Summary
In Martin the authority had made a finding of fact that the barmaid "had * * * limited supervisory responsibility" and urged that on the basis of this finding knowledge of the illegal activity should be imputed to the licensee.
Summary of this case from Matter of Falso v. State Liq. AuthOpinion
Argued November 24, 1976
Decided December 22, 1976
Appeal from the Appellate Division of the Supreme Court in the Second Judicial Department.
Joseph S. Ryan and Alan J. Gardner, New York City, for appellant.
David Goldstein, New York City, for respondent.
MEMORANDUM. The judgment of the Appellate Division is affirmed. The State Liquor Authority found that petitioner had suffered or permitted gambling on the licensed premises on six separate occasions between April 1 and April 24, 1974 in violation of subdivision 6 of section 106 of the Alcoholic Beverage Control Law. The Appellate Division annulled that determination on the ground that there was insufficient evidence to support a finding that the licensee should have discovered the gambling activity by the exercise of due diligence. We agree.
The Half Moon Restaurant had operated for 15 years without incident, except for a minor violation some eight years prior to these charges. The licensee and owner, Mary Martin, had employed Rose Unnerberg as a daytime barmaid for approximately five years. Between April 1 and April 24, 1974 a plainclothes policeman had observed Unnerberg accepting horse racing bets on the licensed premises on six separate occasions, resulting in her arrest and eventual plea of guilty to promoting gambling. But the mere fact that an illegal activity occurred on the licensed premises is not sufficient to support a violation of subdivision 6 of section 106 of the Alcoholic Beverage Control Law. It is required that there be substantial evidence to support a finding that the licensee "suffered or permitted" gambling on the premises. Our interpretation of the meaning of this language has been guided by the oft-quoted passage of Judge CARDOZO in People ex rel. Price v Sheffield Farms Co. ( 225 N.Y. 25, 30): "Sufferance as here prohibited implies knowledge or the opportunity through reasonable diligence to acquire knowledge. This presupposes in most cases a fair measure at least of continuity and permanence." Thus the pivotal issue in this case is whether there was substantial evidence to find that the licensee, through the exercise of reasonable diligence had an opportunity to learn of the illegal gambling and thus can be said to have impliedly acquiesced in such activity (Matter of Leake v Sarafan, 35 N.Y.2d 83; Matter of Migliaccio v O'Connell, 307 N.Y. 566).
There was no evidence whatsoever that the licensee had actual knowledge of the gambling activity. Indeed, there was a specific finding that the licensee had no knowledge of any such activity. Further, there was also a finding of fact that Unnerberg had only limited supervisory responsibility, despite the fact that the only evidence in the proceeding on this subject came from the licensee to the effect that Unnerberg had no such responsibility. Absent a finding that the licensee had given the barmaid unequivocal supervisory responsibility, Unnerberg should not be deemed an agent whose knowledge could be imputed to the licensee (see Matter of Triple S. Tavern v New York State Liq. Auth., 31 N.Y.2d 1006, affg 40 A.D.2d 522; Matter of Reuben, Inc. v State Liq. Auth., 268 App. Div. 981, affd 294 N.Y. 730; Matter of Stevensville Lake Holding Corp. v O'Connell, 269 App. Div. 804). The licensee visited the premises each morning for the purpose of ordering supplies and was in and out of the premises intermittently every day. The record further indicated that the licensee admonished Unnerberg when hired not to engage in gambling or any activity which would jeopardize the license and that immediately on learning of Unnerberg's arrest she was discharged. Unnerberg had been employed without incident for five years and during this time the licensee had actively participated in the business, providing ample opportunity to observe her employee. The pattern of intermittent visits to the restaurant and the prior unblemished employment record of the barmaid can in no way serve to impute knowledge of illegal gambling to the licensee and the record is devoid of any further evidence warranting such an imputation. We find insufficient evidence to support a finding that through due diligence the licensee had an opportunity to discover and prevent the gambling activity of Unnerberg. Further the proof in this record is insufficient to impute knowledge to the licensee on the basis of a continuous and permanent activity (Matter of Triple S. Tavern v New York State Liq. Auth., supra). Thus the Appellate Division was correct in holding that this record lacked substantial evidence to support a finding that the licensee had constructive notice of the gambling.
Chief Judge BREITEL and Judges GABRIELLI, JONES, WACHTLER and FUCHSBERG concur; Judges JASEN and COOKE dissent and vote to reverse for the reasons stated in the dissenting memorandum by former Justice FRED J. MUNDER at the Appellate Division ( 49 A.D.2d 941).
Judgment affirmed, with costs, in a memorandum.