Hyperlawhypertext legal databasebeta Vilabar Cafe, Inc. v. State Liquor Authority 19 N.Y.2d 186

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Vilabar Cafe, Inc. v. State Liquor Authority

19 N.Y.2d 186 Court N.Y. Decision date 1967-02-23 English

Delivered by *190 Burke, J.

Contents

Majority

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In the Matter of Vilabar Cafe, Inc., Respondent, v. State Liquor Authority, Appellant.
Argued January 4, 1967;
decided February 23, 1967.
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Emamtel D. Black, Hyman Amsel and Hyman Mark for appellant.
I. This appeal presents only questions of law. The Appellate Division has unanimously found that the evidence
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supported the findings of fact made by the Authority. (Matter of College Point Wine & Liqs. v. O’Connell, 271 App. Div. 278 , 296 N. Y. 752 ; Matter of Humphrey v. State Ins. Fund, 298 N. Y. 327 ; Matter of Avon Bar & Grill v. O’Connell, 301 N. Y. 150 ; Lapp v. Lapp, 286 N. Y. 252 .) II. Because of petitioner’s fraud the license was voidable if not void. Such license was subject to cancellation or annulment at any time. (Middlesboro Liq. & Wine Co. v. Berkshire, 133 F. 2d 39 ; People ex rel. Loughran v. Flynn, 110 App. Div. 279 , 184 N. Y. 579 ; Matter of Brenner v. Bruckman, 253 App. Div. 607 , 278 N. Y. 503 ; Matter of Glenram Wine & Liq. Corp. v. O’Connell, 295 N. Y. 336 .) III. The time limitation contained in section 118 of the Alcoholic Beverage Control Law does not apply to a license obtained by fraud. If such time limitation is applicable in such instance, the proceeding to revoke the license was timely begun and the license was cancelled within the time allowed by law, because of the continuing fraud of petitioner. (Matter of Colonial Liq. Distrs. v. O’Connell, 295 N. Y. 129 ; Matter of Benjamin v. State Liq. Auth., 13 N Y 2d 227 ; Matter of Petterson v. Daystrom Corp., 17 N Y 2d 32 ; Essenfeld Bros. v. Hostetter, 14 N Y 2d 47 ; Matter of Grace v. Grace Inst., 25 A D 2d 277 ; Transit Comm. v. Long Is. R. R. Co., 253 N. Y. 345 ; Nasaba Corp. v. Harfred Realty Corp., 287 N. Y. 290 ; Easley v. New York State Thruway Auth., 1 N Y 2d 374 ; Matter of Breen v. New York Fire Dept. Pension Fund, 299 N. Y. 8 ; State Bd. of Health v. Roy, 22 R. I. 538 ; Matter of Hacker v. State Liq. Auth., 21 A D 2d 755 .) IV. The running of the Statute of Limitations (Alcoholic Beverage Control Law, § 118) was tolled by the commencement of the proceeding on March 22, 1965, the date of the service of the notice of hearing. (Matter of Sorrentino v. State Liq. Auth., 10 N Y 2d 143 ; Matter of Marsh [Catherwood], 13 N Y 2d 235 .) V. The renewal of the license for the 1965-1966 license year did not estop the Authority from terminating the license by cancellation. Moreover, section 118 of the Alcoholic Beverage Control Law specifically excludes from the time limitation provided therein causes and violations occurring during the license period immediately preceding the renewal of such license notwithstanding such renewal. Petitioner did not claim nor prove that it was prejudiced by such renewal, nor did it
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urge the doctrine of estoppel as a basis for annulling the Authority’s determination, either before the Authority or in the court below. (Matter of Benjamin v. State Liq. Auth., 13 N Y 2d 227 ; Matter of Farley v. Miller, 216 N. Y. 449 ; Matter of A. E. F.’s, Inc. v. McKenzie, 269 App. Div. 316 ; Matter of Restaurants & Patisseries Longchamps v. O’Connell, 271 App. Div. 684 , 296 N. Y. 888 ; Trustees of Brookhaven v. Smith, 118 N. Y. 634 ; Bank of Monongahela Val. v. Weston, 172 N. Y. 259 ; Metropolitan Bd. of Excise v. Barrie, 34 N. Y. 657 ; Martin v. State Liq. Auth., 43 Misc 2d 682 , 15 N Y 2d 707 ; Moore v. United States Cremation Co., 158 Misc. 621 , 249 App. Div. 637 , 275 N. Y. 105 ; Wirtz v. Lobello, 1 A D 2d 416 , 2 N Y 2d 721 ; Matter of Regal Wine & Liq. v. State Liq. Auth., 12 A D 2d 920 , 13 A D 2d 491 , 9 N Y 2d 613 ; Matter of Barton Trucking Corp. v. O’Connell, 7 N Y 2d 299 ; Matter of Yetta’s Rest. v. State Liq. Auth., 47 Misc 2d 436 ; Matter of Berlingieri v. O’Connell, 279 App. Div. 735 , 305 N. Y. 776 ; Communications Comm. v. WOKO, 329 U. S. 223 ; Matter of Kemp v. Hults, 17 N Y 2d 191 .)
Irving P. Zelman and Benjamin M. Zelman for respondent.
I. The Authority may not cancel a liquor license for causes or violations which occurred prior to the license period immediately preceding the issuance of a license. (Matter of Benjamin v. State Liq. Auth., 13 N Y 2d 227 ; Matter of Glenram Wine & Liq. Corp. v. O’Connell, 295 N. Y. 336 ; Bryant Park Bldg. v. Frutkin, 10 Misc 2d 198 .) II. The Authority is estopped from canceling a liquor license for alleged causes or violations known to it which occurred during the license period immediately preceding the issuance of the license. (Matter of Hacker v. State Liq. Auth., 21 A D 2d 755 ; Matter of Restaurants & Patisseries Longchamps v. O’Connell, 271 App. Div. 684 , 296 N. Y. 888 ; Matter of Maksik v. O’Connell, 301 N. Y. 541 ; Middlesboro Liq. & Wine Co. v. Berkshire, 133 F. 2d 39 .) III. There is no substantial evidence to warrant the finding that respondent was guilty of the two charges made against it. (Matter of Stork Rest. v. Boland, 282 N. Y. 256 ; Matter of Lynch’s Bldrs. Rest. v. O’Connell, 303 N. Y. 408 ; Matter of Humphrey v. State Ins. Fund, 298 N. Y. 327 ; Matter of Miller v. Kling, 291 N. Y. 65 ; Matter of Reynolds v. Triborough Bridge & Tunnel Auth., 276 App. Div. 388 .)

