author:
Fuchsberg, J.
      Wachtler, J.

text:
    Kalisch-Jarcho, Inc., Respondent, v City of New York, Appellant.
    Argued January 6, 1983;
    decided March 29, 1983

      POINTS OF COUNSEL

      Frederick A. O. Schwarz, Jr., Corporation Counsel (James P. Griffin and Leonard Koerner of counsel), for appellant.
    I. The trial court’s essential errors lie not in the form of the interrogatories posed to the jury but rather in its charge which was so erroneous as a matter of law as to compel the jury to find that the city had “actively interfered”. (Peckham Rd. Co. v State of New York, 32 AD2d 139, 28 NY2d 734; Taylor-Fichter Steel Constr. Co. v Niagara Frontier Bridge Comm., 261 App Div 288, 287 NY 669.) II. The trial court’s failure to consider both in its charge to the jury and in its denial of the city’s motion to dismiss the intent or motive of the city in taking the action which allegedly caused delay was error. (Pettinelli Elec. Co. v Board of Educ., 43 NY2d 760; Flushing Nat. Bank v Municipal Assistance Corp. for City of N. Y., 40 NY2d 731; Levine v Shell Oil Co., 28 NY2d 205; Vey v Port Auth. of N. Y. & N. J., 54 NY2d 221; Emery v Depot Constr. Co., 53 NY2d 971; Gross v Sweet, 49 NY2d 102; Kurek v Port Chester Housing Auth., 18 NY2d 450; Liff v Consolidated Edison Co. of N. Y., 23 NY2d 254; Grumman Amer. Aviation Corp. v International Business Machs. Corp., 77 AD2d 582; Gottschalk v Consolidated R. R. Corp., 469 F Supp 254.)

      David E. Montgomery and Gary L. Rubin for respondent.
    I. By approving the interrogatories submitted to the jury and by failing to make appropriate objections to the trial court’s charge, the city has waived the issues it seeks to raise on appeal. (Bichler v Lilly & Co., 55 NY2d 571; Peckham Rd. Co. v State of New York, 32 AD2d 139, 28 NY2d 734; Lundin Co. v Board of Educ., 68 AD2d 881; Vanderlinde Elec. Corp. v City of Rochester, 54 AD2d 155; Barry v Manglass, 55 NY2d 803; Caprara v Chrysler Corp., 71 AD2d 515, 52 NY2d 114; Rupert v Sellers, 50 NY2d 881; Knobloch v Royal Globe Ins. Co., 38 NY2d 471; Martin v City of Cohoes, 37 NY2d 162.) II. A no-damage-for-delay clause does not relieve an owner from liability for damages caused by his own active interference with a contractor’s work. (Mansfield v New York Cent. & Hudson R. R. Co., 102 NY 205; United States v Spearin, 248 US 132; Montrose Contr. Co. v County of Westchester, 80 F2d 841, 298 US 662; MacKnight Flintic Stone Co. v Mayor of City of N. Y., 160 NY 72; Ryder Bldg. Co. v City of Albany, 187 App Div 868; Horgan v Mayor of City of N. Y., 160 NY 516; Baker Co. v State of New York, 267 App Div 712, 294 NY 698; Shore Bridge Corp. v State of New York, 186 Misc 1005, 271 App Div 811.) III. Having itself breached the no-damage-for-delay clause by failing to grant Jarcho a time extension, the city cannot claim the benefits of the clause. (American Bridge Co. v State of New York, 245 App Div 535; Taylor-Fichter Steel Constr. Co. v Niagara Frontier Bridge Comm., 261 App Div 288, 287 NY 669; Waples Co. v State of New York, 178 App Div 357; Endres Plumbing Corp. v State of New York, 198 Misc 546, 285 App Div 1107;
      Northeast Clackamas County Elec. Co-op. v Continental Cas. Co., 221 F2d 329; Perlman v Israel & Sons Co., 306 NY 254; Holdeen v Rinaldo, 28 AD2d 947; General Supply & Constr. Co. v Goelet, 241 NY 28; Mosler Safe Co. v Maiden Lane Safe Deposit Co., 199 NY 479.) IV. The no-damage-for-delay clause in this case is not applicable since it applies only to claims for delay and not claims. for interference. (Gross v Sweet, 49 NY2d 102; Boll v Sharp & Dohme, 281 App Div 568, 307 NY 646; Shalman v Board of Educ., 31 AD2d 338; Wilson & English Constr. Co. v New York Cent. R. R. Co., 240 App Div 479; Whitmyer Bros. v State of New York, 63 AD2d 103, 47 NY2d 960; American Bridge Co. v State of New York, 245 App Div 535; Cauldwell-Wingate Co. v State of New York, 276 NY 365.) V. The city did not assert an absence of evidence of bad faith and deliberate intent in support of its motions to dismiss at trial and, in any event, the record was replete with such evidence. (Brown v Du Frey, 1 NY2d 190; Nordone Contr. Co. v City of New York, 295 NY 985; Jackson v State of New York, 210 App Div 115, 241 NY 563; Laura Roofing & Renovating Co. v Board of Educ., 57 AD2d 586; Grow Constr. Co. v State of New York, 56 AD2d 95; Young Fehlhaber Pile Co. v State of New York, 265 App Div 61.)
   OPINION OF THE COURT

Fuchsberg, J.

The pivotal point on this appeal is whether, under the facts and circumstances of this action for breach of a construction contract, it was reversible error, in the face of a “no-damage-for-delay” exculpatory clause, for the trial court to refuse to charge that the contractor could not recover for delays allegedly caused by the contractee, the City of New York, unless these were actuated by bad faith and deliberate intent. The exculpatory clause, article 13 of the contract, reads as follows: “The Contractor agrees to make no claim for damages for delay in the performance of this contract occasioned by any act or omission to act of the City or any of its representatives, and agrees that any such claim shall be fully compensated for by an extension of time to complete performance of the work as provided herein”.

In a strenuously contested trial, the plaintiff, Kalisch-Jarcho, Inc., the successful bidder, at $8,033,000, for the heating, ventilating and air-conditioning component in the construction of the new New. York City police headquarters, offered proof calculated, essentially, to convince the jury that the progress of its work was subjected to drastic and costly delays which stretched out the time for the job’s completion, originally fixed at 1,000 consecutive calendar days, for an additional 28 months. Attributing this solely to the city’s “endless” revisions of scores of plans and drawings, to its failure to co-ordinate the activities of its prime contractors, of which plaintiff was one of four, and to other acts of omission or commission interfering with the sequence and timing of the work, Kalisch sought $3,311,960 in damages.

On trial, it was at Kalisch’s specific request that the jury was instructed that, notwithstanding the exculpatory clause, to bring in a verdict for the plaintiff it would have to find no more than that “the delay was caused by conduct constituting active interference”. Relevant also is Kalisch’s position that the right" to challenge the correctness of this charge was not preserved for our review.

The city, in defense, also raised issues of fact and of law. Contending that the delays were well within the contemplation of the parties, it presented evidence on which, among other things, it was possible to hold that, at the time of the bidding, the plaintiff knew that many of the drawings still were incomplete and so entered into the contract with eyes open. Moreover, the city attempted to show that the delay in any event was either greatly exaggerated or not of its making. From Kalisch’s own partial payment requisitions, it argued, for instance, that 97.4% of this contractor’s work was complete fully nine months before the formal completion, only routine punch list items remaining open thereafter. The city also relied on the fact that for a considerable period an industry-wide strike immobilized the project. But, above all, by way of affirmative defense, it relied on the exculpatory clause, the thrust of which, in its view, was to insulate it from any finding of delay based on less than “bad faith and deliberate intent”.

In this context, the jury rendered a general verdict for the plaintiff in the sum of $806,382 to cover “delay damages [including claims of] subcontractors”, whose separate damage assertions had been incorporated into the Kalisch complaint. The verdict took the form of a response to the last of a series of interrogatories drafted by the Trial Judge and, after some hesitancy by the city’s counsel, submitted to the jury by consent of the parties. Important too is the jury’s affirmative answer to the interrogatory which asked whether “the delay, interference or obstruction” was within the contemplation of the parties at the time the contract was made. In addition, other replies placed responsibility for the delay on both parties and then placed 63% of the blame on the city and 37% on Kalisch. And, by its answer to an interrogatory cast in language conforming to the Judge’s charge, the jury further affirmed that the delay or obstruction caused by the conduct of the city constituted “active interference”.

Judgment on the verdict, inclusive of interest, having been entered in the sum of $949,645.35, the city took an appeal to the Appellate Division, which affirmed without opinion. Because, on our examination of the record, we find that the correctness of the trial court’s “active interference” charge was saved for our consideration, and, in our view, a stricter standard is required, the order of affirmance cannot stand. Our reasons follow.

Preliminarily, as to preservation, Kalisch’s presentation is two-pronged. First, it argues that the city failed to note its exception to the charge and, second, that, assuming it had, the city in effect waived any error by acquiescing in the form of the interrogatories, which, as afore-mentioned, contained a question parroting the “active interference” charge. We find neither ground persuasive.

In essence, CPLR 4110-b provides for the filing of written requests to charge, for the court’s informing counsel of its rulings and, when adverse, for counsel to have an opportunity for meaningful objection before the jury retires. On the specific matter before us now, the city in writing duly requested a charge that unless it be proved that the city “[had] acted in bad faith and with deliberate intent [to delay] the plaintiff in the performance of its obligation, plaintiff [could] not recover”. In so doing, it merely kept to the legal tack it had taken, unswervingly, from the beginning of the trial. For his part, the Trial Judge, when pressed on the same request at a charge conference, if less than explicit, left no doubt of his intention to tell the jury no such thing. For, not only did he state, “I’m not going to use the word ‘intent’ ”, explaining in the process that “An intent is an important ingredient in a crime”, but went on to add, “In fact, the City of New York may have done certain things with all the good intention in the world and committed a wrong.” Moreover, after the court acted on this communication by charging the “active interference” formulation, when counsel began to intone each of his earlier objections, the court interrupted to assure him that all written requests had been studied and, in the interest of time, could be deemed adequately protected by blanket exception. In light of the court’s elaboration of its ruling, the denial of the city’s request had the earmarks of an “irrevocable” decision (Meagher v Long Is. R. R. Co., 27 NY2d 39, 46). In this perspective, counsel’s desistance from continuing his ad seriatim recitation must be taken fairly as acceptance of the court’s suggestion.

