Rambaum v. Swisher

• Decision Date: 13 January 1989
• Docket Number: No. CO-87-2192,CO-87-2192
• Citation: 435 N.W.2d 19
• Parties: Anthony RAMBAUM, Respondent, v. Susan Lynn SWISHER, Respondent, Hrvatski Dom, an Association, petitioner, Appellant.
• Court: Minnesota Supreme Court

Page 19

435 N.W.2d 19

Anthony RAMBAUM, Respondent, v. Susan Lynn SWISHER, Respondent Hrvatski Dom, an Association, petitioner, Appellant.

No. CO-87-2192.

Supreme Court of Minnesota.

Jan. 13, 1989.

Syllabus by the Court

1. A fraternal club's sale of liquor to a person not a member nor a guest is an illegal sale under the Civil Damages Act.

2. The payment made in a Pierringer settlement is not credited against plaintiff's entire award, only against the settling defendant's share.

3. This court will not consider an issue not raised by a petition for further review.

Rolf E. Sonnesyn, Minneapolis, for appellant.

Edward Lynch, South St. Paul, for Anthony Rambaum.

Bradley Cosgriff, Hopkins, for Susan Swisher.

OPINION

SIMONETT, Justice.

This case raises two issues: (1) Whether a fraternal club's sale of liquor to a person not a member or a guest is an illegal sale under the Civil Damages Act; and (2) whether the sum paid by a settling Pierringer defendant applies pro tanto to reduce all of plaintiff's award, not just the share attributable to the settling defendant's fault. The court of appeals ruled there was an "illegal sale" and the settlement payment did not apply "pro tanto." We affirm. We decline to reach a third issue not preserved for review.

Early in the evening of September 14, 1985, Susan Swisher had three or four mixed drinks at the Croatian Hall, a bar known locally as the Cro-Bar and operated by a fraternal organization known as Hrvatski Dom. Swisher then proceeded to O'Neill's Bar for the rest of the evening, where she had seven or eight drinks and left about midnight. On the way home, Swisher drove her car over the curb and struck plaintiff Anthony Rambaum.

Plaintiff Rambaum sued defendant Susan Swisher for negligent driving and sued defendants Hrvatski Dom (hereinafter the Croatian Club or Club) and O'Neill's Bar under the Civil Damages Act. Plaintiff claimed the Croatian Club's sales were illegal because in violation of its club license restricting sales to members and guests; plaintiff claimed O'Neill's sales were illegal because made to an obviously intoxicated person.

On the first day of trial, defendant O'Neill's Bar settled with plaintiff on a Pierringer release for $200,000. The case proceeded to trial, with the Croatian Club arguing that Swisher was a guest of a companion, who was allegedly a club member. The jury rejected the claim that the companion was a club member, found that the club had illegally sold liquor to Swisher, and found dramshop liability. Swisher and O'Neill's Bar were also found liable and fault was apportioned 80 percent to defendant Swisher, 10 percent to defendant Croatian Club, and 10 percent to O'Neill's Bar. Damages of $432,035.52 were awarded. When collateral sources were deducted and future damages discounted, the net award, exclusive of costs and prejudgment interest, was $268,241.67.

Since O'Neill's 10-percent share of the net award was only $26,824.17, its settlement payment of $200,000 proved to be more than generous. In post-trial motions, the Croatian Club asked that the entire $200,000 be credited against the net award. The trial court granted the motion.

On appeal to the court of appeals, defendant Croatian Club argued that a club sale to one not a member or guest was not an illegal dramshop sale. By notice of review, plaintiff Rambaum challenged the $200,000 award reduction and further attacked the constitutionality of Minn.Stat. § 604.07, subd. 2 (1986) (requiring future damages to be reduced to present value). The court of appeals affirmed the ruling of an "illegal sale" and rejected the constitutional challenge; but, except for a 10 percent reduction, the court denied the Croatian Club a credit for the $200,000 settlement payment. Rambaum v. Swisher, 423 N.W.2d 68 (Minn.App.1988). We granted the Croatian Club's petition for further review on the "illegal sale" and Pierringer payment issues. Plaintiff Raumbaum did not petition for further review on any issue but now seeks in his respondent's brief to raise a new issue, namely, that the future damages award should not be discounted because the discount statute was repealed while appellate review of his case was pending.

I.

The Civil Damages Act imposes dramshop liability for "illegally selling" alcoholic beverages but does not define what is illegal. Minn.Stat. § 340A.801, subd. 1 (1986). Does a liquor sale by a club licensed vendor to a person not a member or guest of the club constitute an "illegal sale" under the Act? We answer yes.

