Court Opinion

ID: 9515342
Source: CourtListenerOpinion
Date Created: 2023-08-06 22:55:49.980984+00
Date Added: 2024-06-11T09:06:28.300926
License: Public Domain

GILBERTSON, Chief Justice
(dissenting).
[¶ 29.] I respectfully dissent. I would affirm the trial court.
[¶ 30.] Pursuant to the Twenty-first Amendment of the United States Constitution, South Dakota has enacted a detailed legislative program for the regulation and control of the sale of alcoholic beverages within its boundaries. In State v. I-90 Truck Haven Service, 2003 SD 51, ¶ 8, 662 N.W.2d 288, 291, we set forth the standard for statutory construction of alcoholic beverage statutes:
Ultimately, the purpose of statutory interpretation is to fulfill the legislative dictate. Intent is ordinarily ascertained by examining the express language of the statute. We therefore defer to the text where possible. We read statutes as a whole along with the enactments relating to the same subject. We assume that the Legislature intended that no part of its statutory scheme be rendered mere sur-plusage
[Faircloth v. Raven Industries, Inc.,] 2000 SD 158, ¶ 6, 620 N.W.2d 198, 201 (citations omitted).... We have speeifi-*212eally applied this standard of statutory analysis in a previous case concerning the legal rights and responsibilities of alcohol beverage licensees. Rushmore State Bank v. Kurylas, Inc., 424 N.W.2d 649, 653 (S.D.1988).
[¶ 31.] In the matter of liquor licenses, the Legislature recognized that the issuance of licenses by municipalities could involve a conflict of interest. Therefore it passed SDCL 9-14-16 which prohibits a “mayor, alderman, commissioner, or trustee” who holds a liquor license from voting “on the issuance or transfer of any such license.” In a similar vein, SDCL 35-1-3 prohibits the Secretary and employees of the Department of Revenue from having any “interest, financial or otherwise, in the ... sale of alcoholic beverages.” SDCL 35-2-6.4 bars liquor manufacturers and wholesalers from holding á retail liquor license. However, that is as far as the Legislature felt it appropriate to act. Significantly for This casé, it never-prohibited even those local city council members who held liquor licenses from voting on other liquor license applications. We have said repeatedly that the Legislature said what it meant and meant what it said. S.D. Subsequent Injury Fund v. Casualty Reciprocal Exchange, 1999 SD 2, ¶ 22, 589 N.W.2d 206, 210. Nevertheless, based upon case law from other states with their own liquor statutes, the Court today expands the clear scope of SDCL 9-14-16 to prohibit voting on a liquor license if a council member has a de minimus financial interest in the issue.
[¶ 32.] More significantly, the Court concludes that one council member’s de minimus financial interest taints the vote of the entire council. This is -not a criminal case requiring a unanimous vote. Rather a majority vote will approve a proposition. This may be by an affirmative vote o.f four members or three with the mayor breaking a tie. SDCL 9-8-8, 9-8-3.
[¶ 33.] Citing Strain v. Rapid City School Dist., 447 N.W.2d 332, 336 (S.D.1989), the Court also applies to liquor license proceedings a due process standard applicable to tenured teacher termination proceedings conducted by school boards. The two types of proceedings are dissimilar as they address completely different interests.
[¶ 34.] The formality and procedural requisites of a hearing to address licensing issues depends on.the nature of the importance of the property interests involved. Appeal of Schramm, 414 N.W.2d 31, 34 (S.D.1987)(citing Cleveland Bd. of Ed. v. Loudermill, 470 U.S. 532, 105. S.Ct. 1487, 84 L.Ed.2d 494 (1985); Boddie v. Connecticut, 401 U.S. 371, 91 S.Ct. 780, 28 L.Ed.2d 113 (1971)). Property rights are created and defined by state statutes.
“To establish a procedural due process violation, a plaintiff must demonstrate that he has a protected property or liberty interest at stake-and that he was deprived of that interest without due process of law.” First, the property interest must be derived from a source independent from the Constitution. Second, the individual must have been deprived of this right by a state actor. Property interests are granted by state law.... See also [Hopkins v. Saunders, 199 F.3d 968, 975 (8thCir.1999) ](“A property interest worthy of due process protection must be granted or defined by a source independent from the Constitution, such as state law.”)(citing Board of Regents v.Roth, 408 U.S. 564, 577, 92 S.Ct. 2701, 2709, 33 L.Ed.2d 548, 561 (1972)).
Osloond v. Farrier, 2003 SD 28, ¶ 16, 659 N.W.2d 20, 24-25 (some citations omitted). A tenured teacher has a property right in his or her position under our teacher con*213tract law. This is granted the teacher by statute. See SDCL 13-43-6.3. See also Wirt v. Parker School Dist. # 60-4, 2004 SD 127, 689 N.W.2d 901.
