Louis Stores, Inc. v. Dept. of Alcoholic Beverage Control

• Decision Date: 04 January 1962
• Citation: 18 Cal.Rptr. 294
• Court: California Court of Appeals Court of Appeals
• Parties: LOUIS STORES, INC., a corporation, Petitioner and Appellant, v. DEPARTMENT OF ALCOHOLIC BEVERAGE CONTROL OF the State of CALIFORNIA and Alcoholic Beverage Control Appeals Board of State of California, Respondents, California Beer Wholesalers Association, Inc., a corporation, Intervenor and Respondent. Civ. 19771.

Page 294

18 Cal.Rptr. 294

LOUIS STORES, INC., a corporation, Petitioner and Appellant, v. DEPARTMENT OF ALCOHOLIC BEVERAGE CONTROL OF the State of CALIFORNIA and Alcoholic Beverage Control Appeals Board of State of California, Respondents California Beer Wholesalers Association, Inc., a corporation, Intervenor and Respondent.

Civ. 19771.

District Court of Appeal, First District, Division 1, California.

Jan. 4, 1962.

As Modified on Denial of Rehearing Jan. 31. 1962.

Hearing Granted Feb. 28, 1962.

Opinion vacated 22 Cal.Rptr. 14, 371 P.2d 758.

Orr, Heuring & Wendel, David I. Wendel, Victor D. Rosen, Oakland, for appellant.

Stanley Mosk, Atty. Gen., Wiley W. Manuel, Deputy Atty. Gen., for respondent, Department of Alcoholic Beverage Control and the Alcoholic Beverage Control Appeals Board.

Albert G. Evans, San Francisco, for intervenor, California Beer Wholesalers Ass'n., Inc. TOBRINER, Justice.

This case presents the question whether the doctrine of res judicata applies to a decision of the Board of Equalization. Does its determination that a wholesale liquor license of a retail grocery chain should not be revoked bind the successor Department of Alcoholic Beverage Control in a subsequent case against the grocery chain upon the same facts? Should this holder of a business license be protected against successive attempts to forfeit the license upon the same grounds? For the reasons we hereinafter set forth, we think it should be afforded this protection.

The wholesale beer and wine license which the Department of Alcoholic Beverage Control revoked in this case related to the operation of appellant, Louis Stores, Inc., a chain of retail grocery stores doing business in Alameda and Contra Costa Counties. This organization maintains a warehouse in Emeryville from which it distributes food and beverages to its various retail outlets, and for which it holds a wholesale beer and wine license. Thirty-three of the chain's retail outlets possess separate retail off-sale beer and wine licenses. 'Between March 13, 1953 and August 2, 1956,' however, appellant admits it 'did not sell or attempt to sell beer and wine no any retail licenses other than its own separately licensed retail grocery stores * * *.' At no time did it intend to use the wholesale license for distribution of beer and wine to retail licensees in general; it has not held itself out to the public as a wholesaler.

The Board of Equalization, in 1953, sustained the validity of the wholesale license, and appellant relies upon that ruling to foreclose the department's current revocation. At that time the District Liquor Control Administrator brought against appellant an accusation which charged a violation of the then section 6, subdivision (f), of the Alcoholic Beverage Control Act, the predecessor of section 23779 of the Business and Professions Code. The board found that Louis Stores for a 45-day period failed to engage in the business of wholesaling beer and wine as defined in the named section but determined that this failure did not constitute a violation. The board concluded that the section was 'a 'grandfather clause' intended by the California Legislature to preserve to business organizations such as respondent [appellant] herein the right to continue to hold beer and wine wholesaler's licenses so long as such organizations do not engage in activities in the beer and wine business which are contrary to public welfare and morals, and so long as the board finds in the exercise of its discretion that the continuance of the licenses is not contrary to public welfare and morals.' The board then ruled that the accusation 'be dismissed without prejudice to the filing of an accusation charging a violation of subdivision (f) of section 6 of said act for a period or periods of time hereafter upon an showing that the holding of the beer and wine wholesaler's license by respondent [appellant] does present a situation which is contrary to the public welfare and morals and detrimental to the public interest.'

In 1956 the intervenor, California Beer Wholesalers Association, Inc., brought the proceedings which precipitated the present issue. The association filed an accusation upon the same grounds, now under section 23779 of the Business and Professions Code; the Department of Alcoholic Beverage Control, which superceded the Board of Equalization in this field, ordered the revocation of appellant's wholesale beer and wine license. The evidence adduced at the hearings showed no change in the manner of appellant's operations from the date of the previous proceedings. The record sets out no factual circumstances new or different from those prevailing at the earlier time. The appeals board affirmed the decision; appellant filed a petition for alternative and peremptory writs of mandate. The court granted the alternative writ but, after a hearing, denied the petition. From this decision appellant appeals.

