may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2000).
IN COURT OF APPEALS
In Re: City of Cannon Falls Liquor Licensing Complaint
Against Lounge Management Ltd. d/b/a Peeler’s, c/o Richard W. Jacobson.
Affirmed as modified
Cannon Falls City Council
Randall D.B. Tigue, Randall Tigue Law Office, P.A., Karmel Square Building, Suite 200, 2940 Pillsbury Avenue South, Minneapolis, MN 55408 (for relator Lounge Management, Ltd.)
Matthew K. Broki, Elliott B. Knetsch, Campbell Knutson Professional Association, 1380 Corporate Center Curve, Suite 317, Eagan, MN 55121 (for respondent City of Cannon Falls)
Considered and decided by Lansing, Presiding Judge, Stoneburner, Judge, and Mulally, Judge.
Relator Lounge Management, Ltd., d/b/a Peeler’s, challenges the six-day suspension of its liquor license by the city council for respondent City of Cannon Falls. Peeler’s argues that the findings that it sold liquor to an underage male and allowed him to leave the premises with an open bottle were not supported by substantial evidence and, alternatively, that only a three-day suspension should have been imposed because the violations constituted a first appearance before the city council. We affirm as modified.
Until July 1998, Peeler’s was located in an unincorporated area of Cannon Falls Township and held a liquor license issued by Goodhue County. In July 1998, the City of Cannon Falls annexed the area where Peeler’s was located. In November 1998, Peeler’s applied for and obtained an on-sale liquor license from Cannon Falls.
In July 1999, the Cannon Falls police department conducted an alcohol compliance check of all establishments in the city with a liquor license. As a result of the compliance check, Peeler’s was charged with two liquor license violations, selling a bottle of beer to an underage male and allowing him to leave the premises with the open bottle.
At the hearing before the city council, a police report prepared by Cannon Falls police officer Chad N. Mills was admitted into evidence. The report states that Caleb Mills, a 19-year-old male, assisted Chad Mills and another officer in conducting an alcohol compliance check of liquor-license establishments located within the city; Caleb Mills entered Peeler’s and exited two minutes later with an open bottle of beer; he advised the officers that the bartender asked him if the beer was cold enough or if he wanted a mug, but did not request identification; the officers entered Peeler’s and advised the bartender of the violations; and the bartender stated to the officers, “I was going to card him to [sic].”
The city council found that Peeler’s committed two liquor-license violations, selling alcohol to an underage person and allowing a person to leave the premises with an open bottle. The city council found that the violations constituted Peeler’s second offense of laws and ordinances governing liquor licenses. The council ordered Peeler’s liquor license suspended for six days and required Peeler’s to pay a $1,000 fine. Peeler’s does not challenge the fine on appeal.
D E C I S I O N
1. Municipal authorities have broad discretion in determining the manner in which liquor licenses are issued, regulated, and revoked. Bourbon Bar & Cafe Corp. v. City of St. Paul, 466 N.W.2d 438, 440 (Minn. App. 1991) (citing Sabes v. City of Minneapolis, 265 Minn. 166, 171, 120 N.W.2d 871, 875 (1963)). An appellate court’s review of a city council’s decision to suspend a liquor license is limited to whether the city council exercised reasonable discretion, or whether it acted capriciously, arbitrarily, or oppressively. See id. (standard of review applicable to revocation); see also Minn. Stat. §§ 14.69 (1998) (standard of review applicable to agency decisions); 340A.415 (1998) (applying administrative procedure act to liquor license suspensions). A reviewing court must uphold a city council’s decision if the record, considered in its entirety, contains substantial evidence supporting the decision. BAL, Inc. v. City of St. Paul, 469 N.W.2d 341, 343 (Minn. App. 1991).
In a contested case, the city council “may admit and give probative effect to evidence which possesses probative value commonly accepted by reasonable prudent persons in the conduct of their affairs.” Minn. Stat. § 14.60, subd. 1 (1998). Citing Sabes v. City of Minneapolis, 265 Minn. 166, 120 N.W.2d 871 (1963), Peeler’s argues that the police report prepared by Chad Mills does not meet this standard. In Sabes, relying on the official records exception to the hearsay rule, the supreme court held that reports written by police officers reciting their personal observations and experiences with respect to solicitation of customers by prostitutes in a bar were admissible in a liquor license revocation proceeding and that those reports supported a finding that the bar was used as a resort for prostitutes in violation of state law. Id. at 175, 120 N.W.2d at 877-78; see also Minn. R. Evid. 803(8) (public records and reports exception to hearsay rule). But the Sabes court also held that statements in the reports made to police by third parties regarding other solicitations were incompetent evidence. Id. at 172-73, 120 N.W.2d at 876.
