Appendix — George Campbell Painting Corp. v. Reid

Supreme Court brief1968

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APPENDIX

IN THE

Supreme Court nf the United States

October Term, 1967

No 673 |

~GeorGE CamMpBELL Parntixc Corp.,

| Appellant,

against “

. X

Ww ILLIAM Rep, Francis V. Mapicax, Ira S. Rossins, Mem- .

bers of. the ‘New York ‘City Housing Authority, and Tue

New York City Houstxc AvTuority, :

\ = ees.

snail,

Gerorce CaMPBELL Parxtinc Corp., .

Appellant,

against - | |

Wiiuiam Rem, Francis V. Mapican, Ina S. Rossrxs, Mem-

bers of the New York City Housing Authority, and Tue

New York City Hovusine AvTuoriry, ;

. cS . ' Appellees.

On Appeal from the ‘Court of Appeals of the

. State of New -York —__

‘ aa

we , ‘ ae | :

. Filed October 2, 1967 ?

_ Probable Jurisdiction Noted January. 29, 1968

D 4 :

TABLE OF ‘CONTENTS

f j PAGE

Record of Review from Administrative Determination _

Motion of Petition, -:.........+<.coecccsoesnsnse: ne 5

LESS RE TC ORT ae

' Exhibit A—Copy of Minutes of Directors’ Meet- °

. a

Biers pints Ren payin ec oh NNEC RR Mere ee OE — All

Letter of Resignation Dated March 26, 1965 ....... A15

——— Exhibit B—Letter Datdi April 21, 1966 ......:........--AG '

Exhibit C--Letter Dated April 9, 1965 .............:.... aati,

Exhibit C-1—Letter Dated April 23, 1965 ........ A19°

Exhibit D—Telegram Dated ‘April 27, 1966 ........ A22

Exhibit E—Letter Dated May 5, 1965... A28

Exhibit. F—Notice of Claim Dated July 2, 1965 -A24

Exhibit G—News Release Deion Friday, May 28,

“ee ....... SASSI Pie TN He Oe Scaanecieihnidoneihess - AB -

Notice of Respondents’ Cross NID cis cstcinssincesies ieee A29

Order and J udgment ac the Petition . EMEA A30

Opinion albinos, oh | horcpbbettefnecSascecstetonin A3?:

Stipulation as to Prior Peseta: cheats aaa A35

Aas | VAR

“+ Order of Affirmance ..............:...::0.0000 Sead OO Oe A37

- Opinion of Appellate Division a NOERE CAEN etancehals 7 A38

Remittitur from Court of Appeals ..)....0....02..00cscc. .. A39

an _Il

| PAGE

Opinion of Court of Appeals, State of New York......... ~A42 |

Notice of Appeal to the Supreme Court = the United ;

BN a aL ate a es —A44

—* a | . 7 , a .

Order Noting I Probable Jurisdiction gegen: a

Record of Plenary Action .

Order to Show: an fe emeeretans nce Nee on

Affidavit of George Morr! in Support of Motion ...... A50

Exhibit A—Minutes of a Special Meeting of

- Board of Directors foo ciebairenceendetantn ina deeinie A55

‘Letter of Resignation seseapesensselapescssnsssssscsessenestass oe A56

Exhibit B—Letter Dated April 9, 1965 ecaatn ASG

Exhibit: C—Notice of Disqualification Dated —_—

Ss VU II sca ia a i cl lcedc tice ebacden MciacSpaesotaraniteornrebéot A57

"Exhibit D—Letter Dated April 23, 1965 A59

Summons ini Support of Motion ......... says total solic

Verified Complaint in Support of Motion ...... canis .. A64

Exhibit A—Notice of —. ale Weer fesonvnsenrorcesssenes A71

Notice of Cross Motion .....1...:.ssscccccsssssssssssssegesisecssasen AT ;

Affidavit ‘of Paul W. Hessel in Sciithints to Motion

and in. Support of Cross Motion ................ iuiiciions AT7

Exhibit A—Letter Dated April 16, ae A105 —

Exhibit B—Letter Dated April 21, 1965 .............. A106

ans

PAGE.

: Exhibit B-1—Notice ‘of Examination ........ @... A108.

Exhibit C—Indictment .0.0..00.0000cccccccceen “ctienn

- Exhibit D—Executive Order .......... Semen ae

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aa,

~ a

‘Reply and Answering Affidavit of George Morvan

in Support of Motion ron an Opposition to Cross

Motion ........ i glomus rocbenversanavesscrsctaanssecesserse ea A119

Order Staying tthe hated ener: onsen ee diate A122

Opinion of Schweitzer, ( enone melds massive bert A124

Notice of Cross-Appeal te lee Wsoaknuouse 7 A126

Order of Modification of the Appellate Division oe A128

Opinion of the ‘Appellate Division fabian Ciicidakinnsnnshil A130

Remittitur from Court of Appeals’............... eee A131

Opinion of Court of Appeals, State Hf New York ........ A134

Notice of Appeal to the Supreme Court of the United

ES i SA AG Ss EEO Pe Ae A136

Order Noting Probable Jurisdiction ................. eee A139 —

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RECORD OF REVIEW FROM

ADMINISTRATIVE DETERMINATION

~ )

Notice of Petition

SUPREME COURT OF THE STATE OF NEW YORK

County or New York -

Index No. 6987/1965

_ [Same TiriE]

Sims: 7 2.

Presse Take Notice that upon the annexed petition of’

George Campbell Painting Corp., verified on the 2nd day’

of Octaber, 1965, upon.all the proceedings heretofore had -

herein, an application will be made to a Special Term,

Part I of this Court, to be held at.the New York County

Court House, 60 Centre Street, Borough of Manhattan,

_. City and State of New York, on October 25, 1965, at 9:30.

'. A.M., or as soon thereafter as counsel can be heard, for

a judgment granting the relief prayed for in the petition,

and for such other and further relief this Court may deem

just and peng.

TAKE Furruer Notice that petitioner demands that you .

produce the following papers at the hearing specified above:

1. The letter by District Attorney Frank S.

Hogan to William Reid, advising the New York City

Housing Authority of the- alleged refusal of —

Campbell, Jr. to waive immunity ;

2. Copies of the decisions, orders, or notices in

which the New York City Housing Authority allegedly

ae the petitioner from bidding on future contracts ; ; A

and ‘

Notice of Petition

3. A copy of the transcript of the deposition of

Theodoré Ruzow taken pursuant to Section 157(3)

of the Public Housing Law on ‘August 5, 1965, and

subscribed to on August 19, 1965.

Dated: New York, New York

October 4, 1965.

Yours, etc.

. , “‘Ruzow & Liner

Attorneys - for. Petitioner

Axprrt A. BLINDER

To: .

- William Reid

Francis I. Madigan

_ Ira S. Robbins

New York City Housing »

Authority

Z Of Counsel -

% alae

| _ Petition

SUPREME COURT OF THE STATE OF NEW YORK

County oF New York

[Same Tit.e]

To the Supreme Court of the State Of New York:

Petitioner, George Campbell Painting Corp., by its at-

torneys, Ruzow & Lipner, complaining of Kiana re-

spectfully alleges :

1. Petitioner is a corporation duly organized under the

laws of the State. of New York, with its principal place of

business at 40-11 149th Street, Flushing, County of Queens.

2. Petitioner is in the business of general painting con-

tracting and, among: other things, has been engaged in

painting and decorating contracts for the respondent, New

: ‘York. City Housing aria

- 3. Respondents, William Reid, Francis V. Madigan and

Tra 8. Robbins, respectively, are chairmer aud members of |

the New York City Housing ‘Authority.

A Respondent, New York City Housing duainatiy is

the agency which cancelled certain existing contracts of the

' _ petitioner and barred it from future bidding for five years.

5. The alleged refusal by: an officer and director of peti-

tioner to waive re oecurred in New York County.

6. Petitioner is a eunpiieltum which was organized i in

1964 with the Estate.of George Campbell, Sr., owning fifty

Ad mM,

Petition |

(50%) percent of the stock therein, and the*remaining fifty .

(50%) percent owned equally by George Campbell, Jr.,

‘Marian Campbell Rizzi, Anita Campbell Ponte, Jane Camp-

bell J ny ‘and a Campbell Dougherty.

a Pripr to the incorporation of the George Campbell

Painting Corp., as aforesaid, the business was conducted

as a partnership entitled ‘‘George Campbell & Company.”’

The stockholders of petitioner were members of the part-. .

nership with the same ownership interest. At all times

- during his lifetime George Campbell, Sr., was the general

partner in charge of the partnership. :

_8. Under the partnership the aforesaid George Camp-

bell, Sr. was engaged in performing general painting con-

tracting for the respondent, New York City Housing Au-—

thority, and for other governmental agencies and sub-divi-

sions within the State of New York and elsewhere, for a

period in excess of thirty (30) years. At no time during

that period had any of its contracts been cancelled or had

it been barred from future bidding because of provisions

of Public Authorities Law, §2602,.General Municipal Law

.§103(b), or any other corresponding sections of. the State

or Federal Statutes. te

9. After the demise of George Campbell, Sr. on August

2, 1964, petitioner acquired all of the asséts/and assumed

all of the liabilities of the partnership. George Campbell,

Jr. was elected president of petitioner. He was also a di-

rector and stoekholder. ;

10. On March 26, 1965, the aforesaid George Campbell,

Jr. resigned as an officer and director of the petitioner, and

on or about that date he divested himself of his stockhold-

ings. - A copy of the minutes of the directors’ meeting per-

taining to the resignation is annexed hereto, made a part

hereof and marked Exhibit A. .

- A5

Petition

11. Since March 26, 1965, George Campbell, Jr. has —

been employed as an estimator, a position which does: not

cneaiyeny management functions. : ; nat

| 12. On April-13, 1965,.at the office of Albert’A. Blinder,

485 Lexington Avenue, New York ‘“Gity, a detective of the

New York County District Attorney’s Office served a sub-

poena upon the aforesaid George Campbell, Jr., calling for —

_ his appearance -before a Grand J ury” on Wednesday, April

14, 1965.

13. On April 14, 1965, George Campbell, Jr. appeared

before the Grand Jury, and refused to sign a waiver of im-

f munity. ‘thereat. Panne, age

: caipanteennlee

14. Upon information aad “pelief, New York County

District Attorney Frank S. Hogan, advised the respondent,

New York City Housing Authority, of such refusal in a

letter to the —— Reid.

15. Upon ndienniitten and ‘belief, as a result of the

aforesaid letter, the respondent, New York City> Housing

Authority, upon the decision made by the respondents Reid,

Madigan and Robbins, cancelled the existing contracts of

the George Campbell Painting Corp. and barred it from

future bidding with respondent, New York City Housing

Authority, for five years.

16. Thereafter a letter was sent to the petitioner by

the New York City Housing Authority informing it of the

Authority’s action. A copy of the letter is annexed hereto,

made a part, hereof and issinaees Exhibit B.

17. On March 29,-4965, ‘Emest Ponte, a vice-president

of the petitioner, was subpoenaed to appear before the same

_ Grand Jury allegedly investigating painting contracts. On

- Petition : /

March 30, 1965; the aforesaid Ernest Ponte appeared at

the office of the District Attorney and was. interviewed by

an assistant district attorney. At that time the assistant

district attorney in charge was informed that the aforesaid

Ernest Ponte was willing to 8 a waiver of immunity.

‘The assistant ‘district attorney informed: the aforesaid

Ernest Ponte that his appearance was not required on that

date, but that at a latef time he would be recalled. The

aforesaid assistant district attorney was. told that Mr.

Ponte would cooperate with the Grand Jury and would

appear whenever a request was made through counsel.

18. On or about the 20th Sey of April, 1965, other offi-

cers and directors of the petitioner, to wit, Marian Camp-

bell Rizzi, Elizabeth Campbell, George Morvan, Theodore

Ruzow and Ernest Ponte, were requested to appear before

the Grand Jury. Each of the aforesaid officers and direc-

tors voluntarily appeared on the 22nd day of April, 1965,

. each advised the assistant district attorney that he (or she)

would sign a waiver of immunity, did in fact so sign. Later,

George Morvan, Theodore -Ruzow and Ernest Ponte were

asked to appear before the Grand-Jury and each answered

any and all questions put to him by the aforesaid Grand

Jury and its legal representative. (Marion. Campbell Rizzi

and Elizabeth Campbell were excused without —— asked

to testify.) :;

19. No agreements of any kind have been entered into

with. the aforesaid George Campbell, Jr. about his rein-

statement as an officer and director. The petitioner does

' not now intend te reemploy or otherwise reengage his serv-

_ ices as an officer and director.

20. The petitioner, as aforesaid, through its other off-

cers and directors as aforesaid,. has cooperated with the

District Attorney’s investigation. Moreover, its books and

ee ee

ere yet yer

—

sor partnership, and since its incorpdration, the petitioner,

.... been the highest. Among thewajor contracts undertaken

_ and satisfactorily completed by the petitioner and its pred- ~

_ ecessor partnership wales the last ten years: have been:

‘AT

_ Petition |

records have been made-available to ‘other city agencies

in connection gwith their investigations.

21. The titles of the officers and directors of the petie

tioner who ny testified and/or signed waivers of

Immunity are: 4

George Morvan | :

Executive Vice-President, Director

: Ernest Ponte

_ Vice-President

Theodore Ruzow' ~ |

Director

Marion Campbell Rizzi

Secretary, Director ee -

Elizabeth Campbell -

Treasurer, Director me

22. During the past thirty years, petitioner’s predeces-

has constituted’ oné of the largest painting contractors in

the area. Its reputation’for public service contracts has

‘United States ‘Militatry Academy

West Point, New York

Oahe Reservoir

Pierre, South Dakota

General Electric Appliance Patk

-" Louisville, Kentucky . :

_ Petition ° 4

'. Triboro Bridge . °,

. New York

- Whitestone Bridge

New York |.’

- Henry Hudson Bridge

New York

Walt Whitman Bridge

_ Philadelphia, Pa.

Mid-Hudson Bridge

New York

Memphis Arkansas Bridge

_, Memphis, Tenn. |

Ravenswood Generating Plant

_ New York

Astoria Génerating Plant

New York -

Mahlstrom Airforce Base

Great Falls, Montana

- $Scott Airforce Base

Illinois arey

Loring Airforce Base

Caribou, Maine

New York State Court of Appeals ~

Albany, New York

- Creédmoor Hospital

New York Solel ee

| Harlem Valley State Hospital _

Pawling, New York

won az

Petition

: :

Booth Memorial Hospital c=

Queens, New York |

Veteran’s Admini

stration Hospital

New York

United States Court House é,

Foley Square, New York City, New York

Yeshiva University =~ |

New York

| Municipal Court,

"New York |

Bronx City Prison -

New York .

Raymond Street J ail

Brooklyn, New York

- Grumman Aireraft Company Plant e

Brookhaven, New Yor

City of New York

four years of age.

legatee under the

1,Sr. No distribu-

es the only beneficial

rge Campbell, Jr. now has in petitioner,

bell, Jr. will receive

in lieu’ of a distribution

Ow owned by the estate.

A10

Petition

25. The work done by the petitioner and its predecessor

partnership during the last five years for respondent, New

York City Housing Authority, has constituted léss than

fifteen (15%) percent of-its total annual volume. At the

~present time the work for the respondent, as aforesaid, con-

stitutes an even smaller percentage of its gross sales.

26. The action by the respondents, Reid, Madigan and

Robbins, and the New York City Housing Authority, pur-

portedly was pursuant to Section 2602 of the Public Au-

thorities Law ‘in that the aforesaid respondents thought

that the aforesaid section had been violated’ by a member,

partner, director, or officer of ‘the petitioner refusing to

eR a waiver of immunity.

a. Respondents in barring the’ petitioner from future

bidding for five years for the alleged refusal of George

_ Campbell, Jr. to waive immunity before the New York

County Grand Jury, violated the rights of your petitioner,

and your petitioner respectfully submits that this action

by respondents, Reid, Madigan, Robbins and the New York |

City Housing Authority was an abuse of their discretion

_ and was decided arbitrarily and-ecapriciously, based upon

erroneous information and/or interpretation of the afore-

said section of the Public Authorities Law. :

: 28... Such acts by the respondents were arbitrary, capri- .

cious and an abuse of discretion in that the aforesaid

. George Campbell, Jr., was no longer an officer, director, or

stockholder of.the petitioner at the time he refused to waive

immunity before the Grand Jury, and moreover, was not

an officer, director, or stockholder at the time a subpoena

was served upon him for his appearance as aforesaid.

29. The decision by the respondents, Reid, Madigan,

Robbins and fhe New York City Housing Authority on or ©

: Petition

~ about April 21, 1965, to bar and disqualify as aforesaid,

' was arrived at without a hearing being held, despite the

fact that they were informed by letter dated April 9, 1965,

that the aforesaid George Campbell, Jr. was no longer an

- Officer and director of the corporation. Likewise, by létter .-

_ bearing the same date, the District Attorney of New York

County, Frank S. Hogan, was notified . that the aforesaid -

George Campbell, Jr. whs no longer an ‘officer, director, or

. stockhelder of said co ration.

oe ,

30. After notice by the respondents, Reid, Madigan, ~

Robbins and the New York City Housing Authority of the

barring and disqualification as aforesaid, a letter dated

April 23, 1965 was sent by the petitioner through its counsel

to the respondent, requesting an immediate hearing. A

copy of the letters dated April 9, 1965 and April 23, 1965

are annexed hereto, made_a part hereof and designated : as

Exhibits C and C-1. .

_ $81. When no reply was received concerning the afore-

said Exhibit C, a telegram was sent by one of the counsel

for petitioner on April 27, 1965, again requesting a hearing. |

A eopy of the aforesaid telegram is annexed hereto, made

a part hereof and marked — D. ‘

32. On or about May | 1965, respondent, New York

City Housing Authority, fae Te: to petitjoner’s requests by

letter, to the effect that no useful purpose would be served .

. by holding a hearing. A copy of the. aforesaid letter is

annexed hereto, made a part hereof and marked Exhibit E.

33.. Petitioner submitted a notice of claim to the re-

spondent, New York City Housing Authority, a copy of

which is annéxed hereto, made a part hereof, and marked

Exhibit F. More than thirty days have elapsed since the

notice of claim was served and since then the deposition,

pursuant to Section 157(3) of.the ‘Public Housing Law was

a +s

° ‘

A12

Petition

? oe

‘concluded by the respondent New York City Housing Au-.

~ thority.

an Petitioner holds other contracts with povernmentel

bodies, subdivisions. and authorities within the State of

New York. .The decision by the New York City Housing

- Authority and its members, as aforesaid, has caused and

' will contiriue: to cause irreparable damage io petitioner’s

goodwill and reputation in the community, with a resulting

loss of business, and may well jeopardize its continuing

relationship with government departments, agencies, au- |

thorities or their subdivisions within the State of New

York.

