Source: https://supreme.justia.com/cases/federal/us/392/286/
Timestamp: 2019-04-22 16:20:04+00:00

Document:
The Public Authorities Law of New York requires all contracts awarded by a public authority for work or services to provide that, upon refusal of "a person" to testify before a grand jury, to answer relevant questions, or to waive immunity against subsequent prosecution, such person and any corporation of which he is an officer or director shall be disqualified for five years from contracting with any public authority and any existing contracts may be canceled by the authority without penalty or damages. Appellant corporation's president, who was also a director and stockholder, executed three painting contracts, on behalf of appellant, with the New York City Housing Authority. When appellant learned of an impending investigation of bid rigging, the president resigned and divested himself of his stock. He remained in appellant's employ as an "estimator." He was later subpoenaed to appear before the grand jury, and refused to sign a waiver of immunity. Appellant was notified that the contracts were canceled and that it and the president were disqualified for five years. The New York Court of Appeals denied relief to appellant, holding the disqualification valid and the statute constitutional. The court also rejected appellant's claim that it should not have been disqualified because its president resigned as president and director before being called to testify.
1. The constitutional privilege against self-incrimination is "a personal one, applying only to natural individuals," and, since appellant corporation cannot avail itself of the privilege, it cannot take advantage of the claimed invalidity of a penalty imposed for refusal of an individual, its president, to waive the privilege. Pp. 392 U. S. 288-289.
2. There is no reason to disturb the finding of the Court of Appeals that the resignation of the president was solely for the purpose of avoiding disqualification, and the conclusion of that court that the purported resignation should be disregarded for purposes of this case. P. 392 U. S. 289.
20 N.Y.2d 370, 229 N.E.2d 602, affirmed.
investigation before a grand jury of alleged bid rigging on public contracts, including those of appellant. Thereafter, George Campbell, Jr., resigned as appellant's president and director and divested himself of his stock. He remained in appellant's employ as an "estimator."
After proceedings in the lower courts of New York, the New York Court of Appeals denied relief to appellant. It held that the disqualification was valid and that § 2601 of the Public Authorities Law is constitutional, citing Gardner v. Broderick, 20 N.Y.2d 227, 229 N.E.2d 184 (1967) (reversed this day, ante, p. 392 U. S. 273). The Court of Appeals also rejected appellant's claim that it should not have been disqualified because Campbell resigned as president and director before he was called to testify. [Footnote 2] We noted probable jurisdiction. 390 U.S. 918 (1968).
or on behalf of any organization, such as a corporation." United States v. White, 322 U. S. 694, 322 U. S. 698, 322 U. S. 699 (1944); see also Essgee Co. v. United States, 262 U. S. 51 (1923); Baltimore & Ohio R. Co. v. ICC, 221 U. S. 612, 221 U. S. 622 (1911); Wilson v. United States, 221 U. S. 361, 221 U. S. 382-385 (1911); Hale v. Henkel, 201 U. S. 43, 201 U. S. 74-75 (1906). If a corporation cannot avail itself of the privilege against self-incrimination, it cannot take advantage of the claimed invalidity of a penalty imposed for refusal of an individual, its president, to waive the privilege. Since the privilege is not available to it, appellant, a corporation, cannot invoke the privilege to challenge the constitutionality of § 2601 of the Public Authorities Law. A fortiori, it cannot assail the validity of the provision in the contracts into which it entered, incorporating the substance of that section.
As to appellant's claim that its due process rights were denied by the imposition of the penalty despite Mr. Campbell's purported resignation from managerial positions, we do not reach the abstract legal question that is urged upon us. We see no reason to disturb the finding of the New York Court of Appeals that "the resignation was tendered and accepted solely for the purpose of avoiding the statutory disqualification," and the conclusion of that court that the purported resignation should be disregarded for purposes of this case.
In the old days when a culprit, unpopular person, or suspect was punished by a bill of attainder, the penalty imposed often reached not only his own property, but also interests of his family. [Footnote 2/2] When the present law blacklists this family corporation, it has a like impact.
he shall forfeit, say, $10,000, the law would plainly be unconstitutional as exacting a penalty for asserting a constitutional privilege. What New York could not do directly, it may not do indirectly. Yet penalizing this man's family corporation for his assertion of immunity has precisely that effect.
E.g., Delaware Laws 1778, c. 29b; New Jersey, Act of Dec. 11, 1778, N.J.Rev.Laws 40 (Paterson ed. 1800). Compare North Carolina Laws, Session of April 14, 1778, c. 5, calling for confiscation of the estates of certain persons "inimical to the United States," but specifically providing that members of their families should be allowed that portion of the estate forfeited which they might have enjoyed had the owner died intestate. See also Bayard v. Singleton, 1 Martin's N.C. Rep. 42 (1787). And see Comment, The Supreme Court's Bill of Attainder Doctrine: A Need for Clarification, 54 Calif.L.Rev. 212, 214, 216 (1966).
Damage to shareholders which results indirectly from damage done to the corporation can, of course, be rectified through suit by the corporation itself or by a stockholder's derivative action. E.g., Paulson v. Margolis, 234 App.Div. 496, 255 N.Y.S. 568 (Sup.Ct.1932). See generally Ballantine, Corporations 333-339 (1946); 13 Fletcher Cyclopedia, Corporations §§ 5908-5911 (1961). There is no indication in the opinion of the New York Court of Appeals that that remedy is inappropriate on the facts of this case.
"Such application shall be in the form of a petition setting forth grounds, including that the cooperation by petitioner with the grand jury at the time of the refusal was such, and the amount and degree of control and financial interest, if any, in the petitioning firm, partnership 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 petitioner's contracts or to continue the disqualification. . . ."

References: § 2601
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 § 2601
 v. 
 v.