author: Jasen, J. Meyer, J.

text:
    Murray Sporn, Appellant, v MCA Records, Inc., et al., Respondents. (And a Third-Party Action.)
    Argued February 9, 1983;
    decided March 31, 1983

      POINTS OF COUNSEL

      Peter S. Kaufman for appellant.
    I. Each wrong committed by defendants began a new limitation period. (Malloy v Town of Niskayuna, 64 Misc 2d 676; Meruk v City of New York, 223 NY 271; Korry v International Tel. & Tel. Corp., 444 F Supp 193; Sachs v Cluett Peabody & Co., 265 App Div 497; Kistler Instrumente AG. v PCB Piezotronics, 419 F Supp 120; Pollack v Warner Bros. Pictures, 266 App Div 118; Clayton v Farish, 191 Misc 136; Hunt v Hunt, 152 Misc 364.) II. Adverse possession should not be applied to intangible choses-in-action. (Crocker Point Assn. v Gouraud, 224 NY 343; Heller v Cohen, 154 NY 299; Lincoln Sav. Bank v Schneider, 105 Misc 530; Doherty v Matsell, 119 NY 646; Rabinof v United States, 329 F Supp 830; Brand v Prince, 35 NY2d 634.) III. Equitable considerations require a reversal of the decision of the Appellate Division, First Department. (Thomas Trust v Crown Publishers, 456 F Supp 531; Marks Music Corp. v Wonnell, 61 F Supp 722; Greenbie v Noble, 151 F Supp 45.)

      Douglas C. Fairhurst for respondents.
    I. Both courts below correctly held that plaintiff’s claim for an alleged wrong committed against plaintiff’s property 11 years before this suit was brought is barred by the three-year Statute of Limitations. (Sachs v Cluett Peabody & Co., 265 App Div 497, 291 NY 772; Citizens Nat. Bank v Osetek, 353 F Supp 958; Lemelson v Carolina Enterprises, 541 F Supp 645; Petnel v American Tel. & Tel. Co., 280 App Div 706; Bright Radio Labs. v Ilich, 44 Misc 2d 1018, 46 Misc 2d 460; Pickford Corp. v De-Luxe Labs., 161 F Supp 367.) II. Bell’s 11 years of continuous exploitation of the “Get a Job” master, openly and under a claim of rights adverse to plaintiff’s assignor, vested Bell with rights in the recording by proscription or adverse possession. (Gee v CBS, Inc., 471 F Supp 600, 612 F2d 572; Lightfoot v Davis, 198 NY 261; Monnot v Murphy, 207 NY 240.) III. Plaintiff has no reasonable basis for arguing that the dismissal was unfair or inequitable.
   OPINION OF THE COURT

Jasen, J.

The issue raised on this appeal is whether plaintiff’s cause of action for unauthorized commercial exploitation of a master phonograph record accrued for the purpose of computing the Statute of Limitations when defendant first began using plaintiff’s property as its own or whether a new cause of action arose each time the defendant used what plaintiff claims to be his property.

Plaintiff commenced this action in June of 1976. The complaint alleges that defendant MCA Records, Inc. (MCA), commercially exploited master recordings which belong to the plaintiff. Defendants moved to dismiss the complaint on the grounds that the action raised a claim for injury to property and was barred by the three-year Statute of Limitations because the injury occurred in 1965 when MCA began using what plaintiff claimed to be his property as its own. (CPLR 214.) Plaintiff argued that although the statute would bar recovery for use by the defendant more than three years before the commencement of the action, this claim should be considered in the nature of a continuing trespass on the plaintiff’s property rights in that master recording so that each unauthorized use by the defendant of plaintiff’s property would give rise to a new cause of action. According to this argument, plaintiff would be entitled to recover for each unauthorized use by the defendant of plaintiff’s property in the three years prior to the commencement of the action. Plaintiff also sought injunctive relief to bar the defendant from manufacturing or exploiting phonograph records from the master recording which the plaintiff claimed was his property.

Taking the facts as alleged by the plaintiff in the complaint and explained in supporting affidavits, the following occurred. In 1957, a Philadelphia disc jockey, Kae Williams, heard a rock and roll singing group, the Silhouettes, and arranged for them to record through his record company. In late 1957, that company, Junior Records, released the Silhouettes’ recording of “Get a Job”. According to Williams’ affidavit, he had produced a master phonograph recording of “Get a Job” (the Master) in late 1957 and on December 12,1957 he leased, pursuant to a written agreement, “exclusively and in perpetuity, all rights in the Master to Ember Records.” He also alleges that he entered into an oral agreement with the president of Ember Records that if Ember at anytime “liquidat[ed] its business or with[drew] from the record business, the ‘Get a Job’ master tape * * * would be returned” to Williams.

It is not disputed that Ember did in fact liquidate its assets and terminate its recording business. Under a written agreement, dated February 5, 1965, Ember sold its master recording catalogue to Bell Records (Bell) and the master recordings were turned over to Bell Records pursuant to this agreement. Included was the master recording to “Get a Job”. Bell Records, predecessor to defendant Arista Records, Inc. (Arista), released a recording of “Get a Job” in an album in 1965. Since then, it has continued to republish the song.

Defendant MCA has manufactured and sold recordings of the sound track from the motion picture “American Graffiti” since August, 1973. That recording includes copies of the song “Get a Job”, pursuant to an agreement between MCA and Arista.

In his affidavit, Williams asserts that by virtue of his oral agreement with Ember’s president, he reacquired all rights to the master recording of “Get a Job” when in 1965 Ember discontinued its business operations. There is no assertion that the master recording was ever returned to him. He claims to have objected to Bell’s use of the master recording in a telephone call he made to Bell’s president, Lawrence Uttal. Mr. Uttal, in his affidavit, states that no such claim was ever made and that Bell was never advised by Ember’s president that anyone but Ember had any property rights in any of the master recordings purchased by Bell. Mr. Williams indicates that he did not take any action against Bell because he could not afford the cost of any litigation to resolve his rights. In June, 1976, he assigned his rights to plaintiff Murray Sporn, who commenced this action.

Supreme Court granted defendants’ motion for partial summary judgment on the ground that the Statute of Limitations barred the action. The Appellate Division modified only to the extent of adding the additional declaration, pursuant to defendants’ motion for a declaratory judgment, that plaintiff had no enforceable rights against the defendants to the recording of “Get a Job” by virtue of the expiration of the Statute of Limitations (88 AD2d 857). Two Justices dissented on the ground that plaintiff had a continuing right to the property and each interference with that right constituted a new injury to plaintiff’s property so that those claims arising within three years of the commencement of the action should not be considered time barred. The dissent also urged consideration of defendants’ claim that the concept of adverse possession should be applied to intangible personal property.

For the purposes of determining whether the Statute of Limitations will bar an action, the general rule is that the statutory period is computed from the time the cause of action accrued. (CPLR 203,. subd [a].) The cause of action asserted here is wrongful use or misappropriation of the plaintiff’s property — that is, the master recording. In order to determine whether that cause of action accrued when the defendant first allegedly used the property without authority or whether it accrued with each subsequent unauthorized use of the property, it is necessary to characterize the nature of that use.

Interference with a person’s property constitutes a trespass (61 NY Jur, Trespass, § 8, p 12), while a “denial or violation of the plaintiff’s dominion, rights, or possession, is the basis of an action for conversion” (23 NY Jur 2d, Conversion, and Action for Recovery of Chattel, § 3, p 210). The question then becomes whether the defendant’s alleged conduct constituted an interference with plaintiff’s property or was a denial of plaintiff’s rights to the property or possession of that property. “A continuing right may exist where there is an interference with but no destruction or conversion of property.” (Sachs v Cluett, Peabody & Co., 265 App Div 497, 501, affd 291 NY 772.) The mere assertion of a continuing right, however, will not be sufficient to have the cause of action deemed a continuing trespass if the facts as pleaded indicate that the defendant’s alleged conduct, if proven, would constitute a taking of the property and a conversion of that property to his own.

The Appellate Division in Sachs v Cluett, Peabody & Co., (supra) adopted the following example to explain the distinction between trespass and conversion: “ Tf defendant hits plaintiff’s horse repeatedly, plaintiff has a new cause of action upon each striking; but if defendant destroys plaintiff’s horse, or takes it and claims it as his own, plaintiff’s right accrues immediately and he must sue within the period of limitation measured from that date — or never.’ ” (Sachs v Cluett, Peabody & Co., supra, at p 501.) Thus, in deciding whether an action is one to recover for a trespass or a conversion, the primary consideration must be what the plaintiff claims the defendant did. If a review of the pleadings indicates that the defendant merely interfered with the plaintiff’s property and thereby his property rights, then the complaint will be properly construed as an action to recover for trespass. Only then would it be necessary to consider the applicability of continuing trespass concepts. If, however, the conduct the plaintiff seeks to recover for amounts to the destruction or taking of the property, then the action is properly deemed one for conversion.

For the purposes of the Statute of Limitations, if the action is one for conversion, the time period will run from when that cause of action accrued — that is, when the conversion occurred. If the action is deemed one for trespass, then the cause of action will accrue at the time the trespass occurs. Trespasses of a continuing character may be considered a continuing trespass which would give rise to successive causes of action each time there is an interference with a person’s property so that relief would not be barred by the Statute of Limitations for interferences occurring within three years of the commencement of the action. (509 Sixth Ave. Corp. vNew York City Tr. Auth., 15 NY2d 48; Galway v Metropolitan El. Ry. Co., 128 NY 132.)

Turning to the case before us, on the basis of the pleadings submitted, it seems abundantly clear that plaintiff’s cause of action is one for conversion and not for trespass. The complaint alleges that although the plaintiff regained his rights to the master recording of “Get a Job” by operation of the oral agreement he had with Ember’s president, the defendant, since 1965, has been using that master recording as his own by manufacturing, distributing and selling records and otherwise commercially exploiting that master recording which it is claimed is the property of the plaintiff. These allegations amount to more than mere interference. The conduct of the defendant certainly constituted a denial of both the plaintiff’s right to the master recording and a total usurping of plaintiff’s right to possess the master recording.

