Case Name: MICHIGAN LICENSE BEVERAGE ASSOCIATION v. BEHNAN HALL, INC.
Court: Michigan Court of Appeals
Jurisdiction: Michigan
Decision Date: 1978-04-03
Citations: 82 Mich. App. 319
Docket Number: Docket No. 77-795
Parties: MICHIGAN LICENSE BEVERAGE ASSOCIATION v BEHNAN HALL, INC.
Judges: Before: Bashara, P. J., and Beasley and D. E. Holbrook, Jr., JJ.
Reporter: Michigan appeals reports; cases decided in the Michigan Court of Appeals.
Volume: 82
Pages: 319–335

Head Matter:
MICHIGAN LICENSE BEVERAGE ASSOCIATION v BEHNAN HALL, INC.
Docket No. 77-795.
Submitted December 20, 1977, at Detroit.
Decided April 3, 1978.
The Michigan License Beverage Association brought an action against Behnan Hall, Inc., to permanently enjoin the defendant from renting premises to others for the consumption of alcoholic beverages and from further providing the food, bartenders, and assorted nonalcoholic beverages to be used with liquor on the rented premises, claiming a violation of the Michigan Liquor Control Act. The defendant argued that the plaintiff association lacked standing to maintain the action since it did not possess a liquor license and was not engaged in any commercial activity which would be affected by the outcome of the litigation. It also contended that equity jurisdiciton was not available in this instance to enjoin a violation of a criminal statute. The Oakland County Circuit Court, Robert B. Webster, J., found that the plaintiff did have standing to maintain the action as the representative of its liquor licensee members and, finding that equity jurisdiction was properly invoked, granted a permanent injunction prohibiting the defendant from providing food, and beverages to be used with liquor on the premises because such conduct was violative of the Liquor Control Act and damaging to the property rights of the liquor licensees represented by the plaintiff. Plaintiff appeals arguing that the injunction’s prohibition should have included a ban on the consumption of alcoholic beverages on the rented premises. Defendant cross-appeals, primarily contending that the plaintiff lacked standing to maintain the action. Held:
The plaintiff nonprofit corporation, which did not possess a liquor license and was not engaged in any activity which would be affected by the outcome of the litigation and which was not constituted for representative litigation purposes according to its charter, did not have standing to maintain the action. The Court also found that the action was not properly brought because there was no indication of legal notice given to the plaintiff’s liquor licensee members which would have made the outcome of an adjudication binding upon them, and that equity jurisdiciton was not properly invoked to enjoin this violation of a criminal statute because plaintiff’s conclusory allegations of injury were not enough to meet its burden of demonstrating a public or private nuisance or injury to its property rights, directly traceable to the alleged unlawful conduct of the defendant.
References for Points in Headnotes
[1, 3, 6, 7] 59 Am Jur 2d, Parties §§ 26, 27.
45 Am Jur 2d, Intoxicating Liquors § 448.
59 Am Jur 2d, Parties § 81.
42 Am Jur 2d, Injunctions §§ 157, 161.
45 Am Jur 2d, Intoxicating Liquors § 445 et seq.
22 Am Jur 2d, Declaratory Judgments § 25.
Reversed and dismissed.
Judge Beasley partially dissented on the ground that judicial review of justiciable issues should be freely available to obviously interested parties to an action with the least judicial encumbrance. He would find that liquor licensees have a property right in their licenses which would justify equitable intervention on their behalf to enjoin criminal acts which would injure those rights, but concluded, as did the majority, that the plaintiff in this instance was not entitled to such relief because it had failed to make an evidentiary showing of pecuniary damages directly traceable to defendant’s allegedly wrongful conduct.
Opinion op the Court
1. Words and Phrases — Standing—Interest in Litigation — Advocacy.
Standing is the legal term used to denote the existence of a party’s interest in the outcome of litigation, an interest that will assure sincere and vigorous advocacy.
2. Parties — Standing—Licenses—Liquor Licensees — Intoxicating Liquors — Affected Activities.
A nonprofit corporation which was formed for the stated purpose of educating liquor licensees as to their moral, ethical and civic responsibilities does not have legal standing to maintain an action for an injunction to bar a hall which rents its space and furnishes food and soft drinks to its tenants and their guests from profiting from the provision of these goods and services to be used in conjunction with liquor where the corporation itself does not possess a liquor license and is not engaged in any activity which would be affected by the outcome of the litigation.
3. Parties — Litigation Representative — Corporate Purposes— Standing to Sue.
A nonprofit corporation consisting of members who are liquor licensees may not assert representative legal rights under the liquor licenses of its members where the corporation was not constituted for representative purposes and where the facts indicate that its corporate purpose is unrelated to that of a litigation representative.
