Campagna v. Shaffer, 73 N.Y.2d 237 (1989)

An administrative agency’s regulatory power is limited to the authority delegated to it by the legislature; it cannot create new laws or expand existing ones through administrative fiat.

Summary

This case addresses the scope of the New York Secretary of State’s authority to regulate real estate brokers, specifically concerning a nonsolicitation order in the eastern Bronx. The Secretary issued an order prohibiting brokers from soliciting listings for sale in that area to combat “blockbusting.” A licensed real estate broker, Campagna, challenged the order and a related regulation restricting the relocation of broker offices. The New York Court of Appeals reversed the lower courts, holding that the Secretary exceeded her authority by enacting a blanket ban on solicitation, which went beyond the legislature’s specific prohibitions against discriminatory practices. The Court emphasized that agencies can only administer, not rewrite, laws.

Facts

In response to community complaints about aggressive solicitation by real estate brokers in eastern Bronx County, the Secretary of State issued an order prohibiting all real estate brokers from soliciting residential property listings in that area. This ban included letters, calls, door-to-door canvassing, and advertisements. Additionally, the Secretary enforced a regulation requiring brokers to obtain prior approval before relocating their offices. Campagna, a licensed real estate broker, sought to relocate her office to her Bronx residence, which fell within the nonsolicitation zone. She challenged the order and relocation restriction, arguing that the Secretary lacked the authority to impose such broad limitations.

Procedural History

Campagna sought a declaratory ruling from the Department of State that the nonsolicitation order and relocation restrictions should not be enforced against her. The Department declined to rule, leading Campagna to initiate litigation. The lower courts upheld the Secretary’s authority and deemed the actions constitutional. Campagna appealed to the New York Court of Appeals.

Issue(s)

1. Whether the Secretary of State exceeded her authority by issuing a nonsolicitation order that broadly prohibited all real estate broker solicitation in a designated area.

2. Whether the Secretary of State has the authority to require pre-approval for the relocation of a real estate broker’s office.

Holding

1. Yes, because the Secretary’s nonsolicitation order exceeded the authority delegated by the legislature, which only prohibited specific types of discriminatory solicitation related to blockbusting.

2. No, because Real Property Law § 441-a (5) only requires notification of relocation, not pre-approval.

Court’s Reasoning

The Court reasoned that administrative agencies, as creations of the legislature, possess only the powers expressly granted to them, along with those necessarily implied. While agencies have broad power to regulate in the public interest, they cannot create new laws or expand existing ones. The Court emphasized that the legislature had explicitly defined prohibited blockbusting activities in Executive Law § 296 (3-b) as representations about neighborhood changes related to race, creed, color, or national origin leading to undesirable consequences. The Secretary’s nonsolicitation order, however, banned all broker-initiated contact, not just the illegal solicitation targeted by the legislature. The Court analogized the case to Boord v. O’Brien, where the Police Commissioner overstepped his authority by attempting to curtail the legitimate activity of hotel runners beyond what was permitted by law.

The Court found that if a complete ban on solicitation is necessary to prevent blockbusting, that determination should be made by the legislature, subject to constitutional review. The Court also found no support in the record for the broad remedy chosen by the Secretary, noting the lack of evidence that enhanced disciplinary measures or periodic reviews were considered. Regarding the relocation of licensees, the Court cited Council for Owner Occupied Hous. v Abrams and Real Property Law § 441-a (5), stating that the Secretary of State is only entitled to notification of relocation, not pre-approval. The regulation requiring pre-approval was therefore invalid.

The Court stated, “[a]n agency cannot by its regulations effect its vision of societal policy choices and may adopt only rules and regulations which are in harmony with the statutory responsibilities it has been given to administer.”