In Wilmington Country Club v. Delaware Liquor Commission, 8 Terry 352, 363, 364, 91 A.2d 250, 255, 256 (1952) the Wilmington Country Club applied for an off-premises license for the sale of alcoholic liquors.Summary of this case from Wilm. Vitamin Cosmetic Corp. v. Tigue
September 8, 1952.
TERRY, J., sitting.
Henry M. Canby, James T. McKinstry and Rodney M. Layton (of the firm of Richards, Layton and Finger) for the Appellant.
Daniel J. Layton, Sr., for the Appellee.
Appeal from decision of the Delaware Liquor Commission refusing to grant to the Club a license for off-premises consumption.
Superior Court for New Castle County, Civil Action, 1952.
This is an appeal filed pursuant to the provisions of Section 22 of the Liquor Control Act of Chapter 176, § 6151, Revised Code, 1935, from a decision of the Delaware Liquor Commission, in which the Commission refused to grant to the Wilmington Country Club a license for the sale of alcoholic liquor for consumption not on the premises where sold.
The Wilmington Country Club (called Club) was licensed by the Delaware Liquor Commission (called Commission) for the sale of alcoholic liquor for consumption both on and off the premises where sold from 1934 until June 30, 1952, without interruption. On March 27, 1952, the Club made application for the renewal of its license, as theretofore granted, for the period commencing July 1, 1952, and ending June 30, 1953. On June 27, 1952, the Club received from the Commission a license for the sale of alcoholic liquor for consumption on the premises where sold, and upon the face of the license the following phrase was crossed out: "To sell alcoholic liquor not for consumption on the premises where sold in quantities as provided in the Liquor Control Act." This constituted the Club's first notice of the Commission's decision to refuse to grant the license in accordance with the Club's application. The Commission, however, in mailing to the Club its license enclosed a copy of a rule adopted and promulgated by the Commission, the effective date of which was July 1, 1952. The rule in pertinent part is as follows:
"A rule repealing rule 21 of the Delaware Liquor Commission in relation to licenses to clubs for the sale of alcoholic liquors not for consumption on the premises where sold or any dependency thereof.
"The Commission has reasonable cause to believe that licenses to clubs for the sale of alcoholic liquors not for consumption on the premises where sold are not necessary for the public convenience. And no licenses to clubs for the sale of alcoholic liquors not for consumption on the premises where sold will be granted.
"Delaware Liquor Commission
"/s/ Edgar S. Stayer Commissioner"
On the 7th day of July, and within ten days after the receipt of the notice of the Commission's refusal to grant to the Club a license to sell alcoholic liquor for consumption not on the premises, the Club in pursuance to Section 22 of the Act filed its notice of appeal. On the 24th day of July the answer of the Commission was filed, in which it is alleged in Paragraph 6 thereof that the refusal to grant the license in question constituted an exercise of the Commission's discretion and was predicated upon the ground that the issuance of the license was not necessary for public convenience or public necessity.
On the 28th day of July a hearing was held. At that time I did not find in the file of the case any record which would indicate the reason relied upon by the Commission in refusing the Club's application for an off-premises license. However, counsel representing the respective parties thereupon orally stipulated that the record below consists only of the Club's written application for a renewal of its license, including the right to sell for off-premises consumption, and the mailing by the Commission to the Club of a license which shows on its face an on-premises license, including a locker room license, with the provisions thereon for an off-premises license stricken, together with a copy of the Commission's rule that "* * * no licenses to clubs for the sale of alcoholic liquors not for consumption on the premises where sold will be granted."
Counsel for the Commission stated that prior to the denial of the license on June 27th, the Commission made a survey throughout the State of existing licensees holding off-premises licenses, and based upon that survey found that public necessity did not demand that clubs in that State of Delaware should be granted off-premises licenses and thereby concluded that in the future applications made by clubs for such licenses, including the present applicant, would be denied. Counsel further stated that the foregoing finding of fact by the Commission and the Commission's conclusion based thereon were incorporated in the aforementioned rule adopted and promulgated by the Commission, the effective date of which was July 1, 1952.
