Geer v. Stathopulos

Mr. Justice Frantz

delivered the opinion of the Court.

Stathopulos applied for a hotel and restaurant liquor license pursuant to the Liquor Code of 1935 (C.R.S. ’53, 75-2-1 et seq.) The application was, after hearing, denied by the Manager of Safety and Excise, the licensing authority of the City and County of Denver. These parties will be respectively referred to in this opinion as the applicant and the Manager.

In denying the application, the Manager held:

“1. In nay opinion, you failed to establish a prima facie case as to the statutory need for an additional liquor outlet to serve the reasonable requirements of this neighborhood.

“2. In arriving at this decision, due consideration was given to the 303 written signatures in favor of the issuance of this license. However, in my judgment, more weight is given to the oral testimony produced by persons appearing as witnesses than to mute signatures on petitions. None of the persons appearing as witnesses could testify that there was a need for this additional outlet. The evidence taken in its most favorable light established nothing more than it would be desirable for periodic events at the Coliseum.

“3. There are four Hotel and Restaurant Liquor Outlets in this neighborhood which adequately serve the reasonable requirements of the residents thereof.” (Emphasis supplied.)

After the denial of this application, the applicant sought relief under Rule 106 (a) (4) R.C.P. Colo, (a proceeding in the nature of certiorari) against the Manager’s decision, and obtained an order from the District Court of the City and County of Denver requiring the Manager to show cause why such license should not be granted. In compliance with the order to show cause, the Manager certified the record and transcript of the proceedings before him, and sought thereby to be justified in his denial of the application for such license.

On the day appointed for trial of the cause the same was assigned to the Hon. Edward J. Keating, and the Manager thereupon filed his motion to disqualify, charging said Judge with being not qualified to sit as the trial judge in the matter for the reason that he was prejudiced in favor of the applicant and against the Manager in the case under consideration and in all similar cases. This motion to disqualify was supported by an affidavit which stated that said Judge had “expressed personal opinions, both in chambers and in open court, to the effect that the handling and administration of liquor licenses in and for the City and County of Denver has been, and is a rotten, stinking mess and that in his opinion, the entire matter should be investigated by a grand jury.” The affidavit also stated that the Judge told the attorney for the Manager in open court “that he, said Judge, intends to reverse the decisions of the Manager in every case where he has the opportunity, and 'that he will keep this counsel busy appealing his decisions to the Supreme Court until a grand jury or someone else does something to straighten this matter out.”

This motion to disqualify was denied, the court in part saying, “For the purposes of the record this court wishes to let it be known that those portions of the affidavit as submitted by able counsel for the City Attorney’s Office as to statements made by this court, were made upon the evidence submitted in cases heretofore tried by this court. This court does- not feel that he is prejudiced'in this matter in any way, manner, shape or form; that he knows none of the parties involved herein, and that this motion is denied.”

Apparently the Manager was satisfied at -the hearing before him that all the requirements of the law relating to qualifications of applicants, and conditions, for the license were met, excepting the proof of the reasonable needs of the neighborhood. What was the evidence bearing on this matter of the reasonable requirements of the neighborhood?

From the testimony and the exhibits it appears that a number of persons in the area were consulted regarding their views on the question of the issuance of the license. Among the persons thus contacted by the applicant, none registered any objection. Many of them, 303 in number, representing 87.3% of those approached, signed the applicant’s petition in support of the issuance of the license. Of the 44 who refused to sign for various reasons (such as being employed by the City), only 15 said they objected to the issuance of a license, and this on the sole ground that they were opposed to “liquor in any shape or form.”

The area involved is primarily industrial in character, but it contains the homes of approximately 500 people who live within its confines. In this area are the Coliseum and the Denver Stock Yards. The business of the applicant is located on the Northeast side of East 46th Avenue, directly across from the Coliseum. East 46th Avenue is a very busy thoroughfare in Denver; each day some twenty thousand cars pass the applicant’s location.

There was testimony that this additional outlet was needed in order to serve patrons attending entertainment at the Coliseum and working in the area; that the applicant intended to operate a first-class restaurant capable of accommodating about 160 persons at one time, and providing for parking facilities for 50 cars; that a restaurant such as he intended to operate, was necessary to take care of the wants of the public traversing East 46th Avenue.

Because daily between 15 and 20 persons came and left the restaurant due to inability to obtain liquor with their meals, the present owner of the business (who has given an option to the applicant to buy the establishment) believes there is a need for the license sought by the applicant. The business is presently licensed to sell 3.2 beer.

Introduced in evidence was a map, to which was attached a statement of outlets in the area, obtained from the Manager’s records. These records revealed that there were four places licensed in the neighborhood to serve malt, vinous and spirituous liquors under hotel and restaurant licenses.

