Case ID: ny-2d_16/html/0112-01.html
Source: Caselaw Access Project
Author: {"author": "Bergan, J. Chief Judge Desmond (dissenting).", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

In the Matter of Hub Wine & Liquor Co., Inc., et al., Respondents, v. State Liquor Authority, Appellant.
    Argued June 9, 1965;
    decided July 9, 1965.
    
      
      Lawrence Kunin, Hyman Amsel and Bartholomew A. Moynahan for appellant.
    The determination of the State Liquor Authority, in approving the removal sought in line with the policy adopted by it, was a proper exercise of the broad discretion vested in the Authority by law. (Matter of Rockower v. State Liq. Auth., 4 N Y 2d 128; Matter of Gambino v. State Liq. Auth., 4 A D 2d 37, 4 N Y 2d 997; Matter of Williamson v. New York State Liq. Auth., 14 N Y 2d 360; Matter of Franklin Nat. Bank v. Superintendent of Banks of State of N. Y., 40 Misc 2d 565, 20 A D 2d 682, 14 N Y 2d 482; Matter of Nostrand Check Cashing Co. v. Clark, 27 Misc 2d 799, 13 A D 2d 922; Shepard v. Village of Skaneateles, 300 N. Y. 115; Matter of Swalbach v. State Liq. Auth., 7 N Y 2d 518; Martin v. State Liq. Auth., 43 Misc 2d 682,15 N Y 2d 707.)
    
      Monroe I. Katcher, II, for respondents.
    I. Appellant’s determination was not an exercise of the discretion vested in it by the Legislature to make an individual judgment upon the facts and circumstances of the application before it; the approval was merely perfunctory and in reliance upon a general policy covering every petition for removal by a package store licensee. (Matter of Swalbach v. State Liq. Auth., 7 N Y 2d 518, 8 N Y 2d 934.) II. Sections 2, 17, 99-d (subds. 3, 4) and 111 of the Alcoholic Beverage Control Law were unchanged by the 1.964 Legislature. Chapter 531 of the Laws of 1964 merely repealed the previous mandatory curb on appellant’s discretion to locate liquor store licenses closer together than 1,500 feet on the same street or avenue. Section 14 of said chapter reaffirmed the statutory standard which imposes upon appellant the duty to determine, in each and every case, whether the location of licensed premises of all licenses to traffic in alcoholic beverages serves the convenience and advantage of the public. (Martin v. State Liq. Auth., 43 Misc 2d 682, 15 N Y 2d 707; Matter of Lenward Liq. Corp. v. New York State Liq. Auth., 19 A D 2d 612; Matter of Acker Merrall & Condit Co. v. New York State Liq. Auth., 282 App. Div. 638, 306 N. Y. 755; Matter of Williamson v. New York State Liq. Auth., 20 A D 2d 544, 14 N Y 2d 360; Matter of Gambino v. State Liq. Auth., 4 A D 2d 37, 4 N Y 2d 997; Matter of Mularz v. State Liq. Auth. of State of N. Y., 20 A D 2d 65; Matter of William H. Grossman, Inc. v. Quinn, 281 App. Div. 1028.) III. Appellant disregarded its obligation under the law to consider, appraise and evaluate all of the relevant factors and legitimate considerations upon which to reach its informed judgment as to whether the convenience and advantage of the public would be adequately served by the elimination of City Stores from 74 Fifth Avenue, Manhattan, and as to whether the proposed area in the Bronx was already being adequately served by a sufficient number of liquor stores. (Matter of Mularz v. State Liq. Auth. of State of N. Y., 20 A D 2d 65; Matter of Steiert v. Epstein, 27 Misc 2d 1090, 15 A D 2d 532.) IV. The City Stores’ approval on August 18, 1964 was void and invalid insofar as it was made pursuant to bulletin No. 390 which was not filed with the Secretary of State at that time and, therefore, was without legal effect under section 8 of article IV of the New York State Constitution. (Matter of F & S Liqs. v. State Liq. Auth., 19 A D 2d 359; Matter of Gross v. New York City Alcoholic Beverage Control Bd., 7 N Y 2d 531; People v. Cull, 10 N Y 2d 123; Matter of Costello v. New York State Liq. Auth., 17 A D 2d 547; Matter of Suffolk County Retail Wine & Liq. Dealers Assn. v. New York State Liq. Auth., 44 Misc 2d 334, 23 A D 2d 552.) V. The determination herein was made by appellant under the authority of section 111 of the Alcoholic Beverage Control Law. It should be annulled and set aside because said section is a delegation of legislative power without guides or standards, in violation of section 1 of article III of the New York State Constitution. (Packer Collegiate Inst. v. University of State of N. Y., 298 N. Y. 184; Darweger v. Staats, 267 N. Y. 290; People v. Klinck Packing Co., 214 N. Y. 121; Matter of Levine v. O’Connell, 275 App. Div. 217, 300 N. Y. 658.) VI. Section 13 of chapter 531 of the Laws of 1964, to the extent that it was made effective 47 days after the issuance by appellant to petitioner Hub of a retail liquor store license, is an impairment of the obligations of the contract between Hub and the State, in violation of the provisions of the United States Constitution. (Matter of Wa-Wa-Yanda v. Dickerson, 18 A D 2d 251; People v. Durante, 19 App. Div. 292; Niles v. Mathusa, 20 App. Div. 483; Matter of Hilliard v. Giese, 25 App. Div. 222, 155 N. Y. 702.)
    
