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Goode v. Thomas

SEPTEMBER 3, 1975.




APPEAL from the Circuit Court of La Salle County; the Hon. JOHN D. ZWANZIG, Judge, presiding.


The City of Ottawa and its mayor, James M. Thomas, appeal from a judgment order of the Circuit Court of La Salle County directing the issuance of a writ of mandamus to compel the mayor to grant a Class B retail liquor license to Samuel A. Goode, appellee.

The determinative facts, as found by the trial court, are not disputed on appeal. Goode purchased a hotel and adjacent empty tavern building in August of 1973. After commencing to remodel the hotel, he filed his application and bond for a liquor license for the tavern premises. Mayor Thomas informed him that all 36 licenses allowed by ordinance were then outstanding, but that he would receive the next available license and that the mayor believed Mr. Dunn was going out of business and would surrender his license soon. In November, 1973, after receiving additional assurances from the mayor that he would soon receive a license, Goode began to remodel the tavern, expending $3,300 plus his personal labor. Thereafter, Goode received offers to sell outstanding licenses from four license holders for sums of $10,000, $7,500, $5,000 and $2,500 respectively. At one time Goode and a licensee agreed to the sale of a license for $1,000, and Mayor Thomas agreed to approve transfer of the license to Goode, but the sale was not consummated because the licensee increased the price to $2,500. Goode filed his petition for writ of mandamus on April 2, 1974, and trial began on May 14, 1974.

At trial Mayor Thomas testified that at least two outstanding licenses were not in use — one belonging to Gray who had obtained a license during 1973-74 but had never used it, and the other belonging to Mr. Dunn who had gone out of business and who had changed the address of the licensed premises to his home. All 36 licenses, including those of Gray and Dunn, were renewed by the mayor on May 1, 1974, while Goode's application was pending, although the mayor knew that the Gray and Dunn licenses were not in use.

The trial court, in a very helpful memorandum opinion, reviewed the liquor licensing ordinance of the City of Ottawa, and concluded that the ordinance does not contemplate or permit nonuse of a license, although it contains no provision for recall or termination of a license when the licensee goes out of business. The court held that renewal of a license not in use is not permissible since an applicant for renewal must have the same requisites and qualifications as an original applicant. Renewal of licenses not in use, in the face of Goode's application and admitted qualifications and after Goode undertook to repair and remodel the tavern in reliance on the mayor's promise of a license, was held to be arbitrary and unreasonable official conduct. The court also took into account the attempts to sell licenses in contravention of section 1 of article VI of "An Act relating to alcoholic liquors" (Ill. Rev. Stat., ch. 43, § 119). Although the testimony was contradictory, the court found that the mayor had no knowledge of the proposed "sales" of licenses. The court then construed the ordinance to mean that 36 "establishments" could be licensed and held that issuance of a license to Goode would not result in more than the desired number of liquor establishments in Ottawa. The court urged the city council to adopt an ordinance banning transfers and requiring surrender or termination upon nonuse in order to aid the mayor in performing his duties as liquor commissioner.

On appeal, Mayor Thomas and the city contend that three reversible errors were committed by the trial court: (1) refusal to dismiss the complaint for failure to allege that a license was available; (2) admission of irrelevant testimony as to use and nonuse of outstanding licenses when the question of the validity of such licenses was not before the court; (3) entry of judgment for Goode which was error as a matter of law.

These three contentions may be reduced to a single question: Under the liquor control legislation of the State of Illinois and the City of Ottawa, may the liquor commissioner, in exercise of his discretionary authority, deny an application for a license on the grounds that no licenses are available for the qualified applicant at a time when outstanding licenses are not in use? If we agree with the trial court that the denial of Goode's license was improper, plaintiff argues that we still face the problem of ordering the mayor to issue license to Goode when all 36 licenses authorized by ordinance have already been issued and none of those outstanding are before the court in this case.

• 1 We can find no cases in Illinois which have considered the legal import of nonuse of liquor licenses, and neither "An Act relating to alcoholic liquors" (Ill. Rev. Stat., ch. 43), nor the Ottawa liquor ordinance (Ottawa Mun. Code, ch. 34) contains any provision for terminating a license not in use. Regulation of the liquor business must be pursuant to a legitimate exercise of State and municipal police power and although a liquor license is a privilege, not a right, a person entitled to sell liquor is entitled to fair treatment when public officers, grant, deny, suspend or revoke liquor licenses. (Shoot v. Illinois Liquor Control Com., 30 Ill.2d 570, 198 N.E.2d 497 (1964).) Good cause must be shown for denial of a license, and, where the evidence establishes that an officer arbitrarily abused his discretion in failing to issue a license, mandamus will issue compelling him to grant the license. Stevens v. County of Lake, 24 Ill. App.3d 51, 320 N.E.2d 263 (2d Dist. 1974); McCray v. Daley, 133 Ill. App.2d 67, 272 N.E.2d 815 (1st Dist. 1971); Daley v. License Appeal Com., 63 Ill. App.2d 43, 211 N.E.2d 573 (1st Dist. 1965).

In our opinion, both the State statute and the Ottawa ordinance indicate a legislative intent that liquor licenses be issued to specific premises for purposes of operating a business. The grant of powers to the mayor is contained in section 3 of article IV (Ill. Rev. Stat., ch. 43, § 112), which provides, in part, as follows:

"Each local liquor control commission shall also have the following powers, functions and duties with respect to licenses * * *.

1. To grant and or suspend for not more than thirty days or revoke for cause all local licenses issued to persons for premises within his jurisdiction;

2. To enter or to authorize any law enforcing officer to enter at any time upon any premises licensed hereunder to determine whether [any statutes or regulations] * * * are being violated * * *;

3. To receive complaint from any citizen within his jurisdiction that any of the provisions of this Act, or any rules or regulations adopted pursuant hereto, have been or are being violated and to act upon such complaints in the manner hereinafter provided * * *."

The Ottawa liquor ordinance, section 34.07, provides that a liquor license "shall permit the sale of alcoholic liquor only in the premises described in the application and license. Such location may be changed only upon the written permit to make such change issued by the mayor." Section 34.06(6) of the ordinance requires that the application state "The location and description of the premises or place of business which is to be operated under such license." Finally, section 34.10(15) provides that no ...

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