Odette v. Liquor Control Commission

429 N.W.2d 814, 171 Mich. App. 137

• Court: Michigan Court of Appeals
• Decided: May 25, 1988
• Docket: Docket 92720
• Status: Published

Opinions

Maher, J.

Defendant, Michigan Liquor Control Commission (mlcc), appeals as of right from the trial court’s opinion and order of May 1, 1986, granting declaratory relief in favor of plaintiff. The opinion and order also permanently enjoined mlcc from denying or revoking a transfer to plaintiff’s premises of the liquor license belonging to plaintiff’s tenant, Sunshine Food Corporation. The sole issue concerns whether mlcc may lawfully condition a transfer to plaintiff’s premises of Sunshine’s liquor license upon plaintiff’s resignation from employment at the Oakland County Sheriff’s Department or upon the selling of his premises.

The material facts are not in dispute. In the latter part of 1984, plaintiff began construction of a building in Oakland County to be used as a commercial retail outlet. Plaintiff also entered into a ten-year lease agreement with Sunshine, under the terms of which Sunshine would have a right to conduct any lawful business on the premises. Sunshine, which was in the business of operating party stores, applied to mlcc for a transfer of its liquor license from its current store location to plaintiff’s premises. Mlcc’s decision to condition its approval of the transfer request on plaintiff’s resignation from his employment with the sheriff’s department or the sale of his rental property was based on § 18 of the Michigan Liquor Control Act, MCL 436.18(1); MSA 18.989(1), which states:

A person who holds or whose spouse holds, either by appointment or election, a public office which involves the duty to enforce any of the penal laws of the United States, or the penal laws of this state, or a penal ordinance or resolution of any municipal subdivision of the state, except civil defense volunteer policemen, mayors or council members of cities, or village presidents, or mayors of home rule cities whose law enforcement authority under the city charter is restricted to emergency situations, shall not be issued a license, or have an interest, directly or indirectly, in a license. However, a nonprofit fraternal organization incorporated under the laws of this state, whose membership is not totally composed of law enforcement personnel or public officeholders charged with the duty of enforcing any penal laws or ordinances of a governmental body, may be issued a club liquor license if the organization is otherwise qualified.

Plaintiff responded to mlcc’s decision by resigning from his position as a county deputy and by filing suit. Plaintiff regained employment, however, after the trial court entered a temporary restraining order preventing mlcc from interfering with Sunshine’s liquor license or plaintiff. The subject matter of this appeal is plaintiff’s motion for declaratory relief made in the lower court. The motion was decided based on the parties’ briefs and oral arguments and the undisputed facts contained therein.

On appeal, our first concern is the appropriate standard of review. A declaratory judgment is a flexible remedy. It is available to a party when necessary to guide the party’s future conduct in order to preserve his or her legal rights. Shavers v Attorney General, 402 Mich 554, 588; 267 NW2d 72 (1978), cert den sub nom Allstate Ins Co v Kelley, 442 US 934 (1979). Our review is de novo on the record. Smith v Lumbermen’s Mutual Ins Co, 101 Mich App 78, 86; 300 NW2d 457 (1980), lv den 411 Mich 873 (1981). Here, the focus of plaintiffs motion was whether a law enforcement officer who leases property to an owner of a liquor license, without more, violates § 18’s mandate that law enforcement officers not have an interest— directly or indirectly—in such a license. Under a provision in this state’s constitution, Const 1963, art 4, § 40, mlcc is vested with complete authority to regulate alcoholic beverage traffic subject only to limitations imposed by the Legislature. Bundo v Walled Lake, 395 Mich 679, 699; 238 NW2d 154 (1976). For this reason and because the underlying facts were not disputed, we limit our review to determining whether mlcc’s application to plaintiff of § 18 is authorized by law and supported by competent, material, and substantial evidence.¹

In applying § 18, we are guided by the following rules of statutory construction:

This Court’s guiding principle of statutory interpretation is to determine and effectuate the intent of the Legislature. Charpentier v Canteen Corp, 105 Mich App 700, 704; 307 NW2d 704 (1981). To ascertain this intent, the Court must first review the specific language of the disputed provision, giving all terms their plain and ordinary meaning absent a contrary legislative intent. Lamphere Schools v Lamphere Federation of Teachers, 400 ; 252 NW2d 818 (1977). When an ambiguity is found, resulting in alternative interpretations being possible, this Court may refer to any factors which may advance the most probable and reasonable legislative intention. Charpentier, supra, pp 704-705. [Couture v General Motors Corp, 125 Mich App 174, 177-178; 335 NW2d 668 (1983), lv den 418 Mich 884 (1983).]

We recognize that an act must be read in its entirety, with meaning being given to one section only after due consideration of other sections, so as to produce, if possible, a harmonious and consistent enactment as a whole. Stratton-Cheeseman Management Co v Dep’t of Treasury, 159 Mich App 719, 724; 407 NW2d 398 (1987). We are also mindful that administrative interpretations of a statute by the agency responsible for that statute’s administration are accorded deference by the courts and must be reviewed with respectful consideration. Berrien Co v Michigan, 136 Mich App 772, 782; 357 NW2d 764 (1984); Bd of Ed of Oakland Schools v Superintendent of Public Instruction, 401 Mich 37, 41; 257 NW2d 73 (1977).

