Campagna v. Shaffer

• Decision Date: 16 February 1989
• Citation: 538 N.Y.S.2d 933,73 N.Y.2d 237,536 N.E.2d 368
• Parties: , 536 N.E.2d 368 In the Matter of Candida CAMPAGNA, Appellant, v. Gail S. SHAFFER, as Secretary of State of the State of New York, Respondent.
• Court: New York Court of Appeals Court of Appeals

Page 933

538 N.Y.S.2d 933

73 N.Y.2d 237, 536 N.E.2d 368

In the Matter of Candida CAMPAGNA, Appellant, v. Gail S. SHAFFER, as Secretary of State of the State of New

York, Respondent.

Court of Appeals of New York.

Feb. 16, 1989.

Michael T. Wallender, John T. DeGraff, Jr. and Brian J. McCann, Albany, for appellant.

Robert Abrams, Atty. Gen. (Kathie Ann Whipple, O. Peter Sherwood, Richard G. Liskov and Ellen J. Fried, New York City, of counsel), for respondent.

OPINION OF THE COURT

BELLACOSA, Judge.

Petitioner, a licensed real estate broker, challenges an order of the respondent Secretary of State, dated September 6, 1977, which interdicts real estate brokers and salespersons from soliciting for sale residential realty in eastern Bronx County. A related regulatory practice restricting the number of brokers permitted to operate in areas covered by the nonsolicitation order is also attacked. The lower courts upheld the authority of the Secretary of State to issue the order and to control the number of brokers in the area and declared the actions constitutional.

The Appellate Division order, 140 A.D.2d 1015, 529 N.Y.S.2d 671, appealed as of right should be reversed because the Secretary of State's power to regulate real estate brokers does not authorize the regulations under review. By deciding the case traditionally on the narrowest ground available, we need reach no other issue and do not reach the constitutional issue adjudicated by the lower courts as to whether this wholesale ban on solicitation is violati of the First Amendment (Central Hudson Gas & Elec. Corp. v. Public Serv. Commn., 447 U.S. 557, 100 S.Ct. 2343, 65 L.Ed.2d 341).

The responsibility for licensing real estate brokers has been expressly delegated to the Secretary of State (Real Property Law § 441-a). The Secretary is also authorized to discipline any licensees who have demonstrated "untrustworthiness" (Real Property Law § 441-c) and is empowered to enact rules and regulations to effectuate this authority (Executive Law § 91) which, reasonably interpreted, authorizes her to set standards of conduct for the real estate industry and to promulgate regulations pertaining to the licensing and disciplining of real estate brokers. In 1969, the Legislature declared in Executive Law § 296(3-b) that it shall be unlawful "for any real estate broker * * * to represent that a change has occurred or will or may occur in the composition [of a neighborhood or block] with respect to race, creed, color [or] national origin * * * and to represent, directly or indirectly, that this change will or may result in undesirable consequences * * * including but not limited to the lowering of property values, an increase in criminal or anti-social behavior, or a decline in the quality of schools or other facilities."

To further this State policy of preserving stable and integrated communities and of avoiding churning and panic selling, the Secretary of State, acting expressly under both Real Property Law article 12-A and Executive Law § 91, promulgated a regulation which prohibited licensed real estate brokers from representing to homeowners that the value of their homes was decreasing due to an influx into the community of people of a different race, color or creed (19 NYCRR 175.17[a] ). The antiblockbusting regulation was initially to be enforced by individualized cease and desist orders against brokers soliciting individual homeowners who had notified the Secretary that they did not desire to sell or lease their property (19 NYCRR 175.17[b] ).

In the summer of 1977, residents and community representatives in eastern Bronx County complained to the Department of State of excessive solicitation and aggressive activities by real estate brokers in the community, despite the use of cease and desist orders. Following a public hearing on the issue, the Secretary of State issued an order under challenge in this lawsuit, which states in pertinent part "that all real estate brokers and salespersons are hereby restricted and shall cease and desist from soliciting listings of residential properties for sale and for purchase in any manner, including but not limited to solicitation by means of letters, postcards, telephone calls, door-to-door canvassing, window signs, billboards, advertisement by handbills or news publications except news publications of general circulations within the boundaries of Community Planning Board 9, 10, 11 and 12 of Bronx County. That all solicitation be and is hereby prohibited until further notice" (record on appeal, vol. I, at 46).

In addition to issuing the nonsolicitation order, the Secretary of State promulgated a regulation, also at issue here, providing that: "No broker shall relocate his principal office or any branch office without prior approval of the department" (19 NYCRR 175.20[d] ).

In June 1984, petitioner Campagna, a licensed real estate broker who resides in The Bronx, closed her real estate office in Stormville, Dutchess County. Six months later, she notified the Department that she wished to relocate her office to her Bronx residence within the area of the nonsolicitation order. The Department conditionally acquiesced.

In March 1985, petitioner sought a declaratory ruling from the Department that the nonsolicitation order and license relocation restrictions should not be enforced against petitioner and other licensees similarly situated. The Department declined to rule and this litigation ensued.

Petitioner contends that the Secretary of State lacked the authority to issue the order, that the Secretary has no authority to approve or condition broker relocation and that, in any event, her right to free speech was violated. She also alleges that the order unduly restricts her business activity, causing her economic hardship.

The Secretary of State defends, contending that it is within her expressly delegated authority to determine what conduct constitutes untrustworthiness and that she has determined that all broker-initiated contact in this specified area constitutes untrustworthiness. The Secretary also argues that the order is consistent with the legislatively declared policy to ban blockbusting and is a reasonable means to achieve that goal.

The Secretary claims she has authority to approve broker relocation under Real Property Law article 12-A generally and Real Property Law § 441-a(5) specifically, which provides in part: "Change of address. Notice in writing * * * shall be given the department * * * by a licensed real estate broker on his own behalf and on behalf of each salesman associated with him of any change in his or its principal business address."

Before turning to the substance of our analysis, we note that we were previously confronted with a challenge to the scope and validity of a nonsolicitation order covering different geographic areas. In Matter of Hawley v. Cuomo, 46 N.Y.2d 990, 416 N.Y.S.2d 232, 389 N.E.2d 827, a 1976 nonsolicitation order encompassing all of Brooklyn and Queens was at issue, and we assumed without deciding that the Secretary had authority to issue the order. We nonetheless invalidated the order there as arbitrary and capricious, noting that "the facts before respondent failed to establish any rational basis for promulgation of an order so broad in geographic scope" (id., at 992, 416 N.Y.S.2d 232, 389 N.E.2d 827).

Agencies, as creatures of the Legislature, act pursuant to specific grants of authority conferred by their creator. In discharging responsibilities, an agency is "clothed with those powers expressly conferred by its authorizing statute, as well as those...