Under these circumstances, we agree with the majority at the Appellate Division that since the conversion occurred in 1965, the cause of action arose at that time and, thus, this action is barred by the three-year Statute of Limitations. (CPLR 214.)

We would also note that plaintiff’s claim that this cause of action should be construed as a continuing trespass because the defendant’s conduct infringed on his intangible rights in the musical performances is not well founded. While it is true that an action for conversion will not normally lie, when it involves intangible property (23 NY Jur 2d, Conversion, and Action for Recovery of Chattel, § 11, p 216), an action involving infringement.of property rights by virtue of misappropriating tangible property — in this case the master-recording — should properly be considered an action to recover for conversion of that property. In this case, the plaintiff alleged only that he holds the rights Williams had which it is alleged was the right to have the master recording returned to him if Ember Records ever liquidated its business. When Ember did discontinue its business operations, instead of returning the master recording to Williams, Ember sold it to Bell. Bell subsequently treated the master recording as its own property. The complaint is directed at who should possess and benefit from the master recording. This is a tangible piece of property. The action is thus properly considered one for conversion. Naturally, plaintiff’s intangible property rights which flow from his claimed ownership of the master recording are involved, but that is not sufficient to convert a claim for recovery of losses sustained because a tangible piece of property was sold into an action involving purely intangible property.

Since we have concluded that plaintiff’s cause of action is barred by the Statute of Limitations and does not involve intangible property, there is no reason to consider, at this time, the applicability of the doctrine of adverse possession to intangible property.

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

Meyer, J.

(dissenting). I cannot accept the majority’s

characterization of plaintiff’s action as one for conversion in the face of the allegations of the complaint that plaintiff is the owner of “all rights in and to two certain master phonograph recordings, and the performances therein embodied,” that defendant MCA has without authority been “commercially exploiting phonograph records embodying the musical performances recorded on the said two master recordings”, and that defendant Arista has received a share of the proceeds “derived from exploitation of the phonograph records embodying the performances of the said two master recordings” (emphasis supplied).

The action, then, is not simply for misappropriation or conversion of the record, but for its repeated and continuing use thereafter to manufacture and sell reproductions in violation of plaintiff’s rights. Short of determining that there can be adverse possession of an intangible and that MCA acquired title by adverse possession, an issue which, I agree with Justice Sandler, must await a trial, the complaint cannot be dismissed as barred by limitations.

Accordingly, and for the reasons stated in Justice Sandler’s dissent at the Appellate Division, I dissent and vote to reverse and reinstate the complaint.

Judges Jones, Wachtler and Simons concur with Judge Jasen; Judge Mkyer dissents and votes to reverse in a separate opinion in which Chief Judge Cooke and Judge Fuchsberg concur.

Order affirmed, with costs.


source: Caselaw Access Project

author: Jones, J. Chief Judge Cooke

license: Public Domain

text:
    The People of the State of New York, Respondent, v Alton Lee, Appellant.
    Argued February 10, 1983;
    decided March 31, 1983

      POINTS OF COUNSEL

      Carl Silverstein and Morris Gindi for appellant.
    The Village of Monticello ordinance violates the Fifth Amendment due process clause of the United States Constitution as applied to the States by the Fourteenth Amendment and also violates the Fourth Amendment of the United States Constitution as applied to the States by the Fourteenth Amendment and section 12 of article I of the New York State Constitution. (Papachristou v City of Jacksonville, 405 US 156; United States v Herrera, 584 F2d 1137; United States v Persky, 520 F2d 283; Matter of Sussman v New York State Organized Crime Task Force, 39 NY2d 227; People v Berck, 32 NY2d 567, 414 US 1093; People v Pagnotta, 25 NY2d 333; People v Shepard, 50 NY2d 640; People v Cruz, 48 NY2d 419; United States ex rel. Newsome v Malcolm, 492 F2d 1166, cert granted sub nom. Lefkowitz v Newsome, 417 US 967, 420 US 283.)

      Stephen L. Oppenheim, Village Attorney, for respondent.
    I. Section 39-3 of the Village of Monticello Code is a narrowly drawn specific statute, within the regulatory powers of the State, reasonably directed to the evils sought to be remedied; section 39-3 is not unconstitutionally vague or otherwise infirm. (People v Katz, 21 NY2d 132; People v Hepker, 59 Misc 2d 868; Matter of Van Berkel v Power, 16 NY2d 37; People v Pagnotta, 25 NY2d 333; United States v Harriss, 347 US 612; People v Cruz, 48 NY2d 419; People v Berck, 32 NY2d 567; People v Smith, 44 NY2d 613; Grayned v City of Rockford, 408 US 104; Police Dept. of Chicago v Mosley, 408 US 92.) II. An intent to consume the alcohol beverage in the open container is properly made an element of the violation, if such an intent is necessary to uphold the constitutionality of section 39-3 of the Village of Monticello Code. (Screws v United States, 325 US 91; People v Munoz, 9 NY2d 51; People v Adamkiewicz, 298 NY 176; People v Spillman, 309 NY 295; People v Davis, 112 Misc 2d 138; Matter of Van Berkel v Power, 16 NY2d 37; People v Pagnotta, 25 NY2d 333; Meredith v Connally, 68 Misc 2d 956, 38 AD2d 385; People v Bell, 306 NY 110; Incorporated Vil. of Upper Brookville v Torr, 7 Misc 2d 725.)
   OPINION OF THE COURT

Jones, J.

A defendant by a plea of guilty does not forfeit the right on appeal from the conviction to challenge the constitutionality of the statute under which he was convicted. On review of this defendant’s conviction under that principle, we hold the village ordinance prohibiting mere possession in a public place of an open or unsealed container of an alcoholic beverage, without requiring proof of any intent to consume, unconstitutional.

On June 15, 1981 defendant was arrested and charged with violation of section 39-3 of the Village of Monticello Code which provides: “No person shall have in his possession, within the Village of Monticello, an open or unsealed bottle or container of an alcoholic beverage while such person is in any public place, including but not limited to any public highway, public street, public sidewalk, public alley, public parking lot or area, except for locations licensed for the sale of alcoholic beverages by the State of New York and the De Hoyos Park pavillion area, when such area is being used with the approval of the village authorities involved.” Following denial by the Village Justice Court of defendant’s motion to dismiss the charge on the ground that section 39-3 of the code is unconstitutional, defendant pleaded guilty. On appeal Sullivan County Court affirmed the judgment of conviction.

At the outset we address the question whether, by his plea of guilty, defendant has forfeited his right to appellate review of his challenge to the constitutionality of the code provision under which he was charged. There can be no doubt that such a plea constitutes an effective judicial admission by a defendant that he committed the acts charged in the accusatory instrument and waives such trial rights as the privilege against self incrimination, the right to trial by jury, and the right to confront one’s accusers (Boykin v Alabama, 395 US 238, 243; People v Lynn, 28 NY2d 196, 201-202) (i.e., rights going to the establishment of the factual elements of the crime charged). A plea of guilty, however, is in no way inconsistent with the contention that, conceding commission of all the acts charged, the provision of statute or ordinance which proscribes the particular conduct as criminal is nonetheless unconstitutional. Thus, in People v Whidden (51 NY2d 457) we recognized the right of a defendant on his plea of guilty expressly to reserve his right to raise arguments that the statute under which he was convicted was unconstitutional, there the so-called statutory rape laws. Again, and more recently, we observed that the doctrine of forfeiture of appellate review in consequence of a guilty plea would not necessarily extend to a reservation of the right to contest the constitutionality of the statute under which a defendant had been convicted (People v Di Raffaele, 55 NY2d 234, 240-241 — in the context of criminal usury statutes). We now recognize the general principle that pleading guilty to a charge (irrespective of whether there is any attempt at reservation of the issue for appellate review) does not of itself foreclose appellate attack on the constitutionality of the statute under which the charge was laid, and hold that in this instance, while defendant’s plea forecloses any assertion that on June 15, 1981 he did not “have in his hand a can of beer with a straw in it [or] hand the same to second subject named (Albert Woodward) who drank from same and threw on [the] ground”, as charged in the accusatory instrument, it did not operate to forfeit his right to challenge the constitutionality of the Monticello code provision.

We turn then to the provisions of the code in question. The Village Justice Court upheld the statute as a reasonable exercise of the municipal police power as to which there was no pre-emption by State laws or regulations under the Supreme Court’s recognition of the States’ absolute power to bar the sale of alcoholic beverages in New York State Liq. Auth. v Bellanca (452 US 714). Apparently recognizing the insufficiency of that analysis, County Court sustained the ordinance by reading the section “to prohibit possession with the intent of the possessor or another to consume in one of the proscribed public places” (emphasis in original). Whatever might be judged to be the constitutionality of an ordinance so drafted, it suffices for present purposes to note that the provision now before us prescribes no such element of intent. We are called on to pass on the constitutionality of the provision as enacted, not as it might have been drafted.

“[I]n order to be upheld as constitutional, a law which places some restriction upon an individual’s freedom of action in the name of the police power must bear some reasonable relation to the public good.” (People v Pagnotta, 25 NY2d 333, 337; see, also, People v Uplinger, 58 NY2d 936; People v Onofre, 51 NY2d 476, 492; People v Bunis, 9 NY2d 1, 4-5). While reasonable regulation of the possession of alcoholic beverages might be upheld, outright proscription as criminal of possession only of a container of an alcoholic beverage has not been shown to bear a reasonable relation to the public good. Consumption in public may be an activity subject to criminal proscription but no reasonable argument could be advanced to support a proscription against public possession alone which, if uniformly enforced, would effectively foreclose the acquisition of all alcoholic beverages for all purposes.

Nor is the ordinance in this case saved by the fact that all that is proscribed is possession of alcoholic beverages in “open or unsealed” containers. The condition of openness in itself in no way threatens the public good, as the County Court recognized when it imported an intent to consume in public. While, of course, a container must be opened or unsealed to permit consumption, it cannot be presumed that every opening or unsealing is for the purpose of direct human consumption or least of all for the purpose of direct human consumption in a public place.