Yilabar Cafe, Ine. (Yilabar) was first issued a liquor license on August 30, 1963. The license was thereafter renewed for the normal one-year license period on March 1, 1964 and March 1, 1965. By notice of hearing dated March 22, 1965, the State Liquor Authority instituted a disciplinary proceeding pursuant to sections 118 and 119 of the Alcoholic Beverage Control Law to revoke or cancel Yilabar’s license on the following charges: (1) that Manuel Yilas, one of Yilabar’s two stockholders and an officer and director of the licensee, had concealed or suppressed in the licensee’s application the fact of five arrests which had occurred between 1945 and 1950, and (2) that the licensee had violated section 65 of the Alcoholic Beverage Control Law in selling alcoholic beverages to intoxicated persons on two separate occasions in the immediately preceding license period. On November 4, 1965, the Authority adopted the findings of the hearing officer and sustained the charges, ordering that Yilabar’s license be cancelled.

After the-licensee’s article 78 proceeding to review this cancellation had been removed from the Supreme Court, Kings County, to the Appellate Division, Second Department, that court unanimously annulled the determination of the Authority. Despite its conclusion that ‘ ‘ there was substantial evidence to warrant the Authority’s [factual] finding that petitioner was guilty of the two charges made against it,” it nevertheless held that the Authority was “ precluded by statute (Alcoholic Beverage Control Law, §• 118) from invoking the charge that petitioner had concealed prior arrests of a person who was an officer * * * in its original application”. ( 25 A D 2d 662 [2d Dept., 1966].) The second charge against the licensee was similarly dismissed on the theory that the Authority was estopped from canceling the license because of its renewal of same, irrespective of the fact that two' violations upon which the charge was based had occurred in the license period immediately preceding the cancellation of its license.

