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Hi, I own a small private club in St. Paul MN, with fewer

Hi, I own...
Hi,

I own a small private club in St. Paul MN, with fewer than 200 members. In the eighties, we sold the bar next door (same address) which has a full liquor license. The two businesses are contiguous, share a common parking lot, and I retain an easement into it. However, we were engaged in lawsuits for over 20 years, and I REFUSE TO DO ANY BUSINESS with the current owner. Recently, I have become concerned about some of my members keeping Scotch in their lockers, and bringing in a beer or two for after a match. On occassion, I have OKed a few bottles of wine/beer for special occassions. Years ago, St. Paul repealed the Consumption and Display permit, which allowed for just this sort of scenario. I am told I risk losing my license, face potential fines, and may be found guilty of a misdemeanor. St. Paul says they may be willing to issue me a 3.2 License, which I in fact had back in the 90's, but never stocked or sold 3.2 beer as I can't stand the taste and don't want to be in the business of selling alcohol. I suppose there are also Federal penalties.
My questions are: if I am caught with alcohol on my property without a license, but am NOT selling it (I am told I am in fact selling it, as members pay dues to belong to my health club), what kind of defense could I use to avoid serious trouble, and how can I go about getting St. Paul, and the Feds to approve of this limited on site use? Am I in fact covered by my neighbor's license, even if he is unaware? Might there be some "Private Club" angle I have overlooked? If the members supply beer for common use, does that change anything?
Here is the Municode: http://library.municode.com/index.aspx?clientId=10061&stateId=23&stateName=Minnesota&customBanner=10061.jpg&imageclass=L&cl=10061.txt.

Thanks,

Anonymous
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Answered in 1 hour by:
1/5/2013
socrateaser
socrateaser, Attorney
Category: Business Law
Satisfied Customers: 39,498
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Hello,

After reviewing the ordinances, I do not see how you could reasonably be found to be selling liquor on the premises, even indirectly. You don't receive revenue from the neighboring bar, not even as rent. The fact that you have an easement to use the parking lot doesn't generate income from the bar owner.

The only thing that you are selling is a place for members to congregate. And, this is where state law takes over. You need a consumption and display permit (click here).

The applicable law is MN Stat. 340A.414.

I think this solves your problem.

Hope this helps.
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Customer reply replied 5 years ago


Hi,


 



"It shall be grounds for the suspension or revocation of the license if the licensee or owner or manager or any of the employees or persons having a financial interest in the premises are found to be in control of or possession of any alcoholic beverages or controlled substances on the premises, possession of which is illegal under city ordinance or state law."



Thank you, XXXXX XXXXX must have missed the above part of the ordinance. Furthermore, that Consumption and Display permit was repealed by St. Paul, which is the problem. My easement is directly into his business, not into the parking lot. "Found" is an interesting word, which suggests if I keep things locked up and out of sight I might not be breaking the law after all. Thoughts?

Customer reply replied 5 years ago


Hi,


 



"It shall be grounds for the suspension or revocation of the license if the licensee or owner or manager or any of the employees or persons having a financial interest in the premises are found to be in control of or possession of any alcoholic beverages or controlled substances on the premises, possession of which is illegal under city ordinance or state law."




Thank you, XXXXX XXXXX must have missed the above part of the ordinance. Furthermore, that Consumption and Display permit was repealed by St. Paul, which is the problem. My easement is directly into his business, not into the parking lot. "Found" is an interesting word, which suggests if I keep things locked up and out of sight I might not be breaking the law after all. Thoughts?

I think you have a different problem, here. If the easement actually enters the bar itself, then that could be construed as your granting access to your members to the bar, and thereby engaged in the indirect sale of liquor -- given that, as you say, you charge for your membership.

There is an old case: Dostal v. McLeod County, 247 Minn. 452, 77 N.W.2d 654 (1956), the Minnesota Supreme Court determined that the "communication" between the place of sale and the place of consumption could be viewed as violating the licensing laws. At the time, the court was interpreting a different law, i.e., the "Dance Hall Act." But, my concern is that even if you were to ultimately prevail, you could be drawn into an expensive legal battle with the city, and while the public will be funding the prosecution, you will be paying for your own defense.

