Rickard v. Ohio Dept. of Liquor Control, 85-CA-18

• Decision Date: 27 August 1985
• Docket Number: No. 85-CA-18,85-CA-18
• Citation: 491 N.E.2d 388,23 Ohio App.3d 101
• Parties: , 23 O.B.R. 166 RICKARD et al., Appellees, v. OHIO DEPARTMENT OF LIQUOR CONTROL, Appellant. *
• Court: Ohio Court of Appeals

Page 101

23 Ohio App.3d 101

491 N.E.2d 388, 23 O.B.R. 166

RICKARD et al., Appellees, v. OHIO DEPARTMENT OF LIQUOR CONTROL, Appellant. ^*

No. 85-CA-18.

Court of Appeals of Ohio, Second District, Greene County.

Aug. 27, 1985.

Syllabus by the Court

1. In an action brought against the Department of Liquor Control seeking to restrain it from enforcing the results of a local option election, R.C. 4301.31 mandates that the action be brought in the Franklin County Court of Common Pleas.

2. To the extent that the local option election provisions of R.C. 4301.32 fail to provide reasonable notice to existing liquor permit holders of an impending local option election, the statute is unconstitutional in that it fails to provide the requisite procedural due process mandated by the Ohio and United States Constitutions.

David W. Cox, Xenia, for appellees Robert W. and Madonna J. Rickard.

David L. Phipps, Xenia, for appellee Fraternal Order of Eagles 1689.

Paul W. Barrett, Xenia, for appellees Dennis McGlathen and Raymond Gulley.

Anthony J. Celebrezze, Jr., Atty. Gen., and James M. Guthrie, Columbus, for appellant Dept. of Liquor Control.

BROGAN, Presiding Judge.

Prior to the fall 1983 general election in Greene County, Ohio, petitions were properly and timely filed with the Greene County Board of Elections for a local option election involving the sale of alcoholic beverages in adjoining precincts CLB and CFA in Xenia, Ohio. At that time, precinct CLB was "dry" for liquor sales and precinct CFA was "wet." As mandated by statute, the only way for precinct CLB to become "wet" was for it to combine with an adjoining precinct and let the voters of these precincts determine what status they wished their precincts to continue to enjoy.

No protests were filed with the board of elections before or after the election. On November 8, 1983, voters in the two precincts voted "No" on the wet/dry issue disallowing liquor sales in these precincts. The board of elections certified the results to the Ohio Department of Liquor Control as mandated by law. On February 7, 1984, the Secretary of State certified the results of all local option elections to the Department of Liquor Control for proper action.

On April 4, 1984, the Department of Liquor Control notified the affected permit locations in precinct CFA that their "right" to sell alcoholic beverages had been terminated by such election and they could request safekeeping of their licenses by the department. On April 10, 1984, Robert W. and Madonna Rickard, d.b.a. Waterstreet Tavern, the Fraternal Order of Eagles, Dennis McGlathen and Raymond Gully, d.b.a. Sportman's Club, filed a declaratory judgment action in the Greene County Court of Common Pleas against the Department of Liquor Control, for a declaration that R.C. 4301.32 through 4301.42 and R.C. 3501.38 were unconstitutional as applied to them. In addition, the plaintiffs sought an injunction against the department restraining it from enforcing the results of the local option election.

After the trial court granted a temporary injunction enjoining the department from enforcing the results of the election, the department answered the complaint and moved to dismiss the complaint for failure to state a cause of action and to dismiss for lack of jurisdiction over the subject matter.

The plaintiffs then moved for summary judgment on their complaint and attached to the motion the affidavits of two voters in precinct CFA who stated they voted in the local option election and voted against the sale of alcoholic beverages. They stated they were unaware such election would affect liquor sales by existing liquor permit holders, and had they known of that they would have voted differently.

Plaintiffs also argued in support of their motion that they did not receive any notice about the local option election until notified by the department in April 1984.

After the defendant department filed its memorandum contra the motion, the trial court granted plaintiffs' motion for summary judgment. Specifically the trial court found the material facts were not in dispute. The court found that the plaintiffs were not notified of the local option election nor did they see the legal advertisement in the local newspaper announcing the election. The court found that R.C. 4301.31 did not preclude the court from exercising jurisdiction in the matter before it because "this is not an action restraining the exercise of any power [of the department] or compelling the performance of any duty under R.C. 4301.31."

