
    The People of the State of New York ex rel. Ferdinand Munch Brewery, Respondent, v. Maynard H. Clement, as State Commissioner of Excise of the State of New York, Appellant.
    First Department,
    February 8, 1907.
    Intoxicating liquors — conditions precedent to rebate on surrendered certificate — mandamus — answer raising questions of fact — peremptory writ denied.
    To entitle the holder of a liquor tax certificate to a rebate on surrendering the same under section 25 of the Liquor Tax Law the burden is upon the holder of the certificate to establish as a condition precedent to the right to rebate :(1) that there is no complaint, prosecution or action pending on account; of a violation of the Liquor .Tax' Law; (2) that the person surrendering has not violated any provision of the law during the excise year for which the certificate was issued^ (3) that the certificate was surrendered before arrest or indictment for a violation of the law; (4) that the person surrendering has ceased to trafile in liquors during the term for which the tax was paid.
    Where the petition on mandamus to compel the Commissioner of Excipe to pay the rebate adpiits that an agent or employee of the owner was arrested and convicted for illegally selling liquor on Sunday, and the answer denies the condi-' tions precedent aforesaid alleged by the petition, and affirmatively sets out that the holder personally and by her agents and servants sold liquor on Sunday, etc., an issue of fact is raised and the relator is entitled only to an altérnative writ; the granting of a peremptory writ is improper.
    
      Appeal by the defendant. -Maynard N.. Clement", as Commissioner, etc., 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 6th- day of December, 1906,. granting a, peremptory writ of mandamus commanding him to prepare and ■execute orders -for the payment of a rebate, - upon the surrender of a certain liquor fax certificate.
    . Herbert U. Kellogg, for the appellant. .
    
      Victor E. Whitlock of counsel [Holm, Smith, Whitlock & Scarff], for the respondent.
   Clarke, J.:

It appeared from the petition that the relator, the Ferdinand Munch Brewery, brought this proceédiñg as the assignee and attorney in-fact of Bosa Tubbiolo, to whom a'liquor tax'certificate issued to-Frances Gagliano had been-- transferred, to obtain a mandamus directing the State Commissioner of Excise to prepare and issue two .orders for the payment, of' the rebate claimed to be due upon' said liquor tax-certificate which had been surrendered. After setting up the formal facts, about which -there is no dispute, showing that the amount of the rebate for the nnexpired term- liad been -duly computed at the sum of $485, the petition alleged in paragraph 11, TJpon information and belief that-at the time of the surrender of said liquor tax certificate, no .complaint, prosecution or action was pending- on'account of any violations thereof -against the aforesaid Frances Gagliano or Bosa Tubbiolo, or your petitioner, the persons holding the said' certificate, or who have held the said certificate, nor was any complaint, prosecution or action pending-on account of any violations of the Liquor Tax Law, and that neither Said Frances Gagliano nor Bosa Tubbiolo had been arrested nqr-indicted for any violation of.the Liquor Tax Law; and that no one-of the- aforesaid holders of the said certificate has 'violated any provision of the Liquor Tax Law during the excise year for which such certificate Was issued-; except, however, that .on. or about the 10th day of September, 1905, one Brusehi Na-tále, an. agent and employee of the aforesaid Bosa Tubbiolo, who Was at that time -the holder of the .aforesaid certificate; Was arrested for a violation of the Liquor Tax Law, charged with selling liquors on a Sunday, in violation of the statute, and was thereafter duly tried and convicted of said offense in the Court of Special Sessions of the Borough of'Manhattan, City of Mew York, and sentence was suspended; and, upon information and belief, that there has been no other violation or conviction of any agent or employee of the holder of said certificate.”