Nor was the city’s ultimate acquiescence in the query as to whether there had been “active interference” a waiver of its underlying contention. The Trial Judge already had ruled that he would submit the case on the contractor’s rather than the city’s legal theory. The interrogatory in question was but a mechanism by which the jury was to say whether there was enough credible proof to support that theory. At this purely procedural juncture, to require a rote refrain of an objection so “clearly made and overruled” would have been superfluous (Kulak v Nationwide Mut. Ins. Co., 40 NY2d 140, 145).

Turning then to the exculpatory clause, we at once note that it is cast in language which on its face, tersely it is true, but clearly, directly and absolutely, states the contractor’s agreement to make no claims for delay damages caused by any act or omission to act by the city. Such a provision, not uncommon in construction contracts, especially when entered into at arm’s length by sophisticated contracting parties, in this case between a large contractor and a large city, are enforceable. When inserted at the behest of public agencies, restrained as these almost always are by limited financial authorizations, the object of such a clause is not only the usually ascribed avoidance of “vexatious” litigation as to whether delays are reasonable or unreasonable or, for that matter, real or fancied, but also, hopefully, to discourage dilatoriness itself (e.g., Mack v State of New York, 122 Misc 86, 88, affd 211 App Div 825; Psaty & Fuhrman v Housing Auth. of City of Providence, 76 RI 87, 93; Christhilf v Mayor & City Council of Baltimore, 152 Md 204, 208-209; Siefford v Housing Auth. of City of Humboldt, 192 Neb 643, 654-655).

As is true of contracts generally, implicit in the present one was the obligation of fair dealing (see Van Valkenburgh, Nooger & Neville v Hayden Pub. Co., 30 NY2d 34, 45; People ex rel. Wells & Newton Co. v Craig, 232 NY 124, 144; Restatement, Contracts 2d, § 205). Even absent an exculpatory clause, this very well may have rendered the contractee’s reasonably created delay acceptable. The clause here, therefore, might have little purpose if it were not read to extend acceptability to a range of unreasonable delay as well. Manifestly, this interpretation is mandated by the clause’s “unmistakable intent” that, as between these parties, the contractor rather than the contractee is to absorb damages occasioned by contractee-caused delay. For apt is the statement that public policy is not undermined by a frank recognition of such a perfectly common and acceptable business practice, by which an entrepreneur may provide protection against its own fault.

But an exculpatory agreement, no matter how flat and unqualified its terms, will not exonerate a party from liability under all circumstances. Under announced public policy, it will not apply to exemption of willful or grossly negligent acts (cf., e.g., Gross v Sweet, 49 NY2d 102, 106, with Ciofalo v Vic Tanney Gyms, 10 NY2d 294, 297; see, generally, 15 Williston, Contracts [3d Jaeger ed], § 1750A; 5 Corbin, Contracts, § 1068; Restatement, Contracts 2d, § 195).

More pointedly, an exculpatory clause is unenforceable when, in contravention of acceptable notions of morality, the misconduct for which it would grant immunity smacks of intentional wrongdoing. This can be explicit, as when it is fraudulent, malicious or prompted by the sinister intention of one acting in bad faith. Or, when, as in gross negligence, it betokens a reckless indifference to the rights of others, it may be implicit (Matter of Karp v Hults, 12 AD2d 718, affd 9 NY2d 857).

In either event, the policy which condemns such conduct is so firm that even when, in the context of the circumstances surrounding the framing of a particular exculpatory clause, it is determined, as it was by one of the interrogatories here, that the conduct sought to be exculpated was within the contemplation of the parties, it will be unenforceable (see Peckham Rd. Co. v State of New York, 32 AD2d 139, 141-142, affd 28 NY2d 734; Johnson v City of New York, 191 App Div 205, affd 231 NY 564).

It was against the background of these policies and principles that, as summarized above, the claim against the city centered on the extraordinarily long delay, the immense number of drawing revisions with which Kalisch was confronted and the failure to co-ordinate the contractors. By attributing all of this to the misconduct of the city, even absent any evidence of malice, Kalisch’s proof, if credited, would have to establish that the city’s conduct amounted to gross negligence.

To support such a conclusion, however, the jury would have to find more than “active interference”, which, incidentally, was not a contract term. For whether conduct is “active” or “passive” does not determine wrongdoing, and “interference”, which most commonly translates as “intervention” (Webster’s International Dictionary [2d ed, 1950], at p 1294), does not connote willfulness, maliciousness, abandonment, bad faith or other theories through which runs the common thread of intent. So, taken at face value by the jury, the charge was calculated to expose the city to liability for conduct within the umbrella of the exculpatory clause. Accordingly, although the request to charge perhaps could have been more precisely put, the city, at the very least, was entitled to the amplifying instruction that unless Kalisch-Jarcho proved that “the City acted in bad faith and with deliberate intent delayed the plaintiff in the performance of its obligation”, the plaintiff could not recover.

For all these reasons, the order of the Appellate Division should be reversed, with costs, and a new trial granted.

Wachtler, J.

(dissenting). The trial court committed no error of law in refusing to charge the jury that the “no-damage-for-delay” clause exempted the city from liability for its delays unless the city acted with “bad faith” or deliberate intent to delay the contractor’s performance. That has never been the law in this State as the city readily conceded in its brief and on oral argument. What the city actually requests is a change in the settled meaning of the contractual term, after the parties have entered into the contract. Basic principles of fairness and stare decisis should preclude the court from granting the city this relief.

At the trial the court rejected the city’s requested charge, submitted the following interrogatories to the jury and received the responses indicated:

“Was the delay, interference or obstruction within the contemplation of the parties at the time the contract was made? Answer: Yes.

“Even if the parties could have contemplated the delay or obstruction, was the delay or obstruction caused by conduct by the City constituting active interference with the plaintiff’s performance? Answer: Yes.”

The city did not object to these interrogatories, and indeed consented to the court’s submitting them to the jury. The majority holds that this action by the city does not constitute a waiver because the interrogatories merely summarized the charge on which the court had already ruled, so that any further objection would have been futile. In its brief, however, the city concedes that there is an even more fundamental reason why further objection would have been futile.

The city states: “[The] City had no basis in law to object. The interrogatories follow precisely the decision of the Appellate Division, Third Department, in Peckham Road Co. v. State, 32 A.D. 2d 139, *** aff’d *** 28 N.Y. 2d 734 * * *. Peckham is, we believe, the most recent instance in which the ‘no damage’ issue was presented to this Court. It is cited by contractors constantly as the New York rule on this issue. There the Appellate Division reversed the trial court and enforced the exculpatory clause to bar recovery but stated [at pp 141-142]: ‘If the delay or obstruction is within the contemplation of the parties at the time the contract is entered into the “no damage” clause will be valid and enforceable unless the delay was caused by conduct constituting active interference with the contractor’s performance (see Cauldwell-Wingate Co. v. State of New York, 276 N.Y. 365)’ * * * [c]learly, the interrogatories correctly reflect the rule established in Peckham which this Court had affirmed.”

Thus the city itself concedes that the trial court’s interpretation of the meaning and effect of the “no-damage-for-delay” clause was correct under existing law. Its argument that the contractors should have been required to prove “bad faith” or “deliberate intent” instead of mere active interference, in order to recover for the delays occasioned by the city calls for a change in the law which would reduce the city’s contractual liability and, of course, also diminish the contractor’s right to compensation for delays attributed to the city.

A court is bound to follow precedent unless the need for a new rule of law far outweighs the need for stability, predictability, and uniform application of the settled rules (see, e.g., Matter of Eckart, 39 NY2d 493; People v Hobson, 39 NY2d 479; 20 Am Jur 2d, § 187, p 523). Indeed there are precedents which establish guidelines a court must follow in determining whether an existing precedent should be overruled. Primary among them is the rule that courts should be most reluctant to change the law affecting contractual rights and commercial dealings generally (Matter of Eckart, supra, at p 500; People v Hobson, supra, at p 489; 20 Am Jur 2d, § 192, p 529; Loughran, Some Reflections on the Role of Judicial Precedent, 22 Ford L Rev 1, 4; Cardozo, Nature of the Judicial Process, p 151). Even those, like Justice William O. Douglas, who have urged that the doctrine of stare decisis has been too rigidly applied in some areas of the law recognize a greater need for “uniformity and continuity” to preserve “the integrity of contracts” and other matters dealing with commercial and property rights (see, e.g., Douglas, Stare Decisis, 49 Col L Rev 735-736).

There are several reasons why the courts should exercise an extra measure of self-restraint in this type of case, most of which are obvious. In general terms, as former Chief Judge Loughran cautioned some time ago, “[I]t is important to bear in mind that the overruling of a precedent may often cause more harm than good by the unsettling effect that it may have upon transactions concluded in reliance on the previously declared rules” (Loughran, op. cit., p 4). Those engaged in business enterprises have a need to know with reasonable certainty the legal consequences of their actions before they make contractual arrangements (People v Hobson, supra, at p 489). Changes in the law retroactively altering the legal effect of contractual terms frustrates the legitimate expectations of those who relied upon the prevailing law and has an unsettling effect on the business community (People v Hobson, supra, at p 489). Thus in cases involving property and contractual rights “where it can reasonably be assumed that settled rules are necessary and necessarily relied upon, stability and adherence to precedent are generally more important than a better or even a ‘correct’ rule of law” (Matter of Eckart, supra, at p 500).

