Boyd v. Allen , 246 N.C. 150 ( 1957 )

97 S.E.2d 864 (1957) 246 N.C. 150

Louis E. BOYD and Vernon Luther Towe, trading as Plaza Grill,
v.
T. W. ALLEN, Sam Etheridge and Frank T. Erwin, as Members of the Board of Alcoholic Control, State of North Carolina.

No. 456.

Supreme Court of North Carolina.

May 1, 1957.

McDougle, Ervin, Horack & Snepp by Frank W. Snepp, Jr., Charlotte, for plaintiffs, appellants.

George B. Patton, Atty. Gen., Claude L. Love, Asst. Atty. Gen., and Thomas S. Harrington, Staff Atty., Henderson, for defendants, appellees.

PARKER, Justice.

Under its inherent police power the State of North Carolina has the right to prohibit, regulate or restrain the use, manufacture and sale of beer within its bounds. State v. Kittelle, 110 N.C. 560, 569, 15 S.E. 103, 15 L.R.A. 694; Bailey v. Raleigh, 130 N.C. 209, 41 S.E. 281, 58 L.R.A. 178; State v. Williams, 146 N.C. 618, 61 S.E. 61, 17 L.R.A.,N.S., 299; 30 Am.Jur., Intoxicating Liquors, sec. 22; 48 C.J.S. Intoxicating Liquors § 33. The liquor business "stands, by universal consent, in a class peculiarly within the police power." Blackman Health Resort v. Atlanta, 151 Ga. 507, 107 S.E. 525, 529, 17 A.L.R. 516.

A retail beer permit grants the holder a special privilege or permission to engage in the beer selling business, and is limited by the statutes under which such permit or license is granted. The permit is not a contract, and confers no contract rights. It is generally held that the permit or license is not property or a vested right, in the ordinary meaning of those terms, in any legal or constitutional sense. 48 C.J.S. Intoxicating Liquors § 109(a); 30 Am.Jur., Intoxicating Liquors, sec. 136. In Fitzpatrick v. Liquor Control Commission, 316 Mich. 83, 25 N.W.2d 118, 122, 172 A.L.R. 608, the Court said: "A license to engage in traffic in alcoholic liquor is not a contract in the sense that the licensee has thereby acquired any vested property rights. It is in the nature of a permit and the traffic is at all times subject to the control of the State in the exercise of its police power."

In 30 Am.Jur., Intoxicating Liquors, Section 142, it is said: "A liquor license is at all times within the control of the legislature, and may be revoked, annulled, or amended at its pleasure."

G.S. § 18-78.1 provides that no holder of a license authorizing the retail sale of beer, for consumption on the premises where sold, or any servant, agent, or employee of the licensee, shall (3) sell beer "upon the licensed premises or permit such beverages to be consumed thereon, on any day or at any time when such sale or consumption is prohibited by law," or "(5) sell, offer for sale, possess, or permit the consumption on the licensed premises of any kind of alcoholic liquors the sale or possession of which is not authorized under his license."

G.S. § 18-141 prohibits the sale and consumption of beer on licensed premises during certain hours.

G.S. § 18-78 states the State Board of Alcoholic Control may "revoke or suspend the State permit of any licensee for a violation of the provisions of this article or of any rule or regulation adopted by said Board," (Beverage Control Act of 1939). This statute provides for a notice to the licensee and for a hearing, which was done here.

The petitioners had no license to sell whiskey. The findings of fact, which are supported by sufficient competent evidence, are that John Cureton, a curb boy employee of petitioners, on 24 March 1956, sold to a State ABC Inspector on the licensed premises a jar of non-tax paid whiskey for $5.50, and that on 6 April 1956, after closing hours and during a prohibited time, James Robinson, another curb boy employee of petitioners, sold a can of beer on the licensed premises to the same Inspector, and that at the same time and place, John Cureton made arrangements to sell the Inspector a case of whiskey.

The parties stipulated that there is no evidence in the record that petitioners had any knowledge of John Cureton's sale of whiskey on the licensed premises, or of James Robinson's sale of beer on the licensed premises during prohibited hours and of Cureton's arrangements to sell a case of whiskey. Petitioners contend that the State Board of Alcoholic Control is not authorized by law to suspend their retail beer permit for the illegal acts of their two curb boy employees done without their knowledge or consent.

The proceeding by the State Board of Alcoholic Control is not a criminal proceeding against petitioners, but an administrative proceeding authorized by G.S. § 18-78 for the purpose of revocation or suspension of petitioners' retail beer permit for alleged violations of G.S. § 18-78.1. This is a specific remedy authorized by statute for violations of the Beverage Control Act or of any rule or regulation adopted by the Board. It is to be noticed that the question in this case is not whether petitioners are criminally liable for their employees' acts but whether their retail beer permit can be suspended by the State Board because of their employees' violations of G.S. § 18-78.1.

The petitioners had a retail beer permit issued to them by the statutory law of the State, and they placed beer in charge of John Cureton and James Robinson, their curb boy employees, to sell as a beverage. These employees had no license to sell beer. Can petitioners put these employees in their shoes, give them the benefit of the permit issued to them, and not be held responsible for their violations of the law found as facts in the instant proceeding, because they had no knowledge of these violations of the law? Upon the facts found the law has been violated. Can petitioners set up their beer emporium, receive its profits, and abdicate their duties to prevent illegal sales of beer and whiskey on their premises by their employees? Or, will the law look to the licensees, the persons it permitted to sell beer on their premises, and hold them responsible for the unlawful acts of their employees engaged in the retail sale of beer?

