Court Opinion

ID: 9641158
Source: CourtListenerOpinion
Date Created: 2023-08-22 17:24:14.452045+00
Date Added: 2024-06-11T18:10:35.532796
License: Public Domain

Carton, P. J. A. D.,
Temporarily Assigned (dissenting). The majority premises its reversal on the salutary principle that the terms and conditions of a plea bargain are to be scrupulously carried out by the State. See Santobello v. United States, 404 U. S. 257, 262, 92 S. Ct. 495, 30 L. Ed. 2d 427 (1971); State v. Jones, 66 N. J. 524, 526 (1975); State v. Thomas, 61 N. J. 314, 322 (1972). While I accept that premise, I cannot accept the conclusion implicit in the majority opinion that the Gallo business entities were either expressly or impliedly promised immunity from the consequences of their 13 years of wrongdoing.
A perusal of the record establishes beyond cavil that there was no such understanding. Indeed, the record demonstrates that Gene and Yincent Gallo, the corporate and partnership representatives responsible for entering the plea, were expressly informed that the acceptance of the guilty plea did not affect the State’s right to bring debarment proceedings against the business entities.
*416I.
In the process of accepting the pleas, as noted by the majority, the court had commented:
Of course, in accepting the plea with that condition, it does not give any immunity, it merely means that the plea cannot be used in evidence in a civil matter. And if there should be any civil suit, or a follow-through, of course, the evidence can be presented but it simply means the pleas cannot be used as admissions, [emphasis added].
It is difficult to understand in what manner the above-quoted statement support's the majority’s position that immunity was conferred. In the consent order entered by the trial court the Gallo businesses were promised only that “Such plea[s] of guilty shall not be evidential in any civil proceeding which may now be pending or which may be instituted in the future * *
This was the plea bargain in its entirety. In effect, the Gallo businesses1 pleaded non vult contendere, or nolo contendere, to the charges contained in the indictments.2 Affidavits submitted by the Attorney General on the motion to supplement the record after the oral argument make it crystal clear that promises of enterprise immunity from debarment were sought and rebuffed.3 _ .
*417The State’s position that the Gallo business entities were not to be guaranteed immunity from debarment finds support not only in the express understanding of the parties but also in the realities of the situation. Is it conceivable that it was the State’s intention to allow the Gallo businesses to purchase for so small a price an indulgence freeing the entities of the consequence of 13 years of criminal activities? In this connection, it should be noted that the maximum fine that could be imposed as a consequence of the guilty plea was $1,000. On the other hand, the bid-rigging corruption to which the Gallo entities pleaded concerned public contracts involving millions of dollars and the illegal siphoning off of hundreds of thousands.
As noted, the affirmative evidence demonstrates that the State made clear to the Gal'los that it reserved the right to consider the guilty pleas in subsequent debarment proceedings. It is equally clear from the language of the agreement itself that the entry of the guilty pleas was never intended to foreclose the State from establishing the underlying facts charged against the Gall'o business entities in later proceedings.
What then was the legal significance of this agreement? It had no more and no less effect than a usual plea of noilo contendere or non vult in any other criminal proceeding. The chief feature of a plea of non vult (or nolo contendere) concerns its use in a later proceeding. In this and only this respect, it differs from a plea of guilty. See generally, 29 Am. Jur. 2d, Evidence, § 702 at p. 760. A plea of non vult or nolo contendere has been described as a “passive step,” a step which does not foreclose the prerogative of one entering the plea from later contesting the issues of fact which underlay the charges pleaded to. Holly v. Bates, 7 N. J. 191, 196 (1951). Professor Wigmore described the plea as “hypothetical or ambiguous,” and stated that the plea may not be used in later proceedings as an admission. 4 Wigmore, Evidence (Chadburn Rev. 1972), § 1066 at p. 81. By contrast, *418a straightforward guilty plea precludes a pleader from a later assertion of innocence.
In Hudson v. United States, 272 U. S. 451, 47 S. Ct. 127, 71 L. Ed. 347 (1926), the origins of the nolo contendere plea were traced to- the reign of Henry IV (1399-1413). After scholarly analysis of early English texts, the Hudson court concluded that the nolo contendere plea had its genesis in a prisoner’s “implied confession,” a plea for mercy allowable only in non-capital cases. 272 U. S. at 453, 47 S. Ct. 127, citing Hawkins, Pleas of the Crown, 8th ed., book 2, chapt. 31 at p. 460. Unlike an “express confession,” the implied confession did not estop the defendant from pleading and proving his innocence in a subsequent civil action. 272 U. S. at 455, 47 S. Ct. 127. “Like the implied confession,” the court analogized, “[a plea of nolo contendere] does not create an estoppel, but like the plea of guilty, it is an admission of guilt for the purposes of the case.” Id. 272 U. S. at 455, 47 S. Ct. at 129. See generally, Anno., “Plea of Nolo. Contendere or Non Vult Contendere,” 89 A. L. R. 2d 540 (1963).
It has long been the settled law of New Jersey that a nolo contendere plea qua plea is not proper evidence of the pleader’s participation in the events detailed in the charge to which the plea was entered. See, e. g., State v. Pometti, 12 N. J. 446, 453 (1953); Holly v. Bates, supra, 7 N. J. 191, 196 (1951); Kravis v. Hock, 136 N. J. L. 161, 165 (1947).