So, now I think that the risk has increased substantially.

The statement that the liquor may not be "found" in the "control or possession" of anyone with a financial interest in the club, could easily be expanded by a judge to deem control as within your knowledge, that members are storing liquor in their lockers, which are actually your lockers, being rented to the members, but still subject to your ultimate control.

Once again, the risk increases.

Given these changes (and I do admit to having missed the part of the ordinance that you identify, because I was looking at the liquor license ordinances and not the club license ordinances), I don't see that you have any alternative other than to completely prohibit alcoholic beverages on the premises, or alternatively, obtain an on-sale license, even if you don't actually sell any liquor.

Hope this helps.
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Customer reply replied 5 years ago

Hi, Maybe the devil is in the details. My easement has been blocked off for about 20 years, but is still "on the books." It technically runs from a door in my lounge (just recently sheetrocked over, by the way) through an accessway to his kitchen, and then into another hallway (though he sheetrocked that closed years ago) , and then up stairs to a locked door servicing a Condominium Complex, through which one enters another hallway, and finally one can reach another locked door which gains enterance to his bar. The original purpose of the easement was so that members would not have to go outside to get to his bar (which Dad once owned), but it has been blocked off for years as I described. I mention it only because I wonder if it might help the argument I am still technically covered by that old license.


You have not yet clearly addressed my question as to whether my business might yet be covered under his liquor license, with or without his approval. Thank you for thinking this through. It is a complex matter. The State Permit states clearly that it requires City approval, and that State Permit was repealed by St. Paul. I might be able to get a 3.2 License again, but I know I can't get a Liquor License because of my proximity to my neighbor, and the cost of one is over $5,500 anyway.



That form you partially filled in with me as a small business instead of a private club. Is it better to be a private club or a small business to achieve my goal?


 


Thanks

Maybe the devil is in the details. My easement has been blocked off for about 20 years, but is still "on the books."

A: I try to review things both from the legal and the economic viewpoint. If you're not using the easement, and the servient estate (i.e., the bar) has effectively cut of your use without your objection. This could mean that you have abandoned the easement, and to the extent of that abandonment, there is no longer any "communication" with the bar. That's what I would argue if I were representing you in court.

As a judge, I would probably see the entire matter as a big to do about nothing, and I'd dismiss the case in the interests of justice. But, some judges are sticklers for the letter of the law, and you can't know that until you get the judge -- so, that's a risk, that you cannot prepare for in advance.

You have not yet clearly addressed my question as to whether my business might yet be covered under his liquor license, with or without his approval. Thank you for thinking this through. It is a complex matter. The State Permit states clearly that it requires City approval, and that State Permit was repealed by St. Paul. I might be able to get a 3.2 License again, but I know I can't get a Liquor License because of my proximity to my neighbor, and the cost of one is over $5,500 anyway.

A: You could approach the city for enactment of an exception in the license to accommodate your unusual requirements -- e.g., that the city will issue a consumption and display license to a private club, if all of the following are true [list conditions]. You have a unique circumstance, and it's placing you at risk, because your members, are always purchasing liquor and they want to consume it on your premises. And, short of your putting a bouncer at the entrance and patting the members down (which will make them all feel unwelcome and destroy your business), you can't stop them from bringing liquor into your premises.

I'm trying to argue something that makes sense to a city council, and operates in the public interest without injuring anyone. Can't guarantee it will work, but if you don't try, you won't know.

That form you partially filled in with me as a small business instead of a private club. Is it better to be a private club or a small business to achieve my goal?

A: It's generally better to be a private club, because in some cases a private club can discriminate against members, where businesses that are open to the general public cannot, because of the public accommodations laws.

Hope this helps.
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Customer reply replied 5 years ago


Hi,


 


Thank you for trying to help. How would I find out if I am still covered under that old license (you seem not to have a clear answer)? Is there even a remote chance I am still covered? The City would likely say I am not, but who makes that decision? Is there enough wiggle room in interpretation that I could argue, if necessary, that I presumed I was and avoid serious consequences? If I am actually covered, than presumably I need do nothing at all. Is it safe to presume I am?


