Court Opinion

ID: 9755864
Source: CourtListenerOpinion
Date Created: 2023-08-28 20:56:43.477372+00
Date Added: 2024-06-11T07:28:12.403242
License: Public Domain

Jacobs, J., with whom Burling, J.,
agrees (dissenting). In the proper discharge of our function of judicial review we should examine the proceedings with full recognition that the Division of Alcoholic Beverage Control is part of a coordinate branch of government and that its administrator has the same capacity for the wholesome administration of justice in his lawful sphere as judges have in theirs. Thus viewed, the record leaves little room for doubt that the appellant was fairly charged, tried and found guilty on the basis of compelling evidence, and that his liquor license was justly suspended in strict compliance with all statutory and constitutional requirements.
The appellant-licensee operates a barroom and hotel on the Paterson Plank Road in East Rutherford. Eollowing the receipt of a complaint, investigators of the Division of Alcoholic Beverage Control visited the licensed premises to ascertain whether rooms were being rented for immoral purposes. They conducted their investigation and took statements in the licensee’s presence from the bartender Charles Bauer, the night bartender Prank Gentile and the waiter Eugene Forzani. Thereafter the Division charged the licensee with (1) having permitted and suffered lewdness and immoral activities upon his licensed premises, “viz., the renting of rooms for the purpose of illicit sexual intercourse; in violation of Rule 5 of State Regulations No. 20,” and (2) having permitted and suffered the sale of contraceptives in the licensed premises in violation of Rule 9 of State Regulations No. 20. Hearing pursuant to the charges was duly held, the licensee appeared with counsel and participated *528fully in the hearing, and all of the testimony was taken stenographically and transcribed. Three investigators testified fully and directly in support of the charges, and Bauer’s statement, acknowledging in detail the truth of the first charge, was introduced in evidence. The licensee testified on his own behalf and stated that he knew nothing about his employees having rented any rooms for immoral purposes or having sold contraceptives. Eorzani testified that he had rented rooms to the investigators, had given contraceptives to one of them and had received $1 in addition to the price charged for the rooms; he denied any knowledge as to the purported use of the rooms. Gentile testified that Eorzani had given him the money received from the investigators for the rooms and that he had placed it in the cash register; he likewise denied any knowledge as to the purported use of the rooms. Bauer attended the hearing but was not called by the licensee to testify.
The hearing was conducted before Clarence E. Kremer, an attorney-at-law employed by the Division as a hearer, and at its close he stated that the matter would be submitted to the Director for determination. Counsel for the licensee voiced no objection; thereafter he requested and received permission to file a brief with the Director and he did so on November 24, 1952. In his brief he advanced the contention that there was “only the uncorroborated testimony of the department’s own employees, contradicted by the testimony of the licensee’s witnesses” and that the question of credibility must be “resolved by the Director against his own employees in favor of the licensee.” Although the record does not so indicate it may safely be assumed that the hearer presented to the Director, in some form or other, his analysis of the testimony and his recommendation. However, no request was ever made on the licensee’s behalf to examine the hearer’s analysis and recommendation and, in any event, the Director did not rely upon them. The record may be searched in vain for any suggestion to the contrary and the Director’s opinion states unequivocally that he had “examined and reexamined the entire record” before him and that, *529having done so he was “thoroughly convinced that a careful reading of the testimony and evidence could lead any dispassionate, discerning person to but one conclusion, namely, that the testimony of the Division’s agent truthfully represents the facts in all material and probative respects.” Further on, he states that “on the basis of the full testimonial record, revealingly corroborated by all of the attendant circumstances, I am convinced that the violations were committed as charged herein.” There is no contention advanced by the licensee that the Director did not personally study all of the testimony and evidence as he says he did. Cf. Willapoint Oysters v. Ewing, 174 F. 2d 676, 696 (C. C. A. 9 1949), certiorari denied, 338 U. S. 860, 70 S. Ct. 101, 94 L. Ed. 527 (1949), rehearing denied, 339 U. S. 945, 70 S. Ct. 793, 94 L. Ed. 1360 (1950), where the Court of Appeals for the Ninth Circuit said: “We cannot allow the Administrator’s recitation that he has personally examined and considered the evidence in making his decision to be successfully challenged by a mere allegation in a brief. We have neither moral nor legal right to presume that only those who occupy judicial office respect their obligations and perform their official duties honestly, sincerely and conscientiously.” When the Appellate Division reviewed the record it found that “ample proof was presented to support the determination that the licensee’s employees freely and brazenly rented rooms to the Division’s agents for the ostensible purpose of enabling them to engage in illicit sexual intercourse; and further, that one of the employees sold them contraceptives to be used in connection therewith.” See Mazza v. Cavicchia, 28 N. J. Super. 280, 284 (App. Div. 1953).
