American Travelers Club, Inc. v. Hostetter

• Decision Date: 24 June 1963
• Citation: 219 F. Supp. 95
• Parties: AMERICAN TRAVELERS CLUB, INC., Plaintiff, v. Donald S. HOSTETTER, Benjamin Balcon, William H. Morgan, John C. Hart and Robert E. Doyle, being the Chairman, Members and Commissioners of the State Liquor Authority of the State of New York, Defendants.
• Court: U.S. District Court — Southern District of New York

219 F. Supp. 95

AMERICAN TRAVELERS CLUB, INC., Plaintiff, v. Donald S. HOSTETTER, Benjamin Balcon, William H. Morgan, John C. Hart and Robert E. Doyle, being the Chairman, Members and Commissioners of the State Liquor Authority of the State of New York, Defendants.

United States District Court S. D. New York.

June 24, 1963.

COPYRIGHT MATERIAL OMITTED

Moss, Wels & Marcus, New York City (Richard H. Wels and James L. Adler, Jr., New York City, of counsel), for plaintiff.

Louis J. Lefkowitz, Atty. Gen. of New York (Irving Galt, Asst. Sol. Gen. of New York, and George D. Zuckerman, Asst. Atty. Gen. of New York, of counsel), for defendants.

Galef & Jacobs, New York City (William M. Ivler, New York City, of counsel), for Railway Express Agency, Inc., amicus curiae.

Before MEDINA, Circuit Judge, and HERLANDS and FEINBERG, District Judges.

MEDINA, Circuit Judge.

This is an action brought by plaintiff, American Travelers Club, Inc., a Delaware corporation with its principal place of business in New York State, against the Chairman, Members and Commissioners of the New York State Liquor Authority, seeking a declaratory judgment and injunction against the enforcement of Bulletin No. 359 issued by defendants relative to the shipment into New York State of alcoholic beverages declared "to follow" returning United States residents. The complaint alleges that the Bulletin is contrary to the New York Alcoholic Beverage Control Law and in violation of the Supremacy, Commerce, Due Process, Privileges and Immunities, and Equal Protection Clauses of the United States Constitution. We hold, (1) that federal question jurisdiction exists under 28 U.S.C. § 1331, and that this three-judge District Court was properly convened under 28 U.S.C. §§ 2281, 2284; (2) that the Pullman doctrine of "equitable abstention" (Railroad Comm. of Texas v. Pullman Co., 1941, 312 U.S. 496, 61 S.Ct. 643, 85 L.Ed. 971) should not be applied to the instant case; (3) that as applied to plaintiff's business operation Bulletin No. 359 is neither contrary to the New York Alchoholic Beverage Control Law, nor in violation of the Supremacy, Commerce, Due Process, Privileges and Immunities, or Equal Protection Clauses of the United States Constitution. Accordingly, the complaint is dismissed on the merits and judgment is granted for defendants.

I The Facts

Based upon the testimony given and the exhibits received into evidence at the hearings held before this Court, the details of plaintiff's business operation and the nature of the controversy that has arisen between the parties may be stated as follows:

Plaintiff was incorporated in Delaware in March of 1960 and maintains its principal place of business at the Crossway Idlewild Inn near Idlewild Airport in the City of New York. Paul Stevens, the president and principal stockholder of plaintiff, testified that plaintiff "aids overseas travelers in making purchases and providing information related to local conditions and also engages in the mail order business of liquor, cigarettes and gifts." The liquor phase of the business, with which this suit is exclusively concerned, has been conducted since December of 1960. Plaintiff has never received or applied for any sort of license issued by the New York State Liquor Authority. On December 28, 1962, defendants, the Chairman, Members and Commissioners of the New York State Liquor Authority, issued Bulletin No. 359 addressed to "All Common Carriers of Passengers or Freight" on the subject of the "Importation of Alcoholic Beverages."¹ Defendants thereafter advised the United States Commissioner of Customs of the issuance of such bulletin, which superseded the previous Bulletin No. 263, dated July 20, 1954,² and the Surveyor of Customs, Outside Division, Port of New York, has issued Surveyor's Order No. 3-1963 in implementation of Bulletin No. 359.³ The result has been that the Customs Service has refused to release liquor arriving in the Port of New York subsequent to March 1, 1963, and which was declared by plaintiff's customers on arrival from foreign countries as duty-free liquor "to follow." Since March 1, 1963, the Customs Service in the Port of New York has also refused to issue Customs Form 3351, entitled "Release For Unaccompanied Tourist Shipment," to plaintiff's customers for alcoholic beverages declared "to follow" on the standard Customs Form 6063. The proof is to the effect that plaintiff has been able to clear shipments for residents of the State of New Jersey, and there is no evidence that shipments to residents of states other than New York have been affected. The Surveyor's Order expressly states that it does not apply to alcoholic beverages which physically accompany returning tourists, and we understand this suit to concern only the right of plaintiff to conduct its unlicensed business operation with respect to alcoholic beverages which "follow" returning New York residents.

