Hon. Bert Rbrd, Administrator
Texas Ldquor Control Board
Austin, Texas

Dear Sir:                           Opinion No. O-1145
                                    Re: Whether Acts of members of
                                    Rouston country Club, Houston,
                                    Texas, in operations of such club,
                                    constitute a violation of the Texas
                                    Liquor Control Act.

          Your rsquest for an opinicn on the above stated question has
been receiked by this department. The facts, with reference to the op-
erations of Houston Country Club, as stated by you, are as followsr

                 "No personmay become a participant in the
            Revolving Fund unless he is a member of the Club,
            but membership in the Club does not automatically
            make hima participant in the Revolving Fund. Each
            member of the club who desires to become a partici-
            pant in the Revolving F'cndis required to pay $5
            into the fund, and with the fund so created liquor
            is purchased in packages from a regular retail store.

                 "The stock of liquor so purchased and belong-
            ing to,the participants in the Revolving Fund is
            kept in the club house and the participants in the
            fund are entitled to make withdrawals therefrom, to
            be consumed as a straight drink, as a highball, as
            oonstitutents of a cocktail, or otherwise, and either
            on or off the premises of the Country Club. Liquor
            so withdrawn is served to the Revolving Fund partici-
            pants by persons who are on the payroll of Rouston
            Country Club.

                 "Only participants who have contributed to the
            Revolving Fund are permitted to make withdrawals from
            this liquor stock, and for each withdrawal a slip is
            made out which must be signed by the participant be-
            fore the withdrawal is made. A, participant may make
            withdrawals for any other person, in the same manner
            that he makes tithdrawals for himself, -- that is, by
            signing his -   name thersfor. There is set out on
            the face of such slip the character of the drink,
Hon. Bert Ford, Page 2 (O-1146)



           such as whiskey, gin, hightall, or martini cocktail,
           as the case may be, with a specified charge therefor,
           which depends upon the nature of the drink and the
           ingredients therein. At the end of eachmonth an
           inventory is taken of the liquor stock and the cost
           value of the liquors taken from the stock during the
           month is determined. This amount, i.e., cost value
           of the liquor withdrawn, is then deducted from the
           total amount charged during the month against all
           the participants in the fund, and is put back into
           the fund, afiilethe remainder is paid to the Country
           Club in payment for the ice, soda and personal ser-
           vices supplied by it to the participants in the fund.

                "One of the members of the Revolving Lund handles
           the purchases of liquor which are necessary to replen-
           ish the stock that is owned by the participants in the
           fund. At the end of each calendar month the Country
           Club purchases fram the Revolving Lund the withdrawal
           slips signed during that month by the participants in
           the fund, and collects the amount theredf from such
           partioipants in the same manner that it collects the
           regular club bills.

                "The Houston Country Club holdswine and beer re-
           tailer's permit No. 15879,.issued January 1, 1939,
           which Is a renewal. The stock of laine and beer owned
           and served by the olub is kept in a small building
           adjacent to the main building of the olub. Entranoe
           to this small store rocnu is gained by stepping fram
           the porch of the main building into the door of the
           store room.   Beer and wines are served by miters
           frDIpthis store room into all parts of the club house
           and grounds, including,the spaces in which the stock
           of liquor owned by participants in the Revolving Fund
           is kept and drinks of liquor are served to such parti-
           cipants. Toe same praiterswho serve wine and beer from
           this store roan also serve drinks of liquor to the par-
           ticipants in the Revolving Fund. Wins and beer served
           by the club proper is signed for on a different type of
           check than that used Iy the Revolving Fund."

                 Section 3(a) of Article 1, of the Texas Liquor Control
Act, defines the term "open saloon" as follows:

                "The term *open saloon' as used in this Act
           means aqg place where any alcoholic beverage what-
           ever, manufactured in whole or in part by means of
           the process of distillation, or any liquor composed
Hon. Pert Fod, Page g (O-1145)



            or compounded in part of distilled spirits, is sold
            or offered for sale for beverage purposes hy the
            drink or in broken or unsealed containers, or aw
            place where aw such liquors are sold or offered for
            sale for hman ccnslrmption011the premises where
            sold."