35. Onor about: ‘April 21, 1965, upon i. Ceebtionel erro-

neous findings of the reapendanta, Reid, Madigan, Robbins

and the New York City Housing Authority, the aforesaid

respondents directed their Director of Public Relations,

‘one Oscar Kanny, to release a ‘‘news release’’ which was

disseminated not: only among all the news media within

this county and state, but was also, sent to other’ public

officials at governmental agencies, departments, bureaus

and, their subdivisions with whom the petitioner has con-

tracts extant. A copy of the news release is annexed here-

to, made a part hereof and marked Exhibit G.

36. Upon all the foregoing and the cancellation of the

_ three contracts described in Exhibit C annexed hereto, peti-

_ tioner is now suffering irreparable and irremedial injury

which will continue for the next five years as a result of the

arbitrary, capricious and erroneous. decision referred to —

above.

37. For the reasons above stated, and in view of the

limited amo int of financial interest.of the aforesaid George

Campbell, Jr. at the time of his refusal to sign a waiver of —

immunity, the petitioner believes that it will not be in the

public interest to countenance the disqualification alleged

above. eh

Ais

ee 1

¥g Petites

38. Petitioner, to the Shelia of any of its es.

and directors, denies that it has engaged in any .practices

which were illegal under any state or federal law, oru —

any anny ordinance or regulation.

39. This petition applies ‘only to the disqualification

' portionef the notice of claim heretofore served.

40.. Petitioner has no sacsiroreie remedy at law.

41. Petitioner. commended’ a special proceeding» on or

about May 5, 1965, in this Court. Upon the return date

thereof respondents moved -to: dismiss for, among other

reasons, the failure of petitioner to allege that more than

thirty days had elapsed between the time of the filing of-

‘the notice of claim and the commencement of the special

‘ proceeding. Justice William Lyman sustained the motion ©

on this ground, but granted petitioner leave to renew upon

compliance ‘therewith. As set forth above in paragraph 33,

petitioner has complied with the thirty-day requirement. and

makes this p@ition pursuant to the previous decision of =

Mr. Justice Lyman.

Waninnens, ‘petitioner prays that an order be granted .

herein pursuant to Article 78 of the Civil Practice Law and

-Rules annulling the deterthination by respondents barring

and otherwise disqualifying petitioner from future bidding _

. for a period of five (5) years and for such other and further

_ relief as to this Court may seem just and proper.

Ruzow & Lipner

Attorneys for Petitioner — :

Albert A. Blinder .

Of Counsel

(Verified Oct. 2, 1965.)

Al4

Exhibit A Annexed to Petition —

Copy of Minutes of Directors’ Meeting

Minutes or a SpeciaL MEETING

. OF

Boarp oF DIRECTORS.

GEORGE CAMPBELL PAINTING CORP.

A special Meeting of the Board of Directors of Gzorce .

* CaMPBELL Parntrne Corp. was held on the 9th day of April,

1965 at 10:30 AM o’clock in the offices of Ruzow and —

501 Fifth Avenue, New York City.

The following were present:

George Morvan Jane Jesinsky

- Marian Rizzi Elizabeth Campbell

Anita Ponte | Pheodore M. Ruzow

Theodore M. Ruzow served as Acting Chairman and

called the meeting to order.

The Acting Chairman presented the shania of

George Campbell, Jr., as President and Director of Gzorcr

CaMPBELL PaInTING Cons. dated March 26, 1965, and also

surrendered Stock Certificate #6 in the amount of 10 shares

- transferred to Gzorcz CampBeLL Parnqine Corp. to the Di-

rectors of Gzorcz CAMPBELL Parntrne Corp. at the meeting.

On motion duly made, seconded and unanimously car-

‘ried, it was

'.Resoivep, that committee be elected to select a presi-

dent. The committee to be Elizabeth Campbell, Jane

Jesinsky, ‘Anita Ponte, with Marian Rizzi as Secre-

tary +o the Committee,

ite nae

Campbell

A15

_Exhibit A Annexed to Petition

Resouven, that the Committee would give their re-

port 1 in — (30) days.

There being no further business before the meeting,

the same was, on motion, duly adjourned. 2

Marian Rizzi

Secretary

Dated: April 9, 1965

Letter of Resignation Dated March 26,. 1965

‘Annexed to Exhibit A

| March 26, 1965

To The Board of Directors .

George Campbell Painting Corp.

Ei ma resign as Director and President of many

ainting Corp. effective immediately.

George W. Campbell, Jt.

Witness:

- Theodore M. Ruzow

Harry Lipner

on ° At 6 x +

ae | w iges \

Exhibit B Annexed to Petition ~

Letter Dated April 21, 1965

[LETTERHEAD OF ]

cN EW YORK CITY HOUSING AUTHORITY

{> 250 Broadway

New York, N. Y. 10007 .

~ . April 21, 1965

Gestes en Painting Corp. |

40-11 149th Street

_ Flushing 52, New York . , tm

Re: Contracts Nos. :

PD 65-5A (McKinley, Morris &

. . Morrisania) — \

PD 65-10C (First & Riis\(F-& ( C) -

PD 65-14B (Lehman & Taft) +

Gentlemen: — ft. ~ Youll

_ The Authority has been officially = i the Dis-

trict Attorney of New York County that George Carnpbell,

Jr., an officer of your company, has refused to waive im-

munity when subpoenaed to testify before the Grand Jury ©

of that county in connection with a pending investigation

to determine whether the crimes of bid rigging on public .

contracts, bribery of a public officer, bribery of a labor.

official, extortion, coercion, assault, and conspiracy to com-

mit each of those crimes; has occurred in New York County.

— take notice that by reason of the foregoing, and

pursuant to the provisions of Section 38 of the General

Conditions of the above contracts, the Authority has di- -

rected, and you are hereby advised, that such Contracts be

and they hereby are cancelled and terminated, effective im-

mediately. You are directed to remove immediately from

ALT

| Exhibit B Annexed to Petition

each of the projects seeenek by the above Contracts all

your materials and equipment. .

Please take ‘further notice that in accordance with the

further provisions-of said Section 38 the Authority has ©

directed, and- you are hereby advised, that said George

Campbell, Jr., and any firm, partnership or corporation

of which he is a member, partner, director or officer, in-

cluding your company, has been and will be disqualified

from selling’ to or submitting bids to or receiving awards

from or enteritig into any contracts with the Authority for

goods, work or services, fora _ period “a five (5) years after

. such refusal.

Yours very isn,

— Poy Bit ok} teats Gerald J. Carey -

| General Manager

Certified Mail — .

Return Receipt Requested

2 a

—AI8.

Exhibit C Annexed to Petition

' Letter Dated April 9, 1965 |

[uerrerBEsD oF |

GEORGE CAMPBELL PAINTING CORP.

40-11 149th Street — ;

Flushing, N. Y. 11352

: April 9, 1965

New York City Housing Authority

250 Broadway

New York, New York 10007

‘

Gentlemen:

Please be advised that George William Campbell, Jr.

Tesigned as an officer and director of our corporation on

March 26, 1965.

, Very truly yours,

Groce Canvouts, Pascoe Corp. |

’ Marian Rizzi

Secretary

Pnse

AI9

Exhibit C-1 Annexed to Petition

Letter Dated April 23, 1965

[LETTERHEAD OF]

RUZOW & LIPNER

ATTORNEYS AND COUNSELLORS aT Law

501 Fifth Avenue

New York 17, N. Y.

| April 23, 1965

' New York City Housing Authority

250 Broadway ;

New York, New York 10007

Att. Mr. Qerald J. Carey

General Manager —

Re: George Campbell Painting Corp.

Morris Houses, McKinley and

Morrisania‘Houses_

Contract No. PD 65-5A

Amt. of Contract—$80,630.00

First and Riis Houses

Contract No. PD 65-10C

- Amt. of Contract—$61,395.00

Lehman Village & Taft Houses

Contract No. PD 65-14B.

Amt. of Contract—$8,500.00 _

Dear Sir:

We are the attorneys for George Campbell Painting

Corp. and have been requested to write to you by our client, -

with regard to the following matter.

On April 9, 1965, a letter was addressed to the Authority

advising you that George William Campbell, Jr. had re-

A20

Exhibit C-1 Annexed to Petition’

signed as an officer and director of ‘their corporation on

March 26, 1965, a copy of which is attached herewith.

On April 20, 1965, the employees of George Campbell

Painting Corp. were directed to cease their work at the site.

On April 21, 1965, George Campbell Painting Corp. re-

ceived a requisition, which contained a written statement to _

the effect that their contract was cancelled April 20, 1965.

On April 21, 1965, the undersigned spoke to Mr. Fitz-

simmons of the Legal Department of the New Y6rk City

' Housing Authority and was informed that a letter was in

.the mail to George Campbell Painting Corp. cancelling the

several contracts between the Authority and them, includ-

ing the above referred to contracts. ,

Mr. Fitzsimmons further said that this action was taken

as a result of information received from the District At-

torney of New York County’s office and mentioned having.

received it from Assistant District Attorney Joseph Phil- | |

lips. At this point in the conversation, the undersigned

asked Mr. Fitzsimmons if the Authority had received and

had before it, at the time it made the decision to cancel the

contracts of George Campbell Painting Corp., the aforesaid

letter of April 9, 1965 attached herewith. Mr. Fitzsimmons

did: not answer the question propounded and I then told him

that the. letter stated that George William Campbell, Jr.

had resigned as an officer and director of George Campbell

Painting Corp. on March 26, 1965 and that this was a fact.

I also informed Mr. Fitzsimmons that a similar communi-

cation had been sent to Mr. Joseph Phillips, Assistant Dis-

trict Attorney, on April*9, 1965, giving Mr. Phillips the

same information regarding the resignation of Mr. Camp-

bell. 7

I requested Mr. Fitzsimmons to arrange a hearing or

_ give the contractor and his attorneys some opportunity to

present the facts regarding the resignation, because of their

significance relevant to the acts of cancellation of the con-

. tracts by the Authority. .

A21 ;

_Exhbit C-1 Annexed to Petition

+ ‘- . |

On April 23, 1965, George Campbell Painting Corp. re- _

ceived a letter from the Authority formally notifying it of

the proposed cancellation of the above referred to con-

tracts. ,

I direct your attention to Section 38 of the Aasepiteiente

to General Conditions enfitled ‘‘Cancellation and Disquali-

fication for Faflure to Waive Immunity’’.- It is a fact that

George Willjam Campbell, Jr. refused to waive immunity

at an appearance before a Grand J ury of seeaed York County

on April 14, 1965.

Your attention is directed to Subdivision (a) of Section

38, which clearly speaks. in the present tense, when it refers

to the disqualification of the person failing to waive im- _

munity and in Subdivision (b), it speaks in the present ~

tense, when it refers to the right of the Authority to cancel

existing contracts as a result of th» relationship between

the person failing to waive immunity and the corporation "2

under contract with ‘the Authority.

It is respectfully submitted that if George William

Campbell, Jr. resigned-as an officer, director and stock-

holder prior to his being called upon to waive immunity

and prior tothis failure. to waive immunity, that the pro-

visions of: Section 38 have no application and should not

be applied or enforced by the Authority, with relation to

any contracts existing between the Authority and Qeorge

Campbell Painting Corp. a

Please be advised that all officers and directors of

George Campbell Painting Corp., who have been requested

to appear before the New York County Grand Jury have

_ voluntarily appeared, without subpoena, and have volun-

-tarily signed waivers of immunity. .

_ As time is of the essence and great and irreparable harm

and damages are accruing hourly to George Campbell

Painting Corp., this letter is being hand-delivered to your

office, to request an immediate hearing by the Authority

with regard to the cancellation of the contracts and the

ee pts

A22

Exhibit D Annexed to Petition

application of Section 38 thereto and the related tition

of ‘the resignation of George William Campbell, “Jr. as an

officer, director and stockholder of George Campbell Paint-

ing Corp.

Very truly yours,

Ruzow & Lieven

TMR sag

Enc. Copy of letter of

George Campbell Painting Corp.

dated April 9, 1965

DELIVERED BY Hanp

Exhibit D Annexed to Petition

) Telegram Dated April 27, 1965°

WESTERN UNION

[TELEGRAM |

New York NY Apr 27 1965

Gerald J Carey

N. Y. City Housing Authority 250 Bway NYK

We respectfully request prompt reply to our 4etter of

April 23rd regarding George Campbell Painting Corp. re-

questing hearing on cancellation. |

Theodore M Ruzow 501 Fifth Ave. NYC

| Exhibit E Annexed to Petition

Letter Dated May 5, 1965

[LETTERHEAD OF]

NEW YORK CITY HOUSING AUTHORITY

250 Broadway New York, N. Y. 10007

: May 5, 1965

Ruzow & Lipner, Esqs. z

501 Fifth Avenue

New York 17, N. Y.

Re: George Campbell

Painting Corp.

Gentlemen:

This will acknowledge your letter of April 23, 1965 and

telegram of April 27, 1965... | |

The contents of your letter jndicate no basis for any

change in the Authority’s determination, and you are there-

fore advised that there is no purpose to further correspond-

ence upon or discussion of this matter.

Yours very truly,

Gerald J. Carey

General Manager

Exhibit F Annexed to Petition

Notice of Claim Dated July 2, 1965

—- ae

In the Matter of the Claim of

GEoRGE CAMPBELL ParntinG Corp.

against

iy Tue New York City Hovustne AuTHoRITY

Sirs: =e

TaKe Norice that the “undersigned, insane Campnats, ,

ParntinG Corp., with its principal place of business at 40-11 —

149th Street, Flushing, oe of — New. York,

’. claims:

| 1) Damages against The New York City Housing Au- -

thority in the sum of Onze Mion Lt 000,000.00) Dotuars, -

2) A right to have its cancelled contracts with The New

York City Housing Authority reinstated, and

3) The order barring it from future bidding for a period .

of five (5) years vacated, because of The New York City

Housing Authority’ s wrongful interpretation and applica- — -

tion of the provisions of the contract entered into by and

between George Cambell Painting Corp. and The New

York City Housing Authority and the applicable statutes.

The damages, wrongful cancellation of the contracts and

wrongful barring of the claimant from future bidding for a* -

period of five (5) years were sustained as a result of the |

+ AQ5

‘Exhibit F Annexed to Petition

_action by The New York City Housing Authority purport-

edly pursuant to provisions of the contract and applicable

statutes claiming a violation thereof by a member, partner,

director or officer of the claimant refusing to sign a waiver

of imnfunity. The New Yorkity Housing Authority in

making the determination of cancelling the existing con-

tracts and barring petitioner from future bidding for five

(5) years for the alleged _refusal-of George Campbell, Jr..to

waive immunity before the New York Grand Jury, was a —

- breach of contract and violated the claimant’s rights and

was based upon the erroneous information and/or interpre-

tation of the aforesaid contracts and statutes in that the

aforesaid George Campbell, Jr. was no longer an officer,

“director or stockholder of the ‘petitioner at the time he

refused to waive immunity before the Grand Jury, and, —

moreover, was not an officer, director or stockholder at the

time a subpoena was served upon him for his appearance

. aS aforesaid. The decision by The New York.City Housing

_ Authority was arrived at despite the fact that they were

informed by letter dated April 9, 1965 that George Camp-

bell, Jr. was no longer an officer and director of the cor-

poration. ,

The undersigned, on Campbell Painting Corp. ie

claims damages in the sum of Onze Mrxion ($1,000,000.00)

Dotuars for loss of profits on contracts they were prevented

from obtaining because of said wrongful determinatiqn by

The New York City Housing Authority.

TaKe FurtHER Notice that the undersigned, George _

_ Gampbell Painting Corp., hereby presents its claims as -

aforesaid respectively for adjustment, reinstatement, vaca-

ture of the existing prohibition and payment, and notifies

you that unless the same’ are adjusted, reinstated, vacated.

and paid within thirty (30) days from the date of their

presentation to you, it is the intention of the undersigned

to commence an action or actions, a proceeding or proceed-

A26

Exhibit F Annezed to Petition

ings thereon in the. Supreme Court of the State of New

- York, County of-New York, against The New York City

Housing Authority: and its members for the relief sought

herein, with costs and disbursements in the action or ac-

tions, proceeding or proceedings as aforesaid.

Dated: Flushing, New York - -

July 2, 1965

Grorce CaMPBELL Parntine Corp.

By ~ 2 Marran CO. Rizzt

. State of New York ):

County of Queens ) ss.:

On this 2nd day of July 1965, before mé personally came

Marian C. Rizzi, to me known, who, being duly sworn, did

depose and say, that she resides at 55 Rose Drive, Great

Neck, New York; that she is the Secretary of George Camp-

- bell Painting Corp., the corporation described in and which

exectted the foregoing instruments that she knows the seal

of said corporation, that the seal affixed to said instrument

is such corporate seal; that it-was so affixed by order of

the board of directors of said corporation, and that she

signed her name thereto by like order.

Harry Lipner

Notary Public

Harry Lipner.

’ Notary Public, State of New York

* No. 41-7564430 Queens County

Term Expires March 30, 1966

Bs A27

Exhibit F Annezed to Petition

State of New York )

County of Queens ) ss.:

Marran C. Rizzi, being duly sworn, deposes dnd says:

That she is the Secretary of George Campbell Painting

Corp., the corporation named in the within Notice of Claim;

that she has read the foregoing Notice of Claim and knows

the contents thereof; and that the same is true to her own

knowledge, except as to the matters therein stated to.be

alleged upon information and belief and as to those matters,

she believes it to be true.

Deponent further says that the reason this verification

is made by deponent and not by George Campbell Painting

Corp. is because the said George Campbell Painting Corp. —

is a domestic corporation and deponent is an officer thereof,

to — its ne

Marin C. Rizzr

Sworn to before me. this

2nd day of July 1965

; . Harry Lipngr

Notary Public, State of New York

No. 41-7564430 Queens County

Term Expires March 30, 1966

A28

Exhibit G Annexed to Petition |

NEW YORK CITY HOUSING AUTHORITY

News Release Dated Friday, May 28, , 1965 -

250 Broadway

New York, N. Y. 10007

: From: Oscar: Kanny

Drmecror or Pusiic ReLations

433-5013 :

For ImMEDIATE RELEASE

Frmay, May 28, 1965

_ William Reid, Chairman of the-New York City Housing

Authority, announced today cancellation of the existing .

contracts of Eli Smith of Smith Decorating Co., Inc., 327

Canal Place, the Bronx and barring it from future bidding

- for five years for refusing to answer relevant questions be-

fore the New York County Grand Jury.

