Bell v. New York Higher Educ. Assistance Corp.
| Decision Date | 04 December 1987 |
| Parties | , 46 Ed. Law Rep. 340 John B. BELL, Plaintiff, v. NEW YORK HIGHER EDUCATION ASSISTANCE CORPORATION, Chemical Bank and New York Law School, Defendants. |
| Court | New York Supreme Court |
John B. Bell, pro se.
Kenneth J. Kelly (Adrienne B. Packer, New York City, of counsel), for Chemical Bank.
Robert Abrams, Atty. Gen., Randolph Volkell, New York City, for NYHEAC.
Defendant New York Higher Education Assistant Corp. (NYHEAC) moves for an order dismissing the complaint for lack of subject matter jurisdiction.
Plaintiff brings this action to recover damages allegedly sustained when NYHEAC, acting as guarantor of plaintiff's student loan, prematurely reimbursed plaintiff's lendor bank.
Defendant made a prior motion to dismiss plaintiff's complaint, which was granted solely on the ground that service of process on the Attorney General was insufficient to confer in personam jurisdiction on the defendant NYHEAC. Plaintiff subsequently effected proper service of a new complaint.
It was not necessary for this court to reach the issue of subject matter jurisdiction in resolving the previous motion to dismiss, and, in fact, the issue never was reached. It is incorrect to infer, as does the plaintiff, that the prior motion resolved any issue beyond that of the lack of personal jurisdiction.
Pursuant to the Court of Claims Act, the Supreme Court does not have jurisdiction to hear suits against the State or its agencies. Court of Claims Act §§ 8, 9; Breen v. Mortgage Commission of the State of New York, 285 N.Y. 425, 35 N.E.2d 25 (1941).
A corporation created by the State may be considered such an agency if the "business of the corporation is so closely linked with State functions as to be essentially the State itself." Belscher v. New York State Teachers Retirement System, 45 A.D.2d 206, 208, 357 N.Y.S.2d 241 (4th Dept.1974).
If the legislature has not expressly dealt with the question of jurisdiction in the enabling legislation creating the corporation, it is the function of the court to determine whether the corporation is sufficiently engaged in a governmental function so as to entitle it to the same immunity to suit in the Supreme Court enjoyed by the State. See Down v. New York Automobile Insurance Plan, 95 Misc.2d 316, 407 N.Y.S.2d 421 (Civil Ct. NY Co.1978).
New York Education Law Article 14 was revised in 1974. (The correct name of the corporation is now New York Higher Education Services Corp).
The revised statute states, as the earlier version did not, that the corporation was created "in the State Education Department and within the University of the State of New York as established under the Board of Regents." Education Law § 652(1). The State Education Department and the University of the State of New York are State agencies subject to the Court of Claims Act. See Education Law § 352; People v. Branham, 53 Misc.2d 346, 278 N.Y.S.2d 494 (Sp.Ct.Albany Co.1967). Clearly, the specific reference to NYHEAC's status as "within" the State University is an indication of the legislature's intention that NYHEAC be considered as an agency of the State.
The legislature empowered NYHEAC to coordinate the State's administrative effort in student financial aid and loan programs "with those of other levels of government" (Education Law § 652[2][b] ), indicating that NYHEAC itself occupies a level of government.
The fact that NYHEAC's Board of Trustees included important State functionaries, such as the Commissioner of Education and the Chancellor of the State University supports NYHEAC's position. See Glassman v. Glassman, 309 N.Y. 436, 440-41, 131 N.E.2d 721 (1956). It is also significant that NYHEAC's employees are considered State employees subject to the rules and regulations of the Civil Service Law. Down v. New York State Insurance Plan, supra 95 Misc.2d at 317, 407 N.Y.S.2d 421.
Obviously, NYHEAC's function as indicated by the expressed purpose of the corporation, is more than that of merely lending money to students, and the close connection between NYHEAC and other state departments devoted to education clothes NYHEAC "with the sovereign immunity of the State." Glassman v. Glassman, supra 309 N.Y. at 440, 131 N.E.2d 721.
I am aware of the contrary holding in State Higher Education Services Corporation v. Baker, 126 Misc.2d 244, 482 N.Y.S.2d 212 (Civil Ct.Kings Co.1984), but respectfully differ with that opinion.
The plaintiff's remaining arguments are without merit.
The mere fact that NYHEAC receives funds from sources outside the government is not relevant. NYHEAC's...
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