Fulmer Supermarket, Inc. v. State of Ohio, Director, Department of Liquor Control

• Court: Ohio Court of Appeals
• Writing for the Court: WHITESIDE, Presiding Judge.
• Decision Date: 13 September 1988
• Docket Number: 88-LW-3215,88AP-26
• Citation: Fulmer Supermarket, Inc. v. State of Ohio, Director, Department of Liquor Control, 88-LW-3215, 88AP-26 (Ohio App. Sep 13, 1988)
• Parties: FULMER SUPERMARKET, INC., Plaintiff-Appellant, v. STATE of Ohio, DIRECTOR, DEPARTMENT OF LIQUOR CONTROL, Defendant-Appellee.

FULMER SUPERMARKET, INC. Plaintiff-Appellant, v. STATE of Ohio, DIRECTOR, DEPARTMENT OF LIQUOR CONTROL, Defendant-Appellee.

No. 88AP-26.

88-LW-3215 (10th)

Court of Appeals of Ohio, Tenth District Franklin.

September 13, 1988

Appeal from the Franklin County Common Pleas Court.

Crabbe Brown, Jones, Potts & Schmidt, and Larry H. James, for appellant.

Anthony J. Celebrezze, Jr., Attorney General, James M. Guthrie and Nathan Gordon, for appellee.

OPINION

WHITESIDE Presiding Judge.

Plaintiff, Fulmer Supermarket, Inc., appeals from a judgment of the Franklin County Court of Common Pleas and raises four assignments of error (each labeled in the brief as a "proposition of law") as follows:

"I.The trial court erred in ruling that a liquor license is not a property interest right.

"II.The trial court erred in ruling that a liquor license is not a protected right under the Due Process Clause or Equal Protection Clause of the Fourteenth Amendment to the U.S. Constitution and the Ohio Constitution.

"III.The trial court erred in ruling that section 4301.32 of the Ohio Revised Code is not arbitrary, capricious, unreasonable and unconstitutional.

"IV.The trial court erred in ruling that appellee did not violate section 4301.37 of the Ohio Revised Code."

Plaintiff commenced this action in the Franklin County Court of Common Pleas seeking a declaratory judgment, with ancilliary injunctive relief, as to the constitutionality of R.C. 4301.32 to 4301.39, and more specifically, R.C. 4301.32. The common pleas court found that plaintiff is not entitled to injunctive relief because the statutes in question have previously been held to be constitutional by this court in Rickard v. Ohio Dept. of Liquor Control (1986), 29 Ohio App.3d 133.

Local-option petitions were filed and a local-option election was conducted in precinct CLB in Xenia, Ohio, on May 6, 1986 as a result of which, the sale of beer, wine and mixed beverages was prohibited in said precinct. At the time of the election, plaintiff was a holder of a D2 and a D2A permit. Pursuant to R.C. 4301.391, the Department of Liquor Control notified plaintiff that it could no longer sell beer, wine and mixed beverages in the premises in question, under their D2 or D2A permit and, accordingly, should place those permits in safekeeping, pursuant to R.C. 4301.39.

Plaintiff did not receive notice of the local-option election to be held May 6, 1986 and as a result of the inability to sell alcohol at that location, will lose approximately $3,500 per week based upon sales on the permit premises prior to the local-option election.

By the first assignment of error, plaintiff contends that the trial court erred in holding that a liquor license is not a property-interest right. In doing so, the trial court was consistent with the decision of this court in Scioto Trails Co. v. Dept. of Liquor Control (1983), 11 Ohio App.3d 75, wherein we expressly held that a liquor permit issued by the Department of Liquor Control is neither a contract nor a property right in the constitutional sense and is subject to limitation and termination as provided by statute. In so holding, we followed the second paragraph of the syllabus of State, ex rel. Zugravu, v. O'Brien (1935), 130 Ohio St. 23, which states that "[p]ermits to carry on the liquor business * * * are mere licenses, revocable as therein provided, and create no contract or property right." We also followed, and were and are bound by, the fifth paragraph of the syllabus of Abraham v. Fioramonte (1952), 158 Ohio St. 213 which holds expressly that "[p]ermits issued by the Department of Liquor Control * * * are personal licenses and are not property which can be mortgaged or seized under execution * * *."