Contracts total $193,061. . +

_ This action was taken pursuant to the terms of the con-

tracts under which a contractor who after signing a waiver

of immunity refuses to answer relevant soos awed before a

Grand Jury and therefore incurs these penalties. _

New York County District’ Attorney Frank 8. Hogan ~*

had advised the Authority of such refusal in a letter to Mr. -

Reid received this morning and the above action by the -

Authority followed later in the day.

_ District Attorney Hogan ’s office, with the Authority,’s

cooperation, has been conducting an exhaustive investiga-

tion into painting contracts.

Notice of Respondents’ Cross-Motion ~

SUPREME COURT OF THE STATE OF NEW YORK

* Country or New York

[Same TitiE] -

Sirs:

_ Pueasz Taxe Notice that upon the notice of petitioner’s

motion herein dated October 4, 1965, the petition herein of .

George. Campbell Painting Corp., verified the 2nd day of

October, 1965, the exhibits annexed thereto, and.uponall

the proceedings heretofore had herein, the undersigned will

cross-move this court at Special Term, Part I, on October

25, 1965, at 9:30 A.M. upon the return of the application

made herein by petitioner for judgment, :

Pursuant to Section 7804(f) CPLR, iteiiiaiies the peti- .

tion as a matter of law, upon the following grounds:

(a) Petitioner has an adequate remedy at law.

* (b) The petition fails to state facts sufficient to warrant

the relief sought therein; ‘

should properly, and could adequately, have been reviewed

‘by appeal to this court pursuant to the provisions of Section

2603 of the Public Authorities Law; and .

(d) This proceeding is accordingly barred saidied the

provisions of Section 7801 subdivision 1, CPLR, and this

court does not have jurisdiction * the subject matter. in

this proceeding.

Dated: New York, ‘October 20, 1965.

. Yours, ete.,

si re ayy Harry Levy |

_ Ruzow & Lipner, Esqs. Attorney for Respondents

. Attorneys for Petitioner on v

Ausert A. Buinver, of Counsel ee

; *

¢ . A30

Order and Judgment Dismissing the Petition

_ At a Special Term, Part I of the Supreme Court

| of the State of New York, held in and for the

County of New York, at the County Court-

house thereof, on the 14th day of December,

1965. j

Present:

Hon. Georcr T1uzer, Justice.

‘Index No. 6987/65

In the Matter of the Application of

Grorce CAMPBELL ParntiNnG Corp.,

, _ Petitioner,

against ata. |

Wruuiam Rei, FRancis V. Manican, Ina S. Rossrns, mem-

bers of the New York City Housing Authority, Tue NEw

Yorx Crry Housinc AUTHORITY,

; Respondents, |

” For a Review pursuant to Article 78 of the

Civil Practice Law and Rules. i

Petitioner, by its attorneys, Ruzow & Lipner, having

duly petitioned for an order annulling the determination - :

by respondents barring and otherwise disqualifying peti-

tioner from future bidding on public contracts for a period

A31 .

Order and Judgment Dismissing the Petition

of five years, respondents having cross-moved to dismiss

the petition, and said petition and cross motion having

regularly come on to be heard,

Now, upon reading and filing the notice of petition, ©

dated October 4, 1965, the petition verified October 2, 1965,

by Marian Campbell Rizzi, secretary of petitioner, in sup-

port of the motion with exhibits annexed and upon the

notice of cross motion dated October 20, 1965, and after

hearing Ruzow & Lipner, Esqs., Albert A. Blinder, Esq.,

of counsel, in support of the petition, and in opposition to

the cross motion, and Harry Levy. Esq., Paul W. Hessel,

and I. Stanley Stein, Esq., of counsel, in opposition to the

petition and in support of the cross motion, and after due

deliberation having been had hereon,

Now, upon motion of Ruzow & Lipner, attorneys for

petitioner, it is.

Orveren, that the petition is denied and the cross motion

granted and it is further

OrpERED, ADJUDGED AND Decreep that the petition be and

the same hereby is dismissed, that the foregoing be witk-

out prejudice to petitioner commencing a plenary action

for .the same or similar relief requésted in the petition

herein.

‘Enter

/s/ George Tilzer .

3 a.m O°

James McGunam, Clerk

Filed Jan. 10, 1963 at 10:45 A.M.

County Clerk’s Office of New York County

A32

Opinion of Tilzer, J.

(48 Mise. 2d 544, 265 N.Y.S. 2d 304)

This is an article 78 proceeding instituted by petitioner

for an order annulling the determination made by respond-

ent New York City Housing Authority barring and other-

‘wise disqualifying petitioner from future bidding on public

contracts for a period of’ five years. Respondent cross- ©

moves, prior to answer, to dismiss the petition on multiple

grounds.

The proceeding stems: from the refusal of ‘an alleged .

former officer of petitioner, George Campbell, Jr., to sign

a waiver of immunity when called before a grand jury of

New York County, in its investigation to determine whether

the crime of bid rigging on public contracts, among others,

had occurred in New York County. °

The petition alleges that, George | Jr., resigned

on March 26, 1965,.as an officer’or director of petitioner,

and on or about that date divested himself of his stock-

holdings. That-since that date, he had-been employed as

an estimator by petitioner, . a position which does not en-

tail any management functions. ° That thereafter, on April

13, 1965, he was served with a subpoena to appear before

, the grand jury on April 14, 1965; that’ he did appear on

said date, but refused to sign a waiver of immunity and

was not questioned by the grand Jury.

Such alleged resighation ‘and ie of his stock

_ interest in the corporation by George Campbell, Jr., prior

to his refusal to waive immunity, appears to be the basis

for this proceeding. ~

A33

Opinion of Tizer, J.

The question for determination is whether the petitioner

presents a proper case for an article 78 proceeding. Re-

spondents contend that petitioner has an adequate remedy

at law. They rely.on Public Authorities Law, section 2601,

requiring that a clause bhall-be inserted in all contracts

with any pytblic authority\created by the state for work or ©

services performed or to be performed or goods sold or

_to be sold, that upon the refusal of any person when called

to testify before a grand jury concerning any transaction

or contract had with the state, public authority, &., to sign

a waiver of immunity, such person, and any firm, partner-

ship or corporation of which he is a member, partner, di-

_ rector or officer, shall be disqualified from thereafter sell-

ing to or submitting bids to or receiving awards from or

entering into any contracts with any public authority for

_ goods, work or services for a’ period of five years after such

refusal. The provision, mandated by section 2601, is con-

tained in each of respondent’s contracts with petitioner,

under section 38 of the amendments to the general condi-

tions thereof. y)

Respondent received a letter from the District Attorney

of New York Courity stating that said George Campbell,

Jr., of the petitioner corporation had refused to sign a

_ waiver of immunity before the grand jury. Upon receipt

of the district. attorney’s letter, the authority canceled the

painting contracts with petitioner, and disqualified peti-

tioner, as well as said George Campbell, Jr. , and any other

firm, partnership or corporation of which he is a member,

. partner, director or officer, from entering into contracts

with the authority for a period of five years. Petitioriér

was so informed by letter of the Authority. This letter

states that such action was. taken pursuant ‘to. section 38

Pe)

Opinion of Tileer, J.

of the General'Conditions of the contracts. Thus respond-

ent argues that the disqualification is pursuant to contract

with petitioner and if it was erroneous, petitioner’s remedy .

is by way of penery suit base@ on the contract.

The fact that ection 38 of the General Ciafiiens of

the contracts was incorporated therein by reason of the

mandate of section 2601 of the Public Authorities Law

does not make its provisions any the less a purely -con-

_ tractual matter between the Authority and the petitioner.

Here it appears that petitioner has a remedy based upon

contracts with respondent.

The scheme of the Public Authorities Law provides not

one, but two means by which the penalty of disqualification

may be invoked against a recalcitrant contractor Tefusing

to cooperate in a grand jury investigation involving public

_eontracts, Thus, section 2601 provides for the mandatory

contract provision whereby:both cancellation and disquali-

fication may be applied as a matter of contractual agree-

ment between a public authority and such contractor. Sec-

tion 2602, on the other hand, provides a purely statutory -

basis solely for disqualification even’if such contractual

provision were non-existent.

- The court is not persuaded that this is a proper case

for a proceeding under article 78. It is available only in

‘hose situations where there are no other remedies and the

conditions surrounding its use are not found in the ordi-

_ nary plenary suit (Matter of Wilson v. Board of Educa-

tion, &., 276 App. Div. 482).

Accordingly, the application is denied and the cross-

motion is granted dismissing the petition without prejudice

‘ toa er suit. Settle judgment.

A385 °

Stipulation as to Prior Proceedings

SUPREME COURT OF THE STATE OF NEW YORK

APPELLATE Division—F rst DEPARTMENT

—_—E-~ ee

In the Matter of the Application of

Grorce CamPBeui Parnzine Corp., :

Petttioner-Appellant,

agamst

Wuisam Rew, Francis V. Mapican; Ina 8S. Rossins, mem-

bers of the New York City Housing Authority, and. THe

‘New Yorx Crry Hovusine Avurnosrrry, ©

Respondents-Respondents.

For a Review pursuant to Article 78 of the

Civil Practice Law and Rules.

i ee A

’

Ir Is Heresy StrpvLaTep AND Acreep by and between

the attorneys: for the respective parties hereto that the

Notice of Respondents’ Cross-Motion appearing at page 33 Ne

of this record referring to ‘‘all the proceedings heretofore

had herein’’ relates to an Article 78 proceeding also bear-

ing Index No. er /e but having as its caption the fol-

lowing :

A386

Stipulation as‘ to Prior 1 Proceedings

_ Index No. 6987/65.

In the Matter of the Application

| of

GrorcE CAMPBELL ParInTING CorpP.,,

7 ‘ Petitioner,

For a Review Pursuant to Article 78 of the Civil Practice

Law and Rules and Section 103(c) of the General Munici-

pal Law,

against

Wim Rei, Francis V. Mapican, Ina S. Rossrns, mem-

- bers of The New York City Housing Authority, Taz New

York Crry Housine Aurnority, Louis J. Lerxowrrz, Attor-

ney General of the State of New York and Frank S. Hogan,

Dinteret Attorney of the County of New York, :

| | Respondents.

—_—e .

Ir Is Furruer SrreutatTep AND AGREED, subject to the

approval of this Court that either party has the right to.

refer to this prior proceeding i in briefs or on the argument.

in the interest of justice since it was referred to in the

briefs and argument before Mr. Justice Tilzer whose order °

and judgment is the subject of this appeal. Upon the

argument of this appeal, the original file in said prior

proceeding will be subpoenaed from the’ Clerk of New

York County to be made available to this Court.

Dated: New York, April 11, 1966.

.. Ruzow & Lipner. :

Attorneys for Plaintiff-Appellant

. Harry’ Levy

Attorney for Defendants-Respondents

So ORDERED: © = |

-A37

Order of Affirmance

At a term of the Appellate Division of the Su-

preme Court held.in and for the First Judicial

Department in the County of New York, on

the 3rd day of November, 1966.

Present:

Hon.: Charles D. Breitel, Justice Presiding —

Hon. Benjamin J. Rabin, ~— )

Hon. Harold A. Stevens, ) Justices

Hon. Louis J. Capozzoli, )

Hon. Earle C. Bastow, )

10763

In the Matter of the Application of

GEORGE CAMPBELL PainTIne Corp.,

Petitioner-Appellant,

- against

Wim Ren, Francis V. Manican, Ira S. Rosprns, mem-

bers of the New York City Housing Authority, THe Naw

York City Housinc AUTHORITY,

Respondents-Respondents,

For a Review pursuant to Article 78 of the

Civil Practice Law and Rules.

—— — —

An appeal having been taken to this Court by the peti-

tioner-appellant from the order and judgment (one paper)

”~

A38

Order of A jprmenes

of the Supreme Court, New York Oueaty, entered on Janu-

ary 10, 1966, granting iestimeccunal cross-motion to dismiss

the petition,

And said appeal having been argued by Mr. Albert A.

Blinder of counsel for the appellant, by Mr. Paul W. Hessel

of counsel for respondents-respondents, by Mr. Robert E.

Hugh of counsel for Hon. Louis J. Lefkowitz, Attorney

General of the State of New York, appearing pursuant to-

Executive Law, §71, and a brief: amicus curiae having been |

filed on behalf of the District Attorney, New York County;

and due deliberation having. been had thereon,

It is unanimously ordered and adjudged that the order

and judgment (one paper) so appealed from be and the

. same is hereby, in all things, affirmed; and that the respond-.

ents recover of the appellant $50 costs and disbursements

of this appeal.

Enter:

- Hyman W. Gamso

| Clerk.

Opinion of the Appellate Division

275 N.Y.S. 2d 363 (not officially reported)

Order and judgment (one paper) unanimously affirmed,

with $50 costs and disbursements to the respondents. No

opinion. a filed. |

A39

Remittitur from Court.of Appeals

No. 115 . :

COURT OF APPEALS

State or New York, ss:

Puzas in the Court of Appeals, held at Court of

Appeals Hall, in the City of Albany, on the

7th day of July in the year of our Lord one .

thousand nine hundred and sixty-seven, before —

_ the Judges of said Court.

Witness, ;

The Hon. Stantey H. Fuxp, Chief. Judge, Presiding.

Raymonp J. Cannon, Clerk.

Remittitur July 7, 1967

i ee ‘No.115 ; <6

————

In the Matter of the Application of

George Campbell Painting Corp.,

: Appellant,

vs. ;

William Reid, & ors., &., & ano.,

. - Respondents,

' For a Review &. .

a ee

Br 1r -RememsBereD, That on the 12th day of March in

the year of our Lord one thousand nine hundred and sixty-

seven, George Campbell Painting Corp., the appellant in

A40

| Remittitur from Court of Appeals

this cause, came here unto the Court of Appeals, by Ruzow

- & Lipner, its. attorneys, and filed in the said Court a return

. . thereto from the order of the Appellate Division of the ~

Supreme Court in and:for the First Judicial Department:

And William Reid, & ors., &., & ano., the respondents in

said cause, afterwards appeared in said Court of Appeals

by Harry Levy, their attorney.

.Which said. return thereto, filed as saat are inate

unto annexed. a

- Wuerevpon, The said Court of Appeals having heard

this cause argued by Mr. Albert A Blinder, of counsel for

the appellant, and by Mr. Paul W. Hessel, of. counsel for

the respondents;’and by Mr. Samuel A. Hirshowitz, of. -

counsel for the Attorney General, brief “filed by..amicus - Es

curiae, and after due deliberation had thereon, did order : -

and adjudge that the order of the Appellate Division of the

Supreme Court herein be and the same hereby is affirmed,

with costs. i.

| And it was also further ordered that the records afore-

said, and the proceedings in this Court, be remitted to the

._ Supreme Court of the State. of. New. York, there to be

"proceeded upon according to law. en

- THEREFORE, it is scnnidieniie that the said order be af-

firmed, with costs, as aforesaid.

And hereupon, as well the return thereto. aforesaid as

the judgment of the Court of Appeals aforesaid, by-it given <

_in the. premises, are by the said Court of Appeals remitted

into the Supreme Court of the State of New York before

the Justices thereof, according to the form of the statute

in such case made and provided, to be enforced according

A41

Remittitur me Court of Appeals .

to law, and which record now remains in the said ‘Supreme

Court, before the. Justices thereof, &e.

_ Raymonp J CaNNON

Clerk of the Court of Appeals

of the State of New York

Court of ial Clerk? s Office,

. Albany, July 7, 1967.

I Heresy Certiry, that the preceding

record contains a correct transcript

| of the proceedings in said cause in

[szaL]. - the Court of Appeals, with the pa-

pers originally filed therein, at-

- tached thereto.

Raymonp J. Cannon

Clerk. :

A42

Opinion of Court of Appeals, State of New York

| "90 N. ¥. 2d 370

283: N.Y.S. 2d 31

! 229 N.E. 2d 602

* +

- Strate or New York

COURT OF APPEALS

[Same Trriz]

_ Per Curiam:

This is an action to nullify a determination of the New

York City Housing Authority disqualifying the appellant —

corporation from bidding. on future contracts with the Au-

thority. In addition the appellant seeks an injunction

against the Authority’s enforcement of its decision. The

disqualification -is mandated by Public Authorities Law

§2601 since the appellant’s former president appeared be-

~forea grand jury investigation bid-rigging and refused to

sign a waiver of immunity. ~* |

We hold that section 2601 of the ‘Public Authorities

Law is constitutional (Matter of Gardner v. Broderick;

20 N Y 2d 227, 282 N Y S 2d 487,.229 N.E. 2d 184, de-

cided herewith) and that the disqualification imposed on

the appellant corporation.is valid. The fact that the

appellant’s officer resigned: his position and that the res-

ignation was accepted prior to his appearance before

the grand jury. and his refusal to sign a waiver of im-

munity is not controlling. Where the termination of the’

ie relationship of the individual officer with the corporation

- occurs almost contemporaneously with his refusal to sign

i waiver of immunity or where it is obvious that the resig-

A43

Opinion of Court of Appeals, State of New York

nation was tendered sini accepted solely for the purpose

of avoiding: the statutory disqualification, the person so

resigning or otherwise departing shall be deemed to have

acted in his capacity asa ee officer when he refused

to sign the waiver.

There may be times when the statute will operate to

penalize a corporation which had severed its connection

with the recalcitrant officer and which has otherwise been

cooperative. The Legislature has, - however, recognized —

this problem and has specified a procedure by which the

disqualification can be removed under such circumstances.

(Public Authorities Law §2603). The appellant ’s exclusive _

remedy is the procedure outlined in that statute.’

The orders of the — en should be affirmed

with costs.

Futp, C.J., and. Van Vooruis, BURKE, Bonuses, BgRGAN

’ and Keatine, . J.5 concur. - "

a J., taking no part.

Orders affirmed.

Py a . og

a a

A44.

Notice of Appeal to the Supreme Court

of the United States y,

SUPREME COURT OF THE STATE OF NEW YORK

County or New York

Index No. 6987/65

” °

In the Matter of the Application of

GzorcE CaMPBELL ParnTING Corp., :

Petitioner-Appellant,

agaist

Wiuiam Ren, Francis V. Manican, Ira S. Rossrs, memn-.

- bers of the New York City Housing res THe NEw

Yorx City Hovusine AUTHORITY,

Respondents-A ppellees.

' For a Review pursuant to Article 78 of the

Civil Practice Law and Rules.

IL. Notice i is hereby given that Greorce CAMPBELL Parnt- --

ina Corp., the appellant above named, hereby appeals, ta,

the Bapeune Court of the United States from the final

judgment of the Court of Appéals affirming the dismissal

of appellant’s petition entered in this action on July -7,

1967. -

This appeal is taken a to 98 U. S.C. 91257(2).

