Rupinski v. Biel

Liss, J., delivered the opinion of the Court. ⁶³⁶ Josephine G. Ellis and her husband owned a building located in Perry Hall, Baltimore County, Maryland. They were also the sole stockholders of a liquor dispensing corporation known as Harbalt Liquors. She and her husband conducted that business for a period of twelve years during which time her husband suffered two heart attacks. As a consequence, the Ellises decided they could no longer operate the liquor store.

In December of 1976, Mrs. Ellis, on behalf of Harbalt, a Maryland corporation, entered into a contract to sell the liquor license to Spring Pizza, Inc. Spring Pizza, Inc. was the owner of a franchise which it had purchased from Pizza Hut. It proposed to operate a pizza business and to sell alcoholic beverages to its customers from a free standing building located adjacent to the Silver Spring Shopping Center on Belair Road. The officers and directors of Spring Pizza, Inc. were identified as Edward J. Rupinski, James T. Stockdale and Debra D. Schulze, who are the appellants in this case. A number of the individuals protesting the transfer of the license, including Andrew Biel, Charles Link, James A. Persing and others, are listed as the appellees.

The contract between Harbalt and Spring Pizza, Inc. was conditioned on attainment of the approval from the Board of Liquor License Commissioners to transfer the license to the Belair Road address and to reclassify the license from Class A (package goods, beer, wine and liquor) to Class B (beer only). On April 29, 1977, an application for transfer and reclassification was filed by Spring Pizza, Inc. and after a hearing that application was denied by the Board on June 13, 1977 on the ground that the transfer was not required for the accommodation of the public. No appeal was taken from that decision. Subsequently, a new application for the same relief was filed before the Board of Liquor License Commissioners for Baltimore County which came on for hearing on March 20, 1978.

After hearing and argument, the Board, on March 28, 1978, approved the application to transfer the Harbalt license to 8641 Belair Road subject to the restriction that no alcoholic beverages be sold to patrons except with the sale of food. The ⁶³⁷ protestants appealed to the Circuit Court for Baltimore County and after hearing and argument the presiding judge (DeWaters, J.) remanded the case to the Board for its consideration as to whether the premises occupied by Harbalt were “vacated” within the meaning of Article 2B, Section 75 of the Annotated Code of Maryland (1957, 1976 Repl. Vol.). If such “vacation” had in fact occurred, the court indicated the license was null and void.

In the original hearing before the Liquor Board, a witness for the protestants testified that from February of 1977 until June 13, 1977 the premises were occupied by a Suzuki motorcycle dealership and an H & R Block tax office, and that after February of 1977, it had not been occupied as a package liquor store. At the remand hearing, Mrs. Ellis conceded that these facts were accurate but testified that before renewing the license in 1977, she spoke to the Secretary of the Board, Mrs. Anne Eirman, and was advised by her that the license, if renewed, could be sold. On the basis of that information, the Ellises renewed the license. This testimony of Mrs. Ellis was not contradicted.

After this hearing, the Board reaffirmed its decision to approve the transfer of the license for the following reasons: [T]he license was renewed and, although the transfer was denied at the hearing on June 13,1977, that the contract for the sale of the license was not terminated and subsequently the Spring Pizza, Inc., reapplied for transfer of the license. That during the entire period of time from December 26, 1976, until the hearing of April, 1978, and, in fact, to this day, the transferor retained ownership of the property and testimony was that the tenants could, at any time, be required to leave the premises in order to re-establish the business at the same location. It becomes incumbent upon this Board to decide whether or not the transferor vacated the premises with the intent to terminate the business and the license. Although the business was, in fact, closed and the stock and fixtures sold and removed from the premises, it is the opinion of this Board that the ⁶³⁸ license was not vacated from the premises by reason of the fact that the licensee did not intend to cease operation without the completion of the sale and transfer of the license.

The fact that the contract for the sale of the license was never terminated and the ownership of the property was retained by the licensee indicated an intent to proceed with the transfer of the license and not to vacate the premises in accordance with the requirements of Section 75 of Article 2B of the Annotated Code of Maryland. For the reasons above stated, the Board reaffirms the conclusion that the subject license as of the time of the consideration of the application for transfer, was, in fact, a valid, viable license and subject to consideration for transfer. The appellees appealed to the Circuit Court for Baltimore County as authorized by the provisions of Article 2B, Section 175(e) Annotated Code of Maryland (1976 Repl. Yol.) which provides as follows: (l)(i) Upon the hearing of such appeal, the action of the local board shall be presumed by the court to be proper and to best serve the public interest.

The burden of proof shall be upon the petitioner to show that the decision complained of was against the public interest and that the local board’s discretion in rendering its decision was not honestly and fairly exercised, or that such decision was arbitrary, or procured by fraud, or unsupported by any substantial evidence, or was unreasonable, or that such decision was beyond the powers of the board, and was illegal. The case shall be heard by the court without the intervention of a jury. If in the opinion of the court it is impracticable to determine the question presented to the court, in the ease on appeal, without the hearing of additional evidence, or if in the opinion of the court any qualified litigant has been deprived of the opportunity to offer ⁶³⁹ evidence, or if the interests of justice otherwise require that further evidence should be taken, the court may hear such additional testimony to such extent and in such manner as may be necessary. After a hearing and argument Judge DeWaters issued the following memorandum reversing the Board of Liquor License Commissioners in which he said: This is an appeal from the Board of Liquor License Commissioners for Baltimore County, hereinafter referred to as the board.

The case was argued before this court on an earlier occasion at which time the matter was remanded to the board for further testimony. Further testimony was required to determine the issue in this case involving the expiration of the license which is sought to be transferred. On September 9,1978, testimony was taken by the board on this issue. The testimony was elicted [sic] from Josephine G. Ellis.

Mrs. Ellis testified that her husband had suffered two heart attacks and it was decided that the liquor operation would be abandoned. Harbalt Liquors, Inc. were the holders of the license. On December 20, 1976 an agreement was signed for the sale of the liquor license to Spring Pizza, Inc. In Feb. of 1977 the liquor operation ceased and all stock and inventory was sold. The premises was leased to businesses which do not conduct any type of liquor operation.

The license has not been used in any establishment for a liquor business since Harbalt Liquors, Inc. ceased operations. Subsequent to ceasing operations the board was contacted and license fees have been kept current. On April 29,1977 an application for transfer was filed and denied on June 13,1977. Based on this evidence the board ruled that the license had not expired and granted the requested transfer. ⁶⁴⁰ Article 2B, sec. 75(a) states as follows: 1 “On the tenth day after the holder of any license issued under the provisions of this article shall have vacated, or been evicted from the premises for which the license was issued, the license shall expire unless an application for approval of a transfer thereof to another location of assignment to another person pursuant to § 74 of this article or an application pursuant to § 78 of this article has been approved or is then pending.

However, the official authorized to issue licenses, in his discretion, may postpone the expiration for an additional period not exceeding 20 days in any case to avoid undue hardship.” The board does not have authority to grant this transfer unless the license has not expired. The board is controlled by the statute which governs the expiration of a liquor license. The controlling statute is Art. 2B, see. 75(a), supra. It is clear from the facts in this case that a transfer was not granted within 10 days and it is equally clear that an application for approval of a transfer was not filed within 10 days, so that such application could be pending.

The board’s decision must, therefore, stand or fall on the proper interpretation of the word “vacated” in the statute. The testimony of Mrs. Ellis establishes the fact that