Effect of annexation of territory in which the sale of liquor is permitted by a city in which sale of liquor is prohibited

LIQUOR ‑- LIQUOR CONTROL BOARD ‑- LICENSES ‑- ELECTIONS ‑- ANNEXATION ‑- CITIES AND TOWNS ‑- Effect of annexation of territory in which the sale of liquor is permitted by a city in which sale of liquor is prohibited

1.  RCW 66.04.030 permits a local option election unit to conduct an election in the question of whether the sale of liquor under a class H license should be permitted within the election unit.  The boundaries of the local option election unit are the city or town or unincorporated portion of the county in which the unit is located.  If the voters approve the proposition, it is unlawful to sell spirituous liquor by the drink within the local option election unit.

2.  When a city annexes new territory, the general rule is that the authority of the city extends over the new territory.  However, cities are not granted the power to restrict the sale of liquor.  That power is granted to the voters of a local option election unit.  Annexation does not make the new territory a part of the local option election unit.  The prohibition on liquor sale is limited to the corporate limits of the city as it existed at the time of of the local option election.  Thus, when "wet" territory is annexed into a city that contains a "dry" local option election unit, it does not become "dry" by reason of the annexation.

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                                                                October 14, 1991

Honorable Shirley Winsley
State Representative, District 28
319 John L. O'Brien Building
Olympia, Washington 98504
                                                                                                                 Cite as:  AGO 1991 No. 31

Dear Representative Winsley:

            By letter previously acknowledged, you requested our opinion on a question we paraphrase as follows:

             [[Orig. Op. Page 2]]

            When a local option election unit, whose boundaries are the city limits, has voted to prohibit the sale of liquor by the drink pursuant to chapter 66.40 RCW, and the city subsequently annexes an unincorporated area that was not subject to such proscription, may establishments currently holding class H licenses in the annexed area continue to sell liquor by the drink following annexation?

The answer to this question is yes.

                                                                     ANALYSIS

            It is unlawful in the state of Washington for any public place or club to permit the sale of liquor on its premises without a valid license issued by the Washington State Liquor Control Board.  RCW 66.24.481.  The Liquor Control Board has the power to issue licenses for the sale of liquor in any business premises within the state, subject only to the conditions and restrictions imposed by Title 66 RCW and the regulations adopted thereunder.  RCW 66.24.010(6).  The Liquor Control Board may issue to any qualified applicant a class H license to sell "spirituous liquor"1/

            by the individual glass on the licensee's premises.  RCW 66.24.400.

            Municipalities and counties in the state of Washington are preempted by the state from licensing the sale of liquor within their boundaries except to the extent that such licensure is authorized by Title 66 RCW.  RCW 66.08.120.  Chapter 66.40 RCW, however, provides incorporated cities and towns, and the unincorporated areas of counties, with the authority to exercise a local option to hold an election to prohibit the sale of any liquor within their boundaries.

            RCW 66.40.030 also allows a "local option election unit" to conduct a separate election on the more limited question of whether the sale of liquor under class H licenses should be permitted within the election unit.  Upon approval by a majority  [[Orig. Op. Page 3]] of qualified electors voting against the sale of liquor under class H licenses, it is unlawful to operate a business which sells spirituous liquor by the drink, within the local option election unit.  Id.

            This prohibition against operation of class H licensed premises continues in effect within the local option election unit's boundaries until such time as another local option election is conducted, and the prohibition is lifted.  RCW 66.40.130.  If a local option election on the sale of liquor under a class H license is never called in any incorporated city or town, or unincorporated county, then the Liquor Control Board may issue a class H license to any business therein, if the sale of liquor is not otherwise prohibited under chapter 66.40 RCW.  RCW 66.40.130.

            Pursuant to this local option authority, a local option election unit comprised of the City of Fircrest conducted an election in 1975 in which a majority of qualified electors voted against the sale of liquor under class H licenses within the boundaries of the incorporated city as it then existed.2/

            The city is now considering annexing portions of unincorporated Pierce County.  Your question asks whether the annexation of these areas into the city limits of a "dry" local option election unit, will preclude the Liquor Control Board from continuing to issue class H licenses to a business now operating within the annexed territory.