There were no remonstrances signed by residents of the neighborhood protesting the issuance of a license. No person appeared at the hearing in the Manager’s office to oppose the application, excepting a clergyman who did not live in the area, and as to his testimony, the Manager held that his statement that the churches of Colorado were against the issuance- of the license “had no evidentiary weight at all.”

Based upon the record before it the trial court held that the denial of the application “was and is clearly without ‘good cause,’ ” and directed the Manager to issue the license requested by the applicant. The Manager seeks reversal of this judgment.

It has been urged in the Manager’s brief that the trial judge should have disqualified himself on the sKbwing made by the motion and affidavit, and that his failure to do so requires reversal.

Every litigant is entitled to a fair and impartial trial. A fair and impartial trial, the very desideratum of.the administration of justice, is a judicial process by which a court hears before it decides; by which it conducts a dispassionate inquiry, and renders judgment only after trial. The antithesis of a fair and impartial trial is prejudgment by a court. A tendency to prejudge, or a prejudgment of a particular controversy, or of a class or character of cases only sucks the administration of justice down into the eddy of disrepute.

Had this been a trial de novo before Judge Keating, it would have been our duty to review his ruling on the “motion to disqualify.” While we do not condone prejudgment of any controversy, including a case of the character now before us, we deem it unnecessary to determine whether this case should be reversed on the ground of error for failure of the trial judge to disqualify himself.

The review of the Manager’s action, denying the application for a liquor license, came before the trial judge on a printed record — the identical record before this court. Hence, there is no difference, as to what is being reviewed, between the trial court and this court. “In other words, this court ‘will examine the record as though the matter had never been heard or examined by the trial court, and will exercise its discretion in the matter as a trial court is authorized to do in such matters.’” Boise Flying Service v. General Motors Accept. Corp., 55 Ida. 5, 36 P. (2d) 813. Thus, the question initially forming the subject of this controversy will be fairly and impartially reviewed here, and there is no need for this court to go into the question of the disqualification of the trial judge.

We are not concerned with the rule ordinarily applicable to writs of error before this court — that we must approach the facts of a case by constantly keeping in mind the exclusive vantage point of the trial judge in that he was able in the trial to use his eyes, ears and intelligence to discern wherein was truth, and wherein credit and weight should be given to the testimony of witnesses. Such is not required in this case. The rule is well stated in Miller v. Taylor, 6 Colo. 41, as follows: “The testimony in this case was taken before a referee, and the rule that a decree or judgment will not be disturbed unless manifestly against the weight of evidence does not obtain.

“The opportunity which the jury, or the nisi prius court, when the trial is to the court, has to judge of the credibility of witnesses by their appearance on the stand and their general manner of testifying supplies the reason for the rule.

“Where the testimony of witnesses is taken before a master or referee no such opportunity is afforded, and the rule ceases with the reason for it.

“It becomes our duty in such case to examine the entire record, sift and weigh all the evidence with a view to a just determination, uninfluenced by the proposition that the court below had superior opportunities to judge of the credibility of witnesses.” See Jackson v. Allen, 4 Colo. 263; Conklin v. Shaw, 67 Colo. 169; Gerard v. Costen, 68 Colo. 542; Van de Vegt v. Commissioners, 98 Colo. 161, 55 P. (2d) 703, involving the issuance of a liquor license.

In view of the evidence before the Manager, was his refusal to grant the license arbitrary and without good cause? If it was, the trial court had the duty of ordering the license to issue; if not, the Manager’s action in the premises must be sustained and the trial court held to have ruled erroneously. C.R.S. ’53, 75-2-8 (2). In order properly to resolve the problem, the court must determine “whether or not the decision of the licensing authority was supported by competent evidence.” MacArthur v. Sanzalone, 123 Colo. 166, 225 P. (2d) 1044. “The question now before us is not as to whether there was any evidence to support the decision of the trial court, but rather whether there was any evidence to support the decision of the licensing authority, or whether he acted arbitrarily and capriciously.” MacArthur v. Presto, 122 Colo. 202, 221 P. (2d) 934.

The evidence, undisputed and not countered, except by the proof of the existence of four like licenses in the area (of which we will have more to say hereinafter), establishes a prima facie case for the granting of the application. To hold otherwise, as the Manager did, constitutes arbitrary action. “Capricious or arbitrary exercise of discretion by an administrative board can arise in only three ways, namely: * * * (c) By exercising, its discretion in such manner after a consideration of evidence before it as clearly to indicate that its action is based on conclusions from the evidence such that reasonable men fairly and honestly considering the evidence must reach contrary conclusions.” Van de Vegt v. Commissioners, supra; Page v. Blunt, 126 Colo. 324, 248 P. (2d) 1074.

