On appeal from the order of removal by the Governor to the Appellate Division of the Superior Court, certified by the Supreme Court on its own motion.
For reversal and remandment -- Chief Justice Vanderbilt, and Justices Oliphant, Jacobs and Brennan. For affirmance -- Justices Heher and Wachenfeld. The opinion of the court was delivered by Vanderbilt, C.J. Heher, J. (dissenting). Wachenfeld, J. (dissenting).
This is an appeal from an order of the Governor removing Louis J. Russo from his position as Assistant Chief Examiner in the Department of Civil Service for misconduct in office while he held the position of Chief Examiner and Secretary. The order was made pursuant to an exercise of the authority granted to the Governor by Article V, Section IV, paragraph 5 of the Constitution which provides:
"The Governor may cause an investigation to be made of the conduct in office of any officer or employee who receives his compensation from the State of New Jersey, except a member, officer or employee of the Legislature or an officer elected by the Senate and General Assembly in joint meeting, or a judicial officer. He may require such officers or employees to submit to him a written statement or statements, under oath, of such information as he may call for relating to the conduct of their respective offices or employments. After notice, the service of charges and an opportunity to be heard at public hearing the Governor may remove any such officer or employee for cause. Such officer or employee shall have the right of judicial review, on both the law and the facts, in such manner as shall be provided by law."
An appeal was taken from the order of removal to the Appellate Division of the Superior Court as authorized by the statute implementing the constitutional provision, N.J.S.A. 52:14-17.2, and we then certified the matter on our own motion while it was pending there.
On March 18, 1954 the Governor appointed H. Norman Schwarzkopf to investigate into the management and affairs of the Division of Employment Security in the Department
of Labor and Industry. As a result of that inquiry evidence was obtained tending to indicate misconduct on the part of Russo in the submission by him to the Division of Employment Security of vouchers for alleged overtime work for that division while he was employed by the Department of Civil Service. These invoices resulted in the payment to him of $1,000 a year during the period from July 1, 1948 to June 30, 1953. He was suspended from his position by executive order on June 18, 1954, pending the hearing and determination of the charges against him. The propriety of that action by the Governor was considered by this court and upheld in Russo v. Walsh, 18 N.J. 205 (1955).
The formal charges against Russo alleged that in his official capacity as Chief Examiner and Secretary Russo "did commit malfeasance in office founded on improper and illegal conduct" and "did commit acts amounting to misconduct and misfeasance in his official capacity founded upon his breach of good faith, trust and right action impliedly required of his official position and upon the performance of his official duties as said Chief Examiner and Secretary in the Department of Civil Service, in an improper and illegal manner." The specifications alleged the submission of invoices for overtime services to the extent of $5,000 "while employed as Chief Examiner and Secretary and/or Assistant Chief Examiner" and that his acts "were fraudulently, willfully, unlawfully and knowingly committed * * * and constituted malfeasance and misfeasance in his said official capacity." Further specifications charged Russo with not having performed the services for which he had billed the State and that he was not entitled to receive any such payments in any of the capacities in which he was employed by the State. The charge that Russo had not performed these overtime services was abandoned at the hearing and the Governor's finding of misconduct was limited to the period during which Russo held the position of Chief Examiner and Secretary.
The Governor appointed Mr. Augustus C. Studer, Jr., of the New Jersey bar, to conduct a hearing on the charges
and report his findings to the Governor together with his recommendations. At the conclusion of the Governor's case counsel for Russo moved for a dismissal of the charges, and the introduction of the defendant's case was held in abeyance pending the determination of that motion. Mr. Studer then submitted his report to the Governor, recommending that the motion be granted and the charges dismissed. Mr. Studer's findings were in part as follows:
"The proof fails to show that Russo acted fraudulently. It shows merely that during a portion of his tenure in office, partly as Chief Examiner and Secretary of the Department of Civil Service, and partly as Assistant Chief Examiner of the Department of Civil Service, he performed certain work for the Division of Employment Security, for which he was paid and which payment was approved by his superiors.
From a consideration of the evidence adduced to sustain the charges made against Russo, your representative finds that the acts of Russo specified by the State as constituting malfeasance and misfeasance in his official capacity, were not fraudulently, willfully, unlawfully and knowingly committed by him. Accordingly, your representative finds that the State has failed to establish a prima facie case in proof of the charges before him."
Exceptions to this report were filed by counsel for the Governor and thereafter oral argument on those exceptions were heard by the Governor personally. The Governor sustained the exceptions and denied the defendant's motion to dismiss.
In his determination the Governor held that the payments to Russo were clearly illegal; that as Chief Examiner and Secretary Russo's salary was to be "as provided in the annual appropriation law," (R.S. 11:2-1) and that as such Chief Examiner and Secretary he could "hold no other public office or employment" except as an unpaid officer "or as director of any quasi -public or other corporation," (R.S. 11:2-2); that Russo's position that he did not violate the law was unsustainable either on the basis that he performed services for the Department of Employment Security apart from his duties as Chief Examiner or on the basis that he performed them in the discharge of his official duties as Chief Examiner, holding that on the first basis he would
violate R.S. 11:2-2 and on the second basis he would violate R.S. 11:2-1. The Governor held that although the statutory authority for overtime pay prior to the passage of chapter 51, Laws of 1951, was obscure, the committee created by that act set up regulations for the exclusion from overtime payments any position for which the work week was classified as "indefinite." He held that Russo plainly came within that class and therefore overtime pay for him as Chief Examiner and Secretary was clearly foreclosed.
