her intoxication by serving excess quantities of alcohol to her. The police accident report notes the time of the accident as 9:45 P.M.

It is not disputed that defendant received serious injuries in the accident and was hospitalized immediately thereafter. Although it appears that a blood alcohol test was performed at the hospital for diagnostic purposes, no test to determine blood alcohol content was administered at the direction of a police officer or by court order pursuant to Vehicle and Traffic Law § 1194. In her answer, defendant simply denies the allegations in the complaint and asserts the affirmative defenses of comparative negligence and the failure of plaintiffs to wear available seat belts.

Alleging that defendant’s hospital records contain evidence of her blood alcohol content at the time of the accident, plaintiffs moved, pursuant to CPLR 3121 (a), to compel defendant to disclose any medical records relating to her physical condition on the date of the accident, including the results of any blood alcohol test administered to defendant upon her admission to the hospital. The papers submitted in support of the motion included an affidavit by plaintiffs’ attorney, the police accident report, and three affidavits of persons who claim to have been with defendant prior to the accident and to have observed her consume alcohol over approximately a seven-hour period. Plaintiffs also submitted excerpts from defendant’s examination before trial wherein she claimed to have no memory of the events occurring prior to the accident except that she remembered being at Red’s Good Luck Tavern earlier in the day for a union meeting and having one drink while she was there. Excerpts from the deposition testimony of the manager of Eddie’s Conklin Inn, where defendant allegedly continued to imbibe after leaving Red’s Good Luck Tavern, reveal that following the accident the manager was informed by his bartender that on the night of the accident the bartender had "shut off” a woman from alcoholic beverages because she had been drinking excessively and that the woman might have been defendant.

By cross motion defendant sought an order of protection (CPLR 3122), asserting the physician-patient privilege (CPLR 4504). Supreme Court denied plaintiffs’ motion and granted defendant’s cross motion, concluding that inasmuch as defendant had not affirmatively placed her physical condition in issue, the physician-patient privilege precluded discovery of her medical records (CPLR 3101 [b]; 4504 [a]).

A majority of the Appellate Division affirmed, stating that although defendant’s physical condition at the time of the accident "is undeniably in issue”, defendant had not affirmatively placed her condition in controversy and that under Koump v Smith (supra) the privilege is not waived where the defendant simply denies the allegations in the complaint (140 AD2d 766, 767). The court concluded further that defendant had not waived the privilege in testifying that she suffers from amnesia concerning the accident since she was not seeking damages for that condition nor was she claiming that her amnesia in any way excused her conduct (id., at 767). The two dissenters, relying on Judge Bergan’s concurrence in Koump, would have allowed inspection of defendant’s hospital records, concluding that the privilege must yield where, as here, plaintiffs submit evidence demonstrating that defendant’s physical condition is genuinely "in controversy”.

The Appellate Division granted leave to appeal positing the following certified question: "Did this court err as a matter of law in affirming the order of the Supreme Court which denied plaintiffs’ motion for discovery of defendant Sherry L. Hess’ medical and hospital records and granted said defendant’s cross motion for an order of protection?” We now affirm and answer the certified question in the negative.

II.

The physician-patient privilege, presently contained in CPLR 4504, is entirely a creature of statute. At common law, confidential communications between physicians and patients received no protection against disclosure in a legal proceeding, however unethical such disclosure may have been viewed when occurring outside the courtroom (Fisch, NY Evidence § 541 [2d ed]; McCormick, Evidence § 98 [3d ed]; see, Williams v Roosevelt Hosp., 66 NY2d 391, 395; Koump v Smith, 25 NY2d, at 293, supra). The common-law rule is perhaps best illustrated by the Duchess of Kingston’s Trial, wherein the Duchess was tried for bigamy and the Crown sought to compel her physician to testify concerning certain admissions made by the Duchess in confidence. When the physician expressed reluctance to divulge the secret admissions of his patient, the court ordered him to testify, explaining: "If a surgeon was voluntarily to reveal these secrets, to be sure, he would be guilty of a breach of honor and of great indiscretion; but to give that information in a court of justice, which by the law of the land he is bound to do, will never be imputed to him as any indiscretion whatever” (The Duchess of Kingston’s Trial, 20 How St Trials 355, 573 [1776]; Shuman, The Origins of the Physician-Patient Privilege and Professional Secret, 39 Sw LJ 661, 671 [1985]).

New York State became the first jurisdiction to depart from the common-law rule when it adopted the physician-patient privilege by statute in 1828 (2 Rev Stat of NY, part III, ch 7, tit 3, § 73 [1828]). In its current form, the privilege prohibits disclosure of any information acquired by a physician "in attending a patient in a professional capacity, and which was necessary to enable him to act in that capacity” (CPLR 4504 [a]). The privilege applies not only to information communicated orally by the patient, but also to "information obtained from observation of the patient’s appearance and symptoms, unless the facts observed would be obvious to laymen” (Fisch, NY Evidence § 544, at 361 [2d ed]; see, 5 Weinstein-Korn-Miller, NY Civ Prac ]¶ 4504.08; Matter of Coddington, 307 NY 181, 193; Edington v Mutual Life Ins. Co., 67 NY 185, 194). Moreover, the form in which the information is sought to be introduced is irrelevant, as the privilege operates whether the information is contained in a patient’s medical files or is sought to be introduced at trial in the form of expert testimony (see, Williams v Roosevelt Hosp., 66 NY2d, at 396, supra; Davis v Supreme Lodge, Knights of Honor, 165 NY 159, 163; 5 Weinstein-Korn-Miller, NY Civ Prac ¶ 4504.08a).

