author: Meyer, J. Fuchsberg, J.

text:
    Nicole Weinberg, Respondent, v D-M Restaurant Corporation, Appellant.
    Argued March 26, 1981;
    decided June 18, 1981

      POINTS OF COUNSEL

      Joseph D. Ahearn, Joseph W. Conklin and Michael Majewski for appellant.
    I. In view of the undisputed proof before Special Term that plaintiff did not declare the alleged $23,000 value of the coat, and the undisputed proof that no fee or charge was exacted, the instant action is governed by Honig v Riley (244 NY 105), and the court below on the first appeal should have granted defendant’s motion for summary judgment or, in the alternative granted plaintiff summary judgment but limited her damages to $75. (Zuckerman v City of New York, 49 NY2d 557; Alvord & Swift v Muller Constr. Co., 46 NY2d 276; Fried v Bower & Gardner, 46 NY2d 765; Platzman v American Totalisator Co., 45 NY2d 910; Mallad Constr. Corp.v County Fed. Sav. & Loan Assn., 32 NY2d 285; Stainless, Inc. v Employers’ Fire Ins. Co., 69 AD2d 27, 49 NY2d 924; Woodmere Academy v Steinberg, 41 NY2d 746; Capelin Assoc. v Globe Mfg. Corp., 34 NY2d 338; Ehrlich v American Moninger Greenhouse Mfg. Corp., 26 NY2d 255; Montgomery v Ladjing, 30 Misc 92.) II. The court below on the second appeal should have dismissed the complaint or, in the alternative, ordered a new trial. (Lopez v Burns Int. Detective Agency, 48 AD2d 645.) III. As a matter of law, there was no fee or charge exacted, and the complaint should be dismissed. Solely in the alternative, the trial court clearly erred when, contrary to the prior explicit directive of the court below, it refused to submit to the jury the issue as to whether a fee was “exacted,” and instead made its own matter-of-law adjudication that a gratuity is the exacting of a fee. Even if the court below had not previously ruled that such issue was one for the jury, at the very least a question of fact was raised. (Falk v Goodman, 7 NY2d 87; Ugarriza v Schmieder, 46 NY2d 471; Werfel v Zivnostenska Banka, 287 NY 91; Gerard v Inglese, 11 AD2d 381; Sadowski v Long Is. R. R. Co., 292 NY 448; People v Alicea, 25 NY2d 685; De Leon v New York City Tr. Auth., 50 NY2d 176; Patrolmen’s Benevolent Assn. of City of N. Y. v City of New York, 41 NY2d 205; Zaldin v Kiamesha Concord, 48 NY2d 107; Liff v Schildkrout, 49 NY2d 622.)

      Morris Block for respondent.
    I. Where defendant restaurant accepted the coat of plaintiff patron in its checkroom for which a check was given and no explanation was furnished as to its failure to return the coat upon presentation of the coatroom check, plaintiff was entitled to judgment on the issue of liability as a matter of law, whether the action is one in conversion or in negligence. (I.C.C. Metals v Municipal Warehouse Co., 50 NY2d 657.) II. Defendant bailee cannot claim the benefit of a statutory limitation of liability where it has failed to offer any explanation for the return of goods entrusted to it. (I.C.C. Metals v Municipal Warehouse Co., 50 NY2d 657.) III. The ruling by the trial court that section 201 of the General Business Law was inapplicable by reason of the fee having been exacted was correct. (Jacobson v Belplaza Corp., 80 F Supp 917; Aidrich v Waldorf Astoria Hotel, 74 Misc 2d 413.)

      Gerard A. Navagh for New York State Restaurant Association, Inc., amicus curiae.

    I. The liability of defendant, a restaurant keeper, is limited to $75 by section 201 of the General Business Law. (D’Utassy v Barrett, 219 NY 420; Honig v Riley, 244 NY 105; Madill v McDonald, 187 App Div 761.) II. Section 201 is a reasonable regulation and does not impose an absolute limitation of liability regardless of value. (Honig v Riley, 244 NY 105; Dilkes v Hotel Sheraton, 282 App Div 488.) III. The mere giving to an employee a gratuity does not deprive a restaurant of the protection afforded by section 201 of the General Business Law.
   OPINION OF THE COURT

Meyer, J.

Section 201 of the General Business Law has no bearing upon an action against a restaurant owner sued for the conversion of a coat checked by a patron. It does limit recovery by a patron who sues for negligence: to the value of the coat if negligence be shown, a fee or charge is exacted for checking the coat, and a value in excess of $75 is declared and a written receipt stating such value is issued when the coat is delivered to the checkroom attendant; to $100 if a value in excess of $75 is declared and the other conditions are met but negligence cannot be shown; to $75 in any event if no fee or charge is exacted or a value in excess of $75 is not declared and a written receipt obtained when the coat is delivered. For the reasons hereafter stated, the order of the Appellate Division affirming judgment of $9,578.75 entered February 7, 1979 for plaintiff after trial by jury must be modified by reducing the amount awarded to $75.

I

Plaintiff’s complaint contained but one cause of action predicated upon the negligence of defendant restaurant owner. Defendant moved for summary judgment limiting plaintiff’s recovery to $75. The affidavits presented by defendant established that neither defendant’s president nor anyone else in his employ could explain the disappearance of the Russian sable fur coat which plaintiff checked with defendant’s checkroom attendant, that no value had been declared by plaintiff nor had any written receipt stating a value been given, acknowledged that no sign had been posted but stated that section 201 of the General Business Law did not require posting by a restaurant, and quoted a portion of plaintiff’s deposition in which she acknowledged that no charge had been made for the checking of the coat. Plaintiff cross-moved for summary judgment. Her affidavit noted the admission of defendant’s president that tipping was discretionary and characterized it as contrary to common knowledge. Attached to it also was the deposition of the coatroom attendant in which she conceded that on the night in question she received $20 to $30 in tips.

Special Term denied both the motion and cross motion. On appeal the Appellate Division modified and remanded for trial as to damages, holding that plaintiff was entitled to judgment on liability but that on the issue of damages there existed questions of fact concerning whether defendant restaurant had “exacted” a fee or charge and whether the loss was the result of theft by defendant, its agent, servants or employees (60 AD2d 550). On remand the Trial Judge, after testimony by defendant’s president that the checkroom attendant received an hourly rate of pay plus a percentage of the tips given her, the owner receiving the balance of the tips, ruled that notwithstanding that there was no sign concerning tips nor other open solicitation of them and that some people received their coats without leaving any tip, the gratuities paid the checkroom attendant constituted, as a matter of law, the exaction of a fee within the meaning of the section. He noted further that the issue of theft by defendant or its employees had become academic, that were that not so he would have directed a verdict for plaintiff on that ground also because defendant had presented no evidence on the question of theft. He submitted to the jury, therefore, only the question of the value of plaintiff’s coat. The jury fixed that value at $7,500 and judgment was entered for that sum plus interest and costs.

On appeal from the judgment entered on the jury’s verdict, the Appellate Division affirmed, without opinion, but granted defendant leave to appeal to our court from the final judgment pursuant to CPLR 5713. In reliance on CPLR 5601 (subd [d]), defendant had previously filed a notice of appeal from the earlier Appellate Division order granting summary judgment to plaintiff and affirming denial of its motion for summary judgment. For the reasons stated below we hold that (1) the tip or gratuity customarily given a checkroom attendant is not a “fee or charge * * * exacted” for the checking service within the meaning of section 201 of the General Business Law; (2) restaurants are not required to post the provisions of section 201 in order to be entitled to its limitation of liability; and (3) in granting summary judgment to plaintiff rather than defendant and in affirming the judgment entered February 7, 1979 the Appellate Division erred; its order of affirmance must, therefore, be modified and judgment directed to be entered for plaintiff in the amount of $75 with interest from March 3, 1975.

II

Subdivision 1 of section 201 of the General Business Law provides in relevant part: “[A]s to property deposited by guests or patrons in the parcel or check room of any hotel, motel or restaurant, the delivery of which is evidenced by a check or receipt therefor and for which no fee or charge is exacted, the proprietor shall not be liable beyond seventy-five dollars, unless such value in excess of seventy-five dollars shall be stated upon delivery and a written receipt, stating such value, shall be issued, but he shall in no event be liable beyond one hundred dollars, unless such loss occurs through his fault or negligence.” In a case strikingly similar to the instant case, Honig v Riley (244 NY 105), that language was construed by this court. Plaintiff Honig sought to recover the value of the fur coat she left at the checkroom of defendant’s restaurant on New Year’s Eve 1925. She received a check but was not questioned as to value and made no statement to the attendant concerning value. The Trial Judge charged that plaintiff was entitled to full value of the coat if they found defendant to have been negligent. On appeal by defendant from a judgment of $850 entered on the jury’s verdict and affirmed by the Appellate Term and the Appellate Division, this court reversed and directed reduction of the judgment to $75. In an opinion by Judge Cardozo, we said (244 NY, at pp 108-109):

“The defendant maintains that where property is deposited in a parcel or check room without statement of value or delivery of the prescribed receipt, there is a limit of liability to $75 for loss from any cause. Disclosure of the value, if followed by a receipt, will extend liability for fault or negligence up to the limit of the value stated, though even then the liability, if any, as insurer will be $100 and no more. The plaintiff on her side maintains, and the courts below have held, that the exemption from liability in excess of $75 where the value is not disclosed, is not to be read as a limitation of liability for loss from any cause, but is confined to losses not due to the fault or negligence of the proprietor.

“We think the defendant’s construction is the true one, however clumsy and inartificial may be the phrasing of the statute. A limitation of liability affecting merely the measure of recovery is applicable, if not otherwise restrained, to loss for any cause. * * * From the beginning of the section to the end, the exemption from liability in excess of the prescribed maximum is absolute where value is concealed. Only where value is stated and a receipt delivered is the exemption made dependent upon freedom from negligence or other fault.”

