356 N.E.2d 704 | Mass. | 1976
ARTHUR B. POWERS, JR. & others
vs.
SIXTY BROADWAY, INC. & another.
Supreme Judicial Court of Massachusetts, Norfolk.
Present: HENNESSEY, C.J., REARDON, BRAUCHER, KAPLAN, & WILKINS, JJ.
Daniel H. Kelleher for Sixty Broadway, Inc. (Paul W. Goodrich, for Cornelius J. Murphy, with him).
Howard M. Miller for the plaintiffs.
Evan T. Lawson & Howard J. Wayne, for the Massachusetts Beverage Association, amicus curiae, submitted a brief.
BRAUCHER, J.
Twelve legal voters of the town of Norwood sought and obtained an injunction under G.L.c. 139, § 16A, as appearing in St. 1973, c. 1114, § 12, against the exercise of privileges by the defendant Sixty Broadway, Inc. (the corporate defendant), under a package store license. The defendants appealed, and we transferred the case to this court on our own motion. A judge of the Superior Court made detailed findings of fact and ruled that Robert White, the owner of the corporate defendant, and four other corporations constitute a "combination of persons," prohibited by G.L.c. 138, § 15, from holding more than three liquor licenses. The defendants contend that that ruling was erroneous in the absence of a finding of common management control. We hold that such a finding is not required. Cf. Cleary v. Cardullo's, Inc., 347 Mass. 337, 347-348 (1964). We affirm the judgment.
We summarize the judge's findings. In 1974 the package store liquor license was transferred to the corporate defendant, and the transfer was approved by the selectmen of Norwood and the Alcoholic Beverages Control Commission. Robert White was to have the sole voting power in *298 the corporate defendant. His father had acquired three package stores in Roslindale, Medford and Newton, owned by three corporations. The stock in two is held by Robert White's father and mother as trustees for their four children; the stock in the third was given to the three children other than Robert White. Robert White owns and operates a fourth store in Quincy through a fourth corporation. He is sole trustee of a real estate trust formed by his father which holds title to the store premises in Medford and Quincy; the beneficiaries are the four children.
All the officers, directors and stockholders of the four corporations are members of the White family except for an attorney who is a director and the clerk of each of the four. Robert White had authority to sign checks for all four corporations until the authority was terminated in 1973 and 1974. He did substantial work for the Newton and Roslindale stores without compensation, but was paid substantially for services to the Medford store; and he borrowed $40,200 from the Medford store in 1973. Transactions among the four corporations, chiefly exchanges of liquor, involved substantial sums. They employ the same accounting firm, and had Blue Cross group insurance for their employees and a single fire and casualty policy. They all operated under the name "Atlas Liquors," carried a private brand named "Atlas," and advertised in the "yellow pages" of the telephone book under the heading "Distributors of Atlas Products."
The defendants sought to show that the litigation was financed by competing package store owners in the town of Norwood, that Robert White was a man of substantial means, that he alone controls the Quincy store, and that he has no control over the other three stores. The judge made no findings with respect to these matters. So far as appears the corporate defendant never commenced operations, and there is no finding connecting its operations with the operations of the other four corporations. There is no finding of common management control over it and the other four corporations.
Contrary to the defendants' contention, we hold that *299 there was no error in admitting evidence with respect to events prior to 1974 and with respect to the real estate trust of which Robert White was sole trustee. This evidence provided background against which the relations of the various members of the White family could be evaluated. It bore directly on their purpose and intent. See Butts v. Tiffany, 21 Pick. 95, 97-98 (1838). The judge was not bound to accept intra-family transactions at face value or as conducted at arm's-length. Cf. Lexington Nursing Home, Inc. v. Rate Setting Comm'n, 358 Mass. 601, 603 (1971). We find no abuse of discretion in inquiry into various aspects of common operation of the four corporations and into Robert White's participation therein. Cf. Cleary v. Cardullo's, Inc., 347 Mass. 337, 348-350 (1964).
The defendants' principal contention is that a finding of common management control is essential to a ruling that there has been a violation of G.L.c. 138, § 15, as amended through St. 1935, c. 440, § 12: "No person, firm, corporation, association, or other combination of persons, directly or indirectly, or through any agent, employee, stockholder, officer or other person or any subsidiary whatsoever, shall be granted, in the aggregate, more than three such [package store] licenses in the commonwealth, or be granted more than one such license in a town or two in a city." Cf. Granite State Grocers Ass'n v. State Liquor Comm'n, 112 N.H. 62, 65 (1972); New Hampshire Wholesale Beverage Ass'n v. New Hampshire State Liquor Comm'n, 100 N.H. 5, 7-8 (1955); Opinion of the Justices, 368 Mass. 857, 864-865 (1975).
Cleary v. Cardullo's, Inc., supra, is to the contrary. There a father owned stock in two corporations holding licenses to sell alcoholic beverages to be drunk on the premises, and G.L.c. 138, § 12, forbade, in language identical to that of § 15, the grant to him of a package store license. The father transferred his stock in a corporate package store licensee to his son, and the trial judge found that the father's "financial backing and support" for his son was "short of control," and did not violate § 12. Id. at 346. We reversed, saying that the grant of the license to *300 the corporate licensee was forbidden, "not only if it was in effect an agent of, or otherwise controlled by," the father, "but also if" the father, the corporate licensee, and the father's two corporations "constituted in effect a `combination of persons'" within the meaning of § 12. Id. at 347. We said that we might have determined the issue ourselves on the record before us, but we thought it more appropriate to leave the issue to be decided by the trial judge in the light of our holding.
We stand by that decision, and apply it to § 15 as well as to § 12. Common management control is one way of violating § 15, but it is not the only way. Interlocking stockholders, directors and officers, family relationships, guidance, assistance and financial support, and joint activities warranted the judge's finding in the present case that there was a "combination of persons." A friend of the court urges us not to discourage package store licensees from achieving economies of scale through joint activities. We do not pass on any such issue, or on the effect of use of the same attorney and accountant, joint bookkeeping, group insurance, joint advertising, and use of a common trade name, where the licensees are otherwise independent. Cf. J. & J. Enterprises, Inc. v. Martignetti, 369 Mass. 535, 537-538 (1976).
Judgment affirmed.