Under a club license, "liquor sales will only be to members and bona fide guests," Minn.Stat. § 340A.404, subd. 1 (1986); a violation of this limitation is a misdemeanor, Minn.Stat. § 340A.703 (1986). Whether a particular liquor sale imposes dramshop liability involves a four-step analysis. (1) Was the sale in violation of a provision of Chapter 340A? (2) If so, was the violation substantially related to the purposes sought to be achieved by the Civil Damages Act, i.e., was the violation substantially related to the mischief sought to be suppressed and the remedy sought to be advanced by the Act? Hollerich v. City of Good Thunder, 340 N.W.2d 665, 669 (Minn.1983); Kvanli v. Village of Watson, 272 Minn. 481, 484, 139 N.W.2d 275, 277 (1965). If yes, then the violation is an "illegal sale" under the Act. This second step presents a policy question and raises an issue of law for the court to decide. If there is an illegal sale, the third and fourth steps present two causation questions: (3) Was the illegal sale a cause of the intoxication? and (4) if so, was the intoxication a cause of plaintiff's injuries? We are concerned here only with the second step in this analysis. ¹

The Croatian Club points out it served three mixed drinks during regular serving hours to an adult customer who was then sober. True, the customer was not a member or guest, but, argues the Croatian Club, there is simply no meaningful connection between benign sales to someone who only happens to be a nonmember and the problems the Civil Damages Act has in mind. Plaintiff, on the other hand, says "unlicensed sales" create dramshop liability. Both parties tend to argue whether the unlicensed sales "caused" the intoxication contributing to plaintiff's injuries, but this is not the test. We are not at this second stage of our dramshop analysis concerned with "causation" in a tort sense; rather, at this point we inquire whether, from a policy standpoint, there is a substantial relationship between the unlicensed sale and the purposes of dramshop liability.

The court of appeals suggested club members among themselves are more likely to drink moderately, and that the licensing restriction reflects a legislative belief that sales to nonmembers would "presumably dilute" this club tendency towards moderation. Rambaum, 423 N.W.2d at 72. The Croatian Club, on the other hand, asks us to take judicial notice that "[m]oderation has never been the touchstone of a club atmosphere"; in other words, the Club suggests, there is little to choose between the drinking habits of those who belong to clubs and those who do not. We do not think this kind of speculation leads us anywhere, except perhaps to reveal the difficulty in applying the "substantial relationship" test.

If we were writing on a clean slate, the argument that dramshop liability should be limited to sales to obviously intoxicated persons would not be unattractive as a matter of logic. In 1917, however, this court held that an illegal sale of liquor on Sunday was covered by the Dramshop Act. Fest v. Olson, 138 Minn. 31, 163 N.W. 798 (1917). In 1965, we added sales to minors, Kvanli v. Village of Watson, 272 Minn. 481, 139 N.W.2d 275 (1965), and 5 years ago we added after-hours sales, Hollerich v. City of Good Thunder, 340 N.W.2d 665 (Minn.1983). We have looked to the manner in which certain kinds of illegal sales impact on the public's access to and consumption of alcoholic beverages. The legislature has not seen fit to disagree with our interpretations of the Civil Damages Act over the years. In this case, with this background, we think it significant that the legislature has placed limits on the number of regular liquor licenses that a municipality may issue based on population. See Minn.Stat. § 340A.413 (1986). Club licenses, however, are excepted from this license quota, even though clubs, unlike some other special licensees, do substantial business. The club exception is granted, however, with the proviso that sales must be limited to club members and guests. This proviso serves, we think, to limit the extent clubs can compete for business with other licensed vendors, thereby reducing the potential for alcohol abuse that occurs with competition for consumers in an over-saturated market. In view of the legislature's strict regulation of vendors and its deep concern over alcohol abuse, we conclude that the relationship between the restrictive club license and the purposes of the Civil Damages Act is sufficiently substantial to make a club sale to a nonmember or nonguest an "illegal sale" for dramshop purposes. We do not by this opinion purport to characterize what further violations of Chapter 340A, if any, might be covered under the Civil Damages Act. Our decision is limited to club licenses under section 340A.404, subd. 1(3).

II.

Is the entire $200,000 paid by O'Neill's Bar for its Pierringer release to be credited against plaintiff's judgment against defendants Croatian Club and Swisher? We agree with the court of appeals that it should not be.

The settling tortfeasor under a Pierringer release settles for its fair share of plaintiff's award as later determined by the trier of fact. Because plaintiff agrees, as part of the Pierringer, to indemnify the settling tortfeasor against cross-claims for contribution from nonsettling tortfeasors, the nonsettling tortfeasors are assured, as against the settling tortfeasor, that they will not...