Darling Apartment Co. v. Springer

• Decision Date: 22 June 1940
• Citation: 25 Del.Ch. 98,15 A.2d 670
• Parties: DARLING APARTMENT COMPANY, a corporation of the State of Delaware, v. WILLARD SPRINGER, JR., constituting the "DELAWARE LIQUOR COMMISSION.&quot
• Court: Court of Chancery of Delaware

15 A.2d 670

25 Del.Ch. 98

DARLING APARTMENT COMPANY, a corporation of the State of Delaware, v. WILLARD SPRINGER, JR., constituting the "DELAWARE LIQUOR COMMISSION."

Court of Chancery of Delaware, New Castle

June 22, 1940

BILL IN EQUITY to enjoin Willard Springer, Jr., the defendant constituting the "Delaware Liquor Commission," from suspending certain licenses for the sale of alcoholic liquors, issued by that Commission to the complainant.

Case heard on demurrer to the complainant's bill.

The licenses in question were issued to the complainant May 31st 1939, and would have expired June 30th, 1940. The complainant's bill was filed March 13th, 1940, and the threatened suspension of such licenses was based on an alleged violation on January 21st, 1940, of a rule which had been promulgated by the Liquor Commission. That rule prohibited any holder of a license, for the sale of alcoholic liquors, other than the holder of certain specified licenses which we need not consider, "to knowingly permit the consumption of any alcoholic liquor' on the premises, to which such license pertains, between 12:30 o'clock in the forenoon and 9 o'clock in the forenoon, except on the First day of January in each year."

Other facts will appear in the opinion of the court.

The defendant demurred to the complainant's bill, alleging:

1. That the provisions of the Liquor Control Act (Chapt. 18, Vol. 38 Laws of Delaware, Chapt. 176 Rev. Code 1935), authorizing the adoption of rules and regulations, and the enforcement thereof by the Delaware Liquor Commission, were valid and constitutional.

2. That the rule promulgated by the Delaware Liquor Commission was not legislative in nature, but was a valid exercise of the power given by Chapter 18, Volume 38, Laws of Delaware (Chapter 176, Rev. Code 1935), and, therefore, did not violate the provisions of the constitution.

3. That it appeared from the allegations of the bill of complainant that the complainant had no cause of action against the defendant.

Demurrer to the complainant's bill sustained and injunctive relief prayed for denied.

William H. Bennethum, for complainant.

William S. Potter, of the firm of Southerland, Berl, Potter & Leahy, for defendant.

OPINION

THE CHANCELLOR:

This case is before this court on a demurrer to the complainant's bill.

The bill, in substance, alleges that the complainant, "Darling Apartment Company," a corporation doing business in the City of Wilmington, holds two several licenses, issued by the Delaware Liquor Commission, which permit it to sell alcoholic liquors on its premises in that city. One of these licenses permits it to sell such liquors by the glass or by the bottle, for consumption in any dining room, taproom or bedroom, authorized by the Commission, and on the premises where sold, pursuant to the provisions of "The Liquor Control Act." The other license permits the "Darling Apartment Company" to sell alcoholic liquors in certain specified quantities, not for consumption on the premises where sold, and, also, as provided in the same act. Both of these licenses were issued May 31st, 1939, and will expire June 30th, 1940. Prior to the filing of the bill, Willard Springer, Jr., constituting the "Delaware Liquor Commission," had notified the Darling Apartment Company that such licenses to sell liquor would be suspended or revoked for a period of one week because that company had knowingly permitted the consumption of alcoholic liquors upon its premises after 12:30 o'clock A. M. on January 21st, 1940, in violation of the provisions of a rule which had been promulgated by the Liquor Commission September 22nd, 1938. The right of the defendant to revoke or suspend the licenses in question is challenged by the complainant, and injunctive relief is prayed for. The bill does not allege that the complainant operated a hotel, or that it knowingly permitted alcoholic liquors to be consumed on its premises after 12:30 o'clock A. M. on January 21st, 1940. In fact, it denies any such charge, but, by agreement of counsel, the case has been argued both orally and on briefs as though the complainant had specifically alleged those facts. The right of the defendant to suspend the licenses in question under that state of facts will, therefore, be considered and determined regardless of whether, in strictness, that question is raised by the demurrer to the bill.

