Appendix — George Campbell Painting Corp. v. Reid

Opinion by Tilzer, J.

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

This is an article 78 proceeding instituted by silting

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 petitione® 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 en alleges that George Campbell, Jr., resigned

on March 26, 1965, as @m officer or directér of petitioner,

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

holdings. Tliat since that date, he had been employed as —

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

tail any management fuyetions., 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 resignation and divestiture of his stock

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

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

for this proceeding.

014

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, séction 2601,

requiring that a clause shall be inserted in all- contracts

with any public authority created by the state for work or

services performed or'to be performed or goe6ds 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-

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

a ing to or submitting bids to or receiving awards from or

entéring into any.contracts with, any public authority. for

as 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. | ee

‘Respondent received a letter from the District Attorney

of New York County 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 er corporation: of which he is a member,

partner, director or officer, from entering into contracts

with the authority for-a period of five years. Petitioner

was‘so informed by letter of the Authority. This letter

states that such action was taken pursuant to section 38

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

~# ls

em 15

°. : , ; «

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 sand way of plenary suit based on the contract.

, The fact that section 38 of the General Conditions of

ihe. 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-

traetual matter between the Authority and the petitioner.

Here it appears that petitioner has a remedy esi upon

contracts with respondent.

, The scheme of the Public Anitheritton Law provides not

one, but two means by which the penalty of disqualification

may be invoked against a recalcitrant contractor refusing

to cooperate in a grand. jury investigation involving public

' contracts. Thus, section 2604 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, providés 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

those 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

to a plenary suit: Settle ae

Ne

.

-

Opinion of Schweitzer, J.-

(N.Y.L.J. March 8, 1966)

Plaintiff-painting contractor instituted this action for

a permanent injunction of the enforcemnent by defendant

the New York City Housing “Authority of the disqualifica-

tion and barring of plaintiff from bidding on public con-

tracts with the aforesaid authority for a period of five

years. At this initial stage of the lawsuit, plaintiff applies

for a preliminary injunction which would, during the in-

terim trial period, afford plaintiff the same reliof as the

ultimate remedy sought. Defendant has cross-moved for

an order dismissing the complaint upon, amongst .other

bases, the ground that another action is pending between

the same parties for the same cause of action (CPLR 3211

[a] 4); An article 78 proceedirig had ‘been instituted by:

plaintiff in the instant action for. an order annulling the

subject determination by the New York City Housing. Au-

thority, and examination by both pleadings lends support

to ‘the contention by defendant. The application was de-

nied and the petition dismissed without prejudice to a

plenary suit as the court was convinced that an article 78

proceeding was not appropriate. At present, an appeal is

pending from this judgment of dismissal. Logie and the

rationale of. fairness underlying CPLR 3211(a)4 require.

that, under the present circumstances,}we adopt the view

that ‘** * * an action in which “ys nt has been ren-

dered is deemed to continue to® ee an appeal

*** (Apelbaum v. Apelbaum, 16 Misc. 2d 636, 638; see

4 Weinstein-Korn-Miller, New York Civil Practice, pars.

3211.25-3211:21).\ Accordingly, defendant’s cross-motion

is granted in so far as-it has been interposed pursuant to.

-_—

_ CPLR#3211(a)4 and only to the extent’ 6f staying the in-

stant ‘action pending final determination after appeal or

termination, in any fashion, of the aforesaid appeal or ter-

mination, in any fashion, of the aforesaid 78 proceeding.

Within the context of the foregoing disposition, the appli-

cation by plaintiff and the remainder of the relief requested

in the cross-motion are, consonant with the’ foregoing, not

considered, and leave is granted to renew at any appropri-

ate time. Settle order.