In fact there is rarely a compelling need for judicial intervention to correct an “erroneous” but long-standing interpretation of a contractual term. Unlike constitutional rulings, where the only alternative to court correction of court-created error is the cumbersome process of constitutional amendment (People v Hobson, supra) or “erroneous” statutory rulings, which may be rectified by the simpler but still imposing legislative process (Matter of Eckart, supra, at pp 498-500), a party who is discontent with a court’s interpretation of a contractual term may easily correct the “error” in future cases by simply redrafting the contract. In short, in cases where the court is asked to correct an “erroneous” precedent interpreting a contractual term the potential adverse effects are rarely justified or outweighed by any need to provide a “better” rule for the future.

A proper consideration of these factors should require the court to adhere to precedent in the case now before us. The “no-damage-for-delay” clause has been a standard feature in public contracts in this State for many years (see, e.g., Cauldwell-Wingate Co. v State of New York, 276 NY 365; Wilson & English Constr. Co. v New York Cent. R. R. Co., 240 App Div 479; 10 NY Jur, Contracts, § 355, pp 336-338). Despite its broad wording it has been consistently held to permit a contractor to recover for delays occasioned by active interference by the municipality (see, e.g., Cauldwell-Wingate Co. v State of New York, supra; Johnson v City of New York, 191 App Div 205, affd 231 NY 564; Ippolito-Lutz, Inc. v Cohoes Housing Auth., 22 AD2d 990; Norman Co. v County of Nassau, 27 AD2d 936). Although, of course, the city would not be permitted to claim the benefit of the exculpatory clause where it had acted with bad faith or deliberate intent to delay performance (see, e.g., People ex rel. Wells & Newton Co. v Craig, 232 NY 125), that has never been held to be a necessary component of active interference. Indeed in many cases the courts of this State have recognized the right of public contractors to recover for delays, despite the exculpatory clause, where the State, municipality or other owner has merely failed to carry out its obligations to provide proper plans, materials, services or supervision of the worksite (see, e.g., Johnson v City of New York, supra; Cauldwell-Wingate Co. v State of New York, supra; Wilson & English Constr. Co. v New York Cent. R. R. Co., supra; Ippolito-Lutz, Inc. v Cohoes Housing Auth., supra; Norman Co. v County of Nassau, supra; Peckham Rd. Co. v State of New York, 32 AD2d 139, affd 28 NY2d 734).

Municipalities and public contractors who enter into public contracts are not neophytes ignorant of the legal consequences of standard contractual terms which have been repeatedly interpreted and applied by the courts (cf. Levine v Shell Oil Co., 28 NY2d 205). As the majority notes this case involves “sophisticated contracting parties”. In addition the evidence shows that both sides knew that there would be delays in the performance of the contract. Under settled law that meant that the contractor might be entitled to additional compensation if the delays were occasioned by the city’s active interference, even if the city acted in good faith with no deliberate intent to interfere with the contractor’s right to complete performance in the time specified.

If the city was not willing to accept the bid on those terms it should have altered its contract accordingly (cf. Conduit & Foundation Co. v State of New York, 52 NY2d 1064; Peckham Rd. Co. v State of New York, supra). Then the contractor would have been on notice that it could not recover for delays which would generally be compensable as a matter of law and could have adjudged its bid to cover this additional risk. In future cases the city is free to follow this course if, as it contends, it finds the legal effect of its current contract financially unacceptable. The court, however, should not alter-the settled meaning of a standard clause in a municipal contract after the contract has been awarded to a public bidder, particularly where the successful bidder has fully performed its part of the bargain.

Accordingly, I would affirm the order of the Appellate Division.

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

Order reversed, etc.

      . Though the contract was awarded to and performed by Jarcho Bros., Inc., its affiliate, Kalisch-Jarcho, Inc., is the plaintiff in this action. The parties have raised no question concerning the seeming discrepancy. We therefore treat Kalisch-Jarcho, Inc., as the contractor for the purpose of this opinion.

      . In addition, it was to collect $1,854,782 for change orders, none of which it credits to the delay.

      . Indeed, spelling out his personal, albeit nondeterminative, reaction to the proof, in his preceding two sentences, the Judge, though not the fact finder, remarked, “I don’t believe the City of New York had the intent to stop him. I think the City of New York was desirous of pursuing the work as diligently as possible”.

        . Malice, in law, is a state of mind intent on perpetrating a wrongful act to the injury of another without justification (Jestic v Long Is. Sao. Bank, 81 AD2d 255, 257).

      . Bad faith, the mirror image of good faith, connotes a dishonest purpose (cf. Uniform Commercial Code, § 1-201, subd [19] [“good faith” defined as “honesty in fact”]).

      . In its brief on this appeal, Kalisch in part now argues that “the City’s failure to disclose [that the contract drawings were defective] coupled with its positive misrepresentation of the facts at the pre-bid meeting, amounted to actual or constructive fraud”. Intent is, of course, an essential element of fraud. But, even if one were to assume that such an inference can be drawn from the record, there was no request that such a theory, which would have been within the realm of willful misconduct, be charged to the jury. Concomitantly, there is nothing in the interrogatories to suggest that such a claim was to be considered.

      . “Active interference” is merely one of the several expressions which courts have used in discussing a broad range of willful wrongdoing beyond the sufferance of an exculpatory clause (e.g., Cauldwell-Wingate Co. v State of New York, 276 NY 365, 375 [“misrepresentation”]; Wright & Kremers v State of New York, 238 App Div 260, mod 263 NY 615 [“abandonment”]; Taylor-Fichter Steel Constr. Co. v Niagara Frontier Bridge Comm., 261 App Div 288, affd 287 NY 669 [“unlawful interference”]; Norman Co. v County of Nassau, 27 AD2d 936 [“willful interference”]; Ippolito-Lutz, Inc. v Cohoes Housing Auth., 22 AD2d 990 [“refusals * * * to perform”]). Therefore, stare decisis, so vigorously defended by the dissent, is inapropos. Indeed, far from contributing to stability in the law, affirmance here could result in the realization of the danger warned of over 40 years ago — that a plaintiff, having waived its right to claim damages caused by delay, be able to “recover such losses by the more expediency of terming this delay ‘[active] interference’ ” (Taylor-Fichter Steel Constr. Co. v State of New York, 261 App Div, at p 295).

      . Abandonment connotes relinquishment with the intention of never resuming the interest relinquished (see Foulke v New York Consolidated R. R. Co., 228 NY 269, 273).

      . Since there will be a new trial, we comment briefly on two other issues. The first relates to section 343a-1.0 of the Administrative Code of the City of New York, which reflects a city policy that when the cost of changes on a building project has exceeded 5% of the original cost, further changes require Board of Estimate approval; in no way did this authorize an instruction that change orders in excess of 5% are excessive vis-a-vis contractors. The second, relating to article 12 of the contract, which in substance provides, in a clause to be found in each prime contractor’s agreement, that when the act or omission of another contractor is responsible for any damage, the contractor affected thereby must proceed against the offending contractor and “shall have no claim against the City”; there was no prejudice in the Trial Judge’s refusal to charge this provision since this case was presented essentially on the theory that the city itself caused the delay.


source: Caselaw Access Project

author: Chief Judge Cooke.

license: Public Domain

text:
    In the Matter of Peter Tallini, Respondent, v Martino & Son et al., Appellants. Workers’ Compensation Board, Appellant.
    Argued February 14, 1983;
    decided March 30, 1983

      POINTS OF COUNSEL

      Alan Rothstein and Henry Shemin for Martino & Son and another, appellants.
    I. Claimant who is involuntarily incarcerated for a fixed period in a mental institution for the criminally insane, for murdering two people, should be denied workers’ compensation benefits for the period of the sentence or commitment. (Matter of Pallas v Misericordia Hosp., 264 App Div 1, 291 NY 692; Matter of Garner v Schulte Co., 23 AD2d 127; Matter of Bilello v Eckert Co., 43 AD2d 192; Matter of Packard v Sperry & Sons, 39 AD2d 622.) II. The decision of the Workers’ Compensation Board is consistent with the established policy in New York of denying benefits to felons during their incarceration for their crimes. (Matter of Lindewall, 287 NY 347; Matter of Pallas v Misericordia Hosp., 264 App Div 1, 291 NY 692; Matter of Garner v Schulte Co., 23 AD2d 127; Matter of Bilello v Eckert Co., 43 AD2d 192; Matter of Packard v Sperry & Sons, 39 AD2d 622.)

      Robert Abrams, Attorney-General (Howard Friedland, Peter H. Schiff, Henriette Frieder and Morris N. Lissauer of counsel), for Workers’ Compensation Board, appellant.
    The court below erred in its reliance on Matter of Papkoff v Feldman as a basis for reversing the Workers’ Compensation Board’s denial of the continuance of compensation benefits to claimant, who had been declared totally mentally disabled, while he was confined by law to an institution for the criminally insane. (Rogers v Decker, 131 NY 490; Matter of Sentry Ins. Co. [Amsel], 36 NY2d 291; Matter of Jordan v Decorative Co., 230 NY 522; Matter of Mazziotto v Brookfield Constr. Co., 40 AD2d 245; Matter of Osowski v

      Board of Coop. Educational Servs., 78 AD2d 740; Matter of Fromm v Rochester Tel. Co., 22 AD2d 728; Matter of Bellotti v Salvio, 8 AD2d 552, 6 NY2d 707; Matter of Bilello v Eckert Co., 43 AD2d 192; Matter of Roberts v General Elec. Co., 6 AD2d 43; Matter of Gugino v New York State Workmen’s Compensation Bd., 31 AD2d 698.)

