Court Opinion

ID: 8893352
Source: CourtListenerOpinion
Date Created: 2022-11-26 23:32:37.010632+00
Date Added: 2024-06-11T17:07:20.005145
License: Public Domain

MULLIGAN, Circuit. Judge
(dissenting) :
I
New York Telephone Co. (NYT) made a $50,000 contribution to “Yes for Transportation in New York State,” a not-for-profit corporation organized for the sole purpose of promoting the passage of the transportation bond proposition which was submitted to the electorate of the State of New York at the general election of 1971. New York Election Law § 460 (McKinney Supp.1973) prohibits any corporation doing business in this State from making any payment to aid any corporation organized for political purposes or “for any political purpose whatever.” “YES,” which had as its nominal corporate purpose the improvement of the quality of mass transportation in New York State, was in fact (and this is not disputed) an ad hoe organization dedicated to securing the passage of the transportation bond issue at the 1971 election. It seems to me to be clear, therefore, that the payment of $50,000 by NYT to YES was a transaction prohibited by the unambiguous language of Section 460 and that Judge. Carter was correct in so holding.
The majority here concludes that the court below was in error because the statute was not intended to be applicable to a referendum which has bipartisan *855support, but should be construed to include only partisan political contributions. In support of its position, the majority seeks to avoid the language which bars corporate contributions “for any political purpose whatever” by resort to the familiar ejusdem generis principle of statutory construction. It is true that Section 460 condemns payments in aid of a “political party” or a “candidate for political office,” terms which have an unmistakable partisan connotation. However, the language of the statute preceding the omnibus clause also proscribes gifts to “any corporation, joint-stock or other association organized or maintained for political purposes.” We cannot assume that this language is merely repetitious or surplus-age. It goes beyond donation to the traditional partisan political party and encompasses payments to an entity created to achieve a political purpose. YES seems to me to be precisely such an animal. While support for the bond issue might well, and did, include individuals of varying political party affiliation, YES was obviously a fiercely “partisan” apparatus devoted to influencing the outcome of an election — the passage of a proposition submitted to the body politic. It is thus truly political in the generic and primary sense of that term. See note 6 of the majority opinion, supra.
To support its restrictive interpretation of Section 460, the majority also depends upon its legislative history, relying in great measure upon the comments of Elihu Root at the State Constitutional Convention in 1894 urging the passage of an amendment to the Constitution of the State of New York, which the majority considers to be the progenitor of Section 460. In response, it might be sufficient to note that Root’s observations were made 12 years before the passage of Section 460 and then to a different body organized for a different purpose. However, it is more significant to recognize that the Root amendment was limited to payments to candidates for political office, and, while it did have the existing omnibus clause, no language in his amendment referred even to payments to a “political party,” much less to “any corporation, joint-stock or other association organized or maintained for political purposes.” Hence, it is not surprising at all that the primary thrust of Root’s remarks at the Convention in 1894 were directed to the evil of the purchase of legislators by corporate malefactors in order to advance their selfish interests at the expense of the public. The New York Legislature in 1906 broadened the scope of the prohibition to include political parties and organizations maintained for political purposes. Therefore, I see no point in the argument that Root’s remarks in support of a narrow constitutional amendment are relevant in construing a statute enacted 12 years later with patently broader coverage.
The 1906 legislation was proposed not by Root, but by a Joint Committee Appointed to Investigate Life Insurance Companies, and I find no reference in its report to the 1894 convention debate. In its report the committee stated:
Contributions by insurance corporations for political purposes should be strictly forbidden .... Whether made for the purpose of supporting political views or with the desire to obtain protection for the corporation, these contributions have been wholly unjustifiable. In the one casé executive officers have sought to impose their political views upon a constituency of divergent convictions, and in the other they have been guilty of a serious offense against public morals . . . . Not only should it be expressly prohibited and treated as a waste of corporate moneys, but any officer, director or agent making, authorizing or consenting to any such contribution should be guilty of a misdemeanor ....
Report of the Joint Committee of the Senate and Assembly of the State of New York Appointed to Investigate the Affairs of Life Insurance Companies, Assembly Doc. No. 41, at 20 (1906).
*856It is noteworthy that this Committee was concerned with the waste of corporate assets to impose political views upon a constituency of divergent opinions. Section 460 is not only designed to prevent the crudity of the corporate purchases of politicians, but also to thwart the influencing of elections and the propagation of political principles with corporate assets without stockholder consent. The use of the corporate treasury to influence the passage of a $2.5 billion bond issue would seem to be logically as offensive as such use to influence the election of an assemblyman.
