|Legal Opinion: |
Text of Document:
June 13, 2002
You have the following question: Is a person entitled to a beer permit under the following circumstances? A beer permit was issued for an establishment around 1997; following the issuance of that permit, a church located within the prohibited distance contained in the city’s beer ordinance; a sale of the establishment is contemplated; the prospective owner of the establishment claims he is entitled to a beer permit.
In my opinion, the answer is no.
The second sentence of ' 8-209 of the Municipal Code provides that:
In no event will a [beer] permit be issued authorizing the storage, sale, or manufacture of beer within four hundred (400) feet of any school, church, shopping center, or other such place of public gathering.
Tennessee Code Annotated, ' 57-5-109 (as amended by Public Acts 2002, Chapter 774) provides that:
(a) A city or county shall not suspend, revoke or deny a permit to a business engaged in selling, distributing or manufacturing beer on the basis of the proximity of the business to a school, church, or other place of public gathering if a valid permit had been issued to any business on that same location as of January 1, 1993. This section shall not apply if beer is not sold, distributed or manufactured at that location during any continuous six-month period after January 1, 1993.
(b) For the purposes of this section, “on that same location as of January 1, 1993" means within the boundaries of the parcel or tract of the real property on which the business was located as of January 1, 1993. The provisions of this section apply whether or not the business was a conforming or nonconforming use at the time of the move.
(c) If a business applies for a beer permit within the continuous six-month period referenced in this section, and if the city or county denies the business a permit and if the business appeals that denial, a new six-month continuous sale period shall begin to run on the date when the appeal of that denial is final.
Because that statute applies only to establishments holding a valid permit as of January 1, 1993, it obviously does not protect the prospective purchaser (or the purchaser) of an establishment that first obtained a beer permit around 1997. Moreover, that statute indicates an intention on the part of the General Assembly to “grandfather” beer establishments in the same category in which the establishment in Smithville finds itself, but only up until the date of January 1, 1993, and no further. Otherwise it would have been easy for the General Assembly to generally “grandfather” any such establishments both backward and forward in time.
In Sparks v. Beer Committee of Blount County, 339 S.W.2d 23 (1960), Sparks was issued a beer permit in 1951. In 1958 a church was established within the 2,000 prohibited feet that applied to county beer permits. In 1959 the Blount County Beer Board revoked Sparks’ permit on the sole ground that his beer establishment was within 2,000 feet of a church. The Tennessee Supreme Court overturned the revocation of Sparks’ permit, reasoning that while the county had the legal right to revoke the permit, the revocation was not equitable in that case.
There are four related reasons why Sparks v. Beer Committee of Blount County does not offer any protection to a prospective purchaser (or purchaser) of the beer establishment in your City:
First, in that case, the beer board revoked the beer permit of the current permit holder following the establishment of the church within the prohibited 2,000 feet. In your situation, the beer permit of the person who holds it is not in jeopardy. It has regularly been held that no person has a property right in a beer permit. [Needham v. Beer Board, 647 S.W.2d 226 (Tenn. 1983)] The prospective purchaser of the beer establishment in your City does not even have a permit; his claim to a permit is based on the ground that the person who owns the establishment has one. Even paying Sparks v. Beer Committee of Blount County its due, it is difficult to see what equities would favor the prospective purchaser of the establishment. He intends to buy an establishment he knows, or should know, is within 400 feet of a church. In addition, it was held in MAPCO Petroleum, Inc. v. Basden, 774 S.W.2d 598 (Tenn. 1989), that a beer permit did not even pass to the survivor of merged corporations, that the holder of the beer permit no longer existed, and that the new entity had to apply for a beer permit.