Mr. Studer was then relieved from any further duties in the case and the hearing of the balance of the proceedings, the defendant's case, was conducted before the Governor personally.
Initially, in the proceedings before the Governor's appointee, Russo made application for an extensive inspection of certain documents and records of the State pertaining in some respects to the matters in issue. That relief was neither granted nor withheld. After the Governor took over the hearing of the matter personally, and prior to the hearing of the defendant's case, counsel for Russo made application to the Governor seeking the inspection and production of records of the Department of Civil Service and other state departments dealing with the matters upon which Russo's claims for overtime services were based, and dealing also with the records of payments for overtime services made to other state employees for performing work in connection with the administration of this system. The application was generally granted but was limited to the matters relating specifically to Russo. In his letter opinion the Governor stated:
"It is appropriate to refer to the sweeping application for inspection of all records relating to payment of overtime to State employees and officers both in connection with the joint merit system and independent of it. I gather that two purposes are sought to be advanced: (a) to support a claim that Mr. Russo acted in good faith and (b) to establish a custom or practice.
Without now determining the legal efficacy of the claim of good faith, it seems clear that insofar as Mr. Russo may assert that he relied upon payments to others, the crux is the state of his knowledge or information at the time of his challenged conduct, and not such knowledge or information as may perhaps be gleaned by a present
inspection. No affidavit having been filed in support of the motion indicating the state of Mr. Russo's knowledge or information, the inspection would become a roving investigation without any apparent purpose. It is unlikely that the production of such records could have any bearing beyond testing the sincerity of the claim of good faith. In any event, if Mr. Russo's testimony or other developments at the hearing should indicate the necessity or desirability of examining records relating to specific situations upon which he should testify that he relied, the application to inspect may then be renewed before me.
The second asserted objective, namely, to prove custom or practice, is without legal basis. If Mr. Russo is guilty of the charges against him, it is no defense that someone else may also be amenable in like proceedings. Nor can the clear meaning of a statute or regulation be altered by proof of conduct in violation of it."
Thereafter, the defendant sought the issuance of subpoenas duces tecum directed to the 13 department heads who constitute the Governor's cabinet directing them to produce their departmental records covering their employees of Russo's classification who had received extra pay or overtime pay during the period covered by the charges. This the Governor likewise declined to do. At the opening of the hearing before the Governor, this matter was again raised by the defendant's counsel, but denied by the Governor. The following portion of the transcript is helpful in understanding the positions taken by the respective parties:
"Mr. Pellettieri: * * * The purpose of our demand is to show the statute, rules and regulations relating to overtime payments were interpreted uniformly throughout the State service during the period of these charges. This interpretation did not prohibit overtime payments or extra compensation to employees above $240.00 annual increment and such payments were regular and prevailed throughout the State service.
We respectfully urge that this is important to a charge of malfeasance, misfeasance and misconduct because if the records bear us out they will show that every one understood the payments not to be prohibited and thus they will show that there was no operative prohibition; and thus acceptance of such payment by Mr. Russo, or anyone else, is not motivated by any evil intent or result of any conscious wrongdoing.
Governor Meyner: Mr. Fisher.
Mr. Fisher: Sir, the issue is whether Russo received his extra payments lawfully or unlawfully and knowingly. Good faith is a matter of his own reaction to certain circumstances. Mr. Russo
would be free to testify, if he wishes, what knowledge he has of other services, or other rules, or other regulations made. Any offer by Mr. Pellettieri to prove or to show that someone else had, perhaps, likewise unlawfully received any extra compensation would not be a justification, would not show any good faith on Mr. Russo's part. Mr. Russo's good faith would depend entirely upon his own action, and upon his own knowledge, and upon whether it came to his attention and how he reacted toward such facts. I do not see any relevancy with respect to material pertaining to others.
Mr. Pellettieri: That's just the point we made. How can we demonstrate Mr. Russo's claim of good faith if we are not permitted to show the facts demonstrated, at least demonstrating a reasonable basis for it in his behalf, extra payments were in order with general State policy. That's the basis of our objection.
Governor Meyner: What is this second motion specifically?
Mr. Pellettieri: That we want the list which we have submitted to your counsel for the production of the records of overtime payments to -- we are informed there are at present 127 or 130 people on the State payroll who are beyond the $240 annual increment and are on overtime compensation. We want to show Mr. Russo knew of that by reason of the position he held. That's the element of good faith insofar as he was concerned knowing it was a State policy.
Governor Meyner: I think I have outlined in my letter to you May 6th, the conditions under which we are willing to assist you in issuance of subpoenas; and until you can meet the ...