
    In the Matter of Hermina Forman et al., Doing Business as Halsey Wine & Liquor Store, Appellants, v. New York State Liquor Authority et al., Respondents.
    Argued March 24, 1966;
    decided April 28, 1966.
    
      
      Robert W. Corcoran and Joseph C. Hilly for appellants.
    I. The Authority’s appeal from the order of the Supreme Court, Kings County, dated July 15, 1965, was improper, such order having been superseded by the order of that court dated and entered October 13, 1965, following reargument of the original order. II. The Supreme Court, Kings County, did not base its determination on the lack of ‘ ‘ specific findings of fact ’ ’ in the record, nor, as a matter of fact, did the court intend when it remitted the matter that the Authority should make ‘ ‘ specific findings of fact” in the technical sense. (Matter of Bosco v. 
      New York State Liq. Auth., 10 A D 2d 629; Matter of Hub Wine & Liq. Co. v. State Liq. Auth., 16 N Y 2d 112.) III. The Authority, in licensing matters, is not free to exercise arbitrary judgment with respect to the number or location of package liquor stores, but must be motivated by the effect thereof upon " public convenience and advantage ’ ’. The record in this case fails to establish that the Authority had before it any information indicating that “ public convenience and advantage ” would be served by the location of a new package liquor store at the proposed location. (Matter of 54 Cafe & Rest. v. State Liq. Auth., 274 App. Div. 428, 298 N. Y. 883; Matter of Gambino v. State Liq. Auth., 4 A D 2d 37, 4 N Y 2d 997; Matter of Swalbach v. State Liq. Auth., 7 N Y 2d 518; Matter of Williamson v. State Liq. Auth., 14 N Y 2d 360; Matter of Hub Wine & Liq. Co. v. State Liq. Auth., 16 N Y 2d 112; Matter of Cooper v. State Liq. Auth., 12 A D 2d 472.) IV. The record before the Authority is inadequate in that it fails to state the facts or conditions which motivated the Authority in its approval of the application of Schecter and Fruchter. V. If Special Term erred in the use of the words “ specific findings of fact ”, the condition of the record upon which the Authority acted in making the administrative determination here complained of was such that the matter, at worst, should have been remitted to Special Term for further proceedings.
    
      Louis J. Lefkowitz, Attorney-General (Philip Weinberg and Samuel A. Hirshowitz of counsel), for New York State Liquor Authority, respondent.
    I. The Appellate Division properly dismissed this proceeding challenging approval of a package store license following a finding by the Authority that such approval will promote the public convenience and advantage (Alcoholic Beverage Control Law, § 2), since the record showed no illegality in the decision of the Authority. (Matter of McNulty v. State Liq. Auth., 17 N Y 2d 434; Matter of Millman v. O’Connell, 300 N. Y. 539; Matter of Gambino v. State Liq. Auth., 4 A D 2d 37, 4 N Y 2d 997; Matter of Fiore v. O’Cownell, 297 N. Y. 260; Matter of Rockower v. State Liq. Auth,, 4 N Y 2d 128; Matter of C. Van Deusen, Inc. v. New York State Liq. Auth., 47 Misc 2d 1091; Matter of Driscoll v. Troy Housing Auth., 6 N Y 2d 513; Matter of Whitman, 225 N. Y. 1; Walsh v. New York State Liq. 
      
      Auth., 45 Misc 2d 601, 23 A D 2d 876, 16 N Y 2d 781.) II. The Appellate Division properly reversed Special Term’s erroneous order remitting for “ specific findings of fact ” the determination under review. (Matter of Hub Wine & Liq. Co. v. State Liq. Auth., 16 N Y 2d 112; Matter of Barry v. O’Connell, 303 N. Y. 46; Flagg v. Nichols, 307 N. Y. 96; Johnson & Sons v. National City Bank, 6 A D 2d 1055; Schneikraut v. Gerges Realty Cory., 24 A D 2d 991.)
    
      Monroe I. Katcher, II, for Metropolitan Package Store Association, Inc., amicus curiæ.
    
