# Appellants Brief — George Campbell Painting Corp. v. Reid > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386413_0021%3A07 ## Record - **Collection:** Supreme Court brief - **Document type:** Appellants Brief - **Published:** January 1, 1968 - **Citation:** 392 U.S. 286 ## Text . 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 yee . . 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: . . 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 --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386413_0021%3A07. Public record. Not legal advice.