SC Administrative Law Court Decisions

Jain, Inc., d/b/a Village Liquors, (Jain) filed an application for a retail liquor store license with the South Carolina Department of Revenue (DOR). The store is to be located on Decker Boulevard in the Dentsville section of Richland County near Columbia, South Carolina. Bob Sherr (Sherr), a resident who filed a protest seeking to prevent DOR from granting the license, became a party as an intervenor in this matter. Pursuant to S.C. Code Ann. § 61-6-185 (Supp. 2000) the filing of a protest requires a hearing with jurisdiction in the Administrative Law Judge Division (ALJD) under S.C. Code Ann. § 61-2-260 (Supp. 2000).
 

In this matter, three requirements for obtaining a retail liquor license are disputed. First, have a sufficient number of licenses have already been issued in the Dentsville community? S.C. Code Ann. § 61-6-910 (Supp. 2000). Second, was Jain's notice to the public so defective as to warrant denying the license? S.C. Code Ann. § 61-6-180 (Supp. 2000). Third, is a church situated within 500 feet of Jain's proposed location? S.C. Code Ann. § 61-6-120 (Supp. 2000). 
 

1. Positions of Parties
 

Sherr argues the area is already saturated with retail liquor stores and that adding an additional one will create insurmountable financial problems tempting other retailers to violate the liquor laws in order to financially survive. Jain asserts the area residents are not more than adequately served and thus the financial concerns are overstated. DOR did not participate at the hearing, but rather submitted its investigative file as evidence for consideration.
 

2. Findings of Fact
 

I find by a preponderance of the evidence the following facts:
 

Jain seeks to operate a retail liquor store at 2316 Decker Boulevard in the Dentsville area of Columbia, South Carolina. For purposes of this hearing, the Dentsville area consists of a population of 20,000 primarily located within the 29206 zip code area. The retail liquor industry recommends one retail liquor store for every population of 20,000 residents.
 

Decker Boulevard is a highly traveled multilane highway. However, the relatively high volume of automobile traffic has not prevented a recent economic decline in the area near the proposed location. For example, several nearby businesses have recently closed such as a Kroger, Burger King, and Target. In addition, numerous vacant stores are in the immediate area.
 

The recent economic decline in the area has been mirrored in the surrounding retail liquor stores as well. For example, in the last several years at least one retail liquor store has closed with that store being in the immediate vicinity of the proposed location.
 

Sherr has seen a decline in the profitability of his liquor store as well. Sherr's store is on Decker Boulevard and is within 100 yards of Jain's proposed location. Sherr's earnings have declined and are now to the point that he has annual net earnings of approximately $30,000. 
 

The decline in profitability is due in part to an increase in the number of retail liquor stores in the area. Thirteen liquor stores are within a five mile radius of Sherr's store. If the proposed location were granted, three liquor stores would be within 200 yards of each other. 
 

Against this backdrop, Sherr argues a sufficient number of licenses have already been issued in the Dentsville community.
 

3. Conclusions of Law
 

The issue here is whether Jain's request for a retail liquor license must be denied since a "sufficient number of licenses have already been issued in the [Dentsville]. . . community." S.C. Code Ann. § 61-6-910 (Supp. 2000). Unlike some states, South Carolina has not established a bright line test limiting the number of licenses in an area. ⁽¹⁾ Rather than specifics, S.C. Code Ann. § 61-6-910 (Supp. 2000) imposes a general requirement denying a retail liquor license request when a "sufficient number of licenses" have already been issued for a community.
 

In applying such a general test, two determinations must be made: identifying the community involved and identifying relevant criteria to measure when a sufficient number of retail liquor licenses have been granted. Because no published appellate decisions interpret § 61-6-910, the ALJ "must decide the case on the evidence presented, its interpretation of the law, and the application of the facts pertinent thereto." Warren v. Board of Education, 41 Ohio Misc. 87, 322 N.E.2d 697 (Ohio Com.Pl. 1974) (dicta).
 

a. Community
 

In the instant case, no facts dispute the "community" involved. Here, the community under review is characterized as Dentsville, an unincorporated area of Richland County consisting of a population of 20,000 primarily within the 29206 zip code area.
 

