Cohon v. Department of Alcoholic Beverage Control

• Decision Date: 16 July 1963
• Citation: 218 Cal.App.2d 332,32 Cal.Rptr. 723
• Court: California Court of Appeals Court of Appeals
• Parties: Charles COHON and Irving Sirbu, Plaintiffs and Appellants, v. DEPARTMENT OF ALCOHOLIC BEVERAGE CONTROL of the State of California, Defendant and Respondent. Civ. 20485.

Page 723

32 Cal.Rptr. 723

218 Cal.App.2d 332

Charles COHON and Irving Sirbu, Plaintiffs and Appellants, v. DEPARTMENT OF ALCOHOLIC BEVERAGE CONTROL of the State of California, Defendant and Respondent.

Civ. 20485.

District Court of Appeal, First District, Division 1, California.

July 16, 1963.

M. Mitchell Bourquin, San Francisco, for appellants.

Stanley Mosk, Atty. Gen. of State of California, Wiley W. Manuel, Deputy Atty. Gen., San Francisco, for respondent.

MOLINARI, Justice.

This is an appeal from a judgment denying appellants (hereinafter called the licensees) a peremptory writ of mandate in a proceeding for judicial review of an administrative decision of the Department of Alcoholic Beverage Control (hereinafter called the Department) ordering the suspension of an off-sale retail liquor license issued by the Department.

On March 13, 1959, the Department filed an accusation against the licensees in five counts charging that on five different occasions the licensees sold from their licensed premises cases of distilled spirits under the labels of Ancient Age whiskey and Cyrus Noble whiskey at sales prices below the applicable fair trade price. The acts set forth in all five counts were charged as providing grounds for suspension or revocation of the licensees' license under article XX, section 22, of the CALIFORNIA CONSTITUTION, SECTIONS 24200¹, subdivisions (a) ² and (b) ³ 24755 ⁴ of the Business and Professions Code, ⁵ and rule 99(f) of the Department's rules. ⁶ (Cal.Admin.Code, Title 4, § 99, subd. (f).)

A notice of defense was filed with the Department in which the licensees admitted that the beverages listed in the five counts were sold by them at the prices alleged. They denied, however, that the 'fair trade prices' alleged in the accusation were stipulated to or fixed in any fair trade contract which was filed and posted as required by law and the Administrative Code. ⁷

On November 2, 1959, a hearing was held before the Department. At the commencement of the hearing the hearing officer denied the motion to dismiss and overruled the objections set forth in the notice of defense. Counsel for the licensees stipulated that the prices alleged in the accusation as the 'Fair Trade Prices' were published in the 'Industry Price Book' for the period covered by the accusation, and also stipulated that the prices charged by the licensees for the whiskies in question were as set forth in the accusation. The evidence adduced by the Department consisted of three exhibits. Exhibits No. 1 and No. 2 were fair trade contracts which fixed the minimum retail prices for the two brands of whiskey involved in the five counts of the accusation. ⁸ Each of the contracts had attached thereto a schedule of prices which listed the case price of the respective whiskies. ⁹ These contracts were duly certified by the custodian of fair trade contracts for the Department. The authentication of these contracts was not challenged by the licensees, but they were objected to by the licensees on the basis of irrelevancy and immateriality and upon the grounds that these documents do not purport on their face to be valid contracts and that these contracts were not subjects of the accusation, and upon all of the grounds enumerated in the notice of defense. ¹⁰ Exhibit No. 3 consisted of an affidavit by the editor of the Beverage Industry News to the effect that the prices alleged by the Department to be controlling on the licensees during the period covered by the accusation were published in said publication. ¹¹ This affidavit was not objected to by the licensees. The Department's case was submitted upon these three exhibits. The licensees, conceding that there were no factual questions involved, did not present any evidence but submitted the matter upon the basis of the objections theretofore made and as stated in the notice of defense.

Thereafter, and on January 5, 1960, the hearing officer rendered his proposed decision wherein he made the following findings of fact: (1) that each of the sales which formed the basis of each of the five counts took place as therein alleged and that in each instance the sale was made at less than the stipulated minimum resale price provided for in the fair trade contracts duly filed with the Department; and (2) that the alcoholic beverages subject to the accusation were, and are, in free and open competition with alcoholic beverages of the same general class produced by others. The hearing officer also determined the legal issues presented and adjudged: that the various statutes and rules applicable to the accusation are constitutional and valid; that the fair trade agreements in question do not violate the Sherman Anti-Trust Act nor the Cartwright Act; and finally, that the fair trade prices were supported by valid contract and were subject to agreements or contracts sanctioned by law. The hearing officer thereupon recommended that the licensees' license be suspended for 15 days on each count, said suspension to run concurrently.

