text:
    Joseph Dermatossian et al., Respondents, v New York City Transit Authority, Appellant.
    Argued February 6, 1986;
    decided March 27, 1986

      POINTS OF COUNSEL

      Steve S. Efron, Albert C. Cosenza and John A. Murray for appellant.
    I. The Authority’s payment of first-party benefits pursuant to the No-Fault Law was not admissible in evidence to establish that plaintiff sustained injuries on an Authority bus. (Montgomery v Daniels, 38 NY2d 41; Perkins v Merchants Mut. Ins. Co., 41 NY2d 394; Licari v Elliott, 57 NY2d 230; Johnson v Hartford Ins. Co., 100 Misc 2d 367; Matter of Gretka [General Acc. Group], 100 Misc 2d 170; Yanis v Texaco, Inc., 85 Misc 2d 94; State Farm Mut. Auto. Ins. Cos. v Brooks, 78 AD2d 456; Matter of McKenna v County of Nassau, 61 NY2d 739; Matter of Furstenberg [Aetna Cas. & Sur. Co.], 67 AD2d 580, 49 NY2d 757; White v Old Dominion S. S. Co., 102 NY 660.) II. The trial court erroneously charged the doctrine of res ipso loquitur in the complete absence of proof that the Authority maintained exclusive control over the grab handle or that plaintiff was free of contributory negligence. (Corcoran v Banner Super Market, 19 NY2d 425; Board of Educ. v Herb’s Dodge Sales & Serv., 79 AD2d 1049; Weeden v Armor Elevator Co., 97 AD2d 197; Cameron v Bohack Co., 27 AD2d 362; Murphy v City of New York, 19 AD2d 545, 14 NY2d 532; Mercatante v City of New York, 286 App Div 265; Buria v

      Rosedale Eng. Corp., 7 AD2d 486; Minotti v State of New York, 6 AD2d 990; Feblot v New York Times Co., 32 NY2d 486.)

      Paul F. McAloon for respondents.
    I. As reflected by the court’s charge and defendant’s summation, the evidence of no-fault payments was not received to show liability, but only to show that the accident occurred on the bus; the evidence was properly admitted for that limited purpose. (Flieg v Levy, 148 App Div 781, 208 NY 564; Green v Le Beau, 281 App Div 836; Savoie v Otto Candies, 692 F2d 363; Keet v Murrin, 260 NY 586; Pretto v Leiwant, 80 AD2d 579; Thompson v Korn, 48 AD2d 1007; Ryan v Dwyer, 33 AD2d 878; Geddes v Red Star Express Lines, 30 AD2d 761; Mannion v General Baking Co., 266 App Div 1028; Woodland v Cote, 252 App Div 254.) II. The court properly applied the principle of res ipso loquitur. (Murphy v City of New York, 19 AD2d 545, 14 NY2d 532; Foltis, Inc. v City of New York, 287 NY 108; Galbraith v Busch, 267 NY 230; Cameron v Bohack Co., 27 AD2d 362; Mercatante v City of New York, 286 App Div 265; Buria v Rosedale Eng. Corp., 7 AD2d 486; Robinson v Atlantic & Pac. Tea Co., 184 Misc 571, 269 App Div 977; Lewis v Metropolitan Transp. Auth., 99 AD2d 246; Plumb v Richmond Light & R. R. Co., 233 NY 285.)
   OPINION OF THE COURT

Hancock, Jr., J.

Plaintiff, Joseph Dermatossian, recovered a judgment, following a jury verdict, for injuries allegedly sustained on May 5, 1980 when he struck his head on a defective grab handle as he stood up to leave defendant’s bus. Although no proof of actual negligence was adduced, the court, over defendant’s objection, submitted the case to the jury on the theory of res ipso loquitur. The defense was that no accident had occurred on defendant’s bus and that plaintiff must have hurt himself elsewhere. The Appellate Division affirmed, without opinion, and we granted leave to appeal.

Two questions are presented: (1) whether the court erred in admitting evidence of defendant’s payment of no-fault "first-party benefits” as an admission by defendant that plaintiff sustained injuries on the bus and; (2) whether there was sufficient proof that defendant maintained exclusive control over the grab handle so as to warrant submission of the case to the jury under the theory of res ipso loquitur. For reasons hereinafter stated, we agree with defendant’s contentions on both points. Accordingly, the order should be reversed and the complaint dismissed.

I

THE TRIAL PROCEEDINGS

At the commencement of the trial, in the absence of the jury, plaintiff’s counsel sought permission to prove that defendant had paid $30,000 to $40,000 in no-fault first-party benefits to plaintiff. Defense counsel objected and the court reserved decision. During cross-examination of plaintiff, defense counsel inquired about an entry in an emergency room hospital record for May 10, 1980 when plaintiff received treatment for injuries to the left side of his face. The history of the injury as given by plaintiff to the admitting nurse was: "States fell in street — tripped on hole — onto [left] side of face.” On redirect examination, when plaintiff’s counsel again offered to prove payment of no-fault benefits, the court received the evidence, finding it to be relevant to the issue of whether the accident had occurred on defendant’s bus. Over defendant’s continued objection, the court allowed plaintiff to testify that defendant had paid his medical expenses and part of the earnings plaintiff claimed to have lost as a result of the May 5, 1980 accident. In admitting the evidence, the court told the jury to consider defendant’s payment of benefits as bearing only on whether the accident occurred on the bus — not whether defendant was legally responsible for the injuries. To corroborate its position that plaintiff had not been injured on the bus and had sustained the injuries in some other manner, defendant proved that plaintiff never reported the accident to the bus driver or other employee, and that its first knowledge of the accident was on June 6, 1980 when it received plaintiff’s notice of claim. During the colloquy concerning admission of the payment of no-fault benefits, defendant argued that payment was irrelevant and could not constitute an admission since the benefits were paid prior to the discovery of the history given by plaintiff in the May 10, 1980 hospital record.

II

ADMISSIBILITY OF PAYMENT OF NO-FAULT BENEFITS

Evidence, albeit logically and technically relevant, is not necessarily admissible. It will be excluded "if it is too slight, remote, or conjectural to have any legitimate influence in determining the fact in issue” (Richardson, Evidence § 147 [Prince 10th ed]; see, 21 NY Jur, Evidence, § 161). The claimed basis for admitting proof that no-fault benefits were paid here was that it was probative of a critical fact in issue — the fact on which defendant’s liability depended — that plaintiff was injured on the bus. The evidence was offered and received on the theory that it constituted an admission by conduct that plaintiff was hurt on the bus because presumably defendant would not have made payment if it were not so. The proof should have been excluded. The payment of no-fault benefits, in response to plaintiff’s facially valid sworn claim that he had been hurt on the bus, proved nothing more than that, at the time of payment, defendant had determined that there was no valid basis for challenging the truth of plaintiff’s assertions (11 NYCRR 65.11 [k] [3]) and, thereby, avoiding its statutory obligation to pay first-party benefits promptly after loss is incurred. (Insurance Law § 5106 [a].) Plaintiff’s argument to the contrary is based on a misconception of an insurer’s obligations under the No-Fault Law and, particularly, when and how an insurer must pay first-party benefits to a "covered person”.

By statute, an insurer, or self-insurer as in the instant case, is liable for the payment of first-party benefits to persons "for loss arising out of the use or operation” of a motor vehicle (Insurance Law § 5103 [a] [1]). Payment of first-party benefits must be made "as the loss is incurred” and such benefits are overdue if not paid within 30 days after the claimant supplies proof of the fact and amount of loss sustained (Insurance Law § 5106 [a]). Any overdue payment bears interest at a rate of 2% per month, and an insurer is liable for the attorney’s fees incurred by the insured in securing payment of a valid overdue claim (Insurance Law § 5106 [a]; 11 NYCRR 65.15 [g], [h]).

Under the regulations promulgated by the Insurance Department, insurers must adhere to the following guidelines in processing claims:

"(1) Have as your basic goal the prompt and fair payment to all automobile accident victims.

"(2) Assist the applicant in the processing of a claim. Do not treat the applicant as an adversary.

"(3) Do not demand verification of facts unless there are good reasons to do so. When verification of facts is necessary, it should be done as expeditiously as possible.

"(4) Hasten the processing of a claim through the use of a telephone whenever it is possible to do so.

"(5) Clearly inform the applicant of the insurer’s position regarding any disputed matter.

"(6) Respond promptly, when a response is indicated, to all communications from insured’s, applicants, attorneys and any other interested persons” (11 NYCRR 65.15 [a]).

It is readily apparent that in the usual case, like the one here, where a self-insurer has no reason to deny the no-fault claim at the time payment is due, the fact of payment cannot in any sense be taken as a concession that the claim is legitimate. Insurers are admonished not to "treat the applicant as an adversary” and not to "demand verification of facts unless there are good reasons to do so.” Consequently, benefits are paid with only limited opportunity to investigate a claim. A claimant to receive payment need only file a "proof of claim” (11 NYCRR 65.11 [k] [3]), and the insurers are obliged to honor it promptly or suffer the statutory penalties. Thus, under the circumstances here, the probative value, if any, of the payment of first-party benefits was so slight and conjectural that it should not have been admitted.

There are, moreover, compelling reasons of policy supporting our holding that the proof that benefits were paid should have been excluded. A rule permitting the use of such evidence against insureds would work against the primary purpose underlying the No-Fault Law — to assure claimants of expeditious compensation for their injuries through prompt payment of first-party benefits without regard to fault and without expense to them (see, Memorandum of State Executive Dept, 1977 McKinney’s Session Laws of NY, at 2448, 2450; see also, Licari v Elliott, 57 NY2d 230, 237). To implement this legislative aim of curtailing delay and reducing expense in the adjustment of motor vehicle accident claims, the regulations (see, 11 NYCRR 65.15) are written to encourage prompt payment of claims, to discourage investigation by insurers, and to penalize delays. Permitting evidence in a personal injury lawsuit of the fact that the defendant (if self-insured) or its insurer had paid the plaintiff the statutorily obligated first-party benefits would unquestionably frustrate the very purpose of the No-Fault Law by discouraging insurers from making prompt and voluntary payment of claims. We hold, therefore, that proof of defendant’s payment of no-fault benefits to plaintiff was also inadmissible for reasons of policy.

