Opinion
February 4, 1929.
March 18, 1929.
Liquor law — Liquor permits — Proceedings to revoke permit — Proceedings de novo — Res judicata — Prior proceeding in equity — Act of February 19, 1926, P. L. 16.
1. Under the Act of February 19, 1926, P. L. 16, on an appeal from an order of the Alcohol Permit Board revoking an alcohol permit, the proceedings are de novo in the court of common pleas.
2. In such case, where all counsel agree that the evidence taken in a previous equity suit for padlocking, between the same parties and for the same cause of action, shall be submitted and heard, and it appears that the court decided against the permit board, the board cannot, in the subsequent proceeding, demand that the court shall reverse its opinion and sustain the board.
3. E. S. Motor Transportation Co. v. Pennsylvania Alcohol Permit Board, 295 Pa. 394, explained.
Before MOSCHZISKER, C. J., FRAZER, WALLING, SIMPSON, KEPHART, SADLER and SCHAFFER, JJ.
Appeal, No. 46, Jan. T., 1929, by defendant, from order of C. P. Northampton Co., Nov. T., 1927, No. 110, reversing decision of defendant revoking an alcohol permit, in case of Charles H. Kutz and John Cooper, trading as Bushkill Products Company, v. Pennsylvania Alcohol Permit Board. Affirmed.
Appeal from decision revoking alcohol permit. Before STOTZ, J.
The following opinion of the court below, reversing the permit, was filed by STOTZ, J.:
This is an appeal by the above named plaintiffs from the order of the Pennsylvania Alcohol Permit Board, the defendant, revoking a permit, designated as "General No. 178, Serial No. G-54," theretofore granted by the said board to the plaintiffs, trading as the Bushkill Products Company, which permit authorized them to operate a brewery or cereal beverage plant located at 58-72 Locust Street, in the City of Easton. The permit was revoked following proceedings authorized by section 13 of the Act of February 19, 1926, P. L. 16, and section 3, article XIV, and section 1, article XVI, of the general rules and regulations adopted by the board. A citation was issued against the plaintiffs June 25, 1927, which was duly served, and hearings were held by the board July 6th and 19, 1927, at which the plaintiffs appeared. On September 27, 1927, the board made the order revoking the permit.
Following this order, the plaintiffs made application for a rehearing, which was denied. An appeal petition was then filed in this court, and the board filed an answer.
The first question for consideration is whether or not the matter before us is upon a hearing de novo. Section 13 of the Act of 1926 (P. L. 16-24), provides as follows: "Any permittee, agrieved by any decision of the board, may file, within thirty days thereafter, in the court of common pleas of the county in which the permittee is resident, a petition, against the board as defendant, alleging therein the action and decision complained of and praying for a reversal thereof. Upon personal service of a summons on any member of the board, returnable within three days of the date thereof, the board shall, within one week from such return date, file an answer, in which it shall be alleged by way of defense the grounds for its decision and such other grounds as shall in the meantime accrue or be discovered. All allegations of the answer shall be deemed to stand denied without further pleading and, upon application of either party, the cause shall be advanced and heard without delay. Mere technical irregularities in the procedure of the board shall be disregarded. A judgment, sustaining the revocation of a permit by the board, shall not bar, after one year, a new application by the plaintiff for a permit, nor shall a judgment in favor of the plaintiff, prevent the board from thereafter revoking or refusing a permit, for any proper cause which may thereafter accrue or be discovered. The court shall have full power to dispose of all costs. From the judgments of the court of common pleas, appeals may be taken, as in other actions at law, but, during the pendency of any such appeal in which a former permittee is appellant, such former permittee shall not carry on any business of the kinds regulated by the act."
