Appellants Brief — George Campbell Painting Corp. v. Reid

.

wethe 2@ae.

JPREME COURT. U. &

IN THE

—_— Court of the Wn

October Term, 1967 JOHN F. DAVis, CLERK

iad =

9 1968

Staten

No 673

| ‘GzoncE CampBeLt Paintin Corp., |

%. , ) | Appellant,

| * against .

Wiu.umM Ren, ‘Francis V. Manican, Ina S. Rossixs, Mem- .

bers of the New York City Housing ease and —_

New York City Hovstne AUTHORITY, ’

- Appellees.

ie

: Gzorce CamPBELL Parntine Cogp., = ~° —

| “ Appellant,

3 Fad os. against

We u Reip, Francis V.. Mapican, Ina S. Ropsins, Mem-

bers of the New York City Housing Authority, and THE

New York City Housine Autuoriy,

‘A ppellees.

On Appeal from the Court of higainsil: of. the -

State of New York

-

APPELLANT’S BRYEF

TuEopore M. Ruzow

Attorney for Appellant

201 East-42nd Street

| New York, New York 10017

Auserr A. BLINDER aoe eee

Harry Lipner | = a4

STEPHEN ‘HocHHAUSER ae }

. Of Counsel ae

a

rere baa ah i aie ck aad

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.

.

OL LBB AS caltag yaPB iAb etiane EES Pee A ee

IT EOE LATE MERE AE LTE

Special proceeding commenced pursuant to CPLR |

— lk eee Reovabiclincubindessqpencamacmnanaetons " 2

Plenary action ............... mciepusionsijuasaeebnimeceneteeaanlseieiids

| JURISDICTION ...........eeeeee eee Tenet beet SEAS Anke, 200 ie 2

CoNSTITUTIONAL PRovIsIONS AND STATUTES Ixvotvep ag 3

> Qomorsoms PRMMBITED ...............0005icccscccccscscsesccevoscesseenencsesere 3

STATEMENT OF Facds cae Samet cuamnaee Seamthcoies 4

. , . e .

Pe aay mes an

‘PROCEEDINGS BELOW .................:c:ccssceeeeeees ss aevc anole aah 8

. rs

‘Summary or ARGUMENT 0000.00... een snndamtaigace 8

ARGUMENT T—The economic sanction . imposed by |

the: New York State Public Authorities Law ‘%

' against Appellant is repugnant to and prohibited ,

by the Fourteenth Amendment ....................0.....0. 9

A.’ The Test Prior to Spevack: Due Process’... 10.

B. The Privilege ‘Against Self-Ingrimination .. 11

C. The New York Court of Appeals’ Apilioation

of Spevack seasbs secceeedeceecteneeeeennnnnnunananeen yottlige snore 13.

Arcument II—The imposition of .a Vicarious penalty

' against a corporation which disavowed the acts of

-its former president is repugnant to the Due

Process Clause of the/Fourteenth Amendment... 15

than. Aes ao Tet ih 6 ot 0 Aen LE eM soln it lite BE SA Ath ie a Pot ee we ieee: ee AA Path aN scene PA ath OR Nate Llp Nee at pilD 5 Bae min), iwi

It

Arcument III—Section 2601 of the New York Public

Authorities Law imposes. unconstitutional condi-

tions on those doing business with the State and

its RES EE MAR OPES “Et ieaer are ponnmnanilbiie

I badiciosmescacacrntbronchsnnsremmnnepao roa.

Appeypix TO APPELLANT ’s BREF

New York State Public Authorities Law

§2601 Ground for Cancellation of Contract by

Oe NN aos cscinncischensocdcovecvnandsBiaiencnnsnes’

§2602 Disqualification to Contract with Public

cate hesicnttns

§2603 Removal of Disqualification of Public

;Contractors by Petition 00.0.0... y

New York State Code of Criminal Procedure }

§253. Grand jury must inquire as to persons im-

prisoned on criminal charges and not in-

dicted, and the misconduct of public officers

§253-a. Grand jury reports . SE ree a seedltiaac

$258, Secrets of the grand jury to be kept ...... =

‘oe York State Penal Law : E }

§2447. Witnesses’ et Fie aiscap eovoaoatiobs exe

United States Constitution

Amendment XIV. —Citzenship; Privileges arid

- Immunities} Due Process ; Equal Protection ;

Apportionment of Representation; Disquali-°

a fication of Officers; Public Débt; Hnforce-

— aciuhidboiuasidabeaeitadacaninnt p sislekaaaepthadlensaeadaich da

PAGE —

18

20

21

22

23

28

5 |

VA

ee

Ill

TABLE OF AUTHORITIES

Cases:

Application of Grand Jury Report Concernigg Its In-

vestigation of Certain Television Quiz Programs, —

19 Mise.2d 682, 193 N.Y.8.2d 553 (Sup. Ct. a

hic: I oasis ar coecotiein acids tcncergiasmesmcntiaeiounes 13

Arglo Painting Corp., Matter of, v. Board of Educa-

tion, 47 Misc.2d 618, .263 N.Y.S.2d 124 (Sup. Ct. ‘

Kings Co., 1965) ........ , ates wees near mamas 16 -

¥ ,

Beilan v. Bodrd of Public Education, 357 U. S. 399,

2 L.ed.2d 1414, 78 S. Ct. 1317 (1958) oo... 10, 12

Caristo Const. Corp. v. Rubin, 10 N.Y.2d. 538, 225

ica ieeinsimrincarinion 14

Cohen v. Hurley, 366 U. 8. 117, 6 L.ed.2d 156, 81 g, Ct. .