Ah The: clerk will please prepare a transcript of -the

entire ‘record in this cause, for transmission to the Clerk

, .

‘ e

. ad ‘ ° -

. a

A45

Notice of A ppeal to the Supreme Court of the United States

of the ‘Supreme Court of the United States, and include

in said transcript the following:

Remittitur dated July 7, 1967 from the Court of

Appeals. :

2. Opinion of the Court of Appeals.

3. Order granting permission to appeal to the Court

of Appeals. »

Order of the Appellate Division.

Opinion of the Appellate Division.

Notice of Appeal to the Appellate Division.

Order and Judgment of Special Term.

Notice of Petition.

Petition and Exhibits se s6q@r wr there-

to. .

Notice of Respondent ’s cross motion.

. Opinion of Tilzer, J. _*

Stipulation as to prior proceedings. —

: a The following ewes are prevented by this ap-

peal:

1. Is the 14th Amendment offended ‘i New York |

State’s Public Authorities Law, §2602, which dis- |

_ qualifies a corporation from eligibility to bid on

public contracts if one of its officers or directors as-

serts his privilege against self incrimination when

called before a grand. jury?’

a) If not, does the fact that the recalcitrant wit-

‘ness resigned his office’ and surrendered his

. A46

Notice of Appeal to the ugreme Court of the United States

7 | 2 : x .

control of the company’s affairs prior to being

called as a.svitness make a difference?

2. Is New York State’s statutory requirement,

Public Authorities Law §2601, that all public con-

tracts contain an agreement to waive the privilege

against self incrimination ‘an unconstitutional con-

dition of doing business with the mane a its agen- .

cies? | '

Ruzow & LirxenR

Attorneys for Petitioner-Appellant

Office & Post Office Address :

122 East 42nd Street

Borough of Manhattan.

va. ' City. of New York |

To: Mae

Cizrx, Supreme Court of the State of New York

County of New York

* “Hussy Levy ;

Attorney for iit elite

250 Broadway

New Yorlg New York

Louis J. Lerxowrrz

Attorney General of the State of

New York appearing pursuant to

Executive Law #71 -

Albany, New York 12224

A47 ie ee

Order Noting Probable Jurisdiction

SUPREME COURT OF THE UNITED STATES

No. 673 ........ , October Term, 1967

Gronce Campsetn Pawtine Corp.,

Appellant,

WiiuiaM Ren, et al.

Appga from the Court of Appeals of the State of New _

York. ° Mae “i

' The statement of jurisdiction#in this case having been

submitted. and considered by the Court, probable jurisdic-

tion is noted. The case is placed on the summary calendar

and set for ‘oral ae immediately following No. 635.4.

January 29, 1968

-# 7s

“A49 | ‘¢

Order to Show Cause

At a Special Term, Part II of the Supreme

Court of the State of New York held in and

for the County 6f New York at the Courthouse

thereof, 60 Centre Street, Borough of Man-

bie hattan, City “and State of New York, on the

7th day of January, 1966, 3 ,

| Present: se

"Hor. Grorce TixzEr, Justice —

(Same Tirtz)

Enter ;

ee ; <

Justice of the Supreme Court

Ne of the State of New York

aay

b Affidavit of George Morvan in Senisert of Motion -

SUPREME COURT OF THE STATE OF NEW YORK

County or New York

[Sanen Tres]

State of New York -

_ County of. New York ) ss.: x,

Grorce Morvan, being duly sworn, says:

1. I am the president of the plaintiff corporation and

make this affidavit in support of its motion for a tem-

_ porary injunction. |

2. For more than thirty years and until the actions

complained of herein, the plaintiff was one of the largest: ©

and most reputable painting contractors in the United

States.. In the dast six years in the State of "New York

alone, plaintiff performed over’ Five Million Dollars of

painting services for New York City and State Agencies.

3. Among others, plaintiff has provided services to the

_ New York City Housing Authority, Department of Public ..

Works, Parks, Department of Sanitation, Board of Educa-

tion, Department of Hospitals, D. W. S. G. & E., The Port

of New York Authority, the New York City Transit Au-

thority and the New, Y

Works.

4. In addition, plaintiff has enjoyed a substantial busi-

“ness reputation throughout the country i in both public and

private ventures. Some of the major contracts undertaken

and completed satisfactorily by the plaintiff. during the

an cies of Public |

athe then ae ee ee

A51

Affidavit of George Morvan :

oS, , a

last ten years are listed in paragraph ‘<7? of the verified

complaint annexed hereto. The list is impressive and the

: company takes pride in its accomplishments.

D. a of. certain actions teken by defendants, more

fully set forth below, plaintiff finds itself disgraced in the

business eommunity, barred from submitting hids to pub-

lie agencies in this State, and, as a result, has siniilarly

. been barred by public agencies in other States. F

6. The reverberation of. plaintiff’ S : dinasiliieadion has

also been felt in plaintiff’s — — sphere.

7. Defendants purported > act Creer Section 38 of the

amendments to General Conditions of Contract Nos: PD65- -

5A (McKinley, Morris & Morrisania)’; PD65-10C (First &

_ Riis [F & C]); and PD65-14B (Lehman & Taft), between

plaintiff and defendants, the contract provision inserted

pursuant to Section 2601 of the Public Authorities Law

which provides a five year disqualification from bidding

on public contracts to any person who refuses when duly

_ requested, to sign a ‘‘ Waiver of Immunity’’. Further, any ~

firm or corporation of which such person is a partner, —

member, officer or director is similarly disqualified.

8. Defendants’ claim that the refusal of George Camp- *

bell, Jr. to sign a ‘‘Waiver of Immunity’’ on April 13,

1965, thereby results in the disqualification of plaintiff,

even though George Campbell, Jr. was not then an officer,

director or —— of the — corporation. |

9. On or iad iis 26, 1965, George Campbell, Jr.,

who, upon the death of George Campbell, Sr: in August,

1964, assumed the presidency of intiff, became aware

of the pendency of: an investigation }by the Grand Jury

A52

Affidavit of George Morvan -

which promised to encompass numerous contracts between

., | plaintiff and various New York City Agencies. -

> 10. Both-George Campbell, Jr. and all of the other,

officers and members of the Board of Directors of plain-

tiff, including your deponent, were advised by counsel that

they could expect to be subpoenaed and requested ta 1 waive |

_| statutory immunity. .

ee tA : 11. We were further advised by counsel of the penal-

¢ ties that would result if any of us refused to waive im- .

_ munity. Counsel laid special emphasis ‘on the fact that -

if for any personal reason any of the officers or directors

of the plaintiff did not deem it in his or her interest to

waive immunity, that it was their duty to inform the Board

and suitable arrangements made for their resignation be-

‘~~ ~eause* of the conflict between their persanal interest and

the plaintiff ’s best interest.

ney,

5 aaa a

12. Of all of the officers and directors of plaintiff, jae

George Campbell, Jr., then only twenty-four years, of age,

and having the fewest years of service with the company,

_deemed it advisable to refuse to waive immunity, and he—

was therefore _Tequested_ to and did resign. He also dis-

-posed of his stock i in — aes ~

13. On April 9, 1965, the Board of Directors of plain-

tiff met and accepted the resignatién of George Campbell, '

_ Jr. (Exhibit ‘‘A’’ annexed hereto), and a letter was sent

to defendants so informing them (Exhibit ‘*B’’ annexed .

hereto). .

14. Upon information and belief, the aforesaid Grand

Jury met on April 13, 1965, George Campbell, Jr. was sub-

poenaed to testify, refused to sign a ‘‘Waiver of Immu-

nity’’, and defendants were so informed in due course.

= an Affidavit of George ‘Morvan

15. On April 20, 1965, your deponent, and upon in-

formation and _belief, other officers and directors of plain- -

tiff, appeared before the aforesaid Grand Jury’and, when

asked, signed ‘‘ Waivers of Immunity’ and testified.

16. The following day plaintiff received from defend- /

ants a notice of disqualification (Exhibit ‘‘C’’ annexed

hereto). i

‘ )

17. By letter, hand délivered, on April 23, 1965 (Ex-

hibit ‘‘D’’ annexed hereto), counsel for ‘plaintiff attempted

disabuse defendants of. the numerous factual errors .

_ €ontained in their notice of disqualification; the most sig-

nificant of. which was the fact ‘that the\said George Camp- -:

bell, Jr. was not an officer or director of plaintiff a¢ de-

fendants’ notice alleged. ° .

’ < ; a ie

18. I am informed by counsel that. defendants have

- taken. the position that under Section 38 of tthe. General

Conditions of the aforesaid contracts between plaintiff

and defendants and under Section 2601 of the Public Au-’.

thorities Law, so long as George Campbell, Jr. was an-

officer or director when the contract was‘made, his resig-

nation prior to his refusal to waive immunity is meaning- -

less. |

19. I am.informed by counsel that the interpretation

placed on the contracts and statute by defendants is clearly

erroneous as the annexed Memorandum of Law amply dem-

onstrates. . ,

20. I pm informed and believe that within the hext

thirty to sixty, days, several millions of dollars of Work

will be offered for bid by public agencies in this city And

state, for which plaintiff j eminently qualified to bid and

perform. ~*~ . ; e re

A54

“Affidavit of George Morvan

21. Plaintiff sought the relief requested herein by pro-

ceeding under Article 78 of the C, P. L. R. for a review

of defendants’ determination. This Court held that the.

proper method for obtaining’ a. review of ten acts ©.

is by’a plenary action (New York Law Journal, December

_6,1965, page 18, Tilzer, J. ». i aoe

22. Aside from the Article 78 proceeding, no previous’

requést for the relief requested herein has been made to

this or any other court.

23. No previous application for the relief asked for i in

* this application. ;

Geonns Morvan

(Sworn to January 6, 1966.) -

ah Rant ME MMS:

ASS |

Exhibit A Annexed to Morvan Affidavit

MINUTES OF A SPECIAL MEETING

' OF

BOARD OF DIRECTORS

Grorce CAMPBELL PaInTING Corp.,

A special Meeting of the Board of Directors of George

Campbell Painting Corp. was held on the 9th day of April,

1965 at\10:30 AM o’clock in the offices of Ruzow and Lip-

_ ner, 501 Fifth Avenue, New York City.

The following were present: ”

George Morvan Jane Jesinsky

Marian Rizzi _. Elizabeth Campbell

Anita Ponte — *. Theodore M. Ruzow ~

Theodore M. Ruzow wilted. as Acting Chairmen and

called the meeting to order.

The Acting Chairman presented the- ‘resignation. of -

George Campbell, Jr., as Président and Director of George

Campbell Painting Corp. dated March. 26, 1965, and also —

surrendered Stock Certificate +6 in-the amount of 10

shares transftrred to George Campbell Painting Corp. to

the Directors ‘of George anne aca Painting Corp. at the |

meeting.

On motion duly. made, cnapnied and unanimously car-"

ried, it was . ,

Reso.vep, that committee be elected to select a pres-

ident. Thé committee to\ be Elizabeth Campbell,

Jane J esinsky, Anita Ponte, with Marian Rizzi as

Secretary to the. Committee.

ReEsouveD, that the Committee would give their re-

port in thirty (30) days.

“There being no further business before the meeting, ie

same was, on motion, duly adjourned.

Dated: April 9, 1965 oe of Marian Rizzi -

Reeretgry

A56

Eahibit A, Annexed to Morvan Affidavit ;

Letter of Resignation sii to Exhibit A

Pie March 26, 1965

To The Board of Directors |

_ George Campbell Painting Corp.

I hereby resign as Director and on of George

naan i serene ca effective immediately. .

George W. we ete Jr.

Witness:

‘Theodore M. Ruzow |

Harry —

_ Exhibit B po to Morvan Affidavit

Letter

[LETTERHEAD OF]

GEORGE CAMPBELL PAINTING CORP.

P. O. Box 631, 40-11 149th St.,

Finshing, N. Y. 11352

: ) April 9, 1965

New York City Housing Authority

250 Broadway .

‘New York, New York 10007 ss

Gentlemen:

Please be wiavieed that George Campbell, Jr. resigned as .

an Officer and director of of corporation on March 26, 1965.

Very truly. yours,

Gzorce CampsetL Parntinc CorpoRATION ©

Marian Rizzi,

Secretary

Ast

Exhibit C Annexed to Sieanee Affidavit

Notice of Dieqrinlifcation

. ae [LeTTBERHEAD oF] ©

NEW YORK CITY HOUSING AUTHORITY |

250 Broadway : New acted N. Y. 10007 : : :

—— Oe

? : toot 3 April 21, 1965 .

George Campbell Painting Corp. ‘

40-11 149th Street ;

Flushing 52, New York = Ka

Re: Contracts Nos..

PD 65-5A (McKinley, Morris & .

Morrisania) :

PD 65-100 (First & Riis (F & C)

. PD 65-14B (Lehman & Taft)

Gentlemen: ~ °

| The Authority has been officially informed by the Dis-

trict Attorney of New-York County that George Campbell, —

Jr., an officer of your company, has refused to waive im-

munity when subpoenaed to testify before the Grand Jury

of that county in connection with a pending investigation

to determine whether the crimes of bid rigging on publix

contracts, bribery. of a public officer, bribery of a labor:

official, extortion, coercion, assault, and conspiracy to com-

mit each of these crimes, has occurred in New York County. |

Please take notice that by reason of the foregoing, and

pursuant to the provisions of Séction 38 of the General —

Conditions of the above contracts, the Authority has di-

rected, and you are hereby advised, that such Contracts be |

arid they heteby are cancelled and terminated, effective im-

mediately. You are directed to remove immediately from

each of. the projects covered by the above Contracts all

your materials and equipment.

A58

Exhibit C Annexed to Morvan Affidavit —

Please take further notice that in accordance with the

_further provisions of said Section 38 the Authority has di-

rected, and you are hereby advised, that said. George Camp-:

bell, Jr.,-and any firm, partnership or corporation of which

he is a sneunber: partner, director or officer, including your

company, has been and will. be disqualified from selling. to

- or submitting bids to or receiving awards from or entering~ .

into any contracts with the Authority for goods, work or

services, for a period of five (5) years after such refusal. |

Yours very truly,

Gerald J. Carey

“= : General Manager

_ Crrtirrep Man, | | ae

Return Receret REQUESTED

A59

: Exhibit D Annexed to Morvan Affidavit

. Letter

[LETTERHEAD oF |

RUZOW & LIPNER |

ATTORNEYS AND COUNSELLORS AT LAW

501 Fifth Avenue

New York 17, N. Y. .

+ April. 23, 1965

- New York CjigeHousing Authority |

250 Broadway

New York, New York 10007

Att. Mr. Gerald J. Carey ©

General Manager

‘Re: George Campbell Painting Corp. —

Morris Houses, McKinley and .

Morrisania Houses

Contract No; PD 65-5A

| Amt. of Contract—$80,630.00

‘First and Riis Houses

Contract No. PD 65-10C ~

Amt. of Contract—$61,395.00 |

- Lehman Village & Taft Houses

~ Contract No. PD 65-14B

t, a) Amt. of ee

' Dear Sir:

- We.are the attorneys for George Campbell Painting

Corp. and have been requested to write to you by our client,

with regard to the féllowing: matter. meee |

_On April 9, 1965, a letter was addressed to the Author-

ity advising you that George William Campbell, Jr. had

Exhibit D Annexed. to Morvan Affidavit

resigned as an officer and director of their corporation on

Marck 26, 1965,:a copy of which is attached herewith.

On April 20, 1965, the employees of George Campbell

Painting’ Corp. were directed to cease their work at the

site.

‘On April 21, 1965, George — Painting Corp. re-

| err a requisition, which contained a written statement

to the effect that their contract was cancelled April 20, 1965.

On April 21, 1965, the undersigned spoke to Mr. Fitz-..

simmons of the Legal Department of the New. York City.

Housing Authority and was informed that a letter was in

the mail to George Campbell Painting Corp. cancelling the

several contracts between the Authority and asiah includ-

ing the above referred to contracts.

Mr. Fitzsimmons further said that this action was taken

as a Tesult of information received from the District At-

torney of New York County’s office and mentioned: having

received it from Assistant District Attorney Joseph Phil-

_ jips. At ‘this point in the conversation, the undersigned

- asked Mr. Fitzsimmons if the Authority had received and

had before it, at the time it made the decision to cancel the

contracts of George Campbell Painting Corp., the aforesaid -

letter of April 9, 1965 attached herewith. Mr. Fitzsimmons -

did not answer the. question propounded and I then told

him that the letter stet: 1 that George William Campbell,

Jr. had resigned as an officer and director of George Camp-

bell Painting Corp. on March 26, 1965 and.that this was a

fact. I also informed Mr. Fitzsimmons that a similar com-

_ munication had been sent to Mr. J oseph Phillips, Assistant —

District Attorney, on April 9, 1965, giving Mr. Phillips the

- same information regarding the ——— of Mr. Camp-

bell. |

I requested Mr. Fitzsimmons to arrange a hearing or

give the contractor and his attorneys some opportunity to

present the facts regarding the resignation, because of

. : ~

‘A61

Exhibit D Annexed to M orvan Affidavit

; habe significance - relevant to the acts of cancellation of the

contracts by the Authority.

On April 23, 1965, George Campbell Painting Corp. re-

ceived a letter from the Authority formally notifying it

of the ei cancellation of - above referred to con-.

tracts. ¥

I direct your attention to Setbin 38 of the Amendments

- to General Conditions entitled ‘‘Cancellation and -Disquali-

fication for’ Failure to Waive Immunity’’. It is a fact that

George William Campbell, Jr. refused to waive immuhity

- at an appearance before a Grand Jury of New York County

’ on. April 14, 1965.

_- Your attention is directed to Subdivision (a) of Section

38, which clearly speaks in the present tense, when it refers

to the disqualification of the person failing to waive immu-

nity and in Subdivision (b), it speaks in the present. tense,

_ when it refers to the right of the Authority to cancel ex-

" isting-contracts as a result of the relationship between the

person failing to waive immunity and the corporation un-

der contract with the Authority.

_ It is respectfully submitted that if George William

Campbell, Jr. resigned as an officer, director and stock- .

holder prior to his being called upon to waive immunity

and prior to his failure to waive immvzxity, that the pro-.

visions of Section 38 have no application and should not

be applied or enforced by the Authority, with relation to

any contracts existing between the — and George

Campbell Painting Corp.

' Please be advised that all officers and directors of

George Campbell Painting Corp., who have been requested

to appear before the New York County Grand Jury have

voluntarily appeared, without subpoena, and have volun-

tarily signed waivers of immunity. .

