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| STATE OF NEW YORK SUPREME COURT - ALBANY COUNTY ________________________________________________ ROBERT L. SCHULZ, GARY T. LOUGHREY, MARK N. AXINN, BRADFORD R. ARTER, and JAMES B. STRAWHORN, Plaintiffs, AMENDED VERIFIED COMPLAINT - against - THE NEW YORK STATE LEGISLATURE, SHELDON SILVER, Defendants. ________________________________________________ Robert L. Schulz, Gary T. Loughrey, Mark N. Axinn, Bradford R. Arter and James B. Strawhorn, allege: 1. This is a declaratory judgment action pursuant to CPLR 3001 and an action pursuant to Article 7A of the State Finance Law. 2. The relief requested herein is a final order: a) declaring Chapter 16 of the Laws of 1997 to be unconstitutional, null and void, b) declaring the exception language in State Finance Law Section 123-b(1) to be unconstitutional, null and void, and c) for such other and further relief as to the court may seem just and proper.
PARTIES 3. Robert L. Schulz is a citizen-taxpayer-voter of New York State. He resides in the Town of Fort Ann, Washington County. His mailing address is 2458 Ridge Road, Queensbury, New York 12804. He is an individual taxpayer and property owner liable to pay taxes upon an assessment of more than $1,000 in the Town of Fort Ann, Washington County, and in Queensbury, Warren County, New York. He pays State income, sales and compensating use taxes. He is a registered voter registered to vote in the Town of Fort Ann, Washington County, New York. He voted in the last general election in New York State. He is eligible to vote in the next general election in New York State. 4. Gary T. Loughrey is a citizen-taxpayer-voter of New York State. He resides in the Town of Queensbury, Warren County. His mailing address is 58 Western Avenue, Queensbury, New York 12804. He is an individual taxpayer and property owner liable to pay taxes upon an assessment of more than $1,000 in the Town of Queensbury, Warren County. He pays State income, sales and compensating use taxes. He is a registered voter registered to vote in the Town of Queensbury, Warren County, New York. He voted in the last general election in New York State. He is eligible to vote in the next general election in New York State. 5. Mark N. Axinn is a citizen-taxpayer-voter of New York State. He resides in the City of New York, New York County. His mailing address is 175 East 73rd Street, Apt. 1, New York, New York 10021. He is an individual taxpayer and property owner liable to pay taxes upon an assessment of more than $1,000 in the City of New York, New York County. He pays New York City income tax. He pays State income, sales and compensating use taxes. He is a registered voter registered to vote in the City of New York. He voted in the last general election in New York State. He is eligible to vote in the next general election in New York State. 6. Bradford R. Arter is a citizen-taxpayer-voter of New York State. He resides in the City of New York, Queens County. His mailing address is 79-12 31st Ave., East Elmhurst, New York, 11370. He pays New York City income tax. He pays State income, sales and compensating use taxes. He is a registered voter registered to vote in the City of New York. He voted in the last general election in New York State. He is eligible to vote in the next general election in New York State. 7. James B. Strawhorn is a citizen-taxpayer-voter of New York State. He resides in the City of New York, Queens County. His mailing address is 3317 84th Street, Apt. C1, Jackson Heights, New York, 11372. He pays New York City income tax. He pays State income, sales and compensating use taxes. He is a registered voter registered to vote in the City of New York. He voted in the last general election in New York State. He is eligible to vote in the next general election in New York State. 8. The New York Legislature is the Legislative Branch of the State of New York, Joseph L. Bruno is a member of the Legislature and is the Majority Leader of the Senate, Sheldon Silver is a member of the Legislature and is the Speaker of the Assembly. 9. The New York State Executive is the Executive Branch of the State of New York, created by Article IV of the New York State Constitution. George Pataki is the duly elected Governor of New York State. H. Carl McCall is the Comptroller of the State of New York.
STATEMENT OF THE FACTS 10. On or about February 12, 1997, the Legislature passed and the Governor signed into law bill No. S.2592/A.4320, an Act creating the New York City Transitional Finance Authority. Exhibit A hereto is a copy of the Act, which became effective on March 5, 1997, as Chapter 16 L97. Exhibits B and C hereto are two memorandums in support. 11. In 1975, the Legislature passed and the Governor signed into law what is now State Finance Law Section 123-b(1).
FIRST CLAIM CHAPTER 16 L97 IS VIOLATIVE OF ARTICLE VIII, SECTION 4 OF THE NEW YORK CONSTITUTION 12. The New York Constitution reads in relevant part: "...no county, city, town, village or school district described in this section shall be allowed to contract indebtedness for any purpose or in any manner which, including existing indebtedness, shall exceed an amount equal to the following percentages of the average full valuation of taxable real estate of such county, city, town, village or school district...c) the City of New York, for city purposes, ten per centum...." Article VIII, Section 4, Paragraph C New York Constitution 13. Chapter 16 L97 reads in relevant part: "Section 1. Legislative findings and declaration. The legislature hereby finds and declares that as the City of New York approaches its constitutional debt limit, the availability of adequate funding for the maintenance, expansion and rebuilding of the infrastructure of the City is in jeopardy; that an emergency financing mechanism should be made available to the City of New York to ensure that adequate funds are available to meet the needs of the City’s capital program to maintain, expand, and rebuild the City’s infrastructure;...that a transitional finance authority should therefore be established to issue up to seven and one-half billion dollars in bonds to finance such capital projects...It is further found and declared that authorization for this transitional finance authority to issue debt shall be temporary; that the existing calculation methodology for the City’s constitutional debt limit which is based on ten percent of the full value of taxable real estate, is outdated...that a constitutional amendment should be proposed to update the calculation of the City’s debt limit...and that the power of the authority to issue bonds (other than refunding bonds) shall expire upon enactment of such constitutional amendment and implementing legislation." Section 1. Chapter 16 Laws of 1997 "Section 2799-gg. Bonds of the Authority. 1. The authority shall have the power and is hereby authorized from time to time to issue bonds...not to exceed seven billion, five hundred million dollars ($7,500,000,000)...." Page 6, line 36-45 Chapter 16 Laws of 1997 14. Chapter 16 L97 is repugnant to Article VIII, Section 4 of the New York Constitution. 15. The Legislature cannot suspend Article VIII, Section 4.c of the Constitution and rule, instead, by Chapter 16 L97, a statute that is obnoxious to Article VIII, Section 4.c.
SECOND CLAIM CHAPTER 16 L97 IS VIOLATIVE OF ARTICLE VIII, SECTION 2 OF THE NEW YORK CONSTITUTION 16. The New York Constitution reads in relevant part: "No indebtedness shall be contracted by any county, city, town, village or school district unless such county, city, town, village or school district shall have pledged its faith and credit for the payment of the principal thereof and the interest thereon...Provision shall be made annually by appropriation by every county, city, town, village and school district for the payment of interest on all indebtedness and for the amounts required for (a) the amortization and redemption of term bonds, sinking fund bonds and serial bonds...." Article VIII, Section 2 New York Constitution 17. Chapter 16 L97 reads in relevant part: "The bonds or other obligations of the authority shall not be a debt of either the state or the city and neither the state nor the city shall be liable thereon...." Page 9, lines 23-25 Chapter 16 Laws of 1997 18. Debt incurred under Chapter 16 L97 is to be debt incurred only on behalf of the City of New York, to pay for "costs, appropriated in the capital budget of the city pursuant to chapters nine and ten of the New York city charter, as amended from time to time, providing for the construction, reconstruction, acquisition or installation of physical public betterments or improvement which would be classified as capital assets under generally accepted accounting principles for municipalities, or the costs of any preliminary studies, surveys, maps, plans, estimates and hearings, or incidental costs, including, but not limited to, legal fees, printing or engraving, publication of notices, taking of title, apportionment of costs, and interest during construction, or any underwriting or other costs incurred in connection with the financing thereof...In accordance with the provisions of this title, the authority may only finance costs...." See Chapter 16 L97, page 3, line 20-31, and lines 48, 49. 19. The only identifiable source of revenues to be used to service the debt incurred on behalf of the City of New York under Chapter 16 L97, will be "payments by the state comptroller". See Chapter 16 L97, page 9, line 35. 20. Under Chapter 16 L97, the comptroller must make payment to the authority, using, first, moneys deposited with him (under the mandate of Section 1313 of the state tax law) but collected under the mandates of Section 1304(b) of the state tax law (state tax on income earned in New York City), and, second, moneys collected and deposited with him under the mandates of Sections 1101-1148 of the state tax law (state sales and compensating use taxes), including but not limited to the mandate of Section 1107 of the state tax law (Temporary Sales and Compensating Use Tax in New York City). See Chapter 16 L97, page 10, lines 15, 16 and lines 42-49, and page 3, lines 1-3.
THIRD CLAIM CHAPTER 16 L97 IS VIOLATIVE OF ARTICLE VIII, SECTION 12 OF THE NEW YORK CONSTITUTION 21. The New York Constitution reads in relevant part: "It shall be the duty of the legislature, subject to the provisions of this constitution, to restrict the power of taxation, assessment, borrowing money, contracting indebtedness, and loaning the credit of counties, cities, towns and villages, so as to prevent abuses in taxation and assessments and in contracting of indebtedness by them...." Article VIII, Section 12 New York Constitution 22. Chapter 16 L97 is violative of Article VIII, Section 12 of the New York Constitution.
FOURTH CLAIM CHAPTER 16 L97 IS VIOLATIVE OF ARTICLE X, SECTION 5 OF THE NEW YORK CONSTITUTION 23. The New York Constitution reads in relevant part: "Neither the state nor any political subdivision thereof shall at any time be liable for the payment of any obligations issued by such a public corporation heretofore or hereafter created, nor may the legislature accept, authorize acceptance of or impose such liability upon the state or any political subdivision thereof...." Article X, Section 5 New York Constitution 24. Chapter 16 of the Laws of 1997 reads in relevant part: "5. Tax revenues received by the authority pursuant to Section 1313 of the tax law, together with any alternate revenues received by the authority, shall be applied in the following order of priority; first pursuant to the authority’s contract with bondholders, then to pay the authority’s operating expenses... Section 2799ii. Agreement with the state...to the extent that the tax revenues payable to the authority under section thirteen hundred thirteen of the tax law during such fiscal year are projected by the mayor to be insufficient to meet at least one hundred fifty percent of the maximum annual debt service on authority bonds then outstanding, the mayor shall so notify the state comptroller and the state comptroller shall pay to the authority from alternative revenues such amount as is necessary to provide at least one hundred fifty percent of the maximum annual debt service...." Page 10, lines 15-18, 42-49 Chapter 16 Laws of 1997 25. Chapter 16 L97 is repugnant to Article X, Section 5 of the New York Constitution. 26. The Legislature cannot suspend Article X, Section 5 of the Constitution and rule, instead, by Chapter 16 L97, a statute that is obnoxious to Article X, Section 5.
FIFTH CLAIM CHAPTER 16 L97 IS VIOLATIVE OF ARTICLE VII, SECTION 11 OF THE NEW YORK CONSTITUTION 27. The New York Constitution reads in relevant part: "no debt shall be hereinafter contracted by or in behalf of the state, unless such debt shall be authorized by law, for some single work or purpose, to be distinctly specified therein. No such law shall take effect until it shall, at a general election, have been submitted to the people, and have received a majority of all the votes cast for and against it at such election...." Article VII, Section 11 New York Constitution 28. Chapter 16 of the Laws of 1997 reads in relevant part: "Section 2799-ii. Agreement with the state...to the extent that the tax revenues payable to the authority under section thirteen hundred thirteen of the tax law during such fiscal year are projected by the mayor to be insufficient to meet at least one hundred fifty percent of the maximum annual debt service on authority bonds then outstanding, the mayor shall so notify the state comptroller and the state comptroller shall pay to the authority from alternative revenues such amount as is necessary to provide at least one hundred fifty percent of the maximum annual debt service...." Page 10, lines 42-49 Chapter 16 Laws of 1997 29. Chapter 16 L97 is repugnant to Article VII, Section 11 of the New York Constitution. 30. The Legislature cannot suspend Article VII, Section 11 of the Constitution and rule, instead, by Chapter 16 L97, a statute that is obnoxious to Article VII, Section 11.
SIXTH CLAIM CHAPTER 16 L97 IS VIOLATIVE OF ARTICLE VII AND ARTICLE VIII OF THE NEW YORK CONSTITUTION 31. The New York Constitution reads in relevant part: "...nor shall the credit of the state be given or loaned to or in aid of any individual, or public or private corporation or association, or private undertaking...." Article VII, Section 8 New York Constitution "...nor shall any county, city, town, village or school district give or loan its credit to or in aid of any individual, or public or private corporation or association, or private undertaking...." Article VIII, Section 1 New York Constitution 32. Chapter 16 Laws of 1997 reads in relevant part: "Section 2799-ii. Agreement with the state...and the state comptroller shall pay to the authority from alternative revenues such amount as is necessary to provide at least one hundred fifty percent of the maximum annual debt service...." Page 10, lines 47-49 Chapter 16 Laws of 1997 "Section 2799-jj. Agreement with the city. Nothing contained in this section shall be deemed to restrict any right the city may have to amend, modify or otherwise alter local laws imposing or relating to the taxes payable to the authority pursuant to section thirteen hundred thirteen of the tax law so long as, after giving effect to such amendment, modification or other alteration, the amount of tax revenues projected by the mayor to be available to the authority during each of its fiscal years following the effective date of such amendment, modification or other alteration shall not be less then one hundred fifty percent of maximum annual debt service on authority bonds then outstanding." Page 11, lines 13-23 Chapter 16 Laws of 1997 33. Chapter 16 L97 is repugnant to Article VII and Article VIII of the New York Constitution. 34. The Legislature cannot suspend Article VII and Article VIII of the Constitution and rule, instead, by Chapter 16 L97, a statute that is obnoxious to Article VII and Article VIII.
SEVENTH CLAIM THE EXCEPTION IN STATE FINANCE LAW SECTION 123-b(1) IS UNCONSTITUTIONAL 35. State Finance Law Section 123-b(1) reads in relevant part: "1. Notwithstanding any inconsistent provision of law, any person, who is a citizen taxpayer, whether or not such person is or may be affected or specially aggrieved by the activity herein referred to, may maintain an action for equitable or declaratory relief, or both, against an officer or employee of the state who in the course of his or her duties has caused, is now causing, or is about to cause a wrongful expenditure, misappropriation, misapplication, or any other illegal or unconstitutional disbursement of state funds or state property, except that the provisions of this subdivision shall not apply to the authorization, sale, execution or delivery of a bond issue or notes issued in anticipation thereof by the state or any agency, instrumentality or subdivision thereof or by any public corporation or public benefit corporation."(plaintiffs’ emphasis). Section 123-b(1) State Finance Law 36. With respect to the New York Constitution: · the exception language of SFL 123-b(1) strips plaintiffs of their fundamental right, as provided by Article I Section 9.1, to petition the government for a redress of grievances when the State acts in a way that is repugnant to provisions of the U.S. and New York Constitutions; · SFL 123-b(1), in its effect, strips plaintiffs of their constitutional (republican) protection against debt incurred by the State to fund operating costs as provided by Article VII, Section 12; · SFL 123-b(1), in its effect, strips plaintiffs of their constitutional (republican) protection against debt incurred by local governments to fund operating deficits, as provided by Article VIII, Section 2; · SFL 123-b(1), in its effect, strips plaintiffs of their constitutional (republican) protection against the use of State credit in aid of public corporations and Authorities, as provided by Article VII, Section 8; · SFL 123-b(1), in its effect, strips plaintiffs of their constitutional (republican) protection against the use of the credit of local governments in aid of public corporations as provided by Article VIII, Section 1; · SFL 123-b(1), in its effect, strips plaintiffs of their constitutional (republican) protection against the use of State or local government tax revenues to fund any part of any debt obligations of public corporations or Authorities as provided by Article X, Section 5; · SFL 123-b(1), in its effect, strips plaintiffs of their constitutional (republican) guarantee of municipal debt limitations as provided by Article VIII, Section 4; and · SFL 123-b(1), in its effect, strips plaintiffs of their constitutional (republican) protection against the use of public funds to subsidize private corporations as provided by Article VII, Section 8. 37. With respect to the United States Constitution: · the exception language of SFL 123-b(1) strips plaintiffs of their First Amendment right to petition the government for a redress of grievances after the State has acted in a way that is repugnant to provisions of the U.S. and N.Y. Constitutions; · SFL 123-b(1), in its effect, strips plaintiffs of their guarantee of a republican form of government, as provided by Article IV, Section 4, if they are residing in New York State; · SFL 123-b(1), in its effect, strips plaintiffs of their Fifth Amendment right against a taking of their money property through taxes and fees without "constitutional due process"; · it is arguable that SFL 123-b(1), in its effect, strips plaintiffs of their Thirteenth or Ninth Amendment protection against involuntary economic servitude; and · SFL 123-b(1), in its effect, strips plaintiffs of their Fourteenth Amendment right against laws that abridge these privileges and immunities
EIGHTH CLAIM SFL 123-b(1) IS VIOLATIVE OF THE FIRST AMENDMENT TO THE UNITED STATES CONSTITUTION 38. The exception in SFL 123-b(1) is designed to bar challenges to unconstitutional borrowing practices, principally those that violate the people’s fundamental debt-limiting protections as found under articles VII, VIII and X of the New York Constitution. 39. The exception in SFL 123-b(1) is being used to bar plaintiffs from exercising their fundamental right to petition the government for a redress of their grievances by accessing the courts. First, Fifth and Fourteenth Amendments. The First Amendment right to petition the government for a redress of grievances has been incorporated into the Fourteenth Amendment and is therefore applicable to the States. Nicholson v Moran, D.R.I 1993, 835 F. Supp. 692. 40. The filing of a lawsuit carries significant constitutional protection, implicating the First Amendment right to petition the government for redress of grievances and the right of access to the courts. Hoeber for and on Behalf of N.L.R.B. v Local 30, United States, Tile & Composition Roofers et al (Pa) 1991, 939 F.2d 118. SFL 123-b(1) abridges these rights and is unconstitutional. 41. The First Amendment protects the right to petition of persons whose activities are genuinely aimed at procuring favorable governmental action, as has been the case in those cases cited above which have been dismissed by the Unified Court System of New York under SFL 123-b(1). LeBlanc-Sternber v Fletcher, S.D.N.Y. 1991, 781 F.Supp.261. 42. The petition clause of the First Amendment is of paramount importance. It was inspired by the same ideals of liberty and democracy that resulted in the First Amendment freedoms to speak, publish and assemble. McDonald v Smith, N.C. 1985, 105 S. Ct. 2787. 43. The right to petition government for a redress of grievances is a specific, natural right guaranteed by the First Amendment, Boling v National Zinc Co., D.C. Okl. 1976 435 F. Supp, 18. See also U.S. v State of Mich., D.C. Mich. 1978, 460 F. Supp. 637. 44. The right of petition guaranteed by the First Amendment has been extended so as to prevent its denial by the States. Richards Furniture Corp. v Bd. of County Com’rs of Anne Arundel County. (1963) 196 A.2d 621, 223 Md. 249. SFL 123-b(1) denies plaintiffs their right to petition. 45. Due process right to access to the courts and the right to petition officials and courts for redress of grievances are fundamental rights which cannot be invaded without justification by a compelling state interest. Morales v Turman, D.C. Tex, 1971, 326 F. Supp. 677. Defendants have offered no justification much less a compelling justification. 46. Right of access to courts is but one aspect of right to petition. California Motor Transport Co. v. Trucking Unlimited Cal. 1972, 92 S. Ct. 609. SFL 123-b(1) abridges that right.
