Cathedral Academy v. State, 56557

• Decision Date: 24 April 1975
• Docket Number: No. 56557,56557
• Parties: CATHEDRAL ACADEMY, Appellant, v. STATE of New York, Respondent. Claim
• Court: New York Supreme Court — Appellate Division

Page 900

366 N.Y.S.2d 900

47 A.D.2d 390

CATHEDRAL ACADEMY, Appellant, v. STATE of New York, Respondent.

Claim No. 56557.

Supreme Court, Appellate Division, Third Department.

April 24, 1975.

Davis, Polk & Wardwell, New York City (Richard E. Nolan, New York City, of counsel), for appellant.

Louis J. Lefkowitz, Atty. Gen., Kenneth J. Connolly, Asst. Atty. Gen. (Jean M. Coon and Ruth Kessler Toch, Albany, of counsel), for respondent.

Before HERLIHY, P.J., and GREENBLOTT, SWEENEY, KANE and LARKIN, JJ.

GREENBLOTT, Justice.

By chapter 138 of the Laws of 1970, the New York State Legislature enacted the Mandated Services Act which provided that for school years beginning after July 1, 1970 qualifying non-public elementary and secondary schools would be reimbursed for the expenses incurred in providing various testing, record-keeping and related services which were required to be performed by separate statutory provision. The payments were not contingent upon performance of the services since said services were independently required. Reimbursement was to be in the form of two equal installments, the first payable up to March 15, the balance payable between April 15 and June 15. No requirement that recipient schools account for actual costs incurred was imposed; rather, payments were to be determined pursuant to a statutory formula whereby each school was to receive for each pupil in average daily attendance $27 in grades one through six and $45 in grades seven through twelve. These amounts were determined because in the judgment of representatives of the State Education Department, they were 'reasonable' (Levitt v. Committee for Public Educ. & Religious Liberty, 413 U.S. 472, 476, n. 4, 93 S.Ct. 2814, 37 L.Ed.2d 736).

In July, 1970 an action was commenced in United States District Court for the Southern District of New York, seeking to have the Mandated Services Act declared unconstitutional as violative of the religion clauses of the First Amendment to the Federal Constitution. It was not until April 27, 1972 that a three-judge court by a divided vote declared the Act unconstitutional, and on June 1, 1972 a final judgment was entered permanently enjoining reimbursement to nonpublic schools (Committee for Public Educ. & Religious Liberty v. Levitt, D.C., 342 F.Supp. 439). In the interim, the 1970--71 school year and most of the 1971--72 school year had been completed, and since the complainants had not sought temporary injunctive relief, appellant, a non-public school operated under the auspices of the Roman Catholic Church, Albany Diocese, as well as numerous other non-public schools, was actually reimbursed for the 1970--71 school year and for the first half of the 1971--72 school year. An appeal was taken to the United States Supreme Court which on June 25, 1973, by a vote of eight-to-one, affirmed the judgment of the District Court (Levitt v. Committee for Public Educ. & Religious Liberty, 413 U.S. 472, 93 S.Ct. 2814, 37 L.Ed.2d 736 (hereinafter, 'Levitt')). In so doing, the court referred to its decision in Lemon v. Kurtzman, 403 U.S. 602, 91 S.Ct. 2105, 29 L.Ed.2d 745 (Lemon I), and in noting the 'potential for conflict' inherent in state payments to religious schools, held that because the state had failed to take any steps to assure that 'state-supported activity is not being used for religious indoctrination * * * Chapter 138 constitutes an impermissible aid to religion; this is so because the aid that will be devoted to secular functions is not identificable and separable from aid to sectarian activities' (Levitt, supra, 413 U.S. at 480, 93 S.Ct. at 2819). ¹

Subsequent to the District Court judgment, the New York State Legislature apparently took the view that non-public schools such as claimant had been placed in inequitable situations because they had already performed the services but could no longer be paid therefor under the invalidated Mandated Services Act. Accordingly, the Legislature enacted chapter 996 of the Laws of 1972 which, in essence, conferred jurisdiction on the Court of Claims to 'hear, audit and determine' claims of eligible non-public schools for reimbursement of funds expended in the performance of services which had been required by law. ² This appeal is from a decision of the Court of Claims dismissing the claim on the ground that chapter 996 violates the Establishment clause of the First Amendment. (It appears to be assumed by the parties that chapter 996 is intended to be limited in its application to reimbursing the schools solely for the second semester of the 1971--72 school year.) Appellant urges that equitable considerations, primarily the good faith reliance by appellant and other schools in fashioning their budgets in expectation of payment warranted remedial legislative intervention, and that precedent for upholding the validity of one-time payments can be found in The decision in Lemon v. Kurtzman, 411 U.S. 192, 93 S.Ct. 1463, 36 L.Ed.2d 151 (Lemon II)).