I I hee ores dich altace 12

Frost v. Railroad Cenledhink 271 U.S. 583, cia L.ed. :

©, 1101, 46 S. Ct. 605 (1926) oon ecceeeeeeee ae. ee

Gardner v. Broderick, 20 N.Y.2d 277, 282 N.Y.S.2d 487,

229 N.B.2d 184 (1967) ......op-.. ‘hate a ler 12, 13

Garner v. Board of Public: Works, 341.U. S. 716, 95 ©

L.ed. 1317, 71 S. Ct. 909 (1951) eco eeccccecccseecsseece -

’ Garrity v. New Jersey, 385 U.S. 493, 17 L.ed.2d 562,

87 S. Ct: 616 (1967) .......... cdc haul aa a: -

Gault, Matter of, 387 U. S. 1, 18 L.ed.2d 527, 559, 87

SG)... a

Grae; In re, 282 N.Y. 428, 20 N.E.2d 964 (1940) .......: |

‘ Grand Jury, January 1967, In re, 52 Mise.2d 895, 277:

N.Y.S.2d 105 (Sup. Ct. Cortland Co., 1967) ........ 13

Griffin v. California, 380 U. S. 609, 14 L.ed.2d 106, 85

a. Ob 19 GS) 10, 11

fe ) .

.

Iv

PAGE

Mealy, In re, 161 Misc. 582, 293 NYS.. 584 (Co. Ct.

6 I INI 23 cs scnittccssnsacqieadgenioratipescunesoesscatgainania 13

Home Insurance Co. v. Morse, 87 U. S. 445, 22 Led.

365 IS cask a cea, TN TN te eer eo 19

. Kimm v. eae 363 U. S. 405, 4 L.ed.2d 1299, 80

RI os ain tee ca casmsceueiendct earn 10

Konigsberg v. State Bar of California, 353 U. S. 25z, ;

- 1 L.ed.2d 810, 77 S. Ct. 722 (1952) ooo. 10

Lerner v. Casey, 357 U. S. 468, 2 L.ed.2d 1423, 78 S. Ct.

ea 10,11

Malloy v. Hogan, 378 U. 8. 1, 12 Led 24 653, 84S. Ct.

I canes aciecs nicnceicasosale optabereded ahaaeel 10, 11

"Missouri v. Curamings, 4 Wall. 277, 18 Led. 367 (1867) 11

Murphy v. Waterfront Comm. of N.Y. Harbor, 378

U. 8. 52, 12 L.ed.2d 678, 84 8. Ct. 1594 (1964)... i

Nelson v. Los haiti 362 U.S. 1,-4 L.ed.2d 494, 80

=. % 2. ‘eect cece Peaennrs 10, 12, 13

NY. Central & H.B.R. Co. v. United ‘States, 212 U.S.

481, 53 L.ed. 613, 29 S. Ct. 304 (1909) paingiecca. ae

Peogie v. Canadian Fur Trappers Corp., ., 248 N.Y. 159,

UE MEM OOE I aan een 15

Schware v. Board of Bat Examiners, 353 U. S. 232,

1 L.ed. 796, 77 S. Ct. 752 cad ee 16

Sioux Remedy Co. v. Cope, 235 U. 8. 197, 59 L.ed. 193,

BBS. Ct. 57 (1914) cece ecccccccseceecvevssssssessesetvevvseee 19

Slochower v. Board of Education, 350 U. S. 551, 100

_. Lned.2d 692, 76 S. Ct. 637 (1956) ooo ccecceeceleoee 9, 10, 12

‘ Solovei, In re, 276 N.Y. 647, 12 N.E.2d 802 (1938) ....... 12

Spevack v. Klein, 385 U. s. 511, 17 L.ed.2d 574, 87

| i RM I I csc aa itt cseereivossesbenoonnees 11, 12, 13, 14

Stevens v. Marks, 383. U. S. 234, 15 L.ed.2d 724, 86

: ‘ov

. erred 1 v. Burke Const. Co., 257 U. S. 529, 66 L. ik

as ef ee fat ee ¢ 19

Western Union Tel. Co. v. Kansas, “216 U. 8. 1, 54 .

L.ed. 355, 30 Sup. Ct. 190 (1909)... sdAOe ED . 19

Wieman v. Updegraff, 344 U. S. 183, 97 Lied. 216, 73 |

S. Ct. 215 (1952) ..:.......... PRR ae te eRe 16 .

_ Wilcox, Matter of, 153 Mise. 761, 296 N.Y.S.-117 (Sup,

De hg I Fig Be os tacigcmesecescnvteporevsicsacattasngpsveon eens 1B

Wood v. Hughes, 9 N.Y.24 144, 212 N.Y.8.2d 33, 173

Fr N.E.2d 144 CIDE) oonsornsrnrscgqenissccvenoipsting btosebeonenssevessee 13

Zara Cuidonsiong tain " Matter of, 45 Mise: 2d 497,

257 N.Y.S.2d 479 (Sup. Ct. Alb. Co., 1964), aff’d

23 A.D.2d 718, 257 N.Y.S.2d 118 (3d Dept. 1965) 14

-- Constitution and Statutes

United States ‘Constitution: © | re

14th Amendment Seaman — Oe Ee SS 2, 8,11

United States Code: < ar ey

§1257 (2), a eee PROS REEL LANTERN on RT OL 2

New York. State Code of Criminal Peentnie: .

