Greensboro Elks Lodge v. North Carolina Board of Alcoholic Control , 27 N.C. App. 594 ( 1975 )

BRITT, Judge.

Respondent-appellant contends that the court erred in concluding that applicable statutes require State and local A.B.C. and law enforcement officers to request and obtain permission to enter the premises of a permittee, and that the evidence with respect to selling whiskey and gambling presented to respondent’s hearing officer in the case at hand was inadmissible. We think the contention has merit.

G.S. 18A-19 (c) reads as follows:

“(c) All State A.B.C. officers shall have authority to investigate the operation of the licensed premises of all persons licensed under this Chapter, to examine the books and records of such licensee, to procure evidence with respect to the .violation of this Chapter or any rules and regulations adopted thereunder, and to perform such other duties as the Board may direct. A.B.C. officers shall have the right to enter any licensed premises in the State in the performance of their duty, at any hour of the day or night. Refusal by a permittee or by any employee of a permittee to permit such officers to enter the premises shall be cause for revocation or suspension of the permit of the permittee.”

G.S. 18A-20(b) reads as follows:

“(b) Within their respective jurisdictions, all sheriffs, deputy sheriffs, municipal police, and local A.B.C. officers, as well as rural police and other local law-enforcement officers, shall have authority to investigate the operation of premises licensed under any provision of this Chapter and to procure evidence with respect to violations of this Chapter or any rule or regulation promulgated pursuant thereto. These law-enforcement officers shall have the right to enter the .licensed premises in the performance of their duties at any hour of the day or night.” (Emphasis ours.)

The Twenty-First Amendment to the Federal Constitution redelegate's authority for the control and regulation of intoxicating' beverages to the states. Joseph E. Seagram & Sons v. Hostetter, 384 U.S. 35, 16 L.Ed. 2d 336, 86 S.Ct. 1254 (1966). It appears that all of the states have established regulatory systems to control the sale and distribution of alcoholic beverages, North Carolina’s comprehensive plan being set forth in Chapter 18A of the General Statutes.

Some of the control mechanisms contained in our statutes are’provisions for permits and licensing of outlets for distribution of alcoholic beverages. G.S. 18A-19 empowers respondent’s agents to investigate facilities of permittees. Mere refusal of entry upon demand for inspection constitutes an adequate ground for revocation of permits under this section.

Recognizing the complexity of the problem and the necessity for effective statewide enforcement, the General Assembly enacted G.S. 18A-20 authorizing local law enforcement agencies to inspect facilities dispensing intoxicating beverages under permit. It appears that G.S. 18A-20(b), by authorizing local officers to enter and inspect the premises of permittees at any hour of the day or night, might afford them greater authority than that given state agents under G.S. 18A-19.

These statutes are aimed at a similar problem. Analogous in function, they are to be construed cumulatively as part of a regulatory package although not necessarily in pari materia as held by the superior court. Stevenson v. Durham, 281 N.C. 300, 188 S.E. 2d 281 (1972). See, e.g., 2A Sutherland Statutory Construction §§ 51.02-51.03 (C. Sands rev. 3d ed. 1973). The language is clear and unambiguous. To engraft the implied demand and refusal provision of G.S. 18A-19(c) onto the broad right of entry and inspection of G.S. 18A-20(b) would, in our opinion, frustrate legislative purpose.

Respondent challenges the superior court’s ruling that prior determination of inadmissibility barred use of evidence obtained by Officers Dotson and Tysinger by respondent in administrative proceedings to revoke petitioner’s permits. We agree with respondent.

Judge Alexander’s grant of petitioner’s motion to suppress was not dispositive of the competency of evidence in a subsequent administrative proceeding. Freeman v. Board of Alcoholic Control, 264 N.C. 320, 141 S.E. 2d 499 (1965). Thus, we proceed to analyze the competency of the evidence introduced before respondent’s hearing officer.