Exhibit D Annexed to Morvan Affidavit

As time is of the essence.and great and irreparable

harm and damages are. accruing hourly to George Campbell

Painting Corp., this letter is being hand-delivered to your

office, to. request an immediate hearing by the Authority

with regard to the cancellation of the contracts and the -

application of Section 38 thereto and the related question

of the resignation of George William Campbell, Jr. as an

officer, director and stockholder of George —— Paint-

ing Corp.

Very truly yours,

ae 4S Gee ~ Rozow & ne

“* ae a

TMR;ag d |

Ene. Copy of letter of Sia

George” Campbell Painting Obey.

dated April 9,1965

‘Deiverep sy Hanp

A63

Summons in Support of Motion |

SUPREME COURT OF THE STATE OF NEW YORK

County or New York

- ~e Tire]

Plaintiff deletion New York ratea J as the place of

_ trial.

The basis of the venue is Defendants’ sonklienss,

Plaintiff resides at 40-11 149th Street, Flushing, County

of Queens. . ..

SS.

» »¥

—

To the above named Defendants” i

You Arr Heresy Summonep to answer the complaint in in

this action and to serve a copy of your answer, or, if the

complaint is not.served with this summons,-to serve a no-

tice of appearance, on the Plaintiff’s Attorneys within

_. 20 days after the service of this summons, exclusive of the

day of service (or within 30,days after the service is com-

plete if this summons is nét personally delivered to you~

within. the State of New York) ; and in case of Your failure -

te appear or answer, judgment ‘will be taken against you

“by default for the relief demanded in the complaint.

Dated, J anuary 7, 1966.

Ruzow & Lipner

Attorneys for Plaintiff

A64

_ Verified Complaint in Support of Motion

SUPREME COURT OF THE drave OF NEW YORK

County or New Yorx |

(Same Trtte] a .

Plaintiff (een Campbell Painting Corps, by its at-

torneys, Ruzow & Lipner, complaining of defendants, re- |

Pe alleges:

- sabes William Reid, Francis V. Madigan and

Ira S. Robbins, réspectively, are Chairmen and members

of the New York City Housing Authority. Defendant, The

‘New York Housing Authority, is a Public Authority, duly

constituted under the New York City mn ns

Law. |

2. Plaintiff is a corporation duly organized under the ©

Laws of the State of New York, with its principal plage

of business at 40- lt 149th Street, Flushing, New York.

- Plaintiff i is in the business of general paititing, con-

tracting, and among other things has engaged in painting

and decorating contracts for the defendant, The New York

- City’ Housing Authority.

_ 4 Plaintiff ieiliiiilion. was s organized in’ 1964-with the .

Estate of George Campbell, Sr. owning fifty percent. of

the stock therein, and the remaining fifty percent owned

equally by George Campbell, Jr., Marian Campbell Rizzi,

Anita Campbell Ponte, Jane Campbell Jesinsky and Bar-

bara Campbell Dougherty.

5. Prior thereto, the business was conducted as a part-

‘nership, ‘‘George Campbell & Company’’. Theé stockhold-

eel -

_ York and

‘A65 |

Verified Complaint .

ers of plaintiff were members of the partnership with the

‘same ownership interest. At all times duri his lifetime,

George Campbell, Sr. was the general pareer's in charge of

the ‘partnership. -

6. For a period of thirty years plaintiff has been ¢n-

gaged in general painting contracting for defendant,

New York City ‘Housing Authority, and other ou

mental agencies, and subdivisions within the State of New “

any of its contracts been cancelled or had it been, barred

. from future bidding because of the provisions of Section

2601 or 2602 of the Public Authorities Law, or the provi-

__ sions of Section 103 of the General Municipal Law, or any

other couresponding provisions of State or Federal Law.

7. During the past thirty years plaintiff has been one

of the largest painting contractors in the area. Its reputa-

tion for public service: contracts -has been the highest.

Among the major contracts undertaken and satisfactorily

completed by the — during the last ten — have

been:

Consolidated om New Yuk

ere '

-New York City Housing Authority

» * New York City Department of

s, Public Works

Parks

Sanitation --

| ,- Board of Education *° *

‘ Hospitals

D.W.S.G.&E.

Port of New York Authority

sewhere. At no time during that period had ©

A66

Verified Complaint

New York City:Transit Authority

New York State Department of Public Works

' United States Military Academy, West Point,

New York

Oahe Reservoir, Pierre, South ice

General Electric Appliances’ Park,

Louisville, honmeaen

Triboro Bridge, New "York :

Whitestone Bridge, New ‘York |

'~ Henry Hudson Bridge, New York

Walt Whitman Bridge, Philadelphia, Pa.

Midhudson Bridge, New York

Memphis Arkinsaw Brigge, Memphis, Tennessee

Ravenwood Generating Plant, New York —

Astoria Generating Plant, New York

Mahlstrom Airforce Base, Great Falls, Stontien

Scott Airforce Base, Illinois

Loring Airforce Base, Caribou, Maine

New York State Court of — Albany,

New York

Creedmore —- York ad

Harlem Valley Stat Hospital, Pauling,

New York

United States Court House, Foley Square,

New York

Yeshiva University, New York

Municipal Courts, City of N ew York

—t

—

after he was replaced as president. by George Morvan, the

said resignation of George Campbell, Jr.

‘been employed as an estimator by the plaintiff, a position

as yet been made to any legatee under the aforesaid estate

_ anticipates that George Campbell, Jr. will receive as his

4 kind of stock in plaintiff now owned by the estate.

- A67

| vege Complaint

Bronx City Pinon; N New YORK

Raymond Street J ail, Brooklyn, New York

Grumman Aircraft ies Plant, Brookhaven,

New York

8. Upon the death of Ascorge Campbell, Sr. in August .

1964, George Campbell, Jr. be@ffne the- president of plain-

tiff. George Campbell, Jr. is twenty-four years of age. -

9. On March 26, 1965,the resigned as an officer and di-

rector of the plaintiff, and\on or about that date he di- °

vested himself of his stockholdings in the plaintiff. Theré-

former executive vice president. of plaintiff. Defendants

were informed on April 9th, 1965, by letter, of the afore-

10° Since March 26, 1965, George Campbell, Jr. has

which does not entail any management functions.

11. Plaintiff has no secret oabueinanie with George

Campbell, Jr. concerning his future reinstatement or re-

employment with plaintiff. He has a ten percent interest

in the residue of,his father’s estate. No distribution has

which is being probated in the ae s Court of Queens

ae ew York,

‘12. The aforementioned ten percent undistributed in-

terest in the estate constitutes the only beneficial interest

which George Campbell, Jr. now has in plaintiff. Upbn

the final distribution’ of ‘the assets of the estate, plaintiff

share, a monetary payment ‘rather than a distribution in

Pomel

M . < 4

’ i

— A68

Verified Complaint

13. Thereafter, and on April 13, 1965, at the office of

Albert A. Blinder, Esq., 485 Lexington Avenue, New York, °

New York, a detective of the New York County District

Attorney’s office served a subpoena upon the aforesaid

George Campbell, Jr. calling for his appearance ‘before a

Grand Jury on Wednesday, April 14, 1965.

14. On April 14, 1965, George Campbell, Jr. appeared |

before the Grand J ury and refused to sign a Waiver of

Immunity.

15. Upon information and belief, the New York County

District Attorney, Frank S. Hogan, advised defendant,

The New York City Housing Authority, of the refusal of

George Campbell, Jr. to sign a Waiver of immunity.

16. Upon information and belief, as a result. of the

aforesaid. advicé, the defendants determined to and did

cancel the then existing contract between plaintiff’and de-

fendant The New York City Housing Authority, purport-

ing to act pursuant to Section 38 of the General Conditions#

of Contracts. Said Section 38 is the provision incorpo-

rated therein by reason of the mandate of Section 2601 of |

the Public Authorities Law. *

17. In addition, and upon information and belief, simi-

larly purporting to act under Sevtion 38 ‘of the General

Conditions of Contracts between plaintiff and defendant,.

The New York City Housing Authority, the defendants

barred plaintiff from future bidding with defendant, The

_ New York City Housing Authority, for a J eguict of five

years.

18. On or about April 21, 1965, by ik defendants

notified plaintiff of the aforesaid cancellation and disquali-

fication. :

A69_

Verified Complaint

19. Thereafter, plaintiff, by its attorneys, informed de-.

fendants by letter dated April 23, 1965, re-notifying de-

fendants of the fact that George Campbell, Jr. was not an

officer or director of the plaintiff at the time he refused

to waive immunity before the Grand Jury, and’ further

notifying the defendants that all of the officers and direc- _

tors of the plaintiff (including George Morvan, the plain-

tiff’s president) who were requested to appear before the

; aay? J ury, and 4vere requeSted to sign Waivers of Immu-

y did so voluntarily without oper and signed such

Waivers of Immunity. ,

20.- On or about May 5, 1965, defendant, The New York

City Housing Authority rejected plaintiff’s argument ané

‘thereafter a Notice of Claim ‘was filed against The New

York City Housing’ Authority claiming One million and

* 00/100 ($1,000,000.00) dollars in damages,* together with

the claim that its contract should be reinstated and the or-:

der barring it from future bidding vacated and cancelled.

A copy of this Notice of: Claim is annexed hereto as Ex-

hibit A. More than thirty days have elapsed since the

Notice of Claim was served, and since the depositions, pur-

suant to Section 157(3) of the Public Housing Law was

concluded by the defendant, The ‘New York City Housing

Aathority:

- 2. Plaintiff, to the knowledge of its officers and diree-

tors, denies that lt has engaged in any practices illegal un-

der any State or Federal Law, or under City ordinances —

or regulations. —

22.- During the six year period from 1959 until the de-

‘fendants’ disqualification’ of plaintiff in 1965, plaintiff did

an average yearly business of $1,085,912.00 with New |

York City and New York State Agencies and with the

Consolidated Edison Company, all of, whom have refused

-A70 .

—— Complaint |

to ‘accept bid§ resis plaintiff as a result of the defendants’

action. ©

23. In addition, the chief of the Bureau of Contract

Administration for the State Highway Department of the

_ State of New Jersey, on — 29, 1965, wrote to the

plaintiff as follows:

_ ‘We are returning your Contractor’s Financial -

and Equipment Statement as of the close of busi- —

ness on August 31, 1965, as we have on file in this-’

._ Office information that your firm was banned by~ex-

ecutive order number 138 of the Mayor of New York

until April 27, 1970.

“Tt will not be possible for your organization to

qualify with our Department until this date has been

reached or this executivé order has been. cancelled.”’

24. As a direct result of defendants’ action, plaintiff

_ will lose countless opportunities to bid upon contracts with

public agencies throughout the United States, not to men- -

tion the incalculable loss of non-public business opportu-

nities. eee e .

25. The damage suffered and to be suffered in the fu-

ture by plaintiff is incalculable. Even after the five year

ban will have come to an ‘end, plaintiff’s reputation will

have been Seago injured by defendants’ actions.

26. ‘Plaintiff has no adequate remedy at ie.

WHEREFORE, plaintiff demands a judgment permanently

enjoining defendants from continuing to disqualify the

plaintiff as aforesaid, together with the — of this action.

hieow & Lipner

Attorneys for Plaintiff

: (Verified by George Morvan, Jan. 6, 1966.)

A711

5 Exhibit A Annened to Verified ie

_ Notice of Claim .

a : a. re

In the Matter of the Claim of

GrorcGe CAMPBELL Paintine Corp.

against .

Tue New York Crry Hovstne AutHorRITY

—_—_—_——-— a

Sirs ;

Taxe Norice that the euleiigal GEORGE Qunersat.

ParntinG Corp., with its principal place of business at 40-11

‘149th Street, Flushing, — of- Gasena, New York,

claims: <,

(1) enbiiih against The New York City: Housing. Au-

thority in the sum of One Million ($1,000,000.00) Dollars,

(2) A right to have its cancelled: contracts with The

New York’ City Housing Authority reinstated, and

| 3) The order barring it from future bidding for a pe-

riod of five (5)* years vacated, because of The New York "

City Housing Authority’s wrongful interpretation and ap- .

plication of the provisions of the contract entered into by -

and between George Campbell Painting Corp. and The New .

York City Housing Authority and the ‘applicable statutes.

The damages, wrongful cancellation of the contracts

and wrongful barring of the claimant from future bidding

‘fora period of five (5) years were sustained as a result of |

A72

Bobi A pw to Verified ieseihicat .

the action by The New York City Housing Authority pur-

-portedly pursuant to provisions of the contract and ajppli-

cable statutes claiming a violation thereof by a- member,

partner, director or officer of the claimant réfusing to sign

a waiver of immunity. The New York City. Housing: Au-

thority in making the determination of cancelling the exist-

ing contracts and barring petitioner from future bidding

for five (5) years for the alleged refusal of George Camp-

bell, Jr. to waive immunity before the New York Grand ©

Jury, was a breach of contract and violated the claimant’s

rights and was based upon the erroneous information and/

or interpretation of the aforesaid contracts.and statutes in

that the aforesaid George Campbell, Jr. was no longer an ~

officer,.director or stockholder 6f the petitioner at the time

he refused to waive immunity before the Grand Jury, and,

- moreover, was not an officer, director or stockholder at the

time a subpoena was served upon him for his appearance

"as aforesaid. "he decision by The New York City Housing

Authority was arrived at despite the fact that they were in-

formed by letter dated April 9, 1965 that George Campbell,

Jr. was no longer an officer and director of the corporation.

The undersigned, George Campbell Painting Corp.,

claims damages in the sum of One Million ($1,000,000.00)

‘ Dollars for loss of profits on contracts they were prevented

from obtaining because of said: wrongful determination by °

The New York City Housing Aathonity.

Ties Toman Notice that the ‘endereigned, George

Campbell Painting Corp., hereby presents its claims as

aforesaid respectively for adjustment, reinstatement, vaca-

ture of the existing prohibition and payment, and notifies |

é you that unless the same are adjusted, reinstated, vacated

and’ paid within thirty (30) days from the date of their

presentation to you, it is the intention of the undersigned to

commence an action or actions, a preceeding or proceedings

A73

Exhibit A Anneced to Verified Complaint

thereon in the Supreme Court of the State of New York,

‘County of New York,.against The New York City Housing

Authority and its members for the relief sought herein,

with costs and disbursements in the action or actions, pro-

ceeding or. “proceedings: as aforesaid.

“Dated: Flushing, New York : .

July 2, 1965 : ,

Grorce CAMPBELL PAINTING Corp.

‘By Marian C. Rizzi

State of New York )

County of Queens ) ss.:

On this 2nd day of July 1965, before me personally came

Marian OC. Rizzi, to me known, who, being duly sworn, did

depose and say, that she resides at 55 Rose Drive, Great

Neck, New York; that she is the Secretary of George’Camp-

-bell Painting Corp., the corporation deserived in and which

executed the foregoing instrument; that she knows the -

seal of said corporation, that the si al affixed to said instru-

ment is such corporate seal; that it was so affixed by order

of the board of directors of said corporation, and that she

signed her name thereto by like order.

Harry Lipner

Notary Public

. : Harry LirpneR

Notary Public State of New York -

No. 41-7564430 Queens County

Term Expires March 30, 1966

earner earamaaaaaaeaaentmaaiaramnaeaaaeen ete

sa.

° of, fo wit, its Secretary.

Exhibit.A Annexed to Verified Complaint .

State of New York ) Th . ;

County of Queens. ) ss.:

Marian C. Ruz, being duly sworn, deposes and says:

That she is the Secretary of George Campbell Painting

Corp., the corporation named in the within Notice of Claim;

that she has read the foregoing Notice of Claim and knows

the contents thereof; and that the same is true to her own

knowledge, except as to the matters therein stated to. be

- alleged upon:information and belief es as to those mat-

ters, she believes it to, be true. mt 7

Deponent further says that the reason this verification

is made by deponent and not by George Campbell Painting :

Corp. is because the said George Campbell Painting Corp. -

is a domestic corporation and deponent is an officer there-

~ «> Marian C. Rizzi

_ Sworn to before me this | yw"

2nd day of July 1965 ~

Harry LIPner. _

- Notary Public State.of New York

No. 41-7564430° Queens County

Term Expires March 30, 1966

Pt en nner en tI

A75

Notice of . Cross Motion

SUPREME COURT OF THE STATE OF NEW YORK

County or Naw York _

Index No. 247/1966

[Same Trre]

Sirs:

PLEASE Taxn Notice, that upon the artnexed affidavit ot

Paul W. Hessel, sworn to the 31st day of January, 1966, and’

all the papers, documents and exhibits thereto annexed and —

therein referred to, plaintiff’s motion for an injunction

pendente lite, brgught on by Order to Show Cause dated

January 7, 1966, and the complaint herein,.a cross motion

will be made by the defendants pursuant to Rule 2215 of

the Civil Practice Law and Rules, upon the argument of

. seplaintiff’s said motion for an injunction pendente lite; re-

turnable at a Special Term, Part I, of this Court, to be held

“ fn and for the County of New York, at the Courthouse, 60

“

Centre Street, in the Borough of Manhattan, City, County

and State of New York, on February 15, 1966, at 9:30 in the

forenoon of that day or as soon thereafter as counsel can be -

_ heard, for judgment, dismissing thg complaint herein pur- °

suant to:

1,- CPLR 3211 (a) 1. on the ground that one or more

a3 ; complete defenses to the cause‘of action alleged

in the complaint have been established by docu-

mentary evidence.

.2. CPLR 3211 (a) 2. on the ground that the Court —

- has not jurisdiction of the subject matter of this

Pet eee, we ATE

ated? pn

Notice. of Cross Motion

action in that plaintiff has ‘available another ex-

clusive and adequate remedy provided by law for

the relief demanded in the complaint.

3. CPLR 3211 (a) 4. on the ground that there is an-

_ ‘other proceeding pending between these parties

for the same cause of action alleged in the com-

plaint herein.

4. €PLR 3211 (a) 7. on the ee that the com-

plaint fails to state facts sufficient to constitute

a cause of action.

Awe for such oles and further relief as to the Coutt

may seem just and proper.

Pease TAKE FurtHer nies that pursuant to 2214 (b)

CPLR you are required to serve any answering affidavits in

opposition to this cross motion at least five (5) days before

y / the return date hereof.

Dated: New York, N. Y., January 31, 1966.

_ Yours, ete.

Harry Levy

Attorney for Defendants.

To:

Ruzow & Lipner, Esgqs.,

Attorneys fo Plaintiff

Albert A. Blinder, Of Counsel _

AT77

Affidavit of Paul W. Hessel in Opposition to Motion

and in. Support.of Cross Motion

SUPREME COURT OF THE STATE OF NEW YORK

County or New York.