b. Criteria
 

While the identity of the community under review is not disputed, identifying the criteria for measuring when a sufficient number of retail licenses have been granted presents a more difficult issue. In determining the measure for "sufficiency," no single factor can be controlling since the General Assembly has not chosen a single-factor test for liquor licenses. Indeed, even in those instances where the General Assembly has provided a specific statutory listing of criteria for a liquor license, such criteria have not been considered exhaustive or even exclusive. On the contrary, even when a factor is omitted in one statute but included in another, the omitted factor can still be considered in granting or denying a license since a plain recognition exists that "there may be a number of variables inherent in any decision regarding the issuance of an alcoholic beverage license." Schudel v. South Carolina Alcoholic Beverage Control Commission, 276 S.C. 138, 276 S.E.2d 308, 310 (1981).
 

i. Number and location of licenses in the community
 

A starting point for identifying appropriate criteria is the statutory scheme governing retail liquor licenses. When interpreting a statute, sections of law which are part of the same general statutory law must be construed together. State v. Alls, 330 S.C. 528, 500 S.E.2d 781 (1998). Indeed, to find the meaning of a statute, courts should be mindful not to isolate the single statute under review but rather to construe the statute with regard for the whole system of law of which the statutes form a part. South Carolina Dept. of Transp. v. Faulkenberry, 337 S.C. 140, 522 S.E.2d 822 (Ct. App. 1999). One such related statute is S.C. Code Ann. § 61-6-170.
 

South Carolina Code Ann. § 61-6-170 limits retail liquor licenses in a political subdivision if "the citizens who desire to purchase alcoholic liquors therein are more than adequately served because of (1) the number of existing retail stores, (2) the location of the stores within the subdivision, or (3) other reasons." Thus, the sheer number of stores and the locations of those stores are relevant factors.
 

ii. Economic Impact on Existing License Holders
 

Sherr argues that the economic impact on existing liquor stores in the area is a valid basis upon which to determine when a sufficient number of licenses have been granted. Jain argues that economic concerns are not valid considerations for issuing or denying a license.
 

Deciding whether economic concerns are relevant to a licensing issue requires a perspective that laws regulating liquor sales stem from an "exercise of the police power of the state to do what otherwise would be unlawful to do[.]" Feldman v. South Carolina Tax Commission, 203 S.C. 49, 26 S.E.2d 22 (1943). A law grounded in police powers is a law based on what the General Assembly "judges fit for the protection and welfare of its people . . . ." Merchants' & Planters' Bank v. Brigman, 106 S.C. 362, 91 S.E. 332 (1917). Thus, the decision of how much weight to give to the economic impact on existing retail stores must be made in light of the General Assembly's intent to provide for the protection and welfare of the people. ⁽²⁾
 

Given such an intent, is the economic impact on existing retail stores created by granting a new retail liquor license relevant to furthering the protection and welfare of the people? The answer is yes.
 

Certainly not all cases of negative economic impact on existing licenses in the community will warrant denial of a new license. Rather, in each case, the scope and severity of the impact should be examined to adequately evaluate the effect on the public welfare.
 

At a minimum, evaluating the effect of an additional license requires considering whether existing operators are in a state "of impending operation at a loss." Park Distributing Co. v. Delaware Liquor Com'n, 44 Del. 6, 54 A.2d 551(Del.Gen.Sess. 1947). Indeed, as a general proposition, courts have found economics to be a valid factor since some licensing bodies have "found from past experience that licensees who attempt to operate with inadequate resources oftentimes succumb to the temptation of committing violations of the Alcoholic Beverage Control Law." Tobkes v. O'Connell, 272 A.D. 240, 70 N.Y.S.2d 494, 496 (1st Dep't 1947). Thus, the economic impact to the existing license holders in the area is a relevant consideration for deciding whether to grant an additional liquor license.
 

iii. Other meaningful factors
 

Other factors for consideration can be inferred from the use of the word "sufficient" in § 61-6-910. "Sufficient" means "enough to meet the needs of a situation." Merriam-Webster Collegiate Dictionary, www.m-w.com/cgi- bin/dictionary, October 2, 2001. Thus, consideration can be given to whether the existing retail liquor stores are adequate for the needs of the community. For example, in deciding whether the needs of a community have been met, other jurisdictions have considered "whether the clientele to be served [by the new license] is different from that served by the existing business." Pennsylvania Liquor Control Board v. Spring Gulch, Inc., 87 Pa.Cmwlth. 395, 487 A.2d 472 (1985). Thus, a relevant factor is deciding whether the new license serves a clientele different from the existing licenses.
 

iv. Factors Considered
 

In summary, determining when a sufficient number of licenses have been issued for a community can include any number of factors. However, based on the evidence presented in the instant case, the most significant factors are identifying the number of existing retail stores in the community, determining the location of the existing stores, assessing the economic impact the new license will have on existing stores, and deciding whether the clientele to be served by the new license is different from that already served by the existing license holders.
 

