State Ex Rel. Grimes v. Board of Commissioners

The noted author of the law on municipal corporations, Mr. Dillon, in Dillon on Municipal Corporations, vol. II, sec. 675, p. 1020, footnote, states the rule to be: "But when the statute prescribes the qualifications of the persons who may be licensed, the city cannot by ordinance prescribe additional qualifications under its power to restrain, license, etc. Territory v. Robertson, 19 Okla. 149, 92 P. 144." It will be noted from the language used that the board of city commissioners of the city of Las Vegas attempted by section 7 of its ordinance to reserve unto themselves an arbitrary discretion to refuse to grant or renew each or any license. They fix no standard of additional qualifications, even if they had the power so to do. Such standard would have to be general in its nature, apply equally and with uniformity. The attempt to reserve the power to reject without regard for the right of the applicant or regardless of any reason for their acts is void. By such method there is no safeguard to preclude them from acting from ulterior motives, nor to prevent their following their mere whim and caprice. 43 C.J. 243; Smith v. Hosford Building Inspector (Kans.), 187 P. 685; Yick Woo v. Hopkins, 30 L.Ed. 220; Cicero Lumber Co. v. Town of Cicero, 176 Ill. 9, 51 N.E. 758, 42 L.R.A. 696; 28 Cyc. 368. From the language used in the resolutions adopted by the board of city commissioners in their meeting of April 17 it is apparent that their phraseology and ideas in their application of their power under section 7 of ordinance 165 are, almost verbatim, from the opinion in the Nebraska case of In Re Jugenheimer, 116 N.W. 966, 18 L.R.A. (N.S.) 386. It is respectfully urged that the said Nebraska decision is not in accordance with the great weight of authority, nor with sound constitutional principles. Marksville v. Worthy, 123 La. 432, 49 So. 11, 131 Am. St. Rep. 353; 43 C.J. 228; Curran Bill Posting, etc. Co. v. Denver, 47 Colo. 221, *Page 366 107 P. 261, 27 L.R.A. (N.S.) 544; Robinson v. Wood,196 N.Y.S. 209; State v. Stahlman, 81 W. Va. 335; 94 S.E. 497, L.R.A. 1918c, 77; Fruth v. Charleston, 75 W. Va. 456, 84 S.E. 185, L.R.A. 1915c, 981; 43 C.J. 229; Dobbins v. Los Angeles, 195 U.S. 223,49 L.Ed. 169. The board had authority to prohibit gambling in all its various forms, but did not see fit to exercise such power as a matter of public policy, but on the contrary clearly adopted a different policy by permitting open gambling in the city of Las Vegas and issuing six licenses therefor. Not having exercised its power to prohibit generally, it cannot deny equal protection of the law and equal privileges by arbitrarily granting some licenses and refusing others when the latter are equally worthy and qualified. 43 C.J. 232; Tuggman v. Chicago, 78 Ill. 405, under "Discussion of Rule"; Franz Gunnarssolin v. The City of Sterling, 92 Ill. 5696; Zenome v. Mound City, 103 Ill. 552; Monmouth v. Popol, 183 Ill. 634; Cairo v. Feuchter, 159 Ill. 155; People v. Van Cleave, 183 Ill. 330, 55 N.E. 698, 47 L.R.A. 795. Under the guise of "regulation" the city board has no authority to prohibit as to certain persons and allow as to others similarly situated, as same would create and foster a monopoly. Dillon Municipal Corporations (5th ed.), vol. II, sec. 661, p. 994; sec. 676, p. 1021; 19 R.C.L. sec. 4, p. 10, 11; Melos v. Milwaukee, 149 N.W. 882; Eubank v. City of Richmond (U.S.), 57 L.Ed. 1567; Bear v. Cedar Rapids (Ia.), 126 N.W. 324, 27 L.R.A. (N.S.) 1150; City of Richmond v. Douglas (Ind.), 13 L.R.A. 587, and footnote, "Municipal ordinances, etc."; City of Montpelier v. Mills (Ind.), 85 N.E. 6. Such discrimination as is attempted by said ordinance 165 and by the resolutions and actions of the city board pursuant thereto, in the case at bar, constitutes an invasion of the rights of petitioners under art. 14 of the amendments to the constitution of the United States, and is a violation of similar rights of *Page 367 petitioners under secs. 1 and 8 of art. I of the constitution of the State of Nevada. Ex Parte Levy, 43 Ark. 42, 51 Am. Rep. 550; 15 R.C.L. on p. 307; State of Louisiana ex rel. Edward Galle v. City of New Orleans, 67 L.R.A. 70. Since section 13b of the 1931 gambling act reserved to incorporated cities the power only to "fix, impose and collect a license tax" in such cases where such powers were conferred by the charter or organic law of such incorporated city, the 1931 amendment to the city charter expressly conferred upon the board of city commissioners the additional express powers of regulation and prohibition of gaming carried on within the limits of the incorporated city of Las Vegas. This