S & R Lake Lounge, Inc. v. New York State Liquor Authority

• Decision Date: 05 December 1995
• Citation: 661 N.E.2d 1355,638 N.Y.S.2d 575,87 N.Y.2d 206
• Court: New York Court of Appeals Court of Appeals
• Parties: , 661 N.E.2d 1355 In the Matter of S & R LAKE LOUNGE, INC., Respondent, v. NEW YORK STATE LIQUOR AUTHORITY, Appellant.

Page 575

638 N.Y.S.2d 575

87 N.Y.2d 206, 661 N.E.2d 1355

In the Matter of S & R LAKE LOUNGE, INC., Respondent, v. NEW YORK STATE LIQUOR AUTHORITY, Appellant.

Court of Appeals of New York.

Dec. 5, 1995.

[87 N.Y.2d 207] Scott A. Weiner, New York City, and Adrian C. Hunte, for appellant.

Richard W. Fulfree, Yonkers, for respondent.

OPINION OF THE COURT

CIPARICK, Judge.

The question presented is whether respondent's determination that petitioner violated Alcoholic Beverage Control Law § 65(1) was supported by substantial evidence given the circumstantial proof in the record. We answer this question in the affirmative.

According to the findings of fact of the Administrative Law Judge (ALJ), which are not controverted in any material respect, on November 3, 1990, Timothy Brown (age 19) picked up his friends, Richard Orsini (age 18) and James Louch (age 17), in his car at approximately 11:30 P.M. Brown had with him a container of wine from which all three began drinking. The trio unsuccessfully attempted to gain admittance to several bars before they entered one where Brown, who appeared older than the others, was able to buy beer. However, the beer was confiscated by the bartender when Brown tried to share it with his companions.

The party left this bar and proceeded to petitioner's premises, a topless establishment, where Brown alone was admitted by the doorman based solely on his appearance. Orsini and Louch were turned away for failure to present proof of age and they remained outside in the car for the entire time Brown was inside, approximately 45 minutes to one hour. During this time, Orsini and Louch returned to the entrance and asked the doorman whether they could speak to Brown. Brown came to the doorway carrying the bottle of beer from which he was seen drinking. Brown endeavored to convince the doorman to admit his friends by offering him $20. The offer was rejected and Brown went back inside the premises. The doorman reported the incident to the manager, who noticed that Brown appeared intoxicated. The manager instructed the bartender not to serve Brown thereafter. No effort was made to verify Brown's age. Brown eventually rejoined his friends outside. By this time, all three were intoxicated. Brown began driving erratically and lost control of his vehicle, which struck an unknown object, killing Brown and injuring his passengers. A police officer later examined Brown's personal effects and the contents of his wallet and found that all forms of identification bore his correct date of birth. No false identification was found.

Respondent charged petitioner with selling alcohol to a minor in violation of Alcoholic Beverage Control Law § 65(1) ^* and commenced a proceeding to suspend petitioner's license. A hearing was held on the charge before an ALJ. The ALJ concluded that it could be inferred that Brown obtained the beer inside petitioner's premises, but because there was no direct proof concerning "the manner in which it was acquired," there was no substantial evidence to support the charge. The ALJ further noted that the door leading into the premises contained a sign stating "Charge is part of additional cost of first drink;" however, the record was silent as to whether Brown was charged an admission fee on the night in question.

Respondent reversed the findings and conclusion of the ALJ only insofar as the ALJ found that there was a failure to establish the charge by substantial evidence. Respondent imposed a 15-day suspension and $1,000 fine. Petitioner commenced this CPLR article 78 proceeding.

The Appellate Division, with one Justice dissenting, granted the petition, annulled the determination and dismissed the charge. The majority concluded that respondent's determination was not supported by substantial evidence, because "[t]here was no evidence adduced at the hearing to establish that the petitioner knew or should have known the manner in which the deceased obtained the beer." (209 A.D.2d 420, 421, 618 N.Y.S.2d 435.) The dissent opined that under the peculiar circumstances of this case, where the minor was deceased and his friends had no opportunity to observe him purchase the beer, "the determination depends perforce upon circumstantial evidence--but it is not for that reason unsound." (209 A.D.2d, at 422, 618 N.Y.S.2d 435.)

Respondent urges that its determination was supported by substantial evidence and should not have been disturbed. We agree and therefore reverse the judgment of the Appellate Division.

Substantial evidence is " 'such relevant evidence as a reasonable mind might accept as adequate to support a conclusion' " (Matter of Kopec v. Buffalo Brake Beam-Acme Steel & Malleable Iron Works, 304 N.Y. 65, 71, 106 N.E.2d 12, quoting Edison Co. v. Labor Bd., 305 U.S. 197, 229, 59 S.Ct. 206, 216-217, 83 L.Ed. 126). In order to establish a violation of Alcoholic Beverage Control Law § 65(1), which prohibits sale or delivery of alcohol to a minor, there must be proof that the proscribed conduct was "open, observable and of such nature that its continuance could, by the exercise of reasonable diligence, have been prevented" (see, Matter of 4373...