Untitled Texas Attorney General Opinion

Hon. Bert Rbrd, Administrator Texas Ldquor Control Board Austin, Texas Dear Sir: Opinion No. O-1145 Re: Whether Acts of members of Rouston country Club, Houston, Texas, in operations of such club, constitute a violation of the Texas Liquor Control Act. Your rsquest for an opinicn on the above stated question has been receiked by this department. The facts, with reference to the op- erations of Houston Country Club, as stated by you, are as followsr "No personmay become a participant in the Revolving Fund unless he is a member of the Club, but membership in the Club does not automatically make hima participant in the Revolving Fund. Each member of the club who desires to become a partici- pant in the Revolving F'cndis required to pay $5 into the fund, and with the fund so created liquor is purchased in packages from a regular retail store. "The stock of liquor so purchased and belong- ing to,the participants in the Revolving Fund is kept in the club house and the participants in the fund are entitled to make withdrawals therefrom, to be consumed as a straight drink, as a highball, as oonstitutents of a cocktail, or otherwise, and either on or off the premises of the Country Club. Liquor so withdrawn is served to the Revolving Fund partici- pants by persons who are on the payroll of Rouston Country Club. "Only participants who have contributed to the Revolving Fund are permitted to make withdrawals from this liquor stock, and for each withdrawal a slip is made out which must be signed by the participant be- fore the withdrawal is made. A, participant may make withdrawals for any other person, in the same manner that he makes tithdrawals for himself, -- that is, by signing his - name thersfor. There is set out on the face of such slip the character of the drink, Hon. Bert Ford, Page 2 (O-1146) such as whiskey, gin, hightall, or martini cocktail, as the case may be, with a specified charge therefor, which depends upon the nature of the drink and the ingredients therein. 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 This amount, i.e., cost value of the liquor withdrawn, is then deducted from the total amount charged during the month against all the participants in the fund, and is put back into the fund, afiilethe remainder is paid to the Country Club in payment for the ice, soda and personal ser- vices supplied by it to the participants in the fund. "One of the members of the Revolving Lund handles the purchases of liquor which are necessary to replen- ish the stock that is owned by the participants in the fund. At the end of each calendar month the Country Club purchases fram the Revolving Lund the withdrawal slips signed during that month by the participants in the fund, and collects the amount theredf from such partioipants in the same manner that it collects the regular club bills. "The Houston Country Club holdswine and beer re- tailer's permit No. 15879,.issued January 1, 1939, which Is a renewal. The stock of laine and beer owned and served by the olub is kept in a small building adjacent to the main building of the olub. Entranoe to this small store rocnu is gained by stepping fram the porch of the main 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 parti- cipants. Toe same praiterswho serve wine and beer from this store roan also serve drinks of liquor to the par- ticipants in the Revolving Fund. Wins and beer served by the club proper is signed for on a different type of check than that used Iy the Revolving Fund." Section 3(a) of Article 1, of the Texas Liquor Control Act, defines the term "open saloon" as follows: "The term *open saloon' as used in this Act means aqg place where any alcoholic beverage what- ever, manufactured in whole or in part by means of the process of distillation, or any liquor composed Hon. Pert Fod, 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 place where aw such liquors are sold or offered for sale for hman ccnslrmption011the premises where sold." Subdivision (b) of Section 3, reads as follows: "It shall be 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, the matedal facts are about as follows: A group of men formed a club. These men in turn hired a steward at a fixed salary. The steward ordered beer for the members 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 tickets which represented his in- terest in the beer the steward ordered. After the keg of beer arrived at the club house a ticket was placed in a-box~and a glass of beer was drawn by any member who desired one, each ticket representinv (I~1~88 of beere The beer which ~88 ordered Ty the steward for the pur- chasers and paid for by said purchasers. The Court of Criminal Appeals held in this case that the facts estab- lished a sale of beer by the steward eachtime that a glass of beer was drawn by a member of the club. In the case of Sutton v. State, 40 S.W. 501: A certain firm kept what was known as "Temperance Hall." Certain parties paid 50 cents for the privilege of buy- ing beer from the firm at the ordinary retail price. The 60 cents paid to beccrmea member of the alleged club was all the money ever paid into the concern, except the usual price for beer when purchased. Such firm received 1,630 dozen bottles of beer in five months; kept the stockmplenished with the money arising from sales to members : and its pay was the profits. Ihe court of crim- inal Appeals of this State held that this was clearly an evasion of the local option law. In the case of Krnavek v. 