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01/27/76 BUNDO v. CITY WALLED LAKE

January 27, 1976

BUNDO
v.
CITY OF WALLED LAKE



Williams, J. Coleman and Fitzgerald, JJ., concurred with Williams, J. Lindemer and Ryan, JJ., took no part in the decision of this case. Levin, J. Kavanagh, C.j., concurred with Levin, J.

SYLLABUS BY THE COURT

Opinion of the Court

1. Intoxicating Liquors -- Licenses -- Renewal -- Interest -- Property -- Due Process.

A licensee seeking renewal of a liquor license under the Michigan Liquor Control Act has an "interest" in "property" such that he is entitled to due process protection (MCL 436.17).

2. Intoxicating Liquors -- Licenses -- Renewal -- Judicial Review.

Arbitrary and capricious actions by local legislative bodies in recommending to the Michigan Liquor Control Commission that liquor licenses not be renewed are subject to judicial review.

3. Intoxicating Liquors -- Licenses -- Revocation -- Notice -- Hearing -- Renewal.

Under the Michigan Liquor Control Act, liquor licenses may be revoked upon the request of a local legislative body but only after proper notice and hearing by that body, while in the case of applications for renewal of existing licenses the local legislative body may object and such action will compel the Michigan Liquor Control Commission to deny renewal even though no notice or hearing has been afforded the license holder (MCL 436.17).

4. Intoxicating Liquors -- Licenses -- Regulation -- Due Process.

The regulation of establishments selling alcoholic beverages is a special area and one in which the local community has been given a great deal of control; however, if a person has important interests which otherwise would be entitled to the protection of procedural due process, he cannot be denied this constitutional safeguard because the business in which he is engaged happens to involve alcoholic beverages.

5. Constitutional Law -- Due Process -- Liberty -- Property.

In deciding whether one is being deprived of liberty or property so that due process is required the courts must look not to the "weight" but to the nature of the interest at stake; the concepts of "liberty" and "property" are not to be defined in a narrow or technical sense but are to be given broad application; the archaic distinction between rights and privileges no longer has any applicability in the area of procedural due process.

6. Intoxicating Liquors -- Property -- Rights -- Privilege.

The mere fact that an interest exists by the grace of the government no longer precludes that interest from being treated as a property right and those cases which have relied upon the distinction between rights and privileges in finding no property interest in a liquor license can no longer be followed for this purpose.

7. Constitutional Law -- Due Process -- Property.

While a property interest entitled to due-process protection may be less than a formal contractual right, it must be based on more than a mere unilateral expectation.

8. Intoxicating Liquors -- Licenses -- Renewal -- Property -- Due Process.

The statutory scheme for renewal of liquor licenses is geared to permit renewal to take place as a matter of course and licensees have made substantial investments of time and money on the understanding that a licensee will be permitted to operate his establishment for more than one year; such reasonable reliance upon the licensing practice gives a licensee a property interest in renewal which is entitled to due process protection (MCL 436.17).

9. Intoxicating Liquors -- Licenses -- Renewal -- Due Process -- Notice.

The holder of a liquor license which a local governing body proposes to recommend not be renewed must be afforded what has come to be called rudimentary due process, which requires timely written notice detailing the reasons for the proposed administrative action, an effective opportunity to defend by confronting any adverse witnesses and by being allowed to present in person witnesses, evidence, and arguments, and a written, although relatively informal, statement of findings (MCL 436.17).

10. Intoxicating Liquors -- Licenses -- Non-renewal -- Judicial Review.

The courts may consider whether a local legislative body has acted in an arbitrary and capricious manner in recommending to the Liquor Control Commission that an existing liquor license not be renewed (MCL 436.17).

11. Intoxicating Liquors -- Licenses -- Renewal -- Local Legislative Bodies -- Arbitrary and Capricious Action -- Judicial Review.

The power of local communities to control alcoholic beverage traffic is extremely broad but does not permit local legislative bodies to act arbitrarily and capriciously, and when the local bodies conduct themselves in such a manner their actions are reviewable by the courts.

12. Intoxicating Liquors -- Licenses -- Renewal -- Notice -- Hearing.

The Michigan Liquor Control Act is construed to require that before a local legislative body can recommend non-renewal of liquor licenses to the Michigan Liquor Control Commission, the licensee affected must be given notice and a hearing (MCL 436.17).

Separate Opinion

Kavanagh, C. J., and Levin, J.

13. Intoxicating Liquors -- Licenses -- Renewal -- Constitutional Law -- Due Process.

An application for renewal of a liquor license under the Michigan Liquor Control Act may not, consistent with the Due Process Clause, be denied without notice to the licensee and an opportunity for an evidentiary hearing (MCL 436.17; MSA 18.988, US Const, Am XIV).

The opinion of the court was delivered by: Williams; Levin

Plaintiff, Benjamin Bundo, Jr., obtained a class C liquor license issued by the defendant Liquor Control Commission, along with an entertainment permit approved by defendant City of Walled Lake. The issuance of the local permit was conditioned on plaintiff's agreement not to have "stripping" or "go-go" dancing on the premises of his establishment. The city council requested that the Liquor Control Commission revoke plaintiff's license after he began to offer topless entertainment; this request was later changed to a recommendation to the commission that it refuse to renew the liquor license. Plaintiff was not notified of the council's intent to recommend non-renewal nor was he afforded a hearing on the matter. The recommendation had the effect under the Michigan Liquor Control Act of compelling the commission to refuse to renew plaintiff's license. The commission notified the plaintiff that his liquor license would not be renewed. Plaintiff initiated proceedings in the Oakland Circuit Court, Farrell E. Roberts, J., and obtained an order preventing both the city and the commission from taking further action to revoke or refuse to renew the liquor license and entertainment permit. Later, the circuit court granted the city's motion for summary judgment and vacated all restraining orders. The Court of Appeals, McGregor, P. J., and R. B. Burns and O'Hara, JJ., affirmed (Docket No. 18860). Plaintiff appeals. Held:

1. A licensee seeking a renewal of a liquor license under the Michigan Liquor Control Act has an interest in property such that he is entitled to due process protection.

2. A licensee must be afforded the procedural safeguards of notice and hearing before a local legislative body can recommend non-renewal of his license to the Liquor Control Commission.

3. Plaintiff must be afforded "rudimentary due process" and this requires: (1) timely written notice detailing the reasons for proposed administrative action; (2) an effective opportunity to defend by confronting any adverse witness and by being allowed to present in person witnesses, evidence, and arguments; and (3) a written, although relatively informal, statement of findings. The local body itself may conduct the hearing.

4. Where there is no showing of an abuse of discretion or an arbitrary exercise of power, there can be no judicial review. However, when a showing can be made that the local bodies have acted arbitrarily and capriciously then judicial review is appropriate.

5. Since this is a case of first impression and since it has not been the custom to provide notice and hearing in recommending denial, the rule of this case will apply only to denials recommended after the date of this opinion, and to any case still pending ...


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