20 1094 George Campbell Painting Corp v. Reid, 673

• Decision Date: 10 June 1968
• Docket Number: No. 673,673
• Citation: 392 U.S. 286,88 S.Ct. 1978,20 L.Ed.2d 1094
• Parties: . 20 L.Ed.2d 1094 GEORGE CAMPBELL PAINTING CORP., Appellant, v. William REID et al
• Court: U.S. Supreme Court

392 U.S. 286

88 S.Ct. 1978.

20 L.Ed.2d 1094

GEORGE CAMPBELL PAINTING CORP., Appellant,

v William REID et al.

No. 673.

Argued April 30, 1968.

Decided June 10, 1968.

Albert A. Blinder, New York City, for appellant.

Paul W. Hessel and Samuel A. Hirshowitz, New York City, for appellees.

Mr. Justice FORTAS delivered the opinion of the Court.

The Public Authorities Law of New York, McKinney's Consol.Laws, c. 43—A, § 2601, provides that a clause must be inserted in all contracts awarded by a public authority of the State for work or services to provide that upon refusal of 'a person' to testify before a grand jury, to answer any relevant question, or to waive immunity against subsequent criminal prosecution, such person and any firm or corporation of which he is a member, officer, or director shall be disqualified for five years from contracting with any public authority, and any existing contracts may be canceled by the public authority without incurring any penalty or damages.¹

During 1964, appellant, a closely held family corporation, entered into three painting contracts with appellee New York City Housing Authority. Each of these contained the standard disqualification clause. The contracts were executed by appellant's president, George Campbell, Jr., who was also a director and stockholder of the corporation.

Early in 1965, appellant became aware that the District Attorney of New York County was conducting an 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.'

A few weeks thereafter, Campbell was subpoenaed to appear before the grand jury. He refused to sign the waiver of immunity. In due course, the Public Housing Authority notified appellant that, pursuant to the provision in its contracts, the contracts were terminated and Campbell and the corporation were disqualified from doing business with the Authority for five years.

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, 282 N.Y.S.2d 487, 229 N.E.2d 184 (1967) (reversed this day, 392 U.S. 273, 88 S.Ct. 1913, 20 L.Ed.2d 1082). 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.² We noted probable jurisdiction. 390 U.S. 918, 88 S.Ct. 848, 19 L.Ed.2d 978 (1968).

We do not consider the constitutionality of § 2601 of New York's Public Authorities Law or the validity or effect of the contract provisions incorporating that section. Appellant's claim is that these provisions operated unconstitutionally to require its president, Mr. Campbell, to waive the benefits of his privilege against self-incrimination. But appellant cannot avail itself of this point, assuming its validity. It has long been settled in federal jurisprudence that the constitutional privilege against self-incrimination is 'essentially a personal one, applying only to natural individuals.' It 'cannot be utilized by or on behalf of any organization, such as a corporation.' United States v. White, 322 U.S. 694, 698, 699, 64 S.Ct. 1248, 1251, 83 L.Ed. 1542 (1944); see also Essgee Co. v. United States, 262 U.S. 151, 43 S.Ct. 514, 67 L.Ed. 917 (1923); Baltimore & Ohio R. Co. v. ICC, 221 U.S. 612, 622, 31 S.Ct. 621, 626, 55 L.Ed. 878 (1911); Wilson v. United States, 221 U.S. 361, 382—385, 31 S.Ct. 538, 945 946, 55 L.Ed. 771 (1911); Hale v. Henkel, 201 U.S. 43, 74—75, 26 S.Ct. 370, 378—379, 50 L.Ed. 652 (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.

Affirmed.

Mr. Justice DOUGLAS, with whom Mr. Justice BLACK concurs, dissenting.

Appellant corporation has been disqualified as a contractor with the State of New York because its president, George Campbell, Jr., who was also a director and an owner of 10% of its stock, invoked the protection of the Self-Incrimination Clause of the Fifth Amendment when summond before the grand jury. All other officers, di- rectors, and the controlling stockholders of this closely held corporation appeared and indicated a willingness to sign waivers of immunity and to testify. The president, who invoked the Self-Incrimination Clause, resigned as officer and director and agreed to sell his 10% stock interest, though so far as appears the contract of sale has not been consummated.¹

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.² When the present law blacklists this family corporation, it has a like impact.

I fail to see how any penalty—direct or collateral—can be imposed on anyone for invoking a constitutional guarantee. A corporation, to be sure, is not a beneficiary of the Self-Incrimination Clause, in the sense that it may invoke it. United States v. White, 322 U.S. 694, 64 S.Ct. 1248, 88 L.Ed. 1542. Yet placing this family corporation on the blacklist and disqualifying it from doing business with the State of New York is one way of reaching the economic interest of the recalcitrant president.³ If, as I felt in Spevack v. Klein, 385 U.S. 511, 87 S.Ct. 625, 17 L.Ed.2d 574, placing the penalty of disbarment on a lawyer for invoking...