Predicated upon the foregoing stipulation, counsel for the Club moved that Paragraph 6 of the answer be stricken on the ground that there is no reasonable basis of facts appearing in the record to support the refusal of the Commission to issue the license for off-premises consumption on the ground that the issuance "was not necessary for public convenience." Counsel for the Commission in opposing the motion contended that the adoption of the rule itself constituted a finding of fact. I reserved my decision upon the motion and stated to counsel that in view of the state of the record below I would grant to each the right to offer evidence in support of their respective positions relating to the Commission's refusal to grant to the Club an off-premises license in accordance with its application. The Commission thereupon offered in evidence, without objection, three maps; one of New Castle County, and two of the City of Wilmington, upon which were marked in red ink the locations of licensed premises where alcoholic liquor not for consumption on the premises where sold could be purchased. The Club called several witnesses, each being a member of the Club, and each testified in substance that he had purchased quantities of liquor in the past for off-premises consumption, and that the Club's license in this respect served not only his individual convenience, but the convenience of other club members as well.
Upon reflection, and in the light of the fact that the Commission at all times has within its particular knowledge all of the outlets for off-premises licenses, I feel that the decision of the Commission that licenses to clubs are not necessary for public convenience constituted a finding of fact by the Commission, and that the sending to the Club of a notice thereof in the form and substance of the rule adopted clearly indicated the reason for the Commission's refusal to grant the Club's license in the present case. I, therefore, deny the Club's motion to strike Paragraph 6 of the defendant's answer. Whether the decision by the Commission as evidenced by the adoption of its rule resulted from a true fact finding survey conducted by it, or whether the result is merely indicative of an arbitrary position taken by the Commission seems to be of little import, as will be subsequently developed in this opinion.
Upon the conclusion of the hearing, the Club moved that the decision of the Commission denying to it an off-premises license be reversed and the Commission ordered to issue to the Club such a license forthwith. Under its motion the Club argues —
(1) That the conclusion reached by the Commission that no licenses would be granted to clubs in this State for sale of alcoholic liquor not for consumption on the premises where sold is invalid in that it is contrary to the provisions of Subsection 6 of Section 17 of the Act, and evidences an arbitrary abuse of the Commission's power thereunder.
(2) That the record is devoid of any facts, including those established at the hearing on July 28th, which would justify the Commission in the exercise of its discretion to refuse to grant the off-premises license applied for.
Certain provisions of the Liquor Control Act pertaining to the sale of alcoholic liquor should be set forth prior to a discussion of the questions to be determined.
Section 17 of the Act, Rev. Code 1935, § 6146, sets forth those that are eligible to be licensed, and, if licensed, may purchase and resell or dispense alcoholic liquor.
Subsection 6 of Section 17, as amended, 44 Del. Laws c. 203. provides in pertinent part as follows:
"Any person in charge of a hotel, a restaurant, a club or a store, whether owner, lessee or manager, and recognized as such by the Commission, may purchase from the Commission or through the Commission, as provided in Section 16, Paragraph (4), but not otherwise, and may keep and sell and deliver on the premises only spirits, wine or beer by the bottle or half-bottle only, but not for consumption on the premises where sold, or in any dependency thereof; * * *."
Subsection (8) of Section 3, Rev. Code 1935, § 6132(8), defines the word "person" when employed in the Act as including "an individual, a partnership, a corporation, a club or any other association of individuals."
Section 21 of the Act, Rev. Code 1935, § 6150, provides that "The Commission shall examine all applications for license as promptly as possible, and if it shall appear that any application should not be granted, the commission shall so notify the applicant, stating the cause for refusal and returning the amount paid by the applicant."
Section 22 provides as follows:
"The Commission may refuse to license any applicant if it has reasonable ground to believe:
"(1) That there are sufficient licensed premises in the locality or that the granting of a license in the locality set out in the application is not demanded by public interest or convenience.
"(2) That the applicant has not furnished an acceptable bond.
"(3) That the applicant appears to be financially irresponsible or neglects to provide for his family or neglects, or is unable, to pay his debts.
"(4) That the applicant has been provided with funds by or has any forbidden connection with a manufacture of alcoholic liquor.
"(5) That the applicant is in the habit of using alcoholic beverages to excess, or has been arrested for drunkenness or for driving a motor vehicle while under the influence of intoxicating liquor.
"(6) That the applicant has made false statements to the Commission.
"(7) That the applicant has been convicted, of violating any of the liquor laws of this State, or has at any time been convicted and imprisoned for a crime or misdemeanor.
"(8) That the applicant has maintained a noisy, lewd, disorderly or unsanitary establishment.
"(9) That there is any other reason which in the opinion of the Commission based on public convenience or necessity warrants its refusal to grant such license.
"If an application for license be refused, the applicant may appeal to the Court of General Sessions of the County in which he resides and the Court may order the grant of such license."
