Dundalk Liquor Co. v. Tawes

• Decision Date: 14 November 1952
• Docket Number: No. 32,32
• Citation: 92 A.2d 560,201 Md. 58
• Parties: DUNDALK LIQUOR CO. v. TAWES et al.
• Court: Maryland Court of Appeals

Page 58

201 Md. 58

92 A.2d 560

DUNDALK LIQUOR CO. v. TAWES et al.

No. 32.

Court of Appeals of Maryland.

Nov. 14, 1952.

Rehearing Denied Jan. 14, 1953.

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

Robert M. Thomas, Asst. Atty. Gen (Hall Hammond, Atty. Gen., and George H. P. Eierman, Baltimore, on the briefs), for appellees.

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

MARKELL, Chief Judge.

This is an appeal from a decree dismissing on demurrer a bill praying that Chapter 711 of the Acts of 1951 'be vacated and set aside, and declared unreasonable and void' and that the Comptroller and the Chief of the Alcoholic Beverages Division be prevented by injunction from enforcing the act and the Comptroller's regulations under it. Chapter 711 is an act authorizing and directing the Comptroller (1) to fix maximum discounts (or prohibit discounts) to be allowed by manufacturers or wholesalers of wines and liquors in the sale or distribution thereof and (2) to require the filing of schedules of prices and proposed price changes at which wines and liquors are sold by such manufacturers or wholesalers and by non-resident dealers. The act followed promptly our decision on March 16, 1951 in Dundalk Liquor Co. v. Tawes, Md., 79 A.2d 525. In that case we held that a regulation of the Comptroller requiring the filing of schedules of prices and proposed price changes was not authorized by then existing law. The effect of the act of 1951 (if valid) is to 'authorize and direct' the Comptroller to make and enforce just such regulations as we held unauthorized before the passage of the act.

In the bill plaintiff alleges, '4. That said enactment, while on its face declared to be intended to eliminate price wars, which, it is claimed, unduly stimulate the sale and consumption of wines and liquors, is in reality a price-fixing Bill, and attempts to grant vague, indefinite and arbitrary power to control the prices at which merchandise may be sold, to thwart and impede the regular course of business, and to stifle free competition, none of the said powers thus sought to be granted having any real relationship to the expressed purpose or to the public weal.' In argument plaintiff bitterly assails the motives of the proponents of the bill, the Comptroller as chief among them, and asserts that the real but 'camouflaged' purpose and effect of the act (if valid) is to enable 'a pressure group' within the liquor industry to 'evade the vigilance of the courts in the application of constitutional safeguards designed to preserve individual initiative.' Paragraph (a) of the act declares, 'It is the declared policy of this State that it is necessary to regulate and control the sale and distribution within the State of wines and liquors, for the purpose of fostering and promoting temperance in their consumption and respect for and obedience to the law. In order to eliminate price wars, which unduly stimulate the sale and consumption of wines and liquors and disrupt the orderly sale and distribution thereof, it is hereby declared as the policy of this State that the sale of wines and liquors should be subjected to the following restrictions, prohibitions and regulations. The necessity for the enactment of the provisions of this section is, therefore, declared as a matter of legislative determination.' An invalid act cannot be made valid by a 'preface of generalities' in the form of a legislative declaration of purpose. Schechter Poultry Corporation v. United States, 295 U.S. 495, 537, 55 S.Ct. 837, 79 L.Ed. 1570. But if a legislative declaration is not demonstrably untrue or meaningless, and if true, would support the validity of the act, the courts must accept the judgment of the legislature and cannot substitute a contrary judgment of their own. In sustaining the constitutionality of the Illinois Fair Trade Act, S.H.A. ch. 121 1/2, § 188 et seq., the Supreme Court said, 'There is a great body of fact and opinion tending to show that price cutting by retail dealers is not only injurious to the good will and business of the producer and distributor of identified goods, but injurious to the general public as well. The evidence to that effect is voluminous; but it would serve no useful purpose to review the evidence or to enlarge further upon the subject. True, there is evidence, opinion and argument to the contrary; but it does not concern us to determine where the weight lies. We need say no more than that the question may be regarded as fairly open to differences of opinion. The legislation here in question proceeds upon the former and not the latter view; and the legislative determination in that respect, in the circumstances here disclosed, is conclusive so far as this court is concerned. Where the question of what the facts establish is a fairly-debatable one, we accept and carry into effect the opinion of the Legislature.' Old Dearborn Distributing Co. v. Seagram-Distillers Corp., 299 U.S. 183, 195-196, 57 S.Ct. 139, 145, 81 L.Ed. 109.

