In re DLC Corporation

In re DLC Corporation  (97-321); 167 Vt. 544; 712 A.2d 389

[Filed 1-May-1998]



       NOTICE:  This opinion is subject to motions for reargument under
  V.R.A.P. 40 as well as formal revision before publication in the Vermont
  Reports.  Readers are requested to notify the Reporter of Decisions,
  Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801 of
  any errors in order that corrections may be made before this opinion goes
  to press.


                            No. 97-321


In re DLC Corporation                        Supreme Court
d/b/a Pour Man's Pub
                                             On Appeal from
                                             Liquor Control Board

                                             March Term, 1998


Daniel J. O'Brien, Chairman, J.

       Lamar Enzor of Abatiell & Valerio, Rutland, for Plaintiff-Appellant.

       William H. Sorrell, Attorney General, and William Griffin, Chief
  Assistant Attorney General, Montpelier, for Defendant-Appellee.


PRESENT:  Dooley, Morse, Johnson and Skoglund, JJ.


       SKOGLUND, J.,  DLC Corporation d/b/a/ Pour Man's Pub appeals an order
  of the Vermont Liquor Control Board, which issued a first and third class
  liquor license to DLC subject to several conditions.  DLC contends that the
  Board exceeded both its constitutional and statutory authority by placing
  those conditions upon DLC's liquor license.  We affirm.

       Laurel Chapman is the sole director and stockholder of DLC, which
  leased a building in Rutland to be used as a bar -- Pour Man's Pub.  The
  building had housed another bar -- June's Corner Bar -- previously, and
  Glenn David Chapman, Ms. Chapman's husband, managed June's Corner Bar for
  several months before DLC leased the premises.  While not formally
  connected with DLC, Mr. Chapman helped develop DLC's business plan, and
  both the husband and wife had spoken of Pour Man's Pub as if it were a
  jointly-held business.  After Pour Man's Pub opened, Mr. Chapman performed
  janitorial services and "odd jobs" for the pub.  In addition, he tended bar
  part-time and arranged promotional events and hired entertainment for the
  pub.

 

       In 1996, DLC applied to the Board for a liquor license, and a hearing
  was held.  At that time, Mr. Chapman had been charged with, but not yet
  convicted of, the crime of conspiracy relating to the delivery of cocaine,
  in violation of 13 V.S.A. § 1404(a).  On May 16, 1996, the Board granted
  DLC a first-class (FN1) and third-class (FN2) liquor license with the 
  following condition:

   It is a specific condition of the continued licensure that Mr. Glenn
   David Chapman NOT be convicted of the crime he is currently
   charged with or any other crime of any type, misdemeanor or
   felony.  In the event a conviction of any crime occurs, these
   licenses shall be subject to immediate review by the Board of
   Liquor Control and treated as . . . new license applications.  The
   Board will then offer the licensee a hearing and make a decision
   whether or not to revoke the conditional license issued this date,
   whether or not to issue a new license, and if so, whether to subject
   and condition such further license.


       In November 1996, a police officer discovered Mr. Chapman smoking
  marijuana and sitting in an automobile owned and licensed by DLC that was
  parked in an alley next to the Pour Man's Pub.  A small amount of marijuana
  was also found on Mr. Chapman.  He was arrested and later pleaded nolo
  contendere and was adjudicated guilty of the misdemeanor crime of
  possession of marijuana.  See 18 V.S.A. § 4230(a).

       Mr. Chapman's pending conspiracy charge was subsequently amended to a
  misdemeanor charge of possession of cocaine.  On January 8, 1997, Mr.
  Chapman pleaded nolo contendere to the amended charge and was adjudicated
  guilty.(FN3)  Upon learning that the condition under which DLC's license was
  granted had been violated, the Board informed DLC that if DLC did not
  request a hearing within five days then DLC's liquor license would be
  revoked.  DLC requested a hearing, and the Board held proceedings on June
  17, 1997.  After the hearing, the

  

  Board issued DLC a first-class and third-class liquor license with the
  following conditions:

   1.   Glenn David Chapman shall have no legal or defacto
   ownership interest in or managerial responsibilities for the DLC
   Corporation, d/b/a Pour Man's Pub; and

   2.   Because of Glenn David Chapman's prior and repeated
   criminal activities, including those criminal activities taking place
   outside of licensed premises, the Board finds it necessary in the
   public interest and considering the public health, safety and
   morals, that in the event Glenn David Chapman were to be found
   on the licensed premises by any competent evidence therefore, this
   Board will issue an emergency closing order by which the liquor
   license issued to the DLC Corporation, d/b/a/ Pour Man's Pub
   will be immediately revoked pending a hearing which shall be
   granted on short notice, at which hearing the Board will determine
   whether once again Glenn David Chapman violated the condition
   under which the license was issued by being physically on the
   premises.  If this Board finds that CHAPMAN was in fact upon
   the premises, the license in the discretion of this Board, will be
   permanently revoked.

