Opinion
Index No. 512090/2023
10-03-2023
Honest Funding, LLC, Plaintiff, v. Signature Hospitality Solutions LLC and GAYLA MICHONDA ST JULIEN, Defendants.
Law Offices of Steven Zakharyayev, New York City (Blaire Fellows of counsel) for Plaintiff. Dominick Dale, Brooklyn, for Defendant.
Law Offices of Steven Zakharyayev, New York City (Blaire Fellows of counsel) for Plaintiff.
Dominick Dale, Brooklyn, for Defendant.
HON. AARON D. MASLOW, Justice of the Supreme Court of the State of New York.
The following papers were read on this motion:
Submitted by Plaintiff
Summons and Complaint (NYSCEF Doc No. 1)
Copy of Merchant Agreement (NYSCEF Doc No. 2)
Copy of Remittance History (NYSCEF Doc No. 3)
Memorandum of Law in Opposition (NYSCEF Doc No. 38)
Submitted by Defendants
Answer (NYSCEF Doc No. 6)
Stipulation Transferring Venue (NYSCEF Doc No. 19)
Notice of Motion (NYSCEF Doc No. 21)
Affirmation in Support (NYSCEF Doc No. 22)
Request for Judicial Intervention (NYSCEF Doc No. 23)
I. Questions Presented
Does the New York State Supreme Court possess subject matter jurisdiction over claims involving less than $50,000, or, if the action is presently pending in the Supreme Court, Kings County, is jurisdiction vested solely in the New York City Civil Court by virtue of a recent constitutional amendment increasing that court's jurisdictional limit?
Would there have been subject matter jurisdiction in the Supreme Court of the colony of New York prior to the American Revolution to entertain the within action seeking $17,596.70 (in 2023 currency) in undelivered future receivables pursuant to a merchant cash agreement?
II. Introduction
This action was commenced by Plaintiff, who allegedly purchased future receivables from Defendant Signature Hospitality Solutions LLC pursuant to an agreement which was guaranteed by Defendant Gayla Michonda St Julien. Plaintiff claims that Defendants owe $17,596.70 in undelivered future receivables. (See Complaint.)
The action was originally commenced in Supreme Court, Monroe County (see Summons). Per stipulation it was transferred to Supreme Court, Kings County (see Stipulation of Transfer). Despite executing said stipulation, Defendants moved pursuant to CPLR 3211 (a) (2) to dismiss the action "for lack of subject matter jurisdiction since it falls under the exclusive jurisdiction of the Civil Court of the City of New York, Kings County and not that of the Supreme Court of the State of New York..." (Notice of Motion at 3). Defendants' argument is premised on the fact that effective January 1, 2022, the State Constitution was amended to increase the jurisdictional limit of the New York City Civil Court from $25,000 to $50,000.
III. Discussion
Defendants' motion is devoid of merit. "The Supreme Court has general jurisdiction in law and equity (NY Const. art. VI, § 1).... Giving additional jurisdiction to other tribunals does not take general jurisdiction away from the Supreme Court. (Matter of Stilwell, 139 NY 337, 342; Matter of Berkovitz v. Arbib & Houlberg, 230 NY 261, 274.)" (Barone v Aetna Life Ins. Co., 260 NY 410, 414 [1934].)
Article VI, § 7 of the State Constitution provides:
a. The supreme court shall have general original jurisdiction in law and equity and the appellate jurisdiction herein provided. In the city of New York, it shall have exclusive jurisdiction over crimes prosecuted by indictment, provided, however, that the legislature may grant to the city-wide court of criminal jurisdiction of the city of New York jurisdiction over misdemeanors prosecuted by indictment and to the family court in the city of New York jurisdiction over crimes and offenses by or against minors or between spouses or between parent and child or between members of the same family or household.
b. If the legislature shall create new classes of actions and proceedings, the supreme court shall have jurisdiction over such classes of actions and proceedings, but the legislature may provide that another court or other courts shall also have jurisdiction and that actions and proceedings of such classes may be originated in such other court or courts.