This has long been and must now be the attitude of this court toward facts underlying so-called economic legislation. We neither approve nor disapprove this act. We cannot speculate as to the motives of the legislature, the Comptroller or other proponents of the act. All economic legislation, from the protective tariff down to the recent supplement to the Miller-Tydings Act, 15 U.S.C.A. § 1, has been bitterly assailed and defended by opposing classes, usually activated by self-interest. Opposing strains of policy are sometimes found in the same or closely related legislation. The Sherman Act, 15 U.S.C.A. §§ 1-7, 15 note, before the Miller-Tydings Act, forbade restraints on competition, including all resale price maintenance. The Miller-Tydings Act, as recently supplemented, act of July 14, 1952, c. 745, 15 U.S.C.A. § 45(a), carves an exception out of the Sherman Act and, within limits, permits the States to compel price maintenance. In Goldsmith v. Mead, Johnson & Co., 176 Md. 682, 7 A.2d 176, 125 A.L.R. 1339, this court sustained the constitutionality of the Maryland Fair Trade Act. In several cases we have enforced that act against nonsigners before the Supreme Court held such acts invalid as against nonsigners. Donner v. Calvert Distillers Corp., Md., 77 A.2d 305; Schwegmann Brothers v. Calvert Distillers Corp., 341 U.S. 384, 71 S.Ct. 745, 95 L.Ed. 1035. In Daniel Loughran Co. v. Lord Baltimore Candy & Tobacco Co., 178 Md. 38, 43, 12 A.2d 201, the first Unfair Sales Act was held unconstitutional because of uncertainty and potential inequities. In Blum v. Engelman, 190 Md. 109, 57 A.2d 421, we sustained the constitutionality of the Unfair Sales Act of 1941. In Cohen v. Frey & Son, Me., 80 A.2d 267, we held that act unconstitutional as applied, with unjustly discriminatory effect, to a cash-and-carry grocer. We have ruled upon the validity of these various statutes with varying results according to the facts of each case and the provisions of each statute, but never by overruling the legislative judgment on so debatable a question as the relative economic and political merits and demerits of unrestricted competition, when the subject matter has been within legislative power.

In Dundalk Liquor Co. v. Tawes, supra, we held that the Comptroller's regulations were not authorized by section 104 of Article 2B of the Code of 1951 for the reasons, inter alia, that they tended to permit horizontal price fixing, which section 104 does not authorize. Notwithstanding our conclusion as to the effect of the Comptroller's regulations in this respect, the legislature by the act of 1951 expressly authorized such regulations. If the act of 1951 is valid, the Comptroller's regulations will be valid, because the legislature has said so in section 105, not because of what was argued or decided as to section 104 in the prior case.

In the bill plaintiff alleges, '5. That said legislation is upon its face unconstitutional and void, and would, if enforced, deprive the Complainant of rights guaranteed to it under the Constitution of the United States of America and the several Amendments thereto, as well as of rights guaranteed to it under the Bill of Rights and Constitution of the State of Maryland, and the same is arbitrary, unreasonable, and void.

'6. That the Complainant has a large investment in its business, has on hand substantial quantities of merchandise, and has opportunities and offers to purchase additional merchandise which it could market at a profit, provided it could do so without the threat of the interference with its business posed by the legislation mentioned.

'7. That the Complainant believes, and therefore alleges, that the Respondents purpose to act under the authority alleged by them to have been granted as aforesaid, unless restrained by Order of this Honorable Court, whereby said Complainant would be deprived of its freedom of contract, its right to engage in free, open and lawful competition, and caused to suffer great and irreparable loss and damage.'

The short answer to most of these allegations and those previously quoted, supra--and to most of plaintiff's argument--is that in Maryland no one has a constitutional right to engage in the liquor business--or for that matter to engage in 'free and open competition' except as regulated and restricted by law. The Sherman Act, on which plaintiff largely relies, has no local counterpart in Maryland, and is not embodied in the constitution of the United States. It could be repealed in toto, as it has been repealed pro tanto by the Miller-Tydings Act and by the act of July 14, 1952, c. 745.

'In the field of regulatory law, more attention has perhaps been given by Legislatures to the control and management of the liquor business than of any other traffic, because of the ease with which the privilege of engaging in it may be abused, and the social evils ordinarilty incident to such...