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Original Author: Pullen, Mark
Date of Material: 04/13/1994

Alcoholic beverages
Beer--Licenses and permits

Issuance of Beer Permits Under Beer Ordinance

Reviewed Date: 07/21/2021
MTAS was asked if the beer board was correct in denying a beer permit for two brothers, after the board learned that a third brother, who has been convicted of a crime of moral turpitude, was also going to be a partner in the business.

April 13, 1994

Recently you approached me with several questions concerning the issuance of permits under your beer ordinance. The facts, as I understand them, are as follows. Two brothers applied for a beer permit. During the course of reviewing the application, the beer board learned that a third brother was also going to be a partner in the business. He has been convicted of a crime of moral turpitude within the last ten years. The application itself prohibits persons convicted of such crimes from being issued a permit. The board then denied the permit and has maintained that they are estopped from applying for another permit for ten years due to their material misrepresentation of the role of the third brother, also pursuant to the application. You want to know if the board is correct in its actions. It is.

T.C.A. 57-5-106 lays out the licensing powers of municipalities and states that they are:

authorized to pass proper ordinances governing the issuance and revocation or suspension of licenses for the storage, sale, manufacture and/or distribution of beer within the corporate limits of cities and towns...

It does not give the form for such permits but allows:

the power of such cities and towns... to issue licenses shall in no event be greater than the power granted herein to counties, but cities, towns and Class B counties may impose additional restrictions, fixing zones and territories and provide hours of opening and closing and such other rules and regulations as will promote public health, morals and safety as they may by ordinance provide.

It is thus clear that the city may provide for such restrictions in its application process as it may desire as long as such restrictions do not exceed those allowed counties.

T.C.A. 57-5-105 sets out the permit requirements of counties. Among other things it prohibits any person who has been convicted of a violation of beer or other alcoholic beverage laws or any crime of moral turpitude from having a 5% or more ownership interest or from working in the sale or distribution of beer. It also requires the applicants to identify anyone with a 5% or more interest in the business.

57-5-105(d) reads:

Any applicant making a false statement in the application shall forfeit such applicant's permit and shall not be eligible to receive any permit for a period of ten (10) years.

Municipal Code Section 2-207(a) makes it unlawful for someone to sell beer without first making an application and obtaining a permit to sell beer from the beer board. It also specifies that such application is to be on a form such as the board may provide or prescribe. The form adopted by the City beer board contains provisions exactly similar to those previously mentioned as being in 57-5-105.

With its adoption in Section 2-207(a), I believe beyond a shadow of a doubt that the beer permit application is a valid part of the city beer ordinance. The restrictions contained in the application are the same ones counties can impose thus are in line with the limitations on the powers of municipalities found in 57-5-106. By not including any mention of their brother's interest in the business the applicants have made a material misrepresentation on their application and thus are barred from receiving a permit for a period of ten years.

The applicant's mother has expressed interest in applying for the permit. She can but she must be the owner of the business. None of the sons may own 5% or more of it nor may the brother in question work at the establishment. She must indeed have the title to the business and receive its profits. If she does not do this but merely files for the brothers, she will have acted as their agent, not as the owner, and should likewise have her application denied or permit revoked.

They have also threatened to hire an attorney and instigate legal action. This is a groundless threat. T.C.A. 57-5-108(d) grants applicants a statutory right to a writ of certiorari and a trial on the facts but these are rarely won by the plaintiff's as long as the licensing agency has applied its regulations in a non-discriminatory manner. As pointed out in Watkins v. Naifeh, 635 S.W.2d 104 (Tenn. 1982), it is a long standing rule of law in Tennessee that municipalities have extremely broad powers to regulate the sale of beer including the power to ban such sales. Indeed, under Ketner v. Clabo, 225 S.W.2d 54 (Tenn. 1949), the sale of beer is not a right thus a municipality is not required to issue a beer permit.

Please find enclosed the statutes cited herein. Feel free to contact me if I may be of any further assistance on this or any other matter.

Very truly yours,

Mark Pullen
Legal Consultant