REYNOLDS v. STATE BOARD OF EQUALIZATION

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District Court of Appeal, Third District, California.

REYNOLDS v. STATE BOARD OF EQUALIZATION.

Civ. 7126.

Decided: October 24, 1945

B. Grant Taylor, of Redwood City, and Edwin E. Grant, of San Francisco, for petitioner. Robt. W. Kenny, Atty. Gen., and Allen L. Martin and J. Albert Hutchinson, Deputy Attys. Gen., for respondents.

This is an appeal from a judgment of the Superior Court of Sacramento County ordering the issuance of a peremptory writ of mandate directing the California State Board of Equalization to revoke the licenses of the proprietors of certain premises known as the Cupertino Cafe, located in the county of Santa Clara.

The facts in this case, substantially as agreed to by the parties but with certain additions deemed material, are as follows:

Prior to August 4, 1943, Joe Enos and Enrico O. Olcese, doing business as the Cupertino Cafe, were the holders of certain licenses issued by appellant State Board of Equalization, and by virtue thereof were permitted to and did sell intoxicating liquors in the designated premises. The licenses were issued under authority of Article XX, Section 22 of the Constitution of the State of California, and appropriate provisions of the Alcoholic Beverage Control Act of this state (Deering's General Laws, Act 3796). Respondent Clifton G. Reynolds, acting on behalf of a committee of residents of the community affected, filed a claim with the appellant board, alleging, among other things, that the licensees ‘have maintained a public saloon bar and barroom in said premises, selling and disposing of intoxicating liquors, other than beers, therein for consumption on the premises, when said premises and the business conducted therein were not a bona fide hotel, restaurant, cafe, cafeteria or other public eating place, in disregard and violation of Sec. 22, Article XX of the Constitution, and subdivision (m) of Sec. 2, Sec. 18, and Sec. 53 of the Control Act.’

A hearing of said complaint was held on December 13, 1943, by a representative of the appellant board. The pertinent portions of his findings and the recommendation are as follows:

‘The evidence shows that the premises are not being operated as a bona fide public eating place within the meaning of Section 22 of Article XX of the Constitution of the State of California. The licensees are not engaged on said premises in a bona fide business of serving meals or other food ordinarily served to the public in bona fide restaurants, cafes, dining rooms or other bona fide eating places. The evidence in this respect showed that customarily no food is served in the premises excepting sandwiches which are sold for the same price at which they are bought by licensees. * * * practically the entire business conducted on the premises is the sale of alcoholic beverages including intoxicating liquors. (It appears that the premises have been operated in this matter at least from September 18, 1943 to the date of the hearing herein.) Officers of the Board inspected the premises on December 10, 1943, at which time there was no food on the premises and none being served. Recommendation: That the licenses be suspended indefinitely.’

Acting upon such recommendation, the appellant board, on February 3, 1944, ordered that said licenses be suspended indefinitely, and gave notice of its decision to the licensees. Thereupon complainant Reynolds, petitioner herein, filed with the appellant board a petition for reconsideration, which petition was denied.

On March 9, 1944, by order of the appellant board, the licenses in question were reinstated. Thereafter respondent petitioned for a writ of mandate in the Superior Court of the State of California, in and for the County of Sacramento, attacking solely the alleged failure of appellant to revoke unconditionally the licenses in question instead of suspending them indefinitely. In short, it was the contention of respondent that appellant was without authority to suspend the licenses even for an indefinite period of time and that it was the duty of appellant to revoke the licenses on the basis of the findings of fact of the board's representative which were adopted by the appellant board.

The Superior Court sustained the contention of respondent and granted a peremptory writ of mandamus, ordering appellant to revoke the licenses. From the judgment entered in favor of respondent, appellant appeals.

At the outset it further should be noted that the complaint and the findings of the board contain certain recitals relating to the proximity of the licensed premises to a church, and to an occasion of disorderly conduct on the part of the patrons of the establishment. However, an examination of the opinion of the trial court shows that these matters formed no part of the decision on which the judgment was based nor have the parties on appeal raised any issue thereon or made any reference thereto. We, therefore, assume that such issue has been waived, and accordingly we will confine our discussion to the sole theory upon which the case was tried and the disposition thereof made.