SF, Sidiakanssesnssitaa REPEATER OTP OA RUC. Ay “13

RCI ECR) EE Re i AO: ee ee 13

BIT ssisticrashacuanetigt capil Auashstnhe again wididacowhesemsemeraaics _

New York State Penal Law: ;

§2447 steeteeeeeeeeerens eeeeee a oedecccccocccees dnabaeeieidincshanes ne seccccctovcces ; 5, 6

New York State Public Anthorities Law:

' $2601 ......... seedaacisoaias A TO ot RN I! Ie .2, 4, 13, 18°

ae ealonncntpantan cain gaat Pay Wands lee 2,13

MEY <<a citiidgesiaunosecnans seapeeteseageentnsnnnnncersesBeceeeeneeeeeeseees 16,17

ow

Miscellaneous:

Governor’s ‘Meséage April 21, 1959, McKinney’s 1959 | a

, Séssion Laws of New York, pp. 1757-58 «.......j.000- 17.

Hale, Unconstitutional Conditions and Constitutional.

Rights, 35 Colum. L. Rev. 321° (1935) ....... veabasiasioians ‘* 18

Unconstitutional Conditions, 73 Harv. L. Rev. 1595

eee SES SAR RENEE 18

‘Merrill, Unodnatitutional Conditions, 77. U. of Pa. L.

Sone 9 ION eae 18

Powell, Thomas Reed, The ‘Right to Work for the

“State, 16 Colum. L. Rev. 99 (1916) ......ccceose 18

~ Willeox, Invasions of the First Amendment Through

Conditional Public “pane 41 Cornell L. Q.

Ree a 18 .

PAGE

ts

IN THE

Supreme Court of the United States

October Term, 1967

_No 673

Se ee an

Gzorce CampBeLg Parntine Corp.,

| peti ee Appellant,

against

~-» Wiiuiam Rem, Francis V. Mapican, Ina S. Rossrns, Mem-

bers of the New York City Housing Authority, and THE

New Yorx Crry Housine AUTHORITY,

Appellees.

Grorce CaMPBELL Partntine Cokp., :

: oa Appellant,

agamst ,

Wiiaam Rew, Francis V. Manican, Ira S.-Rossrns, Mem-

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

_ New York Crry Hovusine Autuonrity, 3

Appellees.

.On Appeal from the Court of Appeals of the

. State of New York

-APPELLANT’S BRIEF _

Opinions Below

The, official and unofficial reports of the opinions de-

livered in the Courts below are as follows: }

4

Special proceeding commenced

pursuant to CPLR Article 78:

2 48 a 2d 544, 265 N-Y.S.2d 304 (Supreme Court, N.Y.”

Co. 1966) ; affirmed, 275 N.Y.S.2d 363 (Appellate Division,

First Department, 1966) (not officially. reported) ; affirmed,

20 N.Y.2d 370, 283 N.Y.S.2d 31, 229 N.E.2d 602 (Court of

fs, 1967).

‘ Plenary action:

The opinion of the Supreme Court, iw York County

(Schweitzer, J.), is unofficially reported in the New York

Law Journal of March 8, 1966; modified, 26 A.D.2d 912,

. 275 N.Y.S.2d 365 (Appellate Division, First Department,

. 1966) ; affirmed, 20 N.Y.2d 370, 283 N.Y.S. ad 31, 229 N.H.2d

602 (Court of Appeals, 1967).

Jurisdiction

In both cases jurisdiction of this Court § is conferred by

28 U.S.C. §1257(2). The validity of a ‘state statute, Public *

Authorities Law, §§2601-2, was challenged as being: repug-

- nant to the 14th Amendment provisions dealing with the

privilege against self-incrimination and due process. The - |

State Courts upheld the —— of the statute.

The judgment sought to be jen ee was made and |

entered on July 7, 1967 by the New York State Court of

‘Appeals. Notices of appeal were duly filed on September

18, 1967.: The Jurisdictional Statement was submitted on

October 2, 1967, and on January 29, iad —— juris-

diction was noted in this Court.

Constitutional Provisions and Statutes Involved |

The complete text .of §§2601-3 of the New York State

Public Authorities Law,. §§253, 253-a and 258 of the New >. .

York State Code of Criminal Procedure, §2447 of the New

York State Penal Law, and the 14th Amendment are set ”

forth in the Appendix to this Brief. Sections 2601-3 of the

Public Authorities Law is published in McKinney’s Con-

solidated Laws of New York Annotated, Book 42, ‘Part II,

pages 415 through 417. Sections 253, 253-a and 258 of the

- Code of Criminal Procedure is published in McKinney’s’

Consolidated Laws of New York Annotated, Book 66, Part .

- I, pages 497, 511 and 142-3 of the 1967’Cumulatiye Annual

Pocket Part. Section 2447 of the Penal Law is published.