Although several proposed Acts have been introduced in the Senate and General Assembly, our Legislature has thus far deliberately refrained from adopting any general enactment comparable to the Federal Administrative Procedure Act. 5 U. S. C. A., § 1001 et seq. Consequently the Director remains governed by R. S. 33 :1-31 which simply provides that the licensee shall have reasonable opportunity to be heard on the charges against him, and the elemental due *530process requirement that the hearing be fairly conducted. In the instant matter the licensee had ample opportunity to be heard and there is no substantial basis for the suggestion that the hearing was not fairly conducted. Indeed, the Director’s procedure did not materially differ from that followed by Appellate judges whose law clerks prepare preliminary memoranda often embodying analyses of the testimony and their views. And it was similar to that followed by his predecessors in thousands of cases covering over two decades; it is significant that until today the many courts which reviewed similar license suspensions by Commissioners Burnett, Driscoll and Hock did not in any instance suggest that their procedure infringed upon constitutional rights of liquor licensees. See Greenbrier, Inc. v. Hock, 14 N. J. Super. 39, 42 (App. Div. 1951), certification denied 7 N. J. 581 (1951); In re Gulman, 21 N. J. Super. 579 (App. Div. 1952); In re Larsen, 17 N. J. Super. 564 (App. Div. 1952); In re Schneider, 12 N. J. Super. 449 (App. Div. 1951); Traymore of Atlantic City, Inc. v. Hock, 9 N. J. Super. 47 (App. Div. 1950); The Panda v. Driscoll, 135 N. J. L. 164 (E. & A. 1946); Kravis v. Hock, 137 N. J. L. 252 (Sup. Ct. 1948); Essex Holding Corp. v. Hock, 136 N. J. L. 28 (Sup. Ct. 1947); Cedar Restaurant & Cafe Co. v. Hock, 135 N. J. L. 156 (Sup. Ct. 1947); Grant Lunch Corp. v. Driscoll, 129 N. J. L. 408 (Sup. Ct. 1943), affirmed 130 N. J. L. 554 (E. & A. 1943), certiorari denied 320 U. S. 801, 64 S. Ct. 431, 88 L. Ed. 484 (1944); Gaine v. Burnett, 122 N. J. L. 39 (Sup. Ct. 1939), affirmed 123 N. J. L. 317 (E. & A. 1939).
Although the majority have dealt at length with them, we are in nowise concerned here with instances in which administrative officials have gone beyond the evidence in the strict record for their decisions. See Pennsylvania R. Co. v. New Jersey State Aviation Comm., 2 N. J. 64, 72 (1949); In re Plainfield-Union Water Co., 11 N. J. 382 (1953); Id., 14 N. J. 296 (1954); Family Finance Corp. v. Gough, 10 N. J. Super. 13, 25 (App. Div. 1950). We are concerned here only with an instance in which the administrative offi*531cial, after exhaustive examination thereof, has determined the matter on the evidence in the strict record properly before him and now presented to ns for judicial review; in this situation the pertinent authorities clearly recognize that the presence of a subordinate’s factual analysis and recommendation does not impair the constitutional validity of the proceedings and determination. Thus, in the first Morgan case (Morgan v. United States, 298 U. S. 468, 56 S. Ct. 906, 912, 80 L. Ed. 1288 (1936)) Chief Justice Hughes took pains to point out that evidence may be taken by an examiner and “may be sifted and analyzed by competent subordinates.” Cf. Morgan v. United States, 304 U. S. 1, 25, 58 S. Ct. 773, 82 L. Ed. 1129, 1136 (1938); National Labor Relations Board v. Mackay Radio d T. Co., 304 U. S. 333, 350, 58 S. Ct. 904, 82 L. Ed. 1381, 1392 (1938); Horsman Dolls, Inc. v. State Unemployment, etc., Comm., 134 N. J. L. 77, 81 (E. & A. 1946), appeal dismissed 329 U. S. 693, 67 S. Ct. 635, 91 L. Ed. 606 (1947). And in the fourth Morgan case (United States v. Morgan, 313 U. S. 409, 61 S. Ct. 999, 1004, 85 L. Ed. 1429 (1941)), the Supreme Court, through Justice Frankfurter, had this to say as to the interrogation of an administrative official with respect to the extent of his discussion with his subordinates:
“Over the Government’s objection the district court authorized the market agencies to take the deposition of the Secretary. The Secretary thereupon appeared in person at the trial. He was questioned at length regarding the process by which he reached the conclusions of his order, including the manner and extent of his study of the record and his consultation with subordinates. His testimony shows that he dealt with the enormous record in a manner not unlike the practice of judges in similar situations, and that he held various conferences with the examiner who heard the evidence. Much was made of his disregard of a memorandum from one of his officials who, on reading the proposed order, urged considerations favorable to the market agencies. But the short of the business is that the Secretary should never have been subjected to this examination. The proceeding before the Secretary ‘has a quality resembling that of a judicial proceeding.’ Morgan v. United States, 298 U. S. 468, 480, 56 S. Ct. 906, 911, 80 L. Ed. 1288 [1294], Such an examination of a judge would be destructive of judicial responsibility. We have explicitly held in this very litigation that ‘it was *532not the function of the court to probe the mental processes of the Secretary.’ 304 U. S. 1, 18, 58 S. Ct. 773, 776 [999], 82 L. Ed. 1129 [1132], Just as a judge cannot be subjected to such a scrutiny, compare Fayerweather v. Ritch, 195 U. S. 276, 306, 307, 25 8. Ct. 58, 67, 49 L. Ed. 193 [213, 214], so the integrity of the administrative process must be equally respected. See Chicago, B. & Q. R. Co. v. Babcock, 204 U. S. 585, 593, 27 S. Ct. 326, 327, 51 L. Ed. 636 [638]. It will bear repeating that although the administrative process has had a different development and pursues somewhat different ways from those of courts, they are to be deemed collaborative instrumentalities of justice and the appropriate independence of each should be respected by the other. United States v. Morgan, 307 U. S. 183, 191, 59 S. Ct. 795, 799, 83 L. Ed. 1211 [1217].”
Cf. Bethlehem Steel Co. v. National Labor R. Board, 74 App. D. C. 52, 120 F. 2d 641, 653 (App. D. C. 1941), where Justice Edgerton said:
“Petitioners complain of the extent to which the Board availed itself of the services of subordinates in the process of considering the case and reaching a conclusion. The petition alleges that the Board ‘did not judically consider, weigh or appraise the evidence’ in making its decision, but relied upon conclusions of fact and law made by subordinates, and that petitioners were given no opportunity to inspect or argue against these conclusions. The Board’s answer neither admits nor denies these allegations, on the ground that they are irrelevant and beyond the scope of judicial inquiry. Petitioners’ contention was presented in the same way, and rejected, in Bethlehem Shipbuilding Corp., Limited, v. National Labor Relations Board [1 Cir., 114 F. 2d 930]. There az-e other eases to like effect. The Act requires only a hearing, before the Board or an agent designated by the Board, and findings by the Board which are supported by evidence. It is not the function of a court to ‘probe the mental processes’ of an administrative officer ‘in reaching his conclusions if he gave the heaz-ing which the law requiz-ed.’ ”
In Peoria Braumeister Co. v. Yellowley, 123 F. 2d 637, 639 (C. C. A. 7 1941), the court, in an opinion delivered by Supreme Court Justice Minton (then Circuit Court judge), summarily rejected the contention that the failure to furnish a copy of the examiner’s report in a liquor license suspension proceeding, rendered the proceeding unfair under the due process clause; and the holding of the Second Circuit in Hartford Electric Light Co. v. Federal Power Comm., 131 F. 2d 953, 966 (C. C. A. 2 1942), certiorari denied 319 U. S. *533741, 63 S. Ct. 1028, 87 L. Ed. 1698 (1943), was to the same effect. In the latter case the court noted that “So far as appears from its findings and legal conclusions, the Commission did not rely upon any such report, nor is it required to do so by the Act. We see no reason why, in the circumstances, that report, if there be one, should be considered by us.” Cf. Berg v. Industrial Commission, 236 Wis. 172, 294 N. W. 506, 510 (Sup. Ct. 1940); American Toll Bridge Co. v. Railroad Commission, 12 Cal. 2d 184, 207, 83 P. 2d 1, 12 (Sup. Ct. 1938), affirmed 307 U. S. 486, 59 S. Ct. 948, 83 L. Ed. 1414 (1939). In the Appellate Division (Mazza v. Cavicchia, supra, 28 N. J. Super., at page 287) Judge Erancis aptly pointed out that “the courts have declared that so long as the one who has the ultimate burden of decision, in fact makes his own independent study of the record and in fact makes the determination of the issue involved, a fair hearing in the sense of due process has been granted. Horsman Dolls, Inc. v. State Unemployment Compensation Commission, supra; In re Gutman, supra, 21 N. J. Super., at page 581; In re Larsen, 17 N. J. Super 564 (App. Div. 1952); In re 17 Club, Inc., supra, 26 N. J. Super. [43], at page 48; 42 Am. Jur., Public Administrative Law, § 141, p. 484; Gellhorn, Administrative Law, p. 739 (1940).” Cf. Leeds v. Gray, 109 Cal. App. 2d 874, 242 P. 2d 48, 54 (D. C. App. 1952) :
