Danzo v. State Liquor Authority, 27 N.Y.2d 469 (1971)
A licensee can be held responsible for gambling activities on their premises if they have actual knowledge or should have had knowledge through the exercise of reasonable diligence.
Summary
The State Liquor Authority (SLA) suspended Danzo’s restaurant liquor license based on findings of gambling on the premises. Police officers testified to observing patrons engaging in apparent betting activities with the chef and another patron, along with finding unsold football pool tickets and horse racing wagers on the premises. The hearing officer initially concluded the evidence was insufficient to prove the licensee’s knowledge. The SLA rejected this finding, determining that the licensee knew or should have known about the gambling. The New York Court of Appeals reversed the Appellate Division’s annulment of the SLA’s determination, holding that the SLA’s decision was supported by substantial evidence, given the officers’ testimony and the presence of gambling paraphernalia.
Facts
Patrolman Restivo observed patrons at Danzo’s restaurant engaging in conversations with the chef, John Danzo, followed by perusing horse racing information, making notations on slips of paper, and handing the slips with money to John. On a subsequent visit, Restivo observed similar activity. A search warrant led to the discovery of 137 unsold football pool tickets and slips containing horse racing wagers near John Danzo. Patrolman Silverstein observed a patron, Vasquez, receiving money from individuals after brief conversations and recording numbers on a matchbook cover. Vasquez was found to possess 58 horse race bets. Nicholas Danzo, the owner, denied permitting gambling and claimed ignorance of Vasquez.
Procedural History
The SLA suspended Danzo’s liquor license based on a finding of gambling on the premises. The hearing officer initially found insufficient evidence of the licensee’s knowledge. The SLA rejected the hearing officer’s findings and sustained the charges. The Appellate Division annulled the SLA’s determination. The New York Court of Appeals granted review.
Issue(s)
Whether the determination of the State Liquor Authority, that the licensee suffered or permitted gambling on the premises, is supported by substantial evidence.
Holding
Yes, because the testimony of the police officers regarding the activities of John Danzo and Vasquez, along with the discovery of betting materials on the premises, could reasonably lead the State Liquor Authority to infer that gambling was occurring with the knowledge of the licensee.
Court’s Reasoning
The Court of Appeals reasoned that a quasi-judicial determination, like that of the SLA, should be sustained if the reviewing court concludes that others might reasonably reach the same result. The Court found that the SLA could reasonably conclude that Danzo permitted gambling on the premises based on the combination of evidence. The court emphasized that the issue was not whether the licensee was guilty of a criminal gambling charge, but whether the SLA could reasonably determine a violation of Section 106(6) of the Alcoholic Beverage Control Law. The court cited Matter of Avon Bar & Grill v. O’Connell, 301 N.Y. 150, 152-153, stating that the SLA must find that the licensee, through its officer, had actual knowledge or the opportunity to acquire knowledge of the prohibited activities through reasonable diligence. By crediting the police officers’ testimony, the SLA could reasonably find that Nicholas Danzo had or should have had knowledge of the gambling activities. The court also addressed the Appellate Division’s concern about the SLA rejecting the hearing officer’s report, clarifying that the SLA merely changed the conclusion drawn from the testimony, making a full rejection and new findings unnecessary. The court stated: “The fragmentation of these incidents, however, overlooks the point that the authority could reasonably infer from the combination of these suggestive occurrences that the licensee suffered or permitted gambling on his premises.”