Opinion ID: 1626992
Heading Depth: 1
Heading Rank: 1

Heading: Going-concern value under a liquor license is property.

Text: The intangible character of going-concern value does not preclude compensation for its taking. In Kimball Laundry Co. v. United States, 338 U.S. 1, 10, 69 S.Ct. 1434, 1440, 93 L.Ed. 1765, 1774, 7 A.L. R.2d 1280, the United States Supreme Court held that compensation for going-concern value was required, saying:    [T]he question arises whether the intangible character of such [going-concern] value alone precludes compensation for it. The answer is not far to seek. The value of all property, as we have already observed, is dependent upon and inseparable from individual needs and attitudes, and these, obviously, are intangible. The state argues that a liquor license is not a property right but, instead, a privilege. It bases its argument on the fact that [n]o citizen has an inherent or vested right to sell intoxicating liquors. [2] Sabes v. City of Minneapolis, 265 Minn. 166, 171, 120 N.W.2d 871, 875. Appellant recognizes that liquor selling is a privilege, but contends that this means no more than that it is subject to the control of the licensing authority, and that as to the licensing authority, one has no right to a license. Appellant further contends, however, that a liquor license does constitute a property right as to third parties. In Lane v. Hewgley (Tex.Civ.App.), 155 S.W. 348, 350, the court stated:    It has been said that `as between the state [licensor] and the licensee no such right does exist.'    [Citation omitted.] But it does not follow that as to all the balance of the world the licensee has not a property right in the license.       This license or permission the citizen can hold and exercise against all the world but the state which conferred it. Such a right can hardly be said to be without value as a property interest. [3] Courts do differ as to whether a liquor license is a privilege [4] or property [5] vis-a-vis third parties.    This difference of opinion as to the legal nature of a liquor license is apparently due to the fact, not always recognized by the courts, that such license, while a mere privilege as far as the relation between the government and the licensee is concerned, nevertheless constitutes a definite economic asset of monetary value for its owner.    It is submitted that wherever the legislature has made licenses assignable or transferable, and the transfer can be effected with the consent of the authorities to anyone qualifying under the statute, the property element in the license is sufficiently recognized to warrant its exposure to seizure by the creditors of the licensee. [6] Annotation, 148 A.L.R. 492. Appellant operated a liquor establishment under the authority of a valid and unrevoked license issued by the city of Minneapolis. The license was specifically related to a particular location or premises. Minneapolis Code of Ordinances, § 851.440. The number of licenses which can be issued is limited. § 851.030. Upon the licensee's death, the decedent's personal representative might operate under the license by filing his appointment and a bond. § 851.450. The license was transferable to another person with the consent of the city council. § 851.300. Revocation of an issued license would be in order only upon a violation of ordinances and laws relative to such license, and then only for cause after notice to the licensee and hearing. § 851.330. Thus, appellant's license was assignable and transferable and as such can be construed as a property right rather than a privilege. Compensation has been awarded for condemnation of rights very similar to those which exist under liquor licenses. In Jackson v. United States, 103 F.Supp. 1019, 122 Ct.Cl. 197, plaintiff's decedent had possessed, since 1941, a license from the State of Maryland to conduct commercial fishing operations in certain areas of Chesapeake Bay. Under the Maryland statute the license was effective for one year but, barring misconduct, could be renewed. The license, like the liquor license in the present case, was capable of being transferred to other parties, or to the licensee's estate upon his death. In 1943, the government redefined certain restricted military proving-ground areas to include decedent's fishing grounds, and notified him that he would no longer be permitted to fish there. The court noted that he was unable to secure a license to fish elsewhere since all other locations had been appropriated by other fishermen, and held that the fishing right constituted a property right for which compensation in excess of $11,000 was required. The court reasoned (103 F.Supp. 1020, 122 Ct.Cl. 206): In a sense, what the plaintiff had before he was forbidden to fish was a property right. It had value, in that he made his living from it.    We think, therefore, that the plaintiff had a sort of property right in his fishing ground, and that the Government took that property from him. [7] United States v. Smoot Sand & Gravel Corp. (4 Cir.), 248 F.2d 822, involved rights granted by state statute to riparian landowners to remove sand and gravel from tideland waters owned by the state. In holding that compensation for such rights was required upon condemnation of the landowner's land, the court said (248 F.2d 827):    It cannot be disputed that when one is assigned the right, pending its revocation, to use or consume something to the exclusion of all others, and to receive compensation from anyone who ventures to exercise the privilege without his authority, he has a species of property, regardless of what theory of property we may adopt.    Whether the right with which the owner is endowed by this statute is called a revocable though unrevoked `license,' or a `profit a prendre,' is immaterial. The label does not matter; the substance cannot be taken away by the United States even for a public use without the owner being made whole. Thus, though the right vested in the owners is created through a revocable license, so long as the right exists it cannot be taken away without just compensation. The trial court placed considerable reliance upon Arens v. Village of Rogers, 240 Minn. 386, 61 N.W.2d 508, appeal dismissed, 347 U.S. 949, 74 S.Ct. 680, 98 L.Ed. 1096. In that case the court held that the refusal to renew the village vendors' licenses (after they had expired) so that an exclusive municipal store could be established was a valid exercise of the police power. The court also upheld the village's refusal to reimburse the vendors for their tangible personal property used in the establishment. This court in that case did hold that a license is a privilege and not a right (240 Minn. 401, 61 N.W.2d 518):    [I]t is very doubtful whether liquor licensees whose licenses have lapsed at the time of the establishment of the municipal liquor store are deprived of any property without due process of law, for as this court has frequently stated, no person has a vested property right to engage in or continue to engage in the liquor business. George Benz Sons, Inc. v. Ericson, 227 Minn. 1, 10, 34 N.W.2d 725, 730; Paron v. City of Shakopee, 226 Minn. 222, 32 N.W.2d 603, 2 A.L.R.2d 1227. (Italics supplied.) The court held that there was no obligation, legal or moral, to compensate. In connection with the moral obligation, the court said (240 Minn. 406, 61 N.W.2d 521):    Although strong and compelling reasons can be advanced for finding a moral obligation to reimburse the ordinary businessman for losses sustained as a result of governmental action, such reasons do not apply with equal weight to a trade as tenuous as the retail hard liquor business in this state. How can there be a moral obligation to compensate a business traditionally unfavored by society which is commenced merely at the will of the sovereign and subject to its discretion and control throughout the whole of its existence? It is inconceivable to say that any moral obligation would be owed a private liquor licensee whose license was not renewed upon its normal expiration. Note that Arens stands only for the proposition that the license is a privilege as to the licensor, not vis-a-vis third parties. [8] That case is distinguishable further from the situation before us. In Arens, the license had expired. Here, it had not. Arens in no way involved the exercise of eminent domain power, but rather presented a straight failure-to-renew situation, involving only the question of whether the licensing authority's actions were proper. While it is true that liquor businesses are appropriately subject to more scrutiny and control than most businesses when the government is acting pursuant to its police power, they have the same rights as any other businesses when the government is not acting pursuant to such police power, but rather in the exercise of eminent domain.