vs. ) CASE NO. 79-1693
Respondent. )
This matter came on for hearing in Miami, Florida, before the Division of Administrative Hearings, by its duly designated Hearing Officer, Robert T. Benton, II, on September 25, 1979. The parties were represented by counsel:
For Petitioner: Dennis E. LaRosa, Esquire
By notice to show cause dated Jun 14, 1979, petitioner alleged that respondent on or about April 9, 1979, "failed to notify the Division in writing of a change in your corporate officers; to-wit: the resignations of YVETTE DUVAL and CARLENE SUNDELL and the election of new officers within 10 days of the change, contrary to Administrative Rule 7A-2.07"; "failed to file a sworn declaration as to control of the corporation after the sole shareholder, YVETTE DUVAL divested her interest in the corporation contrary to Administrative Rule 7A-3.37"; and that "ANTHONY DUVAL, previously disqualified by the Division to have a direct or indirect interest in a beverage license, continued to have an indirect interest in [respondent] . . . in violation of F.S. S. 561.15 and F.S. S561.17."
Anthony DuVal agreed to purchase from Irene J. Elia the entire capital stock, at the time 50 shares, of Redwing Enterprises, Inc., the corporate owner of an establishment known as Red Road Lounge and Package Store. At the same time, Anthony DuVal agreed to purchase from Mrs. Elia and/or her husband Frank the entire capital stock of Penn Realty, Inc., whose only asset was the building in which the Red Road Lounge and Package Store is located. Both of these purchase agreements called for transfer of the stock to Anthony DuVal or assignees. Neither agreement was contingent on the transfer of any beverage
license. The transaction closed in accordance with these agreements, and the stock was transferred to Anthony DuVal and Barbara DuVal, his wife. Thereafter, fifty percent of the stock of both companies was transferred to one Juanita Hester, wife of somebody Anthony DuVal intended to take in as a partner. When he changed his mind, Juanita Hester relinquished her interest in favor of the DuVals. Eventually, Anthony DuVal acquired all the stock of both companies.
At the time the DuVals acquired their stock ownership, the building owned by Penn Realty, Inc. was encumbered by a mortgage in favor of Commercial Bank and Trust Company, securing Penn Realty's corporate indebtedness in the approximate amount of $72,000.00. The agreed upon purchase price for the capital stock of both companies was $145,000.00 less this indebtedness. As part of the transaction, both corporations agreed to pay Frank and Irene J. Elia the bulk of the Elias' equity, some $55,000.00, in weekly installments over a period of years. This obligation was secured by respondent's assets, under a financing statement covering "[a]ll present and future furniture, fixtures, equipment, stock in trade, inventory, all Beverage and Liquor and other licenses and all successor licenses." Petitioner's exhibit No. 6. The financing statement was signed by Anthony DuVal on behalf of each company. Anthony DuVal never personally guaranteed any obligation of respondent. He did put money over and above the purchase price into respondent's business.
On March 27, 1977, Penn Realty, Inc., entered into a written lease agreement with Redwing Enterprises, Inc., in which respondent undertook to pay
$794.60 monthly either to Penn Realty, Inc., or to Commercial Bank and Trust Company, plus all state and county real property taxes levied on the property. Penn Realty, Inc., has paid sales tax on all rental payments respondent has made.
By order entered January 31, 1978, petitioner denied Anthony DuVal's application for transfer of respondent's license No. 4-COP #23-2867, on the grounds that Anthony DuVal (formerly Anthony Anello) lacked good moral character. Petitioner's exhibit No. 9.
Anthony DuVal then conveyed his entire interest in respondent to his daughter Yvette. Consideration for this conveyance was substantially less than fair market value. At the time of the hearing, however, no gift tax return had been filed. Mr. O'Neal, a public accountant retained by respondent, testified that he was awaiting certain records before estimating the value of the interest conveyed for gift tax purposes. At the time of the hearing, Redwing Enterprises, Inc., had only one share outstanding and Yvette owned it. Anthony DuVal also made gratuitous transfers to Yvette and to his son Danny of shares of Penn Realty, Inc., while retaining a substantial number of Penn Realty shares for himself.
In June of 1978, Yvette DuVal took over the management of the Red Road Lounge and Package Store, after on-the-job training under Freddie Magnole and Carlene Sundell, who stayed on as night manager. Yvette had worked as a cashier at Pantry Pride, in an office for Pantry Pride, where she had charge of the payroll for 120 employees, and as a secretary at an insurance company. Yvette is a high school graduate; she has finished two years of junior college. The lounge and package store are open from 10:00 o'clock a.m. to 5:00 o'clock a.m. Yvette works on the premises every day of the week, sometimes as long as eight hours a day. When she took over the ownership of respondent, she put about
$8,000.00 of her own money into the business.