It is the contention of the appellant board that the provisions of Section 22 of Article XX of the Constitution, to-wit: ‘State Board of Equalization shall have the exclusive power to license the * * * sale of intoxicating liquors * * * and shall have the power, in its discretion, to deny or revoke any specific liquor license if it shall determine for good cause that the granting or continuance of such license would be contrary to public welfare or morals,’ is a grant of power and not an order; that under said section the board may revoke a license, but that the quoted portion thereof does not require it to do so in any given case, and that in addition thereto the legislature has seen fit to add to the power so granted the further power to suspend. Section 40, A.B.C.Act.

Respondent replies that said Section 22 of Article XX precludes the imposition of a suspension and makes revocation mandatory, and that under the facts of the present case only by absolute termination of the licenses in question could the board discharge the duty imposed upon it by the Constitution.

Therefore the only question remaining for determination on appeal is this: Where the record shows that intoxicating liquors, other than beer, are being sold for consumption on premises which bare being conducted not as a bona fide restaurant, cafe, or other public eating place, as these terms are used in the Constitution, but as a public saloon or public bar, has the State Board of Equalization the power or right to suspend licenses subject to reinstatement, or is the board compelled by said constitutional provision to revoke such licenses absolutely? Although the question so presented, insofar as the specific facts are concerned, is one of first impression in this state, an examination of the adjudicated cases in comparable situations appears to substantiate appellant's position.

In the case of Bar Ass'n, etc. v. Cantrell, 53 Cal.App. 758, 760, 200 P. 968, the district court had before it a question relative to the disbarment of an attorney under the provisions of the Code of Civil Procedure, section 289 et seq., as it then read, and the court stated: ‘The difference between a judgment of disbarment and one of suspension is a difference of degree only * * *’ and that * * * it is an axion of the law that ‘the greater (disbarment) includes the less (suspension’.' Citing Civil Code, § 3536.

Again in the case of Klatt v. Guaranteed Bond Co., 213 Wis. 12, 250 N.W. 825, 830, the court, in passing upon a provision of the statute of that state, giving to the Securities Commission of Wisconsin the power for cause to terminate any broker's right to proceed under the statute, stated that ‘the power to suspend is certainly included in the power to terminate.’

A comparable use of terminology is found in the case of Schnitzler v. Yellowley, D. C. N.Y., 290 F. 849, 852–853. It there appears that the provisions in the National Prohibition Act, Title 2, Sections 6 and 9, 27 U.S.C.A. §§ 16, 21, required every permit to limit the acts that might be performed thereunder and further provided that the official charged with the duty of administering the act might, for cause therein provided, revoke the permit. Upon the contention that in limiting a license under said act rather than revoking the same the Commissioner exceeded his power, the court therein stated: ‘By statute the Commissioner had the right, on granting the permit, to limit the acts of the permittee, and for cause to revoke the permit, and therefore the greater would include the lesser, and, instead of revoking, the could, if he saw fit, limit the acts allowed under the permit.’

A previous decision of this court likewise is in point, Goldsmith v. Board of Education, 66 Cal.App. 157, 163, 164, 225 P. 783, 785. There a permanent teacher in the Sacramento city schools, who participated in certain political activities, was found to be guilty of unprofessional conduct within the meaning of section 1672 of the Political Code, which then provided that a permanent teacher guilty of unprofessional conduct within the meaning of said section was subject to dismissal. The section did not provide that a teacher found to be guilty of such conduct could either be suspended or temporarily dismissed. However, the school board suspended her for ten days. In disposing of the contention of appellant therein that, as the provision provided for dismissal, the judgment of suspension was void because it was not within the expressed words of the section, this court upon the issue so presented stated:

‘We are of the opinion, however, that the word ‘dismiss', as used in the section in question, could not have been intended by the Legislature so to restrict the power of the board as to require it in all cases of guilt under said section to impose as a punishment the permanent dismissal of the offending teacher. * * * To hold that the meaning of the word ‘dismiss', as used in said section was intended to limit the power of the board to the imposition of no other punishment than that of permanent dismissal in any and all cases arising thereunder, regardless of whether the particular offense charged is of sufficient gravity to warrant such a penalty, would give to the section a construction which, in its application to conceivable cases, would be so unreasonable as that the courts might be justified in declaring it to be void. * * * Colloquially, or as used in common vernacular, the word ‘dismiss' is often used interchangeably with the word ‘suspend,’ and it is clear that the interpretation of that word as so used is the only one that may be given it to relieve the section from the imputation of being absurd or of authorizing, when applied in certain cases, unjust and, in truth, nonsensical consequences. * * * The established legal maxim, ‘The greater contains the less' (section 3536 Civ.Code), should be applied in this instance, and that therefore the word ‘suspend’ should be held to have been intended by the Legislature to be included within the word ‘dismiss' * * *.’

The maxim therein quoted and relied upon, that the ‘greater contains the less', is of such universal application as not to warrant extensive citation of cases. Illustrative authorities are 46 Corpus Juris, 1090; Cavanaugh v. Wholey, 143 Cal. 164, 168, 76 P. 979; Carpenter v. Webster, 27 Cal. 524, 553; La Mar v. City Council, etc., 53 Cal.App.2d 387, 390, 127 P.2d 1022; Williams v. Hawkins, 20 Cal.App. 161, 163, 128 P. 754.

In addition to the principle just discussed, the obvious purport of the language contained in the latter part of said section 22 of Article XX, that, ‘Until the Legislature shall otherwise provide, the privilege [of dealing in intoxicating liquors] shall be licensed and regulated under the applicable provisions of the so-called State Liquor Control Act, California Statutes 1933, Chapter 658, in so far as the same are not inconsistent with the provisions hereof * * *,’ confirms the conclusion herein reached. By this reference, the applicable portions of the State Liquor Control Act were incorporated into and made a part of said section 22; and an examination of that Act discloses that the power of the board to suspend a license is mentioned specifically in sections 12, 19, 20, 22, 23 and 25 thereof. That these sections, expressly authorizing the exercise of the right of suspension, were not inconsistent with the provisions of section 22, appears to have been the deliberate conclusion of the subsequent legislatures which enacted the present Alcoholic Beverage Control Act and the amendments thereto. For those succeeding legislatures enacted, in much the same form as they existed before, the provisions conferring on the board the power to suspend alcoholic beverage licenses. See Sections 6(c), 38e, 48 and 48.6 of the A.B.C.Act, Deering's General Laws, Act 3796, Stats.1935, p. 1123, as amended. So that, even if it may be said that section 3536 of the Civil Code is not controlling in this case and that there is still a doubt as to the interpretation to be given the mooted portion of said section 22, yet by reason of the incorporation therein of those portions of the Liquor Control Act relative to suspension, such question finds complete answer in the case of City and County of San Francisco v. Industrial Accident Comm., 183 Cal. 273, 279, 191 P. 26, 28. There the Supreme Court stated:

‘In such a situation, where a constitutional provision may well have either of two meanings, it is a fundamental rule of constitutional construction that, if the Legislature has by statute adopted one, its action in this respect is well-nigh, if not completely, controlling. When the Legislature has once construed the Constitution, for the courts then to place a different construction upon it means that they must declare void the action of the Legislature. It is no small matter for one branch of the government to annul the formal exercise by another and coordinate branch of power committed to the latter, and the courts should not and must not annul, as contrary to the Constitution, a statute passed by the Legislature, unless it can be said of the statute that it positively and certainly is opposed to the Constitution. This is elementary. But plainly his cannot be said of a statute which merely adopts one of two reasonable and possible constructions of the Constitution.’

Complainant, however, further argues that the suspension of the license herein amounted to a continuance thereof, in disregard of the prohibition against saloons. But it is to be noticed that section 40, subdivision 1, of the Alcoholic Beverage Control Act specifically provides that a ground exists for the suspension of a license ‘When the continuance of such license would be contrary to public welfare or morals'—thereby in effect saying that the suspension of a license it a discontinuance thereof.

