Van Riper v. Oregon Liquor Control Commission

• Decision Date: 20 September 1961
• Citation: 228 Or. 581,365 P.2d 109
• Parties: Elwin VAN RIPER, Respondent, v. OREGON LIQUOR CONTROL COMMISSION and Hugh R. Kirkpatrick, Martin H. Buchanan, and Russell C. Bogart, as members of and constituting the Oregon Liquor Control Commission, Appellants. *
• Court: Oregon Supreme Court

Page 109

365 P.2d 109

228 Or. 581

Elwin VAN RIPER, Respondent, v. OREGON LIQUOR CONTROL COMMISSION and Hugh R. Kirkpatrick Martin H. Buchanan, and Russell C. Bogart, as members of and constituting the Oregon Liquor Control Commission Appellants.^*

Supreme Court of Oregon, In Banc.

Argued and Submitted Sept. 6, 1961.

Decided Sept. 20, 1961.

Francis T. Wade, Asst. Atty. Gen., Portland, argued the cause for appellants. With him on the brief was Robert Y. Thornton, Atty. Gen.

James M. Burns, Portland, argued the cause for respondent. With him on the brief was Harold L. Davidson, Portland.

Before McALLISTER, C. J., and ROSSMAN, WARNER, PERRY, SLOAN, O'CONNELL and GOODWIN, JJ.

ROSSMAN, Justice.

This is an appeal by the defendant, Oregon Liquor Control Commission (ORS 471.705), from a decree of the circuit court which ruled that (1) a regulation adopted by the commission May 10, 1960, known as Regulation 17, was 'void and without effect'; (2) action taken by the commission October 12, 1960, which cancelled the plaintiff's dispenser's license (Class 'B') for his violation of Regulation 17 was unauthorized and (3) the commission should reinstate the license.

The defendant (the commission) presents a single assignment of error which reads:

'The Circuit Court erred in decreeing: that the Oregon Liquor Control Commission acted without authority of law in adopting its Regulation 17; that said regulation is void and without effect; that, consequently, the Commission abused its discretion in revoking plaintiff's license; and that the Commission reinstate fully said license.'

The plaintiff is the owner of an establishment in Portland known as 'Van's Olympic Room' which he terms 'a night club.' In it he sells liquor by the glass and a tenant of his serves food. Entertainment for the guests is provided. The establishment is licensed by the defendant.

This proceeding had its inception September 14, 1960, when the commission charged the defendant 'with a violation of Section 1 of Commission Regulation 17 in that during the sixty-day period ending August 31, 1960, the gross receipts from the sale of food in your licensed establishment amounted to less than twenty-five percent of the gross receipts from the sale of both food and alcoholic liquor.' The plaintiff was afforded a hearing upon the charge September 26, 1960, in the course of which both he and the commission presented evidence. After the close of the hearing the commission entered findings of fact, two of which read:

'3. That during the sixty-day period ending August 31, 1960, the gross receipts from the sale of food by said licensee in his licensed commercial establishment amounted to the sum of $263.80, constituting 2.1% of the gross receipts from the sale of both food and alcoholic liquor therein, which amounted to the sum of $12,833.35 during the same period.

'4. That the kitchen and restaurant of the licensee are leased to and operated by an individual who is a stranger to the license, and thereby the business of selling and serving alcoholic liquor had become and is separate from that of cooking and serving food.'

October 12, 1960, the commission entered an order which cancelled the plaintiff's license effective October 31, 1960. From the order the plaintiff appealed to the circuit court (ORS 472.190) which held Regulation 17 invalid. The trial judge stated:

'* * * The requirement of twenty-five per cent gross sales to be in food would be adding another additional requirement to a Class B or C license, or whatever this is, something the statute does not require. They say that in addition to the statutory requirements 'We, the Commission, suggest that and decree that they must sell twenty-five per cent gross sales, income, must be from sales of food,' going beyond the authority the Commission possesses under the general aspects of the act and the general authority conferred by the statute. It is in the nature of an assumption of legislative authority * * *.'

The facts pertaining to this case are free from dispute. The ruling of the circuit court which held Regulation 17 invalid was not based upon a belief that the regulation was adopted in an irregular manner, but, as we saw from the declaration of the trial judge, just quoted, it was based upon a persuasion that the commission had no authority to demand that the sales of food by a licensee must have a ratio of not less than 25 per cent to his total sales.

