State ex rel. Young v. Minnesota Club

LEWIS, ,T.

Does the serving of liquors to its members by the Minnesota Club, of St. Paul, subject the club to the necessity of obtaining a license, pursuant to the provisions of chapter 16, R. L. 1905 ? The cause was argued upon the following agreed statement of facts:

“The Minnesota Club is a corporation organized solely for social purposes, and not for pecuniary profit, under the statutes of the state applicable to such organizations. It was created and has existed ever since 1884. It maintains a club house building, which it owns. The articles of incorporation, constitution and by-laws of said club are hereby referred to for greater certainty, and may be used on presentation of the question herein involved by either party. Ever since its organization said corporation has maintained its club house, and carried on therein a restaurant, and served its members with meals and wines and liquors upon their request. It always has and maintains certain rooms and sleeping apartments for the use of its members, and is conducted as a bona fide social club.

“Its membership consists of resident and nonresident members, each of whom is elected under the provisions touching membership found in the constitution and by-laws. No person, not a member of such club, can enter upon its premises, or be entertained therein, save that nonresidents of Ramsey county may be admitted to the privileges of said club for a period not exceeding ten days upon a written invitation of a member in good standing and a written card issued to such visitor. During the period of such visit, such visitor is entitled to all the privileges of the club, but the person introducing him is responsible for him. Residents of Ramsey county, not members of the club, may be entertained in one of the private dining rooms of said club, at a dinner given by some member for not less than four persons, and such persons attending such dinner as such guests are not entitled to any of the privileges of the club whatever, nor may they enter upon any part of said club except such private dining room, and the entrance to and egress therefrom.

“Each member of said club, besides his initiation fees, pays annual dues; resident members $60 per annum, and nonresident members $30 per annum. .The club transacts all its business in its corporate name, through regularly chosen officers. It furnishes its members and their guests with meals to order, also with cigars, or any kind of intoxicating liquor to order, but only serves liquor within the club by the drink, and therefore in quantities of less than five gallons. The meals, cigars, or liquors so served are taken from the common stock of such articles owned by the club, and are charged to the member ordering the same at such price as will reimburse the club for the cost of the article furnished and the expense of the service; the aim being to make the club self-sustaining, but not to make a profit on its gross business. Members are required to pay their accounts for meals, cigars, or liquors monthly.

“Up to this time no license for the sale of liquor has been required of said club by the city of St. Paul, in which said club is situated; but said club has always paid the special tax imposed by the United States government for the sale of liquors.”

The learned trial court was of opinion that the object of this class of legislation has. always been to control the traffic in liquors as a business, and-has no application to a purely private social club, where the dispensing of liquors is a mere incident to the main purpose of the organization. We believe this is the first time in the history of this state that- the courts have been called upon to construe the statute with reference to such organizations, and the importance of the question demands that it be considered from the various points of view suggested at the argument. The Minnesota Club is a corporation duly created and existing under the laws of this state. It is a legal entity, and within its corporate powers transacts business in the commercial world and with its members with the same effect as any other corporation. As a corporation the club purchases liquors at wholesale, keeps them in stock, and upon application furnishes its members liquor in quantities less than five gallons to be drunk upon the premises. The trial court was of opinion that the drastic measures of the statute could not have been intended to apply to social clubs, for the reason that it would be detrimental to the purpose of such institutions and subject them to such espionage and restrictions as to practically interfere with the main object of their existence.

From territorial times one continuing purpose runs through the legislative expression on this subject, and that is to prohibit absolutely the sale or dispensing of intoxicating liquors, less than a certain quantity, unless duly licensed. By chapter 8, p. 43, Laws 1849, the sale of intoxicating liquors without a license in quantities less than one quart was prohibited. This remained unchanged until 1858, when the amount was increased to five gallons, at which time the language of the statute was: “If any person or persons shall sell or barter any spirituous, vinous or fermented or malt liquors, in less quantity or quantities than five gallons, without first having obtained license therefor,” etc. Pub. St. 1849-1858, c. 18, § 20. In the revision of 1866 (G. S. 1866, c. 16, § 4) the prohibition was expressed as follows: “Whoever sells or-barters any spirituous, vinous, fermented, or malt liquors in a less quantity than five gallons, without first having obtained license therefor,” etc. The same provision was carried into the statutes of 1878 (G. S. 1878, c. 16, § 4), and keepers of drug stores, dispensaries, apothecary shops, or other business houses in any manner dealing in spirituous, vinous, or malt liquors, for whatever purpose, were brought within the provisions of the law (section 16). In 1866 (Laws 1866, p. 84, c. 40), for the first time the provision prohibiting the sale of liquors at the State Capitol, and the hour for closing saloons, was introduced, and chapter 16, § 10, G. S. 1878, prohibited the sale to minors. In 1887, the license fee was regulated (Laws 1887, p. 40, c. 5), and what is known as the “blind pig” law was enacted (Laws 1887, p. 44, c. 7), and it was provided that pharmacists and druggists might dispense liquors in good faith for medicinal purposes upon a written prescription of a reputable and duly licensed physician (Laws 1887, p. 45, c. 8). By Laws 1889, p. 67, c. 21, the sale of liquor in the vicinity of the State Fair grounds was prohibited. Section 4, c. 16, G. S. 1878, was carried into section 1993, G. S. 1894; but the revisers of 1905 condensed the various provisions, and section 1519, R. L- 1905, is the statute now in force. It reads:

“Any person who shall sell any intoxicating liquors in quantities less than five gallons, or in any quantity to be drunk upon the preml ises, except as hereinafter provided', is guilty of a misdemeanor,” etc.

Students in any educational institution in the state, intoxicated persons, habitual drunkards, spendthrifts, and improvident persons are all placed under the protection of the law. The line separating the retailing from the wholesaling of intoxicating liquors is a certain quantity — five gallons — and brewers and wholesalers are not required to take out a license so long as they do not sell at retail.

As a result of the evolution of public sentiment on this question, as voiced in the legislation above outlined, it is evident that the unrestrained sale of intoxicating liquor has been regarded as an evil and that the public good requires that it should be restrained. Absolute prohibition has not' been adopted as the most effectual method, blit prohibition to a certain extent is the principle now established as the most effective method of restraint. Up to the‘present time the people have been satisfied to apply the principle of prohibition to a limited extent, viz.: First, that no liquor in any quantity, under any conditions whatever, shall be sold to certain persons, and none shall be sold in any quantity to any person within certain specified districts; second, that no liquor shall be sold in quantities less than five gallons, or in any quantity, to be drunk upon the premises, unless licensed according to law. “Any person,” as used in the statute, includes all' persons and parties, unless excepted. There are no express exceptions in favor of social clubs, and, considering the history and purpose of the law, we are of opinion that no such exception is implied.

There are many decisions from the different state courts bearing upon the subject, and in several instances the statutes differ in some essential feature. In one class of cases the question turned upon whether a commercial club was a public place, within the meaning of a statute prohibiting unlawful games of cards in public places. Grant v. State, 33 Tex. Crim. 527, 27 S. W. 127. The court was of opinion that the commercial club under consideration was not open to the public generally, and hence was not a public place, within the meaning of the statute. Koenig v. State, 33 Tex. Crim. 367, 26 S. W. 835, 47 Am. St. 35, is to the same effect. There the statute made it a misdemeanor for any person to play at any game of cards at any house for retailing spirituous liquors, storehouse, tavern, inn, or any other public house, or in any street, highway, or other public place. It was- held that a clubroom of a private incorporated social club, in which liquors were sold to members only, was not a public house for retailing spirituous liquors, within the meaning of the statute. Again, in State v. Austin Club, 89 Tex. 20, 33 S. W. 113, 30 L. R. A. 500, a license tax was imposed upon persons engaged or engaging in the business of selling spirituous liquors, and it was held that the law did not apply to a social club where liquors were sold to its members only, and the decision is based upon the ground that the tax was not intended to apply to any one not engaged in the selling of spirituous liquors as a business. The club was not engaged in the retail busiJ ness, and hence it was not within the act. To the same effect is Manassas Club v. City, 121 Ala. 561, 25 South. 628, where the statute required a license tax to be paid by persons or corporations trading or carrying on any business, trade, or profession, and 'it was decided that the club was not within the act, upon the ground that the business intended to be taxed was one carried on for a livelihood or profit. However, in Martin v. State, 59 Ala. 34, it was held that a commercial club was engaged in retailing liquors, within the meaning of the statute which prohibited the sale of intoxicating liquors without a license, and the court called attention to the difference between that statute,-which was aimed at any sale, and statutes with reference to the business of retailing as such.

A case often referred to is that of Piedmont Club v. Com., 87 Va. 540, 12 S. E. 963, where it was held that liquors kept by a club in its rooms, and served only to its’ members and their invited guests, without profit, was not a sale of intoxicating liquors within the meaning of an act which provided'that no person, corporation, company, firm, partnership, or association should engage in the business of selling liquors, etc., without obtaining a license. The same view was taken in Barden v. Montana Club, 10 Mont. 330, 25 Pac. 1042, 11 L. R. A. 593, 24 Am. St. 27. In Seim v. State, 55 Md. 566, 39 Am. 419, the court was of opinion that the disposing of beer on Sunday to members of a social 'club was not in violation'of a statute which prohibited the sale of intoxicating liquors on the Sabbath; but. in the later case of State v. Easton, 73 Md. 97, 20 Atl. 783, 10 L. R. A. 64, it was distinctly held that a social club was within the meaning of the statute, which prohibited any person from selling spirituous liquors in certain districts in a certain county, and the court referred to Seim v. State, supra, as follows: “In that case the party was indicted for selling and disposing of beer on Sunday; and it was supposed that because the license laws had never been construed to apply to social clubs, that therefore the law restraining the sale and disposition of liquor on Sunday was not intended to apply to them. But no such reasoning can apply in this case. Here the law is an unqualified prohibition to every one within the districts mentioned; and there can be no pretense that social clubs, such as the defendants in this case, were intended to be exempted from the operation of the law.”