Absent any legislative findings or other demonstration that there exists a reasonable relation between mere possession of an opened or unsealed container of an alcoholic beverage and the public good, we conclude that the Monticello ordinance cannot withstand constitutional scrutiny. The proscription strikes down what may well be innocuous behavior and undertakes to make criminal conduct which would not carry the slightest taint of corruption or impropriety and which a person of ordinary intelligence would not perceive as criminal (cf. Papachristou v City of Jacksonville, 405 US 156).

Accordingly, the order of the County Court should be reversed, the judgment of conviction vacated, and the accusatory instrument dismissed.

Chief Judge Cooke

(dissenting). In a reasonable attempt to promote public order, the Village of Monticello enacted an ordinance prohibiting the possession of open containers of alcoholic beverages in public areas. Whatever may be the wisdom of the village’s action, no basis exists for holding the ordinance constitutionally infirm. Therefore, I dissent and vote to affirm.

Defendant, having been arrested on June 15,1981 in the Village of Monticello and charged with having an open can of beer in his hand, pleaded guilty to violating section 39-3 of the Village Code. That section proscribes the possession in certain public areas of the village of “an open or unsealed bottle or container of an alcoholic beverage”. As the majority properly concludes, defendant’s guilty plea did not foreclose his challenge to the constitutionality of the ordinance under which he was convicted.

The majority errs, however, in holding the ordinance unconstitutional as lacking a rational basis. Under the Twenty-first Amendment to the United States Constitution, the individual States have broad power to regulate the sale and consumption of alcoholic beverages, extending even to the power to prohibit entirely the sale of liquor (see Ziffrin, Inc. v Reeves, 308 US 132, 138). The Supreme Court has stated that “[w]hile the States, vested as they are with general police power, require no specific grant of authority in the Federal Constitution to legislate with respect to matters traditionally within the scope of the police power, the broad sweep of the Twenty-first Amendment has been recognized as conferring something more than the normal state authority over public health, welfare, and morals” (California v La Rue, 409 US 109,114; see, also, New York State Liq. Auth. v Bellanca, 452 US 714).

Pursuant to this broad power to regulate the sale and use of alcoholic beverages, the village enacted an ordinance proscribing only the possession of open containers of alcohol in public places. The regulation, designed to promote public order, is narrowly drawn. Inasmuch as licensed liquor stores are prohibited from selling liquor in unsealed containers (Alcoholic Beverage Control Law, § 105, subd 11) and bars and restaurants may not sell open containers of alcohol for off-premises consumption (Alcoholic Beverage Control Law, § 106, subd 3), the ordinance does not affect the ability of persons to consume alcohol in licensed establishments or to purchase such beverages for consumption at home. The ordinance merely prohibits a person who buys a sealed container of an alcoholic beverage from opening it in the proscribed public places.

The majority concedes that a municipality may criminally prohibit the public consumption of alcohol (p 495). The ordinance here goes one small step further by proscribing the possession in public of an open container of alcohol. If a prohibition against public consumption is constitutional as a valid exercise of the police power, so must a ban on possession of open containers be valid. Both proscriptions have a rational basis in the same public policy — avoidance of disorders and related problems created by the consumption of alcoholic beverages in unlicensed public places. As with the ban on public consumption, the prohibition against possessing an open container punishes a discrete act, rather than a person’s status.

The majority’s reasoning that “it cannot be presumed that every opening or unsealing is for the purpose of direct human consumption” (p 496) begs the question of the ordinance’s rational basis. Under the majority’s analysis, prohibitions against public consumption would also be invalid. The goal behind both proscriptions is the prevention of public disorder. In neither case can it be said that every instance of public consumption, or every instance of public possession of an open container, disrupts the public order. But the existence of exceptions does not in itself render the perceived public policy worthless. So long as the enactment has “ ‘some fair, just and reasonable connection’ between it and the promotion of the health, comfort, safety and welfare of society”, it should be upheld (People v Bunis, 9 NY2d 1, 4, quoting People v Gillson, 109 NY 389, 401).

Furthermore, as this court unanimously recognized in Lighthouse Shores v Town of Islip (41 NY2d 7, 11-12), an “exceedingly strong presumption of constitutionality applies not only to enactments of the Legislature but to ordinances of municipalities as well. While this presumption is rebuttable, unconstitutionality must be demonstrated beyond a reasonable doubt and only as a last resort should courts strike down legislation on the ground of unconstitutionality * * * It is also presumed that the legislative body has investigated and found the existence of a situation showing or indicating the need for or desirability of the ordinance, and, if any state of facts known or to be assumed, justifies the disputed measure, this court’s power of inquiry ends.”

Finally, it should be emphasized that there is no evidence in the record that the ordinance has been enforced in an arbitrary or discriminatory manner against only certain portions of the citizenry.

The order of County Court upholding the ordinance should therefore be affirmed.

Judges Wachtler, Fuchsberg and Meyer concur with Judge Jones; Chief Judge Cooke dissents and votes to affirm in a separate opinion in which Judges Jasen and Simons concur.

Order reversed, etc.

        People v Thomas (53 NY2d 338) should not be read as suggesting a contrary view. The statute whose constitutionality defendant there sought to challenge following a conditional plea of guilty was one which provided a means of establishing his commission of the proscribed criminal conduct — i.e., subdivision 3 of section 265.15 of the Penal Law, under which the presence in an automobile of certain specified weapons gives rise to a presumption of possession by the vehicle’s occupants. We there took note of the fact that the issue which defendant had sought to save for review concerned “only the sufficiency of conceded facts to support a judgment of conviction”, and cautioned that our decision in the case was limited to the particular issues sought to be preserved “leav[ing] for-another day consideration of other permutations of the problem” (p 344). Thomas is thus of a kind with Boykin v Alabama (395 US 238) and People v Lynn (28 NY2d 196), addressing as it does the effect of a plea of guilty on conditional rights incident to a trial. The present case, raising a constitutional challenge to an aspect of defendant’s conviction quite discrete from the establishment of his commission of the conduct proscribed by the statute, is one of the permutations foretold in Thomas.

      We further observe that we have recognized the procedural ability of a sophisticated defendant to preserve constitutional issues for appellate review by the device of admitting only the commission of the acts on which the criminal charge is based, preceding a nonjury verdict of guilty (People v Onofre, 51 NY2d 476, 483; see, also, People v Shepard, 50 NY2d 640, 643-644). When another procedural means is available to achieve the same end, there is added reason to reject any contention that pleas of guilty forfeit the right to raise such constitutional issues on appeal.


author: Meyer, J. Jasen, J. Fuchsberg, J.

text:
    David J. Kennedy, Appellant, v McKesson Co. et al., Respondents, et al., Defendant.
    Argued January 6, 1983;
    decided March 31, 1983

      POINTS OF COUNSEL

      Paul R. Shanahan for appellant.
    The cause of action set forth in the complaint is cognizable under New York State law. (Johnson v State of New York, 37 NY2d 378; Tobin v Grossman, 24 NY2d 609; Lafferty v Manhasset Med. Center Hosp., 54 NY2d 277; Vaccaro v Squibb Corp., 52 NY2d 809; Becker v Schwartz, 46 NY2d 401; Howard v Lecher, 42 NY2d 109; Albala v City of New York, 54 NY2d 269.)

      Catherine A. Gale for McKesson Company, respondent.
    I. New York State does not recognize a cause of action for unintended psychic harm sustained as a result of injuries inflicted upon a third party. (Steitz v Gifford, 280 NY 15; Battalla v State of New York, 10 NY2d 237; Howard v Lecher, 42 NY2d 109; Johnson v State of New York, 37 NY2d 378; Vaccaro v Squibb Corp., 71 AD2d 270, 52 NY2d 809; Becker v Schwartz, 46 NY2d 401.) II. Public policy considerations require affirmance of the order below. (Howard v Lecher, 42 NY2d 109; Tobin v Grossman, 24 NY2d 609.) III. Plaintiff’s action is barred by section 15-108 of the General Obligations Law. (Matter of Torres v

      State of New York, 67 AD2d 814; Flood v Re Lou Location Engr., 487 F Supp 364.) IV. Plaintiff has failed to establish a prima facie case of defamation. (Chapadeau v Utica Observer-Dispatch, 38 NY2d 196; Triggs v Sun Print. & Pub. Assn., 179 NY 144; Morrison v National Broadcasting Co., 19 NY2d 453.)

      William L. Allen, Jr., for Norton-Starr, Inc., respondent.
    I. This case would extend liability for emotional injury beyond that previously recognized — contrary to Becker, Howard, Vaccaro and Lafferty. Indirect damage from emotional response to an injury to another distinguishes it from Johnson, and warrants denial of liability here. (Johnson v State of New York, 37 NY2d 378; Howard v Lecher, 53 AD2d 420; Aquilio v Nelson, 78 AD2d 195; Tobin v Grossman, 24 NY2d 609; Lafferty v Manhasset Med. Center Hosp., 54 NY2d 277; Becker v Schwartz, 46 NY2d 401; Vaccaro v Squibb Corp., 52 NY2d 809.) II. The public policies against extending liability to indirect emotional injury, applied in Becker, Tobin, Howard, Vaccaro and Lafferty, apply here also. The vast potential ramifications of any action for indirect emotional trauma and psychic damages as a response to an accident to another should not be imposed by this court. (Howard v Lecher, 42 NY2d 109; Tobin v Grossman, 24 NY2d 609; Kalina v General Hosp. of City of Syracuse, 31 Misc 2d 18, 13 NY2d 1023; Johnson v State of New York, 37 NY2d 378.) III. The provisions of section 15-108 of the General Obligations Law warrant dismissal of the claim for pecuniary losses growing out of an accident on which there already was a settlement. Plaintiff’s direct pecuniary losses are very plainly barred by the General Obligations Law. (Rock v Reed-Prentice Div. of Package Mach. Co., 39 NY2d 34; McDermott v City of New York, 50 NY2d 211.)
   OPINION OF THE COURT

Meyer, J.

