Finn's Liquor Shop, Inc. v. State Liquor Authority

• Decision Date: 24 April 1969
• Parties: , 249 N.E.2d 440 In the Matter of FINN'S LIQUOR SHOP, INC., Respondent, v. STATE LIQUOR AUTHORITY, Appellant. In the Matter of Nicholas LA PENTA, Jr., Doing Business as Tunic's Hotel, Respondent, v. STATE LIQUOR AUTHORITY, Appellant. In the Matter of Anna MALIK, Respondent, v. NEW YORK STATE LIQUOR AUTHORITY, Appellant.
• Court: New York Court of Appeals Court of Appeals

Page 584

301 N.Y.S.2d 584

24 N.Y.2d 647, 249 N.E.2d 440

In the Matter of FINN'S LIQUOR SHOP, INC., Respondent, v. STATE LIQUOR AUTHORITY, Appellant.

In the Matter of Nicholas LA PENTA, Jr., Doing Business as

Tunic's Hotel, Respondent, v. STATE LIQUOR AUTHORITY, Appellant.

In the Matter of Anna MALIK, Respondent, v. NEW YORK STATE LIQUOR AUTHORITY, Appellant.

Court of Appeals of New York.

April 24, 1969.

Louis J. Lefkowitz, Atty. Gen. (Samuel A. Hirshowitz and Brenda Soloff, New York City, of counsel), for appellant State Liquor Authority.

Samuel B. Waterman, New York City, for respondent Finn's Liquor Shop., inc.

A. Albert Fein, New York City, for respondent Nicholas La Penta, Jr.

Crucian S. Messina, Buffalo, for respondent Anna Malik.

FULD, Chief Judge.

In each of these cases, the Appellate Division annulled a determination of the State Liquor Authority on the ground that it was based upon evidence obtained by an illegal search and seizure, and the primary question presented is whether the exclusionary rule of Mapp v. Ohio, 367 U.S. 643, 81 S.Ct. 1684, 6 L.Ed.2d 1081, applies to administrative proceedings as well as to criminal prosecutions. We discuss that question before examining the several issues posed by the individual appeals.

The function of the exclusionary rule, as stated by the Supreme Court (Mapp v. Ohio, 367 U.S., at p. 656, 81 S.Ct. at p. 1692), "is to deter--to compel respect for the constitutional guaranty in the only effectively available way--by removing the incentive to disregard it." (See, also, Kaufman v. United States, 394 U.S. 226, 229, 89 S.Ct. 1068, 22 ,L.Ed.2d 227; Lee v. Florida, 392 L.Ed.2d 227; Lee v. Florida, 392 1166; Elkins v. United States, 364 U.S. 206, 217, 80 S.Ct. 1437, 4 L.Ed.2d 1669.) To the extent that the State, or its agents, can bypass the deterrent effect of the exclusionary rule by using the fruits of an illegal search in a 'civil' or 'administrative' proceeding, the incentive for enforcement and investigative personnel to exceed constitutional limitations on their activity remains and the effectiveness of the rule as a deterrent is diminished. Recognizing this, the courts have never hesitated to apply the exclusionary rule to a variety of proceedings, including those which, at least in form, are not of a criminal character. (See One 1958 Plymouth Sedan v. Com. of Pennsylvania, 380 U.S. 693, 85 S.Ct. 1246, 14 L.Ed.2d 170; Incorporated Vil. of Laurel Hollow v. Laverne Originals, 17 N.Y.2d 900, 271 N.Y.S.2d 996, 218 N.E.2d 703; Matter of Leogrande v. State Liq. Auth., 25 A.D.2d 225, 268 N.Y.S.2d 433, revd. on other grounds 19 N.Y.2d 418, 280 N.Y.S.2d 381, 227 N.E.2d 302.) In the Plymouth Sedan case (380 U.S. 693, 85 S.Ct. 1246, Supra)--a civil forfeiture suit brought to confiscate an automobile allegedly used for the illegal transportation of alcoholic beverages--the Supreme Court, after noting that the object of the action, 'like a criminal proceeding, is to penalize for the commission of an offense against the law' (380 U.S., at p. 700, 85 S.Ct. at p. 1250), went on to say (p. 701, 85 S.Ct. at p. 1250):

'It would be anomalous indeed, under these circumstances, to hold that in the criminal proceeding the illegally seized evidence is excludable, while in the forfeiture proceeding, requiring the determination that the criminal law has been violated, the same evidence would be admissible.'

The Authority seeks to distinguish the Plymouth Sedan case on the ground that its sole function is administrative--the regulation of the liquor industry--and the enforcement of the criminal law is, at most, a peripheral concern. ¹ To the extent that this is true, it makes the argument all the more compelling that, if the exclusionary rule is to be effective, it may not be limited to purely criminal proceedings. It is no longer subject to question that State agencies, charged with purely administrative responsibilities, just as those engaged in the enforcement of the criminal law, must conduct their investigative and enforcement functions in compliance with constitutional requirements and, more particularly, within the confines of the Fourth Amendment. (See Camara v. Municipal Ct., 387 U.S. 523, 530--531, 87 S.Ct. 1727, 18 L.Ed.2d 930; See v. City of Seattle, 387 U.S. 541, 87 S.Ct. 1737, 18 L.Ed.2d 943.)