Notwithstanding this conclusion, we also noted in Scioto Trails that there may be certain interests in a liquor license, as created by statute, which partake of the nature of a property right, including the right to receive compensation for transferring a liquor license to another, but subject to the approval of the Department of Liquor Control of such transfer. What we concluded in Scioto Trails, supra, is that a liquor license is limited in scope by the legislative provisions providing for its termination. One such continuing provision for "termination" of a liquor permit is the local-option election statutory provisions providing not only that such a local-option election may be conducted but, also, that if the electorate so vote, existing liquor licenses are terminated thirty days after the result of the election. However, we also noted that the termination of the liquor permit itself is not automatic as a result of an local-option election, but that the holder thereof may retain the liquor permit and place it in safekeeping until another location for use of such permit may be found, pursuant to the provisions of R.C. 4301.39 which provides in part that "[i]f, as the result of a local option election, * * * the use of a permit is made wholly unlawful, the permit holder may, within thirty days after the certification of such final result by the board of elections to the department, deliver his permit to the department for safekeeping * * *."

R.C. 4301.391 specifically provides that "[n]o permit premises shall remain in operation inconsistent with the results of a local option election after the thirty day period set forth in section 4301.39 of the Revised Code and no court other than in a recount or election contest shall suspend or hold in abeyance any restriction or cancellation brought about by a local option election pursuant to sections 4301.32 to 4301.41, inclusive, and 4305.14 of the Revised Code." Thus, as we have held, the holder of a liquor license holds the permit subject to the exercise of the right of local option with the contingency of termination as set forth in R.C. 4301.39 and 4301.391, supra. However, we further noted in Scioto Trails that the permit may be placed in safekeeping pursuant to R.C. 4303.272, which preserves to the permit holder any monetary value of the liquor permit allowing him to renew the permit once and to transfer to a different location or to another person pursuant to the revisions of R.C. 4303.272.

Plaintiff asks this court to reconsider the "property-interest issue" and relies upon Paramount Finance Co. v. United States (C.A.6, 1967), 379 F.2d 543 and Bogus v. American National Bank (C.A.10, 1968), 401 F.2d 458. Not only is neither of these cases binding upon us, but they do not answer the specific question before us, and are inconsistent with state law on the question. Nor does either case attempt to deal with the constitutional issue of property rights. In short, none of the cases cited by plaintiff have any bearing upon the issue before us, which depends upon Ohio law and Ohio statutes and determinations of the Ohio Supreme Court by which we are bound.

As noted above, the Supreme Court of Ohio has twice held that liquor permits are neither contracts nor property. This court cannot overrule those decisions of the Supreme Court of Ohio, even if we were inclined to do so.

As this court held in Scioto Trails, supra, there is a monetary value to a liquor license, subject to the statutory provisions controlling use of the liquor permit. In other words, the holder of a liquor permit holds it subject to the various statutory provisions pertaining to its use and "ownership." A transfer of a liquor permit is permitted only upon approval of the Department of Liquor Control. The "value" of the permit is gained not from the permit itself, or the business conducted pursuant to the permit but, instead, because of statutory and rule limitations upon the number of permits that may be issued within a given area.

The question before us, and which was before us in Scioto Trails, and in Rickard, supra, is whether there is a property right to continue to operate a business at a specific location pursuant to a liquor permit issued by the Department of Liquor Control. Plaintiff has cited no cases indicating that such a property right exists. In other words, to the extent that plaintiff may have a "property interest" in the liquor permits, such "property interest" is preserved by the statutory provisions permitting plaintiff to retain the permits and even place them in safekeeping until another location may be found to use the permits, where the location at which they previously had been used is no longer available for such use because of a local-option election. In other words, even assuming that there may be a "property interest" in the liquor permits themselves, there is no property interest or property right in the use of such permits in precinct CLB in Xenia, Ohio. The first assignment of error not well-taken.

By its second assignment of error, plaintiff contends that the trial court erred in finding that the liquor license is not a protected right under the Due Process Clause or the Equal Protection Clause of the Fourteenth Amendment to the United States Constitution and similar protections under the Ohio Constitution.

The precise issue was determined by this court in Rickard, supra, and in Scioto Trails, supra. While recognizing that certain due process and equal protection rights may exist with respect to a liquor permit, R.C. 4301.32 does not violate any due process or equal protection right. In Rickard, we noted that the decision in Scioto Trails may have involved only what is sometimes called substantive due process, whereas procedural due process issues are raised in Rickard. In Scioto Trails we stated at pages 79-80 that:

" * * * [E]ven though a liquor permit may be subject to protection of due process or equal protection under some limited circumstances, there has been no denial under the...