Case Name: In the Matter of 17 Cameron St. Restaurant Corp., Doing Business as Dillons, Respondent, v. New York State Liquor Authority, Appellant
Court: New York Court of Appeals
Jurisdiction: New York
Decision Date: 1979-11-29
Citations: 48 N.Y.2d 509
Docket Number: 
Parties: In the Matter of 17 Cameron St. Restaurant Corp., Doing Business as Dillons, Respondent, v New York State Liquor Authority, Appellant.
Judges: 
Reporter: New York Reports
Volume: 48
Pages: 509–513

Head Matter:
In the Matter of 17 Cameron St. Restaurant Corp., Doing Business as Dillons, Respondent, v New York State Liquor Authority, Appellant.
Argued October 18, 1979;
decided November 29, 1979
POINTS OF COUNSEL
Martin P. Mehler and Warren B. Pesetsky for appellant. The measure of penalty imposed by respondent against pe titioner was a reasonable exercise of its discretion.
The nature and gravity of the charge furnishes reasonable basis for and justifies the penalty imposed. (People v Daiboch, 265 NY 125; Matter of Scranton Volunteer Fire Co. v Ball, 37 AD2d 757; Hudson v United States, 272 US 451; United States v Norris, 281 US 619; Matter of Nicotare Rest, v State Liq. Auth., 33 AD2d 859; Matter of Victorian House v New York State Liq. Auth., 24 AD2d 484; People v Lynn, 28 NY2d 196; Matter of Barnes v Tofany, 27 NY2d 74; Matter of South Shore Yacht Club v State Liq. Auth., 34 AD2d 794; Matter of Stolz v Board of Regents of Univ. of State of N. Y., 4 AD2d 361.)
Henry J. Boitel and Charles J. Carreras for respondent.
The court below properly exercised its authority under CPLR 7803. (Matter of Mitthauer v Patterson, 8 NY2d 37; Matter of Julia’s Lounge v State of New York Liq. Auth., 44 AD2d 786; Matter of Ronall Rest. v New York State Liq. Auth., 45 AD2d 682; Becker v State Liq. Auth., 44 AD2d 594; Danchak v State Liq. Auth., 44 AD2d 638; Matter of Papoutsis v State Liq. Auth., 32 AD2d 284; Matter of 230 Green Rest. Corp. v State Liq. Auth., 32 AD2d 898; Matter of Bovino v Scott, 22 NY2d 214; Matter of Pell v Board of Educ., 34 NY2d 222; Matter of Butterly & Green v Lomenzo, 36 NY2d 250.)

Opinion:
OPINION OF THE COURT
Jasen, J.
On this appeal, the sole issue presented for our consideration is whether the penalty imposed on a corporate licensee by the State Liquor Authority is excessive.
On June 1, 1974, respondent State Liquor Authority issued petitioner 17 Cameron St. Restaurant Corp., doing business as Dillons, a restaurant liquor license for the on-premises consumption of alcoholic beverages. That license was renewed annually, the last such renewal having been made for the license period expiring February 28, 1979. However, on June 26, 1978, respondent commenced a proceeding pursuant to sections 118 and 119 of the Alcoholic Beverage Control Law to revoke petitioner's license upon the ground that one of petitioner's coprincipals, Howard Kolbenhayer, a 50% shareholder of petitioner, had been convicted of a felony, to wit: criminal sale of a controlled substance in the fifth degree. Petitioner entered a plea of no contest and offered evidence of mitigating circumstances. Thereafter, on November 1, 1978, respondent ordered that petitioner's license be revoked, that petitioner forfeit a $1,000 bond which had been given to ensure compliance with the Alcoholic Beverage Control Law and that a two-year proscription against the sale of alcoholic beverages be entered on the premises at 17 Cameron Street, Southampton, New York.
Petitioner commenced the instant CPLR article 78 proceeding contending that the penalty ordered by respondent was excessive. Upon transfer from Supreme Court, the Appellate Division granted the petition to the extent that it modified, on the law, the determination of the State Liquor Authority by reducing the penalty to the bond forfeiture alone. As so modified, the determination of respondent was affirmed. Respondent appeals from this judgment. There should be a reversal.
It should be noted at the outset that petitioner does not deny the existence of the facts underlying the revocation proceeding, nor does it now contend that a disciplinary proceeding could not properly be based upon these facts. Rather, petitioner's sole contention is that the sanction imposed by respondent was excessive. In this situation, the role of the courts in reviewing the penalty imposed by an administrative agency is extremely limited. Indeed, it is well settled that "where the finding of guilt is confirmed and punishment has been imposed, the test is whether such punishment is ' "so disproportionate to the offense, in light of all the circumstances, as to be shocking to one's sense of fairness".' " (Matter of Pell v Board of Educ., 34 NY2d 222, 233; Matter of Stolz v Board of Regents of Univ. of State of N. Y., 4 AD2d 361.) We cannot say, as a matter of law, that the penalty imposed was excessive in this case.
It is beyond dispute that the liquor industry has a significant impact upon the health, welfare and morals of the people of this State and that it must, of necessity, be strictly controlled. Further, the power of the State to regulate every facet of this industry has long been recognized by the courts. (See, e.g., Seagram & Sons v Hostetter, 16 NY2d 47, 56, affd 384 US 35.) As a result, those who engage in the sale of intoxicants do so with the knowledge that their business conduct will be subject to constant scrutiny and that any violation of the law governing their trade is subject to a penalty commensurate with the nature of the offense. Thus, where it has been shown that a coprincipal of a corporate licensee has engaged feloniously in the sale of illegal drugs, it cannot be said that the penalty of license revocation and the entry of a two-year proscription against the premises formerly operated by the guilty coprincipal is so disproportionate as to be shocking to one's sense of fairness. Trafficking in narcotics is a serious national problem and the authority, in imposing the sanctions, took cognizance of this fact.
Nor can it be said that the inability of the remaining coprincipal to do business under the corporate license requires us to reach a contrary conclusion. As we have noted in a case involving the operation of a nursing home, another regulated industry, the disqualification of only one of two partners authorized to operate the nursing home does not oblige the licensing agency to continue such authorization for the benefit of the remaining partner alone. (Matter of Spiegel v Whalen, 44 NY2d 745.) The innocence of one co-owner of petitioner does not diminish the wrongdoing of his associate, nor does it obviate the necessity of penalizing this corporate petitioner where its president, who held 50% of its stock, has been shown to have engaged feloniously in the sale of illegal drugs. In our view, this penalty against the corporate licensee does not become excessive merely because it may have a financial effect upon a shareholder of the guilty corporation. This is a risk any shareholder assumes when a corporation operates a licensed premises.
For the above reasons, the judgment of the Appellate Divij sion should be reversed, with costs, and the determination of the State Liquor Authority reinstated.
Chief Judge Cooke and Judges Jones, Wachtler, Fuchs-berg and Meyer concur; Judge Gabrielli taking no part.
Judgment reversed, etc.