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DEFENDER ASSOCIATION PHILADELPHIA AMENDMENT ARTICLES INCORPORATION (07/02/73)

decided: July 2, 1973.

DEFENDER ASSOCIATION OF PHILADELPHIA AMENDMENT OF ARTICLES OF INCORPORATION


Appeal from order of Superior Court, Oct. T., 1970, No. 989, affirming order of Court of Common Pleas, Trial Division, of Philadelphia, June T., 1930, No. 10005, in the matter of Amendments to the Articles of Incorporation of the Defender Association of Philadelphia.

COUNSEL

Bernard L. Segal, with him Louis B. Schwartz, for appellants.

Edward W. Madeira, Jr., for appellee.

Gilbert M. Cantor, for amicus curiae.

Jones, C. J., Eagen, O'Brien, Roberts, Pomeroy, Nix and Manderino, JJ. Opinion by Mr. Justice Pomeroy. Dissenting Opinion by Mr. Justice Roberts. Mr. Justice Manderino joins in this dissenting opinion.

Author: Pomeroy

[ 453 Pa. Page 354]

We are presented by this appeal with the question whether the work of the Defender Association of Philadelphia in affording legal representation to indigent persons accused of crime will be compromised and rendered constitutionally ineffective by reason of the substantial

[ 453 Pa. Page 355]

    representation of the City of Philadelphia in the management of the Association. Specifically, does a potential 50% degree of control of the governing board of the Association by the City serve automatically to deprive the indigent client of competent, disinterested counsel?

The Defender Association, a nonprofit corporation in existence since 1934, applied to the court below in 1969 for approval of certain amendments to its Articles of Incorporation. The Non-Profit Corporation Law*fn1 provides that the court of common pleas shall approve amendments to the charter of such corporations if in the court's opinion they are "lawful, will be beneficial and not injurious to the community." Objections interposed by appellants and others were heard and considered, whereupon the court of common pleas entered its order approving the amendments.*fn2 On appeal the Superior Court affirmed, per curiam, without opinion, two judges dissenting.*fn3 Defender Association of Philadelphia Amendments of Articles of Incorporation, 219 Pa. Superior Ct. 309, 279 A.2d 240 (1971). We granted allocatur because of the importance of the question involved, and now affirm.*fn4

[ 453 Pa. Page 356]

The facts as found by Judge McDevitt in his adjudication are not disputed. They may be summarized as follows: From the time of its incorporation in 1934 until the mid-nineteen sixties, the Association had been purely private in character, deriving its funds from membership dues and contributions from individuals and charitable organizations such as the Community Chest and the United Fund. Until the revolution in the field of constitutional law relating to criminal procedure which began in the early part of the last decade, the Association could function adequately with the moneys so received. Commencing with the historic decision of the Supreme Court of the United States in Gideon v. Wainwright, 372 U.S. 335, 9 L. Ed. 2d 799 (1963), however, the scope of judicially mandated representation of the poor increased dramatically.*fn5 The

[ 453 Pa. Page 357]

Association therefore sought other sources of funding in order to continue to provide quality defense services to the increasing number of indigents entitled to them. Initially the Association was successful in obtaining significant financial assistance through grants from the Ford Foundation, the National Defender Project of the National Legal Aid and Defender Association, the United States Office of Economic Opportunity (OEO) and voluntary contributions of the City of Philadelphia. Thus, by 1967, the combined budget for Association operations, including representation of juveniles, had risen to $600,000; of this amount $152,000 came from the City.

In 1968 the still increasing need for legal defense services and the termination of contributions previously received for limited time periods from the Ford Foundation, OEO and the National Defender Project combined to create a financial crisis for the Association. An effort to obtain additional funds from the City was unsuccessful, and the Association was compelled to plan for a reduction of services. Contemporaneously, in November of 1968, a bill was introduced in City Council proposing the creation of a wholly new public defender program unrelated to that of the Association, the chief administrative officer of which would be appointed by the Mayor of the City of Philadelphia. The bill met immediate opposition from the Association and from many other groups in the community who were satisfied that throughout its existence the Association had provided indigent citizens

[ 453 Pa. Page 358]

    with independent legal defense services of the highest quality. There followed meetings between representatives of the Association and the City to search for a compromise approach which would enable the Association to continue to provide all of the constitutionally required legal defense services in Philadelphia. These negotiations resulted in a contract between the Association and the City, entered into on January 28, 1969.

The contract was approved by a majority (19 to 16) of the Board of Directors of the Association. It provides that the Association shall provide counsel and necessary investigative and other services to indigents in various areas of representation,*fn6 and that the City shall compensate the Association in amounts to be appropriated by City Council from time to time.*fn7 The Board of Directors of the Association is to be reduced in number from 50 to 30 members, 10 directors to be chosen by the Mayor of the City of Philadelphia with the approval of City Council, ten to be chosen by the members of the Association, and the remaining ten directors (called "community directors") to be chosen by agreement among a majority of the City Directors and a majority of the Association directors. Under the contract the Board of Directors appoints the Chief Defender

[ 453 Pa. Page 359]

    and the First Assistant Defender; the Chief Defender appoints such other professional and non-professional staff as may be necessary.*fn8

As a result of the agreement between the City and the Association, the public defender bill then pending in City Council was not acted upon. It was to effectuate the contractual provisions pertaining to changes in its organizational structure that the Association undertook to amend its Articles of Incorporation, for that purpose seeking the necessary approval of the court of common pleas.

