MUNRO v. Helen M. Richards, Appellant.

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District Court of Appeal, Third District, California.

Russell S. MUNRO, Director of the Department of Alcoholic Beverage Control, State of California, Petitioner and Respondent, v. ALCOHOLIC BEVERAGE CONTROL APPEALS BOARD OF the State of CALIFORNIA and Helen M. Richards, Respondent, Helen M. Richards, Appellant.

Civ. 9385.

Decided: May 14, 1958

Richard tum Suden, San Francisco, for appellant. Edmund G. Brown, Atty. Gen., by William T. Chidlaw, Deputy Atty. Gen., for petitioner-respondent.

This is an appeal from a judgment affirming the decision of the Department of Alcoholic Beverage Control and reversing the decision of the Alcoholic Beverage Control Appeals Board.

Appellant applied for an on-sale beer license for a small restaurant which she owned and operated. Approval of the application was recommended by an investigating officer of the department. However, protests were filed by residents in the vicinity and, after a hearing thereon, an officer of the department found that the premises were in a residential area; that there were inadequate off-the-highway parking facilities and that issuance of the license would be contrary to the public welfare and morals. His recommendation that the protest be sustained and the application denied was adopted by the department. Upon appeal from the decision, the Alcoholic Beverage Control Appeals Board, hereinafter referred to as the Appeals Board, found that the findings of fact were not supported by substantial evidence in the light of the whole record, and the decision of the department was reversed. The department petitioned for a writ of mandate to compel the Appeals Board to reverse its decision and reinstate that of the department. As the interested party, appellant appeared and answered in the mandamus proceedings, wherein the trial court found that the Appeals Board's reversal of the decision of the department on the ground that it was not supported by substantial evidence was erroneous, arbitrary and capricious and constituted a prejudicial abuse of discretion, and judgment was entered accordingly. This appeal followed.

Appellant first contends that the trial court erred in looking to the department's decision to determine if it was supported by substantial evidence, since it was the decision of the Appeals Board that was under attack. There is no merit in this contention. The rule of law applicable to the review of the decisions of the Department of Alcholic Beverage Control is stated in Bric v. Department of Alcoholic Bev. Control, 153 Cal.App.2d 315, 320, 314 P.2d 807, 810, as follows:

‘* * * That agency is a constitutional agency that has succeeded to some of the powers of the State Board of Equalization in Alcoholic Beverage Control matters. Being an agency upon which the Constitution has conferred limited judicial powers, its decisions on factual matters must be affirmed if there is substantial evidence to support them. Cal.Const., Art. 20, § 22; Covert v. State Board of Equalization, 29 Cal.2d 125, 173 P.2d 545; Kirchhubel v. Munro, 149 Cal.App.2d 243, 308 P.2d 432; Molina v. Munro, 145 Cal.App.2d 601, 302 P.2d 818; Dethlefsen v. State Board of Equalization, 145 Cal.App.2d 561, 303 P.2d 7; Griswold v. Department of Alcoholic Beverage Control, 141 Cal.App.2d 807, 297 P.2d 762. In other words, on the mandamus proceeding, the trial court was not permitted to exercise an independent judgment on the facts, as it may do in reviewing the findings of legislatively created state-wide administrative agencies, but was required to give to the factual determinations of the appellant the same deference that an appellate court must give to the findings of a trial court. Thus, the trial court was simply called upon to determine whether the findings of the Board were supported by substantial evidence.’

There is nothing in Section 23084 of the Business and Professions Code or in Article XX, Section 22, of the California Constitution which warrants departure from that rule, nor is there any reason why the rule should not control the Appeals Board on appeal to that body. Thus, the Appeals Board was simply called upon to determine whether the findings of the department were supported by substantial evidence in the light of the whole record. It was not permitted to exercise an independent judgment on the facts as contended for by appellant.

More serious questions are presented upon the issues as to (a) whether there is substantial evidence in the record to support the findings that the area is residential in nature and does not afford adequate off-the-road parking facilities, and (b) if so, whether a denial of an on-sale beer license constitutes an arbitrary abuse of the discretion vested by the California Constitution in the department.

