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MATTER FINN'S LIQUOR SHOP v. STATE LIQUOR AUTHORITY (11/07/68)

SUPREME COURT OF NEW YORK, APPELLATE DIVISION, FIRST DEPARTMENT 1968.NY.43427 <http://www.versuslaw.com>; 294 N.Y.S.2d 592; 31 A.D.2d 15 November 7, 1968 IN THE MATTER OF FINN'S LIQUOR SHOP, INC., PETITIONER,v.STATE LIQUOR AUTHORITY, RESPONDENT Proceeding under article 78 CPLR (transferred to the Appellate Division of the Supreme Court in the First Judicial Department by an order of the Supreme Court at Special Term, entered in New York County) to review a determination by respondent suspending petitioner's license and fining petitioner $1,000. Samuel B. Waterman for petitioner. Howard Hertzberg of counsel (Hyman Amsel, attorney), for respondent. Louis J. Lefkowitz (Samuel A. Hirshowitz and Brenda Soloff with him on the brief), as Attorney-General of the State of New York, amicus curiae. Stevens, J. P. Eager, Tilzer, McGivern and Rabin, JJ., concur. Author: Stevens


Proceeding under article 78 CPLR (transferred to the Appellate Division of the Supreme Court in the First Judicial Department by an order of the Supreme Court at Special Term, entered in New York County) to review a determination by respondent suspending petitioner's license and fining petitioner $1,000.

Stevens, J. P. Eager, Tilzer, McGivern and Rabin, JJ., concur.

Author: Stevens

 This is an article 78 proceeding in which petitioner seeks review of a determination of the State Liquor Authority (SLA) which suspended petitioner's license for 10 days, directed that a demand be made on petitioner and its surety on the bond of $1,000 and directed a letter of warning. The proceeding was transferred to this court pursuant to CPLR 7803 and 7804. The central facts are not in dispute.

Petitioner was charged with a violation of subdivision 5 of section 100 of the Alcoholic Beverage Control Law for selling liquor on credit. The second charge was a refusal to answer questions in an interview conducted by SLA January 18, 1967 in violation of subdivision (o) of rule 36 of the Rules of SLA (9 NYCRR 53.1 [o]).

At the hearing held on March 28, 1967, a preliminary motion to suppress certain evidence obtained by SLA investigators as having been obtained as the result of an illegal search on January 11, 1967, was denied as being made in the wrong forum. The Hearing Commissioner stated such a motion should be addressed to the Supreme Court. Thereafter Mr. Rownin, an investigator for the SLA, testified that on January 11, 1967, he and Investigator Statruck visited the petitioner's liquor store at 64 West 9th Street. Rownin identified himself to a Mr. Segal, who stated he was the manager of the premises and asked him "to allow me to inspect the premises." Rownin testified Segal said "go ahead, inspect the premises. I must be on duty in the front." Rownin went into the rear room of the premises, saw there a suburban coat hanging on a clotheshanger, searched the pocket of such coat "and came out with a batch of sales slips from the premises." The witness stated SLA had received a letter to the effect petitioner was selling liquor on credit and evidence of such sales would be found in a coat in the rear room. No search warrant was obtained.

About one or two hours later Martin Finn, an officer, director and stockholder of petitioner to whom the coat belonged, came into the store. In response to questioning by Rownin, Finn identified certain slips as representing sales on credit. Finn also signed a statement prepared by Rownin. Over objection the statement and slips were received in evidence.

Rownin also testified that on the 11th of January he took all slips found in the pocket -- those identified as cash as well as credit sales. Finn's request that the cash sales slips be left was refused and he was directed by Rownin to "call me tomorrow and you'll come up and pick them up." Finn did not call the following day but subsequently an appointment was arranged for January 18, 1967. On that date Finn appeared with his attorney, was sworn in, but after consulting with his attorney Finn refused "to answer on the grounds it might tend to incriminate him." It is this refusal which forms the basis for the charge of a violation of subdivision (o) of rule 36. Admittedly there was no stenographer present at the time.

On cross-examination it developed that Rownin also looked through the desks in the rear room, although the books and records had been produced when requested.

In this proceeding petitioner urges there is no evidence to sustain the charge of sales on credit because the supporting evidence was obtained in violation of petitioner's constitutional rights, or was the fruit or result of such violation. SLA asserts there is substantial evidence to support the determination, and the penalty imposed was proper.

The amicus curiae brief of the Attorney-General asserts the hearing officer properly refused to exclude the evidence and notes whatever might be the personal rights of Finn, the corporation cannot avail itself of the benefit of such personal right of privacy.

SLA has statutory authority "to inspect or provide for the inspection of any premises where alcoholic beverages are manufactured or sold" (Alcoholic Beverage Control Law (ABC), § 17, subd. 7; § 106, subd. 15). Inspection, as the term is generally used, involves a viewing or looking over to ascertain if the premises conform to statutory directives (cf. ABC Law, § 106, subd. 9) and embraces as well the right to inspect books and records (subds. 12, 15; Matter of Barski v. State Liq. Auth., 285 App. Div. 996). A search, on the other hand, involves an examination or seeking out, an exploration in an effort to discover objects or material to be later utilized, presumably, in some form of judicial proceeding. It "implies a prying into hidden places for that which is concealed" (People v. Dozier, 52 Misc. 2d 631, 633; cf. United States v. Lee, 274 U.S. 559, 563).

The right of the people to be secure in their persons, houses and effects against unreasonable searches and seizures has been too long recognized to require extended discussion (U. S. Const., 4th Amdt.; N. Y. Const., art. I, § 12; Civil Rights Law, § 8). The Fourth Amendment is enforcible against the States through the Fourteenth Amendment (Ker v. California, 374 U.S. 23, 30). It has been held that "except in certain carefully defined classes of cases, a search of private property without proper consent is 'unreasonable' unless it has been authorized by a valid search warrant" (Camara v. Municipal Ct., 387 U.S. 523, 528-529). It concluded that this was an unreasonable search.

Segal was the manager of the business only and his permission to inspect the premises could not and obviously did not confer a right to search the personal property of another lawfully and properly on the premises. This was not an instance where the investigator saw what was in plain sight, but rather involved the ferreting out and removing from the private personal property of Finn, without his consent, certain papers concealed in the pocket of his coat. Under the decisions there can be no doubt that there was an unconstitutional invasion of Finn's personal rights by the search. The more difficult question to be resolved is whether petitioner, a corporation, has standing to object to the procedure.

It has been held that a corporation is entitled under the Fourth Amendment to the protection against unlawful search and seizure (Silverthorne Lbr. Co. v. United States, 251 U.S. 385, 392) and that the protection may extend to ...


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