Sinodis v. STATE BD. OF ALCOHOLIC CON., MALT BEV. DIV.

128 S.E.2d 587 (1962) 258 N.C. 282

Cornelius N. SINODIS and Nicholas J. Fermanides, t/a Las Vegas Inn, Petitioners,
v.
STATE BOARD OF ALCOHOLIC CONTROL, MALT BEVERAGE DIVISION, Respondents.

No. 469.

Supreme Court of North Carolina.

December 12, 1962.

T. W. Bruton, Atty. Gen., and Richard T. Sanders, Staff Attorney, Raleigh, for respondent appellants.

Bailey & Dixon by J. Ruffin Bailey, Raleigh, for petitioner appellees.

RODMAN, Justice.

The factual situation disclosed by this record does not require an answer to the question: May a permit to sell intoxicating beverages be suspended or cancelled without notice and hearing? Seemingly, a majority of the courts, when called upon to decide, have answered in the negative. See Annotation entitled "Right to hearing before revocation or suspension of liquor license," 35 A.L.R. 2d 1067, 30 Am.Jur. 638.

The Legislature of 1933 declared the policy of this State on the revocation of licenses for the sale of beer. It said such a license could be revoked only "after the licensee has been given an opportunity to be heard in his [self] defense." c. 319, sec. 15, P.L.1933. The policy then declared with respect to the revocation or suspension of permits to sell beer has been expressed in more detail in subsequent legislation. The right of a permittee to a hearing on charges warranting a suspension or revocation now appears as G.S. §§ 18-135 and 137. These were sections 6 and 8, c. 974, S.L.1949. The rights given by those statutes were supplemented by c. 1094, S.L.1953, now G.S. § 143-306 et seq., giving those adversely affected by administrative decisions the right to judicial review.

Since the statutes expressly accord the permittee the right to a hearing, the only questions for determination are: (1) What kind of hearing does the statute contemplate? (2) Have petitioners been denied a hearing of the kind contemplated by the statute?

The 1949 Legislature, when it wrote the present statutes, might not have been familiar with the language of Chief Justice Hughes in Morgan v. United States, 298 U.S. 468, 56 S. Ct. 906, 80 L. Ed. 1288, but we think it intended to provide a hearing of the kind described by him. He said: "The requirement of a ``full hearing' has obvious reference to the tradition of judicial proceedings in which evidence is received and weighed by the trier of the facts. The ``hearing' is designed to afford the safeguard that the one who decides shall be bound in good conscience to consider the evidence, to be guided by that alone, and to reach his conclusion uninfluenced by extraneous considerations which in other fields might have play in determining purely executive action. The ``hearing' is the hearing of evidence and argument. If the one who determines the facts which underlie the order has not considered evidence or argument, it is manifest that the hearing has not been given. * * * That duty cannot be performed by one who has not considered evidence or argument. It is not an impersonal obligation. It is a duty akin to that of a judge. The one who decides must hear.

"This necessary rule does not preclude practical administrative procedure in obtaining the aid of assistants in the department. Assistants may prosecute inquiries. Evidence may be taken by an examiner. Evidence thus taken may be sifted and analysed by competent subordinates. Argument may be oral or written. The requirements are not technical. But there must be a hearing in a substantial sense. And to give the substance of a hearing, which is for the purpose of making determinations upon evidence, the officer who makes the determinations must consider and appraise the evidence which justifies them. That duty undoubtedly may be an onerous one, but the performance of it in a substantial manner is inseparable from the exercise of the important authority conferred."

The philosophy expressed in the first Morgan appeal was adhered to by the Supreme Court when the case was again before it. See Morgan v. United States, 304 U.S. 1, 58 S. Ct. 773, 82 L. Ed. 1129. Similar views are expressed in Fifth Street Pier Corp v. City of Hoboken, 22 N.J. 326, 126 A.2d 6, and Mazza v. Cavicchia, 15 N.J. 498, 105 A.2d 545.

The statute, G.S. § 18-137, requires notice of the time and place for the hearing with an opportunity to offer evidence and to be represented by counsel. The charges must be specific. Permittee must have at least ten days to prepare his defense.

The Board, acting pursuant to the authority conferred by G.S. § 18-138, promulgated rules governing hearings. Copies of these rules were, as required by G.S. § 143-195, filed with the Secretary of State on 20 September 1956. The rules expressly require witnesses to be sworn. Permittee may object and except to any ruling, including the admission and exclusion of evidence. The exceptions so taken are a part of the record which the Board must consider. Argument, either oral or written, may be made. If the argument is oral, permittee may require it to be recorded and transmitted to the Board as a part of the record. Rule 5.

The record is submitted to the Board "for approval, modification or rejection as the Board may find to be justified by the record." (Emphasis supplied) Rule 8, Rules 12 and 13 provide:

"12. When an applicant or permittee makes written request for an additional hearing before the full Board, the Chairman shall cause him to be given at least ten days written notice of the time and place of a Board meeting at which he may be heard.

"13. Upon such hearing, the Board shall consider the record of the hearing before the hearing officer and may take such additional evidence for or against the applicant or permittee as may be presented. The Board may limit the introduction of evidence which is irrelevant or immaterial or which is merely cumulative and may limit the time permitted for oral argument. All testimony shall be taken under oath or affirmation and recorded. All objections to evidence or procedure, rulings thereon, and exceptions thereto shall be entered in the record."

In our opinion the rules as promulgated correctly interpret the statute. They accord a permittee full opportunity to show want of merit in the charges which, if true, would warrant revocation of his permit.

We find nothing in the record which justifies the contention that petitioners have been denied a hearing of the kind contemplated by the statute and provided for by the rules of the Board. True, the record does not show that petitioners were sent a copy of the hearing examiner's recommended findings and action which he thought the Board ought to take; but the record is barren of any suggestion that petitioners ever requested a copy of the proposed findings or recommendations. They knew when the Board would consider the transcript and act thereon. It is, we think, implicit in the rules that if petitioners had requested a copy of the proposed findings or the evidence before the Board acted, their request would have been complied with. All they were entitled to was a copy, if requested. No burden rested on the State to run petitioners down and furnish them with something without binding force, not requested, and probably not wanted. The failure to furnish without a request cannot be held violative of due process or our statutes providing for a hearing. For a similar result, see Dami v. Department of Alcoholic Beverage Control, 176 Cal. App. 2d 144, 1 Cal. Rptr. 213.

Petitioners did not request a hearing by the Board—a right expressly accorded them. Hence their application for judicial review must be dismissed. Only those who have exhausted their administrative remedies can seek the benefit of the statute. G.S. § 143-307. Warren v. Atlantic Coast Line R. R. Co., 223 N.C. 843, 28 S.E.2d 505; In re Wright, 228 N.C. 301, 45 S.E.2d 370; In re Employment Security Commission, 234 N.C. 651, 68 S.E.2d 311; Carson v. Board of Education of Mc-Dowell County, 4 Cir., 227 F.2d 789; Carson v. Warlick, 4 Cir., 238 F.2d 724.

Reversed.