Young's Market Co. v. State Board of Equalization

• Decision Date: 21 September 1935
• Docket Number: No. 736-H.,736-H.
• Citation: 12 F. Supp. 140
• Parties: YOUNG'S MARKET CO. et al. v. STATE BOARD OF EQUALIZATION OF CALIFORNIA et al.
• Court: U.S. District Court — Southern District of California

12 F. Supp. 140

YOUNG'S MARKET CO. et al. v. STATE BOARD OF EQUALIZATION OF CALIFORNIA et al.

No. 736-H.

District Court, S. D. California, Central Division.

September 21, 1935.

Meserve, Mumper, Hughes & Robertson (by Baldwin Robertson), of Los Angeles, Cal., and M. J. Donnelly, of Chicago, Ill., for plaintiffs.

U. S. Webb, Atty. Gen. (by Eugene M. Elson, Deputy Atty. Gen.), for defendants.

Before WILBUR, Circuit Judge, and HOLLZER and STEPHENS, District Judges.

PER CURIAM.

Plaintiffs bring this suit both on their own behalf and also for the benefit of all others similarly situated, to enjoin the enforcement of certain provisions of a statute recently enacted by the Legislature of the State of California, and known as the "Alcoholic Beverage Control Act" (St. Cal. 1935, c. 330).

The provisions here under attack impose a "beer importer's" license tax of $500 per year, define an "importer" as "every person who, in the case of alcoholic beverages brought into this State from outside of this State, is the first in possession thereof in this State after the act of importation is completed," also empower certain state officials to collect this tax, and to institute proceedings, civil and criminal, for any failure to pay such license tax, authorize the imposition of penalties for such failure, also empower certain state officials to seize and dispose of the property of the beer importer who fails to pay such license tax, also prohibit common and private carriers from delivering imported beer to any importer failing to pay such license tax. These provisions further require the payment of a like tax for each of the premises of any business establishment having more than one location.

Upon commencement of this suit an order was issued, directing the defendant officials to show cause why the enforcement of the above-mentioned provisions of the act should not be enjoined and at the same time a temporary restraining order was issued.

The defendants have responded by interposing a motion to dismiss and, in addition, have filed a pleading which has been denominated as a return to the order to show cause.

At the hearing, counsel stipulated that the application for an injunction pendente lite and also the cause on its merits be submitted on the pleadings. In view of the statements made by the counsel at such hearing, we have concluded that the material allegations of fact set forth in the bill of complaint are not in controversy and that the only issues raised by the return to the order to show cause are issues of law.

For more than a year past, each of the plaintiffs has been, and still is, engaged in the business of importing beer into this state from either Wisconsin or Missouri.

In addition to the provisions hereinbefore noted, the statute in question prohibits any person engaging in business as a broker, jobber, or wholesale merchant, dealing in alcoholic beverages, unless he shall have secured a license so to do from the defendant State Board of Equalization, and also prescribes an annual license tax of $50 for such license to sell beer at wholesale. A like charge is made for each separate establishment maintained by such wholesaler.

All of the plaintiffs are "wholesalers" of beer and have secured the requisite licenses to engage in such business in this state.

It is conceded that, under this statute, a person who engages in business as a "wholesaler" of beer manufactured in California pays annually only a $50 license tax for each establishment maintained by him in this state for that purpose; whereas, a competing "wholesaler" of beer which he imports into this state pays a like charge, and in addition is required to pay a further license tax of $500 for each establishment maintained by him for the receipt and possession of such imported beer.

One of the plaintiffs maintains, in each of twelve different cities in this state, a separate establishment to which it imports beer from Wisconsin, and for each of which premises it holds the requisite "wholesaler's" license to sell beer.

The plaintiffs, and others engaged in the business of importing beer into this state and similarly situated to them, have refused to apply for and obtain an importer's license for the various places of business at which they import and receive beer.

The defendants threaten, and unless enjoined from so doing will proceed, to enforce against plaintiffs and others similarly situated all of the provisions of said Act here under attack.

Plaintiffs contend that the provisions of the statute, the enforcement of which they here seek to enjoin, violate the commerce clause (section 8, article 1) and the equal protection clause (section 1, Amend. 14) of the Constitution of the United States.

Defendants assert that "since the adoption of the Twenty-First Amendment to the United States Constitution, neither the commerce clause nor the equal protection clause of the United States Constitution applies to intoxicating liquors." In addition, defendants maintain that the act in question constitutes a proper exercise of its police power by the state.

With respect to the first ground of the defense interposed herein, a similar contention was raised and held untenable in the recent case of Joseph Triner Corporation v. Arundel et al., 11 F. Supp. 145, 146, by the United States District Court in Minnesota, in a decision rendered by a three-judge court on June 29, 1935. Upon this point, the court there said: "With the contention that by this language it was intended that intoxicating liquors should be excepted from the provisions of the commerce clause and other provisions of the Constitution of the United States, we are unable to agree. The purpose of the provision referred to was to make it impossible for Congress to permit the transportation or importation into any state, territory, or possession of the United States of intoxicating liquors in violation of the laws of the state, territory, or possession. In other words, the provision left the states, territories and possessions free to determine to what extent, if at all, intoxicating liquor should be a lawful subject of commerce within their limits."

We are convinced that the foregoing statement is a correct construction of the Twenty-First Amendment in its application to a state of facts such as we have in the case before us.

Passing now to a consideration of the remaining defense interposed herein, it is contended that even though it be held that, once the state permits the traffic in liquors within its borders, the requirements of the commerce clause as well as the equal protection clause of the Fourteenth Amendment must be adhered to, nevertheless the provisions of the law in question represent merely the exercise of the state's police power. In support of this contention it is urged:

1. "The fee imposed upon the importer in the instant case is a fee imposed for the privilege of receiving and possessing the beer brought in — imported from other states. * * * When the beer is delivered by the carriers to the plaintiffs at their respective places of business, the act of importation at that instant is completed, and the beer ceases to be a subject of interstate commerce."

Accordingly, it is argued that the statute does not contravene the commerce clause of the Federal...