Case Name: In the Matter of Caristo Construction Corp., Appellant, v. Max. J. Rubin, as President of the Board of Education of the City of New York, et al., Respondents. (Public School 154.) In the Matter of Caristo Construction Corp., Appellant, v. Max J. Rubin, as President of the Board of Education of the City of New York, et al., Respondents. (Public School 309.) In the Matter of Mars Associates, Inc., et al., Appellants, v. Max J. Rubin et al., Constituting the Board of Education of the City of New York, Respondents
Court: New York Court of Appeals
Jurisdiction: New York
Decision Date: 1962-01-25
Citations: 10 N.Y.2d 538
Docket Number: 
Parties: In the Matter of Caristo Construction Corp., Appellant, v. Max. J. Rubin, as President of the Board of Education of the City of New York, et al., Respondents. (Public School 154.) In the Matter of Caristo Construction Corp., Appellant, v. Max J. Rubin, as President of the Board of Education of the City of New York, et al., Respondents. (Public School 309.) In the Matter of Mars Associates, Inc., et al., Appellants, v. Max J. Rubin et al., Constituting the Board of Education of the City of New York, Respondents.
Judges: 
Reporter: New York Reports
Volume: 10
Pages: 538–542

Head Matter:
In the Matter of Caristo Construction Corp., Appellant, v. Max. J. Rubin, as President of the Board of Education of the City of New York, et al., Respondents. (Public School 154.) In the Matter of Caristo Construction Corp., Appellant, v. Max J. Rubin, as President of the Board of Education of the City of New York, et al., Respondents. (Public School 309.) In the Matter of Mars Associates, Inc., et al., Appellants, v. Max J. Rubin et al., Constituting the Board of Education of the City of New York, Respondents.
Argued January 15, 1962;
decided January 25, 1962.
Louis E. Yavner and Robert Nelson Shiverts for Mars Associates, Inc., and another, appellants.
I. The board was required to act fairly toward Mars, Its failure to make an investigation, or to give Mars some sort of a hearing was tyrannical, arbitrary and capricious. (Matter of Heaney v. McGoldrick, 286 N. Y. 38; Housing Auth. of Opelousas, La., v. Pittman Constr. Co., 264 F. 2d 695; People ex rel. Coughlin v. Gleason, 121 N. Y. 631; Grace v. Forbes, 64 Misc. 130; Matter of Weinstein Bldg. Corp. v. Scoville, 141 Misc. 902; Matter of Wignall v. Fletcher, 303 N. Y. 435; Zimmerman v. Mulrooney, 241 App. Div. 695; Matter of Hecht v. Monaghan, 307 N. Y. 461; Erving v. Mayor of City of N. Y., 131 N. Y. 133; Matter of Alpert v. Board of Governors of City Hosp., 286 App. Div. 542; Matter of La France Truck Corp. v. City of New York, 7 Misc 2d 739; Morgan v. United States, 304 U. S. 1; People ex rel. Doscher v. Sisson, 222 N. Y. 387; People ex rel. Jordan v. Martin, 152 N. Y. 311; Matter of Poss v. Kern, 263 App. Div. 320; Matter of Bridgman v. Kern, 257 App. Div. 420; People ex rel. Lodes v. Department of Health, 189 N. Y. 187; Matter of County of Ulster v. State Dept, of Public Works, 211 App. Div. 629.) II. Even if taken as true, the facts on which the board relied do not sustain a finding of illegal or immoral conduct on the part of Mars. (Matter of Rubenstein v. Thacher, 14 A D 2d 524; Planet Constr. Corp. v. Board of Educ., 7 N Y 2d 381; Rason Asphalt v. Town of Oyster Bay, 6 A D 2d 810; A. & J. Cianciulli Inc. v. Town of Greenburgh, 8 A D 2d 963, 9 N Y 2d 812; People v. Stephens, 71 N. Y. 527; Briggs v. Tillotson, 8 Johns. 304; Marsh v. Russell, 66 N. Y. 288; Hopkins v. Ensign, 122 N. Y. 144; Delisi v. Ficarrotta, 76 Misc. 488; Wicker v. Hoppock, 6 Wall [73 U. S.] 94; Matter of Association for Preservation of Freedom of Choice v. Shapiro, 9 N Y 2d 376.) III. The board’s disqualification of Mars was ultra vires. IV. The Special Term erred in excluding the second Kaplan report. (Matter of Mandle v. Brown, 5 N Y 2d 51.) V. The court below was correct in conducting a hearing in order to compel the board to submit the entire record of its proceedings and to determine disputed issues of fact. Its decision is not appealable. (Matter of Towne v. Sherk, 256 App. Div. 938; Matter of Scott v. McCaffrey, 12 Misc 2d 671; Matter of Heaney v. McGoldrick, 286 N. Y. 38; Matter of Newbrand v. City of Yonkers, 285 N. Y. 164; Matter of Mandle v. Brown, 5 N Y 2d 51; Matter of Satterlee, 2 N Y 2d 285; Mills v. Stewart, 88 Hun 503.)