4. Parties — Litigation Representative — Binding Adjudications— Notice.
Economic utilization of judicial resources is a principal objective of representative litigation; it is therefore paramount that the outcome of an adjudication be binding upon those represented; those whose rights are to be determined by litigation must be given notice of its pendency and an opportunity to participate personally or through a class representative.
5. Equity — Criminal Acts — Injunctions—Nuisance—Conclusory Allegations — Traceable Injury.
It is a well-established general rule that only in cases of public or private nuisance or injury to property rights will equity jurisdiction be available to enjoin criminal violations; mere conclusory allegations of injury are insufficient; plaintiff must show as a pre-condition to obtaining equitable relief that the injury was directly traceable to the alleged unlawful conduct of the defendant.
Partial Dissent by Beasley, J.
6. Parties — Standing to Sue — Justiciable Issues — Claim of Right —Interested Parties — Judicial Encumbrance.
The law should favor an interpretation which grants standing to a party to obtain resolution of an issue where there is a genuine justiciable issue raised by that party under a claim of right against one who has an interest in contesting it; judicial review of justiciable issues should be freely available with the least judicial encumbrance,
7. Parties — Standing to Sue — Litigation Representative — Intoxicating Liquors — Licenses.
A nonproñt corporation which was organized, according to its bylaws, for the mutual improvement, protection and beneñt of its liquor licensee members should be granted standing to bring a lawsuit to protect the license interests of those members, even where it does not itself possess such a license.
8. Licenses — Intoxicating Liquors — Property Rights — Injunction —Criminal Acts.
Liquor licensees have a property right in their liquor licenses which would justify equitable intervention on their behalf to enjoin criminal acts by a defendant which would injure those property rights.
9. Equity — Injunction—Criminal Acts — Damage to Property Rights — Pecuniary Damages — Burden op Proof.
Injunctive relief is not available to a plaintiff seeking to enjoin a criminal act which he alleges is causing damage to a property right where the plaintiff is unable to make an evidentiary showing of pecuniary damages directly traceable to the alleged unlawful conduct of the defendant.
10. Actions — Declaratory Judgment — Statutes—Interpretation.
An action for declaratory judgment is a proper means to seek an authoritative binding interpretation of a statute.
Campbell, Kurzman & Plunkett, for plaintiff.
Hyman, Gurwin, Nachman, Friedman & Winkle-man, for defendant.
Before: Bashara, P. J., and Beasley and D. E. Holbrook, Jr., JJ.

Opinion:
Bashara, P. J.
Plaintiff appeals from a trial court judgment granting injunctive relief against defendant, prohibiting pertain conduct alleged by plaintiff to be in violation of the Michigan Liquor Control Act. The contention of plaintiff is that the scope of the injunction's prohibition does not enjoin all of the defendant's allegedly unlawful conduct.
Defendant cross-appeals from the judgment. Its primary contention is that plaintiff lacked standing to maintain the action for injunctive relief. To sustain the argument, defendant asserts that plaintiff lacks any interest affected by the alleged unlawful conduct, and that plaintiff has failed to establish any basis upon which equity jurisdiction can be founded. Additionally, defendant contends that the conduct of which plaintiff complains is not violative of § 26c of the act.
This case was submitted to the trial court by stipulation of facts, which were adopted by the trial court. Those facts disclose that the defendant is in the business of operating a catering hall. That facility is rented to various persons and organizations for use in holding wedding receptions, banquets, and similar social gatherings. As part of its business services to those lessees, defendant provides food, a bartender, and assorted nonalcoholic beverages, some of which are used in conjunction with liquor, for an agreed upon price per person.
Any alcoholic beverages consumed on defendant's premises by the lessees or their guests are furnished by the lessees. The lessees purchase the liquor, not from defendant, but from licensees under the act. Defendant does not sell liquor, derives no profit from its sale by others, nor is it licensed to do so under the act.
Proceedings were initiated by plaintiff, a nonprofit corporation whose members are licensees under the act, to enjoin the operation of defend ant's business insofar as it permitted the consumption of liquor on its premises. Suit was predicated upon allegations that such business activity violates § 26c of the act and injures the property rights of plaintiffs members in their liquor licenses.
Initially, we analyze the defendant's contentions relative to plaintiffs standing to maintain the action and the existence of a basis for equity jurisdiction.
In the context of this case questions of standing and jurisdiction are closely related. Indeed, much of defendant's argument denominated as pertinent to standing is actually aimed at the existence of equity jurisdiction. Therefore, the distinction should be clarified.