On the facts of this case, entry of an unqualified plea of guilty would have precluded the Gallo organizations from attempting to show that they had not participated in the price-fixing and bid-rigging schemes charged in the indictments. By entering non vult pleas the opportunity to make such a showing of innocence was preserved. In fact, however, defendant businesses never availed themselves of that opportunity. They did not deny or put in issue the guilt of the business. Indeed, they do not do so now.
As the Appellate Division properly noted, there was ample evidence presented to the Commissioner, other than the pleas *419themselves, tending to prove the heavy involvement of the Gallo family businesses in the illegal activities for which the firms were indicted.
Deputy Attorney General Zauber, basing his testimony specifically on evidence gathered during the investigation, referred repeatedly to the criminal involvement of the Gallo companies. At one juncture he noted that the pleas were entered because the businesses “were indeed guilty of the charge [sic] as alleged in the indictment * * Deputy Attorney General Edwin Stier based his testimony on “the investigation as a whole, Avhich included interviews of witnesses and people who participated directly in the meetings and transactions which are alleged in the indictment.” Stier repeatedly testified that Mario Gallo participated in the bid-rigging schemes on behalf of the Gallo companies. In short,, there was simply no attempt made to deny the fact that the Gallo companies — via Mario — engaged in a protracted bid-rigging scheme. The transcript of the debarment proceedings is replete with references to the criminal activity which underlay the debarment order.
But even if there was no proof of criminal wrongdoing on the part of the Gallo enterprises and even if the guilty plea could not be considered as evidence of guilt of those entities in the debarment proceedings, the judgment of conviction alone provides an adequate basis for affirming the Commissioner’s determination.
Whatever else may be said concerning the use of a plea of nolo contendere in a collateral civil proceeding, it is settled that the plea leads directly to a judgment of conviction. Hence, in the current case, the Commissioner was dealing with two entities which had been convicted of participation in a bid-rigging conspiracy. Whether that conviction flowed from a plea of guilty, nolo contendere or the verdict of a judge or jury is of no moment. Cf. State v. Henson, 66 N. J. L. 601 (E. & A. 1901), holding that a plea of nolo contendere yields a conviction and that the conviction is admissible to impeach credibility.
*420In a proceeding having as its focus the fitness and responsibility of a party, the fact of a criminal conviction — amy criminal conviction — is highly relevant. This is particularly so where the State employs its broad police powers to shore up< public confidence in the qualifications of those who would engage in a particular occupation or where significant expenditures of public funds are in the offing.
In In re Berardi, 23 N. J. 485 (1957), the court held that proof of a plea of nolo contendere was admissible in a proceeding to terminate a'private detective’s license. The investigator had pleaded nolo contendere to charges of falsifying his federal income tax returns. Just as in Berardi, the Commissioner here is concerned with the “good character, competency and integrity” of state contractors. In re Berardi, supra, 23 N. J. at 493; cf. Trap Rock Industries v. Kohl, 59 N. J. 471, 481 (1971), cert. den., 405 U. S. 1065, 92 S. Ct. 1500, 31 L. M. 2d 796 (1972).
Moreover, it appears to be the rule in the vast majority of states that
the fact of [a] conviction upon [a plea of nolo cont&ndm-e] may be shown in a later proceeding, and such a conviction subjects the defendant to all the consequences of a conviction in the same way as if it were after a plea of guilty or not guilty. TAnno., “Plea of Nolo Contendere,” 89 A. L. R. 2d 450 (1963), § 42 at p. 604],
Certainly the Berardi view seems the correct one. There is simply no doubt that a no<lo■ plea yields a conviction as that word is commonly understood. The court is free, following the plea, to proceed to judgment and to impose (as it did here) the maximum sentence. It would be a radical departure from • this State’s settled view of the effect of a nolo plea and subsequent sentence to reach the result urged here.
Unquestionably, the Commissioner’s duty to involve the State solely with “responsible” bidders requires him to exclude from State business firms which lack moral integrity. Trap Rock Industries v. Kohl (Trap Rock I), 59 N. J. 471, *421481 (1971), cert. den., 405 U. S. 1065, 92 S. Ct. 1500, 31 L. Ed. 2d 796 (1972). On the facts of this case, the business organizations involved were convicted of (and given the maximum sentences for) a criminal conspiracy that spanned many years, a conspiracy which was aimed at the very heart of the integrity of the competitive bidding system. See also United States v. Addonizio, 451 F. 2d 49 (3d Cir.), cert. den., 405 U. S. 936, 92 S. Ct. 949, 30 L. Ed. 2d 812 (1972), in which the criminal involvement of the Gallo enterprises in another aspect of the bid-rigging conspiracy is detailed. In Trap Bock I, the corporation’s wrongdoing had no relation to its performance as a government contractor. In Trap Rock Industries v. Sagner (Trap Rock II), 133 N. J. Super. 99 (App. Div. 1975), aff’d by an equally-divided court 69 N. J. 599 (1976), there was only an inferential nexus between the wrong (a disguised illegal contribution to the election campaign of a former Governor of this State) and the corporation’s place on the list of qualified State contractors.
