Leogrande v. State Liquor Authority

• Court: New York Supreme Court — Appellate Division
• Writing for the Court: BREITEL; All concur except EAGER; EAGER
• Citation: Leogrande v. State Liquor Authority, 25 A.D.2d 225, 268 N.Y.S.2d 433 (N.Y. App. Div. 1966)
• Decision Date: 31 March 1966
• Parties: Application of Frank LEOGRANDE, Jr., Petitioner, for a review pursuant to Article 78 of the CPLR, v. STATE LIQUOR AUTHORITY of the State of New York, Respondent.

Page 433

268 N.Y.S.2d 433

25 A.D.2d 225

Application of Frank LEOGRANDE, Jr., Petitioner, for a review pursuant to Article 78 of the CPLR, v. STATE LIQUOR AUTHORITY of the State of New York, Respondent.

Supreme Court, Appellate Division, First Department.

March 31, 1966.

Arnold E. Wallach, New York City, of counsel (Fruchtman & Wallach, attorneys) for petitioner.

Joseph S. Ryan, Brooklyn, of counsel (Hyman Amsel, New York City, attorney) for respondent.

Before BOTEIN, P.J., and BREITEL, RABIN, EAGER, and BASTOW, JJ.

BREITEL, Justice.

Petitioner's restaurant liquor license was cancelled by the State Liquor Authority and he brings this proceeding under Article 78 of CPLR to review the determination. The evidence before the agency, if competent, was ample to substantiate the charges that the licensee engaged on and off the licensed premises in professional gambling activities, namely, bookmaking and policy collections. Petitioner contends, however, that the evidence establishing the charges was not competent because such evidence was the product of illegal search and seizure by police officers. The police officers, testifying in this administrative proceeding, had acted under two search warrants in collateral criminal proceedings, in which the warrants were subsequently vacated for lack of probable cause. Petitioner argues that the evidence other than that tainted by illegality is insufficient to sustain the charges.

The cancellation of the license should be annulled and the license restored. It is concluded that the exclusionary rule barring the use of evidence obtained by illegal search and seizure by public officials extends to any official proceeding brought to impose official forfeitures, penalties, or similar sanctions for violations of law or regulation. It is noted, however, that the precise issue is not one that has been passed upon by the Court of Appeals, and rarely, if ever, by the highest courts in other jurisdictions.

The two search warrants were based on observations by police officers made from the street. As background, perhaps to explain the occasion for the police observations, it is notable that the licensee had been once before suspended by the agency for suffering gambling on the licensed premises.

On November 26, 1963, police officer Smyth observed the licensee being approached immediately outside the licensed premises by four persons unknown to the police, each of whom engaged the licensee in conversation and handed him money. Officer Smyth heard the fourth man say to the licensee: "Give me the five for a dollar."

On November 29th officer Smyth obtained a search warrant, entered the licensed premises with another police officer, made a search, and obtained from the licensee's person a slip of paper bearing evident gambling notations. From the table in the kitchen area of the licensed premises officer Smyth obtained a slip bearing 14 plays of "single action of mutual race operation" and the "identities" of collectors, a quantity of other gambling papers, and two racing programs of current date. According to officer Smyth, the licensee admitted to him that all the gambling papers were his "action." While there the officer answered the telephone on a number of occasions and the persons at the other end attempted to place bets. At the time of the search by officer Smyth, his partner (officer Segarra) remained at the bar where one Fay Ettinger approached him. She gave him a list of bets, containing 65 plays of mutuel race horse policy, single action and bolita, to deliver to the licensee and, after being arrested, told him that she had been taking policy bets for about two weeks and turning the numbers in to the licensee. Thereafter, in criminal proceedings brought against the licensee, the search warrant was controverted, the evidence obtained by it ruled inadmissible, and the criminal charges were dismissed.

The second search followed a somewhat similar course. On March 11th and 12th, 1964, police officer Morgan observed one McHugh, outside the licensed premises, being approached by some twenty persons who engaged McHugh in conversations, handing him moneys, and McHugh making notations on paper. On both dates McHugh was later observed by officer Morgan turning over the papers and moneys to the licensee who was seated in his automobile outside the licensed premises.

After officer Morgan had obtained a search warrant based on the observations last described and on additional information, he returned to the neighborhood on March 19th and observed McHugh operating in similar fashion but this time delivering money and papers to the licensee inside the licensed premises. The observation was made through the front window of the bar. Upon executing the search warrant officer Morgan removed from the person of the licensee, as the latter was entering his automobile, a number of papers bearing wagers on horse races and $259 in money. In criminal proceedings brought against the licensee and McHugh this search warrant was also controverted, vacated for lack of probable cause, and the criminal proceedings dismissed.