In Sabes, some of the third parties had been convicted of moral offenses, and the opinion does not indicate that the other third parties were known to police. Here, in contrast, Caleb Mills was known to the officers and was assisting them in their investigation. The record contains no evidence indicating that Caleb Mills was unreliable or had any motive to lie. Under these circumstances, the city council did not err in admitting the police report, including the information provided by Caleb Mills, into evidence.
Even if Caleb Mills’s statements to the officers were incompetent evidence, the officers observed Caleb Mills leave Peeler’s with an open bottle of beer and, a few minutes later, the bartender essentially admitted to the officers that she had sold Mills alcohol without requesting identification. The report also shows that the officers verified Caleb Mills’s identity and age. Thus, the statements in the police report based on the officers’ own personal knowledge are sufficient to support the findings that Peeler’s violated the conditions of its liquor license by selling alcohol to an underage person and by allowing a person to leave the premises with an open bottle.
Peeler’s also argues that the city deprived Peeler’s of its due process rights by refusing to continue the city council hearing until the criminal charges against the bartender were resolved. Having neither cited authority supporting its due process argument nor made any offer of proof showing how the bartender’s testimony could have helped its case, Peeler’s is not entitled to reversal on this basis. See City of Moorhead v. Minnesota Pub. Utilities Comm’n, 343 N.W.2d 843, 846, 849 (Minn. 1984) (appellate court presumes that agency decision is correct, and challenging party has the burden of proving error).
2. On a first appearance before the city council, a three-day liquor license suspension is the presumptive penalty for sale of an alcoholic beverage to an underage person, and a two-day liquor license suspension is the presumptive penalty for failure to take reasonable steps to stop a person from leaving the premises with an alcoholic beverage. Cannon Falls, Minn., Ordinances § 5.02(E)(5)(b)(3), (a) (1999). To justify a six-day suspension as a presumptive penalty, Cannon Falls had the burden of proving that the current appearance before the city council was Peeler’s second appearance. See Johnson v. Minnesota Dep’t of Human Services, 565 N.W.2d 453, 458 (Minn. App. 1997) (stating burden of proof applicable to civil cases applies to agency’s quasi-judicial decision); Zawels v. Edutronics, Inc., 520 N.W.2d 520, 523 (Minn. App. 1994) (“in ordinary civil action plaintiff has burden of proving every essential element of case”) (citing Carpenter v. Nelson, 257 Minn. 424, 427, 101 N.W.2d 918, 921 (1960); see also Sabes, 265 Minn. at 177, 120 N.W.2d at 878-79 (rejecting argument that city failed to satisfy its burden of proving violation of liquor licensing statute).
Peeler’s appeared before the city council in August 1998 and received a warning for violating liquor laws or ordinances, but, at that time, Peeler’s was still operating under a county liquor license. Cannon Falls Ordinance § 5.02(5)(e) defines a subsequent appearance as “a second, third or fourth appearance before the Council by the same licensee.” A licensee is defined as an “applicant who, pursuant to his/her approved application, holds a valid, current, unexpired license from the City for carrying on the business stated therein,” and a license is defined as a “document, issued by the City, to an applicant permitting him/her to carry on and transact the business stated therein.” Cannon Falls Ordinance § 5.01(3), (4).
The record contains no evidence showing that Peeler’s county liquor license became a city liquor license upon or after annexation. The record shows that Peeler’s did not obtain a liquor license from the city until November 1998. Therefore, Peeler’s current appearance before the city council does not fall within the definition of subsequent appearance set forth in Cannon Falls Ordinance § 5.02(5)(e).
Cannon Falls argues that the six-day suspension can, alternatively, be upheld under the city council’s discretionary authority to depart from the presumptive penalty. Cannon Falls Ordinance § 5.02.(E)(5)(a) provides that the city council may deviate from the presumptive penalty in an individual case if substantial reasons exist supporting deviation and requires the council to provide written findings to support a deviation from the presumptive penalty. Cannon Falls did not make this argument before the city council and in the absence of written findings that argument necessarily fails on appeal. See Dear v. Minneapolis Fire Dep’t Relief Ass’n, 481 N.W.2d 69, 73 (Minn. App. 1992) (making factual findings is an administrative body’s obligation and not an appellate court function, so this court need not consider issues not raised before an administrative body), aff’d as modified, 485 N.W.2d 145 (Minn. 1992). Accordingly, consistent with counsels’ representations during oral argument, we modify the suspension of Peeler’s liquor license to five days, three days for the sale of an alcoholic beverage to a minor and two days for failing to take reasonable steps to stop a person from leaving the premises with an alcoholic beverage.
Affirmed as modified.
* Retired judge of the district court, serving as judge of the Minnesota Court of Appeals by appointment pursuant to Minn. Const. art. VI, § 10.