OPINION OF THE JUSTICES TO THE SENATE.

OPINION OF THE JUSTICES TO THE SENATE.

349 Mass. 794

June 22, 1965

Present: WILKINS, SPALDING, WHITTEMORE, CUTTER, KIRK, SPIEGEL, REARDON, JJ.

Constitutional Law, Public purpose, Retirement of liquor license, Expenditure of public money, Opinions of the Justice. Alcoholic Liquors, License.

Findings of a branch of the General Court contained in an order propounding questions to the Justices with respect to a pending bill were entitled to weight as constituting the framework within which the questions were asked. [799]

Payments of public money by the city of Boston to the holders of certain alcoholic beverage licenses surrendered for cancellation upon the taking of the holders' premises by public authority would be for a public purpose if the Legislature in authorizing such payments should find that they would serve the public good in view of an excessive number of outstanding licenses in the city and conditions inimical to the public interest resulting therefrom and in view of substantial hardship caused by a paucity of suitable sites for relocation of the displaced establishments currently existing in the city by reason of extensive urban renewal and redevelopment projects. [800-801]

The Justices were not required by the Constitution of Massachusetts to answer a question propounded by a branch of the General Court apparently asking for an expression of an opinion generally as to the constitutionality of a specific pending bill as a whole. [801]

In proposed legislation authorizing expenditures of public money by the city of Boston for the public purpose of retiring certain alcoholic beverage licenses surrendered for cancellation by their holders, a provision for payment to the licensees of a certain sum if the surrender was made within one year after a specified date, a lesser sum if it was made within two years after that date, or a still lesser sum if it was made more than two years after that date, would accelerate the achievement of the purpose of the legislation and would not be discriminatory nor render the legislation unconstitutional. [801]

On June 22, 1965, the Justices submitted the following answers to questions propounded to them by the Senate.

To the Honorable the Senate of the Commonwealth of Massachusetts:

The Justices of the Supreme Judicial Court respectfully submit these answers to questions in an order adopted by the Senate on June 8, 1965, and transmitted to us on June

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10. The order recites the pendency before the Senate of a bill, Senate No. 1042, a copy of which was transmitted with the order. The bill is entitled, "An Act providing for the retirement of certain alcoholic beverage licenses in the city of Boston."

The bill has five sections. Section 1 would provide for payments by the city for the retirement of certain all alcoholic beverage licenses issued under G. L. c. 138, § 12 or § 15, to do business on premises in Boston: (1) those taken by public authority on or after the effective date of the act; (2) those so taken prior to that date but not transferred to an approved location prior to that date. To be entitled, the holder must tender the license, during the period during which it is reserved under c. 138, § 23B, to the licensing board of the city for cancellation. This period is presently four years from the date of taking. St. 1958, c. 514, amending G. L. c. 138, § 23B. The board shall accept the tender and cancel the license, and upon requisition by the board, the collector-treasurer of the city shall make payments as follows to the person tendering the license: (1) if tendered within one year after the taking or the effective date of the act, whichever is later, $10,000; (2) if tendered within two years after the taking or such effective date, whichever is later, $5,000; or (3) if tendered thereafter $2,500. There is a proviso that no payment shall be made upon the tender of any such license if its cancellation would reduce to less than 700 the number of all alcoholic beverage licenses outstanding under § 12 or to less than 250 the number outstanding under § 15.

Section 2 provides an increase of $200 in the fee for each all alcoholic beverage license issued by the board under § 12 or § 15 in or for the year 1966 and for each year thereafter until the city has been reimbursed in full for all payments made by it under the proposed act.

Section 3 provides that, within its limit of indebtedness prescribed by G. L. c. 44, § 10, the city, in anticipation of receipts under Section 2, may borrow, from time to time, not exceeding $2,000,000 and may issue and sell bonds, payable

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in not more than twenty years from the date of issue. Section 4 provides for a detailed account in the annual reports of the board. By Section 5 the effective date of the act is to be July 1, 1965.

The purpose of Senate No. 1042 appears from its extensive preamble and from the preamble to the report of the Special Commission to Study the Number and Granting of Alcoholic Beverage Licenses in the City of Boston, Senate Document No. 794, a copy of which is annexed to, and incorporated by reference in, the order.

We summarize the recitals in the preambles. Over thirty years ago the Legislature established quotas intended to bring about a reduction of the number of liquor licenses granted in the city of Boston. The quota for on-premises all alcoholic licenses (Section 12) was set at 700. St. 1939, c. 263. The quota for off-premises (package) licenses (Section 15) was set at 250. St. 1936, c. 245. Even though Boston's population has since declined by over 100,000, the numbers of licensed establishments still continue above the allowable quotas. The current figures are respectively: (1) Under § 12, 757 active, 19 reserved under § 23B, one reserved under a special act; (2) under § 15, 289 active, 8 reserved under § 23B.

