Shaffer v. Allt

• Decision Date: 22 January 1976
• Docket Number: CA-CIV,Nos. 1,s. 1
• Citation: 545 P.2d 76,25 Ariz.App. 565
• Parties: John SHAFFER, Appellant, v. Thomas ALLT, as Mayor of the City of Yuma, the City Council of the City of Yuma, the City of Yuma, a Municipal Corporation, Appellees. John SHAFFER, Appellant, v. ARIZONA STATE LIQUOR BOARD, and the City of Yuma, a Municipal Corporation, Appellees. 2716, 1 2777.
• Court: Arizona Court of Appeals

Page 76

545 P.2d 76

25 Ariz.App. 565

John SHAFFER, Appellant, v. Thomas ALLT, as Mayor of the City of Yuma, the City Council of the City of Yuma, the City of Yuma, a Municipal Corporation, Appellees.

John SHAFFER, Appellant, v. ARIZONA STATE LIQUOR BOARD, and the City of Yuma, a Municipal Corporation, Appellees.

Nos. 1 CA-CIV 2716, 1 CA-CIV 2777.

Court of Appeals of Arizona, Division 1, Department B.

Jan. 22, 1976.

Rehearing Denied March 2, 1976.

Review Denied March 30, 1976.

Brandt & Engler, by Don B. Engler, Yuma, for appellant.

Douglas S. Stanley, City Atty., Yuma, for appellees Mayor and City Council of City of Yuma and City of Yuma.

Bruce E. Babbitt, Atty. Gen., by James Michael Low, Asst. Atty. Gen., Phoenix, for appellee Arizona State Liquor Board.

James D. Webb, City Atty., by Enos P. Schaffer, Deputy City Atty., Tucson, amicus curiae.

OPINION

JACOBSON, Presiding Judge.

This appeal presents the question of whether the City of Yuma may engage in the business of selling alcoholic beverages at a city-owned recreation complex.

In December, 1973, the City Council of the City of Yuma adopted Ordinance No. 1344 authorizing the city to purchase an Arizona liquor license. ¹ Appellant, John Shaffer, a resident taxpayer of Yuma, filed a Special Action against Thomas Allt as Mayor of the City of Yuma, the Yuma City Council, and the City of Yuma, contending that the ordinance was invalid as an excess of those defendants' legal authority and sought an injunction restraining defendants from taking action to purchase a liquor license during the pendency of the proceedings. After hearing argument on a motion to dismiss filed by the City, the Superior Court entered an order dismissing the complaint and gave judgment for the defendants.

Following the defeat of his special action in Superior Court, Shaffer filed a Special Action on the same grounds in the Supreme Court. That court declined to accept jurisdiction of the matter.

In addition to the proceedings described above, Shaffer appealed a decision of the Arizona State Liquor Board approving a transfer of a liquor license to the City of Yuma. The Superior Court affirmed the decision of the Board.

Pursuant to an order of this court, the actions on appeal against the City and the state liquor board have been consolidated. Appellant formulates two issues for decision. First, whether the City of Yuma has authority to hold a liquor license and engage in the selling of alcoholic beverages; and second, whether the Arizona State Liquor Board is statutorily authorized to transfer a liquor license to a municipal corporation.

Yuma is a charter city, organized in accordance with the constitutional grant, found in article 13, § 2 of the Arizona Constitution, of 'home rule' to qualifying municipal corporations.

Turning to the first issue presented, that is, the authority (power) of the city of Yuma to hold a liquor license and engage in the business of selling alcoholic beverages, we must start with the scope of the City's power as a charter city. As a charter city, Yuma may exercise all the powers authorized by its charter, insofar as those powers are consistent with the Arizona Constitution and do not conflict with state legislative enactments which have appropriated the field in an area of general statewide concern. See, A.R.S. § 9--284(B); Gardenhire v. State, 26 Ariz. 14 221 P. 228 (1923); Buntman v. City of Phoenix, 32 Ariz. 18, 255 P. 490 (1927); Clayton v. State, 38 Ariz. 135, 297 P. 1037 (1931); City of Tucson v. Walker, 60 Ariz. 232, 135 P.2d 223 (1943); Shropshire v. Peery, 60 Ariz. 530, 141 P.2d 852 (1943); City of Tucson v. Tucson Sunshine Climate Club, 64 Ariz. 1, 164 P.2d 598 (1945); Arizona Fence Contractors Ass'n v. City of Phoenix Advisory and Appeals Board, 7 Ariz.App. 129, 436 P.2d 641 (1968).

Our inquiry then concerning whether the City of Yuma may engage in selling alcoholic beverages at its baseball, golf and civic center complex is a three-pronged one: (1) Is the selling of alcoholic beverages by a municipality consistent with the Arizona Constitution; (2) Are there state statutes which would prohibit a municipality from selling alcoholic beverages; and (3) Does the charter of the City of Yuma expressly grant or fairly imply a grant of power to engage in the sale of alcoholic beverages?

