author: Cooke, J.

text:
    Shelby White, Appellant, v William E. Guarente et al., Defendants, and Arthur Andersen & Co., Respondent.
    Argued November 16, 1977;
    decided December 21, 1977

      POINTS OF COUNSEL

      Bennett Frankel, P. C., for appellant.
    I. Privity exists between an accounting firm hired by a limited partnership and each partner. (Ultramares Corp. v Touche, 255 NY 170.) II. Plaintiff relied on the Andersen audit through her agent. (Wechsler v Hoffman-La Roche, 198 Misc 540; Farr v Newman, 14 NY2d 183.)

      James D. Zirin, Edward J. Ross, George F. Vary and Charles W. Boand, Chicago, Illinois, for respondent.
    I. The conclusive finding of Special Term and the court below as to the lack of any negligence by Andersen is dispositive. (State St. Trust Co. v Ernst, 278 NY 104; Le Roux v State of New York, 307 NY 397; Harrington v Harrington, 290 NY 126; Aerated Prods. Co. of Buffalo v Godfrey, 290 NY 92; Assets Realization Co. v Howard, 211 NY 430.) II. Plaintiffs appeal here must be confined to the dismissal of the complaint for failure to state a cause of action against Andersen. (Wilson v Mechanical Orguinette Co., 170 NY 542; Matter of Davis, 149 NY 539; Matter of Havemeyer, 149 NY 599; Kelsey v Western, 2 NY 500; Odell v City of New York, 237 NY 564; Mooney v New York El. R. R. Co., 163 NY 242; Gittleman v Feltman, 191 NY 205.) III. A limited partner may not recover on a theory of negligence against an accounting firm engaged by the partnership since there is no privity of contractual relationship. (Ultramares Corp. v Touche, 255 NY 170; Millard v Newmark & Co., 24 AD2d 333; Lichtyger v Franchard Corp., 18 NY2d 528; Riviera Congress Assoc, v Yassky, 18 NY2d 540; Ruzicka v Rager, 305 NY 191; Lynn v Cohen, 359 F Supp 565; Bolger v Laventhol, Krekstein, Horwath & Horwath, 381 F Supp 260; Blue Chip Stamps v Manor Drug Stores, 421 US 723; Cenven, Inc. v Bethlehem Steel Corp., 41 NY2d 842.) IV. Assuming, arguendo, that privity existed, plaintiff-appellant’s admitted lack of reliance on the audited financial statements suffices for dismissal. (State St. Trust Co. v Ernst, 278 NY 104.) V. In any event, plaintiff-appellant did not establish a cause of action against Andersen based on a theory of negligence. (Ryan v J. Walter Thompson Co., 322 F Supp 307, 453 F2d 444, 406 US 907; McGee v Adams Paper & Twine Co., 26 AD2d 186, 20 NY2d 921; Townes v Park Motor Sales, 7 AD2d 109, 7 NY2d 767.)
   OPINION OF THE COURT

Cooke, J.

The issue posed is whether accountants retained by a limited partnership to perform auditing and tax return services may be held responsible to an identifiable group of limited partners for negligence in the execution of those professional services. We hold that, at least on the facts here, an accountant’s liability may be so imposed.

Plaintiff is a limited partner in Guarente-Harrington Associates (Associates), a limited partnership formed in early 1968 for the stated purpose of serving "as a hedge fund through which the funds of its Partners may be utilized in investing and trading in marketable securities and rights and options relating thereto.” The general partners are defendants William E. Guarente and George F. Harrington. In September, 1968, Associates retained defendant Arthur Andersen & Co. (Andersen), a partnership engaged in the general practice of public accountancy, to perform an audit and prepare the tax return of Associates. Such an audit was required by the-partnership agreement.

Among the partnership agreement stipulations were provisions: that the initial capital contribution of each limited partner shall not be less than $250,000; that no partner may withdraw any part of his interest in the partnership, except at the end of any fiscal year upon giving written notice of such intention not less than 30 days prior to the end of such year; that the books and records of the partnership shall be audited as of the end of each fiscal year by a certified public accountant designated by the general partners; and that proper and complete books of account shall be kept and shall be open to inspection by any of the partners or his or her accredited representative.

The complaint purports to embrace five causes of action, four against the two general partners individually, and the fifth against Andersen, the accounting firm. It is this last cause, the gravamen of which is for professional malpractice, with which we are here concerned. It is alleged that there are approximately 40 limited partners. Plaintiff moved for leave to serve an amended and supplemental complaint and defendant Andersen moved for dismissal of the cause of action asserted against it pursuant to CPLR 3211 (subd [a], par 7) on the ground that the pleading fails to state a cause of action, or, alternatively, for a severance of said cause from those asserted against the general partners. The motions were consolidated for disposition and Special Term dismissed the complaint as to Andersen for failure to state a cause of action and directed that judgment be entered dismissing the complaint against Andersen on the merits, as well as ordering a severance of the cause against Andersen, denying the motion to dismiss the causes against the general partners and granting leave to plaintiff to serve an amended and supplemental complaint only on defendant general partners, individually. Plaintiff appealed from so much of Special Term’s order as dismissed the complaint against Andersen for failure to state a cause of action and the Appellate Division affirmed.

The cause of action directed against Andersen alleges, inter alia, that between September 1, 1969 and March 31, 1970 Andersen knew or should have known that Guarente and Harrington were engaging in withdrawal of funds from their capital accounts in violation of the partnership agreement, that on March 31, 1970 Andersen issued its auditor’s report with financial statements of Associates for the fiscal year ending October 31, 1969, and that Andersen violated its professional duties and was guilty of professional misconduct: in that it failed to notify all partners that Guarente and Harrington made withdrawals of funds without proper notice, that the general partners had neglected to prepare and distribute the annual schedule required by the partnership agreement, and that withdrawals were made between November 1, 1969 and March 20, 1970 but were calculated and reported as being retroactive as of October 31, 1969; and in that the audit reports and financial statements were inaccurate and misleading in failing to state that disbursements for various management expenses- other than salaries were made in violation of the partnership agreement and in carrying forward without critical comment misrepresentations as to the value of restricted sécurities held by Associates. From the evidentiary material submitted to Special Term by plaintiff (see Guggenheimer v Ginsburg, 43 NY2d 268 [decided herewith]), the thrust of plaintiff’s claim of malpractice against Andersen centers on the accounting firm’s alleged failure to comment on the withdrawal by the general partners of $2,000,000 of their $2,600,000 capital investment based on back-dated oral notices, avoiding six months of losses prior to actual withdrawal, and the lumping together of the $2,000,000 withdrawals with $49,144 in withdrawals by limited partners so that a reader of the financial statement would not be likely to realize that the two general partners had withdrawn a major portion of all their investments. Emphasis is also placed on the acceptance of the valuations of the general partners of restricted securities without adequate checking.

Citing Ultramares Corp. v Touche (255 NY 170) and contending that plaintiff does not stand in privity with it, defendant Andersen maintains that plaintiff lacks capacity to sue and may not recover for these alleged acts of negligence (see Siegel, Practice Commentaries, McKinney’s Cons Laws of NY, Book 7B, CPLR 3211:13, pp 19-20). Ultramares, however, presented a noticeably different picture than that here, since there involved was an "indeterminate class of persons who, presently or in the future, might deal with the [debtor-promisee] in reliance on the audit” (p 183). There, it was stated at pages 180-181: "In the field of the law of contract there has been a gradual widening of the doctrine of Lawrence v. Fox (20 N. Y. 268), until today the beneficiary of a promise, clearly designated as such, is seldom left without a remedy (Seaver v. Ransom, 224 N. Y. 233, 238). Even in that field, however, the remedy is narrower where the beneñciaries of the promise are indeterminate or general. Something more must then appear than an intention that the promise shall redound to the beneñt of the public or to that of a class of indefinite extension. The promise must be such as to 'bespeak the assumption of a duty to make reparation directly to the individual members of the public if the benefit is lost’ (Moch Co. v. Rensselaer Water Co., 247 N. Y. 160, 164; American Law Institute, Restatement of the Law of Contracts, § 145)” (emphasis added). Indeed, the import of Ultramares is its holding that an accountant need not respond in negligence to those in the extensive and indeterminable investing public-at-large.

Here, the services of the accountant were not extended to a faceless or unresolved class of persons, but rather to a known group possessed of vested rights, marked by a definable limit and made up of certain components (see Ultramares Corp. v Touche, 255 NY 170, 182-185, supra). The instant situation did not involve prospective limited partners, unknown at the time and who might be induced to join, but rather actual limited partners, fixed and determined. Here, accountant Andersen was retained to perform an audit and prepare the tax returns of Associates, known to be a limited partnership, and the accountant must have been aware that a limited partner would necessarily rely on or make use of the audit and tax returns of the partnership, or at least constituents of them, in order to properly prepare his or her own tax returns. This was within the contemplation of the parties to the accounting retainer. In such circumstances, assumption of the task of auditing and preparing the returns was the assumption of a duty to audit and prepare carefully for the benefit of those in the fixed, definable and contemplated group whose conduct was to be governed, since, given the contract and the relation, the duty is imposed by law and it is not necessary to state the duty in terms of contract or privity (cf. Glanzer v Shepard, 233 NY 236, 239; see, also, Scholen v Guaranty Trust Co. of N. Y., 288 NY 249, 253; 1 Harper and James, Torts, § 7.6, p . 546).

In Glanzer v Shepard, a judgment in favor of plaintiffs was upheld where defendants, public weighers engaged by the seller of beans, reported negligently the weight of a quantity of the commodity thus causing plaintiffs, the buyers, to overpay the sellers. Thus, there was involved a negligent misrepresentation which induced a third party to act to his disadvantage.

Judge Cardozo, who wrote both Glanzer and Ultramares, distinguished Glanzer in this fashion: "Here was something more than the rendition of a service in the expectation that the one who ordered the certificate would use it thereafter in the operations of his business as occasion might require. Here was a case where the transmission of the certificate to another was not merely one possibility among many, but the 'end and aim of the transaction,’ * * * The intimacy of the resulting nexus is attested by the fact that after stating the case in terms of legal duty, we went on to point out that viewing it as a phase or extension of Lawrence v. Fox * * *, or Seaver v. Ransom * * *, we could reach the same result by stating it in terms of contract”. (Ultramares, supra, at p 182.) Here, too, the furnishing of the audit and tax return information, necessarily by virtue of the relation, was one of the ends and aims of the transaction.

