Nine, Inc. v. City of BrookingsAnnotate this Case
Appellees Nine, Inc. and GDT, Inc. own and operate a private bar and/or restaurant businesses in Brookings. These businesses are authorized to sell alcoholic beverages under operating agreements with Brookings. Appellees sought a declaration that a Brookings ordinance and resolution establishing the fee for additional full-service restaurant on-sale liquor operating agreements/licenses violated state law because the fee was based on city population rather than the market value of existing operating agreements/licenses. Brookings is a "local option community" in that there is only one liquor "license" and that license is held by the city. Local option cities then enter into "operating agreements" with private businesses to sell alcoholic beverages. Because there are technically no licenses or license sales to determine current fair market value, a question arose whether Brooking's operating agreements should be considered the same as licenses for the purpose of determining the fee under SDCL 35-4-117. Brookings took the position that because there wee no "license sales upon which current market value could have been established under the statute, the city was authorized to set the new license fee at the minimum amount based on population as provided for in SDCL 35-4-116. Appellees brought suit; the circuit court ruled that the operating licenses were the same as licenses for the purposes of determining the fee under the new statutes. The court declared the Brookings ordinance and resolution invalid because they established the new license fee at an amount far less than current fair market value under SDCL 35-4-117. On review, the Supreme Court found that the circuit court correctly determined the Brookings ordinance and resolution were invalid and affirmed the lower court's decision.