Invoking policy reasons to exclude the proof here finds ample legal precedent in analogous situations (see, e.g., Smith v Satterlee, 130 NY 677 [holding that an offer to compromise or settle a pending controversy is not an admission of fact]; Getty v Town of Hamlin, 127 NY 636 [excluding evidence of repairs made after an accident as an admission of negligence]; Grogan v Dooley, 211 NY 30 [holding offer to pay medical bills inadmissible, since such an offer might be construed as a voluntary act of benevolence, not inconsistent with a claim of freedom from negligence]; see also, Cover v Cohen, 61 NY2d 261, 270; Caprara v Chrysler Corp., 52 NY2d 114, 122-125; see generally, Richardson, Evidence §§ 148, 225 [Prince 10th ed]; 2 Wigmore, Evidence § 283; 4 Wigmore § 1061 [3d ed]).

Moreover, as defendant correctly notes, if an insurer’s conduct in paying a no-fault claim could be deemed an admission in the claimant’s subsequent action for damages, an insurer would have to choose between two courses of action, both potentially harmful: either pay the no-fault claim and risk having the fact of payment held against it later as a concession on some point in issue such as the extent of the injury, or its causal connection to the accident — or dispute the claim and subject itself to the arbitration process with attendant expense and delay and the risk of being bound by any adverse arbitral ruling in a subsequent personal injury lawsuit (see, Matter of American Ins. Co. [Messinger — Aetna Cas. & Sur. Co], 43 NY2d 184; Altman v Queens Tr. Corp., 94 Misc 2d 549; cf. Baldwin v Brooks, 83 AD2d 85). In sum, strong policy considerations militate against permitting proof of a claimant’s receipt of first-party benefits for an injury covered by no-fault insurance as bearing on a material point in issue in the ensuing lawsuit to recover damages for those injuries.

Ill

SUBMISSION OF THE CASE UNDER RES IPSA LOQUITUR

The doctrine res ipso loquitur represents an application of the ordinary rules pertaining to circumstantial evidence in negligence cases stemming from accidents having particular characteristics. When the doctrine is invoked, an inference of negligence may be drawn solely from the happening of the accident upon the theory that "certain occurrences contain within themselves a sufficient basis for an inference of negligence” (Foltis, Inc. v City of New York, 287 NY 108, 116; see, Richardson, Evidence § 93, at 68 [Prince 10th ed]). The rule simply recognizes what we know from our everyday experience: that some accidents by their very nature would ordinarily not happen without negligence (see, e.g., Dittinger v Isal Realty Corp., 290 NY 492; Griffin v Manice, 166 NY 188). Res ipso loquitur does not create a presumption in favor of the plaintiff but merely permits the inference of negligence to be drawn from the circumstance of the occurrence. (Richardson, Evidence § 93, at 69 [Prince 10th ed]). The rule has the effect of creating a prima facie case of negligence sufficient for submission to the jury, and the jury may — but is not required to — draw the permissible inference (see, Foltis, Inc. v City of New York, supra, at pp 115-120).

In New York it is the general rule that submission of the case on the theory of res ipso loquitur is warranted only when the plaintiff can establish the following elements: " '(1) the event must be of a kind which ordinarily does not occur in the absence of someone’s negligence; (2) it must be caused by an agency or instrumentality within the exclusive control of the defendant; (3) it must not have been due to any voluntary action or contribution on the part of the plaintiff ” (Corcoran v Banner Super Market, 19 NY2d 425, 430, mod on remittitur 21 NY2d 793 [quoting from Prosser, Torts § 39, at 218 (3d ed)]). Only when these essential elements have been established, after the plaintiff has first demonstrated the nature of the instrumentality which caused the injury and its connection with the defendant (see, Manley v New York Tel. Co., 303 NY 18), does a prima facie case of negligence exist (see, Weeden v Armor Elevator Co., 97 AD2d 197, 203; Fogal v Genesee Hosp., 41 AD2d 468, 476).

It is the second of the required three elements — exclusive control — which is critical here. Courts do not "generally apply this requirement as it is literally stated” (2 Harper and James, Torts § 19.7, at 1086) or as a fixed, mechanical or rigid rule (Prosser and Keeton, Torts § 39, at 250 [5th ed]; see, Corcoran v Banner Super Market, 19 NY2d 425, 431-432, supra; Payless Discount Centers v 25-29 N. Broadway Corp., 83 AD2d 960, 961). For example, res ipso loquitur has been applied even though the accident occurred after the instrumentality left the defendant’s control, where it was shown that the defendant had exclusive control at the time of the alleged act of negligence (see, Prosser and Keeton, op. cit. § 39, at 250; Zentz v Coca Cola Bottling Co., 39 Cal 2d 436, 247 P2d 344; see also, Hyams v King Kullen Grocery Co., 20 AD2d 657; Day v Grand Union Co., 280 App Div 253, affd 304 NY 821).

The exclusive control requirement, as generally understood, is that the evidence "must afford a rational basis for concluding that the cause of the accident was probably 'such that the defendant would be responsible for any negligence connected with it.’ ” (2 Harper and James, Torts § 19.7, at 1086, quoting Prosser, Res Ipsa Loquitur in California, 37 Cal L Rev 183, 201 [1949].) The purpose is simply to eliminate within reason all explanations for the injury other than the defendant’s negligence (see, Prosser and Keeton, Torts § 39, at 248-251 [5th ed]; see, e.g., Zentz v Coca Cola Bottling Co., 39 Cal 2d 436, 247 P2d 344, supra). The requirement does not mean that "the possibility of other causes must be altogether eliminated, but only that their likelihood must be so reduced that the greater probability lies at defendant’s door.” (2 Harper and James, Torts § 19.7, at 1086). Thus, in a case involving the break of a water main, we held that a municipality ordinarily has sufficient control over the mains under its streets to permit application of res ipso loquitur (see, Foltis, Inc. v City of New York, supra); but that control is insufficient where the proof does not eliminate the activities of a third party having access to a main as a possible cause of its break (see, De Witt Props. v City of New York, 44 NY2d 417; compare also, Griffin v Manice, supra, with Feblot v New York Times Co., 32 NY2d 486).

Turning to the case here, we conclude that plaintiff did not establish control of the grab handle by defendant of sufficient exclusivity to fairly rule out the chance that the defect in the handle was caused by some agency other than defendant’s negligence. The proof did not adequately exclude the chance that the handle had been damaged by one or more of defendant’s passengers who were invited to use it. It is this crucial fact — that the grab handle was continuously available for use by defendant’s passengers — which distinguishes the case at bar from Bressler v New York R. T. Corp. (277 NY 200), cited by plaintiff, where it could not be shown that the subway train window which caused the injury was used or under the control of someone other than the defendant.

The order should be reversed and the complaint dismissed.

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

Order reversed, with costs, and complaint dismissed.

      . Hereafter, "plaintiff” refers only to the physically injured party, Joseph Dermatossian. The action of his wife, Nelly Dermatossian, is purely derivative in nature and, therefore, is treated as one with Joseph’s action.

      . The grab handle, according to plaintiff, projected straight down from the ceiling of the bus instead of at the customary angle of about 45 degrees.

      . First-party benefits are defined as "payments to reimburse a person for basic economic loss on account of personal injury arising out of the use or operation of a motor vehicle” (Insurance Law § 5102 [b]). Plaintiff, if injured on defendant’s bus, would be a "covered person” and as such entitled to first-party benefits (Insurance Law § 5102 [b]).

      . In its charge to the jury, the court stated with respect to the payment of first-party benefits: "As I explained to you during the trial, you are to consider this evidence only on the issue of whether Mr. Dermatossian’s injuries resulted from an accident on one of defendant’s buses and not whether the Transit Authority was responsible for negligence in connection with the alleged accident. You will recall my instructions during trial that defendant was not legally obligated to make these payments if the accident did not occur on one of his buses. If you find defendant made such payments you may consider this as some evidence, that Mr. Dermatossian’s injuries did occur on one of defendant’s buses. This type of evidence is legally called an admission by conduct.”

      . It has been suggested that the advent of comparative fault logically eliminates the third requirement, since comparative fault, by its nature, converts the plaintiffs contributing fault from its traditional function of barring liability into one of merely reducing damages (see, Prosser and Keeton, Torts § 39, at 254 [5th ed]). We express no view on this question.

      . Our disposition of the res ipso loquitur issue on this element obviates any consideration of either of the other two.


source: Caselaw Access Project

author: Hancock, Jr., J.

license: Public Domain

text:
    United States Fidelity & Guaranty Company, Respondent, v Saverio L. Annunziata, Defendant, and Anthony D. Maresca, Appellant.
    Argued February 7, 1986;
    decided April 1, 1986

      POINTS OF COUNSEL

      James E. Cullum for appellant.
    I. The mortgagee is not
    required to submit to an examination under oath since the policy does not specifically require such examination and the owner-insured timely submitted to such examination under oath in accordance with the terms of the policy. (Government Employees Ins. Co. v Kligler, 42 NY2d 863; Tyroler v Continental Cas. Co., 31 AD2d 8, 25 NY2d 710; State Farm Mut. Auto. Ins. Co. v Westlake, 35 NY2d 587; Austrian v Equitable Life Assur. Socy., 48 AD2d 144, 39 NY2d 477; McDowell v St. Paul Fire & Mar. Ins. Co., 207 NY 482; Syracuse Sav. Bank v Yorkshire Ins. Co., 301 NY 403; Mortgagee Affiliates Corp. v Commercial Union Ins. Co., 27 AD2d 119.) II. The insurance company is not unduly prejudiced by a mortgagee not being required to submit to an examination under oath after an owner has already submitted to such examination. (Ampersand Hotel Co. v Orient Ins. Co., 204 NY 619; Hicks v British Am. Assur. Co., 162 NY 284; Azeem v Colonial Assur. Co., 96 AD2d 123, 62 NY2d 951.) III. Assuming arguendo that the mortgagee was required to submit to an examination under oath, the failure to do so under the circumstances of this case should not result in the granting of summary judgment. (Igbara Realty Corp. v New York Prop. Ins. Underwriting Assn., 63 NY2d 201; Abudayeh v Fair Plan Ins. Co., 105 AD2d 764; Lentini Bros. Moving & Stor. Co. v New York Prop. Ins. Underwriting Assn., 76 AD2d 759, 53 NY2d 835; Dyno-Bite, Inc. v Travelers Cos., 80 AD2d 471; Catalogue Serv. v Insurance Co. of N. Am., 74 AD2d 837; Pogo Holding Corp. v New York Prop. Ins. Underwriting Assn., 73 AD2d 605.)

