Becker v. State , 410 N.Y.S.2d 699 ( 1978 )

OPINION OF THE COURT

Per Curiam.

Claimant filed this claim in the Court of Claims to recover for the value of physician’s services rendered during the calendar year 1974 to patients of the Downstate Medical Center (Downstate), Brooklyn, New York, pursuant to an agreement between claimant and the State University of New York (SUNY).

For a number of years, it has been the practice of Downstate to employ physicians to serve as faculty members while also permitting them to practice privately as long as it did not interfere with their teaching responsibilities. In 1969, SUNY, on behalf of Downstate and a partnership of certain of Downstate’s faculty-doctors known as the Downstate Medical Group (Group), entered into an agreement whereby the members of the Group would bill their private patients directly for services rendered and Downstate would bill hospital patients directly and all fees received for services rendered by members of the Group would be split between the Group and the hospital according to certain percentage applications. The agreement was reduced to writing but was never signed by SUNY or by or on behalf of the Group and its doctors.

On or about December 31, 1970, the physicians comprising the department of radiology formed the corporation which is the claimant herein. The corporation and/or its members thereafter rendered services in the hospital, and until April, 1971, the claimant received from the State a percentage of fees, as provided in the unsigned 1969 agreement between SUNY and the Group. In 1971, the Comptroller of the State of New York refused to honor any vouchers for payments to the claimant based upon the 1969 agreement upon the ground that formal approval as required by section 112 of the State Finance Law had not been given. The claimant nevertheless continued to render services, and SUNY permitted the relationship to continue after the Comptroller’s refusal.

The claimant previously filed a claim for its percentage of fees for services rendered from April 1, 1971 to December 31, 1973. That claim was compromised before trial by a settlement based upon the percentages stated in the 1969 agreement. The State, consistent with that settlement, has refused to pay any sums of money for services rendered subsequent to December 31, 1973, and, accordingly, this claim was filed in 1975 to recover for services rendered during the calendar year 1974.

The central issues in this case involve the agreement entered into in 1969 between SUNY and the Group. The record establishes that the claimant was not a party to that agreement, but both SUNY and the claimant have attempted to adopt it as a contract between them and/or as legally representing the relationship between them.

It is undisputed upon this appeal that section 112 of the State Finance Law is applicable to the 1969 agreement and/or the relationship between the parties herein as a matter of contract. The finding by the trial court that the contract has never been approved by the Comptroller is supported by the record and precludes a recovery based on contract (see Blatt Bowling & Billiard Corp. v State of New York, 14 AD2d 144).

Further, as found by the trial court, the claimant was not induced to render any services or confer any benefits upon the State by any misrepresentation by the State. Specifically, the court noted: "Quite the contrary, as early as April, 1971 the claimant knew there was a contract problem; yet it continued to work”. That the claimant did thereafter secure payment through December, 1973, does not erase the continuing knowledge of the Comptroller’s refusal to approve any alleged existing contract.

In the present case, the trial court invoked equitable considerations to require the State to pay the claimant for services rendered. The trial court had no such equitable jurisdiction (Psaty v Duryea, 306 NY 413; Westgate North v State Univ. of N. Y., 77 Misc 2d 611, 616, affd 47 AD2d 1004). To consider the instant relief as being merely incidental would not be realistic and would exceed the reference thereto in the Psaty case (Psaty v Duryea, supra, pp 416-417).

Furthermore, assuming that the trial court is correct in its legalistic formulation of a duty on the part of the State to pay moneys representing the services rendered to someone, such a consideration does not weigh in favor of the claimant.

The claimant proceeded while knowing that it was a violation of section 112 of the State Finance Law for either it or SUNY to be in performance of a contract not approved by the Comptroller. Assuming that by virtue of having conferred a benefit on the State of New York an "innocent” supplier may claim an estoppel of the right of the citizens of the State to insist on satisfaction of their constitutional and/or statutory protection (Gerzof v Sweeney, 22 NY2d 297) the claimant herein was not "innocent”. In any event, the estoppel in Gerzof is a shield, and to apply it to this case would convert it into a sword, i.e., in Gerzof the village had performed its duties (payment) and the issue was the right of the village to recover its payment, whereas in this case the State has not performed, and the estoppel would be used to require performance.

There is no merit to any suggestion of equities favoring the claimant in this action and, as hereinbefore observed, the equitable relief granted by the trial court is not within its jurisdiction (see Westgate North v State Univ. of N. Y., supra). (See, also, Westgate North v Boyer, 47 AD2d 970.) Since the claim must be dismissed, the contention of the claimant that the trial court erred by denying interest need not be considered.

The judgment should be reversed, on the law and the facts, without costs, and the claim dismissed without prejudice to any further proceeding the claimant may institute, if so advised.