~ in McKinney’s Consolidated Laws of New York Annotated,

Book 39, 1966 Cumulative Annual Pocket Part, pages '355-6.

The text of the 14th Amendment is published i in U.S.C.A.:°

Constitution, page 288.

Questions Presented

’ 1. Whether the 14th Amendment is offended by. New

York State’s Public Authorities Law, §§2601-2, which re-

quire the disqualification of a corporation from eligibility

to bid on public contracts when one of its officers or diréc-

tors asserts or refuses to. waive his privilege against self-

incrimination before a grand jury?

(a): If not, does the fact. that the veiiiahirnsi wit-

ness resigned his office and surrendered his control of -

the company’s affairs prior to being called as a witness

make the application of the statute against the corpo-

ration repugnant to the due process clause of the 14th

' Amendment? |

4 Peete

_ 2. Whether New York State’s statutory requirement,

Public Authorities Law §2601, that, all, public contracts con-

tain an agreement to waive the privilege against self-in-

crimination, is an unconstitutional condition of doing. busi-

ness with the state and its agencies? — |

Statement of Facts

Appellant corporation has been disqualified by appellees

from bidding on public contracts for. five 2 years (A16-17 ;

58}.* Appellees purported to act pursuant to the provi-.

sions required by §2601 of the Public Authorities Law

(App. 21) to be included as clauses (A80) in’ their agree-

ments with ii appellant to paint several of appellees’

buildings. Those provisjons_state that when a person.

refuses to testify or sign a waiver of immunity. when called.

by a Grand Jury seit. any transaction had with

the State:

_ “Such a person and any firm, partnership, or corpo-

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

officer shall be- disqualified from thereafter selling or

submitting bids to or receiving awards from or enter-

ing into any contracts with the;Aythority for goods,

work or services, for a period oP tive years after such

refusal’? (A80) (App. 21). |

On April 20, 1965 ‘all of the officers and ‘directors of

- appellant who were asked, signed waivers of immunity and

_ testified (A6; 53). Yet, all of those officers and directors — .

as well as some 180 employees are now actually disqualified,

* Reference to the Appendix is designated “A” followed by the

page number. Reference to the Appendix to this Brief which con-

tains the relevant Statutes is designated “App.” followed by the page

number. ; ;

4

4)

- individually and collectively, for five years from bidding on

public contracts. |

The sanction was imposed against appellant because on

April 14, 1965, George’ Campbell, Jr., who at the time was

neither an ‘officer, director nor stockholder of appellant,

refused, when asked, to sign a waiver of his privilege

against self-incrimination (44, 14-17; 52, 55-62, 71-73, 119-

121), He was not questioned by the Grand Jury. —~ +

He was one of five children of George Campbell, Sr.,

appellant’s founder. ‘Each child had held an equal minority . =

- stock interest (A3-4; 64). In. August, 1964, when his father

died,. George Caimpbell, Jr., was — President of

_ appellant and signed all corporate papers ‘as-such (A4;

67,119). However, at the time he was only recently out of ©

college, had less than one year’s experience in the painting

business, and was not actually in control of its affairs

(A119-121). The de facto operating head*of the appellant ¢

‘ was George Morvan,-who has since been named its Presi-

dent (A119-121),

. When ‘appellant’s officers and directors learned that a

Grand Jury investigation was being conducted, they were

advised by their counsel that each might be called as a

witness (A52). They were further advised that each might

“ be requested to execute a waiver of the immunity conferred

by §2447 of the Penal Law (App. 28-30), and were told of

the disqualification. provisions of the Public Authorities

Law (A52). -— |

With the exception of George Campbell, Jr., all of the

officers and directors of appellant were anxious to cooperate

.

it \ 6

in full with the Grand Jury investigation (A6-7; 52-53).

For ° personal and individual reasons (A5; 52) George

Campbell, Jr., did not wish to testify without obtaining the

statutory grant of immunity under the Penal Law, §2447 .

(App. 28-30). \

In view, of his attitude and because he did not want his

personal aititude to reflect on the other stockholders, officers

and directors, manyf\whom derived their livelihood from

appellant, George Campbell, Jr., on March 26, 1965, sub-

mitted his resignation as an officer and director, and sur-

rendered his minority stock interest (A4, 52; 120-121).

There can be no question but that on April 13, 1965,

when George Campbell, Jr., was summoned, and on April

14; 1965, when he refused to sign a waiver of immunity, he

"Was neither an officer, director nor stockholder of appellant

__ (14-15; 55-56). Appellees have never sériously disputed

this.-" Indeed, in appellees’ motion to this Court to dismiss

‘the appeal (pp. 12, 19-21), they stressed the fact that, at

that time, George Campbell, Jr., was a complete stranger °

to appellant. - ‘

-

‘Is is. significant that since George Campbell, Jr., was

never asked a single question by the Grand Jury or any

duly constituted board of responsibility, it is-obvious that

he never refused to answer a single question. Moreover,

-all of the controlling officers, directors and stockholders

did cooperate (A6-7; 52-3).° On April 20, 1965, George ©

Morvan, then: appellant’s Executive Vice President and a

Director; Ernest Ponte, a Vice President and husband of

Anita Campbell -Ponte, a Director and 10% shareholder:

Theodore Ruzew, a Director and Co-Executor of the Fsia*

5

eo

-»®

of George Campbell, Sr., which owns: 50% of the stock of .

appellant; Marian Campbell Rizzi, Secretary and a Direc-

. tor of appellant, and a 10% shareholder; and Elizabeth

Campbell, the widow of George Campbell, Sr., Co-Executrix

of his” Estate, Treasurer and a Director of. appellant;

were all requested to appear before the Grand Jury (A6-

7; 52-53). Each of them appeared voluntarily and ad-

vised the Assistant District Attorney that he (or she)

would sign waivers of immunity (A6). Only George Mor-

van, Theodore Ruzow and Ernest . Ponte were asked to

appear “before the Grand Jury (A6). Marian Campbell

‘Rizzi and Elizabeth Campbell were excused by: the Grand

Jury and wére not wt to testify (A6). |

In spite of this, appellant was disqualified on April 21,

- 1965 (A16-17; 57-58).. When appellant learned of its being

_ blacklisted, its attorneys wrote to’ appellees stating that

although George Campbell, Jr. had refused to sign a waiver

of immunity, he had, as appellees well\knew (A56), resigned |

as an officer, director and stockholder, and that all.the other

officers and directors of appellant, who had been requested

‘to appear, had voluntarily appeared without subpoena and

_ had voluntarily signed waivers of immunity (A19-22; 59-:

62). Appellant requested appellees to consider their action

and, by subsequent telegram, asked’ for a hearing (A22).

On May‘5, 1965, appellees responded; stating that there was

no point to any further discussion of the matter (A23).°

-

Proceedings Below

- ¢

+ Appellant commenced a proceeding to review the ad-

ministrative determinatiofr of disqualification., The deter-

‘mination was asserted to have been erroneous as a matter

of fact in deeming George Campbell, Jr. to have been an .

officer or director when ‘he refused to sign a waiver of.im- ° ‘

munity, or as a matter of law in applying the statute to

disqualify a corporation because of the acts of a former

officer or director (A24-26). ‘On motion of the apyéllees,

the proceeding was dismissed with leave to commence a

plenary action for breach of contract (A30-34). ‘Such an,

+ action was commenced (A63-74). Both are here on appeal

from final determinations dismissing them on the merits

sacs 132- 136). | .

,

Summary of Argument

Appellant’ presents three contentions. ,The firet is that -

the 14th Amendment prohibits economic sanctions being

visited upon a person solely because he has asserted his

privilege agu‘nst self-incrimination (Argument 3

=

The second is that due process is offended by the im-

position of sanctions against a corporation charged with -

tlack of candor, even though the recalcitrant witness re-

signed his offices and surrendered his Stock when the cor-

poration learned that he was planning to refuse to. ane:

erate ee TI).

A as a con-

°

' The ‘third 1 is that the Staté may not requi

- dition of doing public business, that persons bargain away

their privilege against self-incrimination in advance (At- -

‘gument III). a ee | . it

( .

ARGUMENT I .

The economic sanction imposed by the New York

State Public Authorities Law against appellant Is re-

pugnant to and prohibited by the Fourteenth Amend-.

ment. ;

»

Appellant’ is an officially blacklisted Pare a It is

barred from submitting bids on any publio’contracts in

New York State (A16-17; 57-58). The stigrha, eover,

has also resulted in the loss of substantial privaté and out-

_ of-state business (A69-70).

6

The reason ascribed for the blacklisting is he refusal —

by one of appellant’s former officers to waive his privilege

against self-incrimination. Appellant contends that the .

_ blacklisting.is prohibited by the 14th Amendment. as‘jnter-

preted and applied by this Court for many years.

a aoe ,

A. The Test Prior to Spevack: Due Process

In 1956, this Court held that the denial or termination of

-a public contract, employment or license solely because the ~

applicant or holder exercised his privilege against self-

incrimination was arbitrary, and therefore a denial of due

process. Slochower v. Board of Equcation, 350 U. S. 551, :

100 L.ed.2d 692, 76 S.Ct. 637 (1956). The Court reasoned

that the sanction was arbitrary.since the statute ‘operated

“summarily without referenge to the subject matter of the —

_ questions asked, the reasorf for the exercise of the privilege,

or whether the inquiry was even. related to the fitness or

qualifications of the applicant (350 U, S. ‘at p. 558). See,

100

also, Konigsberg v. State Bar of California, 353 U. S. 252,

1 L.ed.2a 810, 77 S.Ct. 722 (1957).

' Thé court distinguished: Garner v. Board of Public

Works, 341 U. S. 716, 95 L.ed. 1317, 71 S.Ct. 909 (1951),

‘‘where the City was attempting to elicit information nec-

‘ essary to determine the qualifications of its employees”

(350 U. S. at p. 588).