Claiming that adequate protection of Fourth Amendment rights is assured if illegally obtained evidence is not admissible in criminal prosecutions, the Authority urges that the exclusionary rule should not be extended to administrative proceedings. In the absence of any other means of enforcement, however, the effect of such a restricted application of the rule would be to place the agency beyond the reach of the Constitution and there would be no way to protect licensees from abuse and harassment at the hands of its employees or agents.

In Matter of Leogrande v. State Liq. Auth., 25 A.D.2d 225, 268 N.Y.S.2d 433, revd. on other grounds 19 N.Y.2d 418, 280 N.Y.S.2d 381, 227 N.E.2d 302, Supra, the Appellate Division had annulled the Authority's determination that the licensee had used his premises for gambling activities on the ground that the evidence upon which the determination was based was illegally obtained. 'All of the reasons in policy which suggest the application of the exclusionary rule to illegal searches and seizures by public officers in criminal proceedings', Judge BREITEL, writing for that court declared (25 A.D.2d, at pp. 231--232, 268 N.Y.S.2d at p. 440), 'apply equally to administrative proceedings of the present character, namely those involving penalties, forfeitures, or other sanctions for the violatio of law or regulation * * * The exclusionary rule rests on a theory of deterrence; that policy would not be served if the illegal official activity could be used, despite unavailability in criminal proceedings, to effect parallel sanctions of forfeiture in an administrative proceeding.' The Court of Appeals reversed--but on the very different ground that the petitioner had failed to raise the question before the Authority and had thereby not preserved it for review.

The Authority contends that the Appellate Division's decision in Leogrande was inconsistent with our holding in Sackler v. Sackler, 15 N.Y.2d 40, 255 N.Y.S.2d 83, 203 N.E.2d 481, 5 A.L.R.3d 664. Although we did, in Sackler, permit the use of unlawfully obtained evidence in a civil suit, we based our conclusion solely on the ground that the unlawful entry was committed by Private individuals as opposed to Representatives of Government and that, in the absence of State action, there was no constitutional violation involved. The court's opinion in Sackler expressly noted that the decision would not be controlling in a case where the evidence was illegally obtained 'by governmental people' (15 N.Y.2d, at p. 44, 255 N.Y.S.2d 83, 203 N.E.2d 481; see, also, People v. Horman, 22 N.Y.2d 378, 381--382, 292 N.Y.S.2d 874, 876--878, 239 N.E.2d 625, 627--628).

The Authority, just as any other State agency, is obligated to conduct its activities in conformity with the demands of the Constitution. When its agents exceed those limits, it should not be permitted to avail itself of the fruits of such unlawful activity in order to impose sanctions upon the persons whose constitutional rights have been violated.

With this principle in mind, we proceed to a discussion of each of the three cases before us.

Matter of Finn's Liquor Shop v. State Liquor Authority

Action on a tip that sales were being made on credit, two inspectors from the State Liquor Authority entered Finn's Liquor Shop, in New York City, on a January day in 1967, and asked the store manager, the only person present, if they could inspect the premises. When the manager told them to '(g)o ahead,' one of the inspectors went immediately to a room in the rear of the liquor store where a coat was hanging. Without bothering to ascertain its ownership, the inspector went through the pockets of the coat and found sales slips indicating that sales had been made, impermissibly, on credit.

The licensee's principal--Martin Finn--arrived at the premises shortly thereafter and, when confronted with the slips which the investigator had seized, he admitted that they were used for sales on credit. Finn was called to the offices of the Authority a week later for further questioning but, upon the advice of counsel, refused to answer any questions on the ground that to do so would incriminate him. Charges were filed against the petitioner, alleging that he had sold liquor on credit and had refused to answer questions in an investigation conducted by the Authority (Alcoholic Beverage Control Law, § 100, subd. 5: Rules of the State Liquor Authority, rule 36, subd. 15, Alcoholic Beverage Control Law, Appendix; 9 NYCRR 53.1 (o)). At the commencement of the hearing on those charges, the petitioner requested that all of the evidence resulting from the search of the coat be suppressed as unlawfully obtained. The hearing officer, relying on the Leogrande case (25 A.D.2d 225, 268 N.Y.S.2d 433, Supra)--which had not yet been decided by our court--agreed that illegally seized evidence would be inadmissible. However, voicing the opinion that he lacked jurisdiction to pass upon the constitutional question, he declined to suppress the evidence and suggested that the petitioner address his application to the Supreme Court. Relying upon the sales slips, Mr. Finn's admission as to their purpose and his subsequent refusal to answer questions, the Authority ordered a 10-day suspension of the license, a $1,000 bond forfeiture and the issuance of a letter of warning.

The petitioner thereupon instituted this article 78 proceeding in which it renewed its claim that the evidence was the product of an unlawful search and seizure and, for that reason, could not be used against it. ² The Appellate Division, First Department, unanimously sustained the petition and ordered...