The court further found that the plaintiffs, as liquor permit holders, were entitled to due process and equal protection. As such the court held the plaintiffs were entitled to a notice and a hearing before loss of their licenses. Since the statutes concerning local option elections do not provide for actual notice of the election to the permit holders, the statutes are unconstitutional. The court found the election to be an adequate "hearing." The court also found that the statutes in question were unconstitutional as the ballot language fails to inform the voter of the consequences of a negative vote in a "wet" area. The court also found that the department improperly suspended the plaintiffs' licenses as the city of Xenia failed to refund permit fees as required by R.C. 4301.39(D).

Appellant, Department of Liquor Control, appeals and asserts as error three assignments, to wit:

I

"The lower court erred in failing to dismiss the Ohio Department of Liquor Control as a party since both sections 4301.10(B)(1) and 4301.31, Revised Code, disallow jurisdiction for any court other than the Franklin County Court of Common Pleas and for any matter other than actions involving state liquor stores."

II

"The Department of Liquor Control is not a proper party to any action to attack the validity of a local option election and failure of a party to properly follow protests and election contest statutory procedures estops him from challenging the election through indirect lawsuits."

III

"The lower court erred in granting injunctive relief in a proceeding other than in a recount or election contest suit as provided in section 4301.391, Revised Code."

Section 16, Article I, of the Ohio Constitution provides for the waiver of the state's immunity from suit. It has been held that this section of the Constitution is not self-executing. Suits may be brought against the state only in such manner as may be provided by law. Wolf v. Ohio State University Hospital (1959), 170 Ohio St. 49, 162 N.E.2d 475 .

R.C. 4301.10(B)(1) provides:

"(B) The department may:

"(1) Sue, but may be sued only in connection with the execution of leases of real estate and such purchases and contracts necessary for the operation of the state liquor stores that are made under Chapters 4301. and 4303. of the Revised Code;"

R.C. 4301.31 provided in pertinent part:

"Except as provided in section 4301.28 of the Revised Code, no court, other than the court of common pleas of Franklin county, has jurisdiction of any action against the board of liquor control, the director of liquor control, or the department of liquor control, to restrain the exercise of any power or to compel the performance of any duty under Chapters 4301. and 4303. of the Revised Code. * * * " (Emphasis added.)

Numerous courts have had occasion to hold that sections 4301.10 and 4301.31, supra, must be applied in pari materia. In Hoffman Candy & Ice Cream Co. v. Department of Liquor Control (1954), 96 Ohio App. 304, 306, 121 N.E.2d 837 , the court stated:

" * * * [S]ubdivision (9) of Section 6064-8, General Code [Section 4301.10, supra ], which authorizes the department to be sued 'only in connection with the execution of leases of real estate and such purchases and contracts necessary for the operation of the state liquor stores that are made under the provisions of this act' did not expressly authorize a suit for damages to be brought against the department due to the express provision in Section 6064-30 [Section 4301.31, supra ] * * *; that Section 6064-30, General Code, and subdivision (9) of Section 6064-8, General Code, are in pari materia; and that Section 6064-30, General Code, is an express limitation on the right to sue authorized by subdivision (9) of Section 6064-8, General Code." (Emphasis sic.)

In Allied Investment Credit Corp. v. Kuzjo Tavern, Inc. (May 18, 1978), Cuyahoga App. No. 37453, unreported, the Cuyahoga County Court of Appeals reversed an order of the Cleveland Municipal Court which directed the Ohio Department of Liquor Control to transfer a liquor permit and enjoined the board from proceeding to suspend or revoke the permit. The action originated in Cleveland Municipal Court when Allied Investment sued Kuzjo Tavern, Inc. on a promissory note. After judgment was entered for Allied, a receiver was appointed who later filed an application to confirm a sale of the tavern and all its assets, including the permit. When a dispute arose over distribution of the assets and the payment of sales taxes as a condition precedent to transfer of the liquor permit, the receiver filed a supplemental complaint adding the Board of Liquor Control and the Ohio Tax Commissioner as parties defendant. The receiver sought restraining orders against these state agencies and that the Department of Liquor Control be ordered to transfer the permit pursuant to the court's earlier order.

When the trial court granted the request of the receiver, the department appealed asserting that the trial court lacked subject matter jurisdiction under R.C. 4301.10(B)(1) and R.C. 4301.31. In reversing the trial court, Judge Krupansky wrote:

"This statute clearly precludes the action taken by the Cleveland Municipal Court. The lower court ordered the Department of Liquor Control to transfer the permit and restrained the Department from proceeding with any hearings or actions for suspension or revocation of the permit held by...