NINTH CLAIM SFL 123-b(1) IS VIOLATIVE OF SECTION 1, CLAUSE 2 OF THE FOURTEENTH AMENDMENT TO THE UNITED STATES CONSTITUTION 47. The purpose of the Fourteenth Amendment, Section 1, Clause 2, 28 USC Section 1331 and the civil rights statute, 42 USCA Section 1983, are to preserve and enforce, as against state action, those rights, privileges and immunities secured by the constitution and the laws. Golden v Biscayne Bay Yacht Club, C.A. Fla. 1976, 530 F.2d 16, certiorari denied 97 S. Ct. 186. 48. The adoption of section 1, clause 2 of the Fourteenth Amendment implied that there are matters of fundamental justice that the citizens consider so essentially an ingredient of human rights as to require restraint on action on behalf of any state that appears to ignore them. Orleans Parish School Bd. v Bush, C.A. La. 1957, 242 F.2d 156, Certiorari denied 77 S.Ct. 1380. 49. The Fifth Amendment and Section 1, Clause 2 of the Fourteenth Amendment are designed to protect plaintiffs from invasion of their rights, privileges and immunities by the federal and state governments respectively. Schatte v Int’l Alliance of Theatrical Stage Emp. et. al., D.C. Cal 1947 70 F. Supp. 1008, affirmed 165 F.2d 216 Certiorari denied 68 S.Ct. 1018. 50. In the constitution and laws of the United States the word "citizen" is generally, if not always used in a political sense to designate one who has the rights and privileges of a citizen of the State or of the United States and it is so used in Section 1, Clause 2 of the Fourteenth Amendment. Baldwin v Franks, Cal 1887, 7 S.Ct. 656. Plaintiffs are citizens of the United States and of New York State. 51. Section 1, Clause 2 of the Fourteenth Amendment prohibits New York State from denying or abridging privileges or rights of plaintiffs as citizens of the United States. State v Johnston, 1969, 456 P.2d 805, 51 Haw. 195, 259, appeal dismissed 90 S.Ct. 1152. Defendants have violated the Fourteenth Amendment by making and enforcing SFL 123-b(1). 52. The right to sue and defend in the courts is the alternative of force, and it is one of the highest and most essential privileges of citizenship. Chambers v Baltimore etc. R. Co. Ohio 1907, 28 S. St. 34. SFL 123-b(1) strips plaintiffs of that privilege and is, therefore, unconstitutional. 53. Section 1, Clause 2 of the Fourteenth Amendment furnishes an additional guarantee against any encroachment by the state upon fundamental rights which belong to every citizen as a member of society. U.S. v. Cruikshank, La. 1876, 92 U.S. 554. SFL 123-b(1) is such an encroachment. 54. The Fourteenth amendment’s provision that no state shall make or enforce any law which shall abridge privileges or immunities of citizens of the United States, nor deprive any person of life, liberty or [money] property without due [constitutional] process of law are limitations on the power of the States. Peoples Cab Co. v Bloom, D.C. PA 1971, 330 F. Supp. 1235, affirmed 472 F.2d 163. Defendants acted outside of their power in making and enforcing SFL 123-b(1). 55. Amendments 1 to 8 to the U.S. Constitution were intended as restrictions upon the federal government, but Section 1, Clause 2 of the Fourteenth Amendment constitutes a limitation upon the States. Beauregard v Wingard, D.C. Cal. 1964, 230 F. Supp. 167. 56. The right to petition the government for a redress of grievances and the other rights enumerated in Amendments 1 to 8 are the privileges and immunities of citizens of the United States; they are secured by the Constitution. U.S. v Hall, C.C. Ala. 1871, 3 Chicago Leg.N.260, 26 Fed.Cas. No.15, 282. SFL 123-b(1) is unconstitutional. 57. Protection of life, liberty, and property rests primarily with the states, and Section 1, Clause 2 of the Fourteenth Amendment furnishes an additional guaranty against any encroachment by the States upon those fundamental rights which belong to citizenship, and which the State Governments were created to secure. The privileges and immunities of the citizens of the United States are indeed protected by it. In re Kemmler, ____ N.Y. 1890, 10 S.Ct. 930. SFL 123-b(1) is abrogated.
TENTH CLAIM SFL 123-b(1) IS VIOLATIVE OF ARTICLE IV, SECTION 4 OF THE UNITED STATES CONSTITUTION 58. The purpose of Section 4 of Article IV, which guarantees to every state a republican form of government, is to protect the people against aristocratic and monarchical innovations, and to prevent the States from abolishing a republican form of government, in which the government governs based only upon the consent of the governed, whose will is expressed (for instance) in the New York Constitution. Van Sickle v Sharrahan, 1973, 511 P.2d 223, 212 Kan. 426. 59. The term "state" in section 4 of Article IV is used in the idea of a people or political community as distinguished from a government, and is used in its geographical sense. Texas v White, Tex. 1869, 74 U.S. 700. 60. By the constitution, a republican form of government is guaranteed to every state in the Union and the distinguishing feature of that form is the right of people to choose their own officers for governmental administration, and pass their own laws in virtue of the legislative powers reposed in representative bodies, whose legitimate acts may be said to be those of the people themselves; but, while the people are thus the source of political power, their governments, national and state, have been limited by written constitutions. In re Duncan, Tex. 1891. 11 S. Ct. 573. 61. The debt-limiting provisions of Articles VII, VIII, and X of the New York Constitution represent the will of the people, not established for light and transient causes but based on the hard lessons of history. The intent of the people is to tightly control the natural tendency of public officials to incur debt 62. Section 4 of Article IV guarantees to every state in the Union a republican form of government, and every sentence and provision of the New York Constitution evidences principles of that form of government (including Articles VII, VIII, and X) declaring and guaranteeing liberties of the people. Harris v Shanahan, 1963. 387 P2d 771, 192 Kan.183.
CONCLUSION 63. Plaintiffs respectfully request an order: a) declaring Chapter 16 of the Laws of 1997 to be unconstitutional, null and void, b) declaring the exception language in State Finance Law Section 123-b(1) to be unconstitutional, null and void, and c) for such other and further relief as to the court may seem just and proper. DATED: June 21, 1997
August 10, 1998 Hon. Stuart M. Cohen Re: Schulz v NYS Legislature, et al. Dear Mr. Cohen: This is in response to the Court’s sua sponte letter dated July 31, 1998. Plaintiffs’ substantial constitutional questions, which were raised in the court of original instance and which are directly involved, are as follows:
Question No. 1 Plaintiffs have early and expressly challenged the exception in SFL 123-b(1) on its face, as violative of plaintiffs’ fundamental, constitutional right to petition their government for a redress of grievances as expressly provided by Article I, Section 9.1 of the New York Constitution (See R 45, para. 36) and as expressly provided by the First Amendment of the United States Constitution (See R 46, para. 37). In addition, plaintiffs have early and expressly challenged the exception in SFL 123-b(1) as unconstitutional in its application because it was being used by the Legislature, Executive and Judiciary to bar citizens from seeking the protections and guarantees provided by the New York Constitution (See R 45, 46) and under Article IV and the 5th and 14th Amendments to the U.S. Constitution (See R 46,47), if the matter involves public borrowing. In a manifest act of injustice, the court below dismissed most of plaintiffs’ claims in the instant case for lack of standing under SFL 123-b(1), after arbitrarily and capriciously ruling that plaintiffs’ constitutional challenge to SFL 123-b(1) was barred by the doctrines of res judicata and stare decises. There has been no court decision which responded to, fully encompassed and was decisive of the question. Instead, there is a daisy chain of decisions which, by reference, appear to rely on Wein v Comptroller, 46 NY2d 394 (1979), a case in which the question of the constitutionality of SFL 123-b(1) was neither presented, raised nor determined. In support of its ruling in the instant case, the court below cited Wein v Comptroller, 46 NY2d 394 (1979) and other cases that in turn cited Wein v Comptroller: Schulz v State of New York, 185 AD2d 596 aff’d 81 NY2d 336 (1993); Schulz v State of New York, 193 AD2d 171, 177, aff’d 84 NY2d 231, cert denial 513 US 1127; and Schulz v N.Y.S. Executive, 233 AD2d 43, aff’d __ NY2d __ [June 9, 1998]. Again, the question of the constitutionality of SFL 123-b(1) was not presented, raised or determined in Wein v Comptroller, 46 NY2d 394 (1979). It never came up! The continuing dismissal of this claim on the basis of res judicata and stare decisis and the continual (20 year) case-to-case practice of applying SFL 123-b(1) to dismiss causes of action involving public borrowing is one of the greatest calamities in the history of the N.Y.S. court system. It is obvious, prima facie, that the courts’ practice has reflected its cooperation with the general government’s desire for the funds involved in the bond issues, irrespective of their source. In affect, the courts have enforced an act of the legislative and executive branches which countermands constitutional guarantees. That is, it closes the courts’ doors to citizens who need to assert their constitutional rights and who need to seek the protection of certain constitutional provisions. While the Wein court denied standing to Professor Wein, citing SFL 123-b(1), the Wein court was not asked to consider the constitutionality of such a door closing statute -- a statute written to prevent citizens from asserting their constitutional rights in any forum -- and so, to its discredit, it chose to turn a blind eye toward the written Constitutions of New York State and the United States. The NYS court system has used SFL 123-b(1) as a convenient crutch to frustrate legitimate taxpayer questions about the propriety of bond issues, ostensibly to "minimize the uncertainty in the minds of potential investors in New York bonds." It cannot be fairly argued that the decisions in Schulz v State of New York, 185 Ad2d 596, or in Schulz v State of New York, 193 AD2d 171 responded to, fully encompassed and were decisive of the question of the constitutionality of SFL 123-b(1) which was properly before the courts in both cases. In dismissing the constitutional attacks on SFL 123-b(1) the Third Department merely cited Wein v Comptroller, 46 NY2d 394 (1979) which, as argued in the preceding paragraph, was a case in which the question of the constitutionality of SFL 123-b(1) was never raised, presented or determined. Nor can it be fairly argued that the Court of Appeals in Schulz v State of New York, 81 NY2d 336 (1993) or in Schulz v State of New York, 84 NY2d 231 (1994), responded to and fully encompassed the question of the constitutionality of SFL 123-b(1), which was properly before that Court in both cases. Unlike Wein v Comptroller, the question of the constitutionality of SFL 123-b(1) was properly before the Court of Appeals but the Court simply did not address the question. Nor can it be fairly argued that the courts’ decisions in Schulz v N.Y.S. Executive, 233 AD2d 43, __ NY2d __ [June 9, 1998] responded to, fully encompassed and was decisive of the question of the constitutionality of SFL 123-b(1). In dismissing the constitutional attack on SFL 123-b(1) the Third Department merely cited its decision in Schulz v State of New York, 185 AD2d 596 (1992) which, as argued above, merely cited Wein v Comptroller, 46 NY2d 394 which, as argued above, was a case in which the question of the constitutionality of SFL 123-b(1) was never raised, presented or determined. The Court of Appeals again failed to address the question of the constitutionality of SFL 123-b(1) before dismissing plaintiffs’ Article III claim for lack of standing, citing SFL 123-b(1). Finally, in Schulz v State of New York, 960 F.Supp. 568 (N.D.N.Y. 1997) the federal court did not respond at all to the question of the constitutionality of SFL 123-b(1), much less fully encompass the question in its deliberations and decision. As argued on pages 16-19 of their Reply Brief to the Federal Court of Appeals for the Second Circuit (copy attached as Exhibit A hereto), the District Court simply failed to address plaintiffs’ First Amendment "right to petition" claim against SFL 123-b(1) and applied the wrong "privileges and immunity" clause to the claim against SFL 123-b(1). Exhibit A hereto, along with Judge McAvoy’s decision itself (Exhibit B), demonstrates that the question of the constitutionality of SFL 123-b(1), while properly before that Court, was not addressed much less determined in Schulz v State of New York, 960 F.Supp. 568 (N.D.N.Y. 1997). SFL 123-b(1) cannot be used to deny plaintiffs’ their fundamental right to assert their constitutional claims. To do so violates plaintiffs’ right to petition the government for a redress of (constitutional) grievances. Plaintiffs have a fundamental right to seek the protection of, and to defend in court, each and every provision of the New York Constitution against transgression/abuse by government officials whether or not the matter involves public borrowing. Plaintiffs have the fundamental right to maintain an action challenging the constitutionality of Chapter 16 L97 in defense of the New York Constitution Article VII Section 7, Article VII Section 8, Article VIII Section 1, Article VIII Section 2, Article VIII Section 4, Article VIII Section 12 and Article X Section 5, as well as Article VIII Section 11, as they have done in this case. The legislative and executive branches cannot legally make a law that abridges plaintiffs’ privileges and immunities. Nor can the Judiciary legally enforce one. Plaintiffs’ constitutional right, as citizens of this state, to defend each and every provision of the Constitution is not limited by their status as voters. No State constitutional protection can be effectively nullified by an Act of the State Legislature, unless the Constitution enables it. No legislative Act can legally direct the Judiciary to close the door to any citizen seeking the protection of a provision of the Constitution from an Act of the Legislature which is in conflict with it, whether or not the matter involves public borrowing. Under our system of governance the people are to enjoy the republican principles of popular sovereignty, self-government, a government which derives its powers from the consent of the governed as expressed in their Constitution, and separation of powers. Chapter 16 L97 violate these principles. Plaintiffs are injured (loss of sovereignty, erosion of liberty, annual payment of tax revenues without legislative appropriation, increased State and local indebtedness above constitutional limits and without pledging full faith and credit, use of public funds to pay debt obligations of a public corporation, etc.), and SFL 123-b(1) cannot be used to prevent citizens from seeking redress. These injuries lie within the zone-of-interest to be protected by the Constitution in general and specifically by said sections of Articles VII, VIII and X. Plaintiffs have constitutional standing. Their standing rises to a constitutional right on matters constitutional. State defendants have admitted (Defendants’ Memorandum of Law dated July 11, 1997, page 17, Exhibit A to Appellants’ Brief), that plaintiffs have a right to challenge the validity of state legislation as violating plaintiffs’ interests that fall within the zone-of-interests to be protected by the Constitution. Defendants have admitted, "[W]here a bond issue affects other interests of the litigant, for example, the right to vote arising under Section 11 of the Article VII of the New York Constitution, the courts have recognized standing (see e.g., Matter of Schulz v State of New York, 81 NY2d 336." Other interests of the plaintiffs-litigants in the instant case have, indeed, been invaded. Plaintiffs have standing because we are claiming injuries to plaintiffs’ interests that fall within the zones-of-interests to be protected by: 1. Article VIII, Section 4 (limits NYC debt) These constitutional questions are substantial and directly involved. The Court is respectfully requested to discontinue the daisy chain of decisions regarding the constitutionality of SFL 123-b(1) by not dismissing this appeal from the lower court’s decision regarding this claim on the grounds of res judicata or stare decisis.