Under that reading of the statute plaintiff’s recovery is limited to $75, no value having been declared or receipt obtained, unless it can be found that a “fee or charge [was] exacted.” The ruling of the lower courts that the acceptance by the checkroom attendant of a gratuity in which the restaurant owner shares constitutes an “exaction”, made not as a finding of fact but as a matter of law was, however, erroneous. Though tips may constitute compensation to an employee for purposes of the Workers’ Compensation Law (Matter of Bryant v Pullman Co., 188 App Div 311, affd 228 NY 579; Matter of Sloate v Rochester Taxicab Co., 177 App Div 57, affd 221 NY 491; see Ann., 75 ALR 1223), of the income tax (Ann., 10 ALE2d 191) and of unemployment compensation taxes (Ann., 83 ALE2d 1024), it does not follow that a tip to an employee may be regarded for all purposes as compensation to the employee (Williams v Terminal Co., 315 US 386, 404, reh den 315 US 830; see People v Vetri, 309 NY 401, 408; Ann., 65 ALR2d 974 [Federal Fair Labor Standards Act and State wage laws]) or as a part of the employer’s income (Ann., 73 ALR3d 1226 [sales tax]). As to the employer the test generally is whether the payment is a “service charge” exacted by the employer or a voluntary payment by the patron to the employee (Beaman v Westward Ho Hotel Co., 89 Ariz 1; see Ann., 73 ALR3d 1226, 1231). So in Beaman the Arizona Supreme Court held a service charge collected by the hotel, where direct tipping of employees was not permitted, to be subject to sales tax. In so doing, it distinguished the customary employee gratuity saying (89 Ariz, at pp 4-5) “A tip is in law, if not always in fact, a voluntary payment” (see, also, Peoria Hotel Co. v Department of Revenue, 87 111 App 3d 176,179). The United States District Court for the Southern District of New York reached a result similar to Beaman in Restaurants & Patisseries Longchamps v Pedrick (52 F Supp 174), but noted (at pp 174-175) that “A patron in a restaurant is under no compulsion to leave a Tip’ ” (see, also, United States v Conforte, 624 F2d 869, 874, cert den 449 US 1012).

The more clearly should such a distinction be made when, as here, we deal with a statute not at all concerned with the compensation of the employee or the taxes payable to the State, but rather with whether the employer in permitting gratuities to be paid to the employee has exacted a fee or charge (see Williams v Terminal Co., supra, at p 404). So a restaurant owner or hotel that imposes a fixed charge for the service of checking a coat and does not leave to the patron the decision whether to give and what amount to give may properly be said to have exacted a service charge or fee (semble Aldrich v Waldorf Astoria Hotel, 74 Misc 2d 413, 414 [35 cents per garment paid; held a “fee or charge”]).

When the service cannot be obtained without the payment of a fixed sum a fee has been exacted, but when, as the papers on the summary judgment motions showed, plaintiff acknowledges that no charge was made and presents no evidence that there was a sign indicating a fixed charge, or of solicitation of any kind, or that the giving and the amount were other than discretionary with the customer, there has, as a matter of law, been no exaction of a fee or charge.

III

Plaintiff argued on the original motions, and the dissenter in this court agrees, that section 201 is not applicable because defendant failed to comply with subdivision 2 of the section. That subdivision requires that “A printed copy of this section shall be posted in a . conspicuous place and manner in the office or public room and in the public parlors of such hotel or motel.” While that provision was not added to the section until 1960 (L 1960, ch 840), section 206 has since 1909 required posting of a printed copy of section 201. Section 206 is by its terms limited, however, to a “hotel or inn” just as subdivision 2 of section 201 is limited to a “hotel or motel.” To read subdivision 2 to require posting by a restaurant because subdivision 1 groups “hotel, motel or restaurant” together is to fly in the face of usual rules of statutory construction that a statute (in this instance, subdivision 2’s posting requirement) is to be read and given effect as it was written, and that the courts under guise of interpretation may not enlarge or change the scope of a legislative enactment (see Matter of Jeter v Ellenville Cent. School Dist., 41 NY2d 283, 286; McKinney’s Cons Laws of NY, Book 1, Statutes, §§ 73, 144, 363). Nor is the dissent’s reliance upon the language of Honig v Riley (supra) a proper basis for concluding otherwise. No issue of posting was presented in that case. Moreover, since section 201 contained no posting requirement when Honig was decided and no mention was made in the opinion of section 206, the phrases from that opinion quoted by the dissent cannot be fairly read as having been written with respect to the point for which those phrases are now cited. If posting by restaurants is to be required as a condition of the limitation of liability granted them by subdivision 1 of section 201, it is the Legislature father than this court that must impose the requirement.

IV

Though neither the posting nor the fee exaction provisions of section 201 limit defendant’s right to the benefits of its provisions, plaintiff, pointing to the statement in Honig v Riley (supra, at p 110), that “The statute is aimed at loss or misadventure. It has no application to theft by the defendant or his agents,” contends she is entitled to affirmance of the judgment because defendant failed to come forward with proof that the coat had not been stolen by its employees. The difficulty with plaintiff’s position is that the complaint declares for negligence only and has never been amended either by motion addressed to Special Term or by a motion to conform pleadings to proof at the end of the trial. Quite simply, plaintiff cannot recover on a conversion theory which she has never pleaded.

Accordingly, the Appellate Division’s order of February 7, 1979 should be modified, with costs to defendant in all courts, by reducing the amount awarded to plaintiff to $75 with interest from March 3, 1975.

Fuchsberg, J.

(dissenting). Invited, of course, to do so by its management, plaintiff, a restaurant patron, deposited her fur coat, now found to have been worth $7,500, at the defendant’s cloakroom at the plush Rainbow Grill in Rockefeller Center. Without explanation, it was never to be returned. Yet, the majority would relegate her to a recovery of $75. Neither the history or public policy of the statutory scheme which governs such a case, nor the common sense or the elementary fairness that go with a living law will abide such a result. I therefore vote to uphold the Trial Term award to the plaintiff for the full amount of her loss as thereafter unanimously affirmed by the Appellate Division. Here follow my reasons, grounded, I would like to believe, on principle, practicality and, withal, sound law.

I start with section 201 of the General Business Law, which as we have seen, so drastically and arbitrarily limits the amount which even the grievously damaged patronbailor may recover for the loss of property entrusted without separate fee to restaurants, hotels or, since they arrived on the scene, motels. Indeed, its provisions, enacted, as the legislative history makes clear, at the instance of restaurant and hotel industry functionaries, are so harsh that, even when a restaurateur, hotelkeeper or motel owner to whom an article is committed is proved to have knowingly engaged a dishonest checkroom attendant, collectable damages may not exceed the more munificient sum of $100. This cap, I might add, has remained unaltered since it was fixed in the antedeluvian monetary times of 57 years ago.

But, as one might have suspected, there had to be and, indeed, are compensating provisions designed to ameliorate the confiscatory nature of this scheme or at least to warn those who otherwise could be caught within its web. So, when a patron requests a receipt containing the declared value of the item he or she decides to check, the limitations are inoperative, and the restaurant, hotel or motel resumes its traditional liability for full value (General Business Law, § 201).

Now, it goes without saying that, unless a restaurant proffers receipts and invites declarations, or unless patrons in some other manner are advised of the existence of this option (or, for that matter, of the limitations that prevail in the absence of its exercise), it would be but a secret, and, therefore, ineffective privilege. It was to avoid this paradoxical consequence that the Legislature, apparently recognizing that almost no one is likely to consult the Consolidated Laws before deciding to dine out, enacted section 206 as an auxiliary to the statutory scheme. In my view, this provision, a precondition to the enforcement of the limitation preferences granted restaurants by section 201, requires them to informatively post a printed copy of the statute in a conspicuous place and manner. This, concededly, the defendant here did not do. Yet, because the posting appendage, though part of what Judge Cardozo called a “connected plan” embracing both restaurants and hotels (Honig v Riley, 244 NY 105, 109), does not refer to restaurants by name, the majority, by choosing to deal with section 206 as though it stood in isolation rather than as a dependent part of a whole, would stultify the salutary purpose it was intended to achieve.

It takes no missionary zeal to observe that, while canons of construction are helpful, they can never take the place of reasoned analysis (Beary v City of Rye, 44 NY2d 398, 410-411; Becker v Huss Co., 43 NY2d 527, 533). Signposts at best, they are not to be followed blindly when they appear to point in the wrong direction. All the more is this so when we treat with a statute which Judge Cardozo also deservedly characterized as “clumsy and inartificial” (Honig v Riley, supra, at p 109). For, the notion that, because words are plain, their meaning is also plain is “merely pernicious oversimplification” (United States v Monia, 317 US 424, 431 [Frankfurter, J., dissenting], quoted in People v Brooks, 34 NY2d 475, 478). So, when words, read literally, lead to an unreasonable result plainly at variance with the policy of legislation as a whole, a court must look “to the purposes bf the act” (New York State Bankers Assn. v Albright, 38 NY2d 430, 437). Or, as we suggested, in Brooks, the goal of judicial inquiry is not always to be satisfied by a “mechanical” reading of a statute, but rather by understanding that its phrases have “ ‘some purpose or object to accomplish, whose sympathetic and imaginative discovery is the surest guide to their meaning’ ” (People v Brooks, supra, at p 478, quoting Cabell v Markham, 148 F2d 737, 739 [Learned Hand, J.]).

Turning then to the purpose of the statute before us now, its genesis goes back to the days when, if food and drink were to be provided outside the home, it was primarily the business of the innkeeper to provide it. In this unitary concept, the same responsibility was borne toward the wayfarer who applied for lodging and the one who applied for a meal. One of these in the beginning was that of absolute liability, as an insurer, for the loss of a guest’s property and, later, a combination of statutorily fixed limited liability matched by compulsory safeguards against loss (Zaldin v Concord Hotel, 48 NY2d 107; 111-112, and authorities cited therein). However, with time, as a growing urban population developed an everincreasing habit of taking meals at restaurants, the obligation of its proprietors was reduced to that imposed by the general law of negligence (Montgomery v Ladjing, 30 Misc 92; Simpson v Rourke, 13 Misc 230).