In Hochfelder v Ernst & Ernst (503 F2d 1100, 1107, revd on other grounds 425 US 185), the court, in discussing recent inroads on the reach of Ultramares, stated: "The courts in diminishing the impact of Ultramares have not only embraced the rule of Glanzer—liability to a foreseen plaintiff—but have extended an accountant’s liability for negligence to those who, although not themselves foreseen, are members of a limited class whose reliance on the financial statements is specifically foreseen.” Here, plaintiff was a member of a limited class whose reliance on the audit and returns was, or at least should have been, specifically foreseen.

As to duty imposed, generally a negligent statement may be the basis for recovery of damages, where there is carelessness in imparting words upon which others were expected to rely and upon which they did act or failed to act to their damage (Nichols v Clark, MacMullen & Riley, 261 NY 118, 125), but such information is not actionable unless expressed directly, with knowledge or notice that it will be acted upon, to one to whom the author is bound by some relation of duty, arising out of contract or otherwise, to act with care if he acts at all (Courteen Seed Co. v Hong Kong & Shanghai Banking Corp., 245 NY 377, 381). Indeed, the rule thus enunciated was specifically approved in Ultramares (supra, at p 185; see, also, International Prods. Co. v Erie R. R. Co., 244 NY 331, 337-338; Everson v First Trust & Deposit Co., 46 AD2d 722; Dorsey Prods. Corp. v United States Rubber Co., 21 AD2d 866, affd 16 NY2d 925).

Defendant Andersen’s contention, that plaintiff falls beyond the bounds of protected parties, rests primarily on the theory that its contract with the limited partnership circumscribed the extent of its obligation and the outer limits of its care. This reasoning fails to recognize that "[t]he duty of reasonable care in the performance of a contract is not always owed solely to the person with whom the contract is made * * * It may inure to the benefit of others” (cf. Rosenbaum v Branster Realty Corp., 276 App Div 167, 168; see, also, Wroblewski v Otis Elevator Co., 9 AD2d 294, 296). While Ultra-mares made it clear that accountants were not to be liable in negligence on the generalized basis that a contract for professional services creates liability in favor of the general populace, this plaintiff seeks redress, not as a mere member of the public, but as one of a settled and particularized class among the members of which the report would be circulated for the specific purpose of fulfilling the limited partnership agreed upon arrangement.

Accordingly, the order of the Appellate Division should be reversed and the motion to dismiss the complaint as against defendant Arthur Andersen & Co. denied, with costs to abide the event.

Chief Judge Breitel and Judges Jasen, Gabrielli, Jones, Wachtler and Fuchsberg concur.

Order reversed, etc.

       The order of affirmance of the Appellate Division recites that the appeal was taken from so much of the order as grants the motion of Andersen to dismiss the complaint as against it "and from the judgment entered thereon.”


source: Caselaw Access Project

author: Gabrielli, J.

license: Public Domain

text:
    The People of the State of New York, Respondent, v Preston Vails, Appellant.
    Argued November 18, 1977;
    decided December 21, 1977

      POINTS OF COUNSEL

      Edwin Ira Schulman for appellant.
    The testimony regarding appellant’s prior similar act was inadmissible. (People v Dales, 309 NY 97; Coleman v People, 55 NY 81; People v Fiore 34 NY2d 81; People v Grutz, 212 NY 72.)

      Eugene Gold, District Attorney (Douglas Eric Grover of counsel), for respondent.
    Appellant received a fair trial. (People v Condon, 26 NY2d 139; People v Molineux, 168 NY 264; People v Jackson, 39 NY2d 64; People v Fiore, 34 NY2d 81; People v Dales, 309 NY 97; People v Goldstein, 295 NY 61; People v McKinney, 24 NY2d 180; People v Mitchell, 40 AD2d 117; People v Acevedo, 32 NY2d 941; People v Gines, 36 NY2d 932.)
   OPINION OF THE COURT

Gabrielli, J.

Through the efforts of an undercover police officer, aided by a surveillance team, the defendant was indicted, tried and convicted upon a jury verdict, of criminal sale of a controlled substance in the first and second degrees. On two separate occasions during the course of the trial reference was made to evidence of prior crimes committed by the defendant and he asserts that such references constituted reversible error. We disagree and affirm the order of the Appellate Division sustaining the convictions.

On December 20, 1973 six members of a narcotics undercover investigative unit met to co-ordinate the focus of their activities for the day. It was determined that their investigation would center around the defendant, who was believed to be trafficking in drugs. Accordingly, undercover officer Nicholas Molfetta placed a telephone call to Wilbur and Denise Bostick, two individuals with whom the police had dealt in connection with other drug investigations involving this defendant, asking them to contact the defendant in order to arrange a buy. Shortly after lunch, Officer Molfetta went to the Clairmont Hotel where he met the Bosticks who informed him that all the arrangements had been made. The party of three then drove to West 112th Street and Lenox Avenue in Manhattan where the purchase was to occur. When they arrived the defendant was not there, and Denise offered to locate him and bring him back to the car, which she successfully accomplished. Officer Molfetta testified, over objection, that he then had the following taped conversation with the defendant:

"Defendant: You beat me.
"Molfetta: What do you mean, I beat you.
"Defendant: The last package that I gave you, it was too much in there.
* * *
"Defendant: You owe me $600.
"Molfetta: No f* * * way I owe you $600.
"Defendant: Well, you’re going to have to come up with something.
"Molfetta: Well, what do you have right now?
"Defendant: Well, I got some dope and I have more coke than dope.
"Molfetta: The coke was s* * * before.
* * *
"Defendant: I don’t have two pieces of dope; but the coke I have has rocks in it.
* * *
"Molfetta: All. right. Listen, I need something to get over. I’ll take the coke, I also want some of the dope because the dope is super.
"Defendant: I know, but I only have a little bit left.
"Molfetta: Whatever you have left, give me.
"Defendant: I got almost a half a piece. Okay.
"Molfetta: How much coke do you have?
"Defendant: I’ll have to check.
"Molfetta: All right, listen, I’ll give Denise some money. How much?
"Defendant: Listen. Give Denise $1,500 and that would take care of the coke, a piece and some of the dope, and if I have more I’ll let you know.”

Molfetta paid the required sum whereupon defendant and Denise walked acrosss 112th Street into a housing project. Shortly thereafter Denise returned and arranged the sale of more cocaine for the additional price of $700, departing once again to the housing project. Finally, the two came back to the car, the defendant remaining in the street while Denise entered the car. Officer Molfetta demanded to see the drugs and, although objections were voiced because of a claimed abundance of police in the area, Denise retrieved the packets from inside her bra, so that the officer could observe the drugs. Officer Molfetta and the Bosticks then drove to another location where the officer was given the drugs.

On cross-examination Officer Molfetta was asked whether his testimony indicated the money was given to Denise, with the apparent intent of demonstrating that the money was not handed directly to defendant. The officer responded, "[w]ell, as I was trying to hand Preston [defendant] the money, on previous occasions, he refused the money and always told me to give it to Denise”. Defense counsel objected that the answer was not résponsive and improperly placed prior criminal activity before the jury. The Trial Judge sustained the objection and directed the jury to disregard the statement, declaring that "[i]t is not evidence in this case.”

Defendant’s primary objection is directed toward the testimony describing the prior transaction in which defendant believed he had made a bad bargain. He argues that this testimony had no probative value and served only to demonstrate a criminal disposition. As a general rule evidence of unconnected, uncharged criminal conduct is inadmissible if offered for no other purpose than to raise an inference that a defendant is of a criminal disposition (People v Fiore, 34 NY2d 81, 84; People v McKinney, 24 NY2d 180, 184; People v Dales, 309 NY 97, 101) but such evidence may be admissible if offered for some relevant purpose (People v Jackson, 39 NY2d 64, 67; People v McKinney, supra, at p 184). Although any evidence of prior criminal conduct may have some prejudicial effect, when the prior activity is directly probative of the crime charged it may be deemed to outweigh that effect (People v Jackson, supra, at p 68; People v McKinney, supra, at p 184). As this court stated in People v Molineux (168 NY 264, 293), "[generally speaking, evidence of other crimes is competent to prove the specific crime charged when it tends to establish (1) motive; (2) intent; (3) the absence of mistake or accident; (4) a common scheme or plan embracing the commission of two or more crimes so related to each other that proof of one tends to establish the others; (5) the identity of the person charged with the commission of the crime on trial.”

The categories delineated in Molineux are not exclusive but merely illustrative of instances where prior criminal conduct is admissible (People v Jackson, supra, at p 68; People v Calvano, 30 NY2d 199, 205-206; Richardson, Evidence [10th ed], § 170, p 140). In this case the trial court admitted the evidence of the prior transaction because the process of buying and making preparations for the sale was inextricably interwoven into this one transaction. Reference to the prior sale was intrinsic to the bargaining between defendant and Officer Molfetta. It concerned the price to be paid and the quality of the drugs, providing highly probative evidence relating directly to the crime charged. When the conversation is so inextricably interwoven with the crime charged in the indictment it may be received in evidence (People v Mitchell, 40 AD2d 117, 119) where, as in this case, the value of the evidence clearly outweighs any possible prejudice.

Objection is also raised to the statement made on cross-examination by Officer Molfetta that on prior occasions the defendant had directed him to make payments to Denise Bostick. The District Attorney asserts that this statement was admissible to show a common plan or scheme. In order to admit the evidence as demonstrative of a common plan there must be a concurrence of common features such that the acts proved can naturally be explained as caused by a general plan of which each act is but a part (People v Fiore, supra, at p 85). The mere act of paying one individual on two or more occasions fails to adequately demonstrate that the acts are merely part of an over-all scheme involving each sale. However, the trial court properly recognized the inadmissibility of this evidence and immediately directed the jury to disregard the statement. Further, the court instructed the witness to restrict his answers only to the specific questions asked. Given the admissibility of the officer’s initial conversation with the defendant and the court’s prompt action striking this statement here challenged and instructing the jury to disregard it, we cannot say there was prejudicial error warranting a new trial.

Accordingly, the order of the Appellate Division should be affirmed.

Chief Judge Breitel and Judges Jasen, Jones, Wachtler, Fuchsberg and Cooke concur.

Order affirmed.

