Brown-Forman Distillers Corp. v. Stewart
| Decision Date | 12 March 1975 |
| Docket Number | No. 58799,BROWN-FORMAN,58799 |
| Citation | 520 S.W.2d 1 |
| Parties | DISTILLERS CORPORATION et al., Appellants, v. Robert G. STEWART, Supervisor of Liquor Control for Missouri, Respondent. |
| Court | Missouri Supreme Court |
Cullen Coil, Jefferson City, for plaintiffs-appellants; Carson, Inglish, Monaco & Coil, Jefferson City, for counsel.
John C. Danforth, Atty. Gen., Walter W. Nowotny, Jr., Asst. Atty. Gen., Jefferson City, for respondent.
This is an action in which Brown-Forman Distillers Corporation, et al, (appellants) 1 seeks (1) a judgment declaring void regulations numbered 28 and 4(g) of the Supervisor of Liquor Control (respondent) and (2) a decree enjoining their enforcement. The trial court denied relief and Brown-Forman, et al., appealed. The court of appeals, Kansas City district, in an opinion by Somerville, J., reversed and remanded, holding regulation 4(g) valid and a part of regulation 28 void. On application of respondent, we ordered the case transferred to this court and decide it 'the same as on original appeal.' Mo.Const. Art. V, § 10, V.A.M.S.
We have determined from our review that the decision of the court of appeals correctly states the law and adopt, with minimal changes, the opinion of Somerville, J.
Regulation 28 reads:
The last four sentences of this regulation are italicized to indicate the only portion thereof attacked by appellants. No attack is made upon the first sentence of the regulation.
Regulation 4(g) reads:
'(1) No manufacturer, distiller, wine maker or wholesaler of alcoholic beverages shall conduct or participate in any promotional contest or activity in connection with the sale or distribution of such beverages or any other type of contest or activity promoting the sale or distribution of alcoholic beverages, nor shall they allow, permit, or suffer any employee to participate in any such contest or activity whereby the employee is paid, or otherwise rewarded or compensated on the basis of his success in the contest or activity, or receives any bonus, payment or other reward based upon his production in selling or promoting sales of such alcoholic beverages.
'(2) These provisions shall not apply to manufacturers or wholesalers who deal exclusively in malt alcoholic beverages, nor shall they apply where the pay or compensation of the employee is based upon his total production in selling or promoting sales of all the various brands of intoxicating beverages dealt in by the manufacturer, distiller, wine maker or wholesaler, provided that, if such pay or compensation is increased and such increase is only temporary and shall not continue and be in effect for at least one year, there is no exception and paragraph (1), above, applies.'
Appellants attack all of this regulation.
Evidence adduced at the trial disclosed that each appellant has written or oral contracts with their respective Missouri wholesalers. The various contracts, so far as pertinent to the issues on appeal, can be generally characterized as being terminable without cause or notice, without cause but with notice of termination, or without right of renewal and early termination for cause. Appellants offered two witnesses who each tendered the like opinion that the contractual rights of appellants to cancel contracts with wholesalers in accordance with the terms of the respective contracts were valuable rights, which, in effect, were destroyed or taken away by regulation 28, and that regulation 4(g) adversely affected each appellant because it prohibited all advertising by appellants. The referred to witnesses further testified that the relationship between distiller-manufacturers and wholesalers 'is really a partnership' and 'a franchise,' and that there were verbal, as well as written obligations and commitments on the part of both distiller-manufacturers and wholesalers which, depending upon a change of circumstances or conditions, such as failure on the part of a wholesaler to maintain adequate sales management or to maintain adequate credit, might necessitate moving part or all of a distiller-manufacturer's line of products from one wholesaler to another. Appellants' witnesses acknowledged that distiller-manufacturers could exert undue pressure or influence on wholesalers to 'push' a particular product resulting in evasion or violation by such wholesalers of the provisions of the Liquor Control Law (Chapter 311) 2 and valid regulations promulgated thereunder, but denied that the respective companies which they represented had ever engaged in any such tactics or terminated the contract of any of their wholesalers for failure to respond to such influence or pressure.
Respondent's evidence disclosed that regulation 28 was promulgated to eliminate illegal practices engaged in by wholesalers in order to keep a distiller-manufacturer's line because of the dominant control possessed by distiller-manufacturers over wholesalers in view of the power to transfer the right of distribution from one wholesaler to another and to create dual distributorships. Respondent's evidence further disclosed that former regulation 28, directed towards the aforementioned problem, was unworkable because it compelled a wholesaler to commit 'economic suicide' by reporting to the Supervisor of Liquor Control undue pressures and influence exerted on him by distiller-manufacturers. The former regulation read:
Respondent's evidence further disclosed that regulation 4(g) was designed to control any promotional contest whereby the compensation to a salesman of a distiller-manufacturer or wholesaler was based on the sale of a particular brand or item, because such contests encouraged violation of the liquor laws, but that regulation 4(g) did not outlaw all advertising by distiller-manufacturers.
It becomes important to circumscribe the grounds upon which appellants attack the validity of the regulations in question by first pointing out certain aspects involving rule-making authority possessed by respondent which appellants do not question. Appellants concede, arguendo, the following: (1) respondent, by virtue of the last sentence of § 311.336, and subparagraphs (6) and (10) of § 311.660, possesses authority to promulgate valid regulations pertaining to the general areas of control under consideration; (2) traffic in liquor is subject to strict legislative regulation; (3) no question is raised concerning the constitutionality of any provisions of the Liquor Control Law from which valid regulations concerning the general areas of control implicit in the regulations in question might spring; (4) valid regulations pertaining to the general areas of control implicit in the regulations in question are not condemned as being unnecessary or undesirable; and (5) valid regulations pertaining to the general areas of control implicit in the regulations in question could be lawfully and properly promulgated by respondent in view of various provisions found in the Liquor Control Law. On the other hand, appellants vigorously contend that the regulations in question are so broad and vague that they are tantamount to the vestment of absolute arbitrary enforcement power in respondent beyond the pale of the Liquor Control Law, all of which is compounded by the fact that violation of any of the regulations in question, knowingly or unwittingly, subjects appellants and other licensee violators to having their license removed or suspended. Section 311.660(6).
There can be no question that respondent, as Supervisor of Liquor Control, is statutorily vested (§ 311.660, supra) with power and authority to promulgate valid regulations to fill in the interstices of the Liquor Control Law. Milgram Food Stores, Inc. v. Ketchum, 384 S.W.2d 510, 513(1) (Mo.1964).
Since traffic in liquor is subject to the plenary power of the state, those who do so are severely limited in claiming the full spectrum of those common, inherent, natural or constitutional rights attendant to most other business enterprises. The rationale underlying permissive impingement of basic rights of those engaged in the traffic of liquor, which would be struck down if shown to exist with respect to most other business enterprises, is that the business of engaging in the traffic of liquor is a matter of privilege, rather than right, in...
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