Lewis v. City of Grand Rapids, 15669.

• Decision Date: 16 February 1966
• Docket Number: No. 15669.,15669.
• Parties: Alphonse LEWIS, Jr., Plaintiff-Appellee, v. CITY OF GRAND RAPIDS et al., Defendants-Appellants.
• Court: U.S. Court of Appeals — Sixth Circuit

356 F.2d 276 (1966)

Alphonse LEWIS, Jr., Plaintiff-Appellee, v. CITY OF GRAND RAPIDS et al., Defendants-Appellants.

No. 15669.

United States Court of Appeals Sixth Circuit.

February 16, 1966.

Wendell A. Miles, Grand Rapids, Mich., for appellants, William J. Garlington, City Atty., Dutchess, Mika, Miles, Meyers & Snow, Grand Rapids, Mich., on brief.

George W. Crockett, Jr., Detroit, Mich., for appellee, Alphonse Lewis, Jr., Grand Rapids, Mich., Charles M. Waugh, James Kobza, Muskegon, Mich., on brief.

Before CECIL, O'SULLIVAN and EDWARDS, Circuit Judges.

O'SULLIVAN, Circuit Judge.

Appellants, City of Grand Rapids, Michigan, and its Chief of Police, William A. Johnson, challenge a judgment of the United States District Court which vacated an order of the Grand Rapids City Commission denying approval of the transfer of a Class C liquor license to plaintiff-appellee, Alphonse Lewis, and affirmatively ordered the Chief to recommend and the City to grant such approval. Under the Michigan Liquor Control Act, such approval was required before the Liquor Control Commission would effectuate the transfer. M.S.A. § 18.988, Comp.Laws Mich. 1948, § 436.17. Roodvoets v. Anscer, 308 Mich. 360, 13 N.W.2d 850.

The District Judge held that the City Commission's action was the product of racial and other invidious discrimination and that plaintiff, a negro, was entitled to, and was denied, due process of law in the City's consideration of his application for such approval. After the desired approval was refused, and after a subsequent resolution of the Commission requesting the Liquor Control Commission to revoke the involved license, plaintiff brought this action in the United States District Court at Grand Rapids. His complaint charged deprivation of rights guaranteed by the First and Fourteenth Amendments to the United States Constitution, and asserted jurisdiction under pertinent civil rights sections of the Judicial Code.

We hold that the District Judge erred in his conclusion that consideration of the transfer application had to comply with traditional procedures of due process, viz., specification of grounds for refusal, presentation of evidence supporting such grounds, confrontation of witnesses with opportunity for cross-examination, and like procedures.

If racial bias or invidious discrimination motivated the actions of the City of Grand Rapids, or if denial of the transfer approval was the consequence of a conspiracy to deny plaintiff Lewis his civil rights, then such actions must be struck down as a denial of the Fourteenth Amendment's guarantee to plaintiff Lewis of equal protection of the law. Glicker v. Michigan Liquor Control Commission, 160 F.2d 96 (CA 6, 1947). Our review of the entire record of the case, however, leaves us with "the definite and firm conviction that a mistake has been committed" by the District Court findings in such regard. United States v. United States Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 92 L.Ed. 746, 766 (1948). Fed.R.Civ.P. 52(a). We reverse the judgment of the District Court to the extent that it vacates the order of the City Commission denying the transfer and affirmatively orders approval thereof. The City's brief does not challenge the District Judge's finding of denial of due process in the revocation of the license. We, therefore, do not discuss that. McCraw v. United Ass'n of Journeymen & App. of Plumbing, etc., 341 F.2d 705 (C.A. 6, 1965).

Much of the troubled history of Barnett's Bar, a Class C liquor establishment of Grand Rapids, is set forth in the extensive opinion of the District Judge. Lewis v. City of Grand Rapids, 222 F. Supp. 349-396 (W.D.Mich.1963). The opinion contains the District Judge's subjective conclusions and factual inferences upon which he based his findings. The Chief of Police and six of the seven members of the City Commission of Grand Rapids were convicted of conspiring to invidiously discriminate against plaintiff Lewis, motivated, at least in part, because he was a Negro.