Before discussing the facts, a brief reference should be made to the rules of law which we feel are applicable to a determination of the question.

It is well established that the decisions of the department are final, except that they are subject to review for excess of jurisdiction, error of law, abuse of discretion and insufficiency of evidence. Covert v. State Bd. of Equalization, 29 Cal.2d 125, 173 P.2d 545. It was held in Schaub's, Inc., v. Department of Alcoholic Bev. Control, 153 Cal.App.2d 858, 864, 315 P.2d 459, that when the jurisdiction of the department to grant or refuse a transfer of a license (in this case the granting of a license) depends upon the establishment of an ultimate fact (in the instant case the public welfare and morals by reason of appellant's premises being in a residential district, and the inadequacy of off-the-highway parking facilities) the reviewing court may examine the evidence upon which the findings of the department to that effect is based, and if the findings of the department are contrary to the evidence, read as a whole, or without meritorious support in the evidence, the findings of the department, like those of a trial court, may be set aside and the decision based thereon may be set aside. See also Southern Pac. Co. v. Railroad Com., 13 Cal.2d 125, 127, 128, 87 P.2d 1052; West v. Industrial Acc. Com., 79 Cal.App.2d 711, 719, 720, 180 P.2d 927. In other words, in such case the question presented is, are the findings and the decision on the department supported by substantial evidence in the light of the whole record?

While under the provisions of Section 22 of Article XX of the California Constitution the department is vested with the power to deny or revoke in its discretion any specific liquor license if it determines, for good cause, that the granting of the license would be contrary to public welfare and morals, in so determining the department performs a quasi-judicial function similar to local administrative agencies. Covert v. State Bd. of Equal., supra. But as stated in Stoumen v. Reilly, 37 Cal.2d 713, 717, 234 P.2d 969, 971:

‘* * * The board's discretion under section 22, however, is not absolute but must be exercised in accordance with the law, and the provision that it may revoke a license ‘for good cause’ necessarily implies that its decisions should be based on sufficient evidence and that it should not act arbitrarily in determining what is contrary to public welfare or morals.' See also Weiss v. State Bd. of Equalization, 40 Cal.2d 772, 775, 256 P.2d 1; Schaub's, Inc., v. Department of Alcoholic Bev. Control, supra.

The same rules apply to the determination of an application for a license as those for a revocation of a license. Weiss v. State Bd. of Equalization, supra, 40 Cal.2d at page 775, 256 P.2d at page 2.

‘Arbitrarily’ is defined in Ballentine's Law Dictionary as ‘unreasonably’. In Vol. 1 Bouv. Law Dict., Rawle's Third Revision p. 94, we find the phrase ‘abuse of discretion’ defined as: ‘A discretion exercised to an end or purpose not justified by and clearly against reason and evidence.’ Ballentine says: ‘The expression does not mean only the decision of a case by whim or caprice, arbitrarily or from a bad motive, but it also means that the discretion has not been justly and properly exercised under the circumstances of the case. It has also been held to mean such an abuse as amounts practically to a denial of justice. In this view, it signifies a clearly erroneous conclusion and judgment; one that is clearly against the logic and effects of the facts presented.’ In Sharon v. Sharon, 75 Cal. 1, 48, 16 P. 345, 366, the court said: ‘In a legal sense, discretion is abused whenever, in its exercise, a court exceeds the bounds of reason, all the circumstances before it being considered.’

Tested by these rules, we feel that the findings are not supported by substantial evidence in the light of the whole record and that the decision of the board cannot be upheld.

