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violation of Tax Law § 1814 (d)

Counsel also asserts that “the owners of the premises new or should have known of the illegal activity,” citing an attached “notice letter” allegedly “sent to the owners.” The attached letter, dated July 19, 2007, is addressed to only one of the two owners of the property, and is not accompanied by sufficient proof that it was mailed. The court fails to understand, moreover, how a letter in July can provide notice of activities in May and June; the letter does not even note the June arrests.

Similarly, counsel asserts that “despite numerous summonses, arrests and notice, the operators continue to sell and warehouse untaxed cigarettes.” Not only is there a lack of any summonses or arrests, other than the arrests on June 14, there is absolutely no evidence that even a single sale of untaxed cigarettes has been made since June 5. Such an unsupported statement on a fact so highly material to the drastic relief the City is seeking is, at the least, inappropriate.

Turning to the law, there is also, at the least, a serious question as to whether a violation of Tax Law § 1814 of the kind involved here could ever support a nuisance abatement order. For purposes of determining whether a violation of any provision of section 1814 has been shown, the court will assume that the “untaxed” cigarettes described in Police Officer Knorr’s affidavit were not stamped with a “NYC/NYS tax stamp.”

Tax Law § 1814 contains 19 separate subdivisions or paragraphs, describing crimes of various degrees of severity, but neither the Police Officer’s affidavit nor counsel’s affirmation specifies the crime that purportedly supports the charge of criminal nuisance. Attached to the affidavit, however, are Property Clerk invoices that reference subdivision (d) as the “Charge/Offense under Investigation.” That provision makes it a crime to “possess or transport for the purpose of sale any unstamped packages of cigarettes subject to tax,” or to “sell or offer for sale unstamped or unlawfully stamped packages of cigarettes.” The first offense is a misdemeanor; a second offense within five years is a felony.

If the “commercial establishment doing business on the ground floor” at Ralph Avenue is to be deemed a “place wherein there is occurring a criminal nuisance”, there must be a finding that it is a “place where persons gather for purposes of engaging in unlawful conduct”. The question then becomes whether a place where a person “sells or offers for sale unstamped packages of cigarettes” or “possesses for the purpose of sale any unstamped packages of cigarettes” is a “place where persons gather for purposes of engaging in unlawful conduct”. Arson was not involved and neither was assault.

Subdivision (d) of Tax Law § 1814 does not make it a crime to purchase or possess unstamped cigarettes, but subdivision (a) makes it a misdemeanor to “willfully attempt in any manner to evade or defeat” the cigarette tax or the “payment thereof.” The statute has been interpreted to make it a crime to possess cigarettes for personal use, with the requisite intent, but only 400 cigarettes or more, and only after 24 hours without payment of the tax. There is no tax liability to the purchaser, and therefore no criminal liability, at the time and place of retail purchase, no matter how many cigarettes are purchased.

Only by giving the broadest meaning to “place where persons gather for purposes of engaging in unlawful conduct” in Penal Law § 240.45 (2) can a market that sells “untaxed” cigarettes at retail be deemed the site of a “criminal nuisance.” Beyond the meaning of the words, moreover, is the context. “Unlawful conduct” for purposes of subdivision (2) of Penal Law § 240.45 must be understood in the context of the provision as a whole.

Penal Law § 240.45 provides for two alternative sets of elements for the crime of criminal nuisance: the elements relied upon by the City here, that is, “knowingly conducting or maintaining any premises, place or resort where persons gather for purposes of engaging in unlawful conduct”; and “by conduct either unlawful in itself or unreasonable under the circumstances, knowingly or recklessly creating or maintaining a condition which endangers the safety or health of a considerable number of persons”. The requirement of “endangerment of the safety or health of a considerable number of persons” is consistent with notions of public nuisance at common law.

It is this court’s view that neither the retail sale of unstamped cigarettes, nor the possession of unstamped cigarettes for the purpose of retail sale, nor the retail purchase or possession of unstamped cigarettes for use is “unlawful conduct” within the meaning of Penal Law § 240.45 (2), and that a “place” where that conduct occurs is not, therefore, a criminal nuisance as a “place where persons gather for purposes of engaging in unlawful conduct.” It follows that such a place, like the subject of this proceeding, is not a “public nuisance” for purposes of Administrative Code § 7-703 (l).

Even if this view is wrong, however, the City may not obtain a temporary closing order or a temporary restraining order as to the operation of “Family Grocery Corp.” at 283 Ralph Avenue, unless it has shown “by clear and convincing evidence that the public health, safety or welfare immediately requires” it. The sale of two packs of “untaxed” cigarettes and the possession of 12 more, which in total is less than the 20 packs a purchaser may possess for use without tax liability, provides the basis for no inference that the continued operation of “Family Grocery Corp.” will have any effect upon the “public health, safety or welfare.” As previously noted, the City makes no showing of any actual effect upon the public health, safety or welfare.
Nor has the City provided any explanation for the four-month delay from the last documented violation of Tax Law § 1814 (d) and the making of this application. The court cannot reconcile that delay with the City’s contention that the public health, safety or welfare “immediately requires” the drastic relief applied for. This court’s position on the consequence of delay to the City’s application can come as no surprise to the City.

The court’s determination that the City is not entitled to a temporary closing order or temporary restraining order would not necessarily preclude the issuance of the proposed order to show cause, limited to the scheduling for hearing the City’s motion for a preliminary injunction. Generally, “the party seeking a preliminary injunction must demonstrate a probability of success on the merits, danger of irreparable injury in the absence of an injunction and a balance of equities in its favor.”

Accordingly, the court held that the application for the issuance of the proposed order to show cause is denied.

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