“

Opinion of the Appellate Division

275 N.Y.S. 2d 363 (ngtbfficially reported)

x

Order and judgment (one paper) seins affirmed,

with $50 costs and’ “di sbursements to- the respondents.” “No

opinion. Order filed. a= ——

o

"Opinion of the Appellate Division

26 A.D.2d 365, 275.N.Y.S. 2d 365 -

, Order, entered on March 21, 1966, granting defendants’

cross-motion to dismiss the complaint pursuant to CPLR

3211(a) to the extent only of. staying the action for a

permanent injunction, pending a final determination of the

article 78 proceeding instituted by plaintiff in this action

against defendants in this action, unanimously modified on

the law and on the facts, with $50 costs and disbursements

* to defendants-respondents-appéllants ‘and complaint dis-

‘ missed. The complaint is insufficient because. plaintiff is

subject to the contractual agreements. it made and because

. on the present allegations plaintiff doeg not establish’a case

for — relief. Order filed. ,

y-4

hae

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Opinion of Court of ‘ne State of New York

/ 20 me 2d —

Stare: OF _ Yorx —

-* ; h j re 4 :

0 COURT OF APPEALS si

| co TITLE]

a

Per CurrM:

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 the Public Authorities Law

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

‘fore a grand jury investigation bid-rigging and refused to

sign a waiver of immunity.

- We hold that section 2601 of the Public Authorities Law et

is constitutional (Matter of Gardner v: Broderick, 20 N Y

2d 227, decided herewith) and ‘that the disqualification im-

posed on the appellant. corporation-is valid. The fact that

the appellant’ s officer resigned his position and that the

resignation 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

relationship of the individual officer with the corporation |

occurs almost. contemporaneously with his refwsal to sign

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

nation was tendered and accepted solely for the purpose

:

ORB cet carte nirrr ites nee tn ~e

concur except Breitel, J. taking. no part.

19, 2 ae :

of avoiding the statutory disqualification, the person so

resigning or otherwise departing shall bé deemed to have

acted in his capacity as a corporate officer when he refused

to sign the waiver.

There may, be times when the statute will operate to

penalize a corporation which had apevered 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)7 The appellant’s exclusive

remedy is the procedure outlined in that statute. —

TH orders of the Appellate Division should be affirmed ©

with costs’. - ore,

Order affirmed, with costs.: Opinion Per Curiam. All

‘

i * 20

7 Strate or New Yorx

COURT OF APPEALS |

ae CU

In the Matter of |

vf the Application of Robert Vincent Gardner,

; Appellant,

For an Order &c. —

vs.

Vincent L. Broderick, as Police Commissioner of the

' City of New York, & ano.,

=m Respondents.

Y

/ ° . 4.

Foutp, Ch. J.:

In this article 78 proceeding, the petitioner seeks rein-

statement as a patrolman in the New York City Police

Department, claiming that he was dismissed solely for re-

fusing to waive his privilege against self-incrimination and

that it was unconstitutional for the Police Commissioner

to discharge him on that ground. In August of 1965, a New

York County Grand Jury was investigating accusations of

bribery and corruption of’ police officers in connection with es,

illicit gambling operations. “The petitioner,~ then ider

departmental charges, was subpoenaed to appear before |

the grafid jury.’ After. being advised of the investigation -

and that the grand jury desired to question him concerning . ‘

the performance of his official duties, he was requested to

ID wnt ictcsercrtccaieminrncisns

a. oe. ~

21

sign a limited waiver of immunity — ‘to waive irnmunity

from prosecution ” for any misconduct i in office disclosed by

‘his testimony—as provided in section 1123 of the New York

City Charter. (See, also, N. Y.-Const., art. I, §6.)* The

petitioner was also informed that, under both the Charter

and the Constitution, he was required to sign the waiver

and that, if he refused to do so, he would be discharged: from

his position as a police officer. He refused to execute the

waiver and, following an administrative hearing, was dis-

missed from the force. °

It is clear, and was so understood by the petitioner, ‘that

section 1123 of the Charter required him, as a condition of

his continued employment by the police department, to

waive his constitutional privilege against self-incrimination

and to answer questions regarding the conduct of his office

and the performance of his official duties. Such provisions

have been upheld in thé past (see, e.g., Nelsou v. Los An-:

geles County, 362 U. S. 1) and, althotigh the Supreme Court

has indicated that the question may still be an open one

- Section, 1128tof the City Charter provides, in part, that, if

any employee of the City “shall * * * wilfully refuse or fail to appear

before * * * any officer, board or body authorized to conduct any

hearing ‘or ‘inquiry, or having appeared shall refuse to testify or to

answer any question regarding * * * official conduct of any officer or

employee of the city or of any * * * county, on the ground that his

answer would tend to incriminate him, or shall refuse, to waive im-

munity from prosecution on account of any such matter in relation

to which he may be asked to testify upon arly such hearing or inquiry,

his term or tenure of office or employment shall terminate and such

office or employment shall be vacant.”