  This appeal followed.

       DLC contends that by conditioning its liquor license upon the
  requirement that DLC "absolutely" control Mr. Chapman's access to the
  premises, the Board exceeded its statutory and constitutional authority. 
  First, DLC contends that the second condition is improper because it has
  nothing to do with the fitness of DLC to conduct its business and sell
  liquor.  In addition, DLC contends that the second condition interferes
  with its constitutionally-protected right to run a business.  Finally, DLC
  alleges that DLC cannot lawfully control the movements of Mr. Chapman
  because Mr. Chapman is not a shareholder, owner, or employee of DLC and,
  therefore, the condition is unreasonable and impossible for DLC to enforce.
  We disagree.

       Traditionally, federal and state treatment of intoxicating liquors has
  been markedly different than their treatment of most other items of
  commerce.  This disparity in treatment is directly related to intoxicating
  liquor's "tendency . . . to deprave public morals."  Green Mountain Post
  No. 1 v. Liquor Control Bd., 117 Vt. 405, 409, 94 A.2d 230, 233 (1952).
  Thus, "it has come to be the generally accepted doctrine that the
  manufacture or sale of such

 

  liquors, and even their possession or use, is not a matter of `common',
  `inherent', or `natural' right, but, if a right at all, is one held subject
  to the police power of the state."  Id.; see also Billado v. Control
  Comm'rs, 114 Vt. 350, 354, 45 A.2d 430, 432 (1946) ("`There is no inherent
  right in a citizen to . . . sell intoxicating liquors by retail; it is not
  a privilege of a citizen of the State or of a citizen of the United
  States.'") (quoting Crowley v. Christensen, 137 U.S. 86, 91 (1890)).

       Because of intoxicating liquor's potential danger to the community's
  safety and general welfare, a state has the authority to prohibit its
  manufacture and sale within the state's boundaries.  See Billado, 114 Vt.
  at 354, 45 A.2d  at 432.  In place of a complete ban, a state may instead
  permit the manufacture and sale of intoxicating liquor "under such
  conditions as will limit to the utmost its evils.'"  Id. at 354-55, 45 A.2d 
  at 432 (quoting Crowley, 137 U.S. at 91). Vermont has chosen the second
  option -- permitting the manufacture and sale of alcoholic beverages but
  under conditions set forth by the Legislature, see 7 V.S.A. §§ 1-807, and
  the Legislature has determined that it will exercise its authority in this
  area to its constitutionally-permissible limits.  See id. § 1 ("This title
  is based on the taxing power and the police power of the state, and is for
  the protection of the public welfare, good order, health, peace, safety and
  morals of the people of the state, and all of its provisions shall be
  liberally construed for the accomplishment of the purposes set forth
  herein.").  Therefore, the Legislature has great latitude in exercising and
  delegating its authority, fashioning conditions, and regulating the
  alcoholic beverage field.  See, e.g., Green Mountain Post No. 1, 117 Vt. at
  411, 94 A.2d  at 234 ("What a legislative body may entirely prohibit, it
  certainly can regulate drastically.").

       The Legislature created the Liquor Control Board to administer the
  laws that govern the distribution and sale of alcoholic beverages in
  Vermont.  See 7 V.S.A. § 104.  The Board has the express authority to
  "issue permits under such terms and conditions as it may impose for the
  furnishing, purchasing, selling, bartering, transporting, importing,
  exporting, delivering and possessing of alcohol . . . ."  Id. § 104(8); see
  also id. §§ 221-240 (sections delineating the

 

  duties of the Board with regard to licensing).

       A liquor license, however, is not a contract between the licensee and
  the state, and it does not give the licensee any vested rights.  See State
  v. Gibbs, 82 Vt. 526, 528, 74 A. 229, 230 (1909); Commonwealth v.
  Blackington, 24 Pick. 352, 358 (Mass. 1837) ("[T]he exclusive authority and
  power to sell spirit by retail, is not conferred on the licensed person, as
  a benefit or privilege to him, or with a view to give him an exclusive
  right; but solely because the peace and security, the morals and good order
  of the community, will be promoted by it, and the exclusive power therefore
  is collateral and incidental, and not one of the objects and purposes of
  the law.").  Instead, a license to sell intoxicating liquors is a permit to
  sell, subject to restrictions, and the licensee accepts this privilege,
  subject to such conditions as the Board sees fit to impose.  Cf. Green
  Mountain Post No. 1, 117 Vt. at 409, 94 A.2d  at 233 (holding that license
  may be subject to conditions that the general assembly chooses to enact).

