Our Lady of Good Counsel, Roman Catholic Church and School v. Ball

• Decision Date: 17 June 1974
• Citation: 45 A.D.2d 66,356 N.Y.S.2d 641
• Parties: In the Matter of OUR LADY OF GOOD COUNSEL, ROMAN CATHOLIC CHURCH AND SCHOOL et al., Respondents, v. Ira M. BALL, as Commissioner of the State Bingo Control Commission, et al., Appellants, et al., Respondents.
• Court: New York Supreme Court — Appellate Division

Page 641

356 N.Y.S.2d 641

45 A.D.2d 66

In the Matter of OUR LADY OF GOOD COUNSEL, ROMAN CATHOLIC

CHURCH AND SCHOOL et al., Respondents, v. Ira M. BALL, as Commissioner of the State Bingo Control

Commission, et al., Appellants, et al., Respondents.

Supreme Court, Appellate Division, Second Department.

June 17, 1974.

Louis J. Lefkowitz, Atty. Gen. (David H. Berman and Samuel A. Hirshowitz, New York City, of counsel), for appellants Ball and Lynch.

Johnson, Tannen, Katzman, Fishman & Feit, New York City, P.C. (Robert J. Fishman and David M. Schwarz, New York City, of counsel), for appellant Victory Hall, Inc.

John S. Zachary, P.C., Staten Island (John A. Purpura, of counsel), for respondents.

Before MARTUSCELLO, Acting P.J., and LATHAM, COHALAN, BRENNAN and MUNDER, JJ.

MARTUSCELLO, Acting Presiding Justice.

The principal issue in this proceeding under article 78 of the CPLR is whether an interim change in the law should affect the determination of a pending application for a bingo license which should have been issued prior to the change. Subsidiary to this is the threshold issue of whether holders of bingo licenses who are 'authorized organization(s)' have standing to sue to annul a bingo license granted to a 'commercial lessor'.

Article 14--H of the General Municipal Law, entitled 'Local Option for Conduct of Bingo by Certain Organizations', provides for two classifications of holders of bingo licenses. One is an 'authorized organization' defined in subdivision 4 of section 476 of the General Municipal Law as a bona fide religious, charitable, educational, fraternal, civic, service, veterans or volunteer firemen's organization which operates without profit and which for at least one year prior to application for a bingo license was engaged in serving one or more of the generally public-spirited or religious purposes set forth in subdivision 6 of section 476.

The other is an 'authorized commercial lessor' which is an entity other than an 'authorized organization' and which is permitted to lease its premises to an 'authorized organization' for particular bingo play (General Municipal Law, § 476, subd. 9).

Sections 480 and 481 of the General Municipal Law state the procedure and some of the requirements for application for and issuance of a license to conduct bingo. The application is initially made to the municipality, which shall conduct an investigation. In New York City the pertinent agency is the Department of Consumer Affairs (hereinafter referred to as the City Department) (Administrative Code of the City of New York, ch. 32, tit. A, § 773--2.0, subd. b). As to applicants for a commercial lessor's license (General Municipal Law, § 480, subd. 2; § 481, subd. 1, par. (b)), if the municipal agency finds the applicant is qualified and satisfies the statutory requirements and, Inter alia, if the State Bingo Control Commission (hereinafter referred to as State Commission) has approved as fair and reasonable the applicant's schedule of maximum rentals for each occasion of play, the municipal agency issues such license.

On February 27, 1973 appellant Victory Hall, Inc. applied to be licensed as an authorized commercial lessor to conduct bingo at 181 Bay Street, Staten Island, New York. The four principals of the corporation made a large investment of money in connection with altering and preparing the premises to comply with governmental regulations.

The application was filed with both the City Department and the State Commission. The City Department investigated the principals of the corporation and found them to be of good moral character. The place of assembly permit was issued on March 2, 1973 and received by the City Department on March 7, 1973. However, despite persistent and continuous inquiry by Marvin Bortnick, an officer of Victory Hall, beginning the second week of March, 1973, to the Assistant Director of Bingo Operations of the City Department, the City Department failed to report the satisfactory conclusion of its investigation to the State Commission.

