Soursos v. Mason City

• Decision Date: 18 March 1941
• Docket Number: 45496.
• Citation: 296 N.W. 807,230 Iowa 157
• Parties: SOURSOS v. MASON CITY.
• Court: Iowa Supreme Court

296 N.W. 807

230 Iowa 157

SOURSOS v. MASON CITY.

No. 45496.

Supreme Court of Iowa.

March 18, 1941

Appeal from District Court, Cerro Gordo County; T. A. Beardmore Judge.

Action in equity to establish the right of plaintiff, as the successor to a partnership composed of himself and another to sell beer under a permit issued to said partnership. Opinion states the facts. From decree for plaintiff defendant appeals.

Reversed.

Breese & Cornwell, of Mason City, for appellant.

L. A Moe and Raymond Zebker, both of Mason City, for appellee.

OLIVER, Justice.

On May 1, 1940, the City Council of Mason City, Iowa, issued to Royal Billiard Parlor, then a partnership composed of appellee Soursos and one George Andon, a Class B. Beer permit for the year ending May 1, 1941, under the provisions of Chapter 93.2, § 1921.095 et seq., Code of Iowa 1939, and a city ordinance adopted thereunder.

The partnership paid the permit fee of $250, furnished a beer bond (in which appellee Soursos was named as sole principal) and operated under the license until July 24, 1940, when appellee bought his partner's interest. Thereafter he continued to operate as an individual. He stated the city clerk had previously told him this could be done under the original permit. On September 5, 1940, the former partner, Andon, notified the city of the dissolution of the partnership and that he desired to be relieved from liability in connection with said permit, and the city then notified appellee to cease operating under said permit. Thereupon, appellee instituted this action in equity to establish his right to sell beer under said permit and to enjoin the city from interfering with such right. Trial resulted in decree for plaintiff, from which the city has appealed.

In Iowa a partnership is a legal entity distinct from its members. This is too well settled to require discussion. National Sewer Pipe Co. v. Smith-Jaycox Lumber Co., 183 Iowa 17, 166 N.W. 708. And that this partnership was dissolved July 24, 1940, and thereafter ceased to exist is not disputed. One purpose of the permit fees required under the Beer Law, Chapter 93.2 of the Code, is to provide revenue. However, said law is primarily a police regulation rather than a revenue act. It relates to an occupation or business regarded as requiring substantial restriction, supervision and control. Bernstein v. Marshalltown, 215 Iowa 1168, 248 N.W. 26, 86 A.L.R. 782. The act itself recognizes the necessity of strictly regulating the handling and sale of beer for the protection of the public welfare and morals. Madsen v. Oakland, 219 Iowa 216, 257 N.W. 549; State v. Talerico, 227 Iowa 1315, 290 N.W. 660.

In the absence of specific provision to that effect a beer permit is not transferable. Lewis v. United States, Morris 199, 37 C.J. 245. Indeed, appellee does not here claim any right to a transfer. His contention is that after the purchase of his partner's interest the permit continued in force for his individual use and benefit.

State v. Zermuehlen, 110 Iowa 1, 81 N.W. 154, 155, passes upon this proposition in a case under the Mulct Law then in effect. There the consent of the city council was given to a partnership, Ohlschlager & Zermuehlen, which paid the license fee. The partners signed the bond individually as principals. Later Zermuehlen bought his partner's interest and sought to continue the business. The court stated that the consent was to the partnership and the bond for the protection of that firm, which entity had ceased to exist; that although Zermuehlen was a member of the firm, and as such was included in the consent, the consent was to the partnership alone.

" * * * In contemplation of law,-at least, so far as this question is concerned-the persons composing a firm are as separate and distinct from that firm as any other persons. Surely it cannot be said that consent was given that Zermuehlen might carry on that business in that place in his own name and for his own benefit. For aught we know, such consent would have been refused. It is enough to say that the protection afforded by the consent and bond and the payment of the tax was to Ohlschlager & Co. alone, that by the dissolution of the partnership that company ceased to exist, and that its rights to this protection pertain to it alone, and could not be conferred upon another by transfer or otherwise, not even upon a member of the firm who might succeed to the business."

We think the cited case governs the case at bar. Although the Mulct Law did not specifically set up the definite procedure for testing the fitness of applicants found in the present Beer Law, the resolution of consent of the council required by the former was similar to the permit of the council...