Palm Gardens, Inc. v. Oregon Liquor Control Commission

514 P.2d 888, 15 Or. App. 20, 1973 Ore. App. LEXIS 698
CourtCourt of Appeals of Oregon
DecidedOctober 8, 1973
StatusPublished
Cited by39 cases

This text of 514 P.2d 888 (Palm Gardens, Inc. v. Oregon Liquor Control Commission) is published on Counsel Stack Legal Research, covering Court of Appeals of Oregon primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Palm Gardens, Inc. v. Oregon Liquor Control Commission, 514 P.2d 888, 15 Or. App. 20, 1973 Ore. App. LEXIS 698 (Or. Ct. App. 1973).

Opinions

LANGTRY, P.J.

Petitioners appeal from a revocation of the Dispenser Class B license of Palm Gardens, Inc. and the notice of warning issued to the permittee Michael Makin. Palm Gardens, Inc. was issued the Dispenser Class B license on October 18, 1972 as a result of an application filed with the Oregon Liquor Control Com[24]*24mission (referred to as OLCC) on August 18, 1972. The license replaced a previous license issued to Albert Parker, doing business as Palm Gardens; Mr. Parker is listed as the sole stockholder of Palm Gardens, Inc. on the application for the license.

The events forming the basis for this revocation, occurred on October 10, 1972. On the evening of that date, two undercover inspectors for the OLCC observed a dancer, wearing only “pasties” and G-string, on the petitioners’ stage approach at the edge of the stage bar a male patron who had placed a piece of folded paper between his teeth. The dancer pulled down her G-string with her thumbs, placed her crotch in the patron’s face, and, with her hips gyrating; removed the folded paper from Ms mouth. TMs “performance” was repeated several times during the course of the inspection. A notice of violation was served on both petitioners as' a consequence of this inspection.

The dancers engaged in tMs “performance” were Mred from an independent booking agent by the petitioners, but the petitioners had control of their activities on the stage at all times.

The record also indicates that on two occasions during the three weeks prior to October 10, 1972 inspectors for the OLCC had contacted the petitioners about improper bodily contact between the dancers and the customers.

Based on its findings of fact and on the record presented to it, the OLÍCC made the following conclusions of law and ruling:

• “CONCLUSIONS OF LAW '
“Licensee Palm Gardens, Inc., through its employee, for whose acts it is held responsible pur[25]*25suant to OAR Chapter 845 10-075, maintained a lewd or disorderly establishment and permitted or suffered disorderly conduct upon the licensed premises, in violation of ORS 472.180 (5) and OAR Chapter 845 10-065 (2).
“Permittee Michael Mabin, maintained a lewd or disorderly establishment and permitted or suffered disorderly conduct upon the licensed premises, in violation of ORS 472.180 (5) and OAR Chapter 845 10-065 (2).
“Wherefore, it is considered and ordered:
“That the Dispenser Class B license of Palm Gardens, Inc., be cancelled for violation of ORS 472.180 (5) and OAR Chapter 845 10-065 (2), further;
“That a warning be issued Permittee Michael Maldn for violation of ORS 472.180 (5) and OAR Chapter 845 10-065 (2); * ° *
ÍÉ# * * * &

Our review of the order of the OLCC is governed by ORS 183.480 (7) (d) which states:

“(7) The court may affirm, reverse or remand the order. The court shall reverse or remand the order only if it finds:
“(d) On review of a contested case, the order is not supported by reliable, probative and substantial evidence on the whole record;
& * * * »

The statutes and regulations under which responsibility was founded and violations charged are as follows:

Oregon Administrative Rules ch 845, § 10-075 (OAR 845-10-075):

“Each licensee shall be held responsible for any violation of any regulation of the Commission pertaining to his licensed premises and for any' act or [26]*26omission of any servant, agent, employee, or representative of such, licensee in violation of any law, municipal ordinance or regulation affecting his license privileges.”

OES 472.180 (5):

“The commission may cancel or suspend any license granted if it finds:
“(5) That the licensee maintains a noisy, lewd, disorderly or insanitary establishment or has been supplying impure or otherwise deleterious beverages or food.”

OAE 845-10-065 (2):

“No licensee shall permit or suffer any loud, noisy, disorderly or boisterous conduct, or any profane or abusive language, in or upon his licensed premises, or permit any visibly intoxicated person to enter or remain upon his licensed premises.”

Under the substantial evidence rule, we may decide questions of law, but must limit ourselves to the test of reasonableness in reviewing findings of fact. 4 Davis, Administrative Law Treatise 114, § 29.01 (1958); ORS 183.480 (7). See Bay v. State Board of Education, 233 Or 601, 605, 378 P2d 558, 96 ALR2d 529 (1963).

The petitioners raise nine assignments of error which will be considered in order.

(1). IS PALM GAEDENS, INC. EESPON-SIBLE FOE VIOLATIONS OC CURBING PEIOE TO THE ISSUANCE OF ITS LICENSE?

The basic argument of the petitioners here is that there is insufficient evidence to disregard the corporate entity and to make the corporation liable. It is true, as the petitioners contend, that the mere ownership of all the stock of the corporation, or man[27]*27agement control, by Mr. Parker is not sufficient to justify disregard of the corporate entity. Wakeman v. Paulson, 257 Or 542, 544, 547, 480 P2d 434 (1971). However, if the legal entity is being used to defeat public convenience, justify wrong, protect fraud or defend crime, “courts will disregard the corporation or its entity and look at the substance and reality of the matter.” 1 Fletcher, Cyclopedia of Private Corporations 240-42, § 45 (rev 1963). Wakeman v. Paulson, supra, 257 Or at 544. Looking at the substance and reality of the matters here, it becomes quite clear that to permit Palm Gardens, Inc. to be held blameless for the acts of Albert Parker, dba Palm Gardens, would be to permit the petitioners to evade the authority of the OLCC under the statute. Palm Gardens, Inc. was clearly designed to be a successor to the business operated in an unincorporated form by Albert Parker and the application for a license filed by Palm Gardens, Inc. so indicates.

(2). WERE THE DANCERS EMPLOYES, OFFICERS, AGENTS OR REPRESENTATIVES OF PALM GARDENS, INC.?

The test for determining whether a person is a servant or an independent contractor is based not on the actual exercise of control by the employer, but on the right to control. Where the employer has no right to control the other’s actions, the actor is usually deemed to be an independent contractor. But the test of the right to control does not refer to the right to control the results of the work, but rather to the right to control the manner and means of accomplishing the result. Great American Ins. v.

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Bluebook (online)
514 P.2d 888, 15 Or. App. 20, 1973 Ore. App. LEXIS 698, Counsel Stack Legal Research, https://law.counselstack.com/opinion/palm-gardens-inc-v-oregon-liquor-control-commission-orctapp-1973.