      Francis J. Holloway and Michael Jon Longstreet for respondent.
    I. A mortgagee named in a policy of insurance which contains the New York standard mortgagee clause is obligated to submit to an examination under oath upon demand. (Mortgagee Affiliates Corp. v Commercial Union Ins. Co., 27 AD2d 119; Syracuse Sav. Bank v Yorkshire Ins. Co., 301 NY 403.) II. The facts of this case present a compelling example of why mortgagees are required to submit to an examination under oath upon demand. (Azeem v Colonial Assur. Co., 96 AD2d 123, 62 NY2d 951.) III. Maresca’s failure to submit to an examination under oath bars him from maintaining any action against plaintiff for the proceeds of the policy. (Igbara Realty Corp. v New York Prop. Ins. Underwriting Assn., 63 NY2d 201; Lentini Bros. Moving & Stor. Co. v New York Prop. Ins. Underwriting Assn., 76 AD2d 759, 53 NY2d 835; Mortgagee Affiliates Corp. v Commercial Union Ins. Co. 27 AD2d 119.)
   OPINION OF THE COURT

Hancock, Jr., J.

A mortgagee named in a fire insurance policy containing a standard mortgagee clause is not obligated to comply with the provisions of the policy requiring the named insured to submit to an examination under oath. In reaching this conclusion we reject the contrary rule stated in Mortgagee Affiliates Corp. v Commercial Union Ins. Co. (27 AD2d 119, 121).

The narrow question concerning a mortgagee’s obligation to submit to oral questions arises in a dispute over coverage for a fire loss occurring in a summer home in the Village of Fort Ann, Washington County. Defendant Annunziata owned the home. Defendant Maresca, the mortgagee, who sold the property to Annunziata, held a purchase-money mortgage. Plaintiff insured the home in a policy containing a New York standard mortgagee clause. After both the owner and mortgagee had filed proofs of loss and the owner had submitted to an oral examination pursuant to the policy, plaintiff sought to examine the mortgagee Maresca. Upon Maresca’s refusal, plaintiff commenced the instant declaratory judgment action seeking a declaration that Maresca was barred from any recovery. Maresca counterclaimed for the amount of the loss he had sustained and, thereafter, plaintiff moved for summary judgment in the declaratory judgment action and for a dismissal of the counterclaim. Special Term denied plaintiff’s motion but the Appellate Division modified by granting the motion, dismissing the counterclaim and declaring that plaintiff was not liable under the policy to Maresca because of his failure to submit to the examination. There should be a reversal.

Because this case turns on the construction of the policy, we briefly restate the well-established rules which apply. Where the provisions of the policy "are clear and unambiguous, they must be given their plain and ordinary meaning, and courts should refrain from rewriting the agreement (State Farm Mut. Auto. Ins. Co. v Westlake, 35 NY2d 587; Johnson v Travelers Ins. Co., 269 NY 401).” (Government Employees Ins. Co. v Kligler, 42 NY2d 863, 864.) The policy must, of course, be construed in favor of the insured, and ambiguities, if any, are to be resolved in the insured’s favor and against the insurer (see, Government Employees Ins. Co. v Kligler, supra; Austrian v Equitable Life Assur. Socy., 39 NY2d 477, 479).

Turning to the policy in question, we note first that the term "Insured” as defined in the policy means the named insured (in this case, the owner of the property, Annunziata), and not the mortgagee. While the policy contains a provision requiring the insured to submit to examinations under oath, there is no provision requiring the mortgagee to do so. The single clause pertaining to examinations is as follows: "The insured, as often as may be reasonably required, shall * * * submit to examinations under oath * * * at such reasonable time and place as may be designated by this Company.”

In contrast with the foregoing clause, which omits any reference to the mortgagee, is the policy provision specifically requiring the mortgagee to render proof of loss upon the insured’s failure to do so. The proof of loss clause is as follows: "If the insured fails to render proof of loss such mortgagee, upon notice, shall render proof of loss in the form herein specified within sixty (60) days thereafter and shall be subject to the provisions hereof relating to appraisal and time of payment and of bringing suit.”

When the policy is construed as required by giving the words their plain meaning (see, Government Employees Ins. Co. v Kligler, supra), there is no question that only the named insured — not the mortgagee — is required to submit to an examination under oath. Moreover, the drafters of the policy in writing the proof of loss clause included a provision specifying the particular conditions under which a mortgagee would be required to submit proof of loss. Their omission of any similar reference to the mortgagee in the clause pertaining to examinations under oath must be assumed to have been intentional under accepted canons of contract construction (see, 151 W. Assoc. v Printsiples Fabric Corp., 61 NY2d 732, 734; see generally, 22 NY Jur 2d, Contracts, General Rules of Construction, §§ 187-199). This is especially true inasmuch as the standard fire insurance policy specifically provides that the parties may add to the "obligations of such mortgagee * * * by agreement in writing” (Insurance Law § 3404, Second Page of Standard Fire Policy, lines 83-85). The parties added no such obligation here.

As authority for its position that the policy should be read as including the omitted requirement for examination under oath of the mortgagee, plaintiff cites Mortgagee Affiliates v Commercial Union Ins. Co. (27 AD2d 119, supra) — the decision followed by the Appellate Division here. The Mortgagee Affiliates court, in dismissing the complaint of the mortgagee because of its refusal to submit to an examination under oath, relied on Syracuse Sav. Bank v Yorkshire Ins. Co. (301 NY 403).

Our holding in Syracuse Sav. Bank was an application of the established rule that a mortgagee clause in a standard insurance policy creates an independent and separate insurance coverage for the mortgagee’s interest and that the owner-mortgagor may not, through its actions or neglect, defeat the independent rights of the mortgagee. In Syracuse Sav. Bank we simply held that the mortgagee was not bound by the appraisal submitted by the owner-mortgagor and that it could, if it chose, protect its own interests by participating in the appraisal proceedings, notwithstanding the absence of such explicit right in the policy (Syracuse Sav. Bank v Yorkshire Ins. Co., 301 NY 403, 408, supra). Our holding there clearly does not call for the result reached in Mortgagee Affiliates. Nothing in Syracuse Sav. Bank suggests that a policy containing a standard mortgagee clause imposes upon the mortgagee obligations identical to those imposed on the named insured. Construing the policy in Syracuse Sav. Bank to permit the mortgagee to protect its interests by participating in the appraisal proceedings does not lead to the conclusion — adopted by the court in Mortgagee Affiliates — that a provision is to be read into the contract requiring the mortgagee to submit to an examination under oath or forfeit its claim.

While a policy may be construed liberally for the purpose of protecting the interests of the insured mortgagee, it may not be rewritten against the interests of the mortgagee by imposing an obligation which the policy omits. Mortgagee Affiliates was, therefore, wrongly decided and should not have been followed.

Accordingly, the order of the Appellate Division should be reversed, with costs, and the motion denied.

Chief Judge Wachtler and Judges Meyer, Kaye, Alexander and Titone concur; Judge Simons taking no part.

Order reversed, with costs, and plaintiff’s motion for summary judgment denied.

      . The New York standard mortgage clause provides in part, as follows: "If a mortgagee is named in the Declarations, loss or damage, if any, on buildings under this policy, shall be payable to the aforesaid as mortgagee (or trustee) as interest may appear, and this insurance, as to the interest of the mortgagee (or trustee) only therein, shall not be invalidated by any act or neglect of the mortgagor or owner of the within described property, nor by any foreclosure or other proceedings or notice of sale relating to the property, nor by any change in the title or ownership of the property, nor by the occupation of the premises for purposes more hazardous than are permitted by this policy, provided, that in case the mortgagor or owner shall neglect to pay any premium due under this policy, the mortgagee (or trustee) shall, on demand, pay the same.” (Emphasis added.)

      . There can be no question that the term "Insured” is not intended to include the mortgagee. The owner or mortgagor and the mortgagee are treated as distinct entities in defining their separate and different rights and obligations in the "New York Standard Mortgagee Clause” and in the clause entitled "Mortgagee Interests and Obligations”. In the policy declarations, defendant Annunziata is shown as the "Insured” and defendant Maresca as the "First Mortgagee”. (See, McDowell v St Paul Fire & Mar. Ins. Co., 207 NY 482, 488 [to the effect that the word "Insured” applies only to the owner, the one to whom the policy was issued, and not to the mortgagee]; see also, Heilbrunn v German Alliance Ins. Co., 140 App Div 557, 560, affd 202 NY 610.)