The majority finds further support for its restrictive interpretation of Section 460 in the Assembly’s failure, in 1906, to adopt a proposal that would have explicitly prohibited contributions for “any question to be voted on at an election.” Assembly Int. No. 84, Print. No. 77, 1906 New York State Assembly Journal, Vol. 1, p. 333. It preferred instead, we are advised, to enact a statute that tracked the 1894 proposal “with the restrictive gloss given to it by Elihu Root.” As we have already indicated, Section 460 did not track the Root amendment; it gave it the broadened scope which makes it pertinent here. Hence, it is just as reasonable to hypothesize that the reason for the “rejection” of the proposal was that the Assembly considered referenda already included in Section 460.1
The position taken by the majority that the interpretation of Section 460 given below and adopted in this dissent would make New York Legislative Law § 66 (McKinney 1952), also enacted in 1906, unnecessary, reflects a basic confusion between the constitutional rights of speech and petition, which I submit are not involved here, and the corporate contribution of funds to candidates, parties and organizations created for political purposes which Section 460 prohibits. Section 66 recognizes the right of the corporation to retain lobbyists to promote or oppose the passage of bills or resolutions “by either house or to promote or oppose executive approval of such bills or resolutions.” No one denies, however, that a corporation may have the constitutional right to express its views and to petition the legislature. See, e. g., Eastern R. R. Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127, 137-138, 81 S.Ct. 523, 5 L.Ed.2d 464 (1961) (freedom of petition); Grosjean v. American Press Co., 297 U.S. 233, 244, 56 S.Ct. 444, 80 L.Ed. 660 (1936) (freedom of expression). Section 460 was never intended to interfere with these rights and, in any event, the New York courts would construe the provision to avoid the conclusion that it is unconstitutional. In re Coates, 9 N.Y.2d 242, 253, 213 N.Y.S.2d 74, 82-83, 173 N.E.2d 794, appeal dismissed, 368 U.S. 34, 82 S.Ct. 147, 7 L.Ed.2d 91 (1961). Section 460 attacks the use of the corporate treasury to finance candidates, parties or organizations formed for political purposes, which was the role played by YES. There is no ease cited by any litigant here which has held that such legislation is unconstitutional. In fact, the distinction between the cor*857porate right to expression and the use of the corporate treasury to make payments to political organizations is implicit in the holdings of the Supreme Court. See United States v. UAW-CIO, 352 U.S. 567, 77 S.Ct. 529, 1 L.Ed.2d 563 (1957); United States v. CIO, 335 U.S. 106, 68 S.Ct. 1349, 92 L.Ed. 1849 (1948). See also United States v. Painters Local No. 481, 172 F.2d 854 (2d Cir. 1949). It is difficult to see why contributions to political organizations formed to influence referenda make the statute any more vulnerable than its admitted application to payments to candidates or partisan political parties. The only cases in which the Supreme Court has found it significant that regulation of political activities was limited to partisan politics have not involved business corporations, but rather government employees, where the only legitimate regulatory purpose was the preservation of a non-partisan work force. See Broadrick v. Oklahoma, 413 U.S. 601, 93 S.Ct. 2908, 37 L.Ed.2d 830 (1973); CSC v. Letter Carriers, 413 U.S. 548, 93 S.Ct. 2880, 37 L.Ed.2d 796 (1973); United Public Workers v. Mitchell, 330 U.S. 75, 67 S.Ct. 556, 91 L.Ed. 754 (1947).
The majority also contends that so-called bipartisan or apolitical referenda do not lend themselves to the corrupting influences which prompted the enactment of Section 460. Once again we must reject the premise which underlies the argument. Elihu Root’s concerns in 1894 were much more narrow than those expressed by the Joint Committee in 1906 which introduced the present statute, which is so much broader than the earlier proposed constitutional amendment. The report of the Joint Committee in 1906 demonstrates its twin concerns that the treasuries of the corporate behemoths were being utilized to bring a disproportionate influence on public elections, and that this further represented a waste of corporate • assets without the consent of stockholders whose political views might well differ from those of the°directors. Similar concerns have prompted analogous legislation.2 Recent history would indicate that legislative concern over corporate political contributions has not been unwarranted.
The support by the corporate defendants here of the $2.5 billion bond issue to finance highway construction and mass transportation is well within the ambit of the legislative concern that prompted Section 460. This proposition was not a moot question or an academic quibble. It was perhaps the most bitterly contested issue of the 1971 campaign. YES was reported to have as its aim the accumulation of a war chest of $2.5 million. In addition to NYT, other public utilities were contributors — Consolidated Edison ($25,000) and Long Island Lighting Co. ($12,500).3 It is difficult *858to avoid the conclusion that this “nonpartisan” referendum possessed the same potential for corporate abuse as any other political campaign.
