Martin v. Alcoholic Beverage Control Appeals Bd. of Cal.

• Citation: 52 Cal.2d 287,341 P.2d 296
• Court: California Supreme Court
• Decision Date: 12 June 1959
• Parties: Thomas W. MARTIN, as Director of the Department of Alcoholic Beverage Control, State of California, Respondent, v. ALCOHOLIC BEVERAGE CONTROL APPEALS BOARD of the State OF CALIFORNIA, Defendant and Appellant; Martin Bert Haley, Real Party In Interest and Appellant. S. F. 20102.

Page 296

341 P.2d 296

52 Cal.2d 287

Thomas W. MARTIN, as Director of the Department of Alcoholic Beverage Control, State of California, Respondent, v. ALCOHOLIC BEVERAGE CONTROL APPEALS BOARD of the State OF CALIFORNIA, Defendant and Appellant;

Martin Bert Haley, Real Party In Interest and Appellant.

S. F. 20102.

Supreme Court of California, In Bank.

June 12, 1959.

Edsel W. Haws, Chief Counsel, Charles P. Just, Associate Counsel, Sacramento, Foley & Foley and James W. Foley, San Jose, for appellants.

Edmund G. Brown and Stanley Mosk, Attys. Gen., and Wiley W. Manuel, Deputy Atty. Gen., for respondent.

SPENCE, Justice.

This is an appeal by Martin Bert Haley, the licensee, and also by the Alcoholic Beverage Control Appeals Board (hereinafter called the Appeals Board) from a judgment of the trial court granting a writ of mandate directing the Appeals Board to affirm the decision of the Department of Alcoholic Beverage Control (hereinafter called the Department) revoking the general on-sale liquor license theretofore issued to Haley. For a general discussion of the respective powers conferred by article XX, section 22, of the Constitution upon the Department and the Appeals Board, reference is made to our recent decisions in Martin v. Alcoholic Beverage Control Appeals Board, 340 P.2d 1, and Martin v. Alcoholic Beverage Control Appeals Board, 341 P.2d 291.

In 1942 Haley applied for and received an on-sale liquor license for premises known as the Brite Spot in San Jose, of which he was then the sole owner. In either 1942 or 1943, Haley entered into an oral arrangement with one Frank Mendoza for the operation of the business as a partnership. Thereafter, each contributed money, exercised authority in running the business, and shared in the profits. They represented the business to be a partnership for the purpose of applying for business loans and insurance policies, and in preparing income tax returns. In 1953, on advice from the sales tax division, they obtained a sales tax permit in the names of both partners. Each testified that in 1953 they inquired from someone in the liquor division of the Board of Equalization whether they should obtain a liquor license in the partnership name, and that they were advised that this was not necessary. On the application for a renewal license each year from 1943 through 1955, only Haley signed his name as sole owner of the business, though the form indicated that in the case of a partnership, the renewal application should be signed by each partner.

In April 1955, the Department filed an accusation against Haley charging him with violations of certain sections of the Alcoholic Beverage Control Act because of the undisclosed ownership of Mendoza in the business over the years 1943 to 1955. The hearing officer found that the accusation was true, that Haley had violated sections 23300, 23355, 23951, and 23953 of the Alcoholic Beverage Control Act (as now numbered in the Bus. & Prof. Code), and that grounds for suspension or revocation of the license under the provisions of section 24200, subdivisions (a), (b), and (c) of the act had been established. He recommended that the licese be revoked, and the Department adopted his recommendation. Haley appealed to the Appeals Board. The board upheld the Department on all issues except the penalty, which it found to be disproportionate to the offense found and to be arbitrary as a matter of law; and it reversed the decision with directions to the Department to reconsider the penalty imposed.

The director of the Department then filed in the superior court a petition for a writ of mandate. Following the trial, judgment was entered granting a writ of mandate directing the Appeals Board to vacate its decision reversing the Department's order and to affirm the Department's decision revoking Haley's on-sale license.

Section 23300 of the Business and Professions Code provides that no person shall perform any act which a licensee may perform under the authority of a license unless the person is authorized to do so by a license issued by the Department. Section 23355 provides that the license issued by the Department authorizes the person to whom issued, and no others, to exercise the rights and privileges specified, at the premises for which issued. Section 23951 provides that the application for a license shall contain 'in the case of a copartnership, the names of the individual partners.' Section 23953 requires that such application 'be signed by each of the partners.'