Question No. 2 In another manifested act of injustice, the Third Department dismissed plaintiffs’ Article VII, Section 7 claim because the claim was raised in the court of original instance, fully briefed by both plaintiffs and defendants in the court of original instance, reached and dismissed on its merits by the judge of the court of original instance and fully briefed by both plaintiffs and defendants before the Third Department, but not originally presented in the Complaint. The Third Department was arbitrary and capricious in dismissing plaintiffs’ Article VII, Section 7 claim. The issue was briefed by both sides in this controversy and Justice Teresi dismissed the claim on the merits. It was wrong for the Third Department to dismiss the claim merely because it was not presented in the original Complaint. As plaintiffs argued before the Third Department (Appellants’ Br. page 14), Chapter 16 gave no specific clue that payments by the Comptroller to the TFA would be made without prior appropriation by law. No reasonable person could conclude from reading only the Act that the defendants intended that the money would be paid to the TFA without a prior appropriation. It was not until plaintiffs read the Bond Buyer on September 4, 1997, that they learned that the bonds were being rated and sold as "appropriation free" bonds. Plaintiffs then immediately raised the Article VII, Section 7 question in the court of original instance. See plaintiffs’ affidavit of September 5, 1997, together with Exhibit A attached thereto (R 138-141). The question was briefed by both sides in the court of original instance. See plaintiffs’ affidavit dated 9/17/97 (R 173-176) together with its Exhibit H (R 182-201). See also Exhibit C annexed hereto (also annexed to plaintiffs’ Reply Brief . It is a copy of defendants’ letter-memorandum to Supreme Court dated October 7, 1997, in support of their motion for summary judgment. Chapter 16 L97 authorizes the State Comptroller to make payments to the TFA out of funds under his care and management. See definition of "tax revenues" and "alternative revenues" under Section 2799-bb.1 and 15 (R 61). See also Sections 2799-ff.5,6; 2799-gg.6,7; 2799-hh.1,5; 2799-ii and 2799-jj. (R 63-69). Defendants had argued and Justice Teresi had ruled that the moneys in question are not State funds that come within the provisions of Section 7 of Article VII. This is a fallacy. Defendants argued that while the Act does, indeed, direct the State Comptroller to make the required payments to the TFA without legislative appropriations the Act does not violate Article VII, Section 7 of the State Constitution which prohibits the Comptroller from paying money "out of the State treasury or any of its (the State’s) funds, or any of the funds under its (the State’s) management except in pursuance of an appropriation by law." Defendants argued that the Act does not violate this constitutional prohibition because the money the Comptroller is to pay to the TFA is not State money or money in any fund under his care and management. Defendants argued that the structure and process being employed here is similar to the structure and process employed in Saratoga Harness Racing Assn. v Agriculture and N.Y.S. Horse Breeding Development Fund, 22 NY2d 119 (1968) which was determined to be constitutional. However, this case is distinguishable from Saratoga. In Saratoga, the Horse Breeding Development Fund derived its revenues from private parties (Racing Associations) who were required to pay fees (not general tax revenues) directly to it (the Development Fund). The TFA, on the other hand, derives its revenues from general taxpayers who are required to pay the money to the State Department of Taxation and Finance, who deposits the money in State accounts under the care and management of the State Comptroller -- the principal State fiscal officer whose office is created by the terms and provisions of the New York Constitution itself -- which State Comptroller is to draw checks on those accounts made payable to the TFA. Unlike the TFA, the money in the Horse Breeding Development Fund is not derived from state income and sales taxes and it is not directly held or managed by the State but is money paid directly to that public benefit corporation, much the same way tolls are paid to the Thruway Authority. Notwithstanding the strong opinion of three dissenting judges (Judge Breitel voted to reverse the lower Court in an opinion in which Chief Judge Fuld and Judge Jasen concurred) the majority opined that the money in question was held in a "fund, not directly held or managed by the State but by a public benefit corporation." Saratoga at 123, 124. In the case at bar, it cannot fairly be argued that the money in question is to be held in a fund not directly held or managed by the State. In fact, the revenues are to be derived from the most basic and widespread tax programs -- the "income tax" and the "sales and compensating use" tax. In fact, those revenues are to be paid to the State Agency to which all taxes are paid -- the N.Y.S. Department of Taxation and Finance. In fact, the Department deposits those revenues in accounts under the care and management of the State’s chief fiscal officer -- the State Comptroller. No money shall ever be paid "out of the State treasury or any of its (the State’s) funds, or any of the funds under its (the State’s) management" except upon legislative appropriation. See Matter of Roosevelt Raceway v Monaghan, 9 NY2d 293, 313; Switzer v Commissioners for Loaning Certain Moneys, 134 A.D. 487, 490; 1917 Opns. Atty-Gen. 175, 181-186. Control by the Legislature through regular appropriation, restrictions on the Legislature to make current appropriations only on a two-year basis at the outside, the public visibility of legislative control over the raising of revenues and their disbursement and the executive – legislative balancing of the budget are objectives of the highest importance in State government. Saratoga at 130, n2. Defendants in the instant case admitted there are only three sources of payment by the State Comptroller into the Authority (which payment the defendants admit is to be used, first, to service the Authority’s debt) and that payment will be made by the State Comptroller from three fund accounts under the care and management of the State: (1) the Section 1313 Tax Law Account holding revenues from New York City’s personal income tax imposed under Article 30 of the NYS Tax Law; (2) the State sales and compensating use tax fund account; and (3) the sales and compensating use tax surcharge account authorized by Section 1107 of the State Tax Law. Chapter 16 L97 directs the State Comptroller to make said payments, year after year, as long as the TFA bonds are outstanding (30 years or more), without requiring the State legislature to appropriate the funds by law. (Lhota affidavit sworn to on September 2, 1997, paragraph 4). (R 133) This feature of Chapter 16 is repugnant to Article VII, Section 7 of the New York Constitution and "is unique in New York State, if not in the country." Bond Buyer, September 4, 1997. See (R 146). The money in the funds established by Sections 1101-1148 and 1313 of the Tax Law are in fact and in law funds under the management of the State within the meaning of Section 7 of Article VII. The funds are, indeed, an integral part of the State and by law under the care and management of the State Comptroller. The funds are used as a source of public expenditure. Since Chapter 16 L97 envisions disbursement of these funds without appropriation, it represents an unlawful attempt to evade the constitutional controls upon State finances. This is a substantial constitutional questions that is directly involved. The Court is respectfully requested not to dismiss the appeal from the lower court’s decision regarding this question on any ground that the question is not directly involved because it was not properly before the lower court. It was.
Question No. 3 Whether Chapter 16 Of The Laws Of 1997 Is Violative In another terrible act of injustice, the Third Department, relying basically on SFL 123-b(1) and Wein v Comptroller and its prodigy, ruled that plaintiffs lacked standing to seek the protections of Article X, Section 5 simply because this case involves the incurrence of public debt. As argued under Question 1 above, SFL 123-b(1) is unconstitutional, is abrogated, and should not be used to dismiss a citizen’s constitutional attack on Chapter 16 L97. Chapter 16 L97 is patently illegal -- unconstitutional beyond a reasonable doubt. Plaintiffs’ Article X, Section 5 question is substantial and is directly involved, not having been determined in any prior case. No settled law is contrary to the position urged by Appellants. There can be no question but that under Chapter 16, state and local tax funds will be used to pay obligations of a public corporation in violation of Article X, Section 5. See Table 1 attached hereto.
Question No. 4 and No. 5 Whether Chapter 16 L97 Is Violative Of Article VII, Section 8 In another manifested act of injustice, the Third Department, again relying basically on SFL 123-b(1) and Wein v Comptroller and its prodigy, ruled that plaintiffs lacked standing to seek the protection of Article VII, Section 8 and Article VIII, Section 1 simply because this case involves the incurrence of public debt. As argued under Question No. 1 above, SFL 123-b(1) is unconstitutional, is abrogated, and should not be used to dismiss a citizen’s constitutional attack on Chapter 16 L97. Chapter 16 L97 is patently illegal -- unconstitutional beyond a reasonable doubt. Plaintiffs’ Article VII, Section 8 and Article VIII, Section 1 questions are substantial and are directly involved, not having been determined in any prior case. There can be no question and defendants admit that under Chapter 16 the Legislature has pledged both City and State tax revenues for the expressed, priority purpose of servicing the TFA’s debt, in violation of Article VIII, Section 1 and Article VII, Section 8, respectively. See Table 1 attached hereto. Without said authorization the bonds of the TFA would not be creditworthy. Nobody would buy them.
Question No. 6 Whether Chapter 16 L97 Is Violative Of Article VIII, In another manifested act of injustice, the Third Department, again relying on SFL 123-b(1) and Wein v Comptroller and its prodigy, ruled that plaintiffs lack standing to seek the protection of Articles VIII, Sections 4, 2, 8 and 12 because this case involves the incurrence of public debt. As argued under Question No. 1 above, SFL 123-b(1) is unconstitutional, is abrogated, and should not be used to dismiss a citizen’s constitutional attack on Chapter 16 L97. Chapter 16 L97 is patently illegal -- unconstitutional beyond a reasonable doubt. Plaintiffs’ Article VIII, Sections 4, 2 and 12 questions are substantial and are directly involved, not having been determined in the prior case. There can be no question, and defendants admit that under Chapter 16, City income and sales tax revenue is earmarked/pledged to be paid to the TFA, putting the City in debt to the TFA in the amount of $7.5 billion plus interest, placing the City’s debt well above the constitutional debt limit, in violation of Article VIII, Sections 2, 4 and 12. See Table 1 attached hereto. This issue was not raised or determined in Wein I, a case in which Professor Wein asked the court to determine if the debt of the public corporation (SRC) was the debt of the City in violation of Article VIII, Section 4. The court said no because the City was not obligated to pay the SRC and any payment by the City to the SRC was a "gift". Here, the City is indebted to the TFA. To avoid the semantic shell game, plaintiffs’ question is not whether the debt of the TFA is technically the debt of the City. The question is whether in violation of Article VIII the City is indebted to the TFA and whether that indebtedness exceeds the limit set by Section 4, and whether the City was required to pledge its full faith and credit because of that indebtedness.
Question No. 7 Whether Chapter 16 L97 Is Violative Of Article VII, The Third Department acknowledged plaintiffs’ standing to seek the voter referendum protection of Article VII, Section 11. However, relying on Wein v City of New York, 36 NY2d 610 (1975) ("Wein I") and Schulz v State of New York, 84 NY2d 231 (1994) ("Schulz I"), defendants argued, and the Third Department erroneously agreed that the provisions of the Chapter 16 conform to a "line of precedents upon which reliance has been placed in the financial marketplace," and that "the Court of Appeals has consistently upheld public authority funding mechanisms which are indistinguishable from that contained in Chapter 16." Plaintiffs argued under Point IV of their Appellants’ Brief (page 19-24) that the facts and the law surrounding the issues which were raised, presented and determined in Wein I are clearly distinguishable from the facts and the law of the case before the bar. Plaintiffs have also argued under Point VIII of their Appellants’ Brief (page 28-31) that the facts and the law surrounding the issues which were raised, presented and determined in Schulz I are clearly distinguishable from the facts and the law of the instant case. Table 1 (attached) demonstrates some of the major unconstitutional provisions of Chapter 16 L97 and demonstrates that this case is distinguishable from Wein I and Schulz I. The Court’s attention is directed to Table 1. Chapter 16 L97 is patently illegal -- unconstitutional beyond a reasonable doubt. Plaintiffs’ Article VII, Section 11 question is substantial and is directly involved, not having been determined in the prior case. Under Chapter 16, State tax revenues are earmarked/pledged to be paid to the TFA, putting the State in debt to the TFA (as opposed to the bondholders) for as long as TFA bonds are outstanding, in violation of the voter referendum requirement of Article VII, Section 11. This issue of the State’s indebtedness to a public corporation rather than to the corporation’s bondholders is an issue most certainly not raised or determined in Wein I of in Schulz I. Also, in Schulz I, the Court held that the bonds of the MTA and the Thruway Authority were not State debt because the payment was subject to appropriation and not legally enforceable. In the instant case, the State’s payment is not subject to appropriation and is legally enforceable (see Appellants’ Brief, pages 29-31). See also Section 2799-00.2, 2799-mm (R 70,71), as well as Article VII, Section 16 of the NY Constitution.
Question No. 8 SFL 123-b(1) And Chapter 16 L97 Are Violative Of Section 1, The purpose of the Fourteenth Amendment, Section 1, Clause 2 is to preserve and enforce, as against state action, those rights, privileges and immunities secured by the constitution. Golden v Biscayne Bay Yacht Club, C.A. Fla. 1976, 530 F.2d 16, certiorari denied 97 S. Ct. 186. The adoption of section 1, clause 2 of the Fourteenth Amendment implied that there are matters of fundamental justice that the citizens consider so essentially an ingredient of human rights as to require restraint on action on behalf of any state that appears to ignore them. Orleans Parish School Bd. v Bush, C.A. La. 1957, 242 F.2d 156, Certiorari denied 77 S.Ct. 1380. Section 1, Clause 2 of the Fourteenth Amendment is designed to protect plaintiffs from invasion of their rights, privileges and immunities by the federal and state governments respectively. Schatte v Int’l Alliance of Theatrical Stage Emp. et. al., D.C. Cal 1947 70 F. Supp. 1008, affirmed 165 F.2d 216 Certiorari denied 68 S.Ct. 1018. In the constitution and laws of the United States the word "citizen" is generally, if not always used in a political sense to designate one who has the rights and privileges of a citizen of the State or of the United States and it is so used in Section 1, Clause 2 of the Fourteenth Amendment. Baldwin v Franks, Cal 1887, 7 S.Ct. 656. Plaintiffs are citizens of the United States and of New York State. Section 1, Clause 2 of the Fourteenth Amendment prohibits New York State from denying or abridging privileges or rights of plaintiffs as citizens of the United States. State v Johnston, 1969, 456 P.2d 805, 51 Haw. 195, 259, appeal dismissed 90 S.Ct. 1152. Defendants have violated the Fourteenth Amendment by adopting Chapter 16 L97 and SFL 123-b(1). The right to sue and defend in the courts is the alternative of force, and it is one of the highest and most essential privileges of citizenship. Chambers v Baltimore etc. R. Co. Ohio 1907, 28 S. St. 34. SFL 123-b(1) strips plaintiffs of that privilege and is, therefore, unconstitutional. Section 1, Clause 2 of the Fourteenth Amendment furnishes an additional guarantee against any encroachment by the state upon fundamental rights which belong to every citizen as a member of society. U.S. v. Cruikshank, La. 1876, 92 U.S. 554. Chapter 16 L97 and SFL 123-b(1) are such an encroachment. The Fourteenth amendment’s provision that no state shall make or enforce any law which shall abridge privileges or immunities of citizens of the United States, nor deprive any person of life, liberty or [money] property without due [constitutional] process of law are limitations on the power of the States. Peoples Cab Co. v Bloom, D.C. PA 1971, 330 F. Supp. 1235, affirmed 472 F.2d 163. Defendants acted outside of their power in making and enforcing Chapter 16 L97 and SFL 123-b(1). Amendments 1 to 8 to the U.S. Constitution were intended as restrictions upon the federal government, but Section 1, Clause 2 of the Fourteenth Amendment constitutes a limitation upon the States. Beauregard v Wingard, D.C. Cal. 1964, 230 F. Supp. 167. The right to petition the government for a redress of grievances and the other rights enumerated in the U.S. Constitution are the privileges and immunities of citizens of the United States; they are secured by the Constitution. U.S. v Hall, C.C. Ala. 1871, 3 Chicago Leg.N.260, 26 Fed.Cas. No.15, 282. Chapter 16 L97 and SFL 123-b(1) are unconstitutional. Protection of life, liberty, and property rests primarily with the states, and Section 1, Clause 2 of the Fourteenth Amendment furnishes an additional guaranty against any encroachment by the States upon those fundamental rights which belong to citizenship, and which the State Governments were created to secure. The privileges and immunities of the citizens of the United States are indeed protected by it. In re Kemmler, ____ N.Y. 1890, 10 S.Ct. 930. Chapter 16 L97 and SFL 123-b(1) are abrogated.
Question No. 9 Chapter 16 L97 And SFL 123-B(1) Are Violative Of Article IV, The purpose of Section 4 of Article IV, which guarantees to every state a republican form of government, is to protect the people against aristocratic and monarchical innovations, and to prevent the States from abolishing a republican form of government, in which the government governs based only upon the consent of the governed, whose will is expressed (for instance) in the New York Constitution. Van Sickle v Sharrahan, 1973, 511 P.2d 223, 212 Kan. 426. The term "state" in section 4 of article IV is used in the idea of a people or political community as distinguished from a government, and is used in its geographical sense. Texas v White, Tex. 1869, 74 U.S. 700. By the constitution, a republican form of government is guaranteed to every state in the Union and the distinguishing feature of that form is the right of people to choose their own officers for governmental administration, and pass their own laws in virtue of the legislative powers reposed in representative bodies, whose legitimate acts may be said to be those of the people themselves; but, while the people are thus the source of political power, their governments, national and state, have been limited by written constitutions. In re Duncan, Tex. 1891. 11 S. Ct. 573. The debt-limiting provisions of Articles VII, VIII, and X of the New York Constitution represent the will of the people, not established for light and transient causes but based on the hard lessons of history. The intent of the people is to tightly control the natural tendency of public officials to incur debt. Section 4 of Article IV guarantees to every state in the Union a republican form of government, and every sentence and provision of the New York Constitution evidences principles of that form of government (including Articles VII, VIII, and X) declaring and guaranteeing liberties of the people. Harris v Shanahan, 1963. 387 P2d 771, 192 Kan.183.