We have previously noted that this State’s codification of the physician-patient privilege was based largely "on the belief that fear of embarrassment or disgrace flowing from disclosure of communications made to a physician would deter people from seeking medical help and securing adequate diagnosis and treatment” (Williams v Roosevelt Hosp., 66 NY2d, at 395, supra; Matter of Camperlengo v Blum, 56 NY2d 251, 254-255; Edington v Mutual Life Ins. Co., 67 NY 185, 192, supra; see, Fisch, NY Evidence § 541 [2d ed]; McCormick, Evidence § 98 [3d ed]). Additionally, it was feared that physicians would alter or conceal the truth when forced, in the absence of any privilege, to choose between their legal duty to testify and their professional obligation to honor their patients’ confidences (Fisch, NY Evidence § 541 [2d ed]; Reports of Commissioners on Revision of Statutes of NY, 3 Rev Stat of NY, Appendix, at 737 [1836]). A third rationale supporting the privilege that has gained increased currency in recent years is premised on the need to protect the privacy expectations of patients (see generally, Developments in the Law, Medical and Counseling Privileges, 98 Harv L Rev 1530, 1544-1548 [1985]; McCormick, Evidence § 105, at 259 [3d ed]). This court recognized long ago that "[t]he disclosure by a physician, whether voluntary or involuntary, of the secrets acquired by him while attending upon a patient in his professional capacity, naturally shocks our sense of decency and propriety, and this is one reason why the law forbids it” (Davis v Supreme Lodge, Knights of Honor, 165 NY 159, 163, supra). Thus, it has been argued that "the value placed on privacy, manifested both by general concerns for privacy and by the specific concerns for an individual’s bodily integrity found in constitutional, statutory, and common law doctrines, suggests a strong policy basis” for the privilege (Medical and Counseling Privileges, op. cit., 98 Harv L Rev, at 1548; see, Whalen v Roe, 429 US 589, 598-599 [government disclosure of private medical information implicates constitutional right to privacy]).

Although the physician-patient privilege has been criticized by commentators who maintain that there is little empirical support for the proposition that the privilege promotes public health (5 Weinstein-Korn-Miller, NY Civ Prac ¶ 4504.02; Fisch, NY Evidence § 557 [3d ed]; see, Williams v Roosevelt Hosp., 66 NY2d, at 395-396, supra), that the principle of medical confidentiality is antiquated and no longer regularly observed by physicians (Fisch, NY Evidence § 557 [2d ed]; Goldberg, The Physician-Patient Privilege — An Impediment to Public Health, 16 Pac LJ 787, 788-789 [1985]), and that protection of patients’ privacy is not a sufficiently important interest to justify nondisclosure of legally pertinent medical information (McCormick, Evidence § 105, at 259 [3d ed]; Goldberg, op. cit., at 803), the privilege remains rooted in both the statutory law and public policy of New York State. The issue on this appeal, therefore, is whether the information requested by plaintiffs, acquired by defendant’s physician in the course of treating her for injuries incurred in the automobile accident and thus privileged under CPLR 4504, must be disclosed once it is established that defendant’s physical condition is "in controversy” and thus subject to discovery under CPLR 3121 (a), notwithstanding that defendant has not placed her physical condition in controversy or otherwise waived the privilege.

III.

In Koump v Smith (25 NY2d 287, supra), we examined the operation of the physician-patient privilege in the context of a personal injury action. In that case, the plaintiff was injured in an automobile accident and, as here, it was alleged that the driver of the offending vehicle was intoxicated at the time of the collision. The plaintiff served a discovery request pursuant to CPLR 3121 (a), alleging that the defendant’s physical condition was "in controversy” within the meaning of the statute and demanding production of the defendant’s hospital records relating to the accident. The defendant refused to comply with the request and the plaintiff moved for a court order directing compliance. Citing the physician-patient privilege, the Appellate Division affirmed the trial court’s denial of the motion. We affirmed, concluding that plaintiff had not demonstrated that defendant’s physical condition was "in controversy” within the meaning of CPLR 3121 (a) and that, in any event, the requested information was protected by the physician-patient privilege (CPLR 4504) which defendant had not waived by merely denying the allegations in the complaint.

We acknowledged in Koump that there is a strong presumption in favor of discovery and that "full disclosure of all evidence material and necessary in the prosecution or defense of an action” is ordinarily mandated by CPLR 3101. Consequently, where the mental or physical condition of a party is in controversy, a notice may be served pursuant to CPLR 3121 (a) requiring that the party submit to a medical examination or make available for inspection relevant hospital and medical records. The initial burden of proving that a party’s physical condition is "in controversy” is on the party seeking the information and it is only after such an evidentiary showing that discovery may proceed under the statute (Koump v Smith, 25 NY2d, at 300, supra).

Once this preliminary burden is satisfied, however, discovery still may be precluded if the requested information is privileged and thus exempted from disclosure (CPLR 3101 [b]). The statutory scheme, by expressly providing an exception for privileged information, clearly contemplates that certain information, though otherwise material and relevant to a legal dispute, "shall not be obtainable” where it is shown to be privileged (CPLR 3101 [b]). Physician-patient communications, privileged under CPLR 4504, may therefore be shielded from discovery and when it has been established that the requested information is subject to discovery under CPLR 3121 (a), the burden shifts to the person claiming the privilege to assert it by seeking a protective order pursuant to CPLR 3122 (Koump v Smith, 25 NY2d, at 294, supra; see, Bloodgood v Lynch, 293 NY 308, 314). Once the privilege is validly asserted, it must be recognized and the sought-after information may not be disclosed unless it is demonstrated that the privilege has been waived (CPLR 4504 [a]; see, Koump v Smith, 25 NY2d, at 294, supra; 5 Weinstein-Korn-Miller, NY Civ Prac ¶ 4504.19; Fisch, NY Evidence § 554 [2d ed]).

A litigant will be deemed to have waived the privilege when, in bringing or defending a personal injury action, that person has affirmatively placed his or her mental or physical condition in issue (Koump v Smith, 25 NY2d, at 294, supra). As we stated in Koump, this rule is necessary because, notwithstanding New York’s strong policy in favor of the privilege, a party should not be permitted to affirmatively assert a medical condition in seeking damages or in defending against liability while simultaneously relying on the confidential physician-patient relationship as a sword to thwart the opposition in its efforts to uncover facts critical to disputing the party’s claim (id.; see, 3A Weinstein-Korn-Miller, NY Civ Prac ¶ 3121.01). Nevertheless, a party does not waive the privilege whenever forced to defend an action in which his or her mental or physical condition is in controversy. In order to effect a waiver, the party must do more than simply deny the allegations in the complaint — he or she must affirmatively assert the condition "either by way of counterclaim or to excuse the conduct complained of by the plaintiff” (Koump v Smith, 25 NY2d, at 294, supra).