    I. The Legislature refused to accept the two recommendations of the Moreland Commission that the State abandon its policy of limiting the number of package store licenses and that the State Liquor Authority be deprived of its jurisdiction over the locations of such package store licenses. (Martin v. State Liq. Auth., 43 Misc 2d 682, 15 N Y 2d 707; Matter of Cherkis v. Impellitteri, 307 N. Y. 132; Orinoco Realty Co. v. Bandler, 233 N. Y. 24.) II. The Authority may not be under a statutory obligation to make “findings of fact” when it grants an application without a hearing, but it is always under a duty to furnish the reasons which motivated its decision to approve rather than disapprove any application. (Matter of Hub Wine & Liq. Co. v. State Liq. Auth., 16 N Y 2d 112; Matter of Barry v. O’Connell, 303 N. Y. 46; Securities Comm. v. Chenery Cory., 332 U. S. 194; Matter of Scudder v. O’Connell, 272 App. Div. 251; Matter of Tobkes v. O’Connell, 272 App. Div. 240; Matter of Glintenkamp v. O’Connell, 271 App. Div. 795, 296 N. Y. 806; Matter of Watinsky v. O’Connell, 271 App. Div. 973, 297 N. Y. 552; Matter of Snetlage v. O’Connell, 271 App. Div. 1015, 297 N. Y. 207; Matter of Pichacz v. O’Connell, 272 App. Div. 755, 297 N. Y. 981; Matter of McKeon v. O’Connell, 271 App. Div. 897; Matter of Isaacs v. O’Connell, 276 App. Div. 1065.) III. The right of petitioners-appellants to bring the proceeding herein is rendered meaningless, and express legislative determinations, purpose and policy are stultified if, on the record herein, respondent Authority is deemed to have demonstrated by legal proof that it has discharged its statutory obligations, in the instant case, to restrict the numbers of package stores and to restrict the locations of package stores, so as to assure that the policy of the State and the intent and purpose of the law, “ to foster and promote temperance in consumption”, will be carried out. (Martin v. State Liq. Auth., 43 Misc 2d 682, 15 N Y 2d 707; Cantlin v. State Liq. Auth., 16 N Y 2d 155; Matter of McNulty v. State Liq. Auth., 48 Misc 2d 653, 24 A D 2d 599, 17 N Y 2d 434; People v. Cull, 10 N Y 2d 123; Matter of Costello v. New York State Liq. Auth., 17 A D 2d 547; Matter of Suffolk County Retail Wine & Liq. Dealers Assn. v. New York State Liq. Auth., 44 Misc 2d 334, 23 A D 2d 552; Matter of Brenner v. O’Connell, 308 N. Y. 636; Matter of Williamson v. New York State Liq. Auth., 14 N Y 2d 360; Fenson v. State Liq. Auth., 152 Misc. 446, 243 App. Div. 847.)
   Chief Judge Desmond.

This order must be reversed and the matter remitted to the State Liquor Authority to develop a complete record as to the package store license application and to establish the basis for the Authority’s conclusion that the grant of the license will promote “ public convenience and advantage ” (Alcoholic Beverage Control Law, §§ 2, 63, subd. 6).

In April, 1965, when the application of respondents Schecter and Fruchter for a new package store license was approved by the Authority, there were, within 600 feet of the proposed premises, no fewer than four other such licensed shops, one of which, owned by petitioner-appellant, was but 75 feet distant from the Schecter-Fruchter proposed location. Annexed to the Authority’s answer to the petition in this proceeding were three documents. One of them was a report of an “ Area survey ’ ’ made by an investigator and of his 11 Office interview ’ ’ with applicants Schecter and Fruchter. This report contains data as to location of the subject premises, proximity to other stores and prior history, background and financial position of the applicants. Nothing in this paper is pointed to as having any bearing on “ public convenience and advantage ” and the same is true as to the second document, a State Liquor Authority ‘ ‘ Zone Office Digest Sheet”, except that the latter shows the gross receipts of the four nearby package stores for 1962 and 1963. These show that the 1962 figures ranged from $89,000 to $227,000 and that all these stores showed small increases (2, 3, 10, 12%) in 1963.

The third item attached to the Authority’s answer, apparently by way of explaining why ‘ ‘ public convenience and advantage ” requires still a fifth liquor store in this small area, is an affidavit by the Chairman of the State Liquor Authority. He describes the location, shows that it violates none of the prohibitions of the statute, repeats the gross earnings of other stores already referred to, describes the investigations and the Authority’s deliberations and recites the Authority’s determination and findings that ‘ ‘ public convenience and advantage would be served by the granting of the Schecter-Fruchter application ’ ’. The Authority calls our attention to its investigator’s report which describes the neighborhood as “ congested ” and the Schecter-Fruchter building as being on a business street in a mixed business and residential neighborhood. There is nothing else in this record. It fails completely to establish that the Authority’s grant of the new license promotes “public convenience and advantage ”.

