Boller Beverages, Inc. v. Davis

• Decision Date: 29 June 1962
• Docket Number: No. A--65,A--65
• Citation: 38 N.J. 138,183 A.2d 64
• Parties: BOLLER BEVERAGES, INC., Petitioner, v. William Howe DAVIS, Director of the Division of Alcoholic Beverage Control, etc., Defendant.
• Court: New Jersey Supreme Court

Page 138

38 N.J. 138

183 A.2d 64

BOLLER BEVERAGES, INC., Petitioner, v. William Howe DAVIS, Director of the Division of Alcoholic Beverage Control, etc., Defendant.

No. A--65.

Supreme Court of New Jersey.

Argued Jan. 8, 1962.

Decided June 29, 1962.

Joseph M. Jacobs, Newark, for petitioner (Harrison & Jacobs, Newark, attorneys, Joseph M. Jacobs, Newark, of counsel).

Samuel B. Helfand, Deputy Atty. Gen., for defendant (David D. Furman, Atty. Gen of New Jersey, attorney, Samuel B. Helfand, Newark, of counsel).

The opinion of the court was delivered by

HALL, J.

The Director of the Division of Alcoholic Beverage Control specially ruled that the sale of a brand of corn whiskey was illegal in New Jersey when packaged in Mason or fruit jars. Petitioner, a licensed wholesaler of this State handling the product, appealed to the Appellate Division, treating the Director's action as the final decision of a state administrative agency, R.R. 4:88--8, and, by the same pleading, considering the action as an administrative rule promulgated by a state agency, sought a review of validity through the declaratory judgment procedure, R.R. 4:88--10. We certified the case on our own motion before hearing in the Appellate Division. The matter involves important aspects of the powers of the Director and the manner of exercise thereof.

From the stipulated record we are advised that in 1958 Viking Distillery, Inc., of Albany, Georgia, began to manufacture and sell in interstate commerce a product called 'Georgia Moon Corn Whiskey,' under the authorized trade name of The Johnson Distilling Co. and appropriate federal distiller's basic permit. The whiskey, a colorless liquid, was marketed in conventional beverage bottles, having a neck and narrow mouth, in two sizes, pint and fifth (4/5ths of a quart or 1/5th of a gallon). The labels were also of conventional style and identified the contents as 90 proof and less than 30 days old. Petitioner, undertaking to sell the product to retailers in New Jersey, filed with the Director in 1960 the necessary quarterly listings of minimum prices for wholesale and retail sales as prescribed by his Regulations Nos. 34 and 30. Such listings show the brand name and the respective prices for the differing size bottles in which the product is sold.

In the latter part of 1960 the distiller commenced to market the whiskey also in an open-mouthed cylindrical bottle with a screw-on cap, identical in shape with the common Mason or fruit jar. It held a fifth and bore an unconventional style label. All federal approvals required for the new container and label were obtained. Petitioner started to sell it at wholesale in New Jersey late in 1960 or early in 1961. Since the wholesale and retail minimum prices were the same at inception as for the regular fifth, no notice of the new packaging was given to the Director. A higher price and difference in proof from the conventional bottle were, however, decided upon in the early part of 1961, which necessitated separate listings. Consequently in February of that year petitioner filed listings for the quarter commencing April 1, specifying one price and proof for 'Mason Jar' fifths and another for 'Regular Bottles.'

The brand name 'Georgia Moon' in conjunction with the specification of the 'Mason Jar' container excited the Director's interest and he called for further information. His concern arose because a Mason or fruit jar apparently is the traditional container for illicit or 'moonshine' whiskey, particularly in certain sections of the country, and the 'Georgia Moon' brand name also invoked a similar connotation. Personal and telephone conversations and letter communications between petitioner, the distiller and the Director followed. No formal proceeding was instituted or trial type hearing held.

The upshot was the ruling compained of, contained in the Director's letter to petitioner, dated March 1, 1961. Although disturbed by the connotation of the brand name, he agreed to continue to accept regular bottle listings thereunder, but concluded as follows concerning the jar container:

'The Director finds the Mason jar objectionable for a number of reasons, including the fact that 'moonshine' has been traditionally packaged in Mason jars and he does not approve of what may have the appearance of illicit whiskey being sold or dispensed on licensed premises. Furthermore, this Division has disapproved other containers which, as in the case of Mason jars, have other utilitarian uses, when empty.'

He did not refer to any statutory section or regulation as authority for the ruling.