Section 24, Rev. Code 1935, § 6153, provides as follows:
"(1) The Commission shall refuse to grant a license to be used in any county or sub-division thereof, contrary to any prohibitory law then in force, in such County or sub-division thereof.
"(2) The Commission shall refuse to grant any license for the sale of `alcoholic liquor' upon grounds or in buildings occupied by any agricultural fair, industrial exhibition or race track meeting, or any such license of temporary nature to be exercised within one-quarter mile thereof. The Commission may refuse to grant a license to sell alcoholic liquor to any establishment located in the vicinity of a Church, School or College; provided, however, that the Commission may issue a license to any establishment located in the vicinity of a Church, School or College when such establishment has been located in a place prior to the time any Church, School or College may thereafter be located in the vicinity of such establishment."
Our Liquor Control Act, Rev. Code 1935, § 6130 et seq. evidences a dual purpose: (1) that alcoholic liquor shall be made available to the inhabitants of this State, and (2) that the business of distributing the same, often looked upon as a source of evil, shall at all times be rigidly controlled in the interest of the general welfare.
The Act provides the manner in which alcoholic liquor shall be dispensed and clearly indicates the channels in which it shall flow to the ultimate consumer. Under the provisions of Subsection 6 of Section 17 of the Act the Legislature has in unequivocal language designated that hotels, restaurants, clubs and stores, as well as others therein included, shall be eligible to apply to the Commission for a license to dispense alcoholic liquor for off-premises consumption and, if the license be granted by the Commission, may purchase from the Commission or through the Commission alcoholic liquor to be sold for consumption off-the-premises where sold. However, if reasonable grounds exist under the specific provisions of Sections 22 and 24 of the Act, supra, the Commission may refuse to grant a license to any applicant. Thus, it seems clear that the Legislature intended that a club which is defined under Subsection 17 of Section 3 of the Act as meaning "a corporation or association created by competent authority, which is the owner, lessee or occupant of premises operated solely for objects of national, social, patriotic, political, or athletic nature, or the like, whether or not for pecuniary gain, and the property as well as the advantages of which belong to or are enjoyed by the stockholders or by the `members' of such corporation or association" may by direct statutory authority apply to the Commission for a license to sell alcoholic liquor not to be consumed on the premises where sold in accordance with the provisions of Subsection 6 of Section 17 of the Act, and that it is the duty of the Commission to grant said license, Subsection 6 of Section 5 of the Act, subject only to the provisions of Sections 22 and 24 of the Act, aforesaid.
Section 5 of the Act provides for the establishment of a Commission with the following functions and duties:
"(1) To adopt and promulgate rules and regulations not inconsistent with the provisions of this Act or of the laws of the State of Delaware. All such rules and regulations shall have the force and effect of law;
"(2) To establish by such rules and regulations an effective control of the business of manufacture, sale, dispensation, distribution and importation of `alcoholic liquors' within and into the State of Delaware, including the time, place and manner in which `alcoholic liquors' shall be sold and dispensed, not inconsistent with the provisions of this Act".
Section 8 of the Act entitled "Regulations" states the purposes for which the Commission may make regulations, i.e., for "its internal economy and the conduct of its business," and the manner in which the Commission may amend or repeal its regulations, i.e., by another regulation of the Commission, duly published.
Two questions are presented for determination:
(1) Has the Commission the rule making power to eliminate clubs as a class from being eligible to apply for off-premises license?
(2) Has the Commission the authority under Section 22 of the Act to refuse to issue to a club an off-premises license because the same is not necessary for public convenience?
The first question relates solely to the rule making power of the Commission. The Legislature by the language employed under Section 5 of the Act, supra, defining the functions and duties of the Commission, definitely recognized the principle of administrative law universally followed; that is, that a public administrative agency such as the Commission may not adopt and promulgate rules and regulations which are inconsistent with the provisions of a statute, particularly with a statute which it is administering or which created the agency. The authority conferred under this Section pertains to the adoption of rules and regulations found to be necessary in order to carry out the true legislative intent as indicated under the Act. Legislation, however, may not be enacted under the guise of its exercise by adopting a rule or regulation which is out of harmony with, or which alters, extends or limits the Act, or which is inconsistent with the clear legislative intent as therein expressed. Thus, as in the present case, where a right is granted to a class by a statute, the agency administering such statute may not by the adoption and promulgation of a rule or regulation add to the condition of that right a condition not stated in the statute, nor may it exclude from that right a class of persons included within the terms of the statute.
