Guar. Trust Co. of New York v. State

• Decision Date: 02 June 1949
• Docket Number: (Claim No. 27969).
• Citation: 299 N.Y. 295,86 N.E.2d 754
• Parties: GUARANTY TRUST CO. OF NEW YORK v. STATE.
• Court: New York Court of Appeals Court of Appeals

299 N.Y. 295

86 N.E.2d 754

GUARANTY TRUST CO. OF NEW YORK

v.STATE.

(Claim No. 27969).

Court of Appeals of New York.

June 2, 1949.

Appeal from Supreme Court, Appellate Division, Third Department.

Proceeding on claim by Guaranty Trust Company of New York against the State of New York to recover contributions made by claimant toward unemployment insurance fund. From a judgment in favor of claimant in the Court of Claims, upon order of Appellate Division of the Supreme Court which dismissed defendant's appeal to such court, 191 Misc. 259, 76 N.Y.S.2d 824, the State appeals. The instant appeal also brings up for review an order of the Appellate Division, 271 App.Div. 711, 69 N.Y.S.2d 65, which reversed, on the law and the facts, a prior judgment of Court of Claims, Ryan, J., 186 Misc. 676, 62 N.Y.S.2d 309, granting a motion by defendant for a dismissal of the claim upon ground that it had not been timely filed, and remitted the matter to Court of Claims for hearing on the merits. The parties thereafter entered into a stipulation of agreed facts and the Court of Claims awarded judgment in favor of claimant. The appeal to Court of Appeals was first argued in January 4, 1949. On March 3, 1949, an application for reargument on the merits was granted.

Judgment reversed and claim dismissed. Nathaniel L. Goldstein, Attorney General (Kent H. Brown, Wendell P. Brown, John R. Davison, and Donald C. Glenn, Albany, of counsel), for appellant.

Ralph M. Carson and William R. Meagher, New York City, and Frank H. Medinger, New York City, for respondent.

LOUGHRAN, Chief Judge.

This claim against the State of New York was filed in the Court of Claims for recovery of the amount of unemployment insurance contributions which the claimant Trust Company had paid for the period August 10 to December 31, 1939. Upon motion made by the State before trial, the claim was dismissed on the ground that it had not been filed within the time limited by the Court of Claims Act, 186 Misc. 676, 62 N.Y.S.2d 309; then, upon an appeal by the claimant to the Appellate Division, the judgment of dismissal by the Court of Claims was reversed and the case remitted to that court ‘for a hearing on the merits.’ 271 App.Div. 711, 714, 69 N.Y.S.2d 65, 68.

When the parties met again in the Court of Claims, they entered into a ‘stipulation of agreed facts' which embodied substantially all the matters alleged in the claim and thereupon the Court of Claims awarded to the claimant a judgment for the sum demanded. An appeal by the State to the Appellate Division followed but upon the claimant's motion was dismissed by an order upon which judgment was thereafter entered in the office of the clerk of the Court of Claims. At that stage, it will be observed, and claimant had acquired the equivalent of a final judgment of affirmance in its favor by the Appellate Division. Hence the State was quite in order when it appealed from that judgment to this court as of right, two Justices of the Appellate Division having dissented. See Stevens v. Central Nat. Bank, 162 N.Y. 253, 56 N.E. 628, Id.,168 N.Y. 560, 61 N.E. 904;Matter of City of New York (New Court House), 216 N.Y. 489, 111 N.E. 65, Ann.Cas.1917D, 157;Silverstein v. Standard Accident Ins. Co. of Detroit, Mich., 221 N.Y. 332, 117 N.E. 307; Borenstein v. Borenstein, 272 N.Y. 407, 3 N.E.2d 844; Civil Practice Act, s 588, subd. 1, cl. (b). Accordingly, we heretofore denied a motion by the claimant for dismissal of the appeal so taken by the State, 298 N.Y. 860, 84 N.E.2d 327, and the appeal having been argued before us we now pass to a determination of the merits.

The material facts admit of a short statement. The claimant, a State banking institution subject to the New York Unemployment Insurance Law, Labor Law, Consol.Laws, c. 31, art. 18, on October 11, 1939, and January 13, 1940, reported and paid umemployment insurance contributions for the period August 10 to December 31, 1939. In March, 1944, collection of unemployment insurance contributions from State banks for that period was declared unconstitutional and void because during that time national banks had not been subjected to the same exaction. Matter of Bank of Manhattan Co., v. Murphy, 267 App.Div. 456, 47 N.Y.S.2d 524, affirmed 293 N.Y. 515, 58 N.E.2d 713. After the last-cited decision of the Appellate Division, the claimant, on June 21, 1944, filed a claim for refund with the State Department of Labor, but that claim was ultimately rejected because it was not filed within the time limited by subdivision 6 of section 570 of the Labor Law.

It was while that proceeding was pending before the Labor Department that the claimant commenced its suit in the Court of Claims, filing on February 7, 1945, its notice of intention to file a claim and on October 9, 1945, the claim itself. The Court of Claims, as we have said, dismissed that claim because it had not been filed in time. The limitation applied by the court is to be found in subdivision 4 of section 10 of the Court of Claims Act. It is thereby provided: ‘A claim for breach of contract, express or implied, * * * shall be filed within six months after the accrual of such claim, unless the claimant shall within such time file a written notice of intention to file a claim therefor in which event the claim shall be filed within two years after such accrual.’

Taking the payments of the unemployment insurance contributions in question to have been illegally compelled, the Court of Claims said that ‘claimant's cause of action arose immediately that it paid the tax.’ 186 Misc. 676, 683, 62 N.Y.S.2d 309, 314. Such contributions had been paid on October 11, 1939, and January 13, 1940, as we have noticed. It followed, therefore, that the claim had long been barred as the Court of Claims held.

The Appellate Division was of a different opinion. In its view, the illegally enforced payments of the contributions in question gave rise to a resultant trust of which the State was statutory trustee for the benefit of the claimant as the settlor. Upon that premise the court concluded that the Statute of Limitations did not commence to run against the claimant as such settlor until after demand for a refund had been made upon the State as such trustee. We find ourselves unable to follow this reasoning of the Appellate Division.

Unemployment insurance contributions, to be sure, are trust funds under the jurisdiction of statutory trustees. Statutory trusts of that kind, however, are nothing new. Cf. Decedent Estate Law, Consol.Laws, c. 13, s 130; General Business Law, Consol.Laws, c. 20, s 382-a; General Corporation Law, Consol.Laws, c. 23, s 168; Lien Law, Consol.Laws, c. 33, ss 4-a, 13, 25, 25-a, 25-b, 36, 36-a, 36-b, 70-76; Insurance Law, Consol.Laws, c. 28, ss 125, 514; Real Property Law, Consol.Laws, c. 50, s 233. Unlike trusts set up by wills or deeds of individuals, statutory trusts are enactments of the Legislature in which no ‘settlor’ plays a part (see Restatement, Trusts, s 23, comment c). For example, the personal representative of a decedent who recovers damages in an action for wrongfully causing the decedent's death must hold that recovery to the use of statutory distributees, Central New York Coach Lines v. Syracuse Herald Co., 277...