special act relating to the city of Las Vegas differs from the general gambling act with respect to such powers of regulation and prohibition, and the effect is to suspend in the city of Las Vegas the operation of the general act with respect to such difference. Tilden v. Esmeralda County (Syl. 2), 32 Nev. 319; 19 R.C.L. sec. 112, p. 805, n. 9; Joyce on Intoxicating Liquors, sec. 204, p. 240, 241, n. 1, and cases cited; State ex rel. Crumpton v. Montgomery,177 Ala. 212, 59 So. 294. We submit that the case of Smyth v. Butters (Utah),112 P. 809, 32 L.R.A. (N.S.) 393, is in itself decisive of the case at bar. Neither the provisions of the city charter or of ordinance No. 165 are mandatory upon the board to grant a license; in fact, the ordinance specifically provides that "the board of city commissioners, in the exercise of their discretion, may refuse to grant or renew the license provided for in this ordinance, etc." The proceedings of the board of city commissioners, set forth as exhibits to the petition, show examination, consideration, and inquiry respecting the application, and further show the exercise of a reasonable discretion in the rejection of the petitioner's application. There is nothing whatever in the record, except *Page 368 the conclusions and opinions of the pleader to show that the rejection of petitioners' application was wrongful, unlawful, unreasonable, arbitrary, whimsical and/or capricious. The court should assume that public officers will act from proper motives until the contrary appears. Perry v. Salt Lake City (Utah), 25 P. 739, 11 L.R.A. 446, at p. 448; New York ex rel. Lieberman v. Van De Carr (U.S. Sup. Ct.), 50 L.Ed. 305, at p. 310; State ex rel. Crumpton v. Montgomery, 177 Ala. 212,59 So. 294, at 302. From the foregoing it clearly appears that the respondents have not failed to perform an act which the law especially enjoins as a duty resulting from an office, trust or station, nor that the petitioners have been denied a right to which they are entitled. There being no mandatory provisions in the charter of the city nor in its ordinance No. 165 as to the issuance of gaming licenses, then the right to carry on the business of gaming is a mere privilege and not a vested right. Such is the rule with respect to licenses to engage in the sale of intoxicating liquors, and by analogy the same rule applies to gaming licenses. Section 7 of ordinance No. 165 purports to confer a broad discretion on the board of commissioners to refuse to grant a license, and does not prescribe therein a rule of action. We contend that the power so conferred was proper, and that the ordinance is valid and enforceable. 12 A.L.R. p. 1435 et seq., p. 1453. For illustration of uncontrolled discretion granted licensing boards, see, Darby v. Pence (Ida.), 107 P. 484, 27 L.R.A. (N.S.) 1194; Downes v. McClellan (Colo.), 210 P. 397; 38 C.J. 689, n. 97 and cases cited; 33 C.J. 552; Black on Intoxicating Liquors, sec. 170, p. 211, 212; sec. 171, p. 214, 215; Joyce on Intoxicating Liquors, secs. 268, 269, p. 318-321; 33 C.J. sec. 148, p. 553; 33 C.J. sec. 494, p. 554; Perry v. Salt Lake City (Utah), 25 P. 739, 11 L.R.A. 446; State v. Gray (Conn.), 22 A. 675; Engel v. O'Malley, 182 Fed. 365. *Page 369 The record in this proceeding clearly shows that a reasonable discretion was exercised by the city board in rejecting the application of petitioners. What constitutes arbitrary action is clearly defined in the case of Smyth v. Butters, supra. The rule is well settled that local authorities may, in the exercise of reasonable discretion, limit the number of licenses to be granted for the sale of intoxicating liquor. Brown v. Jugenheimer (Neb.), 116 N.W. 965, 18 L.R.A. (N.S.) 386; People v. Harrison (Ill.), 99 N.E. 903. OPINION 1. This is an original proceeding in mandamus wherein petitioners seek to have this court compel the respondents to grant them a gaming license to open, conduct, and carry on in the city of Las Vegas a gambling game known as craps. A demurrer was filed to the petition, which of course admits the well-pleaded facts. Among these facts are the following: On the 30th day of March, 1931, the respondent board of city commissioners adopted an emergency ordinance to prohibit gaming and the operation of slot machines in the city of Las Vegas, without first obtaining a license therefor. This ordinance is designated as ordinance No. 165, and contains seventeen sections. Petitioners filed their application for said gambling license with the city clerk of the city of Las Vegas on the 7th day of April, 1931. On the same day and subsequent to the filing of petitioners' application the board laid over for future consideration the applications