In re Loper

McLennan, J. :

The facts in this case are not in dispute, and are of such a character as to present the interesting question whether privileges which attach to real property by virtue of a statute may be destroyed or materially impaired without the knowledge or consent of the owner by the secret act of a tenant done in violation of his agreement of lease.

The premises in question, situate in Gasport, in the town of Royalton, Niagara county, N. Y., were owned by one Charles Hathaway prior to March 23, 1896, when the Liquor Tax Law (Laws of 1896, chap. 112), so called, went into effect, and until tlie 17th day of January, 1900, at which t.ime they were purchased by the appellants. At the time the Liquor Tax Law went into effect, and continuously thereafter until the 29th day of January, 1900, the premises had been occupied as a saloon and for the purpose of trafficking in liquors by one Mary A. Knights under a verbal lease with Hathaway, she paying rent monthly in advance. On April 29, 1899, Mary A. Knights obtained a certificate from the county treasurer aauthorizing her to continue the traffic in liquors until May 1,1900.

The premises were purchased by the appellants for the purpose of carrying on traffic in liquors thereon, and are very much more valuable for that purpose than for any other, and unless they can be occupied for such purpose are of comparatively little value to the purchasers.

Within a day or two after purchasing the premises the appellants informed Mary A. Knights, who was then in possession of said premises and engaged in carrying on the business of trafficking in liquors thereon, of their purchase, and notified her that they desired immediate possession of the premises for the purpose of continuing such business, to which they were entitled under their deed of conveyance. Mrs. Knights asked the appellants to permit her to continue in possession of said premises until the 1st day of May, 1900, the time when her liquor tax certificate would expire, to enable her to get another place. This the appellants refused to do, but for the purpose of accommodating her they consented that she might occupy the premises until March 1, 1900, for the purpose of a saloon and for carrying on the traffic in liquors as she was then doing, which she* agreed to do, and to pay for the use of said premises the sum of twenty-five dollars per month up to March 1, 1900, and then to surrender possession of the same.

At the same time it was verbally agreed and understood between said Mary A. Knights and the appellants that if she had any liquors or supplies on hand March 1, 1900, they would take them from her at a price to be agreed upon.

On the 29th day of January, 1900, ten or twelve days after this arrangement was made, Mrs. Knights, without any notice to the appellants, or any knowledge either directly or indirectly on their part of her intention so to do, surrendered her liquor tax certificate to the county treasurer of Miagara county and received the rebate thereon. On February 1, 1900, two days after such surrender, one of the appellants went to the saloon to collect the rent due, which was paid, and Mrs. Knights did not inform him that she had surrendered her certifícate, and there was no change in the premises or their occupancy which would in any manner indicate that traffic in liquors upon the premises had been discontinued. At that time all the saloon fixtures and furniture were in place; the sign “ Henry A. Knights,” that being the name under which said business had been carried on, was over the door; on the side of the building were the words “ Hathaway & Gordon’s Porter and Ale,” and on that occasion, February 1, 1900, Mrs. Knights said to one of the appellants that if anything should happen by which they would not carry on the saloon business in the building, or if they should be unable to obtain a license therefor, she would like to rent the premises and continue the business.

On the 17th day of February, 1900, the appellants made application to the county treasurer for a liquor tax certificate authorizing them 'to carry on the business of trafficking in liquors at the place in question, and obtained a certificate therefor, to take effect on the 1st day of February, 1900, and to run until May 1, 1900.

On the 1st day of March, 1900, Mrs. Knights vacated the premises and the appellants went into possession and commenced trafficking in liquors under such certificate. They found in the premises bar fixtures, tumblers, glasses, bottles, extracts for making mixed drinks, a small quantity of ale and some saloon furniture. There was nothing to indicate that the traffic in liquors had been discontinued by Mrs. Knights previous to her removal.

The certificate so obtained by the appellants is sought to be revoked by this proceeding, for the reason and upon the sole ground that Mary A. Knights had discontinued the traffic in liquors at the place in question on the 29th day of January, 1900, and that, therefore, the appellants were not entitled to receive the certificate in question, they not having obtained the consent in writing that traffic in liquors should be carried on in the premises, executed by the owner or owners of at least two-thirds of the buildings exclusively occupied for dwellings, situated within 200 feet of said premises. Upon these facts and under those circumstances the certificate issued to the appellants was revoked, and from the order revoking the same this appeal is taken.

If the order appealed from is to stand, it follows that a tenant may at will seriously impair the rights of his landlord in leased premises, and that the landlord is powerless to protect himself against loss or injury thereby. The privilege which attached to the property in question, to sell liquor without the consent of those living within 200 feet of the premises, wras a valuable one, and, as appears by the evidence in this case, constituted the chief value of the premises. Under the arrangement made by the appellants with Mrs. Knights she obligated herself to preserve such privilege ; obligated herself to continue the business of trafficking in liquors until she surrendered possession to the appellants March 1,1900, when, under the license obtained by them, they would be entitled to continue the same business. Without the knowledge or consent of the appellants, whether upon her own motion or acting in collusion with the petitioners does not clearly appear, Mrs. Knights, by her secret act, in effect sought to destroy the valuable privilege which attached to the leased premises, to wit, the right to traffic in liquors upon the premises in question without obtaining the consent of the adjacent owners. We think such a construction of the statute is unreasonable and ought not to prevail.