November 4, 1952, Oregon amended its Constitution by including in it the following which has become Article I, § 39:

'The State shall have power to license private clubs * * * and commercial establishments where food is cooked and served, for the purpose of selling alcoholic liquor by the individual glass at retail, for consumption on the premises, including mixed drinks and cocktails, compounded or mixed on the premises only. The Legislative Assembly shall provide in such detail as it shall deem advisable for carrying out and administering the provisions of this amendment and shall provide adequate safeguards to carry out the original intent and purpose of the Oregon Liquor Control Act, including the promotion of temperance in the use and consumption of alcoholic beverages * * *.

'(2) Legislation relating to this matter * * * shall be liberally construed for the accomplishment of these purposes.'

ORS 471.030(1) provides:

'The Liquor Control Act shall be liberally construed so as:

'(a) To prevent the recurrence of abuses associated with saloons or resorts for the consumption of alcoholic beverages.

'(b) To eliminate the evils of unlicensed and unlawful manufacture, selling and disposing of such beverages and to promote temperance in the use and consumption of alcoholic beverages.

'(c) To protect the safety, welfare, health, peace and morals of the people of the state.'

ORS 471.040 says:

'The commission has the powers and duties specified in this chapter, and also the powers necessary or proper to enable it to carry out fully and effectually all the purposes of this chapter. * * *'

We now quote from ORS 471.730:

'The function, duties and powers of the commission include the following:

* * *

* * *

'(5) To adopt such regulations as are necessary and feasible for carrying out the provisions of this chapter and to amend or repeal such regulations. When such regulations are adopted they shall have the full force and effect of law.

'(6) To exercise all powers incidental, convenient or necessary to enable it to administer or carry out any of the provisions of this chapter.'

ORS 472.030, which is a part of the chapter known as 'Sale of Alcoholic Liquor by Individual Drink,' declares:

'This chapter shall be deemed an exercise of the police powers of the state for the protection of the safety, welfare, health, peace and morals of the people * * * to provide for the sale of alcoholic liquor as provided for by section 39, Article I, Constitution of Oregon, * * * to eliminate the evils of unlicensed disposing of distilled alcoholic liquor; and to prevent abuses associated with saloons or resorts for the consumption of distilled alcoholic liquors.'

ORS 472.060 follows:

'(1) For all purposes in connection with this chapter, the cmmission shall have and exercise all of the powers and be subject to the duties conferred upon it by the Oregon Liquor Control Act * * * and constitutional provisions, and the commission is hereby authorized and directed to administer and perform the duties provided by this chapter within and in accordance with the powers and duties prescribed in the Oregon Liquor Control Act * * *.

'(2) In addition to the functions, duties and powers vested with and possessed by the commission, the commission is hereby vested with the following functions, duties and powers:

'(a) To grant, refuse, suspend or cancel licenses for the sale upon licensed premises, by licensees, of distilled liquor for consumption on the premises;

* * *

* * *

'(d) To adopt such regulations as are necessary and feasible for carrying out the provisions of this chapter and to amend or repeal such regulations, and to exercise all such other powers, duties and functions covered by this chapter, and all powers incidental, convenient or necessary to enable it to administer or carry out any of the provisions of this chapter.'

Regulation 17, upon which the commission depended when it cancelled the plaintiff's license and which the plaintiff challenges as unauthorized, was adopted by the commission May 10, 1960. Its pertinent part follows:

'Section 1.

'Every commercial establishment licensed under ORS Chapter 472 must keep accurate daily records of account showing separately the amounts of all receipts from the sale of food and of alcoholic liquor on the licensed premises. Such records shall be kept available for examination by the commission * * *. The gross receipts from the sale of food by the licensee in such a licensed commercial establishment during every sixty-day period commencing after July 1, 1960, shall amount to not less than twenty-five per cent of the gross receipts from the sale of both food and alcoholic liquor in such commercial establishments * * *.

'Section 2.

'Commercial establishments, while open for business must provide regular meals during the usual hours when such meals are regularly served. They shall also, as a minimum provide short orders or other cooked food at all other times when alcoholic liquors are served.'

The plaintiff possesses a Class 'B' dispenser's license for his establishment which was issued to him by the commission. According to ORS 472.110(3) a Class 'B' dispenser's license 'may be issued to * * * commercial establishments where food is cooked and served.' ORS 472.010(3) defines the term 'commercial establishment' as 'a place of business where food is cooked and served and having adequate and sanitary kitchen facilities for the preparation and serving of meals to the general public and having for that purpose proper and...