Second, even if any equities in your situation rebound to the prospective purchaser of the establishment, the maxim “Equity follows the law” would apply to deny his relief. Tennessee Code Annotated, ' 57-5-109 strongly implies an intent on the part of the General Assembly to “grandfather” only those establishments in similar situations as of January 1, 1993. That appears to be the law, and where the law speaks, equity cannot intervene on behalf of a person even when the equities are in his or her favor. [See Standard Grocery Co. v. National Fire Insurance Company, 32 S.W.2d 1023 (1930); Pewitt v. Pewitt, 240 S.W.2d 521 (1951); Fletcher’s Gin, Inc. v. Critchfield, 423 F.2d 1066 (6th Cir. 1970)].
Third, in Sparks v. Beer Committee of Blount County, the Court reasoned that while the beer committee had the discretion to revoke Sparks’ beer permit, the revocation under the facts of that case was an “arbitrary and unreasonable exercise of discretion.” [At 26] However, in the Smithville situation the beer board has no discretion to exercise. Section 8-209 of the Municipal Code flatly prohibits the issuance of beer permits to establishments within 400 feet of a church. The effect of the city’s violation of Section 8-209 is detailed in the fourth reason below.
Fourth, if the city issues the permit it will have put itself in a legally impossible position. It is the law that where a municipality issues a beer permit in violation of its own distance regulations, the distance regulation is rendered invalid and unenforceable. [City of Murfreesboro v. Davis, 559 S.W.2d 805 (Tenn. 1978); Seay v. Knox County Quarterly Court, 541 S.W.2d 946 (Tenn. 1976); Serv-U-Mart, Inc. v. Sullivan County, 527 S.W.2d 121 (Tenn. 1975); Needham v. Beer Board, 647 S.W.2d 226 (Tenn. 1983); Reagor v. Dyer County, 651 S.W.2d 700 (Tenn.1983).] There appears to be no exception to that rule, except with respect to establishments grandfathered under Tennessee Code Annotated, ' 57-5-109.
Incidentally, under City of Murfreesboro v. Davis, cited above, there are two ways a city can revive a distance regulation after it has issued permits in violation of its distance regulations: revocation and attrition of the discriminatorily issued permits. If under Sparks v. Blount County Beer Committee, a local government cannot revoke beer permits issued to a person whose establishment violates the distance regulations as a consequences of a church having moved into the prohibited distance, the only remaining method available to the city to correct the problem of churches, schools and other places of public gathering moving into the prohibited distance is to refuse to issue a new beer permit for the establishment when for some reason the old one is no longer valid.
The refusal to issue a new permit in such cases involves a form of “attrition.” However, I put “attrition” in quotation marks for a reason. The reason is that the refusal to issue a new beer permit in such a situation is not “attrition” in the sense that the above cases speak of the revival of a distance regulation by the revocation or attrition of permits issued in violation of that regulation. The City’s question does not involve the issuance of any beer permits in violation of its distance rule, or the revival of the city’s distance regulations by revocation or attrition of the illegally issued permits; there are no illegally issued permits to eliminate by revocation or attrition.
The reason that incidental point is important, is that an argument can be made that under Reagor v. Dyer County, 651 S.W.2d 700 (1983), an attrition policy must be in writing. The City does not have such a policy, but does not need one. The “attrition” policy of which that case speaks involves the attrition of illegally issued permits for the purpose of reviving the city’s distance regulation. The act of the city in refusing to issue a beer permit to a person who buys or otherwise operates an establishment for which a valid permit had been issued before a church, school, or other place of public gathering moved into the prohibited distance does not involve “attrition,” in that context, but simply an application of the city’s distance regulation, in the case of the City, ' 8-209 of its Municipal Code of Ordinances. That regulation prohibits the issuance of beer permits to establishments within 400 feet of a church, school, etc.
The establishment in question is now within 400 feet of a church. For the purposes of the rights of a new owner or prospective owner of the establishment, it does not appear that he or she has any legal or equitable rights to a beer permit. In fact, if the city were to issue him or her a permit, it would jeopardize the validity of its distance rule.
Sidney D. Hemsley
Senior Law Consultant