Opinion
November 29, 1911.
William M. Ivins and Edgar T. Brackett, for the appellant.
James W. Osborne and Arthur T. Warner, for the respondents.
The only authority upon the subject holds that section 856 of the Code of Civil Procedure contemplates no notice to the alleged offender. We do not feel at liberty to overrule those cases. ( Matter of McAdam, 7 N.Y. Supp. 454, General Term, First Department, 1889; Matter of Grout, 105 App. Div. 98, Second Department, 1905.) The question, therefore, is whether this section, so construed, violates the appellant's constitutional rights. In the case of criminal contempts it is provided by section 751 of the Judiciary Law (Consol. Laws, chap. 30; Laws of 1909, chap. 35) that if committed in the presence of the court the offense may be punished summarily; otherwise the alleged offender must have notice and time to prepare his defense. In the so-called civil contempts (Judiciary Law, §§ 755, 757) a person cannot be punished for contempt until after he is brought before the court by warrant or an order to show cause and given an opportunity to be heard. The McAdam case, above cited, holds that although no notice is required the section is valid. The Grout case holds that the section is unconstitutional in that the defendant has had no opportunity to be heard. Adopting the construction placed upon the section by the above authorities, that no notice is contemplated, we are constrained to follow the Grout case, as the latest decision of a court of co-ordinate jurisdiction, that the statute is unconstitutional, and that the order should be reversed and the motion for commitment denied.
All concurred, except HOUGHTON, J., concurring in result in memorandum, and BETTS, J., dissenting in brief memorandum, and voting for affirmance, on opinion of Justice JOSEPH A. KELLOGG in the court below.
For the reasons pointed out by the learned court at Special Term, and particularly because requirement for notice can properly be read into the law, I think section 856 of the Code of Civil Procedure is not in contravention of either the Federal or State Constitutions. I do not think, however, that the questions propounded to Mr. Barnes with respect to his acquiring the J.B. Lyon stock and which he refused to answer were pertinent or material to the legitimate inquiries of the legislative committee, or that the necessity and propriety of producing the books of the Journal Company sufficiently appeared. On the 2d of September, 1911, the President of the Senate, pursuant to a concurrent resolution of the Legislature, appointed five Senators as a special committee to investigate the city and county of Albany. The resolution authorizing such appointment recites in substance that it is reputed that the commission of crime is prevalent in the city and county of Albany; that prosecution therefor is lax, and that municipal laws and regulations are disregarded by the public officials, and that corruption amongst them exists, and that it is wise for the Legislature to investigate concerning the truth of such rumors to the end that remedial legislation may be suggested to cure such evils if any be found. The committee organized, engaged counsel and began hearings at which various witnesses were sworn. As shown by the moving papers, it appears that a corporation known as the J.B. Lyon Company, engaged in the printing business, was organized about 1901 with a capital of $300,000, consisting of 3,000 shares of the par value of $100 each, and that at about the time of such organization Mr. Barnes, who was and is the majority owner and publisher of the Albany Evening Journal, a Republican newspaper, became the owner of 750 shares of the Lyon Company stock; that the Albany Evening Journal for a period of twelve years prior to the hearing had presented and been paid by the State upwards of $14,500 for the printing of Session Laws for which it is alleged no services were rendered; that for several years upon competitive bidding the city of Albany had awarded to the Albany Argus, a Democratic newspaper, because it was the lowest bidder, printing contracts upon which the Argus Company voluntarily paid the Journal Company fifteen per cent of its receipts, and that for several years various boards and departments of the city of Albany had split up their contracts with the Journal Company for printing and services into amounts less than $250 to avoid competitive bidding; and that the J.B. Lyon Company for a number of years had been paid large sums for county printing without public bidding, at the instance of county officials and departments, all of which were Republican in politics. After these facts were claimed to have been established by other evidence, Mr. Barnes was called as a witness, and he testified that he was a Republican and for some years had been the Republican leader in the city and county of Albany, defining his position of leader as one whose advice was in general accepted by members of his party; that for some years he had been the majority owner and manager of the Albany Evening Journal; that since its organization he had been and was now the owner of 750 shares of the J.B. Lyon Company. He was then asked how much he paid for those shares, whether they were given to him or not, and whether he had any talk with Mr. Lyon when he acquired them, which questions he refused to answer. A subpœna duces tecum was also served upon him to produce before the committee all ledgers and books of original entry showing the business of the Journal Company with the various departments of the city and county of Albany and with persons and corporations transacting business with said city and county for the past ten years; and he refused to produce such books, but offered, however, to give to the committee true copies of all entries contained in such books for said period, relating to any business had by such company with the city and county of Albany and the various departments and officers thereof.