      . The Mortgagee Affiliates court (27 AD2d 119), in holding that the mortgagee is bound by all the provisions of the policy which are binding on the owner-mortgagor except as the policy specifically provides otherwise, purported to adopt the rule stated in Hessian Hills Country Club v Home Ins. Co. (262 NY 189, 201). But the policy in Hessian Hills, unlike the policy in Mortgagee Affiliates, did not contain a standard mortgagee clause creating an independent policy of insurance with the mortgagee but, rather, a "loss payable” clause which did not give the mortgagee any right to recover where there was a breach of condition by the mortgagor. The Mortgagee Affiliates court erred in applying the Hessian Hills rule and nothing in Syracuse Sav. Bank v Yorkshire Ins. Co. (301 NY 403) called for that result.


author: Hancock, Jr., J. Alexander, J.

text:
    The People of the State of New York, Appellant, v Frank Sinistaj, Respondent.
    Argued February 7, 1986;
    decided April 3, 1986

      POINTS OF COUNSEL

      Mario Merola, District Attorney (Roger L. Stavis and. Steven R. Kartagener of counsel), for appellant.
    The court below erred by refusing to apply to a superseding indictment for purposes of statutory speedy trial analysis, those periods of excusable delay occasioned by defense counsel and excluded from speedy trial time computations concerning the original indictment pursuant to CPL 30.30 (4). (People v Lomax, 50 NY2d 351; People v Weirich, 65 AD2d 932, 49 NY2d 1020; People v Osgood, 52 NY2d 37; People v McBride, 126 Misc 2d 272; People v Twine, 121 Misc 2d 762; People v White, 115 Misc 2d 800; People v Sturgis, 38 NY2d 625; People v Kendzia, 64 NY2d 331.)

      Walter L. Rich for respondent.
    The court below did not err in holding that for statutory speedy trial purposes periods of excusable delay applicable to an original indictment are not applicable to a superseding indictment charging the same crime but under a different theory. (People v Lomax, 50 NY2d 351; People v Osgood, 52 NY2d 37; People v Twine, 121 Misc 762; People v White, 115 Misc 2d 800; People v Cruz, 123 Misc 2d 316; People v Reid, 110 Misc 2d 1083; People v McBride, 126 Misc 2d 272.)
   OPINION OF THE COURT

Hancock, Jr., J.

Under this court’s decisions in People v Lomax (50 NY2d 351) and People v Osgood (52 NY2d 37), an indictment which replaces an earlier one in the same criminal action should be related back to the original accusatory instrument for the purpose of determining the commencement of the six-month readiness period imposed by CPL 30.30 (1) (a). The question on this appeal is whether such an indictment should be related back as well for the purpose of computing excludable time under CPL 30.30 (4). We hold that it should be.

On November 20, 1981, a felony complaint was filed charging defendant with criminal possession of a weapon in the third degree under Penal Law §265.02 (4) and other related crimes. On December 3, 1981, an indictment was filed containing those charges. Several months later, on July 13, 1982, the People obtained a second indictment which replaced the weapon possession count of the original indictment and charged defendant with criminal possession of a weapon in the third degree under Penal Law § 265.02 (1). This second indictment was obtained after the People realized that defendant, who had been accused of possessing the firearm in his office, had mistakenly been indicted under a provision of the Penal Law specifically excluding possession in a "place of business”. The second indictment, albeit charging defendant with a crime under the same Penal Law section, based on the same criminal transaction and involving the possession of the same weapon, contained an additional element not included in the first indictment — i.e., that defendant had previously been convicted of a felony. On August 20, 1982, the People answered ready for trial on the record and, several weeks later, on September 29, 1982, defendant moved for dismissal of both indictments on the ground that the People had failed to satisfy the requirements of CPL 30.30.

Supreme Court, calculating delays in excess of six months chargeable to the People, dismissed both indictments. On appeal, the Appellate Division unanimously modified Supreme Court’s order by reinstating the first indictment and affirming the dismissal of the second. The court held that certain periods of delay had been erroneously charged to the People and that, excluding such periods, the six-month time limitation had not been violated with regard to the first indictment. It held, however, that these same excludable periods of time were "simply inapplicable” to the second indictment inasmuch as that indictment had not even been filed within six months of the original felony complaint. (Ill AD2d, at p 43.) Noting that seven months had passed between the time of that complaint and the second indictment, the court concluded that the People could not possibly have satisfied the ready-for-trial requirements of CPL 30.30 and, therefore, that Supreme Court’s dismissal of the second indictment had to be affirmed. The People appeal to this court from the latter portion of the Appellate Division’s order, and we now reverse. CPL 30.30 requires that the People be prepared to proceed to trial within six months, plus excludable time, from the commencement of the criminal action. The statute does not address problems involving speedy trial rights or due process in a constitutional sense. Rather, it is purely a statutory "readiness rule”. It was enacted to serve the narrow purpose of insuring prompt prosecutorial readiness for trial, and its provisions must be interpreted accordingly (see, People v Anderson, 66 NY2d 529, 535; People v Worley, 66 NY2d 523, 527; Bellacosa, Practice Commentary, McKinney’s Cons Law of NY, Book 11 A, CPL 30.30, pp 148-149; compare CPL 30.20). With this in mind, our analysis of the question here is simplified.

Consistent with the legislative intent to limit the prosecutor’s time for trial readiness, we held in People v Lomax (50 NY2d 351, supra) that a new indictment, returned after the original one had been dismissed, should be related back to the commencement of the criminal proceeding for purposes of the six-month readiness period under CPL 30.30 (1) (a). We reasoned that there "can be only one date which marks the 'commencement’ of [a criminal] action” for the purposes of CPL 30.30, "the date on which the first accusatory paper is filed” (id., at p 356; see also, CPL 1.20 [17]). This is so, we said, "notwithstanding that the original accusatory instrument may be replaced or superseded during the course of the action” and even despite "the issuance of successive indictments” (id., at p 356). Applying this reasoning in People v Osgood (52 NY2d 37, supra), we came to a similar conclusion with respect to an indictment which had been returned sometime after the original felony complaint had been dismissed for the People’s failure to proceed with a felony hearing.

We perceive no logical reason why, when a subsequent indictment is related back to the commencement of the proceeding for purposes of applying the six-month limitation prescribed by CPL 30.30 (1) (a), it should not also be related back for the purpose of computing the time to be excluded from that limitation. A contrary holding — treating the subsequent indictment as part of the original criminal action for imposing the time limit under CPL 30.30 (1) (a), but not permitting the applicable exclusions under CPL 30.30 (4)— would offend the accepted rule of construction that all parts of a statute should be read together to determine the fair meaning of the whole (McKinney’s Cons Laws of NY, Book 1, Statutes §§97, 98). It would, in effect, afford different treatment to a subsequent indictment under subdivision (4) than that given under subdivision (1) (a). Such fragmenting of the statute in its application should be avoided. As we have recently emphasized, CPL 30.30, which should be implemented as one integral statutory scheme, must be interpreted "so as to harmonize its various provisions” (People v Anderson, supra, at p 535).

Moreover, a rule that succeeding indictments are not to be related back to the commencement of the criminal action for computing excludable time would have consequences which do not further the aim of CPL 30.30 and could not have been contemplated by the Legislature. Contrary to defendant’s contentions, the effect of such a rule would be to establish an arbitrary six-month cut-off period beyond which a replacement or superseding indictment could not be returned — even one based on evidence revealed for the first time after the six-month period. It is not suggested that such a result would be reasonable or could have been intended by the Legislature in adopting CPL 30.30. Indeed, the rule would render ineffective the provisions of CPL 200.80 which specifically permit the People to seek "another indictment” in the same criminal action, "any time before entry of a plea of guilty to an indictment or commencement of a trial thereof’. Again, the canons of statutory construction would be violated (see, McKinney’s Cons Laws of NY, Book 1, Statutes §§ 97, 98).

Contrary to defendant’s arguments, our construction of CPL 30.30 to require that all excludable periods must be deducted from the "total time” (People v Lomax, supra, at p 357), starting with the filing of the accusatory instrument (CPL 1.20 [16], [17]), is entirely consistent with the purpose of CPL 30.30 as a prosecutorial readiness rule. Nor is the construction unfair to defendant. The District Attorney remains entitled to but one six-month readiness period. The issuance of a successive indictment neither affords him additional excludable time nor does it renew, toll, or in any way supplement that single, six-month limitation which always commences to run upon the filing of the initial accusatory instrument.

Here, application of the excludable periods of time to the second indictment, as well as to the first, requires that the motion to dismiss be denied. The Appellate Division’s computation of excludable time, which is not challenged on this appeal, reduces the "total time” within which the People became ready for trial under the second indictment to less than the six-month statutory limitation. Hence, the People satisfied the ready-for-trial requirements of CPL 30.30.

Accordingly, the order of the Appellate Division, insofar as appealed from, should be reversed, and indictment No. 2646/ 82 reinstated.

Alexander, J.

(dissenting). Under the authority of People v Lomax (50 NY2d 351) and People v Osgood (52 NY2d 37) a superseding or replacement indictment properly may be related back to the original accusatory instrument for the purpose of determining the commencement of the six-month readiness period imposed upon the People by CPL 30.30 (1) (a), and for the purpose of computing excludable time under CPL 30.30 (4).

The majority would accord the same treatment to what they characterize here as a "successive” indictment, despite the fact that it is neither a "superseding” nor a "replacement” indictment, and in fact charges a completely new crime. Because I believe that the rule enunciated by the majority is not warranted under any fair reading of Lomax and Osgood, and impermissibly weakens the CPL 30.30 readiness rule, I respectfully dissent.

The facts of this case are not complex. On November 20, 1981, defendant was charged in a felony complaint with criminal possession of a weapon in the third degree under Penal Law § 265.02 (4) (possession of a loaded firearm outside of one’s home or place of business). The factual portion of the complaint noted that defendant had been previously convicted of a felony, but no charge was made of a violation of Penal Law § 265.02 (1) (criminal possession of a weapon in the fourth degree, as defined in subdivisions [1], [2], [3] or [5] of Penal Law § 265.01, by a defendant who has been previously convicted of any crime).

