Federal Distillers, Inc. v. State
| Decision Date | 02 May 1975 |
| Docket Number | 44844,44837,44832--44834,Nos. 44831,s. 44831 |
| Citation | 229 N.W.2d 144,304 Minn. 28 |
| Court | Minnesota Supreme Court |
| Parties | FEDERAL DISTILLERS, INC., et al., Respondents-Appellants, v. STATE of Minnesota and Joseph Novak, Liquor Control Commissioner of Minnesota, Respondents, Ed Phillips & Sons Co., Intervenor, Appellant-Respondent, Griggs, Cooper & Co., Inc., Intervenor, Respondent-Appellant, Raymond Distributing Co., Inc., Intervenor, Respondent. and OLD PEORIA COMPANY, INC., Heaven Hill Distilleries, Inc., and NationalDistillers & Chemical Corporation, Appellants, v. Joseph NOVAK, Liquor Control Commissioner of Minnesota, Respondent. |
a. That the trial court's interpretation of L.1973, c. 664, to include plaintiff Ed Phillips & Sons Company, a licensed wholesaler and manufacturer, within the classification of a 'licensed importer' is reasonable; is consistent with its factual findings, the language of the act, and the intent of the legislature; and is required under the rule of presumed constitutionality of a legislative act against a claimed denial of equal protection by other licensed wholesalers.
b. The act does not on its face transgress constitutionally protected private or property rights of presently licensed Minnesota wholesalers, for the Twenty-First Amendent to the Federal Constitution empowers the states through the exercise of police power to entirely prohibit or broadly regulate the importation, distribution, and sale of liquor, and a wholesaler's license is not a vested right but a privilege subject to such regulations.
c. The claim by plaintiff Johnson Brothers Wholesaler Liquor Company that the act requires the sale to all other wholesalers of liquor bottled under registered, private brands owned by it is hypothetical, for there is no threatened construction or enforcement which would invade such ownership and the act on its face does not require such construction.
d. The act's failure to include in its regulation wines and malt beverages similarly distributed and sold in this state does not constitute an invidious discrimination in violation of equal-protection guarantees.
e. The provisions of the act which require every licensed distiller to sell his manufactured product at no higher than the lowest price offered elsewhere in the United States and make it unlawful for every distiller who chooses to offer his product to one licensed wholesaler to refuse to deal with other Minnesota wholesalers on an equal basis are a valid exercise of the state police power, since it constitutes a reasonable legislative determination to abolish the existing system of exclusive wholesale dealerships which portend monopolistic practices, inevitably limit competition, and ultimately affect consumer prices; and prohibiting such refusals to deal by distillers bears a rational relation to the promotion of the economic welfare of the public.
f. The provisions of the act classifying every distiller's refusal to deal above described except for 'arrears on payments for past purchases' as discriminatory is on its face neither overbroad nor amounts to the employment of a constitutionally impermissible presumption violative of due process, for, as presented here, it constitutes no more than a finding peculiarly within the knowledge and experience of the legislature that every prohibited refusal to deal necessarily frustrates achieving the economic goals sought, and such a finding will not, under appropriate enforcement regulations, be applied to offend due process or unreasonably interfere with a distiller's legitimate marketing rights and opportunities in this state.
Maslon, Kaplan, Edelman, Borman, Brand & McNulty, Hyman Edelman, Irving R. Brand and Joann N. Lynch, Minneapolis, for Phillips & Sons Co. and Old Peoria Co., and others.
Shanedling, Phillips, Gross & Aaron, and Felix M. Phillips, Minneapolis, for Fed. Distillers, Inc., and others.
Maun, Hazel, Green, Hayes, Simon & Aretz and William J. Hassing, James A. Gallagher and Richard M. Gaalswyk, St. Paul (Griggs Cooper & Co.), for respondents-appellants.
Warren Spannaus, Atty. Gen., Peter W. Sipkins, Sol. Gen., Kenneth E. Raschke, Jr., and Thomas H. Jensen, Spec. Asst. Atty. Gen., St. Paul, for State and others.
Shear & Rooney, St. Paul, for Raymond Dist. Co.
Considered and decided by the court en banc.