Nothing in these constitutional provisions denudes the Supreme Court of subject matter jurisdiction over actions merely because a lower level trial court for New York City was created which possesses jurisdiction over actions where the amount in dispute is $50,000 or less. Nothing in the provisions of the State Constitution referenced by Defendants concerning the New York City Civil Court (Art VI, § 15) vests said jurisdiction exclusively in the Civil Court:
a. The legislature shall by law establish a single court of city-wide civil jurisdiction and a single court of city-wide criminal jurisdiction in and for the city of New York and the legislature may, upon the request of the mayor and the local legislative body of the city of New York, merge the two courts into one city-wide court of both civil and criminal jurisdiction. The said city-wide courts shall consist of such number of judges as may be provided by law. The judges of the court of city-wide civil jurisdiction shall be residents of such city and shall be chosen for terms of ten years by the electors of the counties included within the city of New York from districts within such counties established by law. The judges of the court of city-wide criminal jurisdiction shall be residents of such city and shall be appointed for terms of ten years by the mayor of the city of New York.
b. The court of city-wide civil jurisdiction of the city of New York shall have jurisdiction over the following classes of actions and proceedings which shall be originated in such court in the manner provided by law: actions and proceedings for the recovery of money, actions and proceedings for the recovery of chattels and actions and proceedings for the foreclosure of mechanics liens and liens on personal property where the amount sought to be recovered or the value of the property does not exceed fifty thousand dollars exclusive of interest and costs, or such smaller amount as may be fixed by law; over summary proceedings to recover possession of real property and to remove tenants therefrom and over such other actions and proceedings, not within the exclusive jurisdiction of the supreme court, as may be provided by law. The court of city-wide civil jurisdiction shall further exercise such equity jurisdiction as may be provided by law and its jurisdiction to enter judgment upon a counterclaim for the recovery of money only shall be unlimited.
c. The court of city-wide criminal jurisdiction of the city of New York shall have jurisdiction over crimes and other violations of law, other than those prosecuted by indictment, provided, however, that the legislature may grant to said court jurisdiction over misdemeanors prosecuted by indictment; and over such other actions and proceedings, not within the exclusive jurisdiction of the supreme court, as may be provided by law.
d. The provisions of this section shall in no way limit or impair the jurisdiction of the supreme court as set forth in section seven of this article.
In fact, as it quoted above, paragraph d of § 15 states outright that nothing in the section shall limit or impair the Supreme Court's jurisdiction.
The memorandum of the State Assembly sponsor of the constitutional amendment increasing the Civil Court's jurisdictional limit to $50,000 wrote:
JUSTIFICATION:
In 1983, the Constitution was amended to raise the jurisdictional limit of the New York City Civil Court from claims of $10,000 to $25,000, where it has remained. This was done to adjust for inflation, and to help lift a burden off of a backlogged New York State Supreme Court, setting precedent that the court systems should evolve as the nation and as the state does.
Now, more than 35 years later, it is time to once again revisit this threshold. This bill would raise the jurisdictional limit of New York City Civil Court to $50,000. In the New York State Unified Court System 2018 annual report, the Chief Judge of the New York Court of Appeals Janet DiFiore made reducing backlogs and delays a crucial point of her Excellence Initiative. Adjusting this jurisdictional limit would be one powerful tool to address these problems. It would adequately adjust for inflation, and help to relieve some of the burden placed on New York Supreme Court judges.(Mem in Support of 2019 NY Assembly Bill A7714, May 24, 2019.)
While it was hoped that the burden on Supreme Court judges would be lessened, there is no indication n the memorandum that the amendment was designed to affect that court's status as a court of general jurisdiction in law and equity.
"Moreover, even though the Legislature may permissibly grant concurrent jurisdiction to another court, it cannot thereby deprive the Supreme Court of its jurisdiction (e.g., Barone v Aetna Life Ins. Co., 260 NY 410). Furthermore, even though the Supreme Court could constitutionally transfer an action to another court with concurrent jurisdiction (NY Const, art VI, §19, subd a), it may not divest itself of jurisdiction and grant exclusive jurisdiction in the Family Court in violation of the State Constitution. Accordingly, the requisite jurisdiction was present...." (Green v Green, 50 A.D.2d 235 [3d Dept 1975] [prior order directing further support and custody matters be transferred to county family court did not preclude Supreme Court jurisdiction].) Even an agreement to confer jurisdiction on a trial court cannot vitiate the constitutional grant of jurisdiction to the Supreme Court (see Lannon v Lannon, 124 A.D.2d 1051 [4th Dept 1986]).
