Board of License Commissioners v. Pizza Hut of Maryland, Inc.

620 A.2d 953, 95 Md. App. 291, 1993 Md. App. LEXIS 48
CourtCourt of Special Appeals of Maryland
DecidedFebruary 26, 1993
DocketNo. 956
StatusPublished
Cited by2 cases

This text of 620 A.2d 953 (Board of License Commissioners v. Pizza Hut of Maryland, Inc.) is published on Counsel Stack Legal Research, covering Court of Special Appeals of Maryland primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Board of License Commissioners v. Pizza Hut of Maryland, Inc., 620 A.2d 953, 95 Md. App. 291, 1993 Md. App. LEXIS 48 (Md. Ct. App. 1993).

Opinion

ROSALYN B. BELL, Judge.

Appellant, the Board of License Commissioners of Carroll County (Board), filed suit in the Circuit Court for Carroll County, seeking a declaratory judgment, pursuant to the Maryland Uniform Declaratory Judgments Act, Md.Cts. & Jud.Proc.Code Ann. §§ 3-401 through 3-415 (1974, 1989 Repl.Vol.), that all of the Pizza Hut restaurants located in Carroll County are “chain stores” within the meaning of Md.Code Ann. Art. 2B, § 41(a-l) (1959, 1990 Repl.Vol., 1992 Cum.Supp.).1 The complaint requested further that the [293]*293court declare, under the statute, that the liquor licenses of the Carroll County Pizza Hut restaurants were invalid.

Appellees, Pizza Hut of Maryland, Inc., and others2 (Pizza Hut), moved for summary judgment, asking the circuit court to rule as a matter of law that the term “chain stores,” used in Art. 2B, § 41(a-l), does not include restaurants. The Board filed a cross-motion for summary judgment. After denying the parties’ motions for summary judgment, the circuit court set the case for trial and, on May 13, 1992, issued a Memorandum Order declaring that Art. 2B, § 41(a-l) does not apply to the Pizza Huts in Carroll County because they are not “stores.”

The Board has appealed, contending that the establishments operated in Carroll County under the management and direction of Pizza Hut, all of which are licensed as “chain stores” under Md.Code Ann. Art. 56, § 57 (1957, 1990 RepLVol., 1991 Cum.Supp.),3 are “chain stores” within [294]*294the proscription of Art. 2B, § 41(a-l). Finding no error, we affirm and explain.

THE FACTS

Pizza Hut of Maryland, Inc., a Kansas corporation, was granted an exclusive franchise by Pizza Hut, Inc., a Dela[295]*295ware corporation, to operate Pizza Hut restaurants in Baltimore City, Anne Arundel County, Baltimore County, Carroll County, Cecil County, Harford County, and Howard County. In turn, Pizza Hut of Maryland, Inc. granted licenses to the other appellees to operate the Pizza Huts in question in Carroll County.

By virtue of the parties’ trial stipulation that all of the Carroll County Pizza Huts are part of a “chain” of restaurants, we are not called upon to scrutinize the business structure and the relationships between appellees as that might otherwise bear on the issue decided by the trial court and which is now before us.

Three of the Carroll County Pizza Huts, located in Westminster, Eldersburg and Mount Airy, have Class B — Beer, Wine and Liquor licenses issued by the Board. Pizza Hut restaurants serve food to the public, including pizza and other menu items. To be issued a Class B liquor license in Carroll County, a restaurant must operate in facilities having an assessed value of not less than $50,000 and must generate 41 percent of its average total monthly receipts from the sale of food to comply with Md.Code Ann. Art. 2B, § 19(h)(l)(iii) (1959, 1990 Repl.Vol., 1992 Cum.Supp.), and Rule 21, Rules and Regulations of the Board of License Commissioners for Carroll County (June 11, 1991).

The first of the three existing Class B liquor licenses involved in this case was issued in 1972 and has been renewed each year since then. The second was issued in 1976 and has also been renewed each year. The third license was issued in 1986 and has been renewed each year, as well.

An application for a fourth Class B — Beer, Wine, and Liquor license was filed in 1989 by Gregory Hendrickson on behalf of Stead, Inc. for use at Pizza Hut in Hampstead, Maryland. The Board held a hearing on the application in September 1989. The Board then filed the declaratory judgment suit. The parties agreed that the court could stay further proceedings in the action while the General Assem[296]*296bly considered House Bill 633, introduced during the 1990 legislative session, designed to authorize chain stores in Carroll County to apply for and receive Class B liquor licenses. When this legislation failed to pass the General Assembly, Pizza Hut answered the suit against it and both parties filed their motions for summary judgment.

Subsequently,- the Board discovered that Pizza Hut was officially listed as a “chain store” by the Comptroller of the Treasury4 and that Pizza Hut had applied for and obtained chain store licenses from the Clerk of the Circuit Court for Carroll County. Again, the Board filed a Motion for Summary Judgment, and again the court denied it.

The court held a merits hearing on May 4, 1992. The case then concluded with the court’s ruling, in a Memorandum Opinion and Order, that the prohibition in Art. 2B, § 41(a-l), against issuing Class B (Restaurant) licenses to chain stores, does not prohibit issuance of such licenses to restaurant chains. This appeal followed.

CHAIN STORES

As a preliminary matter, it must be determined whether the Carroll County Pizza Huts are “chain stores” for purposes of Art. 2B, § 41(a-l).

The term “chain stores” is defined as a “[njumber of stores under common name, ownership and management; normally selling some general line of merchandise or products.” Black’s Law Dictionary 208 (5th Ed.1979). A chain includes a person, firm, corporation, association, or copartnership that opens, establishes, operates, or maintains two or more stores or mercantile establishments where goods, wares and/or merchandise are offered for sale at retail under the same general management, supervision, or ownership. Maryland Law Encyclopedia, Licenses § 35 (1986). Thus, a chain store is simply one selling merchandise that is [297]*297owned and managed by the same body as that of other stores selling merchandise.

The issue of whether a store belongs to a “chain” appears most often in the context of taxation. Pizza Hut relies on Pizza Hut, Inc. v. Dolan, 619 P.2d 508, 509 (Col.Ct.App.1980), for the proposition that Pizza Huts are restaurants, not stores, for licensing purposes. Dolan, a Colorado case, dealt with this issue by differentiating between the purpose of restaurants and stores. The Colorado Court stated:

“The difference between a store or mercantile establishment and a restaurant is that the restaurant sells a service; the sale of food is merely an incidental part of that service. The distinction is well stated in State Tax Commission v. Gay-Teague Realty Co., 237 Ala. 133, 185 So. 739 (1938).
‘But we do not think that a restaurant is a mercantile establishment, though it is a place where food is prepared and sold for consumption then and there. The restaurateur as a mile does not sell the food in the form in which he buys it. He adds a service and provides facilities for its consumption, which distinguish his place from that of a store or mercantile establishment. The distinction being that in the latter the sale is ordinarily made of the article in the form in which it is bought by the merchant, and not to be then consumed. While they are both places for sales of personal property in a certain sense, each is distinctive in name and substance from the other, and is so well understood.’ ”

Dolan, 619 P.2d at 509. The Colorado Court went on to conclude that the Pizza Hut outlets were restaurants, not stores or mercantile establishments.

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620 A.2d 953, 95 Md. App. 291, 1993 Md. App. LEXIS 48, Counsel Stack Legal Research, https://law.counselstack.com/opinion/board-of-license-commissioners-v-pizza-hut-of-maryland-inc-mdctspecapp-1993.