      Irwin B. Silverman for respondent.
    I. Claimant was acquitted of a crime by the Italian court, on the ground that he was mentally unstable at the time of the act. (Matter of Pallas v Misericordia Hosp., 264 App Div 1, 291 NY 692; Matter of Garner v Schulte Co., 23 AD2d 127; Matter of Bilello v Eckert Co., 43 AD2d 192.) II. The confinement of claimant to a psychiatric ward for the criminally insane does not preclude him continuing workers’ compensation benefits. (Matter of Papkoff v Feldman, 26 AD2d 140.) III. The court below was correct, as a matter of law, in its reliance on Matter of Papkoff v Feldman as a basis for reversing the Workers’ Compensation Board’s denial of the continuance of compensation benefits to claimant. (Matter of Papkoff v Feldman, 26 AD2d 140; Matter of McSweeney v Hammerlund Mfg. Co., 275 App Div 447.)
   OPINION OF THE COURT

Chief Judge Cooke.

This case presents the question whether a claimant, suffering from a prior work-related permanent partial disability, is entitled to continue receiving workers’ compensation benefits during the period he or she is confined to a psychiatric ward for the criminally insane. This court holds that such confinement should not preclude claimant from receiving those benefits.

On May 5, 1959, claimant injured his back while employed in New York State. The Workers’ Compensation Board subsequently determined that claimant had suffered a permanent partial disability and awarded him benefits. Some time later, claimant moved back to his native Italy. On May 3, 1976, he was arrested in Torrice, Italy, for fatally shooting two persons and wounding a third. After claimant had undergone psychiatric examination, an Italian court declared him “acquitted of the crime of which he is accused * * * inasmuch as the person involved was not responsible due to total insanity at the time he committed the acts.” The court ordered him “committed to a hospital for the criminally insane for a minimum of ten years.”

Claimant’s former employer and its insurance carrier applied to the Workers’ Compensation Board for permission to suspend paying compensation to claimant during his confinement. The board held that claimant’s benefits should be suspended for the duration of his commitment. The Appellate Division, by a divided court, reversed and héld that claimant was entitled to continued benefits. This court now affirms.

The Workers’ Compensation Law in general was enacted “as a means of protecting workingmen and their dependents from want in case of injury” on the job (Matter of Post v Burger & Gohlke, 216 NY 544, 553), and should “be interpreted with fair liberality, to the end of securing the benefits which it was intended to accomplish” (Matter of Petrie, 215 NY 335, 338). Under certain circumstances, however, a worker who has suffered an impairment of wage-earning ability through a permanent work-related disability may lose the right to further workers’ compensation benefits.

It has been held that a claimant is not entitled to workers’ compensation benefits while incarcerated after conviction of a crime (see Matter of Bilello v Eckert Co., 43 AD2d 192; Matter of Packard v Sperry & Sons, 39 AD2d 622). Not all confinements that remove a claimant from the labor market, however, deprive the claimant of the right to receive compensation for a prior work-related injury. A claimant who is in jail awaiting a criminal trial is entitled to benefits so long as the work-related disability continues (see Matter of Bilello v Eckert Co., 43 AD 2d 192, 194, supra).

Likewise, a claimant who is voluntarily committed to a mental institution should not be deprived of continued compensation for his work-related permanent partial disability (see Matter of Papkoff v Feldman, 26 AD2d 140, affd no opn 19 NY2d 932). Indeed, there is “no basis, in authority or in reason, for [the] unqualified conclusion that a claimant may not collect payments awarded to him for permanent partial disability unless he is in the labor market. The fortuitous circumstance that a- claimant who has sustained a permanent partial disability is subsequently hospitalized, for a long or short period, or for different periods, should not inure to the benefit of the carrier while the physical and industrial disability and the loss of wage-earning capacity on which the award was bottomed still continue.” (Id., at p 141.)

To penalize a worker who has suffered a permanent disability solely because he or she has subsequently been afflicted by mental illness would in no way further the goals behind the Workers’ Compensation Law. Indeed, the new malady most often will increase the importance of these benefits to the worker and his or her family (see Walsh’s Case, 227 Mass 341; Ward v Heth Bros., 212 Mich 180). Suspending benefits during periods of institutionalization for treatment of mental illness would only compound the hardship created by the illness itself. In addition, by discouraging recipients from seeking treatment for mental problems, suspension of benefits might well be counterproductive to the health of such injured workers. For these reasons, the commitment of a workers’ compensation recipient for treatment of mental illness should not in itself bar continued benefits, so long as the underlying work-related disability continues to exist. It is undisputed here that claimant’s permanent partial disability had not ended, and that the board’s determination was based solely on claimant’s court-ordered commitment.

The employer and carrier argue that claimant’s commitment is the equivalent of a criminal conviction barring him from continued workers’ compensation benefits (see Matter of Bilello v Eckert Co., supra). This contention finds no support in the determination of the Italian court. The court found him “not responsible due to total insanity” at the time of the shootings, and acquitted him of the criminal charges. For the purposes of this case, the court’s commitment of claimant to a mental hospital for a minimum of 10 years does not convert the court’s determination into a criminal conviction.

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

Judges Jasen, Jones, Wachtler, Fuchsberg, Meyer and Simons concur.

Order affirmed, with costs.


author: Meyer, J.

text:
    In the Matter of Joseph R. Klonowski, Appellant, v Department of Fire of City of Auburn et al., Respondents.
    Argued February 11, 1983;
    decided March 30, 1983

      POINTS OF COUNSEL

      Mimi C. Satter and Charles E. Blitman for appellant.
    I. Fire fighter Klonowski is entitled to benefits pursuant to section 207-a of the General Municipal Law. (Cook v City of Binghamton, 48 NY2d 323; Matter of Mashnouk v Miles, 55 NY2d 80; Pease v Colucci, 59 AD2d 233.) II. The lower courts erred when they held that fire fighter Klonowski was not entitled to section 207-a benefits. (Matter of Mash

      nouk v Miles, 55 NY2d 80; Legg v Fitzmaurice, 112 Misc 2d 283; Matter of Weber v Department of Fire of City of Syracuse, 54 AD2d 164; Hadden v Consolidated Edison Co. of N. Y., 45 NY2d 466; Byer v City of New York, 50 AD2d 771; Macey v New York State Elec. & Gas Corp., 80 AD2d 669; Hobbs v Scorse, 59 AD2d 1037; Guggenheimer v Ginzburg, 43 NY2d 268; Matter of Kieper v Fitzgibbons, 91 Misc 2d 1067; Matter of Adam v Farbo, 16 Misc 2d 614.)

      Earle E. Thurston, Assistant Corporation Counsel, for respondents.
    I. Appellant was not receiving benefits under section 207-a of the General Municipal Law and was not disabled at the time of his voluntary retirement from the City of Auburn. II. Appellant’s voluntary retirement from employment terminated his right to benefits under section 207-a of the General Municipal Law. (Matter of Weber v Department of Fire of City of Syracuse, 54 AD2d 164; Matter of Devens v Gokey, 18 Misc 2d 647, 10 NY2d 898; Matter of Robinson v Cole, 193 Misc 717.) III. Eligibility for disability retirement under the State Firemen’s Retirement System is not determinative of eligibility under section 207-a of the General Municipal Law. IV. Appellant’s right to benefits under section 207-a of the General Municipal Law were not vested. (Matter of Weber v Department of Fire of City of Syracuse, 54 AD2d 164; Matter of Devens v Gokey, 18 Misc 2d 647, 10 NY2d 898.) V. The failure of appellants to reply to appellees’ affirmative allegations and its answering affidavits deem those facts admitted. (Matter of Hines v La Guardia, 293 NY 207; Matter of Kelly v Monaghan, 208 Misc 31.) VI. Appellant is bound by the factual determination of the original court and is unanimously affirmed by the Appellate Division, Fourth Department. (People ex rel. Scarpetta v Spence-Chapin Adoption Serv., 28 NY2d 185, cert den and app dsmd sub nom. De Martino v Scarpetta, 404 US 805; Matter of Seagram & Sons v Tax Comm. of City of N. Y., 14 NY2d 314.)
   OPINION OF THE COURT

Meyer, J.

A fireman who has applied for an accidental disability retirement allowance before his voluntary retirement becomes effective is entitled, upon the granting of the accidental disability retirement allowance, to receive from the municipality, from and after the date of voluntary retirement, the difference between his regular salary and the disability retirement allowance granted him. The order of the Appellate Division should, therefore, be reversed and the matter remitted to the Supreme Court for entry of judgment in favor of the petitioner.

I

Petitioner, Joseph Klonowski, was employed as a fireman for the City of Auburn Department of Fire from December 12, 1947 until May 11, 1978. On February 17, 1977, he injured his left toe, foot and leg while “pulling hose” in the course of his employment and never thereafter returned to active duty as a fireman. On February 28,1978 he submitted a notice for voluntary retirement; on May 8, 1978 he submitted to the New York State Policemen’s and Firemen’s Retirement System his application for accidental disability retirement as a result of the February, 1977 injury, and on May 10, 1978 he was voluntarily retired by the Department of Fire. On September 6,1978 petitioner’s application for accidental disability benefits was granted by the State Comptroller. Petitioner then requested payment pursuant to section 207-a of the General Municipal Law of the difference between his regular salary and the disability allowance, and respondents granted that request retroactive to May, 1978. In January, 1979, however, respondents terminated the section 207-a payments on the ground that “if, at the time you were granted accidental retirement benefits, you were not on 207-A [sic] benefits, you are not entitled to the wage supplement.”

Klonowski then began this CPLR article 78 proceeding to require payment to him of the difference between his salary and the accidental disability retirement benefit. Respondents’ answer alleged that “petitioner’s attending physician indicated that the petitioner could return to full duties effective November 1, 1977,” that “as of January 1, 1978, the petitioner was not disabled,” and that “effective May 10, 1978, the petitioner voluntarily retired from the employment with the City of Auburn as a fire fighter.” Petitioner served no reply.