Petitioner relies on the New York case of Finn’s Liquor Shop Inc. v. State Liquor Authority, 24 N.Y. 2d 647, 301 N.Y.S. 2d 584, 249 N.E. 2d 440 (1969) (2 Judges dissenting), rehearing denied, 25 N.Y. 2d 777, 303 N.Y.S. 2d 526, 250 N.E. 2d 583 (1969), cert. denied, 396 U.S. 840, 24 L.Ed. 2d 91, 90 S.Ct. 103 (1969). This reliance is misplaced. The opinion in Finn involved determination of three license suspension cases consolidated for appeal all of which contained Fourth Amendment infractions inapposite the facts presented by this case. In Finn, officers violated the Fourth Amendment rights of defendants by searches which went beyond their statutory authority. In this case there was no ransacking or breaking and entering. Pursuant to G.S. 18A-20, Greensboro police officers had the right to go upon and enter petitioner’s premises, at any time day or.night and procure evidence of violation of State A.B.C. regulations. Further, in Finn Liquor Authority agents were held to be a part of the prosecution function on equal footing with the district attorney’s office; therefore, even though not a party' to the original proceeding, they were precluded by the prior determination of inadmissibility. Here, neither respondent nor petitioner was a party to the original criminal prosecution.

The sale and distribution of intoxicating spirits is a privilege subject to stringent state sanctions due to its sensitive nature and high potential for corruption and vice. Crowley v. Christensen, 137 U.S. 86, 34 L.Ed. 620, 11 S.Ct. 13 (1890). Compare, Note, Liquor License-Privilege or Property?, 40 Notre Dame Law. 203 (1965). This position has been recognized by the United States Supreme Court even where the scope of state regulation impinges upon constitutionally guaranteed freedoms. California v. La Rue, 409 U.S. 109, 34 L.Ed. 2d 342, 93 S.Ct. 390 (1972). See generally, Kamenshine, California v. La Rue; the Twenty-First Amendment as a Preferred Power, 26 Vand. L. Rev. 1035 (1973).

Entertainment regulation aimed at sexually titilating performances has been held valid under the Twenty-First Amendment. California v. La Rue, supra. Similar exercises of the police-power focusing on obscenity have been felled on First Amendment grounds as barriers to freedom of expression. Roaden v. Kentucky, 413 U.S. 496, 37 L.Ed. 2d 757, 93 S.Ct. 2796 (1973). States have acted within the Fourteenth Amendment’s equal protection guarantee denying liquor licenses to private clubs precluding Negroes from membership. B.P.O.E. No. 2043, of Brunswick v. Ingraham, 297 A. 2d 607 (Me. 1972), appeal dismissed, 411 U.S. 924, 36 L.Ed. 2d 386, 93 S.Ct. 1893 (1973). (3 Justices dissenting) ; rehearing denied, 412 U.S. 913, 36 L.Ed. 2d 977, 93 S.Ct. 2288 (1973). See Moose Lodge No. 107 v. Irvis, 407 U.S. 163, 32 L.Ed. 2d 627, 92 S.Ct. 1965 (1972).

It has been held that where officers, without a warrant, enter commercial of private premises by breaking locks and tearing down doors, there is a clear violation of Fourth Amendment rights. Colonnade Catering Corp. v. United States, 397 U.S. 72, 25 L.Ed. 2d 60, 90 S.Ct. 774 (1970). In this case, however, there was no breaking and entering by the police. There were: no violations of petitioner’s rights under the Fourth Amendment.

It is recognized that within the Fourth Amendment there áre several different gradations .of reasonableness. Different standards apply to a home from those applicable to a business or motor vehicle. Commercial premises are covered under the Fourth Amendment. See v. Seattle, 387 U.S. 541, 18 L.Ed. 2d 943, 87 S.Ct. 1737 (1967). The context of an administrative inspection or search is such, however, that entry otherwise than by warrant is not per se unconstitutional. Camara v. Municipal Court, 387 U.S. 523, 18 L.Ed. 2d 930, 87 S.Ct. 1727 (1967). While there is a right to require a search warrant, that right arises upon demand for entry and refusal. Camara v. Municipal Court, supra.