of one Ethel W. Genther and one C.H. Mackay for gambling licenses, and granted gambling licenses to the following named applicants: The Boulder Club, the Las Vegas Club, A.T. McCarter at the Exchange Club, and to Sticker and Morgan at the Northern Club, and adopted the following resolution: "Resolved: That this Board *Page 370 of City Commissioners of the City of Las Vegas not grant any gambling licenses except to those places of business that held gambling licenses in the previous quarter and that new licenses not be considered until a zone is established for the operation of gambling houses, and a policy is adopted by the Board governing the issuance of new licenses." On the 17th day of April, 1931, the board adopted a resolution rejecting petitioners' application for a gambling or gaming license. In this resolution rejecting petitioner's application the following reason for such refusal is given, to wit: "For the reason that under Ordinance No. 165 of said City six gaming licenses (exclusive of licenses issued solely for the operation of slot machines) have already been issued in this city and upon careful consideration of the question we believe that public interest requires that no additional licenses (other than licenses solely for the operation of slot machines) and for additional games, at the location for which license is already granted, under the provisions of section 9 of said Ordinance No. 165, `Any licensee holding a valid existing license from the City of Las Vegas, and from the County of Clark, State of Nevada, for a current quarter may, during such current quarter, secure a license for additional slot machines, games or devices, as the case may be, over and above the particular number of slot machines, games or devices for which, he, they or it holds a license, for the remainder of the quarter by paying to the City Clerk the license fee above provided, for the additional particular slot machine, game or device, as the case may be, and for which the City Clerk shall issue an additional license for the remainder of such quarter, and the additional license shall be upon the same terms and conditions as though issued under the provisions of section 8 of this Ordinance,' be granted in this city in excess of the number already granted, until the further order of this Board and until further or other gaming licenses (other than licenses solely for the operation of slot *Page 371 machines) are reasonably necessary for the accommodation of the public and the granting of such further or other licenses will not contravene public interest and will not require an excessive amount of police protection for a city the size of Las Vegas, Nevada, having in mind the funds provided for police protection under the City's 1931 and 1932 Budgets heretofore adopted, and the state of the City funds applicable to police protection." Section 7 of ordinance No. 165 provides as follows: "The Board of City Commissioners, in the exercise of their discretion, may refuse to grant or renew the license provided for in this Ordinance, to any person, firm, association or corporation, and may also revoke any license granted hereunder, if in their judgment or discretion it should appear to them that the licensee is not a proper person, firm, association, or corporation to carry on or conduct the slot machine, device and/or game for which the license is granted, or that such slot machine, device and/or game is not being properly or fairly conducted. Upon such revocation the City of Las Vegas shall be entitled to retain the license fee theretofore paid for such license." It is alleged that petitioners have no right of appeal from the action of the board, or any other plain, speedy, or adequate remedy at law. It is further alleged that petitioners possess all of the qualifications prescribed by law or by any ordinance of said city of Las Vegas for gambling or gaming licenses, and the refusal to grant them a license was arbitrary and unlawful. The same contention was made by petitioner in his oral argument and in his memorandum thereof filed herein. The argument is this: That, inasmuch as the 1931 gambling act prescribes no qualifications other than that the applicant must be a citizen of the United States, the council is powerless to prescribe additional qualifications, but must on proper application grant a license to any such, or, if they have any discretion, must exercise it through some prescribed standard general in its nature, which will apply equally to all; that otherwise the *Page 372 issuance of a license would rest within the power of the council to grant or refuse at their mere whim or caprice and therefore amount to a discrimination