            The general rule in Washington is that when new territory is annexed to a city, the authority of the city IPSO FACTO extends over the new territory, and it becomes subject to the control and supervision of the municipal authority.  Evergreen Trailways, Inc. v. Renton, 38 Wn.2d 82, 86, 228 P.2d 119 (1951).  However, the general rule as to the effect of municipal laws on newly annexed territory only applies to those local ordinances which were within the police power of the city to adopt.  There is a narrow exception to the general rule when the authority to regulate on a particular subject is not granted to the municipality itself, but rather to the voters of an election unit  [[Orig. Op. Page 4]] defined by the geographical boundaries of the city.  This distinction can be illustrated by comparing the Evergreen Trailways case to the issues involved in the proposed annexation by Fircrest.

            InEvergreen Trailways, a bus company provided transportation services in an area of unincorporated King County under a permit issued by the state public service commission.  The area was subsequently annexed by the City of Renton.  Renton passed an ordinance prohibiting the operation of a public transportation business on the streets of Renton without a franchise from the city.  Evergreen applied for a franchise, but their application was turned down and the franchise was awarded to another corporation.  Evergreen then brought suit against the city to enjoin it from prohibiting the operation of Evergreen's business within the city limits.  Id. at 83-84.

            Evergreen's first contention was that the city's ordinance was invalid because it conflicted with the public commission laws of the state.  To support this contention, Evergreen cited article 11, section 11 of the Washington Constitution, which provides that any city may make and enforce within its limits all such local police, sanitary, and other regulations as are not in conflict with the general laws.  The court rejected this argument, however, holding that the Constitution granted cities police power to regulate the transportation of passengers by motor vehicles within incorporated limits and general laws of the state that did not remove that power.  38 Wn.2d at 84-85.

            Evergreen's second contention was that the city could not deprive them of a valuable property right by the process of annexation.  The court rejected this argument also, and held that when territory is annexed to a city, the authority of the city IPSO FACTO extends over the new territory, and it becomes subject to the control and supervision of the municipal authority.  Id. at 86.

            Put into context,Evergreen Trailways holds that annexed territory is only subject to the legal control of the city as to municipal laws that are within the police power of the city to enact, and which are not in derogation or conflict with the general laws of the state.  In Evergreen Trailways, the authority to terminate the privilege of the bus company to operate in the area annexed into Renton, was within the police power of the city to enforce, and was not in conflict with a general law of the state.

            In contrast, the City of Fircrest has no statutory or constitutional authority to license or prohibit the sale of alcohol; rather, that authority lies only with the State.  See  [[Orig. Op. Page 5]] RCW 66.08.120.  The authority to prohibit the sale of liquor under a class H license is not a police power granted to cities, but instead is left to the voters within the statutorily created local option election units to decide.  RCW 66.40.010.

            While a local option election unit may share the geographical boundaries of a municipality when an election is held, the municipality is a separate legal entity from the local option election unit.  The local option election unit has not other police powers, such as the power to annex other territory.  Therefore, the authority of the local option election unit, as defined by the geographical boundaries of the City of Fircrest at the time of the local option election, to prohibit the sale of liquor under a class H license, does not "ipso facto" extend over the area sought to be annexed.

            The power to adopt local option laws is a right granted only to the people in a city, town or other specified locality to determine for themselves by a decisive vote at an election, the issue of whether or not they shall prohibit intoxicating liquors.  Barnes v. Dayton, 216 Tenn. 400, 392 S.W.2d 813, 816 (1965).  See also 6A E. McQuillin, Municipal Corporations § 24.167 (3d rev. ed. 1988).  The theory behind local option laws is that the people of a political or governmental unit should have the right to determine for themselves their status on the question of whether or not to allow the sale of intoxicating liquor.  Annot.,Local Option‑-Change of Boundaries, 25 A.L.R.2d 863, 864 § 2 (1952).

            Local option laws are a general law of the state and are not effective unless adopted by a vote of the people.  Hardy v. State, 162 Tex. Crim. 165, 283 S.W.2d 233, 234 (1955).  Thus, it has been generally held that the right to change the local option status once adopted in a local option electoral unit, belongs only to the people of such unit, and cannot be nullified by zoning or other local ordinances.  Randolph v. Village of Turkey Creek, 240 La. 996, 126 So.2d 341, 346 (1981).  See also 6A E. McQuillin,Municipal Corporations § 24.167 (3d rev. ed. 1988).  Under this theory, a local option status one adopted is usually considered to attach to the territory which was originally bound by the vote, and to remain operative, unless lawfully changed, notwithstanding changes for other purposes in the boundaries of the unit.  Annot.,Local Options‑-Change of Boundaries, 25 A.L.R.2d 863, 864 § 2 (1952).

