Belscher v. New York State Teachers' Retirement System

• Decision Date: 05 July 1974
• Citation: 357 N.Y.S.2d 241,45 A.D.2d 206
• Parties: Lillian A. BELSCHER, as Executrix of the Will of Mary I. Brosemer, Deceased, Respondent, v. NEW YORK STATE TEACHERS' RETIREMENT SYSTEM, Appellant.
• Court: New York Supreme Court — Appellate Division

Page 241

357 N.Y.S.2d 241

45 A.D.2d 206

Lillian A. BELSCHER, as Executrix of the Will of Mary I Brosemer, Deceased, Respondent, v. NEW YORK STATE TEACHERS' RETIREMENT SYSTEM, Appellant.

Supreme Court, Appellate Division, Fourth Department.

July 5, 1974.

Ruth Kessler Toch, Sol. Gen., Louis J. Lefkowitz, Atty. Gen., Albany, for appellant (William J. Kogan, Asst. Atty. Gen., of counsel).

Burke & Burke, Buffalo, for respondent (Thomas M. Burke, Buffalo, of counsel).

Before MARSH, P.J., and WITMER, MOULE, CARDAMONE and SIMONS, JJ.

OPINION

WITMER, Justice.

This case presents the question of the jurisdiction of the Supreme Court to determine an issue of liability for breach of a contract between the New York State Teachers' Retirement System and the estate of a deceased member thereof. Defendant, New York State Teachers' Retirement System, appeals from the order of Special Term granting summary judgment to plaintiff as Executrix of the Will of Mary I. Brosemer, deceased, on the first cause of action of the complaint in her action to recover interest on the benefit due to the estate by reason of testatrix' death and denying defendant's cross-motion for summary judgment dismissing the complaint.

Testatrix died on December 25, 1970. Because defendant believed that the designation of beneficiaries by testatrix was defective and ambiguous, on January 25, 1971 it refused to pay without a court order the death benefit of $56,792.19 admittedly owing. By decree dated January 31, 1972 the Erie County Surrogate directed that defendant pay said benefit, plus whatever interest had accrued thereon, to plaintiff as executrix. On March 6, 1972 defendant paid the principal amount to plaintiff but refused to pay interest thereon, and plaintiff brought this action in Supreme Court to recover interest on such sum at the rate of 7 1/2 per cent from the date of testatrix' death to the date of payment of the benefit on March 6, 1972, amounting to the sum of $5,099.62. Upon motion, Special Term granted summary judgment therefor to the plaintiff.

In its cross-motion and on this appeal defendant contends that the Supreme Court lacks jurisdiction of this action, because in essence it is an action against the State of New York over which the Court of Claims has exclusive jurisdiction, and so this action must be dismissed. Some aspects of this subject are not free from doubt, but on the facts of this case we believe that defendant is correct and that the complaint must be dismissed for lack of jurisdiction in the Supreme Court.

It must be noted, at the outset, that the Court of Claims has jurisdiction over all actions by and against the State itself, and, generally speaking, by and against agents and agencies of the State exercising governmental powers (see, Psaty v. Duryea, 306 N.Y. 413, 118 N.E.2d 584). In creating a State agency the Legislature has often expressly provided that actions against the agency are exclusively within the jurisdiction of the Court of Claims (see, Public Authorities Law, §§ 163--a, 212--a and 361--b); and the Court of Appeals has recognized that such legislative provision is controlling (Easley v. New York State Thruway Auth., 1 N.Y.2d 374, 153 N.Y.S.2d 28, 135 N.E.2d 572).

In respect of a corporation as to which the Legislature has made no specification with regard to court jurisdiction, the court must determine whether the business of the corporation is so closely linked with State functions as to be essentially the State itself (Glassman v. Glassman, 309 N.Y. 436, 440--441, 131 N.E.2d 721, 723--724; Story House v. Job Develop. Auth., 37 A.D.2d 345, 325 N.Y.S.2d 659). In our view the holding in Glassman, supra, that the New York State Employees' Retirement System is a governmental agency clothed with the authority of the State is dispositive of the jurisdictional issue in this case.

Although there are differences between the New York State Employees' Retirement System and the defendant, the New York State Teachers' Retirement System, they perform essentially similar functions for the State. The Employees' System has the State Comptroller as its administrative head, whereas the Teachers' System is operated by an independent board of nine members, only three of whom are State employees (Education Law, § 504). The State Comptroller invests the funds of the Employees' System (Retirement and Social Security Law, § 13), whereas the funds of the Teachers' System are invested by its own retirement board (Education Law, § 508). The State Attorney General is legal advisor to the Employees' System (Ret. & Soc.Sec.Law, § 14), but not to the Teachers' System (Education Law, § 507, subd. 2). Yet, two members of the Board of the Teachers' System must be administrative officers of the New York State School System appointed by the Commissioner of Education and one shall be the State Comptroller or his designee (Education Law, § 504, subd. 2, pars. c and d). The Teachers' System is supervised by the State Insurance Department (Education Law, § 523), and the custodian of that System's funds is the head of the State Division of the Treasury in the Department of Taxation and Finance (Education Law, § 507,...