Hon. Bert Rbrd, Administrator Texas Ldquor Control Board Austin, Texas

Dear Sir: OpinionNo. O-1145 Re: WhetherActs ofmembers of Rouston country Club, Houston, Texas, in operations of such club, constitutea violation of the Texas Liquor ControlAct.

Your rsquest for an opinicn on the above stated question has been receikedby this department. The facts, with referenceto the operations of Houston Country Club, as statedby you, are as followsr

"No personmay becomea participant in the RevolvingFund unless he is a member of the Club, butmembership in the Club does not automatically make hima participant in the Revolving Fund. Each member of the clubwho desires to become a participant in the Revolving F'cnd is required to pay $5 into the fund, andwith the fund so created liquor is purchased in packages from a regular retail store.

"The stock of liquor so purchased and belonging to,the participants in the Revolving Fund is kept in the club house and the participants in the fund are entitled tomake withdrawals therefrom, to be consumedas a straightdrink, as a highball, as oonstitutentsof a cocktail, or otherwise, and either
on or off the premises of the Country Club. Liquor
so withdrawn is served to the Revolving Fund participants by personswho are on the payroll of Rouston Country Club.
"Only participantswho have contributedto the Revolving Fund are permitted to make withdrawals from this liquor stock, and for eachwithdrawal a slip is made outwhich must be signedby the participant before the withdrawalis made. A, participantmay make withdrawals for any otherperson, in the samemanner that he makes tithdrawalsfor himself, -- that is, by signinghis - name thersfor. There is set out on the face of such slip the characterof the drink,Hon. Bert Ford, Page 2 (O-1146)

such aswhiskey, gin, hightall, or martini cocktail,
as the casemay be,with a specified chargetherefor, which dependsupon the nature of the drink and the ingredientstherein. At the end of eachmonth an inventory is taken of the liquor stock and the cost value of the liquors taken from the stock during the month is determined. This amount, i.e., costvalue of the liquor withdrawn, is then deducted from the total amount chargedduring themonth against all the participants in the fund, and is put back into the fund, afiile

the remainder is paid to the Country Club in payment for the ice, soda and personal services suppliedby it to the participants in the fund.

"One of themembers of the Revolving Lund handles the purchases of liquorwhich are necessary to replenish the stock that is owned by the participants in the fund. At the end of each calendarmonth the Country Club purchases fram the Revolving Lund the withdrawal slips signedduring thatmonth by the participants in the fund, and collects the amount theredf from such partioipants in the samemanner that it collectsthe regular clubbills.

"The Houston Country Club holdswine and beer retailer's permit No. 15879,.issuedJanuary 1, 1939, which Is a renewal. The stock of laineand beer owned and served by the olub iskept in a smallbuilding adjacent to the main building of the olub. Entranoe to this small store rocnu is gained by stepping fram the porch of themain building into the door of the store room. Beer and wines are served by miters frDIpthis store room into all parts of the club house and grounds, including,the spaces in which the stock of liquor owned by participants in the Revolving Fund is kept and drinks of liquor are served to such participants. Toe same praiters who servewine and beer from this store roan also serve drinks of liquor to the participants in the Revolving Fund. Wins and beer served by the club proper is signed for on a different type of checkthan that used Iy the Revolving Fund."
Section 3(a) of Article 1, of the Texas Liquor Control Act, definesthe term "open saloon" as follows:

"The term *open saloon' as used in thisAct
means aqg place where any alcoholicbeveragewhatever,manufactured in whole or in part bymeans of the process of distillation, or any liquor composedHon. PertFod, Page g (O-1145)

or compounded in part of distilled spirits, is sold
or offered for sale for beverage purposes hy the drink or in broken or unsealed containers, or aw placewhere aw such liquors are sold or offered for sale for hman ccnslrmption 011 the premiseswhere sold."
Subdivision (b) of Section 3, reads as follows:

"It shallbe unlaaful for any person,whether
as principal,agents or employees, to operate or assist in operating, or to be directly or indirectly interested in the operation of any open saloon in this Ste.te."

In the case of Adkins v. State, 95 S.VL, thematedal facts
are about as follows:

A group ofmen formed a club. These men in turn hired a steward at a fixed salary. The stewardordered beer for themembers of the club and placed such beer in the club
room for them. Each member of the club paid $l&C for a membership and received ticketswhich representedhis interest in the beer the steward ordered. After the keg of beer arrived at the clubhouse a ticketwas placed in a-box~and a glass of beer was drawn by anymember who desired one, each ticket representinv (I~1~88 of beere The beer which ~88 ordered Ty the steward for the purchasersand paid for by saidpurchasers. The Court of CriminalAppeals held in this case that the facts established a sale of beer by the steward eachtime that a glass of beerwas drawn by amember of the club.

In the case of Suttonv. State, 40 S.W. 501:

A certain firm kept what was known as "TemperanceHall." Certainparties paid 50 cents for the privilege of buying beer from the firm at the ordinary retail price. The 60 centspaid to beccrme a member of the alleged club
was all the money ever paid into the concern, except the usual price for beerwhen purchased. Such firm received 1,630 dozen bottles of beer in fivemonths; kept the stockmplenished with themoney arising from sales to members: and its pay was the profits. Ihe court of criminal Appeals of this State held that this was clearly an evasion of the local option law.

In the case of Krnavekv. Stats, 41 S.W. 612, the facts were about as rnllowsr..