This is in accord with the literal meaning and significance of the word ‘suspend’ which primarily means ‘to cause to cease’, temporarily or for a time prescribed. Vol. 40 Words and Phrases, Perm.Ed. p. 918, and pocket part. Such is the meaning commonly ascribed to the term ‘suspend.’ Derrick v. City of Valejo, 4 Cal.App.2d 25, 27, 40 P.2d 949, quoting from Webster's New International Dictionary.

By the rules and regulations promulgated by the board all business operations must cease when an order of suspension is served on a licensee. Said rules provide in part that prominent notices of the suspension must be posted in conspicuous places both on the exterior and interior of the premises, for the duration of the suspension; and they forbid the licensee from advertising or posting signs to the effect that the premises have been closed or business has been suspended for any reason other than by order of the board suspending alcoholic beverage licenses. The rules also require that the board notify all licensed manufacturers, manufacturers' agents, rectifiers and wholesalers of the names and license numbers of the licensees whose licenses have been suspended.

In support of his argument in this regard, complainant relies strongly on the case of Board of Trustees, etc. v. State Board of Equalization (decided Nov. 2, 1934), 1 Cal.2d 784, 787, 37 P.2d 84, 85, 96 A.L.R. 775. That case involved an application for a writ of review to cancel and annul a license to sell intoxicating liquors, which license had been granted to the California Avenue Pharmacy at Palo Alto over the protest of the petitioner therein. The ground for the protest and petition was the contention that the issuance of the license was in direct violation of Penal Code, § 172a, which prohibited the sale of intoxicating liquors within one and one-half miles of the grounds or campus of a university having a designated number of students, where the principal business offices of the university were located on such grounds or campus. After determining that the pharmacy was within the prohibited zone, the court further pointed out that the rules of the State Board of Equalization also expressly forbade the issuance of a license in a case where the premises in question were located within an area in which the establishment was prohibited by law. The decision of the court in this respect was thus summarized:

‘As the licensed place of business in this case is located in territory in which the sale of intoxicating liquor is prohibited by law, the respondent Board of Equalization granted an illegal and void license. * * * (Citing cases.) It is therefore the duty of the Board of Equalization to cancel and annul the license.’

First of all it is to be noted, as stated by the court in the previous quotation, the granting of the license by the board was in direct violation of an express statutory prohibition. Such is not the situation in the case at bar. Section 13 of the Alcoholic Beverage Control Act merely provides that: ‘The board is specifically authorized to refuse the issuance of on-sale retail licenses for premises located within the immediate vicinity of churches, * * *.’ Secondly, the Stanford case was decided prior to the amendment to Article XX, section 22 of the Constitution, adopted November 6, 1934, and hence is inapplicable to the case at bar. Said constitutional amendment confers on the State Board of Equalization the exclusive power to license and regulate the sale of intoxicating liquors, and the power, in its discretion, to deny or revoke any specific liquor license if it shall determine for good cause that the granting or continuance of such license would be contrary to public welfare or morals. This conferment of power, we have held in the case of Covert v. State Board of Equalization, Cal.App., 162 P.2d 717, this day decided, comprehends the exercise by the board of judicial—not merely ministerial—functions. Thirdly, in the Stanford case no issue was made as to suspension or revocation, or as to the kind of relief to be granted if the order of the board was based on erroneous findings and conclusions and was to be set aside for that reason. In the case at bar the findings and conclusions were sustained; only the character of the order made thereon is attacked. Lastly, the Stanford case is one where there was no reason to believe that the conditions which made the issuance of the license unlawful could or would change. There was no reason for terminating the privileges of the licensee for an indefinite period only, when nothing but a repeal of the law or a change in the boundaries of the university could warrant a reinstatement of the license.

In the case at bar the findings and judgment show that as a matter of fact within a few weeks after the original hearing on respondent's petition and the suspension of the licenses the board ordered the reinstatement thereof. There is nothing in the record to show that said order of reinstatement was unwarranted, and its validity is not questioned on appeal. In the absence of any showing to the contrary ‘a court will not interfere * * * but will assume that official duty has been properly and lawfully performed’, Goytino v. McAleer, 4 Cal.App. 655, 658, 659, 88 P. 991, 992, and ‘that a proper order * * * was in fact made and entered’ by the board. San Francisco Breweries, Ltd. v. Superior Court, 80 Cal.App. 433, 439, 251 P. 935, 937. See also subsection 15, section 1963, C.C.P., and 16 Cal.Jur. p. 869, sec. 67.