Index No. 247/1966

. [Same Trre]

State of New York )

County of New York ) ss.:

Paut W. HeEssEx, being duly sworn, deposes and Says:

1. I am an attorney at law and Deputy Counsel of the

New York City Housing Authority (hereinafter referred to

as the ‘‘Authority’’), the defendant above named, and am

associated as such with Harry Levy, Counsel to the Author-

ity and its attorney of record herein. I am fully familiar

with all of the facts relating ‘to the subject matter of this

action, having personally handled all of the prior proceed-

ings in this Court.with respect thereto hereinafter referred

to. I make this affidavit upon my own knowledge of the

facts herein set forth, based upon the papers and proceed-

ings had in such proceedings, and upon documents, data and

records of the Authority available to me. |

2. This affidavit is submitted in opposition to plaintiff’s

motion for an injunction pendente lite and such other relief

as-is set forth in the Order to Show Cause herein; and in

support of defendant’s cross motion to dismiss plaintiff” s

.complaint contained in the foregoing Notice thereof.

3. This is the third litigation’ instituted by this plain-

tiff in this Court for substantially ‘the same’ relief as is

A78

Affidavit of Paul W. Hessel

sought by the complaint and the present motion in this ac-

tion. The first was brought on by petition verified May 4,

1965. wherein, in addition to the Authority, thgre were

named as parties respondent the Attorney General of the

State of New York and the District Attorney of New. York

. County. Two ‘‘proceedings’’ were therein alleged: \first, -

an Article 78 proceeding, and second, a proceeding ‘‘—pur-

suant to Section 103 (c) of the Generat Municipal Law and

Article 4 of the Civil Practice Law and Rules.’’ The relief

sought was annulment ‘‘—ofgthe determination of the re-

spondents cancelling petitioner’s contracts with the New

York City Housing Authorityfand barring it from future

bidding for a period of five (5) years—’’.° Plaintiff on its

own motion voluntarily discontinued the proceeding pursu-

ant to Section 103 (c) of the General Municipal Law. The

Article 78 proceeding was dismissed by this Court for fail-

ure of petitioner to file with the Authority, as a condition

precedent thereto, a Notice of Claim pursuant to Section

157 of the Public Housing Law, but with leave to renew.

4. Plaintiff having served the Notice of Claim referred ©

to in paragraph ‘‘20’’ of its complaint herein and annexed

thereto as Exhibit A, it instituted a second litigation pur-

suant to Article 78 CPLR by petition verified October 2,

1965. This time it omitted the demand for reinstatement of

its cancelled contracts, and sought only an annulment of the

determination barring it from future bidding upon Author-

ity contracts for a period of five years. This proceeding

was also dismissed by this Court on motion of the Author-

ity, without prejudice to petitioner commencing a plenary .

- action for the same or similar relief. Plaintiff has served

_a Notice of Appeal to the Appellate Division from ‘the

judgment entered thereon, and this appeal is now pending.

_§. The proceedings described in the foregoing para-

graphs 3 and 4 are on file in this Court under Index No.

AT79

Affidavit of Paul W. Hessel

6987-1965. e papers therein will be requisitioned for the

information of the Court in connection with the present mo-_

tion and cross motion, and are hereby referred to and sub-

. mitted as part of the documentary evidence upon which

’ the branch of the cross motion under CPLR 3211 (a) (1)

is based. ‘From such papers, and the additional documen-

tary evidence annexed as Exhibits hereto or hereinafter

referred to, the further facts npeovent to this present litiga-.

tion are as set forth below.

6. Plaintiff is a major painting contractor who, after

public bidding as required by the Public Housing Law,

entered into three written contracts with the Authority

prior to March 26, 1965 for maintenance painting of its

public housing projects. Such contracts are specified in

paragraph ‘‘7’’ of plaintiff’s moving affidavit. of George

Morvan. They are hereby referred to and submitted as if

" annexed as Exhibits hereto.

7. The bids for éach of such contracts, the contracts

themselves, and the Performance and Payment Bonds made

part thereof, were executed and acknowledged on behalf of

plaintiff by one George Campbell, Jr. as its president, and

otherwise expressly set forth therein that said George

Campbell, Jr. was at the time of such execution the presi-

» dent of plaintiff.

8. Plaintiff was then and now is basically a family?

corporation, fifty percent of whose.stock i» owned by the

‘.- estate of said Gearge Campbell, Jr.’s‘late father (of which

estate George Campbell, Jr. is a beneficiary). The remain-

ing fifty percent was, at the time of the execution of said

contracts and up to at least April 9, 1965, owned by said

. George — Jr. and his sisters.

A80

pa R

Affidavit of iota W. Hessel.

9, At the time of the acai of said contracts said

George Campbell, Jr. was, also a director of plaintiff, and

continued as such fantil at least March 26, 1965. ~

, 10. Each of such contracts contained the following

_ standard provisions set forth in Section 38 of the Amend-

ments to the General Conditions thereof :

‘638. Ceninthailes and Disqualification for

Failure to Waive Immunity

Upon the refusal by a person, when called before

a Grand Jury to testify concerning any transaction

- or contract had with the State, any political subdivi-

sion thereof, a public authority or with any public

department, agency or official of the State or of any

political subdivision thereof or of a public authority,

to sign a waiver of immunity against subseqyent

criminal prosecution or to answer any relevant ques-

tion concerning such transaction or contract.

A. Such person and any firm, partnership, or

corporation of which he is a member, partner, direc-

tor or officer shall be disqualified from thereafter

‘selling or submitting bids to or receiving awards

from or entering into any contracts with the Au-

thority for goods, work or services, for a period of

five (5) years after such refusal, and

_ B. This Contract and any and all other coritracts

made with the Authority on or after July 1, 1959, by

such person and by any firm, partnership or corpora-

tion of. which he is a-member, partner, director or

officer may be cancelled or terminated by the Author-

ity, without incurring any penalty or damages on

account of such cancellation or termination, but mon-

ine Rb = 6 en A ete

Affidavit of Paul W. Hegsel :

v0 a

jes owing by the Authority, for goods delivered or

work done prior to the concellation or termination.

shall be paid.’’

11. Like other standard provisions of such public con-

tracts required to be incorporated therein by various stat- -

utes, this provision was mandated by Section 2601 of the

Public Authorities Law, reading as follows:.

**2601 Ground for Cancellation of Contract

by Public Authority . ‘

A clause shall’ be inserted in all specifications or

contracts hereafter:made or awarded by any publlic

authority or by any official of any public authority

created by the state or any political subdivision, for

work or services performed or goods sold or to be

sold, to provide that upon the refusal by a person, .

when called before a grand jury to testify congern-

« ing any transaction or contract had ‘with the state, .

any/ political subdivision thereof, a public authority

or,with any public department, agency or official of

the state or of any political subdivision thereof or

of a public authority, to sign a waiver of immunity

against subsequent criminal prosecution or to an-

swer ary relevant question concerning such trans-

action or contract.

(a) Such person, ‘and any firm, ‘estate or

corporation of which he is a member, partner, di-

rector or officer’ shall be disqualified from thereafter |

selling to or submitting bids to or, receiving awards

from or entering into any contracts with any public

authority or official thereof, for goods, work or serv-

ices, for a period of five years after such refusal, and

to provide also that

A82

Affidavit of Paul W. Hessel

(b) any and all contracts made with any public

. authority or official thereof, since the effective date

of this law, by such person and by any firm, part-

nership or corporation of which he is a member,

partner, director or officer may be cancelled or termi-

nated by the public authority without 1 incurring any

penalty or damages on account of such cancellation

‘or termination, but any monies owing by the public

authority for goods delivered or work done prior

to the cancellation or termination shall be paid.’’

‘- The subsequent Seetionl 2602 and 2603 of the Public

Authorities ‘Law read as follows:

“$2602 Disqualification to Contract with

Public Authority

Any person who, when called before a grand jury

to testify concerning any transaction or contract had

with the state, any political subdivision thereof, a

public authority or with a public department, agency

or Official 6f the state or of any political subdivision

thereof or of a public authority, refuses to sign a.

waiver of immunity against subsequent criminal

prosecution or to answer any relevant question con- -

- cerning such transaction or contract, and any firm,

partnership or corporation, of which he is a member,

partner, director or officer shall be disqualified from

thereafter selling to or submitting bids to or receiv-

ing awards from or entering into any contracts with

_any public authority or any official of any public au-

. thority created by the state or any political subdi-

vision, for goods, work or services, for a period of

five years after such refusal or until a disqualification

shall be removed pursuant to. the provisions of sec-

tion — Six hundred three of this title.

<« -

A83

Affidavit of Paul W. Hessel

It shall be the duty of the officer conducting the in-

vestigation before the grand jury before which the

refusal occurs to send notice of such refusal, to-

gether with the names ‘of any firm, partnership or

corporation of which the person so refusing i is known

- to be a member, partner, officer or director, to the

superintendent of public works of the State of New

-York and the appropriate departments, agencies and

officials of the state, political subdivisions thereof or

public authorities with whom the persons so refusing

and any firm, partnership or corporation of which he

is a member, partner, director or officer, is known

to have a contract.”’ . |

2603 - Removal of bisiieiiinabiins of Public

Contractors by Petition

1. Any firm, partnership or corporation which

_ has become subject to the cancellation or termination

of a contract or disqualification to contract on ac-.

- count of the refusal of a member, partner, director

or officer thereof to waive immunity when called to

* testify, as provided in sections twenty-six hundred

one and twenty-six hundred two of this title, may, ~

upon ten days’ notice to the attorney general and to

the officer who conducted the investigation before

’ the grand jury in which the refusal occurred, com-

mence a special proceeding at a special term of the

supreme court held within the judicial district in,

which. the refusal-o¢curred for a judgment discon-

tinuing the disqualification. Such application shall

' be in the form of a petition setting forth grounds, in-

cluding that the cooperation by petitioner with the .

grand jury at the time of the refusal was such, and

the amount and degree of control and financial in-

terest, if any, in the petitioning firm, partnership or

| AS4 |

Affidavit ¥f Paul W. Hessel

corporation by the member, partner, officer or direc-

_ tor who refused to waive immunity is such that it |

will not be in the public interest to cancel or termi-

nate petitioner’s contracts or to continue the disqual-

ification, as provided in section twenty-six hundred

‘one and twenty-six hundred two of this title.

_A copy of the petition and accompanying papers

shall be served with the notices to be given pursuant

to this subdivision.

2. Upon the filing of such petition the court may

‘ stay as to petitioner, pending a decision upon the

petition, the cancellation or termination of any con-

tracts resulting from such refusal upon such terms.

as to notice or otherwise as may be just.

3. At least two days prior to the return day, the

‘ officer who conducted the investigation before the

grand jury and the attorney general may file an-

swers to the petition or apply for judgment dis-

missing the petition as a matter of law. Onor before .

- the return day the petitioner may file a reply to. the

answer.

4. Upon the return day the court may, upon the

‘petition and answer and other papers filed, forth-

with render such judgment as the case requires, or

if a triable issue of fact is duly raised, it shall forth-

with be tried: before a court sitting without a jury or

before a referee. The provisions of statute or rule

governing references in an action shall apply to a

' 5. The court shall render judgment dismissing

the petition on the merits or discontinuing the dis-

qualification upon the ground that the public interest

would be served by its discontinuance, and granting

iN a celal INS At AR Se) atv ee Tends 92

A895

Affidavit of Paul W. Hessel

such other relief as to the cancellation or termination

of contracts as may be appropriate, bat without costs

to — se

13. . For some time prior to April, 1965, and thereafter,

Hon. Frank S. Hogan, District Attorney. of New York

County, hed been conducting an investigation before a

Grand Jury of that County to determine whether the crime

of bid rigging on public contracts, among others, had oc-

curred in New York County. Early in April, 1965 said

District Attorney so informed the Authority, and further

advised that certain individuals who were officers of corpo-

rations (other than plaintiff herein) having painting con-

tracts with the Authority had refused to waive immunity

and to testify in connection with such investigation.

14. By letter of April 16, 1965 the District Attorney

informed the Authority that said George Campbell, Jr., of

_ the plaintiff corporation, had also refused to sign a waiver

of immunity before the Grand Jury in such investigation.

The letter further stated that it was sent in conformance

with Section 103-b of the General Municipal Law, and re- —

qx1ested advice as to what action the Authority would ‘take-

in the matter. <A copy of this letter is annexed hereto as

Exhibit -A.

15. Sections 103-a, 103-b, and 103-c of the General Mu-

nicipal Law are identical with Sections 2601, 2602 and 2603

of the Public Authorities Law, respectively, except that

the former apply to municipal corporations, whereas the

latter apply to public authorities such as defendant here-

in. (In its original proceeding in this matter plaintiff also

erroneously referred.to the General Municipal rather than

the Public Authorities Law, but. it was agreed upon. the

argument that this technicality would be overlooked. In

F — A86

Affidavit of Paul W. Hessel |

any event, Section 103-b of the General Municipal Law, as

well as Section 2602 of the Public Authorities Law, express-

ly requires the District. Attorney, where such refusal to

‘waive immunity has occurred, to give such notice thereof

to public authorities, . as well as other governmental agen-

cies).

16. Upon receipt of the District Attorney’s letter the

Authority cancelled the three painting contracts with plain-

tiff, and disqualified ‘it, as, well as said George Campbell,

Jr., and any other firm, partnership or corporation of which

he is a member, partner, director or officer, from entering

into contracts with the Authority for a period of fivé years.

Plaintiff was so informed by letter of the Authority dated

April 21, 1965, a copy of which is annexed to the moving

affidavit in the present action as Exhibit B.

17. Inits petitions in the prior proceedings plaintiff

expressly alleged that the foregoing action of the Authority

was taken ‘‘—as a result of—’’ the advice given in said

letter of the District Attorney (Exhibit A hereto). A simi-

lar assertion is made in paragraphs ‘‘16’’ and-‘‘17”’ of the

compla*-~+ in this action. And the fact is that the action

of the Authority did arise out .of and result from such ad-

‘ vice in the District Attorney’s letter. This point is-of im-

portance in the consideration of the nature of the remedy

which defendant tonténds, as Hereinafter set forth, is ex-

clusive in these circumstances, and whether, therefore, the

— action and motion are tenable.

18. In its ashlee in the _ proceedings plaintiff

further alleged cooperation by its officers and directors

other than George Campbell, Jr. with the District Attorney

and the Grand Jury and the limited amount and degree of .

control and financial interest in plaintiff corporation by

said George Campbell, Jr., and asserted that by reason

= vale

Affidavit of Paul W. Hessel

thereof ‘‘—it will not be in the public interest to counte-

nance the disqualification—’’ (Petition of October 2, 1965,

par. “37’’). Similar allegations of cooperation are made

in the present moving.affidavit of George Morvan (par.

“*15’?) and the complaint herein (par. ‘‘19’’).

19. It will be noted-that allegations of this nature are

provided for in Section 2603 of the Public Authorities Law

set forth in full at par. ‘‘12” of this affidavit, above (and

its counterpart Section 103-c of the General Municipal Law)

- for relief from disqualification of a corporation for failure

of an officer to waive immunity—which is precisely what

is sought in-the present action and motion. For emphasis,”

that portion of Section 2603 setting forth these require-

ments is now repeated, as follows;

“Such application shall be in the forth of a

petition setting forth grounds, ineluding that the.

. cooperation by petitioner with the grand jury at. the

time of refusal was such, and the amount and degree

of control and financial interest, if any, in the peti- °

‘tioning firm, partnership or corporation by the mem- .

ber, partner, officer or director who refused to waive ~

immunity is such that it will not.be in the public in-

terest to cancel or’ terminate i s contracts

or to continue the disqualification—

20. "Defendant respectfully. contends that “the relief

sought by plaintiff in this.action and by this motion is ex-

_pressly provided for in these very circumstances by the-

procedure-set forth in this Section 2603, that it is the exclu-. -

sive remedy available in such circumstances, that it would

afford, if justified, an adequate remedy, and that therefore,

on-this ground alone, this equitable action cannot be main-

tained and this motion must be denied. This will be further. |

A88

- Affidavit of Paul W. Hessel

treated in a memorandum of law to be submitted on the :

argument of these motions.

21. Indeed, it will be nee that, as stated in par. ‘‘3”’

of. this affidavit, above, the first litigation instituted by .

plaintiff for the relief now sought by this action did set

forth a proceeding under Section 103-c of the General Mu- .

nicipal Law (it was agreed that by inadvertence this was so

designated in lieu of its counterpart, Section 2603 of the

Public Authorities Law, and that the latter was intended) ;

thereby, and by the allegations of ‘‘cooperation’’ and ‘‘ pub-

lic interest’? above mentioned, recognizing its applicability

to these circumstances. As will further be noted, Section

2603 provides that the only proper parties to that proceed-

ing are the Attorney General and the*District Attorney who

brought about the disqualification by the public agency con-

cerned. There is no provision for making the public agency

itself a party thereto. Why, then, plaintiff voluntarily dis-

continued that proper proceeding, and thereafter pursued,

and continues to pursue the Authority in improper and

untenable litigations such as this one, is best known only

to on

22. The refusal of George Campbell, Jr. to waive im-

munity in the investigation before the Grand Jury, as

advised to the Authority: by the District Attorney (Exhibit —

A hereto) is expressly alleged in plaintiff’s moving affidavit

(par. ‘‘14’’) and complaint (par. a? It is also undis- .

puted that he was the president of plaintiff and director and_-

stockholder thereof at the time. that plaintiff bid for and —

executed the three contracts in question, and continued as

such at least until March 26, 1965, several weeks before his:

appearance before the Grand Jury. It is claimed, however,

that on March 26, 1965 George Campbell, Jr. resigned as an

officer and director of .plaintiff, but not until after he and -

«<

hrenttesseteaebebiatSiitibeil vied asisiteina! set tives he

A89

‘Affidavit of Paul W. Hessel

the other officers and directors were aware of the pending

investigation and that therein ‘‘—they could expect to be

subpoenaed and requested to waive statutory immunity’’.

(Morvan affidavit, par. ‘‘10’’). The alleged resignation

was advised by counsel (Morvan affidavit, par. ‘‘11’’), and

was upon request; and simultaneously ‘‘He also disposed

of his stock in plaintiff.”’ (Morvan affidavit, par. ‘‘12’’).

The moving affidavit clearly indicates that at the same time,

to wit, March 26, 1965, that such advice was given and

George Campbell, Jr. was requested to and did resign,

‘‘_all of the other officers and members of the Board of

Directors of plaintiff—’’ were present together (see Mor-

van affidavit, pars. ‘‘10’’ and ‘‘11’’). Yet singularly, it was °

not until April 9,-1965, not more than four or five days be-

fore George Campbell’s refusal to waive immunity, that

the Board of Directors of plaintiff met in special meeting,

‘‘__and accepted the resignation of George — Jr.”’

