Schenker v. State, 65360

• Decision Date: 13 December 1984
• Docket Number: No. 65360,65360
• Citation: 126 Misc.2d 1038,484 N.Y.S.2d 424
• Parties: Irwin SCHENKER, Claimant, v. The STATE of New York, Defendant. Claim
• Court: New York Court of Claims

Page 424

484 N.Y.S.2d 424

126 Misc.2d 1038

Irwin SCHENKER, Claimant, v. The STATE of New York, Defendant.

Claim No. 65360.

Court of Claims.

Dec. 13, 1984.

De Forest & Duer by Joyce Leahy, New York City, for claimant.

Robert Abrams, Atty. Gen. by Allen J. Goodman and William P. Kleen, Asst. Attys. Gen., for defendant.

DECISION

ALBERT A. BLINDER, Judge.

This is a claim for breach of contract predicated on an alleged agreement between claimant and the State University of New York, Downstate Medical Center (Downstate).

From 1967 until December 1, 1980, claimant was the Executive Director of Hillcrest General Hospital. In 1974, when Group Health Incorporated (GHI) took over the operation of Hillcrest, claimant received the additional title and duties of Vice President of GHI. At the time of his resignation from GHI, Mr. Schenker was earning in excess of $54,000 a year, in salary plus fringe benefits.

In the Fall of 1980, claimant was recruited by one Jeffrey Weiss, a member of a search committee seeking candidates for the position of Acting Executive Director at Downstate. Mr. Weiss was the representative of Dr. Stanley L. Lee, the Acting President of Downstate.

During meetings with Mr. Weiss and Dr. Lee, claimant discussed his salary requirements and other related topics. These matters included, inter alia, a request for an employment contract of at least a year's duration containing a provision that if the employment was terminated before the end of that period, severance pay equaling six months' salary was to be paid to the claimant.

Between October 6, and October 20, 1980, the terms of claimant's compensation were negotiated. Claimant testified that in his meeting with Dr. Lee on October 17, 1980, the offer of the position as Acting Director was made and he accepted. Dr. Lee indicated that approval of the Chancellor's office was still to be obtained.

It is clear, however, that Mr. Schenker did not wish to announce his resignation at GHI until he had something in writing. At the alleged direction of Dr. Lee, Mr. Schenker had his attorney draft two agreements, in letter form. Thereafter, on October 20, 1980, Mr. Schenker spoke by telephone to Dr. Lee who informed the claimant that the Chancellor's approval had been obtained. Dr. Lee requested that claimant bring the two draft agreements to Downstate later that day. Mr. Schenker delivered the agreements to Mr. Weiss, who delivered them to Dr. Lee for signature. After the documents were signed and returned to Mr. Schenker, claimant delivered his oral resignation to his supervisor, at GHI. A few days later, the draft agreements were retyped on the letterhead of Downstate and re-signed by both claimant and Dr. Lee.

Pursuant to the agreements, Mr. Schenker immediately began his consulting work for Downstate which continued until December 1, 1980. ^* On that date he assumed the full time duties as Acting Executive Director. Shortly thereafter, Mr. Schenker received a letter, dated November 21, 1980 from Chancellor Wharton advising claimant that he had been appointed "Acting Hospital Director" at Downstate. Claimant was to sign the letter, to indicate his acceptance of the position, and return it to Dr. Lee. On December 17th claimant signed the letter but not until adding the following typed paragraph at the bottom:

I hereby accept, subject to the terms and conditions of the letter agreement dated October 20, 1980 between Dr. Stanley Lee, Acting President of Downstate Medical Center-State University Hospital.

Claimant testified that he then sent the letter back to the chancellor.

Mr. Schenker continued in his position, performing his duties and receiving his salary, until he received a letter, dated January 16, 1981, from Jerome B. Komisar, Vice Chancellor for Faculty and Staff Relations. In the letter, Dr. Komisar indicated that the typed addition to the Chancellor's letter of November 21, 1980, caused the acceptance to be treated as a counter-offer by the claimant, which, in turn, could not be accepted by the University. Thus, the "offer" of the appointment in the November 21, 1980 letter was being withdrawn.

Claimant testified that on January 28, 1981, claimant was advised by Dr. Lee, both orally and in writing that since the offer of the appointment was withdrawn, his salary would cease at the end of the current payroll period.

No termination payments were ever received by Mr. Schenker pursuant to the alleged agreements signed by Dr. Lee and himself on October 20, 1980. After the exhaustion of unemployment insurance benefits, claimant allegedly remained unengaged for a considerable period of time.

It is undisputed that no agreement between claimant and personnel at Downstate was ever forwarded to, approved by or filed in, the State Comptroller's office.

Section 112(2) of the State Finance Law provides, in relevant part, as follows:

Before any contract made for or by any state department, board, officer, commission, or institution, shall be executed or become effective, whenever such contract exceeds five thousand dollars in amount, it shall first be approved by the comptroller and filed in his office. (Emphasis supplied).

This section has been held applicable to contracts entered into by the State University of New York. See Westgate North v. State University of New York, 77 Misc.2d 611, 354 N.Y.S.2d 281, aff'd 47 A.D.2d 1004, 368 N.Y.S.2d 1020.

Claimant, initially, argues that the defendant waived the right to assert the State Finance Law since it did not include it as an affirmative defense in its answer. This argument, while compelling at first, fails to find justification in the law. In Belmar Contracting Company, Inc. v. State of New York, 233 N.Y. 189, 135 N.E. 240, a similar provision then in existence in the Highway Law (Section 130) was the subject of the Court of Appeals scrutiny. It held, at p. 194, 135 N.E. 240:

Section 130 of the Highway Law (Cons.Laws, ch. 25), clearly provides that the execution of a formal written contract after its approval by the comptroller is essential. This is the basis of the liability of the state. None of its officers may impose upon it a contractual obligation except in the manner prescribed. We may not ignore the restrictions and limitations with which the legislature has chosen to surround the expenditure of public moneys. They are wise and should be enforced. The state has chosen to enact something similar to the Statute of Frauds for its own protection. Those dealing with it do so knowing this fact and at their own risk. If there is no contract there is no liability. However inequitable the conduct of the state may be it has said that it shall only be responsible upon one condition and consequently the claimant must show that that condition has been complied with. (Emphasis supplied).

In the case at bar, we find that compliance with Section 112 of the State Finance Law is a "condition precedent" to the existence of a valid contract and an issue upon which claimant had the burden of proof. Matter of Konski Engineers v. Levitt, 69 A.D.2d 940, 941, 415 N.Y.S.2d 509, aff'd 49 N.Y.2d 850, 427 N.Y.S.2d 796, 404 N.E.2d 1337, cert. den. 449 U.S. 840, 101 S.Ct. 118, 66 L.Ed.2d 47. Thus, the defendant was under no requirement to assert this matter by motion or in its responsive pleading.

Claimant's alternative argument, that the State Finance Law does not apply to the facts presented, must also fail. While the Chancellor has authority to appoint college administrative officers (8 NYCRR 333.5, 333.6) to serve at his pleasure (8 NYCRR 333.8), there is no provision allowing the Chancellor or any of his appointees to unilaterally bind the State of New York to contracts of employment,...