unlawful under the constitution. It is argued that section 7 of the ordinance is void for the reason that it gives the council the power to discriminate in the matter of issuing licenses. The contention that the discretion to grant or withhold a license must be exercised through some prescribed uniform rule of action finds support in the leading case of Yick Wo v. Hopkins,118 U.S. 356, 6 S.Ct. 1064, 30 L.Ed. 220, and a number of state decisions accepting the doctrine there announced. It is to be noted that the case of Yick Wo and those adhering to its doctrine were dealing with some useful business or calling in which a property right or vested interest could be acquired. Even among such, exceptions to the establishment of some uniform rule of action have been recognized, as in cases where it was difficult or impracticable to lay down a definite comprehensive rule; St. Louis Consolidated Coal Co. v. Illinois, 185 U.S. 203,22 S.Ct. 616, 46 L.Ed. 872; Ex Parte Whitley, 144 Cal. 167, 77 P. 879, 1 Ann. Cas. 13, or where the determination of personal fitness was involved, State ex rel. Minces v. Schoenig, 72 Minn. 528,75 N.W. 711. But it has been held that, for the carrying on of a business of a character regarded as tending to be injurious, such as dealing in intoxicating liquor, a wide discretion may be given to licensing officers to grant or withhold a license without prescribing definite and uniform rules of action. State ex rel. Crumpton v. Montgomery et al., 177 Ala. 212, 59 So. 294; Perry v. City Council, 7 Utah, 143, 25 P. 739, 740, 998, 11 L.R.A. 446; In Re Jugenheimer, 81 Neb. 836, 116 N.W. 966, 969, 18 L.R.A. (N.S.) 386. We think the distinction drawn between a business of the latter character and useful trades, occupations, or businesses is substantial and necessary for the proper exercise of the police power of the state. Gaming as a calling or business is in the same class as the selling of *Page 373 intoxicating liquors in respect to deleterious tendency. The state may regulate or suppress it without interfering with any of those inherent rights of citizenship which it is the object of government to protect and secure. 12 R.C.L. 709. The legislature of 1931, by an act approved March 19, 1931, has sanctioned divers forms of gambling under license. Stats. 1931, p. 165 et seq. The only qualification prescribed by the statute is that the applicant for a license must be a citizen of the United States. Section 1. 2-4. The legislature has, however, by amendment enacted subsequently to the passage of the 1931 gambling act, to wit, on March 27, 1931, clothed the board of commissioners of the city of Las Vegas with power in the premises. Stats. 1931, p. 374, 381, 382. In section 10 of the amendment appear the following delegations of power to the board of commissioners: "To fix, impose and collect a license tax on all * * * games and gaming houses; to license and regulate gambling as allowed by law and to prohibit gambling in all its various forms." That the board of commissioners has power under this amendment to regulate gambling in the city of Las Vegas, and has power, notwithstanding the legislature has legalized gambling, to absolutely prohibit it within the city limits, or prohibit it in part by zoning, cannot be denied. The power to restrict the number of licenses in the city is, we think, a very necessary implication from the power to license and regulate gambling. This discretion is derived from the police power of the state. It is necessarily incidental to the delegated power to license and regulate. On account of the nature of the business of gambling, which is capable of being so conducted as to be a source of evil, a very wide discretion is thus conferred, not only to restrict the number of licenses in the city, but to pass all reasonable rules and regulations concerning it which the city authorities may deem necessary for the police government of the municipality. The wide discretion conferred upon a city in the *Page 374 power to regulate a business of this character and the reasons for it are well discussed in Perry v. City Council, supra. The court said in the body of the opinion: "The question now comes, has the council any further discretion with respect to granting such licenses? [Licenses to sell intoxicating liquors.] Under its power to regulate, has it any discretion as to the person to whom licenses shall be granted, as to the place of business, or as to the number of licenses to be granted? * * * "It is apparent from the act under consideration that the intention of the legislature in conferring on the council the power to regulate the sale of liquor was to enable that body to protect society from the