Then, the year 1924 saw the birth of the legislation which Judge Cardozo so critically was to describe that same year and which we, as his successors, today confront. Its intended goal and format, as described in hotel terms by the counsel to the New York State Hotel Association and the Hotel Association of New York City, who did the drafting, is revealing: “Heretofore the hotelkeeper has been practically at the mercy of the unscrupulous guest and has often been compelled to pay heavy claims for the loss of property from store-rooms and checking-rooms in cases where, when the property was originally deposited with the hotel-keeper, he had no knowledge of the real value thereof nor was such value called to his attention by the guest. The * * * bill relieves the situation and at the same time works no hardship on the guest, for all he is required to do is to notify the hotelkeeper of the value of the property at the time of depositing the same. Furthermore, when so notified, the hotelkeeper at all times continues to be liable for the full value of such property in case of negligence, and copies of the law are required to lie posted, pursuant to Section 206 of the General Business Law” (emphasis added; legislative bill jacket, Document No. 3, L 1924, ch 506).

As formally enacted, however, the bill, to be known as section 201, without further definition, put restaurants within the ambit of its general protection. Then, significantly, when it was construed by this court, Judge Cardozo made clear that, however ineptly presented, its inclusion of restaurants made them part of an integrated whole. Specifically, he not only referred to them “in conjunction with the provisions immediately preceding it as part of a connected plan,” but also declared that “the statute is not aimed at the protection of proprietors of restaurants exclusively”. Crucially, he went on to say that, “[/]or the purpose of the new exemption, proprietors of inns and proprietors of restaurants are grouped as a single class” (Honig v Riley, 244 NY 105, 110, supra [emphasis added]).

That sensible crossover among the different sections of the General Business Law was intended is well illustrated by these observations. For “the new exemption” for “proprietors of restaurants” to which Honig refers is also contained in article 12 of the General Business Law under what ordinarily might be regarded as the misleading heading “Hotels and Boarding Houses”. It follows from this most confusing arrangement that the posting requirement applicable to hotels, if they are to make any sense, must be deemed equally applicable to restaurants.

It was in the same vein that, in 1960, section 201 was amended to include, as had been the case with restaurants, the newly emerging motel industry as well. On that occasion, in language again reflecting the recognized tradeoff between the benefits and obligations of the statutory framework, the Department of Commerce and the Association of the Bar of the City of New York advised the Governor that those desiring the protection should be “subjected to the posting provisions of the law” (legislative bill jacket, Document Nos. 14, 31, L 1960, ch 840).

Sound policy too supports this conclusion. In the past, this court, dehors the present context, has repeatedly emphasized that it would be misleading and unfair to allow a hotel to assert a limited liability when it had not posted a copy of a statute so that a guest would be “notified of the true situation and acts with knowledge” (Millhiser v Beau Site Co., 251 NY 290, 296). It would be equally misleading and unfair for one who patronizes a restaurant to be confronted with a defense of limited liability without such notice. (See, also, Klar v H & M Parcel Room, 270 App Div 538, 542, affd 296 NY 1044 [claim check limiting damages recoverable for loss at parcel room in railroad terminal, though otherwise comporting with public policy, held inadequate in absence of “conspicuous signs * * * calling attention to the limitation * * * or that there was any opportunity afforded to plaintiffs to assent to or dissent from the alleged contract”]).

In fine, history and policy lead to inexorable conclusions: The Legislature did not intend to extend the salutary benefits of section 201 of the General Business Law to the proprietors of either restaurants, hotels or motels without appropriate notice of the condition — exaction of a receipt containing a statement of value — without which the most extensive loss would bring but a pittance. When the bill was originally enacted, it would have served nothing but an impermissibly overprecious and overliteral reading to assume it intended to charge only hotels with its posting requirement, when, though its hotel sponsors had ignored restaurants, the Legislature affirmatively and expressly took the trouble to include them within the “connected” statutory scheme (Matter of Allstate Ins. Co. v Shaw, 52 NY2d 818, 820-821).

Therefore, while, no doubt, the statutory language could be clearer, it surely is remiss not to give effect to the clear-cut underlying intent that, at least for checkroom posting purposes, restaurants are in the “same class” with the other kinds of establishments to be found in the related subdivisions of the statute.

It is for all these reasons that the order of the Appellate Division should be affirmed.

Chief Judge Cooke and Judges Jasen, Gabrielli, Jones and Wachtler concur with Judge Meyer; Judge Fuchs-berg dissents and votes to affirm in a separate opinion.

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

       The appeal as of right has become unnecessary in view of the Appellate Division’s grant of leave to appeal from its own order on the second appeal. Such an appeal automatically brings up for review any prior nonfinal order “which necessarily affects the final judgment” (CPLR 5501, subd [a], par 1; see 7 Weinstein-Korn-Miller, NY Civ Prac, par 5501.01). Because the prior order in the instant case granted summary judgment to plaintiff it necessarily affects the final judgment (7 Weinstein-Korn-Miller, op. cit., par 5501.05; Cohen and Karger, Powers of the New York Court of Appeals, § 79, p 341).

      . Examination of the record in Honig reveals that the posting provision was not raised in that case.

      . The majority’s passing reference to an unpleaded conversion action in the circumstances of this case can serve no practical purpose, since an attempt to activate such a theory could hope to do no more than launch a trusting and factually uninformed patron on a legally frustrating “fool’s errand”.


source: Caselaw Access Project

author: Per Curiam.

license: Public Domain

text:
    In the Matter of Dorothy Ryan, Respondent, v Board of Elections of the City of New York, Respondent, and Carol Reichman et al., Appellants. (And Another Proceeding.)
    Argued September 1, 1981;
    decided September 3, 1981

      APPEARANCES OF COUNSEL

      Henry T. Berger for appellants.

      Harry R. Pollak for Dorothy Ryan, respondent. .
   OPINION OF THE COURT

Per Curiam.

The requirement of subdivision 2 of section 6-132 of the Election Law that the subscribing witness to a designating petition be “a resident of the political subdivision in which the office or position is to be voted for” is a substantive legislative requirement which may not be relaxed by the courts. I'he signatures contained on a petition witnessed by a nonresident of the political subdivision involved may not be counted in determining whether a sufficient number of voters has validly signed a candidate’s designating petition. The order of the Appellate Division should, therefore, be reversed and the judgment of Special Term should be reinstated, without costs.

At issue is the validity of the petition designating Dorothy Ryan as a candidate for the Democratic Party nomination for member of the city council for the third council district. Fifteen hundred signatures are required for such a designation. The parties stipulated that 1,161 signatures were valid and the referee validated 110 more about which no question is raised before us. He also validated 368 signatures obtained by Charles Bayor, thus bringing the total to 1639.

Until eight days prior to the first day to circulate petitions, Charles Bayor resided in the third council district. Though Bayor continued to reside in the same building, a redistricting plan effective June 8, 1981 redefined the district in such a manner as to place Bayor’s residence approximately 125 feet outside the new district lines. Unaware of the change, Bayor obtained and was the subscribing witness for 368 signatures on the Ryan petition. The referee, relying upon the substantial compliance concept of Matter of Rosen v McNab (25 NY2d 798) and the holding in Matter of McManus v De Sapio (5 NY2d 773), recommended validation of the petition. Special Term, however, rejected the referee’s recommendation. The Appellate Division reversed, on the law and in the interest of justice, one Justice dissenting, and the matter is before us on an appeal of right.

Our recent decisions have made clear that the failure of a designating petition to comply with an element that the Legislature has deemed essential is a fatal defect. In Matter of Alamo v Black (51 NY2d 716), the failure to include in the subscribing witness’ statement a declaration that the signers had subscribed on the dates shown in spaces adjacent to their signatures invalidated the designating petitions; in Matter of Higby v Mahoney (48 NY2d 15), the failure to set forth in the petition the assembly district in in which the subscribing witness resided was likewise fatal, even though the town in which the election was to be held was wholly within a single assembly district and the witness had been advised by Board of Elections personnel that the assembly district number could be omitted. Though the Legislature has made clear that the petition need only be “in substantially the following form” (Election Law, § 6-132, subd 1) and that the form of the subscribing witness’ statement need only be “substantially” as set forth (subd 2), its substantial compliance provisions are limited to the statutorily prescribed format and do not permit deviations as to statutorily prescribed qualifications of signers, witnesses or candidates or the contents of the petition (Matter of Alamo v Black, supra, p 717). Nor are we aware of any provision of law which authorizes a court to permit deviations from such qualifications or contents in the exercise of discretion or in the interest of justice (see Matter of Hutson v Bass, 54 NY2d 772 [decided herewith]).

To the argument advanced by petitioner and adopted by the Appellate Division that to construe the residence requirement strictly is to defeat the will of the voters who signed the petition though they and the subscribing witness all acted in good faith, it is a sufficient answer that-when the Legislature sought to avoid such a consequence it knew how to do so. Thus, the same subdivision 2 of section 6-132 under consideration relaxes its residence requirement when the position in question is the party position of member of the county committee. Further, the Legislature has specifically provided for the situation in which the candidate himself is redistricted out of his prior political subdivision. Thus, to the requirement that an assembly district leader reside within the district subdivision 3 of section 2-110 of the Election Law makes specific exception for “the first election next ensuing after a readjustment or alteration of the units of representation becomes effective”, in that instance requiring only that the candidate have been a resident of the county in which the district is contained for 12 months past (see, also, the similar provision of section 7 of article III, of "the New York Constitution, relating to the qualification of a candidate for Senate or member of Assembly after a reapportionment).

Finally with respect to the validity of the petition, we note that neither Matter of McManus v De Sapio, 5 NY2d 773 (supra) nor Matter of Verdi v Mattera (32 NY2d 837) relied on by appellant and the Appellate Division majority are to the contrary. In Mattera the change of district boundary had been declared invalid, and in McManus the subscribing witness in fact lived within the district and, therefore, was qualified, though he failed to enter the proper election district number in his witness’ statement because the Board of Elections changed the district number after the last date it was permitted to do so.