A Final Point The City alleged (R 133) (Lhota Aff., par 5), that unless the TFA issued some of its bonds right away, the City’s ability to enter the capital contracts and to continue its capital program would be "called into question," whatever that meant. The City did not allege that it would not be able to enter into contracts or continue its "capital" program. The City argued "if" the City were required to shut down its capital program, the impact would be disastrous (R 133) (Lhota Aff., par 6). This was a conclusionary statement, unsupported by the Record. The City did not claim that it would have to shut down its capital program if the Act is declared illegal. The City alleged (R 133) (Lhota Aff. Par. 7) that "An inability to undertake necessary capital reconstruction of the City’s aging bridges, roads, schools and other public buildings would severely jeopardize the health and safety of the City’s inhabitants." There is no evidence in the Record that but for Chapter 16, the City would not be able to undertake necessary capital reconstruction. Neither the City nor the State offered any evidence that they were flat broke, that they were not already receiving far more tax revenues than they required, which "surplus" funds were available, or that funds could not be transferred from one account to another, or that new taxes could not be imposed. In fact, the City and the State has each received billions of dollars in revenues in 1996 and 1997, over and above their budgetary estimates. The state budgets for 1997-1998 and for 1998-1999 have included surplus fund accounts with hundreds of millions of dollars which are to be spent in any way that the Governor and the two leaders of the Legislature decide to spend that money. The State and the City are routinely providing hundreds of millions of dollars worth of tax credits and subsidies to private corporations, and the City is considering paying the cost of constructing two sports stadiums on behalf of billion dollar team owners and multi-million dollar ball players.
Conclusion The Court has jurisdiction to hear this appeal. The constitutional questions are substantial and directly involved. Very truly yours, Gary T. Loughrey, pro se
August 20, 1998 Hon. Stuart M. Cohen Re: Schulz v NYS Legislature, et al. Dear Mr. Cohen: This letter is in reply to Mr. Bing’s letter to the Court dated August 13, 1998. Contrary to Mr. Bing’s argument, all questions before the Court are constitutional questions. The construction of the Constitution is directly involved with each question. Each constitutional question is a substantial question. With respect to plaintiff’s Article VII, Section 7 constitutional attack on Chapter 16 L97, Mr. Bing asserts in paragraph 2 on page 2 of his letter that, "The Appellate Division correctly found that plaintiffs did not raise question number 1, relating to Article VII, Section 7 of the New York Constitution, in their complaint or amended complaint and thus that the issue was not properly before that court. Schulz v New York State Legislature, slip op. At 5 n 3. Such holding does not involve a constitutional question." This is a frivolous assertion. Mr. Bing knows full well the issue was properly before the Appellate Division. He knows that before the question got to the Appellate Division it was, in fact, raised in the lowest court, fully briefed in the lowest court and the judge in the lowest court (Hon. Joseph Teresi - J.S.C.) reached the merits on the question in his decision. Mr. Bing knows that he and the plaintiffs fully briefed the issue before the Appellate Division. Mr. Bing knows the Appellate Division erred in ruling that plaintiffs’ Article VII, Section 7 question was not properly before that court. The Court is respectfully requested to note what plaintiffs have said on this issue in their August 10, 1998 comment letter to the Court. If the Court fails to acknowledge that the facts as stated above are true then it becomes transparent that the integrity and independence of the Court has been compromised. If this is not the case, then the Record cannot be considered to be the Record in this case. With respect to plaintiffs’ constitutional attack on SFL 123-b(1), the appellate Division held that "the constitutionality of such provision has long since been resolved (see, e.g., Schulz v State of New York, 185 AD2d 596, 597, appeal dismissed, 81 NY2d 336)." In fact, the Third Department erred. The question has never been resolved. In Schulz v State of NY, 185 AD2d 596, appeal dismissed, 81 NY2d 336, neither the Appellate Division nor the Court of Appeals decided the question of the constitutionality of SFL 123-b(1) for the simple reason that the Appellate Division based its brief comment on Wein v Comptroller, 46 NY2d 394 where the question of the constitutionality of SFL 123-b(1) was never raised and the Court of Appeals apparently decided not to agree or disagree. Mr. Bing asserts in paragraph 1 on page 3 of his letter that the question of the constitutionality of SFL 123-b(1) "has been repeatedly rejected and is patently lacking in merit." This, too, is a frivolous assertion and Mr. Bing knows it. He knows full well that plaintiffs’ First Amendment attack on SFL 123-b(1) has never been fully addressed or discussed to say nothing of being decided by any court -- i.e., that no court decision, including Wein v Comptroller, 46 NY2d 394 has fully encompassed, or been decisive of, the question of the constitutionality of SFL 123-b(1). Before the Court is tempted to continue what can only be called a daisy chain of unfounded decisions regarding the question of the constitutionality of SFL 123-b(1), beginning with Schulz v State of New York, 185 AD2d 596, appeal dismissed, 81 NY2d 336, the Court is respectfully requested to revisit its decisions in all the prior Schulz and Wein cases, review what plaintiffs have written on pages 1 - 4 of their August 10, 1998 comment letter to the Court, and determine once and for all whether what plaintiffs are saying is not the truth -- the question of the constitutionality of SFL 123-b(1) has never been decided. In which case it would be incumbent upon the Court to decide at this juncture, whether SFL 123-b(1) is not violative of the basic right to petition the government for a redress of grievances. With respect to plaintiffs’ Article VII, Section 8 and Article VIII, Sections 1,2,4,12 and Article X, Section 5 constitutional attacks on Chapter 16 L97, the Third Department with Mr. Bing in tow, have, in effect, held that plaintiffs lack standing because the Legislative and Executive intent behind SFL 123-b(1) is that the courthouse doors be closed to any citizen who is attempting to seek the constitutional protections afforded by these provisions, if the matter involves public borrowing. Obviously, should the Court agree that the question of the constitutionality of SFL 123-b(1) has never been decided and that it is to be decided here, in this appeal, then all of these constitutional questions left for dead by the Appellate Division, because of the threshold issue, become alive, are directly involved, are substantial and plaintiffs have a right of appeal since the constitutional questions have not been reached. With respect to plaintiffs’ Article VII, Section 11 constitutional attack on Chapter 16 L97, the Court is respectfully requested to revisit its decisions in Wein I and Schulz I, review plaintiffs’ arguments as presented in their briefs to the Third Department in the instant case, and review what plaintiffs have written on pages 9 and 10 of their August 10, 1998 comment letter to the Court, particularly Table I attached to that letter. Plaintiffs are confident that the Court will conclude that neither Wein I nor Schulz I is dispositive of the Article VII, Section 11 constitutional question raised in the instant case. Very truly yours, Gary T. Loughrey, pro se cc: Ellen Ravitch Esq.
STATE OF NEW YORK COURT OF APPEALS ________________________________________________ ROBERT L. SCHULZ, GARY T. LOUGHREY, MARK N. AXINN, BRADFORD R. ARTER, and JAMES B. STRAWHORN, Plaintiffs-Appellants, NOTICE OF MOTION TO DISQUALIFY - against - Albany County Index No. 3256-97 A.D. No. 81812 THE NEW YORK STATE LEGISLATURE, SHELDON SILVER, SPEAKER OF THE ASSEMBLY AND JOSEPH BRUNO, SENATE MAJORITY LEADER; and THE NEW YORK STATE EXECUTIVE, GEORGE PATAKI, GOVERNOR, H. CARL MC CALL, COMPTROLLER, Defendants-Respondents, And THE CITY OF NEW YORK; and THE NEW YORK CITY TRANSITIONAL FINANCE AUTHORITY, Intervenors-Defendants-Respondents. ____________________________________________________ PLEASE TAKE NOTICE that, based on the annexed affidavit by Robert L. Schulz and Gary T. Loughrey, plaintiffs will move this Court on August 31, 1998, to disqualify Chief Judge Judith Kaye and Judges Joseph Bellacosa, Carmen Ciparick, and Howard Levine, and for such other and further relief as the Court may deem proper and just. DATED: Queensbury, NY August 17, 1998 GARY T. LOUGHREY, Pro Se ROBERT L. SCHULZ, Pro Se JAMES B. STRAWHORN, Pro Se To: Dennis C. Vacco, Esq., Attorney General, New York State Department of Law, The Capitol, Albany, NY 12224 Ellen Ravitch, Esq., Assistant Corporation Counsel, The City of New York, 100 Church Street, New York, NY 10007 W. Cullen MacDonald, Esq., Hawkins, Delafield & Wood, 67 Wall Street, New York, NY 10005
STATE OF NEW YORK COURT OF APPEALS ________________________________________________ ROBERT L. SCHULZ, GARY T. LOUGHREY, MARK N. AXINN, BRADFORD R. ARTER, and J AMES B. STRAWHORN, Plaintiffs-Appellants, - against - Albany County Index No. 3256-97 A.D. No. 81812 THE NEW YORK STATE LEGISLATURE, SHELDON SILVER, SPEAKER OF THE ASSEMBLY AND JOSEPH BRUNO, SENATE MAJORITY LEADER; and THE NEW YORK STATE EXECUTIVE, GEORGE PATAKI, GOVERNOR, H. CARL MC CALL, COMPTROLLER, Defendants-Respondents, And THE CITY OF NEW YORK; and THE NEW YORK CITY TRANSITIONAL FINANCE AUTHORITY, Intervenors-Defendants-Respondents. MEMORANDUM OF LAW DATED: October 21, 1998 GARY T. LOUGHREY, Pro Se ROBERT L. SCHULZ, Pro Se MARK N. AXINN, Pro Se BRADFORD R. ARTER, Pro Se JAMES B. STRAWHORN, Pro Se (The Table of Contents and Table of Authorities have been omitted from this website) PRELIMINARY STATEMENT On July 30, 1998, the Appellate Division, Third Department issued its decision and order, affirming Supreme Court’s (Teresi, J.) order which was entered November 25, 1997. On September 22, 1998, the N.Y. Court of Appeals dismissed plaintiffs’ appeal, taken as of right, because there was "no substantial constitutional question directly involved." This memorandum is written in support of plaintiffs’ motion for permission to appeal. Plaintiffs will establish that the Court below misapprehended material facts and that the Court misapplied controlling principles of law. Plaintiffs do not merely seek to argue once again the very questions previously decided, nor are plaintiffs seeking to advance arguments different from those tendered in the Court below. In the interest of justice and jurisprudence, this Court should grant plaintiffs permission to appeal. The Court below misapplied various principles of law established by the New York Court of Appeals and the Supreme Court of the United States, and misapprehended material issues and facts. The issues are of great public importance. At stake is the right of the majority of people to control the incurrence of public debt and the overburdensome level of taxation that results when a law is enacted which closes the door to judicial review of other laws which authorize the seemingly unconstitutional incurrence of public debt. Fundamental rights are invaded, weakened, limited or destroyed by the legislative acts under challenge. They are evidently of the kind which has been frequent of late, a kind which has been so frequent of late, a kind which is meant to protect some class in the community against the fair, free and full competition of some other class (the ordinary, non-aligned citizen-taxpayer-voter), the members of the former class thinking it impossible to hold their own against such competition, and therefore flying to the Legislature to secure some enactment which shall operate favorably to them or unfavorably to their competitors in the socio-political and socio-economic fields. The acts under challenge restrain the ordinary, non-aligned citizen-taxpayer-voter in the free enjoyment of his faculties, which he ought to have and use in the pursuit of his happiness. These laws interfere with his right not to have the fruits of his labor taken from him except by constitutional due process. If these laws and others like it are valid, the fact of their existence is a complete answer to the complaints of the citizen-taxpayers-voters as plaintiffs, that their liberty and freedom from oppressive debt and taxation are greatly impaired. The legislative acts under challenge here are as opposed to a safe state policy as to the very letter of the Constitution. Left undisturbed, the decision by the courts means laws can be enacted which can restrict the judicial authority to hear constitutional challenges to the acts of the other branches and to fashion remedies; a patently unconstitutional infringement on the power of the judiciary. Left undisturbed, the decision by the courts means the executive and legislative can merely refer to a "fiscal crises" as the justification for circumventing the inconvenient but intentionally protective constitutional debt limiting provisions, equating man-made fiscal crises with emergencies contemplated in the Constitution: that is enemy attack and other forms of disaster. Left undisturbed, appeals may not be able to bring up for review issues raised and determined by the judgment being reviewed, merely because they weren’t initially presented in the complaint. Left undisturbed, the legislative and executive will henceforth be able to : 1) use public authorities to incur debt on behalf of the state and its municipalities; 2) have the Authority contract with the State to apply tax revenues to the Authority for the priority purpose of servicing the bonds; 3) assign (by contract) the contract to a trustee of the bondholders, thereby transferring the State’s pledge of tax revenues to the bondholders; and 4) contract directly with the bondholders, pledging to never pass any laws which would weaken the State’s contractural commitments to assign tax revenues to the Authority. QUESTIONS PRESENTED 1. Whether the Court below misapplied a controlling principle of law established in People v Gillson (1888) 109 NY 389. 2. Whether the Court below misapplied a controlling principle of law established in Rathbone v Wirth (1896), 150 NY 359. 3. Whether the Court below misapplied a controlling principle of law established in In re Kemmler (1890), 10 S.Ct. 930. 4. Whether the Court below misapplied a controlling principle of law established in In re Duncan (1891), 11 S.Ct. 573. 5. Whether the Court below misapplied a controlling principle of law established in Boryszewski v Brydges, 37 NY2d 361. 6. Whether the Court below misapplied a controlling principle of law established in Bethlehem Steel Corp. v Bd. Of Educ., 44 NY2d 831. 7. Whether the Court below misapplied the controlling principle of law established in Matter of Town of Minerva v Essex County IDA, 173 AD2d 1054, lv denied 78 NY2d 857. 8. Whether the Court below misapprehended material facts. 9. Is a state’s judicially determined purpose of "minimizing uncertainty in the minds of potential investors," sufficiently compelling to justify the enforcement of a state law which abridges the fundamental right of individual citizens of that state to petition the state court for a redress of grievances, even grievances that are deeply rooted in the State Constitution? 10. Whether plaintiffs’ fundamental rights under the U.S. Constitution to petition the government for a redress of constitutional grievances (First Amendment), to a guarantee against State laws which abridge fundamental privileges and immunities (Section 1, Clause 2 of the Fourteenth Amendment), to have state judges bound by the provisions of the U.S. Constitution (Article VI, cl 2), and to a government republican in form and substance (Article IV, Section 4) have been violated by the New York State Legislative and Executive when they enacted State Finance Law Section 123-b(1) which, in the case of matters involving the incurrence of public debt, is preventing plaintiffs from petitioning State courts for a redress of State constitutional grievances, and by the N.Y. State Judiciary in enforcing State Finance Law 123-b(1). 11. Whether the will and intent of the people to prohibit any and all payments out of funds under the management of the State without appropriations by law, as expressed in Article VII, Section 7 of the NY Constitution has been violated by Chapter 16 L97, thereby abrogating the Act. 12. Whether the will and intent of the people to prohibit the use of State and local funds to pay any part of any debt obligation of any public corporation, as expressed in Article X, Section 5 of the NY Constitution has been violated by Chapter 16 L97, thereby abrogating the Act. 13. Whether the will and the intent of the people to prohibit the State and the City of New York from lending their credit to a public corporation as expressed in Article VII, Section 8 and Article VIII, Section 1 of the NY Constitution has been violated by Chapter 16 L97, thereby abrogating the Act. 14. Whether the will and intent of the people to prohibit the State from contracting indebtedness without the approval of the voters, as expressed in Article VII, Section 11 of the NY Constitution has been violated by Chapter 16 L97 thereby abrogating the Act. 15. Whether the will and intent of the people to limit the financial indebtedness of New York City to 10% of the average full valuation of taxable real estate of the City, as expressed in Article VIII, Section 4(c) of the NY Constitution has been violated by Chapter 16 L97, thereby abrogating the Act. 16. Whether the will and intent of the people to prohibit the City of New York from contracting indebtedness without pledging the full faith and credit of the City for the payment of the principal thereof and the interest thereon, as expressed in Article VIII, Section 2 of the NY Constitution has been violated by Chapter 16 L97, thereby abrogating the Act. 17. Whether the will and intent of the people to restrict abusive borrowing and credit lending, as expressed in Article VIII, Section 12 of the NY Constitution has been violated by Chapter 16 L97, thereby abrogating the Act. 18. Whether Ch. 16L97 violates the US Const. (Art. IV, 1st and 14th Amendments). JURISDICTION The Order of the New York Court of Appeals dismissing the appeal of right was entered on September 22, 1998. In accordance with the Rules of this Court, this motion is filed within 30 days of the date of the Order of the New York Court of Appeals. The jurisdiction of this Court is invoked under Article VI, Section 3.b.(6)(b). And CPLR 5602(a)(1)(i). FEDERAL CONSTITUTIONAL PROVISIONS INVOLVED 1. The preamble to the Constitution of the United States provides: "We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquillity, provide for the common Defence, promote the general Welfare and secure the Blessing of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America." 2. Article VI of the Constitution of the United States provides in relevant part: "The Judges in every state shall be bound by this Constitution." 3. The First Amendment to the United States Constitution reads, in relevant part: "Congress shall make no law...abridging...the right of the people…to petition the Government for a redress of grievances." 4. The Fourteenth Amendment (Clause 2) to the United States Constitution provides, in relevant part: "No state shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States...." 5. An implicit constitutional (structural) safeguard is "separated powers" among the legislative, executive and judicial branches. 6. Article IV, Section 4 of the United States Constitution reads in relevant part: "The United States shall guarantee to every citizen in this Union a republican form of government." NEW YORK CONSTITUTIONAL AND STATUTORY PROVISIONS INVOLVED 7. New York State Finance Law Section 123-b(1) reads: "notwithstanding any inconsistent provision of law, any person, who is a citizen taxpayer, whether or not such person is or may be affected or specially aggrieved by the activity herein referred to, may maintain an action for equitable or declaratory relief, or both against an officer or employee of the state who in the course of his or her duties has caused, is now causing, or is about to cause a wrongful expenditure, misappropriation, misapplication, or any other illegal or unconstitutional disbursement of state funds or state property, except that the provisions of this subdivision shall not apply to the authorization, sale, execution, or delivery of a bond issue or notes issued in anticipation thereof by the state or any agency, instrumentality or subdivision thereof or by any public corporation or public benefit corporation." (Petitioners’ emphasis) 8. Article I, Section 9.1 of the New York Constitution provides in relevant part: "No law shall be passed abridging the rights of the people peaceably to assemble and to petition the government or any department thereof...." 