If, then, the State Board of Equalization has been invested with the power in its discretion to determine whether, in a particular case, the penalty of revocation or suspension should be imposed, and if a determination by such board within constitutional limits must be accorded a relatively high degree of finality and conclusiveness as constituting the decision of a tribunal exercising properly delegated judicial functions, as we have held this day in the case of Covert v. State Board of Equalization, Cal.App., 162 P.2d 717, it inevitably follows that the trial court was not authorized on mandamus to substitute its own determination or judgment for that of the board. As stated in Hilmer v. Superior Court, 1934, 220 Cal. 71, 73, 29 P.2d 175, 176:

‘It is well settled that mandamus will not lie to control the discretion of a court or judicial officer or to compel its exercise in a particular manner, except in those rare instances when under the facts it can be legally exercised in but one way.’

In Lincoln v. Superior Court, 22 Cal.2d 304, 313, 139 P.2d 13, 18, the reviewing court, in discussing the rule as stated in the Hilmer case, observed:

‘Such statement approaches being paradoxical in its implication that any area of discretion remains when ‘it can be legally exercised in but one way.’ The quoted statement is followed by the court's interpretation of its own language, ‘Stated differently, a court can be compelled to act, but, having acted, its act cannot be reviewed on mandamus.’'

This rule was subsequently followed by this court in the case of Friedland v. Superior Court, 67 Cal.App.2d 619, 155 P.2d 90.

The judgment appealed from is reversed.

I dissent. The findings of the Board filed on or about December 21, 1943, were as follows:

‘Findings: The complaint alleged that the premises have been operated in a manner contrary to public welfare and morals; that the licensees misrepresented material facts in making the application for said licenses; that the premises are near a church; and that the premises are not operated as a bona fide public eating place. The evidence shows that the premises and the church in question are located on opposite sides of the Saratoga-Sunnyvale Road; the church property is slightly farther south than the licensees' premises; the two buildings are about 160 feet apart.

‘The evidence shows that there have been occasional incidents in which patrons of the premises have engaged in conduct which disturbed the neighborhood although the premises appear to be operated in an orderly manner excepting on those few occasions. These incidents involved intoxicated persons who made nuisances of themselves. The evidence shows that the premises are not being operated as a bona fide public eating place within the meaning of section 22 of Article XX of the Constitution of the State of California. The licensees are not engaged on said premises in a bona fide business of serving meals or other food ordinarily served to the public in bona fide restaurants, cafes, dining rooms or other bona fide eating places. The evidence in this respect showed that customarily no food is served in the premises excepting sandwiches which are sold for the same price at which they are bought by licensees. The licensees have been selling on an average of about 30 sandwiches a week which sales bring in about $4.50 in receipts; the receipts for the sales of alcoholic beverages for corresponding periods is in excess of $200.00. It therefore appears that the sale of the sandwiches amounts to nothing more than a ‘side-line’ of insignificant proportions, involving no profit, so that practically the entire business conducted on the premises is the sale of alcoholic beverages including intoxicating liquors. It appears that the premises have been operated in this manner at least from September 18, 1943, to the date of the hearing herein. Officers of the Board inspected the premises on December 10, 1943, at which time there was no food on the premises and none being served.'

On these findings the licenses were, on February 3, 1944, ‘suspended indefinitely.’

On March 9, 1944, a rehearing before the Board was denied, and at that time the licenses were ‘reinstated.’ There is nothing in the record to show upon what grounds reinstatement was ordered or that the premises in controversy had during the short interventing period ceased to be near a church (Alcoholic Beverage Control Act, sec. 13) or had become a bona fide eating place. The opinion filed by the trial court, to my mind, correctly decided the issues presented when it stated as follows:

‘A hearing was had before a referee of the Board who, after a full investigation reported that ‘the evidence shows that the premises are not being operated as a bona fide public eating place within the meaning of Section 22 of Article XX of the Constitution of the State of California. The licensees are not engaged on said premises in a bona fide business of serving meals or other food ordinarily served to the public in bona fide restaurants, cafes, dining rooms or other bona fide eating places.’