We are further urged that the construction given to the statute by the Attorney General, who is responsible for the enforcement of the Election Law, and which is in accord with the position of the corporate appellants here, should be entitled to consideration. The principle that some weight is due a contemporaneous and long-standing interpretation of an ambiguous statute by those charged with its enforcement is not'disputed. Nevertheless, the rule cannot be blindly applied.' Here the New York Attorney General’s Office was not involved with the drafting of the statute and has represented only that its views have been “occasionally expressed by the New York State Law Department” and that all such expressions have been “oral.” See Investment Co. Institute v. Camp, 401 U.S. 617, 626-628, 91 S.Ct. 1091, 28 L.Ed.2d 367 (1971); In re Chin Thloot Har Wong, 224 F.Supp. 155, 164-165 (S.D.N.Y.1963) (Feinberg, J.); compare Broadrick v. Oklahoma, supra, 413 U.S. at 617-618, 93 S.Ct. 2908; Law Students Civil Rights Research Council, Inc. v. Wadmond, 401 U.S. 154, 163, 91 S.Ct. 720, 27 L.Ed.2d 749 (1971). In any event, I believe the Attorney General’s interpretation of the statute, is contrary to the legislative history and I find no justification, constitutional or logical, for excluding referenda from its operation.4 See In re Chin Thloot Har Wong, supra, 224 F.Supp. at 165; Payson v. Caputa, 9 A.D.2d 226, 235, 193 N.Y.S.2d 166, 173 (1st Dep’t 1959).
I therefore concur in Judge Carter’s conclusion that the statute plainly encompasses the activity complained of here, although I would agree with the majority that as far as the individual liability of the directors for damages is concerned, the question of their reliance upon advice of counsel should be remanded for trial.
II
The court below found that NYT violated New York Public Service Law § 107 (McKinney 1955) which provides:
Except with the consent and approval of the public service commission first had and obtained, no public utility shall use revenues received from the rendition of public service within the state for any purpose other than its operating, maintenance and depreciation expenses, the construction, extension, improvement or maintenance of its facilities and. service, the payment of its indebtedness and interest thereon, and the payment of dividends to its stockholders.
The majority reverses on this issue primarily because it relies upon an opinion of the Public Service Commission, which was issued not only after the opinion below was filed, but in an administrative proceeding brought by consumers who apparently have no relationship to the plaintiffs here. I agree with the majority that if the funds used by NYT were not revenues received from the rendition of public service, then Section 107 has *859no application. However, the appellants have never raised that defense in this case, and there is nothing in the record before us to indicate that this is the fact. The Commission opinion relied upon makes no such finding; it simply recites that in its reply in the administrative proceeding, NYT contended “that the Company had non-telephone revenues in excess of the amount donated and therefore operating revenues need not have been used for the donation.” The Commission makes no further comment about this defense; it cannot be considered to be a finding and by no means can it be termed an “authoritative pronouncement of the Commission.” The fact that NYT’s non-utility revenues exceeded $50,000 in no way establishes that the gift came from these sources. Presumably NYT incurred other charges against these fees, and without at least an accounting or a hearing, I see no basis at all to reverse on the assumption that Section 107 is inapplicable because non-utility revenue existed.
The transaction questioned falls exactly within the statute. There was con-cededly no consent of the Commission “first had and obtained” and it cannot be seriously argued that the contribution was an operating or maintenance cost. This is implicit in the Commission’s opinion since it emphasizes that the payments could not be reflected in the company’s rates. While this is some solace to consumers, it is hardly relevant in a stockholder derivative action.
The Commission with the benediction of the majority seeks to avoid the plain language of the statute by referring to its legislative history and purpose. As Chief Judge Kaufman has recently observed in American Airlines, Inc. v. Remis Industries, Inc., 494 F.2d 196, 198, (2d Cir. 1974), “[i]t is a well-settled principle of statutory construction that the plain language of a statute offers the primary guidance to its meaning.” Moreover, he there pointed out the controlling New York law, quoting from Meltzer v. Koenigsberg, 302 N.Y. 523, 525, 99 N.E.2d 679 (1951):
“[Where] the language found in the statute is clear and unambiguous, . the intent of the framers ‘is to be sought first of all, in the words and language employed, and if the words are free from ambiguity and doubt, and express plainly, clearly and distinctly, the sense of the framers of the instrument, there is no occasion to resort to other means of interpretation.’ McCluskey v. Cromwell, 11 N. Y. 593, 601-602.”
494 F.2d at 198-199. The law is no different because an agency has disregarded the expressed will of the legislature, People ex rel. West Side Elec. Co. v. Consolidated Tel. & Elect. Subway Co., 187 N.Y. 58, 67, 79 N.E. 892 (1907), and the “administrative construction given to a statute may not in itself create an ambiguity. . . .” Del Giorno v. Police Dep’t, 33 App.Div. 2d 665, 305 N.Y.S.2d 63, 64-65 (1st Dep’t 1969).