A complaint which alleges that plaintiff, a dentist, delivered to defendants for repair an anesthetic machine he had purchased from them, that defendants were negligent in replacing the color-coded decals on the machine with the result that, intending to administer oxygen to a patient, plaintiff in fact administered nitrous oxide, causing the death of the patient, that as a result plaintiff’s mental condition was such that he was unable to carry on his professional work and because of the damage to his reputation was obliged to withdraw from practice states a valid cause of action permitting recovery by plaintiff for such pecuniary loss as may be proved but not permitting recovery for the emotional injury claimed to have resulted. The order of the Appellate Division (88 AD2d 785) should, therefore, be modified, with costs to the appellant, to reinstate so much of the complaint as seeks to recover damages for other than emotional injuries and, as so modified, affirmed.

I

The complaint, the sufficiency of which is the subject of this appeal, alleges the following facts: Plaintiff is a dental surgeon. Defendant Hradil is an employee of defendant Norton-Starr, Inc. Norton is a distributor of products of defendant McKesson Company. Plaintiff bought through Hradil a McKesson anesthetic machine. In September, 1976, he arranged through Hradil and Norton for the overhaul and adjustment of the machine. When the machine was returned the color-coded identification decals for the oxygen and nitrous oxide connections had been reversed and defendants had failed to install, or inform plaintiff that they could install, connectors of different sizes for the oxygen and nitrous oxide which would have prevented improper connection of the machine. On December 10,1976, plaintiff removed four wisdom teeth from the mouth of a patient and upon completion of the extraction adjusted the machine to administer 100% oxygen to the patient. In fact the patient received 100% nitrous oxide as a result of which she died. A civil action against plaintiff for damages for wrongful death of the patient resulted, and there was a criminal investigation all of which resulted in plaintiff’s mental ill health, damaged his reputation, and caused him permanently to withdraw from practice.

Defendants moved to dismiss the complaint for failure to state a cause of action. Supreme Court held that defendants having breached a duty owed to plaintiff, he was entitled to recover for emotional harm as well as for any pecuniary loss sustained. The Appellate Division reversed and dismissed the complaint holding that no cause of action was stated when emotional harm results indirectly through the reaction of the plaintiff to injury negligently caused to another.

II

Dismissal of the complaint was clearly erroneous, for Becker v Schwartz (46 NY2d 401, 413) and Johnson v State of New York (37 NY2d 378, 383) both recognized that a plaintiff who states a cause of action in his own right predicated upon a breach of duty flowing from defendant to plaintiff may recover the pecuniary expenses he has borne as a result of that breach.

The more difficult question is whether damages for emotional injury are recoverable. Examination of our decisions involving recovery for emotional harm reveals three distinct lines of cases. The first recognizes that when there is a duty owed by defendant to plaintiff, breach of that duty resulting directly in emotional harm is compensable even though no physical injury occurred. That principle had its beginning in Ferrara v Galluchio (5 NY2d 16). That was a malpractice action in which plaintiff recovered from defendant, a specialist in X-ray therapy, for radiodermatitis caused by excessive radiation, the sum of $25,000, which included $15,000 for mental anguish arising from cancer-phobia induced by a dermatologist’s advice to plaintiff that she should be checked every six months because of the possibility that cancer might develop. We held (at p 21) that “[flreedom from mental disturbance is now a protected interest in this State” and that the evidence presented a sufficient guarantee of germaneness to permit the jury to pass upon the claim. It was extended in Battalla v State of New York (10 NY2d 237 [failure properly to lock ski-lift belt]), Johnson v State of New York (37 NY2d 378, supra [false information that plaintiff’s mother had died]) and Lando v State of New York (39 NY2d 803 [failure for 11 days to recover plaintiff’s daughter’s body]) to allow recovery for emotional injury by a plaintiff to whom a direct duty was owed, even though unlike plaintiff Ferrara, plaintiffs Battalia, Johnson and Lando incurred no physical injury. At least under the circumstances of those cases, we held, the sophistication of the medical profession and the likelihood of genuine and serious mental distress arising from the circumstances of the case warranted allowing the jury to weed out spurious claims, though there was no contemporaneous physical harm to provide an index of reliability.

The second group of cases has its genesis in Tobin v Grossman (24 NY2d 609). The issue there was whether the operator of a motor vehicle who caused injury to plaintiff’s two-year-old son owed a duty also to plaintiff on the basis of which she could recover for her injuries due to shock and fear for her child even though she did not view the accident. After extended discussion of foreseeability of the injury, proliferation of claims, fraudulent claims, inconsistency of the zone of danger rule, unlimited liability, unduly burdensome liability, and the difficulty of circumscribing the area of liability, we declined to recognize the claimed duty because “there appears to be no rational way to limit the scope of liability” other than drawing arbitrary distinctions (24 NY2d, at p 618), and “[t]here are too many factors and each too relative to permit creation of only a limited scope of liability or duty” (supra, at p 619). Similar cases are Lafferty v Manhasset Med. Center Hosp. (54 NY2d 277) dismissing an action by a daughter-in-law who witnessed a negligent blood transfusion of her mother-in-law and participated in the ensuing efforts to save the mother-in-law, and Vaccaro v Squibb Corp. (52 NY2d 809) dismissing a complaint by the mother of a child born with severe birth defects as the claimed result of the mother’s ingestion of a drug, which alleged no physical injury to the mother.

The third branch of the emotional injury decisions involves the violation of a duty to plaintiff which results in physical injury to a third person but only financial or emotional harm or both to the plaintiff. Progenitor in that line is Howard v Lecher (42 NY2d 109), in which recovery was sought for the emotional (but not financial, see, supra, at p 115) injury to the parents of a two-year-old child afflicted with Tay-Sachs disease whom they had had to watch degenerate and die. We held that a complaint which alleged defendant obstetrician’s awareness of plaintiff’s eastern European lineage and consequent susceptibility of their offspring to the disease and his failure to take or evaluate a history or to cause proper tests to be made, failed to state a cause of action. Notwithstanding the presence in Howard of a duty of the doctor to the parents absent in Tobin (supra), we denied recovery on the policy reasoning of Tobin. Becker v Schwartz and Park v Chessin (46 NY2d 401) involved claims on behalf of the parents of children born with Down’s Syndrome and polycystic kidney disease resulting from claimed similar malpractice of the obstetrician involved. Though we upheld the parents’ claim for pecuniary damages resulting from the duty flowing from defendants to them, we refused to permit recovery for psychic or emotional harm because, as in Howard, to do so would have “ ‘inevitably led to the drawing of artificial and arbitrary boundaries’ ” (46 NY2d, at pp 413-414, quoting from Howard v Lecher, 42 NY2d, at p 113).

The rule to be distilled from those cases is that there is no duty to protect from emotional injury a bystander to whom there is otherwise owed no duty, and, even as to a participant to whom a duty is owed, such injury is compensable only when a direct, rather than a consequential, result of the breach. The fear and upset induced by being left suspended high above the ground on an insecure ski lift is compensable, but that which results from the death of a patient under the circumstances described in the instant complaint is not. It will not do to argue as did the dissenters below that the injury here was inflicted directly upon plaintiff and the death of the patient was only an unintended result of defendant’s breach of duty. The duty in Howard and in Becker (supra) was as direct and the resulting deaths as unintended as in the present case.

Nor is it an answer to suggest as do the dissenters here that plaintiff seeks recovery not because he observed the patient die but because he was, as a result of defendant’s negligence, the very instrument of her death, and that Becker can be distinguished by reason of its reference to the mitigating joy of parenting a child “that even an abnormality cannot fully dampen” (46 NY2d, at pp 414-415). The mothers, if not the fathers, involved in Howard (supra) and Becker were equally, though more painfully because over a much longer period, the cause of death of their infants, and the speculativeness of damage was only one among many of the policy factors considered in Tobin in the search for a “rational practical boundary for liability” (24 NY2d, at p 618). Moreover, the dissent’s repeated reference to liability to more than one person (at pp 508, 509) misconceives the court’s holding in this case, which is simply that recovery for breach of duty includes damages for emotional injury only to the extent that that injury results directly rather than consequentially. Thus, had defendant’s breach resulted in gases escaping from the machine and ruining a family manuscript or portrait, plaintiff’s recovery would be limited to the value of the physical item; recovery of the sentimental or emotional loss consequent upon its destruction would not be permitted (Lake v Dye, 232 NY 209, 214; Furlan v Rayan Photo Works, 171 Misc 839; Twersky v Pennsylvania R. R. Co., 152 Misc 300; Valentino v Nasio Studio, 136 Misc 826).

If the distinction thus drawn appears overfine that is the inevitable result of the fact that the drawing of any line necessarily differentiates between close cases. But to extend the rule as plaintiff argues and as would the dissenters here and below would be not only to ignore stare decisis but also to face Trial Judges and juries with a distinction extremely difficult, if not impossible, to articulate or conceptualize. It would, moreover, be anomalous, allowing recovery for emotional injury by the dentist but denying such recovery to members of the patient’s family.

For the foregoing reasons, the order of the Appellate Division should be modified, with costs to appellant, to reinstate so much of the complaint as seeks to recover damages for other than emotional injuries and, as so modified, affirmed.

Jasen, J.

(dissenting in part). I am compelled to dissent because I believe the complaint in this action alleges a valid cause of action not only for pecuniary loss resulting from loss of professional reputation, but also alleges a valid cause of action for emotional injury suffered by a person to whom the defendants owed a duty which lies despite any separate liability that defendants would have to another person also injured by their negligence.

This case is before us on the basis of the defendants’ motions to dismiss for failure to state a cause of action. We are thus obligated to give the complaint a liberal construction, assuming the allegations to be true. (Underpinning & Foundation Constructors v Chase Manhattan Bank, N. A., 46 NY2d 459; Cohn v Lionel Corp., 21 NY2d 559.) The threshold question before this court, I believe, is whether or not the necessary elements of a tort have been pleaded — that is, whether facts sufficient to conclude that the defendants owed the plaintiff a duty and they breached that duty, resulting in a foreseeable injury to the plaintiff — are alleged. Assuming that all the necessary elements of a cause of action sounding in tort have been alleged in the complaint, the motion to dismiss must be denied unless the injury plaintiff seeks to recover for is not recognized in this State.

