Goncalves v. Regent Intern. Hotels, Ltd.

• Decision Date: 17 February 1983
• Docket Number: No. 2,No. 1,1,2
• Citation: 460 N.Y.S.2d 750,58 N.Y.2d 206,447 N.E.2d 693
• Parties: , 447 N.E.2d 693 Eliza M. GONCALVES, Also Known as Eliza G.M. Salles, Appellant, v. REGENT INTERNATIONAL HOTELS, LIMITED, Doing Business as Mayfair Regent, et al., Respondents. (Action) Sarah CECCONI, Appellant, v. REGENT INTERNATIONAL HOTELS, LIMITED, Doing Business as Mayfair Regent, et al., Respondents. (Action)
• Court: New York Court of Appeals Court of Appeals

Page 750

460 N.Y.S.2d 750

58 N.Y.2d 206, 447 N.E.2d 693

Eliza M. GONCALVES, Also Known as Eliza G.M. Salles, Appellant, v. REGENT INTERNATIONAL HOTELS, LIMITED, Doing Business as

Mayfair Regent, et al., Respondents. (Action No. 1.)

Sarah CECCONI, Appellant, v. REGENT INTERNATIONAL HOTELS, LIMITED, Doing Business as

Mayfair Regent, et al., Respondents. (Action No. 2.)

Court of Appeals of New York.

Feb. 17, 1983.

A. Richard Golub, New York City, for Eliza M. Goncalves, appellant.

Robinson B. Lacy, Michael W. Weir and James H. Carter, New York City, for Sarah Cecconi, appellant.

Franklin D. Tell and Solomon M. Cheser, New York City, for respondents.

Jack P. Jefferies, Stephen J. Crimmins and John J. Murphy, New York City, for the New York State Hotel & Motel Ass'n, Inc., and another, amici curiae.

OPINION OF THE COURT

COOKE, Chief Judge.

A hotel will not be availed of limited liability provided by section 200 of the General Business Law for the loss or destruction of a guest's property delivered to it for safekeeping unless the hotel establishes that it provided a "safe" within the meaning of that section. The hotel may be charged with its failure to provide an adequate facility.

Plaintiffs in these two consolidated cases were guests in late November, 1979, at the Mayfair Regent, a Manhattan luxury hotel owned and operated by defendants. Each plaintiff was traveling with an extensive jewelry collection allegedly worth $1,000,000. As required by law, notices were posted in the hotel that a safe was available in the office for the secure storage of money, jewels, and other valuable items. Plaintiffs each delivered their jewelry over to the management for deposit. In doing so, they signed a "Safe Deposit Box Receipt" which set forth certain terms and conditions. ¹

The security device provided by defendants consisted primarily of rows of safe-deposit boxes that required two keys--one held by the guest--to open. The safe-deposit boxes were housed in a room built of plasterboard with access controlled only by two hollow-core wood doors, one of which had an ordinary residential tumbler lock and the second of which had no lock at all. Plaintiffs claim that this room was unlocked, unattended, and open to the general public. Also, it is alleged that the card file, showing which guest was using each box and when property had been deposited and removed, was exposed to public scrutiny.

On November 25, 1979, thieves entered the hotel and broke into a limited number of safe-deposit boxes, including those used by plaintiffs. The boxes were emptied of their valuables.

Plaintiffs independently commenced these actions to recover for the theft of their jewelry. Plaintiff Goncalves stated four theories for relief in her third amended complaint: (1) gross negligence in providing security; (2) breach of contract by defendants' failure to fulfill an earlier promise to install a secure area for their safe-deposit boxes; (3) breach of duty as a bailee; and (4) breach of section 200 of the General Business Law by defendants' failure to provide a safe as required by that statute. Plaintiff Cecconi relied on two theories: (1) breach of duty as a bailee; and (2) negligence in providing security. Each plaintiff prayed for damages in the amount of $1,000,000.

Defendants denied plaintiffs' allegations and raised three affirmative defenses in their answers. First, they relied on section 200 of the General Business Law as limiting plaintiffs' recovery to $500. Defendants also claimed breaches of the safe-deposit agreements occasioned by plaintiffs' deposit of goods worth more than $500. Last, defendants relied on the agreement to limit their liability to $500.

The two actions were consolidated and defendants moved to dismiss the complaints or, in the alternative, have judgment entered against them in the amount of $500. Plaintiffs cross-moved to strike defendants' affirmative defenses and for summary judgment. Special Term directed entry of judgment of $500 against defendants in favor of each plaintiff. The cross motions to strike and for summary judgment were denied. The Appellate Division unanimously affirmed. This court granted leave to appeal, 57 N.Y.2d 601, 454 N.Y.S.2d ----, 439 N.E.2d 1245. The order below is now modified, 87 A.D.2d 1010, 450 N.Y.S.2d 644.