       The term "rocks” indicates pure cocaine which is more potent than the usual street cocaine.


author:
Wachtler, J.
      Cooke, J. (dissenting).

text:
    In the Matter of Gannett Co., Inc., Respondent, v Daniel A. De Pasquale, as Judge of the Seneca County Court, et al., Appellants.
    Argued October 12, 1977;
    decided December 19, 1977

      POINTS OF COUNSEL

      Bernard Kobroff and Alan D. Marrus for appellants.
    I. The decision of the court below prohibiting exclusion of the public and press from a suppression hearing where the purpose of the exclusion was to protect defendants’ right to a fair trial is erroneous and must be reversed. (Nebraska Press Assn, v Stuart, 427 US 539; James v Powell, 51 Misc 2d 705; Branzburg v Hayes, 408 US 665; Pell v Procunier, 417 US 817; Zemel v Rusk, 381 US 1; Matter of United Press Assns. v Valente, 308 NY 71; New York Times Co. v United States, 403 US 713; Matter of Oliver v Postel, 30 NY2d 171; Cox Broadcasting Corp. v Cohn, 420 US 469; CBS, Inc. v Young, 522 F2d 234.) II. Although the release to petitioner-respondent of the hearing minutes has rendered the appeal moot, since the questions presented are of sufficient importance and interest and are likely to recur, this court is justified in entertaining the appeal. (Matter of Turel v Delaney, 285 NY 16; Matter of Glenram Wine & Liquor Corp. v O’Connell, 295 NY 336; Matter of Rosenbluth v Finkelstein, 300 NY 402; Matter of Oliver v Postel, 30 NY2d 171; Matter of United Press Assns. v Valente, 308 NY 71; Matter of Plumbing, Heating, Piping & Air Conditioning Contrs. Assn, v New York State Thruway Auth., 5 NY2d 420; East Meadow Community Concerts Assn, v Board of Educ., 18 NY2d 129; Matter of Hearst Corp. v Cholakis, 54 AD2d 592; People v Marino, 87 Misc 2d 427; People v Pratt, 27 AD2d 199.)

      Robert C. Bernius and John Stuart Smith for respondent.
    I. The court below correctly held that the orders of Judge De Pasquale deprived the public and the press of their Sixth Amendment and statutory rights to a public trial, and imposed unconstitutional restraints upon freedom of the press. (People v Hinton, 31 NY2d 71, 410 US 911; Lewis v Peyton, 352 F2d 791; Matter of Oliver, 333 US 257; United States v American Radiator & Std. Sanitary Corp., 274 F Supp 790, 388 F2d 201, 390 US 922; Tanksley v United States, 145 F2d 58; United States ex rel. Bennett v Rundle, 419 F2d 599; Matter of New York Post Corp. v Leibowitz, 2 NY2d 677; People v Jelke, 308 NY 56; Sheppard v Maxwell, 384 US 333; Craig v Harney, 331 US 367.) II. The court below correctly determined that the orders of Judge De Pasquale deprived respondent of its rights without due process of law, guaranteed by the Fourteenth Amendment to the United States Constitution. (Matter of New York Times Co. v Starkey, 51 AD2d 60; United States v Schiavo, 504 F2d 1, 419 US 1096; People v Morales, 53 AD2d 517; Matter of Hearst Corp. v Cholakis, 54 AD2d 592; Nebraska Press Assn, v Stuart, 427 US 539; Matter of Gannett Co. v Mark, 54 AD2d 818; Bridges v California, 314 US 252.)
   OPINION OF THE COURT

Wachtler, J.

During the course of pretrial suppression hearings in a highly publicized murder 'caseT "the-eourt- directed that the evidentiary proceedings be closed to the public, including the press. The closure order was imposed as a means to ensure the defendants’ right to a fair trial by forestalling the prejudicial effects of further notoriety. In this article 78 proceeding in the nature of prohibition, the petitioner, a disseminator of news through press and television, claims that the court’s action violated First Amendment guarantees and the Sixth Amendment right to a public trial. In what is hardly a novel conflict, its claim presents an open issue within the "free press—fair trial” controversy (see Matter of Oliver v Postel, 30 NY2d 171, 183; Matter of United Press Assns. v Valente, 308 NY 71, 85; cf. Nebraska Press Assn, v Stuart, 427 US 539, 564, n 8).

This claim to unrestricted media access to criminal proceedings of public interest stems from an unusual matter locally known as "the Clapp murder case”. Wayne Clapp was a former town policeman. He had lived his entire 42 years in the Rochester area and had developed deep ties in the surrounding rural communities. On July 19, 1976, he was reported missing.

According to reports in the news media, including the petitioner’s two daily papers and Rochester television station, Clapp had last been seen leaving Roy’s Marina accompanied by two unidentified youths. His boat had later been returned, laced with bullet holes. But his pickup truck and .357 magnum revolver, along with the two strangers, had vanished. Divers began searching Seneca Lake for Clapp’s remains. The body of the deceased, however, was never recovered.

On July 22, the media announced that a nationwide police alert for Clapp’s truck had proved successful. Michigan police had spotted the vehicle and, after a three-hour chase requiring helicopters and tracking dogs, they arrested a 16-year-old Texas youth, Kyle Greathouse, and his 21-year-old traveling companion, David Jones. The next day, front page articles revealed that Greathouse, apparently acquiescing to police requests, had led Michigan authorities to the location where he had buried the stolen revolver. The press later reported, without expanding, that the suspects had made admissions or confessions before waiving extradition proceedings and being returned to New York.

A Seneca County Grand Jury returned a lengthy indictment charging the two youths with second degree murder and robbery. On August 6, petitioner’s morning daily reported that the accused "pleaded innocent yesterday * * * at their arraignment before Seneca County Court Judge Daniel De Pasquale. 'Not guilty, your honor,’ the 16-year-old Greathouse answered * * * Jones gave the same response.”

At the commencement of a pretrial suppression hearing, defense attorneys argued that an unabated buildup of adverse *, publicity had already jeopardized their clients’ ability to receive a fair trial. To minimize the prejudicial effects of further disclosures, they asked that the pretrial proceedings be held in-camera. The District Attorney had no objections. In an oral ruling, the court concluded that "these matters are in the nature of a Huntley hearing and suppression of physical evidence, and it is not the trial * * * Certain evidentiary ■ matters may come up in the testimony of the People’s witnesses that may be prejudicial to the defendants, and for those reasons the court is going to grant both [defendants’] motions.” The public, including the petitioner’s staff reporter, were removed from the courtroom. The suppression hearing then commenced and continued in camera to its conclusion the next day.

Three days later, counsel for Gannett appeared and asked the County Court to reconsider and vacate its ruling nunc pro tunc. Since the proceedings had already been concluded, a copy of the hearing transcript was also requested. While finding this intervention untimely, the court accommodated the asserted public interest. It signed Gannett’s show cause order directing both the defense and the People to justify withholding the transcripts. The issues were fully briefed, and on November 16, the merits were argued. But the advantages of hindsight and further debate only reinforced the court’s initial determination that open suppression hearings, if exposed to notoriety, would have deprived Greathouse and Jones of any meaningful opportunity to receive a fair trial. The court’s original finding of "a reasonable probability of prejudice to the defendants” not only justified closure in the first instance but, in the Trial Judge’s view, applied with equal force to the request for transcripts as well.

The Appellate Division disagreed and, while trial in the criminal proceeding was still pending, granted the petitioner’s renewed request for access to the sealed records. Its Per Curiam decision, while purporting to resolve what had already become an° academic dispute, has nonetheless provided a conduit through which critical aspects of the "free press—fair trial” controversy have been presented for review.

We would ordinarily decline the invitation and dismiss the appeal, taken by the respondents in the article 78 proceeding, for mootness. But this is far from an ordinary appeal. It crystallizes a recurring and delicate issue of concrete significance both to the courts and the news media. And in its broadest implications, it presents a challenge to a fundamental precept of judicial administration—the courts’ inherent power to control their own process. For these reasons, combined with the fact that matters of this character typically evade review, we have retained jurisdiction to entertain the appeal (see Matter of Oliver v Postel, 30 NY2d 171, 178, supra; Matter of United Press Assns. v Valente, 308 NY 71, 76, supra; cf. East Meadow Community Concerts Assn, v Board of Educ., 18 NY2d 129, 135; Matter of Rosenbluth v Finkelstein, 300 NY 402, 404; see, generally, Cohen and Karger, Powers of the New York Court of Appeals, pp 420-421).

Criminal trials are presumptively open to the public, including the press. Public access is secured through a fundamental concept said to be rooted in distrust for secret tribunals—the inquisition, star chamber and lettre de cachet (Matter of Oliver, 333 US 257, 268-270). It is typically the defendant, however, who reminds us on appeal from cases of compelled closure that the right to a public trial is a constitutional guarantee which "the accused shall enjoy” (US Const, 6th Arndt; Civil Rights Law, § 12; former Code Crim Pro, § 8; see, e.g., People v Hinton, 31 NY2d 71, cert den 410 US 911). .It is after all the defendant whose right to a "fair trial in fair tribunal” (Matter of Murchison, 349 US 133, 136; People v McLaughlin, 150 NY 365, 375) and whose very liberty is in jeopardy. And because it is the defendant who suffers directly when wrongfully deprived of public vigilance against possibly unjust prosecution or potential abuse (or nonuse) of judicial discretion, the right to insist on a public trial is primarily that of the accused (Matter of Oliver, supra, at pp 268-271; United States v Sorrentino, 175 F2d 721, 722-723; compare People v Jelke, 308 NY 56, with Matter of United Press Assns. v Valente, 308 NY 71, 80-81, supra).

In practice, this priority need not detract from the public’s general interest in the assurance of fair as well as effective enforcement of its laws. Though somewhat attenuated in comparison with a defendant’s self-interest, each of us shares a stake in an adversary system which consistently dispenses our penal laws impartially (US Const, 5th, 6th, 14th Arndts; NY Const, art I, §§ 2, 6), free from needless prejudicial/ publicity (see, e.g., Sheppard v Maxwell, 384 US 333). Ordinarily, public trials "serve to instill a sense of public trust in our judicial process” (People v Hinton, supra, at p 73). But this assumes that public access in a given case poses "no threat or , menace to the integrity of the trial” (Craig v Harney, 331 US , 367, 377). Because this assumption sometimes fails, neither / the public nor the press has an absolute right to attend all / stages of all criminal trials (e.g., Estes v Texas, 381 US 532, 538; Matter of United Press Assns. v Valente, supra, at p 81). Particularly where a fair trial may hang suspended in the balances, the Constitution should not be considered as a substitute for a sunshine law (see Public Officers Law, §§ 85- ( 89, as amd by L 1977, ch 933; Freedom of Information Act, US Code, tit 5, § 552).