We shall explain why we have concluded that the doctrine of res judicata applies to the 1953 decision of the board. That decision collaterally estops the instant proceedings before the Department of Alcoholic Beverage Control under section 23779 of the Business and Professions Code, ¹ in the absence of a showing that conditions have changed since the prior ruling or that the current use of the license is contrary to the public welfare and morals and detrimental to the public interest.

To reach the determinative point of this case we must first clear way the brushwood of situations in which res judicata does not apply to administrative bodies. Statewide administrative bodies fall into two classes: agencies that do, and those that do not, derive their powers from the Constitution. Res judicata applies to the former; not the latter. (Sale v. Railroad Commission (1940) 15 Cal.2d 612, 104 P.2d 38.) The Department of Alcoholic Beverage Control is, of course, a constitutionally created agency.

This classification distinguishes intervenor's cases of Empire Star Mines Co. v. California Employment Comm. (1946) 28 Cal.2d 33, 168 P.2d 686, and Ogier v. Pac. Oil & Gas Development Corp. (1955) 135 Cal.App.2d 776, 288 P.2d 101 which involve agencies created by the Legislature. Nor can intervenor successfully rely upon the language of Altadena Church v. State Board of Equalization (1952) 109 Cal.App.2d 99, 105, 240 P.2d 322, 326, to the effect that 'The doctrine of res judicata as such applies only to the decisions of a judge or a court of competent jurisdiction'; as Hasselbach v. Dept. Alcoholic Bev. Control (1959) 167 Cal.App.2d 662, 334 P.2d 1058, explains, the language of the decision reaches further than the issue resolved: 'While some of the language used by the court in the cases just cited is so broad as to preclude a decision of a constitutionally constituted administrative board operating as a collateral estoppel under the doctrine of res adjudicata, we do not believe that when those cases are read in the light of the question before the court they may be so understood. It is unquestionable that the orders of an administrative body such as the Department have in proper cases the same effect and finality as judgments of a court.' (Fn. 2, pp. 666-667, 334 P.2d p. 1061.)

We must also differentiate between the functions of the administrative body as a rule-making and a quasi-judicial body. Thus Hollywood Circle, Inc. v. Dept. of Alcoholic Beverage Control (1961) 55 Cal.2d 728, 13 Cal.Rptr. 104, 361 P.2d 712, states: 'The doctrine [of res judicata] is not applied when the decision of the agency is made pursuant to its rule-making powers (Olive Proration Program Committee, etc. v. Agricultural Prorate Comm., 17 Cal.2d 204, 208, 109 P.2d 918) or when '* * * the legislature intended that the agency should exercise a continuing jurisdiction with power to modify or alter its orders to conform to changing conditions * * *.' Olive Proration Program Committee, etc. v. Agricultural Prorate Comm., supra, 17 Cal.2d at page 209, 109 P.2d at page 921.' (P. 732, 13 Cal.Rptr. p. 106, 361 P.2d p. 714.) (To the same effect: People v. Lang Transportation Co. (1932) 217 Cal. 166, 17 P.2d 721.)

These preliminary observations strip away the brushwood; the doctrine of res judicata applies to the agency constitutionally created; it does not apply to the policy-making function of the administrative agency. As the Supreme Court has said in regard to the predecessor of the department, the State Board of Equalization, 'An examination of the Constitution of California shows that the State Board of Equalization, unlike most other agencies of statewide authority (see Laisne v. California State Board of Optometry, 19 Cal.2d 831, 123 P.2d 457), has specifically been given quasi judicial, or adjudicating power, that is, the right to make determinations of fact which are not subject to reexamination in a trial de novo in the superior court.' (Covert v. State Board of Equalization (1946) 29 Cal.2d 125, 131, 173 P.2d 545, 548.) The recent case of Hollywood Circle, Inc. v. Dept. of Alcoholic Beverage Control, supra, 55 Cal.2d 728, 13 Cal.Rptr. 104, 361 P.2d 712, states as to the Alcoholic Beverage Control Appeals Board: 'The function of the administrative agency in the present case, however, is the purely judicial one of reviewing another agency's decision to determine whether that decision conforms to the law and is supported by substantial evidence. * * * The doctrine of res judicata applies to such a decision * * *.' (P. 732, 13 Cal.Rptr. p. 107, 361 P.2d p. 715.) (To the same effect: Koehn v. State Board of Equalization (1958) 166 Cal.App.2d 109, 333 P.2d 125.) The doctrine of res judicata would apply, then, as a general proposition, to the decisions of the department.

We set out the specific requisites for the application of the doctrine to decide if they are met here. Eistrat v. J. C. Wattenbarger & Sons (1960) 181 Cal.App.2d 57, 5 Cal.Rptr. 77 succinctly states these requirements: 'The...