The centerpiece of this appeal is section 200 of the General Business Law, which places a limitation on the absolute liability for the loss or destruction of a guest's property to which a hotelkeeper was subject at common law. That statute provides:

" § 200. Safes; limited liability

"Whenever the proprietor or manager of any hotel, motel, inn or steamboat shall provide a safe in the office of such hotel, motel or steamboat, or other convenient place for the safe keeping of any money, jewels, ornaments, bank notes, bonds, negotiable securities or precious stones, belonging to the guests of or travelers in such hotel, motel, inn or steamboat, and shall notify the guests or travelers thereof by posting a notice stating the fact that such safe is provided, in which such property may be deposited, in a public and conspicuous place and manner in the office and public rooms, and in the public parlors of such hotel, motel, or inn, or saloon of such steamboat; and if such guest or traveler shall neglect to deliver such property, to the person in charge of such office for deposit in such safe, the proprietor or manager of such hotel, motel, or steamboat shall not be liable for any loss of such property, sustained by such guest or traveler by theft or otherwise; but no hotel, motel or steamboat proprietor, manager or lessee shall be obliged to receive property on deposit for safe keeping, exceeding five hundred dollars in value; and if such guest or traveler shall deliver such property, to the person in charge of such office for deposit in such safe, said proprietor, manager or lessee shall not be liable for any loss thereof, sustained by such guest or traveler by theft or otherwise, in any sum exceeding the sum of five hundr dollars unless by special agreement in writing with such proprietor, manager or lessee."

Several issues requiring the explication of section 200 are raised. Plaintiffs argue that the statute limits absolute liability only, but does not exonerate a hotelkeeper whose negligence is the proximate cause of the loss of the goods delivered for safekeeping. Alternatively, plaintiffs propose that a hotelkeeper who does not provide a "safe" within the meaning of the statute may not claim the benefits of section 200. Defendants argue that section 200 limits their liability no matter what the cause of loss and that they provided a "safe" as required. Defendants further posit that the statute does not require a safe, but that "[an]other convenient place" will satisfy the conditions for invoking the section.

At common law, an innkeeper was an insurer of goods delivered into his or her custody by a guest, and so was absolutely liable for the loss or destruction of such goods "unless caused by the negligence or fraud of the guest, or by the act of God or the public enemy." (See Hulett v. Swift, 33 N.Y. 571, 572.) The practical root of this rule lay in the days when travel was perilous, highway robbers abounded, and the only safe sanctuary at night usually was an inn (see Hulett v. Swift, supra, at pp. 572-573; Browne, Bailments [1896], pp. 81-83; Edwards, Bailments [2d ed, 1878], § 462, pp. 335-336; Schouler, Bailments [3d ed, 1897], § 274, pp. 276-278; 43A CJS, Inns, Hotels, and Eating Places, § 36, p. 880; 9 A.L.R.2d 818). The obligation encompassed not only goods actually delivered into the innkeeper's possession, but also property in the guest's room (see Ramaley v. Leland, 43 N.Y. 539; cf. Bendetson v. French, 46 N.Y. 266). "Undoubtedly an innkeeper, by the common law, is held responsible, in this capacity of exercising a public vocation, for whatever personal property of the guest the latter may have brought infra hospitium. Not only the guest's animals and private equipage may thus claim protection, his wearing apparel and personal jewelry, his baggage and travelling necessaries, but, indeed, money and valuables to an unlimited amount." (Schouler, Bailments [3d ed, 1897], § 283, p. 288.)

The common-law rule placed a heavy burden on the hotelkeeper, who could be held liable for a guest's loss although not having any culpability for the property's theft or destruction (see Edwards, Bailments [2d ed, 1878], § 463, pp. 336-337; see, also, Browne, Bailments [1896], pp. 83-84; 2B Warren's Negligence [3d ed], Hotelkeepers, § 5.01). The New York Legislature early acted to restrict the innkeeper's exposure by providing a statutory exception to the common-law rule. In 1855, the predecessor statute to section 200 of the General Business Law was enacted (L.1855, ch. 421, § 1). Another law limiting the innkeeper's liability for loss by fire came into being 11 years later (L.1866, ch. 658; see, also, General Business Law, § 202). And the Legislature also limited the innkeeper's financial responsibility for guests' property such as clothing and other items that could not be expected to be placed in a safe (L.1883, ch. 227, § 2; see, also, General Business Law, § 201).

Being in derogation of the common law, section 200 is to be strictly construed (see Ramaley v. Leland, 43 N.Y. 539, 541, supra ). Moreover, to obtain its protection, the hotelkeeper must strictly adhere to its provisions (see Millhiser v. Beau Site Co., 251 N.Y. 290, 295-296, 167 N.E. 447 [limitation not available when innkeeper's posted notices do not include information about limitation on liability]; see, also, Zaldin v. Concord Hotel, 48 N.Y.2d 107, 113-114, 421 N.Y.S.2d 858, 397 N.E.2d 370).

Given this statutory framework, negligence by the hotelkeeper may arise in two ways. First, the hotelkeeper may be negligent in such a way that he or she fails to satisfy the conditions of the statute. Second, the...