On December 1, 1981, defendant was indicted for various offenses including criminal possession of a weapon in the third degree, pursuant to Penal Law § 265.02 (4). Some seven months later, on July 8, 1982, a new indictment was returned charging defendant with criminal possession of a weapon in the third degree pursuant to Penal Law § 265.02 (1) in that he possessed a firearm and had been previously convicted of a crime. On the People’s motion, the count in the original indictment which charged the violation of section 265.02 (4) was dismissed. The People did not announce their readiness to proceed to trial until August 20, 1982.

It is now settled that the six-month readiness period imposed by CPL 30.30 (1) (a) commences on "the date on which the first accusatory paper is filed” (People v Lomax, 50 NY2d 351, 356, supra; see also, People v Osgood, 52 NY2d 37, 43, supra). Since the first accusatory paper filed here was the felony complaint of November 20, 1981, the second indictment, which was returned more than six months after that filing, can survive dismissal only if the excludable time computed under CPL 30.30 (4) resulting from the first indictment is also applied to the second indictment.

In Lomax (50 NY2d 351, supra), acknowledging that the starting point for analyzing a defendant’s speedy trial motion under CPL 30.30 is the "commencement of a criminal action”, we approved applying the excludable time under an original indictment to a "new indictment encompassing the same criminal charges” (People v Lomax, 50 NY2d, at p 355, supra) where the new indictment had been obtained by the District Attorney with leave of the court (CPL 210.20 [4]) following dismissal of the original indictment pursuant to the defendant’s motion.

In Osgood (52 NY2d 37, supra), we reaffirmed the "relation back rule” enunciated in Lomax, but did so because the People’s inexcusable six-month delay in announcing readiness for trial after the filing of the felony complaints caused those complaints to be dismissed. Thereafter, indictments were returned charging the same offenses, and the People argued that they should not be charged with the previous delay since the indictments actually commenced a new criminal proceeding. We rejected this argument, observing that the six-month ready rule was meant to eliminate unjustified delays and was not intended to provide rewards or incentives for delay.

Clearly then, the new indictment in Lomax (50 NY2d 351, supra) was a "replacement” indictment, and was authorized by express leave of the court. It charged the same offenses as originally charged and it was toward those originally charged offenses that the defendant’s delay-causing pretrial motions were directed. Thus, logic, fairness and the statute dictated that the People not be charged with delay caused by the defendant or occurring as a result of circumstances beyond the prosecutor’s control. However, where the prosecutor’s inexcusable failure to prosecute under the initial accusatory instrument resulted in a dismissal of the instrument, we denied the prosecutor an opportunity to recommence prosecution of the same charges through an indictment filed beyond the six-month limitation of CPL 30.30 (People v Osgood, 52 NY2d 37, supra). In Osgood, we affirmed our prior observation that " 'there can be only one criminal action for each set of criminal charges brought against a particular defendant, notwithstanding that the original accusatory instrument may be replaced or superseded during the course of the action’ ” (People v Osgood, 52 NY2d 37, 43, supra, quoting People v Lomax, 50 NY2d 351, 356, supra [emphasis supplied]).

Nowhere in the Criminal Procedure Law do we find authorization for "successive indictments” (see, CPL 30.10 [4] [b]; 210.20 [4]; 200.80). Although CPL 200.80 authorizes the seeking of " 'another indictment’ ” in the same criminal action " 'any time before entry of a plea of guilty to an indictment or commencement of a trial thereof ” (majority opn, at p 240), that authorization is limited to "another indictment * * * charging the defendant with an offense charged in the first indictment”. In such a case, the "offense [is] superseded by the second” indictment, and "the count of the first indictment charging such offense must be dismissed by the court” (CPL 200.80). The plain language of this statute requires that in order to supersede a prior indictment, a second indictment must charge the defendant with an offense charged in the first indictment (Matter of Gold v McShane, 74 AD2d 616, appeal dismissed 51 NY2d 910, lv denied 52 NY2d 704; People v Westbrook, 79 Misc 2d 902, 905). Here, the second indictment charges an offense different from that charged in the first indictment. Thus, it cannot be said to have superseded the first for it is axiomatic that each subdivision of a statute constitutes a separate offense (Penal Law § 10.00 [1]; 2 Waxner, New York Criminal Practice § 9.10). Indeed, a defendant could be guilty of a violation of both Penal Law § 265.02 (1) and § 265.02 (4), guilty of one but not the other, or guilty of neither. Each offense has distinct elements and the fact that they are both denominated "criminal possession of a weapon in the third degree” and defined in Penal Law § 265.02 does not make them the same offense. Moreover, CPL 200.80 requires that upon the "defendant’s arraignment upon the second indictment, the count of the first indictment * * * must be dismissed” (emphasis supplied). Here, the count in the first indictment was dismissed on the People’s motion after the second indictment was returned although there was no legal requirement that it be dismissed, as would be the case if the second indictment were truly a superseding indictment.

The term "replacement” indictment is nowhere defined, nor is it found, in the carefully structured Criminal Procedure Law. Our use of this term in People v Lomax (50 NY2d 351, supra) was in respect to a situation where the original indictment had been dismissed, leave granted to the People to resubmit and "a new indictment encompassing the same criminal charges was handed up” (People v Lomax, supra, at p 355; emphasis supplied). There the second indictment clearly charged the same offense and took the place of the first. It did not in any way change the theory of the prosecution nor would it have been possible for the People to proceed on both indictments. By contrast, the second indictment here did not replace the first indictment in the sense that this phrase is used in Lomax because the People could have proceeded with both indictments since each charged a different offense and required proof of distinct elements.

To conclude that Lomax and Osgood authorize the relation back of "replacement”, "superseding” or "successive” indictments, indiscriminately and without regard to legislative authorization, is to read those decisions too broadly and to ignore the rule that " '[t]he language of any opinion must be confined to the facts before the court’ ” (see, People v Anderson, 66 NY2d 529, 535, and cases cited therein). The second indictment is not a "superseding” nor is it a "replacement” indictment; it is a new indictment charging a different offense than that charged originally, and it thereby alters the theory of the prosecution. The People’s delay in securing this second indictment was not in any way "caused by the defendant [nor] is [it] due to circumstances beyond the prosecutor’s control” (People v Osgood, 52 NY2d, at p 41, supra). Indeed, the delay is unexplained and inexcusable. Therefore, in my view, it is an "inconsistent, if not perverse” (id.) construction of the statute and our decisions in Lomax and Osgood to excuse the People’s delay in prosecuting the charge contained in the second indictment.

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

Order insofar as appealed from reversed, etc.

      . Defendant’s application to this court for leave to appeal from that portion of the Appellate Division’s order was denied.

      . In People v Lomax (50 NY2d 351) and People v Weirich (49 NY2d 1020, affg 65 AD2d 932) we affirmed orders which gave effect to excludable periods of time permitted by CPL 30.30 (4) in computing the six-month time limits under CPL 30.30 (1) (a) as applied to succeeding indictments. No question concerning this application of CPL 30.30 (4) was raised and we address it here for the first time.

      . The rule would produce another anomaly. Under CPL 30.30 (4) (a) the time during which the court is considering a pretrial motion, including a motion to dismiss the indictment, is excludable. Under the rule adopted by the courts below, if a motion to dismiss the indictment were made within the six-month period, but not decided until after the six months had elapsed, no effect could be given to subdivision (4) (a) and the new indictment would be untimely.

      . Our decision here that the new indictment should be related back for purposes of giving effect to the excludable periods under CPL 30.30 (4) is dependent on our treatment of the indictment as one that is “directly derived” from the first accusatory instrument and must therefore be considered under Osgood and Lomax as part of the original action. Unless the new indictment is "directly derived” from the first accusatory instrument it is, of course, not related back for purposes of CPL 30.30 (1) (a) (cf. People v Osgood, 52 NY2d 37, 43-44; CPL 1.20 [16]).

       Our decisions in the double jeopardy area lend support to this analysis. We recently stated that "[t]he test for determining whether two offenses are the same within the meaning of the double jeopardy clause is whether two distinct statutory provisions each requires proof of a fact that the other does not” (People v Prescott, 66 NY2d 216, 221; see also, Blockburger v United States, 284 US 299). Applying this test here, it is clear that these provisions state separate and distinct offenses. In order to sustain a conviction under Penal Law § 265.02 (4), the People would not need to prove that defendant was previously convicted of a crime, while a prosecution for a violation of Penal Law § 265.02 (1) would not consider whether the firearm was loaded or whether the possession was in defendant’s home or place of business.


author: Simons, J. Titone, J.

text:
    In the Matter of the Claim of Anna Richardson, Respondent, v Fiedler Roofing, Inc., et al., Appellants. Workers’ Compensation Board, Respondent.
    Argued March 18, 1986;
    decided May 1, 1986

      POINTS OF COUNSEL

      Joseph F. Manes and Raymond C. Green for appellants.
    A thief should not expect an employer to respond in liability in the instance in which the theft or its cover-up results in injury or death. The deviation is so extreme such as to preclude the benefits being awarded under the New York Workers’ Compensation Law. (Matter of Reynolds v Masick, 56 NY2d 839; Matter of Anderson v Cohen Iron Works, 38 NY2d 511; Matter of Adelstein v Bellride Transp. Corp., 15 AD2d 690; Matter of Goldfine v Barsol [Parson] Cab Operating Co., 19 AD2d 672.)