IV.

Applying these principles to the facts of this case, we conclude that plaintiffs have satisfied their threshold burden of demonstrating that defendant’s physical condition at the time of the accident is in controversy. The affidavits submitted in support of their discovery motion indicate that defendant had been drinking rather heavily over a seven-hour period leading up to the accident and there is at least some suggestion, albeit hearsay, that she may have been "shut off” by the bartender at Eddie’s Conklin Inn because of her intoxicated condition. Moreover, it is a matter of public record, alluded to in the affidavit of plaintiffs’ attorney, that defendant was convicted of criminally negligent homicide based on the events surrounding the accident. This evidence, we think, is plainly sufficient to demonstrate that defendant’s physical condition at the time of the accident is "in controversy” within the meaning of CPLR 3121 (a) and thus potentially subject to discovery.

The information sought by plaintiffs, however — hospital records relating to defendant’s physical condition and blood alcohol content following the accident — indisputably falls within the scope of the physician-patient privilege as information acquired by a physician "in attending [defendant] in a professional capacity, and which was necessary to enable him to act in that capacity” (CPLR 4504). Defendant cannot be said to have waived the privilege simply by denying the allegations in the complaint or by testifying that she cannot remember any details of the incident where the fact of her memory loss is not being advanced to excuse her conduct (Koump v Smith, 25 NY2d, at 294, supra). Nor has she waived the privilege by asserting the defenses of comparative negligence and the failure of plaintiffs to wear seat belts since neither defense seeks to excuse the conduct complained of by asserting a mental or physical condition. Moreover, the mere fact that the privilege presents an obstacle to plaintiffs’ discovery of legally pertinent information that would assist them in proving their claim is not, as the dissent seems to suggest, evidence that the privilege is not properly recognized in this case. Indeed, it is inherent in the very nature of an evidentiary privilege that it presents an obstacle to discovery and it is precisely in those situations where confidential information is sought in advancing a legal claim that such privilege is intended to operate. Were we to carve out an exception to the privilege whenever it inhibited the fact-finding process, it would quickly become eviscerated.

Plaintiffs’ contention that the privilege is somehow forfeited upon their submission of evidentiary facts demonstrating that defendant’s physical condition is in controversy is without merit and confuses the amount of evidence required to justify discovery under CPLR 3121 (a) with that required under CPLR 4504 to establish waiver. Plaintiffs may not effect a waiver of the privilege for the simple reason that the privilege is not theirs to waive but rather belongs to the patient (Richardson, Evidence § 434 [Prince 10th ed]; see, Prink v Rockefeller Center, 48 NY2d 309, 314; Iseman v Delmar Medical-Dental Bldg., 113 AD2d 276, 278). Once it has been shown that the requested information is privileged under the statute, therefore, only the patient or an authorized representative may waive the privilege and permit disclosure (CPLR 4504 [a]; Richardson, Evidence § 435 [Prince 10th ed]; 5 Weinstein-Korn-Miller, NY Civ Prac ¶ 4504.19; Fisch, NY Evidence § 554 [2d ed]). That has not occurred in this case and thus plaintiffs’ discovery motion was properly denied. We have examined plaintiffs’ remaining contentions and find them to be without merit.

Accordingly, the order of the Appellate Division should be affirmed and the certified question answered in the negative.

Bellacosa, J.

(dissenting). I respectfully disagree with the majority because in my view the rule in Koump v Smith (25 NY2d 287) is misapplied and then extended in a direction antithetical to that which was intended. Defendant is thus allowed to wield the physician-patient privilege, against the truth-finding process in a case in which the remedial statutory protection (CPLR 4504 [a]) and in which sound policy and interpretation compel the opposite result (compare, Vehicle and Traffic Law § 1194 [2] [a]; former § 1194-a [2] [a]; § 1194 [3] [b] [1]). I would grant disclosure of defendant’s hospital record of a blood test showing an alcohol content of .27 — almost three times the legal limit (Vehicle and Traffic Law § 1192 [2]). My vote is to reverse the denial in the lower courts of the plaintiffs’ motion.

Tonia Dillenbeck was killed and her 10-year-old son, one of the plaintiffs here, was seriously injured when the vehicle in which they were riding was hit by one driven by defendant Hess. Hess was injured, hospitalized, and a blood alcohol test was administered. In a criminal action arising from this same incident, the defendant was convicted of criminally negligent homicide. Plaintiffs sue for wrongful death and personal injuries, and contend that Hess’ intoxication caused the accident.

Hess pleaded in her answer by general denial that she was not intoxicated, and affirmatively asserted comparative negligence and plaintiffs’ failure to wear seat belts. Also, during the examination before trial, she claimed to have no memory of the accident or its attendant details.

Plaintiffs formally moved to compel defendant Hess to execute authorization for them to obtain a copy of Hess’ hospital records pertaining to her blood alcohol content. Defendant opposed discovery, arguing that she enjoyed a physician-patient privilege in this respect. The Appellate Division affirmed the denial of discovery, holding that when defendant driver simply denies being intoxicated, the physician-patient privilege prevails. This court affirms, principally relying on Koump v Smith (25 NY2d 287, supra) and its interpretation of CPLR 4504.

I disagree with what I perceive to be the majority’s holding: (1) that the party enjoying the physician-patient privilege must personally waive it in the sense that a waiver cannot be effected by operation of law through a party’s conduct, and (2) that it is defendant alone who subjectively determines whether her own physical condition is "in controversy” and who thus controls whether plaintiff may gain access to vital evidence. The practical consequence of the majority’s holding is to deny drunk driving accident victims access to blood alcohol test results and to allow defendant to conceal key scientific evidence from plaintiffs and from the adjudication process.

