Could family-controlled trusts put a Connecticut package-store owner over the two-permit limit?

Plain-English summary

In 2000, the Attorney General examined whether a proposed Wallingford package-store permit would violate Connecticut's two-permit limit. Family members already held interests in two stores, while trusts for their children owned most of the stock in the corporation behind the new application. The opinion concluded that the permit could be barred if the agency found that disqualified family members controlled the trusts and corporation. It left that control finding to the liquor-control agency after a hearing.

The opinion separated two questions: whether there was an interest in a permit, and whether disqualified people held that interest through control of the relevant entities. An interest could be indirect or noncontrolling, but the statutory treatment of a trust or corporation turned on the control finding. The Attorney General also said the agency could reject its own 1997 permit precedent without necessarily reopening that earlier permit.

Currency note

This opinion was issued in 2000. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Q: Did children's trusts automatically disqualify the new package-store application?
A: No. The Attorney General said the agency had to determine whether disqualified family members controlled the trusts and corporation. He did not make that factual determination himself.

Q: Could a minority or indirect interest count under the two-permit rule?
A: Yes. The opinion read Conn. Gen. Stat. § 30-48a to cover direct and indirect interests, whether controlling or noncontrolling, while requiring the separate control analysis for interests held through the trusts and corporation at issue.

Q: Would denying the new application require cancellation of a similar 1997 permit?
A: No. The opinion said the agency could decide that its earlier ruling was wrong without necessarily reopening or annulling the existing permit.

Background and statutory framework

The permit application involved Jaimax, Inc., whose majority shares were held by trusts for two children in a family with interests in other package stores. The opinion reviewed trust rights, trustee relationships and the power to appoint successor trustees as relevant evidence. It explained that the liquor-control agency, rather than the Attorney General, had to weigh the record and witness credibility. The opinion interpreted Conn. Gen. Stat. § 30-48a(a) and discussed Eder v. Patterson on practical control under the liquor laws.

Citations and references

Statute: Conn. Gen. Stat. § 30-48a(a).

Case: Eder v. Patterson, 132 Conn. 152, 42 A.2d 794 (1945).

Source

• Landing page: https://portal.ct.gov/AG/Opinions
• Opinion page: https://portal.ct.gov/ag/opinions/2000-formal-opinions/honorable-james-t-fleming-department-of-consumer-protection-2000030-formal-opinion-attorney-general

Original opinion text

Honorable James T. Fleming, Department of Consumer Protection, 2000-030 Formal Opinion, Attorney General of Connecticut

Attorney General's Opinion

Attorney General, Richard Blumenthal

November 28, 2000

Honorable James T. Fleming

Department of Consumer Protection

165 Capitol Avenue

Hartford, CT 06106

Dear Commissioner Fleming:

This is in response to your request for an opinion on whether the two-store limit rule in Conn. Gen. Stat. § 30-48a bars the issuance of a package store permit to Jaimax, Inc. for premises at 701 North Colony Road, Wallingford, CT. For the following reasons, we believe that the statute could bar the permit, but only if your agency finds that the corporations and trusts in question are controlled by disqualified members of the Mastrobuoni family.

You supplied documentation, consisting of the transcript of hearing, exhibits, briefs and liquor control records, gathered from a pending hearing on the application of Jaimax, Inc. for a package store permit at the subject location. You described the facts, and frame the issues, as follows:

The facts are not in dispute. Individuals in the Mastrobuoni family have an interest in two existing package stores, one in Hamden and one in New Haven; the backer for both is Amity Wine & Spirits, Co., Inc. Shareholders in Amity Wine & Spirits, Co., Inc. are Frank Mastrobuoni, Lori Ann Mastrobuoni, Albert Mastrobuoni, and Josephine Mastrobuoni. Jaimax, Inc., the backer for the pending application, is also the backer for Coastal Wine & Spirits, a package store in Branford. The permit for Coastal Wine & Spirits was issued in 1997. The majority owners of stock of Jaimax, Inc. are trusts for Jaime and Alexa Mastrobuoni, children of Albert and Lori Ann Mastrobuoni. The trustees are their attorney and accountant. Jaimax, Inc. is now seeking to obtain a second package permit through the pending application.
The issue raised by this fact situation upon which I seek your legal advice is whether the granting of this package store permit to Wallingford Wine & Spirits is permissible in light of Section 30-48a, Connecticut General Statutes. If your response is that the pending permit application should not be granted, we are then presented with the consequent question of whether the ownership of Coastal Wine & Spirits is proper. What is your recommendation with regard to the existing permit for Coastal Wine & Spirits?