The parties requested that the court determine petitioner’s right to the wage supplement alone, based on the uncontroverted facts in the pleadings, and the court, treating the request as one for severance and partial summary judgment, severed and dismissed as to that issue. It found that Klonowski’s right to section 207-a benefits vested at the time his disability commenced and that he had in fact received such benefits from the time of his injury through May 10, 1978. It, nevertheless; held him not entitled to wage supplement payments because he had voluntarily retired. The Appellate Division affirmed in a memorandum stating that by voluntarily retiring, petitioner waived any benefits to which he might have been entitled under section 207-a (citing Matter of Weber v Department of Fire of City of Syracuse, 54 AD2d 164). We granted leave to appeal and now reverse.

II

Matter of Weber was decided in November, 1976. By chapter 965 of the Laws of 1977, section 207-a of the General Municipal Law was extensively revised, effective January 1, 1978. To understand the effect of the revisions on the question now before us requires review of the legislative history of the 1977 act and the case law that had construed the predecessor provisions of the law.

Section 65 of the Civil Service Law (later renum, § 79), as enacted in 1920 and amended in 1924, allowed a member of the New York State Employees Retirement System who as a natural and proximate result of an accident sustained in service was permanently incapacitated, physically or mentally, from performance of his duties to obtain a pension of three quarters of his final average salary (L 1920, ch 741, § 1, as amd by L 1924, ch 619, § 4; see King v City of Newburgh, 84 AD2d 388, 395). Because membership in the State system was open to certain municipal employees, firemen employed by such municipalities were eligible for such a pension (Retirement and Social Security Law, § 30). In 1938, however, the Legislature adopted the original version of what is now section 207-a of the General Municipal Law (L 1938, ch 562), which gave a paid fireman disabled in the performance of his duties the alternative of collecting from “the municipality or fire district by which he is employed the full amount of his regular salary or wages until his disability arising therefrom has ceased”.

The conflicting interests of the firemen and their employers with respect to these statutes created a number of problems. Although the fireman quite naturally opted to remain on the payroll at full salary from the municipality, it was in the interest of the municipality that a disabled fireman retire, because that not only shifted the financial burden entirely to the State Retirement System but also permitted the municipality to replace a disabled nonworking employee with an active able-bodied one. The tensions thus created were exacerbated by the fact that the full pay provision of section 207-a is “ ‘a remedial statute enacted for the benefit of firemen [which] should be liberally construed in their favor’ ” (Matter of Mashnouk v Miles, 55 NY2d 80, 88, quoting Pease v Colucci, 59 AD2d 233, 235). As a result the municipality was required to pay a disabled fireman not only the salary he had been receiving at the time he was disabled but also any increase granted to his not disabled brothers (Matter of Barber v Lupton, 282 App Div 1008, affd 307 NY 770) and to continue paying the disabled fireman until he died even though section 65 of the Civil Service Law permitted his accidental disability retirement “upon the application of the head of the department in which said member is employed” (Matter of Birmingham v Mirrington, 284 App Div 721).

Unsuccessful at ridding themselves of the burden of full-paid nonworking disabled firemen by involuntarily retiring them, the employing municipalities sought to use both a carrot and a stick to the same end. The carrot — an agreement that the municipality would, if the disabled fireman voluntarily retired, supplement his retirement pay by the difference between it and his salary — was, however, held illegal (Matter of Robida v Mirrington, 1 Misc 2d 968), and the stick — termination of employment on the theory that the words “in which he is employed” (emphasis supplied) required that to receive section 207-a benefits the fireman had to be employed at the time of payment — foundered on holdings that those words “relate to the time when the injuries were received” (Matter of Tyler v Gadwood, 195 Misc 674, 678, revd on other grounds 279 App Div 1138) and vested the right to section 207-a benefits at the time of the accident (Pease v Colucci, 59 AD2d 233, 236, supra).

The only exceptions to the latter holding came in cases ruling that a disabled fireman was not entitled to both full pay under section 207-a from the municipality and accidental disability retirement benefits from the State (Matter of Robinson v Cole, 193 Misc 717; see Matter of Geremski v Department of Fire of City of Syracuse, 78 Misc 2d 555, 558, affd 49 AD2d 1013). Although the Robinson holding could properly have been predicated upon the concept that such double payment was not contemplated by the Legislature, the court, though it emphasized the policy against double payment, also held, contrary to the Tyler vesting concept, that Robinson was not entitled to section 207-a benefits because “He is no longer a ‘fireman’ ” (193 Misc, at p 720). It was the latter concept of Robinson that was emphasized in the Weber holding that a fireman who had voluntarily retired was not entitled to section 207-a benefits (54 AD2d, at p 168).

It was against this background that, as we have previously noted in Matter of Mashnouk v Miles (55 NY2d 80, supra) and Cook v City of Binghamton (48 NY2d 323), chapter 965 of the Laws of 1977 was enacted, “the primary aim of the new statute [being] to shift a large portion of the financial burden generated by disabled fire fighters from the municipal payrolls to the appropriate retirement system or pension fund * * * Aside from partially shifting the source of the payments made to disabled fire fighters, there is no indication that the Legislature also intended to reduce the amount of such payments” (Mashnouk, supra, at p 87 [emphasis in original]).

To former section 207-a the 1977 act added provisions permitting the municipality to require a disabled fireman not eligible for accidental disability benefits to perform appropriate work, to terminate section 207-a benefits of such a fireman when he reached normal retirement age, to prohibit a disabled fireman receiving payments or benefits from engaging in outside employment, and to permit the involuntary retirement of a fireman eligible for accidental disability retirement, with the municipality paying the difference between regular salary and the benefit received (Governor’s Memorandum on Approving L 1977, ch 965, NY Legis Ann, 1977, pp 336-337). Thus, the carrot, held illegal in Robida (supra), was legalized, and the municipality was provided with a partial stick — the power involuntarily to retire for accidental disability though not to terminate entirely — sufficient to obviate any possibility of double payment.

That the Legislature, having authorized the involuntary retirement of a fireman eligible for an accidental disability retirement allowance or pension, intended to place in like position those who had relieved the municipality of three quarters of its burden by voluntarily applying for such an allowance or pension is evident from the second sentence of the newly enacted subdivision 4. That sentence reads: “Where such a fireman retires or is retired under any procedure applicable to him, including but not limited to circumstances described in subdivision two of this section or in this subdivision, he shall thereafter, in addition to any portion of regular wages or salary and/or any retirement allowance or pension to which he is then entitled, continue to be entitled to medical treatment and hospital care necessitated by reason of such injury or illness.” “[Sjuch a fireman” is defined by subdivision 1 as a paid fireman disabled in the course of employment. The quoted sentence, therefore, requires payment to a disabled fireman, whether he voluntarily retires or is involuntarily retired, of the “regular wages or salary” to which he was “then” — that is, at the time of retirement — entitled, except as reduced pursuant to subdivision 2 by the disability allowance or pension. Moreover, by the use of the word “thereafter”, it makes clear that such entitlement runs from the time of retirement, subject only to it being thereafter found that the disabled fireman was in fact eligible for the accidental disability allowance or pension. In light of that provision, Matter of Weber v Department of Fire of City of Syracuse (54 AD2d 164, supra) is no longer good law; the salary differential is due a disabled fireman receiving an accidental disability allowance or pension even though he voluntarily retired.

III

It follows that petitioner Klonowski is entitled to the payments he seeks. Though his disability occurred in 1977, he continued to receive full pay until his voluntary retirement in 1978, after the effective date of the statute. That he was not receiving accidental disability benefits at the time he retired is immaterial, for as the later award of such benefits shows, he was then eligible for such benefits. And when he retired he was “then entitled” to regular wages or salary, less the disability benefit ultimately awarded to him retroactive to the time he retired, as a result of the accidental disability retirement application he had previously submitted. Klonowski, who was 52 years of age when the Supreme Court decision and judgment were rendered, therefore remains entitled, despite his voluntary retirement, to the section 207-a differential allowance until he reaches age 70 (or if he elected section 384 of the Retirement and Social Security Law benefits, until he reaches age 62).

The order of the Appellate Division should, therefore, be reversed, with costs, and the matter remitted to Supreme Court for determination of petitioner’s request for medical expenses and for the entry of judgment in favor of the petitioner in accordance with the foregoing.

Chief Judge Cooke and Judges Jasen, Jones, Wachtler and Fuchsberg concur; Judge Simons taking no part.

Order reversed, with costs, and matter remitted to Supreme Court, Cayuga County, for further proceedings in accordance with the opinion herein.

      . The petition also sought reimbursement for past and future disability-related medical expenses as provided for by section 207-a of the General Municipal Law, but pursuant to agreement of the parties that issue was held in abeyance pending determination of petitioner’s right to the wage supplement.

      . By failing to reply petitioner admitted that his retirement on May 10, 1978 was voluntary, for that clearly was “new matter,” the petition having carefully avoided any mention of the retirement (CPLR 7804, subd fd]). The other allegations quoted above were not new matter, however; they simply controverted petitioner’s allegation and the Comptroller’s determination (annexed as an exhibit to the petition) that he was permanently incapacitated from performance of his duties, and thus are not admitted by failure to reply. Moreover, the first quoted allegation as to what petitioner’s physician “indicated” is irrelevant, subdivision 1 of section 207-a of the General Municipal Law requiring rather for the department to be relieved of its wage supplement obligation that a “physician appointed * * * by the municipality * * * certify that such injured * * * fireman * * * is physically able to perform his regular duties” (see King v City of Newburgh, 84 AD2d 388, 393).

      . By reason of the severance, the judgment is final notwithstanding that the medical expense question remains to be litigated (see Cohen and Karger, Powers of the New York Court of Appeals [rev ed], § 21).