The physician-patient privilege is a statutory shield overturning the common-law rule generally allowing disclosure of otherwise admissible communications to a physician, even those made in the strictest confidence. The remedial statute (CPLR 4504) is premised on the perceived necessity of encouraging uninhibited communications by patients to physicians, presumably producing better medical advice and treatment. The underlying rationale for this rule has more lately been questioned and criticized by commentators for conflicting with New York’s modern, liberal disclosure scheme under CPLR 3101 (a) and 3121, and for impeding the courts’ primary truth-seeking function (see, 5 Weinstein-Korn-Miller, NY Civ Prac ¶ 4504.02; McLaughlin, 1970 Supplementary Practice Commentary, McKinney’s Cons Laws of NY, Book 7B, 1989 Supp Pamph, CPLR 4504, at 319; 8 Wigmore, Evidence § 2380a [McNaughton rev 1961]; McCormick, Evidence § 108). Misuse of the privilege prompted this observation: "Actually the privilege is utilized as a tactical maneuver, and is seldom invoked for any purpose other than to suppress facts that are injurious to the legal position of the person who seeks its protection. Rarely is it used to guard a secret” (Fisch, NY Evidence § 557 [2d ed]). For these reasons, the modern approach is to apply the privilege restrictively rather than expansively (see, Williams v Roosevelt Hosp., 66 NY2d 391, 396; see also, 8 Wigmore, Evidence § 2380a, at 832 [McNaughton rev 1961]; see also, NY Proposed Code of Evidence § 509 [d] [4] [providing disclosure of privileged communications in the generalized interest of justice]; compare, Matter of Knight-Ridder Broadcasting v Greenberg, 70 NY2d 151, 159).

The privilege and its underlying policy are also put in significant competition with statutory developments in the Vehicle and Traffic Law designed to address the great public concern and interest in dealing with drunk drivers. The law in this State now is that any person who operates a motor vehicle shall be deemed to have given consent to a chemical test where there are reasonable grounds to believe that the driver’s ability was impaired by alcohol, provided the test is administered by or at the direction of a police officer (Vehicle and Traffic Law § 1194 [2] [a]). Furthermore, submission to a chemical test is compulsory when a person has been killed or seriously injured by a drunk driver (Vehicle and Traffic Law § 1194 [3] [b] [1]). Holding that a person has a privilege of this kind in an area regarding information that the State explicitly elsewhere requires to be disclosed creates an unnecessary inconsistency in statutory application.

Koump v Smith (25 NY2d 287, supra), with appropriate consideration to all its many facets, does not, in my view, compel the result reached by the majority. The drivers of two automobiles were hospitalized following a head-on collision. Blood tests were taken and in a personal injury action the plaintiff sought the results of the defendant’s blood test, contending that it would confirm plaintiff’s allegation that defendant had been intoxicated. Defendant’s answer simply denied the allegation of intoxication; he raised no counterclaim and offered no explanation. The only support for plaintiff’s motion was an affidavit by plaintiff’s attorney which was based on double hearsay. We acknowledged that while a plaintiff waives the physician-patient privilege by commencing an action which puts plaintiff’s own physical condition in issue, a defendant may not be deemed similarly or automatically to have waived the privilege simply by defending an action for personal injury. To effect a waiver of defendant’s privilege by operation of law based on defendant’s own actions, Koump teaches that a defendant must "affirmatively assert[] the condition either by way of counterclaim or to excuse the conduct complained of by the plaintiff” (25 NY2d, at 294, supra [emphasis added]). In other words, the person asserting the privilege cannot have it both ways and especially may not use the shield as a sword.

But the court’s analysis did not end there; the court went on to explain what is needed to place physical condition in controversy. The court exemplified with cases in which defendant’s pleadings had not placed physical condition "in controversy”, but in which the evidentiary showing nevertheless put the condition genuinely "in controversy” (see, Koump v Smith, at 295-298, supra). The court then differentiated the case before it from those cases: "In each of those cases the defendant’s physical condition was in controversy, either because he affirmatively asserted it in a pleading or at an examination before trial or because he had undergone a prior physical examination which substantiated or gave credence to the allegations of the plaintiff’s complaint. In the instant case, however, we have only the plaintiff’s pleading and the statement in the attorney’s affidavit that the police report says that the policeman said that Dr. Sperling said that the defendant appeared intoxicated — a double link of hearsay. In our view, although this lends some credence to plaintiff’s complaint, it is not sufficient to put defendant’s physical condition in controversy within the meaning of the statute. As a matter of policy, something more must be required” (id., at 299).

The court then mapped out how to satisfy the burden. "The affidavits must contain evidentiary matter and not mere conclusory statements. Because the affidavit must be sworn to by a person having knowledge of the facts, an affidavit by an attorney should be disregarded unless he happens to have personal knowledge of the facts” (id., at 300). Most significantly, the Koump court affirmed the denial of discovery "without prejudice to a new application upon a proper showing”.

As Judge Bergan’s concurring opinion tersely sums it all up, the holding in Koump cannot be interpreted to mean that "the assertion of a physical cause for an accident, and the denial of the assertion by a defendant, can never constitute a sufficient basis for inspecting defendant’s hospital records; because, if this were its holding, it would have flatly cut off any possible inspection on this record and not allowed renewal of the application” (id., at 300 [Bergan, J., concurring]; see also, Prink v Rockefeller Center, 48 NY2d 309, 316; Barker, 1970 Survey of New York Law: Evidence, 22 Syracuse L Rev 99, 109-110).

If a party comes forward with unequivocal proof of the other party’s physical condition at the time of the accident, the condition should be deemed "in controversy” and evidence relating to it subject to discovery. When a party puts the other party’s condition "in controversy” by such evidence and when a party is clearly not on a "fishing expedition”, the interest of letting truth triumph outweighs the defendant’s desire to cloak highly relevant scientific evidence in secrecy. This is consistent with the words of the statute, with the intent of the statutory protection, with a realistic interpretation of Koump, with sound construction of remedial statutes in derogation of the common law, and with present-day legislative attitudes reflected in related statutory developments. This should be especially so when that result and analysis also coincide with the general modern trend towards open and full reciprocal discovery and with fundamental fairness between the parties.