In Lemon I, the case was remanded to the District Court to fashion a decree, wherupon the latter court enjoined payments under the Pennsylvania statute (Pa.Stat.Ann., tit. 24, §§ 5601--5609) but permitted the State to reimburse non-public sectarian schools for services provided before the Supreme Court decision. (There, as here, no temporary injunctive relief had been sought.) Under the Pennsylvania statute there in question, non-public schools were to be reimbursed for certain education services pursuant to contracts with the state. The services consisted of furnishing teachers, texts and instructional materials in certain 'secular' courses. In addition to compensating the schools, the state was to 'undertake continuing surveillance of the instructional programs to insure that the services purchased were not provided in connection with 'any subject matter expressing religious teaching' * * *' (Lemon II supra, 411 U.S. at 195, 93 S.Ct. at 1466). The statute further required the schools to maintain separate funds and accounts pertaining to the services provided, which accounts were to be subject to audit by State officials.

In striking down the Pennsylvania statute in Lemon I, the court focused upon the fact that the requirement of on-going scrutiny as above described fostered an 'excessive entanglement' between church schools and state. The validity of the payments themselves, on the facts there presented, was not determined--that issue did not arise until the question of reimbursement was raised in Lemon II (see 411 U.S. at 202, 93 S.Ct. 1463). In allowing those payments to be made, the Suprme Court stated that reliance interests had significant weight in the shaping of an equitable remedy. However, those reliance interests were weighed not in a vacuum, but, rather, in the context of 'the remote possibility of constitutional harm * * *' (Lemon II, supra, 411 U.S. at 203, 93 S.Ct. at 1471). That remoteness was founded upon the fact that entanglements in the nature of inspection, audit, and the like had already occurred, wherefore 'payment * * * will compel no further state oversight of the instructional processes * * *'. Moreover, and perhaps more significant to a consideration of the case at bar, 'that very process of oversight--now an accomplished fact--assures that state funds will not be applied for any sectarian purposes.' (Lemon II, supra, 411 U.S. at 202, 93 S.Ct. at 1470.) In reaching this conclusion, the court took notice of the existance of an 'insoluble paradox' inherent in the fact that payments to religious schools could not be made without some assurance that they would be applied only to secular purpose, yet such assurances could not be provided without engaging in the forms of oversight constituting entanglements of a sort prohibited by Lemon I. In Lemon II, the 'insoluble paradox' was 'avoided because the entangling supervision prerequisite to state aid has already been accomplished and need not enter into (an) evaluation' of the payments to be made (Lemon II, supra, 411 U.S. at 203, n. 3, 93 S.Ct. at 1470). In the case at bar, on the other hand, the paradox is squarely presented.

We are of the view that the paradox cannot be resolved without sanctioning a violation of the religion clauses of the First Amendment and therefore we affirm. The factor of greatest significance in leading us to this result is that in Levitt, the payments themselves were held to be unconstitutional because of the inability to identify secular purposes to which they would be applied. Nor has any relationship been shown between the payment formula and such supposed secular purposes; as the court noted, '(e)xactly how the $27 and $45 figures were arrived at is somewhat unclear.' (Levitt, supra, 413 U.S. at 476, n. 4, 93 S.Ct. at 2817.) For all its well-argued efforts to bring this case within the ambit of Lemon II, appellant has failed to demonstrate how payments under chapter 996 of the Laws of 1972 would differ in substance or form, in quality or quantity from prohibited payments under the invalidated Mandated Services Act. ³ Thus, if payments are to be made under chapter 996 pursuant to the same formula as had been in effect under the Mandated Services Act, a finding that such payments would be unconstitutional because not limited to identifiable secular purposes is inescapable. If, on the other hand, chapter 996 contemplates that appellant and other schools are to be reimbursed only for actual costs incurred in performing the mandated services, some process of audit, inspection and supervision, invalid under the standards set up in Lemon I, would now be required. ⁴ Because of this fundamental distinction--the lack of an already-completed 'entangling' process--the constitutional interests at stake in the present case are weightier than those in Lemon II, and cannot be overcome by appellant's reliance arguments.

Appellant argues, however, that those constitutional interests, just as the interests in Lemon II,...