        . Normal retirement age for involuntary retirement is 70 (Retirement and Social Security Law, §§ 70, 370) except as to those who by voluntarily electing the additional benefits provided by section 384 of the Retirement and Social Security Law subject themselves to involuntary separation from service at age 62 (Cook v City of Binghamton, 48 NY2d 323, 333, supra).


author: Jones, J.

text:
    Jonari Management Corp., Respondent, v St. Paul Fire & Marine Insurance Company, Appellant.
    Submitted February 11, 1983;
    decided March 30, 1983

      POINTS OF COUNSEL

      Solomon M. Cheser for appellant.
    I. The order below should be reversed because St. Paul’s motion to dismiss the complaint should have been granted. (American Paint Serv. v Home Ins. Co. of N. Y., 246 F2d 91; Halbreich v Travelers Fire Ins. Co., 238 App Div 841; Halbreich v Urbaine Fire Ins. Co. of Paris, France, 238 App Div 842; Blum v Fresh Grown Preserve Corp., 292 NY 241; Bank of U. S. v Manheim, 264 NY 45; Sunbright Fashions v Greater N. Y. Mut. Ins. Co., 34 AD2d 235, 28 NY2d 563.) II. The $96,000 jury award for loss of rent need be vacated as a matter of law. (Maple Leaf Motor Lodge v Allstate Ins. Co., 53 AD2d 1045; Roussos v Christoff, 224 App Div 276; Cramer v Grand Rapids Show Case Co., 223 NY 63; Royce Furs v Home Ins. Co., 30 AD2d 238; Breed v Insurance Co. of North Amer., 46 NY2d 351; Weinberg & Holman v Providence Washington Ins. Co., 254 NY 387.)

      Frank A. Weg for respondent.
    I. The jury’s findings of fact on the issue of fraud was consistent with the evidence after a full airing of such issue and a proper charge by the court. (Happy Hank Auction Co. v American Eagle Fire Ins. Co., 1 NY2d 534; Titus v Glens Falls Ins. Co., 81 NY 410; Buchall v Higgins, 109 App Div 607; Sebring v Fidelity-Phenix Fire Ins. Co., 255 NY 382; Gibbs v Continental Ins. Co., 13 Hun 611; Simcuski v Saeli, 44 NY2d 442; Stephen

      son v Lord, 72 AD2d 857; C-Suzanne Beauty Salon v General Ins. Co. of Amer., 574 F2d 106.) II. The jury’s finding of fact on the issue of loss of rental income was consistent with the evidence within the language of the policy contract, and correct, despite a charge by the court which favored St. Paul on the point. (Saperston v American & Foreign Ins. Co. ofN.Y., 142 Misc 730; Birnbaum v Jamestown Mut. Ins. Co., 298 NY 305; American Home Assur. Co. v Port Auth. of N. Y. & N. J., 66 AD2d 269; Page v Northern Ins. Co., 141 App Div 239; States Import & Export Corp. v Hartford Fire Ins. Co., 210 App Div 374.) III. The jury’s verdict, both as to St. Paul’s affirmative defense and the amount of damage, was fair and proper; this court should not interfere with the jury’s verdict unless the evidence so preponderated in favor of defendant St. Paul that the verdict could not have been reached on any fair interpretation of the evidence. (Rapant v Ogsbury, 279 App Div 298; Rice v Ninacs, 34 AD2d 388; Hyatt v Pepsi-Cola Albany Bottling Co., 32 AD2d 574; Merced v Harris, 26 AD2d 523; Flynn v City of New York, 35 AD2d 936; Aetna Ins. Co. of Hartford, Conn. v Millard, 25 AD2d 341; Matter of Powell v Anonymous, 18 AD2d 911; Flamer v City of Yonkers, 309 NY 114; Pertofsky v Drucks, 16 AD2d 690; Smith v Smith, 273 NY 380.)
   OPINION OF THE COURT

Jones, J.

Where an insured submits a second version of the lease pursuant to the terms of which its recovery under a policy of fire insurance is to be determined, which second version was concededly prepared after the fire, the jury’s finding of no intent to defraud the insurer should not be disturbed where the proof contains testimony that the second version was prepared for the purpose of accurately reflecting the agreement reached by the landlord and tenant but imperfectly manifested in the lease originally signed. Nor was it error for the trial court to refuse the insurer’s request to charge that the filing of duplicate claims would constitute concealment and misrepresentation entitling the insurer to a verdict in its favor. There should, however, be a new trial on the issue of damages for loss of rent.

Plaintiff Jonari is a corporation formed by an optometrist and a dentist, Drs. Mittleman and Zuckerman, for the purpose of establishing and operating a medical center. At the time of the events which gave rise to this lawsuit Dr. Mittleman was also a principal in a professional corporation, Mittleman & Sverdlin, P. C. (M & S). On March 24, 1975 Jonari entered into a sublease with O’Brien Enterprises, Inc. (O’Brien), itself the lessor of premises at 5536 Broadway, Bronx, under which O’Brien, also a contractor, was to remodel the premises at the leased site in accordance with plans provided by Jonari so as to construct multiple accommodations which Jonari in turn might lease to a variety of medical specialists. The president of O’Brien testified that included in the rent to be paid by Jonari was an amount to reimburse the contractor for the expenditures it would put into the structure for improvements and betterments to comply with Jonari’s specifications.

On July 1, 1975 St. Paul Fire & Marine Insurance Company issued a policy insuring Jonari against fire loss at the leased premises, including provision for rents lost following a fire. Among the items of property covered by the policy, under paragraph 1C was: “Improvements and Betterments, meaning the Insured’s use interest in fixtures, alterations, installations or additions comprising a part of the described building(s) occupied but not owned by the Insured and made or acquired at the expense of the Insured exclusive of rent paid by the Insured, but which are not legally subject to removal by the Insured.” With respect to lost rents, the agreement provided that the company would be liable for: “The actual loss sustained by the Insured resulting directly from necessary untenantability, but not exceeding the reduction in rents less charges and expenses which do not necessarily continue during the period of untenantability for only such length of time as would be required with the exercise of due diligence and dispatch to rebuild, repair or replace such part of the property herein described as has been damaged or destroyed, commencing with the date of such damage or destruction and not limited by the date of expiration of this policy”. Also included in the policy was the standard provision mandated by section 168 of the Insurance Law: “Concealment, fraud. This entire policy shall be void if, whether before or after a loss, the insured has wilfully concealed or misrepresented any material fact or circumstance concerning this insurance or the subject thereof, or the interest of the insured therein, or in case of any fraud or false swearing by the insured relating thereto.”

On July 14, 1975 the medical center opened; by the time a major fire occurred at the facility two weeks later on July 28 Jonari had sublet 17 units to medical and related professionals. Four of the arrangements were by written leases at a fixed rent; 13 were by oral agreement under which the tenants agreed to pay rent of a stated percentage of their gross receipts, the prospect being that after a three-to six-month probationary period written leases on the same terms would be executed. One of the tenants with a written lease was the professional corporation M & S, which had theretofore taken out an equipment floater policy with St. Paul at its previous location.

After the fire on July 28, which made the premises untenantable without substantial restoration and repair, Jonari filed a claim under its policy with St. Paul for personal property loss in the amount of $108,613.27, including improvements and betterments of $36,133.02, and for lost rents of $32,000. In connection with that claim, two documents were submitted to St. Paul as expressing the lease arrangement entered into between Jonari and O’Brien on March 24, 1975. Both bore the date last mentioned and were otherwise identical except that the second lease tendered to the insurer included a clause not appearing in the other. That clause — clause 45 — provided: “Notwithstanding any other provisions to the contrary, it is understood and agreed between the parties, that upon completion of landlord’s work on Exhibit A, to be performed for tenant’s exclusive benefit and interest, tenant shall in the event the demised premises are damaged by fire or other cause, repair and rebuild the same to the extent of the available insurance proceeds for this work, within 60 days or have the right to cancel this lease without any further obligations.” This clause was heavily relied on by Jonari as support for its claim that it had an insurable interest in the improvements and betterments at the medical center and its request for payment for such items under its policy with St. Paul. In examinations under oath of Drs. Mittleman and Zuckerman conducted by the insurer pursuant to a provision of the policy each was questioned with respect to the time of execution of the lease that contained clause 45. While Dr. Mittleman stated that he did not know when the clause was put in the lease form, Dr. Zuckerman stated that he knew it was before the fire.

After St. Paul rejected Jonari’s claim in full, the present action was instituted in which the claim was reasserted, with the item of lost rent being increased to $96,000 (the full amount of policy coverage for that item), it being Jonari’s position that that item had continued to escalate during consideration of its claim by St. Paul. In addition to other defenses not now relevant, the insurer asserted that it was relieved of liability under the policy by reason of the insured’s production of a fraudulent lease and its misrepresentation as to the time of inclusion of clause 45 for the purpose of imposing liability on the insurer where none existed.

At the trial of the action, at which Mr. O’Brien testified that the lease containing the clause on which Jonari’s claim for improvements and betterments was in significant part based had not been executed until after the fire had occurred, Jonari’s counsel conceded that that was the fact. To establish the circumstances of the second lease’s execution, testimony was produced that, after the insurer’s adjuster had raised a question with Jonari’s adjuster as to whether the improvements and betterments were covered under Jonari’s policy (in light of the fact that their cost was being paid back to O’Brien in the form of rent), O’Brien and Jonari executed the second instrument, prepared by O’Brien’s attorney, more clearly to manifest what had been the intention of the parties from the outset with respect to improvements and betterments. As Jonari’s adjuster described it, what was inserted in the record lease was “an additional paragraph in clarification of the leasehold improvements”.

When the case was submitted to the jury two questions were posed: “1. Did the plaintiff wilfully and fraudulently place in the proof of loss a statement of property it did not possess or did it place a false and fraudulent value upon the property?” “2. Did the plaintiff materially alter the lease agreement with an intent to defraud the defendant and collect under the provisions of this policy?” The jury answered both questions in the negative and returned a verdict for plaintiff for personal property loss other than improvements and betterments in the amount of $51,856.25 and for loss of rents in the amount of $96,000. Nothing was awarded for improvements and betterments. The judgment entered was affirmed by the Appellate Division (87 AD2d 540). On defendant’s appeal we modify the order of the court below and remit the case for a new trial on the issue of damages for loss of rent alone.