evils attending it. * * * "The authority is delegated to the councilmen as reasonable men, and with the expectation that they will employ reasonable means. To intrust the privilege of selling intoxicating liquors to persons whose antecedents, habits, and characters are such as to inspire confidence in them, and warrant the belief that they would not violate the law by selling to minors, habitual drunkards, or intoxicated persons, and would be likely to conduct their business in other respects with due regard to good morals and the peace and happiness of society, would appear to be within that discretion included in the right to regulate. * * * "A saloon along-side of a school-house or a church would be very undesirable, and to establish one along-side of a man's home would be regarded as very objectionable. To authorize the retailing of liquors in the midst of the homes of the people would be palpably wrong. Neighborhoods infested with liquor saloons are not suitable communities for boys and girls to grow up in; and so a limitation of the number of places for retailing intoxicating liquors in a city would be a reasonable regulation. "Because the council may be authorized to license liquor sellers it does not follow that they must license all who may apply. * * * "General tests might be established by ordinance, by *Page 375 which to determine the fitness of persons to be intrusted with the business of selling liquor, and ordinances might be adopted designating localities in which the business may be conducted, and limiting the number. But we are not prepared to say that the business may not be regulated in such respects without ordinance. "The charter confers the power to regulate the traffic upon the city, without expressly requiring it to be exercised by ordinance. But it is said that the councilmen may act from mere whims, caprice, partiality, or prejudice unless the regulation is by ordinance. The court should assume that public officers will act from proper motives until the contrary appears. "It is also claimed that the court must presume that the council acted arbitrarily or without sufficient reason in refusing the license, because no reason appears upon its record. The court will not assume that the council refused the license arbitrarily, and without sufficient reason, without some proof. Being public officers, and acting under the sanction of an oath, the court will assume that they acted lawfully until the contrary appears." In concluding its opinion, the court decided: "After a careful consideration of the statutes, the ordinances, and the cases cited, we hold that the defendant possesses the power to license, regulate, and tax the liquor business, and that in the use of such authority it may exercise a reasonable discretion in determining who are suitable persons to intrust the business to, the places where it may be conducted, and the number of licenses it will issue, and that the council may exercise that discretion when the application is made, when it has not done so by ordinance before, and that the court will not assume that the council acted arbitrarily, or from any improper motive, without some evidence to that effect. The writ of mandamus is denied." The section of the statute under which the foregoing decision was rendered, aside from certain prohibitions and details, reads: "The city council shall have the following powers: (40) To license, regulate, and tax the *Page 376 manufacturing, selling, giving away, or disposing of in any manner, any * * * intoxicating liquors." It is said in Crowley v. Christensen, 137 U.S. 86-91,11 S.Ct. 13, 15, 34 L.Ed. 620, as to the sale of intoxicating liquors: "The police power of the state is fully competent to regulate the business, to mitigate its evils, or to suppress it entirely. * * * As it is a business attended with danger to the community, it may, as already said, be entirely prohibited, or be permitted under such conditions as will limit to the utmost its evils. The manner and extent of regulation rest in the discretion of the governing authority." In the instant case the manner and extent of regulation within the city limits has been delegated to the discretion of the governing authority of the city, and, unless we can say that that discretion has been exercised in an arbitrary manner, the writ of mandamus must be denied. In the case of In Re Jugenheimer, supra, the power of a city council to limit the number of saloons in a city was squarely before the court, and squarely decided in favor of such power. The court in its opinion in the Nebraska case cited, among others, the case of State ex rel. Howie v. Common Council of City of Northfield, 94 Minn. 81, 101 