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Mazza v. Cavicchia

Decided: May 24, 1954.

JOSEPH MAZZA, TRADING AS TRAVELER'S HOTEL & RESTAURANT, APPELLANT,
v.
DOMINIC A. CAVICCHIA, DIRECTOR, DIVISION OF ALCOHOLIC BEVERAGE CONTROL OF NEW JERSEY, RESPONDENT



On appeal from the Superior Court, Appellate Division.

For reversal -- Chief Justice Vanderbilt, and Justices Heher, Oliphant and Brennan. For affirmance -- Justices Burling and Jacobs. The opinion of the court was delivered by Vanderbilt, C.J. Heher, J. (concurring). Jacobs, J., with whom Burling, J., agrees (dissenting).

Vanderbilt

I.

This is an appeal from a judgment of the Appellate Division of the Superior Court affirming an order of the Director of the Division of Alcoholic Beverage Control suspending the appellant's license to sell alcoholic beverages.

The appellant operates the Traveler's Hotel & Restaurant, a two-story structure on the Paterson Plank Road in East Rutherford, and was the holder of a plenary retail consumption liquor license. Agents of the Division filed a complaint with the Director charging that on September 26 and 27, 1952, as well as on prior occasions, Mazza had violated Rule 5 of State Regulations No. 20 in that he had allowed lewdness and immoral activity on the premises and also that on September 27, 1952 and on other days prior thereto, he had permitted the sale of contraceptive devices on the premises contrary to Rule 9 of State Regulations No. 20. By notice issued September 30, 1952 Mazza was required to show cause why his license should not be revoked or suspended.

Pursuant thereto a hearing was held before a hearer of the Division. An inspector and two investigators of the Division were the only witnesses for the State. At the conclusion of the hearing the hearer advised the parties that the matter would be submitted to the Director for determination and that all parties would be advised of the result. Subsequently the hearer forwarded the record of the hearing to the Director together with a report of his findings and conclusions,

but a copy thereof was not furnished to Mazza. The Director found Mazza guilty of the charges and ordered the suspension of his license for 180 days and on appeal his order was affirmed by the Appellate Division of the Superior Court, 28 N.J. Super. 280 (1953).

Mazza appeals here asserting that his constitutional rights have been infringed, N.J. Const. 1947, Art. VI, Sec. V, par. 1, clause (a), in that he was denied due process and a fair hearing before the Division. It is unnecessary for us to determine each of the points raised because we are of the opinion that by reason of the failure to supply the appellant with a copy of the hearer's secret report to the Director the appellant was deprived of his right to due process and a fair hearing before the administrative tribunal. In order, however, to set at rest questions that may be of some importance in the field of administrative procedure, we will first deal with the other points raised by the appellant.

II.

1. The appellant claims that there is no statutory authority for anyone other than the Director to conduct the hearing. The Alcoholic Beverage Law, R.S. 33:1-23, provides, among other things, that "It shall be the duty" of the Director "to conduct hearings in accordance with this chapter" and also that "The enumeration of the above specific duties shall not be construed to limit or restrict in any way the general authority given [to him] by this chapter." R.S. 33:1-31 authorizes the suspension or revocation of a license by the Director for violation "of rules and regulations" upon the giving of the required notice and "a reasonable opportunity to be heard." R.S. 33:1-35 in effect at the time of this proceeding provided:

designated to act on his behalf, and each other issuing authority

"For the purpose of any investigation, examination or inspection, revocation, rule to show cause and every other proceeding authorized under this chapter or appropriate for its enforcement, the commissioner*fn*, his deputy commissioners*fn*, attorneys and legal assistants

may examine, under oath, any and all persons whatsoever and compel by subpoena the attendance of witnesses and the production of books, records, accounts, papers and documents of any person or persons and the commissioner *, his deputy commissioners*fn* [directors], inspectors and investigators and each other issuing authority may take any oath or affirmation of any person to any deposition, statement, report or application required in the administration of this chapter * * *." (Emphasis supplied)

