Sepatis v. Alcoholic Bev. etc. Appeals Bd.

• Decision Date: 10 September 1980
• Court: California Court of Appeals Court of Appeals
• Parties: William J. SEPATIS, Petitioner, v. ALCOHOLIC BEVERAGE CONTROL APPEALS BOARD, Respondent, DEPARTMENT OF ALCOHOLIC BEVERAGE CONTROL et al., Real Parties in Interest. Civ. 48649.

Page 729

167 Cal.Rptr. 729

110 Cal.App.3d 93

William J. SEPATIS, Petitioner, v. ALCOHOLIC BEVERAGE CONTROL APPEALS BOARD, Respondent, DEPARTMENT OF ALCOHOLIC BEVERAGE CONTROL et al., Real Parties in Interest.

Civ. 48649.

Court of Appeal, First District, Division 1, California.

Sept. 10, 1980.

Hearing Denied Nov. 26, 1980.

George T. Choppelas, San Francisco, for petitioner.

Floyd R. Mitzner, Sacramento, for respondent.

Richard S. Millard, Heller, Ehrman, White & McAuliffe, San Francisco, for real parties in interest.

GRODIN, Associate Justice.

This case presents apparently novel questions in the context of liquor licensing. It arose when William Sepatis (petitioner) applied to the Department of Alcoholic Beverage Control ("Department") pursuant to Business and Professions Code section 23950 et seq. ¹ for transfer of an on-sale retail liquor license to a renovated building on Haight Street, San Francisco, so that he might operate a bar at that location. Section 23958 provides in part that the Department "may deny an application for a license if issuance of such license would tend to create a law enforcement problem, or if issuance would result in or add to an undue concentration of licenses and the applicant fails to show that public convenience or necessity would be served by such issuance." ² The Department uses a statistical formula, based upon the ratio of on-sale retail licenses to population, as a guide for determining whether an "undue concentration" of licenses exists, ³ and by that formula there already existed four "to many" bars in the Haight Street area. ⁴ In the hearing conducted by the Department, however, there was evidence that the proposed premises would be different from existing bars in certain respects. Located in a renovated Victorian building with large windows on two sides, it was to be a "fern" bar, a now-common type of saloon marked by an ambience of ferns and other plants, the interior of which is visible from the outside. Petitioner testified that he planned to operate the bar as a "Victorian type of pub," with snack food and facilities for patrons to play games such as chess and backgammon. Eventually, he said, he plans to operate a restaurant adjacent to the premises. Seven residents testified and several others related by written communication that a bar of that description would, for various reasons, appeal to them over existing bars in the area. ⁵ The administrative law judge found, and the Department adopted his findings, that the proposed premises "will appeal to all segments of the community including many residents and business people in the area who are presently reluctant to enter other bars in the vicinity," and that it would thus serve public convenience or necessity. No protests were received from churches or schools in the area, nor did not the San Francisco Police Department protest issuance of the license. ⁶ The Department, in accordance with the administrative law judge's proposed opinion, found that approval of the application would not add to law enforcement problems in the area. Accordingly, the Department granted the application.

On appeal by protestors (real parties in interest) the Alcoholic Beverage Control Appeals Board ("Board") reversed. It reasoned that the term "public convenience or necessity" relates simply to the "availability of alcoholic beverages for purchase by the general public of a community," and that in determining the existence of public convenience or necessity "the department may not concern itself with the physical appearance of the structure housing a licensed premises nor the esthetic features thereof." Nor, the Board opined, is it appropriate to consider the fact "that an applicant would cater to a particular segment of the public" or that "a certain group of persons does not feel comfortable in the presence of some other group of persons at other licensed premises." Accordingly, it determined that the Department's finding of public convenience or necessity was not supported by substantial evidence. We granted petitioner's application for review of the Board's order (§ 23090 et seq.) to consider the issues thus presented.