After Slochower and Kownigsberg, the distinction be-

came firmly establishéd. The denial or termination of a

public contract, employment or license, based solely on the’

assertion of a constitutional right, was arbitrary.. Where

the assertion of the privilege had the effect of frustrating

a legitimate inquiry of the person’s qualifications for such

‘contract, public employment or license, the failure to be

“~~. - candid justified the sanction, without offending the due

” process clause. Beilan v. Board of Public Education, : 357

U. S. 399, 2 L.ed.2d 1414, 78 S.Ct. 1317 (1958) (public

school teacher); Lerner v. Casey, 357 U. S. 468, 2 L.ed.2d

1423, 78 S.Ct. 1311 (1958) (subway conductor) ; Nelson v.°

Loés Angeles, 362 U. S. 1, 4 L.ed.2d 494, 80 S.Ct. 527 (1960)

(social workers) ; and Kimm v. Rosenberg, 363 U. S. 405,

4 L.ed.2d 1299, 80 S.Ct. 527 (1960) (deported alien). See,

especially, concurring opinion of Frankfurter, J.; in Beilan

and, Lerner, 357 U. 8, at p. 410, 2 L.ed.2d at p. 1433.

’ B.° The Privilege Against Self-Incrimination

In 1964 and 1965 this Court decided Malloy: v. Hogan,

_ 378°U. S. 1, 12 L.ed.2d 653, 84 S.Ct. 1489 (1964), and Griffin

v. California, 380 U. S. 609, 14 see.ae. 106, 85 S.Ct. 1229 -

(1965). |

‘

_

et

In Malloy, the Court stated that the privilege against

self-incrimination was embodied in the Fourteenth Amend-

ment, and meant ‘‘the right to remain silent * * * and to

‘suffer no penalty for such silence’’ (378 U. S. at p. 8)... In ©

Griffin, the court noted that a penalty that makes costly

- the assertion of the privilege cuts down on the privilege

(380 U.S. at p. 614). 7

The rationale of Malloy and Griffin inevitably led to a

review of the. prior decisions., The loss of employment, li-

censé or ofa bwsiness opportihity certainly i is costly and

’ ~ is a penalty for asserting the privilege. Missouri v. Cum-

mings, ® Wall.'277, 320, 18 L.ed. 367 (1867); In re Grae,

282 N.Y. 428, 20 N.E.2d 964 (1940). :

What had passed muster under a test of arbitrary con-

duct under the. due process clause, might fail when meas-

“ured by the ‘standards of the privilege against self-incrimi-

nation. See Matter of Gault, 387 U.S. 1, 18 L.ed.2d 527, 559,

87 S.Ct. —— (1967) ; Murphy v. Waterfront Comm. of N. Y.

Harbor, 378 U. S. 52, 12 L.ed.2d 678, 84 S.Ct. 1594 (1964) ;

Stevens v. Marks, 383 U.S. 234, 15 L.ed.2d 724, 86 S.Ct. 788

(1966) ; Garrity v. New Jersey, 385 U. 8. 493, 17 L.ed.2d F

562, 87 S.Ct. 616 (1967).

In° Spevack y. Klem, 385 U. S, 511, 17 L.ed.2d 574, 87

S.Ct. 625 (1967), there had been a legitimate inquiry into

an.attorney’s qualifications by”’a duly authorized commit-

tee of the Bar Association. The questions were relevant

to that inquiry and dealt with the attorney’s fitness. On

the other hand, the’ attorney’s only choice was between

self-incrimination and loss of license. This Court held that

12

the privilege sgainst. self-jncrimination forbade disbar-

‘ment, even though the. attorney’s assertion of the privi-. .

lege tended to frustrate the inquiry, was hardly the candor

the committee felt it had a right to expect, and similar

disbarment had theretofore been upheld under the due

process clause. See Cohen v. Hurley, 366 U. S: 117, 6 Led.

2d 156, 81 S.Ct. 954 (1961). Compare In re Solovei, 276

N.Y. 647, 12 N.E.2d 802 (1938)..

: Three dissenters recognized that the natural effect of

_- the:holding was to eliminate the well established distinc-

tion between arbitrary and reasonable government action

as formulated in Slochower,.Beilan, Lernér and Nelson (385

U. S. at pp. 527-528). = Lhe

The concurring judge suggested that the different re-

sult in Spevack might be limited to cases involving non- |

public employees (385 U. S. at p. 519). The majority: ex-

plicitly left that question undecided (385 U. S. at p. 516, f.n.

3), although in Garrity v. New Jersey, 385 U. S. 493, 17

‘L.ed.2d 562, 87 S.Ct. 616 (1967), they did decide that testi-

mony by a policeman which was coerced by threat of dis- |

missal, like a coerced confession, could not be introduced i in «

evidence. | ee, eae

C. The New York Court of Appeals’ ;

_ Application of Spevack_

The New York Court of Appeals upheld appellant’s

_ disqualification (A39-43, 132-136). On the same day the

a Court, also upheld a disqualification of a policeman, Gardner

v. Broderick, 20 N.Y.2d 277, 282 N.Y.S.2d 487, 229 N.E.2d -

“ 4 13

184 (1967). The Court noted that its opinion in Gardner —

governed the constitutional question posed by both cases ~

(A42, 135). The Court of Appeals did not~view Spevack

as having established a test different from the traditional

due process. test in Nelson v. Lus Angeles, and indicated °

that it did not think this Court would do so in an appro-

“priate gase (20 N. Y.2d- at pp. 229-30).

Although’ in Gardnér, the Court of Appeals sional its

view that a policeman, as an employee of the State, has a

greater duty of candor than a non-public employee (20

N.Y.2d at pp. 230- 231), it did not explain appellant’s dis-

* qualification on any different grounds. Not only is appel-

lant not a public employee, but, unlike Gardner, appellant

was not first given a hearing, and was never questioned:

by any body or agency authorized to i inquire into its fitness.

