City answers $10,000 question

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The City Council settled an unprecedented legal snag at its meeting Tuesday night when it transferred St. Croix Lanes’ liquor license for $526 instead of requiring a new license for $10,526.

Current bowling-alley owner David Branigan bought the building this summer at 1153 St. Croix St. from an out-of-town bank. Former owner Carter Smith bought the business from Branigan in 2007.

Branigan reluctantly revealed that the former owner had defaulted on his financial obligations; had several properties in foreclosure, including River Falls; and had signed an agreement giving his creditors rights to “general intangibles” of the business. Discussion ensued about whether those intangibles include the license.

Questions flew about if Smith still controls the license and if he should get 90 days to “re-establish” it elsewhere as the law allows.

River Falls has issued its quota of 19 regular licenses and has only a few of the costly reserve licenses available.

“The city is caught squarely in the middle of a contractual squabble,” said City Attorney William Thiel’s memo.

Neither Branigan nor his listed operating agent, Dale Elliott of Kegel-River Falls, Inc., thought Smith had any rights to the license.

“I’m out a lot of money Mr. Smith still owes me,” said Branigan.

Mayor Dan Toland asked Branigan if he’d been promised the license, and Branigan said only in a talk about maybe trading it for inventory. Branigan said Smith had not returned his recent calls.

Council Member David Reese, who voted no, expressed concern about transferring a license that isn’t transferrable. He said only the higher-priced reserve license would completely protect the city’s interests.

“I think there were several opportunities for both parties to clean up this issue,” he said.

Council Member Scott Morrissette asked if former owners of the license -- now likely to be a bank or distant third party -- could seek a damage award. Thiel said no.

Council Member Tom Caflisch said the issue is within the city’s discretion to decide and advised not making decisions based only on their potential for legal trouble: “We’re here to make decisions about what’s right for the people we represent.”

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