Plaintiff Lewis' relevant connection with Barnett's Bar began in early 1959. Mr. Lewis, an attorney, had represented Patricia Barnett while she was under guardianship during her minority. Her property at that time consisted principally of her interest in the estate of her deceased father, the former licensee of Barnett's Bar, who had also been a client of Mr. Lewis. By marriage, Patricia Barnett became Patricia Ettress, and later Patricia Bell. The Liquor Control Commission did not consider this then 23 year old girl qualified to operate the bar and an initial step in Mr. Lewis' service to his young client was the making, on May 20, 1959, of a contract which made him the manager of Barnett's Bar. This arrangement was approved by the police authorities of Grand Rapids and was apparently required by the Liquor Control Commission as a condition to restoration of the license which had been suspended because of previous defaults. By this contract, plaintiff Lewis was to act as Mrs. Ettress' attorney as well as manager of her bar. He was given broad powers to sign all needed documents, and otherwise to exercise full control over the operation of the bar, including the right to hire and fire all of its employees. Lewis was to paid 6% of the bar's gross sales for the first year of his employment and 10% for the second and any subsequent term of the contract, with a guaranteed annual minimum compensation of $2,000.00. The contract further provided that Lewis was to be "the agent and attorney in fact" for his client. The record is unclear as to the amount of time Mr. Lewis spent at the bar in performance of his managerial duties. During the time of his management there were several defaults in payment of federal and state taxes, although it appears that Mr. Lewis cured at least one of such defaults with a loan from his own funds. One or more of such defaults brought about so-called "stop" orders to prevent the continued operation of the bar. During this period Lewis obtained a chattel mortgage on the bar equipment to secure advances made to Mrs. Ettress.

In August of 1960, as the consequence of a police investigation at the Barnett Bar premises, a complaint was filed with the Liquor Control Commission and with a Judge of the Police Court of Grand Rapids that the persons named therein were carrying on "the numbers game." Arrests of several persons were made. Mr. Lewis acted as attorney for those arrested and ultimately all charges were withdrawn or dismissed except as to one accused who pleaded guilty on October 2, 1961, to the unlawful possession of policy or pool tickets "at 58-60 Ionia Avenue, S.W." — the building where the bar was located.

On November 15, 1960, Patricia Ettress agreed to sell her license and business to one Dr. Cortez English for $18,000.00. In May of 1961, Lewis amended the English agreement to add himself as a purchaser with Dr. English. In April of 1961 Lewis had acquired a contract purchaser's interest in the building in which Barnett's Bar was located. The sellers had acquired their title from Patricia Ettress' stepmother. The contract of purchase in which Lewis acquired an interest was in the names of his sisters. Following the making of the contract under which Mr. Lewis was to join in buying out his client, there began the steps to get the needed approval of a transfer of the license to plaintiff Lewis and Dr. English.

During 1961 and into 1962, Mrs. Ettress at various times expressed her dissatisfaction with Mr. Lewis' conduct and with his plan to acquire her license. On several occasions she wrote to the Liquor Control Commission, withdrawing her consent to a transfer. On May 10, 1961, she wrote to Lewis expressing her desire to terminate the management contract, stating "you are unable to take care of my affairs * * * because of conflicting interest." On October 21, 1961, following two and one-half years of Lewis' management of the bar, Mrs. Ettress reported to the Liquor Control Commission that her bar business was then under padlock for failure to satisfy Federal tax liens and that her license was then in the hands of the Internal Revenue Service; that her only out "now as before" was to sell her business to pay her debts. She asked that the pending application for transfer be withdrawn "because of some things that have happened since that application was sent in originally with only Dr. Cortez English as the buyer, before he requested that attorney Alphonse Lewis, Jr., be named as a partner." Her letter proceeds,

"He has been the manager of the before mentioned Barnett\'s Bar and also my attorney and financier on many occasions. I had repeatedly asked him for a final accounting and he gave it to me this summer after I was all ready committed to sell it to him. But, in a nut shell it goes as follows, for managers fees from May 21, 1959 to May 21, 1961, 6% of the gross income for the first year and 10% of the gross income for the second year. Which came to $8,406.78. I of course had never been in business before and that was why the Commission requested that I have a manager at the time and also because I was only twenty-three at the time. Then also he wasn\'t what is referred to as a working manager because he is a attorney by profession law. So of course there were times when he didn\'t even come near the business few days at a time. He also billed me for miscellaneous legal fees which came to $2609.50. I felt that some of these came under management. In loans from him the amount comes to $6079.87, with 6% interest added in of course. The latter of which I\'m more than willing to pay back to him and I have no doubt in my mind that I owe him for what I borrowed from him. The grand total of this is $17,096.15. The sale that I mentioned before was for only $18,000. As you can see this leaves me with the problem of paying my other obligations, which I couldn\'t pay for in a life time as I couldn\'t possibly earn enough on a job to pay

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