Standing is the legal term used to denote the existence of a party's interest in the outcome of the litigation; an interest that will assure sincere and vigorous advocacy. Sierra Club v Morton, 405 US 727, 731-732; 92 S Ct 1361, 1364; 31 L Ed 2d 636, 641 (1972). Conceptually, standing was adeptly described by the Sierra Club Court in the following terminology:
"Whether a party has a sufficient stake in an otherwise justiciable controversy to obtain judicial resolution of that controversy is what has traditionally been referred to as the question of standing to sue. [T]he question of standing depends upon whether the party has alleged such a 'personal stake in the outcome of the controversy,' Baker v Carr, 369 US 186, 204, 82 S Ct 691, 703, 7 L Ed 2d 663, as to ensure that 'the dispute sought to be adjudicated will be presented in an adversary context and in a form historically viewed as capable of judicial resolution.' Flast v Cohen, 392 US 83; 101, 88 S Ct 1942, 1953; 20 L Ed 2d 947." Id.
See also Warth v Seldin, 422 US 490, 499; 95 S Ct 2197, 2205; 45 L Ed 2d 343, 354 (1975), and United States v SCRAP, 412 US 669, 687; 93 S Ct 2405, 2416; 37 L Ed 2d 254, 269 (1973).
Accordingly, the threshold question is whether plaintiff has an interest in the outcome of this litigation sufficient to invoke the controversy-resolving powers of the judiciary. The stipulation of facts discloses that plaintiff does not have a liquor license, nor is it engaged in any commercial activity that will be affected by the outcome of this litigation. As a corporation, a separate legal entity, plaintiff possesses no interest that we are able to discern that confers upon it the requisite standing to maintain this action.
Relying upon White Lake Improvement Assoc v City of Whitehall, 22 Mich App 262; 177 NW2d 473 (1970), plaintiff asserts that the commercial interests of its members constitute a sufficient basis to conclude that it has standing as a representative. In the White Lake case a non-profit corporation was held to have standing to represent its riparian landowner-members in a suit to enjoin the pollution of a lake. Id. at 271-274. This conclusion was obtained notwithstanding that the association itself was not a riparian landowner.
A circumstance in the White Lake case that distinguishes it from the facts before us is that the association in the former was constituted for solely representative purposes. Id. at 272; 177 NW2d at 477. In the case under review the facts indicate that plaintiff's corporate purpose is unrelated to that of a litigation representative. Further, the cases upon which White Lake was premised involved associations that acted as a class representative or sought to establish rights in which they had a direct interest, or without which their existence would terminate. None of these factors characterize plaintiffs position in the instant litigation.
More importantly, since economic utilization of judicial resources is a principal objective of representative litigation, it becomes paramount that the outcome of the adjudication be binding upon those represented. Consistent with our conception of procedural due process, this imports that those whose rights are to be determined by litigation be given notice of its pendency and an opportunity to participate personally or through a class representative. See, e.g., Mullane v Central Hanover Bank & Trust Co, 339 US 306, 313; 70 S Ct 652, 656; 94 L Ed 865, 872-873 (1950).
The stipulation of facts indicates that plaintiff does not know whether any of its members has knowledge of the pendency of this litigation. Concomitantly, if plaintiff seeks to adjudicate the alleged property interests of its members by this action, the binding effect upon its members under the foregoing principle would be tenuous, at best. Consequently, since the plaintiff has neither a direct interest in the cause of action nor a properly constituted representative position, we must conclude that the requisite standing to pursue this litigation is absent.
Should plaintiff establish standing to maintain this action by assuming a proper representative status, under the facts shown by the record, equitable relief would nevertheless remain unavailable. Such result would obtain because of the absence of any grounds upon which the invocation of equity jurisdiction can be founded. Even if a party has standing to maintain a suit for injunctive relief, he must additionally allege and establish a basis for equity jurisdiction.
Violations of the act are, by the terms of § 50, deemed to be crimes. As a well-established general rule, only in the cases of public or private nui sanee or injury to property rights will equity jurisdiction be available to enjoin criminal violations. See e.g. State ex rel Washtenaw County Prosecuting Attorney v Western Union Telegraph Co, 336 Mich 84, 90; 57 NW2d 537, 540 (1953), Glover v Malloska, 238 Mich 216, 220; 213 NW 107, 108 (1927), Village of St Johns v McFarlan, 33 Mich 72; 20 AR 671 (1875). No allegations of nuisánce were made by plaintiff, nor does the act declare violations to be a nuisance. However, the interests of plaintiff's members in their liquor licenses may constitute sufficient property rights to invoke equity jurisdiction. But we need not decide that issue.
Assuming, arguendo, the existence of. standing and property rights, the record is devoid of any evidentiary basis for finding that defendant's alleged violations of the act resulted in any injury to those interests. Mere conclusory allegations are insufficient. Plaintiff must show, as a pre-condition to obtaining equitable relief, that the injury was "directly traceable" to the alleged unlawful conduct of defendant. Glover v Malloska, supra at 221.
