Sound Distributing Corp. v. New York State Liquor Authority
| Decision Date | 30 May 1989 |
| Citation | 144 Misc.2d 1,542 N.Y.S.2d 489 |
| Parties | SOUND DISTRIBUTING CORP., Petitioner, For a judgment pursuant to Article 78 of the Civil Practice Law and Rules, v. NEW YORK STATE LIQUOR AUTHORITY, Respondent. |
| Court | New York Supreme Court |
Warren B. Pesetsky and Leonard Fogelman, New York City, for petitioner.
Sharon L. Tillman, State Liquor Authority, New York City, for respondent.
Petitioner applied to the New York State Liquor Authority ("Authority") for a Warehouse Permit for the storage of alcoholic beverages. The application was denied. This Article 78 proceeding presents serious questions about the Authority's practice of delegating to subordinate tribunals responsibility for final decisions to grant or deny applications for licenses or permits.
Petitioner, which is licensed as a wholesale beer distributor at locations in Bronx and Westchester counties, applied, in 1988, for a wholesale beer license for 1301 Inwood Avenue in the Bronx. That application is still pending. By a 2-2 tie vote, the Authority failed to determine that application; there has been a vacancy since December 1, 1988 when one of the Commissioners died. This court, by order entered January 30, 1989 (Katz, J.), denied Article 78 relief in the nature of mandamus to compel a decision; the court held that the determination of whether to issue a license is not a ministerial act. The license application awaits the appointment of a fifth Commissioner.
On February 22, 1989, petitioner filed an application for a Warehouse Permit. The application was referred to the Licensing Board, a subordinate body, which apparently exercises, in the Authority's name, discretion to grant or deny such a permit. That body denied the application, without a hearing, on March 10, 1989. The denial, signed by Deputy Commissioner O'Connor, stated only that "an application for a wholesale license is pending for this location at the Full Board." Petitioner contends that the determination should be annulled as arbitrary and capricious.
As a threshold question, the court is obligated to consider whether this matter is ripe for review; that is, is there sufficient administrative finality to permit Article 78 review. The answer filed by the Authority asserts that the Licensing Board "may, subject to the Authority's supervision and control, issue or refuse any license or permit." The Authority does not contest the finality of the Licensing Board's decision. However, the affidavit of the Deputy Commissioner suggests that, on request of petitioner, he would have referred the decision to the Authority itself; he "intended to forward any request by petitioner for review thereof to the Members of the Authority for their consideration."
The Court of Appeals has held that the delegation by the Authority of final authority for action on licenses was invalid (Matter of Weekes v. O'Connell, 304 N.Y. 259, 265, 107 N.E.2d 290; cf. Matter of O'Dea's Bar & Rest. v. New York State Liquor Authority, 30 Misc.2d 616, 617-618, 201 N.Y.S.2d 340). The Appellate Division, First Department thereafter held that the Alcoholic Beverage Control Law did not permit delegation of final authority for licensing actions to a Licensing Board and that, in any event, the regulations delegating the authority had not been filed with the Secretary of State as required by article IV, section 8 of the New York Constitution (Matter of Bizarre, Inc. v. State Liquor Authority, 29 A.D.2d 500, 502, 289 N.Y.S.2d 75, appeal dismissed 22 N.Y.2d 721, 292 N.Y.S.2d 106, 239 N.E.2d 203). In 1968, apparently in response to Matter of Bizarre, Inc., the Legislature amended the Alcoholic Beverage Control Law. The limitation in subdivision 10 of section 17, which had previously restricted delegations to the conduct of hearings was deleted; subdivision 13 was added (L.1968, ch. 948). Subdivision 13 specifies that "[t]he powers provided in this section may be delegated by the authority to any member, chief executive officer, assistant chief executive officers, deputy commissioners, secretary to the authority and attorneys attached to the legal staff." The powers enumerated in section 17 include the power "[t]o issue or refuse to issue any license or permit provided for in this chapter" (Alcoholic Beverage Control Law § 17[1]. Thus, the 1968 amendment removed one of the underpinnings of Matter of Weekes and Matter of Bizarre, Inc. and permitted delegation of authority.
In Matter of Bizarre, Inc. v. State Liquor Authority, supra, the court noted that the issuance of retail off-premises beer licenses specifically required that a hearing "be held by the liquor authority or by one of its members" (Alcoholic Beverage Control Law § 54[3]. However, Alcoholic Beverage Control Law § 96, which governs the issuance of warehouse permits, does not specifically require proceedings before a member of the Authority. There is no reason in the Alcoholic Beverage Control Law which would prevent the Authority from delegating to the class of persons listed in Alcoholic Beverage Control Law § 17[13], authority to issue or deny warehouse permits "for the storage of alcoholic beverages in other than licensed premises". (Alcoholic Beverage Control Law § 96[1].)
More than 20 years ago the Authority was told that delegations to a Licensing Board must be submitted to the Secretary of State and published (Matter of Bizarre, Inc. v. State Liquor Authority, supra). The court has reviewed the published Rules of the Authority (9 NYCRR §§ 25.1-101.1). There are still no published regulations describing delegation of authority to the Licensing Board.
Article IV, section 8 of the New York Constitution provides in pertinent part "No rule or regulation made by any state * * * authority * * * except such as relates to the organization or internal management of a state * * * authority * * * shall be effective until it is filed in the office of the department of state." The Legislature implemented the constitutional provision in Executive Law § 102[1] which sets forth the manner of filing the rules and regulations. (People v. Cull, 10 N.Y.2d 123, 129, 218 N.Y.S.2d 38, 176 N.E.2d 495). The language of People v. Cull points out with "crystal clarity" (Whiting v. Marine Midland Bank, 80 Misc.2d 871, 878-879, 365 N.Y.S.2d 628) that the constitution cannot easily be avoided by any state agency or authority. Unfortunately, the Court of Appeals has been called on continually to remind state agencies that the constitutional provision remains viable (see, e.g., Matter of Davidson v. Smith, 69 N.Y.2d 677, 512 N.Y.S.2d 13, 504 N.E.2d 380; People ex rel. Roides v. Smith, 67 N.Y.2d 899, 501 N.Y.S.2d 805, 492 N.E.2d 1221; Matter of Jones v. Smith, 64 N.Y.2d 1003, 1005-1006, 489 N.Y.S.2d 50, 478 N.E.2d 191; Matter of New York State Coalition of Public Employers v. New York State Dept. of Labor, 60 N.Y.2d 789, 791, 469 N.Y.S.2d 679, 457 N.E.2d 785).
The court in Matter of Bizarre, Inc. v. State Liquor Authority, supra, told the Authority that the constitution specifically applied to a regulation similar to the one at issue here. "Certainly, a rule or regulation of such spacious scope delineating a deputy's power vis-a-vis the public, is well within the ambit of the constitutional command" (29 A.D.2d at 502, 289 N.Y.S.2d 75). Yet, no filing has occurred. This court requested from the Authority a copy of the documents supporting the delegation. Counsel provided a copy of a resolution the Authority adopted on December 21, 1988. The court was orally advised by the Authority's counsel that similar resolutions were adopted every year. The resolution provides for the delegation "subject to the supervision and control of the Authority to each of the following persons the power to issue or refuse any license or permit provided for in the Alcoholic Beverage Control Law, while acting as a member of a Licensing Board consisting of at least two of the following persons * * *." The resolution names various persons, who appear to be executives, deputy commissioners, staff attorneys, "Local Board Staff Supervisors" and others, to serve on the ...
To continue reading
Request your trial