That issue aside, are you suggesting my best course of action is to approach the City Council directly, and ask for an "enactment of an exception" as a Private Club and get a Consumption and Display permit?

How would I find out if I am still covered under that old license (you seem not to have a clear answer)?

A: A license is a personal right, not a property right. You sold the bar, so you cannot possibly be covered under the old license, because the license is personal to the licensee. Even if it was transferred with the property, it became the new owner's license, and you lost the license simultaneously.

Is there even a remote chance I am still covered?

A: Not a snowball's chance, in my opinion. It would defy legal doctrine.

The City would likely say I am not, but who makes that decision?

A: The city, and then if you dispute it, you would have to file a petition for a writ of mandamus with the court, and then the court would determine if the city's decision violations one of these four rules: (1) error fact; (2) error of law; (3) error in analysis of fact and law, or (4) abuse of discretion (irrational ruling). The court cannot accept new evidence. It must rule on the record, and it must defer to the agency/city's interpretation of its own regulations, unless the law that authorizes the regulation is unmistakable on its face and contradicts the regulation.

Generally, licensing agencies are give extremely broad discretion in making economic regulations. The only time that a court generally remands to the agency, is where there is evidence of invidious discrimination (race, color, nationality, religion, familial status, age or disability). If you can't convince the agency to rule in your favor, you're almost always sunk.

Is there enough wiggle room in interpretation that I could argue, if necessary, that I presumed I was and avoid serious consequences?

A: Well, I'll tell you -- if you were to argue to me that your members may keep booze in their lockers, but that's outside of your control, I'd have to say: "BS!" You can prevent the members from entering with alcohol, and you can suspend their membership in order to prevent them from violating the rules. And, most important, there is a license available, albeit an expensive one.

Now, if you replied that you attempted to get an on-sale license and you were refused because the bar next door is too close -- and you then asked for an opportunity to purchase a consumption and display license and you were again denied, but for no particular reason, then I would say, okay, that's an irrational agency decision. There is no legitimate government purpose in denying your club a consumption and display. The state recognizes the license, it injuries no one's business, including the bar next door, because members can purchase liquor there and bring it to the club without driving a motor vehicle -- so, if anything, this is actually a benefit to the community, and the city's ruling is arbitrary and capricious.

But, if you simply say, "I have to turn a blind eye to the members, because if I don't, then they won't darken my door, and I don't want to spend the money to try to get a license," then I have no sympathy, because you haven't really tried to work the system.

If I am actually covered, than presumably I need do nothing at all. Is it safe to presume I am?

A: I think you're trying to push me to tell you you're okay, because you need that reassurance to move forward without dealing with the problem as it actually exists. Well, I can tell you that you're in good shape, and you'll be happy and you'll pay me, and then you will go your merry way, and then --- wham! You'll have an inspection and lose your license.

And, guess who you will blame for being a friggin' idiot? Yep -- me. So, I won't tell you you're okay, because my judicial temperament tells me you have a problem here, now that we have fleshed out the details, and we have explored as much of the law as we can find.

That issue aside, are you suggesting my best course of action is to approach the City Council directly, and ask for an "enactment of an exception" as a Private Club and get a Consumption and Display permit?

A: That's what I think is the most reasonable approach. It doesn't make sense that the city doesn't have this option available. Maybe, no one has ever had a good reason to need it. And, yes, it could be a pain, because you'll have to go through the city attorney and manager, and you may have to try to schmooze some council members, either directly or through your connections (hopefully members). And, then you'll need a pubilc hearing and you'll have to make your case in front of the council, etc.

I can't say how it will end up, but that would be the most logical approach, in my opinion.

Hope this helps.
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Customer reply replied 5 years ago

Hi,


 


I keep getting requests via email as to whether or not I was satisfied, and if I have any more questions. I gave a "good" rating so you would be paid, but, truth be told, I was a bit frustrated, and somewhat offended, by the tone of your response. I was not trying to get you to say anything, but was asking, repeatedly, for clarification.