Even if the legislature were to limit jurisdiction over certain types of cases to a lower trial court or intend that they be commenced in such lower trial court, it lacks the power to mandate this; exclusive jurisdiction may not be vested in a lower trial court. The legislature did recognize the advisability of trying certain classes of cases in lower trial courts but there remains concurrent jurisdiction with the Supreme Court. The latter may then transfer the action. (See Matter of 3505 Realty Corp. v Weinberger, 41 Misc.2d 254 [Sup Ct, Bronx County 1963].)
Finally, this Court takes cognizance of the provisions of Judiciary Law § 140-b:
The general jurisdiction in law and equity which the supreme court possesses under the provisions of the constitution includes all the jurisdiction which was possessed and exercised by the supreme court of the colony of New York at any time, and by the court of chancery in England on the fourth day of July, seventeen hundred seventy-six, with the exceptions, additions and limitations created and imposed by the constitution and laws of the state. Subject to those exceptions and limitations the supreme court of the state has all the powers and authority of each of those courts and may exercise them in like manner.
The jurisdiction of the Supreme Court during New York's colonial period "extended to all pleas and causes, civil, criminal and mixed, with the like power as the court of King's Bench, Common Please, and Exchequer in England. 2 R. L. of 1813, app. 5. 6. Real actions, solely cognizable in the Common Pleas,-criminal prosecutions, the original peculiar province of the King's Bench,-the legal branch of the Exchequer-and personal actions common to each of them, all centre in this court." (David Graham, Practice of the Supreme Court of the State of New York intro, ch 1 [The Jurisdiction of the Supreme Court] at 21-22 [2d ed 1836].) "Debt lies for the recovery of a sum certain... or upon articles of agreement to pay money... (id. book 1, ch 2 [Personal Actions], § 1 [The Several Personal Actions], subsec 1 [Actions ex Contractu] at 84). Further,
Assumpsit is an action of trespass on the case, so denominated at the time the records were written in Latin, as descriptive of the defendant's promise or undertaking. It is a remedy, by which a compensation in damages may be recovered, commensurate with the injury sustained by the breach or violation of any contract not under seal, nor of record, whether express or implied, written or verbal, or for the payment of money, or for the performance, or omission of any other act. But the action of assumpsit is not sustainable, unless there has been an express contract, or from the nature of the circumstances, such contract me be implied.(Id. at 81.)
As was noted in 1863:
The scope of this tribunal is coextensive with the limits of' the state, embracing every species of relief, and every variety of jurisdiction, original and revisory. Its common law authority dates from the original establishment of courts of justice in the former colony of New York; its cognizance of equitable cases, from the Constitution of 1846. The powers exercised by it have never on any occasion been made the subject of constitutional definition, but have devolved upon it without restriction-its jurisdiction at common law being that which heretofore belonged to the Supreme Court of this colony, being identical, or nearly so, with that exercised by the courts of King's Bench, Common Pleas, and Exchequer, in England; and, in equity, that by the Court of Chancery, in the same country; subject, however, in either case, to the exceptions, additions, and limitations, created and imposed by the constitution and laws of this state. Vide 2 R. S., 196, § 1; 2 R. S., 173, § 36. See, likewise; definition in Kanouse vs. Martin, 3 Sandf., 653 and Graham's Practice, p. 23.(Henry Whittaker, Practice and Pleading in Actions in the Courts of Record in the State of New York, Under the Code of Procedure, and Other Statutes, Where Applicable book I [Courts of Justice and Their Officers], ch III [Of the Supreme Court], § 11 [General Constitution, and Powers of Judges] at 26 [3d ed 1863].)
Pertinent history of the Supreme Court of Judicature of New York, insofar as is relevant herein, appears in Deborah A. Rosen, The Supreme Court of Judicature of Colonial New York: Civil Practice in Transition, 1691-1760 (5 Law & Hist. Rev. 213 [1987]). Among the salient points made were as follows:
The Supreme Court of Judicature of New York was established by statute in 1691.[ ] It was the first centralized court of original jurisdiction in New York.... The Supreme Court had original jurisdiction over all criminal pleas and over all civil pleas valued at twenty pounds or more and also had appellate jurisdiction to review cases originally decided in the lower courts....