The statute in question provides, with pertinent provisions emphasized, as follows:

Limitation on interest in retail permits. (a) No person and no backer as defined in section 30-1, shall, except as hereinafter provided, acquire an interest in more than two alcoholic beverage retail permits, but nothing herein shall (1) require any such person who had, on June 8, 1981, such interest in more than two such permits to surrender, dispose of or release his interest in any such permit or permits or (2) prohibit any such person who had, on June 8, 1981, such interest in more than two such permits from transferring his interest in such permits by inter vivos or testamentary disposition, including living trusts, to his spouse or child, or such spouse’s child or child’s living trust or prohibit such spouse or child from accepting such a transfer notwithstanding that such spouse or child may already hold another permit issued under the provisions of this chapter. Any such permit so transferred may be renewed by such transferee under the provisions of section 30-14a. Except as provided in subdivision (1), a person shall be deemed to acquire an interest in a retail permit if an interest is owned by such person, such person’s spouse, children, partners, or an estate, trust, or corporation controlled by such person or such person’s spouse, children, or any combination thereof. The provisions of this subsection shall apply to any such interest without regard to whether such interest is a controlling interest. For the purposes of this subsection, "person" means (A) an individual, (B) a corporation of any subsidiary of a corporation or (C) any combination of corporations or individuals any of whom, or any combination of whom, owns or controls, directly or indirectly, more than five per cent of any entity which is a backer as defined in said section 30-1.
(b) A retail permit for the purposes of subsection (a) of this section means a package store liquor permit or a druggist liquor permit.

(c) Membership in any organization which is or may become the holder of a club permit shall not constitute acquisition of an interest in a retail permit.

(d) Any person who violates any provision of this section or of any regulation issued pursuant hereto shall be fined not less than fifty dollars nor more than two hundred fifty dollars and any permit issued in violation of this section shall be revoked.

Conn. Gen. Stat. § 30-48a (Emphasis added).

The emphasized parts of this statute reveal that this statute prohibits the acquisition of more than two package store permits under a two part test. The first test is whether the facts involve an interest in a permit. The second test is whether the interest is held by disqualified persons.

The first test is satisfied here. The statute clearly provides that no person shall acquire an "interest" in more than two package store permits. It further provides that, "The provisions of this subsection shall apply to any such interest without regard to whether such interest is a controlling interest." Thus, the interest in this case can be a sole, majority or minority interest, and active or passive, direct or indirect. In this regard, the limitations of this statute apply to a wide range of interests, in contrast to other restrictions in the liquor control act which usually apply only to those persons with controlling interest or influence. See, e.g., Conn. Gen. Stat. § 30-48; Eder v. Patterson, 132 Conn. 152, 42 A.2d 794 (1945); see also Gwiazda v. Borgin, 121 Conn. 706, 185 A. 416 (1936). The only exception involves club memberships. Conn. Gen. Stat. § 30-48a(c). Thus, the interests under scrutiny here (i.e., the interests of the Albert and Lori Ann Mastrobuoni family in the trust for their children which holds the majority of shares in Jaimax, Inc.) are sufficient interests to be subject to the rules of the statute.

The second part of the test is whether the interests are held by disqualified persons. Clearly, the Mastrobuoni children could not acquire a package store because their parents already have a disqualifying interest in two stores. As for whether the children can be beneficiaries of trusts which hold the majority shares in a corporation backer which intends to hold a permit is controlled by that part of the statute which provides:

. . . a person shall be deemed to acquire an interest in a retail permit if an interest is owned by . . . an estate, trust or corporation controlled by such person or such person’s spouse, children or any combination thereof.
Conn. Gen. Stat. § 30-48a(a).

The question for your agency, then, based on the record facts, is whether the Mastrobuonis control the corporation and trust.

In this regard, the attorney who represented the applicants, who is also one of the trustees of the trusts involved, stated on the record, "Well, it’s not controlled by anybody other than myself and Mr. Gravino." Tr. p. 21. Indeed, the trusts are irrevocable. Trust Instruments, Art. X. However, the beneficiaries can demand distribution, Art. III , Sec. 2c; they have a power of appointment over the trust principal, Art. III, Sec. 41; the trustees are the Mastrobuonis’ attorney and accountant, Tr. P. 25; and the Mastrobuonis can appoint successor trustees. Art. IX, Sec. 1. The trusts hold the majority of shares in the corporation. Liquor Permit Application.

