Asmussen v. Schmidt

• Decision Date: 08 December 1972
• Docket Number: Nos. 11182--11187,s. 11182--11187
• Citation: 202 N.W.2d 857,87 S.D. 53
• Parties: Thomas S. ASMUSSEN, Plaintiff-Appellant, v. Lowell SCHMIDT, Commissioner of Revenue of the State of South Dakota and George Chamales, Defendants-Respondents, and G. E. Kelso and F. M. McDaniels, Jr., Defendants-Cross-Appellants.
• Court: South Dakota Supreme Court

Page 857

202 N.W.2d 857

87 S.D. 53

Thomas S. ASMUSSEN, Plaintiff-Appellant, v. Lowell SCHMIDT, Commissioner of Revenue of the State of South Dakota and George Chamales Defendants-Respondents and G. E. Kelso and F. M. McDaniels, Jr. Defendants-Cross-Appellants.

Nos. 11182--11187.

Supreme Court of South Dakota.

Dec. 8, 1972.

Donald J. Porter, of Martens, Goldsmith, May, Porter & Adam, Pierre, for plaintiff-appellant, Thomas S. Asmussen.

Keith A. Tidball, Pierre, for defendant, George Chamales.

John Dewell, Asst. Atty. Gen., Pierre, for defendant, Lowell Schmidt, Commissioner of Revenue of the State of S. D.

Charles Poches, Jr., Fort Pierre, for defendants-cross-appellants, G. E. Kelso and F. M. McDaniels, Jr.

RENTTO, Associate Judge.*

Plaintiff Asmussen on December 14, 1971 applied to the City of Pierre for a license to sell intoxicating liquors on-sale. Notice of this was published and after a hearing his application was approved by the Board of Commissioners of the city, and forwarded to the defendant Commissioner of Revenue. On January 13, 1972, the Commissioner returned the application to the city without action, stating it was in excess of the quota of such licenses authorized by law for the City of Pierre.

He commenced this action on February 16, 197i against the Commissioner for declaratory relief. During its pendency the others were added as defendants. They are persons whose applications for the same kind of license had been approved by the city and honored by the Commissioner. The matter was presented to the court on a written stipulation of facts entered into by all the parties. This made superfluous the findings of fact and conclusions of law appearing in the record. SDCL 15--6--52(b) states that findings of fact and conclusions are waived 'by entering into a stipulation of facts for consideration by the court.'

By its judgment the court determined that the Commissioner properly refused to act on Asmussen's application and that the granting of an on-sale license to Chamales was valid. It also held that the issuance of a license to Kelso and McDaniels was invalid. Asmussen appeals from the portion of the judgment unfavorable to him and Kelso and McDaniels from the part of it adverse to them. We will first consider the appeal of Asmussen.

In April 1971 Chamales applied to the City of Pierre for a Class Q intoxicating liquor license, generally referred to as a bottle club license. This type of operation had been authorized by Chap. 206, Laws of 1970. The city approved his application and the Commissioner on June 7, 1971, granted the license. The place where he proposed to operate his bottle club was designated as 312 West Sioux in Pierre. These premises consisted of three vacant lots. For this reason the Commissioner retained the license in his office until local requirements relative to his premises had been satisfied. Apparently Chamales was then proposing to build a restaurant and lounge building at the designated site.

In December 1970 he engaged local architects to design such facility, and about a year later contracts for its construction were awarded. Incidentally, no permit to build it had been issued when this matter was presented to the trial court. On October 29, 1971, he filed an application with the city to sell intoxicating liquor on-sale on the same premises for which his Q license had been issued. This application the city approved and sent to the Commissioner. On December 15, 1971, he granted the license applied for and delivered it to the applicant. Five months later it came to his attention that the proposed premises were not in existence, so he requested the license be returned to him, to be held until the contemplated premises were in compliance with statutory requirements. The license was returned to the Commissioner and is presently in his possession.

During 1971 Kelso and McDaniels had a license authorizing them to sell intoxicating liquor on-sale. Under it they operated the 406 Club Lounge and Bar at 406 South Pierre Street. On November 16 of that year they made application to the City of Pierre for a similar license for the year 1972 covering the same premises. Notice of this application was given and a hearing had thereon. The city on December 7, 1971, denied their application for the reason that they were not suitable persons to hold such licenses. Their application and check were returned to them on December 10, 1971.

On December 14, 1971, Asmussen applied to the city for a license to sell intoxicating liquor on-sale. The premises on which he proposed to operate as such licensee were the same as those in which Kelso and McDaniels had operated the 406 Club in 1971 and had been planning to operate in 1972. At a hearing held after notice the city prior to December 31, 1971 approved his application. This was the application the Commissioner declined to honor because the quota had been exhausted. The record does not reveal what possessory interest Asmussen had in the premises where he proposed to operate.

After the described denial of their application by the city on December 7, 1971, Kelso and McDaniels on December 30, 1971, executed an instrument which they denominated as Escrow Agreement. In it they designated themselves as holders of a 1971 on-sale liquor license and applicants for a 1972 license. It directed the Commissioner to forward their 1972 license to the City Auditor if their application was approved by him. At that time they had no application pending. They further agreed in the escrow not to operate under the 1972 license and authorized the City Auditor to hold it until the City Commission of Pierre approved the transfer of it to a party and a location agreed upon by the Commision.

Their escrow was supplemented by a written contract dated March 23, 1972 by which they sold and assigned to a third party, not Asmussen, their interest in the 406 Club and their 1972 on-sale liquor license, if it was granted. They further agreed to proceed under the Bulk Sales Law to effectuate the sale and execute all instruments required to carry out the agreed transfer. The escrow agreement was made a part of the contract. Whether a license applied for may be anticipatorily assigned in this manner we need not, and do not, determine. It was not questioned. See SDCL 35--2--7.

About a month later their former application which had been denied was delivered to the City along with the contract and a new check in payment of the required fee. On May 2, 1972, the Commission considered their application and approved it 'subject to the conditions of the contract attached thereto.' No Notice of this hearing was given. On May 25 the Commissioner issued the license applied for but in line with the policy of his department held it until local requirements relative to health, safety, fire and other standards had been met.

The 46th session of our legislature rewrote the alcoholic beverage laws. Chap. 211, Laws of 1971. One section of it fixed the maximum number of on-sale licenses that a municipality may approve. This appears as SDCL 35--4--11. So far as here pertinent it provides:

'The number of on-sale licenses issued shall not exceed three each and for the first one thousand of population and not exceed one each of such licenses for each additional one thousand of population or fraction thereof, provided, however, the number of such licenses shall not exceed the total number of such licenses allowable or issued prior to July 1, 1971.'

Under the population limitation 12 licenses were permissible in Pierre, but under the second phrase only 11 were allowable. Obviously the latter is controlling.

The parties are in agreement that when the Commissioner refused to award Asmussen a license, eleven had been granted in the City of Pierre. One of these was the Chamales on-sale license. To bring the license sought by him within the quota allowable, Asmussen contends that the Chamales license should not be charged against the quota. He initially...