(Morvan affidavit, par. ‘‘13’’). .

23. Such purported resignation and surrender of his

stock in the plaintiff corporation by George Campbell, Jr.-

prior to and in anticipation of his being called before the

Grand Jury and refusal to waive immunity, is .the entire

basis for this action and motion. With respect to this, de-

fendants respectfully submit: .

(a) That upon the documentary evidence here-

with submitted or. referred to—principally, this

plaintiff’s own various petitions, exhibits, affidavits

and testimony—as well as other circumstances here-

inafter set forth, it is clear that plaintiff has been less

than candid with the District Attorney, with this,

Authority and other public agencies eoncerned, and,\

indeed, with this Court, with respect to the circum-

render of stock.

yA stances of such -purported “resignation” and sur-

Affidavit of Paul W. Hessel

(b) That even if plaintiff ’s interpretation of the

‘contract and statutory provisions in question were

correct—that is, that George Campbell, Jr.’s resig-

nation at any time before his refusal to waive im-

munity was sufficient to preclude the express sanction |

of disqualification provided for therein, and thereby

to frustrate their plain purpose and intent—such

lack of candor, and the other circumstances attend-

ing these purported actions, quite clearly indicate

that they were not actually effective, or taken in good -

faith, or both; that plaintiff has not thereby come

into this Court with clean hands; and that accord-

ingly this action, in- which it seeks equitable relief,

should be dismissed and its motion denied on that

ground alone.

and statutory provisions, upon which it places such

complete reliance, is clearly in error. As will be:

demonstrated in the Memorandum of Law to be sub-

mitted herewith, so long as George Campbell, Jr.

was an officer and director of plaintiff at the time the

.,bids were submitted and the contracts in question

were entered” into, the Authority was not-only justi-

. fied, under their express provisions and those of the

statute, in cancelling the contracts and disqualifying

plaintiff, but it was duty bound to do so ‘immediately

upon receiving the advice from the District Attorney

that Campbell had refused to waive immunity. And

it matters, ®t whether he ‘‘resigned’” four minutes,

or four days, 6four weeks before he came before .

the Grand Jury. ‘As pointed out above, had plaintiff .

pursued the proper procedure provided by Section

2603 of the Public Authorities Law and therein con-

vinced the Court of the good faith and legitimacy of

LS ON ER tate DANA Seid

A91

Affidavit of Paul W. Hessel

such ‘‘ vonlgnation”, and that it should not. be held

accountable for the actions of its erstwhile principal

officer, it might well have obtained appropriate re-—

. lief. But apparently it is unwilling to subject itself

to the probing, in such a proceeding, of the District .

. Attorney (who, with the Attorney General, is the

Bcd proper party thereto) on these subjects.

(d) In connection with plaintiff®s § contention that

the contract and statute are to be inter. eted so: as

to preclude the sanctions of cancellation and disquali- -

, | fication where the officer concerned resigned at any

time before his refusal to waive immunity, it may

interest the Court to know that at least thirteen other

major painting contractors of the Authority involved

in the same investigation, and who had done millions

of dollars of business with the Authority, have simi-

larly had their contracts cancelled and been dis-

qualified’ under these contract and statutory pro-

visions. Upon information and belief, other public

agencies, including the City of New York, have dis-

qualified both these and other contractors. But not

one of them has had the temerity so fortuitously to

provide for such a ‘‘resignation’’, or to claim that

these contractual and statutory provisions could so

conveniently be frustrated and nullified thereby.

24. Assuming that plaintiff’s. ‘iieioucbiliin of the con-

tract and statute are nevertheless correct, deponent now

proposes ‘to set forth the unassailable evidence. above re-

ferred to, and which will & emonstrate what has been above

‘contended, to wit, that plaintiff’s lack of candor herein with -

respect to the purported resignation and surrender of stock”

by George Campbell, Jr., and other circumstances attending |

them, are such that these _alleged actions are not worthy of

credence, or at least evidence such bad faith and ‘‘unclean |

—— A92

+ Affidavit of Paul W. Hessel

hands”? that they cannot be made the basis for the equitable

' relief demanded in this action and by this motion.

25. Plaintiff’s moving affidavit (by George Morvan)

refers to and annexed as Exhibit A (see*par. ‘‘13’’) the

, purported Minutes of a Special Meeting of plaintiff’s

Board of Directors held April 9, 1965, five days before:

\George Campbell’s appearance before the Grand Jury. As

noted above (par. ‘‘22’’ of this affidavit), this was several

weeks after the purported resignation of George Campbell, .

Jr. on.March 26, 1965, at which time and place alk the direc-

tors were apparently present together and immediately —

available for such a Special Meeting. Although one of the

attorneys of record herein was a director of the corporation

and present at such Meeting, and is the corporate attorney,

these Minutes indicate such desperate haste in their prepa-

ration (undoubtedly it was antieipated that at any moment - .

George Campbell would be called before the Grand Jury)

that not only are there obvious arfd,.elementary omissions

_in the actions reported therein, but they are clearly incon-

sistent, in some respects, with statements made by plain-

tiff’s representatives both in the present moving affidavit —

- and elsewhere. Thus: | ; rig

-(a) The Minutes neither contain nor refer to ‘any

Waiver of Notice of such Special Meeting.

(b). ‘The Morvan affidavit states (par. **13”’) that

at this Special Meeting ‘‘—the Board of Directors

‘met and accepted the resignation of George Camp-

bell, Jr.’’ It will be noted that the Minutes say noth-

ing of such acceptance.

_ replace the one resigning. The Minutes.dé staté that

a committee was appointed to select a new president,

and to report in thirty days. However, while George

a ee ee ee

2 agp a acne Sow ating Barone

A93 | \:

Affidavit of Paul W. Pressel

Morvan presently designates himse]f in the moving

affidavit as the president, and the complaint (par.

‘*9’’) implies that he became such almost immediate-

ly upon the resignation of George Campbell, Jr. on

March 26,.1965, it is a fact that as late as. October :

2, 1965, ‘the corporation was still without a president

President. This appears in par. ‘‘21’’ of the peti-

tion of that date, verified by Marian C. Rizzi, as

Secretary, instituting the Article 78 Proceeding

above referred to.

(d) Such petition of Ouicbee 2, 1965 (par. 10”)

alleges that on or about March 26, 1965, togethér with

his resignation George. Campbell, Jr. ‘‘—divested

himself of ‘his stockholdings’’. The present moving

affidavit of George Morvan (par. ‘‘12’’) also recites

that at the time of his resignation George Campbell,

Jr. ‘‘—also disposed of his stock in plaintiff’’. The

complaint herein (par. ‘‘9’’) is to the same effect.

But the Minutes of the Special Meeting of. April 9,

1965 state that it was at that time and place that

George Campbell, Jr. ‘‘—surrendered Stock Certifi-

cate No. 6 in the amount of 10 shares transferred to

George Campbell Painting Corp. to the Directors

of George Campbell Painting Corp, at the meeting’.

(e) This stock was undoubtedly of great valud if

_.the allegations of the vast nature and. volume of

plaintiff’s husiness are to be credited. It will be

noted that its Notice of Claim herein (Exhibit A

- annexed to the complaint) asserts one million dollars

as damages against the Authority alone. Yet there

is not a word in these Minuté’ as to the consideration

or arrangements for the payment for such stock.

Section 513 of the, Business Corporagion Law pro-

i ae

Afdouit of Paul W. Hessel

hibits a corporation from purchasing its own shares, ~

- except out.of surplus. Yet there is no statement in

these Minutes of the existence of such a surplus, or

any reference thereto, or of any financial statement

before the Meeting: showing whether or not such a

surplus existed.

26. After receiving the Notice of Claim of July 2, 1965

(Exhibit A annexed to the complaint, par. ‘‘20’’), the Au-

thority served upon plaintiff and-its attorneys’ a Notice

Tequiring it to submit to examination thereon pursuant to

Section 157, subdivision 3 of the Public Housing Law. A

copy thereof is hereto annexed as Exhibit B-1. It, will be

noted that it requires the submission to such examination

» of any officer, director or employee having knowledge of or

being acquainted with each item of the claim, including,

specifically, George Campbell, Jr. The complaint herein

expressly alleges (par. 10°?) that since his purported

resignation as officer and director on March 26, 1965 George

Campbell, Jr. ‘‘—has been employed as an estimator by

plaintiff—’’. Certainly he was the one best. in a position

to testify as to the circumstances, good faith, validity and

effectiveness of his purported resignation and divestiture

of his stock, which constituted the very foundation of the

claim. Yet not only did George Campbell, Jr. not appear

for such examination but. neither did any officer of the

corporation active in its affairs and having full knowledge

thereof—not even Marian Rizzi, its secretary, and who veri-

fied the Notice of Claim. The only person who did appear

was Theodore M. Ruzow, who, it will be noted, is one of the

_attorneys of record for the plaintiff herein, and who .sub-

| mitted to examination as a director of the corporation. At

‘the examination there also appeared Harry Lipner, Esq.,

his law partner as attorney for the plaintiff, and Albert A.

ee ee i!

; A95

Affidavit of Paul W. Hessel -

Blinder, Esq., who stated that he: was representing the ab-

sent George Campbell, Jr. as an individual.

_ 27. The'record of this examination, held at the Author-

ity’s offices on August 5, 1965, is quite revealing with re-

spect to the matters hereinabove discussed. It will be

- furnished to the Court on the argument of these motions,

. and is hereby referred to as part of the documentary -evi-

dence upon which the cross-motion is based.’ Apart from

the evasions, bickering with Authority counsel, refusals to

answer, and denials of knowledge of material facts with

which the examination is replete, some of the testimony

which was given is herewith set forth, for the convenience

of the Court, to demonstrate the inconsistencies and un-

believable assertions attending the purported resignation

of and surrender of his stock to George Campbell, Jr. ‘Page |

numbers below set forth are those of the reece

record of the examination.

At pages 45 through 47 the following questions were put

to arid answered by Mr. Ruzow:

Q. What consideration was paid ‘dieias W.

Campbell, Jr. on March 26, 1965, for the transfer of

George Campbell Painting Corporation ten shares .

of stock? A. To my knowledge, no consideration

was paid to him at that time.

Q. As a director of the corporation, are you fa-

‘ mniliar with the nature of this transfer? A. Yes.

Q. Will you state the circumstances under which ..

he surrendered the ten shares of stock denominated

_ as’ No. 6 in the stock certificate book? A. He decided

to endorse the certificate to the corporation at the

_. Same time as he resigned as ‘an officer and a director.

These things were done.

Q. Did you ask him why? A. I didn’t specifically

ask him why, no.

A96

Affidavit of Paul W. Hessel

Q. Were you surprised? .A. I don’t want to

characterize my.emotions. I don’t recall them.

Q. No; but, as a director of the corporation,

-when the President comes over to. you and says ‘‘I

resign as an officer; I resign as President; here are

my ten shares of stock’’; now, isn’t-it only normal

to ask ‘‘What’s the idea? What for? What’s the

reason’’? A. I don’t recall making such inquiry of

recall any specific conversation where we developed

the reasons at that time for his conduct. I recall

‘subsequent conversations where we discussed it at

a greater length.

At pages 48 through 50 the following appears:

Q. As a director, you don’t know that Mr. George

W. Campbell, Jr. appeared with Mr. Lipner, your

associate, at the office of District Attorney Phillips

prior to March 26, 1965? A. In spite of the apparent

facetiousness of your questions, I don’t recall that .

I was informed, in my capacity as a director. Of

. course, I was made aware by my partner, Mr. Lipner,

that he did visit the District saree s office with

Mr. Campbell, yes.

Q. When March 26, 1965 came around and Mr.

_ Campbell, Jr. handed i in his resignation as an officer

and director and he asked to sign the certificate

of shares of stock, No. 6, for transfer, you then

knew that he, before that, was at the District

generally that I did, yes. There is a striking simi-

larity between. your questions and the District At-

' torney’s questions. I don’t know now whether I am

being questioned by the District Attorney’s office

Q. Did you make any inquiry of him? A. I don’t.

WEE ne ti eid ath iy Aenea Ms

—_— ie

ae ee he a ees

A97

Affidavit of Paul W. Hessel

or the New York City Housing: Authority, but I’m

prepared to answer all valid questions, nevertheless.

Q. Is it a valid question to ask you to tell the

circumstances under which George .W. Campbell, —

Jr. resigned on March. 26th and at.the same time

transferred his interest of ten shares of No. 6 cer-

tificate to the Campbell Painting Corporation? A.

Yes, it is, and if you would ask me that question I

would be happy. to answer it.

Q. I am asking you that question. State all the

facts and. circumstances. A. The answer is that

Mr. Campbell expressed his conclusion to me that

-+he wanted to resign as an officer and director and

_ Surrender his stock and he prepared a resignation,

it was given to me, the stock certificate was en-

dorsed and that was also given to me, and it was

properly recorded in the corporate books, and that’s

it.

* . Q. You said he -prepared the resignation. He

cannot type; can he? A. I think he can.

At pages 51 to 52:

Q. Can you tell me who drew the resifnation

A. I cannot for sure.

Q. Is your name listed as a witness to that sig-

nature? A. My name and Mr. Lipner’s appear as

witnesses. I know that this was signed at my office,

. which was then 501 Fifth Avenue. I just can’t tell,

you—I. don’t see the pertinency of it but you are a

‘better judge of that, but I just don’t know who ac-

tually prepared the document or typed it.

Q. When was that resignation put into the min-

ute book, what date? A. Shortly thereafter. It

was attached to the minutes of a special “meeting

A98

Affidavit of Paul W. Hessel

of the Board of Directors of: the corporation, which

took place on the 9th sed of — at 10:30 A.M. at

my office.

At page D0:

Q. When did George Caiapbel Painting Corpo-.

ration stop paying George Campbell, Jr., for his

.¢ services to the corpor ation, .if they did stop? A/In

what capacity, sir? |

° Tn any capacity? As president? A. As” presi-

dent, upon his resignation.

Q. And upon the transfer of the rang was he

paid in cash for the transfer of the stock? A. I

have not testified that any ean has been made

to him for the stock.

aa 'Q. Is there.an agreement as to any payment -

be made to him? A. Orally or written? |

' -Q. Is there an agreement? A. To the present

time, no formal agreement has been entered into.

Q. What informal agreement has been made and

between whom has it been made and when? A. I

have not said’ there was a formal agreement. I

~ merely said there wasn’t a formal agreement. .

| Q. All right. Was there an informal agreement!

A. No informal agreement has been concluded. —

-. QQ. What was stated with reference to’ payment

for the stock?) A. The matter has just been gen-~

erally discussed. :

Q. Between whom? . A. Among’. ihe directors. -

Q. Name them, please. A. The directors of the

corporation. *

Q. And what was Siatnitiinils A. No conclusion -

was reached. |

Q. Was any price suggested by Mr. ‘George W.:

Campbell, Jr.?° A. No.

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whale CoN sce aidan ari Gia in ie want ree i Bn Sane

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A99

Affidavit of Paul W. Hessel

Q. Was any price offered “ the directors? AL

_ No.

Q. He was to receive no wiemadion for the

- stock? A. No definite conclusion was reached. .

Q: Any par ticular reason why? A. I cannot ex-

press an opinion.

_Q. Asadirector? A. I cannot express an opinion.

Q. Asa director,: ‘you mean you cannot express an

opinion? A. As a director, I cannot express an

opinion.

_ Q. Who employed George, W. Campbell, Jr., as‘an

employee of George Campbell Painting Corporation?

A. The officers of the corporation.

Q. Which officers employed him? A. I don’t

know’ the specific officer who — him, but it

. would be one of the officers.

At page 60:

Q Will you please state the circumstances under

which George W. Campbell, Jr. was - -employsd by, .

‘George Campbell Painting’ Corporation, indicating.

the place, the time and the conversations or agree-

ments? A. ‘I have no direct knowledge and I ex-

pressed the opinion, inasmuch as you have asked me

for an opinion, that no such formalities. as you have

indicated took place. This is still a fairly small busi-

ness and rfot the New York City Housing Authority.

At page 61:

Q. Now, can. you tell me the Givuminneen under

which he was employed, when, how, who and. the

amount of compensation he is receiving for .that em-

ployment? A. [cannot tell you more than this :'That

he was employed after his resignation as an ‘officer

and director. I don’t know his exact salary. I be-

A100

s .

Affidavit of Paul W. Hessel

lieve it to be substantially less than the salary he

earned as president of the corporation. I don’t know

_ if any specific interview took place for the purpose of

hiring.

_-At page 62 through 64:

Q. Some officer employed him, and I think the offi-

cer who employed him knows more about him than

you do; right? A. I have testified that he has been

employed by an officer of the corporation, that he is

employed, that he receives a salary. Now, what else

do you qant to ask me? ;

Q. I will ask you, will you sities the officer who

employed him? A. I will not. You have asked for

testimony. You have gotten the testimony you have

-asked for.

Q. I am _ not getting the testimony I’ asked for.

‘because I asked for officers and I did not get the an-

_ swer as'to who employed him. .A. Mr. Stein—

Q. You are a director of the corporation? A.I

am a director and; as director, I told you that he has

been properly and politely employed. |

Q: What do, you base your conclusion — A.

Conversations.

Q. With whom? A. With the. officers of vos cor-

poration. |

Q. Name them. A. We went pices this sient

= minutes ago. ;

- Q. You may not have spoken to all of them at the

same time. A. I have not spoken to-them at one time

but we are satisfied to continue Mr. Campbell’s em-

- ployment. . .

- Q. Will you state the time these conversations

took place? A. No. I don’t recall the specific time.

We did not call a mae to discuss it.

Aus lad.

2» *

nik \ochtnein atid mesiaed lind

“Al0k

Affidavit of Paul W. Hessel

_Q. When was the last time you spoke with George

Campbell, Jr.? A. A week ago. ,

Q. Did you ask him anything about his employ-

ment? A. No, There was no need to. 7 .

“At page 40, the Certificate of Stock for ten axes i in plain

tiff corporation allegedly ‘‘surrendered’”’ or “disposed of’’

by George Campbell, Jr. was marked.in evidence, and the

following colloquy with respect thereto appears:

Q. .I have before me a certificate of George Camp-

bell Painting Corporation; No. 6, which has typed in

above the face of the certificate the following: ‘‘The

sale or other disposition of these shares are- restricted

pursuant to terms of a stockholders’ agreement dated ”

the ninth day- of Janggry 1964; a copy of which i is on

file with the office of@e corporation.”’

I now ask you, was Ggorge W. Campbell, JT. a.

‘party to this agreement? A. Yes.

Q. May,I see that agreement, please? A. I re-

fuse to.show you the agreement.