St. Paul repeats its argument of fraudulent conduct on the part of Jonari in its submission of the second lease executed by it and its landlord O’Brien, containing clause 45. In light of the jury’s rejection of that argument, affirmed by the Appellate Division, we are without power to reverse that result unless we are to say as a matter of law that on the proof before it the jury was required to accept the conclusion the insurer would draw from the insured’s actions. This we cannot do on the record before us, which distinguishes the present case from Sunbright Fashions v Greater N. Y. Mut. Ins. Co. (34 AD2d 235, affd 28 NY2d 563), relied on by the insurer and the dissenting Justice at the Appellate Division. In Sunbright it was admitted that an elaborate story of delivery, return and redelivery of insured goods intended to place them at the scene of a theft, as well as the spurious documents in verification, was a fabrication. The president of the insured in that case never denied that he knew both that the papers were false and that the narrative was completely without basis in fact. In contrast, the testimony given in the present case by both parties to the primary lease was consistently to the effect that the second version of the lease executed by them accurately reflected the agreement arrived at by them but imperfectly manifested in the first document. While the jury might well have chosen not to believe that evidence and thereby have concluded that a fraud had been perpetrated on the insurer, it found the witnesses credible and rejected all argument that a fraud had been perpetrated. Similarly, although a contrary finding would not have lacked evidentiary support, the jury did not exceed its power in determining that misstatements by Dr. Zuckerman with respect to when the second lease was executed in relation to the July 28 fire did not demonstrate that a fraud was being practiced on the insurer. Indeed, having found that there had been no material alteration of the lease with intent to defraud, the jury may have concluded that execution of the second agreement was an event of such little significance that the doctor’s error in recollection of the date was unexceptional.

Nor is there merit to the suggestion made by the insurer that the fact the jury gave the insured no award for improvements and betterments establishes a finding by it of fraud and misrepresentation on the part of the insured which invalidates the policy in its entirety. In addition to the issue of fraud, the jury also had submitted to it the conflicting claims by the parties as to whether the policy provision excluding coverage for improvements and betterments repaid by inclusion in rent was controlling and whether Jonari had sufficient rights to have an insurable interest. The denial of an award to the insured for internal construction could have resulted from a resolution of either of these questions in the insurer’s favor, quite apart from any misconduct on the part of the insured.

St. Paul makes a novel argument that no fraud or intent to defraud was necessary in this case to work an invalidation of the policy under the “Concealment, fraud” provision of the insurance agreement and that proof of misrepresentation alone was sufficient. Thus, it assigns as error, to which objection was taken, the inclusion by the trial court in the questions submitted to the jury of the words “fraudulently” and “with an intent to defraud”. No relevant authority is cited for the proposition urged. Conceivably, misrepresentation by an insured, unattended by an intent to defraud, might be given significant effect in determining the validity of a policy of insurance if the misrepresentation preceded the issuance of the policy. In that instance a misstatement of a relevant fact, intentional though of innocent purpose as regards the insurer, might lead the insurer to accept a risk it would not have undertaken with full knowledge of the true facts, and the resolution of the rights of the parties in the event of a loss might be determined by the materiality of the misrepresentation (Sebring v Fidelity-Phenix Fire Ins. Co. of N. Y., 255 NY 382; see 9 Couch, Cyclopedia of Insurance Law [2d ed], § 38:27).

When misrepresentation goes to proof of loss however, the cases uniformly speak of fraud, fraudulent, and intent to defraud when considering claims of invalidity under the “Concealment, fraud” provision mandated by section 168 of the Insurance Law (e.g., Saks & Co. v Continental Ins. Co., 23 NY2d 161; Happy Hank Auction Co. v American Eagle Fire Ins. Co., 1 NY2d 534; Sunbright Fashions v Greater N. Y. Mut. Ins. Co., 34 AD2d 235, affd 28 NY2d 563, supra). Indeed, intent to deceive appears to be equated with intent to defraud in the case of claims asserted against an insurer: “[O]ne of the elements involved in the determination of whether an insured has forfeited his rights under an insurance policy because of fraud or false swearing as to his proof of loss is the intent of the insured; that is, whether the false statement with respect to a material matter was made wilfully and with the intention of thereby deceiving the insurer” (13A Couch, Cyclopedia of Insurance Law [2d rev ed], § 49A:66). Were intent to defraud not a necessary element, the discussion in Sunbright of the conclusive evidence of such intent would have been irrelevant, the making of false statements and production of spurious documents having been admitted.

With respect to the charge, St. Paul asserts that the trial court erred in declining a requested charge that if the jury found that Dr. Mittleman, acting for Jonari, filed duplicate claims for the same equipment under the policies issued by St. Paul to Jonari and to M & S professional corporation, then the jury should find that Jonari concealed and misrepresented material facts and it should return a verdict for the insurer. There was no error in the court’s refusal so to charge on the evidence in this case. In light of the confusion which frequently exists with respect to which of multiple policies covers a loss and in view of time requirements for prompt filing of claims, it is not uncommon for an insured to pursue more than one avenue immediately after the loss occxirs, without thereby intending or being chargeable with an intent to defraud any insurer. That no such intent existed here was implicit in the fact that the two claims were filed with the same broker, by whom they were forwarded to the insurer within a four-day period. Certainly no charge was warranted that the fact of the duplicate filing, if found, should result in a verdict for the insurer.

For the reasons stated, there should be no disturbance of the jury’s finding that Jonari is entitled to recover on the policy issued by St. Paul. Because it appears however that the amount awarded for lost rent is not supported by the proof and is therefore speculative only, a new trial is required for the computation of damages recoverable for that item of loss.

The policy coverage for lost rents extended to actual loss, not exceeding reduction in rents less noncontinuing charges and expenses during the period of untenantability, for such time as would be required “with the exercise of due diligence and dispatch” to restore the damaged property. The only testimony relating to the time period required in this case for restoration was that of a builder called by Jonari who estimated that approximately four months would be the time necessary to restore the interior improvements and betterments. Another witness testified that only 30 to 60.days would be necessary to secure replacement equipment. No evidence was produced with respect to time required for work on the building itself to permit interior completion. The estimate' of lost rents prepared by Jonari’s appraiser used a four-month untenantability period and, based on extrapolations from the rents provided in the written and oral leases in effect on the day of the fire (most of which were percentage leases of tenants who had had only two weeks’ experience in the premises) fixed the total loss at $35,681.92. On such a record, the jury’s award of $96,000 — the full coverage provided by the policy — cannot stand.

We reject as without reason or precedent Jonari’s attempt to support the award by a contention that “the time period based upon the application of ‘due diligence and dispatch’ never stopped running” during the period when the insurer resisted payment of the insured’s claim under the policy. Its plea for what it terms a “subjective” standard — expandable as an insurer delays payment under a policy — even if there were authority for its application ip other circumstances, must of necessity fail in the present instance in which the jury’s refusal to have awarded any recovery by Jonari on its claim of $36,133.02 for improvements and betterments and its reduction of the remaining property claim byr $20,000 demonstrates the propriety of the insurer’s resistance of the insured’s demands under the policy.

On retrial Jonari will be required to establish its actual rent loss, in the form of reduction of rents together with noncontinuing charges and expenses to be deducted therefrom, for the period defined by the insurance agreement.

For the reasons stated, the order of the Appellate Division should be modified, without costs, to the extent of remitting the case to Supreme Court for a new trial as to amount of damages the insured is entitled to recover for loss of rent, and as so modified, affirmed.

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

Order modified, without costs, and case remitted to Supreme Court, New York County, for a new trial in accordance with the opinion herein and, as so modified, affirmed.


author: Fuchsberg, J.

text:
    Joanne Hollender, Appellant, v Trump Village Cooperative, Inc., et al., Defendants, and Public Administrator of Kings County, as Administrator of the Estate of Pasquale Anastasio, Deceased, et al., Respondents.
    Argued February 9, 1983;
    decided March 30, 1983

      POINTS OF COUNSEL

      Neal Forman for appellant.
    I. An adjournment in contemplation of dismissal pursuant to CPL 170.55 does not bar a subsequent civil suit for false arrest. (S. T. Grand, Inc. v City of New York, 32 NY2d 300; Matter of Cumberland Pharmacy v Blum, 69 AD2d 903; Kenul v Hollander, 86 Misc 2d 466; People v Campo, 71 Misc 2d 6; Broughton v State of New York, 37 NY2d 451.) II. Recent legislative enactments indicate that an “ACOD” was never intended to be considered as either an admission of guilt or a conviction. (Staebler v Supermarkets Gen. Corp., 105 Misc 2d 677.) III. Merely because Joanne Hollender consented to an “ACOD”, she should not be precluded from recovering damages in a civil suit for malicious prosecution. (Halberstadt v New York Life Ins. Co., 194 NY 1; People v Clougher, 246 NY 106; Tousey v Hastings, 194 NY 79; Matter of Totten, 179 NY 112; Nardelli v Stamberg, 44 NY2d 500.)