The language of this section of the act seems by its very terms, without expressly saying so, to indicate that a hearing de novo is intended. We have here a petition and answer, which are referred to as "pleadings." The act provides that "all allegations of the answer shall be deemed to stand denied without further pleadings," and, "upon application of either party, the cause shall be advanced and heard without delay." This implies that testimony and evidence upon matters thus automatically controverted must be submitted to the court, otherwise there would be nothing upon which the court could base a determination. In this case the defendant includes in and makes a part of its answer the testimony taken before the board at the several hearings, but this testimony merely forms a part of the "allegations," which the act says shall stand denied. Without anything further, there is no proof before us of the matter in controversy. The act specifies what the answer of the board shall contain: (a) "the grounds for its decision," and (b) "such other grounds as shall in the meantime accrue or be discovered." "In the meantime" refers, of course, to the period following the hearings before the board, at which the permittee may appear and defend himself, and preceding the filing of the answer. If the hearing before the court is not de novo (the act itself says the "cause" shall be "heard"), how and where may the permittee meet these alleged "other grounds" which the board in the meantime has discovered? The Alcohol Act of 1926 does not indicate any procedure for bringing the record or testimony before the court. When we examine the Workmen's Compensation Law (Act of June 26, 1919, P. L. 642, section 6) or the Public Service Commission Law (Act of 1913, P. L. 1347, article VI, section 18) we find that the legislature in express terms directed that the board shall certify to the court "its entire record in the matter in which the appeal has been taken, including the notes of testimony." In the case of the public service commission, the act prescribes all that the record, so certified, shall contain, including the testimony taken, the findings of fact, etc. In this regard the Alcohol Act is entirely silent, and yet the legislature had before it both of the prior acts cited. In the Public Service Act (see section 23) there is an express provision that the "notes of testimony, . . . . . . filed as aforesaid as a part of the record, shall be considered by the court as the testimony in the case." The original Workmen's Compensation Act of 1915 did not contain any provision of this character, but prescribed the following procedure (see section 425 of the act): "In such case it shall be the duty of the bureau within ten days to prepare and mail or deliver to the prothonotary . . . . . . a transcript of the agreement or finding of fact and award or disallowance of compensation, or modification thereof, involved in the appeal." Construing this act in McCauley v. Imperial Woolen Co., 261 Pa. 312, it was held that, "The notes of testimony are not properly a part of the record sent up on appeal by the compensation board to the common pleas, and, if they are mistakenly included in the record, they should not be considered." The present Chief Justice says, at page 320-1, "As recently stated in Franklin Film Mfg. Corp., 253 Pa. 422, 426, 'at the present time, in our law, the word "appeal" has no conclusive meaning . . . . . .; therefore it is necessary in each instance to look at the particular Act of Assembly giving the right of appeal, to determine just what powers are to be exercised by the appellate court.'
"The statute here in question makes no provision for bringing up the testimony to the courts by sealing a bill, certifying the record thereof, or other known method; more than this, the act particularly prescribes what shall be sent to the common pleas, — significantly, in view of its provisions as to the finality of the findings of fact, omitting reference to the evidence taken before the referee or board, — all of which makes it clear that the appeal to the common pleas contemplated by this statute is in the nature of a certiorari, the purpose probably being to prevent appeals to the courts, except for errors of law, and thus to hasten the final determination of claims under the act.
"It may be noted that, if the legislature had desired the testimony in workmen's compensation cases brought up on appeal, by the courts, for consideration, it knew how to accomplish this end, as shown by article VI, section 18, of the Public Service Company Law (Act of July 26, 1913, P. L. 1374, 1425), where it is provided testimony shall be certified, 'under seal,' as part of the record for consideration: see St. Clair Boro. v. Tamaqua P. E. Ry. Co., 259 Pa. 462, 467."
With this decision before it, which was handed down in 1918, the legislature of 1919 changed the law respecting appeals to the common pleas in the manner and to the extent above noted.
In the very recent case of Premier Cereal Beverage Co. v. Pa. Alcohol Permit Board, 292 Pa. 127, which was an appeal from the decree of the Common Pleas of Philadelphia County sustaining the permit board, Mr. Justice WALLING held: "The trial court properly disposed of the case on the evidence submitted to the board; as to whether, on the timely application of either party, other proof should have been received, or a hearing had de novo, we express no opinion. That question, while referred to in argument, is not raised in the record." The matters raised in the court below, and on appeal, were the constitutionality of the Alcohol Act of 1926, and the right of a trial by jury, both of which were decided against the permittee plaintiff.
In view of the fact that this question of a hearing de novo was not raised in the Premier Cereal Co. Case, there was no occasion to cite the decision in Bagley Co. v. Cameron, 282 Pa. 84, upon the argument, either in the court below or upon appeal, and so far as we know this case was not brought to the attention of the court. Bagley Co. v. Cameron, construes the character and scope of an appeal under the Act of June 14, 1923, P. L. 779, known as "The Securities Act." We quote section 19 of the Securities Act in full: "Any dealer, salesman, or agent aggrieved by any decision of the commissioner may file, within thirty days thereafter, in the Court of Common Pleas of Dauphin County, a petition against the commissioner, officially, as defendant, alleging therein, in brief detail, the action and decision complained of, and praying for a reversal thereof. Upon service of summons upon said defendant, returnable within three days from its date, the commissioner shall, within one week from such return date, file an answer, in which he shall allege by way of defense the grounds for his decision, and such other grounds as shall in the meantime accrue or be discovered. All allegations of the answer shall be deemed to stand denied without further pleading and, upon application of either party, the cause shall be advanced and heard without delay. Mere technical irregularities in the procedure of such commissioner shall be disregarded. The court's decision shall consult only the rights of the plaintiff and the protection of the public, and the commissioner shall prosecute no proceedings to obtain a reversal, modification, or a vacation of a judgment rendered in favor of the plaintiff. A judgment sustaining the refusal of the commissioner to grant or renew a registration shall not bar, after one year, a new application by the plaintiff for registration, nor shall a judgment in favor of the plaintiff prevent such commissioner from thereafter revoking or refusing to renew such registration for any proper cause which may thereafter accrue or be discovered. The court shall have full power to dispose of all costs."