                 Subdivision (b) of Section 3, reads as follows:

                "It shall be unlaaful for any person, whether
           as principal, agents or employees, to operate or
           assist in operating, or to be directly or indirectly
           interested in the operation of any open saloon in
           this Ste.te."

            In the case of Adkins v. State, 95 S.VL, the matedal   facts
are about as follows:

           A group of men formed a club. These men in turn hired a
           steward at a fixed salary. The steward ordered beer for
           the members of the club and placed such beer in the club
           room for them. Each member of the club paid $l&C for a
           membership and received tickets which represented his in-
           terest in the beer the steward ordered. After the keg
           of beer arrived at the club house a ticket was placed in
           a-box~and a glass of beer was drawn by any member who
           desired one, each ticket representinv (I~1~88 of beere
           The beer which ~88 ordered Ty the steward for the pur-
           chasers and paid for by said purchasers. The Court of
           Criminal Appeals held in this case that the facts estab-
           lished a sale of beer by the steward eachtime that a
           glass of beer was drawn by a member of the club.

            In the case of Sutton v. State, 40 S.W. 501:

           A certain firm kept what was known as "Temperance Hall."
           Certain parties paid 50 cents for the privilege of buy-
           ing beer from the firm at the ordinary retail price.
           The 60 cents paid to beccrmea member of the alleged club
           was all the money ever paid into the concern, except the
           usual price for beer when purchased. Such firm received
           1,630 dozen bottles of beer in five months; kept the
           stockmplenished with the money arising from sales to
           members : and its pay was the profits. Ihe court of crim-
           inal Appeals of this State held that this was clearly an
           evasion of the local option law.

            In the case of Krnavek v. Stats, 41 S.W. 612, the facts were
about as rnllowsr
                                                                       ..



Hon. Bert Ford, Page 4.(0-1145)



                    After the enactment of a local option law, a club
                    was inoorporated for social and literary purposes,
                    and to provide the convenience of a clubrocm~ It
                    had a billiard table, a domino tahls and 12 books,
                    and took a semi-rmekly paper* The club bought
                    large quantities of intoxicants,md employed an
                    ex-saloon keeper at a monthly salary to sell them
                    at retail to its menbers only, from the bar fona-
                    erly owned by him, and the proceeds of such sale
                    became the property of the club* The Court of
                    CrMnal Appeals of this State.held that the club
                    we.8formed for the purpose of evading the local
                    option law.

                         In the case of Fwige V* State, 95 &PC. 506:

                         A club was incorporated for social purposes. The
                    manager of such club devoted his time to the manganent
                    of it8 affairso A~membership fee of $1 was paid* him
                    by eaah member. The members of the club obtained beer
                    by purchasing tickets, The beer was obtained the day
                    after the purchase of the tickets. The manager in-
                    structed the members how to order beer by stating that
                    when the members wanted beer, the should put money in
                    a box and take out a ticket for each nickel, and that
                    could be procured at the clubrocm the following night.
                    Held, that the club members, when they paid their
                    money into the treasury, parted with it to the club,
                    so that rhen it sent out the money it bought beer on
                    its own behalf, making the manager liable for sale.

                          In the cass of Adams V. State, 145 S.W. 940, the Court
        of Criminal Appeals of this State held:

                          Where a club purchased liquors in bulk with money
                     in the treasury a distribution of the same to members
                     at the usual price constituted a sale within the prohi-
                     bition laws.

                          In State v. Country Club, 173 S.H. 570, the Qurt   of
        Criminal Appeals of this State held*

                          The dispensing of intoxicating liquors by an
                     incorporated, bona fide social club to its members,
                     for a swa sufficient to psv the cost of the liquors
                     and of maintaining the aermlce, is a sale of such
                     Xauors o
              _   ..   -



Hon. Bert Ford, Page 5 (O-1145)



                    In the case of Williams V. State, 103 S.W. (2d) 380, the
       facts were as follows:

                                The defendant was found in the possession of ten
                           cases of beer, in the city of,Abilene, in Taylor County,
                           Texas. At the time defendant was the manager of xhat
                           1~s known as the "Abilene Athletic Club," which had
                           approximately 250 members. A prerequisite to member-
                           ship being that a written application had to be made
                           which called for a deposit qf $5.00 by the applicant
                           with said manager. Upon being approved as a member of
                           the club, the applicant paid a monthly sum of $1.00
                           dues, the primary purpose of the $5.00 mentioned being
                           that it was to be used in the purchase of merchandise;
                           and also if the member nithdrew he was entitled to the
                           return of his $5 deposit, provided it had not been con-
                           sumed in the individual purchase of merchandise or in
                           the payment of dues. Rhen the $5 deposit had been con-
                           suxed, it ms also understood that the members should
                           deposit a like strm;alxo the general properties and
                           activities of the club are set out; it is shown that
                           appellant is permitted to sell chexing grrm,cigars,
                           cigarettes, sandwiches, coffee, milk, and soft drinks
                           and put the profits of such business into the payment
                           of part OS his salary as manager. It is further set out
                           in the agreed statement of the facts in this case that
                           some of the members of said Athletio Club had directed
                           appellant to have on hand in said club beer for their
                           constiption and that the beer upon which this prosecu-
                           tion xas based hadbeen ordered by various members and
                           that the defendant had gone to Sleetwater, and acting as
                           manager   of said club and agent for the members of said
                           club had purchased with the money of said membsrs said
                           beer~to bring 'tackfor the members c+'fhe club. Each
                           member was to pay the manager 15 cents per container
                           for said beer when he received his beer at said club,
                           and said 15 cents deposit, if any, nas deposited in
                           *the members deposit account" to replenish same and to
                           be used in accordance with the direction of the members
                           ofthe club. Appellant got no profit from the sale of
                           any beer but from the revenues, dues, and profits fran
                           the sale of merohandise were to be paid all expenses
                           in the opration of said club, the rent of the building
                           and salaries of attendants. The Court of Criminal
                           Appeals held in this case under the facts, that the
                           defendant possessed intoxicating liquors for the pur-
                           pose of sale in a dry area.

                          It is true that the violation in the Williams case, as well
        as those in the other casss herein referred to, occurred in dry territory,
        honever, tn view of the definition of an open saloon, in our opinion, the
Hon. Bert Ford, page 6 (O-1145)



facts herein set forth with referenoe to~the manner of operation of the
Houston Country Club of Houston, Texas, clearly show that the acts of
the members of such club, in the operating of same, constitute a viola-
tion of the Texas Liquor Control Act, in that the operation of seme
comes within the definition of an open saloon, which is prohibited by
statute in the State of Texas.

             It would seem, that in so far as the selling of alcoholic
beverages, manufactured in whole or in part, by means of the process of
distillation, or any liquor composed or ccmpounded, in part of distilled
spirits, or the offering for sale of the same, by the Luston County Club,
is concerned, the members of said club are attempting to do indirectly,
what they cannot legally do directly.

             In your letter you also request an opinion as to whether the
River Oaks Country Club of Houston, Texas, under the facts suhnitted, is
operated as an open saloon. We see no differenae in the method of opera-
tion of these tvc clubs, as far as the handling of their liquor is ccn-
cerned, except that the latter purchases its liquor through a trustee.
This probably makes the trustee guilty of operating an open saloon, and
releases the club members of such liability.

             We do not think that there is any doubt but that the fact
that liquor is dispensed to msmbers of these clubs by the drink, coupled
with the further fact that suoh members are called upon to contribute
money to the Revolving Fund, and that they do so contribute, 80 that liq-
uormay be kept on hand, constitutes sales of liquor by the drink on the
part of those who deliver the liquor to the various members, whoever they
4w be, and that both clubs in question are being operated as open
saloons.

             He trust that this satisfactorily enswers your inquiry.

                                           Yours very truly

                                        ATTORNEY GENERAL OF TEXAS


                                        By
                                         /s/Fred C. Chandler
                                                 Fred C, Chandler
                                                        bssistant

FCCsob:egw
_I..                                                   APPR+OVED
APPROVRD AUG. 26, 1939                            Opinion Conrmittee
/s/GERALD C. MANN                                      By*
ATTORNSYGRNERAL OFTEXAS                               Chairman