In subsequent correspondence, petitioner indicated a desire to make known 'certain facts and conclusions' before 'this action is closed.' The Director in reply, while indicating willingness to discuss the matter further, directed the removal of all jar containers from the New Jersey retail market since their sale was illegal. He further stated that his decision was not based solely on the fact that the jar is a refillable container. A later conference took place but the ruling remained unchanged and this action was commenced shortly thereafter. The ruling has been complied with pending the outcome of the litigation.

Prior to the ruling petitioner and the distiller urged upon the Director the federal approval of the new packaging and the fact that the product was being sold in this fashion in 25 or more states. They further contended that marketing in the jar container was 'doing more to combat moon-shining than all the enforcement agencies combined' because it gave 'the normal moon-shine drinker a safe, legal tax paid product that is similar to what he likes to drink,' thereby 'competing with his normal supplier, and making (the moonshiner's business less profitable.' Also submitted to the Director were magazine articles commenting on the new form of packaging as an effective sales 'gimmick.'

In response to the Director's initial request for further information, petitioner furnished him with a label sample, required as a prerequisite to sale at wholesale or retail of any alcoholic beverage by Regulation No. 30, Rule 1. Through error the label submitted was that for the conventional bottle rather than the one used on the jar. (No point is made of the mistake.) The jar label apparently did not come to his attention until after the ruling was made. Copies are included in the stipuated record and, by agreement, we have also been furnished with samples of the jar, the cardboard carton in which it is placed for retail sales and a pamphlet or brochure of drink recipes packed in the carton. At oral argument we were advised that the Director also finds the label and pamphlet objectionable and perhaps the carton as well. His objection is based not only on the connection of the printed materials with the jar type container, but also because he believes them to be lacking in good taste and unduly designed to stimulate or increase consumption of alcoholic beverages. We take it the parties desire that we consider the Director's ruling as if it had banned them as well for the reasons just recited. Since both phases of the matter involve the same fundamental issues of administrative power and its exercise, we are willing to comply with the request despite the irregularity of the presentation. The fact that the case must turn on these basic questions makes unnecessary full description of the printed matter.

Petitioner's first contention is that a state lacks authority to bar the jar container, the label and the other items. The petition alleges that 'the label and container in question has been approved by the Federal Alcoholic Administration and defendant has no power to render illegal in New Jersey the sale of a product which is permitted on a national basis * * *.' While the basis of the point is not clearly articulated, we must assume it to be that, since the distiller here has met all federal requirements with respect to bottles and labels of liquor moving in interstate commerce, New Jersey is barred from imposing further or different regulation of the subject because such would violate the Commerce Clause of the Federal Constitution or would be intruding upon a field which the national government has already exclusively occupied. The contention necessitates some consideration of the pattern of federal regulation of alcoholic beverages and its relation to state authority.

On the one hand, it is clear that the Twenty-First Amendment did not give to the states complete and exclusive control over commerce in intoxicating liquors and that the power of Congress to regulate foreign and interstate commerce therein continues except as modified by the amendment. William Jameson & Co. v. Morgenthau, 25 F.Supp. 771 (D.D.C.1938), decree vacated on procedural grounds, 307 U.S. 171, 59 S.Ct. 804, 83 L.Ed. 1189 (1939); U.S. v. Frankfort Distilleries, Inc., 324 U.S. 293, 65 S.Ct. 661, 89 L.Ed. 951 (1945). Cf. Motor Cargo, Inc. v Division of Tax Appeals, 10 N.J. 580, 92 A.2d 774 (1952). As Mr. Justice Black said in his concurring opinion in Carter v. Virginia, 321 U.S. 131, 64 S.Ct. 464, 88 L.Ed. 605, 612 (1944), 'Though the precise amount of power (the Amendment) has left in Congress to regulate liquor under the Commerce Clause has not been marked out by decisions, this much is settled: local, not national, regulation of the liquor traffic is now the general Constitutional policy.'

So, conversely, the Amendment sanctions the right of a state to legislate concerning alcoholic beverages brought from without, unfettered by the Commerce Clause, and bestowed upon the states broad regulatory powers over the liquor traffic within their borders. Ziffrin v. Reeves, 308 U.S. 132, 60 S.Ct. 163, 84 L.Ed. 128 (1939); U.S. v. Frankfort Distilleries, Inc., supra. As the court said in Ziffrin:

'Without doubt a state may absolutely prohibit the manufacture of intoxicants, their transportation, sale, or...