The liquor licenses issued to the complainant were issued pursuant to the provisions of Chapter 18, Volume 38, Laws of Delaware. That act is entitled "An Act Creating a Commission for the Control of the Manufacture, Distribution, Sale and Transportation of Alcoholic Liquor, Wines and Beer." It is incorporated in Chapter 176 of the Revised Code of 1935, which includes Sections 6130 to 6205 inclusive of that volume.

Section 6134 of the Code of 1935 provides:

"The functions, duties and powers of the Commission shall be the following:

"(1) To adopt and promulgate rules and regulations not inconsistent with the provisions of this Chapter or of the laws of the State of Delaware. All such rules and regulations shall have the force and effect of law;

"(2) To establish by such rules and regulations an effective control of the business of manufacture, sale, dispensation, distribution and importation of alcoholic liquors' within and into the State of Delaware, including the time, place and manner in which alcoholic liquors' shall be sold and dispensed, not inconsistent with the provisions of this chapter; * * *

"(5) To control the manufacture,' possession,' sale' and delivery' of alcoholic liquors' in accordance with the provisions of this Chapter; and to control the purchase, possession, transportation and sale' of alcoholic liquors' by those licensed to manufacture' or to sell';

"(6) To grant, to refuse, or to cancel licenses for the manufacture' or sale' of alcoholic liquor,' or other licenses in regard thereto, and to transfer any license granted;

"(7) To investigate and to prevent every violation of this Chapter, make every seizure of alcoholic liquor,' manufactured, ' sold,' kept or transported in contravention thereof and to confiscate such alcoholic liquor' whenever required by this Chapter;

"(8) To act for the purposes of this Chapter, as the competent authority in connection with other matters pertinent thereto."

Section 6158 provides:

"(1) The Commission may cancel or suspend any such license for the sale of alcoholic liquor, if it has reasonable ground to believe:

"a. That the licensee has violated any provisions of this Chapter or Acts amendatory hereof or any regulation of the Commission pursuant hereto."

Section 6162 provides:

"* * * (4) It is forbidden for any holder of a license for the sale of alcoholic liquor' in a hotel,' in a restaurant,' in a club' or in a tavern,' to sell the same between twelve o'clock midnight of any day and nine o'clock in the forenoon of the following day, provided that the closing hour may be made earlier in any Municipality by ordinance of the Municipal Corporation. * * *"

It is not denied that under the police powers of the State, the Legislature has broad, regulatory powers over the manufacture, distribution, sale and transportation of alcoholic liquors. See Meehan v. Board of Excise Commissioners, 73 N.J.L. 382, 64 A. 689; 15 R. C. L. 255. Exercising that right, the Act in question prohibits the sale of any such liquor in a hotel, restaurant, club or tavern "between 12 o'clock midnight of any day and 9 o'clock in the forenoon of the following day." One of the declared powers and duties of the Commission, created by that Act, is, also, to adopt such rules and regulations, not inconsistent with its provisions, as will bring about "an effective control of the business of manufacture, sale, dispensation, distribution and importation of alcoholic liquors' within and into the State of Delaware, including the time, place and manner in which alcoholic liquors' shall be sold and dispensed."

Pursuant to the power given it by the statute, the Liquor Commission promulgated a rule, which forbids "any holder of a license for the sale of alcoholic liquors' other than the holder of a Gathering License', to knowingly permit the consumption of any Alcoholic Liquor' on the premises to which such license pertains between 12:30 o'clock in the forenoon and 9:00 o'clock in the forenoon, except on the First day of January in each year."

Perhaps the most important question to determine is whether this rule is of an administrative nature and within the scope of the act, or whether it is purely of a legislative nature and therefore, illegal. The Legislature had the undoubted power to authorize the Liquor Commission to make such reasonable, administrative rules and regulations, clearly within the general purpose and scope of the Act, as would aid in its complete enforcement; but that power is distinctly of a limited nature, and cannot be used merely to supply omissions in the provisions of any such Act. State v. Retowski, 6 W. W. Harr. (36 Del.) 330, 172 A. 257; Hoff v. State, 9 W. W. Harr. (39 Del.) 134, 197 A. 75, 79. In considering the validity of a rule of that character, we must bear in mind that the true distinction is between the delegation of the power by the Legislature to a Commission to make a law, which necessarily involves discretion as to what its provisions shall be; and the right to confer upon that Commission a measure of administrative authority and discretion in aid of the execution of such law. Id. We must, also, bear in mind that, in order to uphold a delegation of power to an administrative body, there must be discovered in the terms of the act a standard, reasonably clear, whereby the discretion of that body must be...