In Williams v Roosevelt Hosp. (66 NY2d 391, supra), our court’s own most recent articulation in this general area, this very privilege was accorded a narrow interpretation, holding it applicable to confidential communications only and "not the mere facts and incidents of a person’s medical history” (id., at 396; see also, Matter of Knight-Ridder Broadcasting v Greenberg, 70 NY2d 151, supra). Arguably, though it is not necessary to decide in this case, the blood alcohol content test results may not even be a "communication” under Williams because it is neither confidential nor intended to be secreted within the physician-patient privilege in this narrow context.

In sum, plaintiffs’ motion for discovery in this case should be granted for several interrelated reasons. First, unlike the defendant in Koump who simply denied plaintiff’s allegation of intoxication, defendant Hess has gone far beyond that in this case — she claims no memory of the event and has affirmatively pleaded comparative negligence and plaintiffs’ failure to wear seat belts. In so doing, defendant Hess has sought in whole and in part to "excuse” her conduct. Thus, in this context, defendant Hess should be charged by operation of law with a waiver of the privilege by affirmatively placing her own physical condition "in controversy” (Koump v Smith, supra, at 294).

Second, plaintiffs’ proffer of evidence supporting their discovery motion also satisfies Koump’s standard that plaintiff can bring about a legal waiver of defendant’s privilege by an evidentiary showing that defendant’s condition is genuinely "in controversy” (id., at 300). Plaintiff submitted affidavits from persons swearing on their own direct knowledge that they observed defendant Hess consume 9 or 10 alcoholic drinks in the hours just prior to the accident. Plaintiff has also established through submission of the sentencing minutes from defendant’s conviction for criminally negligent homicide that a blood alcohol test was conducted at the hospital and that the test reveals that defendant was highly and legally intoxicated at the time of the accident.

Third, it cannot be said that this defendant has a legally cognizable privilege expectation with respect to her blood alcohol test results, especially in view of the Legislature’s present-day policies and statutory expressions in this area.

Taken together, these satisfactions by plaintiffs and by defendant of Koump’s prerequisites and adherence to sound statutory construction and the latest policy reflections from the Legislature all lead to only one conclusion — reversal in favor of plaintiffs.

To allow defendant to sweep scientific evidence under the rug of a physician-patient privilege in this case is to allow her to hide the truth, without legal justification or good purpose.

Judges Simons, Titone and Hancock, Jr., concur with Judge Alexander; Judge Bellacosa dissents and votes to reverse in a separate opinion in which Chief Judge Wachtler and Judge Kaye concur.

Order affirmed, with costs, and certified question answered in the negative.

      . We note in passing that section 1195 of the Vehicle and Traffic Law requires that the blood alcohol test results of any person arrested for operating a motor vehicle while under the influence of alcohol be admitted into evidence where such results are obtained pursuant to a chemical test administered at the direction of a police officer or by court order (Vehicle and Traffic Law §§ 1192, 1194). This statutory provision, however, obviously does not contemplate the mandatory disclosure of blood alcohol evidence not obtained in the context of a possible criminal prosecution under the Vehicle and Traffic Law. Furthermore, we see no "unnecessary inconsistency” (dissenting opn, at 292) in declining to import the provisions of that criminal discovery statute into this civil case to compel disclosure of hospital records containing information acquired by defendant’s physician for the express purpose of medical treatment. This is particularly true where the Legislature has not provided the slightest indication that it intended to abrogate the protection accorded ordinary physician-patient communications under CPLR 3101 (b) and 4504 (a) in all cases where blood alcohol evidence is sought in connection with an action arising out of a motor vehicle accident.

      . Following the accident, defendant was indicted and charged with second degree manslaughter, vehicular manslaughter, third degree assault, second degree reckless endangerment and operating a vehicle while under the influence of alcohol. After a jury trial, defendant was convicted of the lesser included offense of criminally negligent homicide and acquitted of all other charges. The results of the blood alcohol test administered to defendant at the hospital, indicating a blood alcohol level of .27%, were ruled inadmissible at defendant’s criminal trial, the court concluding that the test results were protected by the physician-patient privilege and that the privilege had not been waived.

      . Excerpts from the minutes of defendant’s sentencing upon her conviction of criminally negligent homicide confirming that a blood alcohol test was administered to defendant upon her admission to the hospital were also submitted, as was a copy of a written notification denying defendant’s claim for no-fault insurance benefits.

        . The suggestion in the dissent that defendant’s blood alcohol test results may not qualify as a "communication” protected under CPLR 4504 is clearly erroneous and directly contradicted by the case law and expert authorities. Though a physician is not precluded from testifying concerning ordinary incidents and facts of a person’s medical history that are obvious to those without professional training, it is universally acknowledged that any medical information acquired by the physician through the application of professional skill or knowledge is protected by the statute (Richardson, Evidence § 432, at 424-425 [Prince 10th ed]; Fisch, NY Evidence § 544, at 361 [2d ed]; 5 Weinstein-Korn-Miller, NY Civ Prac ][ 4504.08; see, Williams v Roosevelt Hosp, 66 NY2d 391; Klein v Prudential Ins. Co., 221 NY 449, 453). Quite clearly, the information obtained by defendant’s physician in administering a blood alcohol test to defendant was the product of professional skill and knowledge and would not have been apparent to a layman uninitiated in the medical arts. That information, therefore, is without question a protected communication under CPLR 4504.