A comparison of section 118 and rule 36 of the Buies of the State Liquor Authority (9 NYCBB Part 53) makes it evident that the limitation provision applicable to “ cancellation ” proceedings contained in 118 is applicable to “ cancellation ” proceedings' instituted pursuant to rule 36 for fraud or concealment. Similarly, as a fraudulent misrepresentation eon

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cerning the termination of outside employment in Hacker (infra) did not embody therein an underlying substantive violation of the Alcoholic Beverage Control Law (such as being a convicted felon or allowing someone not mentioned in the license to avail himself thereof [§§ 111, 126]), neither does the concealment of several arrests in the original application. We must bear in mind on this point that Vilas did disclose several arrests in the original application. On learning of additional arrests, the Authority gave Vilabar the opportunity to amend its application prior to the license being granted. Upon amendment, said license was granted, and it is five additional arrests hitherto unacknowledged by the licensee for which the charge under review was preferred against Vilabar. We need not consider whether such a concealment was of material facts, or whether the license would have been granted notwithstanding the concealment. (See Matter of Canada Dry Bottling Co. v. O’Connell, 284 App. Div. 370 [3d Dept., 1954], affd. 308 N. Y. 778 [1955]; Matter of College Point Wine & Liqs. v. O’Connell, 296 N. Y. 752 [1946].) The existence of an arrest record is no absolute bar to an applicant’s obtaining or retaining a license, nor is it a substantive violation of the Alcoholic Beverage Control Law. Therefore, á fraudulent concealment relative thereto cannot be considered a continuing violation which would render the Statute of Limitations inapplicable (Matter of Hacker v. State Liq. Auth., 19 N Y 2d 177 , decided herewith). The violation as to the fraudulent concealment in the application occurred in August of 1963, and proceedings against the licensee therefor were not commenced until March of 1965, after said license had been renewed twice. Since there is no continuing violation, since the fraud does not render the license void db initio, and since there is no issue as to the tolling of the statute (because the proceedings were not commenced in the immediately following license period), the Appellate Division properly concluded that, as regards this particular charge, the Authority was precluded from disciplining the licensee because the short period of limitation contained in section 118 had transpired.

As in Hacker (supra), however, no estoppel theory can be invoked against the Authority. The relative merits (or lack thereof) of such a theory need not be repeated here. Suffice it to say that the Authority seemingly acted with exemplary dis

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patch (the violations occurred in November, 1964; disciplinary proceedings were commenced the following March, and the license was ordered cancelled in November, 1965); it in no way misled the licensee into committing the violations (serving on two separate occasions persons who were already intoxicated); the licensee’s unlawful conduct certainly warrants no equitable relief; and the licensee can show neither reliance on the renewal nor a detrimental change of position — the status quo remained unchanged. Again, there is no reason to compel the Authority to exact a stipulation as a condition to granting such a renewal, when the very section which includes the Statute of Limitations recognizes that a renewal in and of itself is to be considered no bar to revocation or cancellation proceedings.

Accordingly, as to the charge of serving liquor to already intoxicated persons, the order of the Appellate Division must be reversed and the determination of the State Liquor Authority confirmed. Since, however, we are sustaining only one of. the two charges against the licensee for which its license was can-celled, the ease must be remanded to the Authority for a redetermination of the punishment to be imposed. (Matter of Sacharoff v. Corsi, 296 N. Y. 927 [1947].)

Chief Judge Ftjld and Judges Van Voorhis, Soileppi, Bergan, Keating and Breitel concur.

Order reversed, with costs in this court and in the Appellate Division, and matter remitted to the State Liquor Authority for further proceedings in accordance with the opinion herein. (Matter of Sacharoff v. Corsi, 296 N. Y. 927 [1947].)

Cases cited

Statutes and regulations cited