-. 29. ‘A mere comparison of the foregoing testimony with

_ the allegations in plaintiff’s present moving affidavit and

complaint will, it is respectfully submitted, show their

glaring inconsistencies, and the lack of genuineness, good —

faith and even validity of the alleged resignation of and“

‘disposition or surrender of his stock by George Campbell,

.. Jr. As to the latter, most striking is not only the lack of

able stock, but tie fact that its *‘sale or other disposition’’

was expressly prohibited by a stockholders’ agreement re- .

ferred to by endorsement on its face, and which plaintiff’s.

any provision a date for payment for this very valu-

attorney and director refused to produce: Further, while

iM various of the inconsistencies, contradictions, evasions and.

‘ineredible assertions pointed to above may individually

seem. small matters, taken as a whole and. together they

A102

Affidavit of Paul W. Hessel

- ¢ ’ >

should, it is respectfully submitted, persuade this Court

that in seeking equitable relief in this matter of such major |

public importance, plaintiff does: not come before it with

_candor, frankness and comptete honesty—in a word, with

‘*clean hands’’.

30. In addition to what has been stated above, “a ts

--a further substantially conclusive reason why plaintiff’s

motion must be denied and its complaint dismissed. Both

George Campbell, Jr. and plaintiff itself. have been indicted

upon three counts of perjury in the first degree in that, in

‘ submitting the bids to the Authority for the very contracts

here in issue, they falsely swore therein that such bids

were genuine and not collusive or sham. A copy of such

dismiss such indictment and for a bill of particulars-there-

of was,denied. by Hon. Justice Brust of this Court (N. Y.

L. J., Oct. 6, 1965, Special and Trial Term, Part XXIX)-

- The indictment is now pending. As will be amply demon-—

strated in the Memorandum of Law to be submitted here-.

with, it has been settled that under these circumstances this —

‘ public agency would be fully justified in rejecting such a

bidder as not- qualified or responsible, and will not be en-

joined from doing so.

31. Plaintiff’s complaint states in conclusory terme that —

‘‘__as a direct result of defendant’s aétion—”’ it will lose

countless opporffinities to bid upon contracts with public

agencies throughout the United States_ (Complaint, par.

‘*24’’). But the only specitic fact it sets forth in this re-

spect is a letter of rejection from the New Jersey State

Highway Department, which states, as the reason there-

fore ‘‘—that your firm was banned by_executive order of

' . the Mayor of New York until April 27, 1970.” (Complaint,

ar. ‘‘23’’). A copy sf 9 Bxecntve Order_i¢.annexed

ae : ; a.

< t i» : ’ €

A103 -

_ Affidavit of Paul W. Hessel

hereto as Exhibit D. Since. the Authority i is an sichaniiiliset

autenomous public corporation, it is obvious that im any

case, at least in this instance such rejection was not predi-

. eated upon any action taken by it, but by the City of New:

York; and that the complaint in this respect 1 is without sub- |

stance on its face. -

32. There is one final obstacle to the relief demanded

in plaintiff’s motion and: complaint in this action. It has

been pointed out-in par. ‘‘4’’ above that plaintiff instituted

an Article 78 proceeding in this Court for the very relief.

» now sought in this action, that it has served a Notiee of

Appeal from the judgment dismissing that action, and that

that appeal is now pending undetermined. | Accordingly,

as provided by 3211 subdivision 4 CPLR, on this ground

alone this action should be dismissed, unless the Court pur-

_suant thereto makes such other order 1 in the circumstances

as justice may require.

-33. In summary, deponertt smetiieline submits that it .

has: been amply demonstrate by all of the foregoing that

pliintiff’s motion shoyld be denied and defendant’s eross

motion to dismiss the complaint granted, for the following

reasons:

(a) Under the express provisions of the con-

. tracts and Sections 2601 and 2602 of the Public. Au-’

thorities Law plaintiff was properly disqualified

whether or not George Campbell, Jr. resigned as

president and director of plaintiff, and disposed of

his stock therein, prior to his refusal to waive im-

munity. Plaintiff’s interpretation of these provyi-

. sions to-the contrary 4s in error.

(b) Plaintiff has an adéquate and. exclusive rem-

edy, for the relief sought i in this action, in the pro-

- ceeding provided for in Section 2603 of the Public —

¢ , ‘ :

‘A104

s . Affidavit of Paul W. Hessel °

Authorities Law; It will be noted that that section

* provides for such a proceeding whether-the disquali-

fication is made under the mandatory provisions in

these contracts required by Section 2601, or‘pursuant

_to the purely statutory provisions of Section 2602.

(d) Even if plaintiff’s interpretation’ were cor-

. rect, the documentary evidence shows on its face that.

such purported resignation and disposal of stock

were not genuine, in good faith and valid, and that |

in making these assertions -plaintiff does, not come

into this Court of Equity with ‘‘clean hands’’. °

(e) Plaintiff and George Campbell, Jr. being.

_ presently under criminal indictment in connection

with these very contracts, the Authority will be fully

justified in continuing to refuse to accept further bids

from them, and will not be compelled to do so by the

relief sought in this action and motion.

WuEREgORE, deponent respectfully prays that plaintiff’s

. motion herein be denied and its complaint cemmaeed, with

costs.

a Pav W. Hessen

_ (Sworn to January 31, 1966.)

arg saan aR athe Mad ana eabe hy oad W

‘

‘A105 . @

Exhibit A Annexed to Hessel Affidavit

a i Letter”

DISTRICT ATTORNEY

oe OF THE | |

County or New Yorx

155 Leonard Street

New York 13, N. Y.

April 16, 1965.

Honorable William Reid .

Chairman of the New York City

Housing Authority

250 Broadway

Rp: People v. adi Doe et al.

'- Dear Mr. Reid:

Following my letters of April 8th and April 14th, 1965,

and in, conformance with Section 103-b of the General Mu-

nicipal Laws, this office advises you that Mr. George Camp-

bell, Jr. of the George Campbell & Co. and George Camp-

bell Com, Pet at 40-11 49th Street, Flushing, New

York, and Vincent B. Turecamo of the Ryan-Turecamo,

Inc. of 275 Madison Avenue, New York City, refused to

sign waivers of immunity before the New York County

Grand Jury referred to in my letters of April 8th and 14th.

We would appreciate being advised as to what action

your agency fakes in this matter.

Sincerely, .

Frank 8. Hogan

District Attorney

MHM/en a

~~ Gentlemen:.

A106 _

Exhibit B Annexed to Hessel Affidavit

"Letter

"[uerreRHEaD oF] ;

NEW YORK CITY, HOUSING AUTHORITY

, | April 21, 1965

George Campbell Painting Corp. ae a

- 40-11:'149th Street —

Flushing 52, New York | ~-

Re: Contracts Nos.

PD 65-5A (McKinley, Meeits &

Morrisania)

_ PD 65-10C (First & Riis (F & C)

PD. 65-14B (Lehman & Taft)

The Authority has been’ officially informed by the Dis-

trict Attorney of New York County that George Campbell,

Jr., an officer’of your company, has refused to waive im-

| niunity when subpoenaed to testify before the Grand Jury —

of that county in connection with a pending investigation

to determine whether the crimes of bid. rigging on public

contracts, bribery of a public officer, bribery of a labor offi-

cial, extortion, coercion, assault, and conspiracy to commit

each of these crimes, has eee? in New York County.

Please take notice that wy reason of the hence and:

‘pursuant to the provisions of Seétion 38 of the General °

Conditions 6f the above contracts, the Authority has di-

rected, and you are liereby advised, that such Contracts be

and they hereby are cancelled and terminated, effective

GAS NON GAR antic LHR on G8 LANs

”

BR.

ne a erase.

Exhibit B Annexed te H essel Affidavit

‘iumodintely. You are Siaeted to remove immediately

from each of the projects covered by the above Contratts

all your materials and equipment. |

rd is e . ‘

Please take. further sotios that: in accordance- with the -

further provisions of said Section 38 the Authority has di-

rected, dnd you are hereby advised, that said George Camp-

— bell, Jr., and any firm, partnership or corporation of which

he is a member, partner, director or officer, including your

company, has been and will be disqualified from selling to

or submitting bids to or receiving awards from or enter-

ing into any contracts with the Authority for goods, work

or services, for a period of five (5) years after such refusal.

Yours very truly,

q =

Gerald J. Carey

7 . #° “ ‘General Manager

CERTIFIED Mar _ - epee

Return Receret REQUESTED

A108

. Exhibit B-1 Annexed to Hessel Affidavit

Notice: of Examination -

a — ———____—

In the Matter of the Claim of George Campbell Painting

Corp. dated July 2, 1965 relating to Contracts Nos. PD 65-

5A (McKinley, Morrisania and Morris Houses), PD 65-10C

. (First and Riis Houses) , and PD 65- 14B (Lehman and. Laft -

Houses), . , | N

against

New York City Housing Authority.

Sins:

Pease Take — that the New York City Housing ,

Authority, pursuant to the provisions of Section 157,-sub-

' division '3, of the Public Hovsing Law, requires George

Campbell Corp., the claimant named in the above entitled

caption, by its president, and any officer, director, or em-

ployee having knowledge of or being acquainted with each

item of said claim, including specifically, but not limited

to, George Campbell, Jr., to appear at the principal office

of the New York City Housing Authority, 250 Broadway,

New York City, Room 624, on August 5, 1965,jat 11:00 A.M. .

of that day, to testify under oath with respect to each ahd |

every item specified in its notice of ebtint dated July 2,

' 1965 and to answer orally as to any facts relative to the

adjustment or disposition of such claim. ’

Pizase Take FURTHER Notice that the New York City

Housing Authority requires that-George Campbell Paint-

ing Corp., at the time and place-of said hearing, make’

: all

To:

A109

Exhibit B-1 Annexed to Hessel Affidavit. ~

available to the Authority for its examination, on matters

relating to each item of said claim the following:

1. Certificate of Incorporation, with amendments, if

any, of George Campbell Painting Corp., the minute book,

stock book, transfer book of George Campbell Painting:

Corp.-

2. All dovumhente, igi and correspondence bearing

upon and relating to the connection between Mr.-George ~

Campbell and George Campbell Painting Corp. in his ca-

- pacity as President, officer, employee and stockholder.

3. Last Will and Testament of George Campbell, Sr.

apers and proceedings ‘counécted thereto.

4. All records, documents, ‘contracts, books ome writ-

ings bearing upon and relating to the sum of $1,000,000

which sum is claimed as damages by. George. Campbell

Painting Corp. in its notice of claim served upon the Au-

thority.

Dated: New York, N. Y., July 20, 1965

Yours, ete.

&,.

.' Harry Levy, Counsel,-

New York City Housing Authority,

250 Broadway

New York, N. Y. 10007

- °433-5175 .

Ruzow & Lipner, Esgqs. ee —

201 E. 42nd Street ae | 7m

» New York City |

Attorneys for Claimant

L S P

Surrogate’s Court, Queens County, and copies of |

A110

Exhibit C Aansaxed to. Hessel Affidavit

es Indictment :

SUPREME COURT OF THE STATE OF NEW YORK —

Dounry OF New York

ae 2 ——

Tue PEOPLE OF THE StTaTE OF NEw YorREK

: * against |

Grorce W. CAMPBELL, JB.

| and

Xe piae “@EORGE Casievens. Parntinc Corp.,

‘Peete

. . The Grand J ury of the County of New York, by this

indictment, accuse the above-named defendants of Perjury

- in the First Degree, committed as follows:

The diiadenta, i in the County of New York on or about

‘October 15, 1964, did commit perjury with réspect to a ma-

terial matter on’an occasion ‘in which an affirmation was -

required by law in that said defendants did unlawfully,

knowingly, wilfully and falsely affirm! as true the following

non-collusive bidding statement:

‘‘That this bid is genuine and not an or sham.

That said bidder has not colluded, conspired or con-

nived * * * to fix the bid price * * *”’

—_— | | .

Exhibit C Annexed'to Hessel Affidavit

Said false non-collusive bidding sictument was sub-—

: mitted to the New York City Housing Authority in con-

. nection with an official bid tendered to said authority for

the purpose of securing a contract to furnish the-said au-

thority with materials and services. -

Szconp Count: |

Anp THE Granp Jury ArorEsaID, by this indictment,

further accuse the defendants of the crime of Perjury. in

the First Degree, committed as follows: .

The defendants, m the County of New a Gene

October 20, 1964, did commit perjury with respect to a

material matter on an occasion on which an affirmation

was reyuired by law in that said defendant did unlawfully, -

knowingly, wilfully and falsely affirm as true the follow-.

ing non-collusive bidding statement: *%

‘<That this bid is genuine and not collusive or sham.

That said bidder has not colluded, conspired or con-

nived * * * to fix the bid price * * *”’

Said false non-collusive bidding statement was sub-

~ mitted to the New York City Housing Authority in con-

nection with an official bid tendered to said atithority for

. the purpose of securing a contract to furnish the- said au-"

thority with materials and services.

Trp Count:

wah abe Mie hw

ee wpe rd ake ob ws

“eee

AnD THE Granp Jury) AForzsan, by this indictment,

further accuse the defendants of the crime of Perjury i in

the First Degree, committed as follows: |

’ Tor -

DAA eer baen ra wet eB

The defendants, in the — of New ‘York on or about

November 30, 1964, did commit perjury with respect to a

A112

Exhibit C Annexed to Hessel Affidavit

material matter on an occasion on which an i ale

. . Was required by law in that ‘said. defendants did unlaw

™ ally, knowingly, wilfully and falsely affirm as true the

ollowing non-collusive bidding statement: _

‘'That this bid is genuine and not collusive or sham.

That. said bidder has not colluded, conspired or con- .~

nived * * * to fix the bid price * °-*”’

Said false siipeiiiailine bidding statement was sub-

mitted to the New York City Housing Authority in con-

nection with an official bid tendered to said authority for

the purpose of securing a contract to furnish the said

authority with materials and services.

Frank 8. Hogan _

District Attorney

- 3

’ All13

- Exhibit C Annexed to Hessel Affidavit

No. 1D

THE PEOPLE oo THE StaTE or New York

against ,

Gzorce W. CaMPBEL, JR.

and

Grorce CaMPBELL Parntine Corp., \( NA)

Defendants.

.. INDICTMENT

_ Persury in rat Fst DEGREE »

Penal Law Sect. 1620-a

Frank S. Hocan ;

. | : District Attorney

; X ‘

« A Trvse Bux

a v Foreman

* A114 :

Exhibit D Annexed to Hessel Affidavit

Executive Order

Brsovrs Orver No. 138

To: - Heaps or AL DEPARTMENTS AND AGENCIES’

F Rom : Rosert F. Wacner, Mayor

Supsect: DisQUALIFICATION OF CONTRACTING Firms

‘Section 103-b of the General Municipal Law provides | :

that upon the refusal of any person, when called before a

grand jury (a) to testify concerning any transaction or

contract had with the State, City or any of their agencies,

(b) to sign a waiver of immunity against subsequent crim-

inal prosecution or (c) to answer any relevant question con-

cerning such transaction or contract, such person, and any

firm, partnership or corporation of which he isa member,

partner, director or officer shall -be disqualified from. sub-

mitting bids or entering into any contracts with any munici-

pal corporation for a period of five years after such refusal.

The officer conducting the investigation before the grand

jury is required t6 advise the various governniental agen-

cies involved.

- Whenever a City Department or City Agency, has been

officially informed by a District Attorngy of the names of

any firm, partnership or corporation,6f which a member,

. partner, officer or director who has so refused, the Depart-

ment or Agency shall take the following action:

1. Each sentonst with such firm, partnership or corpo-

ration shall be cancelled or terminated, subject only to pay- -

ment of any monies owing for goods delivered or work done

prior to such cancellation or termination.

April 8; 1965 —

i a ee ee

Ne PO Dad diate te. Suede wR

one PA

ee enya ae ee

|. To oe

Recs

ia istrative

A115

Ethibit D Annéxed to H essel Affidavit

2. Such person, and any firm, partnership or corpora-

tion of which he is a member, .partner, director or officer,

shall be disqualified from thereafter selling to or submitting

bids to or receiving awards from or.entering into any con-

tracts with the Department or Agency for goods, work or

services for a period of five years after such refusal.

This order shall take effect immediately.

Rosert F. Wacwer

Mayor

3 «

“New York 7, N. Y.

“Aus

‘Exhibit D Annexed to H essel Afidavit .

_ [uerrernEap oF]

CITY OF NEW YORK

OFFICE oF THE Mayor

April 8, 1965.

ExectTive — No. 138 dinainn No. i

To: | ‘Heaps oF ALL DEPARTMENTS AND kamen

From : | : Rosert F. Wacner, Mayor

Susgect: DisquaLiricaTion oF Certain ConTRACTING Firms

Official notification has been received from the District

Attorney of New York County that the following persons

. have refused to sign’waivers of immunity when subpoenaed :

to testify before the Grand Jury of New York County.

‘1. Max Gerben, of Gerben Contracting Corp., 2031 129th

Street, | College Point, ‘N ew York.

2. Jerry i erome, of Jered ‘Contracting Corp. me East 42nd

_ Street, ‘New York 17, N. Y.

_ 8.. John Loconsolo, of Jack Loconsolo & Co., Ine, 2660 —

. Coney Island Avenue, Brooklyn 23, N. Y.

4, Sam Puseshies ‘of Dunrite Painting & Decorating Co., i

. 14% Seabury Place, New York 60, N.Y.

OB. Arnold Marcus of Marcus Decorating Co, * ‘Church |

Street, New York 7, N. Y.

6. Melvin M. Bloom and Howard Bloom’ of Surf Painting

Co., Inc., 3838 Flatlands Avenue, Brooklyn 34, N. Y:

- AlI7

Exhibit: D Annexed to Hessel Affidavit E

7. Pleimeel Garfinkel of Garfinkel Decorating mae

~ Ine., 90-50 Parsons Boulevard, Jamaica 32, N. Y. |

; 8 pron vem _ of Abraham Kaplan Co., used 1847

Utica Avene, Brooklyn, N. Y.

9. Benjamin Fishbein of Benay — Co., also known

as the Hast River Painting Co., 157A Sherman Avenne,

New York 34, N.Y. 2.#

In accordance with the policy set forth in Wieseutive

| Order No. 138 all: City. Departments and Agencies are di-

rected to take the necessary appropriate action immedi-

ately.

——— F. Wisum

_ Mayor

Allg. /

Exhibit D Annexed to Hessel Affidavit

[LETTERHEAD OF ]

OFFICE OF. THE Mayor

New York 7, N. Y.

April 27, 1965

Executive Orper No. 138 AppENDUM No. 2 ,

To: | Heaps or ALL DEPARTMENTS AND AGENCIES

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