Peppermint Lounge, Inc. v. Wright, 57066

• Decision Date: 10 September 1973
• Docket Number: No. 57066,No. 2,57066,2
• Citation: 498 S.W.2d 749
• Parties: PEPPERMINT LOUNGE, INC., a missouri corporation, and Lloyd Michael Kelly, as Managing Officer of Peppermint Lounge, Inc., Appellants, v. William WRIGHT, Supervisor, Department or Liquor Control of State of Missouri, Respondent
• Court: Missouri Supreme Court

Page 749

498 S.W.2d 749

PEPPERMINT LOUNGE, INC., a missouri corporation, and Lloyd Michael Kelly, as Managing Officer of Peppermint Lounge, Inc., Appellants, v. William WRIGHT, Supervisor, Department or Liquor Control of State of Missouri, Respondent.

No. 57066.

Supreme Court of Missouri, Division No. 2.

Sept. 10, 1973.

Sestric, Sestric, Sweet & McGhee, St. Louis, for plaintiffs (appellants).

John C. Danforth, Atty. Gen., Jefferson City, Thomas D. Vaughn, Asst. Atty., Gen., St. Louis, for respondent.

HOUSER, Commissioner.

Appeal by Peppermint Lounge, Inc. and Lloyd Michael Kelly from a judgment affirming the denial by the Supervisor of Liquor Control of appellants' application for a full drink liquor license for premises located at 711 Washington Street in the City of St. Louis. A state officer as such being a party this Court has jurisdiction, the notice of appeal having been filed prior to January 1, 1972.

Appellants contend that the denial of their application was not authorized by law because the supervisor (1) applied an abstract principle of 'good moral character' in evaluating the other business interests of Thomas C. Kelly (sole stockholder in the corporate applicant) and in determining that the corporate applicant and the individual applicant (a brother of Thomas C. Kelly) were not qualified to operate a licensed establishment, without finding any reasonble relationship between the conduct complained of and the operation of such an establishment; (2) denied the application on the basis of information in his files without affording applicants a hearing, after appellants had changed their position in order to make application; and (3) disregarded the best evidence available to demonstrate in what manner a licensed establishment could be expected to be conducted.

Section 311.090, RSMo 1969, V.A.M.S., provides: 'Any person who possesses the qualifications required by this chapter (Liquor Control Law), and who meets the requirements of and complies with the provisions of this chapter, and the ordinances, rules and regulations of the incorporated city in which such licensee proposes to operate his business, may apply for and the supervisor of liquor control may issue a license to sell intoxicating liquor * * * by the drink at retail for consumption on the premises * * *.'

Section 311.060, RSMo 1969, V.A.M.S., provides: '1. No person shall be granted a license hereunder unless such person is of good moral character * * *, nor shall any corporation be granted a license hereunder unless the managing officer of such corporation is of good moral character * * *. 2. No * * * corporation shall be qualified for a license under this law if such * * * corporation, or any officer, director, or any stockholder owning * * * ten per cent or more of the stock of such corporation * * * shall not be a person of good moral character; * * *.'

There is no provision in the Liquor Control Law for the holding of a hearing on an application for a full drink liquor license.

Thomas C. Kelly is the president and owner of 100% of the stock of the corporate applicant. At a special meeting of the board of directors his brother, applicant Lloyd M. Kelly, was designated as managing officer of the corporation and was authorized to apply for a liquor license in the name of the corporation. Appellants complied with the ordinances, rules and regulations of the City of St. Louis by applying for and obtaining a license from the city to sell intoxicating liquor.

In his letter of January 6, 1970 to applicants the supervisor of liquor control advised that while no records reflecting upon the character of Lloyd M. Kelly had been submitted to him, city police records revealed that Thomas C. Kelly had been arrested numerous times ¹ on charges of possessing, displaying and offering obscene literature for sale, and that Thomas C. Kelly had been convicted on a misdemeanor charge of possessing obscene literature with intent to sell or circulate the same, and was fined $500; that Thomas C. Kelly owned various outlet stores in the city where such literature was offered for sale, and that various charges were pending involving charges against Thomas C. Kelly and/or his clerks for possessing or selling pornographic liternature or pictures. The supervisor further advised applicants that after thorough investigation and review and on the basis of documents before him he had determined to refuse issuance of the license applied for, on the following bases:

'First, it is my belief that no person who sells obscene or pornographic literature or photography to the public can be a person of good moral character within the meaning of the laws relating to the sale of intoxicating liquor or within the meaning of any other law of which I could take notice.

'Second, Thomas C. Kelly, President and owner of Peppermint Lounge, Inc., is a person whose various business outlets engage apparently, at least in part, in the sale of literature or pictures of an obscene or pornographic nature.

'Third, the Metropolitan Police Department of the City of St. Louis, Missouri, has submitted for my information samples of booklets seized by its officers from stores operated by the said Thomas C. Kelly. These documents are not merely pornographic or obscene, they are unadulterated filth of the lowest nature. The fact that Peppermint Lounge, Inc., proposes to operate a retail liquor establishment on the second floor of a building adjoining that in which its President also operates an outlet for such materials gives some indication of the type of operation available.

'Fourth, the conviction described above, and the arrests attributed to Thomas C. Kelly, Corporate President, by records of the St. Louis Police Department, give great weight to a conclusion, if necessary, that said person is a police character within the meaning of Regulation 15(j), and thus ineligible even to be on the premises licensed for the sale of intoxicating liquor.

'Fifth, any question regarding the real management and operator of the Peppermint Lounge, Inc., is dispelled by a recent advertising campaign regarding an alleged 'grand opening' of Peppermint Lounge, Inc., one advertisement of which has been copied and is attached to this letter as Exhibit Number 1. Any question about the ownership is removed by the opening line. The type of operation contemplated is fully revealed by advertising a grand opening until 3:00 a.m., when the laws of this State require any licensed retail liquor establishment to be a 'closed place' at 1:30 a.m. Finally, with the great problem involving minors, both in and out of licensed retail outlets, Peppermint Lounge, Inc., advertises that 'Ladies may be under 21."

The supervisor further found that the designation of Lloyd M. Kelly as managing officer of the corporation was a subterfuge.

Appellants do not deny or controvert the findings of fact contained in the supervisor's letter of January 6, which findings are supported by documentary evidence in the transcript of the record.

Appellants contend that 'good moral character' is too broad and all-encompassing a test or qualification for ownership of stock in a corporate applicant for a liquor license; that it has no reasonable or observable relationship to the right to sell liquor and does not bear on the real question, which is how it may be reasonably anticipated that a licensed establishment will be operated. Appellants cite cases striking down the use of this term in statu...