And section 6 of ‘article I of.the State Constitution declares, inso-

far as relevant, that “No person shall * * * be compelled in any

criminal case to be a witness against himself, providing, that any

public officer who, upon being called before a grand jury to testify -

concerning the conduct of his.* * * office * * * or the performance of

his official duties * * *, refuses to sign a waiver of immunity against

subsequent criminal prosecution or to answer any relevant question

concerning such matters before such grand jury, shall by virtue of

such refusal, * * * be removed from his * * * office by the appropri-

ate authority.”

a ee 4

2 . ence ;

7 ,, , . © - i . \

22

(see Spevack v. Klein, 385 U. S. 511, 516, n. 3; Stevens v.

Marks, 383 U. S. 234}243), we find ‘no constitutional defect ,

in the statute as it‘applies to this petitioner.

In Garrity v. New Jersey (385 U.'S. 493), the Supreme

Court, deciding that the government may not use ‘‘the

threat of discharge to secure incriminating evidénce’’

against a public employee, held that a police officer could

not be compelled to waive his constitutional privilege

against self-incrimination by threats that he would other-

wise be removed from office, The testimony obtained under

such circumstances was ruled to be inadmissible in subse-

quent criminal proceedings brought against him. Thi® de-

. cision undoubtedly had the éffect of partially invalidating

section 1123 of the New York City Charter as well.as section

6 of article I of the New York Constitution. But nothing

decided in the Garrity case bears on the issue in the pres-

ent case. If the petitioner before us had’executed the

waiver required by section 1123 and then testified about

misconduct in office, his testimony, though inadmissible in

a criminal prosecution, would, nevertheless, have furnished

sufficient cause to justify his dismissal from the police

force. (Cf..Ullman v. United States, 350 U. S. 422, 430-

431.)

. In point of fact, the petitioner did not execute webs waiver

and stood on his constitutional privilege against self-in- -

¢rimination when. notified that he was to be questioned

about malfeasance as a police officer. Such information - -

patently bore upon his fitness to remain in office, informa-

tion which the public had a right to know and the petitioner

was under a duty to reveal. Hjs refusal to speak on the

subject constituted ‘“employeé insubordination for failure

to give information which * * * the State has a legitimate

interest in, securing” (Nelson v. Los Angeles County, 362

e’

‘a

23

r

U.S. 1, 7, supra; see Spevack.v. Klein, 385 U. S. 511, 519,

supra [per Fortas, J., concurring]), and, consequently, he

was properly dismissed from the police fotce. (See Cante-

line v. McClellan, 282 N. Y. 166; Christal v. Police Com. of —

San Francisco,,83 Cal. App. 2d 564; Cunningham v. Civil

Servicé Com’n, 48 Hawaii 278; *Fallon v. New Orleans Po-

lice Department, 238 La. 531; Souder v. Philadelphia, 305 -

Pa. 1). Although people i in wibtin office and on the public

- payroll may not be compelled to surrender. their constitu-

tional privilege against self-incrimination (see Garrity v.

N ew Jersey, 385 U. S., 493, supra), they have no constitu-

tional right to remain in office when they refuse to discuss

with frankness and candor whether they have faithfully

performed their duties. as

' In Spevack v. Klein (385 U. 8. 511, ni’ the Supreme’

Court held that an attorney. could not be compelled, upon

pain of disbarment, to waive his privileg2 against self-

incrimination andtestify. about his professional conduct.

| (See, also, Matter of Cohen, 7 N Y 2d 488, 498 [dissenting ~

‘opinion J.) However, a lawyer, though licensed by the

-State—like a doctor, barber or chauffeur—is not, as Mr..

