Bundo v. City of Walled Lake

• Decision Date: 27 January 1976
• Docket Number: No. 8,8
• Citation: 395 Mich. 679,238 N.W.2d 154
• Parties: Benjamin BUNDO, Jr., d/b/a Camelot Inn, Plaintiff and Appellant, v. CITY OF WALLED LAKE, a Michigan Municipal Corporation and the Liquor CountrolCommission for the State of Michigan, jointly and severally, Defendants andAppellees.
• Court: Michigan Supreme Court

Page 154

238 N.W.2d 154

395 Mich. 679

Benjamin BUNDO, Jr., d/b/a Camelot Inn, Plaintiff and Appellant, v. CITY OF WALLED LAKE, a Michigan Municipal Corporation and the Liquor CountrolCommission for the State of

Michigan, jointly and severally,

Defendants andAppellees.

No. 8.

Supreme Court of Michigan.

Jan. 27, 1976.

Law Offices of Paul G. Valentino, J.D., P.C., by Paul G. Valentino, Pontiac, for appellant.

Joseph T. Brennan, Brennan & Bibeau, P.C., Farmington Hills, for defendant-appellee City of Walled Lake.

WILLIAMS, Justice.

We are asked in this case to decide 1) whether an individual seeking a renewal of a Class C Resort Liquor License under § 17 of the Michigan Liquor Control Act (MLCA) ¹ has an 'interest' in 'property' such that is entitled to due process protection, 2) if such an interest exists, what process is due the individual and 3) whether arbitrary and capricious actions by local legislative bodies in recommending to the Michigan Liquor Control Commission (MLCC) that liquor licenses not be renewed are subject to judicial review.

In answering questions one and three affirmatively and in setting forth basic due process requirements to be followed, we have not diminished the authority of local bodies to control the traffic in alcoholic beverages according to the best interests of the local community, Rather, we have enhanced the legitimacy of this authority by insuring that the rights of individuals are adequately protected and that abuses of discretion are not left unchecked.

I--FACTS

As the Court of Appeals suggested 'this is not a lawsuit about topless dancing.' Bundo v. City of Walled Lake, 53 Mich.App. 317, 318, 218 N.W.2d 869 (1974). The nature of the entertainment involved is irrelevant to the question of whether the Walled Lake City Council, in recommending non-renewal of plaintiff's liquor license must first give plaintiff notice and a hearing. The following brief summary of the facts is offered simply to describe the context in which the legal issues arose.

In April, 1967 plaintiff, Benjamin Bundo, Jr., obtained a Class C Liquor License issued by the Michigan Liquor Control Commission, defendant, along with an entertainment permit approved by defendant City of Walled Lake. The issuance of the local permit was conditioned by plaintiff's agreement not to have 'stripping' or go-go dancing on the premises of his establishment. ²

Plaintiff's liquor license and entertainment permit were renewed without incident for the years 1968 through 1971 but during 1971 plaintiff began to offer topless entertainment and that's when the problem arose. The city council requested that the MLCC revoke plaintiff's license. This request was later changed to a recommendation to the MLCC that it refuse to renew the liquor license. This recommendation had the effect under § 17 of the MLCA of compelling the MLCC to refuse to renew plaintiff's license. Plaintiff was never notified of the council's intent to take such action in recommending non-renewal nor was he afforded a hearing on the matter. ³ Acting on the recommendation of the city council, the MLCC notified the plaintiff on February 14, 1972, that his liquor license would not be renewed.

Plaintiff initiated proceedings in Oakland Circuit Court and obtained an order preventing both the city and MLCC from taking further action to revoke or refuse to renew the liquor license and entertainment permit. Plaintiff's liquor license was renewed twice through April 1974. On October 29, 1973, the Circuit Court granted the city's motion for summary judgment and vacated all restraining orders. Appeal was taken to the Court of Appeals which on April 18, 1974 entered an order conditionally continuing plaintiff's liquor license until further order by that court.

On May 2, 1974 the Court of Appeals affirmed the lower court's summary judgment in favor of the defendant. Bundo v. City of Walled Lake, 53 Mich.App. 317, 218 N.W.2d 869 (1974). We granted leave on June 24, 1974. 392 Mich. 755, 219 N.W.2d 613. We reverse and remand.

II--DUE PROCESS

The question whether procedural due process must be afforded in this case under the Constitutions of the United States ⁴ and Michigan ⁵ arisen in a particularly difficult context. First, it concerns neither revocation of an existing license nor application for a new license but renewal of an existing license. ⁶ Second, it involves, as was previously suggested, an area of regulation in which great deference has been given to local control.

