
    First Appellate Department,
    June Term, 1904.
    Reported. 95 App. Div. 598.
    The People of the State of New York ex rel. A. Huffel’s Sons, Respondent v. Patrick W. Cullinan, as State Commissioner of Excise of the State of New York, Appellant.
    Liquor tax certificate—Right to surrender it and compel payment of the rebate—Proof that the Excise Law has not been violated.
    An assignee of a liquor tax certifícate, who, pursuant to a provision contained in such assignment, surrenders the certifícate during the term thereof, is not entitled, as a matter of absolute right, to receive the rebate on the certificate if, at the time of the surrender thereof, no proceeding was pending against the holder of the certifícate for a violation of the Liquor Tax Law; in order to be entitled to the rebate, the assignee must prove that "the holder has not violated any provision of the Liquor Tax Law during the excise year for which the certifícate was issued.
    If the holder has been guilty of such violation, the assignee is not entitled to the rebate notwithstanding that, at the time of the surrender of the certificate, such violation had not been discovered, or if it had, that no proceeding was then pending against the certificate holder on account thereof.
    The relation which exists between the holder of a liquor tax certificate and the State is contractual and is subject, in disposition of rights thereunder, to the establishment of a right to recover pursuant to the terms of the statute.
    Appeal by the defendant, Patrick W. Cullman, as State Commissioner of Excise of the State of New York, from an order of the Supreme Court, made at the New York Special Term and entered in the office of the clerk of the county of New York on the 15th day of April, 1904, granting the relator’s motion for a peremptory ivrit of mandamus to compel the State Commissioner of Excise to prepare and execute two orders for the payment of a rebate claimed to be due upon the surrender of a liquor tax certificate.
    
      Herbert H. Kellogg, for the appellant.
    
      Abraham Benedict, for the respondent.
   Hatch, J.:

It appeared by the petition presented to the Special Deputy Commissioner of Excise by the respondent that a liquor tax certificate was issued in April, 1903, to Mary Stark; that the same was thereafter duly assigned to the relator, which assignment contained a provision authorizing the relator to make a surrender of the certificate and collect any rebates due thereon. It was further averred that prior to November 1, 1903, Mary Stark ceased to traffic in liquor and thereupon delivered the certificate to the relator, who, on November- 2, 1903, surrendered such certificate to the Special Deputy Commissioner of Excise who issued the same, and demanded the issuance of receipt for the payment of the rebate for the unexpired term of the certificate pursuant to the provisions of section 25 of the Liquor Tax Law (Laws of 1896, chap. 112, as amended by Laws of 1903, chap. 486). The Special Deputy Commissioner of Excise thereupon issued the duplicate receipts provided for in said section, and upon demand for payment thereunder the State Commissioner of Excise refused to issue the orders authorizing payment, whereupon this proceeding was instituted.

The return to the petition upon which the writ was granted put in issue the averment of the relator that Mary Stark and all persons under her voluntarily ceased to traffic in liquor for the term for which the tax was paid under the certificate. It also put in issue the averment of the petition that at the time the certificate was delivered to the special deputy commissioner of excise, no complaint, prosecution or action was pending on account of any violation of the Liquor Tax Law by Mary Stark, and also the averment that the said Mary Stark had not up to the time of the surrender of the certificate violated any of the provisions of the Liquor Tax Law for the excise year for which such certificate was issued.

The learned court at Special Term held that it Avas the intention of the Legislature to giA’e to the holder of a liquor tax certificate the “absolute right to apply for a rebate unless there was at the time of the surrender of the license some indictment, complaint, prosecution, action or other proceeding against the holder for a violation of the License Law, and that the rebate was to be paid in eArery case unless the same was forfeited by proceedings under the provisions of section 25 of the act.” This holding cannot be sustained. The right to the rebate is imi dependent upon the non-existence of an indictment, complaint, prosecution, action or other proceeding for a violation of the Liquor Tax Law at the time that the surrender is made. On the contrary, by the express provisions of the statute, such condition must not only exist at the time of the surrender, but it is also required that the holder “shall not have violated any provision of the Liquor Tax Law during the excise year for which such certificate was issued.” By the terms of the statute, therefore, it is made a condition precedent that there shall have been no violation of the Liquor Tax Law during the excise year for which the certificate was issued, and that there have been no violations prior to the time- when the holder ceases to traffic in liquor. If the construction suggested by the learned court below obtain, it would necessarily follow that the holder of a certificate might violate every provision of the Liquor Tax Law and still obtain a rebate at the time of the surrender, based upon the condition that, up to that time, violations of law had not been discovered and, therefore, no proceedings as authorized by the act had been instituted. Such is neither the reading nor the construction of the act. On the contrary, its purpose is plain to compel obedience to the mandates of the statute and the right to the rebate is dependent upon making proof of such obedience and not upon the existence or non-existence of proceedings authorized by the act for the enforcement of its provisions. It has been settled by decisive authority that the relation which exists between the holder of a certificate and the State is contractual and is subject, in disposition of rights thereunder, to the establishment of a right to recover pursuant to the terms of the statute. (People ex rel. Stevenson Go. v. Lyman, 67 App. Div. 446; People ex rel Stevenson Go. v. Lyman, 69 id. 406.) The adjudication in the first of these cases was had in this department and in the last in the second department. Both cases were affirmed in the Court of Appeals (173 IST. Y. 604, 605) upon the opinions delivered in the court below. In the present proceeding, as we have already observed, the right to the rebate averred to exist in the petition is put in issue by the return. Therefore, it- devolved upon the relator to establish, as a condition precedent, that he had made compliance with the Liquor Tax Law, and as this is necessarily dependent upon the proof which he is able to make, it follows Thai a peremptory writ of mandamus could.not issue in the face of the issues thus raised.

The order granting the peremptory writ should, therefore, be reversed. As, however, the relator is entitled to an opportunity to establish a case entitling him to the rebate, it is proper that an alternative writ, should be granted, as thereunder the questions put in issue by the petition and the return may be litigated. The order should, therefore, be reversed, with costs and disbursements, with leave to apply at Special Term for the issuance of an alternative writ.

Van Brunt, P. J., O’Brien, Me Laughlin and Laughlin, JJ. concurred.

Order reversed, with costs and disbursements, with leave to apply at Special Term for alternative writ.  