      . The dissent is incorrect in asserting that in Koump this court concluded that the privilege is automatically waived whenever the defendant’s physical condition is genuinely in controversy. We decided no such thing, but merely noted quite properly that the question of whether the defendant’s physical or mental condition is in controversy is the "primary question” that must be resolved before discovery may proceed under CPLR 3121 (a) (Koump v Smith, 25 NY2d 287, 291). Since the Appellate Division had not addressed this question, we discussed the case law in order to "lay down guidelines for the lower courts” for determining when the "in controversy” requirement of CPLR 3121 (a) will be deemed satisfied (id., at 295). We then distinguished those cases where the requirement was satisfied from the facts of Koump, concluding that the plaintiff in Koump had not met his preliminary burden of demonstrating that the defendant’s physical condition was "in controversy” within the meaning of the statute (id., at 300). That we affirmed the denial of discovery without prejudice to plaintiff’s making a new application means only that the plaintiff was afforded a second opportunity to satisfy the "in controversy” requirement. Nowhere in the opinion is it stated that the privilege is forfeited where the plaintiff is able to demonstrate that defendant’s physical condition is in controversy; in fact, the opinion compels just the opposite conclusion since it expressly states that the privilege is not waived "whenever [emphasis in original] a party defends an action in which his mental or physical condition is in controversy” (id., at 294 [emphasis added]).

      . The dissent challenges the notion that the physician-patient privilege must be personally waived by the patient, apparently contending that the privilege may be waived by operation of law whenever the patient’s physical condition is generally " 'in controversy’ ”, regardless of whether the patient has affirmatively placed his or her condition in issue (dissenting opn, at 291). This argument is difficult to comprehend, however, since the sine qua non of any evidentiary privilege is that it is personal to, and can only be waived by, the privilege holder (see, e.g., Richardson, Evidence § 418 [attorney-client], § 425 [clergyman-penitent], § 453 [husband-wife]). Were a different rule applied to the physician-patient privilege, the privilege would become meaningless since confidential communications between physicians and patients would be at the mercy of third parties having no direct stake in that confidential relationship. And while certain exceptions to the privilege have been recognized by the Legislature and the courts (see, CPLR 4504 [b] [dentist required to disclose information for purpose of identification and where patient under age of 16 has been the victim of a crime]; Public Health Law § 3373 [privilege inapplicable for purposes of statute governing controlled substances]; see generally, Fisch, NY Evidence, §§ 547, 548, 549 [2d ed]; 5 Weinstein-Korn-Miller, NY Civ Prac ¶¶ 4504.11, 4504.12, 4504.13, 4504.13a), this is not to be confused with the forced waiver of the privilege once it has been validly asserted.


author: Bellacosa, J.

text:
    The People of the State of New York, Appellant, v John Stone, Respondent. Commissioner, New York State Office of Mental Health, Respondent.
    Argued February 9, 1989;
    decided March 28, 1989

      POINTS OF COUNSEL

      Robert M. Morgenthau, District Attorney (Tami J. Aisenson and Marc Frazier Scholl of counsel), for appellant.
    I. CPL 330.20 (14) authorized the court to place defendant in a secure facility. (Eaton v New York City Conciliation & Appeals Bd., 56 NY2d 340; Bender v Jamaica Hosp., 40 NY2d 560; Matter of Martin B., 138 Misc 2d 685; Matter of Erie County Agrie. Socy. v Cluchey, 40 NY2d 194; Cooper-Snell Co. v State of New York, 230 NY 249; Matter of Albano v Kirby, 36 NY2d 526; People v Flockhart, 96 AD2d 843.) II. CPL 330.20 (14) procedures are constitutional as applied to persons not responsible for criminal acts by reason of mental disease who, at an initial hearing, are not then exhibiting a dangerous mental disorder and do not then seem to be "mentally ill.” Further, the evidence before the CPL 330.20 (14) hearing court was legally sufficient to establish that defendant was suffering from a dangerous mental disorder. (Jones v United States, 463 US 354; People ex rel. Thorpe v Von Holden, 63 NY2d 546; People v Escobar, 61 NY2d 431; People ex rel. Henig v Commissioner of Mental Hygiene, 43 NY2d 334; Warren v Harvey, 632 F2d 925, 449 US 902; Morrissey v Brewer, 408 US 471; Hickey v Morris, 722 F2d 543; Mathews v Eldridge, 424 US 319; United States v Wallace, 845 F2d 1471; Williams v Wallis, 734 F2d 1434.)

      Stephen J. Harkavy, Ronald N. Gottlieb and Marvin Bernstein for John Stone, respondent.
    I. The recommitment procedures delineated in CPL 330.20 (14) do not apply to an insanity acquittee who was adjudged not to have a dangerous mental disorder nor to be mentally ill but was released subject to an order of conditions at the culmination of an initial hearing pursuant to CPL 330.20 (7). (People v Flockhart, 96 AD2d 843; 180 E. 79th St. Corp. v Barba, 5 Misc 2d 588; Hamilton v Rathbone, 175 US 414; People v Besser, 207 Misc 692.) II. Assuming arguendo that the Legislature intended that the recommitment procedures prescribed in CPL 330.20 (14) apply to insanity acquittees adjudged not to have a dangerous mental disorder nor to be mentally ill, the recommitment provision violates respondent’s constitutionally protected rights to due process and equal protection. (Jones v United States, 463 US 354; Addington v Texas, 441 US 418; Jackson v Indiana, 406 US 715; Humphrey v Cady, 405 US 504; O’Connor v Donaldson, 422 US 563; Bolton v Harris, 395 F2d 642; United States ex rel. Shuster v Herold, 410 F2d 1071; Mathews v Eldridge, 424 US 319; Vitek v Jones, 445 US 480; People v Lolly, 19 NY2d 27.)