            The general rule holds that the joining by annexation of territory which has adopted a local option status to other territory with a different local option status to form a new political unit, does not affect the local option status of either  [[Orig. Op. Page 6]] part.  Hughes v. East Baton Rouge Parish Council, 48 So.2d 823, 829 (La Ct. App. 1950).  See also Annot.,Local Option‑-Change of Boundaries, 25 A.L.R.2d 863, 865 § 4 (1952).  This rule has been adopted in the overwhelming majority of jurisdictions which have considered the question, although it usually arises in the context of a "wet" municipality, township, precinct, or ward, that annexes an area that has previously elected to be "dry."  See, e.g.,Palmer v. Liquor Control Comm'n, 77 Ill. App.3d 725, 396 N.E.2d 325 (1979);Rich-Hills Catering Co. v. Slattery, 448 S.W.2d 379 (Ky. 1969);Canton v. Imperial Bowling Lanes, Inc., 16 Ohio St.2d 47, 242 N.E.2d 566 (1968); Blanchard v. Gauthier, 248 La. 1107, 184 So.2d 531 (1966);Houchins v. Plainos, 130 Tex. 413, 110 S.W.2d 549 (1937).

            The only reported case involving a "dry" municipality which subsequently annexes an area which was formerly "wet," is Froeba v. State, Dept. of Pub. Safety, 369 So.2d 727 (La. Ct. App. 1979).  InFroeba, the City of Natchitoches, Louisiana, held a local option election in 1949 and approved an ordinance prohibiting the sale of alcoholic beverages by the drink within the city limits.  In 1950, the city annexed property which was formerly part of another parish.  This parish had also approved a local option ordinance prohibiting the sale of alcohol by the glass in 1943, but the ordinance was subsequently invalidated by the adoption of a state law prohibiting local option elections on a parish-wide basis.  Thus, at the time that it was annexed into the City of Natchitoches, the parish had reverted to its previously "wet" status.  Id. at 729-30.

            The Louisiana Court of Appeals held that the city did not have a vested right in enforcing its local option ordinance in the territory which it annexed.  Thus, under the general rule that a territory retains its "wet" or "dry" status after a change in boundaries until such time as another local option election is held, the Court concluded that the property annexed was still "wet" despite the general "dry" status of the rest of the city.  Id. at 732-33.

            The general rule holding that a territory still retains its local option status after annexation into a governmental unit with a different status, is consistent with the language in the local option statutes in Washington.  RCW 66.40.030 provides as follows:

                        Within any unit referred to in RCW 66.40.010, there may be held a separate election upon the question of whether the sale of liquor under class H licenses, shall be permittedwithin such unit. . . .  Whenever a majority of qualified voters voting upon said question  [[Orig. Op. Page 7]] in any such unit shall have voted "against the sale of liquor under class H licenses", . . . after ninety days from and after the date of the canvass, it shall not be lawful for licensees to maintain and operate premisestherein licensed under class H licenses.

(Emphasis added.)

            RCW 66.40.030 refers to the unit.  It is true that RCW 66.40.010 defines the local option election unit as "any incorporated city or town, or all that portion of any county not included within the limits of incorporated cities and towns."  However, RCW 66.40.010 simply defines the boundary of the unit.  It does not turn the unit into the city, town or unincorporated part of the county.

            When the City of Fircrest voted against the sale of liquor under class H licenses in 1975, its incorporated city limits did not include territory outside the city limits.  Businesses outside the city have been operating under a class H license currently authorized within the local option election unit in which it now resides prior to annexation.  Thus, the prohibition of RCW 66.40.030 making it unlawful for licensees to maintain and operate premisestherein licensed under class H licenses would not apply to these businesses, since they were not a part of the local option election unit at the time the prohibition was adopted.

            This interpretation of the statute defining the limits of a local option election unit is consistent with a previous opinion of the Attorney General's Office in which we said that the relevant unit for the purposes of the local option law is the population of the incorporated city, town, or unincorporated county, at the time that the petition for a local option election is filed.  AGO 49-51 No. 368.  An area which is annexed out of the unincorporated county prior to the county's filing of a petition for a local option election, should not be considered part of the relevant local option election unit.  Id.

            For the same reason, the prohibition against operating class H licensed businesses within the local option election unit should be limited to the unit as it existed at the time the petition was filed.  The local option election unit should not be interpreted to include subsequently annexed territory unless a new local option election is held.

