Untitled Texas Attorney General Opinion ( 1939 )

Hon. Bert Rbrd, Administrator
Texas Ldquor Control Board
Austin, Texas
Dear Sir: Opinion No. O-1145
Re: Whether Acts of members of
Rouston country Club, Houston,
Texas, in operations of such club,
constitute a violation of the Texas
Liquor Control Act.
Your rsquest for an opinicn on the above stated question has
been receiked by this department. The facts, with reference to the op-
erations of Houston Country Club, as stated by you, are as followsr
"No personmay become a participant in the
Revolving Fund unless he is a member of the Club,
but membership in the Club does not automatically
make hima participant in the Revolving Fund. Each
member of the club who desires to become a partici-
pant in the Revolving F'cndis required to pay $5
into the fund, and with the fund so created liquor
is purchased in packages from a regular retail store.
"The stock of liquor so purchased and belong-
ing to,the participants in the Revolving Fund is
kept in the club house and the participants in the
fund are entitled to make withdrawals therefrom, to
be consumed as a straight drink, as a highball, as
oonstitutents of a cocktail, or otherwise, and either
on or off the premises of the Country Club. Liquor
so withdrawn is served to the Revolving Fund partici-
pants by persons who are on the payroll of Rouston
Country Club.
"Only participants who have contributed to the
Revolving Fund are permitted to make withdrawals from
this liquor stock, and for each withdrawal a slip is
made out which must be signed by the participant be-
fore the withdrawal is made. A, participant may make
withdrawals for any other person, in the same manner
that he makes tithdrawals for himself, -- that is, by
signing his - name thersfor. There is set out on
the face of such slip the character of the drink,
Hon. Bert Ford, Page 2 (O-1146)
such as whiskey, gin, hightall, or martini cocktail,
as the case may be, with a specified charge therefor,
which depends upon the nature of the drink and the
ingredients therein. At the end of eachmonth an
inventory is taken of the liquor stock and the cost
value of the liquors taken from the stock during the
month is determined. This amount, i.e., cost value
of the liquor withdrawn, is then deducted from the
total amount charged during the month against all
the participants in the fund, and is put back into
the fund, afiilethe remainder is paid to the Country
Club in payment for the ice, soda and personal ser-
vices supplied by it to the participants in the fund.
"One of the members of the Revolving Lund handles
the purchases of liquor which are necessary to replen-
ish the stock that is owned by the participants in the
fund. At the end of each calendar month the Country
Club purchases fram the Revolving Lund the withdrawal
slips signed during that month by the participants in
the fund, and collects the amount theredf from such
partioipants in the same manner that it collects the
regular club bills.
"The Houston Country Club holdswine and beer re-
tailer's permit No. 15879,.issued January 1, 1939,
which Is a renewal. The stock of laine and beer owned
and served by the olub is kept in a small building
adjacent to the main building of the olub. Entranoe
to this small store rocnu is gained by stepping fram
the porch of the main building into the door of the
store room. Beer and wines are served by miters
frDIpthis store room into all parts of the club house
and grounds, including,the spaces in which the stock
of liquor owned by participants in the Revolving Fund
is kept and drinks of liquor are served to such parti-
cipants. Toe same praiterswho serve wine and beer from
this store roan also serve drinks of liquor to the par-
ticipants in the Revolving Fund. Wins and beer served
by the club proper is signed for on a different type of
check than that used Iy the Revolving Fund."
Section 3(a) of Article 1, of the Texas Liquor Control
Act, defines the term "open saloon" as follows:
"The term *open saloon' as used in this Act
means aqg place where any alcoholic beverage what-
ever, manufactured in whole or in part by means of
the process of distillation, or any liquor composed
Hon. Pert Fod, Page g (O-1145)
or compounded in part of distilled spirits, is sold
or offered for sale for beverage purposes hy the
drink or in broken or unsealed containers, or aw
place where aw such liquors are sold or offered for
sale for hman ccnslrmption011the premises where
sold."