When we now compare the language of the above section with section 13 of the Alcohol Act, under which this proceeding is brought, we find that the two are to all relevant intents and purposes identical. It follows, therefore, that if an appeal under the Securities Act is a proceeding de novo, an appeal under the later Alcohol Act, thus fashioned after the preceding act, is also de novo. The Supreme Court holds that section 19 of the Securities Act provides for a hearing de novo. Mr. Chief Justice MOSCHZISKER says, at page 94: "Section 19 of the act provides that 'Any dealer, salesman or agent aggrieved by any decision of the commissioner' may petition the Court of Common Pleas of Dauphin County for a hearing, and that on this hearing the court shall consider both the grounds set up by the commissioner in justification of his decision and 'such other grounds as shall in the meantime occur or be discovered'; further, that 'the court's decision shall consult only the rights of the [applicant for registration] and the protection of the public,' without regard to 'mere technical irregularities in the procedure of such commissioner.' We agree with the court below that this means a hearing de novo, and that, in the conduct of such hearing, the ordinary rules of evidence apply, although not necessarily with all the strictness that would be pursued in a trial at common law. In other words, at such hearing, much must be left to the discretion of the court, so far as the admission and rejection of evidence is concerned."
In view of the decision in Bagley Co. c. Cameron, where the situation under consideration was exactly analogous to the one in the instant case, we have no hesitancy in holding that this is a hearing de novo.
We have discussed this matter at some length because the case presents a situation that is somewhat unusual, if not anomalous. The board may cite a permittee, and revoke his permit, only for some violation of the act, or of a rule or regulation promulgated by the board under the authority of the act, or of any provision of the act to which the Alcohol Act is a supplement. (See section 13 of the act.) Both the order to show cause why the permit should not be revoked and the findings of the board, which are embodied in its answer, point to but a single date and occasion upon which the violations are alleged to have occurred, to wit, April 23, 1927. If the permittee was not guilty of any violation of the law on that date, the action of the board has nothing to sustain it. No additional grounds are alleged to have accrued since that date, or since the two hearings before the board. No evidence whatever was adduced of any transgressions either before or after April 23, 1927.
As hereinbefore noted, the proceeding to revoke the permit was instituted on June 25, 1927. Ten days prior to the issuance of the citation, to wit, on June 15, 1927, proceedings by way of a bill in equity were instituted in this court, wherein the Commonwealth was plaintiff and the Bushkill Products Company a defendant, to "padlock" the same brewery under the provision of the Act of 1926 and the Act of March 27, 1923, P. L. 34, known as the "Prohibition Enforcement Act." Exactly the same instances of law violations, occurring on the same date, were alleged in the bill as were charged against the permittee by the board. Hearings were held in the equity case, before the same judge to whom the present matter has been committed, on July 13th and September 12th. The same witnesses who testified before the board were called in the equity case, and gave substantially the same testimony. In addition, however, two other witnesses appeared and testified for the products company at the second equity hearing, who were not heard by the board. On October 31st, about a month after the board had revoked the permit, we handed down our findings of fact and conclusions of law, supported by a somewhat elaborate opinion presenting our reasons therefor, in which we held that not a single violation of law had been established against the defendants. We entered a decree nisi against the Commonwealth and dismissed the bill. To this no exceptions were filed, and the decree became final.
At the argument upon the present proceedings it was agreed by counsel for both the board and the permittee that, if we should conclude that this is a hearing de novo, no new or additional testimony shall be taken, but that the testimony taken at the several equity hearings shall be submitted and considered as if heard in this proceeding.
