
    French Hospital, Plaintiff, v. Charles Stuart, Defendant and Third-Party Plaintiff-Respondent. Associated Hospital Service of New York, Third-Party Defendant-Appellant.
    Supreme Court, Appellate Term, First Department,
    November 30, 1967.
    
      Breed, Abbott & Morgan (Michael G. Devine of counsel), for appellant. Vallone Calabrese (Peter P. Vallone of counsel), for respondent.
   Per Curiam.

Triable issues were presented which properly precluded summary disposition below.

■Subdivision 1-a of section 250 of the Insurance Law provides that a hospital service corporation, such as the third-party defendant include on its board of directors and its executive committee representation by its member hospitals to the extent of one third of its board and executive membership. The relationship thus created between hospital and the hospital service corporation is a close one and is made even closer by the terms of the instant contract, whereby Associated Hospital Service agrees to provide hospital service under the terms o£ the agreement and to make payment not to the insured but directly to its member hospital. Article XV of Associated Hospital Service agreement with hospitals provides as follows: “A. AHS shall, subject to the terms and conditions hereof, compensate Member Hospitals for Hospital Service rendered by them to Subscribers by payments in such amounts and upon such basis as shall be determined from time to time by the Board of Directors of AHS ” (Group Contract, p. 16).

It is thus apparent that plaintiff and third-party defendant are in a position to prejudice the insured. By delaying taking action against the insured for more than two years the hospital makes it possible to prevent an adjudication as to the disclaimer, and for Associated Hospital Service to avoid liability under the short Statute of Limitations set forth in the group contract. Moreover, it is significant that the hospital failed to bring action against Associated Hospital Service, as it had a right to do under the contract. Had the hospital in the instant case brought suit within two years against both parties, the question as to coverage raised by Associated Hospital Service could have been litigated. If the Statute of Limitations provided in the contract is enforced, an adjudication as to the validity of the disclaimer is avoided.

While parties may by a contract provide for a short Statute of Limitations, such a provision, being in derogation of statutes, should be strictly construed. And in determining whether a contractual limitation is reasonable in a particular case, the court should consider the entire contract, the surrounding circumstances, the relationship of the parties and whether one was in a position to take advantage of the other (35 N. Y. Jur., Limitations and Laches, pp. 483-484).

Here, it may well be that a full development of the facts at a trial will result in a finding that under all the circumstances the limitation is unreasonable or that the plaintiff is estopped from recovering against defendant. Certainly, the issue is fairly debatable ” (Stone v. Goodson, 8 N Y 2d 8) and not “ so tenuous that the test of a trial may be by-passed ” (United Bd. & Carton Corp. v. Nieberg, 25 A D 2d 647).

In view of the relationship between plaintiff and third-party defendant, and the delay by plaintiff in bringing the action, sufficient is shown to warrant the denial of third-party defendant’s motion for summary judgment.

Accordingly, the order below denying summary judgment should be affirmed, with $10 costs.

Markowitz and Gold, JJ., concur; Hofstadter, J., dissents in dissenting memorandum.

Hofstadter, J.

(dissenting). I dissent. The third-party plaintiff claims only that the appellant waived or is estopped from invoking the limitation in the contract for hospital service benefits. Since appellant’s letter of June 23,1964 was explicit notice to the third-party plaintiff that it denied liability for benefits arising out of the hospitalization of March, 1964, there was no tenable basis for or a triable issue with respect to the claim of waiver or estoppel. (Fotochrome, Inc. v. American Ins. Co., 26 A D 2d 634; Dubins v. Boston Ins. Co., 26 A D 2d 863; Rosenthal v. Reliance Ins. Co., 25 A D 2d 860.) The limitation of two years from the date of the subscriber’s admission to the hospital is reasonable and has been upheld. (Maimonides Hosp. of Brooklyn v. Weisman, N. Y. L. J., May 12, 1967, p. 19, col. 6 [App. Term, 2d Dept.]; see, also, Soviero Bros. Contr. Corp. v. City of New York, 286 App. Div. 435, 441, affd. 2 NY 2d 924.) It has the approval of the State Insurance Department and its validity is not impugned or challenged by the third-party appellant. In the circumstances, I see no reason why it should not be given effect by this court.

Order affirmed, with $10 costs.  