The public’s right to demand access to criminal trials, let alone suppression hearings, was never intended to comprehend outside interference with orderly judicial process. The public trial concept has therefore "never been viewed as imposing a rigid, inflexible straitjacket on the courts. It has uniformly been held to be subject to the inherent power of the court to preserve order and decorum in the courtroom, to protect the rights of parties and witnesses, and generally to further the administration of justice” (People v Jelke, supra, at p 63; accord United States ex rel. Lloyd v Vincent, 520 F2d 1272, 1274, cert den 423 US 937). To this end, the inherent power to limit public access has become a common and integral aspect of due process in trials for particularly sensitive crimes (Judiciary Law, § 4) or, for instance, where closure is necessary to protect a witness’ identity (People v Hinton, 31 NY2d 71, 73, supra), or life (People v Hagan, 24 NY2d 395, cert den 396 US 886) or delicate emotional state (People v Smallwood, 31 NY2d 750; United States ex rel. Smallwood v La Valle, 377 F Supp 1148, affd 508 F2d 837, cert den 421 US 920). Of course, the policies underpinning closure in these matters dictates the sealing of documents and transcripts as well (e.g., Domestic Relations Law, § 235). And in all of these cases, the remedy—legislative or judicial—has called for "a sensitive and wise balancing of the rights of the individual defendant and the interests of the public” (People v Darden, 34 NY2d 177, 181-182).

In other words, we encourage accountability through public legal proceedings and the truthful reporting of whatever transpires in open court (see Civil Rights Law, § 74), but "[only] so far as that object can be attained without injustice to the persons immediately concerned” (Estes v Texas, supra, at»p 542, quoting 2 Cooley’s Constitutional Limitations, p 931 [Carrington ed, 1927]). Having imposed on the Trial Judge an affirmative obligation to ensure this balance (Sheppard v Maxwell, supra, at pp 352-363; Irvin v Dowd, 366 US 717), it would be anomalous indeed to withhold the discretionary power necessary to achieve it.

In the case now before us, the Trial Judge was not presiding over a trial on the merits. His concern was with a suppression hearing which, of course, is "not within the specific meaning of 'trial’ ” (People v Anderson, 16 NY2d 282, 288; see Maurer v People, 43 NY 1, 3; Hopt v Utah, 110 US 574). The court at this stage was not yet forced to insulate an already impaneled jury from extrinsic and inadmissible evi- ; dence of guilt (see Murphy v Florida, 421 US 794; Gonzales v Beto, 405 US 1052; Parker v Gladden, 385 US 363; Jenkins v United States, 380 US 445). Its task instead was to ensure that further pretrial publicity would not impermissibly alter a defendant’s status in the public eye from that of a suspected killer to that of a confessed murderer.

Before any challenged evidence could be submitted to a jury, due process required the Trial Judge to fully and independently resolve, as a matter of law, that the evidence was not obtained in violation of the fundamental constitutional rights of the accused (e.g., Miranda v Arizona, 384 US 436, 467; Jackson v Denno, 378 US 368, 394; Mapp v Ohio, 367 US 643; People v Huntley; 15 NY2d 72, 78). Knowing how damaging the introduction of this evidence could be to a defendant, and that widespread knowledge even of inadmissible evidence could nonetheless predetermine guilt (e.g., Sheppard v Maxwell, 384 US 333, supra), we require the Trial Judge to ensure that tainted evidence never see the light of day (CPL 710). Suppressed evidence should not be used to determine a defendant’s guilt, not at trial and certainly not before trial through publication of illegally obtained evidence by the media, whose credibility is the envy of many institutions (see United States v Nixon, 418 US 683, 714). At their option, the defendants could have later challenged before a jury the voluntariness of their confessions. But this choice is for the accused, not the press.

Defendants Greathouse and Jones sought to invoke these constitutional norms, not by excluding the public or the press from a highly sensationalized murder trial, but rather by excluding allegedly tainted evidence of guilt. The petitioner nonetheless urges us to rule that the trial court’s protective order, however well intentioned, was a nullity in the face of the media’s superior right to be free from prior restraint on publication (US Const, 1st Arndt; NY Const, art I, § 8).

To be sure, when a restraint is imposed to prevent ^ commentary on known facts about a pending criminal case, tensions between First and Sixth Amendment rights are j greatest. The Supreme Court in Nebraska Press Assn, v Stuart (427 US 539, 570, supra) agreed that "the barriers to prior restraint remain high”. In that case, a "gag order” modified by the Nebraska Supreme Court prohibited the press from reporting or commenting on judicial proceedings which had been held in open court. Reporters had attended the "public event”; they had seen and heard what transpired. To prevent dissemination of that highly prejudicial information, the State court purported to restrain all news reports of "confessions or admissions * * * and other information strongly implicative of the accused as the perpetrator of the slayings” (State v Simants, 194 Neb 783, 801). Because "[t]hose who see and hear what transpired can report it with impunity” (Craig v Harney, 331 US 367, 374, supra; see Oklahoma Pub. Co. v District Ct., 430 US 308, 311; Nebraska Press Assn, v Stuart, supra, at p 568; Sheppard v Maxwell, supra, at pp 362-363), the restrictive order was subject to a "heavy presumption against” prior restraint and was ultimately condemned as "clearly invalid” (Nebraska Press Assn, v Stuart, supra, at p 570).

This, of course, does not mean that trial courts are left powerless to stem improper revelation of facts that would present an imminent threat to the impaneling of a constitutionally impartial jury. In fact, as an additional alternative to a trial court’s "benign neglect” outlined in Sheppard v Maxwell (supra, at pp 357-362), the majority in Nebraska Press left open the prophylactic adopted in the case at bar—"[closing of pretrial proceedings with the consent of the defendant” (Nebraska Press Assn, v Stuart, supra, at p 564, n 8; see p 576, n 3; p 584, n 11 [Brennan, J., concurring]). Continuance, extensive voir dire examinations, limiting instructions or venue changes may prove paltry protection for precious rights (see, e.g., Jury System in America [Simon ed, 1975]). Reversals and new trials are hardly acceptable alternatives. The extent of the media’s right to access should not remain unresolved, for it places in issue the very integrity of our courts.

To allow public disclosure of potentially tainted evidence, which the trial court has the constitutional obligation to exclude, is to involve the court itself in the illegality. This potential taint of its own process can neither be condoned nor countenanced. To avoid becoming a link in the chain of prejudicial disclosures, trial courts have the power to exclude the public from pretrial suppression hearings (see ABA Standards Relating to the Administration of Criminal Justice, Pretrial Hearings, § 3.1, p 203 [1974]).<\At the point where press commentary on those hearings would threaten the impaneling of a constitutionally impartial jury in the county ovenue, pretrial evidentiary hearings in this State are presumptively to be closed to the public.

As the locus of public interest, this determination is to rest with the hearing Judge. Of primary consideration is the public’s interest in avoiding any developments that would threaten to truncate a defendant’s right to a fair trial. This concept is premised on the right to an impartial jury as the arbiter of guilt or innocence. To maintain that right, the hearing Judge must have the means to ensure that prospective veniremen do not hear matters from which, by law, they should be insulated.

This was precisely the problem confronting the hearing Judge in the case at bar. The public knew that codefendants Greathouse and Jones had been caught "red-handed” by Michigan police with fruits of the crime. And it was widely known that the defendants had made incriminating statements before being returned to this State. The details, however, were not known, and public curiosity was intense. To safeguard the integrity of its process, the court was required at the outset to distinguish mere curiosity from legitimate public interest.

In so doing, the courts should of course afford interested members of the news media an opportunity to be heard, not in the context of a full evidentiary hearing, but in a preliminary proceeding adequate to determine the magnitude of any genuine public interest. This may be found to outweigh the risks of premature disclosures. In trials involving public officials, for instance, the public may have an overwhelming interest in keeping all proceedings open.

That level of legitimate public concern was not reached in this case. Widespread public awareness kindled by media saturation does not legitimize mere curiosity. Here the public’s concern was not focused on prosecutorial or judicial accountability; irregularities, if any, had occurred out of State. The interest of the public was chiefly one of active curiosity ) with respect to a notorious local happening. While the defendants were still in jeopardy, any true public interest could be fully satisfied, consonant with constitutional free press guarantees, by affording the media access to transcripts redacted ' to exclude matters ruled inadmissible during the closed suppression hearing (cf. Department of Air Force v Rose, 425 US 352, 370-382). Complete transcripts were made available when the defendants’ interests were no longer in jeopardy. The public’s "right to know” was then compatible with the defendants’ right to a fair trial.

This conclusion would ordinarily lead to a reversal inasmuch as the Appellate Division had directed full pretrial disclosure. As noted, however, since the questions presented by this appeal became moot when the pleas were entered, and the relief requested would now serve no purpose, the judgment appealed from should be modified, without costs, to the extent of dismissing the petition solely for that reason.

Cooke, J. (dissenting).

I dissent and vote to affirm the judgment of the Appellate Division.

While court closures may be employed at times for narrowly circumscribed purposes, in this instance invocation of this drastic remedy, without notice, without a hearing, and without substantiation of a clear and present State necessity, abridged the rights of the press to report true accounts of public proceedings and deprived the public of a free flow of information in which they have a great interest. In the absence of compelling necessity, public scrutiny of the administration of justice and the effectiveness of law enforcement agencies cannot be foreclosed.

Petitioner corporation owns and operates two dailies and a television station in the Greater Rochester area. With public attention focused upon the suspicious circumstances surrounding the mysterious disappearance of former Brighton, New York, policeman Wayne Clapp in July, 1976 and the subsequent apprehension and extradition of his alleged slayers, 21-year-old David R. Jones and his 16-year-old companion, Kyle E. Greathouse, in the State of Michigan six days later, petitioner’s newspapers and television studios devoted a great deal of time, manpower and resources to report the investigation of the case and the pretrial proceedings. The notoriety of the crime was heightened by the failure of the police to recover Wayne Clapp’s body from Seneca Lake where, allegedly, it had been dumped after the murder.