      Monroe I. Katcher, II, for Metropolitan Package Store Association, Inc., amicus curiœ.
    
    I. The legislative intent is to require the State Liquor Authority to continue past practice and administrative construction of its duties under the statute. (Matter of Dobess Realty Corp. v. Magid, 186 Misc. 225; Matter of Sarrel v. Telesford, 271 App. Div. 999; Matter of Foscarinis [Corsi], 206 Misc. 62, 284 App. Div. 476; Matter of Berson [Corsi], 283 App. Div. 190; McCaughn v. Hershey Chocolate Co., 283 U. S. 488; Orinoco Realty Co. v. Bandler, 233 N. Y. 24; Matter of Gilmore v. Preferred Acc. Ins. Co., 283 N. Y. 92; Pouch v. Prudential Ins. Co. of America, 204 N. Y. 281.) II. The State Liquor Authority improperly attempted to create general rules where general rules are inapplicable, and has attempted to deprive the Supreme Court of its jurisdiction to entertain judicial review of transfers. (Matter of Barry v. O’Connell, 303 N. Y. 46; Matter of Williamson v. New York State Liq. Auth., 14 N Y 2d 360; Matter of Swalbach v. State Liq. Auth., 7 N Y 2d 518; Matter of Gross v. New York City Alcoholic Beverage Control Bd., 7 N Y 2d 531.)
   Bergan, J.

This appeal by the State Liquor Authority from an order annulling its decision to grant a retail liquor store licensee permission to remove from one location to another brings up an aspect of the revision of the State’s liquor law by chapter 531 of the Laws of 1964 and of the Moreland Commission’s studies leading to the enactment of that statute not considered in Seagram & Sons v. Hostetter (16 N Y 2d 47), decided herewith.

The former statutory provision (Alcoholic Beverage Control Law, § 105, subd. 4) had prohibited the granting of a retail license in cities of over a million population “within fifteen hundred feet of any premises holding a similar license on the same street or avenue ” and within 700 feet in areas outside such cities.

The first report of the Moreland Commission (Jan. 3, 1964) recommended the elimination of the distance restrictions as “ a prerequisite to all of the other recommended changes because, until they are eliminated, intelligent judgment cannot be exercised by new applicants or present licensees in deciding where their businesses should ultimately be located” (Report No. 1, p. 44).