Section 17 of the MLCA which establishes the statutory framework for issuing licenses to establishments selling alcoholic beverages provides in pertinent part:

'All applications for licenses to sell beer and wine or spirits for consumption on the premises, except in counties of 1,000,000 population or over, Shall be approved by the local legislative body in which said applicant's place of business is located before being granted a license by the commission, Except that in the case of an application for renewal of an existing license, where no objection to a renewal has been filed with the commission by the local legislative body, prior to 30 days before the date of expiration of the license, the approval of the local legislative body shall not be required. Upon request of the local legislative body in any county of less than 1,000,000 population, after due notice and proper hearing by the body, the commission shall revoke the license of any licensee granted a license to sell beer and wine or spirits for consumption on the premises.' (Emphasis added.)

Under § 17 liquor licenses may be Revoked upon the request of a local legislative body, but only after proper notice and hearing by that body, while in the case of applications for Renewal of existing licenses, the local legislative body may object and such action will compel the MLCC to deny renewal even though no notice or hearing has been afforded the license holder.

Plaintiff argues that he has an 'important interest' which is affected by the decision not to renew his license and citing Bell v. Burson, 402 U.S. 535, 91 S.Ct. 1586, 29 L.Ed.2d 90 (1971); Sniadach v. Family Finance Corp. of Bay View, 395 U.S. 337, 89 S.Ct. 1820, 23 L.Ed.2d 349 (1969); Goldberg v. Kelly, 397 U.S. 254, 90 S.Ct. 1011, 25 L.Ed.2d 287 (1969) contends he must be afforded rudimentary due process.

Defendant City of Walled Lake maintains that recent United States Supreme Court decisions which have affected due process requirements in licensing practices have no application to liquor licensing because of the long-standing tradition giving local municipalities wide latitude in regulating this industry which is of substantial interest to the community.

Defendant is correct in its characterization that the regulation of establishments selling alcoholic beverages is a special area and one in which the local community has been given a great deal of control. See Crowley v. Christensen, 137 U.S. 86, 11 S.Ct. 13, 34 L.Ed. 620 (1890); Johnson v. Liquor Control Commission, 266 Mich. 682, 685, 254 N.W. 557 (1934). However, if an individual has important interests which otherwise would be entitled to the protection of procedural due process, he cannot be denied this constitutional safeguard because the business in which he is engaged happens to involve alcoholic beverages.

In Wisconsin v. Constantineau, 400 U.S. 433, 91 S.Ct. 507, 27 L.Ed.2d 515 (1971), the

United States Supreme Court struck down a Wisconsin statute which permitted posting in establishments selling alcoholic beverages the names of individuals who were excessive drinkers. The act was voided because it failed to provide notice and hearing to the individuals affected. The Court recognized that the states' police power over intoxicating liquor is extremely broad but nonetheless found that the safeguards of due process must be afforded where an important individual 'interest' is involved. ⁷

However, having established that the nature of one's business does not vitiate constitutional safeguards for 'interests' otherwise entitled to constitutional protection leaves open the question whether the renewal of an existing liquor license under § 17 involves the type of individual 'interest' which would normally qualify for due process protection.

The United States and Michigan Constitutions provide that no person shall be deprived 'of life, liberty or property, without due process of law.' ⁸ Thus the focus of our inquiry becomes whether the renewal of an existing liquor license under § 17 of the MLCA involves a private 'interest' which is either 'liberty' or 'property' within the meaning of the due process clause of the United States and Michigan Constitutions.

In Board of Regents v. Roth, 408 U.S. 564, 92 S.Ct. 2701, 33 L.Ed.2d 548 (1972) and Perry v. Sindermann, 408 U.S. 593, 92 S.Ct. 2694, 33 L.Ed. 570 (1972), the United States Supreme Court discussed in some detail the nature of 'liberty' and 'property' protected by the due process clause of the 14th amendment. It is particularly appropriate that we turn our inquiry to an examination of these important cases because the Supreme Court in City of Kenosha v. Bruno, 412 U.S. 507, 93 S.Ct. 2222, 37 L.Ed.2d 109 (1973) remanded an action to a three-judge district court for consideration whether under Roth and Sindermann, tavern owners' due process rights were violated when local Wisconsin municipalities, without affording notice and an adversary as opposed to a legislative hearing, refused to renew their one-year liquor licenses. ⁹

The Roth and Sindermann cases, both summary judgment cases, involved the property rights in tenure for college professors who were not rehired by their respective institutions.

Roth was employed as an assistant professor for a fixed term of one year. The position was his first teaching job and the fixed term was specified in the notice of his faculty appointment. Tenure at the university where he was employed accrued only after...