The test for control, under the Liquor Control Act, permits both a legal analysis of rights, such as calculation of shares held in a corporation, and factual examination of relationships which would, as a practical matter, evidence control. Eder v. Patterson, supra, at 155; Ruppert v. Liquor Control Commission, 138 Conn. 669, 667, 88 A.2d 388 (1952). One who is under the dominion and control of a disqualified person is likewise disqualified. Biancara v. Liquor Control Commission, 142 Conn. 569, 571, 116 A.2d 427 (1955); Wilks v. Liquor Control Commission, 122 Conn. 443, 446, 190 A.2d 262 (1937).

These questions are matters within the purview of the Commissioners who are in a better position to evaluate the credibility of witnesses and weigh the quality of evidence in light of their experience. Williams v. Liquor Control Commission, 175 Conn. 409, 414, 399 A.2d 834 (1978); Noyes v. Liquor Control Commission, 151 Conn. 524, 527, 200 A.2d 468 (1964).

Accordingly, we advise the agency to decide, in light of the above tests and based on the record facts, whether the trusts and corporation are under the control of the Mastrobuoni family.

Opponents to the application, in their brief to the Commission, argue that Conn. Gen. Stat § 30-48a(a) prohibits family members from having any interest in more than two package stores, regardless of whether the interest is controlling or not, and they highlight quotes from the 1981 legislative debates, suggesting a legislative intent supporting their argument. See Opponent’s Brief with excerpts from debates attached. Attachment A. The remarks of the legislators cited do not address the specific issue in question here. Moreover, two rules of statutory construction militate against the opponents’ argument. First, despite the remarks of the legislators, we must follow the language of the statute. The intention of the legislature is found not in what it meant to say, but in the meaning of what it did say. Colli v. Real Estate Commission, 169 Conn. 445, 452, 364 A.2d 167 (1975). Second, the statute specifically disqualifies trusts and corporations controlled by the disqualified person(s). Conn. Gen. Stat. § 30-48a(a). This circumstance must be found in order to deny an application. We cannot ignore this express language, nor can we read statutes so as to render parts of them superfluous or meaningless. United Illuminating Co. v. New Haven, 240 Conn. 442, 439, 692 A.2d 742 (1997).

Finally, you inquire as to our recommendation with regard to the permit issued to Jaimax, Inc. in 1997 in the event that it is found that the present application is ineligible for issuance. The 1997 permit was issued under identical facts. Of course, your agency is not required to repeat mistakes. You are not required to follow that precedent in this case if you conclude that the 1997 decision was rendered in error. Reconsideration of a previously stated policy is a prerogative of administrative agencies, which are ordinarily not restrained under the doctrine of stare decisis or on the grounds of equitable estoppel.2 City of New Britain v. Conn. State. Bd. of Labor Relations, 31 Conn. Supp. 211, 215, 327 A.2d 268 (1974). This does not necessarily require a reopening and annulment of the 1997 permit. Because of the uncertainties, difficulties and hardships which can arise, the right of an administrative agency to change its decision with retroactive effect is ordinarily curbed on the grounds of public policy. Hartford Elec. Light Co. v. Sullivan, 161 Conn. 145, 159, 285 A.2d 352 (1971) citing Waterbury Savings Bank v. Danaher, 128 Conn. 78, 90, 20 A.2d 455 (1940) but see Middlesex Theatre v. Comm’r. of State Police, 128 Conn. 20, 20 A.2d 412 (1941) (change in circumstance). Therefore, your agency may decline to follow the precedent set in 1997 without disturbing the permit issued in 1997, if you conclude that it was rendered in error. On the other hand, if you find no disqualification in the instant case, then the 1997 precedent is vindicated.

For all the foregoing reasons, we believe that Conn. Gen. Stat. § 30-48a(a) could present a bar to the issuance of a package store permit to Jaimax, Inc. for premises at 701 North Colony Road, Wallingford, if your agency finds, after hearing, that the corporations and trusts in question are controlled by disqualified members of the Mastrobuoni family.

Very truly yours,

RICHARD BLUMENTHAL

ATTORNEY GENERAL

Robert F. Vacchelli

Assistant Attorney General

RB/rfv

1The beneficiaries can transfer the principal of the trust to certain other family members during the beneficiary’s lifetime or in her will "in her sole judgment." Art. III, Sec. 4.

2Counsel for the applicant argued at hearing that it would be unjust to deny the application because applicant relied on the 1997 precedent, expected approval, and is obligated to pay rent for a lease on the proposed premises. Tr. p. 44. We note, however, that applicant’s authority to commence business was expressly provisional only. Conn. Gen. Stat. § 30-35b. Applicants are cautioned against assuming approval. See, e.g. Reg. Sec. 30-6-A1(f).