Hon. Bert Ford, Page 4.(0-1145)

After the enactment of a local option law, a club
was inoorporated for social and literary purposes, and to provide the convenience of a clubrocm~ It had a billiard table, a domino tahls and 12 books, and took a semi-rmeklypaper* The club bought large quantities of intoxicants,md employed an ex-saloonkeeper at amonthly salary to sell them at retail to itsmenbers only, from the bar fonaerly owned by him, and the proceeds of such sale became the property of the club* The Court of CrMnal Appeals ofthis State.heldthat the club we.8formed for the purpose of evading the local option law.

In the case of FwigeV* State, 95 &PC. 506:

A clubwas incorporated for socialpurposes. The manager of such club devoted his time to themanganent of it8 affairso A~membership fee of $1 was paid* him by eaahmember. Themembers of the club obtained beer by purchasing tickets, The beerwas obtainedthe day after the purchase of the tickets. Themanager instructedthe members how to order beer by statingthat when the members wanted beer,the shouldput money in
a box and take out a ticket for each nickel, and that couldbe procured at the clubrocmthe following night. Held, that the clubmembers, when they paid their money into the treasury,parted with it to the club,
so that rhen it sentout the money it bought beer on its own behalf,making the manager liable for sale.

In the cass of Adams V. State, 145 S.W. 940, the Court of CriminalAppeals of this State held:

Where a clubpurchased liquors in bulkwith money in the treasury a distributionof the same to members at the usual price constituteda salewithin the prohibition laws.

In State v. CountryClub, 173 S.H. 570, the Qurt of CriminalAppeals of this State held*

The dispensing of intoxicating liquors by an incorporated,bona fide social club to itsmembers, for a swa sufficientto psv the cost of the liquors and ofmaintaining the aermlce, is a sale of such Xauors o_ .. -

Hon. Bert Ford, Page 5 (O-1145)

In the case ofWilliams V. State, 103 S.W. (2d) 380, the facts were as follows:

The defendantwas found in the possession of ten cases of beer, in the city of,Abilene,in Taylor County, Texas. At the time defendantwas the manager of xhat 1~s known as the "AbileneAthletic Club," which had approximately 250members. A prerequisiteto membership being that a written applicationhad to be made which called for a deposit qf $5.00 by the applicant with saidmanager. Upon being approved as a member of the club,the applicantpaid amonthly sum of $1.00 dues, the primary purpose of the $5.00mentioned being that it was to be used in the purchase of merchandise; and also if themember nithdrew he was entitled to the return of his $5 deposit,provided it had not been consumed in the individualpurchase ofmerchandise or in the payment of dues. Rhen the $5 deposithad been consuxed, it ms also understood that the members should deposit a like strm; alxo the general propertiesand activitiesof the club are set out; it is shown that appellantis permittedto sell chexing grrm,cigars, cigarettes,sandwiches, coffee,milk, and soft drinks and put the profits of such business into the payment of part OS his salaryas manager. It is further set out in the agreed statement of the facts in this case that
some of the members of saidAthletio Club had directed appellant to have on hand in said club beer for their constiptionand that the beer upon which this prosecutionxas based hadbeen ordered by variousmembers and that the defendant had gone to Sleetwater,and acting as manager of said club and agent for themembers of said club had purchasedwith themoney of saidmembsrs said beer~to bring 'tack for the members c+' fhe club. Each member was to pay the manager 15 centsper container for said beerwhen he receivedhis beer at said club, and said 15 centsdeposit, if any, nas deposited in *themembers deposit account" to replenish same and to be used in accordancewith the direction of the members ofthe club. Appellant got no profit from the sale of any beer but from the revenues, dues, and profits fran the sale ofmerohandise were to be paid all expenses in the opration of said club, the rent of the building and salaries of attendants. The Court of Criminal Appeals held in this case under the facts, that the defendantpossessed intoxicating liquors for the purpose of sale in a dry area.

It is true that the violation in the Williams case, as well
as those in the other casss herein referred to, occurred indry territory, honever, tnview of the definition of an open saloon, in our opinion,theHon. Bert Ford, page 6 (O-1145)

facts herein set forth with referenoe to~themanner of operation of the Houston Country Club of Houston, Texas, clearly show that the acts of themembers of such club, in the operatingof same, constitutea violation of the Texas Liquor ControlAct, in that the operation of seme comeswithin the definition of an open saloon,which is prohibited by statute in the State of Texas.

Itwould seem, that in so far as the selling of alcoholic beverages,manufactured in whole or in part,by means of the process of distillation, or any liquor composedor ccmpounded,in part of distilled spirits,or the offering for sale of the same, by the Luston County Club, is concerned,the members of said club are attempting to do indirectly, what they cannot legally do directly.

In your letteryou also request an opinion as to whether the River Oaks Country Club of Houston,Texas, under the facts suhnitted,is operated as an open saloon. We see no differenae in the method of operation of these tvc clubs, as far asthe handling of their liquor is ccncerned, except that the latter purchases its liquor through a trustee. This probablymakes the trustee guilty of operatingan open saloon, and releases the clubmembers of such liability.

We do not think that there is any doubt but that the fact that liquor is dispensed tomsmbers of these clubs by the drink, coupled with the further fact that suohmembers are calledupon to contribute money tothe Revolving Fund, and that they do so contribute, 80 that liquormay be kept on hand, constitutessales of liquor by the drink on the part of those who deliver the liquor to the various members, whoever they 4w be, and that both clubs in questionare being operated as open saloons.

He trust that this satisfactorilyenswersyour inquiry.

Yoursvery truly

ATTORNEY GENERAL OF TEXAS 

# By /s/ Fred C. Chandler

Fred C, Chandler bssistant
FCCsob:egw _I.. APPROVRD AUG. 26, 1939 /s/GERALD C. MANN ATTORNSYGRNERAL OFTEXAS APPR+OVED Opinion Conrmittee By* Chairman