Michigan License Beverage Ass'n v. Behnan Hall, Inc.

• Decision Date: 03 April 1978
• Docket Number: Docket No. 77-795
• Parties: MICHIGAN LICENSE BEVERAGE ASSOCIATION, a non-profit Michigan Corp., Plaintiff-Appellant-Cross Appellee, v. BEHNAN HALL, INC., Defendant-Appellee-Cross Appellant. 82 Mich.App. 319, 266 N.W.2d 808
• Court: Court of Appeal of Michigan — District of US

Page 808

266 N.W.2d 808

MICHIGAN LICENSE BEVERAGE ASSOCIATION, a non-profit Michigan

Corp., Plaintiff-Appellant-Cross Appellee, v. BEHNAN HALL, INC., Defendant-Appellee-Cross Appellant.

Docket No. 77-795.

82 Mich.App. 319, 266 N.W.2d 808

Court of Appeals of Michigan.

April 3, 1978.

Released for Publication June 27, 1978.

[82 MICHAPP 322] Campbell, Kurzman, Plunkett & Roggenbaum, Bloomfield Hills, for plaintiff-appellant-cross-appellee.

Hanley M. Gurwin, Robert Friedman, Southfield, for defendant-appellee-cross-appellant.

Before BASHARA, P. D., and BEASLEY and D. E. HOLBROOK, Jr., JJ.

BASHARA, Presiding Judge.

Plaintiff appeals from a trial court judgment granting injunctive relief against defendant, prohibiting certain conduct alleged by plaintiff to be in violation of the Michigan Liquor Control Act. ¹ The contention of plaintiff is that the scope of the injunction's prohibition does not enjoin all of the defendant's allegedly unlawful conduct.

Defendant cross-appeals from the judgment. Its primary contention is that plaintiff lacked standing to maintain the action for injunctive relief. To [82 MICHAPP 323] sustain the argument, defendant asserts that plaintiff lacks any interest affected by the alleged unlawful conduct, and that plaintiff has failed to establish any basis upon which equity jurisdiction can be founded. Additionally, defendant contends that the conduct of which plaintiff complains is not violative of section 26c of the act. ²

This case was submitted to the trial court by stipulation of facts, which were adopted by the trial court. Those facts disclose that the defendant is in the business of operating a catering hall. That facility is rented to various persons and organizations for use in holding wedding receptions, banquets, and similar social gatherings. As part of its business services to those lessees, defendant provides food, a bartender, and assorted nonalcoholic beverages, some of which are used in conjunction with liquor, for an agreed upon price per person.

Any alcoholic beverages consumed on defendant's premises by the lessees or their guests are furnished by the lessees. The lessees purchase the liquor, not from defendant, but from licensees under the act. Defendant does not sell liquor, derives no profit from its sale by others, nor is it licensed to do so under the act.

Proceedings were initiated by plaintiff, a nonprofit corporation whose members are licensees under the act, to enjoin the operation of defendant's[82 MICHAPP 324] business insofar as it permitted the consumption of liquor on its premises. Suit was predicated upon allegations that such business activity violates section 26c of the act and injures the property rights of plaintiff's members in their liquor licenses.

Initially, we analyze the defendant's contentions relative to plaintiff's standing to maintain the action and the existence of a basis for equity jurisdiction.

In the context of this case questions of standing and jurisdiction are closely related. Indeed, much of defendant's argument denominated as pertinent to standing is actually aimed at the existence of equity jurisdiction. Therefore, the distinction should be clarified.

Standing is the legal term used to denote the existence of a party's interest in the outcome of the litigation; an interest that will assure sincere and vigorous advocacy. Sierra Club v. Morton, 405 U.S. 727, 731-32, 92 S.Ct. 1361, 1364, 31 L.Ed.2d 636, 641 (1972). Conceptually, standing was adeptly described by the Sierra Club Court in the following terminology:

"Whether a party has a sufficient stake in an otherwise justiciable controversy to obtain judicial resolution of that controversy is what has traditionally been referred to as the question of standing to sue. * * * (T)he question of standing depends upon whether the party has alleged such a 'personal stake in the outcome of the controversy,' Baker v. Carr, 369 U.S. 186, 204, 82 S.Ct. 691, 703, 7 L.Ed.2d 663, as to ensure that 'the dispute sought to be adjudicated will be presented in an adversary context and in a form historically viewed as capable of judicial resolution.' Flast v. Cohen, 392 U.S. 83, 101, 88 S.Ct. 1942, 1953, 20 L.Ed.2d 947." Id.

See also Warth v. Seldin, 422 U.S. 490, 499, 95 S.Ct. [82 MICHAPP 325] 2197, 2205, 45 L.Ed.2d 343, 354 (1975), and United States v. SCRAP, 412 U.S. 669, 687, 93 S.Ct. 2405, 2416, 37 L.Ed.2d 254, 269 (1973).