When, however, petitioner’s reporter Carol Ritter appeared to observe the suppression hearing on November 4, 1976, both defendants, without prior notice, joined in an oral motion to exclude the press and public from the courtroom. Without insisting upon notice to the press and without directing a hearing on the application, the County Court summarily granted the application, "the court: [S]ince these matters are in the nature of a Huntley hearing and suppression of physical evidence, and it is not the trial of the matter * * * [cjertain evidentiary matters may come up in the testimony of the People’s witnesses that may be prejudicial to the defendant”.

On advice of counsel, petitioner’s reporter requested in writing a postponement of the suppression hearing in order to afford the news media’s attorneys an opportunity to appear and prepare argument against the order of closure. Upon denial, petitioner moved by order to show cause, dated November 8, 1976, to vacate the closure order so that petitioner’s employees could gain access to the transcripts of the hearing. Although the court conceded, at argument on the motion, that it was regrettable that counsel for the petitioner had not been in court when the motion for closure was made, the court denied the application and adhered to its prior order. In rejecting petitioner’s contention that the effect of the order was to deprive the press of its First Amendment function, the court reasoned that the case was unique, that a reasonable probability of prejudice was a consequence of the publication of the happening of the suppression hearing, and that the defendants, as movants for an order of closure, did not bear the burden of establishing prejudice.

Thereafter, petitioner commenced this article 78 proceeding in the Appellate Division, Fourth Department, to prohibit enforcement of County Court’s order. The Fourth Department unanimously sustained the petition, vacated the order of closure and enjoined its enforcement, holding: "The exclusionary order entered by the County Court is not supported by a showing of compelling factual circumstances. * * * No finding was made concerning the extent of pretrial coverage in the case, the impact which the disclosures would be expected to produce, the size of the prospective jury pool in Seneca County nor as to any other matter that would indicate with a reasonable amount of certainty that the defendants could not receive a fair trial in Seneca County without a closed Huntley hearing. The closure order entered here lacks the requisite factual basis necessary to overcome the right of the public and press to open judicial proceedings” (55 AD2d 107, 110).

On appeal to this court, appellants urge that there exists a fundamental distinction between the prohibited blanket "gag” order (see Nebraska Press Assn, v Stuart, 427 US 539) and a direction to close the courtroom doors. Unlike the "gag” order which bars the press from reporting matter which is otherwise open to the public, the closure order merely regulates access to information and does not prohibit dissemination of any news. The government, appellants maintain, may have no right to interpose a prior restraint on publication, but it certainly has no duty to supply the press with access to information. Further, it is urged that courts have inherent power to preserve order and decorum and to protect the rights of parties and witnesses.

To be sure, the trial court has a wide range of powers at its disposal to assure a fair trial to the parties affected, but the power to isolate judicial proceedings from the scrutiny of the public, absent compelling State necessity, is not numbered among them. "The commission of crime, prosecutions resulting from it, and judicial proceedings arising from the prosecutions * * * are without question events of legitimate concern to the public and consequently fall within the responsibility of the press to report the operations of government” (Cox Broadcasting Corp. v Cohn, 420 US 469, 492; Estes v Texas, 381 US 532, 541-542). In light of Nebraska Press, this court can hardly deny the media’s right and obligation to report on the function of judicial tribunals. By the same token, the premise that there is any significant difference in denying access to information about a matter of public interest—upon undocumented, unproven, and conclusory allegations of possible prejudice—assumes that the right to observe an otherwise public proceeding is severable from and of less value than the right to convey information about it. Any such distinction is without substance, since the right of free expression must encompass both the freedom to convey information about a public matter and the liberty to gain access to proceedings involving the same. A closed proceeding should be recognized for what it is—a "serious backdoor threat to First Amendment interests” (Staff of Subcommittee on Constitutional Rights of the Senate Committee on the Judiciary, 94th Cong, 2d Sess, Free Press— Fair Trial [1976]).

This court’s recognition of an exclusion order as a general prophylactic against the influence of unknown and undocumented prejudices upon the tribunal’s deliberative function suggests an almost casual acceptance of a prior burden on the freedom of the press, a burden presumptively repugnant to the ends of the First Amendment (see Bantam Books v Sullivan, 372 US 58, 70). The effectiveness of such an order cannot be seriously doubted, but the right to report the news is too vital to the nature of a free State to allow the press to be stifled under the pressure of direct "gag” orders, or even more subtle means of accomplishing the same illicit end (Near v Minnesota ex rel. Olson, 283 US 697, 713-714): [S]peech concerning public affairs is more than self-expression; it is the essence of self-government. The First and Fourteenth Amendments embody our 'profound national commitment to the principle that debate on public issues should be uninhibited, robust, and wide-open, and that it may well include vehement, caustic, and sometimes unpleasantly sharp attacks on government and public officials.’ New York Times Co. v. Sullivan, 376 U.S. [254], at 270.” (Garrison v Louisiana, 379 US 64, 74-75 [emphasis added].) Absent compelling and overriding State necessity, the right of the public to gain information about public matters may not be infringed (Schenck v United States, 249 US 47, 52; Brandenburg v Ohio, 395 US 444).

The necessity for public inspection is not diminished because the proceeding is a pretrial hearing to suppress evidence illegally obtained. Suspicion enshrouds whatever determination is not freely aired in a forum open to public inspection, scrutiny and, sometimes, even scorn. The public has the right to know that the Constitution protects equally each person accused of a crime, and has the right to scrutinize the effectiveness of police agencies in coping with criminal activity. "[T]he testimony of police officers regarding police conduct which usually occurs more or less in private within an environment which the police themselves create and in which they reign, should not be given in secret” (United States ex rel. Bennett v Rundle, 419 F2d 599, 606).

At times, the public interest may command otherwise. Thus, it has been held that necessity demands that the doors of the courtroom be closed for the protection of undercover agents (People v Hinton, 31 NY2d 71, 74; People v Hagan, 24 NY2d 395; People v Garcia, 51 AD2d 329, affd 41 NY2d 861; United States ex rel. Lloyd v Vincent, 520 F2d 1272, 1274, cert den 423 US 937), for the protection of witnesses who might be unduly inhibited from or embarrassed by relating the substance of their testimony in front of an audience (People v Jelke, 308 NY 56, 63; People v Hall, 51 App Div 57; Cook, Constitutional Rights of the Accused: Trial Rights, § 101), and for the preservation of public sensibilities (Matter of Oliver v Postel, 30 NY2d 171, 179; Matter of United Press Assns. v Valente, 308 NY 71; People v Jelke, supra; see, also, People v Nicholas, 35 AD2d 18). However, under these circumstances, closure does not contemplate the isolation of the tribunal from its milieu to diminish the possible effects of feedback from the community upon the ultimate disposition. Rather, it seeks to protect the actors in the controversy from personal repercussions which the law deems serious enough to warrant extraordinary precaution or, in the case of matter offensive to public sensibility, to preclude dissemination under a judicial aegis of unlawful material in which, ab initio, the general public has no legitimate interest. Nevertheless, "any claim of practical justification for a departure from the constitutional requirement of a public trial must be tested by a standard of strict and inescapable necessity” (United States ex rel Bennett v Rundle, 419 F2d 599, 607, supra; United States ex rel. Lloyd v Vincent, 520 F2d 1272, 1274, cert den 423 US 937, supra; People v Devine, 80 Misc 2d 641, 644).

The guidelines expressed by the majority signal the common, if not certain, locking of the courtroom door virtually whenever requested in pretrial hearings. To allow closure on the mere showing that press commentary would "threaten” the impaneling of an impartial jury (p 380) affords almost no protection to First Amendment rights for the simple reason that in cases of notoriety it will always be possible to show some risk of prejudice. Of greater concern, however, is that the majority has turned the burden of proof around. In Nebraska Press Assn, v Stuart (427 US 539, supra), the Supreme Court commented that "[t]he record demonstrates, as the Nebraska courts held, that there was indeed a risk that pretrial news accounts, true or false, would have some adverse impact on the attitudes of those who might be called as jurors” (427 US, at pp 568-569 [emphasis added]). Nevertheless, the court concluded that a sufficient showing had not been made that "alternatives to a prior restraint on petitioners would not have sufficiently mitigated the adverse effects of pretrial publicity so as to make prior restraint unnecessary” (at p 569). In so determining, however, the court reasoned that "our conclusion is not simply a result of assessing the adequacy of the showing made in this case; it results in part from the problems inherent in meeting the heavy burden of demonstrating, in advance of trial, that without prior restraint a fair trial will be denied” (at p 569). In contrast, the majority here instead of demanding a heavy burden of showing that alternatives to closure cannot insure a fair trial, requires a determination of the "magnitude of any genuine public interest” (p 381). This presumes that the press should be excluded and discourages use of alternatives to closing the courtroom. In effect, this procedure suggests that any pretrial publicity automatically produces an unfair trial—a proposition expressly rejected by the Supreme Court (see 427 US, at p 565).

By acceding to defendants’ motion for closure in this instance, the County Court exceeded its very limited power to exclude the press and public and overlooked a clear command to preserve the right to a fair trial at a less drastic cost than shutting off channels of legitimate public information. Although the right of the defendant to a jury unbiased by the determination at the Huntley hearing has been repeatedly recognized in the courts (e.g., Lego v Twomey, 404 US 477, 483-486; Pinto v Pierce, 389 US 31; Jackson v Denno, 378 US 368; People v Huntley, 15 NY2d 72; People v Hulett, 28 AD2d .624, affd 22 NY2d 696, cert den 393 US 1097; People v Brainard, 56 AD2d 633; People v Higgins, 28 AD2d 1016; People v Cornell, 28 AD2d 1166; People v Pratt, 27 AD2d 199) here County Court dictated a draconian measure without proof of abject necessity. Before resorting to this ultimate restriction, the trial court was obliged to exercise "ability and ingenuity * * * to devise appropriate steps, within constitutional limits, to protect a defendant in his right to a fair trial” (Matter of New York Times Co. v Starkey, 51 AD2d 60, 66 [concurring opn, Shapiro, J.; emphasis added]; see, also, Matter of Hearst Corp. v Cholakis, 54 AD2d 592, 593). Mere threatened prejudice cannot be a basis for the court’s indulgence in a self-executing order which prevents the free flow of vital information to a willing public when the interests of the defendant in a fair trial, untainted by a juror’s knowledge of inadmissible evidence, can be preserved through the traditional means of detecting, identifying and dispelling prejudice through mechanisms which the law has created and which do t-not impede the flow of information. Unless the party demanding the invocation of the extraordinary practice of excluding the public at large can demonstrate that the effective employment of the time-tested methods—venire, continuance, instructions, admonitions to witnesses, and parties and counsel, sequestration of the jury, or change of venue—would be to no avail in the neutralization of potential sources of prejudice, the courts should not deprive the public of the vital function of the press nor abridge the fundamental interests protected by the First Amendment (Nebraska Press Assn, v Stuart, 427 US 539, 569, supra; see, also, concurring opn of Mr. Justice Powell, at p 571; Branzburg v Hayes, 408 US 665, 685; Sheppard v Maxwell, 384 US 333, 362-363).