The majority, by allowing the plaintiff to pursue his cause of action for injury to his reputation and the resultant pecuniary loss apparently agrees that the defendants owed the plaintiff a duty which according to the allegations in the complaint was breached. Since the same factual allegations support the cause of action for emotional distress, the plaintiff should also be allowed to continue to pursue that cause of action unless recovery for nonphysical injury is barred by public policy. I can only conclude that the implication of the majority’s holding is that a cause of action alleging an injury of emotional distress is no longer cognizable under New York law, at least in those cases where the defendant is also liable to another person for physical injury caused by the same negligent acts.

My disagreement with the majority’s conclusion is twofold. In the first instance, I find it logically inconsistent to say that the plaintiff can recover for one type of injury flowing from the breach of a duty owed him, but that he cannot recover for a different type of injury flowing from that same breach. The majority, despite this logical inconsistency, concludes that this result is mandated by this State’s policy, as expressed in previous opinions of this court, which limits the scope of duty when three people are involved in a situation causing injury. I do not agree that the precedent of this court or the policy embodied in those decisions does mandate such a result. Indeed, a deference to both policy and stare decisis requires that plaintiff’s cause of action for emotional injury not be dismissed.

To my mind, this case is more properly aligned with Battalla v State of New York (10 NY2d 237) and its progeny than the line of cases coming under the rationale and policy of Tobin v Grossman (24 NY2d 609). The first line of cases recognized liability for emotional injury as a result of the defendant’s breach of its duty to the plaintiff. The second line of cases limits liability so that third parties cannot recover for emotional injuries resulting from observing the physical injury sustained by another person as a result of the defendant’s breach of the duty owed that other person. This case, I believe, is readily distinguishable from the second line of cases so that this plaintiff should be allowed to pursue his remedy under Battalla v State of New York (supra). Furthermore, I see no basis for concluding that a third line of cases has developed which arguably bars one plaintiff from recovering for his emotional injuries merely because the tort-feasor is also liable for physical injuries sustained by a third person even when the defendant has breached its duty to both persons.

Instead, I read these cases to establish two lines of cases with valid theoretical and policy reasons to recover on the basis of a cause of action alleging the injury of emotional distress and to impose a reasonable limitation on that liability when it is caused vicariously through injury to the other person. The point at which liability is to be limited is not simply the point at which a tort-feasor may become liable to more than one person. No one would make such a simplistic argument if only physical injuries were alleged to have been sustained by both parties. The fact that one party alleges emotional injury while the other claims physical injury does not transform a tort-feasor’s liability to two injured persons into liability to only one. The rule is not premised on how many people the defendant might be liable to, but, rather, on the nature of that liability. So, too, liability does not depend on the nature of the injury claimed, but on the nature of the liability. Thus, I must conclude that recovery can be had for emotional injury even if the tort-feasor is concurrently liable for physical injury to a third person, but that the policy of this State as first recognized in Tobin v Grossman (supra) is to limit that liability when the injury is vicariously sustained. Because both lines of cases represent fundamental statements of tort law, an analysis of this case must involve not only an evaluation of the pleadings, but an examination of the distinguishing rationale between those cases which impose liability for emotional distress and those which limit that liability.

Accepting the facts as alleged in the plaintiff’s complaint, the following occurred. Plaintiff, a licensed dentist specializing in oral surgery, owned and used a machine by which he could administer a mixture of nitrous oxide and oxygen to his patients as an anesthetic. When it was time for the machine to be given routine service, plaintiff contacted defendant Norton-Starr, Inc., from which he had originally purchased the machine. Norton’s employee, defendant Hradil, disconnected and removed the machine and replaced it with a rental unit. The machine was then returned to the manufacturer, defendant McKesson Co., for an estimate of the work to be done and the cost. After receiving plaintiff’s authorization, McKesson did the necessary work and returned the machine to Norton. On December 7,1976, Hradil reinstalled the machine in plaintiff’s office.

The complaint alleges that the valves were mislabeled during the course of the repair work and that Norton’s employee failed to perceive or correct the problem when he reinstalled the machine. It also alleges that Hradil informed the plaintiff that the machine was ready for use. As a result of these errors, nitrous oxide would flow when the oxygen valve was turned on and vice versa.

Several days after the machine was reinstalled, plaintiff administered anesthesia to a patient, Tracy Brenan, in order to perform several extractions. At the completion of the extractions, plaintiff administered what he believed to be 100% oxygen to his patient. Instead, due to either the maladjustment or misconnection of the machine, the patient received a fatal dose of nitrous oxide.

Plaintiff alleges that as á result of defendants’ negligence, he participated in an event, this patient’s death, which caused his severe emotional distress. He further states that this emotional distress resulted in ill health and neurosis and finally forced him to give up his professional practice.

The plaintiff also alleges that the defendants’ negligence resulted in widespread publicity and a criminal investigation which damaged his reputation as a skilled dental surgeon and resulted in financial losses. I have no dispute with the majority’s conclusion that this alleges a valid cause of action. Defendants owed plaintiff a duty to see that the equipment he entrusted to them for repair and maintenance was properly adjusted and reinstalled. The alleged breach of that duty resulted in an accident which caused severe injury to plaintiff’s professional reputation. Assuming plaintiff can prove the damages alleged as a result of that injury, there is no dispute that recovery is proper. This dissent, therefore, is limited to whether or not recovery is proper for the emotional distress plaintiff suffered as a result of being made, by virtue of the defendants’ negligence, an active participant in his patient’s death.

I believe the essential analysis must examine the sufficiency of the complaint from two perspectives — first, whether a plaintiff can recover for damages flowing from an entirely emotional injury; and, second, whether plaintiff is alleging injury directly to himself or a vicarious injury, that is one sustained by virtue of observing an injury to another.

Whether or not recovery could be had for damages resulting from emotional, as opposed to physical, injury has long troubled the courts. The concern in allowing recovery for emotional injuries was founded, in part, on the court’s reluctance to accept any injury which was not manifested by some physical injury. The requirement of a physical injury was apparently intended to help insure the validity of the claim. But it is apparent that the requirements of a physical injury were also designed ás a limitation on liability. To further limit liability, recovery was not allowed for physical injuries resulting from emotional trauma on the theory that emotional reactions did not constitute injury so that physical injuries flowing from the emotional injury were not cognizable or foreseeable.

That was the basis of this court’s holding in Mitchell v Rochester Ry. Co. (151 NY 107), in which the plaintiff suffered a miscarriage after being frightened by a negligently driven horse car. The opinion states: “Assuming that fright cannot form the basis of an action, it is obvious that no recovery can be had for injuries resulting therefrom. That the result may be nervous disease, blindness, insanity, or even a miscarriage, in no way changes the principle. These results merely show the degree of fright or the extent of the damages. The right of action must still depend upon the question whether a recovery may be had for fright. If it can, then an action may be maintained, however slight the injury. If not, then there can be no recovery, no matter how grave or serious the consequences. Therefore, the logical result of the respondent’s concession would seem to be, not only that no recovery can be had for mere fright, but also that none can be had for injuries which are the direct consequences of it.” (Mitchell v Rochester Ry. Co., supra, at pp 109-110.) Two lines of reasoning barred recovery in Mitchell: first, that a plaintiff could not recover for emotional injuries even when sustained as a direct result of the defendant’s negligence; second, that any physical injury resulting from emotional injuries was too remote to have been foreseen.

This arbitrary distinction between physical and emotional injuries was subject to much criticism. (See, e.g., Throckmorton, Damages for Fright, 34 Harv L Rev 260; Wilson, The New York Rule as to Nervous Shock, 11 Cornell LQ 512.) In 1931, this court, in Comstock v Wilson (257 NY 231), noted the theoretical flaws in Mitchell (supra), but declined to overrule it. Instead, the court held that where there was a car collision, the jar to the passenger was a sufficient battery to allow recovery for physical injury caused by the nervous shock flowing from the battery. Under the reasoning of Comstock v Wilson (supra), it was necessary to show there was some physical injury, even a slight touching, which led to emotional distress and, thus, justified allowing recovery for resultant physical injuries. No recovery was allowed for the nervous shock itself; it was allowed to link the “battery” to the injury. Essentially, the court in Comstock v Wilson (supra) did away with the rule from the Mitchell case that this type of injury was too remote. Instead, it held that whether the injury for which recovery was sought was the proximate result of the physical impact was a question of fact for the jury. Such an analysis, while responding to a certain degree to the criticism levied against Mitchell (supra), continued to adhere to the court’s reluctance to allow recovery for purely emotional injury. But, significantly, the court in Comstock (supra, at p 235) did recognize that “[mjental suffering or disturbance, even without consequences of physical injury, may in fact constitute actual damage”. Comstock then gave at least partial recognition to the concept that a tort could occur by injuring one’s mental and emotional state, as well as one’s physical state.

That concept was specifically recognized in Ferrara v Galluchio (5 NY2d 16), where the court granted leave to consider the propriety of a jury verdict awarding the plaintiff damages for emotional trauma resulting from her fear that she would develop cancer at the site of the defendant doctor’s negligent administration of X-ray treatments. First, the court noted that the claimed injury was not too remote as to bar recovery. Then, in concluding that plaintiff’s claimed injury to her mental state was proper, the court stated that “the original wrongdoers would be responsible for the resulting damage to its full extent including additional mental anguish caused plaintiff.” (Ferrara v Galluchio, supra, at p 20 [emphasis in original].) The court further stated that “[f]reedom from mental disturbance is now a protected interest in this State” and recovery from mental anguish should be allowed where there is adequate proof that the plaintiff is genuinely injured. (Ferrara v Galluchio, supra, at p 21.)

Arguably, the holding in Ferrara (supra) did not do away with Mitchell’s requirement that the plaintiff sustain a physical injury, since the mental anguish resulted from X-ray burns sustained by the plaintiff while undergoing medical treatments. The requirement of a physical injury to justify recovery for mental anguish or emotional distress was, however, abandoned by this court in Battalla v State of New York (10 NY2d 237, supra).

