George Campbell Painting Corp. v. Reid/Dissent Douglas

by William O. Douglas

United States Supreme Court

392 U.S. 286

George Campbell Painting Corp.  v.  Reid

 Argued: April 30, 1968. --- Decided: June 10, 1968

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, directors, 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 the Self-Incrimination Clause is unconstitutional, so is placing a monetary penalty on a businessman for doing the same. ^[4] Reducing the value of appellant corporation by putting it on the State's blacklist is a penalty which every stockholder suffers. If New York provided that where a businessman invokes the Self-Incrimination Clause of the Fifth Amendment he shall forfeit, say, $10,000, the law would plainly be unconstitutional as exacting a penalty for asserting a constitutional privilege. What New York could not do directly, it may not do indirectly. Yet penalizing this man's family corporation for his assertion of immunity has precisely that effect.

The Supremacy Clause of the Constitution (Art. VI, cl. 2) gives the Fifth Amendment, now applicable to the States by reason of the Fourteenth, controlling authority over New York's law.

Notes

1. One of the directors of the corporation testified before appellee New York City Housing Authority that no consideration was paid for the stock at the time of transfer, and that there was as yet no formal or informal agreement as to payment for the stock.
2. E.g., Delaware Laws 1778, c. 29b; New Jersey, Act of Dec. 11, 1778, N.J.Rev.Laws 40 (Paterson ed. 1800). Compare North Carolina Laws, Session of April 14, 1778, c. 5, calling for confiscation of the estates of certain persons 'inimical to the United States,' but specifically providing that members of their families should be allowed that portion of the estate forfeited which they might have enjoyed had the owner died intestate. See also Bayard v. Singleton, 1 Martin's N.C.Rep. 42 (1878). And see Comment, The Supreme Court's Bill of Attainder Doctrine: A Need for Clarification, 54 Calif.L.Rev. 212, 214, 216 (1966).
3. Damage to shareholders which results indirectly from damage done to the corporation can, of course, be rectified through suit by the corporation itself or by a stockholder's derivative action. E.g., Paulson v. Margolis, 234 App.Div. 496, 255 N.Y.S. 568 (Sup.Ct. 1932). See generally Ballantine, Corporations 333-339 (1946); 13 Flectcher Cyclopedia, Corporations §§ 5908-5911 (1961). There is no indication in the opinion of the New York Court of Appeals that that remedy is inappropriate on the facts of this case.
4. The fact that appellant may petition the New York courts for discretionary relief under § 2603 of the New York Public Authorities Law does not cure the defect. For appellant's claim is that its disqualification was improper, and that it was penalized pursuant to an unconstitutional statute. Its remedy cannot be limited by § 2603, which was construed by the New York Court of Appeals below to grant the state courts discretion to afford relief from a proper disaqualification when the application of the statute would cause an unnecessary hardship. Indeed, § 2603 by its terms does not even involve a review of the basis for the disqualification, but provides that any disqualified corporation may apply to the New York Supreme Court to discontinue the disqualification:

'Such application shall be in the form of a petition setting forth grounds, including that the cooperation by petitioner with the grand jury at the time of the refusal was such, and the amount and degree of control and financial interest, if any, in the petitioning firm, partnership or corporation by the member, partner, officer or director who refused to waive immunity is such that it will not be in the public interest to cancel or terminate petitioner's contracts or to continue the disqualification * * *.'