Max E. Greenberg for Caristo Construction Corp., appellant.
I. There was no dishonesty, immoral or illegal action by petitioner warranting the conclusion that it might not satisfactorily perform its contracts. The board’s action was arbitrary and capricious. (People v. Stephens, 71 N. Y. 527; Whalen v. Brennan, 34 Neb. 129; Pyle v. Kernan, 148 Ore. 666.) II. Moral irresponsibility to warrant disqualification must be such as to indicate lack of responsibility in performing contracts. Co'ncededly, there was no such lack here. (Matter of Association for Preservation of Freedom of Choice v. Shapiro, 9 N Y 2d 376.) III. The board’s determination barring petitioner from bidding is arbitrary in that it is based upon conclusions contained in a report of the department of investigation—which the department later conceded to be erroneous — without any testimony or evidence before it indicating the basis for such conclusions. IV. Petitioner has a property right which entitled it to a hearing before being disqualified from bidding board contracts. (Matter of La France Corp. v. City of New York, 7 Misc 2d 739; Matter of Hecht v. Monaghan, 307 N. Y. 461; Duplex Print. Press Co. v. Deering, 254 U. S. 443; Truax v. Corrigan, 257 U. S. 312; Erving v. Mayor of City of N. Y., 131 N. Y. 133; People ex rel. Coughlin v. Gleason, 121 N. Y. 631; Interstate Commerce Comm. v. Louisville & Nashville R. R. Co., 227 U. S. 88; Matter of Perpente v. Moss, 293 N. Y. 325; Matter of Heaney v. McGoldrick, 286 N. Y. 38; Morgan v. United States, 304 U. S. 1; National Labor Relations Bd. v. Cherry Cotton Mills, 98 F. 2d 444.) V. The disqualification of petitioner as a means of punishment and not because petitioner was in fact not a qualified bidder was beyond the authority of the board. VI. The facts adduced at the hearing at Special Term were undisputed. There was no substantial evidence to support the findings of the board.
Leo A. Larkin, Corporation Counsel (Seymour B. Quel, Leon A. Fischel, Fabian Palomino and John L. Radlein of counsel), for respondents.
I. The board’s disqualification of the petitioners was proper because their agreement of October, 1959 was illegal and immoral. Since the facts of the agreement were admitted in the pleadings, the petitions should have been dismissed on the papers before the court. (Kuhn v. Buhl, 251 Pa. 348; Sharp v. Wright, 35 Barb. 236; City of New York v. Bronx County Trust Co., 261 N. Y. 64; Corrigan v. Bobbs-Merrill Co., 228 N. Y. 58; Henry v. Allen, 151 N. Y. 1; Dollard v. Roberts, 130 N. Y. 269; Planet Constr. Corp. v. Board of Educ. of City of N. Y., 7 N Y 2d 381; Rason Asphalt v. Town of Oyster Bay, 6 A D 2d 810; A. & J. Cianciulli Inc. v. Town of Greenburgh, 8 A D 2d 963, 9 N Y 2d 812; Picone v. City of New York, 176 Misc. 967; Matter of Limitone v. Galgano, 21 Misc 2d 376; People v. Stephens, 71 N. Y. 527; McDonald v. Mayor of City of N. Y., 68 N. Y. 23; Parr v. Village of Greenbush, 72 N. Y. 463; Lyddy v. Long Is. City, 104 N. Y. 218; Village of Fort Edward v. Fish, 156 N. Y. 363; Lindlots Realty v. County of Suffolk, 278 N. Y. 45; Matter of Fink v. Cole, 1 N Y 2d 48; Matter of Guardian Life Ins. Co. v. Bohlinger, 308 N. Y. 174, 308 N. Y. 810; Matter of Kandel v. Greene, 236 App. Div. 607; Matter of Haskell-Gilroy v. Young, 20 Misc 2d 294, 10 A D 2d 629, 10 A D 2d 717.) II. The court at Special Term illegally directed and improperly conducted the hearing. III. The record and the opinion of the court at Special Term established no basis for setting aside the board’s resolution. (Matter of Kaelber v. Sahm, 281 App. Div. 980, 305 N. Y. 858; Martin v. Donnelly, 223 App. Div. 353; Matter of Mandle v. Brown, 5 N Y 2d 51.)

Opinion:
Chief Judge Desmond.
While we have doubt as to the board's power permanently to disqualify appellants from bidding on Board of Education specifications and/or contracts, we do not construe the resolution in question as a permanent disqualification, and the Corporation Counsel indicated on the argument that it was not so intended.
Appellants are free at any time to renew their applications for prequalification based upon their past experience and performance with the Board of Education, and such other factors as may be appropriate.
The orders should be affirmed, without costs.