Appellate argues not only that her petition should be validated but also that the proceeding to invalidate it was not properly served because the wrong zip code was used on the postal receipt. The referee found, however, that the proper name and zip code were used on the letter sent to appellant, a finding which Special Term impliedly affirmed. The Appellate Division, presumably because of its conclusion on the merits, did not discuss the issue and there is nothing before us to indicate that the finding that the proceeding was properly commenced is erroneous as a matter of law.

For the foregoing reasons, the order of the Appellate Division should be reversed, and the judgment of Special Term invalidating the petition should be reinstated, without costs.

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

Order reversed, without costs, and the judgment of Supreme Court, New York County, reinstated.


author: Jones, J.

text:
    Isidor Bernstein, as Administrator of the Estate of Deborah Bernstein, Deceased, Appellant, v Eugene Bodean et al., Respondents, et al., Defendants.
    Argued June 8, 1981;
    Decided September 3, 1981

      POINTS OF COUNSEL

      Norman E. Frowley for appellant.
    I. The trial court erred in limiting the questioning of medical malpractice member physicians as to the basis for their recommendation of no liability. (McCluskey v Cromwell, 11 NY 593; Matter of Blyn v Bartlett, 50 AD2d 442, 39 NY2d 349; Comiskey v Arlen, 55 AD2d 304, 43 NY2d 696; Curtis v Brookdale Hosp. Center, 62 AD2d 749; Matter of Heckt v City of Lackawanna, 44 AD2d 763, 35 NY2d 756; Matter of Hecht v Monaghan, 307 NY 461; People v Cole, 43 NY 508.) II. The medical malpractice panel statute, section 148-a of the Judiciary Law, is unconstitutional. (Comiskey v Arlen, 55 AD2d 304, 43 NY2d 696; Kletnieks v Brookhaven Mem. Assn., 53 AD2d 169; Dougherty v Milliken, 163 NY 527; Kulak v Nationwide Mut. Ins. Co., 40 NY2d 140; People v Creasy, 236 NY 205; Montgomery v Daniels, 38 NY2d 41; Ex Parte Peterson, 253 US 300; Niagara Falls Power Co. v Halpin, 267 App Div 236, affd sub nom. Matter of Niagara Falls Power Co. v White, 292 NY 705.) III. In view of the panel doctors’ long-standing associations with defendants Bromberg and Basset (and with Dr. Rubin, Bromberg’s partner), the court ought to have disqualified the panel or have limited the applicability of its recommendation, to avoid potential bias or the appearances of bias. (De Camp v Good Samaritan Hosp., 66 AD2d 766; Virgo v Bonavilla, 49 NY2d 982.)

      Richard A. Young, Michael T. Walsh and Thomas M. Lopez for Eugene Bodean and another, respondents.
    I. The trial court acted properly in restricting questioning of the panel members and in finding that the members were not biased. (Abrams v Brooklyn Hosp., City of N. Y., 91 Misc 2d 380; Curtis v Brookdale Hosp. Center, 62 AD2d 749; Comiskey v Arlen, 55 AD2d 304; Virgo v Bonavilla, 49 NY2d 982; People v De Martini, 213 NY 203; Bennett v Crescent Athletic-Hamilton Club, 270 NY 456; Tactuk v Freiberg, 29 AD2d 868; Cassano v Hagstrom, 5 NY2d 643; Filanowicz v Guarino, 27 AD2d 666; Forman v Azzara, 16 NY2d 955.) II. The Legislature acted within its constitutional authority in enacting section 148-a of the Judiciary Law. (Lincoln Bldg. Assoc. v Barr, 1 NY2d 413.) III. The medical malpractice panel statute, section 148-a of the Judiciary Law, is constitutional. (Ex Parte Peterson, 253 US 300; General Inv. Co. v Interborough R. T. Co., 235 NY 133; Meeker & Co. v Lehigh Val. R. R., 236 US 412; Fleury v Edwards, 14 NY2d 334; Matter of Second Report of Nov., 1968 Grand Jury of County of Erie, 26 NY2d 200; Munn v Illinois, 94 US 113; Silver v Silver, 280 US 117; Montgomery v Daniels, 38 NY2d 41; Jones v Union Guano Co., 264 US 171.)

      E. Richard Rimmels, Jr., and Fredric H. Montfort for North Shore Hospital and another, respondents.
    I. The action should have been dismissed against the hospital and Dr. Basset. (McLaughlin v Mine Safety Appliances Co., 11 NY2d 62; McDaniel v Williams, 23 AD2d 729; Bravo v Thiebout & Sons, 40 Misc 2d 558, 26 AD2d 617; Foley v County of Nassau, 39 AD2d 546; Segarra v Wyckoff Hgts. Hosp., 58 AD2d 644.) II. The New York medical malpractice statute is not unconstitutional. (Comiskey v Arlen, 55 AD2d 304; Davison v Sinai Hosp. of Baltimore, 462 F Supp 778; Hines v Elkhart Gen. Hosp., 465 F Supp 421, 603 F2d 646.) III. There is no basis to attack the integrity of the panel. (Matter of Baar & Beards [Oleg Cassini, Inc.], 30 NY2d 649; Moore v Town of Huntington, 39 AD2d 764;
      Palmieri v Insurance Co. of North Amer., 67 AD2d 967; Kletnieks v Brookhaven Mem. Hosp., 53 AD2d 169; Virgo v Bonavilla, 71 AD2d 1051, 49 NY2d 982; Matter of Cross Props. [Gimbel Bros.], 15 AD2d 913,12 NY2d 806; Matter of O’Neil v De Santis, 40 AD2d 924; Matter of Avery v Rechter, 56 AD2d 963; People v Biondo, 41 NY2d 483, 434 US 928.) IV. Cross-examination of the panel members was proper. (Curtis v Brookdale Hosp. Center, 62 AD2d 749.)

      Robert Abrams, Attorney-General (George C. Mantzoros and Shirley Adelson Siegel of counsel), in his statutory capacity under section 71 of the Executive Law and CPLR 1012 (subd [b]).
    Section 148-a of the Judiciary Law is constitutional. Its provisions that the panel’s recommendation shall not be binding but “shall be accorded such weight as the jury * * * chooses to ascribe to it” with cross-examination of the panelists “with reference to the recommendation only” — e.g., the physical evidence examined and documentary evidence reviewed — do not violate constitutional guarantees of due process or equal protection, nor the constitutional right to trial by jury. (Comiskey v Arlen, 55 AD2d 304; Halpern v Gozan, 85 Misc 2d 753; Curtis v Brookdale Hosp. Center, 62 AD2d 749; Abrams v Brooklyn Hosp., City of N. Y., 91 Misc 2d 380; Meeker & Co. v Lehigh Val. R. R., 236 US 412; Montgomery v Daniels, 38 NY2d 41; Boddie v Connecticut, 401 US 371.)
   OPINION OF THE COURT

Jones, J.

Following introduction in evidence of the recommendation of a medical malpractice panel concerning the question of liability, pursuant to section 148-a of the Judiciary Law, the doctor panel members called as witnesses may be examined, subject to the customary oversight of the Trial Judge, on any matter which will reasonably assist the triers of fact in assessing the probative worth of the panel recommendation.

Deborah Bernstein was the victim of a rare malignancy which originated as a small growth on the left thumb and metastasized first to her arm and then to her lungs, eventually causing her death. During her illness she underwent an extensive course of treatment in which each of the defendant physicians played some part.

This action for medical malpractice was commenced on March 25,1976. At the completion of discovery and all other preliminary proceedings, but prior to trial, a medical malpractice panel consisting of a Supreme Court Justice, a surgeon, a pathologist and an attorney, was convened pursuant to subdivision 2 of section 148-a of the Judiciary Law. Based on their findings, the panel members unanimously recommended that “there is no liability on the part of said defendants”, a recommendation which was subsequently read to the jury in accordance with the statute.

At the trial plaintiff called the panel’s two physicians, Dr. Di Benetto, a surgeon, and Dr. Palladino, a pathologist, as witnesses. Neither was allowed to answer questions put to him by plaintiff’s counsel relating to the basis of his opinions. Indeed, the Trial Judge repeatedly sustained objections to those inquiries which sought to educe either the factual or medical predicate for the conclusions of the individual panel members. In effect, the trial court ruled that the panel physicians could testify on direct only as to the data made available to the panel and the procedures followed by the panel and not as to either their individual opinions or the basis for their participation in the panel’s recommendation.

Thus, when counsel inquired: “On what is the medical basis for your opinion in this case?”, the court directed the witness not to answer and instructed the jury: “No statement or expression of opinion made in the course of the hearing shall be admissible in the evidence, either as an admission or otherwise, in the trial of the action. So that the doctor cannot testify with regard to his opinion, what happened during the course of that panel hearing.”

Following presentation of evidence, the jury returned a verdict in favor of all defendants except one, concerning whom they could not reach a decision; his case accordingly was severed. On appeal the Appellate Division, one Justice dissenting, affirmed. We now reverse, and remit the case for a new trial. We are of the opinion that the limitations imposed by the trial court on the questioning of the physician members of the panel were too restrictive.

Section 148-a of the Judiciary Law makes provision for the establishment of a panel to facilitate the disposition of medical malpractice claims. In essence, as originally enacted in 1974, the statute provides for the following procedures :

All hearings are held before a panel of three members, consisting of a Justice of the Supreme Court, a physician and an attorney (subd 2). The panel doctor and attorney are selected from a list prepared by the Presiding Justice of each respective Appellate Division (subd 2, pars [a], [b]). The listing of doctors is by specialty as is determined and communicated to the court by the Medical Society of the State of New York, a county medical society and/or the New York Academy of Medicine; attorneys selected are required to have trial experience, not confined, however, to the field of medical malpractice (subd 2, pars [a], [b]). Prior to the date set for the hearing any party may object to the doctor or attorney who has been designated, which objection is to be decided by the Justice presiding as a member of the panel (subd 2, par [d]). The panel hearings are informal and without stenographic records (subd 4). As initially enacted section 148-a provided that no statement or expression of opinion made in the course of the hearing would be admissible in evidence either as an admission or otherwise in any trial of the action (subd 4) and contained no provision for introduction of the panel’s recommendation at any subsequent trial.

