Case Information

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PRICE DANIEL ATTORNEY GENERAL

THE ATTORNEY (GENERAL

OF TEXAS

AUHTIN 11. TEXAS

May 19, 1947

Honorable William N. Hensley Criminal District Attorney Bexar County San Antonio, Texas Opinion No. V-203 Re: Whether a private club, under certain prescribed conditions, would be operating in violation of constitutional and statutory provisions relative to the sale of licuor by the drink; clarification of previous opinion No. 0-7139, pertaining thereto.

Dear Sir: Your letter of March 20, 1947, requesting the opinion of this department as to the effect to be accorded previous Opinion No. 0-7139, relative to the sale of liquor in a private club, reads in part as follows: "We hereby request that your office furnish us with an opinion as to whether or not you adopt or reject Opinion No. 0-7139, approved by your predecessor on December 20, 1946. "Your predecessor delivered two contrary opinions on the matter involved, the above captioned opinion being the last one rendered. For that reason, we think it highly advisable to have the doubt thus raised resolved by you after a re-examination and re-consideration of this matter. "In the event that you adopt this opinion, we would greatly appreciate it if you would further clarify same. This opinion did not decide whether or not the fact situation presented constituted a violation of the law, but merely stated that such evidence would make a prima facie case to present to a jury. A more definite and positive

*2 Hon. William N. Hensley, Page 2 (V-203) opinion would be of great benefit to both this office and the local office of the Texas Liquor Control Board in deciding what course of action to take with respect to the San Antonio Club, whose operations constitute the subject matter of the previous opinions and of this request.

It is an extremely difficult task for this office to attempt to pass on the application of a statutory provision to a given situation which is based upon questions of fact. Such questions of fact are to be determined by a jury, or by the court in absence of a jury, and this may be subject to one construction by a given jury panel and to an entirely different interpretation by another, depending upon the credibility and weight placed upon the witnesses and their testimony, circumstantial evidence and other matters which cause the minds of reasonable men to differ. As you stated in your letter, the writer of Opinion No. 0-7139, which was released on December 20, 1946, did not pass upon the given facts as a matter of law, but only that such evidence would make a prima facie case to present to a jury.

In order for us to give an opinion as originally requested by the Honorable Bert Ford, Administrator, Texas Liquor Control Board, the manner in which the San Antonio Club is operated, as set out in Opinion No. 07139, will necessarily have to be assumed as the established facts of the case. The two letters from the Honorable Bert Ford are set out in full, in order that we may have these facts before us, as follows: "Will you please give me your valed opinion as to whether or not a place operated in the manner indicated below, where alcoholic beverages a re served, omatitute the operation of an open saloon: "The San Antonio Club, a corporation duly incorporated under the laws of the State of Texas, is the leases of approximately 1800 square feet of space located on the third floor of the Gunter Hotel. "This space was leased to the San Antonio Club for a period of five years at an annual rental of $\$5,000.00$ per year. The premises were leased for occupancy as a private club and the

*3 lessee agreed to all public laws pertaining to the operation of private clubs. "The club comprises three rooms: a reading room, a club room, and a dining room. The olub is staffed with stewards who are responsible for the general upkeep of the club; and these two stewards are hired by and their salaries are paid by the San Antonio Club. Officers of the olub and members of the club do not receive any compensation. "The Gunter Hotel services the dining room and maintains waiters for both the luncheon and dinner. "The club members pay the hotel regular room service prices, less ten per cent disdount for food. "The hotel waiters do not have access to the olub room, or the reading room. Their activities being confined strictly to the dining room. "There is a service bar in the olub room for dispensing mixed drinks only to members and their guests. "The bar is operated under what is known as the bar pool plan. Each of the seventy-five olub members have on deposit in a separate fund $\$25.00$ each, which makes a total of $\$1875.00$ . This money has been pooled together to purchase liquor for their personal use. "Purchases of liquor for the club is made by the treasurer from the holder of A Retail Package Store Permit. "In withdrawing liquor at the bar from this pool, each member uses a coupon book. Each coupon entitles the member to one drink. "All liquor purchased for the olub is placed on the back bar or is stored in a small room behind the bar. "Club members obtain coupon books from the stewards.

