State v. Williams , 84 N.J. 217 ( 1980 )

The opinion of the Court was delivered by

POLLOCK, J.

The primary issue on this appeal is whether a warrantless search by local law enforcement officers of the nonpublic areas of a tavern was authorized under N.J.S.A. 33:1-35. If the search was unauthorized, then evidence obtained by the officers may be suppressed. The trial court denied a motion to suppress evidence found during the search. The Appellate Division reversed. State v. Williams, 168 N.J.Super. 359 (App. Div. 1979). We granted the State’s petition for certification. 82 N.J. 268 (1979). We now affirm.

Under the facts of this case, we hold invalid the warrantless search of a tavern by local police for evidence of a crime where the search was not authorized as required by statute.

I

Two detectives of the Paterson police department entered a tavern in Paterson on January 22, 1976, at about 11:15 a. m. to search for a stolen citizens’ band radio. One detective had received a tip about the radio from an informant two days earlier. Neither had a search warrant.

The detectives identified themselves to the bartender and proceeded to search the entire premises. One officer searched the public area of the tavern, and the other went into the basement through a trap door behind the bar. While in the basement, the second officer found three men in a small storage room at a table with stacks of money and some paper slips, which were apparently lottery tally sheets. He called his partner and summoned the vice squad for assistance. The officers also found two loaded revolvers and a stolen citizens’ band radio. Defendant Williams, one of the men in the basement, acknowledged ownership of the guns.

Williams lived in an apartment above the bar with his wife and children. The tavern was in a building owned by a corporation of which Williams’ sister and her husband were the majority shareholders. Williams paid reduced rent in exchange for maintenance and cleaning of the entire building, including the furnace in the basement. He had access to the basement and storage room, where he kept tools.

Williams and the others were indicted for possession of lottery paraphernalia, N.J.S.A. 2A:121-3(b); working for a lottery, N.J. S.A. 2A:121-3(a); receiving stolen property, N.J.S.A. 2A:139-1; and possession of revolvers without a permit, N.J.S.A. 2A:151-41(a). After a hearing, the trial judge denied defendant’s motion to suppress the evidence found at the tavern. He found that the warrantless search was authorized by N.J.S.A. 33:1-35 of the Alcoholic Beverage Control (ABC) laws. A jury found Williams guilty on all counts except receiving stolen property.

The Appellate Division reversed, finding that the officers were not conducting an ABC regulatory search. 168 NJ.Super. at 364-365. The court held that N.J.S.A. 33:1-35 authorizes warrantless searches only if they relate specifically to enforcement of the liquor laws and regulations. Id. at 366-367.

I-I

The initial question is whether Williams has standing to argue that the police conducted an illegal search and seizure, an issue first raised by the State on appeal. The United States Supreme Court held in Rakas v. Illinois, 439 U.S. 128, 99 S.Ct. 421, 58 L.Ed.2d 387 (1978), that standing should be considered in conjunction with determining the substantive Fourth Amendment issue. The question thus becomes whether the search and seizure violated the Fourth Amendment rights of the person claiming the violation. Id. at 140, 99 S.Ct. at 429, 58 L.Ed.2d at 399. A search and seizure of premises or property of a third person may not violate the Fourth Amendment rights of a defendant. Id. at 134, 99 S.Ct. at 425, 58 L.Ed.2d 395. However, a defendant need not be the owner of the premises: the test is whether a defendant had a legitimate expectation of privacy in the property or premises involved. Id. at 143, 99 S.Ct. at 430, 58 L.Ed.2d at 401. See also United States v. Salvucci, - U.S.-, 100 S.Ct. 2547, 65 L.Ed.2d 619 (1980) (overruling automatic standing doctrine for possessory offenses).

We find that Williams had a legitimate expectation of privacy in the storage room. The room was used for the storage of liquor and kept locked. Although part of the licensed premises, it was not a public area. Williams kept tools in the room, and as a resident and custodian, had access to it. Consequently, we hold that Williams has standing to challenge the search and seizure under the Fourth Amendment.

Ill

We next consider whether the search was authorized in law or fact. The statute on which the officers relied, N.J.S.A. 33:1-35, provides in pertinent part:

The Director of the Division of Alcoholic Beverage Control and each other issuing authority may make, or cause to be made, such investigations as he or it shall deem proper in the administration of this chapter and of any and all other laws now or which may hereafter be in force and effect concerning alcoholic beverages, or the manufacture, distribution or sale thereof, or the collection of taxes thereon, including the inspection and search of premises for which the license is sought or has been issued, of any building containing the same, of licensed buildings, examination of the books, records, accounts, documents and papers of the licensees or on the licensed premises.