The answer puts in issue the following material allegations of the petition : The Commissioner denies knowledge or information sufficient to form a belief as to whether or not-, prior to the 1st day of December, 1905, Frances Gagliano and Kosa Tubbiolo and. all persons under either of them, voluntarily ceased to traffic in liquors during the term for which the tax was paid under the said certificate. He denies the allegations contained in paragraph 11 of the petition: “That at the time of the surrender of said liquor tax certificate no complaint, prosecution or action was pending on account of any violations thereof against the -aforesaid Frances Gagliano or Posa Tubbiolo, or your petitioner, the persons holding the said certificate, or who have held the said certificate, nor was any complaint, prosecution or action pending on account of any violations of the Liquor Tax Law,” and denies specifically that no one of the aforesaid holders of the certificate has violated any provision of the Liquor Tax Law during the excise year for which said certificate was issued.The answer admits the allegations in the 11th paragraph as to the conviction of Matale, the agent and employee of Tubbiolo, and denies any knowledge or information sufficient to form a belief as to whether there has been any other violation, or any other conviction of any agent or employee of the holder of said certificate. For a further separate and affirmative defense, the Commissioner affirmatively alleges that on Sunday, the 10th of September, 1905, and during the excise year for which said certificate was issued, the said Bosa Tubbiolo, then the holder of said liquor tax certificate, personally and by her agents, servants, bartenders and persons in charge of said premises at the place designated in said liquor tax certificate as the place in which traffic in liquor was to be carried on thereunder, namely, 316 East Thirty-ninth street, borough of Manhattan, Mew York city, did wrongfully and unlawfully traffic in liquor by selling to William H. Lott one glass of lager beer, to be and which was drunk in the premises by said William H. Lott. . He further sets forth the conviction of Hatale and attaches an extract of the minutes of the Court of Special Sessions showing said- conviction., arid ■ the affidavit of William H, Lott, the complaining witness, upon said prosecution.

Section 25 Of the Liquor Tax Law (Laws of 1896, chap. 112, as amd.. by Laws' of. 1903, chap. 486) provides as follows: “If a person holding a liquor tax bertificate and authorized to sell liquors under the provisions of this act, against whom no complaint, prosecution- or action is pending on account of any violation thereof, and who shall not have violated any pro vision of the Liquor Tax Law during the excise year for which such certificate was issued, shall voluntarily, and before arrest or indictment for a violation of • the Liquor Tax Law, cease to traffic in liquors during the term for which the tax is paid under such certificate, such person or his duly authorized attorney may surrender such tax certificate,” provided, that such certificate shall have a't least, one month to run, "and shall ' receive a rebate therefor, except as therein -provided. This right to. a rebate is to be construed as resting upon a contract between the licensee and the State. (People ex rel. Stevenson Co. v. Lyman, 67 App. Div. 451.)

To entitle the holder to thé rebate, there are certain conditions precedent, the fulfillment of which must be completed at the. time of the surrender, and being conditions precedent their fulfillment-must be alleged and the burden of establishing them is upon the certificate holder. These conditions are as follows: First, there must be no .complaint, prosecution or action pending on account of a violation of the"Liquor Tax Law; second, the person surrendering must not have violated any provision of the Liquor Tax Law during the excise year for which this certificate was issued ; third,. the certificate must be surrendered before arrest, or- -indictment for a violation of the Liquor Tax Law; fourth, the person surrendering must have ceased to traffic in liquors during the term for which the tax was paid. . ■ '

As to the first of these conditions, the Court of Appeals said in People ex rel. Frank Brewery v. Cullinan (168 N. Y. 258) : “Hpon a careful consideration of the provisions of this statute, it is apparent that the conditions imposed are conditions precedent and that the property right in the rebate does not attach if there is an arrest or indictment or other prosecution provided for in the statute pending at the time of the surrender or within thirty days thereafter. In this case Anderman was under arrest charged with a violation of the Excise Law, at the time that his certificate was surrendered and consequently was not in a position in which he could make a surrender and become entitled to the rebate. * * * The Frank Brewery, being the' assignee and acting as agent of Anderman, stands in his shoes and has no greater rights to the rebate than he would have had had he surrendered the certificate in person.”