From these provisions of the statute there is evident a clear legislative intent to permit the Director to delegate his authority to conduct hearings even though the duty to make the final decision rests solely in the Director; see Horsman Dolls, Inc. v. State Unemployment Compensation Comm., 134 N.J.L. 77, 80 (E. & A. 1946), appeal dismissed 329 U.S. 693, 67 S. Ct. 635, 91 L. Ed. 606 (1947). Nor does such procedure constitute a deprivation of the appellant's right to due process of law, Horsman Dolls, Inc. v. State Unemployment Compensation Comm., supra, 134 N.J.L. 77, 81; Morgan v. United States, 298 U.S. 468, 481, 56 S. Ct. 906, 80 L. Ed. 1288, 1295 (1936); Schwartz, The Model State Administrative Procedure Act -- Analysis and Critique, 7 Rutgers L. Rev. 431, 453 (1953).

2. The appellant next challenges the validity of Rule 31 of State Regulations No. 20, claiming first that the Director was without legislative authority to issue it. This contention is without merit for the Legislature has specifically granted the Director the power to promulgate rules and regulations, R.S. 33:1-39; see Franklin Stores Co. v. Burnett, 120 N.J.L. 596 (Sup. Ct. 1938); Greenspan v. Division of Alcoholic Beverage Control, 12 N.J. 456, 459, 460 (1953).

3. The appellant then questions the constitutionality of Rule 31 which provides:

"In disciplinary proceedings brought pursuant to the Alcoholic Beverage Law, it shall be sufficient, in order to establish the guilt of the licensee, to show that the violation was committed by an agent, servant or employee of the licensee. The fact that the licensee did not participate in the violation or that his agent, servant or employee acted contrary to instructions given to him by the

licensee or that the violation did not occur in the licensee's presence shall constitute no defense to the charges preferred in such disciplinary proceedings."

It is well settled that a state may without violating the due process clause of the Federal Constitution establish presumptions which according to general experience reasonably tend to prove the fact in question. Hawker v. People of State of New York, 170 U.S. 189, 195, 18 S. Ct. 573, 42 L. Ed. 1002, 1005-1006 (1898); Hawes v. State of Georgia, 258 U.S. 1, 2-5, 42 S. Ct. 204, 66 L. Ed. 431, 431-432 (1922). Rule 31 comes within this test as a reasonable presumption, State v. Morris, 94 N.J.L. 19 (Sup. Ct. 1919), affirmed 94 N.J.L. 567 (E. & A. 1920); State v. Costa, 11 N.J. 239, 246 (1953); Greenbrier, Inc. v. Hock, 14 N.J. Super. 39 (App. Div. 1951), certification den. 7 N.J. 581 (1951).

In addition it must be remembered that a license to sell intoxicating liquor is not a contract nor is it a property right. Rather it is a temporary permit or privilege to pursue an occupation which otherwise is illegal. In re Schneider, 12 N.J. Super. 449, 456 (App. Div. 1951). From the earliest history of our State the sale of intoxicating liquors has been treated in an exceptional manner by the Legislature. Hudson Bergen County Retail Liquor Stores Ass'n. v. Board of Com'rs. of City of Hoboken, 135 N.J.L. 502, 506 (E. & A. 1947). "It is a subject by itself, to the treatment of which all the analogies of the law appropriate to other topics cannot be applied." Paul v. Gloucester County, 50 N.J.L. 585, 595 (E. & A. 1888). "The sale of intoxicating liquor is in a class by itself." Bumball v. Burnett, 115 N.J.L. 254, 255 (Sup. Ct. 1935). "As it is a business attended with danger to the community it may * * * be entirely prohibited, or be permitted under such conditions as will limit to the utmost its evils." Crowley v. Christensen, 137 U.S. 86, 91, 11 S. Ct. 13, 15, 34 L. Ed. 620, 624 (1890).

The governmental power to regulate activities upon the licensed premises has uniformly been accorded liberal judicial support. Board of Com'rs. of Town of Phillipsburg

v. Burnett, 125 N.J.L. 157, 161 (Sup. Ct. 1940); In re Larsen, 17 N.J. Super. 564, 571 (App. Div. 1952).