It is not contended or suggested that the agreement made by the appellants with Mrs. Knights was not made in good faith, and apparently it was made for the very purpose of preserving their right to continue the business of trafficking in liquors upon the premises in question. The arrangement was a reasonable one. Upon their purchase they had a right to enter into immediate possession ; were entitled to a liquor tax certificate as matter of right, but for the purpose of accommodating the then tenant they permitted her to remain in possession upon the express agreement that she would continue the traffic in liquors until the 1st day of March, 1900, at which time the appellants were to enter into possession and themselves continue such traffic. As wre have seen, secretly, without any knowledge on the part of the appellants, and without any opportunity to obtain snch knowledge, in violation of her agreement, Mrs. Knights in fact discontinued her business, although to all outward appearances it was continued; and by such means it is sought to substantially destroy the value of the premises purchased by the appellants.

So far as we have been able to discover, the precise question here involved has not been passed upon by the courts of this State. The cases cited upon the respondents’ brief we think do not apply. In those cases a tenant of premises, who was engaged in trafficking in liquors, discontinued such business and afterwards vacated the premises, and a subsequent lessee sought to engage in the business of trafficking in liquors on such premises under a certificate issued to him. In all these cases it was held that the discontinuance of the traffic by the first tenant was conclusive upon the subsequent tenant, and that the certificate Avas properly revoked. In those cases there was no agreement between the owner and the first tenant that such tenant would carry on the liquor business in the leased premises, and in any event such agreement would not be available to the subsequent tenant.

It is undoubted that if the owner of real property occupied as a saloon leases it without restriction as to its use, the lessee may discontinue its use as a saloon and use it for any other legitimate purpose, and thereby divest the property of the privilege which would have attached to it under the- statute if its use as a saloon had not been discontinued.

Suppose, on the other hand, that the owner of premises valuable only for use as a saloon, leases them for a term of years, upon the express agreement on the part of the tenant that he will carry on the business of trafficking in liquors therein continuously during the term of the lease. Could such tenant, a day or two days before the expiration of such term, secretly and without the knowledge or consent of the landlord, surrender his liquor tax certificate, discontinue the business, and thereby deprive the property of the valuable privilege which otherwise would attach to it under the statute ? If so, then the owner of such property is absolutely without the means of protecting himself against the act, malicious or otherwise, of the tenant. If the lease in the case supposed provided for re-entry in case the tenant discontinued the traffic in liquors, it would afford no protection, because, as in the case at bar, the discontinuance might be done secretly, and in such way that the owner could have no means of knowing the fact.

The provision of the statute under consideration was construed in Matter of Kessler (163 N. Y. 205), and it was considered that it should be interpreted in a reasonable manner rather than literally. In that ease the certificate was sought to be revoked on the ground that the applicant had made a false statement in his application. The alleged false statement was to the effect that the premises had been continuously occupied for traffic in liquors. It appeared that, at the time the statement was made, the business of trafficking in liquors had been discontinued for three months, because of the fact that a portion of the premises had been destroyed by fire. At the time of the application the premises were being rebuilt or repaired with all reasonable speed, and with the bona fide intention of the applicant to resume business as soon as the work was completed. It was held that a revocation of the certificate in that case was error. Judge O’Brien, in writing the opinion of the court, says: “ The false statements in an application for a certificate which will justify its revocation under the statute must relate to some material matter of fact, and it must be shown that such fact was willfully misstated by the applicant. If the statement relates to some matter of law, as to which the applicant is ignorant or misinformed, that will not be sufficient to warrant the court in canceling a certificate. * * *

It appears from the record that the premises in question were actually used for the liquor traffic on the day mentioned (March 23rd, 1896) and continuously thereafter until, the 22d day of April, 1898, the then occupant procured a new license, which expired on May 1st, 1899. This license was transferred to Cashin on the 20th of April, 1899. It appears that, at this date, the business was temporarily suspended„for the reason that the building, or a portion of it, had been destroyed by fire on the 19th of February previous, and it was not repaired or rebuilt, so as to. permit the conduct of the business therein until the 19tli of May following. Unless this temporary suspension of the traffic was sufficient to deprive the place of the right to a license reserved in the general law to places where the traffic was being conducted at the date of its passage, the statements of the petition were not false within any fair construction of the statute. The suspension was due entirely to the fact that the place had been wholly or partially destroyed, since there was no intention to abandon the business, but, on the contrary, to resume it as soon as the building was in a proper condition for that purpose, and it was actually resumed by Cashin under the certificate iu question as soon as the place was put in a suitable condition for the business.

“ The provision of the statute which secures the right to a license for a place where the business is conducted at the time of the passage of the law, does not require that the traffic should be continuous under any and all circumstances. The plain purpose of the law was that when the business in such places has been once abandoned it should not be resumed, except with the consent of the residents, as pointed out in the statute. A temporary suspension of the traffic, resulting from an accident, such as the destruction of the building by fire, or the like, will not operate to affect the right attached to the premises under the law.”

It seems to us that it would be even more unjust and inequitable to hold that the certificate of the appellants should be revoked because of the statement contained in their application than in the case decided by the Court of Appeals. In that case the traffic in liquors was suspended for several months by the destruction of the building by fire, and through no fault of the applicant. In the case at bar the legal traffic in liquors was suspended only for a few days, through no fault of the owners, without their knowledge or consent, and under such circumstances that they were powerless to prevent the same, and it is quite apparent that the actual traffic was continued until the removal of Mrs. Knights from the premises. The appellants, for the purpose of accommodating the tenant, and under the express agreement on her part that she would continue the traffic in liquors until she surrendered possession to them, consented to permit her to occupy the premises for a few days. During those few days, by her conduct, of which the appellants had no knowledge, she has made it impossible, if the order appealed from is to stand, for the appellants to occupy the1 premises for the purpose for which they were purchased, and for the only purpose to which they are adapted.

We are of the opinion that a fair, reasonable and just interpretation of the statute requires that the order appealed from should be reversed.

Adams, P. J., concurred; separate opinion for reversal by Laughlin, J.; dissenting opinion by Spring, J., in which Williams, J., concurred.