Le Drugstore Etats Unis, Inc. v. New York State Bd. of Pharmacy

• Decision Date: 28 December 1973
• Citation: 307 N.E.2d 249,352 N.Y.S.2d 188,33 N.Y.2d 298
• Parties: , 307 N.E.2d 249 Le DRUGSTORE ETATS UNIS, INC., Respondent, v. NEW YORK STATE BOARD OF PHARMACY et al., Appellants.
• Court: New York Court of Appeals Court of Appeals

Page 188

352 N.Y.S.2d 188

33 N.Y.2d 298, 307 N.E.2d 249

Le DRUGSTORE ETATS UNIS, INC., Respondent, v. NEW YORK STATE BOARD OF PHARMACY et al., Appellants.

Court of Appeals of New York.

Dec. 28, 1973.

Louis J. Lefkowitz, Atty. Gen. (Thomas P. Zolezzi and Ruth Kessler Toch, Albany, of counsel), for appellants.

No appearance for respondent.

BREITEL, Judge.

The State Board of Pharmacy, Department of Education, and the Attorney-General, seek reversal of an Appellate Division order in an action for a declaratory judgment upholding the right of plaintiff retailer to use the name 'Le Drugstore' even though it is not licensed as a pharmacy. They contend that the Education Law forbids an unlicensed business to be called a 'drug store', regardless of public disclaimer that the enterprise does not sell or dispense drugs.

Special Term granted plaintiff summary judgment declaring it could conduct its business under the name 'Le Drugstore' so long as no drugs were sold and an exterior sign stated 'Not a Pharmacy'. The court dismissed defendants' motion for summary judgment on their counterclaim for declaratory relief. The Appellate Division, with two dissenters, affirmed and an appeal was taken as of right by defendants based on the dissent (CPLR 5601, subd. (a)). While the appeal was pending, plaintiff closed its business and has moved to dismiss the appeal on grounds of mootness.

The motion to dismiss the appeal for mootness should be denied and the order of the Appellate Division reversed. Upon reversal, summary judgment should be granted in favor of defendants declaring that plaintiff retailer may not conduct business under the name 'Le Drugstore' without being licensed as a pharmacy.

The appeal should not be disposed of on grounds of mootness because a novel question is presented that is likely to recur. On the merits, the Education Law expressly and unambiguously proscribes the use of the name 'drug store' by other than a licensed pharmacy. Whether an exception should be created for the 'Le Drugstore' merchandising technique is properly a matter for the Legislature.

From October, 1970 until February, 1973, plaintiff, Le Drugstore Etats Unis, Inc., and several subtenants, operated a retail business under the name 'Le Drugstore'. The business, modeled on a European merchandising technique, was a kind of 'mini-department store' consisting of boutiques, a restaurant, and other shops. Apparently, 'Le Drugstore' is the name applied to such businesses in Europe.

Concededly, neither plaintiff nor any of its subtenants sold drugs of any kind. Outside the store, prominently displayed, was a disclaimer that the business was 'Not a Pharmacy'. 'Le Drugstore' never obtained a license as a pharmacy.

Financial difficulties forced plaintiff to close 'Le Drugstore' in February, 1973. One month later, plaintiff changed its corporate name from Le Drugstore Etats Unis, Inc. to Drop Kick, Inc. Apart from making a motion to dismiss, plaintiff has made no effort to oppose defendants' appeal. Plaintiff did not appear on oral argument nor has it submitted a brief.

On its motion to dismiss, plaintiff contended that because it had closed 'Le Drugstore' the appeal was moot. Where a novel and important question of statutory construction is presented, which is likely to recur, termination of business by one party to the controversy has been held not to render the appeal moot (see, e.g., Matter of 330 Rest. Corp. v. State Liq. Auth., 26 N.Y.2d 375, 310 N.Y.S.2d 487, 258 N.E.2d 906; see, generally, East Meadow Community Concerts Assn. v. Board of Educ. of Union Free School Dist. No. 3, 18 N.Y.2d 129, 135, 272 N.Y.S.2d 341, 346, 219 N.E.2d 172, 175; Matter of Plumbing, Heating, Piping & Air Conditioning Contrs. Assn. v. New York State Thruway Auth., 5 N.Y.2d 420, 422, n. 1, 185 N.Y.S.2d 534, 535, 158 N.E.2d 238, 239). Plaintiff, throughout this case, has urged that the 'Le Drugstore' complex under that title is a merchandising technique found throughout the world that is becoming increasingly popular. Moreover, the more general question of whether, and under what circumstances, an unlicensed retailer may use the name 'drug store' is of considerable continuing public importance. For that reason the appeal should not be dismissed as moot.

On the merits, subdivision 6 of section 6811 of the Education Law (formerly, until Sept. 1, 1971, Education Law, § 6804, subd. 3, par. q; L.1971, ch. 987) provides that it shall be a misdemeanor for: '6. Any person to carry on, conduct or transact business under a name which contains as a part thereof the words 'drugs', 'medicines', 'drug store', 'apothecary', or 'pharmacy', or similar terms or combination of terms, or in any manner by advertisement, circular, poster, sign or otherwise describe or refer to the place of business conducted by such person, or describe the type of service or class of products sold by such person, by the terms 'drugs', 'medicine', 'drug store', 'apothecary', or 'pharmacy', unless the place of business so conducted is a pharmacy licensed by the department'. On its face, the statute prohibits anyone from conducting a business establishment described as a 'drug store' unless it is a licensed pharmacy.

Both Special Term and the Appellate Division majority were persuaded that an exception should be implied in the statute, despite its unequivocal language. Each concluded that there was no danger of deceiving the public because no drugs were sold and a large, exterior sign proclaimed that the store was 'Not a Pharmacy'. Each concluded that a 'literal' application of the Education Law to 'Le Drugstore' would produce an undesirable result, not intended by the Legislature.

The literal language of a statute will not always be controlling where it contravenes the legislative intent or leads to an unreasonable result (Matter of Astman v. Kelly, 2 N.Y.2d 567, 572, 161 N.Y.S.2d 860, 864, 141 N.E.2d 899, 902, McKinney's Cons.Laws of N.Y., Book 1, Statutes, § 111). But, the literal application of the Education Law, to bar plaintiff from using the name 'Le Drugstore', would neither contravene public policy nor produce an unreasonable result.

The...