The case of State v. St. Louis Club, 125 Mo. 308, 28 S. W. 604, 26 L. R. A. 573, was decided upon the ground that a social club was not a “person,” within the meaning of the dramshop act to take out a license as a dramshop keeper. The decision seems to have been based upon the peculiar wording of the law. A dramshop is not a place where liquor is sold by a club incidentally to its members. A dramshop is a place where a party is engaged in the sale of intoxicating liquors as a business. A similar case is State v. McMaster, 35 S. C. 1, 14 S. E. 290, 28 Am. St. 826. The statute prohibited the sale of intoxicating liquors, except as the same might be licensed by incorporated cities, towns, and villages, and permitted such authorities to grant licenses at retail inside incorporated limits to keepers of drinking saloons and eating houses apart from taverns, and required all such persons to expose their license to public view in the chief place of making sales, and that all such sales should be in a room fronting the public street, without any screen, curtain, or other device for preventing the passing public from fully viewing what may be transpiring within. The court was of opinion that social clubs were not within the scope of the statute, because they were not organized for the purpose of engaging in the business of dispensing liquors for profit.

As we understand the case of State v. Boston Club, 45 La. An. 585, 12 South. 895, 20 L. R. A. 185, it was decided upon the same general ground. The statute construed in Klein v. Livingston Club, 177 Pa. St. 224, 35 Atl. 606, 34 L. R. A. 94, 55 Am. St. 717, reads as follows: “It shall be unlawful to keep or maintain any house, room or place, hotel, inn or tavern, where any vinous, spirituous, malt or brewed liquors, or any admixture thereof, are sold by retail, except a license therefor shall have been previously obtained as hereinafter provided.” It was held that, where the steward of a social club was authorized to purchase and distribute intoxicating liquors to its members without profit, this did not constitute a sale within the meaning of the act. The New York and Massachusetts courts have passed upon statutes similar to our own, and came to conclusions directly adverse to the view we entertain. The leading New York case is People v. Adelphi Club, 149 N. Y. 5, 43 N. E. 410, 31 L. R. A. 510, 52 Am. St. 700, where the statute under consideration provided that any person who should sell intoxicating liquors in less quantity than five gallons, to be drunk or used upon the premises, without a license, should be guilty of a misdemeanor. The court squarely decided that the sale of liquors by the club to one of its members was not a sale within the meaning of the act. In Massachusetts the statute read that no person should sell, or expose or keep for sale, spirituous or intoxicating liquors, except as authorized by law; and-in Com. v. Pomphret, 137 Mass. 564, 50 Am. 340, it was decided that incorporated social clubs were not within the statute. This ruling was adhered to in Com. v. Ewig, 145 Mass. 119, 13 N. E. 365, where the only question for trial was the good faith of the club.