The only. investigation was by a Grand Jury, ‘which, by

‘statutg is not authorized to inquire into or render reports

on the fitness of non-public employees. Code of Criminal

Procedure §§253-and .253-a (App. 25-27); In re Healy,

161 Mise. 582, 293 N.Y.S. 584 (Co. Ct. Queens 1937). See,

also, Wood v. Hughes,-9 N.Y.2d 144, 212 N.Y.S.2d 33, 173

N.E.2d 144 (1961); Application of Grand Jury -Report

Concerning Its Investigation of Certain Television Quiz

Programs, 19 Misc.2d' 682, 193 N. Y.S.2d 553 (Sup. Ct. New,

York Co. 1959);. Matter of Wilcox, 153 Misc. 761, 226

N.Y.S.-117 (Sup. Ct. Monroe Co., 1934). With respect to

§253-a, see In re Grand Jury, January, 1967; 52 Mise. 2d

895, 277 N.Y.S.2d 105, 107 (Sup. Ct. Cortland Co., 1967).

The Public Authorities Law is designed solely to punish

private contractors who exercise their privilege against

14

self-incrimination in the Grand Jury room. ‘Nowhere in

the statute, or, for that matter, in- any other statute of

the State of New York, is there a provision disqualifying

. individuals- or corporations who have actually been found -

guilty of misconduct. Thus, no matter how serious the

misconduct, as long as no one ‘asserts the privilege against

self-incrimination, there is no automatic blacklisting. Mat-

ter of Zara Contracting Corp., 45 Misc.2d 497, 257 N.Y.S.

2d 479 (Sup. Ct. Alb. Co. 1964), aff’d 23 A.D.2d 718, 257

N.Y.S.2d 118 (3d Dept. 1965); Caristo Const. Corp. v.

Rubin, 10 N.Y.2d 538, 225 N.Y.S.2d 502 (1962). Con-

versely, no matter how minor or remote the misconduct,

there is automatic blacklisting only if the privilege against

self-incrimination le assegted. Fitness is immaterial (App. |

21-22). |

Since Grand Jury proceedings are secret, Code of ‘

Criminal Procedure §258 (App. 28), and since not a single

question was asked the witness who refused to waive his _

privilege, appellant’s disqualification would probably have

been deemed arbitrary on due process grounds, even before

Spevack. (supra, pp. 9-10). Since the sole function of the

statute is to make the assertion of the privilege costly, a

fortiori, it is invalid under the test in Spevack. ;

15

“ARGUMENT II

The imposition of a vicarious penalty against a

corporation which disavowed’ the acts of its former

president is repugnant to the Due Process Clause of

the Fourteenth Amendment. —

Appellant’ was disqualified because a former officer re-

fused to sign a waiver of immunity. The officer in question

never actually was-in control of the Corporationi’s activ-

ities, although he was the titular head of the Corporation .

(A 119-120). He was the youthful son of the founder of the

business, who was designated President of the Company

upon his father’s death. (A4; 67; ; 121). This was less than

one year after he finished his schooling and entered the

business (A119-121). |

) |

The — of Appeals has held that (1) the demand by

the corporation for the resignation of the officer i in anticipa-

tion of his planned refusal to execute a waiver of immunity

can be disregarded, and (2) that the procedure for discre-

tionary reinstatement: cohtained’in the Public Authorities

Law (A42-3; 135-6) satisfies all due process objections.

. When dealing with penalties imposed ‘against a corpora-

tion, it has always been a cardinal principle that the corpora-

tion is responsible only when the acts and actions conducted

by its agents were in furtherance of its affairs. N.Y. Cen-

tral d H. R. R. Co. v. United. States, 212 U.S. 481, 53 L. ed.

613, 29'S. Ct. 304 (1909) ; People v. Canadian Fur Trappers

~— 248 N.Y. 159, 161 N.E. 451 (1928).

‘Tes a asngiies is to be disqualified for its refusal to

cooperate or be candid in an investigation of its affairs,

>

16

then wad BN or lack of candor must - ‘attributable to |

the corporation as an act of the corporation. In the case at

bar, the corporation was candid and cooperated as best it

could, and it disavowed, as best it could, the plans of the |

gng.person in the corporation who indicated that, for per-

sont reasons, he might not cooperate. That person was

dismissed, discharged and separated from his official posi-

tien in the corporation. If*this severance had been a

sham and, in fact, the recalcitrant witness continued to

control\the corporation, his resignation would be disre-

garded. atter of Arglo. Painting Corp. v. Board of:

Education\47 Misc. 2d 618, 263 N.Y.S.2d 124 (Sup. Ct.

Kings Co., 13 5). But here, there is no question that ap- eh.

, pellant is not a\“front’’ for George ampbell, Jr., so that

his failure to cooperate cannot conceivably. bie been

“deemed an act of the corporation. |

Sa

To cause rthe corporation, to suffer a penalty of disqualifi-

cation vicariously. in spite of its disavowal before the fact

of the so-called contumacious activity, ‘and in spite of the —

_ecorporation’s cooperation and candor, is indiseriminate and

‘arbitrary, and plainly a denial of due process. See. Wieman .-

v. Updegraff, 344 U. S.. 183, 97 L.. ed. 216, 73 S. Ct. 215

(1952) ; Schware v. Board of Bar Examiners, 353 U. S. 232,

1 L. ed. 2d 796, 77 S. Ct. 752 (1957). —

The Court of Appeals deemed the procedure set forth | in

§2603 of the Public Authorities Law (App. 23-24) to satisfy

any due process objection which might be raised saan

135-136).

