125 Bar Corp. v. State Liquor Authority

• Decision Date: 06 March 1969
• Citation: 247 N.E.2d 157,24 N.Y.2d 174,299 N.Y.S.2d 194
• Parties: , 247 N.E.2d 157 In the Matter of 125 BAR CORP., Appellant, v. STATE LIQUOR AUTHORITY of the State of New York, Respondent.
• Court: New York Court of Appeals Court of Appeals

Page 194

299 N.Y.S.2d 194

24 N.Y.2d 174, 247 N.E.2d 157

In the Matter of 125 BAR CORP., Appellant, v. STATE LIQUOR AUTHORITY of the State of New York, Respondent.

Court of Appeals of New York.

March 6, 1969.

Fred Ehrlich, New York City, for appellant.

Stanley Stein and Hyman Amsel, New York City, for respondent.

BREITEL, Judge.

Petitioner, owner of a bar on 125th Street in Manhattan, was denied a renewal of its restaurant liquor license after an interview pursuant to the regulations of the State Liquor Authority. It sought to overturn the determination of the Authority in this article 78 proceeding on the ground that the action of the Authority had been arbitrary and capricious. The Appellate Division confirmed the determination.

While the adverse determination, after an interview of a renewal application need not be supported by substantial evidence, or, for that matter, competent common-law evidence, to sustain the determination, there must be a rational basis for the administrative agency's action (Matter of Fink v. Cole, 1 N.Y.2d 48, 53, 150 N.Y.S.2d 175, 178, 133 N.E.2d 691, 693). Because, in this case, the data before the Authority does not rationally support the determination, the judgment of the Appellate Division should be reversed, the determination of the Authority annulled, and the matter remanded to the Authority for appropriate proceedings.

Petitioner has held a license for the premises in question since April 28, 1966, having succeeded a prior licensee. During the two years 1966 and 1967 it received four warning letters from the Authority concerning alleged incidents of threatened or actual illegal conduct occurring on the premises. There was an additional incident which had not been the subject of a warning letter. These warnings and the additional incident were reasons given by the Authority in requesting a nonrenewal interview.

At the interview hearing three of the notices were supported by police or Authority investigation reports of the alleged incidents; one was unsupported at the interview but is now covered by a police report attached to the Authority's answer in this proceeding, and the additional incident was supported by testimony taken at a revocation hearing determined in favor of the license.

The first warning of June 16, 1966 related to the employment of felons by the licensee's predecessor and another unrelated licensee in the neighborhood. It is irrelevant to this licensee's application for renewal. The second warning of August 17, 1966 related to the employment of a convicted gambler. Apart from the fact that the licensee denies ever having employed the named person, it is conceded that no gambling incidents were ever reported to have occurred in the licensed premises. This notice, therefore, is hardly relevant to the renewal application.

Of the remaining notices, one, dated January 18, 1967, warned the licensee to tighten its supervision of the premises, citing a solicitation by a prostitute which occurred on the premises on May 25, 1966, another on September 26, 1966, and a surreptitious narcotics sale on July 22, 1966. The last notice, of July 7, 1967, cited a prostitution solicitation on April 9, 1967. The additional specification, not covered by the notices, related to a prostitution solicitation on August 3, 1967, the same matter in which, after a full hearing in revocation proceedings, the licensee was found blameless.

The gist of the matter then is that, giving full credit to the hearsay reports which resulted in the notices, as well as to the testimony concerning the last solicitation, in the year 1966 there were but two prostitution solicitations and one narcotics sale in the premises, and in the year 1967 there were two prostitution solicitations. With respect to none of these was it claimed that the licensee knew or suffered the conditions to arise, and with respect to all but two of them the police testimony or report expressly observed that the offending conduct was surreptitious and not within the sight or hearing of the employees in the premises.

The premises are located on Harlem's main business street between avenues through which pass the Penn-Central Railroad and the Lexington Avenue subway. It is a hub area of the district with heavy transient and local pedestrian traffic.

It is well established that in renewal proceedings, in which a hearing is not mandated by law, the Authority is not as circumscribed as in revocation or cancellation proceedings, nor are the substantive standards the same (Matter of Farina v. State Liq. Auth., 20 N.Y.2d 484, 491, 285 N.Y.S.2d 44, 48, 231 N.E.2d 748, 751; Matter of Wager v. State Liq. Auth., 4 N.Y.2d 465, 176 N.Y.S.2d 311, 151 N.E.2d 869; cf. CPLR 7803, subd. 4). The review of a determination in such renewal proceedings is not in the nature of certiorari but mandamus, on which the standard is not substantiality of the evidence but the rationality of the administrative act (Matter of Sled Hill Cafe v. Hostetter, 22 N.Y.2d 607, 612, 294 N.Y.S.2d 497, 500, 241 N.E.2d 714, 716; cf. Matter of Colton v. Berman, 21 N.Y.2d 322, 329, 287 N.Y.S.2d 647, 650, 234...