The provisions of Subsection 6 of Section 17 of the Act pointing out that clubs are one of the various classes of establishments entitled to apply for and receive licenses for the sale of alcoholic liquor for off-premises consumption constitutes clearly a legislative declaration that it is in the interest of the public welfare of the inhabitants of this State for clubs to have such licenses just as it is for hotels, restaurants and stores as therein indicated, subject always to the safeguards included within the reasons, for refusing to license an applicant as set forth under the provisions of Sections 22 and 24 of the Act.
It is apparent that the Commission in the present case, by reason of its decision not to license any club in this State for off-premises sales of alcoholic liquor, has deleted Subsection 6 of Section 17 to the extent that it has repealed, so to speak, the clear statutory right therein granted to clubs as a class in this State to apply for and receive such licenses.
The Commission under the Act in the true sense has no power to initiate policy. Its duty is to fundamentally pursue the policy predetermined by the Legislature from which is derived its authority. It has by reason of its decision entered into and transgressed upon legislative domain. It has exceeded its administrative and rule making authority under the Act. It cannot under the guise of its administrative or rule making authority eliminate clubs as an eligible class of licensees for off-premises licenses for any reason whatsoever. The clear legislative intent, as expressed under Subsection 6 of Section 17, that clubs shall be eligible licensees for off-premises consumption cannot be contravened in such a fashion. 42 Am. Jur. Page 338; 73 C.J.S., Public Administrative Bodies and Procedure, § 94, P. 414; State v. Retowski, 6 W.W. Harr. 330, 175 A. 325; Robertson v. Schein, 305 Ky. 528, 204 S.W.2d 954; State Board of Medical Examiners ( In re Nathan), 201 Okl. 365, 206 P.2d 211; Whitcomb Hotel, Inc. v. Cal. Emp. Comm., 24 Cal.2d 753, 151 P.2d 233, 155 A.L.R. 405; Bureau of Old Age Assistance of Natick v. Comm. of Public Welfare, 326 Mass. 121, 93 N.E.2d 267; Clintonville Trans. Line, Inc. v. Public Service Comm., 258 Wis. 570, 46 N.W.2d 741; Gentzel v. Board of Emb. Funeral Directors of State, 9 N.J. Super. 605 , 76 A.2d 44; State v. Miles, 5 Wn.2d 322, 105 P.2d 51; People ex rel. Polen v. Hoehler, 405 Ill. 322, 90 N.E.2d 729.
The Commission's decision that "no licenses to clubs in this State for the sale of alcoholic liquor not for consumption on the premises where sold will be granted" cannot be sustained. Likewise, and for the same reasons, the rule as adopted and promulgated by the Commission, effective as of July 1, 1952, five days after the Commission's refusal to grant the Club's application for an off-premises license is invalid and cannot be enforced.
The second question concerns whether or not the Commission can justify its refusal to issue to the Club an off-premises license for the reason that it has reasonable ground to believe that the granting of the Club's application is not demanded for public convenience.
Section 22 of the Act embraces nine specific and independent subsections, each providing a reason under which the Commission may refuse to license an applicant. The alleged reason for refusal to license in the present case is predicated upon the provisions of Subsection 1; that is, the finding "that there are sufficient licensed premises in the locality, or that the granting of the license in the locality set out in the application is not demanded by public necessity or convenience."
The Commission argues that in view of the number of off-premises licenses in the City of Wilmington and New Castle County that appear on the maps now in evidence it had as of the date of refusal in the present case reasonable ground to believe that the granting of the Club's application was not necessary for public convenience.
I cannot agree with the Commission's argument in this respect, as I am unable to understand how the reason for refusal as advanced could furnish the basis for a denial of an application by a club.
The words "public convenience or necessity" under Subsection 1 of Section 22 of the Act were construed by the Court in the case of Lord v. Delaware Liquor Commission, 2 Terry 154, 17 A.2d 230, to have reference only to the ability of the public to have available a convenient place to make a legal purchase of liquor. If this be so, then the presence or absence of a demand for public convenience or necessity could have nothing whatsoever to do with the refusal to grant a club a license for off-premises consumption, to which the general public is a stranger in the sense that persons not club members could not make purchases under a club license.
It is my opinion that the provisions contained in Subsection 1 of Section 22, providing a reason for the refusal of an application for an off-premises license, cannot be successfully asserted by the Commission as a reason for refusing to issue the Club an off-premises license. If an application by a club for an off-premises license is to be refused, then the reason must be other than the one asserted in the present case.
For the reasons indicated in this opinion, the decision of the Commission not to issue to the Club an off-premises license must be reversed. An order will be entered directing the Commission to issue to the Club such a license forthwith.