The evidence taken before the hearing officer and weighed by him and the department discloses the following facts: Appellant's premises and restaurant are located on the westerly side of a 1200 foot section of the old Auburn highway about 6/10ths of a mile south of the city limits of Grass Valley. The distance between the two roads varies up to 150 feet. Appellant and her bind husband live on the premises. The building housing the restaurant is comparatively new, with a well-equipped kitchen. It is a small restaurant specializing in ‘fish and chips', with which many customers desire beer. In the immediate vicinity are nine residences. Seven of the residences are situated on the opposite side of the road, ranging in distance from about 100 feet to 300 feet from appellant's premises. The other two adjoin the appellant's premises on the north. In addition, there are two junk yards in the immediate vicinity and a garage used for a welding shop. One of the residents conducts a sand and gravel business from his home, using 8 or 9 trucks in such business. Another operates a septic tank spraying business from his residence. In one of the junk yards cars are dismantled as late as 9 or 10 o'clock at night. There is also a dump from mine tailings, and poultry and rabbits have been raised for sale in the neighborhood. It also appears that between the restaurant and the road there is sufficient space to park 12 cars. However, the hearing officer, who viewed the premises, found ‘that it would not be practicable to park that many cars'; that ‘the parking area would be inadequate to accommodate sufficient cars for any substantial amount of patronage’ and ‘the parking of cars along the road would create a traffic hazard’. Some of the families have children of school age living at home. Other than the viewing of the premises and the area in question by the hearing officer, these are the facts upon which the Department of Alcoholic Beverage control based its finding that the premises are in a residential area; that ‘the premises do not afford adequate off-the-highway parking facilities' and that the ‘issuance of the license would be contrary to public welfare and morals'.

We find no inhibition in the Constitution, or in the Alcoholic Beverage Control Act, or in the rules adopted by the Department of Alcoholic Beverage Control against the granting of an on-sale license in a residential area. That fact, standing alone, would not a ground for the denying of a license. We dare say that many hundreds of on-sale and off-sale licenses have been granted to establishments, stores, restaurants, and cafes in residential areas throughout the state. It is conceded that appellant's personal qualifications are not in question and there are no charges that her restaurant is conducted in a disorderly manner or had caused any problems, traffic or otherwise. As one of the agents for the department testified: ‘It's just a spot in the road where there's a couple of houses and this business—this two junk yards, and in abandoned garage.’ There are no churches, hospitals, schools, or public playgrounds within the immediate area or vicinity.

There is no evidence that the parking space has been inadequate for customers of the restaurant or that their parking has created a parking hazard. It is only conjectural and without support in the evidence that the serving of beer would so increase the patronage as to create any traffic problems, even though some cars were parked along the side of the old highway. Likewise, there is no evidence to support the finding that ‘ordinary noises incidental to even orderly operation of the appellant's premises will result in substantial annoyance to the occupants of the homes on the easterly side of the road.’ Again, it is merely speculative that the serving of beer with meals would increase the ordinary noises incidental to the operation of appellant's restaurant. No complaints had been made as to any noise or disturbances caused by the appellant's establishment. Moreover, any additional noise would hardly be appreciable in this neighborhood where one resident conducts a sand and gravel business from his home, using 8 or 9 trucks in such business; where another operates a septic tank spraying business; where poultry and rabbits have been raised for sale; where, at one of the junk yards, cars are dismantled, sometimes as late as at 9 or 10 o'clock at night. Under the circumstances, the neighborhood can hardly be classified as strictly ‘residential’. Such being the facts and circumstances, we conclude that the findings are not supported by substantial evidence in the light of the whole record. In so holding, we are not unmindful of the rule announced in Crowley v. Christensen, 137 U.S. 86, 11 S.Ct. 13, 34 L.Ed. 620, quoted with approval in Ritz v. Lightston, 10 Cal.App. 685, 688, 103 P. 363, 364, to the effect that:

‘* * * There is no inherent right in a citizen to thus sell intoxicating liquors by retail; it is not a privilege of a citizen of the state or of a citizen of the United States. As it is a business attended with danger to the community, it may, as already said, be entirely prohibited, or be permitted under such conditions as will limit to the utmost its evils. The manner and extent of regulation rest in the direction of the governing authority. That authority may invest in such officers as it may deem proper the power of passing upon applications for permission to carry it on, and to issue licenses for that purpose.’

We do hold, however, that when a license is denied ‘for good cause,’ the department's decision should have meritorious support in the evidence.

The judgment is reversed.

WARNE, Justice pro tem.

VAN DYKE, P. J., and SCHOTTKY, J., concur.