Stating that the court in Comstock (supra) had abandoned all but the public policy arguments supporting Mitchell’s requirement that a physical injury precipitate the emotional distress, the court considered the underlying rationale of that policy and expressly overruled Mitchell. In Battalla (supra), the court allowed an infant plaintiff to recover for emotional and neurological disorders she allegedly sustained when a State park employee did not properly strap her into a ski-lift chair. There was no physical injury alleged. The court held that the policy concerns in Mitchell should no longer be allowed to bar recovery for emotional injuries.

The opinion in Battalla (supra) noted three policy concerns which had kept the courts from allowing recovery for emotional injury. They were concerned that (1) fraudulent claims would result; (2) that a great deal of extra litigation would develop; and (3) that the damages would be too speculative. As to concerns of fraudulent claims, the court cited the Law Revision Commission’s analysis that causes of action already recognized, such as those requiring only slight impact, could be feigned just as easily and that there was no basis to believe that allowing recovery would necessarily cause more fraudulent claims. Instead, the court concluded that “[t]he ultimate result is that the honest claimant is penalized for his reluctance to fashion the facts within the framework of the exceptions.” (Battalla v State of New York, supra, at p 241.) Thus, the court found that the need to come within one of the exceptions was giving rise to as much litigation as a broad recognition of the right to recover might generate. Furthermore, the court held that it could not abrogate its responsibility merely because of a fear that recognizing a cause of action to recover for emotional injury would increase the court’s workload.

The court found that the only viable policy concern in Mitchell (151 NY 107, supra) was the concern that the damages would be too speculative and difficult to prove. But the court, in a particularly pertinent discussion, stated: “However, the question of proof in individual situations should not be the arbitrary basis upon which to bar all actions, and ‘it is beside the point * * * in determining sufficiency of a pleading’. (Woods v. Lancet, 303 N. Y. 349, 356, supra). In many instances, just as in impact cases, there will be no doubt as to the presence and extent of the damage and the fact that .it was proximately caused by defendant’s negligence. In the difficult cases, we must look to the quality and genuineness of proof [footnote omitted], and rely to an extent on the contemporary sophistication of the medical profession and the ability of the court and jury to weed out the dishonest claims. Claimant should, therefore, be given an opportunity to prove that her injuries were proximately caused by defendant’s negligence.” (Battalla v State of New York, supra, at p 242.)

While it might be argued that Battalla (supra) recognized emotional injury only in those instances where the emotional injury flowed from the plaintiff’s perception that he could be physically injured, there is no indication that the line of cases recognizing emotional distress as a valid injury is to be so limited. Indeed, the logical inconsistency and theoretical flaws enunciated by the commentators and this court in Comstock (supra) would reoccur were such a limitation imposed. Furthermore, those problems would be exacerbated because rather than searching for some physical impact, however slight, the court would be required to speculate on whether plaintiff’s perception of the risk of physical impact, however slight the impact or tenuous the risk, was reasonable.

On this point, other States, many of whom re-evaluated their requirement of physical impact in part in reliance on Battalla (supra), can provide some guidance. I believe the rule as stated by the Supreme Judicial Court of Maine in Wallace v Coca-Cola Bottling Plants (269 A2d 117 [Me]) summarizes the current rule and the logical conclusion one reaches after reviewing this line of New York cases. The rule stated is that “in those cases where it is established by a fair preponderance of the evidence there is a proximate causal relationship between an act of negligence and reasonably foreseeable mental and emotional suffering by a reasonably foreseeable plaintiff, such proven damages are compensable even though there is no discernable trauma from external causes. The mental and emotional suffering, to be compensable, must be substantial and manifested by objective symptomatology.” (Wallace v Coca-Cola Bottling Plants, supra, at p 121.) (See, e.g., First Nat. Bank v Langley, 314 So 2d 324 [Miss]; Daley v La Croix, 384 Mich 4.)

In Johnson v State of New York (37 NY2d 378), we applied such a standard in allowing recovery for the emotional harm the plaintiff sustained when the hospital breached its duty of care to her in negligently informing her that her mother had passed away. The opinion states the rule as: “One to whom a duty of care is owed, it has been held, may recover for harm sustained solely as a result of an initial, negligently-caused psychological trauma, but with ensuing psychic harm with residual physical manifestations” (Johnson v State of New York, supra, at p 381).

Thus, I would conclude that the plaintiff in this case should not be barred solely because of the nature of the injury he sustained. His complaint alleges that he suffered emotional trauma which caused him to abandon his profession when he was put in a position, because of the defendants’ breach of their duty to him, that he caused his patient’s death. It is clear, at least on the allegations of the complaint, that the defendants owed him a duty to properly complete the service work on his equipment and that they breached this duty. Nothing before us indicates any reason why the defendants would not have realized that a failure on their part to properly perform this work would have put the plaintiff in the position of killing or injuring another person. That emotional trauma would be the natural result of the breach is, I believe, obvious. Thus, under the reasoning of Battalla and Ferrara (supra), plaintiff’s cause of action should not be dismissed merely because it seeks recovery only for emotional injury.

Moreover, I believe the majority, at least tacitly, recognizes the applicability of this line of cases when it allows recovery for the plaintiff’s pecuniary loss resulting from the loss of reputation. As this court stated in Johnson v New York (37 NY2d 378, 383-384, supra): “[N]ot only justice but logic compels the further conclusion that if claimant was entitled to recover her pecuniary losses she was also entitled to recover for the emotional harm caused by the same tortious act. The recovery of the funeral expenses stands only because a duty to claimant was breached. Such a duty existing and such a breach of that duty occurring, she is entitled to recover the proven harmful consequences proximately caused by the breach. In the light of the Battalla and Ferrara cases (supra), and the reasoning upon which they were based, recovery for emotional harm to one subjected directly to the tortious act may not be disallowed so long as the evidence is sufficient to show causation and substantiality of the harm suffered, together with a ‘guarantee of genuineness’ to which the court referred in the Ferrara case (5 NY2d 16, 21, supra); see, also, Battalla v State of New York, 10 NY2d 237, 242, supra).”

As noted initially, a proper analysis of this case not only depends on whether a cause of action seeking to recover for emotional injury is recognized, but also whether or not it is barred by the policy concerns embodied in Tobin v Grossman (24 NY2d 609, supra) and the cases following and expanding its reasoning. That line of cases essentially identifies the point at which various policies mandate that the plaintiff should no longer be held liable. These policies are, of course, formulated to limit tort liability, but they also were derived from the fundamentals of tort concepts. Thus, when the injury for which recovery is sought becomes too remote, unforeseeable, or the damages become too speculative, a plaintiff will no longer be allowed to recover.

Both policy concerns of limiting liability and allowing recovery for emotional distress are recognized in Tobin v Grossman (supra) and the cases which rely on it. In Tobin v Grossman (supra), the court reaffirmed Battalla and Ferrara (supra), stating “that one may have a cause of action for injuries sustained although precipitated by a negligently induced mental trauma without physical impact.” (Tobin v Grossman, supra, at p 613.) The court, however, refused to recognize a cause of action for negligently inflicted emotional distress “sustained by one, solely as a result of injuries inflicted directly upon another”. (Johnson v State of New York, 37 NY2d, at p 383, discussing Tobin v Grossman.) Recognizing that this might constitute an arbitrary limit on liability, the court articulated the policy concern that there would, without some arbitrary standard, be “no rational way to limit the scope of liability.” (Tobin v Grossman, supra, at p 618.) Thus, the line, while perhaps arbitrary and perhaps causing some illogical results, was drawn at the point of the third party observer — that being a person who suffered solely by virtue of the emotional trauma of observing another being injured as a result of the defendant’s breach of the duty owed that other person or of the emotional trauma of learning that another person was injured.

The facts of this case, however, make Tobin (supra) inapplicable. Two distinctions are key: (1) Plaintiff’s injuries were caused by the defendants’ breaching their duty to him, not to another; and (2) he does not claim injury because he observed the patient die, but because he was made the very instrument of his patient’s death due to the defendants’ negligence. Had he alleged that his trauma resulted from observing a patient die, rather than causing her death, I would conclude that Tobin would bar the cause of action, but such is not the case. His injury was caused not by watching another suffer, but by being put in the position of committing a loathsome act upon a patient.

Similarly, this distinguishes our holding in Howard v Lecher (42 NY2d 109), where we held that parents of a child born with the fatal disease Tay-Sachs could not recover “for their mental and emotional pain and suffering resulting from witnessing their child suffer from this horrid disease. It cannot be denied that they themselves were made to bear no physical or mental injury, other than the anguish of observing their child suffer, as a result of the defendant’s presumed negligence, nor did that negligence directly cause the child to fall victim to the disease.” (Howard v Lecher, supra, at p 112.) Thus, Howard v Lecher is distinguishable not only because the parents alleged merely vicarious injury, but also because causation problems existed since the doctor’s negligence did not cause the child to be born with the disease.

The scope of the doctor’s duty in such a case and the recovery parents were entitled to were further defined in Becker v Schwartz (46 NY2d 401). We held that “insofar as plaintiffs allege claims on behalf of their infants, whether denominated as claims for wrongful life or otherwise, they have failed to state legally cognizable causes of action.” (Becker v Schwartz, supra, at p 410.) As alluded in Howard v Lecher (supra), this was in part because the doctor had not caused the defective condition of the child, but merely failed to detect it during the prenatal period. Further, we reasoned that there was not a legally cognizable injury since “[wjhether it is better never to have been born at all than to have been born with even gross deficiencies is a mystery more properly to be left to the philosophers and the theologians.” (Becker v Schwartz, supra, at p 411.)

But in considering the parents’ causes of action for their emotional and financial injury suffered as a result of the doctor’s breach of his duty to them in failing to detect the defective condition of the child in the womb, we allowed only recovery for their increased financial obligations resulting from the birth of the defective child. We agreed that it was the breach of the doctor’s duty to advise the parents of the child’s defective condition which caused that financial loss because, according to their complaint, they would have chosen to terminate the pregnancy had they been properly advised. In allowing recovery only in the amount of their increased financial obligations, we limited the legally cognizable injury for which recovery could be had to the duty owed. This, I believe, is a fundamental concept in tort law. Since it was not alleged that the doctor’s negligence in any way caused the child’s defective condition, his liability to the child was limited. The complaint on behalf of the parents alleged only that the doctor failed to fulfill his duty of advising the parents of available testing which would have revealed the child’s condition prior to birth. We were obligated to conclude, since that case was also before us solely on the basis of the pleadings, that the plaintiffs would have chosen, as their pleadings indicated they would, to terminate the pregnancy had they been properly advised. This would have meant that they would not have incurred a continuing financial obligation. The doctor’s breach of his duty to the parents caused that financial burden and was properly compensable.