These appeals challenge the constitutionality of L.1973, c. 664, § 2, now coded as Minn.St. 340.114, an amendment to Minnesota's Intoxicating Liquor Act requiring all licensed importers (distillers) of liquor to offer their products for sale to all Minnesota liquor wholesalers on an equal basis. 1 The court below found the statute constitutional in all respects. As we find c. 664 to be a valid exercise of the state's police power to promote the public's economic welfare, and that plaintiffs, licensed distillers and wholesalers of liquor, have failed to establish that any provisions of the act on their face transgrees constitutionally protected property rights, we affirm.
These cases seeking declaratory judgment and injunctive relief were commenced in June and July of 1973 by the various plaintiffs, all of whom are involved in the distribution of liquor in Minnesota. By order of the Ramsey County District Court the cases were consolidated for trial, and enforcement of the statute was temporarily restrained. The matter was tried to the court without a jury in September 1973. The trial court held that the statute is neither an improper exercise of police power overbroad in operation, nor in violation of the constitutional guarantees of due process and equal protection. Plaintiffs moved the court for amended findings of fact and conclusions of law or for a new trial. The trial judge denied the motions, and plaintiffs appeal from those denials. Upon plaintiffs' motion, this court continued the restraint on enforcement of the statute pending decision on appeal.
Plaintiffs fall generally into two categories: (1) 'Distillers,' or corporations licensed as importers under § 340.113 2 which manufacture, rectify, blend, bottle, and label liquor which is sold to wholesale distributors in Minnesota; and (2) 'wholesalers,' or Minnesota corporations licensed under § 340.11, subd. 2, 3 to sell liquor at wholesale in Minnesota. The distillers include:
1. Federal Distillers, Inc., a Massachusetts corporation, which sells its brands of distilled spirits only to Johnson Brothers Wholesale Liquor Company (Johnson). Some of its manufactured products are bottled and labeled under brands owned by Federal and some are labeled under brands owned by Johnson.
2. Mr. Boston Distiller Corporation, a Massachusetts corporation, which bottles distilled spirits under brands owned by Johnson and under brands owned by Mr. Boston. Mr. Boston sells such brands only to Johnson in Minnesota.
3. National Distillers & Chemical Corporation, a Virginia corporation, which sells its branded liquor and wines only to Ed Phillips & Sons in Minnesota.
4. Heaven Hill Distillers, Inc., a Kentucky corporation, which sells its liquors to Old Peoria Company, Inc., under brands owned by Heaven Hill.
The second group of plaintiffs, the wholesalers which sell to licensed retailers, includes:
1. Johnson Brothers Wholesale Liquor Company, which deals in liquor and wine and owns registered private-brand labels under which liquor is distilled for it by Federal and Mr. Boston.
2. Old Peoria Company, Inc., which sells both liquor and wine.
3. Griggs, Cooper and Company, Inc., which distributes and sells both wine and liquor.
4. Ed Phillips & Sons Company (Phillips), a Minnesota corporation licensed under § 340.113 and carrying on importation, manufacturing, and wholesaling operations under that license. Phillips imports bulk whiskey, which it then rectifies, blends, bottles, and labels with its own registered brand labels. Phillips sells these branded products to retailers in Minnesota and to wholesalers in other states. Phillips also purchases liquor from National and other distillers outside of Minnesota and sells that liquor to Minnesota retailers as the sole wholesale outlet.
Named defendants include the State of Minnesota and Joseph Novak, the liquor control commissioner. Raymond Distributing Company, Inc., which intervened as a defendant, is a Minnesota wholesaler, licensed in May 1973. Raymond has unsuccessfully attempted to purchase certain established brands of intoxicating liquors from some out-of-state distillers and, although it could apparently purchase some unknown or lesser-established brands of intoxicating liquor, it has not commenced business.
Chapter 664, essentially designed to abolish exclusive wholesale distribution of liquor and thereby to promote price competition by seeking to eliminate actual or potential monopolistic practices and price fixing by distillers and wholesalers, adds another page to the long history of legislative regulation of liquor in Minnesota. The most recent thorough revision of the liquor laws occurred in 1967 with the passage of the Intoxicating Liquor Act. 4 That act, together with the earlier regulatory and licensing statutes, has in large measure dictated the pattern of the present system of liquor distribution to Minnesota consumers. In general, that system is three-tiered, consisting of the distiller (also referred to as a manufacturer in our statutes), the wholesaler, and the retailer, each of whom carries...
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