The licensee, testifying in this proceeding, denied the circumstances of the street observations and all of the material incriminating elements connected with the searches and seizures under the warrants. Despite these denials, this Court is bound to accept the police version on the assumption that the agency's findings so concluded on the evidence (Matter of Radigan v. O'Connell, 304 N.Y. 396, 399, 107 N.E.2d 507).

It is evident that the police officers in entering the licensee's premises on the first search did so pursuant to a search warrant and not, as the agency now argues, in the exercise of any supervisory power over licensed premises authorized by subdivision 15 of section 106 of the Alcoholic Beverage Control Law. Moreover, the intrusive nature of the search of the premises and of the licensee's person was not consistent with a statutory supervisory inspection, but was explainable only as a police search in enforcement of the criminal laws. The second search, of course, did not occur inside the licensed premises.

The warrants having been vacated for insufficiency of probable cause, any evidence obtained through their execution was illegally obtained in violation of the Fourth Amendment of the Federal Constitution and section 12 of Article 1 of the State Constitution. The effect under the exclusionary rule is that the incriminating papers which established the policy collecting and bookmaking activities of the licensee were not admissible in any criminal proceeding (People v. Rainey, 14 N.Y.2d 35, 38--39, 248 N.Y.S.2d 33, 36--37, 197 N.E.2d 527, 529--530; People v. Fino, 14 N.Y.2d 160, 163--164, 250 N.Y.S.2d 47, 50--52, 199 N.E.2d 151, 153--154.)

Insofar as the conversations over the telephone with persons unknown to the police, intercepted by officer Smyth while executing one of the vacated search warrants, these, too, are subject to the search and seizure restrictions in the Constitution (Wong Sun v. United States, 371 U.S. 471, 485--488, 83 S.Ct. 407, 9 L.Ed.2d 441; People v. Rodriguez, 11 N.Y.2d 279, 286, 229 N.Y.S.2d 353, 356, 183 N.E.2d 651, 653). Generally, the interception of telephone calls in the course of a legal police search of another's premises is not prohibited by the constitutional restrictions (e.g., United States v. Pasha, 7 Cir., 332 F.2d 193, 196--198, cert, denied, 379 U.S. 839, 85 S.Ct. cert. denied, 379 U.S. 839, 85 S.Ct Telephone Calls--Admissibility, 13 A.L.R.2d 1409, esp. cases cited at pp. 1414--1419). However, the interceptions in question were not made during a lawful search and therefore they fall under the same prohibition applicable to the general search.

The conversations between officer Segarra, who was officer Smyth's partner in the first search, and the woman, Fay Ettinger, took place while officer Segarra was at the bar of the licensed premises and, arguably, occurred while that officer was not actually executing the warrant subsequently determined to be illegal. But, the conversations with the woman cannot be linked with the licensee unless the context of her remarks is accepted as true. It is not legally possible to accept the content of her remarks as true, as distinguished from the fact of their occurrence, without violating the hearsay rule (Richardson on Evidence [9th ed.] §§ 206--209, and cases cited). It is well established in this State that while hearsay evidence is admissible in an administrative proceeding there must be some legal or competent evidence to sustain the determination (e. g., Matter of Stammer v. Board of Regents of University of State of New York, 287 N.Y. 359, 365, 39 N.E.2d 913, 915; 1 N.Y.Jur., Administrative Law, §§ 141, 201).

All that then remains by way of competent evidence to establish the misconduct of the licensee on and off the licensed premises are the observations of the licensee and McHugh engaging in conversations with one another and with persons unknown to the police, the exchange of moneys and the making of notations on paper, with the additional overheard comment of one of the unknown men to the effect, "Give me the five for a dollar." The conduct observed was highly suspicious but not relatable to any criminal or disorderly activity (e. g., People v. Fino, 14 N.Y.2d 160, 163, 250 N.Y.S.2d 47, 50, 199 N.E.2d 151, 153, supra; People v. Moore, 11 N.Y.2d 271, 228 N.Y.S.2d 822, 183 N.E.2d 2d 225). In considering this evidence there is no requirement in this civil proceeding that the proof meet as high a standard as that required in a criminal proceeding (Matter of Katz's Delicatessen, Inc. v. O'Connell, 302 N.Y. 286, 288, 97 N.E.2d 906, 907; Matter of Schnitzler v. Casey, 283 App.Div. 1092, 131 N.Y.S.2d 554, and cases cited). Thus the evidence need not establish culpability beyond a reasonable doubt. Nevertheless, as a matter of logical proof and minimal standards of...