Several propositions have been settled by recent decisions of this court. In Matter of McNulty v. State Liq. Auth. (17 N Y 2d 434) we confirmed that a competitor has standing under section 123 of the Alcoholic Beverage Control Law to contest the grant by the Authority of a liquor store license. In previous decisions we had ruled that the Authority must as to each such application weigh and determine ‘ public convenience and advantage ’ ’ (Matter of Swalbach v. State Liq. Auth., 7 N Y 2d 518; Matter of Hub Wine & Liq. Co. v. State Liq. Auth., 16 N Y 2d 112; Cantlin v. State Liq. Auth., 16 N Y 2d 155, 162, 163). In the Hub decision we had stated also that it was unnecessary for the Authority in these cases to make specific findings of fact. Reading all these cases together leaves no doubt that the Authority when challenged in court, although it need not produce ‘ ‘ findings ” of the conventional sort, must show forth a rational basis for its conclusion as to “public convenience and advantage ”. The right of a competitor to challenge the grant would be meaningless unless the reasons had to be set forth with clarity (see Securities & Exch. Comm. v. Chenery Corp., 332 U. S. 194, 196,197; cf. Matter of Scudder v. O’Connell, 272 App. Div. 251, 253, 254).

Apparently the State Liquor Authority in times past felt the same way as to its obligation in cases like this. We are cited to several instances where it disapproved, for lack of “ public convenience and advantage ”, applications for store licenses in locations not as well served with existing stores as in the present case (see Matter of Watinsky v. O’Connell, 271 App. Div. 973, affd. 297 N. Y. 552; Matter of Snetlage v. O’Connell, 271 App. Div. 1015, affd. 297 N. Y. 707; Matter of Pichacz v. O’Connell, 272 App. Div. 755, affd. 297 N. Y. 981).

“ Public convenience ” necessarily refers to the accessibility of stores and involves considerations of distance, overcrowding of present facilities, etc. “Public advantage ” is a broader terra which brings into play social and similar problems, and involves the State’s general policy as to the sale of alcoholic beverages for off-premises consumption. That general public policy, as stated in section 2 of the Alcoholic Beverage Control Law, is to regulate the manufacture and distribution of alcoholic beverages for the purpose of fostering and promoting temperance and respect for and obedience to law. The record on this appeal leaves it a mystery as to how either ‘ ‘ public convenience ” or “ public advantage ” can in any conceivable way or according to any possible way of thinking be promoted by licensing a fifth package store in this small neighborhood.

The order should be reversed, with costs in this court and in the Appellate Division, and the matter remitted to the State Liquor Authority for further proceedings not inconsistent with this opinion.

Bergan, J. (dissenting).

The petitioners, who have a retail liquor store in the Brooklyn neighborhood for which the State Liquor Authority has granted a new retail license, are opposed to the resulting increased competition. This is readily to be understood.

But the standard by which it is to be decided whether an additional license shall be issued is the “public convenience and advantage ” to be served (Alcoholic Beverage Control Law, §§ 2, 63, subd. 6). It is not tested by the viewpoint toward new competition of the holder of an existing license in a business in which restriction of enterprise has heretofore fostered monopolistic practice under the shelter of public law and administrative policy.

It is not the convenience and advantage of the holders of existing licenses that are to be served, but public convenience and advantage. These are quite different things. And the responsibility for deciding this in any given case or any particular locality is not for Judges but for the Liquor Authority.

The words of the statutory test ‘ ‘ public convenience and advantage ’ ’ have been the same from the beginning of the Alcoholic Beverage Control Law (L. 1934, ch. 478). The public policy of the State relating to alcoholic beverages is best to be carried out, says the statute, by empowering the Liquor Authority “to determine whether public convenience and advantage will be promoted” by the issuance of licenses and by “ the increase or decrease in the number thereof ” and their “location ” (§ 2).

The 1965 amendment to section 63, adding new subdivision 6, (L. 1965, ch. 1024) is, of course, a literal restatement of words that have been in the statute for over 30 years and provides, merely, that determinations as to the issuance of a new license or transfer of an existing license shall be made in accordance with public convenience and advantage.

What is public “ convenience ” in buying liquor at retail can be a matter of reasonable difference of opinion. One factor normally to be considered would be the number of retail outlets as measured against the background of traffic movement in the area, population density and general retail business activity. It is a common experience in free enterprise that competition normally increases to the point where new ventures are no longer profitable and then new businesses stop coming in, and that as competition grows price levels have a tendency to stay down. To the man who would buy liquor at retail, price, as well as geography, is part of “ convenience ”,

But public “advantage” is a broader concept and it is related to general State policies in the sale and distribution of liquor. The public malfunctions in the regulation of liquor which led the Governor in 1963 to appoint a Moreland Commission to make a study and reappraisal of the State’s liquor laws were tied closely into the tight administrative restrictions on the number of retail licenses, and hence the spectacular increase in the money value of a license, as well as to the State-enforced minimum prices for brand liquors which cost New York consumers $150 million a year over the amount at which it would have been available in a free market (Governor’s Message, Feb. 10, 1964; Moreland Comm. Report No. 3, pp. 5, 6; cf. Seagram & Sons v. Hostetter, 16 N Y 2d 47, 54-55). The tight restriction on the number of retail licenses became a fertile ground for corruption.