It is no answer to suggest that the right to a public trial is waivable at the option of the accused. As the right of a public trial knows no correlative right to a private one (see Singer v - United States, 380 US 24, 34-35; Cook, Constitutional Rights of the Accused: Trial Rights, § 103), such a waiver cannot automatically close the court. "A trial is a public event. What transpires in the court room is public property * * * There is no special perquisite of the judiciary which enables it * * * to suppress, edit, or censor events which transpire * * * before it” (Craig v Harney, 331 US 367, 374).

Accordingly, the judgment of the Appellate Division should be affirmed.

Chief Judge Breitel and Judges Jasen and Jones concur' with Judge Wachtler; Judge Cooke dissents and votes to affirm in a separate opinion in which Judge Fuchsberg concurs; Judge Gabrielli taking no part.

Judgment modified, without costs, in accordance with the opinion herein and, as so modified, affirmed.

      . The transcripts had already been offered for the petitioner’s use. The need for sealing them had disappeared after codefendants Greathouse and Jones, in satisfaction of the indictment pending against them, pleaded guilty to lesser included crimes.

      . Secrecy is also the rule in Grand Jury hearings for felony cases (CPL 190.25; see People v Miller, 257 NY 54), professional disciplinary investigations and proceedings (Judiciary Law, § 90; see Matter of Nichols v Gamso, 35 NY2d 35), matrimonial actions (Shiles v News Syndicate Co., 27 NY2d 9; Danziger v Hearst Corp., 304 NY 244) and Family Court proceedings (e.g., Family Ct Act, § 1043; 22 NYCKR 2830.8).

      . Whereas the obligation of nondisclosure in pretrial hearings is for the purpose of insulating prospective veniremen, in certain other situations, such as those involving the identification of an informer, total preclusion from any public knowledge may be called for (cf. People v Darden, 34 NY2d 177, supra; People v Goggins, 34 NY2d 163).


author: Jones, J.

text:
    Sears, Roebuck & Co., Appellant, v Enco Associates, Inc., Respondent.
    Argued October 3, 1977;
    decided December 21, 1977

      POINTS OF COUNSEL

      Robert J. Aurigema, Albert L. Bases and Stephen J. Smirti, Jr., for appellant.
    I. The lower courts misapplied the gravamen or essence test to the facts of the instant controversy. (Matter of Paver & Wildfoerster [Catholic High School Assn.], 38 NY2d 669; Victorson v Bock Laundry Mach. Co., 37 NY2d 395; Sosnow v Paul, 43 AD2d 978, 36 NY2d 780; Read v Local Lodge 1284, Int. Assn, of Machinists & Aerospace Workers, AFL-CIO, 528 F2d 823; Goodman v Mead Johnson & Co., 388 F Supp 1070, 534 F2d 566; Jacob & Youngs v Kent, 230 NY 239; Bellizzi v Huntley Estates, 3 NY2d 112.) II. The lower court was incorrect in refusing to extend the "continuous treatment” exception to appellant in this case. (County of Broome v Vincent J. Smith, Inc., 78 Misc 2d 889; Borgia v City of New York, 12 NY2d 151; Siegel v Kranis, 29 AD2d 477; Wilkin v Dana R. Pickup & Co., 74 Misc 2d 1025.) III. The lower court erred in applying the whole law of Michigan.
      (A. S. Rampell, Inc. v Hyster Co., 3 NY2d 369; Haag v Barnes, 9 NY2d 554; Reger v National Assn, of Bedding Mfrs. Group Ins. Trust Fund, 83 Misc 2d 527; Siegelman v Cunard White Star, 221 F2d 189; Sears, Roebuck & Co. v Enco Assoc., 83 Misc 2d 552; Tooker v Lopez, 24 NY2d 569.)

      Roger A. Goodnough for respondent.
    I. Whether framed as an action for negligence, breach of contract or implied warranty, plaintiffs action is one seeking to recover for alleged professional malpractice and it is barred by the applicable three-year Statute of Limitations. (Carr v Lipshie, 8 AD2d 330, 9 NY2d 983; Jay Bee Apparel Stores v 563-565 Main St. Realty Corp., 130 Misc 23, 226 App Div 721; Western Elec. Co. v Brenner, 41 NY2d 291; State of New York v Cortelle Corp., 38 NY2d 83; Alyssa Originals v Finkelstein, 22 AD2d 701, 24 NY2d 976; Calhoun v Gale, 29 AD2d 766, 23 NY2d 756; Gautieri v New Rochelle Hosp. Assn., 4 AD2d 874, 5 NY2d 952; Blessington v McCrory Stores Corp., 305 NY 140; Loehr v East Side Omnibus Corp., 259 App Div 200, 287 NY 670; Webber v Herkimer & Mohawk St. R. R. Co., 109 NY 311.) II. The "continuous treatment” exception to the rule that a cause of action against a professional for malpractice accrues upon the commission of the alleged act of malpractice or, at the latest, upon completion of the work, does not apply under the ’ admitted facts herein and the lower courts were correct in their refusal to apply it. (Davis v City of New York, 38 NY2d 257; Gilbert Props, v Millstein, 40 AD2d 100, 33 NY2d 857; 509 Sixth Ave. Corp. v New York City Tr. Auth., 15 NY2d 48; Troll v Glantz, 57 Misc 2d 572; Goldberg v Bosworth, 29 Misc 2d 1057; Borgia v City of New York, 12 NY2d 151; Flanagan v Mount Eden Gen. Hosp., 24 NY2d 427; County of Broome v Vincent J. Smith, Inc., 78 Misc 2d 889; Naetzker v Brocton Cent. School Dist., 50 AD2d 142.) III. The courts below were correct in holding that if Michigan law was applied to the instant action, the action would still be barred by the applicable Statute of Limitations. (Dorff v Taya, 194 App Div 278, 234 NY 525; Jones v Cunard S. S. Co., 144 Misc 336, 238 App Div 172; Wood & Selick v Compagnie Generale Transatlantique, 32 F2d 283, 43 F2d 941; Badhwar v Colorado Fuel & Iron Corp., 138 F Supp 595.)
   OPINION OF THE COURT

Jones, J.

We hold that, inasmuch as the relationship between Sears, Roebuck as property owner and Enco Associates as architects had its genesis in the contract between them, in an action commenced more than three but less than six years after the completion of the ramp system with respect to which the architects’ services were rendered, the owner may recover contract damages against the architects either on the theory of breach of a particular contract provision or on the theory of failure to exercise due care in the performance of the contract services.

On the present motion to dismiss the complaint we accept the factual allegations set forth in the complaint as amplified by the bill of particulars. It is alleged that on May 15, 1967 Sears, Roebuck, owner, and Enco Associates, Inc., a firm of architects, entered into a contract under which the architects were to design and to supervise the construction of a system of ramps to provide ingress and egress for a parking deck to be constructed over Sears, Roebuck’s White Plains store. The contract contemplated an elaborate system of exposed ramps with snow-melting pipes to assure ease of snow removal. Defendant corporation held itself out to have architects and engineers qualified to design and to supervise the construction of the ramps and to provide appropriate design, mechanical and electrical engineering services. The architect-engineers prepared the plans and specifications and supervised the construction of the ramp system. Work on the project was commenced in 1967 and was completed in the spring of 1968.

In early May, 1970 cracks appeared in the ramps that endangered the structural integrity of the ramp system. It was alleged that the cracks were due to improper design of the snow-melting pipes contained in the ramps in that the architects had failed to include expansion joints and had provided for monolithic pouring of concrete for the ramps.

The complaint sets forth three separately stated causes of action. In the first liability is grounded on allegations of "the carelessness and negligence of defendant in preparing the design and engineering, plans and specifications of the said ramps”. It is alleged that the cost of removal of the existing ramps and the cost of construction of proper ramps will be $1,000,000, and that in the course of removal of the defective ramps the owner will lose the business of customers resulting in loss of anticipated profits of $350,000.

The second cause of action contains a claim for breach of implied warranty of fitness for the purposes intended and claims damages in the lump sum of $1,350,000.

The third cause of action, with prior allegations incorporated by reference, alleges that the architects contracted to provide design; normal structural, mechanical and electrical engineering services and that they breached the contract by neglect or lack of professional care and in improperly designing the ramps, all to the owner’s damage in the sum of $1,350,000.

The action was commenced in June, 1972. After service of the answer and the bill of particulars, defendant architects moved under CPLR 3211 (subd [a], pars 5, 7) to dismiss the complaint on the grounds that the action was barred by the applicable three-year Statute of Limitations and that the second cause of action for breach of implied warranty failed to state a cause of action. Special Term granted the motion, concluding that, while the first cause of action was for professional malpractice, the second for breach of implied warranty and the third for breach of contract, in essence Sears, Roebuck’s claim was one for professional malpractice and as such was barred by the applicable three-year Statute of Limitations. Additionally Special Term dismissed the second cause of action on the ground that no cause of action lies against an architect for breach of implied warranty. The Appellate Division affirmed and we granted leave to appeal. We conclude that the order of the Appellate Division should be modified to the extent of denying the motion to dismiss as to the first and third causes of action.

The disposition in this case is governed by our recent decision in Matter of Paver & Wildfoerster (Catholic High School Assn.) (38 NY2d 669). We had previously held in Sosnow v Paul (36 NY2d 780) that owners’ claims against architects arising out of alleged defective construction of buildings, however verbally classified, accrue for purposes of all Statutes of Limitations on completion of construction. Thus, here any claims Sears, Roebuck has against Enco Associates accrued in 1968. Although the issues in Paver were presented in the context of arbitration, we expressly recognized the command of CPLR 7502 (subd [b]) that the Statute of Limitations to be applied by the courts in arbitration is the same as that in judicial proceedings (38 NY2d 669, 672, 673-674).