“Petitioner, of course, was entitled to a fair and full hearing. The fact that a fact finding tribunal does not see or hear the witnesses does not in every instance constitute a denial of such hearing. Por example, many court proceedings are determined upon affidavits. There the court neither sees nor hears the witnesses. A fair and full hearing is given where the fact finder fully reviews the record and an opportunity is given the parties to argue their contentions as to the credibility of the witnesses and the other matters involved in the proceeding. This was done in our ease by briefs. It is true that no proposed findings or decision were submitted to the parties and no opportunity given to argue concerning them, but where the board itself is passing on the record, fully considers it and the arguments presented, on the merits, there is no requirement that the board permit further argument on its proposed findings and decision, and no logical reason therefor.”
*534It would seem that the majority have mistakenly dealt with the instant proceeding as one in which the Director went beyond the strict record. Even in that situation, however, this court recently held that the administrative determination will not be upset in the absence of a showing of prejudice. Pennsylvania Railroad Co. v. Department of Public Utilities, 14 N. J. 411, 428 (1954). See in accord: Market Street Ry. Co. v. Railroad Comm. of Cal., 324 U. S. 548, 65 S. Ct. 770, 89 L. Ed. 1171 (1945); United States v. Pierce Auto Freight Lines, 327 U. S. 515, 66 S. Ct. 687, 90 L. Ed. 821 (1946). In criminal cases where the defendant’s life or liberty was at stake this court has repeatedly sustained convictions, though there was error below, upon a finding of no prejudice. See State v. LeFante, 14 N. J. 584 (1954); State v. Witte, 13 N. J. 598 (1953); State v. Vaszorich, 13 N. J. 99 (1953), certiorari denied 346 U. S. 900, 74 S. Ct. 219, 98 L. Ed.- (1953). How may it fairly act otherwise in a case which does not involve life and liberty, or even property, but a liquor license privilege over which the Legislature has practically unlimited control ? See In re Schneider, supra, at page 456. It is well recognized that in view of the peculiar nature of the liquor traffic, licensees, as such, must be and are held legally responsible for the wrongful acts of their employees. See Grant Lunch Corp. v. Driscoll, supra; Essex Holding Corp. v. Hock, supra; Greenbrier, Inc. v. Hock, supra. In the instant matter the wrongful acts by the employees were established not only by the overwhelming testimony of the investigators but also by the testimony and statements of the employees themselves. The delivery of the contraceptives was testified to by the waiter Eorzani; and the bartender Bauer’s written statement, which the licensee .-did not call upon him to deny, acknowledged the first charge in detail. Under the circumstances, how could there have been a finding by the Director other than guilty, regardless of the hearer’s analysis and recommendation? When the proceeding was before the Appellate Division it had power to review the facts and make independent findings (R. R. 4:88-13); it found that there, was ample proof that rooms had *535“freely and brazenly” been rented for ostensibly immoral purposes and that contraceptives had been sold. This court likewise has power to review the facts and make independent findings (R. R. 1:5-3); it would seem beyond belief that its factual conclusions would differ from those of the Director and the Appellate Division. Under the circumstances, the setting aside of the licensee’s suspension disregards the essential justice of the proceeding and the important public interests involved, and tends to impose upon the Director, though the legislature has declined to do so, rigid judicial notions as to the precise form of procedural routine to be followed by him. See Federal Communications Comm. v. Pottsville Broadcasting Co., 309 U. S. 134, 142, 60 S. Ct. 437, 84 L. Ed. 656, 661 (1940). Cf. Feller, Administrative Procedure and the Public Interest, 25 Wash. U. L. Q. 308, 315 (1940) : “the attempt to read the procedural predilections of judges into the due process clause is as much to be condemned as the similar attempt to read economic predilections into the same constitutional provision.” See also Stone, The Common Law in the United States, 50 Harv. L. Rev. 4, 17-19 (1936).