Every applicant for a license, and every licensee, and every director, officer, agent and employee of every licensee, shall, on demand, exhibit to the director or other issuing authority, as the case may be, or to his or its deputies or investigators, or inspectors or agents all of the matters and things which the director of the division or other issuing authority, as the case may be, is hereby authorized or empowered to investigate, inspect or examine, and to facilitate, as far as may be in their power so to do, in any such investigation, examination or inspection, and they shall not in any way hinder or delay or cause the hindrance or delay of same, in any manner whatsoever. Investigations, inspections and searches of licensed premises may be made without search warrant by the director, his deputies, inspectors or investigators, by each other issuing authority and by any officer.

Regulations of the Division of ABC provide that a licensee shall not permit gambling or a lottery on the premises, N.J.A.C. 13:2-23.7(a). There is no regulation prohibiting the receipt of stolen goods. However, there is a general prohibition against any illegal activity on the premises. N.J.A.C. 13:2-23.5(c).

The State argues that the statute authorizes warrantless searches in the enforcement of the alcoholic beverage control laws, and that enforcement includes the investigation of crimes by local police without express authorization by State or local ABC boards.

We begin our analysis of that position with the recognition that “the liquor industry is affected with a public interest” and “has been subject to intense State regulation and control . . . Heir v. Degnan, 82 N.J. 109, 114 (1980). See also California v. LaRue, 409 U.S. 109, 93 S.Ct. 390, 34 L.Ed.2d 342 (1972). Indeed, a state may prohibit liquor sales completely. Gilhaus Beverage Co. v. Lerner, 78 N.J. 499, 509 (1979). Historically, the liquor industry has been viewed as a sensitive industry and has been strictly regulated. Id. at 508-509.

In Colonnade Catering Corp. v. United States, 397 U.S. 72, 90 S.Ct. 774, 25 L.Ed.2d 60 (1970), the Supreme Court recognized the broad power of Congress to design appropriate powers of inspection with respect to the liquor industry. The relevant federal statute provided that a fine could be imposed on a licensee who refused to allow agents to inspect the premises. In Colonnade, the Court suppressed bottles of liquor removed by federal agents who broke into a locked liquor storeroom in a catering establishment. Although the Court held that the statute did not authorize the agents to use force to enter the premises when the licensee refused inspection, it impliedly recognized the power of Congress to authorize warrantless inspections. This power was confirmed in United States v. Biswell, 406 U.S. 311, 92 S.Ct. 1593, 32 L.Ed.2d 87 (1972), which involved a warrantless search by a federal treasury agent of the premises of a firearms dealer pursuant to the federal gun control act. In Biswell, a pawnshop operator acquiesced in a search of a locked storeroom containing two sawed off shot guns. The Court distinguished Colonnade because the search was unaccompanied by unauthorized force. In recognizing that the firearms industry, like the liquor business, is a sensitive and highly regulated industry, the Court held inspections without warrants to be reasonable official conduct. Id. at 316, 92 S.Ct. at 1596, 32 L.Ed.2d at 92. See also Dome Realty Inc. v. City of Paterson, 83 N.J. 212, 239-241 (1980).

Recognition that the government may authorize warrantless searches of certain businesses does not end the inquiry. Colonnade and Biswell established that certain businesses such as the liquor and firearms industries are subject to governmental oversight to such an extent that anyone engaging in those businesses would have a reduced expectation of privacy. Nonetheless, persons engaged in those businesses remain entitled to protection of their limited expectation of privacy. Both cases involved inspections by government agents seeking evidence of substantive violations of relevant regulatory statutes. Neither case considered whether, without authorization from the relevant regulatory agency, a local law enforcement officer may search the premises of a regulated business for evidence of crimes.

More recently, the Court struck down a section of the Occupational Safety and Health Act (OSHA) that authorized federal agents to make warrantless searches of business premises for violations of the Act. Marshall v. Barlow’s, Inc., 436 U.S. 307, 98 S.Ct. 1816, 56 L.Ed.2d 305 (1978). In Marshall, which involved an electric and plumbing installation business, the Court was concerned with inspections by government agents for violations of specific regulations. The Court distinguished between closely regulated businesses, such as the liquor and firearms industries, and ordinary businesses. While requiring OSHA inspectors to obtain warrants, the Court approved warrantless searches of “closely regulated industry of the type involved in Colonnade and Biswell . . . . ” 436 U.S. at 313, 98 S.Ct. at 1821, 56 L.Ed.2d at 312. The import of Colonnade, Biswell, and Marshall is that, although a warrant is not a condition precedent to a search of premises used for the sale of liquor, someone with a legitimate expectation of privacy in the premises otherwise remains protected by the Fourth Amendment. We reject as unsound the notion that persons doing business in a strictly regulated industry such as the liquor business waive their Fourth Amendment rights. See 3 LaFave, Search and Seizure, § 10.2 at 237-238 (1978); but see Daley v. Berzanskis, 47 Ill.2d 395, 269 N.E.2d 716 (1971); Clark v. State, 445 S. W.2d 516 (Tex. Crim. Ct. 1969).