But as to the parents’ allegations that they also suffered severe emotional injury as a result of the child being born defective, no liability was allowed. The implication in allowing recovery only for financial loss was that the doctor’s negligence in failing to advise the parents of various options directly caused the financial loss, but did not cause the trauma associated with conceiving and bearing a child suffering from a serious genetic illness. Since the parents alleged that had they been properly informed they would have avoided the suffering associated with bearing and caring for a defective child, they argued that the emotional injury was a consequential injury of the doctor’s negligence. Two lines of reasoning, however, were specifically stated for barring recovery for that cause of action.

The first stated reason for disallowing recovery was to apply the court’s prior holding in Howard v Lecher (supra). This barred any part of the claim based on emotional injury caused the parents vicariously by virtue of watching their child suffer and die.

The second reason for denying recovery to the parents is particularly pertinent to the case now before us. We distinguished Johnson v State of New York (supra) on the ground that it was clear “that the psychological impact resulting from a daughter’s receipt of a notice incorrectly indicating that her mother had expired would be debilitating.” (Becker v Schwartz, supra, at p 414.) The birth of a child, we reasoned, even one suffering abnormalities, will bring love and emotional fulfillment to the parents, as well as anguish and emotional suffering. The mixed nature of the emotions would require mitigating the emotional injuries sustained by weighing the benefits derived. (Restatement, Torts, § 920.) This additional factor, we concluded, made the ascertainment of damages too speculative for the courts.

The case at hand, however, presents no such question of mitigation. The emotional impact of unintentionally causing someone’s death could in no way be termed anything less than debilitating. No joy or positive emotions can be conceived to have arisen from the situation defendants’ negligence placed the plaintiff in.

Nor can it be said that problems of causation exist. Unlike Howard and Becker (supra), it is clear that defendants’ negligence caused the plaintiff to unintentionally and unknowingly kill someone and this, in turn, understandably caused his severe nervous shock.

In sum, on the basis of the pleadings and the record before us, I would hold that the plaintiff’s allegations that his emotional trauma resulted in ill health and psychological barriers which eventually forced him to give up his dental practice are sufficient to defeat a motion to dismiss. Accordingly, I would reverse the order of the Appellate Division and reinstate the complaint.

Fuchsberg, J.

(dissenting in part). Preferring the result and the reasoning reached by Judge Jasen, I join in his dissent. To this I add that the present case and the divergence of opinion it here has produced is but symptomatic of the reality that, more often than not, it is policy weighted by common sense and justice, rather than logic alone which, in the end, best probes the reaches of the considerations of duty, foreseeability, negligence and proximate cause on which the extension or contraction of tort liability must rest (Sheehan v City of New York, 40 NY2d 496; Palsgraf v Long Is. R. R. Co., 248 NY 339, 352; accord De Angelis v Lutheran Med. Center, 58 NY2d 1053, 1055; Sewar v Gagliardi Bros. Serv., 51 NY2d 752, 759 [concurring opn]). Indeed, even stare decisis bows to this wisdom in personal injury litigation (People v Hobson, 39 NY2d 479, 489).

I therefore respectfully suggest that, if one stands off and judges this case, in which the physical and emotional relationship between the defendants’ wrong and the plaintiff’s rights is self-evident, the retrospective, rationalization of diverse decisions of the past to deny the plaintiff full justice will not do.

Chief Judge Cooke and Judges Jones and Wachtler concur with Judge Meyer; Judge Jasen dissents in part and votes to reverse in a separate opinion in which Judge Fuchsberg concurs; Judge Fuchsberg dissents in part in another opinion; Judge Simons taking no part.

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

       A fourth allows recovery for outrageous conduct causing mental disturbance, an intentional tort (compare PJI 3:6, with PJI 2:284).

      . The majority’s statement that a person to whom a duty is owed may recover only for injuries which are direct, rather than a “consequential, result of the breach”, appears to adopt a similar analysis. Since all injuries are consequences of the breach, I assume the distinction the majority is making is between direct and indirect or vicarious injuries.

      . In this context, I believe damage is synonymous with injury as no question of damages arises without a cognizable injury.

      . Whether or not the mother, or more properly under commonly accepted principles of genetic science, both parents caused their child’s death by their decision, made as a result of negligent medical advice, to conceive the child was not a consideration in Howard v Lecher (supra) since the only allegation was that the parents suffered watching their child suffer. I believe it is inappropriate to draw any conclusion as to what would have been the result in that case had the parents alleged that they suffered by causing their child’s death when they decided to conceive the child. Such an analysis not only overreads the allegations made in that case, but also treads on theoretical and philosophical grounds when construing a parent or parents who conceive a child with a genetic defect or disease to be the cause of that defect or disease.


author: Simons, J. Meyer, J.

text:
    Mary Molina, Appellant, v Games Management Services, Respondent, et al., Defendant.
    Argued March 22, 1983;
    decided May 3, 1983

      POINTS OF COUNSEL

      Andre L. Ferenzo for appellant.
    I. The court below erred in granting summary judgment to Games Management Services. (Van Dyke Prods. v Eastman Kodak Co., 12 NY2d 301; Ciofalo v Vic Tanney Gyms, 10 NY2d 294; Kaufman v American Youth Hostels, 5 NY2d 1016; Baker v Gundermann, 52 Misc 2d 639; Foulke v New York Cons. R. R. Co., 228 NY 269; McLean v Triboro Coach Corp., 302 NY 49; Palsgrafv Long Is. R. R. Co., 248 NY 339; Tedla v Ellman, 280 NY 124; Matter of Jenson v Fletcher, 277 App Div 454, 303 NY 639.) II. Molina’s claim that she is entitled to the value of her winning prize is not barred by the Lotto rules. III. Justice Velsor’s discovery order was valid and respondent waived its right to refuse to respond to Interrogatory No. 13. The court below erred in concluding that the disobedience to said order was rendered moot. (Lane — The Real Estate Dept. Store v Ziv Chestnut Realty Corp., 76 AD2d 902.) IV. Justice Burke correctly ruled that respondent was not entitled to summary judgment while it remained in noncompliance with the outstanding order of Justice Velsor regarding Interrogatory No. 13 in granting summary judgment while respondent remained in noncompliance, the court below erred. (Utica Sheet Metal Corp. v Schecter Corp., 25 AD2d 938.) V. Respondent owed a duty to Molina which formed the basis for the causes of action asserted against it. (Rosenbaum v Branster Realty Corp., 276 App Div 167; Rosenfeld v Smith & Son, 180 App Div 691; Glanzer v Shepard, 194 App Div 693, 233 NY 236; Lord Elec. Co. v Barber Asphalt Paving Co., 226 NY 427; Matusow v Camp Orinsekwa, 155 Misc 452; Scholen v Guaranty Trust Co. of N. Y., 288 NY 249.) VI. The court below failed to consider certain relevant information in granting respondent’s request for summary judgment.

      Howard M. Squadron, Neal M. Goldman and Eugenie C. Gavenchak for respondent.
    I. The rules are reasonable, constitutional and must be enforced. (Darweger v Staats, 267 NY 290; Cherubino v Meenan, 253 NY 462; People ex rel. Jordan v Martin, 152 NY 311; Mc Bride v New York City Off-Track Betting Corp., 66 AD2d 770; Matter of Levine v Whalen, 39 NY2d 510; Matter of City of Utica v Water Pollution Control Bd., 5 NY2d 164; Matter of Marburg v Cole, 286 NY 202; Grossman v Baumgartner, 17 NY2d 345; Matter of Bernstein v Toia, 43 NY2d 437; Chiropractic Assn. of N. Y. v Hilleboe, 12 NY2d 109.) II. Under the rules Molina’s ticket was not a winner. (Finger Lakes Racing Assn. v New York State Off-Track Pari-Mutuel Betting Comm., 65 Misc 2d 946; Seagram & Sons v Hostetter, 16 NY2d 47; Carr v State of New York, 15 AD2d 709.) III. Any liability to Molina is limited to the price of the ticket. (Hochberg v New York City Off-Track Betting Corp., 74 Misc 2d 471; Mills v Roosevelt Raceway, 66 Misc 2d 251; Ciofalo v Vic Tanney Gyms, 10 NY2d 294; Theroux v Kedenburg Racing Assn., 50 Misc 2d 97, 28 AD2d 960; Gross v Sweet, 49 NY2d 102; Boll v Sharp & Dohme, 281 App Div 568, 307 NY 646; Van Dyke Prods. v Eastman Kodak Co., 12 NY2d 301; Freedman v Chemical Constr. Corp., 43 NY2d 260.) IV. There are no issues of material fact. (Federal Deposit Ins. Corp. v Hyer, 66 AD2d 521.)
   OPINION OF THE COURT

Simons, J.

Plaintiff claims she holds the $166,950 winning Lotto ticket for the week of September 6, 1980. She promptly presented it for payment but payment was refused because there was no record of the purchase at Lotto Central. She brought this action against the sales agent who sold her the ticket, J’S Coiffures, Inc., doing business as Donut Shoppe, and the independent contractor operating the Lotto game for the New York State Division of the Lottery, defendant Games Management Services. She seeks to recover the prize money and $1,000,000 punitive damages upon causes of action sounding in negligence, “intentional deprivation”, contract, and bailment. Contending that many Lotto tickets have been misplaced or lost and that defendant contractor was guilty of negligence or gross negligence in losing the original or a record of her ticket, she sought extensive discovery and a trial to prove defendants’ fault. After discovery was partially completed, defendant contractor moved for summary judgment. Special Term denied the motion and ordered further discovery. The Appellate Division reversed and dismissed the complaint (89 AD2d 69). It held that, notwithstanding the outstanding discovery order and the evidence plaintiff might develop from it, defendant contractor was not liable on plaintiff’s claim, either in tort or contract. Defendant J’S Coiffures, Inc., has not moved for summary judgment; rather, it opposed the contractor’s motion when made.