This distance restriction was regarded by the commission as one aspect of a highly protected and monopolistic practice in the sale of liquor in New York which was responsible for the adverse public effect on the administration of the liquor law.

A basic remedy for these evils, the commission found, “ would be the restoration of the free market ”. (Interim Report, Aug. 30,1963, p. 9.) The commission stated further: “ From all the information which can be gathered on the historical background of the distance restriction, it appears that it was designed to prevent liquor stores from locating in clusters 1 in order to prevent an unlimited grouping of retail stores which might result in harmful competition with its resulting evil effects. ’ * * * It is our finding that these distance requirements have no present purpose except to restrict competition.” (Report No. 1, p. 15.) It stated further: “ None of these factors evidences a design to promote temperance and respect for law. Bulletin 279 was primarily concerned with protecting the economic position of entrenched package stores.” (p. 17.) It continued that “the conclusion is irresistible that the maintenance of major restrictive provisions of our liquor laws has been dictated by the industry, at the expense of public convenience, logic and good administration. The history of these provisions and regulations offers impressive support for this view. It is obviously anomalous that the highest degree of economic protection accorded by law tp any industry in this State (with the possible exception of regulated public utilities) is given to an industry which is generally thought to be low on the scale of public value. ’ ’ (p. 27.) It concluded that these restrictions did not promote temperance.

And the Governor’s message to the Legislature (Feb. 10, 1964) asked “justice to the consumer” by putting an end to “ the artificial devices” through which the liquor industry received “ uniquely beneficial treatment at the consumer’s expense ”, an example being the artificial distance requirements between retail premises concerning which “ careful studies now show that there is no discernible connection between temperate and lawful behavior and the establishment of such arbitrary and compulsory distances between package stores. These distance requirements have no present purpose except to restrict competition.”

In the light of these highly pertinent studies and recommendations, the repeal of the distance requirements by the 1964 statute (L. 1964, ch. 531, §§ 13, 14) must be seen as a reversal by New York of the public policy of artificial restrictions on competition in retail liquor selling and an asserted freeing of the Liquor Authority’s power to eliminate these legally protected monopolies.

The statute was not enacted in a vacuum. It was addressed to elimination of a specific public evil and more than literal “ distance ” between stores was involved in this change of policy. The change essentially was toward a free market for the sale of liquor in the interest of the consumer. The elimination of compulsory retail price maintenance by section 11 of the 1964 statute was a step in the same direction.

The petitioners who have proceeded against the Liquor Authority in this ease and have succeeded in anunlliug its determination have no direct interest in the transfer itself. Their objection to it is that it will result, so they believe, in an increase in competition.

It is upon this basis they contend the Authority’s action is arbitrary and not based on sufficient guidelines; that public convenience is not promoted by the transfer, and that the area of removal, in which petitioners have licenses, “ is more than amply and sufficiently served by these four existing stores ”.

The licensee given permission to transfer its location and its predecessor had been doing business as Hearns Liquor Store at 74-76 Fifth Avenue for over 30 years. It was originally established as an adjunct to Hearns Department Store on West 14th Street. In 1955 this department store closed due to adverse business conditions and the Hearns store in the Bronx became its main ” store.

Application would normally have been made then to transfer the license to the Bronx location of Hearns except that the 1,500-foot distance requirement prohibited it. After 1955 the Hearns Liquor Store did largely a mail and phone order business which consistently declined in volume.

In 1960 there was a merger with the parent company and a transfer of ownership to the present applicant City Stores Company, Inc., a subsidiary of Hearns. The 1964 application which has been granted by the Authority would permit the change of location to the same location as the Hearns Department Store at East 149th Street and Third Avenue in the Bronx.

The court at Special Term acted on the assumption the Authority had failed to pass individually on the merits of this application to transfer the license but had merely acted mechanically on the basis of a general policy announcement of August 6,1964 that it would entertain applications of removal of package store licenses and, the court believed, without considering il whether public convenience and advantage will be promoted ” (Alcoholic Beverage Control Law, § 2; and L. 1964, ch. 531, § 14).