[¶ 35.] There is no statute granting the applicant for a liquor license a property right in that license. Moreover, we have consistently recognized the wide statutory latitude the liquor statutes grant the appropriate governing authority concerning the issuance of licenses. An earlier case which had cause to examine the nature of a liquor license in South Dakota, concluded:
From the above statutes, it is readily apparent that a liquor license in the State of South Dakota is nothing more than a personal privilege to participate in the monopoly granted to the state by the Twenty-First Amendment to the United States Constitution and implemented by Title 35 of the South Dakota Compiled Laws. Being a privilege, its value necessarily depends upon the circumstances of its use. Standing alone, a liquor license is worthless under the South Dakota statute. It is not a sever-able commodity from the premises where it is used.
Application of Roberts, 358 F.Supp. 392, 396 (D.S.D.1973). In Kurylas, 424 N.W.2d at 653, we held that, as between the state and the licensee, there clearly is no general property right in a liquor license in South Dakota. See also State v. I-90 Truck Haven Service, Inc., 2003 SD 51, ¶ 16, 662 N.W.2d at 292; In re Engels, 2004 SD 97, ¶ 13, 687 N.W.2d 30, 34.
License renewal applicants in other jurisdictions may be entitled to rudimentary procedural due process, but our law does not require imposing the same process allowed to those whose licenses are up for revocation, because “there clearly is no general property right in [an alcoholic beverage] license in South Dakota as between the state and the licensee.” [Kurylas, 424 N.W.2d at 650]; cf. SDCL 35-2-10; Janssen v. Maxam, 289 N.W.2d 256 (S.D.1980)(administrative procedures act not applicable to denial of license application).
Woodruff v. Meade County Bd. of Com’rs, 537 N.W.2d 384, 386 (S.D.1995).
[¶ 36.] Despite the absence of a general property right in a liquor license, the license applicant is guaranteed the same procedural due process rights as any citizen who wishes to be heard by a governing body: the right to a hearing, notice of the hearing and the right to be heard on the license application. Kurylas, supra; Engels, supra. These guarantees are created by statute. See SDCL 35-2-3 (“No license for the on- or off-sale at retail of alcoholic beverages ... shall be granted to any applicant for any such license, except after public hearing upon notice[.]”). All of these procedural steps were followed in this case. Thus, the Strain standard is inapplicable herein. Clearly there was no property right as: (1) this was only an application for the liquor license; and (2) as between the issuing authority and the holder of an existing license, no property right exists.
[¶ 37.] This leaves the question of the legal status of the council’s decision to deny the liquor license. Clearly the applicant is entitled to a fair tribunal. See Gibson v. Berryhill, 411 U.S. 564, 93 S.Ct. 1689, 36 L.Ed.2d 488 (1973). However, even when there are significant property rights at stake such as in Strain, a board member is not disqualified as a decision maker solely because of prior involvement. “Pre-decision involvement ‘is not enough to overcome the presumption of honesty and integrity in policy makers with decision-making power.’ ” Strain, 447 N.W.2d at 336 (quoting Hortonville Dist. v. Hortonville Ed. Ass’n, 426 U.S. 482, 497, 96 S.Ct. 2308, 2316, 49 L.Ed.2d 1, 11-12 (1976)).
*214[¶ 38.] Public decision makers “are presumed to be objective and capable of judging controversies fairly on the basis of their own circumstances.” See Voeltz v. John Morrell & Co., 1997 SD 69, ¶ 11, 564 N.W.2d 315, 317 (quoting Northwestern Bell Tel. Co., Inc. v. Stofferahn, 461 N.W.2d 129, 133 (S.D.1990)). To overcome that presumption the record must establish either: “1) actual bias on the part of the adjudicator, or 2) the existence of circumstances that lead to the conclusion that an unacceptable risk of actual bias or prejudgment inhered in the proceeding.” Id.
[¶ 39.] Based on the limited statutory prohibitions cited above, I would not have disqualified the councilwoman in question on the basis that she got tips from part-time employment that Hanig claimed might decline as a result of new competition. The councilwoman testified under oath that the basis for her vote was the lack of a building permit. She was unsure whether another bar in Winner would reduce her income from tips. Hanig offered no evidence to contradict any of this.
[¶ 40.] The councilwoman’s direct contact from her employer is a different matter. That contact could have put the councilwoman’s job squarely on the line based upon her vote. Given that this is an appeal from a summary judgment order, it was probably sufficient to disqualify her. However, there were still five votes from other council members to deny the license renewal. Those votes were for valid reasons, those being the applicant’s lack of a building in which to engage in the sale of liquor and his lack of a building permit to build one.6
[¶41.] Hanig did not appeal the city building inspector’s denial of his building permit.7 Thus, there was no basis to question the validity of its denial. This was significant for purposes of summary judgment as it placed Hanig in the legal posture of seeking a liquor license for a location without a building, a building permit, or the right to appeal its denial. Since the city council never got a chance to review the denial of the building permit because of Hanig’s failure to appeal it, any fault rested with Hanig and not the Council.