The Department adopted the hearing officer's decision and an appeal was thereupon taken by the licensees to the Alcoholic Beverage Control Appeals Board. This appeal posed the same legal questions presented by the licensees before the Department and was based on the grounds upon which the original accusation was defended. In addition, it was alleged that the Department had proceeded in excess of its jurisdiction for each of the reasons and upon the grounds alleged as a basis for the appeal. The Appeals Board rendered its decision affirming the Department. The licensees then filed a petition for writ of mandate in the superior court seeking a judicial review of the administrative adjudication. The writ was sought on the basis that substantial evidence did not exist which would support a finding that the alcoholic beverages which were the subject of the accusation were in fair and open competition. The same legal grounds theretofore urged by the licensees were again substantially reiterated before the court below. Upon hearing and determination the superior court discharged the alternative writ theretofore issued and denied a peremptory writ of mandate.

Upon this appeal the licensees make the following contentions:

(1) That the purported fair-trade contracts relied upon do not comply with the provisions of section 24750 and do not constitute valid contracts, and in support of this assertion it is further urged: (a) that the contracts are not between the parties authorized to contract by the act; (b) the agreements relied upon are void for lack of mutuality; and (c) the only valid price fixing agreements are those relating to products which are in fair and open competition.

(2) Open competition does not and cannot exist under the law as presently administered by the Department; and

(3) The evidence is insufficient to support a finding of fair and open competition, and in support of this claim it is further asserted: (a) that the absent evidence of fair and open competition cannot be supplied by official or judicial notice; and (b) the recitals of the fair trade contracts bind no one but the parties signatory thereto.

The scope of our review in the instant case is governed by certain well-established rules. The Department, being an agency upon which the Constitution has conferred limited judicial powers (Cal.Const. art. XX, § 22), we are called upon, where there are conflicts in the evidence, conflicting interpretations thereof and conflicting inferences which may be drawn therefrom, to determine whether the findings of the Department are supported by substantial evidence. In this respect our function is the same as that of the court below. (DeMartini v. Department of Alcoholic Beverage Control, 215 A.C.A. 885, 896-897, 30 Cal.Rptr. 668; Harris v. Alcoholic Bev. etc. Appeals Bd., 212 A.C.A. 107, 114, 28 Cal.Rptr. 74.) On the other hand, where there is no factual issue or substantial conflict in the evidence, the question presented is one of law and the conclusions of law of the Department are not necessarily binding upon the appellate court whose duty it is to make the final determination in accordance with applicable principles of law. (Estate of Platt, 21 Cal.2d 343, 352, 131 P.2d 825; Dunning v. Dunning, 114 Cal.App.2d 110, 114-115, 249 P.2d 609; Mangini v. Wolfschmidt, Ltd., 192 Cal.App.2d 64, 73, 13 Cal.Rptr. 503.) Accordingly, the applicability of certain statutes to a given situation presented on stipulated or uncontradicted facts, is a question of law, the determination of which devolves upon us in accordance with applicable principles of law. (Estate of Madison, 26 Cal.2d 453, 456, 159 P.2d 630; Bodinson Mfg. Co. v. California Employment Comm., 17 Cal.2d 321, 325, 109 P.2d 935; Peterson Tractor Co. v. State Board of Equalization, 199 Cal.App.2d 662, 668, 18 Cal.Rptr. 800; Pac. Pipeline Const. Co. v. State Bd. Equal., 49 Cal.2d 729, 736, 321 P.2d 729; Bank of America v. State Bd. of Equal., 209 A.C.A. 901, 914, 26 Cal.Rptr. 348.) Similarly, the construction of a written instrument, where no extrinsic evidence has been considered in aid of its interpretation, is one of law and we are not bound by the Department's interpretation of it. (Estate of Platt, supra; Meyer v. State Board of Equalization, 42 Cal.2d 376, 381, 267 P.2d 257; Ziganto v. Taylor, 198 Cal.App.2d 603, 606, 18 Cal.Rptr. 229; Estate of Black, 211 A.C.A. 92, 100, 27 Cal.Rptr. 418.) The interpretation placed upon a written instrument by the tribunal below, where extrinsic evidence has not been resorted to, while not binding on appeal, will be accepted by the appellate court if such interpretation is reasonable, or if such interpretation is one of two or more reasonable constructions of the instrument. (Prickett v. Royal Ins. Co., Ltd., 56 Cal.2d 234, 237, 14 Cal.Rptr. 675, 363 P.2d 907, 86 A.L.R.2d 711; Lundin v. Hallmark Productions, Inc., 161 Cal.App.2d 698, 701, 327 P.2d 166; Estate of ...