It is generally agreed that the business of dealing in or with intoxicating liquors is not a common, inherent, constitutional or vested right, but, if a right at all, is one held subject to the police power of the State. It is one affecting the public health, morals, safety and welfare in such a way that State control of it under the police power is so great as to range from complete prohibition to many lesser degrees of regulation and constant surveillance. 30 Am. Jur., Intoxicating Liquors, p. 262, sec. 19 et seq.; p. 264, sec. 22 et seq.; p. 326, sec. 136; Annotation 3 A.L.R.2d pp. 108-111. The legislation for the revocation or suspension of a retail beer permit for the causes found to exist in this proceeding is an exercise of the police power of the State in the interests of public morals and welfare, is reasonable, bears a real and substantial relationship to the public purpose sought to be accomplished by the Legislature in the Beverage Control Act, tends to preserve public morals and welfare, and is not in violation of Article I, Section 17, of the North Carolina Constitution, as contended by petitioners. 11 Am.Jur., Constitutional Law, Sections 305 and 306. See 12 Am. Jur., Constitutional Law, Sections 405, 463, 467, 497 and 499.

In 12 Am.Jur., Constitutional Law, Section 467, it is written: "It is settled that the states have full control over all matters relating to intoxicating liquors within their local sovereignties and that the usual regulations pertaining to liquors in general do not violate any of the constitutional rights of the citizen. Thus, the entire business of manufacturing and selling intoxicating liquors is completely within the control of the states. There is nothing in the Constitution of the United States to prevent them from regulating and restraining the traffic or from prohibiting it altogether. The right to sell intoxicating liquors is not one of the privileges or immunities of a citizen of the United States or an inherent right of citizenship. The state may grant to one class the privilege to sell liquor and deny it to another class. It may restrict the right to obtain licenses for the sale of intoxicating liquors to the male inhabitants of the state."

The petitioners, the licensees, elected to operate their retail beer business at least in part with employees, and they must be responsible to the licensing authority for their employees' conduct in the exercise of their license, whether they know about it or not, else we would have the absurd result that beer could be sold at forbidden hours on the premises by their employees and whiskey sold on the premises by their employees, and the licensees would be immune to disciplinary action by the State Board of Alcoholic Control, if they had no knowledge of it. Such a result would cause a complete breakdown of beverage control by the State, and cannot have been contemplated by the Legislature.

In a number of cases the courts have upheld revocation, cancellation or suspension of liquor licenses because of improper, or wrongful or unlawful acts of the licensees' employees or agents, although such acts are committed against the instructions of the licensee or without his knowledge or consent. This is sound law, which we adopt. Cornell v. Reilly, 127 Cal.App.2d 178, 273 P.2d 572, 578; Mantzoros v. State Bd. of Equalization, 87 Cal.App.2d 140, 144, 196 P.2d 657, 660; Chambers v. Herrick, 172 Kan. 510, 241 P.2d 748; Anschutz v. Michigan Liquor Control Commission, 343 Mich. 630, 73 N.W.2d 533; In re Suspension of License by Oregon Liq. Control Comm., 180 Or. 495, 177 P.2d 406; Bradley v. Texas Liquor Control Board, Tex.Civ.App., 108 S.W.2d 300; 48 C.J.S. Intoxicating Liquors § 175, p. 282; 30 Am.Jur., Intoxicating Liquors, Section 146 and particularly the 1956 Cumulative Supp., Section 146, "p. 331 Add, following note 3"; Annotation 3 A.L. R.2d pp. 108-111, where numerous cases are cited; Ann.Cas.1912A, 1111, where many cases are cited. See Texas Liquor Control Board v. Warfield, Tex.Civ.App., 122 S.W.2d 669. See also Sandstrom v. California Horse Racing Board, 31 Cal.2d 401, 189 P.2d 17, 3 A.L.R.2d 90, where it was held that: "The state may reasonably provide for the suspension, irrespective of guilty participation or culpable negligence, of a race horse trainer's license if stimulating or depressive drugs shall be found to have been administered to a horse participating in a race on the result of which wagering is permitted"; and also Annotation 3 A.L.R.2d p. 114.

In Chambers v. Herrick, supra [172 Kan. 510, 241 P.2d 753], the Supreme Court of Kansas said: "In our opinion there is no room for debate on the question whether, for the purpose of suspension or cancellation of licenses, the holder of a retail liquor license should be held responsible for the acts and conduct of his employee in the operation of the business. Sound public policy requires that he is responsible. To hold otherwise would lead to a complete breakdown of the whole system and theory of supervision contemplated by the Act, and would permit a licensee to escape liability for suspension or revocation of his license merely on the ground he had no knowledge of and had not authorized or approved a violation by the employee. In an effort to get at this very thing the legislature has seen fit to classify those persons to whom licenses may be granted and who may be employed by licensees. In the nature of things it must be held that the licensee is responsible at all times for the acts and conduct of his employee in the operation of the business. The rule under consideration is not unreasonable, arbitrary, capricious or in contravention of the Act, and is not unconstitutional."

The lower court was correct in upholding the decision of the State Board of Alcoholic Control, and the judgment is

Affirmed.