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-rmekly paper* The club bought large quantities of intoxicants,md employed an ex-saloon keeper at a monthly salary to sell them at retail to its menbers only, from the bar fona- erly owned by him, and the proceeds of such sale became the property of the club* The Court of CrMnal Appeals of this State.held that the club we.8formed for the purpose of evading the local option law. In the case of Fwige V* State, 95 &PC. 506: A club was incorporated for social purposes. The manager of such club devoted his time to the manganent of it8 affairso A~membership fee of $1 was paid* him by eaah member. The members of the club obtained beer by purchasing tickets, The beer was obtained the day after the purchase of the tickets. The manager in- structed the members how to order beer by stating that when the members wanted beer, the should put money in a box and take out a ticket for each nickel, and that could be procured at the clubrocm the following night. Held, that the club members, when they paid their money into the treasury, parted with it to the club, so that rhen it sent out 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 Criminal Appeals of this State held: Where a club purchased liquors in bulk with money in the treasury a distribution of the same to members at the usual price constituted a sale within the prohi- bition laws. In State v. Country Club, 173 S.H. 570, the Qurt of Criminal Appeals of this State held* The dispensing of intoxicating liquors by an incorporated, bona fide social club to its members, for a swa sufficient to psv the cost of the liquors and of maintaining the aermlce, is a sale of such Xauors o _ .. - Hon. Bert Ford, Page 5 (O-1145) In the case of Williams V. State, 103 S.W. (2d) 380, the facts were as follows: The defendant was found in the possession of ten cases of beer, in the city of,Abilene, in Taylor County, Texas. At the time defendant was the manager of xhat 1~s known as the "Abilene Athletic Club," which had approximately 250 members. A prerequisite to member- ship being that a written application had to be made which called for a deposit qf $5.00 by the applicant with said manager. Upon being approved as a member of the club, the applicant paid a monthly sum of $1.00 dues, the primary purpose of the $5.00 mentioned being that it was to be used in the purchase of merchandise; and also if the member nithdrew he was entitled to the return of his $5 deposit, provided it had not been con- sumed in the individual purchase of merchandise or in the payment of dues. Rhen the $5 deposit had been con- suxed, it ms also understood that the members should deposit a like strm;alxo the general properties and activities of the club are set out; it is shown that appellant is permitted to 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 salary as manager. It is further set out in the agreed statement of the facts in this case that some of the members of said Athletio Club had directed appellant to have on hand in said club beer for their constiption and that the beer upon which this prosecu- tion xas based hadbeen ordered by various members and that the defendant had gone to Sleetwater, and acting as manager of said club and agent for the members of said club had purchased with the money of said membsrs said beer~to bring 'tackfor the members c+'fhe club. Each member was to pay the manager 15 cents per container for said beer when he received his beer at said club, and said 15 cents deposit, if any, nas deposited in *the members deposit account" to replenish same and to be used in accordance with 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 of merohandise 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 defendant possessed intoxicating liquors for the pur- pose 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 in dry territory, honever, tn view of the definition of an open saloon, in our opinion, the Hon. Bert Ford, page 6 (O-1145) facts herein set forth with referenoe to~the manner of operation of the Houston Country Club of Houston, Texas, clearly show that the acts of the members of such club, in the operating of same, constitute a viola- tion of the Texas Liquor Control Act, in that the operation of seme comes within the definition of an open saloon, which is prohibited by statute in the State of Texas. It would 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 composed or 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 letter you 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 opera- tion of these tvc clubs, as far as the handling of their liquor is ccn- cerned, except that the latter purchases its liquor through a trustee. This probably makes the trustee guilty of operating an open saloon, and releases the club members of such liability. We do not think that there is any doubt but that the fact that liquor is dispensed to msmbers of these clubs by the drink, coupled with the further fact that suoh members are called upon to contribute money to the Revolving Fund, and that they do so contribute, 80 that liq- uormay be kept on hand, constitutes sales 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 question are being operated as open saloons. He trust that this satisfactorily enswers your inquiry. Yours very truly ATTORNEY GENERAL OF TEXAS By /s/Fred C. Chandler Fred C, Chandler bssistant FCCsob:egw _I.. APPR+OVED APPROVRD AUG. 26, 1939 Opinion Conrmittee /s/GERALD C. MANN By* ATTORNSYGRNERAL OFTEXAS Chairman