      Robert Abrams, Attorney-General (Michele M. Woodard, Robert Hermann, Peter H. Schiff and Carlin Meyer of counsel), for Workers’ Compensation Board, respondent.
    I. The court below properly affirmed the factual determination of the Workers’ Compensation Board that decedent’s death arose out of and in the course of his employment as a roofer, and that decedent had not deviated from his employment. (Matter of

      Anadio v Ideal Leather Finishers, 32 AD2d 40, 25 NY2d 737; Matter of Capizzi v Southern Dist. Reporters, 61 NY2d 50; Matter of Lowery v Riss & Co., 10 AD2d 489, 8 NY2d 707; Matter of Sedlack v J. & A. Custom Heating & Air Conditioning, 32 AD2d 1020.) II. Appellants’ argument that the alleged illegal nature of the activities engaged in by the decedent and his co-worker was sufficient to preclude compensability in and of itself is not properly before this court. (Matter of Middleton v Coxsackie Correctional Facility, 38 NY2d 130; O’Rourke v Long, 41 NY2d 219; Matter of Samuels v Dubovsky & Son, 24 AD2d 1060.) III. Neither the applicable decisional law nor Workers’ Compensation Law § 10 compel a finding that the commission of an illegal act operates per se as a bar to an award of compensation benefits. (Matter of Sackolwitz v Hamburg & Co., 295 NY 264; Matter of Chaffee v Effron, 1 AD2d 197; Matter of Perry v Town of Cherry Val., 282 App Div 908, 307 NY 427; Ulrich v Terminal Operating Corp., 186 Misc 145, 271 App Div 930; Matter of Lubrano v Malinet, 65 NY2d 616; Matter of Arrington v Schneider, 75 AD2d 963; Matter of Orbon v Pine Lane Poultry, 77 AD2d 752; Matter of Merchant v Pinkerton’s, Inc., 50 NY2d 492; Matter of Redfield v Boulevard Gardens Hous. Corp., 4 AD2d 906.)
   OPINION OF THE COURT

Simons, J.

Claimant’s decedent, Norman Richardson, was employed by appellant, Fiedler Roofing, Inc. as a waterproofer and roofing mechanic. On January 20, 1981 he fell seven stories from the roof of a building near his jobsite sustaining head injuries which resulted in his death. Immediately before the accident, Richardson and a co-worker were at their work place on the roof waiting for material to arrive with no assigned work to do. While waiting, they moved some distance over the roof and across party walls to another part of the structure and removed some copper downspouts from the building to sell as salvage. While doing so, Richardson slipped on a patch of ice and fell to his death. Respondent Workers’ Compensation Board affirmed a finding of the Administrative Law Judge that the accident occurred during the course of decedent’s employment and that death was causally related to it and awarded benefits to decedent’s five minor children. A divided Appellate Division affirmed the decision of the Board, and the employer and its insurer appeal. They claim that the employer should not be required to pay benefits because decedent was actually engaged in a theft at the time of his accident, and thus his death resulted not from his work duties, but from "decedent’s purely personal act of stealing copper downspouts.”

To be compensable, an injury must arise out of and in the course of employment (Workers’ Compensation Law § 10). Activities which are purely personal pursuits are not within the scope of employment and compensation may not be recovered for injuries sustained while engaging in them (Matter of Pasquel v Coverly, 4 NY2d 28, 31). The test for determining whether specific activities are within the scope of employment or purely personal is whether the activities are both reasonable and sufficiently work related under the circumstances (Matter of Capizzi v Southern Dist. Reporters, 61 NY2d 50, 55; Matter of Davis v Newsweek Mag., 305 NY 20, 24; Matter of Tyler v Gilbert, 29 AD2d 591). It has been held that an employee directed to wait for a specified period of time until materials arrive, is not required to stand by idly but is free to engage in any reasonably related activity while waiting (Matter of Anadio v Ideal Leather Finishers, 32 AD2d 40, 42, lv denied 25 NY2d 737; see also, Matter of Capizzi v Southern Dist. Reporters, supra, p 53). Momentary deviation from the work routine for a customary and accepted purpose will not bar a claim for benefits. The determination of what is reasonable activity and what is unreasonable, and thus a deviation, is factual and the Board is afforded wide latitude in deciding whether the employee’s conduct is disqualifying (Matter of Anadio v Ideal Leather Finishers, supra, p 42).

The Board found from the evidence in this case that it was common practice in the industry for roofers to remove copper downspouts and sell them for scrap. It further found that this employer not only knew of the practice but also frequently had been required to pay for or replace downspouts stolen by its employees. Despite this experience, the employer had never disciplined or discharged an employee for these thefts, and after it learned that decedent and his co-worker had been stealing downspouts on the day of the accident, it did not discipline or discharge the coemployee. Accordingly, the Board found that decedent’s activities while waiting for necessary work materials to arrive did not constitute a deviation from, or an abandonment of, his employment and that the death arose out of and in the course of decedent’s employment. These finding are supported by substantial evidence and thus are conclusive on the court (Matter of Capizzi v Southern Dist. Reporters, 61 NY2d 50, 54, supra).

Indeed, appellants do not now challenge the Appellate Division’s finding that there was substantial evidence to support the award. They contend in this court, for the first time, that a claimant is excluded from compensation benefits, as a matter of law, if he is engaged in an illegal activity at the time of the accident. Normally, they would not be permitted to raise the issue when they challenged only the factual basis of the Administrative Law Judge’s finding that decedent had not deviated from the scope of his employment before the Board (see, Matter of Middleton v Coxsackie Correctional Facility, 38 NY2d 130, 132-133; Workers’ Compensation Law § 23). The argument raises solely a question of statutory interpretation, however, which we may address even though it was not presented below (see, Telaro v Telaro, 25 NY2d 433, 439; Cohen and Karger, Powers of the New York Court of Appeals, at 627-628 [rev ed]).

Appellants base their argument on policy grounds, urging that an employee who engages in illegal activity during his employment should not receive benefits. Appellants note that Workers’ Compensation Law article 9, the disability benefits section, expressly precludes benefits for non-work-related injuries caused by a claimant’s illegal acts (see, Workers’ Compensation Law § 201 [9] [A]; § 205 [3]), and they contend that section 10 of the statute, the liability provision for work-related injuries, should be interpreted as containing a similar limitation. The history and nature of these two clauses prove otherwise.

In 1913, the Bill of Rights of the 1894 New York State Constitution was amended to give the Legislature the power to enact workers’ compensation legislation (see, 1894 NY Const, art I, § 19) and the next year the Legislature did so. The resulting statute provided that employees were to be compensated on a "no-fault” basis, regardless of any negligence on their own part, for all injuries "arising out of and in the course of’ their employment (see, Workers’ Compensation Law § 10). To further the claimant’s ability to establish his right to benefits, the statute creates a presumption that the injuries are compensable (see, Workers’ Compensation Law § 21). The statute was enacted for humanitarian purposes, framed, in the words of Chief Judge Cardozo, to insure that injured employees might "be saved from becoming one of the derelicts of society, a fragment of human wreckage” (see, Surace v Danna, 248 NY 18, 20-21; see also, Matter of Winfield v New York Cent. & Hudson Riv. R. R. Co., 168 App Div 351, 352-353, affd 216 NY 284; and see, Minkowitz, Practice Commentary, McKinney’s Cons Laws of NY, Book 64, Workers’ Compensation Law § 10, pp 126-127 [1986 Cum Ann Pocket Part]). To further that purpose, we have held that the statutory obligation to compensate injuries sustained in the course of employment which are causally related to it does not depend on the equities of a particular case, nor may it be avoided because of the workers’ fraud or wrongdoing: it is absolute (see, Matter of Sackolwitz v Hamburg & Co., 295 NY 264, 268 [construing § 14-a]).

The exceptions to this broad statutory liability are found in section 10, derived from the 1913 amendment to the Bill of Rights. They bar compensation when the injury has been occasioned solely by intoxication of the injured employee while on duty or by willful intention of the injured employee to bring about injury or death (Workers’ Compensation Law § 10; compare, NY Const, art I, § 18; Matter of Sackolwitz v Hamburg & Co., supra; and see, Minkowitz, Practice Commentary, op. cit., p 127). Neither is applicable here.

The disability benefits provisions have an entirely different history and purpose. They were enacted in 1949 to expand the scope of the Workers’ Compensation Law by providing short-term weekly benefits to employees for sickness or disability not arising "out of or in the course of’ employment. We discussed the nature of article 9 in Matter of Flo v General Elec. Co. (7 NY2d 96, 99): "The Disability Benefits statute is broad in concept and general in terms. It was designed to assist the employee of the State who suffered disability by bridging the gap between the Workmen’s Compensation Law and the Unemployment Insurance Law. Unlike the Workmen’s Compensation Law, the Disability Benefits Law contains no requirement that the cause of a disability arise out of and in the course of employment. It contemplates a broad social coverage to protect the employee against the hazard of sickness and disability which interfere with and prevent his continuance in active employment and which can occur and do occur both within and outside of working hours.”

Article 9 excludes benefits for several disabilities and disability periods (see, Workers’ Compensation Law § 205) and one of its provisions, section 205 (3), provides that benefits shall not be paid for a disability occasioned by the "perpetration by the employee of an illegal act”. That limitation is not duplicated in the provisions of the statute dealing with work-related injuries. Indeed, the only exception to liability that the disability benefits provisions and workers’ compensation provisions have in common is the provision which bars recovery for injuries caused by the employee’s willful intention to bring physical harm to himself or another (compare, Workers’ Compensation Law §§ 10 and 205). It is not claimed that that provision has application to this case and there is nothing else in the text of the statute, its legislative history, or in our case law, that supports the appellants’ claim that section 10 should be read to foreclose work-related death benefits in the same way that section 205 forecloses benefits for non-work-related injuries.