Subdivision 8, which was added by amendment in 1975 (L 1975, ch 109, § 16), and that is the portion of section 148-a which is pertinent to the issues posed on this appeal, provides:

“If the three members of the panel concur as to the question of liability, a formal written recommendation concerning such question of liability shall be signed by the panel members and forwarded to all parties. In such event, the recommendation shall be admissible in evidence at any subsequent trial upon the request of any party to the action. The recommendation shall not be binding upon the jury or, in a case tried without a jury, upon the trial court, but shall be accorded such weight as the jury or the trial court chooses to ascribe to it.

“If the recommendation is read to the jury or by the trial court, the doctor member or the attorney member of the panel, or both of them, may be called as a witness by any party with reference to the recommendation of the panel only. The party calling such witness or witnesses shall pay their reasonable fees and expenses.”

The paramount issue is to what extent section 148-a, and most particularly subdivision 8, authorizes either party in a malpractice action to question a panel member who has been called as a witness. To be more precise, what is the scope of examination contemplated and permitted by the statutory phrase — “with reference to the recommendation of the panel only”?

None of the parties has offered and independent research has not uncovered anything in the legislative history of the 1975 amendment to indicate the purpose or objective of the amendment or to assist in the interpretation of the statutory diction. Nor do the legal writers provide any assistance, however speculative or indirect. Thus, there is nothing to suggest that the Legislature envisioned the restrictive interpretation imposed by the trial court in this case and advocated by defendants in our court.

Section 148-a of the Judiciary Law was enacted because of what the Legislature perceived as an urgent need to develop a reasonable procedure for addressing the critical problem of increasing malpractice insurance rates. Its purpose was to bring to the pretrial stage of litigation participatory consideration and evaluation by representatives of the court, the legal profession and the medical profession of the underlying claim, apparently on the theory that the parties would be better equipped to negotiate a setlement, and under greater pressure to settle, if given a preliminary view of the merits of the case.

The Legislature for undoubtedly similar objectives amended section 148-a by the addition of subdivision 8 on the view that the disposition of malpractice claims would be facilitated if the panel’s recommendation was made admissible at the trial and the panel physician and attorney made available as witnesses.

The statutory prescription that the doctor, or attorney, member of the panel, or both, may be called as witnesses “with reference to the recommendation of the panel only” does not describe the scope of the permitted examination with clarity or delineate its boundaries with particularity. We look, nonetheless, to the language employed by the Legislature in the light of the function to be served by the panel recommendation and the interrogation of its members as witnesses.

The objective of the statutory amendment allowing the introduction into evidence of the panel recommendation could only have been to assist the triers of fact in reaching a verdict. The role of the panel was not to supplant the jury (or the trial court, as the case might be); its recommendation was not intended to replace the jury’s verdict (or that of the trial court). The statute explicitly provides that the “recommendation shall not.be binding upon the jury or, in a case tried without a jury, upon the trial court, but shall be accorded such weight as the jury or the trial court chooses to ascribe to it” (subd 8). To impute to the Legislature a purpose to constrain the freedom of jury consideration by substituting therefor, to any extent, the professional judgment of the panel members, and with that objective to insulate their recommendation from the scrutiny of cross-examination, would be to attribute to the Legislature an intention to enact legislation of dubious constitutional validity.

The examination of the panel members can only be comprehended as in furtherance of the legislative objective and thus a means to assist the triers of fact, be they jurors or Judge, to assess the probative worth of the panel’s recommendation. The procedure prescribed for selection of the panel members and the statutory authorization for receipt in evidence serve to authenticate the reliability and to establish the admissibility of the recommendation. There remains, however, for the triers of fact the question of what weight shall be ascribed to it. It is at this point that the statutorily prescribed examination of the panel members becomes significant. Subject to limitations imposed by the adverb “only”, examination is authorized as to any matter which may reasonably assist the'triers of fact in judging the significance and probative worth properly to be accorded the panel’s recommendation. Thus, by way of illustration but not of limitation, such examination might extend to the recommendation itself, the procedures followed by the panel, the materials (documentary and testimonial) considered by the panel, the opportunities for deliberation, the extent of deliberation, the interim and final votes or statements of position of the individual panel members, the education, training and experience of the panel members with respect to the particular issues involved, the factual predicates and the medical bases on which and the reasoning processes by which the panel and its individual members reached tentative and final conclusions. In short, any line of inquiry should be permitted which is found by the Trial Judge in the circumstances of the particular case not to be otherwise inadmissible and to be relevant and material to the assessment by the triers of fact of the evidential persuasiveness of the recommendation.

Two limitations must be recognized and a word of guidance uttered. First, the statute contains the restrictive adverb “only”. We take this to mean that examination shall not be permitted as to the qualifications of the panel member generally but shall be exclusively focused on his qualifications related to and his participation in the panel recommendation. Nor may he be asked to express opinions on hypotheses other than those before the panel. In short he is not to be made an expert witness on behalf of any litigant, but may be examined only with respect to the panel recommendation.

Second, as is true with respect to the examination of all witnesses, the scope and manner of interrogation are committed to the Trial Judge in the exercise of his responsibility to supervise and to oversee the conduct of the trial. Thus, in individual cases it may be that examination will be curtailed as repetitive or cumulative only, as prejudicial, as impermissibly collateral, as abusive, or for other proper reasons. Such constraints are properly left to the sound discretion of the Trial Judge subject to limited appellate review.

We also suggest, but do not now prescribe, the desirability of consideration by the trial court in a jury case, especially on request of a party, of instructing the jury as to the significance to be accorded by it to the testimony of any panel member witness, as well as to the panel recommendation (consider, for instance, the suggested instruction with reference to the panel recommendation and the testimony of panel members set forth in Pattern Jury Instructions 2:150, at p 123 of the 1980 supplement).

Measured against these standards we conclude that the trial court in this case impermissibly restricted the scope of plaintiff’s examination of Drs. Di Benetto and Palladino, and that for this reason the jury verdicts in favor of the three physician defendants must be set aside.

We note that the parties have argued the constitutionality of section 148-a and invited our resolution of their opposing contentions. This issue was not addressed at the Appellate Division, and inasmuch as the case is to be remitted for a new trial, the constitutional issue may never arise; we therefore do not reach or address it (cf. Comiskey v Arlen, 43 NY2d 696).

For the reasons stated, the order of the Appellate Division should be reversed, with costs to abide the event, and the case remitted for a new trial.

Chief Judge Cooke and Judges Jasen, Gabrielli and Meyer concur; Judges Wachtler and Fuchsberg taking no part.

Order reversed, with costs to abide the event, and case remitted to Supreme Court, Nassau County, for a new trial.

      . For further exposition of the restrictions placed on examination of panel members as witnesses (see 74 AD2d 364, 366-368).

      . The panel may request, as was done here, “an additional doctor having particular expertise in the specialty involved to assist in the determination of the claim” (subd 6).

      . Accommodating amendment was made at the same time to qualify what had been the blanket proscription of subdivision 4 by excepting procedures now authorized by the new subdivision 8 from its bar (see n 4, infra.)

      . That the scope of examination of panel members when called as witnesses was not to be tightly confined is underscored by the fact that, when in 1975 subdivision 8 was enacted authorizing the introduction on trial of the panel recommendation and the calling of panel members as witnesses, the Legislature also added the exceptions to the previous categorical bar against use of statements or expressions of opinion made in the course of the hearing, contained in subdivision 4. That subdivision was amended to read: “The hearing shall be informal and without a stenographic record. Except as otherwise provided in this section, no statement or expression of opinion made in the course of the hearing shall be admissible in evidence either as an admission or otherwise in any trial of the action. The justice presiding at the hearing shall not preside at the trial. No other panel member shall participate in the trial either as counsel or witness except as otherwise provided herein.” (Pertinent amendments emphasized, L 1975, ch 109, § 13.)


author: Jasen, J. Meyer, J.

text:
    In the Matter of Barry Hurowitz, Respondent, v Board of Elections of the City of New York, Respondent, and William J. Garry et al., Appellants. (And Two Other Proceedings.)
    Argued September 2, 1981;
    decided September 3, 1981

      APPEARANCES OF COUNSEL

      Alan L. Lebowitz and Fabian G. Palomino for appellants.

      Peter J. Kurshan and Alan Drezin for Barry Hurowitz, respondent.
   OPINION OF THE COURT

Jasen, J.

Petitioner seeks to invalidate petitions designating Barry Hurowitz as a candidate for Civil Court Judge of the City of New York, Kings County, on the ground that his candidacy violates section 20 of article VI of the New York State Constitution. Judge Hurowitz is currently serving as á Judge of the Civil Court of the City of New York, Kings County. He was elected to that position in the general election of 1976 for a term of 10 years, commencing January 1, 1977. After serving less than half of his original term, he now seeks to be a candidate for a new full term of 10 years. Presumably, the Judge will resign from his current position in the event he is successful in the upcoming election.

At issue on appeal is the effect to be given section 20 of article VI of the New York State Constitution which provides, in relevant part, that a Judge may not “be eligible to be a candidate for any public office other than judicial office or member of a constitutional convention unless he resigns his judicial office”. In support of his position to run for this vacancy, the Judge contends that a strict reading of section 20 authorizes his candidacy. It is his view that section 20 not only permits members of the judiciary to retain their positions while they pursue vacancies on other courts, but also sanctions sitting Judges whose terms have not yet expired to be candidates for identical positions on the same court. In our view, such an interpretation would frustrate the general purposes of article VI of the Constitution, thwart the electoral process and enhance the potential for public mischief.