*4 Horn. William N. Hensley, Page 4 (V-203) "At the end of each month the olub member is billed for the number of coupon books he has been issued. "There are no guest cards for the San Antonio Club, and no non-member is allowed in the club room unless he is a guest of a member. No guest can obtain drinks from the bar, but a member may serve his or her guest a drink, using his or her coupon. No money at any time changes hands in the club room. "Following are the house rules of the club. "1. No ladies permitted before 5 p.m. "2. No unescorted ladies permitted at any time. "3. Members required to limit their guests to four -- if more, contact the bar regarding service before arriving with the guests. "4. No gambling with guests at any time. "5. No poker allowed. "6. Club open from 11 a.m. to 12 midnight. "7. No slot machines or nickelodeons permitted on the premises. "8. No long distance phone calls or wires permitted from house phones. "9. No members or guests allowed behind the bar. "10. Members cannot mix their own drinks. "11. No member shall be permitted the privilege of bringing the same resident guest oftener than once a week. "12. Drinks cannot be served to anyone other than a member, unless accompanied by a member. "13. Members are not permitted to bring their own liquor.

*5 Ken. William N. Hensley, Page 5 (V-203) "I wish to call to your attention the following provisions of the Texas Liquor Control Act: "'Section 3, (a) of Article I. The term "open saloon" as used in this Act, means any place where any alcoholic beverage whatever, manufactured in whole or in part by means of the process of distillation, or any liquor composed or compounded in part of distilled spirits, is sold or offered for sale for beverage purposes by the drink or in broken or unsealed containers, or any place where any such liquors are sold or offered for sale for human consumption on the premises where sold.' "'Section 3(b) of Article I. It shall be unlawful for any person, whether as principal, agent or employee, to operate or assist in operating, or to be directly or indirectly interested in the operation of any open saloon in this State.' "I also wish to call your attention to Opinion No. 0-1145, approved by the Attorney General's Department on August 26, 1939. It is the contention of the San Antonio Club that Attorney General's Opinion No. 0-1145 does not cover this situation. The San Antonio Club further contends that the manner in which it operates does not violate Section 3, (a) of Article I."

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"In supplementing my letter of Maroh 7, 1946, requesting an opinion on the operation of the San Antonio Club, a corporation duly incorporated under the laws of the State of Texas, this club operates on a coupon system whereby a member may secure a coupon book containing twenty (20) coupons, of which each coupon is worth fifty cents( $\$\mathrm{.50}$ ) each making the coupon book cost a total of $\$10.00$ . "In each instance of where a member purchases a drink of whiskey, mixed or otherwise, it is necessary that the member and the olub steward countersign each coupon. Each drink of whiskey, either mixed or otherwise, has a cost of fifty cents ( $\$\mathrm{.50}$ ) regardless of the type drink purchased. "The club member does not pay for his coupon

*6 Hon. William N. Hensley, Page 6 (V-203) books until the end of the month, at which time the secretary bills him for the number of coupon books that he has received during the month. "The tressurer of the San Antonio Club purchases all liquors to be used by the club and payment for these liquors is made from the funds, which were originally set up as explained in my previous letter. "Moneys derived from the sale of coupon books is placed in the fund at the end of each month."

It appears to us that the primary question involved in this situation is whether there is a sale from the olub to the individual members when a drink of whiskey is served. The authorities discussed by the writer of Opinion No. 0-7139 will be used here, in so far as they are applicable.