In the 1750s, ejectment and other land-based actions constituted a much lower proportion of the court's business and debt cases a much larger proportion than in the 1690s.[ ] The increase in debt cases may be attributable to the growth of commerce in New York during the eighteenth century.[ ] Alternatively, as William E. Nelson has suggested, it may be attributable to an increased use of promissory notes as a kind of currency in place of specie or paper money. The high number of debt cases between 1754 and 1756 is probably attributable to the several years of depression, fluctuation in the value of currency, and scarcity of specie that preceded the French and Indian War.[ ]...
Even the merchant who was, or who had once been, wealthy enough for people to accept his promissory note as money could not always pay off all of those notes if presented for payment at the same time, nor could he hold back the flood of demands for payment which was likely to result as soon as his financial position appeared to be weakening. Creditors were aware of the difficulties of repaying debts, and they realized that obtaining a judgment against a debtor could not ensure immediate payment of the debt if the debtor had no resources with which to pay that debt. Yet they brought lawsuits nonetheless. Possibly this was because a statute of limitations provided that actions on debts had to be brought within six years after the due date on the obligation.[ ] Creditors could not wait for good times to bring their lawsuits and so had to sue even insolvent debtors or forfeit their right to later judicial enforcement of the debt.(Id. at 214-233 [emphasis added].)
Twenty British pounds in 1776, when the American colonies declared their independence from Great Britain, is equivalent in purchasing power to £2,644 in March 2023 (when this action was commenced in Monroe County) (see Bank of England, Inflation Calculator, available at https://www.bankofengland.co.uk/monetary-policy/inflation/inflation-calculator [last accessed Oct. 3, 2023]). £2,644 in the first quarter of this year converted to $3272.28, according to the U.S. Department of the Treasury (see FiscalData.Treasury.gov, Currency Exchange Rates Converter, available at https://fiscaldata.treasury.gov/currency-exchange-rates-converter/ [last accessed Oct. 3, 2023]).
Working backwards in time, in March 2023, when this action was commenced, the $17,596.70 sued for by Plaintiff was equivalent to £105.16 in 1776 (see id. [$17,596.70 = £13,901.39 in 1st Quarter 2023]; Bank of England, Inflation Calculator [£13,901.39 in March 2023 = £105.16 in 1776]).
Since this action is one claiming a present debt of $17,596.70, equivalent to £105.16 (more than £20) in 1776, purportedly pursuant to an agreement to pay money, subject jurisdiction over an action to enforce the debt would have reposed within the Supreme Court of the colony of New York prior to the American Revolution, particularly in assumpsit. Therefore, jurisdiction still remains vested in the Supreme Court in 2023 despite there being concurrent jurisdiction with the New York City Civil Court.
. At oral argument, counselors for the parties lacked information as to whether merchant cash advance contracts were common in the pre-Revolutionary War colonial America, but it matters not inasmuch as actions to collect money based on agreement would have been permissible in the colony's Supreme Court - certainly those based on defaults in repaying credit advanced. It bears noting, "The use of credit, the duration of credit instruments, and the methods of incorporating interest show credit as an important method of exchange and the economy of colonial America to be very complex and sophisticated" (David T. Flynn, Credit in the Colonial American Economy, available at https://eh.net/encyclopedia/credit-in-the-colonial-american-economy/ [last accessed Oct. 3, 2023]).
IV. Conclusion
The first question posed at the outset, "Does the New York State Supreme Court possess subject matter jurisdiction over claims involving less than $50,000, or, if the action is presently pending in the Supreme Court, Kings County, is jurisdiction vested solely in the New York City Civil Court by virtue of a recent constitutional amendment increasing that court's jurisdictional limit?" is answered as follows: The Supreme Court possesses subject matter jurisdiction; jurisdiction is not vested solely in the New York City Civil Court.
The second question posed at the outset, "Would there have been subject matter jurisdiction in the Supreme Court of the colony of New York prior to the American Revolution to entertain the within action seeking $17,596.70 (in 2023 currency) in undelivered future receivables pursuant to a merchant cash agreement?" is answered in the affirmative.
Accordingly, IT IS HEREBY ORDERED that Defendants' motion to dismiss the within action for lack of subject matter jurisdiction is DENIED.