Court Opinion

ID: 5833148
Source: CourtListenerOpinion
Date Created: 2022-01-12 22:30:45.951148+00
Date Added: 2024-06-11T08:43:30.712838
License: Public Domain

Kupferman, J. P. (dissenting).
I would reverse insofar as appealed from and deny the motion to dismiss the complaint.
Plaintiff is a dealer in municipal and government securities with its office in New York City. The defendant university is a Texas institution. The university entered into a large number of transactions with the plaintiff for the purchase or sale of government securities. Most of the transactions came through a financial analyst employed by the university who, it seems, is now incarcerated in Texas.
Specifically involved are certain securities held by the university and transmitted to the plaintiff in New York for sale with a commitment by the university to repurchase them in the future for the original purchase price plus interest. This arrangement is known as a reverse repurchase agreement, and they were, in effect, loan transactions. The plaintiff in this manner purchased securities having a value of over $4,000,000, with an agreement by the university to repurchase them on July 18, 1977 plus interest of 5.05%. The university mailed a letter agreement to the plaintiff, which the plaintiff executed, and the Manufacturers Hanover Trust Company of *78this city accepted receipt of payment for the securities and delivered the securities to the plaintiff. Agreements were entered into extending the dates for repurchase.
On December 6, 1977, at which time the university was, according to the plaintiff, in default on certain obligations, the university was to repurchase the securities and to make payments due. When it refused, the plaintiff sold the securities and claims to have suffered a loss of over $400,000. Inexplicably, the university now claims that it was not aware of the transactions and never consented to them. It moves to dismiss on the ground of sovereign immunity, lack of personal jurisdiction, and forum non conveniens.
There clearly was jurisdiction here. The university dealt with this New York broker on a continuing basis, sent its agreements here and its securities here. This is not an inconvenient forum. The only ground for a real dispute is whether the university, being under the Texas Education Code, an agency of the State of Texas, has sovereign immunity. It would seem that the law of New York would here apply where the arrangements were entered into. The doctrine of sovereign immunity is one which we recognize. (See State Univ. of N. Y. v Syracuse Univ., 285 App Div 59, 61-62.) However, there is an exception to the doctrine for nongovernmental action. (Alfred Dunhill of London v Cuba, 425 US 682, 695.) We are not being informed as to what the purpose was of the reverse repurchase agreements, and we cannot say that they were in furtherance of a proper university function incidental to a public purpose.
The effect of the majority determination would be to give notice to all concerned that you deal with a Texas instrumentality at your peril.
I am reinforced in my determination by the opinion of the United States Supreme Court in Nevada v Hall (440 US 410) issued after the argument of this case.
Birns, Sandler and Silverman, JJ., concur with Lane, J.; Kupferman, J. P., dissents in an opinion.
Order and judgment, Supreme Court, New York County, entered on July 26, 1978 and July 31, 1978, respectively, affirmed, without costs and without disbursements.