This presents the anomaly to which we have referred. Counsel for the board now asks us to sustain the revocation of the permit upon the same evidence which persuaded us in the equity case that no law violations had been committed. There is, however, this difference; the board did not have the benefit of the testimony of one certain witness (Kane) who testified at the last equity hearing, and whose testimony we regarded as highly important. Both the Commonwealth in the equity case and the board in this proceeding relied upon the testimony of two federal prohibition agents, who raided this brewery on April 23, 1927. They said they found illegal beer in a tank, in the pumps, the filter, and in eight half barrels on a truck in the brewery yard. They admitted that they found no beer in the racking machine, from which kegs are filled. It was not necessarily illegal to have beer of an excessive alcoholic content in the tank, pumps and filter. This depends upon the "hook-up" of the brewery, as it was called, or the method by which legal cereal beverage was manufactured. We found that the method here employed was inspected and approved by state and federal agents, and was legal; therefore, that the presence of alcoholic beer in those machines and contrivances was not in violation of the law. But the eight half-barrels on the truck in the yard, apparently ready for delivery, presented a different and, unexplained, a more damaging situation. It is true that the board heard the explanation of the manager and several others, but evidently it was not believed. We also might have taken the same view if it had not been for the testimony of the witness, Kane, who in our judgment was an entirely disinterested and credible witness. His explanation of the beer on that truck was fully satisfying, taken in connection with all the incident facts and circumstances, and wholly absolved the brewery from any connection with it. Kane was not produced by plaintiff before the board, because he could not be located in time for the hearings, and a rehearing was subsequently denied.
Nothing has been brought to our attention which tends to persuade us that we committed error in dismissing the Commonwealth's bill, and we will not now hold in this proceeding that the plaintiffs violated the law upon exactly the same evidence which moved us last October to find that they had not violated the law. We find again that on this occasion, — the only date and occasion on which they stand accused — the proof submitted does not establish any violation of either the Alcohol or the Prohibition Acts, or of any rule or regulation promulgated by the board. Consequently, we cannot sustain the board in revoking the permit.
Counsel for plaintiffs further contends that, in view of our decision in the equity case, where the parties and the subject-matter of the controversy were the same, the matter is res judicata, and in a brief, showing very diligent preparation, they cite Lowry v. Atlantic Coal Co., 272 Pa. 19; Julian v. Linder Shoe Co., 280 Pa. 566; State Hospital v. Consolidated W. S. Co., 267 Pa. 29; Hochman v. Mortgage Finance Co., 289 Pa. 260; Nernst Lamp Co. v. Hill, 243 Pa. 448; 15 R. C. L. 950, and a number of other cases. We agree with this contention, but in view of our conclusion in the matter upon the other considerations hereinbefore set forth, we shall not further lengthen this opinion by a discussion of it.
And now, February 6, 1928, the decision and order of the Pennsylvania Alcohol Board revoking the permit heretofore issued to Charles H. Kutz and John Cooper, trading as the Bushkill Products Company, to engage in the business of manufacturing cereal beverages containing less than one-half of one per cent of alcohol by volume, and forfeiting, and directing that judgment be entered upon, and proceedings instituted for the collection of, the bond given by the plaintiffs as principals and Fidelity and Deposit Company of Maryland as surety, is reversed, and judgment is entered in favor of the plaintiffs and against the defendant; the judgment entered upon the aforesaid bond is stricken off and any proceedings taken for the collection of the amount of said bond are abated. Cost to be paid by the defendant.
Decision reversed. Defendant appealed.
Error assigned was order, quoting record.
Robert M. Ewing, Special Deputy Attorney General, with him Wilhelm F. Knauer, Special Deputy Attorney General, Louis E. Graham, Legal Adviser, Sixth Federal Prohibition District, and Thomas J. Baldrige, Attorney General, for appellant.
T. McKeen Chidsey, of Kirkpatrick, Maxwell Chidsey, with him Newton R. Turner and Floyd B. McAlee, for appellee.
Argued February 4, 1929.
Plaintiffs appealed to the court below from an order of the Pennsylvania Alcohol Permit Board; after a hearing de novo, the court reversed the board, and defendant has appealed to this court.
The points involved are sufficiently and correctly covered by the opinion of the court below, and, since the opinion of that tribunal will be published in connection herewith, no useful purpose would be served by again discussing them. We may add, however, that the opinion recently filed by us in E. S. Motor Transportation Co. v. Penna. Alcohol Permit Board, 295 Pa. 394, where the court below said that its investigation started with the presumption that the board had not abused its power, is in no sense inconsistent with anything decided in the case now before us. As shown by our opinion in the Motor Transportation Case, the only allegation made by appellant in the court of common pleas and before us was that the permit board had abused its discretion by entering the order in question. There the parties and the court below did not treat the case de novo, but simply submitted the report of the board, acompanied by a transcript of the evidence before that body; and, under the circumstances, we approved what the court below said in regard to the presumption that the board had not abused its power. In the instant case, the whole matter was properly treated de novo by the common pleas; evidence was taken which was not before the board, and, on the proofs as a whole, the court below reversed the board; in this we see no error.
The order appealed from is affirmed.