The sensitive nature of certain trades gives rise to a corresponding state interest in regulating and controlling trade practices. Certainly, this is true where the authority to regulate is delegated to .the states under the mandate of constitutional amendment. The United States Supreme Court has distinguished searches of. regulated trades, such as the spirit industry.

“A central difference ... is that businessmen in such . . . licensed and regulated enterprises accept the burden as well as the benefits of their trade, .... The businessman in a regulated industry in effect consents to the restrictions placed upon him.” Almeida-Sanchez v. United States, 413 U.S. 266, 271, 37 L.Ed. 2d 596, 601, 93 S.Ct. 2535, 2538 (1973).

We are impressed with the logic of the dissenting judges in Finn, that by seeking liquor licenses, licensees (here per-mittees) waive their Fourth Amendment rights and consent to administrative searches. Finn’s Liquor Shop Inc. v. State Liquor Authority, 24 N.Y. 2d 647, 301 N.Y.S. 2d 584, 595, 249 N.E. 2d 440, 448 (1969) (dissenting opinion). See, e.g., United States v. Duffy, 282 F. Supp. 777 (S.D.N.Y. 1968). A similar doctrine of implied consent appears well recognized in this State. See generally, G.S. 20-16 (Driver’s license suspension) ; Honeycutt v. Scheldt, 254 N.C. 607, 119 S.E. 2d 777 (1961) (Driving privilege held conditional on obeying the law) ; G.S. 148-42 (Conditional release of inmates by Parole Commission) ; State v. Caudle, 7 N.C. App. 276, 172 S.E. 2d 231 (1970), rev’d other grounds, 276 N.C. 550, 173 S.E. 2d 778 (1970) (Sentence suspended on certain conditions). We feel that by seeking a permit, petitioner waived its Fourth Amendment right to the limited extent of inspection incident enforcement of State A.B.C. regulations.

Officers knew with certainty that intoxicating beverages were dispensed under permit at petitioner’s lodge hall. They had reason to believe that liquor was being dispensed in violation of the conditions of these permits and that gambling was being allowed on the premises. Under G.S. 18A-20(b) they had a right to go upon and enter petitioner’s lodge building at any time day or night in order to inspect for compliance with State A.B.C. regulations. By virtue of G.S. 18A-43(a) either infraction would be sufficient in and of itself to warrant a revocation of petitioner’s permits. Respondent found that petitioner had allowed its premises to be used for gambling as well as selling alcoholic beverages in violation of State A.B.C. regulations. We think the findings are correct and are supported by material and substantial evidence. Where the findings of respondent Board are supported by material and substantial competent evidence as here, they are conclusive on review by the superior court. Parker v. Board of Alcoholic Control, 23 N.C. App. 330, 208 S.E. 2d 727 (1974).

By Chapter 316 of the 1973 Session Laws, the General Assembly submitted to a statewide referendum the question of legalizing the sale of whiskey by the drink in North Carolina. In said referendum, held on 6 November 1973, the people of our State voted overwhelmingly against the proposition submitted, thereby establishing the public policy of our State on that question. By virtue of its police powers, the General Assembly, by the enactment of general criminal statutes, particularly G.S. 14-292, et seq., has condemned gambling and the operation of.gambling establishments in this jurisdiction. State ex rel. Taylor v. Carolina Racing Ass’n, 241 N.C. 80, 84 S.E. 2d 390 (1954) ; State v. Felton, 239 N.C. 575, 80 S.E. 2d 625 (1954). It behooves the courts not to treat lightly public policy duly established.

For the reasons stated, we hold that the superior court erred in entering the order appealed from. The order is vacated and this cause is remanded to the superior court with direction that it enter an order affirming respondent’s order suspending petitioner’s permits.

Reversed and remanded.

Judges Parker and Clark concur.