The Commission states that in the past it has countenanced “minor expenses” in the nature of donations (charitable contributions and advertising expenses) without precisely checking the source of the funds used and without requiring prior consent and approval. This, the Commission says, would result in inefficient use of the Commission’s revenues. Moreover, the Commission believes that “the free expression of opinion in our society should not be discouraged.” The test of “minor expenses” is whether they will have “little or no effect upon a utility’s financial stability.” What the Commission in sum is saying is that it has disregarded the mandate of the statute in the past and will continue to do so. While the interpretation by an agency of a statute under which it operates is entitled to respect, this can hardly mean that a history of disrespect becomes acceptable custom and usage. The belief of the Commission in free speech is indeed salutary but, as we have indicated, that is not involved here. Section 107 does not prohibit free speech; it simply requires that non-operating expenses be first *860cleared by the Commission. The Commission’s determination that only such expenses as would affect the financial stability of the utility are within the statute, considering the enormous assets of the public utilities, can hardly be considered a de minimis accommodation with the legislative mandate.
I would therefore affirm except as to the question of director liability which I would remand for trial.

. The contention that the Assembly made a conscious choice between the proposals is not tenable. Actually, the bill referred to by the majority was introduced by a Mr. Wainwright and, on February 14,, 1906, was referred to the Judiciary Committee of the Assembly where it died. 1906 New York State Assembly Journal 333. Section 460, on the other hand, was the product of the Joint Committee on Insurance which introduced the identical legislation in both the Senate and the Assembly on February 22, 1906. See 1906 New York State Assembly Journal 461-62; 1906 New York State Senate Journal 251-52. In the Assembly the bill was referred to the Insurance Committee. The Senate was the first to act on the legislation and sent its bill to the Assembly which concurred on April 12, 1906. 1906 New York State Assembly Journal 2222-23. In view of the sponsorship of Section 460 and the Senate’s action, the demise of the Wainwright bill in the Judiciary Committee of the Assembly is attributable to natural political causes. There is no evidence that the bill was rejected because of the Assembly’s determination that referenda should be excluded from its coverage.

. See, e. g., United States v. CIO, 335 U.S. 106, 113, 68 S.Ct. 1349 (1948) which determined that similar considerations underlie Congress’ adoption of the Federal Corrupt Practices Act. See also Comment, 70 Yale L.J. 821, 836 & nn. 106-09 (1961) suggesting that these are the same reasons for state legislation in this area.

. While the appellants urge that their contribution was motivated by their interest in good highways which are essential to the operation of their business, the position of the appellees seems to be that the motivation of NYT was to curry favor with the Governor, who was totally devoted to the passage of the proposition and whose Appointments Secretary resigned to head up YES. They find it sinister that the three identified public utility donors were in the same year seeking rate increases from the Public Service Commission whose members are appointed by the Governor. There is no evidence at all to support their suspicions and we do not question the motivation of any of the parties involved. In any event, the application of the statute does not depend upon the purity of the donees or the probity of the donors. It is the opportunity for abuse created by the contribution which the statute seeks to avoid.
Since we are told by the majority that “[t]he requirement of [New York Election Law] § 320 that the corporation publicly disclose [expenditures to influence referen-da] minimizes the risk that the public will be misled as to the source or inspiration of the corporately-financed views,” it is significant that YES has not reported or disclosed the sources of its income and has successful*858ly resisted a legal action seeking to obtain this information. Mr. Justice Chimera in Olivieri v. YFT (Sup.Ct., N.Y.Co. 23408/71) held that since YES was a corporation, it could not be a “political committee” within the meaning of Section 320 subject to the reporting provisions of Section 321. There seems little doubt that the New York Court of Appeals would reach the same result. See Vannier v. Anti-Saloon League, 238 N.Y. 457, 144 N.E. 679 (1924). This would seem to provide all the more reason that the contribution in question be within Section 460.

. The rule that penal statutes are to be strictly construed does not aid the appellants here. “The maxim is not to be so applied as to narrow the words of the statute to the exclusion of cases, which those words, in their ordinary acceptation, or in that sense in which the legislature has obviously used them, would comprehend.” United States v. Wiltberger, 18 U.S. (5 Wheat.) 35, 43, 5 L.Ed. 37 (1820); see Precise Imports Corp. v. Kelly, 378 F.2d 1014, 1017 (2d Cir.), cert. denied, 389 U.S. 973, 88 S.Ct. 472, 19 L.Ed.2d 465 (1967); Cotheal v. Brouwer, 5 N.Y. 562, 567-568 (1851).