Should the fact that four licenses have been issued in the area, in and of itself, remove the stigma of caprice and unreasonableness from the action of the Manager in denying applicant’s petition? We think not. In so holding, we recognize that the number of licenses in an area may be sufficient to warrant the Manager in denying the issuance of an additional license. But such is not the case before us. Four licenses in the area, without more in the record, prompts the court to regard the denial of the license involved as an arbitrary exercise of the Manager’s discretion.

Now, the Manager may have information, either from his records or from special knowledge, as to why four licenses are enough to meet all needs in the area in question. If so, the record and his findings and order' fail to disclose such information. Lacking such information, we shall not speculate as to its existence and as to its quantum or weight in order to uphold the Manager.

“It has been held that administrative notice is much wider than judicial notice, but it has also been held that an administrative body may not resort to judicial notice as a means of establishing a material fact that is not available tó the courts . . .” 73 C.J.S. 444, §123.

When a court is called upon to review the action of an administrative agency, it should be placed in the same position as such agency. If the administrative agency has knowledge of some fact and acts upon such knowledge, the agency should see to it that what it knows becomes part of the record in order to permit the reviewing court to evaluate the matter so known. Only then can the court be in the same position as the agency in a consideration of the problem successively confronting agency and court. People v. Walsh, 244 N.Y. 280, 155 N.E. 575. The point of the matter is so ably stated by Judge Cardozo in the cited case: “But the power of the board to do justice informally and promptly is not limited to cases where witnesses have been heard. Without any witnesses at all, it may act of its own knowledge, for, as constituted by the statute * * *, it is made up of men with special qualifications of training and experience. In that event, however, it must set forth in its return the facts known to its members, but not otherwise disclosed. To characterize the situation as a hardship without more does not tend in any substantial degree to enlighten a reviewing court. There must be disclosure of the facts from which hardship is inferred.

“We find neither evidence at the hearing, nor any statement, equivalent to evidence, by the board in its return, that this land, if not occupied by a garage, is incapable of application to a profitable use.” (Emphasis supplied.)

With his usual logic and eloquence Judge Cardozo concludes: “We thwart the scheme of the statute if we uphold a resolution for the concession of a privilege with neither evidence at the hearing, nor allegations in the answer to be accepted as a substitute for evidence. The Legislature has said that there shall be a review by certiorari. * * * Such review becomes impossible if without supporting evidence or equivalent averment the mere conclusion of hardship is sufficient and indeed decisive. There has been confided to the board a delicate jurisdiction and one easily abused. * * * Nothing is before use to justify or even suggest a doubt of the good faith and sincerity with which the power has been exercised.- At the same time judicial review would be reduced to an empty form if the requirement were relaxed that in the return of the proceedings the hardship and its occasion must be exhibited fully and at large.” (Emphasis supplied.)

We must not overlook the fact that the Liquor Code of 1935 provides for judicial review of the action of the licensing agency by “a writ of certiorari or other proper method.” The court “shall determine whether said refusal [to license] was arbitrary and without good cause, and if so finding, the said court shall order the state and local licensing authorities to issue said license.” C.R.S. ’53, 75-1-7. Such determination cannot be made unless the Manager discloses the bases for his denial. If the court fails to require disclosure, it cannot properly perform its function of review, and thereby the statute is circumvented.

There is coincidence in our thought and what was said in Leaman Transp. Corp. v. Penn. Public Utilities Commission, 153 Pa. Super. 303, 33 A. (2d) 721: “But where the final order rests in whole or in part upon judicial notice of facts, specific findings must appear in sufficient detail to enable the court on appeal to determine whether proper limits, in supplementing the testimony by judicial knowledge, have been observed.”

Whether the facts administratively known be matter appearing in the records of the agency, or part of the record in the particular case pending before the agency, or is properly judicially cognizable by a court, the administrative body should make known by a clear statement in the record of the hearing the matters it has considered by virtue of administrative notice. If such material forms the basis of its findings and determination, the agency should so state in terms which will afford the reviewing court the opportunity to exercise its function of scanning the record for the purpose of ascertaining whether the agency acted arbitrarily or capriciously.

We have gone to some lengths in discussing the administrative agency aspects of this case. Such was done for a purpose. Administrative law is becoming an ever-expanding phase of the law. Its mushrooming growth has evolved new problems.

Modern conditions, creating great complexities in our way of life, have shifted inquiry from the question of the desirability of administrative law to that of control. Emphasis must be placed upon safeguards necessary to insure against abuses which may result from an unfettered exercise of power.

The informality of hearings before such agencies, the relaxation of rules of evidence, long recognized as rules of reason by the common law, the despatch with which cases are disposed of, spell out the inherent dangers of administrative hearings. Desirable as administrative practise may have become, courts should be ever alert to safeguard the rights and privileges of parties who must go before such agencies from the risks of abuse which inhere in the system.

The judgment is affirmed.

Mr Justice Knauss and Mr. Justice Hall dissent.