9. Article VII, Section 7 of the New York Constitution reads: "No money shall ever be paid out of the state treasury or any of its funds, or any of the funds under its management; except in pursuance of an appropriation by law...." Article VII, Section 7, NY Constitution 10. Article VII, Section 8 of the New York Constitution reads: "...nor shall the credit of the state be given or loaned to or in aid of any individual, or public or private corporation or association, or private undertaking...." Article VII, Section 8, New York Constitution 11. Article VII, Section 11 of the New York Constitution reads: "no debt shall be hereinafter contracted by or in behalf of the state, unless such debt shall be authorized by law, for some single work or purpose, to be distinctly specified therein. No such law shall take effect until it shall, at a general election, have been submitted to the people, and have received a majority of all the votes cast for and against it at such election...." Article VII, Section 11, New York Constitution 12. Article VIII, Section 1 of the New York Constitution reads: "...nor shall any county, city, town, village or school district give or loan its credit to or in aid of any individual, or public or private corporation or association, or private undertaking...." Article VIII, Section 1, New York Constitution 13. Article VIII, Section 2 of the New York Constitution reads: "No indebtedness shall be contracted by any county, city, town, village or school district unless such county, city, town, village or school district shall have pledged its faith and credit for the payment of the principal thereof and the interest thereon...Provision shall be made annually by appropriation by every county, city, town, village and school district for the payment of interest on all indebtedness and for the amounts required for (a) the amortization and redemption of term bonds, sinking fund bonds and serial bonds...." Article VIII, Section 2, New York Constitution 14. Article VIII, Section 4 of the New York Constitution reads: "...no county, city, town, village or school district described in this section shall be allowed to contract indebtedness for any purpose or in any manner which, including existing indebtedness, shall exceed an amount equal to the following percentages of the average full valuation of taxable real estate of such county, city, town, village or school district...c) the City of New York, for city purposes, ten per centum...." Article VIII, Section 4, Paragraph C, New York Constitution 15. Article VIII, Section 12 of the New York Constitution reads: "It shall be the duty of the legislature, subject to the provisions of this constitution, to restrict the power of taxation, assessment, borrowing money, contracting indebtedness, and loaning the credit of counties, cities, towns and villages, so as to prevent abuses in taxation and assessments and in contracting of indebtedness by them...." Article VIII, Section 12 ,New York Constitution 16. Article X, Section 5 of the New York Constitution reads: "Neither the state nor any political subdivision thereof shall at any time be liable for the payment of any obligations issued by such a public corporation heretofore or hereafter created, nor may the legislature accept, authorize acceptance of or impose such liability upon the state or any political subdivision thereof...." Article X, Section 5, New York Constitution 17. Chapter 16 of the New York Laws of 1997 reads in relevant part: "the authority may enter into agreements with the city and the city, acting by the mayor alone, may enter into agreements with the authority in accordance with the provisions of this title as to the financing of costs by the authority, the application of tax revenues to the authority to secure its bonds, and further assurances in respect to the authority’s receipt of such revenues." Section 2799-ff.5(b) "Such agreements (i) shall describe by reference to the capital budget of the city particular projects and costs to be financed in whole or in part by the authority, (ii) shall describe the plan for the financing of the costs or projects, (iii) shall set forth the method by which and by whom and the terms and conditions upon which money provided by the authority shall be disbursed to the city, which disbursements shall occur, subject to receipt by the authority of such documentation as to the costs being reimbursed as the authority shall reasonably require, at least monthly, (iv) shall provide for the payment of such costs by the city under such contracts as shall be awarded by the city or for the city to make a capital contribution of such proceeds as city funds to another entity for the payment or reimbursements of such costs, and (v) shall require every contract entered into by the city, or another entity receiving funds from the city, for projects or costs to be financed in whole or in part by the authority to be subject to the provisions of the New York City Charter and other applicable laws governing contracts of the city or such entity, as the case may be." Section 2799.ff.6 "The authority shall have the power and is hereby authorized from time to time to issue bonds, in conformity with applicable provisions of the uniform commercial code, in such principal amounts as it may determine to be necessary pursuant to section 2799-ff of this title to pay the cost of any project and to fund reserves to secure such bonds, including incidental expenses in connection therewith. The aggregate principal amount of such bonds, notes or other obligations so issued shall not exceed $7.5 billion, excluding bonds, notes or other obligations issued to refund or otherwise repay bonds, notes or other obligations theretofore issued for such purposes;" Section 2799-gg.1 "Whenever the authority shall determine that the issuance of its bonds is appropriate, which determination shall occur at a minimum whenever necessary to reimburse the city for project capital costs incurred by the city,..." Section 2799-gg.5 "Any resolution or resolutions authorizing bonds or any issue of bonds may contain provisions which may be part of the contract with the holders of the bonds thereby authorized as to: (a) pledging all or part of its revenues, together with any other moneys, securities or contracts, to secure the payment of the bonds, subject to such agreements with the bondholders as may then exit...(f) vesting in a trustee or trustees such properties, rights, powers and duties in trust as the authority may determine, which may include any or all of the rights, powers and duties of the trustee appointed by the bondholders pursuant to section 2799-00 of this title...." Section 2799-gg.6 "In addition to the powers herein conferred upon the authority to secure its bonds, the authority shall have power in connection with the issuance of bonds to enter into such agreements for the benefit of the bondholders as the authority may deem necessary, convenient or desirable concerning the use or disposition of its revenues or other moneys, including the entrusting, pledging or creation of any other security interest in any such revenues, moneys and the doing of any act, including refraining from doing any act, which the authority would have the right to do in the absence of such agreements. The authority shall have power to enter into amendments of any such agreements within the powers granted to the authority by this title and to perform such agreements. The provisions of any such agreements may be made part of the contract with the holders of the bonds of the authority." Section 2799-gg.7 "Subject to the provisions of this title, the directors of the authority shall receive, accept, invest, administer, expend and disperse for its corporate purposes all money of the authority from whatever sources derived including (a) payments by the state comptroller pursuant to this title; (b) the proceeds of bonds...." Section 2799-hh.1 "Tax revenues received by the authority pursuant to Section 1313 of the tax law, together with any alternate revenues received by the authority, shall be applied in the following order of priority; first pursuant to the authority’s contract with bondholders, then to pay the authority’s operating expenses not otherwise provided for, and then pursuant to the authority’s agreements with the city...." Section 2799-hh.5 "Agreement with the state. The state does hereby pledge and agree with the holders of any issue of bonds and/or bond anticipation notes secured by such a pledge that the state will not limit or alter the rights hereby vested in the authority to fulfill the terms of any agreements made with such holders pursuant to this title, or in any way impair the rights and remedies of such holders or the security for such bonds and/or bond anticipation notes until such bonds and/or bond anticipation notes, together with the interest thereon and all costs and expenses in connection with any action or proceeding by or on behalf of such holders, are fully paid and discharged. Nothing contained in this section shall be deemed to restrict the right of the state to amend, modify, repeal or otherwise alter statutes imposing or relating to the taxes payable to the authority pursuant to section thirteen hundred thirteen of the tax law. Not less than thirty days prior to the beginning of each city fiscal year, the chairperson of the authority shall certify to the state comptroller, the governor, and the members of the board of directors of the authority a schedule of maximum annual debt service payments due on the bonds and notes of the corporation then outstanding. To the extent that the tax revenues payable to the authority under section thirteen hundred thirteen of the tax law during such fiscal year are projected by the mayor to be insufficient to meet at least one hundred fifty percent of maximum annual debt service on authority bonds then outstanding, the mayor shall so notify the state comptroller and the state comptroller shall pay to the authority from alternative revenues such amount as is necessary to provide at least one hundred fifty percent of the maximum annual debt service; provided, however, that for so long as any indebtedness of the municipal assistance corporation for the city of New York remains outstanding no alternative revenues that are, as of the effective date of this title, or any in the future be, required to be deposited in the municipal assistance tax fund established under section ninety-two-d of the state finance law shall be paid to the authority except out of funds that are otherwise required to be paid to the city under such section of the state finance law. Nothing in this section shall be deemed to obligate the state to make any additional payments or impose any taxes to satisfy the debt service obligations of the authority." Section 2799-ii "Agreement with the city. The city is authorized to pledge and agree with the holders of any issue of bonds and/or bond anticipation notes secured by such a pledge that the city will not limit or alter the rights hereby vested in the authority to fulfill the terms of any agreements made with such holders pursuant to this title, or in any way impair the rights and remedies of such holders or the security for such bonds and/or bond anticipation notes until such bonds and/or bond anticipation notes, together with the interest thereon and all costs and expenses in connection with any action or proceeding by or on behalf of such holders, are fully paid and discharged. Nothing contained in this section shall be deemed to restrict any right the city may have to amend, modify or otherwise alter local laws imposing or relating to the taxes payable to the authority pursuant to section thirteen hundred thirteen of the tax law so long as, after giving effect to such amendment, modification or other alternation, the amount of tax revenues projected by the mayor to be available to the authority during each of its fiscal years following the effective date of such amendment, modification or other alteration shall be not less than one hundred fifty percent of maximum annual debt service on authority bonds then outstanding." Section 2799-jj STATEMENT OF THE CASE A. INTRODUCTORY STATEMENT This is a declaratory judgment action. Plaintiffs are citizens of the United States. They are registered voters residing in the State of New York. They pay state, local and federal taxes. Plaintiffs seek a declaration that New York State Finance Law Section 123-b(1) and the New York City Transitional Finance Authority Act (Chapter 16 of the New York Laws of 1997, hereinafter the "Act") are both unconstitutional, null and void. At issue are numerous provisions of the Constitutions of the State of New York and of the United States. B. STATEMENT OF FACTS The people know that public debt is one of the greatest of dangers to be feared. Because of the hard lessons of history in this state, the people of this state have placed constitutional limits on public debt. For instance, the will of the people, as expressed in the New York Constitution, is that public debt incurred by or on behalf of New York City is limited to 10 percent of the average full valuation of taxable real estate of the City. It is to be noted that the people were cognizant of and sympathetic to the extensiveness of and the cost to build New York City’s water, sewer, transportation and transit systems, and the complexities of the city’s budgeting process and the City’s need to borrow, from time to time, in anticipation of the receipt of taxes and revenues. The New York Constitution allows the City of New York to exclude debt incurred for these purposes from the City’s total outstanding debt level, when determining how much the City can borrow, given the 10% cap of Article VIII, Section 4.c. In 1975, the New York State Legislature and the Executive adopted a law [State Finance Law Section 123-b(1)] which, in its plain language and effect, denies citizens their right to petition their government for a redress of grievances deeply rooted in the New York Constitution -- i.e., to assert their constitutional rights in any forum -- by specifying that citizens shall not be allowed to maintain a lawsuit if the subject matter deals with public debt -- i.e., the "authorization, sale, execution or delivery of a bond issue or notes issued in anticipation thereof by the State or any agency, instrumentality or subdivision thereof, or by any public corporation or public benefit corporation." In 1979, in violation of the "Separate Powers" doctrine, the New York Court of Appeals issued its decision in Wein v. Comptroller, 46 NY2d 394, ruling that SFL 123-b(1) "does indicate a reasonably clear legislative intent to prevent taxpayer challenges with respect to a State bond issue or notes issued in anticipation thereof [SFL 123-b(1)]. Under the circumstances it would be inappropriate for the courts to confer standing in these cases since such a determination would, in effect, render the statutory ‘exception’ a nullity and ignore the expressed legislative policy to the contrary," and that to allow citizens to challenge legislative acts that authorize the incurrence of public debt would "increase the cost of raising revenue by creating uncertainty in the minds of potential investors." (Plaintiffs’ emphasis). Note: The constitutionality of SFL 123-b(1) under the First Amendment was neither raised, presented nor determined in Wein. Since 1979, the New York Judicial branch has been honoring SFL 123-b(1) by dismissing claims that involve public borrowing. By doing so it has been cooperating with the Executive and Legislative branches, allowing the N.Y. Constitution, in effect, to be changed by the Legislative and Executive branches: first, by SFL 123-b(1), and then by various legislative acts which authorize public borrowing and which are obnoxious to the N.Y. Constitution but which are shielded from citizen suits and judicial review by the impenetrable, door-closing barrier represented by SFL 123-b(1). Elected officials knew in 1994 that their customary, free-wheeling, politically expedient, tax, spend and borrow practices would soon bump up against the constitutionally prescripted debt limit of 10%. In 1994, rather than pursue a course of fiscal integrity by reducing the amount of money they were expending or increasing revenues to cover spending, elected officials chose not to end their politically expedient, profligate ways. They chose, instead, to ask the people of the State to approve a constitutional amendment to allow our elected officials to create public corporations (such as the New York City Transitional Finance Authority), to have the public corporations borrow money on behalf of "distressed cities" and to use tax revenues to pay the principle of and interest on the bonds of the public corporations. In 1995 the Legislature gave second passage to, and placed before the voters of the state, a proposed constitutional amendment which would have allowed the state to: "enter into financing or other similar arrangements with a public benefit corporation for the purpose of providing financing assistance to distressed municipalities," and "intercept moneys otherwise payable to a municipality...to make payments of principal, interest, or related payments on indebtedness contracted by...a public corporation authorized to assist such municipality....," and "provide moneys to a municipality...which such municipality...may use or, if permitted by law, pledge for the payment of principal, interest, or related payments on its indebtedness." See the Concurrent Resolution of the Senate and Assembly. (R 206-11). On election day, 1995, approximately 1.2 million voters voted "no" to the proposed constitutional amendment while approximately 600,000 voters voted "yes". Now, our elected officials have the effrontery to do what the voters of this state specifically said they didn’t want them to do. Our elected officials have adopted a law that creates a public corporation to incur debt on behalf of a "distressed" City of New York. In 1997, the Legislature passed and the Governor signed into law as Chapter 16 of the Laws of 1997, an Act which created the New York City Transitional Finance Authority (TFA) and authorized the TFA to contract for $7.5 billion in long-term, tax-supported debt. Then, if this isn’t enough of an insult to constitutional probity, the law states in its very first paragraph, under "Legislative findings," that the Legislature knows the Act is repugnant to the constitutional debt limit, but finds that, in essence, the mess that the elected officials have gotten themselves into by their profligate practices establishes a need that (they say) overrides the constitutional prohibitions. The Legislature has, in effect, stated that they (the City) need to borrow more and the Constitution has to be ignored until it has been "fixed" by Amendment. The Legislature has said, in effect, "We are in charge now, we are seizing the ultimate power from the people, and the courts will have to go along because we have directed them [by adopting State Finance Law 123-b(1)] to throw out of court any citizen who petitions for a redress of this grievance, if their complaint pertains to the incurrence of public debt." In June of 1997, before any bonds were issued by the TFA, plaintiffs filed a lawsuit in State Supreme Court. The plaintiffs petitioned the court to declare SFL 123-b(1) unconstitutional, null and void (because it is violative of a citizen’s fundamental right to petition the government for a redress of grievances), and to declare the TFA Act unconstitutional, null and void because it violated eight provisions of the NY Constitution and 2 provisions of the US Constitution. However, the State Supreme Court did what it has been doing with all other challenges to unconstitutional public borrowing. It ruled that the constitutionality of SFL 123-b(1) had been upheld in a 1979 decision written by Judge Sol Wachtler and then the Court used SFL 123-b(1) to dismiss the bulk of the complaint for lack of standing. Causes not dismissed for lack of standing were dismissed under the doctrines of res judicata or stare decisis. Unfortunately for this case and many earlier rulings of this type, the constitutionality of SFL 123-b(1) was never an issue in the Wachtler decision. See Wein v Comptroller 46 NY2d 394 (1979). The July 30, 1998, decision by the Appellate Division of State Supreme Court was appealed to the New York Court of Appeals in August 1998. At the same time the appellants filed a motion to disqualify four of the seven judges on the Court of Appeals because of conflicts of interest based on spousal employment and ownership of the types of bonds being challenged in the TFA case, making the judges lenders to the State. On September 22, 1998, the Court of Appeals issued its decision. First, the Court dismissed the motion to disqualify four judges on the ground that the Court has no statutory authority to exclude any of its judges from participating in a case. Instead, appellants’ application