"The right to regulate the sale of intoxicating liquors, by the Legislature, or by municipal or other authority under legislative power given, is within the police power of the state, and is practically limitless." Meehan v. Board of Excise Commissioners, 73 N.J.L. 382, 386 (Sup. Ct. 1906), affirmed 75 N.J.L. 557 (E. & A. 1908).

It was clearly within the power of the Legislature to provide that the licensee should be liable for activities upon the licensed premises even in the absence of knowledge thereof by the licensee.

The question then arises as to whether the Legislature has granted the Director the authority to promulgate this rule. The Director has been given the duty "to supervise the manufacture, distribution and sale of alcoholic beverages in such a manner as to promote temperance and eliminate the racketeer and bootlegger." (R.S. 33:1-3). Under R.S. 33:1-39 he is granted very broad and general powers:

"The commissioner [now Director] may make such general rules and regulations and such special rulings and findings as may be necessary for the proper regulation and control of the manufacture, sale and distribution of alcoholic beverages and the enforcement of this chapter, in addition thereto, and not inconsistent therewith, and may alter, amend, repeat and publish the same from time to time.

Such rules and regulations may cover the following subjects: * * * inspections, investigations, searches, seizures, findings and such activities as may become necessary from time to time; * * * racketeering; prostitution; solicitation; disorderly houses; * * * disreputable characters; * * * health and sanitary requirements; standards of cleanliness, orderliness and decency; * * * practices unduly designed to increase consumption of alcoholic beverages; gifts of equipment, products and things of value; and such other matters whatsoever as are or may become necessary in the fair, impartial, stringent and comprehensive administration of this chapter."

R.S. 33:1-73 states that "This chapter is intended to be remedial of abuses inherent in liquor traffic and shall be liberally construed."

In Franklin Stores Co. v. Burnett, 120 N.J.L. 596 (Sup. Ct. 1938), there was an attack upon the validity of Rule 18 of the Alcoholic Beverage Commissioner which provided that:

"No licensee shall sell or possess, or allow, permit or suffer on or about the licensed premises, any malt, hops, oak shavings or chips, flavoring or coloring agents, cordial or liquor extracts, essences or syrups, or any ingredient, compound or preparation of similar nature."

The contention was that the rule went beyond the statute which made these things unlawful only when intended for improper use. The court rejected this argument saying:

"However, we are of the opinion that the defendant is not limited in his control over the conduct of licensees in any such way as is suggested by the prosecutor. By section 36 of the act * * * he is given broad power to promulgate rules and regulations concerning the conduct of the business. That such power may be delegated to such an officer by the legislature has been settled. State Board of Milk Control v. Newark Milk Co., 118 N.J. Eq. 504. The liquor business is one peculiarly subject to strict governmental control. * * *

We think the defendant had ample power to make the regulation in question and furthermore that it is entirely reasonable and proper." (at 598)

In Grant Lunch Corp. v. Driscoll, 129 N.J.L. 408 (Sup. Ct. 1943), affirmed 130 N.J.L. 554 (E. & A. 1943), certiorari denied 320 U.S. 801, 64 S. Ct. 431, 88 L. Ed. 484 (1944), the licensee's employee "by mistake and not willfully" sold a bottle of rye whiskey at a price beneath the minimum consumer price in violation of Rule 6 of State Regulation No. 30 which prohibited the sale or offering for sale of any such product at a figure less than that agreed upon between the manufacturer or wholesaler and the licensed retailer. One of the attacks upon the validity of the rule was that it punished sales resulting from "innocent, non-negligent errors" and thus exceeded the statutory authority under which it was promulgated. The court upheld the rule saying:

"The offense charged against prosecutor was not a crime; it was a violation of rules and regulations duly set up under statutory

authority in the control of a business that for many years has been lawfully subjected to regulation by statute and under statutory authority. The sale of liquor has never been a business of right in this state. The legislature has uniformly granted wide discretion to officers charged with duties with respect to the granting and revoking of liquor licenses. The commissioner is empowered by the 1938 statute, supra, to make the regulations necessary, in his judgment, in order to secure a fair administration of the law permitting the sale of intoxicating liquor and the fixing of a price applicable alike to all dealers and all customers. It was within the authority of the State Commissioner of Alcoholic Beverage Control to impose the regulation under review and to suspend the license of a violating licensee, * * *. The right extensively to regulate the sale of intoxicating liquors by retail has been given broad judicial support, * * *. The prosecutor's argument presents no sound reason for distinguishing the foregoing decisions.