Determination by the Authority without consideration of the record before it is not demonstrated by petitioners. The Authority had a full statement of the factual reasons advanced "by the applicant in support of the change. A part of this material was the statement by the applicant * ‘ that the public convenience and advantage will be promoted by the granting of this removal application for several reasons. The customers of Hearns Bronx department store will be able to obtain their wine and liquor needs as well as their regular department store needs without the necessity of crossing such heavily trafficked streets as East 149th Street and Third Avenue. Furthermore, the proposed area is ideally situated for the Hearns Liquor .Store because it is so heavily concentrated in commercial shopping activities. Applicant understands that the general population of the area surrounding the immediate Hearns shopping district has experienced a large increase over the last several years without any increase in off-premises liquor stores thereby indicating the need for applicant’s proposed liquor store.”

A great deal of other material was before the Authority including the detailed objections of petitioners. Upon this material the Authority announced that this specific application “ has been approved ”.

The Authority is under no obligation to make ‘‘ findings of fact” when it grants an application (Matter of Bosco v. New York State Liq. Auth., 10 A D 2d 629, affg. 20 Misc 2d 115; Matter of Barry v. O’Connell, 303 N. Y. 46). Findings are required on the disapproval of an application, but are not required by section 111 of the Alcoholic Beverage Control Law, pursuant to which this application was approved. Hence decisions such as Matter of Williamson v. New York State Liq. Auth. (14 N Y 2d 360) where the petitioners’ application was denied have no application here.

In reaching the conclusion we do, we recognize and reassert the principle underlying our decision in Matter of Swalbach v. State Liq. Auth. (7 N Y 2d 518). As the court there held, the Authority must decide each application submitted to it on its own merits and find, before granting an application for the removal of licensed premises, that public convenience and advantage will be promoted by the removal; it may not, by rule or bulletin, avoid its duty by formulating and promulgating a predetermined policy to c®ver every such application. The present is not such a case. The application in this case was granted, not automatically on the strength of a general policy announcement, but on the basis of factors submitted by the applicant in support of its petition.

"What is the promotion of “ public convenience and advantage ” must be deemed affected in concept and in operational effect by the 1964 statutory amendments, seen in the light of the statement by the Moreland Commission that the maintenance of major restrictive provisions of the liquor laws has been dictated by the industry ‘ ‘ at the expense of public convenience ’ ’ (Report No. 1, p. 27).

The decision to grant the change in location is consistent with the new law and the petitioners who envisage increased competition in a field heretofore protected against competition demonstrate no good ground to undo the Authority’s decision. (Cf. Matter of Fiore v. O’Connell, 297 N. Y. 260; Matter of Rockower v. State Liq. Auth., 4 N Y 2d 128.)

The order should be reversed, without costs.

Chief Judge Desmond (dissenting).

I vote to affirm on the Appellate Division Per Curiam and particularly on Matter of Swalbach v. State Liq. Auth. (7 N Y 2d 518) and Martin v. State Liq. Auth. (15 N Y 2d 707, decided under the new 1964 statute). These cases read together mean that while “ public convenience and advantage ” is a sufficient legislative standard to guide the Authority in the exercise of its discretionary power to transfer licenses, nevertheless the Authority must make a record and in each instance issue specific factual findings on this question of “ public convenience and advantage ” so that a court review of the Authority’s reasons is possible. The Authority, therefore, exceeded its powers when it authorized this transfer on general policy considerations as to proximity of liquor stores and without any specific findings at all. This question, of course, is not reached in Cantlin v. State Liq. Auth. (16 N Y 2d 155, decided today).

Judges Dye, Fuld and Van Voorhis concur with Judge Bergan ; Chief Judge Desmond dissents and votes to affirm in an opinion in which Judges Burke and Scileppi concur.

Order reversed, without costs, and matter remitted to Special Term with a direction to reinstate the determination of the State Liquor Authority.