      E. Richard Rimmels, Jr., and Bruno Von Lorenz for Public Administrator of Kings County, respondent.
    I. ACOD is a form of plea bargaining. (Matter of Ayman v Teachers’ Retirement Bd. of City of N. Y., 9 NY2d 119; People v Siragusa, 81 Misc 2d 368; People v Campo, 71 Misc 2d 6; People v Pomerantz, 76 Misc 2d 766; People v Wei Chen, 104 Misc 2d 1057; Kenul v Hollander, 86 Misc 466; Grobe v Three Vil. Herald, 69 AD2d 175.) II. The cause of action for malicious prosecution may not be maintained. (Broughton v State of New York, 37 NY2d 451; Halberstadt v New York Life Ins. Co., 194 NY 1; Lewis v Counts, 81 AD2d 857; Fair v City of Rochester, 84 AD2d 908; Block v County of Nassau, 79 AD2d 897; Kenul v Hollander, 86 Misc 2d 466; Cardi v Supermarket Gen. Corp., 453 F Supp 633; Singleton v City of New York, 632 F2d 185.) III. The cause of action for false arrest may not be maintained. (Broughton v State of New York, 37 NY2d 451; Rutuelo v State of New York, 113 Misc 2d 467.) IV. Plaintiff proved no case against defendant Anastasio for false arrest. (People v Licata, 28 NY2d 113; People v Acee, 15 NY2d 568; People v Herbert, 189 Misc 197; Vernes v Phillips, 266 NY 298; Davern v Drew, 153 App Div 844, 214 NY 681; Vennard v Sunnyside Sav. & Loan Assn., 44 AD2d 727; Stearns v New York City Tr. Auth., 24 Misc 2d 216,12 AD2d 451; Francis v Taft Cleaners & Dyers, 281 App Div 893; Freedman v New York Soc. for Suppression of Vice, 248 App Div 517; Mitchell v O’Hara, 165 Misc 630.) V. The release bars the maintenance of the action. (Dziuma v Korvettes, 61 AD2d 677; People v Siragusa, 81 Misc 2d 368; People v Wei Chen, 104 Misc 2d 1057.)

      Anthony J. McNulty and William F. McNulty for Trump Village Cooperative No. 4, Inc., respondent.
    I. Plaintiff’s acceptance of the “ACOD” clearly barred her cause of action against defendant, Trump Village Cooperative No. 4, Inc., for malicious prosecution. (Broughton v State of New York, 37 NY2d 451, cert den sub nom. Schanbarger v Kellogg, 423 US 929; Munoz v City of New York, 18 NY2d 6; Ellman v McCarty, 70 AD2d 150; Grobe v Three Vil. Herald, 69 AD2d 175; Zebrowski v Bobinski, 278 NY 332; Lewis v Counts, 81 AD2d 857; Singleton v City of New York, 632 F2d 185; Cardi v Supermarket Gen. Corp., 453 F Supp 633; Block v County of Nassau, 79 AD2d 897; Kenul v Hollander, 86 Misc 2d 466.) II. The court below also correctly held that plaintiff failed to establish a cause of action against defendant, Trump Village Cooperative No. 4, Inc., for false arrest or imprisonment. (Broughton v State of New York, 37 NY2d 451.) III. The rights of the parties herein are unaffected by the June 1, 1982 amendment to CPL 170.55. (People v Wei Chen, 104 Misc 2d 1057; Tucker v Tucker, 55 NY2d 378; Valladares v Valladares, 55 NY2d 388; Sessa v State of New York, 63 AD2d 384, 47 NY2d 976.)
   OPINION OF THE COURT

Fuchsberg, J.

The issue on this appeal is whether an accused’s acceptance of an adjournment in contemplation of dismissal, popularly referred to by the acronym ACD or ACOD, constitutes a bar to a subsequent civil suit for false imprisonment or malicious prosecution. We hold that an ACOD disposition, authorized by CPL 170.55, is neither a conviction nor an acquittal. We further hold that while it, therefore, does not interdict an action for false imprisonment, it does bar one for malicious prosecution.

At about 8:00 p.m. on January 8, 1975, plaintiff Joanne Hollender, then 17½ years of age, and some friends congregated in an outdoor area between two buildings which were part of a group of co-operative housing units in a development known as Trump Village in Brooklyn. Although Joanne and her family also resided in the complex, their apartment was located in another building.

Two of the co-operative’s security guards approached the young people and ordered them to disperse. When Joanne objected to doing so, they summoned the police who, at the insistence of one of the guards, placed her under arrest for criminal trespass. This despite the fact that, as the arresting officer was to testify, he “couldn’t see any realistic reason” for doing so. The arrestee then was searched, booked and detained until her eventual release on an appearance ticket (CPL 150.10). Ultimately, before her criminal trial was to get underway, she was offered and accepted the ACOD disposition.

Thereafter, Joanne brought this civil action against the co-operative and its prosecuting guard. As pertinent here, her complaint sounded separately in false imprisonment and malicious prosecution. In due course, after trial by jury, to whom the Trial Judge submitted interrogatories as permitted by CPLR 4111, she recovered separate awards for compensatory and punitive damages on each cause. But the Appellate Division, reversing on the law, dismissed the complaint, essentially on the ground that the acceptance of the adjournment in contemplation of dismissal precluded the suit on both counts. For the reasons which follow, we now modify its order insofar as it affects the false imprisonment cause.

We begin our analysis by recounting that CPL 170.55 is rooted in an informal^ mechanism first developed in the New York City court system (Comment, Adjournment in Contemplation of Dismissal: Criminal Procedure Law Section 170.55, 38 Alb L Rev 223, 224-226). Dispensing with the need to consider the formally specified factors integral to CPL 170.40, the interest of justice section applicable to lesser offenses, CPL 170.55 provides a less structured means of disposing of relatively minor charges on a “non-merits adjudicatory basis” (Bellacosa, Practice Commentary, McKinney’s Cons Laws of NY, Book 11A, CPL 170.55, p 91; cf. People v Rickert, 58 NY2d 122). Provided that the defendant, the prosecutor and the court agree, this procedural path makes it possible for such charges — often family or neighbor related and usually involving an individual facing his or her initial encounter with the criminal justice system — to be kept in a state of suspense for a period of six months, during which the subject’s habitual behavior pattern can be tested by time (see Kenul v Hollander, 86 Misc 2d 466; People v McDonnell, 83 Misc 2d 907, 910; People v Siragusa, 81 Misc 2d 368, 371). The trial court, in its discretion, also is empowered to condition ACOD status on a willingness to participate in a dispute resolution program (CPL 170.55, subd 4) and, subject to the accused’s consent, on performance of community service (CPL 170.55, subd 5).

Under the statutory scheme, once the six-month period is at an end, absent any untoward event, the case will be dismissed as a matter of course unless, on application of the prosecutor, the court is convinced “that dismissal of the accusatory instrument would not be in furtherance of justice” (CPL 170.55, subd 2). As per CPL 170.55 (subd 6), such dismissal is not to connote either a conviction or, as in the case of a plea, an admission of guilt. So it is that, in the eyes of the criminal law, once the accusatory instrument is dismissed the arrest and the prosecution are rendered a “nullity” (CPL 170.55, subd 6).

Moreover, to avoid stigmatizing one who has been granted the ACOD dismissal, such a person expressly is included among those entitled to the full benefit of the record sealing and expunging provisions which come into play when a criminal action or proceeding has been terminated in favor of an accused (CPL 160.50, subds 1, 2, par [b]; see Singleton v City of New York, 632 F2d 185, 194, cert den 450 US 920). The over-all effect of a consummated ACOD dismissal is then to treat the charge as though it never had been brought. Nevertheless, the fact is that the occasion for determination of the merits of the events underlying the charge will have gone by without their resolution.

Thus, in a subsequent civil litigation to which a finding of guilt or innocence of the charge is germane, adjournment in contemplation of dismissal, by reason of its sui generis character, will leave the question unanswered (Singleton v City of New York, supra; Cardi v Supermarket Gen. Corp., 453 F Supp 633, 635; Fair v City of Rochester, 84 AD2d 908, 909; Lewis v Counts, 81 AD2d 857).

This in mind, it must be remembered that in an action for damages for false imprisonment, the burden of establishing that the detention was privileged is on those charged with the commission of that tort (Parvi v City of Kingston, 41 NY2d 553, 556; Broughton v State of New York, 37 NY2d 451, 456, cert den sub nom. Schanbarger v Kellogg, 423 US 929). Hence, it was error for the Appellate Division to rule that the. adjournment in contemplation of dismissal in this case was legally decisive of the issue (Staebler v Supermarkets Gen. Corp., 105 Misc 2d 677, 678).

Contrariwise, in a malicious prosecution action, it is for the one who brings the suit to establish that the criminal proceeding allegedly instigated by the defendant terminated in favor of the accused (Martin v City of Albany, 42 NY2d 13, 16; Broughton v State of New York, 37 NY2d 451, 457, supra; Restatement, Torts 2d, § 658). Indeed, it is “only when [the] * * * final disposition is such as to indicate * * * innocence” that this burden is met (Restatement, Torts 2d, § 660, Comment a; see Zebrowski v Bobinski, 278 NY 332, 333; Halberstadt v New York Life Ins. Co., 194 NY 1, 11). So viewed, the Appellate Division’s dismissal of the malicious prosecution claim was correct. For the adjournment in contemplation of dismissal, being as unadjudicative of innocence as it was of guilt, by its very nature operated to bar recovery (Singleton v City of New York, supra; Fair v City of Rochester, supra; Lewis v Counts, supra).

Finally, a few words as to the corrective action are in order. Since the jury, in answering the interrogatories, made special findings and returned separate verdicts, there is no need to direct a new trial (cf. Patafio v Porta-Clean of Amer., 39 NY2d 813). Rather, the reversal having been on the law alone, it suffices that the order from which the appeal is taken be modified by reinstating the verdict on the false imprisonment cause of action and remitting the case to the Appellate Division for a review of the facts pertaining thereto (CPLR 5613). On remand, needless to say, the court may, but only if so inclined, also review the unpreserved issue of the validity of an oral release allegedly tendered on behalf of the plaintiff (cf. People v Wilmot, 104 Misc 2d 412, 413), a matter which, on its earlier review, the Appellate Division expressly declined to reach (cf. Feinberg v Saks & Co., 56 NY2d 206, 210-211).

Accordingly, the order of the Appellate Division should be modified and the case remitted to that court for further proceedings in accordance with this opinion.

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

Order modified, with costs to appellant, and case remitted to the Appellate Division, Second Department, for further proceedings in accordance with the opinion herein and, as so modified, affirmed.

       Although this subdivision was not added until the adoption of chapter 134 of the Laws of 1982, its language, which in effect repeats that of CPL 160.60, represents no more than a codification of pre-existing law (Bellacosa, op. cit., p 96).