Atlanta Beer Distributing Co. v. Alexander

HOLMES, Circuit Judge. This is an appeal from an order made by respondent on April 29, 1937, denying the application of petitioner for a permit authorizing it to engage in the business of purchasing at wholesale wine and malt liquors and to engage in the receipt, sale, and shipment in interstate and foreign commerce of the alcoholic beverages so purchased. Following an examination of its application for such permit, respondent served upon petitioner notice of a contemplated' denial thereof because of a failure to prove to the satisfaction of respondent that, by reason of its business experience and trade connections, or of its officers, directors, and principal stockholders, it was likely to maintain in conformity with federal law the operations authorized by the permit sought. Pursuant to the statute, 27 U.S.C.A. § 204(b), a hearing was had upon the appli [12] cation, at which testimony was taken in support of and in opposition to the issuance of the permit. On January 19, 1937, the officer who conducted the .hearing filed his report, in which he found that by reason of the criminal record of Oran E. Dodd, its president-treasurer and sole stockholder, the applicant was not likely to maintain its operation in conformity with federal law; and, accordingly, he recommended that the application be denied. Exceptions were filed to this report, which were overruled by the Administrator after he had' heard oral argument thereon. The statutes involved are sections 203(c) and 204(a) and (b), title 27, U.S.C.A. (sections 3(c) and 4(a) of the Federal Alcohol Administration Act, approved August 29, 1935, as amended, 49 Stat. 1152). Said section 203(c) provides, in part: “It shall be unlawful, except pursuant to a basic permit issued under this chapter by the Administrator— “(1) to engage in the business of purchasing for resale at wholesale distilled spirits, wine, or malt beverages; or “(2) for any person so engaged' to receive or to sell, offer or deliver for sale, contract to sell, or ship, in interstate or foreign commerce directly or indirectly or through an affiliate, distilled spirits, wine, or malt beverages so purchased. “This subsection shall take effect July 1, 1936.” Said section 204(a) is as follows: “The following persons shall, on application therefor, be entitled to a basic permit: “(1) Any person who, on May 25, 1935, held a basic permit as distiller, rectifier, wine producer, or importer issued by an agency of the Federal Government. “(2) Any other person unless the Administrator finds (A) that such person (or in case of a corporation, any of its officers, directors, or principal stockholders) has, within five years prior to date of application, been convicted of a felony under Federal or State law or has, within three years prior to date of application, been convicted of a misdemeanor under any Federal law relating to liquor, including the taxation thereof; or (B) that such person is, by reason of his business experience, financial standing, or trade connections, not likely to commence operations within a reasonable period or to maintain such operations in conformity with Federal law; or (C) that the operations proposed to be conducted by such person are in violation of the law of the State in which they are to be conducted.” Petitioner contends that the criminal record of Dodd, its president-treasurer and sole stockholder, was insufficient as a matter of law to warrant respondent’s action in finding that it, as a corporation, is not likely to operate in conformity with federal law. This contention involves a consideration of the nature of the appellate procedure before us, as well as of what took place before the hearing officer and the Administrator. The procedure on appeal to this court is set forth in paragraph (h) of sai.d section 204 (27 U.S.C.A.), wherein it is provided that an appeal may be taken by the applicant for a permit from any order of the Administrator denying the application. Such appeal shall be taken to this court, within sixty days after the entry of said order, upon a written petition praying that the order of the Administrator be modified or set aside. Upon service of a copy of the petition upon the Administrator, he is required to file in the proper court a transcript of the record upon which the order complained of was entered. Upon the filing of such transcript, such court shall have exclusive jurisdiction to affirm, modify, or set aside such order in whole or in part. No objection to the order shall be considered by the court unless it shall have been urged before the Administrator, or there were reasonable grounds for failure so to do. The finding of the Administrator as to the facts, if supported by substantial evidence, is conclusive. In providing for a judicial review by appeal, we think Congress did not intend to vest this court with the administrative ■power to determine whether or not the permit should be granted. Therefore, we should not substitute our judgment for that of the Administrator, who is an administrative officer with only quasi judicial functions. When the transcript of the record is filed in this court, the proceedings become wholly judicial. If supported by substantial evidence, we are conclusively bound by the Administrator’s findings of fact, and must affirm his order, provided he did not proceed upon a mistake of law, did not refuse to hear relevant evidence, and did not act arbitrarily or capriciously to the prejudice of the applicant. Cf. Ma-King Co. v. Blair, 271 U.S. 479, 46 S.Ct. 544, 70 L.Ed. 1046; Purepac Corporation v. Helvering (D. [13] C.) 14 F.Supp. 897. See, also, Silberschein v. United States, 266 U.S. 221, 225, 45 S.Ct. 69, 71, 69 L.Ed. 256; United States v. State Investment Co., 264 U.S. 206, 211, 44 S.Ct. 289, 290, 68 L.Ed. 639. Turning to the evidence upon which the Administrator based his findings, it appears that petitioner was incorporated under the laws of the state of Georgia, on May 4, 1935, for the purpose of selling and distributing beverages of all kinds. Its original officers and only stockholders were Oran E. Dodd, president and treasurer, and Della Moore, secretary. The latter withdrew, and' Dodd is now the sole stockholder, one of two directors, and the president-treasurer. Dodd has a criminal record with reference to the liquor business extending over a period from 1925 to 1936. It consists of five convictions in state and federal courts. It is true that he has not been convicted of a felony within five years from the date of his application, nor of a misdemeanor within three years from said date, and, therefore, petitioner is not excluded under said section 204(a) (2) (A) from the class of persons who may obtain a basic permit; but it was not denied a permit under that provision. The denial was under section 204 (a) (2) (B), because the Administrator found that by reason of its business experience and trade connections it was not likely to operate in conformity with federal law. As petitioner was not mandatorily excluded under subdivision (A) of section 204 (a) (2), it contends that Dodd’s criminal record may not be taken into consideration in denying a permit under subdivision (B). We do not concur in this view. There is a discretion vested in said respondent by said subdivision (B) to refuse to grant a permit to an applicant who is not likely by reason of his business experience to maintain operations in conformity with federal law. Dodd’s criminal record was an index to the reputation, if not to the character, of the man whose mind would direct the operations of the corporation under the permit, sought. Petitioner’s trade connections, which were with wine dealers in New York, Maryland, and California, and a large brewery in Indiana, reflected the interstate character of the business likely to be carried' on by it, if the permit applied for were granted. These facts in evidence, we think, give substantial support to the finding of the Commissioner that petitioner is not likely to maintain its operations in conformity with federal law, if said permit should be granted to it. An attack is made upon the constitutional validity of the Licensing Act, but it is not competent to make such an attack in a proceeding for a license under it. We find no reversible error in the record, and the order of the Administrator is affirmed'.