Case Name: Henry H. Lyman, as State Commissioner of Excise, Respondent, v. Nicholas Schermerhorn, Defendant, Impleaded with Fidelity and Deposit Company of Maryland, Appellant
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1900
Citations: 53 A.D. 32
Docket Number: 
Parties: Henry H. Lyman, as State Commissioner of Excise, Respondent, v. Nicholas Schermerhorn, Defendant, Impleaded with Fidelity and Deposit Company of Maryland, Appellant.
Judges: 
Reporter: Appellate Division Reports
Volume: 53
Pages: 32–36

Head Matter:
Henry H. Lyman, as State Commissioner of Excise, Respondent, v. Nicholas Schermerhorn, Defendant, Impleaded with Fidelity and Deposit Company of Maryland, Appellant.
Liquor tax certificate — liability of a surety on a bond giren by an applicant therefor.
A surety on a bond, given upon an application for a liquor tax certificate, becomés responsible only for the future acts of the certificate holder in the conduct of the business, and does not warrant the truthfulness of the statements contained in the application, or that the applicant has never been convicted of a felony.
Consequently, where the excise authorities contend that a liquor tax certificate is void upon the ground that the holder thereof had previously been convicted of a felony, and was, therefore, prohibited from trafficking in liquor by section 23 of the Liquor Tax Law (Laws of 1896, chap. 112), the surety upon the bond given to obtain the certificate is not liable for the acts of the holder in selling liquor under the certificate, as, if the certificate was a nullity, the bond was a nullity also.
Appeal by the defendant, the Fidelity and Deposit Company of Maryland, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of Ulster on the 9th day of January, 1900, upon the verdict of a jury for $700, the full penalty of a bond given upon an application for a liquor tax certificate, rendered by direction of the court, and also from an order entered in said clerk’s office on the 16th day of Jan- ' uary, 1900, denying the said defendant’s motion for a new trial.
Frank II. Platt and Francis G. Kimball^ for the appellant.
Charles F. Ca/ntine, for the respondent.

Opinion:
Kellogg, J.:
The defendant Fichólas Sellermerhorn made application for a liquor tax certificate, and, at the same time, presented to the county treasurer the usual bond with the defendant, the Fidelity and Deposit Company of Maryland, as surety. The tax certificate was issued to him, and thereafter he entered upon the business which the certificate authorized, and made, as the proof shows, three sales of liquor. It is not claimed that the sales so made violated any of the provisions of the Liquor Tax Law, provided the tax certificate authorized, the defendant Schermerhorn to traffic in liquor. It is claimed by the respondent that the tax certificate afforded no protection to the person to whom it was issued, because the applicant had previously been convicted of a felony. The case presents only a question of law, all the facts being admitted or undisputed.
The Liquor Tax Law provides (Laws of 1896, chap. 112, as amd. by Laws of 1897, chap. 312, § 23), " No person who has been, or shall be, convicted of a felony " shall traffic in liquor. Section 17 (Subd. 5) provides that the application for a liquor tax certificate shall contain a statement made and verified by the applicant " that such applicant has not been convicted of a felony." Section 28 provides, " Said liquor tax certificate may be revoked and canceled if material statements in the application of the holder of such certificate were false." Section 34 provides, " Any person trafficking in liquors, who is prohibited from so doing, shall be guilty of a misdemeanor," and fined and imprisoned. Subdivision 2 of section 34 provides, "Any person who shall make any false statement in the application shall be guilty of a misdemeanor," and punished by fine and imprisonment. Section 42 provides that any person who shall make a false statement upon application for a liquor tax certificate shall, in addition to the other penalties and punishments mentioned, be liable in an action by the Commissioner of Excise for fifty dollars for each offense. So it appears that aside from the bond required to be given, the offense of a false statement by an applicant for a tax certificate has been made highly penal, and punishment in several ways has' been provided.
As conditions precedent to the issuing of a tax certificate, a written application in the form prescribed by the Liquor Tax Law, and also a bond in the form prescribed by the same law, must be presented to the county treasurer. The prescribed form of the bond does not bear a construction making it an assurance of the truthfulness of the statements in the application, nor would it be taken as a breach of any of the conditions of the bond if the statements were in fact all false. The bond runs with the future acts of the applicant in the conduct of the business which he is to be authorized to do; it is an assurance that such authorized business will be conducted in the manner prescribed by the Liquor Tax Law and not otherwise; that the privilege of trafficking in liquor will not be abused, and all the require-, ments of the law will be observed in the conduct of the business. It is a contract with the State touching the conduct of a business. It is not- an assurance that the applicant was never convicted of a felony. It is not an assurance that he would not enter upon the business of trafficking in liquor. The State has required no bond from the prohibited class, nor has it required a bond from any citizen that he will not traffic in liquor. If the defendant Schermer horn was already proscribed as having once been convicted of a felony, no contract touching the trafficking in liquor could be made with him. The contract, if made, would be void. It is enough to say that the law itself prohibits such contracts, for it prohibits all dealings with that class touching any privilege in this field of traffic. If the holder of this certificate, or his bondsman, was being prosecuted for failure to conduct the business in the prescribed manner, for instance, for selling liquor on Sunday or to a minor, neither the holder of the certificate nor his bondsman would be permitted to say that the contract was void because the holder had been convicted of a felony. But here the State claims that it granted nothing, no right to do a business, and yet claims that the bond given to assure the business is good. I do not think it is. I think the bond is as near waste paper as the certificate. In no event could the certificate be good, or be made good, not at any rate until the sovereign power which made it void should see fit to make it otherwise by the enactment of a new law. The defendant Schermerhorn sold liquor without the right to sell, without a license, without any privilege granted by the State, and should be treated as other persons are treated who sell without a license or the right to sell. He held no tax certificate ; he was not a person who could give a lawful bond to traffic in liquor. Such a bond as the law contemplates shall only be given by those who can do a business of that nature. It seems to me that it is only by construing the bond to be an assurance to the State that all the statements in the application are true that the bond can be treated as authorized by the law or valid for any purpose ; but obviously the bond is not susceptible of that construction. The learned counsel for the respondent does not claim for it such a construction, but places the breach of the conditions of the bond wholly in the fact that Schermerhorn sold liquor, not having a valid tax certificate. There has been no violation or abuse of any granted privilege, and hence no breach of any conditions of the bond. That there has been a sale made in violation of the provisions of the Liquor Tax Law is true, but not by any one who held a tax certificate — so the plaintiff claims — and it must follow that the violation was by one who could not give a valid bond, a bond authorized by the Liquor Tax Law. Would it be different if the application had been refused and a sale had been made without any pretense to a tax certificate ? I think not. I see no difference in the two cases so far as the principle involved in this action is concerned.
The judgment should he reversed, with costs.
All concurred, except Edwards, J., not sitting.
Judgment reversed on the law and new triaj. granted, with costs to abide the event.