We have previously emphasized that the Workers’ Compensation Law is remedial in nature and must be "construed liberally to accomplish the economic and humanitarian objects of the act” (Matter of Holcomb v Daily News, 45 NY2d 602, 607). It is significant that although we have consistently interpreted the statute in this way (see, e.g., Matter of Sackolwitz v Hamburg & Co., 295 NY 264, supra, and cases cited therein), and the Legislature has amended and revised it repeatedly (see, Millus and Gentile, Time to Recodify the New York Workmen’s Compensation Law, 47 NYSBJ 655), the list of activities which will disqualify an employee from compensation for work-related injuries has remained unchanged for over 70 years. Indeed, despite this long history of liberal interpretation, when section 205 (3) was subsequently enacted barring disability benefits for injuries resulting from illegal acts, there was no effort to change section 10 to include a similar exception for work-related injuries. It is reasonable to assume from all of this that the Legislature did not intend section 10 to be similarly limited. And there is good reason why it should not. It is one thing to disqualify a claimant for injuries he sustains during the course of an illegal activity pursued on his own time, an activity unknown to the employer and one which it cannot control. It is quite another to deprive dependents of benefits because the employee’s death results from misconduct during the course of employment when the employer knows about the illegal activity and tolerates it (compare, Matter of Chaffee v Effron, 1 AD2d 197, 198-199).

Although the appellants’ argument is based on moral grounds — the need to prevent parties from profiting from illegal acts — the suspicion is that the concern has more to do with dollars and cents than morality. The way for an employer to express dissatisfaction with its employees’ acts and also avoid paying benefits for such claims, however, is not for the Board to disqualify innocent dependents but for the employer to make clear to its employees that illegal conduct on the job will not be tolerated.

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

Titone, J.

(dissenting). The majority holds that where an employer tolerates conduct blatantly in violation of the Penal Law, that conduct arises out of and in the course of employment within the meaning of Workers’ Compensation Law § 10. Because I find that holding totally unacceptable, I must dissent.

Initially, where as here, the facts underlying the award of compensation are undisputed, only a question of law is presented (Matter of Paduano v New York State Workmen’s Compensation Bd., 25 NY2d 669, affg on opn at App Div 30 AD2d 1009; Matter of Kaplan v Zodiac Watch Co., 20 NY2d 537, 539; Matter of Martin v Plant, 293 NY 617, 618). Therefore, the decision by the Board that decedent’s activity was reasonable under the circumstances is fully reviewable by this court.

On the merits, the majority reasons that intoxication and intentional self-infliction of injury are the only exceptions to the broad statutory liability imposed in Workers’ Compensation Law § 10. Such an analysis begs the very essence of the statute which endeavors to compensate workers for injuries, disabilities or deaths only "arising out of and in the course of employment”. Thus, the threshold question to be decided in cases involving section 10, as here, is whether the employee’s condition arose "out of and in the course of employment” (e.g., Matter of Malacarne v City of Yonkers Parking Auth., 41 NY2d 189; Matter of Seymour v Rivera Appliances Corp., 28 NY2d 406; Matter of Pryor v Presbyterian Home for Aged Women, 9 NY2d 869; Matter of Pasquel v Coverly, 4 NY2d 28; Matter of Martin v Plant, supra; Matter of Scholtzhauer v C & L Lunch Co., 233 NY 12). In my view, it did not.

There is no dispute that where, as in this case, an employee is instructed to wait for materials, he is not obliged to stand idly by. An employee may " 'indulge in any reasonable activity at that place, and if he does so the risk inherent in such activity is an incident of his employment’ ” (Matter of Capizzi v Southern Dist. Reporters, 61 NY2d 50, 53, quoting Matter of Davis v Newsweek Mag, 305 NY 20, 28 [emphasis in original]; see also, Matter of Di Perri v Boys Bhd. Republic, 31 NY2d 215, 218). For example, activities such as an associate editor of textbooks executing an exuberant dance step in an elevator (Matter of Bletter v Harcourt, Brace & World, 25 NY2d 755), a live-in camp kitchen worker using recreational facilities for gymnastics during off hours (Matter of Di Perri v Boys Bhd. Republic, supra) and a traveling employee bathing in a hotel (Matter of Capizzi v Southern Dist. Reporters, supra) have been held to be reasonable and the injuries sustained compensable. In addition, employee horseplay, given the nature of the materials at hand and the general habits of the employees, may give rise to compensable injury (Matter of Lubrano v Malinet, 65 NY2d 616).

If the prevailing word "reasonable” is to have any meaning at all, however, I cannot condone compensation for an injury sustained during the perpetration of a larceny. There is no authority whatsoever nor definition of the word "reasonable” which would support the proposition that a reasonable activity includes a crime of moral turpitude during idle time. Such a dilution of the import of reasonableness, a standard imposed by our case law repeatedly for over 30 years (e.g, Matter of Capizzi v Southern Dist. Reporters, 61 NY2d 50, 53, supra; Matter of Davis v Newsweek Mag, 305 NY 20, 28, supra), is wholly unwarranted. When the decedent chose to steal— which by no stretch of the imagination can be deemed a "reasonable” activity in any civilized society — he removed himself from his employment and acted at his own peril (Matter of Goldfine v Barsol [Parson] Cab Operating Co., 19 AD2d 672).

Clearly, decedent was in a proper position to combine business with pleasure, as he was merely instructed to wait for materials. That he did so would not defeat his claim unless the accident resulted from risks produced by his unreasonable personal activities (Matter of Pasquel v Coverly, 4 NY2d 28, 30-31, supra; 1 Larson, Workmen’s Compensation § 19.61; see also, Matter of Kaplan v Zodiac Watch Co., 20 NY2d 537, 540, supra). Here, decedent not only strayed from the roof on which he was supposed to wait to a different one but also proceeded to engage in a theft and then a cover-up of his actions leading him to pretend to inspect the icy edge of the unrelated roof. This was a completely unreasonable personal, dangerous and illegal indulgence which substantially increased his risk of injury (Matter of Pasquel v Coverly, supra, p 30).

Moreover, that decedent’s employer tolerated the criminal activity does not make him responsible for any injuries sustained during the larceny. The employer did not encourage the activity and certainly did not benefit from it. On the contrary, decedent’s employer was put in a position of continually replacing downspouts. The decedent’s conduct here does not even approach the equitable position of an employee who is injured while committing a relatively minor infraction which actually may further the employer’s interest (e.g., Matter of Perry v Town of Cherry Val., 307 NY 427). More importantly, the employer is certainly empowered to waive its own rules by implied acquiescence in their habitual violation. Therefore, a violation of the employer’s rules may not preclude compensation. The employer may not choose to ignore the mandates of the Penal Law, however, and the fact that a criminal statute is repeatedly violated cannot be construed as an implied permission on the part of the employer to allow such conduct.

The majority notes that it is the policy of this State to award compensation on a "no-fault” basis. It must also be recognized that this policy must be balanced with a strong policy against rewarding crime. I, too, sympathize with the plight of the innocent children who would suffer financially from the transgressions of their father. It is most unfortunate that children must bear the brunt of the nearsighted choices that their parents make. While it is true that we often disregard these "victims” of crime, this State has not seen fit to enact a workers’ compensation law for the dependents of criminals who sustain injuries in the course of and arising out of their chosen "profession.”

Accordingly, I would reverse the order of the Appellate Division and dismiss the claim.

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

Order affirmed, with costs.

       In 1981, when decedent died, Workers’ Compensation Law § 10 provided: "Every employer subject to this chapter shall in accordance with this chapter, except as otherwise provided in section twenty-five-a hereof, secure compensation to his employees and pay or provide compensation for their disability or death from injury arising out of and in the course of the employment without regard to fault as a cause of the injury, except that there shall be no liability for compensation under this chapter when the injury has been solely occasioned by intoxication of the injured employee while on duty; or by wilful intention of the injured employee to bring about the injury or death of himself or another.”


author: Per Curiam.

text:
    Kenford Company, Inc., Plaintiff, and Dome Stadium, Inc., Appellant, v County of Erie et al., Respondents.
    Argued March 18, 1986;
    decided May 6, 1986

      POINTS OF COUNSEL

      Victor T. Fuzak, Paul I. Perlman and Benjamin M. Zuffranieri, Jr., for appellant.
    I. Plaintiff’s proof was so compelling and conclusive as to overcome even the excessive burden of convincing a jury of Erie County taxpayers to render a substantial verdict against their County. II. Violating prescribed review standards and limitations, the court below has deprived Dome Stadium, Inc. (DSI) of its constitutional rights to trial by jury. (Cohen v Hallmark Cards, 45 NY2d 493; Tripoli v Tripoli, 83 AD2d 764; Alfieri v Lewis Gen. Tires, 62 AD2d 1135; Boyle v Gretch, 57 AD2d 1047; Kimberly-Clark Corp. v Power Auth., 35 AD2d 330; Dobess Realty Corp. v City of New York, 79 AD2d 348; Terpening Trucking Co. v City of Fulton, 46 AD2d 992; Di Bernardo v Gunneson, 65 AD2d 828; Lee v Seagram & Sons, 552 F2d 447.) III. The court below unaccountably ignored the rationale and holding of DeLong v County of Erie (89 AD2d 376, affd 60 NY2d 296 [1983]). (Wakeman v Wheeler & Wilson Mfg. Co., 101 NY 205.) IV. DSI provided a rationale, and indeed peremptory, basis for the jury’s determination of lost profits. (Spitz v Lesser, 302 NY 490; Contemporary Mission v Famous Music Corp., 557 F2d 918.) V. The court below ignored the concessions and tacit admissions of defendants’ own witnesses that DSI had proven a rational basis for the assessment of its damages. VI. The court below premised its nullification of the jury verdict on misperceptions of clear and unquestioned record proof. (Goldman Theatres v Lowe's, Inc., 69 F Supp 103, 164 F2d 1021, 334 US 811; Broadway Photoplay Co. v World Film Corp., 225 NY 104; Bernstein v Meech, 130 NY 354; Moss v Tompkins, 69 Hun 288, 144 NY 659.) VII. The court below’s "one variable” reading of the cases is inaccurate and untenable. (DeLong v County of Erie, 89 AD2d 376; Autowest, Inc. v Peugeot, Inc., 434 F2d 556; For Children v Graphics Intl., 352 F Supp 1280;
      Lexington Prods, v B. D. Communications, 677 F2d 251; Bloor v Falstaff Brewing Corp., 601 F2d 609; Lee v Seagram & Sons, 552 F2d 447; Perma Research & Dev. Co. v Singer Co., 402 F Supp 881, 542 F2d 111, 429 US 987; Contemporary Mission v Famous Music Corp., 557 F2d 918; Wakeman v Wheeler & Wilson Mfg. Co., 101 NY 205; Lakota Girl Scout Council v Havey Fund-Raising Mgt., 519 F2d 634.) VIII. The evidence of lost profits damages was legally sufficient to support the jury verdict in favor of DSI. (Perma Research & Dev. Co. v Singer Co., 402 F Supp 881, 542 F2d 111, 429 US 987; Bloor v Falstaff Brewing Corp., 454 F Supp 258, 601 F2d 609; Lee v Seagram & Sons, 552 F2d 447; Autowest, Inc. v Peugeot, Inc., 434 F2d 556; Riley v General Mills, 226 F Supp 780, 346 F2d 68; Borne Chem. Co. v Dictrow, 85 AD2d 646; Draft Sys. v Rimar Mfg., 524 F Supp 1049, 688 F2d 820; Western Geophysical Co. v Bolt Assoc., 584 F2d 1164.) IX. The court below minority opinion evidences a determination to afford the County preferred treatment.