Section 23958 appears to authorize issuance of a license upon some requisite showing of public convenience or necessity even though it is determined that issuance would otherwise "result in or add to an undue concentration of licenses." The language is perplexing, to be sure. "Undue" ordinarily means "unsuited to the time, place, or occasion" (Webster's Third New International Dict. (1965 ed.)), and a finding that an additional license would produce "undue" concentration in that sense seems somewhat at odds with the notion that public convenience or necessity would nevertheless be served by its issuance. We are obliged, however, by principles of deference to the legislative branch and by established rules of statutory construction to construe apparently contradictory provisions in such a way as to achieve harmony rather than hold that there is an irreconcilable inconsistency. (Estate of McDill (1975) 14 Cal.3d 831, 837, 122 Cal.Rptr. 754, 537 P.2d 874; Phillipson v. Board of Administration (1970) 3 Cal.3d 32, 45, 89 Cal.Rptr. 61, 473 P.2d 765 (overruled on other grounds, In re Marriage of Brown, 15 Cal.3d 838, 851, 126 Cal.Rptr. 633, 544 P.2d 561). Thus, we must indulge the assumption that the Legislature intended by the phrase "public convenience or necessity" to invoke criteria different from those utilized in determining "undue concentration," and to permit the Department on the basis of such criteria to grant an application for issuance or transfer of such a license even where undue concentration is found to exist. This assumption is reflected in the Department's rules, and is not directly challenged by any party to this litigation.

The real problem stems from the fact that neither the statute nor the Department's rules contain any definition of the term "public convenience or necessity" as that term is used in section 23958, nor do they indicate just what criteria (apart from criteria relevant to determination of "undue concentration") are denoted by that concept. And case law from other contexts provides scant guidance. The Supreme Court has observed that the phrase "public convenience and necessity" (arguably more restrictive because of the conjunctive) "cannot be defined so as to fit all cases. . . . (Its) meaning must be ascertained by reference to the context, and to the objects and purposes of the statute in which it is found." (San Diego, etc., Ferry Co. v. Railroad Com. (1930) 210 Cal. 504, 511-512, 292 P. 640, 643.)

The Department's licensing authority stems from article XX, section 22 of the state Constitution, which provides in relevant part that the Department "shall have the exclusive power, except as herein provided and in accordance with laws enacted by the Legislature, to license the . . . sale of alcoholic beverages in this State," and that it "shall have the power, in its discretion, to deny, suspend or revoke any specific alcoholic beverages license if it shall determine for good cause that the granting or continuance of such license would be contrary to public welfare or morals. . . ." The Alcoholic Beverage Control Act (§ 23000 et seq.), which contains the licensing provisions at issue here, is declared to be "an exercise of the police powers of the State for the protection of the safety, welfare, health, peace, and morals of the people of the State, to eliminate the evils of unlicensed and unlawful manufacture, selling, and disposing of alcoholic beverages, and to promote temperance in the use and consumption of alcoholic beverages." (§ 23001.) The Legislature has determined that "the public welfare and morals require that there be a limitation on the number of premises licensed for the sale of distilled spirits" (§ 23815), and has prescribed limitations upon the total number of premises for which on-sale general licenses may be issued in any county. Section 23816 prescribes a limitation of one licensed premise per 2,000 population, or fraction thereof. The determination of population is to be based upon the most recent census (§ 23818), except that where the Department determines that the population of a county has increased since the last census and that "by reason thereof the inhabitants of the county are unjustly and unfairly discriminated against," the Department may issue additional licenses in the same ratio of premises to population. (§ 23821.) Section 23819 makes clear that the Department is not required to issue licenses in the statutorily limited ratio, and section 23820 authorizes the Department to make rules "to carry into effect the provisions of this article, and to restrict the issuance of alcoholic beverage licenses, including seasonal licenses . . . to such number in any county as the department shall determine is in the interest of public welfare and morals, convenience, or necessity." Seasonal licenses are not subject to the statutory limitations (Johnstone v. State Board of Equalization (1950) 95 Cal.App.2d 527, 213 P.2d 429), and the Department has issued regulations providing for issuance of such licenses "only where the demand for alcoholic beverages is warranted by public convenience," defined in terms of influx of population into a recreational area during the seasonal period, and geographical remoteness from other licensed premises. (Cal.Admin.Code, tit. IV, § 55, subds. (b), (c).) Section 23793 proscribes the issuance of new original public premises licenses (except for beer, or beer and wine), and the transfer of public premises licenses from county to county, "unless the applicant can show that substantial public demand cannot otherwise be satisfied."

The Board, in its opinion, reasons with considerable force that these statutory provisions and analogous administrative regulations appear to focus upon the number and location of premises in...