Buffalo Electric Co. v. State, 14 N.Y.2d 453 (1964)

CPLR 5601(d) constitutionally broadens the scope of appeals as of right to the Court of Appeals from final judgments or orders affected by prior Appellate Division decisions, even if those prior decisions were not ‘interlocutory’ in the traditional sense, provided they ‘necessarily affect’ the final judgment.

Summary

This case examines the validity of CPLR 5601(d), which expands the types of Appellate Division decisions that can be appealed to the Court of Appeals as of right. Buffalo Electric Co. sued the State for breach of contract. The Court of Claims initially dismissed the claim based on a release clause, but the Appellate Division reversed. After a second dismissal and reversal, the Court of Claims awarded damages to Buffalo Electric. The State appealed to the Court of Appeals, seeking review of the Appellate Division’s prior orders. The Court of Appeals held that the appeal was proper under the new CPLR provision and that the acceptance of final payment operated as a release, reversing the judgment and dismissing the claim.

Facts

Buffalo Electric contracted with the State of New York, and the contract included a clause stating that acceptance of the final payment would act as a release of all claims against the State. Buffalo Electric completed the work, but claimed extra costs due to the State’s actions. Upon receiving the final payment check, Buffalo Electric endorsed it with a reservation of rights to recover additional costs. The State argued that accepting the final payment constituted a release of all claims, as per the contract.

Procedural History

1. The Court of Claims initially dismissed Buffalo Electric’s claim, finding that acceptance of final payment waived any further claims. 2. The Appellate Division reversed, remanding for further proceedings (9 A.D.2d 372). 3. On the second trial, the Court of Claims again dismissed the claim (27 Misc.2d 527). 4. The Appellate Division again reversed, holding the release defense insufficient and remanding for a determination on damages (17 A.D.2d 523). 5. The Court of Claims then awarded Buffalo Electric $54,334.48. 6. The State appealed directly to the Court of Appeals, challenging the intermediate orders of the Appellate Division.

Issue(s)

1. Whether CPLR 5601(d) constitutionally expands the jurisdiction of the Court of Appeals by allowing appeals as of right from final judgments affected by prior Appellate Division orders that are not traditionally considered ‘interlocutory’.
2. Whether Buffalo Electric’s acceptance of final payment, despite a reservation of rights, constituted a release of all claims against the State under the contract.

Holding

1. Yes, because the statute constitutionally implements the appellate jurisdiction by tying the final judgment to the earlier Appellate Division decision that necessarily affected it.
2. Yes, because under the contract terms, the acceptance of final payment operated as a release, and the reservation of rights did not alter the legal effect of accepting that payment.

Court’s Reasoning

The Court reasoned that CPLR 5601(d) broadened the scope of appeals to include situations where prior Appellate Division orders, even if not strictly ‘interlocutory,’ had a vital influence on the final judgment. The court emphasized that if the Appellate Division’s prior decisions were reversed, the final judgment would also fall. This created a sufficient “nexus” between the Appellate Division orders and the final judgment for the purpose of appeal.

The Court cited previous cases to demonstrate how prior statutes were interpreted to allow appeals based on prior interlocutory judgments, establishing a procedural history that allowed for pragmatic implementation of the constitutional right to appeal. The court emphasized that “Concisely, the attitude is that an intermediate order is within section 580 if the result of reversing that order would be, inevitably and mechanically, to require a reversal or modification of the final determination”.

Regarding the merits, the Court relied on Brandt Corp. v. City of New York, which held that acceptance of final payment constitutes a release under similar contract language. The Court found that Buffalo Electric’s reservation of rights did not change the legal effect of accepting the final payment, reinforcing the principle that such release clauses are consistently upheld. The dissent argued the Appellate Division correctly found a question of fact regarding the parties’ intent. Ultimately, the Court determined that the contract language controlled, and acceptance of payment released the State from further liability. As the court stated, “This court in Brandt was explicit in restating the principle on abundant authority that the validity of a clause in city and State contracts providing that acceptance of final payment by a contractor constitute a release have been “consistently upheld”.