There was a time long ago when control over liquor licensees was vested in our courts. See Gaine v. Burnett, 122 N. J. L. 39 (Sup. Ct. 1939), affirmed 123 N. J. L. 317 (E. &. 1939). And even as late as 1933 when the Department of Alcoholic Beverage Control was established there was still a legislative provision which vested in the judges of the Court of Common Pleas control over liquor licensees in certain counties. See R. S. 33 :1 — 21, repealed by L. 1942, c. 159. Today, no one any longer questions the soundness of the legislative approach which placed in an administrative agency, rather than in the courts, broad and comprehensive power over the liquor traffic with its inherent dangers and abuses. Repeated criticisms have, nevertheless, been voiced with respect to particular phases of the administrative process as exemplified in the Division of Alcoholic Beverage Control and in other agencies. The most persistent criticism has been addressed to the continued legislative policy of concentrating, in a single administrator, wide powers of investigation, prose*536cution, hearing and determination. In 1938 I had occasion to recommend corrective legislative measures (see Jacobs and Davis, A Report on the State Administrative Agency in New Jersey (1938)) and thereafter the recommendation was repeated. See Vogel, Study of State Administrative Agencies in New Jersey (1941). In 1948 a comprehensive administrative procedure act was introduced in our Legislature but failed of passage. See Schnitzer, The New Practice, p. 231, n. 22 (1949). This act provided for the establishment of an independent corps of hearers who would not be subordinate to the heads of the administrative agencies and whose determinations would be final except upon the prescribed administrative or judicial review; there are those who believe that without a corps of independent hearers, or a comparable substantive device, the basic problem will not be met despite such procedural gloss as may be imposed from time to time. Cf. Brennan, J., concurring in In re Larsen, supra, 17 N. J. Super. 564, at page 576. Several later acts containing provisions relating to administrative hearings were introduced in our Legislature but likewise failed of passage. The latest draft act was recently approved by a committee of the State Bar Association and was fully discussed at its last meeting. See 77 N. J. L. J. 133, 144 (1954). See also 77 N. J. L. J. 164 (1954). The social forces in favor of a state act embodying provisions comparable to those contained in the Eederal Administrative Procedure Act are evident and such enactment would undoubtedly receive sympathetic application by the courts. Cf. Wong Yang Sung v. McGrath, 339 U. S. 33. 40, 70 S. Ct. 445, 94 L. Ed. 616, 624 (1949). The undisputed fact, however, is that thus far the Legislature has declined to adopt such provisions and, in recognition of basic principles of separation of power, courts should be very hesitant in asserting any judicial right to do so in the form of newly declared constitutional requirements. Cf. State v. Monahan, 15 N. J. 34, 46 (1954), where reference was made to the familiar, though often unheeded, caution by Justice Holmes that “it must be remembered that legislatures are ultimate guardians of the liberties and welfare of the people *537in quite as great a degree as the courts.” Missouri, Kansas & Texas Ry. Co. of Texas v. May, 194 U. S. 267, 270, 24 S. Ct. 638, 639, 48 L. Ed. 971, 973 (1904).
I would affirm the judgment entered in the Appellate Division.
For reversal — Chief Justice Vanderbilt, and Justices Hehee, Oliphant and Brennan — 4.
For affirmance — Justices Burling and Jacobs — 2.