Two provisions of the Arizona Constitution and cases construing these provisions bear upon the question of what types of business a municipal corporation may engage in. Article 13, § 5 of the Arizona Constitution provides:

' § 5. Right of municipal corporation to engage in business or enterprise

'Section 5. Every municipal corporation within this State shall have the right to engage in any business or enterprise which may be engaged in by a person, firm, or corporation by virtue of a franchise from said municipal corporation.'

And, Article 2, § 34 of the Constitution states:

' § 34. Industrial pursuits by state and municipal corporations

'Section 34. The State of Arizona and each municipal corporation within the State of Arizona shall have the right to engage in industrial pursuits. Added election Nov. 5, 1912, eff. Dec. 5, 1912.'

While these provisions are not 'self-executing', a charter provision can supply the necessary legislation required to but the provisions into effect. Buntman v. City of Phoenix, 32 Ariz. 18, 255 P. 490 (1927). The precise question of whether, reading these provisions together, a municipal corporation is limited in its business activities to those in which it could grant a franchise, was answered by the Arizona Supreme Court in Crandall v. Town of Safford, 47 Ariz. 402, 56 P.2d 660 (1936). The Court stated:

'It should be kept in mind that section 34, art. 2, approved by the people in November, 1912, amended the Constitution and that it enlarged the powers conferred by section 5 of article 13, Supra. And while it is true that the Legislature has on three separate occasions, namely, chapter 11, Laws of the First Special Session of 1912, chapter 31, Session Laws of 1921, and chapter 77, Session Laws of 1933, enacted legislation providing that municipal corporations may engage in any business an individual may follow 'by virtue of a franchise from such municipal corporation,' yet in doing so it seems plain that it overlooked the fact that section 34, art. 2, gives municipalities the right to engage in industrial pursuits, without specifying any limitation whatever as to kind or character. Realizing this, it was held in effect in City of Tombstone v. Macia, 30 Ariz. 218, 245 P. 677, 682, 46 A.L.R. 828, that, following the adoption of section 34, Supra, municipalities were no longer confined in engaging in business, to those particular enterprises for which a municipality might grant a franchise to an individual.' (emphasis added) 47 Ariz. at 409, 56 P.2d at 662--63.

Accord, City of Phoenix v. Wright, 52 Ariz. 227, 80 P.2d 390 (1938); City of Tucson v. Polar Water Co., 76 Ariz. 126, 259 P.2d 561 (1953).

Thus it appears that the City of Yuma may, consistent with the Arizona Constitution, engage in the business of selling alcoholic beverages at the city recreation complex regardless of whether the city is empowered to grant, or need grant a 'franchise' to a private entity to engage in that activity. ² This answer does not end our constitutional inquiry, however. A municipal corporation, even in the exercise of its proprietary powers, must exercise those powers for a public purpose. City of Tombstone v. Macia, 30 Ariz. 218, 245 P. 677 (1926); City of Glendale v. White, 67 Ariz. 231, 194 P.2d 435 (1948); 3 Yokley Municipal Corporations, § 54 at 107 (1958). This is in accord with the fundamental principle that public funds may not be used for private gain. City of Phoenix v. Michael,61 Ariz. 238, 148 P.2d 353 (1944). See, article 9, § 1 of the Arizona Constitution prohibiting the levying and collecting of taxes for other than public purposes.

Other than the strict prohibition against municipal activity for purely private gain, the concept of 'public purpose' is not capable of rigid definition, but must be defined in accordance with the circumstances and the times. The Arizona Supreme Court has stated:

'The question of what is a public purpose is a changing question, changing to suit industrial inventions and developments and to meet new social conditions. Law is not a fixed and rigid system but develops, a living thing, as the industrial and social elements which form it make their impelling growth.' City of Tombstone v. Macia, 30 Ariz. 218, 226, 245 P. 677, 680 (1926).

Appropriation of monies for a civic center has been ackowledged to be for a public purpose. City of Phoenix v. Phoenix Civic Auditorium and Convention Center Ass'n., 99 Ariz. 270, 408 P.2d 818 (1965). The fact that a municipal corporation may make a profit from engaging in a proprietary activity does not negate the underlying public purpose of the enterprise. City of Tombstone v. Macia, supra. The encouragement of immigration, new industries, and investment in the city is a valid public purpose for the exercise of a municipal corporation's proprietary powers. As was stated in City of Tucson v. Tucson Sunshine Climate Club, supra:

'The extent to which a municipality may desire to go in encouraging immigration, new industries and investment within its boundaries is something that its inhabitants should have the power to decide. The people of one city may be perfectly satisfied with conditions as they are, while those of another municipality may wish to make every effort to promote and expand the population, activities and business of the city. It is unquestionably a purely municipal affair.' 64 Ariz. at 8, 164 P.2d at 602.

If, in the opinion of the citizens of the City of Yuma as expressed in their charter, the selling of alcoholic beverages at the recreation complex serves the convenience of the city's inhabitants as well as promotes the tourist industry with...