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RITZ v. RAFAIL (01/02/51)

January 2, 1951

RITZ
v.
RAFAIL, APPELLANT



Appeal, No. 75, March T., 1950, from decree of Court of Common Pleas of Fayette County, in Equity, No. 1942, in case of Nick Ritz et ux. v. Ferris Rafail et al. Decree, as modified affirmed.

COUNSEL

Alex Z. Goldstein, with him Goldstein & Goldstein, for appellants.

T. A. Waggoner, Jr., with him J. C. Glassburn, for appellees.

Before Drew, C.j., Stern, Stearne, Jones, Ladner and Chidsey, JJ.

Author: Stern

[ 366 Pa. Page 274]

OPINION BY MR. JUSTICE HORACE STERN

On July 1, 1946 Nick Ritz and Elizabeth Ritz, plaintiffs, leased to Ferris Rafail and Elias Rafail, defendants, the property situate at 98 E. Main Street, Uniontown, for a term of 5 years at a rental of $125 per month. The lessees covenanted that they would use

[ 366 Pa. Page 275]

    and occupy the premises only as a restatement and that they would not "attempt at any time during the term of this lease to remove or transfer from the said demised premises the restaurant liquor license issued by the Liquor Control Board of the Commonwealth of Pennsylvania, under penalty of instant forfeiture and the right of re-entry for such breach." The property had been used as a restaurant for many years during all of which a liquor license was maintained there, the licensee being either the lessors themselves or their tenants.

Defendants gave to one Esther Salaim, a relative by marriage, a judgment note of $5,000 for money alleged to be due her for a loan. On May 17, 1948, having issued execution on the note, she purchased at sheriff's sale the fixtures and personal property in the restaurant, said to be worth about $3,500, for $18.25; the fixtures were removed and defendants abandoned the premises and paid no rent after May 1, 1948. After returning the license to the Pennsylvania Liquor Control Board at Harrisburg where it is now being held, they executed a bill of sale purporting to transfer the license to Esther Salaim in satisfaction of her judgment, subject to the approval of the Liquor Control Board. The court below found as a fact that the purpose of this alleged sale was to evade their agreement that they would not attempt to remove or transfer the license. Since their surrender of the license to the Board they have been making payments for its renewal from year to year. Plaintiffs have resumed possession of the property and since January 1, 1949 have been operating it as a restaurant on their own account. They brought a bill in equity against defendants for an injunction to restrain the latter from selling, transferring or removing the license from the leased premises. The court below granted a perpetual injunction against a transfer and sale to any other person or to another location.

[ 366 Pa. Page 276]

It is defendants' contention that a liquor license is not a property right but only a privilege, (Spankard's Liquor License Case, 138 Pa. Superior Ct. 251, 259, 10 A.2d 899, 903) and that therefore equity has no jurisdiction to enforce a covenant not to sell or transfer it. Whatever, however, may be the nature or legal status of a liquor license as between the State and the licensee, negative covenants such as that here involved, as well as affirmative agreements to transfer such licenses, have been uniformly enforced in our appellate courts, subject always, of course, to the approval of the Liquor Control Board to any transfer: Cochrane v. Szpakowski, 355 Pa. 357, 49 A.2d 692; Pavlick v. Zellermeyer, 359 Pa. 278, 59 A.2d 92; Rekas v. Dopkavich, 362 Pa. 292, 66 A.2d 230; Guzzi v. Czaja, 163 Pa. Superior Ct. 597, 63 A.2d 426. See also the following lower court decisions: DiPietro v. Cichilli, 38 D. & C. 404; Yuengling Realty Co. v. Basarob, 49 D. & C. 449; Volosin v. Letchko, 39 Luzerne Legal Register Reports 210; Procopio v. Staskiel, 70 D. & C. 252. It would be unrealistic to fail to recognize that a liquor license is of a peculiar value to the premises, especially where, as in the present case, it appears that the number of existing retail liquor licenses exceeds the legal quota, thereby preventing the issuance of any new licenses by the Board. Once a property has been fitted and equipped for use as a restaurant, and especially if it has long been operated as such, the removal of the liquor license therefrom undoubtedly depreciates the value ...


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