Gubelman v. Bennett, 2 N.Y.2d 672 (1957)

A municipal regulation exceeding the scope of its enabling statute and imposing unduly oppressive restrictions on a lawful activity is invalid.

Summary

Gubelman, a licensed New York City ticket broker, challenged a regulation prohibiting licensed brokers from selling tickets to unlicensed persons for resale. This effectively barred sales to out-of-state brokers. The Court of Appeals held the regulation invalid, reasoning that it exceeded the authority delegated to the Commissioner of Licenses and placed unduly burdensome restrictions on a lawful activity. The court emphasized that regulations must be reasonably related to addressing specific abuses and cannot be overly broad or oppressive.

Facts

The petitioner, Gubelman, was a licensed New York City ticket broker who had been selling theatre tickets to a Washington, D.C. ticket agency for over 15 years. These sales were legal under New York law. The Washington agency’s resale practices were not alleged to be unlawful. Regulation 6(f) of the Department of Licenses prohibited licensed brokers from selling tickets to any “unlicensed person” for resale.

Procedural History

The petitioner challenged the validity of Regulation 6(f). The lower courts upheld the regulation. The New York Court of Appeals reversed the lower court’s decision, annulling the Commissioner’s determination. The matter was remitted to Special Term for further proceedings.

Issue(s)

Whether Regulation 6(f), prohibiting licensed ticket brokers from selling tickets to unlicensed persons for resale, exceeds the authority delegated to the Commissioner of Licenses and imposes unduly oppressive restrictions on a lawful activity.

Holding

Yes, because the regulation effectively prohibits trade with out-of-state agencies without demonstrating a reasonable relation to preventing fraud, extortion, or exorbitant rates within New York City.

Court’s Reasoning

The court reasoned that local laws must have a substantial relation to matters within the legislative power of the local body and be reasonably calculated to achieve a legitimate public purpose. Regulations cannot be unduly oppressive or aimed at prohibiting a lawful activity through onerous restrictions. The court found that Regulation 6(f) was too broad and exceeded the authority granted to the Commissioner of Licenses under General Business Law § 169-b, which allows for rules necessary to protect the public against “fraud, extortion, exorbitant rates and similar abuses” (General Business Law, § 167). The court stated: “An ordinance will be invalidated purporting to regulate a lawful activity… where its purpose is ‘to prohibit by onerous and exasperating restrictions, under the guise of regulation’.” The court acknowledged the potential for abuse if out-of-state brokers resold tickets at inflated prices to New York City residents. However, the court held that a blanket prohibition on sales to all out-of-city brokers was not justified without evidence of such abuse. The court concluded that the regulation was akin to “use a cannon to kill a butterfly,” suggesting a disproportionate response to a potentially localized problem. The regulation’s overbreadth rendered it invalid. There were no dissenting or concurring opinions.