As we observed in Paver; the choice of applicable Statute of Limitations is properly related to the remedy rather than to the theory of liability. "[T]he general principle [is] that time limitations depend upon, and are confined to, the form of the remedy” (38 NY2d 669, 672). We took note, however, of the cases in our courts in which the choice of Statute of Limitations had turned on what was termed the "reality” or the "essence” of the particular theory of liability on which the plaintiff relied. We observed that "many of these cases were decided in the context of causes of action to recover damages for direct or underlying personal injury”, and recognized that different policy considerations were involved and often different results reached in actions for damages to property or pecuniary interest only (38 NY2d 669, 675). In particular we held that the rule of Webber v Herkimer & Mohawk St. R. R. Co. (109 NY 311)—a personal injury action —and the cases in its wake should not be blanketed to cover all cases; that in Paver it should not be extended to a case arising in arbitration (38 NY2d 669, 675-676). But as noted above, CPLR 7502 (subd [b]) commands that, when the courts invoke a Statute of Limitations, its period in arbitration and in judicial proceedings shall be the same.

Without intending to disturb the holdings in the line of cases that deal with claims for personal injuries for malpractice on the part of members of one of the professions and acknowledging the Legislature’s general address to malpractice claims (CPLR 214, subd 6), we reaffirm our holding in Paver that claims by owners against architects arising out of the performance or nonperformance of obligations under contracts between them are governed by the six-year contract Statute of Limitations (CPLR 213, subd 2), except with respect to the issue of damages as described below.

All obligations of the architects here, whether verbalized as in tort for professional malpractice or as in contract for nonperformance of particular provisions of the contract, arose out of the contractual relationship of the parties—i.e., absent the contract between them, no services would have been performed and thus there would have been no claims. It should make no difference then how the asserted liability is classified or described, or whether it is said that, although not expressed, an agreement to exercise due care in the performance of the agreed services is to be implied; it suffices that all liability alleged in this complaint had its genesis in the contractual relationship of the parties. (Cf. Brick v Cohn-HallMarx Co., 276 NY 259, 263-264; see Prosser, Torts [4th ed], § 92, p 613.)

As a consequence, the range of proof to be adduced to establish liability will be correspondingly broad. That is to say, not only will evidence be admissible, as in the normal contracts case, which might tend to establish breach of a particular term of the contract between the parties; it will also be open to plaintiff owner to introduce evidence, including expert testimony, which might demonstrate that the architects failed to use due and reasonable care in the performance of their obligations under the contract or that their performance fell short of the applicable professional standards—in effect the same scope of admissibility as in the instance of what has in the past been referred to as a claim for professional malpractice.

Inasmuch as the selection of the applicable Statute of Limitations is related to the remedy sought, we turn to consideration of the relief requested by Sears, Roebuck. In the first cause of action (as amplified in the bill of particulars), plaintiff owner seeks to recover damages of two sorts—first, for cost of correction incident to the removal of the allegedly defective ramps and their replacement by properly constructed ramps (fixed at a figure of $1,000,000), and second, for loss of anticipated profits in consequence of business interruption while the defective ramps are being replaced (fixed at a figure of approximately $350,000). In principle, because this action was not commenced within three years after accrual of the owner’s claims, proof on the issue of damages should be limited to that admissible under the law of damages for contract liability. Had the action been commenced within the three-year period applicable to tort claims, the owner would have been free to elect to sue in contract or in tort as it saw fit and to offer appropriate proof of damages (Matter of Paver & Wildfoerster [Catholic High School Assn.], 38 NY2d 669, 675, supra; cf. Victorson v Bock Laundry Mach. Co., 37 NY2d 395). Inasmuch as it was not, it seems likely, therefore (although the issue cannot finally be resolved until it is known what proof Sears, Roebuck produces) that evidence of loss of profits—a form of consequential damages allowable in tort but usually not in contract—may not be admissible in this instance. It would be inappropriate, however, on a motion addressed to the pleadings for us to attempt to delineate the precise line of demarcation in the law of damages between damages based on contract liability and those based on tort liability. We state the principle, but necessarily its application must now be left to the trial court for resolution in the light of the proof adduced by the parties. (See Sosnow v Paul, 36 NY2d 780, supra.)

There is also a choice of law issue in this case which must be addressed. The parties provided in their agreement that it was to "be governed by the law of the [State of Michigan].” Michigan provides a six-year Statute of Limitations for actions against architects arising out of defective improvements to real property (Mich Comp Laws Ann, § 600.5839). Because we conclude that the applicable New York State Statute of Limitations is also six years, it might appear that no practical purpose would be served in this case by determining which six-year statute should be applied. We should, however, dispose of one theoretical argument which might be advanced by Sears, Roebuck. In effect we are here applying both our State’s six-year and its three-year statutes, in combination; the claim is not barred because the six-year statute is applicable, but damages that may be recovered are limited because the three-year statute is also applicable. Under the Michigan law there would be but a single, six-year statute, without restriction as to damages provable. Thus, on the issue of damages different consequences might turn on whether we are to apply the New York or the Michigan Statute of Limitations. We conclude, however, that there would be no merit here to any contention constructed on such an analysis. The contract provision that the agreement was to be governed by Michigan law operated only to import the substantive law of Michigan (Doríf v Taya, 200 App Div 894, affd 234 NY 525; Siegelman v Cunard White Star, 221 F2d 189, 194). Even if it were to be thought that the contract provision also imported Michigan’s law with respect to limitations, that law included not only the six-year statute with respect to claims against architects but also a familiar “borrowing statute”. The consequence of importing the Michigan borrowing statute would be an instance of renvoi—the reintroduction of the applicable New York State Statutes of Limitation. Thus, we conclude that on any analysis it is our own State’s Statutes of Limitations which are to be applied.

Finally we note our agreement with the determinations below that no action lies for breach of implied warranty, or what is now known as strict product liability, on behalf of an owner against the architect with whom he has his contract. Certainly this is true in New York (Milau Assoc, v North Ave. Dev. Corp., 42 NY2d 482), and it appears to be true in Michigan as well (see Chapel v Clark, 117 Mich 638). In any event, any such claim would be barred by our three-year Statute of Limitations (Victorson v Bock Laundry Mach. Co., 37 NY2d 395, supra).

In sum, then, the claims of Sears, Roebuck against Enco Associates accrued on completion of the ramps in the spring of 1968. Because the present action was not commenced within three years thereafter, Sears, Roebuck is now barred from recovery of damages under the law of damages with respect to liability in tort and is restricted to recovery of damages, if liability be established, under the law of damages with respect to liability for breach of contract. On the issue of liability, proof will be admissible to establish either breach of a particular term or provision of the contract or failure to use due professional care in the performance of the architects’ obligations under the contract.

Accordingly, for the reasons stated, the order of the Appellate Division should be modified, with costs, to deny the motion to dismiss as to the first and third causes of action in the complaint, and, as so modified, affirmed.

Chief Judge Breitel and Judges Jasen, Gabrielli, Wachtler, Fuchsberg and Cooke concur.

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

      . When CPLR 214 (subd 6) was being drafted, it had been suggested that the limitations on malpractice actions should be extended to include contract claims (e.g., NY Legis Doc, 1961, No. 15; Advisory Committee on Practice and Procedure, Fifth Preliminary Report, § 214, subd 6, par 55; NY Legis Doc, 1962, No. 8; Advisory Committee on Practice and Procedure, Sixth Preliminary Report, p 93). Express wording to this effect was never enacted, however. The recommendation of the Law Revision Commission that the statute be explicitly worded to refer to "an action to recover damages for malpractice, whether based on tort, contract or any other theory” (emphasis added) was never adopted by the Legislature (1962 Report of NY Law Rev Comm, pp 232, 233). Nor was any such specificity added when the statute was amended in 1975 to make separate provision for a two-years and six-months Statute of Limitations for medical malpractice (L 1975, ch 109, § 5). (Also, see, Lillich, Malpractice Statute of Limitations in New York and Other Jurisdictions, 47 Corn LQ 339, 369, n 218.)

      . "The period of limitations applicable to a claim accruing outside this state shall be either that prescribed by the law of the place where the claim accrued or by the law of this state, whichever bars the claim." (Mich Comp Laws Ann, § 600.5861, subd [2]; emphasis supplied.)


text:
    Kathleen Murray, as Administratrix of the Estate of James F. Murray, Deceased, Respondent, v City of New York, Appellant, et al., Defendants.
    Argued November 10, 1977;
    decided December 21, 1977

      POINTS OF COUNSEL

      W. Bernard Richland, Corporation Counsel (Bernard Bur-stein, L. Kevin Sheridan and Irving Cohen of counsel), for appellant.
    I. Even in the absence of an affirmative defense, the courts lacked subject-matter jurisdiction to grant plaintiff a tort judgment against decedent’s employer, where plaintiff’s evidence established that decedent was employed by defendant and doing "outside work” at the time and place of injury, and where, in response to the court’s inquiry, plaintiff’s counsel conceded that a claim for compensation benefits had been made and not denied. The issue whether the accident arose in the course of decedent’s employment was within the exclusive jurisdiction of the Workmen’s Compensation Board, and a tort action cannot be maintained unless compensation benefits are conclusively denied. (O’Rourke v Long, 41 NY2d 219; Williams v Hartshorn, 296 NY 49; De Giuseppe v City of New York, 273 App Div 1010, 298 NY 932; Walker v City of New York, 8 AD2d 605; Matter of Chilk v City of New York, 26 AD2d 425; Matter of Anadio v Ideal Leather Finishers, 32 AD2d 40, 25 NY2d 737; Matter of Bennett v Marine Works, 273 NY 429;
      Matter of McDonagh v Troyman Chartering, 50 AD2d 301; Matter of Devlin v Petry & Co., 24 AD2d 804; Matter of Marciniak v Berlitz School of Languages, 53 AD2d 774.) II. Assuming, despite the evidence, the concession, and the statutory presumption, that an affirmative "defense” is necessary to divest a court of subject-matter jurisdiction over a tort claim against plaintiffs employer, then the trial court properly allowed the employer to amend its answer to conform to plaintiffs proof. The failure to assert the defense earlier caused no clear prejudice. The court below based its decision on a misconception of law. (Patron v Patron, 40 NY2d 582; Sindle v New York City Tr. Auth., 33 NY2d 293; Matter of Rusyniak v Syracuse Flying School, 37 NY2d 384; Allen v Crowell-Collier Pub. Co., 21 NY2d 403; Taylor v Interstate Motor Frgt. System, 309 NY 633; de la Bouillerie v de Vienne, 300 NY 60; Dransñeld v Eastern Seaboard Warehouse Corp., 43 AD2d 569; Price v Giffin, 32 AD2d 868; Kane v Long Is. Jewish Hosp., 29 AD2d 554; Hirsch v Flick, 17 AD2d 961.) III. The statement in summation by plaintiffs counsel that plaintiff "is interested in the City of New York and I don’t care what you do with the Virzis because of the damages involved in this case”, was intended to and did communicate to the jury that defendant Virzi was inadequately insured, thus encouraging a verdict based not on fault but upon ability to pay. The city’s motion for a mistrial should have been granted. (Telaro v Telaro, 25 NY2d 433; Matter of Seitelman v Lavine, 36 NY2d 165; Cohn v Goldman, 76 NY 284; Nicholas v Island Ind. Park of Patchogue, 46 AD2d 804; Depelteau v Ford Motor Co., 28 AD2d 1178; Rendo v Schermerhorn, 24 AD2d 773; Kenneth v Gardner, 36 AD2d 575; Brennan v Felter, 48 AD2d 846; Wisniewski v Jem Novelty Corp., 22 AD2d 10; Thiele v Hickey, 6 AD2d 939.)