Accordingly, the threshold question is whether plaintiff has an interest in the outcome of this litigation sufficient to invoke the controversy-resolving powers of the judiciary. The stipulation of facts discloses that plaintiff does not have a liquor license, nor is it engaged in any commercial activity that will be affected by the outcome of this litigation. As a corporation, a separate legal entity, plaintiff possesses no interest that we are able to discern that confers upon it the requisite standing to maintain this action.

Relying upon White Lake Improvement Assoc. v. City of Whitehall, 22 Mich.App. 262, 177 N.W.2d 473 (1970), plaintiff asserts that the commercial interests of its members constitute a sufficient basis to conclude that it has standing as a representative. In the White Lake case a non-profit corporation was held to have standing to represent its riparian landowner-members in a suit to enjoin the pollution of a lake. Id. at 271-74, 177 N.W.2d 473. This conclusion was obtained notwithstanding that the association itself was not a riparian landowner.

A circumstance in the White Lake case that distinguishes it from the facts before us is that the association in the former was constituted for solely representative purposes. Id. at 272, 177 N.W.2d at 477. In the case under review the facts indicate that plaintiff's corporate purpose is unrelated to that of a litigation representative. ³ Further, the [82 MICHAPP 326] cases ⁴ upon which White Lake was premised involved associations that acted as a class representative or sought to establish rights in which they had a direct interest, or without which their existence would terminate. ⁵ None of these factors characterize plaintiff's position in the instant litigation.

More importantly, since economic utilization of judicial resources is a principal objective of representative litigation, it becomes paramount that the outcome of the adjudication be binding upon those represented. Consistent with our conception of procedural due process, this imports that those whose rights are to be determined by litigation be given notice of its pendency and an opportunity to participate personally or through a class representative. See, e. g., Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 313, 70 S.Ct. 652, 656, 94 L.Ed. 865, 872-73 (1950).

The stipulation of facts indicates that plaintiff does not know whether any of its members has knowledge of the pendency of this litigation. Concomitantly, if plaintiff seeks to adjudicate the alleged property interests of its members by this action, the binding effect upon its members under the foregoing principle would be tenuous, at best. Consequently, since the plaintiff has neither a direct interest in the cause of action nor a properly constituted representative position, we must conclude that the requisite standing to pursue this litigation is absent.

[82 MICHAPP 327] Should plaintiff establish standing to maintain this action by assuming a proper representative status, ⁶ under the facts shown by the record, equitable relief would nevertheless remain unavailable. Such result would obtain because of the absence of any grounds upon which the invocation of equity jurisdiction can be founded. Even if a party has standing to maintain a suit for injunctive relief, he must additionally allege and establish a basis for equity jurisdiction.

Violations of the act are, by the terms of section 50, deemed to be crimes. ⁷ As a well-established general rule, only in the cases of public or private nuisance[82 MICHAPP 328] or injury to property rights will equity jurisdiction be available to enjoin criminal violations. See e. g., State ex rel. Washtenaw County Prosecuting Attorney v. Western Union Telegraph Co., 336 Mich. 84, 90, 57 N.W.2d 537, 540 (1953); Glover v. Malloska, 238 Mich. 216, 220, 213 N.W. 107, 108 (1927); Village of St. Johns v. McFarlan, 33 Mich. 72, 20 Am.Rep. 671 (1875). No allegations of nuisance were made by plaintiff, nor does the act declare violations to be a nuisance. However, the interests of plaintiff's members in their liquor licenses may constitute sufficient property rights to invoke equity jurisdiction. But we need not decide that issue.

Assuming, arguendo, the existence of standing and property rights, the record is devoid of any evidentiary basis for finding that defendant's alleged violations of the act resulted in any injury to those interests. Mere conclusory allegations are insufficient. Plaintiff must show, as a pre-condition to obtaining equitable relief, that the injury was "directly traceable" to the alleged unlawful conduct of defendant. Glover v. Malloska, supra 238 Mich. at 221, 213 N.W. 107.

This requirement of direct traceability was reasserted in United-Detroit Theatres Corp. v. Colonial Theatrical Enterprise, Inc., 280 Mich. 425, 430-31, 273 N.W. 756, 757 (1937). There, the Supreme Court reversed an order for injunctive relief because the record failed to show an injury to plaintiff's property interest in their business. Id.

Accordingly, we conclude that the trial court [82 MICHAPP 329] erred in granting injunctive relief to the plaintiff. Further, it is our conclusion that the action should have been dismissed because plaintiff lacked standing to maintain the suit. Consequently, we need not reach an evaluation of the trial court's interpretation of section 26c of the act.

Reversed and dismissed. Costs to defendant.

BEASLEY, Judge (dissenting).

I respectfully dissent.

In this case, plaintiff seeks interpretation...