58 N.Y.2d 206 (1983)

A hotel seeking limited liability under General Business Law § 200 for lost guest property must prove it provided a “safe” that offers reasonable protection against foreseeable risks; a simple safe-deposit box may not suffice.

Summary

Two guests at the Mayfair Regent hotel lost jewelry from their safe-deposit boxes and sued the hotel for negligence and breach of contract. The hotel claimed limited liability under General Business Law § 200. The court addressed whether the hotel provided an adequate “safe” as required by the statute and the enforceability of agreements limiting the hotel’s liability. The Court of Appeals held that the hotel must prove the safe provided adequate protection against foreseeable risks and that the signed agreements were unenforceable. This ruling clarifies the hotel’s burden and the scope of protection offered by § 200.

Facts

Plaintiffs Goncalves and Cecconi, guests at the Mayfair Regent hotel, deposited their extensive jewelry collections (allegedly worth $1,000,000 each) in the hotel’s safe-deposit boxes. Notices were posted indicating the availability of a safe for valuables. Plaintiffs signed “Safe Deposit Box Receipts” with certain terms and conditions. The security consisted of rows of safe-deposit boxes in a plasterboard room with hollow-core wood doors, one with a residential lock and the other without any lock. The room was allegedly unlocked, unattended, and open to the public. On November 25, 1979, thieves broke into the boxes and stole the jewelry.

Procedural History

Plaintiffs independently sued the hotel. The cases were consolidated. The hotel moved to dismiss or limit liability to $500 based on General Business Law § 200 and the safe-deposit agreements. Plaintiffs cross-moved to strike the hotel’s affirmative defenses and for summary judgment. Special Term granted the hotel judgment limited to $500 per plaintiff. The Appellate Division affirmed. The Court of Appeals granted leave to appeal.

Issue(s)

1. Whether General Business Law § 200 limits a hotelkeeper’s liability for negligence in the loss of goods delivered for safekeeping.
2. Whether a hotelkeeper who does not provide a “safe” within the meaning of the statute can claim the benefits of § 200.
3. Whether the safe-deposit agreements signed by the plaintiffs are enforceable.

Holding

1. Yes, because the statutory scheme limits liability for general negligence assuming the proprietor meets the requirements of section 200.
2. No, because to claim the benefits of the statute, the hotel must strictly adhere to its provisions, including providing a “safe”.
3. No, because the agreements are void for lack of consideration and unenforceable as against public policy.

Court’s Reasoning

The Court reasoned that § 200, being in derogation of common law, must be strictly construed. To obtain its protection, the hotelkeeper must strictly adhere to its provisions. Negligence can arise if the hotelkeeper fails to satisfy the statute’s conditions or if, having satisfied them, a negligent act causes the loss. If the proprietor meets the requirements of § 200, the statutory scheme limits their liability for general negligence. The statute requires the proprietor to “provide a safe” as a condition for receiving the statute’s protection.

The Court defined a “safe” as a receptacle that, under the circumstances, provides adequate protection against fire, theft, and other reasonably foreseeable risks. The burden of proof to show a “safe” was provided lies on the defendant hotel. The court rejected the argument that “other convenient place” in the statute allows for something less than a safe, stating it only refers to the location of the safe, not the nature of the receptacle itself. The Court found summary judgment was improper because there was a material issue of fact as to whether the hotel’s safe-deposit boxes constituted a “safe” within the meaning of § 200, based on conflicting expert testimony.

The Court also found the safe-deposit agreements unenforceable. If the hotel provided a “safe”, the agreements were cumulative to the statute’s protection. If not, they were unenforceable against public policy because they would encourage hotels to provide lesser protection. The court stated, “A promise to perform an existing legal obligation is not valid consideration to provide a basis for a contract”. Allowing such agreements without warning the guest of lesser security would result in a waiver of rights, which is unacceptable. As stated in the opinion, “In summary, defendants may not invoke the protection of section 200 of the General Business Law without proving that it provided a ‘safe’ within the meaning of that law.”