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1412 SPRUCE v. COMMONWEALTH PENNSYLVANIA (04/18/84)

decided: April 18, 1984.

1412 SPRUCE, INC., APPELLEE,
v.
COMMONWEALTH OF PENNSYLVANIA, PENNSYLVANIA LIQUOR CONTROL BOARD, APPELLANT



No. 6 E.D. Appeal Docket, 1983, Appeal from the Order of the Commonwealth Court at No. 2438 C.D. 1981, entered December 22, 1982, Nix, C.j., and Larsen, Flaherty, McDermott, Hutchinson, Zappala and Papadakos, JJ. Larsen, J., files a dissenting opinion which Hutchinson and Zappala, JJ., join.

Author: Flaherty

[ 504 Pa. Page 396]

OPINION OF THE COURT

This case involves the issue of whether a liquor license is personal property subject to the execution process. The question arose when appellee, 1412 Spruce, Inc., closed its business and, pursuant to standard Pennsylvania Liquor Control Board (hereinafter PLCB) procedures applicable in these circumstances, forwarded its restaurant liquor license to the PLCB for safekeeping. A holder of an outstanding money judgment against appellee filed a writ of execution directing the Sheriff of Dauphin county to attach and publicly sell appellee's liquor license. The Board was served a copy of this writ as garnishee, and it turned over the license to the Sheriff, who conducted a public sale on or about July 31, 1981, at which the license was sold for $95.14.

Appellee, 1412 Spruce, Inc., then sought a preliminary injunction in Commonwealth Court to enjoin PLCB from transferring or issuing its restaurant liquor license to a successful bidder at a public sale. Commonwealth Court issued a preliminary injunction, and subsequently a summary judgment in favor of appellee, reasoning that the appellee's liquor license "continues as a personal privilege and does not constitute a property right subject to the execution process." 70 Pa. Commw. 501, 505, 453 A.2d 382, 384 (1982). The Liquor Control Board appealed from this order granting summary judgment.

Appellant's primary argument is that although a restaurant liquor license is a privilege as between the licensee and the Liquor Control Board, it is property as between the licensee and third parties, and is, therefore, subject to the execution process. Pa.R.C.P. 3107, which deals with the levy and attachment of real or personal property, and which governs the attachment in this case, provides:

Real or personal property of the defendant may be levied upon or attached in any order or simultaneously, as the plaintiff may direct.

[ 504 Pa. Page 397]

(Emphasis supplied). Since the license in this case was attached pursuant to Rule 3107, in order for the attachment to be permissible, we must hold that the license is "property." However, as Commonwealth Court pointed out, section 468(b.1) of the Liquor Code, referring to instances in which a liquor license is placed in safekeeping with the PLCB, states in pertinent part that "'[t]he license shall continue as a personal privilege granted by the board and nothing herein shall constitute the license as property.'" 70 Pa. Commw. at 503, 453 A.2d at 383. (Emphasis in original).*fn* Thus, if we were to view the license as a privilege between the licensee and the board, but as property between the licensee and the rest of the world, we would be doing so in the teeth of the statute, which plainly states that the license shall not be construed as property. Nevertheless, appellant asserts, ostensibly on the authority of Pennsylvania case law, that the license must be so viewed.

One of the cases cited by appellant, Kosco v. Hachmeister, 396 Pa. 288, 152 A.2d 673 (1959), concerns a liquor business which was destroyed when a landslide ruined the building, an inn, in which the business was conducted. At issue in that case was the measure of tort damages against the person who caused the landslide. The lower court set damages at the value of the building and the land at the time of the destruction, the cost of demolition of the building, lost profits, and the cost of license fees for two years until the end of the innkeeper's lease. This Court disallowed the value of the land (under applicable case law) and license fees (because they were merely a cost of doing business against which profits were calculated) but allowed the value of the building, demolition costs, and lost profits as measures of damages. In response to the argument that a liquor license is not a property right, the Court stated:

This may be admitted, but if a man has a privilege and is prevented from exercising it by another's fault, he loses value during the running period of the privilege.

[ 504 Pa. Page 398396]

Pa. at 293, 152 A.2d at 676. (Emphasis supplied). As this quotation indicates, the Kosco Court acknowledged that a liquor license was not property, although it was necessary to conduct a retail liquor business. Thus, the Court allowed damages for the lost profits of the business which would have been made possible had the business continued to operate with Kosco holding a liquor license; damages were not awarded for loss of the license itself.

In Feitz Estate, 402 Pa. 437, 167 A.2d 504 (1961), this Court held that where a licensee has a statutory right to designate the person who may apply for the transfer of his license after his death, "and, in the absence of such designation, the surviving spouse or personal representative may do so . . . . the right to apply for a transfer of the license is a property right" subject to Pennsylvania inheritance tax. 402 Pa. at 445, 167 A.2d at 508. (Emphasis added). This holding, by its terms, states that the right to apply for transfer is a property right, not that the license itself is an item of property.

Finally, in Redevelopment Authority of Philadelphia v. Lieberman, 461 Pa. 208, 336 A.2d 249 (1975), in the context of a condemnation proceeding, this Court stated:

The fact that a liquor license is sometimes referred to as a "privilege" rather than a "right" is irrelevant to the issue before us . . . . Rigid labels, such as "right" or "privilege," cannot determine a person's constitutional and statutory right to "just compensation."

(Emphasis supplied). 461 Pa. at 225, 336 A.2d at 258. This Court also observed in Lieberman:

The issuance of a liquor license in Pennsylvania constitutes governmental "permission" to use particular premises for a particular purpose . . . . Unless we bog down in technical and unrealistic concepts, it cannot be disputed that a liquor license adds significant use value to a particular premises . . . .

The use value added to a particular premises by a liquor license is not unlike the use value which a premises enjoys because it ...


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