It is important to note that the ALJ is a fact-finder. The ALJ, as the finder of fact, must decide the case based on the evidence presented in the hearing and may not conduct its own independent investigation of the facts. E.g., People v. Hobley, 182 Ill.2d 404, 696 N.E.2d 313 (1998); see also Coleman v. C.I.R., T.C. Memo. 1963-19, 1963 WL 410 (Tax Ct. Jan 24, 1963) ("[W]hile we may sympathize with the petitioner we must decide the case on the evidence presented, which is wholly inadequate to support petitioner's claim here.").
 

Here, the evidence shows that the area already has a significant number of existing retail liquor stores. Within a 5 mile radius of Sherr's store are thirteen liquor stores. Such a large number is a factor weighing against granting an additional license.
 

Another factor weighing against granting Jain's license is the location of his proposed store. The immediate area consists of a population of approximately 20,000 residents. Under the facts of this case, no refutation was made against the evidence that the retail liquor industry recommends one retail liquor store for every population of 20,000 residents. Sherr operates his store in the same immediate service area proposed for service by Jain's store. Indeed, if the proposed location were granted, three liquor stores would be within 200 yards of each other. Thus, at least when measured by the standard used by the retail liquor industry, a resident population of 20,000 is already more than adequately served and weighs against granting an additional retail liquor license.
 

In addition, I do not find that the highway traffic on Decker Boulevard provides a meaningful basis for a "population increase." No persuasive evidence demonstrates that "drive-by" traffic will result in additional sales of liquor. Indeed, given the existing liquor stores on Decker Boulevard, no basis exists to believe that traffic will stop at Jain's location when existing stores already serve the "drive-by" traffic. Further, while a high volume of vehicular traffic uses Decker Boulevard, such a volume has not prevented an overall decline in other business in the immediate area. For example, several nearby businesses (Kroger, Burger King, and Target) have recently closed. Thus, under the facts of this case, traffic flow alone is not enough to conclude the base population should be increased in an effort to justify another retail liquor store.
 

In addition, the economic impact on existing stores is of such a degree that a detriment to the public welfare is presented. Certainly, the object of the law is not to protect profits of existing license holders. Rather, consideration of the economic impact is to avoid introducing additional licenses in an area that is approaching loss consequences since, if granted, existing license holders would face a temptation to violate the law. Already, in the instant case, existing stores have encountered declining sales and at least one nearby liquor store has closed. Further, Sherr, an existing and experienced license holder, has witnessed steady and consistent declining sales approaching loss proportions as additional licenses have entered the area. Such a circumstance negatively impacts the public welfare and does not weigh in favor of granting an additional license.
 

Finally, a relevant factor is whether the clientele to be served by the new license is different from that already being served by the existing license holders. Here, for all practical purposes, the clientele Jain seeks to serve is identical to that being served by the other liquor stores in the area. No evidence in this case differentiates Jain's service or products from that of any other liquor store in the area. Therefore, such a factor weighs against granting an additional license.
 

c. Conclusion As To Service To Community
 

While many factors may be considered, the most significant factors for the instant case are identifying the number of existing retail stores in the community, determining the location of the existing stores, assessing the economic impact the new license will have on existing stores, and deciding whether the clientele to be served by the new license is different from that already served by the existing license holders. The evidence presented in this case indicates that when considered as a whole these factors prohibit granting Jain's current application.
 

1. Positions of Parties
 

Sherr argues that the notice of Jain's intention to apply for a liquor license was fatally defective since the address given was 2300 Decker Boulevard rather than the correct 2316 Decker Boulevard.

Jain asserts the address was sufficiently accurate to provide notice and is not a basis for denial of the license.
 

