No action for a penalty or forfeiture may be brought for an act done in good faith and pursuant to a construction given to a statute by a decision of an appellate court and adjudged lawful thereby, where such act was done prior to a reversal or the overruling of such decision.
§ 7205.Defense of good faith reliance on judicial decision.
Article 72. Recovery of Penalty or Forfeiture · Last amended 1963 · Last verified July 21, 2026
In one sentenceCPLR 7205 protects a defendant from an action for a statutory penalty or forfeiture where the act was done in good faith under an appellate court's construction of the statute that made the act lawful, so long as the act occurred before that decision was reversed or overruled.
Full Text of CPLR 7205
Plain-English Summary
The law sometimes changes after people have already acted in reliance on what an appellate court said it meant. Section 7205 addresses that timing problem directly: no action for a penalty or forfeiture can be brought for an act done in good faith and in keeping with a statutory construction that an appellate court had adjudged lawful, provided the act happened before that decision was reversed or overruled.
The defense turns on a few specific conditions. The favorable construction has to come from an appellate court, not merely a trial-level ruling, and the appellate decision must have adjudged the act lawful, not merely touched on the statute in passing. The defendant's reliance must be genuine, and the timing has to line up — the act has to predate the reversal or overruling, not follow it. Where those conditions are met, the defense removes the exposure to a penalty or forfeiture for conduct that was lawful under the law as it stood at the time.
Frequently Asked Questions
What is the good-faith reliance defense under CPLR 7205?
It bars an action for a statutory penalty or forfeiture where the defendant acted in good faith under an appellate court decision that had adjudged the act lawful, as long as the act came before that decision was reversed or overruled.
Does relying on a trial court's ruling qualify for this defense, or does it have to be an appellate decision?
It has to be an appellate court decision. Section 7205 specifically requires the construction relied on to come from an appellate court, not a trial-level ruling.
What happens if the appellate decision I relied on gets reversed after I acted?
The defense still applies, because section 7205 protects acts done before the reversal or overruling. Timing is what matters — the act has to come before the appellate decision was overturned, not after.
Do I have to show I acted in good faith to use this defense?
Yes. Section 7205 requires the act to have been done in good faith and pursuant to the appellate construction, not merely to coincide with it.
Does it matter whether the appellate decision came from New York's highest court?
No. Section 7205 refers to a decision of an appellate court, without limiting the defense to the Court of Appeals; any appellate-level decision adjudging the act lawful can support it.
Advisory Committee Notes
This section is derived from CPA § 1177. It has been generalized to cover any appellate decision and includes the possibility of reversal or overruling of an Appellate Term decision as well as the reversal or overruling of a Court of Appeals decision by the Supreme Court of the United States.
The provision in the last sentence of CPA § 1177 has been omitted. It was extremely confusing and the courts have apparently found it impossible to give it any meaning. See Hollaman v El Arco Mines Co. (1910) 137 AD 862, 865, 122 NYS 852, 855.
In People v Shoemaker (1930) 228 AD 314, 239 NYS 71, affd 254 NY 567, 173 NE 869, the defendant asserted that the statute providing for a penalty was unconstitutional. In a prior case, the statute was held unconstitutional by the Appellate Division, but the Court of Appeals, affirming the decision on the ground of no violation of the statute, expressed the opinion that it was constitutional. Defendant argued that the Appellate Division had not been reversed and that he had acted in conformity with its decision. His contention was rejected on the ground that the judgment of the Appellate Division, interpreted by the decision of the Court of Appeals, could not be held to be a decision holding the law unconstitutional, that he could not rely on the Appellate Division decision and that he could not use § 1177 as a defense.
CPA § 1177 was successfully relied upon in Hollaman v El Arco Mines Co., supra. Section 33 of the Stock Corporation Law gave a shareholder the right to inspect the corporation’s books. An unreversed decision of the Appellate Division had denied shareholders the right to copy names and addresses of other shareholders from the books, and held that such a request could not be separated from a conjoined demand to inspect. Relying on this decision, the defendant refused the plaintiff’s demand to see the books in order to get a list of shareholders. The decision of the Appellate Division was thereafter reversed by the Court of Appeals.
Amendment History
Add, L 1962, ch 308, eff Sept 1, 1963.
Source & verification. Provision text, History, and Advisory
Committee Notes are reproduced verbatim from the Consolidated Laws of New York.
Last verified July 21, 2026.
· Official source
Also known as: good faith reliance on court decision defense New Yorkdefense to penalty action after appellate reversal New Yorkstatutory penalty good faith defense New York