[¶ 42.] Liquor licenses are granted to a specific location and logic would dictate that it should not be to a vacant lot. SDCL 35-2-1.2 authorizes the city council to require a “suitable” location for the issuance of a license. It is not beyond the council’s discretion to conclude that a vacant lot for which there is no valid building permit is not “suitable.” As this Court noted in Randall’s-Yankton, Inc. v. Ranney, 81 S.D. 283, 134 N.W.2d 297 (1965), the purpose of the public hearing on a liquor license is for the governing body to exercise its discretion. Were there no such discretion, and the governing body limited to the statutory requirements, then “such a public hearing would be meaningless.” Randall’s, 81 S.D. at 288, 134 N.W.2d at 300. See also Hendriks v. Anderson 522 N.W.2d 499 (S.D.1994)(no abuse of discretion in refusal of license where city council concluded applicant did not possess an adequate building to operate the business).
*215[¶ 43.] At the hearing, Hanig was allowed to present any evidence he wished in support of his license renewal. Moreover, Hanig’s own testimony supports the correctness of the council’s decision on the application:
Q. Okay, Is it your understanding today that the reason the City Council voted to deny your application was that they didn’t feel you had presented adequate building plans or business plans to them?
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A. That is my understanding, yes.
Q. Do you have any reason to believe the City Council isn’t being truthful about that?
A. I believe they are being truthful.
Q. You believe they are being truthful. Okay. You just disagree with the decision made; correct?
A. Correct.
That position is once again conceded in Hanig’s appellate brief where he states, “[t]o be blunt, Hanig does not possess any direct evidence to prove pretext.”8
[¶ 44.] Perhaps my strongest disagreement with the opinion of the Court is in its determination that citizen communication with the remaining five council members constituted an “indirect personal interest” which tainted their vote. This license application clearly was an important and controversial request within the City of Winner. Opposition to it at the council hearing ran the gamut from the Winner Ministerial Association to the Winner “liquor industry.” What of the First Amendment which guarantees citizens the right of petitioning their public officials? Are phone calls, personal contact and letters to officials now tainted? What about indirect contact such as letters to the local newspaper? Are citizens now effectively silenced unless they personally appear at the meeting to voice their objections? “ ‘Whatever differences may exist about interpretations of the First Amendment, there is practically universal agreement that a major purpose of that Amendment was to protect the free discussion of governmental affairs.’ ” State v. Springer-Ertl, 2000 SD 56, ¶ 11, 610 N.W.2d 768, 771 (citing Landmark Communications, Inc. v. Virginia, 435 U.S. 829, 838, 98 S.Ct. 1535, 1541, 56 L.Ed.2d 1, 10 (1978) (quoting Mills v. Alabama, 384 U.S. 214, 218, 86 S.Ct. 1434, 1437, 16 L.Ed.2d 484, 488 (1966))).
[¶ 45.] In conclusion, “ ‘[t]he Twenty-first Amendment grants the States virtually complete control over whether to permit importation or sale of liquor and how to structure the liquor distribution system[.]’ ” South Dakota v. Dole, 483 U.S. 203, 205, 107 S.Ct. 2793, 2795, 97 L.Ed.2d 171, 177 (1987) (quoting California Retail Liquor Dealers Assn. v. Midcal Aluminum, Inc., 445 U.S. 97, 110, 100 S.Ct. 937, 946, 63 L.Ed.2d 233, 246 (1980)). The South Dakota Legislature exercised that constitutional power by granting very broad discretion to the licensing authority, in this case the City of Winner. The city’s decision to annex the property did not result in a forfeiture of its discretion to approve or disapprove this liquor license application under SDCL 35-2--1.2. The city was mandated by state law to review the appropriateness of Hanig’s application un*216der South Dakota’s statutes, not those of some other jurisdiction. The disqualified eouncilwoman aside, there were still five votes to deny the application on the basis of an inadequate place in which to do business. This was not an abuse of discretion. No writ should issue. Therefore, I would affirm the circuit court and respectfully dissent from this Court’s conclusion otherwise.
*217APPENDIX A
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*218APPENDIX A
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. The history of the license itself gave the council nothing to review. The license issued by Tripp County had never been used by a functioning bar except on one occasion when Hanig apparently sold a case of beer to friends.

. At this point, Hanig cannot fault the city's handling of the building permit application. He filed the application on January 6, 2003, the same date as the hearing on the liquor license. His plans were deemed "incomplete and inadequate” by the city official who reviewed the application (attached as Appendix A to this writing).

. If the council had undisclosed reasons to deny the license, as Hanig claims, he fails to explain why the city approved the annexation of his property in the first place knowing that he possessed a county liquor license and that, to the future, he would look to the city to renew it. Without that annexation, there could have been no issues over the city building permit and the city liquor license.