STATE OF MICHIGAN

FRANK J. KELLEY, ATTORNEY GENERAL

Opinion No. 6858

July 11, 1995

LIQUOR CONTROL:

Issuing a liquor license for a community college conference center where a member of the college's board of trustees is also the president of and a shareholder in a licensed beer and wine wholesaler

The prohibition found in section 31 of the Michigan Liquor Control Act does not prevent the issuance of a liquor license for the Mendel Center at Lake Michigan Community College, even though a member of its Board of Trustees is also the president of and a shareholder in a licensed beer and wine wholesaler.

Honorable Harry Gast

State Senator

The Capitol

Lansing, Michigan

You have asked if the prohibition found in section 31 of the Michigan Liquor Control Act, MCL 436.31; MSA 18.1002, prevents the issuance of a liquor license for the Mendel Center at Lake Michigan Community College, because a member of its Board of Trustees is also the president of and a shareholder in a licensed beer and wine wholesaler.

Section 31(1) of the Michigan Liquor Control Act prohibits a wholesaler of alcoholic beverages from having "any financial interest, directly or indirectly, in the establishment, maintenance, operation, or promotion of the business of any other vendor." (Emphasis added.) Section 31(2) of the same act prohibits a wholesaler from having "an interest by ownership in fee, leasehold, mortgage, or otherwise, directly or indirectly, in the establishment, maintenance, operation, or promotion of the business of any other vendor." (Emphasis added.)

At the outset it should be noted that the licensed wholesaler does not do any business with the college. We are also advised that the wholesaler, whose president is a Lake Michigan Community College trustee, will, if a license is granted for the Mendel Center, decline to do any business with that center as long as he remains a trustee.

Turning to your question, it is clear that the answer turns on whether the trustee has a financial interest or an ownership interest in the Mendel Center. Michigan's appellate courts have not had occasion to interpret the term financial interest as it is used in Section 31 of the Michigan Liquor Control Act.

Here, the college trustee in question has no personal financial interest in the college or its conference center. The pecuniary gains and losses of the college and the Mendel Center do not result in personal pecuniary gains or losses for the college trustee. Thus, section 31(1) of the Michigan Liquor Control Act does not apply here.

In addition, the trustee in question does not have an ownership interest in either the college or the conference center. Under sections 103, 109 and 121(a) of the Community College Act of 1966, 1966 PA 331, MCL 389.1 et seq; MSA 15.615(101) et seq, the community college district owns the real property of the district. Thus, section 31(2) of the Michigan Liquor Control Act does not apply to this situation.

Admittedly, its president's position with the college could give the wholesaler a competitive advantage in acquiring the Mendel Center as a customer. To the extent that such a conflict of interest might exist, it could be easily remedied. First, the Board of Trustees of Lake Michigan Community College should pass a resolution that it will not contract with the wholesaler for the purchase of alcoholic beverages as long as its president retains both an interest in the wholesaler and his position with Lake Michigan Community College. In addition, the wholesaler should supply the Liquor Control Commission with an affidavit attesting that it will not sell alcoholic beverages to the Mendel Center as long as its president retains both his interest in the wholesaler and his position with Lake Michigan Community College. These actions will prevent any self-dealing on the trustee's part and will ensure that the wholesaler does not have any interest in the operation of the Mendel Center, thus furthering the purpose behind section 31 of the Michigan Liquor Control Act.

If the Liquor Control Commission wants to go a step further, it may issue a conditional or provisional license to a vendor under its comprehensive authority to regulate all traffic in alcoholic beverages within the state under Const 1963, art 4, Sec. 40. If it wishes to, the Commission may condition the license for the Mendel Center upon the assurance that Lake Michigan Community College will not purchase any alcoholic beverages from this wholesaler. If the college violates this agreement, the Commission may revoke its license.

It is my opinion, therefore, that the prohibition found in section 31 of the Michigan Liquor Control Act does not prevent the issuance of a liquor license for the Mendel Center at Lake Michigan Community College, even though a member of its Board of Trustees is also the president of and a shareholder in a licensed beer and wine wholesaler.

Frank J. Kelley

Attorney General