LICENSE FEES UNDER INITIATIVE NO. 171 [CHAPTER 5, LAWS OF 1949]
The Liquor Control Board may make refunds on the unearned portion of Class 23-T license fees.
The Board may make refunds of deposits for Class H licenses where the applications therefor were ultimately denied or withdrawn.
Where beer and wine licenses were surrendered, no probating of fees is provided.
- - - - - - - - - - - - -
November 2, 1949
Washington State Liquor Control Board
Olympia, Washington Cite as: AGO 49-51 No. 151
Attention: Evro M. Becket, Chairman
You have submitted to us a number of questions relating to license fees which you stated have arisen by reason of certain amendments made to the Washington State Liquor Act by Initiative No. 171.
Your specific questions and our conclusions with respect to each are as follows:
QUESTION NO. 1. "Prior to June 2, 1949, on which date all Class 23-T licenses were by operation of the initiative terminated, various clubs in the state held such licenses, which permitted the members to keep on the premises a reasonable quantity of liquor for personal consumption thereon. Where a club applied for and received a [[Orig. Op. Page 2]] Class H license before, on or after June 2, 1949, may the Board make any refund of the 23-T license fee of $300.00 which was previously paid for the fiscal year October 1, 1948 to September 30, 1949, having in mind that a fee of $300.00 was also required for the Class H license for the fiscal year which ends September 30, 1949?"
CONCLUSION: The Board may refund the Class 23-T license fee in proportion to the unexpired term, namely, the period June 2, 1949, to September 30, 1949, inclusive.
QUESTION NO. 2. "Where a club with a 23-T license was denied a Class H license prior to June 2, 1949, the license fee previously deposited with the application was refunded, and later, upon request for a hearing, a temporary operating permit was granted until the matter could be heard and the Class H license fee was redeposited, and where it was subsequently decided that the permit be cancelled and the prior denial be affirmed, may the Board return the deposit for the Class H license? Is there any difference in this situation where prior to the Board's action affirming the denial of a Class H license, the club withdrew its application?"
CONCLUSION: The Board may return the fee deposited in connection with the application for a Class H license, and the fact that the applicant withdrew its application prior to final action being taken thereon by the Board does not alter the situation.
QUESTION NO. 3. "May the annual fees for Class H licenses granted to clubs either before, on, or after June 2, 1949, be prorated, based upon the fiscal year ending September 30?"
[[Orig. Op. Page 3]]
CONCLUSION: The law does not authorize the prorating of the license fee paid by a club for a Class H license granted during the fiscal year which ended September 30, 1949.
QUESTION NO. 4. "In certain cases clubs previously holding Class 23-T licenses applied for Class H club licenses, depositing in connection therewith the fee of $300.00. Said applications were denied and, upon request for hearing, temporary operating permits were granted and the Class H club license fees were redeposited. Before hearings could be held, however, applications were made to operate public restaurants under Class H licenses at the premises for which club licenses previously had been applied, and fees of $1000.00 respectively were submitted together with said applications. Thereupon the temporary permits issued the previous applicants to operate as clubs were withdrawn. What disposition should be made of the $300.00 license fees which had been deposited with the Class H club applications?"
CONCLUSION: The license fee deposited by a club in conjunction with its application for a Class H club license should be returned to the applicant when subsequently the application was withdrawn.
QUESTION NO. 5. "In cases where retail licenses, as distinguished from club licenses, had been issued for the fiscal year, and subsequently the licensees applied for, paid the proper fees, and obtained Class H licenses during the same fiscal year, they were required under the regulations of the Board to surrender for cancellation, upon the granting of the Class H licenses, all other classes [[Orig. Op. Page 4]] of retail licenses then held by them at the premises licensed for Class H operations. Under the circumstances, is any prorating or refund of the license fees authorized under the law?"
CONCLUSION: The law does not authorize the prorating or refunding of license fees under the circumstances.
Section 27, subsection 4, of the Washington State Liquor Act [Rem. Supp. 1947, sec. 7306-27-4], provides that "unless sooner cancelled, every license issued by the Board shall expire at midnight of the 30th day of September of the fiscal year for which the license was issued."
Initiative No. 171, being chapter 5 of the Laws of 1949, added § 23-S-3 to the liquor act, which section sets forth the schedule of annual fees for Class H licenses. It provides that the annual fee for said license if issued to a club shall be $300.00. The only provision made in the liquor act for the prorating of license fees is to be found in said section with reference to the fee for a Class H license when issued outside of incorporated cities and towns. This does not, however, apply to a Class H license issued to a club.