      John H. Stenger, Timothy C. Leixner and Joseph M. Finnerty for respondents.
    I. The dismissal of the lost profits claims of plaintiff DSI by the court below should be affirmed. (Wakeman v Wheeler & Wilson Mfg. Co., 101 NY 205; Cramer v Grand Rapids Show Case Co., 223 NY 63; Banker’s Trust Co. v Steenburn, 95 Misc 2d 967, 70 AD2d 786; Manniello v Dea, 92 AD2d 426; Sam & Mary Hous. Corp. v Jo/Sal Mkt. Corp., 121 Misc 2d 434, 100 AD2d 901, 62 NY2d 941; Hughes v Nationwide Mut. Ins. Co., 98 Misc 2d 667; Palmer v Connecticut Ry. Co., 311 US 544; Lee v Seagram & Sons, 552 F2d 447; Blum v Fresh Grown Preserve Corp., 292 NY 241.) II. The courts below erred in denying judgment to defendants and in granting summary judgment to plaintiffs on issues of liability. (Austrian Lance & Stewart v Jackson, 50 AD2d 735; Ferro v Bersani, 78 AD2d 1010, 59 NY2d 899; Kulaga v State of New York, 37 AD2d 58, 31 NY2d 756; Maguire Leasing Corp. v Falb & Co., 49 AD2d 540; Murphy v Erie County, 28 NY2d 80; Schuylkill Fuel Corp. v B. & C. Nieberg Realty Corp., 250 NY 304; Gilberg v Barbieri, 53 NY2d 285; Gramatan Home Investors Corp. v Lopez, 46 NY2d 481; Griffen v Keese, 187 NY 454; New York, New Haven & Hartford R. R. Co. v Village of New Rochelle, 29 Misc 2d 195.)
   OPINION OF THE COURT

Per Curiam.

The issue in this appeal is whether a plaintiff, in an action for breach of contract, may recover loss of prospective profits for its contemplated 20-year operation of a domed stadium which was to be constructed by defendant County of Erie (County).

On August 8, 1969, pursuant to a duly adopted resolution of its legislature, the County of Erie entered into a contract with Kenford Company, Inc. (Kenford) and Dome Stadium, Inc. (DSI) for the construction and operation of a domed stadium facility near the City of Buffalo. The contract provided that construction of the facility by the County would commence within 12 months of the contract date and that a mutually acceptable 40-year lease between the County and DSI for the operation of said facility would be negotiated by the parties and agreed upon within three months of the receipt by the County of preliminary plans, drawings and cost estimates. It was further provided that in the event a mutually acceptable lease could not be agreed upon within the three-month period, a separate management contract between the County and DSI, as appended to the basic agreement, would be executed by the parties, providing for the operation of the stadium facility by DSI for a period of 20 years from the completion of the stadium and its availability for use.

Although strenuous and extensive negotiations followed, the parties never agreed upon the terms of a lease, nor did construction of a domed facility begin within the one-year period or at any time thereafter. A breach of the contract thus occurred and this action was commenced in June 1971 by Kenford and DSI.

Prolonged and extensive pretrial and preliminary proceedings transpired throughout the next 10 years, culminating with the entry of an order which affirmed the grant of summary judgment against the County on the issue of liability and directed a trial limited to the issue of damages (Kenford Co. v County of Erie, 88 AD2d 758, lv dismissed 58 NY2d 689). The ensuing trial ended some nine months later with a multimillion dollar jury verdict in plaintiffs’ favor. An appeal to the Appellate Division resulted in a modification of the judgment. That court reversed portions of the judgment awarding damages for loss of profits and for certain out-of-pocket expenses incurred, and directed a new trial upon other issues (Kenford Co. v County of Erie, 108 AD2d 132). On appeal to this court, we are concerned only with that portion of the verdict which awarded DSI money damages for loss of prospective profits during the 20-year period of the proposed management contract, as appended to the basic contract. That portion of the verdict was set aside by the Appellate Division and the cause of action dismissed. The court concluded that the use of expert opinion to present statistical projections of future business operations involved the use of too many variables to provide a rational basis upon which lost profits could be calculated and, therefore, such projections were insufficient as a matter of law to support an award of lost profits. We agree with this ultimate conclusion, but upon different grounds.

Loss of future profits as damages for breach of contract have been permitted in New York under long-established and precise rules of law. First, it must be demonstrated with certainty that such damages have been caused by the breach and, second, the alleged loss must be capable of proof with reasonable certainty. In other words, the damages may not be merely speculative, possible or imaginary, but must be reasonably certain and directly traceable to the breach, not remote or the result of other intervening causes (Wakeman v Wheeler & Wilson Mfg. Co., 101 NY 205). In addition, there must be a showing that the particular damages were fairly within the contemplation of the parties to the contract at the time it was made (Witherbee v Meyer, 155 NY 446). If it is a new business seeking to recover for loss of future profits, a stricter standard is imposed for the obvious reason that there does not exist a reasonable basis of experience upon which to estimate lost profits with the requisite degree of reasonable certainty (Cramer v Grand Rapids Show Case Co., 223 NY 63; 25 CJS, Damages, § 42 [b]).

These rules must be applied to the proof presented by DSI in this case. We note the procedure for computing damages selected by DSI was in accord with contemporary economic theory and was presented through the testimony of recognized experts. Such a procedure has been accepted in this State and many other jurisdictions (see, De Long v County of Erie, 60 NY2d 296). DSI’s economic analysis employed historical data, obtained from the operation of other domed stadiums and related facilities throughout the country, which was then applied to the results of a comprehensive study of the marketing prospects for the proposed facility in the Buffalo area. The quantity of proof is massive and, unquestionably, represents business and industry’s most advanced and sophisticated method for predicting the probable results of contemplated projects. Indeed, it is difficult to conclude what additional relevant proof could have been submitted by DSI in support of its attempt to establish, with reasonable certainty, loss of prospective profits. Nevertheless, DSI’s proof is insufficient to meet the required standard.

The reason for this conclusion is twofold. Initially, the proof does not satisfy the requirement that liability for loss of profits over a 20-year period was in the contemplation of the parties at the time of the execution of the basic contract or at the time of its breach (see, Chapman v Fargo, 223 NY 32; 36 NY Jur 2d, Damages, §§39, 40, at 66-70). Indeed, the provisions in the contract providing remedy for a default do not suggest or provide for such a heavy responsibility on the part of the County. In the absence of any provision for such an eventuality, the commonsense rule to apply is to consider what the parties would have concluded had they considered the subject. The evidence here fails to demonstrate that liability for loss of profits over the length of the contract would have been in the contemplation of the parties at the relevant times.

Next, we note that despite the massive quantity of expert proof submitted by DSI, the ultimate conclusions are still projections, and as employed in the present day commercial world, subject to adjustment and modification. We of course recognize that any projection cannot be absolute, nor is there any such requirement, but it is axiomatic that the degree of certainty is dependent upon known or unknown factors which form the basis of the ultimate conclusion. Here, the foundations upon which the economic model was created undermine the certainty of the projections. DSI assumed that the facility was completed, available for use and successfully operated by it for 20 years, providing professional sporting events and other forms of entertainment, as well as hosting meetings, conventions and related commercial gatherings. At the time of the breach, there was only one other facility in this country to use as a basis of comparison, the Astrodome in Houston. Quite simply, the multitude of assumptions required to establish projections of profitability over the life of this contract require speculation and conjecture, making it beyond the capability of even the most sophisticated procedures to satisfy the legal requirements of proof with reasonable certainty.

The economic facts of life, the whim of the general public and the fickle nature of popular support for professional athletic endeavors must be given great weight in attempting to ascertain damages 20 years in the future. New York has long recognized the inherent uncertainties of predicting profits in the entertainment field in general (see, Broadway Photoplay Co. v World Film Corp., 225 NY 104) and, in this case, we are dealing, in large part, with a new facility furnishing entertainment for the public. It is our view that the record in this case demonstrates the efficacy of the principles set forth by this court in Cramer v Grand Rapids Show Case Co. (223 NY 63, supra), principles to which we continue to adhere. In so doing, we specifically reject the "rational basis” test enunciated in Perma Research & Dev. Co. v Singer Co. (542 F2d 111, cert denied 429 US 987) and adopted by the Appellate Division.

Accordingly, that portion of the order of the Appellate Division being appealed from should be affirmed.

Chief Judge Wachtler and Judges Meyer, Alexander, Titone and Kane concur in Per Curiam opinion; Judges Simons, Kaye and Hancock, Jr., taking no part.

Order insofar as appealed from affirmed, with costs.

       Designated pursuant to NY Constitution, article VI, § 2.