As hereinafter appears, the principal question argued by all parties relates to the power of the Appeals Board to reappraise the propriety of the penalty imposed where the Department has properly found upon substantial evidence that the licensee is subject to some disciplinary penalty. The record indisputably shows that Haley was not the sole owner of the business during the years in question, and that the failure to disclose the existing partnership on any of his renewal applications over a period of at least 12 years constituted repeated violations of the act. Upon this premise the Department argues that the offense committed was legally sufficient to justify revocation, and that the Appeals Board did not have the power to interfere with the penalty so imposed by the Department.

As here pertinent, the 1954 amendment to article XX, section 22, of the Constitution provided: 'The department shall have the power, in its discretion, to * * * suspend or revoke any specific liquor license if it shall determine for good cause that the * * * continuance of such license would be contrary to public welfare or morals. * * * Review by the board of a decision of the department shall be limited to the questions whether the department has proceeded without or in excess of its jurisdiction, whether the department has proceeded in the manner required by law, whether the decision is supported by the findings, and whether the findings are supported by substantial evidence in the light of the whole record. * * * When the order reverses the decision of the department, the board may direct the reconsideration of the matter in the light of its order and may direct the department to take such further action as is specially enjoined upon it by law, but the order shall not limit or control in any way the discretion vested by law in the department. Orders of the board shall be subject to judicial review upon petition of the director or any party aggrieved by such order.'

Where the question of the scope of judicial review has arisen in mandamus proceedings, it has been held that the propriety of the penalty imposed by an administrative agency is a matter vested in the discretion of such agency, and that its decision thereon will not be disturbed unless there has been a clear abuse of discretion. Nardoni v. McConnell, 48 Cal.2d 500, 507, 310 P.2d 644; Bonham v. McConnell, 45 Cal.2d 304, 306, 288 P.2d 502; Griswold v. Department Alcoholic Bev. Control, 141 Cal.App.2d 807, 812, 297 P.2d 762; Altadena Community Church v. State Bd. Equalization, 109 Cal.App.2d 99, 104, 106-107, 240 P.2d 322. The statutory provision defining the scope of the judicial inquiry into the validity of an administrative decision expressly declares that the court's 'judgment shall not limit or control in any way the discretion legally vested' in the administrative agency. Code Civ.Proc. § 1094.5, subd. (e). By a parity of reasoning, the same limitation is applicable to the power of the Appeals Board in reviewing the propriety of the Department's decision on the penalty, when the Constitution has placed the discretion in the Department (art. XX, § 22).

While the Department made no specific finding that the continuance of Haley's license would be 'contrary to public welfare' (Const. art. XX, § 22), its finding that Haley had repeatedly violated the above-cited sections of the Alcoholic Beverage Control Act was tantamount thereto. Mercurio v. Department Alcoholic etc. Control, 144 Cal.App.2d 626, 631, 301 P.2d 474.

Haley contends that sections 23951 and 23953 of the Business and Professions Code relate only to original applications, and that the failure of a partner to sign an application for renewal is not a violation of those sections as charged against him. There is no merit in this contention, as those sections obviously relate to all applications. Furthermore, the renewal application form preliminary recited that the 'undersigned hereby certifies that there have been no changes in the material facts set out in the original application,' and below the signature line, there was the note that 'in the case of a partnership the renewal shall be signed by each of the partners.' Haley was charged with violation of the sections requiring disclosure of the partnership, and it was found on undisputed evidence that the business was in fact a partnership. Section 24200 of the Business and Professions Code recites the grounds for suspension or revocation of a license and includes, by subdivision (c), 'The misrepresentation of a material fact by any applicant in obtaining any license.' The record thus shows that Haley made a misrepresentation of a material fact on each of several renewal applications. Therefore sufficient basis for disciplinary action existed.

Haley further contends that the Department was estopped to take disciplinary action against him. He rests this argument on the fact that both he and his partner Mendoza testified that in 1953 an employee in the liquor division of the Board of Equalization advised them that it was not necessary to put both of their names on the license. He also argues that if there was not a strict estoppel, this evidence was introduced to show mitigating circumstances, and a finding should have been made thereon, as it would have a direct bearing on whether or not the Department had abused its discretion in revoking his license. In this connection, it should be noted that Haley...