       Furthermore, the granting and conditioning of a liquor license is a
  discretionary function. See, e.g., 7 V.S.A. § 222 ("With the approval of
  the liquor control board, the control commissioners may grant" a first or
  second class license.) (emphasis added); id. § 224(b) ("In those towns
  voting to permit the sale of spirituous liquors, in its discretion, the
  liquor control board may grant" a restaurant operator a third class
  license.) (emphasis added); Carousel Grill, Inc. v. Liquor Control Bd., 123
  Vt. 93, 94, 182 A.2d 336, 337 (1962) (in regard to liquor licenses "[t]he
  state may grant the opportunity to some and deny it to others or withhold
  it entirely").  Therefore, due to the inherent characteristics of
  intoxicating liquor, the broad authority that is both permitted and
  exercised by the State and the Board in this area, the traditional nature
  and purpose of liquor licenses, and the discretion statutorily bestowed on
  the Board in granting and conditioning liquor licenses, this Court will not
  reverse the Board's decision regarding liquor licenses if that decision
  accomplishes "the Board's purpose in regulating the sale of intoxicants and
  encouraging temperance."  In re Club 107, 152 Vt. 320, 326, 566 A.2d 966,
  969 (1989).  With this standard of review in mind, we now turn to DLC's

 

  appeal.

       DLC contends that the condition requiring Mr. Chapman to remain off
  the premises of Pour Man's Pub is improper because it lacks any
  relationship to DLC's fitness to conduct its business and sell liquor.  We
  conclude, however, that the condition is reasonably related because it is
  designed to protect the public's safety, health, and morals, given the fact
  that Mr. Chapman was convicted of two drug offenses, including one that
  took place on or very near the premises and involved one of DLC's vehicles. 
  While some other condition may have "accomplished the same purpose and
  would have been less onerous is immaterial in the absence of a showing that
  the Board acted arbitrarily in its choice" of conditions.  Green Mountain
  Post No. 1, 117 Vt. at 411, 94 A.2d  at 234.  DLC does not allege that the
  Board acted arbitrarily, and there is no evidence in the record before us
  that the Board's decision was, in fact, arbitrary.(FN4)

       DLC also contends that the same condition interferes with its
  constitutionally-protected right to run a business.  DLC fails to
  recognize, however, that the Legislature and this Court have never afforded
  businesses involved in the alcoholic beverages trade the same protections
  as other businesses.  See Billado, 114 Vt. at 355-56, 45 A.2d  at 432-33
  (The vast majority of constitutional rights conferred to ordinary
  businesses and professions are not extended to those businesses selling
  liquor because "the carrying on of which is a mere matter of privilege
  [and] because of a character tending to be injurious."); Green Mountain
  Post No. 1, 117 Vt. at 411, 94 A.2d  at 234 (noting that "[t]he ordinary
  tests of control applicable to ordinary business do not apply" to those
  selling or manufacturing intoxicating liquors).  As discussed previously,
  the

 

  selling of liquor "is at most a privilege which of necessity is subordinate
  to the public interest and the police power of the state."  Carousel Grill,
  123 Vt. at 94, 182 A.2d  at 337.  Thus, the condition does not
  unconstitutionally interfere with DLC's ability to operate the Pour Man's
  Pub.

       Finally, DLC  claims that it can not lawfully control Mr. Chapman's
  movements because he is not a shareholder, employee, or owner of DLC and,
  therefore, the condition will be impossible for DLC to enforce.  Putting
  aside the facts that Mr. Chapman: (1) is the husband of the sole director
  and stockholder of DLC, (2) has tended bar, (3) has performed janitorial
  work, (4) has done "odd jobs" for DLC, and (5) has developed promotional
  events and hired entertainment for the pub, we find this assertion to be
  without merit.  DLC admits that it has barred fifty-six people from the pub
  for life and precludes these people from entering the premises.  We fail to
  see why DLC cannot use the same procedures to bar Mr. Chapman from the pub.

       Affirmed.
                              FOR THE COURT:



                              _______________________________________
                              Associate Justice



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                                  Footnotes


FN1.   A first-class license permits a "retail dealer" to sell "malt
  and vinous beverages."  7 V.S.A. § 222(1).

FN2.   A third-class license permits a restaurant or hotel operator
  "to sell spirituous liquors."  7 V.S.A. § 224(a), (b).

FN3.   Mr. Chapman pleaded nolo contendere to this charge, pursuant to
  13 V.S.A § 7041, which is commonly called an "Alford" plea, under which Mr.
  Chapman's adjudication of guilt could be struck, providing certain
  conditions subsequent were satisfied. 

FN4.  DLC relies on our holding in In re Club 107, 152 Vt. 320, 324,
  566 A.2d 966, ___ (1989), in an attempt to show that the Board exceeded its
  authority in establishing such a condition in reference to DLC's liquor
  license.  We find Club 107 not to be dispositive on the issues in the
  present case.  In Club 107, we struck down a Board regulation proscribing
  obscene, lewd, or indecent entertainment in Vermont night clubs, because it
  unconstitutionally exceeded the Board's rule-making authority, due to the
  regulation's lack of a nexus with  "a specifically granted power of the
  Board or . . . the consequences of excessive use of alcohol."  Id.  As
  noted above, the condition imposed on DLC's liquor license is reasonably
  related to the public's health, safety, and morals.