Justice Fortas pointed out in his concurring opinion in the -

Spevack ease (385 U. S., at p. 520), ‘fan employee of the -

State. He does not have the responsibility ofan employee

to account to the State for his actions.” The petitioner,

however, did have such a responsibility and his refusal to

carry out that responsibility rendered him subject to re-_

‘moval from his position of public trust and confidence. ;

The order appealed from should be affirmed, without

costs. ~ |

Order affirinéd, without costs. Opinion by Fuld, Ch. J.

All concur.

’

es : 5

“24

an

New York State Public Authorities Law

“2601. Ground for Piesostbiliiee of Geitvast ‘

‘by Public Authority” :

A clause shall ‘be inserted in all dius or con: -

tracts hereafter made or awarded by any public‘authority | |

or by any official of any public authority created by the

state or any political subdivision, for work or services per-.

- formed or goods sold or to be sold, to provide that. 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 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 j

authority, to sign a waiver of immunity against. subsequent

criminal prosecution or to answer any relevant question

concerning such transaction or. contract.

- (a) Such person, and any firm, partnership or corpo-

ration of which he is a member, partner, director or officer

shall ‘be disqualified from thereafter selling to or submit- .

ting bids to or receiving awards from or entering into any

contracts with any public authority or official thereof, for

goods, work or services, for'a period of five years after

. such refusal, and to provide also that ao

( ‘b) any and all contracts made ‘with any” public author-,

ity or official thereof, since the effective - date of. this law,

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 public authority

without incurring any penalty or damages on account of

such ¢ancellation 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.’’. |

“¢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 of the state .

or of any political subdivision thereof .or of a public au-

thority, refuses to sign a waiver of immunity against sub-

sequent criminal * prosecution or to answer any relevant

question concerning such transaction or contract, and any |

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

partner, director or officer shall be disqualified from there-_

after selling to or submitting ‘bids to or receiving awards |

from or entering into any contracts with ariy public au-

thority or any official of any public authority created by

the state. or any political subdivision, for goods, work or

services, for a period of five years after. such refusal or un-

til a disqualification shall be removed pursuant to the pro-

visions of section twenty-six hundred three of this title.

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

| gation before the grand. jury before which the refusal oc- .

curs to send notice of such refusal, together with the names

of any firm, partnership or corporation of which the per-

son so refusing is mar we 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 mem-

26

ber, partner, director or officer, is known to have a con-

tract.’” |

“62603 Removal of Disqualification of Public

| Contractors by Petition

1.. Any firm, partnership or corporation which has be-

‘come subject to the cancellation or termination of a con-

tract or disqualification to contract on account of the re-

fusal of a member, partner, director or officer thereof to.

waive immunity when called to testify, as provided im sec-

tions 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 ata special term of the su-

preme court held within the judicial distriet in which the

refusal occurred for a. judgment discontinuing the dis-

qualification. Such. application shall be in the form of a

petition setting forth grounds, including that the coopera- -

tion by petitioner with the grand jury at the time of the

refusal was such, and the amount and degree of control

and financial interest, if any, in the petitioning firm, part-

nership or corporation by the member, partner, officer or

- director who refused to waive immunity is such that it

will not be in the public interest to cancel or terminate pe- |

titioner’s contracts or to continue the disqualification, as

provided: in sections 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 notiees to be given pursuant to. this

subdivision.

e

. .

iis wir ttitetswicrrnres cet Meee

27

‘2.. Upon the filing of such petition the court may stay

as to petitioner, pénding a decision upon the Pp ‘ition, the

cancellation or termination of any contracts resulting from —

. such refusal. upon such terms as to, notice: or otherwise as

may be “as

.

_ 8. At least two days prior to the return day, the offi-

cer who conducted the investigation before the grand jury

and the attorney general may file answers to the petitioi#

or apply for judgment dismissing the petition as a matter

of law. On or before the return day the petitioner may file

— reply to the answer.

2

4. Upon the return any the court may, upon the peti-

‘tion and answer and other papers filed, forthwith render

_ such judgment as the case requires, or if a triable issue of

fact is duly raised, it shall forthwith 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 reference under this subdivision. 3

5. The court shall render judgment dismissing the peti-

tiori on the merits or discontinuing the disqualification upon

the ground that the public interest would be served by its

discontinuance, and: granting such other relief as to the

cancellation or termination of ‘contracts as may be appro-

priate, but without costs to petitioner.”’