Subdivision (b) of Section 3, reads as follows:
"It shall be unlaaful for any person, whether
as principal, agents or employees, to operate or
assist in operating, or to be directly or indirectly
interested in the operation of any open saloon in
this Ste.te."
In the case of Adkins v. State, 95 S.VL, the matedal facts
are about as follows:
A group of men formed a club. These men in turn hired a
steward at a fixed salary. The steward ordered beer for
the members of the club and placed such beer in the club
room for them. Each member of the club paid $l&C for a
membership and received tickets which represented his in-
terest in the beer the steward ordered. After the keg
of beer arrived at the club house a ticket was placed in
a-box~and a glass of beer was drawn by any member who
desired one, each ticket representinv (I~1~88 of beere
The beer which ~88 ordered Ty the steward for the pur-
chasers and paid for by said purchasers. The Court of
Criminal Appeals held in this case that the facts estab-
lished a sale of beer by the steward eachtime that a
glass of beer was drawn by a member of the club.
In the case of Sutton v. State, 40 S.W. 501:
A certain firm kept what was known as "Temperance Hall."
Certain parties paid 50 cents for the privilege of buy-
ing beer from the firm at the ordinary retail price.
The 60 cents paid to beccrmea member of the alleged club
was all the money ever paid into the concern, except the
usual price for beer when purchased. Such firm received
1,630 dozen bottles of beer in five months; kept the
stockmplenished with the money arising from sales to
members : and its pay was the profits. Ihe court of crim-
inal Appeals of this State held that this was clearly an
evasion of the local option law.
In the case of Krnavek v. Stats, 41 S.W. 612, the facts were
about as rnllowsr
..
Hon. Bert Ford, Page 4.(0-1145)
After the enactment of a local option law, a club
was inoorporated for social and literary purposes,
and to provide the convenience of a clubrocm~ It
had a billiard table, a domino tahls and 12 books,
and took a semi-rmekly paper* The club bought
large quantities of intoxicants,md employed an
ex-saloon keeper at a monthly salary to sell them
at retail to its menbers only, from the bar fona-
erly owned by him, and the proceeds of such sale
became the property of the club* The Court of
CrMnal Appeals of this State.held that the club
we.8formed for the purpose of evading the local
option law.
In the case of Fwige V* State, 95 &PC. 506:
A club was incorporated for social purposes. The
manager of such club devoted his time to the manganent
of it8 affairso A~membership fee of $1 was paid* him
by eaah member. The members of the club obtained beer
by purchasing tickets, The beer was obtained the day
after the purchase of the tickets. The manager in-
structed the members how to order beer by stating that
when the members wanted beer, the should put money in
a box and take out a ticket for each nickel, and that
could be procured at the clubrocm the following night.
Held, that the club members, when they paid their
money into the treasury, parted with it to the club,
so that rhen it sent out the money it bought beer on
its own behalf, making the manager liable for sale.
In the cass of Adams V. State, 145 S.W. 940, the Court
of Criminal Appeals of this State held:
Where a club purchased liquors in bulk with money
in the treasury a distribution of the same to members
at the usual price constituted a sale within the prohi-
bition laws.
