61 Op. Att'y Gen. 180 (1972)
 
61 OAG 180  181 182 183 184 185 186

Wisconsin Attorney General Opinions

6 April 1972.

Liquor License   Competitive Bidding

The issuance of a liquor license on the basis
of competitive bidding constitutes a
violation of Section 176.05(4), Stats.

A town, being a municipal corporation, is not
within the definition of "person" appearing
in Section 176.41, Stats.

RUSSELL FALKENBERG,
District Attorney, Chippewa County

You inquire as to the legality of issuing a
liquor license to the highest bidder
Specifically, you pose the following
questions:

1. In the event the town of Hallie did
   place a liquor license up for bids and
   the license fees as determined on the
   basis of the highest bid were in excess
   of the fees charged for the same class
   of license to other licensees of that
   class, or in the event the license fee
   was in excess of $500 on the basis of
   the high bid, would the town of Hallie
   be in violation of the Wisconsin
   statutes?

61 OAG 180  181 182 183 184 185 186

2. If the town of Hallie is in violation of
   the statutes, would Section 176.41,
   Stats., apply to the town of Hallie, a
   municipal corporation, when the statute
   refers to "any person"?

As you note in your letter, Section
176.05(4), Stats., establishes the maximum
and minimum amounts which can be charged for
liquor licenses.

The same statutory section requires
that the fees for all licenses within
the same class be the same.

Any fees which are not within
these limits are invalid.

See

State ex rel. Torres v. Krawczak (1935),
217 Wis. 593, 598,
259 N.W. 607

and

35 OAG 206 (1946)

Any license issued by the town of Hallie for
a fee exceeding the maximum allowed under
Section 176.05(4), Stats., would be void
"No license shall be issued to any person
in violation of this chapter and any
license so issued shall be void."

Section 176.05(5), Stats.

If the town collects, in any manner or form,
more than the maximum allowed by Section
176.05(4), Stats., as a license fee, the
license issued shall be void.
 

If the town charges an amount for the license
in question which is different from the
amount charged to other licensees of
that class, the license so issued is
issued in violation of Section 176.05(4),
Stats., and, therefore, would be void.

Section 176.05(5), Stats.

The answer to question 1 above
is clearly "yes."

Furthermore, whether or not the license fee
as determined by the high bid was less than
$500 or not more than the license fee charged
to other licensees of the same class, any
attempt to issue a liquor license on the
basis of competitive bidding would be
void at the outset.

Not only would the issuance of a liquor
license on the basis of competitive bidding
be contrary to the statutes, it would be
unconstitutional as well Article VIII,
Section 1, of the
Wisconsin Constitution reads in part:

   The rule of taxation shall be uniform.

61 OAG 180  181 182 183 184 185 186

It seems clear that the town of Hallie
wishes to issue the liquor license on
the basis of competitive bidding for
the purpose of raising revenue.

The Wisconsin Supreme Court has said:

   . . police power must not be employed
   for the primary purpose of raising
   revenue but rather must be designed
   to promote the public welfare.

Milwaukee v. Hoffmann (1965),
29 Wis.2d 193, 198, 199,
138 N.W.2d 223.

It is beyond dispute that liquor licensing
is an exercise of the police power.

State ex rel. Martin v. Barrett (1946),
248 Wis. 621, 626,
22 N.W.2d 663.

In

Odelberg v. Kenosha (1963),
20 Wis.2d 346, 349-350,
122 N.W.2d 345,

the Wisconsin Supreme Court quoted from

Zodrow v. State (1913),
154 Wis. 551, 555, 556,
143 N.W. 693,

with respect to the justification for
involving the police power on the traffic
and sale of intoxicating liquors:

   The justification for the exercise of
   the police power in restraining or
   prohibiting the sale of intoxicating
   liquors has been stated and restated by
   the courts time and again.

   It may be summed up as resting upon the
   fundamental principle that society has
   an inherent right to protect itself;

   that the preservation of law and order
   is paramount to the rights of
   individuals or property in manufacturing
   or selling intoxicating liquors;

   that the sobriety, health, peace,
   comfort, and happiness of society demand
   reasonable regulation, if not entire
   prohibition, of the liquor traffic
   Unrestricted, it leads to drunkenness,
   poverty, lawlessness, vice, and crime of
   almost every description Against this
   result society has the inherent right to
   protect itself   a right which antedates
   all constitutions and written laws   a
   right which springs out of the very
   foundations upon which the social
   organism rests, a right which needs no
   other justification for its existence or
   exercise than that it is reasonably
   necessary in order to promote the
   general welfare of the state.

61 OAG 180  181 182 183 184 185 186

In
Milwaukee v. Hoffmann, supra,
29 Wis.2d, at 199-200,
the Wisconsin Supreme Court said:

   This court has previously examined the
   question of the constitutional propriety
   of imposing license fees.

In

State ex rel. Attorney General
v.
Wisconsin Constructors (1936),
222 Wis. 279, 289,
268 N.W. 238,

appears the following:

   The distinction between a tax and
   an imposition under the police
   powers is well stated in
   4 Cooley, Taxation (4th ed.),

   Page 3511:

   The distinction between a demand of
   money under the police power and one
   made under the power to tax is not so
   much one of form as of substance. The
   proceedings may be the same in the two
   cases, though the purpose is essentially
   different The one is made for regulation
   and the other for revenue.

   If the purpose is regulation the
   imposition ordinarily is an exercise of
   the police power, while if the purpose
   is revenue the imposition is an exercise
   of the taxing power and is a tax.

