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Lyons Farms Tavern Inc. v. Municipal Board of Alcoholic Beverage Control

Decided: July 10, 1975.


For reversal -- Chief Justice Hughes and Justices Mountain, Sullivan, Pashman and Clifford. For affirmance -- None. The opinion of the Court was delivered by Clifford, J.


[68 NJ Page 46] We granted certification to the Appellate Division on the petition of the Municipal Board of Alcoholic Beverage Control of the City of Newark (hereinafter "Board"), 64 N.J. 155 (1973), to consider the two issues presented therein: (a) whether community sentiment can be considered by an issuing authority on an application for person-to-person transfer of a plenary retail consumption license; and (b) whether in light of community sentiment

conditions may be placed on the license pursuant to N.J.S.A. 33:1-32. The Appellate Division held, in an unreported opinion, that "where a person-to-person transfer is involved, the only question to be decided is whether or not the proposed transferee qualifies as an original licensee" and that no conditions may be imposed on this transfer.

Plaintiff, Lyons Farms Tavern, Inc. (hereinafter "Lyons"), was, in 1972, operator of a bar on Clinton Place in Newark. It entered into a contract to purchase the Chancellor Delicatessen, and in connection therewith made application for a person-to-person transfer of the plenary retail consumption license issued to Chancellor Delicatessen & Restaurant, Inc. (hereinafter "Chancellor") for its premises at 378 Chancellor Avenue, Newark. In due course a public hearing was held before the Board, where a number of objectors appeared and were heard. They did not question or oppose the qualifications of Lyons Farms as a license holder; rather, they objected to what they perceived as Lyons' desire to expand the licensed premises from a delicatessen-restaurant to a primary bar operation. Respondent denied such plans, expressing its intention to continue the business as it was then being conducted. The Board denied the application for transfer.

This decision was appealed to the Director of the Division of Alcoholic Beverage Control (hereinafter "Division"), and a de novo hearing was held. One of the owners of Chancellor, the transferor, testified that he was selling because of his doctor's advice to "go out of business" on account of a heart condition. Although the premises contained a twenty-two foot bar, he described its current use as involving only approximately six feet, with five or six stools.*fn1

He had never committed a license violation. The stockholders of the purchaser-transferee, Lyons, were offered to prove their fitness. The major stockholder, Alex Neu, stated that the other bar which the company ran had been violation-free during the 10 years of its operation. He was questioned about the planned future operation of the Chancellor premises. In response, Mr. Neu indicated that he intended "to continue exactly as it has been operated * * * a package store with a small bar and selling sandwiches." It was to be operated "primarily as a delicatessen * * * (g)enerally in the same manner as it is conducted at present."

Again objectors appeared to oppose what they characterized as the expansionist tendencies of Lyons. They generally described the neighborhood's effort at self-improvement, made reference to the proximity of schools and churches, expressed opposition to the influx of liquor licenses driven into the south part of the City by urban renewal of the Central Ward, and gave voice to their apprehension that a Lyons takeover of Chancellor would "increase the output of alcohol consumption at this new place" (presumably on the assumption that the entire length of the bar would be used).

The Hearer's report focused specifically on this last stated apprehension and pointed out that the "total rejection of transfer by the Board surrounds only the anticipated extension or enlargement of the bar facilities." He recommended that the person-to-person transfer be approved subject to the condition that utilization of the bar not be expanded and that the premises continue to be operated as before. Written exceptions and answers to the report were filed, after which the Director issued his Conclusions and Order. He found that the worthiness of the applicant was not in issue, that the applicant had indicated his intention to operate the premises primarily as a delicatessen-restaurant, and permitted the transfer subject to two conditions: (1)

the premises had to be operated "as a bona fide delicatessen-restaurant as defined by N.J.S.A. 33:1-1 (t)" and (2) no other bar could be used except the present one, and that only to the extent of its current use, which he determined to be "approximately eight feet."

At this point Lyons apparently shifted its position. Not now being satisfied with license burdened with these conditions, it appealed to the Appellate Division. This resulted in a reversal of the Director's decision and an order that the transfer of the license be without special conditions. We reverse and reimpose those conditions.

Appellants argue first that community sentiment may be considered in a person-to-person license transfer and that the inquiry should not be restricted solely to the fitness of an applicant. This Court has found community sentiment to be a proper consideration in place-to-place transfers, Borough of Fanwood v. Rocco, 33 N.J. 404, 412-13 (1960), and has given it effect in license renewal applications, Bd. of Comm'rs of Bayonne v. B & L Tavern, Inc. 42 ...

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