      Robert Abrams, Attorney-General (O. Peter Sherwood, Yolanda M. Pizarro and Robert L. Schonfeld of counsel), for Commissioner, New York State Office of Mental Health, respondent.
    I. The court below’s statements concerning second track defendants were obiter dicta. (Matter of Hearst Corp. v Clyne, 50 NY2d 707.) II. Since defendants in the second track of CPL 330.20 (7) have previously been committed to a psychiatric facility they may be recommitted to a secure psychiatric facility pursuant to CPL 330.20 (Matter of Erie County Agric. Socy. v Cluchey, 40 NY2d 194; Finger Lakes Racing Assn. v New York State Racing & Wagering Bd., 45 NY2d 471.) III. CPL 330.20 (14) is consistent with equal protection and due process. (People ex rel. Henig v Commissioner of Mental Hygiene, 43 NY2d 334; People v Escobar, 61 NY2d 431; People ex rel. Thorpe v Von Holden, 63 NY2d 546; Matter of Torsney, 47 NY2d 667; Jones v United States, 463 US 354; O’Connor v Donaldson, 422 US 563.)
   OPINION OF THE COURT

Bellacosa, J.

Two police officers responded to a 911 emergency call from a mother that her adult son, respondent Stone, had beat her and was threatening to kill her. Shortly after they entered the apartment, Stone injured both officers with a baseball bat and was thereafter charged with assault, second degree. The People consented to defendant’s plea of not guilty by reason of mental disease or defect, in Supreme Court, Criminal Term, New York County. This allowed him to be acquitted on that special plea authorization (CPL 220.15) and triggered the postadjudication Criminal Procedure Law provisions governing that resolution of criminal charges.

After a mandatory psychiatric examination (CPL 330.20 [2]) and an initial hearing (CPL 330.20 [6]), Supreme Court con-eluded that under the statutory definitions (CPL 330.20 [1] [c], [d]) Stone was not then suffering from a dangerous mental disorder or mental illness. The court discharged him but only subject to an authorized order of conditions (CPL 330.20 [7]). One condition was his continued voluntary participation in a specific psychiatric treatment program. Five months later, as Stone’s condition was deteriorating, he eloped from his voluntary program. He became acutely suicidal and, upon seeking admission to a different psychiatric facility, assaulted a physician.

The District Attorney, with the consent of Stone’s criminal defense attorney and the New York State Office of Mental Health, then applied for a recommitment order alleging Stone had violated his order of conditions and that he suffered from a dangerous mental disorder (CPL 330.20 [14]). Following the CPL 330.20 evidentiary hearing, the Supreme Court found upon extensive medical proof of paranoid schizophrenia and command hallucinations that Stone suffered from a dangerous mental disorder and was a danger to himself or others (CPL 330.20 [1] [c]). The court ordered his placement in a secure psychiatric facility for six months.

A three-Justice majority of the Appellate Division reversed this order, concluding principally that resort to the recommitment provisions of CPL 330.20 (14) following an initial hearing conditional discharge is neither logically consistent nor statutorily authorized; that Stone’s commitment should be effected in accord with the provisions of only the Mental Hygiene Law (though "orders of conditions” are alien to the Mental Hygiene Law); and that the District Attorney lacked authority to seek recommitment absent a prior secure facility psychiatric placement. Two Justices dissented and reasoned that the plain wording of the pertinent statute and subdivision, as also unequivocally substantiated by its legislative history, authorized a recommitment proceeding during the period covered by an order of conditions.

The People argue that regardless of a criminal acquittee’s postadjudication commitment status, the District Attorney may initiate a recommitment proceeding during the pendency of an order of conditions. Stone counters that a "recommitment order” must be premised on an earlier "commitment order” and that all postadjudication proceedings regarding acquittees who were initially found not tó suffer from a dangerous mental disorder are governed only by the Mental Hygiene Law and not at all by the Criminal Procedure Law.

We hold that a defendant absolved as not responsible for an otherwise criminal act by reason of mental disease or defect, who after an initial mandatory hearing is found not to be suffering from either a dangerous mental disorder or a mental illness, may while subject to an order of conditions under the initial disposition nevertheless be recommitted to a secure psychiatric facility pursuant to CPL 330.20 (14). Thus, we reverse and answer the certified question in the negative, deciding the case on statutory construction grounds only.

The postadjudication statutory scheme set forth in CPL 330.20 provides three alternative tracks, with different treatment progressions and procedural consequences, based upon the hearing court’s postacquittal determination of a criminal acquittee’s mental condition (CPL 330.20 [6], [7]; Approval Mem of Governor Carey, L 1980, ch 548, 1980 McKinney’s Session Laws of NY, at 1880; 1981 Report of NY Law Rev Commn [1981 NY Legis Doc No. 65], The Defense of Insanity in New York State, 1981 McKinney’s Session Laws of NY, at 2251, 2265). The applicable tracks are premised upon findings either "(i) that the defendant has a 'dangerous mental disorder’; or (ii) that the defendant does not have a dangerous mental disorder but is 'mentally ill’; or (iii) that the defendant does not have a dangerous mental disorder and is not mentally ill” (1981 Report of NY Law Rev Commn, op. cit, at 2265-2266; see, CPL 330.20 [1] [c], [d]; [6], [7]).

If the hearing court finds the acquittee has a dangerous mental disorder, it must issue a "commitment order” placing the person in a secure psychiatric facility for six months (CPL 330.20 [1] [f]; [6]). If the acquittee does not have a dangerous mental disorder but is mentally ill, the court must issue an order of conditions and an order committing the acquittee to the care of the Commissioner of Mental Health (CPL 330.20 [7]). Finally, if the court concludes that the acquittee does not suffer from either a dangerous mental disorder or a mental illness, then it must discharge the acquittee either unconditionally or subject to an order of conditions (CPL 330.20 [7]). An order of conditions imposed on track two acquittees and available also as to track three acquittees is a device enabling courts to maintain a supervisory role over particular discharged criminal acquittees by "directing a defendant to comply with this prescribed treatment plan, or any other condition which the court determines to be reasonably necessary or appropriate, and, in addition, where a defendant is in custody of the commissioner, not to leave the facility without authorization” (CPL 330.20 [1] [o] [emphasis added]; see, Stokman and Heiber, The Insanity Defense Reform Act in New York State 1980-1983, 7 Intl J of L & Psy 367, 368).