The controversy in this case involves whether plaintiff had an "indirect” interest in Sunshine’s liquor license. The term "indirect” has been defined in The American Heritage Dictionary of the English Language (1978), New College Edition, p 670, as follows:

1. Not taking a direct course; roundabout. 2. Not descending in a straight line of succession. Said of an inheritance or title. 3. a. Not straight to the point; circumlocutory, b. Evasive; devious. 4. Not directly planned for; secondary: indirect benefíts. 5. Relating to or characteristic of indirect discourse. In this sense, also "oblique.”

In Michigan case law, we find some guidance regarding the factors which should be considered in deciding whether a party has an interest in a liquor license. In reviewing whether a party has a property interest in a liquor license requiring rudimentary due process protections, this Court has looked to the nature of the transaction and the agreement involved. See Bunn v Liquor Control Comm, 125 Mich App 84, 90-91; 335 NW2d 913 (1983), lv den 418 Mich 852 (1983). In reviewing whether a public official has a direct or indirect interest in a liquor license for purposes of § 18 of the Liquor Control Act, the Supreme Court has considered the financial benefits derived from, and the public official’s participation in, the business owning the liquor license. See In re Lawrence, 417 Mich 248, 258-259; 335 NW2d 456 (1983).

Under the facts in this case, we cannot conclude that mlcc’s application of § 18 is not authorized by law or is not supported by competent, material, and substantial evidence. We reach this decision based on the deference courts acknowledge for interpretations of a statute by an agency charged with the statute’s enforcement, Berrien Co, supra, the legislative intent undergirding § 18, and the meaning derived from a logical reading of the statute itself.

The legislative intent behind § 18 is, in part, to avoid a situation in which a law enforcement officer is faced with a conflict of interest such that he or she is called upon to enforce a provision of the Liquor Control Act at a licensed premises in which he or she possesses even an indirect interest. We do not believe that that intent would be furthered where, as in the instant case, a law enforcement officer, functioning as a landlord, derives financial benefits in the form of rent from a licensee. The receipt of rent from a licensee in such a situation inherently establishes a link between the law enforcement officer and the licensed tenant, creating a pecuniary relationship in which the officer’s financial gain in the form of rental payments is related to the licensee’s ability to maintain its license to continue selling liquor on the rental property. Thus, control over the licensee’s business operation or internal processes is not necessarily required to show that a landlord/law enforcement officer derives some indirect interest in the liquor license of a tenant. The statute itself requires the law enforcement officer to have only some form of indirect interest in a liquor license; actual control over the licensee’s business operations or internal processes would constitute much more than an indirect interest.

Moreover, we cannot close our eyes to the link between a law enforcement officer and a liquor licensee which may be created by the mere payment of money. It is not unreasonable, we believe, to recognize that economic interests in our society often foster relationships of a very strong synergistic and symbiotic nature. Thus, the legislative intent behind § 18 may seriously be eroded by permitting a law enforcement officer to be placed into a situation in which his economic interest of retaining a paying commercial tenant, which relies upon its liquor license to generate profits, runs contrary to the performance of official duties which could lead to the revocation of the tenant’s liquor license. Common sense and logic suggest that, in such a situation, a law enforcement officer, because of the rent received from the licensee, may indeed be tempted to perform his official duties not with total objectivity but with some regard to the effect such performance may have on his pocketbook. This is precisely the kind of conflict-inducing situation which § 18 seeks to avoid. As observed, perhaps cynically but certainly insightfully, by Chaucer in The Tale of Melibeus, "Alle thynges obeyen to moneye.”

In conclusion, we disagree with the circuit court, which reversed mlcc’s determination because it "was not supported by any of the underlying facts and the agency’s construction of the statute was given the most unreasonable interpretation and arbitrary application.” We find that mlcc’s determination is authorized by law and is supported by competent, material, and substantial evidence. Accordingly, we reverse the circuit court’s grant of declaratory and injunctive relief in favor of plaintiff and reinstate mlcc’s determination conditioning the transfer of Sunshine’s liquor license to plaintiff’s rental property upon plaintiff’s resignation from the sheriff’s department or upon the sale of plaintiff’s premises.

Reversed. No costs, a question of first impression being involved.

Wahls, P.J., concurred.

1 We note that the scope of review applied by this Court to mlcc’s regulation of alcoholic beverage traffic under the Liquor Control Act has not been the same in all cases. See Kassab v Acho, 150 Mich App 104, 109; 388 NW2d 263 (1986), lv den 426 Mich 862 (1986), discussing the scope of review followed when a license applicant contests mlcc’s decision to deny the application. Given the legal issue and factual basis of this declaratory judgment action, we find that our limited scope of review adopted in this case is appropriate.