Goldmann, Sullivan and Labrecque. The opinion of the court was delivered by Goldmann, S.j.a.d.
This is an appeal from an order of the Acting Director of the Division of Alcoholic Beverage Control concurring in and adopting the report and conclusions of the Division hearer and ordering that the action of respondent council of the Borough of Magnolia in granting a plenary retail distribution license and renewals thereof to appellants D'Amico under an ordinance adopted on October 5, 1960 be reversed, and that the current license granted pursuant thereto be cancelled, effective immediately. We stayed the order pending determination of the appeal.
Much of the factual background of this case may be found in Blanck v. Mayor, etc., of Magnolia , 73 N.J. Super. 306 (App. Div. 1962), and in the opinion of the Supreme Court reversing and remanding the matter to the Division for action not inconsistent with its opinion, 38 N.J. 484 (1962). Briefly, the borough council, on October 5, 1960, had adopted an amendatory liquor ordinance providing for a plenary retail distribution license, and on November 7, 1960 issued such license to the D'Amicos. The Blancks appealed to the Director of the Division of Alcoholic Beverage Control and asked that he declare the amendatory ordinance void because of Mr. D'Amico's self-interest by reason of his being president of the borough council at the time the ordinance was adopted. The Director concluded that the evidence did not support that charge, and he found other claims of error asserted by the Blancks to be without merit.
On appeal to this court, they again contended that the amendatory ordinance was invalid because D'Amico, as council president at the time the amendment was adopted, had a personal and financial interest which conflicted with his public duty. On review we held (73 N.J. Super. 306) that the amendatory ordinance could be directly attacked only by a plenary court action and a judicial ruling as to its invalidity, and that the Director did not have the power to make such a ruling. Accordingly, the court declined to rule as to D'Amico's alleged self-interest or its effect on the amendatory ordinance.
It concluded there was substantial evidence to support the Director's determination that the borough council had not abused discretion in issuing the license to the D'Amicos, nor did it appear that council's action was arbitrary or unreasonable.
The Blancks then sought and obtained certification to the Supreme Court, which said that a fair reading of the Alcoholic Beverage Control Law compelled the conclusion that
"* * * where a member of a local body is interested in obtaining a license and an ordinance creating and authorizing such license is introduced and passed, and thereafter such member resigns and the license is issued to him, the Director should closely scrutinize the entire transaction to determine (1) whether the ordinance was adopted in the public interest or to favor the member, and (2) whether, as an original proposition, the license should be issued to the former official rather than a competing applicant. This, we think, is required to satisfy the legislative aim that the Director exercise a broad supervisory power in this delicate area. * * *" (38 N.J. , at pages 494-5)
"In our view the Director should have taken petitioners' appeal and molded it as if it were a direct application by the D'Amicos for a license. He would have had before him the competing applicant, Myers [sic], and could have then decided all the issues. He would have made a determination as to whether public welfare or favoritism was the basis for enacting the ordinance. If he found public welfare, he would have then considered the relative merits of the two applications. If he found that the amendment was passed for a reason not permitted by the Legislature, he would not have granted a license to either applicant. Cf. Board of Commissioners of the Town of Phillipsburg v. Burnett , 125 N.J.L. 157 (Sup. Ct. 1940). Nevertheless, the power he would exercise would be in the nature of an issuing authority (such as he exercises under R.S. 33:1-20) rather than an appellate one." (at pages 495-6)
What the Supreme Court said was the law of the case on the remand. After a full hearing the Division hearer, in his report, stated that his examination and analysis of the testimony led him to the "inescapable conclusion * * * that the ordinance in question was adopted in favor of D'Amico and for his sole benefit." The borough council had acted in a legislative
capacity when it adopted the amendatory ordinance, but its granting of the liquor license involved an act judicial in nature. In his view, "the standards of disqualifying interest can be no less exacting with respect to such body acting as a liquor license issuing authority than in the case of purely judicial action." The Blancks, he held, had established by a fair preponderance of the evidence that the amendatory ordinance was adopted to favor D'Amico, and he accordingly recommended to the Acting Director that an order be entered determining that the action of the borough council in granting the license and renewals thereof under that ordinance to D'Amico be reversed and the current license cancelled. In view of that determination, the hearer found it unnecessary to consider the other point raised by the Supreme Court in its order of remand, namely, the relative merits of the D'Amico and Meyers applications.
After carefully considering the evidence and exhibits, the hearer's report, the memoranda submitted by counsel at the conclusion of the hearings, the written exceptions of the D'Amicos and the answers of the Blancks thereto, the Acting Director, as already noted, concurred in the hearer's conclusions (as corrected with respect to certain inaccurate statements relating to nonmaterial facts), adopted them, and entered the order under appeal.
Appellants complain that the Acting Director's conclusions and order show that he failed to consider what are described as "the controlling factors" in the case, and that his factual findings are not supported by substantial evidence. We have reviewed the entire record and are convinced that there was substantial evidence to support the Acting Director's determination that the enactment of the 1960 amendment to Magnolia's liquor ordinance was the product of favoritism to Council President D'Amico. Atkinson v. Parsekian , 37 N.J. 143, 149 (1962); Murphy's Tavern, Inc. v. Davis , 70 N.J. Super. 87, 94 (App. Div. 1961); Hornauer v. Division of Alcoholic Beverage Control , 40 N.J. Super. 501, 504 (App. Div. 1956).
Under this first point, appellants list some 19 facts in the record which allegedly could support a determination by the Acting Director that the amendatory ordinance was not adopted to favor D'Amico. However, the test is not to show conflicting evidence, but to examine the record to ascertain whether there is substantial evidence upon which he could have based his determination. As we said in Hornauer , at page 506, the choice of accepting or rejecting the testimony of witnesses rests with the administrative agency, and where such choice is reasonably made, it is conclusive on appeal. We canvass the record, not to balance the persuasiveness of the evidence on one ...