Dundalk Liquor Co. v. Tawes

• Decision Date: 16 March 1951
• Docket Number: No. 117,117
• Citation: 79 A.2d 525,197 Md. 446
• Parties: DUNDALK LIQUOR CO. v. TAWES et al.
• Court: Maryland Court of Appeals

Page 446

197 Md. 446

79 A.2d 525

DUNDALK LIQUOR CO. v. TAWES et al.

No. 117.

Court of Appeals of Maryland.

March 16, 1951.

Abram C. Joseph, Baltimore (Daniel C. Joseph, Baltimore, on the brief), for appellant.

Harrison L. Winter, Asst. Atty. Gen. (Hall Hammond, Atty. Gen., on the brief), for Comptroller et al.

I. William Schimmel, Baltimore (William C. Walsh, Baltimore, on the brief), for intervenors.

Before MARBURY, C. J., and DELAPLAINE, COLLINS, GRASON, HENDERSON and MARKELL, JJ.

COLLINS, Judge.

This is an appeal from a decree sustaining demurrers to appellant's substituted bill of complaint, without leave to amend, and dismissing that bill with costs.

The bill of complaint alleges that the appellant, complainant, a Maryland corporation, notified the Comptroller of the Treasury, one of the appellees and responents, 'that it was in a position to handle for sale to certain retailers a number of new varieties of beverages, which it proposed to sell at the price as submitted'. Submitted was a list containing a brand of brandy and brands of wines with the proposed sale price. '4. That said Respondents, upon receipt of the notification aforesaid, advised the Complainant that the prices indicated could not be published and charged as above set forth by reason of the fact that it was claimed that the prices requested were less than the prices established for other makes and brands of comparable merchandise and that said items could and would be listed only at the so called prevailing prices established as hereinafter set forth. 5. That, notwithstanding the protests of the officials of the Complainant Company, the Defendants and their representatives were adamant in refusing to publish the prices requested, and so advised the Complainant by long distance telephone; whereupon the Complainant's spokesman, while again asserting the illegality and invalidity of the position of said Respondents, admitted its helplessness in the situation, being, as a licensee, subject to the Regulation of said Respondents in the matter, pending such time as the intervention of the Courts might be secured. 6. That thereafter, the Comptroller's office did, in fact, publish the items listed with prices given therefor at the figures fixed by said Respondents, each change calling for a higher price than that at which the Complainant has been willing to sell the products at a reasonable profit to itself, its original prices having allowed a profit of approximately double the general statutory minimum. 7. That the Complainant is advised that the publication of said higher prices has been based upon said regulations promulgated by the Comptroller of the Treasury known as Regulation 206, and in accordance with official instructions published in connection with said regulation, and, more specifically, in connection with instruction No. 17, reading as follows: 'A new item cannot be established at a lower price than the current base price filed by other manufacturers and wholesalers with respect to the same size of a similar case, formula or character of item.' 8. That said regulation was promulgated and published by the Comptroller after consultation with certain wholesalers and distributors of alcoholic beverages within the State of Maryland who advocated the same and urged its adoption.

'9. That the Complainant is advised, and, therefore, alleges, that said regulation, as amplified by said instruction, is beyond the authority conferred upon said Respondents, is arbitrary, unreasonable, and void; and, further, that it has a direct tendency to stifle competition and to deprive the Complainant and others similarly of their constitutional right to pursue their legitimate business in a lawful way. 10. That a copy of the letter of your Complainant of March 21, a copy of the price list issued by the Respondents, and a copy of the instructions promulgated by said Respondents are all filed herewith and prayed to be taken as a part hereof as fully as if incorporated herein, being marked Complainant's Exhibits A, B and C. 11. That the Complainant has a large investment in its business and has on hand substantial quantities of material which it is unable to use to full advantage and has also outstanding offers of merchandise of high quality which, in the absence of the arbitrary regulations above mentioned, it could market at a very handsome profit at a price substantially below that demanded to be fixed by the said Respondents; and that as a result of these arbitrary and unlawful restrictions, the Complainant is deprived of its freedom of contract deprived of its right to engage in free competition, and has been caused great and irreparable loss and damage. 12. That the only tangible result of the regulation aforesaid, in addition to the evils above described, is to favor wholesalers of established and nationally advertised products with the result that the general public is compelled to pay higher prices at the consumer's level.'

The bill asked that the regulation aforesaid be vacated as unreasonable, unlawful and void; that a preliminary injunction be issued against the Respondents; and for other and further relief. To that bill the appellees demurred on the grounds that the bill was bad in substance and insufficient in law and further: 'That Regulation 206 of the Respondents is a fully valid regulation within the statutory power of the Respondents, was duly adopted in accordance with the law and is a valid, subsisting regulation governing the conduct of the Complainant's business.'

Regulation 206, supra, contains several sections. The first section governs the amount of discount allowed and is not in controversy here. The acts done by the Comptroller, as alleged in the declaration and admitted by the demurrers, concern other sections of that Regulation. In addition to the authority given the Comptroller by that Regulation as set out in the bill of complaint, it is provided therein as summarized in appellees' brief: 'Prices may be reduced in the following manner: Notice thereof must be filed with the Comptroller by registered mail not later than the 5th day of the current month, to become effective the 1st day of the subsequent month. Upon receipt of such a notice, the Comptroller then sends notices to all licensees selling to county dispensaries or retail dealers not later than the 12th day of the current month, advising them of the proposed decrease. The licensees receiving such a notice from the Comptroller have the right to reduce the price of one or more competitive items of the same kind or character in a like amount by notifying the Comptroller by registered mail not later than the 20th day of the current month, and upon receiving a written acknowledgment from the Comptroller. The price reduction initiated by a licensee and price reductions on competing items all become effective on the 1st day of the month subsequent to that in which the original action to reduce a price is undertaken. Regulation 206 recognizes that in certain extraordinary circumstances, a price reduction must be accomplished on less than the notice required as set forth above. Accordingly, Regulation 206 permits a price reduction on five days notice at any time by a license upon receipt by the Comptroller of a statement under oath setting forth the quantity, size, formula and brand of item, with established base price, cost price and distress price, the name of the wholesaler handling such item or items, and the fact that the wholesaler has been offered and declined to purchase such item or items at net cost to the seller, together with a further statement that the items will be disposed of within thirty days from the date of authorization and will not be sold or purchased for the six months period subsequent thereto.'

The appellee contends that the authority of the Comptroller to issue Regulation 206, supra, is given by Sections 94, 157, and 158 of Article 2B (1947 Supplement of the Code). Those sections follow: '94. Distribution of Alcoholic Beverages. In order to eliminate the undue stimulation of the sale of alcoholic beverages and the practice of manufacturers and wholesalers in granting secret discounts, rebates, allowances, free goods or other inducement to selected licensees which contribute to a disorderly distribution of alcoholic beverages, it shall be unlawful for any person licensed hereunder as a manufacturer or wholesaler to discriminate directly or indirectly in price, discounts or the quality of merchandise sold, between one dispensary and another dispensary, between one wholesaler and another wholesaler or between one retailer and another retailer purchasing alcoholic beverages bearing the same brand and trade name and of like age and quality. It shall be...