In State v. Country Club, 173 S.H. 570, the Qurt of
Criminal Appeals of this State held*
The dispensing of intoxicating liquors by an
incorporated, bona fide social club to its members,
for a swa sufficient to psv the cost of the liquors
and of maintaining the aermlce, is a sale of such
Xauors o
_ .. -
Hon. Bert Ford, Page 5 (O-1145)
In the case of Williams V. State, 103 S.W. (2d) 380, the
facts were as follows:
The defendant was found in the possession of ten
cases of beer, in the city of,Abilene, in Taylor County,
Texas. At the time defendant was the manager of xhat
1~s known as the "Abilene Athletic Club," which had
approximately 250 members. A prerequisite to member-
ship being that a written application had to be made
which called for a deposit qf $5.00 by the applicant
with said manager. Upon being approved as a member of
the club, the applicant paid a monthly sum of $1.00
dues, the primary purpose of the $5.00 mentioned being
that it was to be used in the purchase of merchandise;
and also if the member nithdrew he was entitled to the
return of his $5 deposit, provided it had not been con-
sumed in the individual purchase of merchandise or in
the payment of dues. Rhen the $5 deposit had been con-
suxed, it ms also understood that the members should
deposit a like strm;alxo the general properties and
activities of the club are set out; it is shown that
appellant is permitted to sell chexing grrm,cigars,
cigarettes, sandwiches, coffee, milk, and soft drinks
and put the profits of such business into the payment
of part OS his salary as manager. It is further set out
in the agreed statement of the facts in this case that
some of the members of said Athletio Club had directed
appellant to have on hand in said club beer for their
constiption and that the beer upon which this prosecu-
tion xas based hadbeen ordered by various members and
that the defendant had gone to Sleetwater, and acting as
manager of said club and agent for the members of said
club had purchased with the money of said membsrs said
beer~to bring 'tackfor the members c+'fhe club. Each
member was to pay the manager 15 cents per container
for said beer when he received his beer at said club,
and said 15 cents deposit, if any, nas deposited in
*the members deposit account" to replenish same and to
be used in accordance with the direction of the members
ofthe club. Appellant got no profit from the sale of
any beer but from the revenues, dues, and profits fran
the sale of merohandise were to be paid all expenses
in the opration of said club, the rent of the building
and salaries of attendants. The Court of Criminal
Appeals held in this case under the facts, that the
defendant possessed intoxicating liquors for the pur-
pose of sale in a dry area.
It is true that the violation in the Williams case, as well
as those in the other casss herein referred to, occurred in dry territory,
honever, tn view of the definition of an open saloon, in our opinion, the
Hon. Bert Ford, page 6 (O-1145)
facts herein set forth with referenoe to~the manner of operation of the
Houston Country Club of Houston, Texas, clearly show that the acts of
the members of such club, in the operating of same, constitute a viola-
tion of the Texas Liquor Control Act, in that the operation of seme
comes within the definition of an open saloon, which is prohibited by
statute in the State of Texas.
It would seem, that in so far as the selling of alcoholic
beverages, manufactured in whole or in part, by means of the process of
distillation, or any liquor composed or ccmpounded, in part of distilled
spirits, or the offering for sale of the same, by the Luston County Club,
is concerned, the members of said club are attempting to do indirectly,
what they cannot legally do directly.
In your letter you also request an opinion as to whether the
River Oaks Country Club of Houston, Texas, under the facts suhnitted, is
operated as an open saloon. We see no differenae in the method of opera-
tion of these tvc clubs, as far as the handling of their liquor is ccn-
cerned, except that the latter purchases its liquor through a trustee.
This probably makes the trustee guilty of operating an open saloon, and
releases the club members of such liability.
We do not think that there is any doubt but that the fact
that liquor is dispensed to msmbers of these clubs by the drink, coupled
with the further fact that suoh members are called upon to contribute
money to the Revolving Fund, and that they do so contribute, 80 that liq-
uormay be kept on hand, constitutes sales of liquor by the drink on the
part of those who deliver the liquor to the various members, whoever they
4w be, and that both clubs in question are being operated as open
saloons.
He trust that this satisfactorily enswers your inquiry.
Yours very truly
ATTORNEY GENERAL OF TEXAS
By
/s/Fred C. Chandler
Fred C, Chandler
bssistant
FCCsob:egw
_I.. APPR+OVED
APPROVRD AUG. 26, 1939 Opinion Conrmittee
/s/GERALD C. MANN By*
ATTORNSYGRNERAL OFTEXAS Chairman