On behalf of respondent, she has personally seen to the making of mortgage payments to Commercial Bank and Trust Company. When payments have been late, somebody at the bank has telephoned Yvette. She has also personally seen to it that the Eliases are paid $125.00 every Saturday morning, against the indebtedness secured by the financing statement. Petitioner's exhibit No. 6. Since June of 1978, Anthony DuVal has maintained the building owned by Penn Realty, Inc., but has put no money into respondent's business, and has taken no part in the day-to-day management of business.
On June 23, 1978, petitioner received a certificate of incumbency and declaration of stock ownership, petitioner's exhibit No. 7, reciting that Yvette DuVal owned all of respondent's stock; that Yvette was president of respondent; and that Carlene Sundell was secretary and treasurer of respondent. Petitioner then initiated an investigation to determine what interest, if any, Anthony DuVal might still have in respondent. Towards the end of the investigation, petitioner subpoenaed Yvette DuVal and Carlene Sundell. On January 5, 1979, Anthony DuVal telephoned petitioner's offices, saying that Yvette and Carlene had quit, and asking that they be released from the subpoenas. Fred Magnole called petitioner's office with the same report on January 8, 1979. As a result, petitioner terminated its investigation into the transfer of respondent's license.
On January 12, 1979, Anthony DuVal, A. C. Lowery (a lawyer friend of Mr. DuVal's), Frank Elia and Carlene Sundell conferred with petitioner's Captain Harris and Officer del Monte. Anthony DuVal said Yvette and Carlene Sundell had resigned and that he would consider reapplying himself for transfer of respondent's license. He agreed to file an application within ten days, if he decided to reapply. Captain Harris wrote Mr. Lowery on January 18, 1979, summarizing the meeting that took place on the 12th and reciting that "Carlene Sundell and Yvette DuVal resigned as officers and directors of Redwing Enterprises." Petitioner's exhibit No. 10. Petitioner heard nothing from Mr. DuVal or respondent and eventually instituted the present proceedings by filing charges.
Carlene Sundell quit respondent's employ in early 1979, but never resigned her position as secretary and treasurer of respondent in writing. No other person has been named secretary or treasurer of respondent since Carlene Sundell. Ms. Sundell never served as a director of Redwing Enterprises, Inc. Yvette DuVal has managed the Red Road Lounge and Package Store continuously since June of 1978. She never resigned her position as president of respondent or as respondent's sole director in writing, although she had second thoughts about running a bar as her life's work about the time she received petitioner's subpoena. Yvette DuVal has held the single share representing the complete ownership of respondent ever since she acquired it.
CONCLUSIONS OF LAW
Petitioner's rules provide that, "If any corporation holding a beverage license shall change corporate officers, such corporation shall . . . submit [to petitioner] a certified copy of the minutes [reflecting the change]", Rule 7A-2.07(2), Florida Administrative Code. The evidence established that Carlene Sundell has severed her connection with respondent, except for submitting a formal, written resignation as secretary and treasurer of the corporation. The evidence also established, however, that no other person had been named as secretary or treasurer of respondent. For this reason, petitioner failed to establish a change of corporate officers within the meaning of Rule
7A-2.07(2), Florida Administrative Code.
Petitioner failed to establish that Yvette DuVal divested herself of the share of stock representing ownership of respondent, at any time after it was given to her. For this reason, petitioner failed to establish any violation of Rule 7A-3.37, Florida Administrative Code.
The final specification alleges that Anthony DuVal's "indirect interest" in respondent violates Sections 561.15 and 561.17, Florida Statutes (1977). Since the evidence showed that Anthony DuVal is no longer an officer of respondent, no violation of Section 561.15(1) or (2), Florida Statutes, was proven. Section 561.15(1) and (2), Florida Statutes (1977), spell out grounds for disqualification of corporate officers, but do not address the matter of indirect interest.
Anthony DuVal is not qualified within the meaning of Section 561.17(1), Florida Statutes (1977), which provides:
If the [beverage license] applicant or any person interested with the applicant either directly or indirectly in the business is not qualified, the application shall be denied. .
. .
Because Anthony DuVal acquired respondent at the same time he acquired another corporation, and because he caused respondent to encumber its property, as security for payment of the purchase money owed on account of the acquisition of both corporations, and because respondent's earnings are the source of payments of the purchase money owed for both corporations, and because Anthony DuVal is a principal stockholder in Penn Realty, Inc., he remains "indirectly interested" in respondent, within the meaning of Section 561.17(1), Florida Statutes (1977), notwithstanding the transfer of the ownership of respondent's stock to his daughter.
Section 561.15(3), Florida Statutes (1977), authorizes petitioner to revoke any license which has been granted to an applicant who is "prohibited from obtaining such license, under the Beverage Law."
Upon consideration of the foregoing, it is RECOMMENDED: That petitioner revoke respondent's license.
DONE AND ENTERED this 17th day of October 1979 in Tallahassee, Florida.
ROBERT T. BENTON, II
Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301
Filed with the Clerk of the Division of Administrative Hearings this 17th day of October 1979.
Dennis E. LaRosa, Esquire Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301