             [[Orig. Op. Page 8]]

            The case ofState v. Donovan, 61 Wash. 209, 112 P. 260 (1910) involved a similar issue but distinguishable from this situation because the law has changed.  InDonovan, Skagit County had elected to prohibit the sale of liquor in a local option election unit consisting of "all that part and portion of said county outside of the incorporated cities and towns therein."  Id. at 210.  Subsequent to the local option election, the town of McMurray was incorporated within Skagit County.  The town then passed an ordinance regulating the sale of alcohol in its city limits and issued a license to Donovan to sell it.  Id.  The county argued that the town was prohibited by the previous local option election from allowing the sale of alcohol, despite its change in governmental status, until it called a new election to allow the voters of McMurray to decide the question for themselves.

            The Court rejected this contention, however, concluding that the general law of the state granting powers of limited sovereignty to newly incorporated cities, overruled the general rule that a local option status adheres to a territory, regardless of a change in boundaries or redistricting.  Id. at 212-13.

            TheDonovan court's rationale for departing from the general rule was based solely upon the inherent conflict between two general laws of the state.  However, a close reading of the Donovan decision reveals that it does not support the separate conclusion that territory acquired by annexation would be subject to the annexing territory's local option status.

            WhenDonovan was decided (prior to prohibition), cities did have the power to license and regulate the sale of alcohol within their corporate limits.  See State ex rel. Pasco v. Superior Court, 49 Wash. 268, 94 P. 1086 (1908) (interpreting Laws of 1888, ch. 72, § 2, p. 124).  This included the power to refuse a license.  Id. Local option election units were authorized to vote on whether to prohibit liquor sales in that unit; in the absence of such an election, the municipality was free to license or refuse to license the sale of alcohol by city ordinance.  See Laws of 1909, ch. 81, § 6, p. 156.  After 1933, the state preempted the field of licensure of alcohol sales.  RCW 66.08.120.  Municipalities and counties are now authorized to adopt only those police ordinances and regulations regarding the sale of liquor that are not in conflict with the general law of the state.  Id.

            TheDonovan court also recognized that its holding was limited to its facts.  Presented with the general rule that territory which was formerly wet remains wet and territory which was formerly dry remains dry after a change of boundaries of  [[Orig. Op. Page 9]] local option units, the court found that cases following the general rule regarding a change of boundaries were "undoubtedly rightly decided."  Id. at 212.  However, the court concluded that the general rule did not apply because the case did not concern a change in boundaries; rather, it concerned the creation of a new form of government.  The court found:

            [I]t will be seen that another principle altogether is involved here, which has no reference to the change of boundaries; but it does have reference to the establishment of another form of government within the territory which had previously been brought under the operation of the law.  There was a limited sovereignty formed within this territory by the incorporation of this city.  It is one of the aids of the state, clothed to a certain extent with the powers of the state.

Id.at 212 (emphasis added).

            Thus, the issue inDonovan involved a conflict of the general law authorizing the local option unit to prohibit liquor sales within its former boundaries, against the general law authorizing the subsequently created city within those boundaries to license the sale of liquor.  The court found that when McMurray incorporated, it received the rights that every fourth class city receives.  This included the right to license or refuse to license the sale of liquor.  Therefore, McMurray was relieved of the original local option election status prohibiting liquor sales by the authority which the general law of the state grants to an incorporated town.

            Under current law,Donovan could not be decided the same way because municipalities can no longer license or refuse to license the sale of liquor.  Furthermore, theDonovan court recognized that the general rule regarding the status of local option election units after a change of boundaries applies; the court merely carved out an exception to the general rule when the territory's local option election status conflicts with a general law of the state delegating police power to newly incorporated municipalities.  See also AGO 1913-1914 at 30 (holding State v. Donovan distinguishable on its facts from the general rule regarding changes in boundaries and districts on local option status).

            In summary, the prohibition on the operation of class H licensed premises in the City of Fircrest is limited to the corporate limits of the city as it existed at the time of the local option election in 1975.  The annexation of new territory will not extend the city's prohibition to this new addition until another election is held on this question within the new local  [[Orig. Op. Page 10]] option election unit pursuant to RCW 66.40.130.  The Washington State Liquor Control Board is not prohibited from renewing a class H license to a business in an area annexed by the City of Fircrest, because it was not a part of the original local option election unit approving the prohibition against class H licensed premises.

            We trust that the foregoing will be of assistance to you.

Very truly yours,

KENNETH O. EIKENBERRY
Attorney General

GEOFFREY G. JONES
Assistant Attorney General