The initiative amended § 23-T of the liquor act by, among other things, adding thereto subsection (d), which reads in part as follows:
"* * * From and after six (6) months after the effective date of this act, each club license granted under this section prior to its amendment by this act shall be null and void. * * *"
From our examination of the law on the subject of the refunding of liquor license fees, we have found that many of the courts of last resort of various states have denied the right or duty generally of licensing authorities to refund such fees, and this is particularly true when the license has been revoked for misconduct of the licensee or when he has voluntarily surrendered his license, unless there are statutory provisions to the contrary. However, the authorities are not in harmony as to the right of recovery of liquor license fees in instances [[Orig. Op. Page 5]] when the license becomes ineffective by operation of law or by acts or circumstances beyond the control of the licensee, and there is considerable authority to support the view that prepaid liquor license fees are refundable for the portion of the unexpired license period at the time local option or statutory prohibition becomes effective. [See 30 Am.Jur., Intoxicating Liquors, § 153, 154 and 155].
We have the benefit of decisions of the Supreme Court of this state dealing with the question of the refunding of unearned fees upon the revocation of a liquor license without the licensee's fault, and our court has recognized and emphasized that consideration should be given to principles of justice and common honesty.
The foregoing rule was announced in the early case of Pearson v. Seattle, 14 Wash. 438. The plaintiff procured an "amusement license" in order to conduct a public dance in connection with his saloon and the required yearly license fee was paid to the city. A few months afterward the city enacted an ordinance prohibiting dancing in saloons and the plaintiff presented a claim for the unearned portion of the money paid for his license. The court held that in justice and equity the city was bound to repay the licensee fee in proportion to the unearned term and said as follows:
"* * * Conceding that the city, in the exercise of its police power, had a right to revoke respondent's license, as it did virtually revoke it by Ordinance No. 3152, yet it does not follow that it has a right to retain the money received for a license for a time during which such license was rendered valueless by its own act. The respondent paid his money for a consideration which he has, in part, failed to receive, by reason of the act of the city. On the other hand, the city has received money for the granting of a privilege which it has repudiated and annulled. * * * "
This rule was confirmed in the later case of Bart v. Pierce County, 60 Wash. 507, 111 Pac. 582, which involved recovery of the unearned portion of the fee for a county liquor license issued for one year which had become inoperative during the year through no act or fault of the licensee. The court held that he was entitled to have returned for the [[Orig. Op. Page 6]] unexpired portion of the year the unearned proportion of the fee paid to the county for a liquor license inasmuch as it was nullified by operation of law. In this connection, the court made the following statement:
"It is said that the rule thus announced is not supported by the weight of authority in other jurisdictions, but it at least finds support in the great principles of natural justice and common honesty by which the conduct of the state and its instrumentalities, as well as the conduct of the individual, should be guided. * * *"
In the case ofState ex rel. Maddaugh v. Ritter, 74 Wash. 649, 134 Pac. 492, our Supreme Court again founded the right to recover a liquor license fee upon the principles announced in the above cases when such license had been annulled through no fault of the licensee.
Our answers to your questions in the main are based upon the decisions referred to. By virtue of the amendment to § 23-T of the Washington State Liquor Act, namely, subsection (d),supra, every Class 23-T license issued prior to such amendment became a nullity six months after the effective date of Initiative No. 171. A majority of the voters approved the initiative at the general election held November 2, 1948, and it became effective on December 2, 1948. Consequently, on June 2, 1949, all 23-T licenses ceased to exist. These licenses were granted prior to December 2, 1948, for the fiscal year ending September 30, 1949, and the full annual license fee in each instance was paid in advance. By operation of law, and through no act or fault of the licensees, the licenses expired almost four months before the end of the term for which they had been granted. Consequently, you are advised that the Board may refund the unearned portion of the fee in those situations outlined in your question numbered 1.
[[Orig. Op. Page 7]]
In those instances where Class H club licenses were applied for and the applications were denied under the circumstances described in questions numbered 2 and 4, the deposits accompanied the applications upon the condition that the licenses would be granted. When the applications were refused, the Board could consider that no fees were earned.
With reference to your question numbered 3, the principles discussed herein cannot be extended in the absence of statutory authority to prorating the annual fee paid for a Class H license which was issued for the fiscal year ending September 30, 1949. Such fee was voluntarily paid with knowledge on the part of the applicant that the term of the license expired on that date by reason of § 27, subsection 4, of the Liquor Act,supra. If the applicant did not desire to pay the full fee he could have chosen to wait until the beginning of the next fiscal year.
The answer which we have given to your question numbered 5 requires little further amplification. § 27 of the Liquor Act, subsection 5, [Rem. Supp. 1947, 7306-27-5], provides that "every license issued under this section shall be subject to all conditions and restrictions imposed by this act or by the regulations in force from time to time." As a condition for obtaining a Class H license, the Liquor Control Board by regulation announced that "upon the granting of a Class H license, all other classes of retail licenses which may be held by such new Class H licensee at that time at the premises to be so licensed must be surrendered to the board for cancellation." [Regulation (29).] Acceptance of a Class H license under the circumstances amounted to the voluntary relinquishment by the licensee of the other classes of retail licenses then held by him. He was not compelled to convert to the Class H license, and if he desired to have the full benefit of the fees paid for his other licenses for the remainder of the fiscal year it was his privilege to wait until the end of the year before making application for the new class of license.
Very truly yours,
JOSEPH P. LAVIN
Assistant Attorney General