Within that matrix, we examine the statute and conduct of the police officers in this case. Here, the conduct constituted a warrantless search by local detectives for evidence of a crime. N.J.S.A. 33:1-35 authorizes the Director of the Division of ABC and local ABC boards to investigate licensed taverns. In this case, the persons who made the search were not agents of either the State or a municipal. ABC board. They were policemen, and they were looking for a stolen C.B. radio. As disclosed at the suppression hearing, for two days the officers had known about the stolen radio. Without either a warrant or authorization, they searched a tavern. There was no reason for them not to obtain either a warrant or an authorization. They obtained neither. A local law enforcement officer who relies on the ABC laws for authority to make a warrantless search must be authorized expressly to conduct that search. The search was invalid. See Biswell, supra, 406 U.S. at 315, 92 S.Ct. at 1596, 32 L.Ed.2d at 92. Consequently, the state of mind of the officers is irrelevant. Therefore, it is not necessary to determine the subjective intent of the officers or the relevance of their intent. See State v. Ercolano, 79 N.J. 25, 38-40 (1979). Cf. Scott v. United States, 436 U.S. 128, 98 S.Ct. 1717, 56 L.Ed.2d 168 (1978) (objective test should be applied to determine if a search is valid).

Two Appellate Division decisions upholding warrantless searches of taverns are distinguishable. State v. Zurawski, 89 N.J.Super. 488 (App. Div. 1965), aff’d o. b. 47 N.J. 160 (1966), involved a search of a tavern by local detectives. On entering the tavern, the officers stated that they were conducting a search on behalf of the local ABC board. There was no dispute that the search was authorized by the board. In the present case, the officers had no ABC authorization. In State v. Ransom, 169 N.J.Super. 511 (App. Div. 1979), police, acting on a tip, went to a tavern in search of cocaine. Although the court thought the search was authorized by N.J.S.A. 33:1-35, it expressly held that the search was reasonable in light of exigent circumstances, the lack of time available to obtain a warrant. 169 N.J.Super. at 519. As previously noted, the police in this case had two days in which to obtain a warrant.

We conclude that there is no statutory authority for a warrantless search of a tavern by local law enforcement officers conducting their own investigation of a crime without specific authorization. Further, we conclude that the issuing authority in this case, the Paterson Alcoholic Beverage Control Board, had not authorized the search and that the police officers were not making an investigation while enforcing ABC laws.

IV

Because we hold that the search was not statutorily authorized, we must consider whether valid consent was given for the search. Two questions are presented. First, whether the licensee consented to all searches by applying for a license. Second, whether the bartender consented to the search of the premises and, if so, whether the consent is binding on Williams.

The consent provision in the license application provides: The applicant consents that the licensed premises and all portions of the building containing same, including all rooms, cellars, out-buildings, passageways, closets, vaults, yards, attics, and every part of the structure of which the licensed premises are a part and all buildings used in connection therewith which are in his possession or under his control, may be inspected and searched without warrant at all hours by the Director of the Division of Alcoholic Beverage Control, the Director of the Division of Taxation, their duly authorized inspectors, investigators and agents and all other officers.

Although more specific than the statute, the consent form is coextensive with N.J.S.A. 33:1-35. Nothing indicates that the form was intended to allow searches other than those authorized by the statute. By filing an application, the licensee consented only to searches that are authorized. As the Court stated in Biswell: “In the context of a regulatory inspection system of business premises that is carefully limited in time, place, and scope, the legality of the search depends not on consent but on the authority of a valid statute.” 406 U.S. at 315, 92 S.Ct. at 1596, 32 L.Ed.2d at 92.

The remaining question is whether the bartender consented to the search. There is no proof of facts surrounding the consent allegedly given by the bartender. The only relevant evidence is that one detective went behind the bar and into the basement through a trap door. Furthermore, there is no evidence that the bartender knew he had a right to refuse the consent. See State v. Johnson, 68 N.J. 349, 354 (1975). We find that the State has not met the burden of showing that the bartender knowingly consented to the search. Id. at 353-354. Consequently, it is unnecessary to decide whether a valid consent by the bartender would be binding on Williams. See United States v. Matlock, 415 U.S. 164, 94 S.Ct. 988, 39 L.Ed.2d 242 (1974).

To conclude, the Fourth Amendment to the United States Constitution generally prohibits a search undertaken without a valid warrant. An exception permits warrantless searches for offenses peculiar to- the liquor business, when authorized by statute. N.J.S.A. 33:1-35 does not allow searches by local law enforcement officers conducting a criminal investigation without specific authorization.

The judgment of the Appellate Division is affirmed.