Farina v. State Liquor Authority

• Decision Date: 02 November 1967
• Citation: 285 N.Y.S.2d 44,20 N.Y.2d 484,231 N.E.2d 748
• Parties: , 231 N.E.2d 748 In the Matter of Anthony J. FARINA, Appellant, v. STATE LIQUOR AUTHORITY, Respondent.
• Court: New York Court of Appeals Court of Appeals

Page 44

285 N.Y.S.2d 44

20 N.Y.2d 484, 231 N.E.2d 748

In the Matter of Anthony J. FARINA, Appellant, v. STATE LIQUOR AUTHORITY, Respondent.

Court of Appeals of New York.

Nov. 2, 1967.

Monroe I. Katcher, II, New York City, for appellant.

Milton Koerner, Far Rockaway, and Hyman Amsel, New York City, for respondent.

SCILEPPI, Judge.

On December 1, 1964 Anthony J. Farina, the petitioner, filed with the Westchester County Alcoholic Beverage Control Board an application for a retail package store license. The application requires a detailed financial statement disclosing all available funds for the establishment of the business. Complying with this requirement, petitioner certified that, in addition to other listed resources, he intended to use the loan value of his New York State Employees Retirement System fund and moneys which he could obtain by increasing the mortgage on his home.

In due course, the petitioner's application was approved, and he received a package store license for the said premises on June 25, 1965 for the license year expiring February 28, 1966.

Several months later, the petitioner sought to sell his liquor store. After visiting the premises, Leonard and Matthew Scaperotta agreed to purchase the business. Accordingly, they filed application for a license, by way of transfer of ownership from the petitioner, with the Westchester County Alcoholic Beverage Control Board on November 17, 1965.

The Scaperottas' application was approved on December 10, 1965 by the local board and forwarded to the State Liquor Authority for final action. The Authority, however, did not act on this license; instead, it ordered an investigation to determine (1) why petitioner wanted to sell the premises so soon after he obtained a license and (2) whether there the time the petitioner received his license. and the proposed purchasers prior to the time petitioner received his license.

On January 19, 1966, petitioner appeared without an attorney before Investigators Zivin and Schachnovsky. He informed them that he was selling the business because he simply could not find the time or energy to run it; that he was then, and had been for the past 31 years, employed by the State of New York as a senior marketing representative in the Division of Marketing of the State Department of Agriculture and that the liquor store was to have been an extra source of income, but it was taking its toll on his health. He had been working 15 hours a day; he had lost 35 pounds; and he had had a slight heart attack.

On January 25, 1966, the petitioner again appeared without an attorney before the same investigators. He produced all of his financial records. The petitioner informed the investigators that, in financing the business, he had decided not to borrow from the New York State Employees Retirement System because he had only a short time to full retirement at age 55; since he still owed the System $1,700 he thought it would be difficult to pay the System and it might interfere with his proposed retirement. The petitioner had not increased the mortgage on his home either, he informed the investigators, because he considered that that extra interest, from 4 1/2% To 5 3/4%, would make the monthly payments of principal and interest too costly.

On the basis of frank answers by the petitioner to the investigators at this interview, they reported that he had financed his business with the following funds which had not been originally contemplated: $1,500 from a relative, previously disclosed; $1,000 from another relative, not previously disclosed; $1,000 in savings of his wife, not previously disclosed, and $3,000 from cash allegedly at hand and allegedly earned as commissions from selling furniture and from real estate transactions, upon which petitioner had told them he had not yet paid taxes.

Having received this information, on February 16, 1966, the Authority determined to refer the matter for a nonrenewal proceeding, with provision to renew the license on stipulation.

On February 21, 1966, the petitioner executed a stipulation which, after reciting 'that it would create undue hardship were the Authority to withhold the issuance of the renewal license pending the completion of the necessary investigation and evaluation of the renewal application or the initiation of a revocation proceeding or the determination of such a proceeding', renewed the license but without prejudice to the Authority's right to revoke, cancel or suspend said renewal license. It further provided that the Authority's issuance of a renewal license was not to be deemed a waiver of its right to refuse to renew the license.

On February 28, 1966 a notice was sent to petitioner to appear for a nonrenewal interview at the Authority's office on March 9, 1966 for the following reasons: 'That the conduct of the licensee was of such an improper nature as to warrant the non-renewal of his license in that in connection with his original application for a license, he concealed or suppressed facts relating to the true source of funds to be used in financing the business; and in that he failed to report for income tax purposes, to the Federal government and New York State, income emanating from commissions as made from selling furniture and from selling businesses or real estate'.

At the conclusion of this interview, which met the requirements of a formal hearing, the specifications were sustained. The Hearing Officer's findings were submitted to the Authority and the petitioner's attorney was afforded an opportunity to controvert them. On April 26, 1966, the Authority approved the findings of the Hearing Officer and unanimously voted that an order of recall be entered against the petitioner on the ground that, as the specifications had been sustained, 'the licensee will not or cannot properly operate these premises so as to prevent violations of law from occurring therein, and renewal of said license would create a high degree of risk in the administration and enforcement of the Alcoholic Beverage Control Law.'

Thereafter, the petitioner brought this article 78 proceeding seeking to annual and set aside the Authority's order on the following grounds; that notwithstanding the stipulation, the Authority could not hold a non-statutory 'non-renewal' proceeding; that the Authority is limited to the specific statutory proceedings of cancellation, revocation and suspension; and that the determination was arbitrary and capricious. The Supreme Court, Westchester County, rejected these contentions.

On appeal, the Appellate Division, Second Department, affirmed with two Justices dissenting, 27 A.D.2d 670, 278 N.Y.S.2d 582.

In this court, petitioner pointed out that by utilizing a non-renewal proceeding, the Authority not only excludes from the range of its disciplinary powers a consideration of suspension of the license but also effectively limits the scope of judicial review of its action. In reviewing a disciplinary proceeding, which under section 118 of the Alcoholic Beverage Control Law, Consol.Laws, c. 3--B, may terminate in revocation,...