CPL 330.20 (14) provides that "[a]t any time during the period covered by an order of conditions an application may be made by the commissioner or the district attorney * * * for a recommitment order when the applicant is of the view that the defendant has a dangerous mental disorder. * * * If the court finds [after a hearing] that the defendant has a dangerous mental disorder, it must issue a recommitment order” (emphasis supplied). Notably, the phrases "commitment order” and "recommitment order” are used only in connection with persons found to suffer from a dangerous mental disorder (see, e.g., CPL 330.20 [6], [8], [14]). Also, the statute importantly defines them singularly as: a " '[commitment order’ or 're-commitment order’ means an order committing a defendant to the custody of the commissioner for confinement in a secure facility for care and treatment for six months” (CPL 330.20 [1] KD.

A recommitment order is therefore expressly premised on an "order of conditions” and on a current dangerous mental disorder, not on a prior commitment. Nowhere does the statute predicate it on a prior commitment. Indeed, persons who are found after an initial hearing to be then suffering from a dangerous mental disorder are the only criminal acquittees subject to an initial "commitment order”. The secure psychiatric placement of such dangerously ill persons and the guarantee of continued judicial oversight pursuant to CPL 330.20 obviate the need in that treatment track for an order of conditions (Stokman and Heiber, The Insanity Defense Reform Act in New York State 1980-1983, 7 Intl J of L & Psy 367, 368; compare, CPL 330.20 [1] [f\; [6]; with CPL 330.20 [7]). Thus, the order of conditions predicate for a recommitment order would be drained of its meaning and purpose if the respondent’s theory were upheld.

Further, criminal acquittees discharged after an initial hearing (CPL 330.20 [7]), or transferred from a secure to a nonsecure facility (CPL 330.20 [11]), or released subsequent to a prior secure placement (CPL 330.20 [12]), or committed directly to the custody of the Commissioner of Mental Health (CPL 330.20 [7]) may all be subject to orders of conditions, yet under the respondent’s reasoning would end up outside the procedural framework and intended protection of the Criminal Procedure Law. The plain purpose of a recommitment order within that statutory scheme is to keep a criminal acquittee previously found through one of these devices not to suffer from a dangerous mental disorder and, thus, not thereby subject to the CPL procedural devices, within the CPL’s continued oversight, due to the potentiality of a dangerous mental disorder. Insofar as the only prerequisites to a recommitment order are an outstanding order of conditions and the procedural safeguard of a judicial finding, after hearing, of a then current dangerous mental disorder, the effect of the plain meaning of the statutory language is that a recommitment order is not literally or logically dependent upon a prior "commitment order” (see, Doctors Council v New York City Employees’ Retirement Sys., 71 NY2d 669, 675; Patrolmen’s Benevolent Assn. v City of New York, 41 NY2d 205, 208).

Even if the statutory scheme were arguably deemed facially ambiguous, consideration of the legislative history of the Insanity Defense Reform Act of 1980 confirms the interpretation and application of the statute we give in this case (see, Doctors Council v New York City Employees’ Retirement Sys., supra, at 675). The Law Revision Commission explained three times in discussion as to each treatment track that, under CPL 330.20 (14), '[a]t any time during the effective period of an order of conditions * * * the district attorney or the Commissioner may apply to the court for a recommitment order if he believes that the defendant has a dangerous mental disorder. If, after a hearing on the application, the court finds that the defendant has a dangerous mental disorder, it must issue a recommitment order directing the defendant to be committed to a secure facility in [the Department of Mental Hygiene] for six months. If a recommitment order is issued, subsequent proceedings regarding retention or release of the defendant shall be governed by the provisions of proposed CPL 330.20” (1981 Report of NY Law Rev Commn, The Defense of Insanity in New York State, 1981 McKinney’s Session Laws of NY, at 2251, 2267-2268, [emphasis added]). The Law Revision Commission appended a flow chart to its report, tracing the stages within each track and demonstrating its expert understanding and narrative explanation as to precisely what it was recommending to the Legislature for enactment with respect to each of the three tracks. This also confirmed the applicability of the recommitment procedures to persons discharged subject to an order of conditions (1981 Report of NY Law Rev Commn, op. cit., at 2276-2277). The Governor’s Approval Message to the Insanity Defense Reform Act added that "[a]t any time during the effective period of an order of conditions, which is valid for five years and may be extended for another five years, the District Attorney or the Commissioner of the Department of Mental Health can request the defendant’s recommitment to a secure facility” (Approval Mem of Governor Carey, L 1980, ch 548, 1980 McKinney’s Session Laws of NY, at 1879, 1880).

These important and express manifestations - of confirmatory legislative history, evincing intent and expertise as to the independent (that is free-standing from a prior commitment order) recommitment provision, should be given consideration and weight in order to appreciate the comprehensive, coherent statutory language and scheme and the practical interrelationship of commitment orders, recommitment orders, and orders of conditions (see, Uniformed Firefighters Assn. v Beekman, 52 NY2d 463, 471; Matter of Erie County Agric. Socy. v Cluchey, 40 NY2d 194, 200).

The legislative objectives of ensuring the safety of the public, safeguarding the rights of defendants found not responsible, and providing for the treatment of acquittees suffering from a current mental illness are secured by recommitment provisions designed to ensure that all persons who develop or relapse into a dangerous mental disorder during the pendency of the order of conditions are amenable to a secure psychiatric placement (see, 1981 Report of NY Law Rev Commn, The Defense of Insanity in New York State, 1981 McKinney’s Session Laws of NY, at 2251; Approval Mem of Governor Carey, L 1980, ch 548, 1980 McKinney’s Session Laws of NY, at 1879, 1880).

The remaining arguments lack merit and the constitutional ones are not preserved because they were not raised at the trial level.

Accordingly, the order of the Appellate Division should be reversed, without costs, the order of Supreme Court, New York County, reinstated insofar as it determined that CPL 330.20 (14) governed and the certified question answered in the negative.

Chief Judge Wachtler and Judges Simons, Kaye, Alexander, Titone and Hancock, Jr., concur.

Order reversed, etc.