The evidence shows that during the fiscal year commencing April 1, 1962 and ending March 31, 1963, the gross volume of mail orders handled by plaintiff amounted to $450,000, of which approximately eighty-five per cent represented orders for liquor. The gross volume of business orders for the two previous years was $127,000 for the year ending March 31, 1962 and $225,000 for the year ending March 31, 1961, approximately eighty to eighty-five per cent of such business consisting of liquor orders. Of the liquor orders received by plaintiff approximately sixty per cent were from New York State residents, approximately forty per cent being from residents of other states, including Connecticut, Illinois, Maine, Massachusetts, Michigan, New Jersey and Pennsylvania.⁴ The shipments of liquor which arrived in the United States but have been denied release have an approximate value of $90,000 and are impounded at the United States Free Trade Zone on Staten Island, New York.

Plaintiff's business operation was conducted in the following manner:

Plaintiff prepared and published order forms which were distributed to departing travelers by certain travel agents, commercial airlines and large corporations located in New York City and other urban parts of the Greater New York City area, and in a number of other states.⁵ These order forms were also distributed to travelers in foreign countries by hotels, airline counters, sightseeing companies, guides and other persons who come in contact with American travelers. Occasionally, plaintiff made direct distribution to travelers upon request. Each form contains a code number assigned to the particular travel agent or other distributor, and commissions averaging $2.50 per order form were paid to such distributors. During the fiscal year ending March 31, 1963 plaintiff paid approximately $12,000 in commissions to distributors in the State of New York.

The order form invites United States residents in certain listed states to select five-fifths (one gallon) of liquor per household member traveling together, and to mail the order form for this duty-free liquor from a point outside the United States or its possessions addressed to plaintiff, together with check or money order. The purchase price is stated to include "all shipping charges and insurance," and plaintiff "guarantees prompt delivery" of the liquor to "home or office," with replacement for breakage or loss in transit "at full U. S. retail value."

Plaintiff returned all order forms which were not mailed from outside the United States or its possessions. "Substantially all" of the orders and checks mailed to plaintiff were received at its New York City office, a "very minute" portion being received at plaintiff's office in Antwerp, Belgium. Upon receiving an order form in New York plaintiff deposited the accompanying check in its bank account at the Idlewild branch of a New York bank. At this time plaintiff owned no supplies or stocks of liquor from which the orders might be filled. The orders were then transcribed onto a purchase order form and once each week plaintiff mailed this transcribed order form containing the names, addresses and liquor selections of each of its customers to Société Commerciale Avimar, Antwerp, Belgium, a Belgian company which specializes in the sale of such liquors. At the same time plaintiff sent Avimar its own check, drawn to the order of Avimar, covering the cost of such liquors, at fixed prices which were approximately fifty per cent of the prices paid to plaintiff by its own customers. Upon receipt of these items Avimar withdrew the specific quantities and brands called for by each order from its liquor stocks in Antwerp, and prepared and made up a separate package for each order, a label being physically affixed to the outside of each package bearing the name and address of the purchaser and stating the brands and quantities making up his purchase.

These individual packages, bound by two metal straps, were placed in large sealed containers, bearing the name of the plaintiff, American Travelers Club, Inc. These containers were shipped by steamer from Antwerp to the Port of New York under a bill of lading which identifies a freight forwarder selected by Avimar as consignor and plaintiff or its own Customs House broker in New York as consignee. Avimar paid all freight and shipping charges until delivery in New York. Avimar also paid for insurance of the liquor for the account of "whom it may concern," until delivery in New York, plaintiff paying all transit and insurance costs thereafter. When the liquor arrived in the Port of New York the sealed containers were unloaded and placed in a crib on the pier where they were subsequently broken down to individual packages.

Upon his arrival in the United States the returning resident completed Customs Form 6063 in which the liquor ordered through plaintiff is declared under the classification of "articles being shipped to you" and stated to be for the personal or household use of the returning resident...