for disqualification was converted by the Court to one for recusal which was then referred to each individual challenged Judge. Each of the challenged Judges then decided not to recuse, deciding instead to participate in decisions relating to the case. Finally, the New York Court of Appeals, acting en banc dismissed appellants’ appeal as of right, on the ground that "there is no substantial constitutional question directly involved." In the interest of justice, in the interest of jurisprudence, and in defense of government republican in form and substance, plaintiffs submit this motion for leave to appeal. Additional cases involving SFL 123-b(1) and legislative acts involving public borrowing will, of necessity, be brought before the Unified Court System. This is immediately manifested by the complaint filed on September 14, 1998, which complaint challenges the constitutionality of Chapter 5 of the New York Laws of 1998 (authorizing the NYS Dormitory Authority to issue $240 million in tax-supported bonds to finance the construction of two state office buildings and a parking garage in the City of Albany), and Chapter 124 of the New York Laws of 1998 (creating a new public corporation, the Schenectady Metroplex Authority, and authorizing it to issue tax-supported bonds to finance the construction of public and private facilities in Schenectady). C. STAGES IN THE PROCEEDING WHERE THE FEDERAL QUESTIONS WERE RASIED Plaintiffs presented the federal questions in their verified complaint dated June 2, 1997, and in their amended verified complaint dated June 21, 1997. On appeal from the November 25, 1997 decision and order of State Supreme Court, plaintiffs repeated the federal questions in their briefs to the Appellate Division. On appeal from the July 30, 1998 decision and order of the Appellate Division, plaintiffs repeated the federal questions in their submissions to the N.Y. Court of Appeals. REASONS FOR GRANTING THE MOTION POINT I THE COURT BELOW MISAPPLIED A CONTROLLING PRINCIPLE OF LAW ESTABLISHED IN PEOPLE V GILLSON, (1888) 109 NY 389 When an act of government properly comes before the Court to be compared by it with the fundamental law, it is the duty of the Court to declare the invalidity of the act if it violates any provision of that law. People v Gillson (1888), 109 NY 389. In their complaint, and on appeal, plaintiffs asked the Court to compare Chapter 16 of the N.Y. Laws of 1997 with the following provisions of the fundamental law of New York State and to declare the act invalid because it violates these provisions: Article VII, Sections 7 and 8, Article VIII, Sections 1,2,4 and 12 and Article X, Section 5. Instead of comparing the act with these provisions of the fundamental law, to determine its validity, the Court below dismissed plaintiffs’ cause of action saying, in effect, that plaintiffs were no longer allowed to seek the protection of those provisions of the fundamental law, by fiat of the Legislative and Executive branches expressed in State Finance Law Section 123-b(1). On page 4 at footnote 1 of its Decision and Order, the Court below held, "standing does not, however, extend to plaintiffs’ claims that the Act violates N.Y. Constitution, Article VII, Section 8 (gift or loan of state money or credit), N.Y. Constitution Article VIII, Section 12 (limits on local indebtedness) or N.Y. Constitution, Article X, Section 5 (restriction on assumption of obligations of a public corporation), as such provisions are not limited to any voting rights (see, e.g., Matter of Schulz v State of New York, 193 AD2d 171, 177, aff’d 84 NY2d 231, cert. denied 513 AD2 1127 [sic])." The Court below misapplied the controlling principle of law established in Matter of Schulz v State of New York, 193 AD2d 171, 177, aff’d 84 NY2d 231. It was the duty of the Court below to compare Chapter 16 L97 with the fundamental law and to declare the invalidity of the Act if it violated any provision of that law. Also, in their complaint and on appeal, plaintiffs asked the Court to compare State Finance Law Section 123-b(1) with the fundamental law (U.S. Constitution, First and Fourteenth Amendments and Article IV; N.Y. Constitution, Article I, Section 9.1) and to declare the act invalid because it violates those provisions. Instead of comparing SFL 123-b(1) with the fundamental law, to determine its validity, the Court below dismissed plaintiffs’ cause of action saying, in effect, that the government is not limited by any written Constitution. On page 5 at footnote 2 of its Decision and Order, the Court below held, "The plain language of State Finance Law Section 123-b(1) precludes standing under such circumstances, and the constitutionality of such provision has long since been resolved (see, e.g., Schulz v State of New York, 185 AD2d 596, 597, appeal dismissed 81 NY2d 336. In fact, SFL 123-b(1) was never compared with the fundamental law to determine the validity of the act. It didn’t happen in Schulz v State of N.Y., 185 AD2d 596, 597, in 81 NY2d 336, in Wein v Comptroller (1979) 46 NY2d 394, or in relation to any other lawsuit. Relying on the principle established in Gillson (supra), it is quite clear that fundamental rights are invaded, weakened, limited or destroyed by the legislative acts under challenge. They are evidently of that kind which has been so frequent of late, a kind which is meant to protect some class in the community against the fair, free and full competition of some other class (the ordinary, non-aligned citizen-taxpayer-voter), the members of the former class thinking it impossible to hold their own against such competition, and therefore flying to the Legislature to secure some enactment which shall operate favorably to them or unfavorably to their competitors in the socio-political and socio-economic fields. The acts under challenge restrain the ordinary, non-aligned citizen-taxpayer-voter in the free enjoyment of his faculties, which he ought to have and use in the pursuit of his happiness. These laws interfere with his right not to have the fruits of his labor taken from him except by constitutional due process. If these laws and others like it are valid, the fact of their existence is a complete answer to the complaints of the citizen-taxpayers-voters as plaintiffs, that their liberty and freedom from oppressive debt and taxation are greatly impaired. "The power of the government is not above the Constitution, but it is bounded by its provisions; and if any liberty or franchise is expressly protected by any constitutional provision it cannot be destroyed by any valid exercise by the legislative or executive [power]...the legislature cannot, without reason and arbitrarily, infringe upon the liberty or the property rights of any person within the protection of the Constitution of this state; and that if the legislature shall determine what is a proper exercise of its [power] its decision is subject to the scrutiny of the courts." Gillson at 400, 401. The Court below misapplied the controlling principle of law established in Gillson (supra). It was the duty of the Court to compare SFL 123-b(1) and Chapter 16 L97 with the fundamental law and to declare the invalidity of the Act if it violated any provision of that law. POINT II THE COURT BELOW MISAPPLIED A CONTROLLING PRINCIPLE OF LAW ESTABLISHED IN RATHBONE V WIRTH, (1896) 150 NY 459 "No inference is warranted that other powers have been conferred by the people upon their legislative body than those which are mentioned in the Constitution, or which are necessary to carry into effect those which are expressly given." Rathbone v Wirth (1896), 150 NY 459, 467. The rights of the people, which are an accompaniment of our political institutions; which are expressly recognized as such by our Constitution, and the permanency of which is guaranteed therein, have been deliberately trenched upon by the legislative and executive bodies. What becomes of the right of the majority of the people to control the incurrence of public debt and the overburdensome level of taxation that results when a law is enacted which closes the door to judicial review of other laws which authorize the seemingly unconstitutional incurrence of public debt? It is not to much to say of SFL 123-b(1) and Chapter 16 L97 that they are an attack upon fundamental forms of personal liberty against which the specific constitutional provisions involved herein were intended to act as safeguards. These legislative acts are as opposed to a safe state policy as to the very letter of the Constitution. It doesn’t take much of an argument to show the importance of the debt limiting clauses in our Constitution, or what their presence means for our political institutions. Their very presence in the Constitution of the State beginning in 1846 evidences the importance which the people attach to the preservation of these rights in the management of their state and local affairs. They mean the right to control the level of public debt or they mean nothing. The theory of the Constitutions is that the people are, of right, entitled to petition the courts to compare acts of the legislature with the fundamental law and to have those laws invalidated if they are repugnant to any provision of the N.Y. Constitution or the Constitution of the United States, and that this right cannot be taken from them and the people, in effect, spat upon by any act of the legislature, or of any or all the departments of the state government combined. This right of "republicanism" lies at the foundation of our institutions, and cannot be disturbed or interfered with without weakening the entire foundation. The fundamental law is to be "carefully guarded by every department of government, but every infraction or evasion of it to be promptly met and condemned; especially by the courts, when such acts become the subject of judicial investigation." People ex rel. Bolton v Albertson, 55 NY 50. The acts under challenge here appear as legislation, hostile to freedoms meant to be protected by the "petition clauses" of the N.Y. and U.S. Constitutions and by Articles VII, VIII and X of the N.Y. Constitution, which plaintiffs have a right to claim, under the Constitution, in the management of the State’s fiscal affairs. It cannot be denied that legislation SFL 123-b(1) and Chapter 16 L97 are examples of legislation that have an inimical tendency. "The judicial power was intended to stand as a bulwark against all legislation which impairs any of the constitutional guarantees. The legislative power of the state is vested in the legislature and it is plenary with respect to the state at large, or to any portion thereof, in matters of government, except as restricted by the Constitution...We must not forget that a Constitution is the measure of the rights delegated by the people to their governmental agents and not of the rights of the people. It apportions the powers of government, with such limitations as are appropriate to keep their exercise clearly defined. The Judicial power can, and should, pronounce null all laws which contravene its provisions...." Rathbone at 470. POINT III THE COURT BELOW MISAPPLIED A CONTROLLING PRINCIPLE OF LAW ESTABLISHED IN IN RE KEMMLER (1890) 10 S.CT. 930 "The Fourteenth amendment did not radically change the whole theory of the relations of the State and Federal governments to each other, and of both governments to the people. The same person may be at the same time a citizen of the United States and a citizen of a state. Protection of life, liberty and property rests primarily with the states, and the amendment furnishes an additional guaranty against any encroachment by the states upon those fundamental rights which belong to citizenship, and which the state governments were created to secure. The privileges and immunities of citizens of the United States, as distinguished from the privileges and immunities of citizens of the states, are indeed protected by it; but those are privileges and immunities arising out of the nature and essential character of the national government, and granted and secured by the Constitution of the United States." In Re Kemmler at 934, citing United States v Cruikshank 92 U.S. 542 and Slaughterhouse Cases, 16 Wall. 36. The Court below misapplied this principle of law. The Fourteenth Amendment protects the privileges and immunities of plaintiffs, including the right to petition the government for a redress of grievances, a right transgressed by SFL 123-b(1). POINT IV THE COURT BELOW MISAPPLIED A CONTROLLING PRINCIPLE OF LAW ESTABLISHED IN IN RE DUNCAN, TEX. (1891) 11 S.CT. 573 "By the Constitution, a republican form of government is guaranteed to every State in the Union, and the distinguishing feature of that form is the right of the people to choose their own officers for governmental administration, and pass their own laws in virtue of the legislative power reposed in representative bodies, whose legitimate acts may be said to be those of the people themselves; but, while the people are thus the source of political power, their governments, national and state, have been limited by written constitutions, and they have themselves thereby set bounds to their own power, as against the sudden impulses of mere majorities." In re Duncan, Tex. 1891, 11 S. Ct. 573, 577. (Plaintiffs’ emphasis). The Court below misapplied this basic principle of law by not comparing SFL 123-b(1) and Chapter 16 of the New York Laws of 1997 with all the provisions of the constitutions of the United States and New York that plaintiffs have alleged the acts have violated. The legislative and executive need to be reminded that they are limited by written constitutions. The passage of time produces corruption of principles. It is the duty of good citizens to be ever on the watch against this, and if the gangrene is eventually to prevail, let the day be kept off as long as possible. The primary role of the court, we believe, is to protect the people from the unrestrained acts of the government --i.e., to keep the Legislature and Executive harnessed to the will of the people as expressed in their constitutions. Plaintiffs, together with other ordinary, non-aligned citizens, have been degraded from the prime rank, which they ought to hold in human affairs, by a willfully wayward state government that is behaving as if the NY Constitution belongs to it rather than to the people and, therefore, may be disregarded at will. Plaintiffs’ cause portrays the three branches of their state government as cooperating in the making and enforcing of laws which abridge plaintiffs’ privileges and immunities as both explicitly and implicitly expressed in the United States and New York State Constitutions. Sovereignty is the right to govern; a nation or state-sovereign is the person or persons in whom that resides. In New York, despite massive misunderstanding, it rests with the people. However, in the practice and even in the science of politics, there has been frequently a strong current in New York against the natural order of things. In New York, which has been denominated free, the state has assumed a supercilious pre-eminence above the people who have formed it. The state, rather than the people, for whose sakes the state exists, is frequently the object which attracts and arrests the principal attention. This has produced much of the confusion and perplexity, which have appeared in several proceedings and several publications on state politics. Sentiments and expressions of this inaccurate kind prevail in our common, even in our convivial language. Since the very beginning, the acts of the early national congresses and the acts of the early conventions, including the congress and committees of New York, are replete with expressions with respect to "republicanism" and to the "sovereignty of the people," and the servant nature of governments at all levels. It is to the honor of the United States that in no other country are subjects of this kind better -- or even so well -- understood. One fact stands out: the attention and attachment of the Constitution of the United States and of the New York Constitution to the rights of the sovereign people are discernible, as hard copy, in almost every provision of these documents. It is to be deeply regretted that the constitutional principles which are the cause of action in our lawsuit has not yet received its merited acquiescence and approval as basic principles of governance -- at least, not from New York State’s Legislative, Executive and Judicial branches. The United States and New York have, in their constitutional language, advocated both the form and substance of constitutional republicanism, with its emphasis on individual rights and governmental responsibility for protecting and enhancing them. Operationally, however, these principles are honored more in the breach than in the observance. There still may be reason to hope that the government of New York, in all three of its branches, may yet perceive the wrongness of actions it has taken, such as interdicting the right of the people to petition their government for a redress of grievances, incurring public debt in spite of constitutional restrictions and attempting to exempt the government that represents the body of her citizens from that "suability" which alone enables her citizens to assert their individual, fundamental rights and to seek and obtain the protections of their Federal and State constitutions. It is with this hope in mind that we petition this Court. The people have good reason to be thankful for their valuable liberties and privileges. Nothing but forthright insistence upon the perpetuation of constitutional law and government can insure the continuance and enhancement of their liberties and privileges. Under the circumstances, in New York, the people cannot do this without actions that would threaten their peace and tranquillity. It becomes necessary for the New York Court of Appeals to apply the rule of law. POINT V THE COURT BELOW MISAPPLIED A CONTROLLING PRINCIPLE OF LAW ESTABLISHED IN MATTER OF GREENE, 166 NY 485 No branch of government may avoid the mandate of the Constitution. Matter of Greene, 166 NY 485. The Court below misapplied this basic principle of law by not comparing SFL 123-b(1) and Chapter 16 of the New York Laws of 1997 with all the provisions of the constitutions of the United States and New York that plaintiffs have alleged the acts have violated. POINT VI THE COURT BELOW MISAPPLIED A CONTROLLING PRINCIPLE OF LAW ESTABLISHED IN BORYSZEWSKI V BRYDGES, 37 NY2d 361 Citizen-taxpayers have "standing to challenge enactments of our State Legislature as contrary to the mandates of our State Constitution." Boryszewski v Brydges, 37 NY2d 361. The Court below misapplied this basic principle of law by not comparing SFL 123-b(1) and Chapter 16 of the New York Laws of 1997 with all the provisions of the constitutions of the United States and New York that plaintiffs have alleged the acts have violated. POINT VII THE COURT BELOW MISAPPLIED A CONTROLLING PRINCIPLE OF LAW ESTABLISHED IN BETHLEHEM STEEL CORP. V BD. OF EDUC., 44 NY2d 831 It is the responsibility of the Court to apply and enforce the will of the people as expressed in the Constitution even if this results in considerable practical difficulty, and any law which purports to restrict the judicial authority to fashion relief, constitutes a patently unconstitutional infringement on the powers of the Judiciary. Bethlehem Steel Corp. v Bd. Of Ed., 44 NY2d 831. The Court below misapplied this controlling principle of law. Any act of the Legislature, "which purports to restrict the judicial authority to fashion remedies, constitutes a patently unconstitutional infringement on the powers of the judiciary." Bethlehem at 834. SFL 123-b(1), in effect, directs the Judiciary to dismiss any lawsuit which seeks to challenge the power of the State or local governments to borrow money, even if the complaint is deeply rooted in the Constitution. The Court below (while misapprehending the facts related to prior Schulz and Wein cases), enforced SFL 123-b(1), thereby accepting the legislatively imposed restriction on its (the Court’s) power to review Chapter 16 L97. Section 1 of Chapter 16 L97 and respondents’ papers in the Court below refer to a fiscal crisis in New York City as the justification for circumventing the Constitution’s debt limiting provisions. However, fiscal crises encountered by cities "does not constitute an emergency justifying suspension of constitutional limitations." Bethlehem at 834. Such fiscal crises, grave as they may be, "cannot seriously be equated with the emergencies contemplated in the Constitution: that is, enemy attack or other forms of disaster." Bethlehem at 834. The consequences of legislation such as SFL 123-b(1) and Chapter 16 L97, purportedly designed to address a fiscal crisis in New York "cannot be justified by fugitive recourse to the police power of the State or to any other constitutional power to displace inconvenient but intentionally protective constitutional limitations." Bethlehem at 834, 835 quoting Flushing Nat. Bank v Municipal Assistance Corp. for City of N.Y., 40 NY2d at 736. POINT VIII THE COURT BELOW MISAPPLIED A CONTROLLING