Plaintiff did not sue the State. She concedes she has no claim against it under the rules and regulations adopted by the Division of Lottery, but she contends that the contractor and the sales agent are not similarly insulated from liability for their own fault. We hold that they are, however. Under the division’s rules and the terms of the contract of purchase printed on the ticket, plaintiff’s ticket never became a “winning ticket” because it was never accepted (i.e., microfilmed) by defendant contractor (21 NYCRR 2817.13). That the failure to deliver the ticket or microfilm it, as the rules required, may have resulted from defendant contractor’s fault is irrelevant. The State and the contractor are both exempt from liability for fault in delivering the ticket for microfilming and plaintiff’s only recourse is recovery of her wager (21 NYCRR 2817.11).

Gambling contracts are unenforceable in New York State (General Obligations Law, § 5-401) and the lottery is authorized only because of specific constitutional and statutory provisions (see NY Const, art I, § 9; Tax Law, § 1600 et seq.). Pursuant to these provisions, the Legislature has directed the State to conduct a lottery to raise funds for educational purposes (Tax Law, § 1601). Under the statutory scheme the Commissioner of Taxation and Finance is authorized to appoint a Director of the Division of the Lottery to administer the lottery and he, in turn, is delegated the authority to determine the type of lottery to be conducted, the number and size of the winning prizes and to promulgate rules and regulations governing its operation. The director is also charged with licensing sales agents and with developing an internal security plan for the lottery (Tax Law, § 1604). Lotto is one of the games established by the division.

Obviously, the success of any gambling operation, particularly one as broad based and as susceptible to counterfeiting and fraud as a lottery, depends upon the security of its operation and the reliability and speed with which prizes are paid. It was essential, therefore, that the State devise procedures that eliminated the possibility of fraud and protracted litigation over the validity of suspect tickets after each weekly drawing by disappointed players. Accordingly, after the statute was enacted the director solicited proposals from those interested in operating Lotto for the State. It accepted the proposal of defendant Games Management Services, a joint venture, whose partners include several affiliates of Vernon’s Organizations Ltd., an operator of over 150 sports pools and lotteries with worldwide experience. The contractor’s experience convinced it that the only reliable way to conduct an off-line game (i.e., one in which computer terminals are not used) was to require the microfilming of the original of each ticket sold. Accordingly, the division enacted rules and regulations detailing the procedures to be followed for each ticket sale and providing that unless such procedures are followed the tickets may not be recognized as winners (see, generally, 21 NYCRR 2817.1 et seq.).

To play Lotto a player buys a ticket printed in triplicate, marks it with the numbers he or she desires to play, in this case six numbers for a $1 wager, and then has the sales agent validate the ticket by machine. After validation, the sales agent returns one copy to the player and keeps the original and one copy. The agent delivers the original with all other original tickets sold that week to the contractor to be taken to Lotto Central, defendant’s headquarters in White Plains. There, the contractor microfilms and dates each ticket to establish proof that the ticket was actually sold, marked and validated before the weekly drawing.

Under the rules of the division and under the terms of sale printed on the ticket, no ticket can be a winner unless it has been microfilmed at Lotto Central before the drawing (see, generally, 21 NYCRR 2817.9 [n]; 2817.13 [a] [4], [c]; 2817.18). Specifically, rule 2817.13 (a) provides: “To be a valid ticket * * * all the following requirements must be met: * * * (4) The top part of the ticket submitted through a Lotto sales agent must be received by Lotto Central and be microfilmed before the drawing for a particular weekly game.” Similarly, among the terms of sale imprinted on each ticket, original and copies, in bold-face type and red ink, is the statement that: “lotto tickets not valid until microfilmed at lotto central, in accordance with LOTTO rules.” The player is bound by both the regulations and the terms of sale printed on the ticket.

Plaintiff has submitted affidavits, including those from an employee of the sales agent, to prove that she purchased and marked her ticket and that it was validated by the sales agent. She hypothesizes that that ticket was not received and microfilmed at Lotto Central because the contractor’s courier must have lost it. Whether he did so or not is irrelevant for the rules provide that neither the State Lottery nor the contractor is liable for lost or stolen lottery tickets (21 NYCRR 2817.10 [b]). Moreover, the fact that defendant sales agent admits it received a fee for the ticket or that it validated the ticket is not sufficient, for neither is acceptable proof that the ticket was received by Lotto Central (21 NYCRR 2817.13 [c], [d]). Finally, the rules provide that the risk of loss rests on the player, not the State or the contractor (21 NYCRR 2817.15), and that in the event of a dispute between the State and/or the contractor and a player claiming a winning ticket, the sole and exclusive remedy of the player shall be a determination by the director and the State Lottery that the player is entitled to a refund of the fee paid (21 NYCRR 2817.11). Similarly, the terms of sale printed on the ticket provide: “Players acknowledge that lotto Sales Agents are acting on behalf of the players in validating the lotto tickets and returning them to the Contractor [defendant Games Management Services] acting for and on behalf of the State Lottery. The liability of the Contractor, the State, and the lotto Sales Agents is limited to a refund of the amount wagered if a ticket is not accepted by the Contractor on behalf of the State, regardless of whether said liability arises through neglect, omission, failure or otherwise on the part of an Agent or the Contractor” (emphasis added).

These rules were formulated and enacted after defendant contractor had been consulted and with its aid and advice. They expressly and necessarily exempt both the State and the contractor from liability on disputed ticket claims, for danger to the stability and success of the game is just as great if either of them becomes bogged down in ticket disputes with disappointed players.

The limited power of the court in cases such as this is familiar law and it remains only for us to pass upon the reasonableness of these rules. The Legislature may establish administrative agencies to accomplish its purposes and such agencies may be given the power to adopt rules and regulations to advance the purposes for which they were created. The regulations so adopted, if reasonable, have the force and effect of law (Matter of Bernstein v Toia, 43 NY2d 437, 448; Ostrer v Schenck, 41 NY2d 782, 786). The court may not disturb them unless they are “so lacking in reason for [their] promulgation that [they are] essentially arbitrary” (Matter of Marburg v Cole, 286 NY 202, 212). Because authorized gambling contracts are an exception to the general laws, administrative rules regulating such activities are to be strictly construed (see Matter of Caplan v New York State Dept. of Taxation & Fin., Div. of Lottery, 32 NY2d 134; Mc Bride v New York City Off-Track Betting Corp., 66 AD2d 770).

Manifestly, these rules were reasonably enacted to prevent fraud, dissipation of funds by excessive and protracted litigation, and to insure prompt payment of prizes. Plaintiff concedes as much. Her contention that defendant contractor is not protected by them is belied by the express language of the various rules which mandate the strict procedures to be followed before the player may be adjudged to possess a winning ticket. Whether the State or an independent contractor is the operator of the game, the player must first prove her entitlement to the prize by proving the ticket was accepted, i.e., microfilmed by the contractor.

Finally, we would note that the terms on the tickets exempting the State and the contractor from liability are clear and unequivocal and consistent with the rules and regulations of the game. They should be enforced (see Ciofalo v Vic Tanney Gyms, 10 NY2d 294; and cf. Gross v Sweet, 49 NY2d 102). Insofar as plaintiff has attempted to charge defendant with gross negligence, her opposing papers fail to raise a question of fact on that issue.

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

Meyer, J.

(dissenting). The majority opinion would be correct were the action against the State. It is not. The defendant is the contractor, which can exempt itself from liability for its own negligence or breach of contract only if that intention “is expressed in unmistakable language” (Gross v Sweet, 49 NY2d 102, 107). Nor is that rule of strict construction against the contractor converted into one of strict construction for the contractor, as the majority suggests, simply because gambling is involved; there is no gambling between plaintiff and the contractor, only between plaintiff and the State.

Here the contract language is far from unmistakable. The terms of sale only limit the contractor’s liability “to a refund of the amount wagered if a ticket is not accepted by the Contractor on behalf of the State” (emphasis supplied), not otherwise. Nothing in the rules supports the majority’s equation of “accepted” with “microfilmed,” which, of course, could only take place after acceptance. Defendant can absolve itself from liability on its motion for summary judgment, therefore, only by showing that plaintiff’s ticket was not accepted by it. Its moving papers, however, do not deny acceptance of plaintiff’s ticket. They state only: “Neither could the original of that ticket [the ticket in issue] be found at GMS.”

That the lottery is susceptible to player fraud is but one side of the equation; it is equally susceptible to skimming, after acceptance by the contractor, by the contractor’s employees, a possibility not foreclosed by the moving papers and to prevent which GMS owed players the duty to exercise reasonable care.

Nor bearing in mind that defendant’s motion for summary judgment cut off before completion the discovery to which plaintiff was entitled should she be put out of court because her answering papers on this motion do not present prima facie evidence of gross negligence.

It may well be that after full discovery plaintiff will not be able to sustain her action against a motion for summary judgment or on trial. But I cannot concur in a decision which speaks almost entirely to the obligations of the State, a nonparty, and ignores the limitation of the exculpatory provision which defendant contractor, as the majority notes, was itself instrumental in preparing. I, therefore, respectfully dissent and vote to reverse the order appealed from and to reinstate Special Term’s order.

Chief Judge Cooke and Judges Jasen, Wachtler and Fuchsberg concur with Judge Simons; Judge Meyer dissents and votes to reverse in a separate opinion in which Judge Jones concurs.

Order affirmed, with costs.

       21 NYCRR 2817.15 (d) provides: “Neither the contractor nor the State Lottery shall be liable to any player for any neglect, omission or failure on the part of any Lotto sales agent to forward a ticket to Lotto Central in accordance with this Part or to properly validate the same. The only acceptable proof of entry for a ticket is that the ticket’s image appears on microfilm for the particular weekly game.”

       Section 2817.15 (d) of the rules (21 NYCRR 2817.15 [d]), quoted in the majority’s footnote 1, is of no help to defendant, Games Management, for it is not sued for failure of a Lotto sales agent to forward plaintiff’s ticket, but for negligence on its own part.