Summary
concluding that counties have implied power to sell beer given the express power to own or operate public recreational facilities
Summary of this case from City of Lakewood v. ArmstrongOpinion
No. 79SA171
Decided April 21, 1980. Rehearing denied May 12, 1980.
After golf corporation's application for transfer of a 3.2% fermented malt beverage license was denied by Department of Revenue, it challenged this denial in the district court which reversed and remanded the cause to the Department with directions to transfer the license to the corporation. The Department appealed to the court of appeals and the supreme court accepted transfer of this appeal pursuant to statute.
Affirmed
1. INTOXICATING LIQUORS — Lack of Evidence — Directors and Officers — Controlled by Board — Transfer of License — Proper. Where there was no evidence that directors or officers had in fact been controlled or dominated by the county board of commissioners as a local licensing authority, nor evidence that the board had abused or was in a position to abuse its regulatory responsibilities, held, under the circumstances, transfer of a 3.2% fermented malt beverage license to applicant as a concessionaire of a portion of clubhouse facilities of county golf course was not unlawful on ground that applicant was alter ego of county board of commissioners and that granting a license to a local licensing authority would violate the "dual control system" of regulating beer outlets adopted by the Colorado legislature.
2. COUNTIES — Power to Operate — Public Recreational Facilities. Counties are given the power to own or operate public recreational facilities, e.g., a golf course; it is common knowledge that a golf clubhouse is a necessary incident to operating a golf course, and that it is customary for food and beverages including beer to be sold at a clubhouse.
3. Commissioners — Implied Powers. A county and its commissioners possess such incidental implied powers as are reasonably necessary to carry out powers expressly conferred.
4. INTOXICATING LIQUORS — County — Issue — License — Golf Clubhouse — Proper. A county may lawfully issue a 3.2% license to a nonprofit corporation which is a licensee-concessionaire of a portion of the golf clubhouse facilities in order to provide such service to the patrons of the golf course and to the general public.
Appeal from the District Court of Adams County, Honorable Abraham Bowling, Judge.
S. Morris Lubow, John E. Bush, Jr., for plaintiff-appellee.
J. D. MacFarlane, Attorney General, Richard F. Hennessey, Deputy, Mary Mullarkey, Solicitor General, James R. Willis, Special Assistant Attorney General, for defendants-appellants.
Appellant, Adams County Golf, Inc. (Adams, Inc.), applied to the Board of County Commissioners of Adams County for the transfer of a 3.2% fermented malt beverage license (3.2% license) from Golf Professionals, Inc., dba Adams County Golf Club. The Board of County Commissioners approved the transfer. Adams, Inc. then filed a transfer application with the Colorado Department of Revenue (Department). After a hearing, the application was denied. Adams, Inc. challenged this denial of its transfer application in the district court which reversed and remanded the cause to the Department with directions to transfer the 3.2% license to Adams, Inc. The Department appealed to the court of appeals and this court accepted transfer of this appeal pursuant to section 13-4-109, C.R.S. 1973. The judgment of the district court is affirmed.
Adams, Inc. is a Colorado non-profit corporation. The directors and officers are all employees of Adams County. One director/officer is the Adams County Deputy Clerk. The Adams County Attorney incorporated Adams, Inc. All profits are to be transferred to Adams County at least once a year in lieu of rent. In return, Adams County is to provide rental space, utilities, and personnel.
The Department denied Adams, Inc.'s transfer application on the ground that Adams, Inc. is the alter ego of Adams County, and that granting a 3.2% license to a local licensing authority would violate the dual control system of regulating beer outlets as established by the Colorado Beer Code, section 12-46-101 et seq., C.R.S. 1973 (1978 Repl. Vol. 5). The district court held the Department acted arbitrarily and capriciously in denying the transfer application. We agree.
The Department does not assert that there are any express statutory restrictions in the Colorado Beer Code which would preclude Adams, Inc. from obtaining a 3.2% license, nor do we find any such prohibitions. The Department contends, however, that there is an implicit statutory prohibition against Adams, Inc.'s obtaining a 3.2% license. It asserts as a basis for this contention that the Board of County Commissioners of Adams County, which is the local licensing authority under the Colorado Beer Code, has significant responsibilities as a part of a "dual control system" adopted by the Colorado legislature. The Department contends that since Adams, Inc. is the alter ego of Adams County this dual regulatory scheme has been abrogated. The gist of the Department's contention is that a regulatory body cannot responsibly regulate itself, and therefore Adams, Inc. should not be granted a 3.2% license.
[1] The Department's conclusion that Adams, Inc. is the alter ego of the Board of County Commissioners of Adams County is premised on the Department's finding that "there is a substantial identity of interest between the Applicant and Adams County. The Applicant is a creation of, and is wholly controlled by Adams County." While it is true that the initial directors and officers of Adams, Inc. are employed by the county, there is not evidence that the directors or officers have been in fact controlled or dominated by the Board of County Commissioners.
We characterize the finding that Adams, Inc. is the alter ego of Adams County as a misapplication of the corporate doctrine having no relevance here. This corporate theory is applicable only after a subservient corporation violates an obligation or commits a dishonest or unjust act at the direction of a dominant corporation. See National Bond Finance Co. v. General Motors Corp., 238 F. Supp. 248 (W.D. Mo. 1964), and Fink v. Montgomery Elevator Co., 161 Colo. 342, 421 P.2d 735 (1966).
Under the facts of this case there is no showing that the Board of County Commissioners of Adams County has abused or is in a position to abuse its regulatory responsibilities. Additionally we note that a variety of statutory safeguards are provided. A state license must always be obtained, and all of the requirements of the Colorado Beer Code must therefore be satisfied. In addition, there are many entities required to regulate and enforce every provision of the Colorado Beer Code. "All sheriffs, police, peace officers, and city and county officials shall enforce every provision of the [Colorado Beer Code] within their jurisdiction." Section 12-46-106(5), C.R.S. 1973 (1978 Repl. Vol. 5). The state licensing officials are also obligated to enforce these provisions. See sections 12-46-104, 105, and 116, C.R.S. 1973 (1978 Repl. Vol. 5).
The Department also argues that counties have no statutory power to sell beer. We disagree.
[2,3] Counties are given power to own or operate public recreational facilities, e.g., a golf course. Section 29-7-101, C.R.S. 1973 (1977 Repl. Vol. 12). It is common knowledge that a golf clubhouse is a necessary incident to operating a golf course, and that it is customary for food and beverages including beer to be sold at a clubhouse. A county, and its commissioners, possess such incidental implied powers as are reasonably necessary to carry out powers expressly conferred. Board of County Commissioners v. City and County of Denver, 194 Colo. 252, 571 P.2d 1094 (1977).
[4] We conclude, therefore, that a county may lawfully issue a 3.2% license to a nonprofit corporation which is a licensee-concessionaire of a portion of the golf clubhouse facilities in order to provide such service to the patrons of the golf course and to the general public.
Since there is no statutory framework within which Adams, Inc.'s transfer application can properly be denied, we agree with the district court's conclusion that the Department acted capriciously and arbitrarily in denying the application. The district court properly reversed and remanded the cause to the Department with directions to grant the transfer application. See sections 12-46-106(7)(a) and 118, C.R.S. 1973 (1978 Repl. Vol. 5). See generally section 24-4-106(7), C.R.S. 1973.
The judgment is affirmed.
JUSTICE DUBOFSKY and JUSTICE LOHR dissent.