Here, however, the Gallo business enterprises were convicted of a criminal conspiracy spanning more than a decade which successfully subverted the competitive bidding system. The Gallos’ criminal activities could not more directly relate to their ability, as well as their willingness, to perform State contracts fully and honestly. The Commissioner was amply justified in taking the action that he did. Consequently, his action should be affirmed on the present record.
The majority concludes that the Commissioner should reconsider the Gallos’ arguments on remand. It is not clear from its opinion what issue the Commissioner would be required to determine on the remand or the nature of the evidence admissible to determine it. If his determination on remand is to turn on responsibility of the business entities, it would seem to be a waste of time to require proof of the individual acts of criminal activity which resulted in an acknowledged conviction of these entities. If, on the other hand, the Commissioner is supposed to consider whether *422the surviving partners were in any way implicated in their deceased brother’s criminal acts, that issue is not involved on this appeal.
II.
In Trap Rock II, supra, the Appellate Division concluded that where
corporate derelictions can be isolated and fixed to particular persons, the corporation’s lack of moral responsibility in that situation should be synonymous with the moral defects of the responsible individuals. [133 N. J. Super, at 108].
That holding was derived in large measure from a statement in Trap Rock I that, “The moral responsibility of a corporation is one and the same with the moral responsibility of the individuals who gave it direction.” Trap Rock Industries v. Kohl, 59 N. J. 471, 482 (1971), cert. den., 405 U. S. 1065, 92 S. Ct. 1500, 31 L. Ed. 2d 796 (1972). The language quoted from Trap Rock I, in context, was directed at the corporate entity’s argument that the conduct of its individual principal should not be imputed to it, i. e., the language was in aid of the enforcement of the Commissioner’s prerogative to debar from State contracts those bidders whose responsibility was suspect. The effect of the Appellate Division’s holding in Trap Rock II, while consistent with the literal holding of Trap Rock I, is inconsistent with the spirit of Trap Rock I and the underlying legislation.
In the current case there was no direct evidence linking the surviving Gallo brothers with the misconduct of the deceased brother. However, in view of the nature of that misconduct, its 13-year duration, and the fact that each of the brothers held a one-third interest in these closely held family businesses, it is not surprising that the Appellate Division found the cries of ignorance on the part of the surviving Gallo brothers inherently incredible. Recall that Gene and Yin-*423cent were not mere ‘^haulers of wood and drawers of water.” They were principals, directors and officers with major interests in the business entities convicted of bid-rigging and corruption. Such a finding is not, however, necessary to support an order of debarment under the circumstances of this case.
I would reach the issue posed in Trap Rock II and conclude that a wrongdoer’s continued active participation in the guilty entity’s operations is not a prerequisite to an order debarring the entity when the entity has acknowledged criminal conduct or such conduct is factually established. The entities (and their principals) benefited from the illegal conduct of the deceased principal. It was the entities which were stained with corruption in the eyes of the public. The Gallo concerns did not cease to exist when Mario died. The business entities, not the surviving individuals, seek restoration of the privilege of contracting with the State. The aroma of corruption was not wafted away simply because its source was removed. In Justice Mountain’s words:
[P] unification and penance are salutary, but they cannot safely be deemed the sole key to ultimate salvation in so sensitive- an area as this. The sting of punishment is important and has been so recognized by the Legislature.
[w]ere it possible to obtain corporate absolution simply by the expulsion of the wrongdoer, it would take little imagination to perceive that public protection had been massively eroded. [Trap Rock Industries, Inc. v. Sagner, supra, 69 N. J. 599, 609 (Mountain, J., dissenting) ].
The Commissioner — as protector of the public interest —■ should be allowed to determine when the circumstances warrant restoration of -petitioners to the list of bidders deemed of sufficient responsibility to do business with the State. Until such time, they should not be privileged to do so.
I would affirm.
Justice Mountain authorizes me to -state that he joins in this opinion.
*424For reversal and remandment-—Chief Justice Hughes and Justices Sullivan, Pashman and Clieeoed—i.
For affirmance—Justice Mountain and Judge Canton—2.
Concurrvmg and dissenting—-Judge Coneond—1.

Tbe Gallo Asphalt Company is organized as a partnership. The Gallo Asphalt Corporation and Passaic Crushed Stone Co., Inc. are organized as corporations.

The terms “non vult” and “nolo contendere” are of virtually interchangeable meaning. New' Jersey, for reasons purely of convenience, employs the term “non vult.” See Pressler, Current New Jersey Rules, comment to R. 3:9-3.

Deputy Attorney General Kenneth Zauber’s affidavit states:
Kather than entering into an agreement to recommend to various bidding agencies that the Gallo companies not be debarred in consideration of the guilty pleas, as the appellants’ attorney has alleged, I expressly advised Dino Bliablias, Esq., the attorney for the Gallo companies in the criminal proceedings, that I would make no such recommendation.