When, therefore, the Moreland Commission recommended (Report No. 1, p. 44) the elimination of the statutory 1,500-foot distance requirement in large cities and the 700-foot requirement elsewhere between retail stores provided by subdivision 4 of section 105 as having “ no present purpose except to restrict competition ’’ (Report No. 1, p. 15), the New York concept of public advantage ” in the competitive aspect of retail licenses must be deemed to have been changed upon the repeal of the distance requirement by chapter 531 of the Laws of 1964.

This court expressly noted in 1965 that the statutory change of 1964 was aimed in the direction of a more open market and an increase in competition in the retail sale of liquor in the interest of the consumer (Matter of Hub Wine & Liq. Co. v. State Liq. Auth., 16 N Y 2d 112, 117).

Moreover, the Governor’s Message of February 10, 1964, which led ultimately to the enactment of the revised statute, treated as one of the artificial devices ” working against “ justice to the consumer ”, and hence presumably against public advantage, the ' ‘ arbitrary and compulsory distances between package stores ”.

If, as it has become apparent, the Liquor Authority is attempting to respond to this manifest change in public policy to reduce a monopolistic evil by more freely granting licenses to retail liquor dealers and, of course, increasing competition among them, the court ought not readily interpose its own special and different concept of what degree of competition in a given neighborhood is for the public advantage. It is obvious on the face of the statute that this is not the court’s proper function.

The case before us illustrates rather well a typical administrative law value situation in which the agency rather than the court ought to make the decision. The Chairman of the Board in an affidavit presented to the court at Special Term swore that the Authority made a finding of ‘ ‘ public convenience and advantage ” in granting the additional license after “ a thorough survey of the area and of the business done by nearby stores, on the part of both the local Alcoholic Beverage Control Board and the Authority ”.

A number of details of the factual basis of the conclusion are disclosed. Among these factors are the physical and business features of the area and increases in business done by the four existing stores in the neighborhood, one of which is 75 feet away from the proposed licensee and on a different street and others at distances in excess of 500 feet.

This court is remitting the application to the Authority for reconsideration. It is not saying flatly that five liquor licenses are too much to serve this Brooklyn area as a matter of “ public advantage ” and, therefore, no additional license should issue; nor is it holding that the increases in business of the four present licenses have not shown dollar or percentage amounts great enough to open the door of competition, and hence as a matter of law the door should be closed.

What it seems to be holding is that the Authority has not spelled out the reasons for its decision sufficiently to satisfy the court. But a careful perusal of the papers shows that the Authority has spelled out its reasons and that they are consistent with the report of the Moreland Commission, with the message of the Governor and with the purposes of the 1964 statute, i.e., that additional competition is in the public advantage. Indeed, this is expressly stated in the Chairman’s affidavit.

A word ought to be said about the procedure. This case illustrates the unsuitability of section 123 of the Alcoholic Beverage Control Law as a vehicle of reviewing a determination of the Liquor Authority reached upon a full consideration of a licensing problem and within the frame of its jurisdiction.

Although the court unanimously affirmed the order in Matter of McNulty v. State Liq. Auth. (17 N Y 2d 434) in a proceeding under section 123, there were among some Judges of the court reservations as to the general procedural suitability of the section for any such purpose as it has been put in the case now before us. McNulty was, indeed, decided on very narrow procedural grounds and essentially all it determined was that the petition was sufficient on its face to require the Authority to file an answer.

But the procedure expressly authorized by this section is lo restrain by injunction at the suit of a taxpayer or the Liquor Authority the “ unlawful ” sale of liquor. The statute, in terms, authorizes the proceeding for an injunction to be maintained against a person selling liquor “without obtaining the appropriate license therefor ’ i.e., where the Authority has not issued a license. The phrase in context “ or otherwise unlawfully ” means the traffic is without a license or otherwise (and similarly) in violation of law.

Before the decision in McNulty two cases had reached this court where the injunctive process was approved after licenses had been granted by the Authority (Matter of Frank v. Hub Liqs., 268 N. Y. 688; Matter of O'Brien v. Rozza, 271 N. Y. 545), but in each there was shown a violation of the express statutory distance requirements, and, of course, in such cases it could be seen by objective observation that the very terms of the statute had been violated by the license.

But the statute must be stretched out beyond all sensible recognition to become a vehicle by which a liquor licensee can sue the Liquor Authority which has given him his license for an injunction to restrain the issuance of another license on the ground it is “unlawful” for the new licensee to sell liquor under the license — all because the present store owner believes there will be too much competition.

The order should be affirmed.

Judges Fuld, Burke and Keating concur with Chief Judge Desmond ; Judge BergAn dissents in an opinion in which Judges Van Voorhis and Scileppi concur.

Order reversed, etc.  