      Robert M. Ginsberg, Abraham Fuchsberg and Norman E. Frowley for respondent.
    I. The order of the court below was proper in all respects. (O’Rourke v Long, 41 NY2d 219; Brecher v Brecher, 27 NY2d 986; Dashinsky v Santjer, 32 AD2d 382; Kingston v Kingston, 283 App Div 355; Matter of Walker, 136 NY 20; Newland v Goelz, 35 Misc 2d 29; Bingham v Battista, 38 AD2d 839; Matter of Dolan v Crawford & Co., 41 AD2d 870; Matter of Johnson v Smith, 263 NY 10.) II. Counsel for plaintiffs comment in summation did not constitute reversible error. (Layton Sales & Rentals v Somat Realty Corp., 39 AD2d 640.)
   OPINION OF THE COURT

Cooke, J.

Plaintiffs decedent James F. Murray, while a pedestrian on a Brooklyn street, was struck by a New York City police car manned by two officers responding to a radio call, after it careened from a collision with another vehicle owned by Sarofino Virzi and operated by Mario Virzi (the latter not being served and against whom plaintiffs stipulated to discontinue). Two days later, Murray passed away. At the time of the accident, decedent was employed as a planner with the Economic Development Administration of the City of New York and had been assigned by his superior to make a feasibility study of the Red Hook section of Brooklyn as a possible location for a container port.

In this action for conscious pain and suffering and wrongful death, defendant City of New York did not allege in its answer the exclusivity of workmen’s compensation as a remedy nor did it move to amend the pleading before trial. However, after plaintiff presented her witnesses and after her counsel indicated plaintiff would rest, aside from reading a hospital record, the city moved for dismissal based on workmen’s compensation as a total bar to suit against the city. Trial court reserved decision. The next day, while the city’s proof was being presented and before Virzi called his witnesses, trial court indicated that it had reviewed the workmen’s compensation questions and had decided to dismiss as to the city, with the right to plaintiff to reopen, but all attorneys requested that the case "go to its fulfillment”. After a verdict was returned in favor of plaintiff against both defendants, liability being apportioned 25% against the city and 75% against Virzi, the Trial Justice granted the city’s motion to conform the pleadings to the proof, to set aside the verdict as against the city and to dismiss the complaint as to it. At no time did plaintiff ask to reopen. The Appellate Division reversed and reinstated the verdict against the city, stating that in its view "the trial court improvidently granted the city’s motion to conform the pleadings to the proof at the late stage at which the workmen’s compensation defense was first interposed.”

CPLR 3025 (subd [b]) is explicit that "[a] party may amend his pleading * * * at any time by leave of court” and that "[l]eave shall be freely given upon such terms as may be just”. The matter of allowing an amendment is committed "almost entirely to the court’s discretion to be determined on a sui generis basis” (Siegel, Practice Commentaries, McKinney’s Cons Laws of NY, Book 7B, CPLR 3205:4, p 476), "the widest possible latitude” being extended to the courts (3 Weinstein-Korn-Miller, NY Civ Prac, par 3025.14). CPLR 3025 (subd [c]), dealing with amendments to conform pleadings to the evidence, authorizes courts to "permit pleadings to be amended before or after judgment to conform them to the evidence, upon such terms as may be just”. An application to amend under subdivision (c) is likewise addressed to the sound discretion of the court and should be determined in the same manner and by weighing the same considerations as upon a motion to amend pursuant to subdivision (b), except that under (c) the possibly increased effect on orderly prosecution of the trial might be a factor to be taken into account (see 3 Weinstein-Korn-Miller, NY Civ Prac, par 3025.26). Where no prejudice is shown, the amendment may be allowed "during or even after trial” (Dittmar Explosives v A. E. Ottaviano, Inc., 20 NY2d 498, 502; Siegel, Practice Commentaries, McKinney’s Cons Laws of NY, Book 7B, CPLR 3205:15, p 487; cf. Brecher v Brecher, 27 NY2d 986, 987; Dransfield v Eastern Seaboard Warehouse Corp., 43 AD2d 569, 570).

There was no operative prejudice here, that is, prejudice attributable to the mere omission to plead the defense in the original answer (Siegel, Practice Commentaries, McKinney’s Cons Laws of NY, Book 7B, CPLR 3025:6, p 477). When a variance develops between a pleading and proof admitted at the instance or with the acquiescence of a party, such party cannot later claim that he was surprised or prejudiced and the motion to conform should be granted (Donner v Baker, 11 AD2d 905; Embien Props, v Emmadine Farms, 282 App Div 1047, 1048; Berkenstat v Oliver, 275 App Div 679; Audley v Townsend, 126 App Div 431, 434; 6 Carmody-Wait 2d, NY Prac, § 34.44, p 127). Under such circumstances, even appellate courts have taken it upon themselves upon review to amend the pleadings to conform to the proof (see Matter of Pittsford Gravel Corp. v Zoning Bd. of Town of Perinton, 43 AD2d 811, 812, app dsmd 34 NY2d 618; Harbor Assoc, v Asheroff, 35 AD2d 667, 668, mot for lv to app den 27 NY2d 490; Di Rosse v Wein, 24 AD2d 510, 511, mot for lv to app den 16 NY2d 487; 3 Weinstein-Korn-Miller, NY Civ Prac, pars 3025.27, 3025.31; cf. Diemer v Diemer, 8 NY2d 206, 211-212). Here, plaintiff called to the stand decedent’s superior in the Economic Development Administration and elicited from him on direct examination that the project decedent was working on at the time he met his death was "a study of the Red Hook Section because at that time the administration was trying to determine the proper location for a container port”, that the superior assigned him to go to this area of Brooklyn to do the field work that had to be done, and that the specific thing decedent was doing when the accident happened "was running a survey of that area in order to determine the vacancy rate, the conditions of the buildings and so forth which was part of the information * * * required by City Planning”. The record is devoid of proof showing any deviation from employment at the time of the accident. (Cf. Matter of Sedlack v J. & A. Custom Heating & Air Conditioning, 32 AD2d 1020, 1021, affd 27 NY2d 784; Matter of Anadio v Ideal Leather Finishers, 32 AD2d 40, 42-43, mot for lv to app den 25 NY2d 737; 65 NY Jur, Workmen’s Compensation, § 330, p 839.)

Since under these circumstances plaintiff was not permitted to claim surprise or prejudice, it was an abuse of discretion as a matter of law on the part of the Appellate Division to disturb the trial court’s grant of the motion to conform the pleadings to the proof, set aside the verdict as against the city and dismiss the complaint as to it (see Sindle v New York City Tr. Auth., 33 NY2d 293, 296-297). Furthermore and significantly, the matter of workmen’s compensation came as no surprise to plaintiff since her bill of particulars stated decedent was employed by the City of New York (cf. Godell v Greyhound Rent A Car, 24 AD2d 568; see, also, Siegel, Practice Commentaries, McKinney’s Cons Laws of NY, Book 7B, CPLR 3025:6, p 477; CPLR 3025:13, p 483), at no time did plaintiff ask to reopen the case although trial court told plaintiff’s counsel that he "always [had] the right to reopen”, nor did plaintiff’s counsel indicate that a claim had not been timely filed for workmen’s compensation benefits. Indeed the record includes the court’s statement that said counsel had informed it "at the beginning” that "there was a reservation of the plaintiff’s right to proceed under compensation.” In response, counsel stated "I do not know that my client has a right to collect workmen’s compensation. All that I did say and represent is that a certain letter was sent to the Compensation Board requesting that her rights be reserved”— hardly a full and complete statement showing prejudice (see Lermit Plastics Co. v Lauman & Co., 40 AD2d 680; Siegel, Practice Commentaries, McKinney’s Cons Laws of NY, Book 7B, CPLR 3025:7, p 479).

Workmen’s compensation is an exclusive remedy as a matter of substantive law and, hence, whenever it appears or will appear from a plaintiffs pleading, bill of particulars or the facts that the plaintiff was an employee of the defendant, the obligation of alleging and, in any event, of proving noncoverage falls on the plaintiff (cf. O’Rourke v Long, 41 NY2d 219, 224-225). Although the issue may be waived, as plaintiff here argues, such waiver is accomplished only by a defendant ignoring the issue to the point of final disposition itself and, in this sense, it is not the kind of subject-matter jurisdiction deficiency which ousts a court of competence to decide the case (see Nuernberger v State of New York, 41 NY2d 111, 113). Here, the issue was raised by the motion to dismiss and then by the application to amend.

Accordingly, the order of the Appellate Division should be reversed, without costs, and the judgment of Supreme Court, Kings County, reinstated.

Chief Judge Breitel and Judges Jasen, Gabrielli, Jones and Wachtler concur; Judge Fuchsberg taking no part.

Order reversed, etc.

       The Advisory Committee noted that CPLR 3025 (subd [c]), based on Illinois Practice, "is intended to govern both amendment during trial, when proffered evidence is objected to, and amendment during or after trial in case of variance” (Advisory Committee on Practice and Procedure, Ford Preliminary Report 78 [1957]).