In the following cases the statutes involved did not materially differ from our own, and the position was distinctly taken that clubs were within the statutes and that the distribution of liquor by a club to its members constituted a sale. In Newark v. Essex Club, 53 N. J. L. 99, 20 Atl. 769, the statute prohibited the sale of spirituous liquors in quantities not less than five gallons at any time, at any place within the' city of Newark, without having a license. The Essex Club was incorporated under the laws of the state, and liquors were kept and furnished to members by the steward upon order therefor. Settlements were made at the end of each month, and no one but a member paid' for liquors. There was no intention to make any profit, and the club was conducted in good faith, not intending to violate the liquor laws. It was held that the liquor belonged to the club, >and that, when furnished to a member to be drunk upon the premises,-a salé was effected within the -meaning of the law. A social club incorporated under the laws of the state of Michigan (Raws 1887, p. 446, No. 313, § 2) is within the scope of the liquor laws, which define “retail dealers” as follows: “Retail'dealers of spirituous or intoxicating liquors, and brewed, malt and fermented liquors, shall be held and deemed to include all persons who sell any of such liquors by the drink, and in quantities of three gallons or less, or one dozen quart bottles or less, at any one time, to any person or persons.” People v. Soule, 74 Mich. 250, 41 N. W. 908, 2 L. R. A. 494. The supreme court of North Carolina, in State v. Lockyear, 95 N. C. 633, 59 Am. 287, held that the.furnishing.of liquor to the members, of a duly incorporated club by its steward, without profit, constituted a sale of such liquor. Tc the same effect is State v. Neis, 108 N. C. 787, 13 S. E. 225, 12 L. R. A. 412. In Georgia the statute provided a penalty for keeping open a tippling house on the Sabbath day, and in Mohrman v. State, 105 Ga. 709, 32 S. E. 143, 43 L. R. A. 398, 70 Am. St. 74, the supreme court held that an incorporated social club was subject to the provisions of the act. In Alabama the statute prohibited the keeping open of a barroom or other place for the sale of liquors on Sunday, and the supreme court of that state, in Beauvoir Club v. State, 148 Ala. 643, 42 South. 1040, 121 Am. St. 82, held that an incorporated private social club was within the purview of the act. The Maryland Club, a duly incorporated social club, was held to be subject to the penalty imposed by statute for selling liquor to its members on the Sabbath day. State v. Maryland Club, 105 Md. 585, 66 Atl. 667. In South Dakota the statute required every person engaged in selling liquors to annually pay a certain sum for license, and the court held that an incorporated commercial club was subject to the provisions of the act that the club was the owner of the liquor dispensed to its members, and that the method of distribution by means .of checks upon which settlement was made from time to time; constituted a sale, although' the business was conducted without profit. State v. Mudie (S. D.) 115 N. W. 107. The supreme court of Illinois has also passed upon this question, and held that a similar arrangement for the distribution of liquor among the members of a duly incorporated social club constitutes a sale. People v. Law & Order Club, 203 Ill. 127, 67 N. E. 855, 62 L. R. A. 884. To the same effect is South Shore Country Club v. People, 228 Ill. 75, 81 N. E. 805, 12 L. R. A. (N. S.) 519, 119 Am. St. 417.

As we understand the Pennsylvania, New York, and Massachusetts decisions, they follow the principle first announced in the English case of Graff v. Evans, 8 Q. B. Div. 373, decided in 1882. From the meager report of the facts in that case it does not appear whether the Grosvenor Club was an incorporated organization or a partnership; but the court took the position that the liquor distributed by the club to its members did not belong to the club as a legal entity, but was the property of the members of the association in common, and hence, when the manager or steward delivered the liquor to one of the members, it did not constitute a sale, for the reason that a party cannot be charged with selling to himself property which he already owns. In a later English case, Newell v. Hemingway, 58 L. J. (1889) Magistrates Cases, 46, the club was a limited company organized for the purpose of providing a club house, hotel, and other conveniences for the use of the club. Newell, not a member, furnished liquors to the members of the club, for which he was paid. Lord Coleridge, C, J., was of opinion that liquors constituted a part of the refreshments, one of the purposes for which the club was organized, and that Newell was merely acting as the agent or representative of the directors in distributing the liquor, and that such distribution did not constitute a sale by him. Manisty, J., concurred, upon the ground that the liquors belonged to the members of the club and that the distribution thereof among the members by a designated party did not constitute a sale by the manager of the club to the members. In a still more recent case, Davies v. Burnett, L. R. [1902] 1 K. B. Div. 666, an attempt was made to hold a waiter of a working-men’s club criminally liable for selling liquors to the members. The court followed Graff v. Evans, supra, and assumed that the liquor was owned in common by the members of the club, and the particular question under discussion was whether the waiter was entitled to furnish liquor to one of the members through the agency of his wife, to be taken from the premises, and the court held that he was not liable for so doing. In the Pennsylvania, New York, and Massachusetts cases, the clubs were certain corporations, legally constituted under the state laws, and we cannot accept the conclusion that under such circumstances the liquor did not belong to the club, but was owned by the members in common. In People v. Adelphi Club, supra, it was stated that, while the property and supplies were technically owned by the club, yet each member was in equity an equal owner in common. We fail to see the force of this argument. If such a corporation is authorized to purchase and own the property necessary to carry on its business, the title thereto vests in the corporation to no less an extent than does title to property owned by any corporation engaged in any line of business.

It will thus be seen that the cases relied upon by respondent either follow the English rule that the distribution of intoxicating liquors to club members does not constitute a sale, for the reason that the members are the joint owners of the property and are merely distributing to themselves property which they already own, or are based upon peculiar statutes which fairly indicate that the legislature only intended to make the license law apply to the retail of intoxicating liquors, where it was carried on as a business for profit as a means of livelihood. Whatever may be the proper application of the statute to voluntary associations where property is held in common, the English rule has no application where the organization is a legally constituted corporation. The statute makes no express exception in favor of such corporations, and, considering the purpose sought to be accomplished in restraining the distribution of intoxicating liquors, as expressed in the plain terms of our statute, we fail to discover any implied exceptions.

Reversed.