It is a basic tenet of both constitutional and statutory construction that the general intent of an article or statute should govern the interpretation of any one part. “In the construction of a law, every part of it must be viewed in connection with the whole, so as to make if possible all its parts harmonious. (1 Kent, 462.)” (People ex rel. Jackson v Potter, 47 NY 375, 378.) We believe that the general intent of article VI of the Constitution, when read in its entirety, is to assure the public an independent and impartial judiciary. Indeed, in commenting upon this article, we have stated: “When the whole sixth (or judiciary) article of the Constitution is considered, certain purposes are clearly indicated. It was purposed to provide for the State a general and complete and continuous judicial system, and to create, or recognize and continue, all the judicial officers needed therefor, save those of inferior local courts. (§19.) It was designed that the general and * * * the exclusive mode of filling these offices * * * should be by election by the people, and not by appointment. (§§ 2, 13, 15, 16,18, 19.) And that that election should, for the officers of higher grade, be a general one, when it was more likely that the whole people would take part in it. It was conceived that the system to be supplanted was defective, in the short term of office it gave; and hence it was intended by the new article, to create and secure a longer term, and to avoid fractions of terms. (Sections above cited, and §§ 3, 9, 12.) It was designed that one full term should follow directly after another full term, with no break of regular and connected succession. It was so arranged that these terms should end with one and begin with another and the next political year; whereby the" people and all their executive officers should know beforehand to take care for the expiration of a term, by provision to that end at the previous general election. (§§ 2, 13, 15.) For although this article does not in terms speak in these sections of the general election, yet a Constitution is to be held as prepared and adopted in reference to existing statutory laws, upon the provisions of which, in detail, it must depend to be set in practical operation. (Cass v. Dillon, 2 Ohio, N. S., 607; and see, per Walworth, Ch., in The People v. Mayor, etc., 25 Wend, 9-13; per Denio, Ch. J., in The People v. Draper, 15 N. Y., 532-537.) ” (People ex rel. Jackson v Potter, supra, at pp 379-380.) Hence, article VI was designed to assure a structured judiciary elected on a regular basis without fragmentation of terms. To accept this candidate’s interpretation of section 20 would defeat the over-all purposes of article VI. Such activities could fragment terms and create iterim vacancies on a regular basis, thereby infringing upon the people’s right to a “complete and continuous judicial system”. (People ex rel. Jackson v Potter, supra, at p 379.)

Futhermore, these provisions also seek to minimize the involvement of the judiciary in the political process and the possible influences such exposure might bring with it. (NY Temp Comm on Constitutional Convention, Pamphlet 12 [1967].) The type of conduct advocated in this case would repeatedly and unnecessarily permit members of the judiciary to enter the political process, thereby defeating the intent and purpose of article VI.

Similarly, it is incumbent upon this court not to allow “[a] public statute relating to the qualifications of public officers [to be] so construed as to produce inconvenience or to promote a public mischief or to render the action of the voters at the election abortive. It should, in every case when the language will fairly permit, be given such a construction as to enable the electors to act intelligently, and to accomplish with as much certainty as practicable the purpose that they may have in view.” (People v Purdy, 154 NY 439, 442.)

In this case, the nature of the Judge’s candidacy could have the effect of aborting the election process. By seeking another position on the same court where he currently sits, he not only allows himself multiple chances to be re-elected, but also assures that when he is elected to the other position on the same court, a vacancy will occur. Such a vacancy creates an additional occasion for political involvement. Moreover, should this type of conduct become the norm, it would be possible that all positions would be appointive upon the resignations and shiftings of the other Judges; only at the next general election would the people be given a chance to vote, the effect of which may well be to merely approve the appointment. Although we do not find that this is currently the practice, the likelihood of such a result portends abuse of the elective system. Even viewed in its most favorable light, this conduct has the potential for “mischief” which this court cannot condone.

Not without significance in this connection is the risk of the appearance of impropriety that may be perceived by the public in a Judge’s injection of himself into the political process for the sole purpose of extending his tenure. (See Rules Governing Judicial Conduct, 22 NYCRR 33.2 33.7, 33.1.)

For all these reasons, the orders of the Appellate Division should be reversed, without costs, the petitions to validate dismissed, and the petition to invalidate granted.

Meyer, J.

(dissenting). I dissent and would affirm the orders of the Appellate Division.

As powerful as are the policy arguments for preclusion of a candidacy of the nature here involved, no such prohibition can be found in the provisions of the Constitution or of any statute. The proscription against candidacy of a Judge for public office “other than judicial office” (NY Const, art VI, § 20, subd. b, par [2]) cannot reasonably be read as does the majority, nor do the provisions of the Rules of Judicial Conduct furnish any basis for interpretation of the Constitution. Conceivably the power given by the last unmarked paragraph of section 20 (subd b) to the Chief Administrator of the courts with the approval of this court to promulgate rules governing the conduct of Judges may authorize adoption of a rule against such a candidacy in the future, but that does not warrant the adoption of such a rule outlawing the instant candidacy by judicial fiat.

Chief Judge Cooke and Judges Gabrielli and Fuchs-berg concur with Judge Jasen ; Judge Meyer dissents and votes to affirm in a separate opinion in which Judges Jones and Wachtler concur.

Orders reversed, etc.

       These rules were approved by the Court of Appeals pursuant to authority under section 28 of article VI of the New York State Constitution.


author: Gabrielli, J.

text:
    In the Matter of Robert F. Flacke, as Commissioner of Environmental Conservation of the State of New York, Appellant, v Freshwater Wetlands Appeals Board of the State of New York et al., Respondents.
    Argued September 8, 1981;
    decided October 20, 1981

      POINTS OF COUNSEL

      Robert Abrams, Attorney-General (Francis J. Keehan, Shirley Adelson Siegel and James A. Sevinsky of counsel), for appellant.
    An analysis of the Environmental Conservation Law and applicable case law clearly demonstrates that the court below erred in dismissing the petition herein on the ground that the commissioner lacked standing. (Boryszewski v Brydges, 37 NY2d 361; Matter of Fritz v Huntington Hosp., 39 NY2d 339; Matter of Dairylea Coop, v Walkley, 38 NY2d 6; Matter of Pooler v Public Serv. Comm., 58 AD2d 940, 43 NY2d 750; Randall v Bailey, 288 NY 280; Matter of Singer [State Laundry Co.], 189 Misc 150, 273 App Div 755; Shilbury v Board of Supervisors of County of Sullivan, 54 Misc 2d 979; O’Connor v Wells, 43 Misc 2d 1075; Matter of Board of Educ. v Allen, 6 NY2d 127; State Div. of Human Rights v Columbia Univ. in City of N. Y., 39 NY2d 612.)

      Whitney North Seymour, Jr., and Molly K. Heines for Freshwater Wetlands Appeals Board of State of New York, respondent.
    The commissioner has no standing to attack the administrative decisions of his own agency. (Matter of Pooler v Public Serv. Comm., 58 AD2d 940, 43 NY2d 750; Lee v Civil Aeronautics Bd., 225 F2d 950; Matter of Dairylea Coop, v Walkley, 38 NY2d 6; Matter of Fritz v Huntington Hosp., 39 NY2d 339.)

      H. Wayne Judge and Mark A. Lebowitz for Meadow Run Development Corporation, respondent.
    I. Having failed to perfect its appeal from so much of the order of the court below as affirms the Special Term finding that a wetland does not exist, the question of standing has been rendered moot. II. The commissioner lacks standing to commence this proceeding by the specific language of the statute and the Attorney-General has a conflict of interest in this matter. (Matter of Pooler v Public Serv. Comm., 58 AD2d 940, 43 NY2d 750; Matter of City of New York v New York Univ., 3 AD2d 954.) III. Special Term did not err when it refused to overturn the decision of the Freshwater Wetlands Appeals Board. (Matter of Pell v Board of Educ., 34 NY2d 222.) IV. The interim provisions of the act are unenforceable by reason of the commissioner’s failure to carry out the legislative mandate to proceed “as soon as practicable” to prepare and finalize wetland mapping. (People v Bondi, 94 Misc 2d 298; Matter of Russo v New York State Dept, of Environmental Conservation, 55 AD2d 935; Matter of New York City Housing Auth. v Commissioner of Environmental Conservation, Dept, of State of N. Y., 83 Misc 2d 89; Matter of Rubin v McAlevey, 54 Misc 2d 338, 29 AD2d 874.)
   OPINION OF THE COURT

Gabrielli, J.

The issue presented in this case is whether the Commissioner of the Department of Environmental Conservation may, by means of an article 78 proceeding, seek review of a determination of the Freshwater Wetlands Appeals Board reversing a determination of his department. A State agency, of course, has only those powers conferred upon it by the Legislature. We conclude today that the Legislature has so empowered the commissioner to challenge an adverse determination of the Freshwater Wetlands Appeals Board.

The Freshwater Wetlands Act (ECL art 24) was promulgated in 1975 to preserve, protect and conserve this State’s freshwater wetlands through regulation of their use and development (ECL 24-0103). Once property has been identified as a freshwater wetland covered by the act, virtually all forms of development are prohibited without first obtaining a permit from the Department of Environmental Conservation. In this case, respondent Meadow Run Development Corporation (Meadow Run) requested the department to determine if land on which the corporation wished to expand an existing parking facility was a freshwater wetland falling within the province of the Freshwater Wetlands Act (see ECL 24-0703, subd 5). The commissioner determined that the property proposed for development was a portion of a wetland larger than 12.4 acres and was, therefore, protected by the act. Meadow Run thereupon appealed to the Freshwater Wetlands Appeals Board, which thereafter overturned the determination of the commissioner.

The commissioner then brought the present article 78 proceeding seeking reinstatement of his determination. After concluding that the commissioner had standing to challenge the determination of the board, Special Term upheld its determination on the merits. On appeal, however, the Appellate Division reversed the order and judgment of Special Term denying respondent board’s motion to dismiss the petition on the ground that the commissioner lacks standing to commence the instant proceeding, and dismissed the petition.