2. Findings of Fact
 

I find by a preponderance of the evidence the following facts:
 

Jain's public advertisement of the application for a retail liquor license identified the proposed location as 2300 Decker Boulevard. However, the building carrying the number of 2300 Decker Boulevard is an existing and operational Eckerd's Drug Store. Jain's proposed located is not at 2300 but rather is to be located at 2316 Decker Boulevard.
 

Jain used the address of 2300 since that was the address given by the real estate agent who drew up the lease agreement on the property. Both 2300 and 2316 are located in the same strip shopping center but are different locations housed in different areas of the shopping center.
 

3. Conclusions of Law
 

The party seeking a license has the duty of proving he has met all of the statutory requirements for the license. 48 C.J.S. Intoxicating Liquors§ 114 (1981). One such requirement is the notice to the public by newspaper advertisement imposed by § 61-6-180(A).
 

The notice must be in the legal notice section of the paper or in an equivalent section if the newspaper has no legal notice section, be in large type, cover a space one column wide and not less than two inches deep, and state the type of license applied for, and the exact location at which the proposed business is to be operated. (Emphasis added).
 

Jain failed to meet the statutory notice requirement since the advertisement showed 2300 Decker Boulevard as the proposed location rather than the correct location of 2316 Decker Boulevard. The statute plainly states that the notice must have "the exact location at which the proposed business is to be operated." Such notice statutes are designed to "notify the public of the proposed use of specified property by named parties so that any member of the public is afforded an opportunity to file a protest against the issuance of a license for that location or to the named parties or both." Palmer-Ball v. Esquire Liquors, Inc., 490 S.W.2d 472 (Ky. 1973). One who fails to list the "exact location" fails to satisfy the notice requirements and must be denied a license. ⁽³⁾
 
 

1. Positions of Parties
 

Sherr argues the license must be denied since a church is 490 feet from the proposed location. Jain disagrees and asserts the license is proper since the church is 744 feet from the proposed location.
 

2. Findings of Fact
 

I find by a preponderance of the evidence the following facts:
 

Forest Lake Bible Church is on Decker Boulevard on the opposite side of the street from the proposed location. A SLED Agent measured the distance to the church at 744 feet. However, Sherr measured the distance as 490 feet.
 

3. Conclusions of Law
 

The location factors for a retail liquor license require satisfying an objective test imposed by S.C. Code Ann. § 61-6-120(A).

"[no retail liquor license shall be granted] if the place of business is . . . within five hundred feet of any church, school, or playground situated outside of a municipality. Such distance shall be computed by following the shortest route of ordinary pedestrian or vehicular travel along the public thoroughfare from the nearest point of the grounds in use as part of such church . . ."
 

Here, the proposed location is outside of a municipality. Therefore, no church can be within 500 feet of the proposed location. Here, a dispute exists on the distance to Forest Lake Bible Church.
 

The distance is measured between two points. One terminus for the measurement is easily identified as the entrance door to the proposed location since such a door provides the means for finding the "shortest route of ordinary pedestrian" travel. The second terminus requires finding the "nearest point of the grounds in use as part of such church." The phrase "nearest point of the grounds in use" is further defined by Regs. 7-55 as being "the nearest point of entrance to the grounds of the church . . ., or any building in which religious services . . . are held, whichever is the closer. . . ."
 

Thus, two points are possible for establishing the "nearest point of the grounds in use as part of such church." First the "grounds" point is the nearest point of entrance to the grounds. Second, the "building" point is the nearest point of entrance to any building in which religious services are held. Once both points are identified, the "closer" of the two must be used.

In addition, in locating the "grounds" point, under Regs. 7-55, the grounds being considered are:

restricted to the grounds immediately surrounding the building or buildings which provide ingress or egress to such building or buildings and does not extend to the grounds surrounding the church which may be used for beautification, cemeteries, or any purpose other than such part of the land as is necessary to leave the public thoroughfare and to enter or leave such building or buildings. Only one entrance to the grounds of a church . . . shall be considered, to wit: the entrance to the grounds nearest an entrance to the church or school building. Where no fence is involved, the nearest entrance to the grounds shall be in a straight line from the public thoroughfare to the nearest door.