Since our exchange, I have been ignored by my councilman's legislative aid, from whom I sought advice. I have learned an On Sale License is possibly available, but only if I provide full food service (not equipped for that service at my club). I might have an "irrational agency decision," but my plan at this point is to approach the powers that be directly. It is not possible to reactivate my old 3.2 license without going through a neighborhood review, site review, parking review, zoning review, etc, or at least that is what I have been told. I don't want or need a 3.2 license for my needs, but that is my current plan. If you have a good idea, I would be happy to read it.

I keep getting requests via email as to whether or not I was satisfied, and if I have any more questions. I gave a "good" rating so you would be paid, but, truth be told, I was a bit frustrated, and somewhat offended, by the tone of your response. I was not trying to get you to say anything, but was asking, repeatedly, for clarification.

A: Hello again. Comments:

1. I do not send or authorize any communication to a customer from this website, other than my direct answer(s) to questions, as asked. If you receive any correspondence from the website, whether or not it displays my userid, that correspondence may be generated by the website, without my authorization or consent, and I have absolutely no idea what said correspondence contains. I apologize for any inconvenience you may have sustained, and I invite you to contact customer service and demand that they cease and desist from sending you any further correspondence -- because I have absolutely no control over these communiques (and I have repeatedly requested that the website stop using my userid for any such correspondence -- to no avail).

2. I apologize if I offended you in any way. That was not my intent. I am in a precarious position here, generally speaking, because customers come to the website seeking more than mere "answers" to their questions. Customers want an answer that provides a positive result for their concerns. Unfortunately, the nature of the law is that there are always at least two sides to any dispute, and at least one side inevitably loses. When I answer a question with anything other than a response such as (example), "That's outrageous. You've been wronged and you can sue the living c*** out of your adversary," the customer, about 90% of the time, gets angry, rates me "poor" or "bad," and then leaves without paying. This is natural, because after all, if the customer can't win over their adversary, and I tell them that they can't, then the customer is being asked to pay for "bad news" -- sometimes, bad news that demonstrates that the customer is in fact a wrongdoer.

I can live with this repeated punishment (i.e., do good work -- become the customer's new target of blame) -- it's just an artifact of the job (if you can call this a job). But, what I cannot do, is tell a customer anything other than the unvarnished truth, because if I do, and the customer later discovers that my answer was BS designed to extract payment in exchange for providing a positive, but erroneous answer, then that would be an outright fraud, and I would be in serious hot water.

Your question fit into the general category where I thoroughly expected you to become angry, and then leave without paying (or pay, and then return later and demand a refund from customer service). So, I felt it necessary to "cover my assets," and characterize my answer in the manner that I did. I certainly meant no insult to you of any kind, and once again, I apologize if that's how it seemed to you.

Since our exchange, I have been ignored by my councilman's legislative aid, from whom I sought advice. I have learned an On Sale License is possibly available, but only if I provide full food service (not equipped for that service at my club). I might have an "irrational agency decision," but my plan at this point is to approach the powers that be directly. It is not possible to reactivate my old 3.2 license without going through a neighborhood review, site review, parking review, zoning review, etc, or at least that is what I have been told. I don't want or need a 3.2 license for my needs, but that is my current plan. If you have a good idea, I would be happy to read it.

 

A: I don't see how a 3.2 license helps you, because your members are allegedly bringing in hard liquor. The cost of litigating this matter for court review will be at least as much as the $5,000 plus for a full-service license -- though I realize that if you were actually to take that approach, your set-up costs to outfit a kitchen, hire personnel, establish a point of sale system, etc. would be a lot more than $5K. But, the question, for me is whether or not burning money in court is as valuable to your club's long-term health as actually trying to set up to provide some level of restaurant service (even if it's only cooking dogs/sausage and burgers or maybe a breakfast burrito).

 

Substantively, from a legal viewpoint, I can't think of any additional avenues to get you where you need to go (other than to try to buyout or partner with the neighboring bar, and then physically connect the two establishments, so that your club is actually part of the bar, and visa versa -- and, talk about expensive).

 

That's really about everything I can think of at this point. Please let me know if I can be of further assistance.

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Customer reply replied 5 years ago

Hi, Thank you for your explanation. I will ponder my options. It appears I can't give you another "good" response without being charged another $60. I did not realize that was to be a consequence of responding once again, and I hope you understand if I just sign off with this email.

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