Preliminarily, we note our continued adherence to the principles set forth in Matter of Pooler v Public Serv. Comm. (58 AD2d 940, affd 43 NY2d 750), where it was held that the Executive Director of the State Consumer Protection Board did not have the capacity to commence an article 78 proceeding against the Public Service Commission for judicial review of its order in a rate case. The Appellate Division there noted that although the Legislature had conferred upon the director of the board power to participate in certain rate cases before the commission, it did not confer authority upon the Consumer Protection Board or its director to maintain a suit. This court then affirmed on the memorandum of the Appellate Division.

Respondents now urge that the principles stated in Pooler require a determination in this case that the commissioner is without power to challenge by way of an article 78 proceeding a determination of the Freshwater Wetlands Appeals Board. We cannot agree with this position, for we hold this power is found within the express language of the Freshwater Wetlands Act.

The general power of the commissioner to bring suits in connection with the Freshwater Wetlands Act is provided in subdivision 1 of section 71-0505 of the Environmental Conservation Law. Specifically, this section states, in pertinent part, that “[t]he commissioner shall have the power to bring actions [sic] suits or proceedings as in his judgment may be necessary or proper to perform any of the powers, functions or duties imposed upon him or upon his department * * * by [, among other provisions, article 24,] or to prevent the violation by any person, public or private, of any of the provisions thereof”. The specific power to challenge a determination of the Freshwater Wetlands Appeals Board, although not arising from this section alone, derives from subdivision 2 of section 24-1105 of the Environmental Conservation Law, which provides that “[a]ny determination, decision or order of the board pursuant to this title may be judicially reviewed pursuant to article seventy-eight of the civil practice law and rules in the supreme court for the county in which the freshwater wetlands affected are located”. We find it noteworthy that this section provides that “any” determination of the board may be challenged, and does not limit challenges to determinations of the board which are adverse to the property owner’s development plans. We find further evidence of a legislative intention to grant the commissioner power to initiate the present proceeding in the language of section 24-1103 (subd 2, par e) of the Environmental Conservation Law, particularly when read in conjunction with the above-mentioned provisions. This section provides that the “commissioner * * * shall be bound by the decision of the board except to the extent such decision is reversed or otherwise modified by a court of competent jurisdiction pursuant to this article”. From all of this, we must conclude that the Legislature empowered the commissioner to institute the present challenge to the appeals board’s determination.

This result is consistent with the general legislative scheme for the protection of this State’s vital freshwater wetlands. It is the responsibility of the Department of Environmental Conservation and of its commissioner to carry out the environmental policy of this State (ECL 3-0301) and, as Special Term recognized, “ [i]t is manifest from the provisions of ECL article 24 that the commissioner and the department which he heads have the primary and over-all responsibility for the preservation and protection of New York’s freshwater wetlands” (100 Misc 2d 393, 399). Moreover, we cannot agree that the Legislature intended that the Freshwater Wetlands Appeals Board have final and unreviewable authority to conclude that land found by the Department of Environmental Conservation to be part of a freshwater wetland is outside the scope of the Freshwater Wetlands Act.

Accordingly, the Appellate Division having erroneously determined that the commissioner lacked standing to maintain the present proceeding, the matter should be reversed, with costs, and the matter remitted to the Appellate Division for a determination of the issues not reached by that court.

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

Order reversed, with costs, and matter remitted to the Appellate Division, Third Department, for further proceedings in accordance with the opinion herein.


author: Meyer, J.

text:
    Leon Da Silva, Appellant, v Antonio Musso et al., Respondents.
    Argued September 10, 1981;
    decided October 20, 1981

      POINTS OF COUNSEL

      Thomas G. Sherwood, and Vincent M. Albanese for appellant.
    I. The court below erred in finding a “mutual” mistake of fact where defendants, in contracting to sell property to plaintiff subject to a second mortgage, ignored an unrecorded instrument signed by them and retained in their possession which accelerated the mortgage upon sale. (Johns-Manville Corp. v Stone, 5 AD2d 110; Florence v Merchants Cent. Alarm Co., 51 NY2d 793; Pimpinello v Swift & Co., 253 NY 159; Hayward v Wemple, 152 App Div 195, 206 NY 692; 15th West 14th St. Co. v D. A.

      Schulte, Inc., 121 Misc 853, 210 App Div 851; Bailey Ford v Bailey, 55 AD2d 729; Matter of Town of Hempsted v Little, 22 NY2d 432; Scarnato v State of New York, 298 NY 376; 67 Wall St. Co. v Franklin Nat. Bank, 37 NY2d 245; Amend v Hurley, 293 NY 587; Matter of Eichner [Fox], 73 AD2d 431; People v Gruttola, 43 NY2d 116.) II. In any event, the court below erred in failing to award plaintiff a new trial on the issue of defendants’ bad faith. (Raphael v Booth Mem. Hosp., 67 AD2d 702; Precision Co. v Automotive Co., 324 US 806; New York Football Giants v Los Angeles Chargers Football Club, 291 F2d 471; Kavanaugh v Kavanaugh Knitting Co., 226 NY 185; Rowe v Great Atlantic & Pacific Tea Co., 46 NY2d 62; Van Valkenburgh, Nooger & Neville v Hayden Pub. Co., 30 NY2d 34; Quigley v Capolongo, 53 AD2d 714, 43 NY2d 748; National Equip. Rental v J & I Carting, 73 AD2d 666.)

      Joseph A. Baum for respondents. I. Mutual mistake when clearly demonstrated permits rescission of a contract.

      (McClure v Rignanese, 25 AD2d 565.) II. Neither bad faith nor fraud by defendants have been pleaded or proven.
   OPINION OF THE COURT

Meyer, J.

Absent any evidence of hardship upon the seller of real estate resulting from his negligent mistake, or of knowledge or reason to know of the mistake on the part of the purchaser, it is an abuse of discretion as a matter of law to deny specific performance to the purchaser and dismiss the complaint. The order of the Appellate Division should, therefore, be reversed and the judgment of Special Term awarding plaintiff specific performance should be reinstated, with costs.

The action arises out of the execution on August 29,1978 of a binder under which plaintiff agreed to purchase and defendants to sell an apartment building for $641,000. The binder provided that the purchaser was to take subject to a first mortgage of $335,000 bearing interest of % a second mortgage of $116,000 bearing interest of 8½% per annum payable $17,448 annually, principal due 1988, and by purchaser executing a purchase money third mortgage of $90,000 bearing interest of 8%% per annum payable $13,-390.56 annually, principal due 1985. The balance of $100,-000 was to be paid in cash, $1,000 on signing the binder, $9,000 additional on signing the formal contract, and $90,-000 at title closing.

No formal contract was ever signed because in preparing the contract the sellers’ attorney brought to their attention the provision in an unrecorded agreement extending the second mortgage under which sale by the mortgagors of the premises within five years from July 15, 1976 accelerated the entire balance. The extension agreement had been signed July 26, 1976, two years and one month prior to the execution of the binder and the acceleration clause was added to the printed extension agreement as a typewritten provision which appeared on the signature page. There was testimony that the mortgagees agreed to waive the acceleration provision upon a principal payment of $22,000, of which the purchaser agreed to pay $10,000, but that defendants refused to pay any part of such sum. The contract closing therefore aborted and the present action for specific performance was begun by the purchaser, who filed a notice of pendency.

The sellers’ answer set forth defenses of Statute of Frauds, mutual mistake and fraud. The Trial Judge held that the binder contained all essential terms and, therefore, constituted a valid contract; that there was no fraud on the part of the purchaser; that defendants had failed to demonstrate mutual mistake, since the purchaser was not aware of the acceleration provision; and that, absent proof of fraud on the part of plaintiff, defendants’ unilateral mistake of which the purchaser had no knowledge and which resulted from the negligence of defendants constituted an insufficient basis for rescission. He, therefore, awarded judgment of specific performance to plaintiff.

The Appellate Division agreed with the trial court’s conclusion that the binder constituted a sufficient contract, but reversed, nevertheless, and dismissed the complaint because the “binder agreement was based on the mistaken belief by both sides that the $116,000 mortgage would remain in effect”; there was no fraudulent intent on the part of the sellers; and their forgetfulness did not call for the drastic remedy sought by plaintiff since rescission would place plaintiff in status quo ante.

The Trial Judge concluded that the mistake was “the result of the defendants’ negligence”, they having executed the extension agreement and it having been in their possession since July 26, 1976. The Appellate Division found that the mistake was “due to the unawareness or forgetfulness” of defendants. The Appellate Division and the Trial Judge having disagreed in their findings of fact and in consequence on the appropriateness of granting the discretionary remedy of specific performance, our court has the power to review the facts and the exercise of discretion (CPLR 5501, subd [b]; Matter of Ray A. M., 37 NY2d 619, 622). Furthermore, the grant or denial of specific performance is a matter of sound judicial discretion, “not an arbitrary or capricious one, depending upon the mere pleasure of the court, but one which is controlled by the established doctrines and settled principles of equity” (Willard v Tayloe, 8 Wall [75 US] 557, 567; accord Hammer v Michael, 243 NY 445, 449; Phalen v United States Trust Co., 186 NY 178, 182). Since this is not a situation in which “there are no ‘as matter of law’ requirements one way or the other” (Vanderbilt v Vanderbilt, 1 NY2d 342, 353), denial of specific performance would constitute an abuse of discretion as a matter of law if there is no evidence to sustain the conclusion that requiring it would be a “drastic” or harsh remedy (Hammer v Michael, supra; cf. Patron v Patron, 40 NY2d 582; see Siegel, New York Practice, § 529; Cohen and Karger, Powers of the New York Court of Appeals, §§ 157, 158). For the reasons hereafter stated we conclude that the weight of the evidence supports the findings of the Trial Judge and that there is no evidence to support the Appellate Division’s conclusion that granting specific performance would be harsh. Moreover, though the rules of law governing mistake as related to specific performance differ from those governing rescission for mistake (see Kleinberg v Ratett, 252 NY 236, 240), we conclude that on this record it was error for the Appellate Division to dismiss the complaint and thus, in effect, grant rescission.