N.W. 1063, which held: "The question whether a license for the sale of intoxicating liquors shall be granted to an applicant therefor within the city of Northfield rests in the sound judgment and discretion of the common council, in the exercise of which they act judicially, and not ministerially, and their action cannot be controlled or reviewed by mandamus. The council may, if in its judgment the best interests of the inhabitants of the city demand it, limit the number of saloon licenses to be granted." The Nebraska court quoted approvingly from the body of the opinion of the Minnesota court as follows: "The provisions of the charter vest in the common council authority to regulate and control the sale of intoxicating liquors within the city, and, in exercising that *Page 377 authority, the council is clothed with discretionary powers, the exercise of which cannot be controlled by the courts. The power to regulate and control includes the power to do all that is deemed, in the judgment of the council, for the best interests of the municipality and its inhabitants. It necessarily confers the power to refuse a license, or to limit the number of licenses to be granted, when, in the judgment of the council, the welfare of the city suggests such action." As to the claim made in the instant case that the city authorities must prescribe some general standard of action, the court, in the case of In Re Jugenheimer, said: "While it might be better to formulate a rule limiting the number of saloons prior to the time set for applying for a license, and then to devise some equitable way in which the licenses shall be awarded, we cannot say that the failure of the board to proceed in this manner is so objectionable as to require a reversal of its action." The generality of the doctrine of the foregoing cases is mentioned by Mr. Black in his work on Intoxicating Liquors. He says: "The rule obtains in a few of the states that if a person who desires a liquor license brings himself within the terms of the law, by complying with all the statutory preliminaries, and possessing the requisite moral and other qualifications, he is entitled as a matter of law to be licensed, and the license cannot be withheld from him. But in far the greater number of states, the doctrine is now well settled that the court or board charged with the duty of issuing licenses is invested with a sound judicial discretion, to be exercised in view of all the facts and circumstances of each particular case, as to granting or refusing the license applied for. The principle is, that the licensing authorities act judicially, and not merely in a ministerial capacity. In determining the nature, as well as the existence, of this discretion, much will depend upon the language of the local statute, and this, of course, should be carefully scrutinized. But the general disposition, under all the diverse forms of statutory provisions, is to leave a *Page 378 wide margin of discretion to the court or board hearing the application." See Muller v. Buncombe County Com'rs., 89 N.C. 171. 5. We conclude that the denial of petitioners' application for a license to conduct in the city of Las Vegas a gambling game known as craps was in the exercise of a sound discretion, and that the writ prayed for should be denied. In so holding we would not have it understood that we are of the opinion that the board could have granted the six licenses and denied petitioners' application by the process of selection merely. They could not do so in a case of this character any more than they could in the case of a harmless business useful in its tendency, without being guilty of that discrimination which is inhibited by our constitution. In the case of In Re Jugenheimer, supra, the excise board, in the resolution denying the application, stated the number of licenses already issued, and stated it was their belief that the public interest required that no additional licenses be granted. This was a statement of a legal reason for denying the application. 6-8. The same reason was given by the board in the case before us. It is evidence showing that the board did not act arbitrarily in granting six licenses in the city and denying petitioners' application. This, together with the presumption that officers who are acting under the sanction of an oath will act lawfully, is sufficient, in the absence of any evidence to the contrary, to rebut the claim of unlawful discrimination. While the board of commissioners was empowered to exercise such discretion independently of section 7 of ordinance No. 165, we are of the opinion that it was within the power of the board to adopt this section. The writ of mandamus is denied.