Cathedral Academy v. State

47 A.D.2d 390, 366 N.Y.S.2d 900, 1975 N.Y. App. Div. LEXIS 9507

• Court: Appellate Division of the Supreme Court of the State of New York
• Decided: April 24, 1975
• Docket: Claim No. 56557
• Status: Published

Opinions

Greenblott, J.

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 nonpublic 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 1 through 6 and $45 in grades 7 through 12. These amounts were determined because in the judgment of representatives of the State Education Department, they were "reasonable” (Levitt v Committee for Public Educ., 413 US 472, 476, n 4).

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, 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 nonpublic school operated under the auspices of the Roman Catholic Church, Albany Diocese, as well as numerous other nonpublic 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 8 to 1, affirmed the judgment of the District Court (Levitt v Committee for Public Educ., 413 US 472 [hereinafter, "Levitt”]). In so doing, the court referred to its decision in Lemon v Kurtzman (403 US 602 [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 identifiable and separable from aid to sectarian activities” (Levitt, supra, p 480).¹

Subsequent to the District Court judgment, the New York State Legislature apparently took the view that nonpublic 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 nonpublic 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 US 192 [Lemon II]).

In Lemon I, the case was remanded to the District Court to fashion a decree, whereupon the latter court enjoined payments under the Pennsylvania statute (Pa. Stat. Ann., tit. 24, §§ 5601-5609) but permitted the State to reimburse nonpublic 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, nonpublic 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 US, at p 195). 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 US, at p 202). In allowing those payments to be made, the Supreme 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, p 203). 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, pp 202-203.) In reaching this conclusion, the court took notice of the existence 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 purposes, 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 US, at p 203, n 3). 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, "exactly how the $27 and $45 figures were arrived at is somewhat unclear.” (Levitt, supra, 413 US, at p 476, n 4.) 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, will be "implicated only once under special circumstances that will not recqr” (Lemon, II, 411 US, at p 202). In Lemon II, however, a constitutional interest arising from the payments was assumed for the purpose of discussion, since the constitutionality of the statute in Lemon I had not turned upon the invalidity of the payments per se, whereas in the present case, the constitutional interest is more tangible because of the invalidation of the payments under Levitt. Moreover, in this case, a further constitutional interest will be implicated because of the need for State oversight in the form, at the very least, of an audit process.

We agree with the following remarks of the learned Judge in the Court of Claims: "Sympathize as we do with this claimant, and the many others similarly situated, and recognize as we must their great and ongoing contributions to the education of over 800,000 young people in this State, and aware as we are of the serious financial problems directly facing the parochial schools, and indirectly, the public, we are, nevertheless, at the same time, constrained because of the Supreme Court decisions in Levitt and Lemon II, to deny reimbursement as being unconstitutional.” (Cathedral Academy v State of New York, 77 Misc 2d 977, 985.)

The judgment should be affirmed, without costs.

1 . This is not to say that the State could necessarily provide such assurance in a manner which would survive constitutional scrutiny. In Lemon I, the basis for invalidating Pennsylvania’s and Rhode Island’s aid programs was, briefly, the extensive process of audit, inspection and oversight required by the State to provide the necessary assurances, thus fostering an "excessive entanglement” between church and State. We shall refer to this problem later.

For a further explanation of the reasons underlying the court’s determination that the payments were in danger of being applied for religious purposes," the opinion of the court, and of the Court of Claims in the present case, should be examined.

2 . No claim is made that appellant and other nonpublic schools should be required to refund payments which have already been made.

3 . In addition to the distinction based on the fact that the decision in Lemon /did not invalidate the payments per se under the Pennsylvania statute, it is also noteworthy that the Federal court there undertook to fashion an equitable remedy by carving out an exception to the scope of the injunction. Here, the Federal court has not seen fit to do so; the injunction against payments stands, without limitation.

4 . Presiding Justice Herlihy, arguing in his dissent that reimbursement should be permitted because of the reliance by the schools upon the expectation of payment, is of the view that reimbursement should be in such amount as would be determined by the trial court to equal the expenditures incurred in performing the services. This amount, as previously suggested, may be markedly different from the amount which appellant and others might have expected under the Mandated Services Act formula. We are unable to agree with the contention that because appellant and .others similarly situated relied upon being paid in an amount determined according to that formula, they should be entitled to reimbursement in an amount which bears no demonstrated relationship to the payments which would have been forthcoming under that formula.