Krnavek v. State, 41 S. W. 612 (Court of Criminal Appeals) holds: "The question here is whether the sale of intoxicants by the managing steward or barkeeper of the olub to one of the members of said olub is a sale. We are of the opinion that it is. When the intoxicants were bought by the steward, or any other member of the olub, with the funds of the olub, they became the property of the corpora-tion, and a sale by the steward of said corpora-. ation to any of its members was a sale, as that term is defined. It was the separation of the property of the olub, and the transfer of the same to an individual member, for which he either paid the oash, or became responsible therefor. . . . . This is not a case where parties contribute sums of money and purchase intoxicants therewith, and divide them prorete among themselves; but it is a transaction where the common assets of a continuing business are used to replenish the goods sold in that business. . . ." (Emphasis ours.) Feige v. State, 95 S. W. 506 (Court of Criminal Appeals), holds: "In any event, according to our view, the

*7 From the authorities cited, supra, and many other authorities found by a careful search in connection with the questions involved in this request, we are of the opinion that under the facts which, as stated at the outset, we are necessarily aneeming to be established, there is a "sale" of whiskey from the olub or steward as agent for the olub to the members. The facts stated in the cited oases are not dissimilar to the facts involved in the operation of the San Antonio Club as set out in the letters from the Honorable Bert Ford. Under such holdings, the manner in which the San Antonio Clab is being conducted

*8 Horn. William N. Hensley, Page 8 (V-203) is clearly in violation of Artiole 666-3, Parsgraph (a) of Yernon's Penal Code of Texas. The money which each member places in the "pool", becomes the common property of the club, and the liquor purchased by the treasurer with this money becomes the property of the club. Therefore, when a drink is served to an individual member and he becomes liable for the "coupon" given for such drink, it is a "sale" of the property of the club to the member. We concede that the members of the San Antonio Club do not have the intention or disposition to violate the provisions of the Texas Liquor Control Act, but, in view of the authorities relative to what constitutes a sale in such cases, we are bound to hold that such conduct does amount to a violation of the hereinabove mentioned provisions of the Penal Code.

Upon determining that a "sale" is made by the Club or by the steward, as agent for the club, to the members, the next question Anvolved is whether such a sale under Article 666-3, Paragraph (a), Yernon's Penal Code of Texas, would be prohibited in a "wet" area as well as in a "dry" area, inasmuch as the violations in the cited cases occurred in a "dry" area. This is specifically passed on by the Court of Criminal Appeals in Shelton v. State, 138 S. W. (2d) 1078, in the following language: "This is a case of first impression where we are asked to determine whether or not the law forbidding an 'open saleen' applies to the 'wet' or to the 'dry' territory within the state. It is our view that the law prohibits an open saleon within the state without reference to other conditions, and that the operation of an open saleon, as defined by statute, is a violation of the law wherever situated." (Emphasis ours.)

We wish to point out that the method of operation involved here is to be distinguished from the one, which we are informed, is being used at the Houston Club in Houston, Texas, and other clubs over the State, where individual lookers are provided for the members of the club. In those situations, there would not be a sale of liquor as there the individual would be providing his own liquor, and it would not be purchased by the treasurer out of funds belonging to the club thereby becoming the property of the olub.

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Hon. William N. Hensley, Page $9$ (V-203)

This opinion is not to be construed as overruling former Opinion No. 0-7139, but only that such opinion is qualified by our taking various conditions as established rather than leaving them for determination by a jury.

SUMMARY

If an offloer of a private club purchases liquor from funds furnished by individual members to the club, such-11quor becomes the common property of the club. When a drink is delivered by the steward to a member, and is paid for in the manner provided by the club, it constitutes a "sale" by the club to the individual member. (Krnavek v. State, 41 S. W. 612; Feige v. State, 95 S. W. 506; Adams v. State, 145 S.W. 940.) Such a sale is in direct violation of the provisions of Article 666-3, Parsgraph (a), Vernon's Penal Code of Texas. This statutory prohibition applies equally to "wet" areas and "dry" areas. (Shelton v. State, 138 S. W. (2d) 1078.)

APPROVED MAY 21, 1947

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