The problem of an excessive number of licensed establishments is compounded by two complex factors. First. Much of the city is undergoing a renewal process, and many of the licensed establishments have been displaced by eminent domain takings. This presents a massive problem to all the city but especially to the core of the city. It is estimated that 135 premises on which the sale of all alcoholic beverages is now licensed will be taken by eminent domain in carrying out, in the near future, vast urban renewal and redevelopment programs, but that by reason of changes in land uses permitted in areas where such establishments are located, and for other reasons, less than 40 such licenses will be reintroduced in those areas. There are few, if any, suitable locations or neighborhoods which are not already adequately served by licensed establishments.

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In other words, some sections have a saturation of such establishments. Second. The method of operation of many establishments has been such as to jeopardize the public interest. The existence of an excessive number of licensed establishments is inimical to the public health, safety, morals, and welfare; constitutes an economic and social liability; and substantially impairs the sound growth of the city. More specifically, as stated by the commission, where too many licenses exist and the economic return from a normal operation is marginal, there is a strong incentive to engage in such illicit operations as sales to minors, violations of hours, serving of people already intoxicated and known drunkards, gambling, prostitution, and other forms of vice. While these activities are grounds for disciplinary action, including revocation of the license, the character of supervision and enforcement has been unequal to the task of protecting and promoting the public interest. It appears all too clear that the public interest has been either ill-defined by those responsible or neglected by them in the discharge of their responsibilities.

There will be substantial financial hardship to licensees if they are unable to continue in business because they cannot obtain transfers of their licenses to other suitable locations within the time limited by § 23B for the reservation of their licenses.

The preamble to the order concludes by reciting that public moneys may not be expended except for a public purpose, and that grave doubt exists as to the constitutionality of the bill, if enacted into law.

The questions are: (1) Would the payments to licensees as provided in said bill be for a public purpose? (2) Would said bill be constitutional if enacted into law?

Liquor licenses are licenses in the technical sense, which are revocable at pleasure without assignment of reasons by the granting authority, and are not intended to confer vested property rights in the holder. Jubinville v. Jubinville, 313 Mass. 103 , 106. G. L. c. 138, § 23. See art. 59 of the Amendments to the Constitution of the Commonwealth.

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As stated in the preamble to the order, the General Court under the general police power may revoke all liquor licenses in the Commonwealth without compensation to the holders, but may not arbitrarily revoke licenses of individual licensees. [Note 1] Also as stated in the preamble to the order, the General Court may provide for the revocation of all licenses of a class without compensation, such as the licenses of holders who, as a class, are not actively engaged in the exercise of their license privilege. Under G. L. c. 138, §§ 12, 15, and c. 140, §§ 4-6, a license must be exercised on approved premises and cannot exist as a roving license, and therefore, in case of a license issued to do business on premises taken by public authority, upon the expiration of the four year period during which the license is reserved for him under the provisions of § 23B, the holder loses all right to the license. New City Hotel Co. v. Alcoholic Beverages Control Commn. 347 Mass. 539 , 541.

In Jubinville v. Jubinville, 313 Mass. 103 , 107, it was said, "While such a [package store] license is not an asset of the business which passes upon its sale, yet such a license has been considered by purchasers of such a business as something of value in excess of the license fee on account of the preferences which . . . the purchaser acquires in the renewal of such a license. . . ."

There have been numerous cases discussing what is a public purpose. Eisenstadt v. County of Suffolk, 331 Mass. 570 , 573, and cases cited. Opinion of the Justices, 347 Mass. 797 , 798-799. "The paramount test should be whether the expenditure confers a direct public benefit of a reasonably general character, that is to say, to a significant part of the public, as distinguished from a remote and theoretical benefit." Opinion of the Justices, 337 Mass. 777 , 781. "Each case must be decided with reference to the object sought to be accomplished and to the degree

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and manner in which that object affects the public welfare." Allydonn Realty Corp. v. Holyoke Housing Authy. 304 Mass. 288 , 292. "Whether an expenditure of public money is for a public purpose is a subject of judicial inquiry, and in deciding upon the validity of an enactment courts will give weight whenever possible to legislative findings of fact material in such determination." Opinion of the Justices, 337 Mass. 777 , 781, and cases cited.

While there are, of course, no legislative findings here (see Id. 781-782), there are findings of the Senate contained in the order which are entitled to weight as they constitute the framework within which the questions are asked. They are similar to the conditions upon which one of the questions was expressly predicated in Opinion of the Justices, 331 Mass. 771 , 774. Since the report of the special commission is incorporated by reference in the order, the Senate must be regarded as accepting its findings for the purpose of the order. Should the proposed bill be enacted, a full statement of findings would be desirable, and very likely necessary, to demonstrate the legislative purpose. As was said in Opinion of the Justices, 240 Mass. 616 , 618, "Where the public purpose of the appropriation of public money is not clear, a recital of facts and legislative reasons may be necessary in order to show that the purpose is in a true sense public, and not private."