The penultimate step towards the issuance of the commercial lessor's license by the City Department is the aforementioned approval by the State Commission of the applicant's proposed schedule of maximum rents; upon receipt of such approval the City Department issues the license. However, the record shows that it was the established policy of the State Commission not to consider rent schedules until it had word from the municipal agency that the principals of the proposed licensees have been approved. As stated by an official of the State Commission, the reason was 'very frankly, because we did not want to spin our wheels and take on something that might turn out to be unnecessary unless the City was about to issue a license'. Thus, both the State and City agencies did nothing towards completion of the processing of the license application, the State Commission because it had received no word as to approval of the personal qualifications of the principals of the applicant, and the City Department because it had received no word as to approval of the maximum rental rates.

On April 3, 1973, while Victory Hall's application was in this state of limbo, an amendment to paragraph (b) of subdivision 1 of section 481 of the General Municipal Law was approved and became effective immediately (L.1973, ch. 142, §§ 3, 4). The amendment provided that 'in cities having a population of one million or more' an additional requirement for issuance of a license to a commercial lessor is a finding by the municipal agency 'that there is a public need and that public advantage will be served by the issuance of such license'.

Following enactment of this amendment the City Department required Victory Hall to submit evidence to it at a hearing that there was a public need for issuance of the license and that public advantage would be served. It decided on August 13, 1973 that Victory Hall had not met this burden.

Pursuant to section 493 of the General Municipal Law, Victory Hall appealed to the State Commission. It claimed that the statute in effect prior to the April 3, 1973 amendment should apply because the delay in the processing of the application was not its fault. On November 28, 1973 the State Commission held a hearing and received evidence from Victory Hall and employees of both the City and State agencies. On December 20, 1973 the State Commission unanimously reversed the decision of the City Department, stating:

'This decision is based solely upon the facts that the said Department had sufficient time, prior to April 3, 1973, within which to process the application of Victory Hall, Inc. for a commercial lessor's license. The undisputed facts, in this regard, disclose that the application was filed in said Department on February 27, 1973; that the officers and stockholders were fingerprinted and found to be of good moral character prior to April 3, 1973 and that a valid Place of Assembly Permit was issued on March 2, 1973 and received by the Department on March 7, 1973. The only matter remaining was for the Department to notify this Commission that its preliminary investigation had been completed and that a commercial lessor's license would be issued after this Commission had issued a fair and reasonable rent schedule as required by Section 481, 1(b) of the General Municipal Law, the procedure heretofore followed between the Department of Consumer Affairs and this Commission.

'The record does not contain any reason or explanation as to why the usual procedure was not followed. Had the customary procedure been followed, the Commission would have had ample opportunity to issue a fair and resonable rent schedule prior to April 3, 1973, the effective date of Chapter 142 of the Laws of 1973.

'In the interest of justice, we do not believe that the applicant should be penalized under the foregoing facts.

'In view of the foregoing, the Commission need not decide the issues of 'public need and that public advantage will be served' in this case.'

On February 20, 1974, the petitioners instituted this proceeding under article 78 of the CPLR in the Supreme Court, Richmond County, to annul the determination of the State Commission, to enjoin the City Department from issuing a commercial lessor's license to Victory Hall and to enjoin Victory Hall from conducting bingo at its premises.

The petition alleged the petitioners to be 'authorized organizations' licensed to operated bingo games who 'will suffer severe economic damages and loss of income' if Victory Hall were granted a commercial lessor's license, that Victory Hall's license application was subject to paragraph (b) of subdivision 1 of section 481 of the General Municipal Law, as amended on April 3, 1973, and that therefore the determination of the State Commission should be treated as a nullity and the license issued deemed void as a matter of law.

On March 20, 1974, an order was made by the Special Term, (1) denying a motion by the State Commission (which motion Victory Hall supported) to dismiss the petition on the ground that the petitioners lacked standing to sue and (2) directing the State Commission to file an answer to the petition. By the judgment under review, dated April 25, 1974 the Special Term revoked the license which had been issued by the City Department pursuant to the State Commissioner's order. The underlying decision of the Special Term ruled that the State Commission's failure to apply the requirements of the amended statute to Victory Hall's application was arbitrary and capricious.

I.

We agree...