PRINCIPLE OF LAW ESTABLISHED IN MATTER OF TOWN OF MINERVA V ESSEX COUNTY IDA An appeal may bring up for review issues determined by the judgment being reviewed. Matter of Town of Minerva v Essex County IDA, 173 AD2d 1054, lv denied, 78 NY2d 857. On pages 10-12 of Supreme Court’s Decision and Order, Judge Teresi addressed and determined a question that, while not included in the complaint itself, was raised and argued by both sides during the proceeding in his court. Judge Teresi wrote: "Plaintiffs allege that Defendants, in enacting Chapter 16 of the Laws of 1997, have authorized money derived from state and local income and sales taxes, under the care and management of the State Comptroller, to be paid to the Transitional Finance Authority without submitting said proposal to the required and proper appropriations by law, in violation of Article VII, Section 7 of the New York State Constitution... In Saratoga Harness Racing Association v. Agriculture & New York State Horse Breeding Development Fund, the Court ruled that a public finance fund was legal because it was the instrument through which the Legislature chose to effectuate a legitimate public interest. Saratoga Harness Racing Association v. Agriculture and New York State Horse Breeding Development Fund, 22 N.Y.2d 119 (1969). That Court decided whether or not a fund not directly held or managed by the State, but held or managed by a public corporation, came within the purview of the Constitution by examining the purposes sought to be attained by creation of the fund. Id at 123. Reviewing the history of Article 7, Section 7, the Court expressed concern that absent Legislative control over expenditures, it was possible for the State to incur obligations in excess of its actual limit and thus create financial burdens for future generations. Id at 124. However, they ruled that not every fund comprised of revenues from public taxation falls within the purview of limitations set out in Section 7 of Article VII of the New York State Constitution because ‘striking down said Legislation will hamper and cripple a significant Legislative program, and such a result is not mandated by the language, purpose or spirit of Section 7, Article 7 of the N.Y. Constitution. Id, quoting Matter of Clark v. Sheldon, 106 N.Y. 104, People v. Ex rel Evans and Chapin, 101 N.Y. 682. The purpose of Section 7 of Article VII is to ensure that the Legislature retains control over State income and expenditures, not to prohibit Public Benefit corporations from making expenditures. Saratoga Harness & Racing Association v. Agriculture, and New York State Horse Breeding Fund, 22 N.Y.2d 119 (1969)." However, on page 5 of its Opinion and Order, at footnote 3, the Appellate Division held, "we note that although plaintiffs argue on appeal that the Act violates N.Y. Constitution, Article VII, Section 7 (providing, in relevant part, that ‘[n]o money shall ever be paid out of the state treasury or any of its funds, or any of the funds under its management, except in pursuance of an appropriation by law’), this issue was not raised in plaintiffs’ complaint or amended complaint and, hence, is not properly before us." (See Matter of Pure Air & Water of Chemung County v Davidson, __AD2d__, 668 NYS2d 248, 249, appeal dismissed 91 NY2d 955) (appellants emphasis). This opinion is at odds with the long standing controlling principle of law, most recently articulated in Matter of Town of Minerva v Essex County IDA, 173 Ad2d 1054, lv denied 78 NY2d 857, which held that an appeal may bring up for review any issue determined by the judgment being reviewed, whether or not raised in the complaint per se, especially an issue that was pled as grounds for the relief sought in the petition, where Supreme Court and respondents were placed on notice if the allegation, where respondents were provided the opportunity to refute the arguments, where respondents refuted the arguments, and where the Supreme Court addressed and determined the issue. Minerva (supra) at 1055. The opinion and order by the Court below has misapplied this principle by ruling that unless an issue is presented in the initial complaint or petition, that issue will not be addressed by the Appellate Division even if the issue was raised and pled during the proceeding in Supreme Court, fully argued there and then decided on its merits by the Supreme Court judge. As appellants argued before the Third Department (Brief, page 14 and Reply Brief, page 8), Chapter 16 gave no specific clue that payments by the Comptroller to the TFA would be made without prior appropriation by law. No reasonable person could conclude from reading only the Act that the defendants intended that the money would be paid to the TFA without a prior appropriation. It was not until plaintiffs read the Bond Buyer on September 4, 1997, that they learned that the bonds were being rated and sold as "appropriation free" bonds. Plaintiffs then immediately raised the Article VII, Section 7 question. See plaintiffs’ affidavit of September 5, 1997 (R 138-141). The question was briefed by both sides. See plaintiffs’ affidavit dated 9/17/97 together with its Exhibit H (R 182-201). See also Exhibit A to Appellants’ Reply Brief to the Court below, which is a copy of State defendants "letter/memorandum" to the Court below dated October 7, 1997, in support of their motion for summary judgment. POINT IX THE COURT BELOW MISAPPREHENDED MATERIAL FACTS On page 5 of its Opinion and Order, the Court below held: "Turning to the merits, plaintiffs’ remaining constitutional claims, to the extent that they are properly before this court, are premised upon the erroneous belief that any debt incurred by the Authority pursuant to the Act is a debt of the State and the City. The basis for this belief, in turn, is plaintiffs’ assertion that the State and City are obligated, through the payments made to the Authority by the Comptroller, to fund the debt service on the bonds issued by the Authority. Plaintiffs’ argument on this point, however, ignores not only the plain language of Public Authorities Law Section 2799-gg (10) and Public Authorities Law Section 2799-ii, but also the Court of Appeals’ prior decisions in Wein v City of New York (36 NY2d 610) and Schulz v State of New York (84 NY2d 231, cert denied 513 US 1127), which in our view, are entirely dispositive of this matter. A review of the funding mechanisms at issue in Wein and Schulz, each of which contained language virtually identical to that set forth in Public Authorities Law Section 2799-gg (10), plainly reveals that the payments made by the Comptroller here are ‘permissible gifts’ to the Authority (see, Wein v City of New York, supra, at 618-619). Simply stated, plaintiffs have failed to meet their heavy burden of demonstrating beyond a reasonable doubt (see, Matter of Klein [Hartnett], 78 NY2d 662, 666, cert denied 504 US 912) that, pursuant to the Act, the State and City are legally obligated to the holders of the bonds in the event of the Authority’s default and, thus, have incurred debt in contravention of the relevant constitutional mandates." This Opinion is based on a misapprehension of material facts. To support its opinion that the Court of Appeals’ prior decisions in Wein v City of New York, 36 NY2d 610 (Wein I) and Schulz v State of New York, 84 NY2d 231 (Schulz I) are "entirely dispositive of this matter" the Court below opined, "funding mechanisms at issue in Wein and Schulz, each of which contained language virtually identical to that set forth in Public Authorities Law Section 2799-gg.10, plainly reveals that the payments made by the Comptroller here are ‘permissible gifts’ to the Authority." While the Court below noticed and quoted a very small portion of the language of Chapter 16, the Court misapprehended the rest of the language of the Act which belied the provisions quoted by the Court below. For instance, the Court below quoted Section 2799-ff.5(a) which reads, "[s]uch agreements shall not constitute indebtedness of the City for purposes of section 20.0 of the local finance law or any constitutional or statutory limitation," section 2799-ff.5(b), which reads, "nor shall the Authority’s revenue be deemed funds of the City," section 2799-gg.10, which reads, "The bonds or other obligations of the Authority shall not be a debt of either the State or the City, and neither the State nor the City shall be liable thereon, nor shall they be payable out of any funds other than those of the Authority; and such bonds shall contain on the face thereof a statement to such effect," and section 2799-ii, which reads, "nothing contained therein shall be deemed to...obligate the State to make any additional payments or impose any taxes to satisfy the debt service obligations of the Authority." The Court is respectfully requested to compare the meaning of the sections of Chapter 16, quoted by the Court below in its Opinion and Order, with the meaning of the rest of the Act, particularly the following sections: "the authority may enter into agreements with the city and the city, acting by the mayor alone, may enter into agreements with the authority in accordance with the provisions of this title as to the financing of costs by the authority, the application of tax revenues to the authority to secure its bonds, and further assurances in respect to the authority’s receipt of such revenues." Section 2799-ff.5(b) "Such agreements (i) shall describe by reference to the capital budget of the city particular projects and costs to be financed in whole or in part by the authority, (ii) shall describe the plan for the financing of the costs or projects, (iii) shall set forth the method by which and by whom and the terms and conditions upon which money provided by the authority shall be disbursed to the city, which disbursements shall occur, subject to receipt by the authority of such documentation as to the costs being reimbursed as the authority shall reasonably require, at least monthly, (iv) shall provide for the payment of such costs by the city under such contracts as shall be awarded by the city or for the city to make a capital contribution of such proceeds as city funds to another entity for the payment or reimbursements of such costs, and (v) shall require every contract entered into by the city, or another entity receiving funds from the city, for projects or costs to be financed in whole or in part by the authority to be subject to the provisions of the New York City Charter and other applicable laws governing contracts of the city or such entity, as the case may be." Section 2799.ff.6 "The authority shall have the power and is hereby authorized from time to time to issue bonds, in conformity with applicable provisions of the uniform commercial code, in such principal amounts as it may determine to be necessary pursuant to section 2799-ff of this title to pay the cost of any project and to fund reserves to secure such bonds, including incidental expenses in connection therewith. The aggregate principal amount of such bonds, notes or other obligations so issued shall not exceed $7.5 billion, excluding bonds, notes or other obligations issued to refund or otherwise repay bonds, notes or other obligations theretofore issued for such purposes;" Section 2799-gg.1 "Whenever the authority shall determine that the issuance of its bonds is appropriate, which determination shall occur at a minimum whenever necessary to reimburse the city for project capital costs incurred by the city,..." Section 2799-gg.5 "Any resolution or resolutions authorizing bonds or any issue of bonds may contain provisions which may be part of the contract with the holders of the bonds thereby authorized as to: (a) pledging all or part of its revenues, together with any other moneys, securities or contracts, to secure the payment of the bonds, subject to such agreements with the bondholders as may then exit...(f) vesting in a trustee or trustees such properties, rights, powers and duties in trust as the authority may determine, which may include any or all of the rights, powers and duties of the trustee appointed by the bondholders pursuant to section 2799-00 of this title...." Section 2799-gg.6 "In addition to the powers herein conferred upon the authority to secure its bonds, the authority shall have power in connection with the issuance of bonds to enter into such agreements for the benefit of the bondholders as the authority may deem necessary, convenient or desirable concerning the use or disposition of its revenues or other moneys, including the entrusting, pledging or creation of any other security interest in any such revenues, moneys and the doing of any act, including refraining from doing any act, which the authority would have the right to do in the absence of such agreements. The authority shall have power to enter into amendments of any such agreements within the powers granted to the authority by this title and to perform such agreements. The provisions of any such agreements may be made part of the contract with the holders of the bones of the authority." Section 2799-gg.7 "Subject to the provisions of this title, the directors of the authority shall receive, accept, invest, administer, expend and disperse for its corporate purposes all money of the authority from whatever sources derived including (a) payments by the state comptroller pursuant to this title; (b) the proceeds of bonds...." Section 2799-hh.1 "Tax revenues received by the authority pursuant to Section 1313 of the tax law, together with any alternate revenues received by the authority, shall be applied in the following order of priority; first pursuant to the authority’s contract with bondholders, then to pay the authority’s operating expenses not otherwise provided for, and then pursuant to the authority’s agreements with the city...." Section 2799-hh.5 "Agreement with the state. The state does hereby pledge and agree with the holders of any issue of bonds and/or bond anticipation notes secured by such a pledge that the state will not limit or alter the rights hereby vested in the authority to fulfill the terms of any agreements made with such holders pursuant to this title, or in any way impair the rights and remedies of such holders or the security for such bonds and/or bond anticipation notes until such bonds and/or bond anticipation notes, together with the interest thereon and all costs and expenses in connection with any action or proceeding by or on behalf of such holders, are fully paid and discharged. Nothing contained in this section shall be deemed to restrict the right of the state to amend, modify, repeal or otherwise alter statutes imposing or relating to the taxes payable to the authority pursuant to section thirteen hundred thirteen of the tax law. Not less than thirty days prior to the beginning of each city fiscal year, the chairperson of the authority shall certify to the state comptroller, the governor, and the members of the board of directors of the authority a schedule of maximum annual debt service payments due on the bonds and notes of the corporation then outstanding. To the extent that the tax revenues payable to the authority under section thirteen hundred thirteen of the tax law during such fiscal year are projected by the mayor to be insufficient to meet at least one hundred fifty percent of maximum annual debt service on authority bonds then outstanding, the mayor shall so notify the state comptroller and the state comptroller shall pay to the authority from alternative revenues such amount as is necessary to provide at least one hundred fifty percent of the maximum annual debt service; provided, however, that for so long as any indebtedness of the municipal assistance corporation for the city of New York remains outstanding no alternative revenues that are, as of the effective date of this title, or any in the future be, required to be deposited in the municipal assistance tax fund established under section ninety-two-d of the state finance law shall be paid to the authority except out of funds that are otherwise required to be paid to the city under such section of the state finance law. Nothing in this section shall be deemed to obligate the state to make any additional payments or impose any taxes to satisfy the debt service obligations of the authority." Section 2799-ii "Agreement with the city. The city is authorized to pledge and agree with the holders of any issue of bonds and/or bond anticipation notes secured by such a pledge that the city will not limit or alter the rights hereby vested in the authority to fulfill the terms of any agreements made with such holders pursuant to this title, or in any way impair the rights and remedies of such holders or the security for such bonds and/or bond anticipation notes until such bonds and/or bond anticipation notes, together with the interest thereon and all costs and expenses in connection with any action or proceeding by or on behalf of such holders, are fully paid and discharged. Nothing contained in this section shall be deemed to restrict any right the city may have to amend, modify or otherwise alter local laws imposing or relating to the taxes payable to the authority pursuant to section thirteen hundred thirteen of the tax law so long as, after giving effect to such amendment, modification or other alternation, the amount of tax revenues projected by the mayor to be available to the authority during each of its fiscal years following the effective date of such amendment, modification or other alteration shall be not less than one hundred fifty percent of maximum annual debt service on authority bonds then outstanding." Section 2799-jj In contravention of Article VII, VIII and X of the N.Y. Constitution, the Act authorizes the TFA to issue $7.5 billion in long-term bonds (2799-gg.1), to reimburse the City for project capital costs incurred by the City (2799-gg.5 and 2799-ff.6), and to contract with the City for the application of tax revenues to the TFA to secure TFA bonds (2799-ff.5.b, 2799-jj and 2799-hh.5), and to contract with the State for the application of tax revenues to the TFA to secure TFA bonds (2799-hh.1, 2799-hh.5, and 2799-ii), and to assign its contracts with the City and the State to its bondholders, thereby transferring to the bondholders the City’s commitment to provide tax revenues to the TFA and the State’s commitment to provide tax revenues to the TFA (2799-gg.6, 2799-gg.7, 2799-ii, and 2799-jj). The Act directs that the City and State tax revenues to be paid to the TFA shall be applied by the TFA in the following order of priority: first, to service the bonds of the TFA, then to pay the TFA’s operating expenses and then to pay the City. (2799-hh.5). Under the Act, the City and the State have contracted directly with the holders of bonds of the TFA, bonds already secured by the "assigned" pledge of the City and the State to pay tax revenues to the TFA for the priority purpose of servicing the bonds of the TFA, not to limit or alter the rights of the bondholders vested in the Authority to fulfill the terms of its contracts with the City and the State, which contracts are assigned to the trustee of the bondholders. (2799-ii, 2799-jj). Even if this language, or anything close to these provisions, could be found in the acts under constitutional challenge in Wein v City of New York, 36 NY2d 610 and in Schulz v State of New York, 84 NY2d 231 (which is not the case), that would not mean Chapter 16 L97 is constitutional, only that plaintiffs, there, did not argue well enough. The Court is respectfully requested to also note Table 1 (attached), which was included in plaintiffs’ Reply Brief to the Court below. It details the features of the Act which distinguish the Act from the Acts which were the focus of Wein I and Schulz I. The Court is respectfully requested to also note plaintiffs’ arguments included in appellants’ brief and in appellants’ reply brief. The Court below misapprehended material facts. As but one example of the misapprehension of these material facts, plaintiffs’ constitutional claims were not premised, as the Court below asserted, upon a belief that any debt incurred by the TFA pursuant to the Act is a debt of the State and the City. Rather, plaintiffs’ constitutional claims were premised on the fact that the Act placed both the City and the State into debt to the TFA, by virtue of various provisions of Chapter 16, including those quoted above. POINT X THE COURT BELOW HAS MISAPPREHENDED A MATERIAL FACT: THE CONSTITUTIONALITY OF SFL 123-b(1) HAS NEVER BEEN DETERMINED On page 4 of the Opinion and Order the Court below held: "We have no quarrel with the proposition, that plaintiffs indeed possess standing as voters to assert that the public referendum requirement of N.Y. Constitution, Article VII, Section 11 (See, e.g., Matter of Schulz v New York State Executive, 233 AD2d 43, 48, aff’d __ NY2d __ [June 9, 1998] [finding that the Court of Appeals’ decision in Matter of Schulz v State of New York (81 NY2d 336) evidenced ‘an intent to permit voter standing in an action or proceeding predicated upon an alleged violation of any of the fundamental requirements of N.Y. Constitution, Article VII, Section 