Specific performance may be denied for mistake even though the mistake is the defendant’s own act or omission for which plaintiff is not in the least responsible (Kleinberg v Ratett, supra; Gordon v Mazur, 284 App Div 289, affd 308 NY 861; Covart v Johnston, 61 Hun 622 [opn at 15 NYS 785], affd 137 NY 560; Bowman v McClenahan, 19 Misc 438, affd without reaching issue 20 App Div 346; see Willard v Tayloe, 8 Wall [75 US] 557, supra; Pomeroy, Specific Performance of Contracts [3d ed], § 245, p 592). However, when the mistake is the result of defendant’s own carelessness, not contributed to by conduct of the plaintiff, specific performance will be denied only in a case “of considerable hardship, or * * * when plaintiff must himself have been aware of the mistake” (Pomeroy, op. cit., at p 595; see, also, 11 Williston, Contracts [3d ed], § 1427, p 858; Patterson, Equitable Relief for Unilateral Mistake, 28 Col L Rev 859, 899-900). Thus, in Kleinberg, a purchaser of real estate who was unaware of the presence of an underground stream was held not entitled to rescind the contract, there having been no fraud or deceit on the seller’s part, but the seller’s counterclaim for specific performance was denied because the seller was aware of the stream and “great hardship will result if the contract be specifically enforced” (252 NY, at p 240). Similarly, specific performance was denied, because of the hardship that would result, in Bowman, against a purchaser who bought for immediate use without knowledge that the sale was subject to an unexpired lease and in Covart because of the difference in value between what the contract wording included and what the seller believed was included. Nor is the dictum in McClure v Rignanese (25 AD2d 565), upon which defendants so heavily rely, to the contrary, for the difference in interest rate payable on the mortgage the plaintiff purchaser in that case would have assumed would have materially and adversely affected the economic consequences of the transaction for the defendant sellers.

The record in this case contains no evidence from which it could be concluded that defendants would suffer hardship or adverse economic consequences from enforcement of the binder. To the contrary, defendants’ willingness to accept a purchase money third mortgage at 8% % establishes that 8% % is a fair return for the somewhat more secure second mortgage. Requiring defendants specifically to perform would, unless the second mortgagee waived the acceleration provision, require defendants to pay the mortgagees but would not terminate plaintiff’s obligation to take subject either to the existing second mortgage after assignment to defendants or to a new second mortgage of the same terms. That defendants would have to raise the cash to pay the present holders of the second mortgage is not per se such a hardship as to mandate denial of specific performance (see Turner v Washington Realty Co., 128 SC 271, 277). Defendants would still receive for their apartment house the exact consideration for which they bargained and would be compensated for having to finance the additional $116,000 they would be required to advance at the same 8% % interest rate they had acknowledged, by agreeing to accept a third mortgage bearing the same rate, to be a fair return on their money (see Schmaltz v Weed, 57 App Div 245, 251). It is, of course, conceivable that defendants’ financial position might so far affect the interest rate on, or maturity date of, funds they had to borrow to satisfy the holders of the existing $116,000 second mortgage as to make it a hardship for them to accept from plaintiff a second mortgage with the interest rate or maturity date of that mortgage. There is, however, nothing in the record to suggest that this is the case. Conceivably also a rising market may have increased the value of the property, but “subsequent fluctuations in the value of property * * * are not allowed to prevent * * * specific enforcement” (Willard v Tayloe, 8 Wall, at p 571, supra; see 11 Williston, Contracts [3d ed], § 1425, p 833). There is, therefore, no evidence that hardship would be visited upon the defendants by requiring them to complete the sale on the terms contracted for.

The Trial Judge found that the extension agreement in which the acceleration clause appeared was unrecorded and that “plaintiff had no way of uncovering” defendants’ mistake, the agreement having been in defendants’ possession from the date of its execution, and the Appellate Division made no contrary finding. There being no other evidence of hardship and an affirmative finding that plaintiff neither knew nor had reason to know of defendants’ mistake, the grant or denial of specific performance turns, under the rules stated above, on whether the mistake resulted from negligence on defendants’ part as the Trial Judge found or on unawareness or forgetfulness as the Appellate Division found.

Our review of the record leads us to conclude that the weight of the evidence is with the Trial Judge’s finding. Both partners, Partridge and Musso, signed the binder and both signed the extension agreement. A period slightly in excess of two years elapsed between the signing of the two documents. Furthermore, the acceleration clause appears on the same page as and within two inches of the signature lines and is the last typewritten clause on the page. Under long accepted principles one who signs a document is, absent fraud or other wrongful act of the other contracting party, bound by its contents (Florence v Merchants Cent. Alarm Co., 51 NY2d 793, 795; Pimpinello v Swift & Co., 253 NY 159; Johns-Manville Sales Corp. v Stone, 5 AD2d 110,114; see Hayward v Wemple, 152 App Div 195, affd 206 NY 692). Thus, both defendants are chargeable with knowledge of the existence of the acceleration clause. Moreover, the agreement being in their possession, they had the means of ascertaining the true facts. Yet only one of the partners, Partridge, testified and his only testimony on the question was that he first discovered the acceleration clause when it was brought to his attention by his attorney at the aborted contract closing. Gryme's v Sanders (93 US 55, 61) teaches that “Mistake, to be available in equity, must not have arisen from negligence, where the means of knowledge were easily accessible.” On the record before us we conclude that defendants were legally, if not factually, aware of the existence of the clause and that their mistake resulted from their negligence in failing to take the means readily accessible of checking the second mortgage documents (cf. Libby, McNeill & Libby v Bush Term. Bldg. Co., 121 Misc 228, mod 208 App Div 713; Turner v Washington Realty Co., 128 SC 271, 276, supra; Bibber v Carville, 101 Me 59) .

It was error also to dismiss the complaint and thus, in effect, by foreclosing plaintiff’s recovery of damages (demanded as an alternative remedy in the complaint), to grant defendants rescission. Defendants’ answer contained no counterclaim for rescission nor was it amended by any motion before or during trial. More importantly, however, the evidence presented did not authorize rescission.

The Trial Judge found that the “mistake was, if anything, unilateral”; the Appellate Division characterized it as a “mistaken belief by both sides.” The confusion resulting from the unilaterial/mutual dichotomy has been the subject of much comment (Ricketts v Pennsylvania R. R. Co., 153 F2d 757, 760 [Frank, J., concurring]; Newman, Relief for Mistake in Contracting, 54 Cornell L Rev 232; Rabin, A Proposed Black-Letter Rule Concerning Mistaken Assumptions in Bargain Transactions, 45 Tex L Rev 1273; Patterson, Equitable Relief for Unilateral Mistake, 28 Col L Rev 859, 899-900; Restatement, Contracts 2d [Tent Draft No. 10], p 7 [Reporter’s Note]), and it can be argued that the distinction should be abandoned (compare Restatement, Contracts 2d [Tent Draft No. 10], § 294, with § 295). But whether the mistake be of one or both parties, the law is that rescission is proper only when “the mistake is so material that we can see it goes to the foundation of the agreeemnt” (Belknap v Sealey, 14 NY 143, 155; accord Dambmann v Schulting, 75 NY 55, 64; Restatement, Contracts, § 502; Restatement, Contracts 2d [Tent Draft No. 10], §§ 294, 295). Comment a to section 294 of the Restatement, 2d, makes clear that: “Relief is only appropriate in exceptional situations, where a mistake of both parties upsets the very basis for the contract in such a way as to have a material effect on the agreed exchange of performances,” and Comment b to section 295 notes that the same requirements apply when a party seeks to avoid a contract “for a mistake that he alone made”. But, as already discussed above, defendants’ mistake had no effect upon the agreed exchange of performance, for defendants will receive neither more nor less than that for which they bargained with plaintiff. An additional reason for denial of rescission is our conclusion, noted above, that defendants were negligent in failing to check the extension agreement, negligence being a bar to rescission (Bailey Ford v Bailey, 55 AD2d 729; see Kleinberg v Ratett, 252 NY 236, supra; cf. Bowman v McClenahan, 19 Misc 438, 439, affd without reaching issue 20 App Div 346, supra; Restatement, Contracts 2d [Tent Draft No. 10], § 299, and Comment b; 11 Williston, op. cit., § 1596).

There being neither ground for denial of specific performance nor for rescission, the order of the Appellate Division should be reversed, with costs, and the judgment of specific performance should be reinstated.

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

Order reversed, with costs, and the judgment of Supreme Court, Queens County, reinstated.

      . The other terms of the first mortgage are irrelevant to decision of this case.

      . The 1988 date is erroneous; the mortgage provided that any principal balance and interest remaining unpaid on April 1, 1986 would be due on that date. The discrepancy is irrelevant, however, in light of the conclusion concerning the acceleration provision reached, in this opinion. A further reason for according it no significance is that mathematical calculation based upon the interest rate and annual payment provided for establishes that by April 1, 1986 the entire principal and interest will have been paid.

      . A counterclaim based on plaintiff’s filing of a notice of pendency was also alleged. The counterclaim was dismissed on plaintiff’s motion for summary judgment and defendants’ appeal from that order was dismissed (70 AD2d 650). The matter went to trial, therefore, only on the complaint and the defenses.

      . The holding of the case was that the binder contained only a provision that made the sale contingent upon the buyer’s ability to assume the misdescribed mortgage, not a promise by defendant to convey subject to that mortgage.

      . Indeed, the contrary is suggested by plaintiff’s testimony, concurred in by defendants, that the second mortgagees were prepared to waive the acceleration provision upon reduction of the mortgage by $22,000.

      . To be distinguished is the situation in JNA Realty Corp. v Cross Bay Chelsea (42 NY2d 392), in which we held that equity would not permit a landlord to forfeit a long term lease in which the tenant had made substantial investment, because of the forgetfulness of the tenant in exercising an option to renew.

      . Ironically, the acceleration clause having expired by its own terms on July 15, 1981, plaintiff will take under the judgment subject to the existing second mortgage with appropriate adjustment at the closing for interest and principal paid by defendants on that mortgage while this matter was proceeding through the courts.