There is no dispute that any plan to provide counsel to persons who need representation in criminal proceedings should be designed to provide counsel who is both competent and independent. "The plan and the lawyers serving under it should be free from political interference." A.B.A. Project on Providing Defense Services § 1.4, at 19 (Approved Draft, 1968). The integrity of the relationship between lawyer and client,

[ 453 Pa. Page 360]

    requiring among other things complete fidelity to the client's interest, should be preserved inviolate. Like any lawyer, a person chosen to represent an accused indigent person may serve but one master -- the client. Independence of any plan to provide such services can be assured "if and only if the system is properly insulated from pressures, whether they flow from an excess of benevolence or from less noble motivations." Id. § 1.4, at 20 (Comment).*fn9 The question presented by the case before us is whether the Association, as it will be reorganized pursuant to the contract with the City, will be able to render defender services which measure up to these standards. We hold that the court of common pleas committed no error of law or abuse of discretion in finding that on this record the question should be answered affirmatively.

In essence, appellants' objections to the amendments are that the appointment of one-third of the Association's directors by the Mayor ("City directors") and the selection by those directors and the "Association directors" of the final one-third of the Board ("community directors") in effect gives the City 50% representation and thus potentially effective control of the Association. This in turn, it is said, will adversely affect the independence of Association attorneys and thus create an unconstitutional conflict of interest. It therefore follows, so appellants argue, that the amendments are neither "lawful, beneficial or non-injurious to the community" as required by statute. The conflict of interest is found in the fact that the Mayor appoints both the Commissioner of Police and the City Solicitor,

[ 453 Pa. Page 361]

    a prosecuting official,*fn10 whose interests as law enforcement officers are presumed to be antithetical to those of criminal defendants. We are unable to agree.

We are of course well aware of the line of conflict of interest cases to which appellants refer us and which declare that "the potentiality that [actual] harm may result, rather than that such harm did result will require reversal." Commonwealth ex rel. Whitling v. Russell, 406 Pa. 45, 48, 176 A.2d 641 (1962) (emphasis in original). See also Commonwealth v. Wilson, 429 Pa. 458, 240 A.2d 498 (1968); Commonwealth v. Werner, 217 Pa. Superior Ct. 49, 268 A.2d 195 (1970); Commonwealth v. Bostick, 215 Pa. Superior Ct. 488, 258 A.2d 872 (1969). These and other similar cases invariably involve direct conflicts that arose in situations in which defense counsel undertook to represent co-defendants with differing interests.*fn11 In the case before us, however, the potentiality of conflict of interest is not direct, but is attenuated and speculative at best, as examination of the proposed new organizational structure shows.

The Mayor appoints one-third of the members of the Association's Board of Directors. Even should each of these City directors be obliged to follow, for political or other reasons, the dictates of the Mayor in exercising his or her vote as a member of the Board, this would not give the Mayor or the City control of the Association.*fn12

[ 453 Pa. Page 362]

It is appellants' theory, however, that the manner of selecting the community directors envisaged by the charter amendments, viz., by agreement of a majority of the City and Association directors, would effectively raise city representation to 50%. This argument assumes, of course, that the City group and the Association group each will select one-half of the community directors and that each group will automatically accept the nominations of the other. It also assumes that those community directors will themselves be the creatures of the group which nominated them. All this is sheer speculation. We have no reason to believe that the Association directors, at least one of whose votes is necessary for majority action, would be unaware of the obvious harm that would result from the injection of improper influence into the operation of the Association and would accept nominees for community director seats on the Board if there were any indication that such nominee would act merely as a rubber stamp for the Mayor. We think it much more likely that both the Association directors and the City directors would make and approve nominations of persons whose character, background and experience suggest qualification for the task of board membership independent of any political predilections.

Appellants argue that, in the same way that effective control of a business corporation can be had with ownership of less than 50% of the outstanding shares,*fn13 so here it would be possible for the City to control the Association even though the City could dictate the

[ 453 Pa. Page 363]

    votes of something less than 50% of the Board of Directors. The analogy is inapposite here where we are not dealing with a business corporation controlled through stock ownership. The arithmetic of control involved in the present case is simple indeed: In making a decision on behalf of the Association, thirty votes may be cast by the Board of Directors; each member of the Board has one vote; the ten votes of the City directors, assuming they would vote in a bloc, would obviously not constitute a majority and would not constitute control of the Association.*fn14

Furthermore, the bylaws of the Association contain safeguards against the creation of an impermissible conflict of interest. The Board of Directors must select the Chief Defender and the First Assistant Defender by majority vote.*fn15 The Chief Defender, in turn, has the power to appoint the Association's professional, investigative,

[ 453 Pa. Page 364]

    and clerical staff. Unless two-thirds of the Board approve, every Association employee must be full-time.*fn16 No employee of the Association is permitted to be a candidate for public office, a member of any committee of a political party, a member of a committee of a partisan political club, or to take ...


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