In the instant case, no definitive measurements establish either the "grounds" point or the "building" point. At most, unsubstantiated measurements dominate the evidence.

On one hand, a report of a non-present SLED Agent asserts the statutory distance is satisfied since themeasurement to the church is 744 feet from the proposed location. However, the SLED agent did not testify at the hearing. Further, no meaningful explanation is given in his report of what land features, if any, he utilized to determine the "grounds" point and no explanation is given of whether a different measurement was taken for the "buildings" point. Thus, the Agent's means for establishing the second terminus point is too unsupported for a meaningful decision.
 

Similarly, Sherr testified the proposed location is 490 feet from the church measured by the shortest route of ordinary pedestrian or vehicular travel along the public thoroughfare. However, he did not testify that he made his measurements consistent with the dictates of Regs. 7-55. Rather, no testimony establishes whether he measured to the grounds point or the building point or how he identified where each point was on the church property. Such detail is needed when assessing a 490 foot measurement relative to a boundary of 500 feet.
 

In short, the evidence here from all sides is simply unhelpful. In deciding a fact issue, the judge must always evaluate the credibility of the witnesses. See Doe v. Doe, 324 S.C. 492, 478 S.E.2d 854 (Ct. App. 1996); Rogers v. Kunja Knitting Mills, Inc., 312 S.C. 377, 440 S.E.2d 401 (Ct. App. 1994), cert. dismissed, 318 S.C. 187, 456 S.E.2d 918 (1995). Further, the mere submission of evidence (even uncontradicted evidence) does not mean the trial judge is bound to adopt it. Indeed, the trial judge is not required to accept evidence if the evidence is unconvincing. All v. Prillaman, 200 S.C. 279, 20 S.E.2d 741 (1942).
 

Here, the evidence of measurement is unconvincing on all sides. Accordingly, since the license is denied on other grounds (area adequately served and failure to provide adequate notice), I decline to find what the distance is to the church. See State ex rel. Condon v. City of Columbia, 339 S.C. 8, 528 S.E.2d 408 (2000) (not necessary to decide issue when other decided matters are dispositive of the controversy).
 

DOR shall deny the application for a retail liquor license submitted for by Jain, Inc., d/b/a Village Liquors since a sufficient number of licenses have already been issued in the Dentsville community and since Jain's notice failed to comply with the statutory notice requirements for a retail liquor license.
 

AND IT IS SO ORDERED
 

______________________

RAY N. STEVENS

Administrative Law Judge
 

Dated: October 3, 2001

Columbia, South Carolina

1. Other states' statutes have very specific criteria for limiting the number of licenses in an area. See, e.g., Mass. Statutes 138 § 17 (Westlaw 2001 Electronic Pocket Part Update) (statute sets the number of licenses for an area based upon the population of the area); Penn. Statutes 47 P.S. § 4-404 (Westlaw, Current through End of the 2000 Regular Session) (new license must not be within two hundred feet of any other licensed premises).

2. Other jurisdictions have reached the same conclusion. See, e.g., Halbert v. Nebraska Liquor Control Commission, 206 Neb. 687, 294 N.W.2d 864 (1980) ( In the first place, the type of competition with which the Commission is to be concerned must, in some manner, affect the general public. As we noted in Allen v. Nebraska Liquor Control Commission, 179 Neb. 767, 140 N.W.2d 413 (1966), the purpose of limiting the number of licenses in a certain community must be related in some manner with furthering the interest of law and order and the well-being of the general public. ).

3. The same result was reached in Durbin v. Wood, 369 S.W.2d 125 (Ky. 1963) .
 

"The notice in question described the premises as 'Ben Wood No. 2, Route 2, Boaz, Kentucky.' The applicable provision of KRS 243.360(1) requires that the notice state 'the location of the premises for which the license is sought.' The purpose of this subsection of the statute is to notify the public of the proposed use of specific property so that any member of the public is afforded an opportunity to file a protest against the issuance of a license for that location. Barnett v. Portwood, Ky., 328 S.W.2d 164. It is our opinion that the quoted description is so indefinite that it gives no notice of the proposed use of any particular property. Hence, there was no compliance with the requirement of KRS 243.360(1) and, under this view, the Alcoholic Beverage Control Board is compelled by KRS 243.450 to refuse to issue the licenses sought by Wood."