‘Upon this finding and report the complainant demanded the revocation of the respondents' license, but the Board upon the recommendation of the referee merely suspended the license which within a short time it restored.

‘The Plaintiff herein, complainant in the matter before the Board asks in this action that the Board be required to perform what he claims is its constitutional duty, to revoke the license of the parties to whom it has been issued. To this relief he is clearly entitled. The Constitution states that ‘intoxicating liquors, other than beers, shall not be consumed, bought, sold, or otherwise disposed of for consumption on the premises in any public saloon, public bar, or public bar-room within the State.’

‘As shown by the report of the referee or representative of the Board of Equalization the business of the licensees was purely that of a saloon and bar-room. There is just one exception to this restriction and that is as specified by the Constitution that ‘intoxicating liquors may be kept and may be bought, sold, served, consumed and otherwise disposed of in any bona fide hotel, restaurant, cafe * * * or other public eating place.’

‘As the premises of the licensees was not a bona fide eating place, the sale of intoxicating liquors there was unlawful. Under no conception of the law can a man be given or permitted to hold a license to do an unlawful thing. It will be noted that the Constitution by positive averment declares that intoxicating liquors, other than beers, cannot be sold for consumption on the premises in any saloon or bar-room in this State. The sole exception that such liquors may be sold in a bona fide restaurant or eating house has no application here as the premises involved are not operated as such a place. So we find the licensees here holding a license to sell intoxicating liquors in a manner prohibited by the Constitution.

‘If the license had been procured in disregard of the requirement that it should have been issued only to persons conducting a restaurant or eating house it would be ‘the duty of the Board of Equalization to cancel and annul’ it. Board of Trustees, etc. v. State Board of Equalization, 1 Cal.2d 784, 37 P.2d 84, 96 A.L.R. 775.

‘I can see no difference between a case where a license is granted in the absence of an indispensable condition and one where after a license has been granted an indispensable condition to its valid existence ceases to exist. When the licensees here discontinued their food service and ceased to conduct the restaurant or cafe through the existence of which they were enabled to obtain their license their premises became a barroom and their business a saloon. Thereafter every use they made of their license was illegal. How can it be contended that a license under such circumstances did not become invalid, the only thing which supported it or gave it validity having ceased to exist?

‘When the fact was found there remained nothing for the Board to do but to declare the license forfeited and order it to be revoked. Instead of doing this the Board attempted to suspend the license. To suspend means to ‘cease for a time’, ‘to postpone,’ to ‘interrupt,’ to ‘delay’ to ‘hold undetermined’. Words and Phrases.

‘To atempt the suspension of an illegal license was to assume that there was something to suspend. When persons to whom a liquor license has been given so re-arrange their business that they discontinue Constitutional requirements and proceed to use the licensed premises as a saloon or barroom and to sell liquor there in a way which the Constitution says they ‘shall not’ be permitted to do, can the Board say to them that they must ‘delay’ such sales, that they must ‘postpone’ them, that they must ‘cease for a time’ to conduct their unlawful business?

‘The only thing that could have been said to them would have been that their business was at an end, that it must ‘cease’ not for a time but for all time.

‘If these licensees later were to begin the business of selling food in some genuine restaurant or cafe and thus equalify for a license it might properly be given to them, but that would be a matter of an application in the nature of an entirely new proceeding.

‘Counsel for respondent calls attention to the fact that the Constitution (Art. XX, Sec. 22) gives the Board ‘discretion’ to revoke, which probably includes the lesser power to suspend, a license for certain causes. It will be observed however, that the discretionary power thus given to the Board is limited, and does not even suggest that it has any power to dispense with or to qualify a fundamental constitutional requirement.'

Assuming, but not deciding, that the legislature may authorize the Board to suspend a valid license for the sale of intoxicating liquors in a bona fide restaurant or eating place, for violations of valid provisions of the Alcoholic Beverage Control Act, where, as here, the business carried on is that of a saloon, in violation of the constitutional provision itself, a different situation is presented and the Board is without authority to license same or to continue in existence a license already issued.

The judgment should be affirmed.

PEEK, Justice.

THOMPSON, J., concurs.