Although the sale was not accomplished in purposeful violation of the regulations it was such an act as would have been avoided had the prosecutor's clerks performed their duty; and in any event it was a flat violation of lawful regulations duly promulgated and fully grounded in the statute."

In Essex Holding Corp. v. Hock, 136 N.J.L. 28 (Sup. Ct. 1947), there was involved the validity of the Alcoholic Beverage Commissioner's Rule 1 of State Regulations No. 20 providing that

"No licensee shall sell, serve, deliver or allow, permit or suffer the service or delivery of any alcoholic beverage, directly or indirectly, to any person under the age of twenty-one (21) years or to any person actually or apparently intoxicated, or allow, permit or suffer the consumption of alcoholic beverages by any such person upon the licensed premises."

The licensee claimed that in order to be guilty of a violation of this rule there must be proof that it had knowledge of the facts complained of. In his opinion for the court Mr. Justice Wachenfeld held that knowledge was unnecessary and that the mere fact of a violation of the rule was sufficient:

"In construing this section consideration must be given to the legislative intent, and inquiry should be made to determine if it concluded to make the offense complete without guilty knowledge. The lawmakers may declare an act criminal irrespective of the knowledge or motive of the doer of such act and the court has no right to insert an element not intended by the Legislature. * * *

Although statutes penal in character must be construed strictly, the injunction of the Legislature as hereabove indicated enjoins us to the contrary in reference to liquor traffic. * * *

Although the word 'suffer' may require a different interpretation in the case of a trespasser, it imposes responsibility on a licensee, regardless of knowledge, where there is a failure to prevent the prohibited conduct by those occupying the premises with his authority." (at 30-31)

As stated in Hudson Bergen County Retail Liquor Stores Ass'n. v. Board of Com'rs. of City of Hoboken, supra, 135 N.J.L. 502, 509, "the state authorities should be given every reasonable opportunity to work out the mandate of the legislature."

The rule in question comes clearly within the delegated authority of the Director as a reasonable regulation in the field of alcoholic beverage control. The Director has the power to make the licensee responsible for the activities upon the licensed premises. In fact, it is difficult to see how the Division could properly maintain discipline in this field if in each case it had to show knowledge by the licensee of all the activities upon the premises. This would leave the door open to evasion of the Alcoholic Beverage Law and the many rules of the Director promulgated thereunder and would make the enforcement of the law an impossibility.

4. The appellant also asserts that it was error to admit in evidence an affidavit signed by the appellant's bartender, who was present at the hearing and who could have been called as a witness. The contents of the affidavit had previously been testified to by the State's witnesses. At best the affidavit was merely corroborative of evidence already in the record. In a hearing before an administrative tribunal technical rules of evidence are not controlling and the erroneous admission of evidence in such a proceeding will not cause a reversal unless the evidence erroneously admitted formed the basis for the decision of the administrative tribunal, Andricsak v. National Fireproofing Corp., 3 N.J. 466, 471

(1950). Such was not the case here; the affidavit of the bartender was merely corroborative of the State's witnesses. There is no reversible error discernible.

5. The appellant objects to the lack of a rule in the Division permitting a licensee to file a brief or present oral argument before the Director after the taking of testimony before the hearer on charges against him. We are told that such permission is granted on request and in fact was granted here. Proper administrative procedure requires that such rights and agency procedure generally should be the subject of agency regulations so that a licensee may know of his rights. The need for the publication of such regulations is ...


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