This requirement of direct traceability was reasserted in United-Detroit Theaters Corp v Colonial Theatrical Enterprise Inc, 280 Mich 425, 430-431; 273 NW 756, 757 (1937). There, the Supreme Court reversed an order for injunctive relief because the record failed to show an injury to plaintiff's property interest in their business. Id.
Accordingly, we conclude that the trial court erred in granting injunctive relief to the plaintiff. Further, it is our conclusion that the action should have been dismissed because plaintiff lacked standing to maintain the suit. Consequently, we need not reach an evaluation of the trial court's interpretation of § 26c of the act.
Reversed and dismissed. Costs to defendant.
D. E. Holbrook, J., concurred.
MCLA 436.1, et seq; MSA 18.971, et seq.
MCLA 436.26c; MSA 18.997(3). This section states as follows:
"No person shall maintain, operate, lease or otherwise furnish to other persons any premises or place which is not licensed under this act, wherein such other persons may engage in the drinking of alcoholic beverages, for a fee or for any other consideration including the sale of food, mixers, ice or other fluids used with alcoholic drinks or the storage of alcoholic liquors: Provided, That the provisions of this section shall not apply to any hotel nor to any licensee under the provisions of this act: Provided further, That the provisions of this section shall not be construed to repeal or amend the provisions of section 26b of this act."
Plaintiffs corporate purpose is stated in its articles of incorporation to be as follows:
"Article II — The purpose or purposes of this corporation are as follows: The purpose of educating licensees of the Michigan Liquor Control Commission as to their responsibilities to the public from a moral, ethical and civic standpoint of view and for the purpose of mutual benefit that accrues from such an understanding."
See White Lake Improvement Assoc v City of Whitehall, 22 Mich App 262, 273-274 and fn 12 and 14; 177 NW2d 473, 477-478 (1970).
For example, in the cases reported in White Lake, at 274, fn 14 the association brought suit as a class action in Smith v Board of Education of Morrilton School District No 32, 365 F2d 770, 777 (CA 8, 1966), and litigated rights essential to its organizational existence or in which it had a direct interest, in the cases of Louisiana v NAACP, 366 US 293, 294; 81 S Ct 1333, 1334; 6 L Ed 2d 301, 303 (1961), and NAACP v Button, 371 US 415, 428-429; 83 S Ct 328, 335; 9 L Ed 2d 405, 415 (1963), respectively. See also NAACP v Alabama, 357 US 449, 459; 78 S Ct 1163, 1170; 2 L Ed 2d 1488, 1489 (1958).
One means of instituting representative litigation is provided by the court rule governing class actions. See GCR 1963, 208. This rule enables the court to assure that all those who are to be bound by the judgment receive proper notice of the litigation. Rule 208.4 provides:
"Protective Orders. The court at any stage of an action under sub-rules 208.1 or 208.2 may require such security and impose such terms as shall fairly and adequately protect the interests of the class or association in whose behalf the action is brought or defended. It may order that notice be given, in such manner as it may direct, of the pendency of the action, of a proposed settlement of entry of judgment, or any other proceedings in the action, including notice to the absent persons that they may come and present claims and defenses if they so desire. Whenever the representation appears to the court inadequate fairly to protect the interests of absent persons who may be bound by the judgment, the court may at any time prior to judgment order an amendment of the pleadings, eliminating therefrom all reference to representation of absent persons, and the court shall order entry of judgment in such form as to affect only the parties to the action and those adequately represented."
MCLA 436.50; MSA 18.1021, which states as follows:
"PENALTIES. Any person, other than persons required to be licensed under this act, who shall violate any of the provisions of this act shall be guilty of a misdemeanor.
"Any licensee who shall violate any of the provisions of this act, or any rule or regulation of the commission promulgated hereunder, shall be guilty of a misdemeanor, punishable by imprisonment in the county jail not more than 6 months or by a fine of not more than 500 dollars, or both, in the discretion of the court.
"Any person, who shall do any act for which a license is required under this act without first obtaining said license or any person who shall sell any alcoholic liquor in any county which shall have prohibited the sale of alcoholic liquor under the provisions of section 57 hereof, shall be guilty of a felony, punishable by imprisonment in the state prison not more than 1 year or by a fine of not more than 1,000 dollars, or both, in the discretion of the court.
"It is the intent of the legislature that the court, in imposing punishment under the provisions of this section, should discriminate between casual or slight violations and habitual sales of alcoholic liquor or attempts to commercialize violations of this act or any of the rules or regulations of the commission promulgated hereunder."