11’])...Such standing does not, however, extend to plaintiffs’ claims that the Act violates N.Y. Constitution, Article VII, Section 8 (gift or loan of State money or credit), N.Y. Constitution, Article VIII, Section 12 (limits upon local indebtedness) or N.Y. Constitution, Article X, Section 5 (restriction on assumption of obligations of a public corporation), as such provisions are not linked to any voting rights (see, e.g., Matter of Schulz v State of New York, 193 AD2d 171, affd 84 NY2d 231, cert denied 513 AD2d 1127). Implied in this opinion is the belief that in one or more of the constitutional law cases brought by Robert L. Schulz against the incurrence of public debt, between 1990 and 1998, or one or more of the constitutional law cases brought by Professor Wein between 1975 and 1982 against the incurrence of public debt, that State Finance Law Section 123-b(1) was, itself, compared with the fundamental law and found to be constitutional. The Court below has misapprehended this most material fact. In fact, no court has ever compared State Finance Law Section 123-b(1) with the fundamental law, including the right to petition clause of the U.S. Constitution (1st Amendment) and the N.Y. Constitution (Article I, Section 9.1), or the right to a government republican in form and substance clause (Article IV, Section 4) of the U.S. Constitution, or the freedom from State laws which abridge our privileges and immunities (Section 1, cl 2, 14th Amendment). Plaintiff Schulz challenged the constitutionality of SFL 123-b(1) in the so-called "Attica case" (Schulz v State of N.Y., 185 AD2d 596, 81 NY2d 336, and in numerous cases since then. In 185 AD2d 596 the appellate Division said that based on Wein v Comptroller, 46 NY2d 394 SFL 123-b(1) was not unconstitutional. However, the constitutionality of SFL 123-b(1) was not addressed or determined in Wein v Comptroller. The Unified Court System has continued to misapprehend this material fact, as evidenced by the Decision and Order by the Court below. POINT XI THE COURT BELOW MISAPPREHENDED MATERIAL FACTS RE SCHULZ V STATE OF NEW YORK, 84 NY2d 231 (SCHULZ I) In Schulz I the Court of Appeals declared the debt of the N.Y.S. Thruway Authority and the Metropolitan Transit Authority, issued pursuant to Chapter 56 of the Laws of 1993, to be constitutional for two reasons: 1) the disclaimer that was in the Act, itself, which declared that payments by the Comptroller to these two public corporations, from State funds, would be "subject to appropriation by the Legislature;" and 2) repayment of the debt was not legally enforceable. In the instant case, the disclaimer is not included in the legislation and the debt is legally enforceable. The Court’s attention is directed to the following facts which were misapprehended by the Court below. In Schulz I the courts ruled, in effect, that due to the disclaimers, the State was only "morally obligated" to make the payments to the two public corporations (i.e., that the debt was not "legally enforceable") and, therefore, the debt of the public corporations was not the debt of the State. However, as the argument under Point IX above and the Record (R 109-112) show, this case is distinguishable from Schulz I, extinguishing any stare decisis defense. Debt incurred under the authority of Chapter 16 L97 would, in fact, be legally enforceable. Any bonds issued under Chapter 16 L97 would not be State "appropriation risk" bonds as was the case of Chapter 56 L93. Chapter 16 L97 does not include the disclaimer that payment of debt service would be "subject to the annual appropriation of the Legislature." This alone distinguishes the instant case from Schulz I and should bar any dismissal on the basis of stare decisis, and, as the Record shows (Memorandum of Law of September 29, 1997, on pages 29-31) a holder of a bond issued by the TFA could legally force the State to make good on the terms of the TFA’s bonds, which provide, in effect, that: the TFA is a public corporation created by the State Legislature, and under the Control of the State’s Public Authorities Control Board, the TFA was created to issue bonds on behalf of one of the State’s municipal subdivisions (NYC), the TFA was created by the State to relieve the State of some of its obligation to provide financial aid to the City through the State’s "Aid to Localities" budget bill which equals approximately 66% of the State’s budget, the State and only the State is to provide the TFA with the money needed to enable the TFA to pay its bondholders, the State money used to pay the TFA will come from the State treasury and/or funds under the care and management of the State Comptroller, NY Constitution Article VII, Section 7 reads in relevant part: "No money shall ever be paid out of the State treasury or any of its funds, or any of the funds under its management, except in pursuance of an appropriation by law...." NY Constitution, Article VII, Section 16 reads in relevant part: "The Legislature shall annually provide by appropriation for the payment of the interest upon and installments of principal of all debts or refunding debts created on behalf of the State...If at any time the Legislature shall fail to make any such appropriation, the Comptroller shall set apart from the first revenues thereafter received, applicable to the general fund of the State, a sum sufficient to pay such interest, installments of principal...and shall so apply the moneys thus set apart." A holder of a TFA bond who did not receive payment when due would only have to sue for a writ of mandamus to compel the Legislature and the Comptroller to perform their duty as provided in the NY Constitution and Chapter 16 L97. Based on the above, the bonds of the TFA will be legally enforceable public debt, making Chapter 16 L97 subject to the debt limiting provisions of the NY Constitution. Chapter 16 L97 is repugnant to the NY Constitution Article VIII, Sections 1, 2, 4 and 12, Article VII, Sections 7, 8 and 11 and Article X, Section 5. POINT XII BASIC RIGHTS HAVE BEEN TAKEN WAY BY THE STATE. THE NEW YORK COURT OF APPEALS CAN RESTORE THOSE RIGHTS. Plaintiffs’ First Amendment right to petition the government for a redress of grievances, involving unconstitutionally incurred public debt, has been taken away by the New York State Legislature and Executive. The N.Y. Court of Appeals can restore that right. The Legislature and the Executive enacted the exception language SFL 123-b(1) which declares, in essence, that the courthouse door is closed to citizen-petitioners in cases where they are seeking to obtain compliance with debt-limiting restrictions of the N.Y. Constitution. It is now necessary for the N.Y. Court of Appeals to declare SFL 123-b(1) to be unconstitutional. Plaintiffs’ fundamental right to a "separation of powers" has been infringed by the Unified Court System of New York. The N.Y. Court of Appeals can restore that right. The New York State Judiciary has been cooperating with the Legislature and Executive by enforcing SFL 123-b(1). Since 1992, the Judiciary has dismissed seven of plaintiff Schulz’ lawsuits for lack of standing under SFL 123-b(1). Those lawsuits were filed against the Legislature and the Executive for enacting laws authorizing the incurrence of public debt in spite of specific New York constitutional restrictions. Plaintiffs’ constitutional right to have their State judges comply with the provisions of the U.S. Constitution has been taken away by the New York State Judiciary. The N.Y. Court of Appeals can restore that right. Plaintiffs have argued four cases before the N.Y. Court of Appeals where the matter involved a constitutional attack on the incurrence of public debt. In each case the Court of Appeals has failed to address plaintiffs’ First Amendment attack on SFL 123-b(1) only to use SFL 123-b(1) to dismiss plaintiffs’ claims for lack of standing. Plaintiffs’ right to a State government republican in form and substance and their guarantee of freedom from the making and enforcement of State laws that abridge their fundamental privileges and immunities have been taken away. The N.Y. Court of Appeals can restore those rights. POINT XIII THE JUDGES IN THE COURT BELOW WERE CONFLICTED Financial disclosure forms submitted by judges of the Third Department Appellate Division, and obtained by plaintiffs within the last few weeks, show serious conflicts of interest that should have been cause for recusal in the TFA bond case. Judge White listed holdings that include many New York municipal bonds: The Franklin NY Bond Mutual Fund, MFS Municipal Bond Fund, MFS Multi-Market Fund, MFS Muni Bond Fund, NY Medical Health municipal bonds. NY Dormitory Authority municipal bonds, and City of Albany municipal bonds. In addition, he lists the NYS Deferred Compensation Plan, which contains New York municipal bonds among its holdings. Judge Mercure lists holdings that include New York municipal bonds: the Nuveen NY Select Closed End Fund (bonds), the Oppenheimer Bond Fund, and four money market accounts. He also lists the NYS Deferred Compensation Plan. In addition, Judge Mercure’s wife is an aide to Senator Stafford and is a paid employee of the NYS Legislature. As Chairman of the UCS Ethics Commission, Judge Mercure’s conflicts set a poor example that encourage other judges to disregard ethical standards concerning financial conflicts of interest. Judge Crew has disclosed investments which include IRA holdings by Valicenti Investment Advisors that contain New York municipal bonds including NYS Medicare and NYS Power Authority municipal bonds, as well as money market investments. Judge Mikoll lists the Copeland Plan/NYS Deferred Compensation Plan and several mutual and money market funds that contain municipal bonds. New York has been the state most aggressively issuing municipal bonds, and mutual funds that buy bonds almost certainly own New York municipal bonds, even if the fund is not devoted exclusively to New York bonds. Money market funds also invest heavily in municipal bonds. It may be concluded that the majority of the Appellate Division judges who adjudicated the TFA bond case in Albany in the spring of 1998 had financial conflicts of interest at the time. Ruling against the TFA bonds could have significantly and adversely affected the value of bonds in their portfolios. Some of their bond mutual funds likely owned the TFA bonds themselves, but an even greater threat and risk would have been felt by numerous other New York municipal bonds owned by the judges, either individually or through their bond funds, that would have become vulnerable to legal challenges had they overturned the TFA bond issue. The rules of judicial conduct say that a financial interest, however small, shall disqualify a judge from a case. Moreover, judicial law requires a judge to reveal any financial interests to all parties in the case, and that the judge cannot participate unless the parties agree; this was not done. DATED: October 21, 1998 GARY T. LOUGHREY, Pro Se ROBERT L. SCHULZ, Pro Se MARK N. AXINN, Pro Se BRADFORD R. ARTER, Pro Se JAMES B. STRAWHORN, Pro Se (Tables have been omitted from this website)
STATE OF NEW YORK COURT OF APPEALS ________________________________________________ ROBERT L. SCHULZ, GARY T. LOUGHREY, MARK N. AXINN, BRADFORD R. ARTER, and JAMES B. STRAWHORN, Plaintiffs-Appellants, NOTICE OF MOTION FOR LEAVE TO APPEAL Albany County Index No. 3256-97 A.D. No. 81812 - against - THE NEW YORK STATE LEGISLATURE, SHELDON SILVER, SPEAKER OF THE ASSEMBLY AND JOSEPH BRUNO, SENATE MAJORITY LEADER; and THE NEW YORK STATE EXECUTIVE, GEORGE PATAKI, GOVERNOR, H. CARL MC CALL, COMPTROLLER, Defendants-Respondents, And THE CITY OF NEW YORK; and THE NEW YORK CITY TRANSITIONAL FINANCE AUTHORITY, Intervenors-Defendants-Respondents. ____________________________________________________ PLEASE TAKE NOTICE that upon the annexed affidavit of Robert L. Schulz, sworn to on the 22nd day of October, 1998, together with the papers attached thereto, and upon all the pleadings and proceedings had herein, the plaintiffs in this matter will move the Court of Appeals at the Court of Appeals Hall, Eagle Street, Albany, New York, on the 9th day of November, 1998, or as soon thereafter as counsel can be heard, for permission to appeal from the Opinion and Order of the Appellate Division, Third Department, decided and entered July 30, 1998, in the matter captioned above. DATED: October 22, 1998 GARY T. LOUGHREY, Pro Se ROBERT L. SCHULZ, Pro Se MARK N. AXINN, Pro Se BRADFORD R. ARTER, Pro Se JAMES B. STRAWHORN, Pro Se STATE OF NEW YORK COURT OF APPEALS ________________________________________________ ROBERT L. SCHULZ, GARY T. LOUGHREY, MARK N. AXINN, BRADFORD R. ARTER, and JAMES B. STRAWHORN, Plaintiffs-Appellants, AFFIDAVIT IN SUPPORT OF MOTION FOR LEAVE TO APPEAL Albany County Index No. 3256-97 A.D. No. 81812 - against - THE NEW YORK STATE LEGISLATURE, SHELDON SILVER, SPEAKER OF THE ASSEMBLY AND JOSEPH BRUNO, SENATE MAJORITY LEADER; and THE NEW YORK STATE EXECUTIVE, GEORGE PATAKI, GOVERNOR, H. CARL MC CALL, COMPTROLLER, Defendants-Respondents, And THE CITY OF NEW YORK; and THE NEW YORK CITY TRANSITIONAL FINANCE AUTHORITY, Intervenors-Defendants-Respondents. ____________________________________________________ ROBERT L. SCHULZ, being duly sworn, deposes and says: 1. I am a plaintiff-appellant (hereinafter "appellant") in the matter captioned above and I make this affidavit in support of appellants’ application for permission to appeal to the Court of Appeals pursuant to Article VI, Section 3.b.(6)(b) of the New York Constitution and, by extension, CPLR 5602(a)(1)(i), this being an exceptional case where public interests and the interest of jurisprudence will be endangered by permitting a decision by the Third Department to pass uncorrected. 2. The motion is returnable November 9, 1998. (ii) STATEMENT OF QUESTIONS PRESENTED 3. Whether the Court below misapplied a controlling principle of law established in People v Gillson (1888) 109 NY 389. 4. Whether the Court below misapplied a controlling principle of law established in Rathbone v Wirth (1896), 150 NY 359. 5. Whether the Court below misapplied a controlling principle of law established in In re Kemmler (1890), 10 S.Ct. 930. 6. Whether the Court below misapplied a controlling principle of law established in In re Duncan (1891), 11 S.Ct. 573. 7. Whether the Court below misapplied a controlling principle of law established in Boryszewski v Brydges, 37 NY2d 361. 8. Whether the Court below misapplied a controlling principle of law established in Bethlehem Steel Corp. v Bd. Of Educ., 44 NY2d 831. 9. Whether the Court below misapplied the controlling principle of law established in Matter of Town of Minerva v Essex County IDA, 173 AD2d 1054, lv denied 78 NY2d 857. 10. Whether the Court below misapprehended material facts. 11. Is a state’s judicially determined purpose of "minimizing uncertainty in the minds of potential investors," sufficiently compelling to justify the enforcement of a state law which abridges the fundamental right of individual citizens of that state to petition the state court for a redress of grievances, even grievances that are deeply rooted in the State Constitution? 12. Whether plaintiffs’ fundamental rights under the U.S. Constitution to petition the government for a redress of constitutional grievances (First Amendment), to a guarantee against State laws which abridge fundamental privileges and immunities (Section 1, Clause 2 of the Fourteenth Amendment), to have state judges bound by the provisions of the U.S. Constitution (Article VI, cl 2), and to a government republican in form and substance (Article IV, Section 4) have been violated by the New York State Legislative and Executive when they enacted State Finance Law Section 123-b(1) which, in the case of matters involving the incurrence of public debt, is preventing plaintiffs from petitioning State courts for a redress of State constitutional grievances, and by the N.Y. State Judiciary in enforcing State Finance Law 123-b(1). 13. Whether the will and intent of the people to prohibit any and all payments out of funds under the management of the State without appropriations by law, as expressed in Article VII, Section 7 of the NY Constitution has been violated by Chapter 16 L97, thereby abrogating the Act. 14. Whether the will and intent of the people to prohibit the use of State and local funds to pay any part of any debt obligation of any public corporation, as expressed in Article X, Section 5 of the NY Constitution has been violated by Chapter 16 L97, thereby abrogating the Act. 15. Whether the will and the intent of the people to prohibit the State and the City of New York from lending their credit to a public corporation as expressed in Article VII, Section 8 and Article VIII, Section 1 of the NY Constitution has been violated by Chapter 16 L97, thereby abrogating the Act. 16. Whether the will and intent of the people to prohibit the State from contracting indebtedness without the approval of the voters, as expressed in Article VII, Section 11 of the NY Constitution has been violated by Chapter 16 L97 thereby abrogating the Act. 17. Whether the will and intent of the people to limit the financial indebtedness of New York City to 10% of the average full valuation of taxable real estate of the City, as expressed in Article VIII, Section 4(c) of the NY Constitution has been violated by Chapter 16 L97, thereby abrogating the Act. 18. Whether the will and intent of the people to prohibit the City of New York from contracting indebtedness without pledging the full faith and credit of the City for the payment of the principal thereof and the interest thereon, as expressed in Article VIII, Section 2 of the NY Constitution has been violated by Chapter 16 L97, thereby abrogating the Act. 19. Whether the will and intent of the people to restrict abusive borrowing and credit lending, as expressed in Article VIII, Section 12 of the NY Constitution has been violated by Chapter 16 L97, thereby abrogating the Act. 20. Whether Ch. 16L97 violates the US Const. (Art. IV, 1st and 14th Amendments). STATEMENT OF PROCEDURAL HISTORY 21. The motion for permission to appeal herein is made directly to this Court, without first having moved at the Appellate Division, but after this Court dismissed an appeal as of right, upon the ground that "no substantial constitutional question is directly involved." Court of Appeals Mo. No. 98/1075. 22. This motion is timely because the Order of the Court of Appeals, dismissing the appeal was issued on September 22, 1998, and served on appellants by U.S. mail on September 23, 1998. This application for permission to appeal to the Court of Appeals is made within thirty days of September 23, 1998. Attached hereto as Exhibit E is a copy of the Order with notice of entry. 23. Previously submitted to this Court was a copy of each of the following documents which were before the Third Department: a) The Record on Appeal b) The Brief on Behalf of Appellants c) Briefs for Respondents d) Reply Brief on Behalf of Appellants 24. A copy of the following orders, judgments, opinions, memoranda, etc., are attached hereto as Exhibits: A. Dated Notice of Appeal filed in Court of first instance. B. Opinion and Order appealed from. C. The findings, conclusions, decisions and order reviewed by the Appellate Division. D. Certification of Notification of the Attorney General. E. Order of the Court of Appeals with Notice of Entry. (iv) JURISDICTIONAL STATEMENT 25. This Court has jurisdiction to grant permission to appeal to the Court of Appeals pursuant to Article VI, Section 3.b.(6)(b) of the New York Constitution and, by extension, CPLR 5602(a)(1)(i). This proceeding originated in Supreme Court, Albany County and the application for permission to appeal is from an order of the Appellate Division, Third Department, dated July 30, 1998, which finally determines the action and on September 22, 1998 was held to be not appealable as of right. (v) THE QUESTIONS PRESENTED WARRANT LEAVE TO APPEAL 26. This is an exceptional case where public interests and the interests of jurisprudence might be endangered by permitting the decision below to go unchallenged. 27. This case transcends the interests of the parties litigant. The broader public interests can only be served by the application of further and full judicial cognizance. 28. The Court below misapprehended material issues of fact. In the interest of substantial justice the opinion and order of the Appellate Division ought to be reviewed by the Court of Appeals. 29. The error by the Court below relates to questions of constitutional law, to the construction of two statutes and to principles of law. If permitted to pass uncorrected the error by the Court below will be likely to introduce confusion into the body of law from the frequent recurrence of occasions where the same question will come up. The public interest and the interests of jurisprudence justify the granting of this motion. 30. Appellants’ arguments in support of the motion for leave to appeal are contained in the memorandum of law dated October 21, 1998. ROBERT L. SCHULZ, Pro Se 2458 Ridge Road Queensbury, NY 12804 (518) 656-3578 |