   If, therefore, the purpose is evident in
   any particular instance, there can be no
   difficulty in classifying the case and
   referring it to the proper power. . .

Page 3513

   Only those cases where regulation is the
   primary purpose can be specially
   referred to the police power.

   If revenue is the primary purpose and
   regulation is merely incidental the
   imposition is a tax; while if regulation
   is the primary purpose the mere fact
   that incidentally a revenue is also
   obtained does not make the imposition a
   tax, although if the imposition clearly
   and materially exceeds the cost of
   regulation inspection or police control,
   it is generally held to be a tax or an
   illegal exercise of the police power. .

This problem was also considered in

Tesch v. Board of Deposits (1941),
237 Wis. 527, 532,
297 N.W. 379,

where this court stated as follows:

   Chapter 34, Stats., does not create a
   tax, but an exaction made under the
   police power.

State ex rel. Attorney General v.
Wisconsin Constructors,
222 Wis. 279, 289,
268 N.W. 238.

Hence there can be no claim that it violates
the uniformity of taxation clause in the
Wisconsin Constitution
Section 1 Article VIII.

The constitutional tests are whether the
action was in a legitimate field for the
exercise of police power to promote the
public welfare, and whether the means
bear a reasonable relation to that end.

State ex rel Carter v. Harper,
182 Wis. 148, 152,
196 N.W. 451;

Purity Extract Co. v. Lynch,
226 U.S. 192, 201,
33 Sup.Ct. 44, 57 L.Ed. 184."

61 OAG 180  181 182 183 184 185 186

As may be noted, not only must liquor
licensing not be utilized for the purpose
of raising revenue, licensing in exercise
of the police power must be conducted
in such a way as to affect all those
within a class equally.

Milwaukee v. Rissling (1924),
184 Wis. 517, 519,
199 N.W. 61,

affirmed
271 U.S. 644,
46 S.Ct. 848,
70 L.ed. 1129.

As the court stated in
Milwaukee v. Kaun (1931),
204 Wis. 103, 106,
235 N.W. 551:

   It is generally understood that a proper
   basis for classification existing and
   natural and reasonable grounds therefor
   appearing, legislation recognizing the
   distinction and affecting all within the
   class equally does not offend against
   the constitutional regulations
   protecting individual rights.

It should be noted parenthetically that a
liquor license may not enter into an
enforceable agreement to transfer a
liquor license because of the personal
nature of the benefit resulting from
the holding of a liquor license and
the personal nature of the obligations
imposed on each licensee   i.e., a
liquor license is not assignable.

Marquette Savings and Loan Association v.
Twin Lakes (1968),
38 Wis.2d 310, 315,
156 N.W.2d 425,

and

State v. Bain (1898),
100 Wis. 35, 38,
75 N.W. 403.

With regard to the second question you pose
above, the town of Hallie, being a municipal
corporation as defined in Section 60.01,
Stats., would not be a "person" within the
meaning of Section 176.41, Stats., since
the word "person" as used in Chapter 176
includes "firm, partnership, corporation
or association."

Section 176.01(13), Stats.

This definition of "person" in Section
176.01(13), Stats., is narrower than the
definition of "person" in Section 990.01(26),
Stats., as including all "partnerships,
associations and bodies politic and
corporate."

While theoretically the word "corporations"
as used in Section 176.01(13), Stats., might
refer to municipal corporations within the
meaning of Art. XI, secs. 2 and 3 of the
Wisconsin Constitution, a search of other
provisions of the Wisconsin statutes dealing
with the word "corporation" reveals that the
word is not used in connection with municipal
corporations.

61 OAG 180  181 182 183 184 185 186

Moreover, if it was the intent of the
legislature to include a municipal
corporation such as the town of Hallie,
within the definition of Section 176.01(13),
Stats., the broader definition could have
been used such as that contained in Section
990.01(26), Stats., where "person" is defined
to include "bodies politic and corporate."

From the context of the other provisions of
Chapter 176, Stats., a town was not intended
by the legislature to be within the
definition of "person" in that chapter.

This does not mean that you are powerless
to take action, however.

The individual members of the town board may
be charged with a violation of Section
176.05(4), Stats., and punished as
provided in Section 176.41, Stats.

Moreover, a nuisance action pursuant to
Chapter 280, Stats., may be brought against
any firm or individual purporting to be
lawfully engaged in the business of selling
alcoholic beverages under a license that was,
in fact, void when granted within the meaning
of Section 176.05(5), Stats., and such
establishments may be closed.

Section 176.72, Stats.,

and

State ex rel. Martin v. Barrett (1946),
248 Wis. 621,
22 N.W.2d 663

Any individual or firm purporting to sell
liquor under a void license may be penalized
as provided in Section 176.04(1), Stats.,
since a sale under a license that was
void when issued is the same as
a sale without a license.

Furthermore, if you notify the board of the
town of Hallie that the issuance of a liquor
license on the basis of competitive bidding
is in violation of the statute, the town
board, as a body politic and corporate within
the meaning of Section 990.01(26), Stats.,
may be charged with misconduct in public
office, specifically Section 946.12(2),
Stats., which prohibits an act known to
be in excess of lawful authority or
known to be forbidden by law when
done in an official capacity.

However, I must assume that the board of the
town of Hallie will act in accordance with
the law and there will be no need to consider
any action once the board has been informed.

RWW:GLF

61 OAG 180  181 182 183 184 185 186