"[W]hen a public purpose can be carried out or helped by spending public money, the power of the Legislature is not curtailed or destroyed by the fact that the money is paid to private persons who had no previous claim to it of any kind." Opinion of the Justices, 175 Mass. 599 , 600, where one of the questions related to whether the General Court could appropriate money to pay the widow, heirs, or legal representatives of a person who died in office, the balance of his salary for the remainder of his term. At pages 602-603, it was said, "[O]ur answer to the first of the two questions before us is that the General Court has the right to appropriate money for the purposes supposed in a case where it fairly can be thought that the public good will be

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served by the grant of such an unstipulated reward, but that it has not that right where the only public advantage is such as may be incident and collateral to the relief of a private citizen. To a great extent the distinction must be left to the conscience of the Legislature."

As is often the case, there is a double aspect to the proposed bill. First and fundamentally, there is the intention to cut down the excessive number of licensed establishments so as to eliminate conditions which, as stated in the preambles of the bill and of the commission's report, are breeding nuisances and near nuisances. Courts should be slow to go behind these findings. Viewed from that angle, the cleaning up of the city is a public purpose.

The other aspect has to do with making payments to certain individual licensees who will comprise only a small part of the total number. In this connection there is an analogy in eminent domain cases. The Legislature in providing for compensation is not limited to damages which the landowner is entitled to receive as a matter of constitutional right, but in addition may allow compensation in cases where a taking would cause great hardship to an owner whose property has been damaged if he should be deprived of compensation. United States Gypsum Co. v. Mystic River Bridge Authy. 329 Mass. 130 , 137, and cases cited. Holbrook v. Massachusetts Turnpike Authy. 338 Mass. 218 , 222. Here again there would be a question for the conscience of the Legislature, which might recognize that changes in permitted land uses in much of the city through urban renewal, with the resultant practical limitation on available sites for the transfer of licenses, might lead to serious hardship to many licensees (see Jubinville v. Jubinville, 313 Mass. 103 , 107) and so create a moral obligation to make compensation. The sale of intoxicating liquor under license is lawful, and licensees, who lose their licenses without fault on their part, may be considered by the Legislature as entitled to the benefit of such a moral obligation as a physician practising under a license (see Earle v. Commonwealth, 180 Mass. 579 , 582-583) or a gypsum

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company (see United States Gypsum Co. v. Mystic River Bridge Authy. 329 Mass. 130 ). For this reason we do not apply the analogy of Arens v. Rogers, 240 Minn. 386, 401-407. As in the Opinion of the Justices, 175 Mass. 599 , supra, our answer to the first question is that the Legislature has a right to appropriate as suggested when it fairly reaches the conclusion that the public good will be served by payments to licensees. On this assumption we answer "Yes" to question 1.

Question 2 apparently asks us to express an opinion generally as to the constitutionality of the bill as a whole. This is an abstract question of law. The Justices have always felt that they cannot be required to answer general questions as to constitutionality even with reference to a specific bill. Opinion of the Justices, 328 Mass. 679 , 691. Opinion of the Justices, 333 Mass. 773 , 782. Opinion of the Justices, 347 Mass. 789 , 791. Opinion of the Justices, 347 Mass. 797 , 798. We shall, however, construe question 2 as supplementary to question 1 and, hence, as an inquiry with respect to the constitutionality of Senate No. 1042 as authorizing expenditures for a public purpose.

Much which we have said in answer to question 1 is here pertinent. Another point which occurs to us is the provision for reduction in amounts payable respectively at the end of one year and at the end of two years. This could be a method of accelerating the achievement of the main purpose of the act. So viewed the unequal payments would not be discriminatory, and on that supposition we answer "Yes" to question 2.

We do not regard ourselves as requested to consider in any other respect the validity of the arrangements outlined in Senate No. 1042.

RAYMOND S. WILKINS

JOHN V. SPALDING

ARTHUR E. WHITTEMORE

R. AMMI CUTTER

PAUL G. KIRK

JACOB J. SPIEGEL

PAUL C. REARDON

FOOTNOTES

[Note 1] General Laws c. 138, § 64 (as amended through St. 1964, c. 64), provides in part, "The licensing authorities after notice to the licensee and reasonable opportunity for him to be heard by them, may modify, suspend, revoke or cancel his license upon satisfactory proof that he has violated or permitted a violation of any condition thereof, or any law of the commonwealth."