The fourth one of these conditions, was considered in People ex rel. Stevenson Co. v. Lyman (Michels Certificate) (67 App. Div. 446; affd., 173 N. Y. 605) and People ex rel. Stevenson Co. v. Lyman (Barry Certificate) (69 App. Div. 406; affd., 173 N. Y. 604). In both proceedings the relator insisted that he was entitled to a writ of mandamus without having shown that the certificate holders had ceased to traffic in liquor. In the Michels case Van Brunt, P. J., said: “ The right of the relator to the rebate having been denied by the return it was bound to show proof or admissions upon the record that the holder of the liquor license and his attorney had done all that the law required as conditions precedent to .the right to claim such rebate. * * * He must, prior to such tender of surrender, voluntarily have ceased to traffic in liquors: *. * * It seems to me that the right to the "rebate is to be construed as resting upon a contract between the licensee and the State. If such is the case, clearly the party claiming must show compliance with all conditions precedent. - * * * Upon whom does the burden of proof lie ? Clearly the claimant must prove his case as in the case of any other contract.” The Barry case followed the Michels case and was to the same effect.

The amendment of 1903 (supra) inserted in section 25 (as amd. by Laws of 1897, chap. 312, Laws of 1900, chap. 367, and Laws of 1903, chap. 115) the additional condition precedent, “ and who shall not have violated any provision of the Liquor Tax Law during the excise year for which such certificate was issued.”

It is evident that the same rule must be laid down as to this condition precedent as lias already.been asserted in regard to the two others, as pointed out, and this was distinctly held in this departmentin People ex rel. Hupfel's Sons v. Cullinan (95 App. Div. 598), Mr. Justice Hatch saying : The right to the rebate is not dependent upon tlie non-existenCe of an indictment, complaint, proseen-' tioñ, action oí* 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 f .shall not liavé 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. ■* * * 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 lie is able to make, it follows that a peremptory writ of mandamus could not issue in the face of the issues thus raised.”

In tlie cáse just cited the record discloses a petition ' and' an answer similar to the one-at bar with one notable exception. In the HupfeVs Sons case the petition asserted that there had been no violation.. The answer set up one conviction by an employee and attached the extract from- tlie minutes, and the affidavit of the complaining witness in that proceeding, precisely as in the-case it bar. .The petition in. the case at bar itself asserts one conviction by an employee, and, therefore, a much stronger case was presented for the refusal of a peremptory writ of mandamus than in the case last cited. . Tlie -denials in the answer tq the petition raised distinct issues of fact as to violations by the liolders_of tlie certificate- personally, and, therefore, in this ‘ case the granting’, of a peremptory writ was ■ error. A question was raised upon the argument that inasmuch as the petition itself disclosed a violation in that there had been a conviction of an employee of the. certificate holder, éven the issuance of an alternative writ should be improper.

' The appellant argues that as this court held'in the HwpfeV s'-Sons' case that an allegation' in the answer of one. conviction by' an employee raised-an issue, of .fact as to whether there had been a-Violation by the certificate holder, which required a trial upon an alternative writ, it necessarily followed that if the one conviction of the employee was established upon the trial the violation by the certificate holder was made out, and there could be ho rebate under section 25 of the Liquor Tax Law as amended by chapter 486 of the Laws of 1903, notwithstanding the provisions of subdivision 3 of section 34 thereof (as amd. by Laws of 1897, chap. 312), which provides that “ If there shall be two convictions of clerks, agents, employes, or servants of a holder of a liquor tax certificate for a violation of any provision of-this act the liquor tax' certificate of the principal shall be forfeited and the said principal shall be deprived of all rights and privileges thereunder, and. of any right to any rebate of any portion of the tax paid thereon * * ■*.”

This raises an interesting question which, however, upon this record, we do not believe" to be before us because it does not appear in the record that any motion to dismiss or quash the proceedings on that ground was made in the court below, and inasmuch as under these papers other violations than the one alluded to might be proved, the decision of this'question at the present time would be improper. We, therefore, reserve judgment upon the point suggested, as not in the record.

The order appealed from granting a peremptory writ should be reversed, with fifty dollars costs and disbursements, and an alternative writ granted.

Patterson, P. J., Ingraham, Laughlin and Scott, JJ., concurred.

Order reversed, with fifty dollars costs and disbursements, and alternative writ granted. Order filed.  