If §2603 of the Public Authorities Law was limited to a

determination of whether George Campbell, Jr.’s resigna-

6

17

tion was a sham or whether his refusal to waive immunity

was on behalf of the corporation and in furtherance of its

affairs, then, perhaps the policy of disqualifying first and

holding: a hearing later might satisfy due process. But.

§2603 invalves something quite: different from a review of

the disqualification. _ Indeed, by its terms it does not even

involve a review of the basis for the disqualification. It

only deals with whether there has been’ a-change in cir-

cumstances after the contumacious behavior, and whether

the public interest would be served by reinstatement. Sec-

tion 2603. was added only after the Legislature realized ©

the disastrous consequences if the State and its agencies

were unable to deal with Westinghouse and General Elec-

—tTic, both of whom. were subject to. ‘automatic disqualifica-

tion for five years. To cope with this, the Begislature

. added §2603 (Governor’s Message April 21, 1959, McKin-

ney’s 1959 Session Laws of New York, pp. 1757-58). The

public interest requirement makes the procedure entirely

unsuitable fir a relatively small company such as appellant.

Moreover, relief. under $2603 is discretionary. If ap-

_ _ pellant is to be punished for lack of candor, then that lack

> of candor must be attributable to appellant. If lack of

candor is not attributable to appellant, then appellant

should be reinstated. Discretionary reinstatement for an

erroneously disqualified corporation does not supply ample

protection. *

"al

a es i — TP ee ee

ARGUMENT ILI

Section 2601 of the New York Public Authorities

Law imposes unconstitutional conditions on those do-

ing business with the State and its agencies.

Section 2601 of the Public Authorities Law requires

that all public contracts contain a waiver of the privilege

against self-incrimination as a condition of the contract.

(App. 21-22).

_ The doctrine of unconstitutional conditions forbids the

government from exacting a waiver of important constitu-

tional rights as a condition of its granting a benefit or

privilege, even though it might not be required to grant any

benefit or privilege. at all.

‘The potential erosion of fundamental liberties

through the use of this bargaining technique | has

we development of the doctrine of ‘uncon- °

stituti conditions.’ ’?’ Unconstitutional eeewions,

73 Harv. L. Rey: 1595, 1596 (1960).

Accord, Willcox, Invasions of the First Amendment Through

' . Conditional Public Spending, 41 Cornell L.Q. 12 (1955) ;

_ Hale, Unconstitutional Conditions and Constitutional

Rights, 35 Colum. L. Rev. 321 (1935) ; Merrill, Unconstitu-

‘tional. Conditions, 77 U. of Pa. L. Rev. 879 (1929) ; Thomas

Reed Powell, The _ to Work for the State, 16 Colum.

L. Rev. 99 (1916). r

_ This Court stated the doctrine i in Frost v. Railroad ~_—

mission, 271 U. ‘Ss. 583, i 70 L. ed. 1101, 1102-5, 6 S. Ct.

605 (1926) :

“It is not necessary to challenge the saison that,

as a general rule, the state, having power to deny a |

= F

6

2

-

19

privilege altogetiness may. grant itu upon such conditions

as it sees fit to impose. But the power of the state in -

that respect is not unlimited ;.and one of the limitations

is that it may not impose conditions which require the

relinquishment of constitutional rights. ”? (Emphasis

added.)

Accord, Sioux Remedy Co. v. Cope, 935 U. S. 197, 59 a ed.

193, 35 S. Ct. 57 (1914) (statute which forbade use of state

courts to foreign corporations unless they subjected them-

selves to the general jurisdiction of the state by the appoint-

ment of a resident agent held to violate the Commerce _

Clause) ; Western Union Tel. Co, v. Kansas, 216 U. S. 1,

54 L. ed. 355, 30 S. Ct: 190 (1909) (excessive tax imposed as

‘a condition of doing business by foreign corporation held to |

violate the due process and commerce clauses); Terral v. .

Burke Const. Co., 257 U. S. 529, 66 L. ed. 352, 42 8. Ct. 93

(1922) (doing business conditioned on agreement not to

| remove cases to Federal Courts held to violate Article “a

- The government may not act with the same Besaom as

a private party. Thus, when the government puts condi-

tions in its contracts which are regulatory, they are tested.

by the same/rules as any other government regulation.

Frost v. Railroad Comm), supra; Home Insurance Co. v.

Morse, 87 U.:

The privilege against self-incrimination is a right ‘‘of

constitutional stature whose exercise a state may not condi-

tion by the exaction of a price. Aa A v. adiow Jersey,

385 U.§ S. : 878 Tall

20

_ Conclusion

For the reasons set forth above, appellant’s dis-

qualification should be reversed.

>

Respectfully submitted,

THeopore M. Ruzow

Attorney for Appellant .

Ausert A. BLINDER '

Harry Lirner .

StePHEN HocHHAUSER

Of Counsel -

a

= —_ fen