It could not aid the committee in framing its report to the Legislature or in the recommendation of legislation to know in what manner Mr. Barnes acquired his stock in the J.B. Lyon Company. If there was any dereliction on his part in owning stock in that corporation, which personally I fail to appreciate, the fact that he owned a large amount was sufficient for the purposes of the committee. Whether he obtained it by purchase or gift, at a high price or at a low price, or with whom he talked about purchasing, is wholly immaterial so far as the jurisdiction of the committee is concerned. Being the owner of a comparatively large amount he is conclusively presumed to be interested in the prosperity and welfare of the corporation. If the Lyon Company was favored by the officials and boards of the city and county of Albany and any inference is to be drawn that such favoritism was because of Mr. Barnes' ownership of stock therein, the committee already has knowledge that he is a large stockholder and is in possession of all the facts and can invoke all the presumptions from which it could draw any conclusion pertinent or otherwise to its inquiry. His interest in the prosperity of the corporation is as great whether the stock cost him much or little or nothing at all. There would have been no breach of the law in Mr. Lyon giving or in Mr. Barnes accepting a gift of the stock, nor in Mr. Lyon selling or in Mr. Barnes buying the stock. I do not understand that it is claimed that any public official has wrongfully given public business to the J.B. Lyon Company at the direct solicitation of Mr. Barnes, and only by inference is it asserted that such public business was given because he chanced to be a large stockholder. If such were the fact it is the official who is thus derelict in his duty and not the owner of the stock. Paternal legislation has not yet gone to the extent of prescribing how an individual shall make investments or what he shall pay for them, or to prevent him from lawfully accepting a gift of personal property if he so desires. The questions, therefore, which the witness refused to answer were wholly immaterial and not at all pertinent to any legislation which the committee could recommend, and he was justified in his refusal. A witness was held justified in refusing to answer questions far more pertinent to the inquiry than those at bar in Harriman v. Interstate Commerce Commission ( 211 U.S. 407).
I recognize that there is a very wide difference between the right to compel the production of corporate books and those of an individual. Assuming, however, that because the books are those of the Journal Company, a corporation owing its life to the State itself there exists a greater right to inspect than if they belonged to an individual, still there must be some reasonable cause shown why the production of the books even of a corporation is necessary before the court shall resort to the extreme remedy of imprisonment for refusal to produce them. The matters set forth in the moving affidavit respecting which the production of the books is claimed to be necessary to the investigating committee are the printing of the Session Laws done by the Journal Company amounting to $14,504.50, during a period of twelve years, paid for by the State after audit by the Comptroller of the State; the payment by the Argus Company to the Journal Company of fifteen per cent of the amount of its printing contracts with the city of Albany which were duly let to it because it was the lowest bidder; and the doing of printing by the Journal Company for the city and its officers without competitive bidding therefor. I do not under stand it to be claimed that the bills for printing the Session Laws were in fact fraudulent, but it is presumably claimed that the printing was done from forms purchased of others instead of the type being set up in the Journal office. This is the common practice throughout the State. The law requires the members of the two dominant political parties of the boards of supervisors of the various rural counties annually to designate a newspaper of each party to publish the Session Laws, and the price therefor is fixed pursuant to statute. These newspapers fully perform their contracts by printing the laws from forms or from sheets printed by others and inserting them in their own newspapers, and there has never been any question concerning their right to compensation if so published.
The fact that the Argus Company gave to the Journal Company fifteen per cent of the amount of its contract price for the printing which it obtained by its lowest bid the committee already has knowledge of. The books of the Journal Company cannot add to the culpability of that act if it was culpable, or throw any light on the transaction. So, too, the committee already has proof before it, as the moving papers show, that the Journal Company entered into contracts with city officials for the doing of printing and the furnishing of materials without such contracts being obtained by competitive bidding, and by splitting up the same so no one would amount to more than the prohibited sum of $250. The books of the Journal Company cannot make these transactions any worse or any better. If there was any evasion or violation of the law that fact is now before the committee. It is not claimed that the books would show that these contracts were in fact let by competitive bidding; the fact that they were not and that the law was violated is asserted to have been already proven before the committee. Indeed, counsel for the committee very frankly states he does not claim that it needs any more light upon those facts set forth in his moving affidavit, but he says the committee desires to look at the books and find out whether some other infraction of the law has not been committed without being able to point out what that infraction is or to show any grounds that it probably exists. Mr. Barnes offered to give to the committee true sworn copies of all that the Journal Company's books show for the period desired respecting any dealings between the city and county or any officials connected therewith. This offer, however, was not satisfactory to the committee, presumably upon the ground last stated, that if permitted to roam through the books and look at all private entries it might be able to discover some person whose name appeared upon the books who had had some questionable dealings with public officials. This would be the exercise of an inquisitorial function far beyond the powers of the investigating committee, and the invasion of the meagre rights even of a corporation. The only legitimate purpose of the investigation is to enable the committee to report some remedial legislation to correct evils which it may find to exist. It is not every evil which is subject to investigation and remedy by the Legislature. Breach of law and defective working of present municipal law embrace all the matters which the resolution creating the investigating committee properly covers and all the committee could legitimately investigate. It is not claimed that Mr. Barnes committed any crime, and counsel for the committee freely disavows any such charge. The most that is insinuated is some vague, indefinite, undue influence exercised by him through his political position. I cannot see how the answers to the questions propounded or an inspection of the books of the Journal Company would throw any light on any breach of law or show any defect in the working of the present municipal laws applicable to the city and county of Albany, or properly aid the committee in performing its legitimate functions.
For these reasons I think the witness was justified in refusing to answer the questions and in declining to produce the books of the Journal Company, and, therefore, concur in a reversal of the order and denial of the motion.
A committee appointed by a concurrent resolution of the Legislature is investigating conditions prevailing in Albany with a view of suggesting remedial legislation that will improve conditions alleged to there exist. A witness, one William Barnes Jr., subpœnaed to testify and produce certain books of the Journal Company, of which he is president, has refused to answer questions claimed to be pertinent, and also refused to produce said books. The matter is important because the judiciary is asked to hinder and prevent the legislative inquiry. The lower court, on sufficient precedent, has, it seems to me, applied to the facts disclosed here, properly held that the questions should be answered and the books produced. This court is about to reverse on the authority of a decision of the Appellate Division of the Second Department, which decision was rendered on facts not at all analogous to the facts existing here. I dissent from that opinion and vote for affirmance of the order appealed from on the opinion of Justice JOSEPH A. KELLOGG in the court below.
Order reversed and motion denied.