Gipson v. Morley

• Decision Date: 22 May 1950
• Docket Number: No. 4-9209,4-9209
• Citation: 217 Ark. 560,233 S.W.2d 79
• Parties: GIPSON v. MORLEY et al.
• Court: Arkansas Supreme Court

Page 79

233 S.W.2d 79

217 Ark. 560

GIPSON v. MORLEY et al.

No. 4-9209.

Supreme Court of Arkansas.

May 22, 1950.

Kenneth C. Coffelt, Little Rock, for appellant.

O. T. Ward and Bailey & Warren, Little Rock, for appellees.

LEFLAR, Justice.

Appellant James A. Gipson, as a citizen and taxpayer, brought this bill in equity for an injunction to restrain the Commissioner of Revenues and the State Treasurer from enforcing or paying out funds for the enforcement of the provisions of Act 282 of the Acts of the General Assembly of Arkansas for 1949. Act 282 contains three principal groups of provisions: (1) It fixes prices at which sales of liquor and related items (not including beer) may be made at wholesale or retail--for wholesale sales the price is fixed at the wholesaler's cost plus 15 percent, and for retail sales at the retailer's cost plus 33 1/3 percent on liquor, plus 45 percent on cordials, liqueurs and specialties, and plus 50 percent on sparkling and still wines (the various items enumerated are defined in the statute); (2) a tax of 25 cents per case on liquor and other stated items and 10 cents per case on wine is levied, the proceeds to go into a special fund in the State Treasury; and (3) there is appropriated from the special fund certain amounts to pay the salaries and expenses of 20 employees in the office of the Commissioner of Revenues whose duty it is to enforce this and all other liquor control laws of the State. Plaintiff Gipson's contention is that Act 282 is unconstitutional under Article II, §§ 3, 18, 19 and 21 of the Constitution of Arkansas. The contention of unconstitutionality is seriously urged however, only as to the group of provisions numbered (1) in the summary just given--those relating to price-fixing. It is virtually conceded that the taxing provisions, and the appropriation for additional employees to police the liquor business in the State, are valid. The Chancellor held the Act to be constitutional, and plaintiff appeals.

The sections of the Constitution upon which appellant relies are as follows:

' § 3. The equality of all persons before the law is recognized, and shall ever remain inviolate; nor shall any citizen ever be deprived of any right, privilege or immunity, nor exempted from any burden or duty, on account of race, color or previous condition.'

' § 18. The General Assembly shall not grant to any citizen or class of citizens privileges or immunities which upon the same terms shall not equally belong to all citizens.'

' § 19. Perpetuities and monopolies are contrary to the genius of a republic, and shall not be allowed; nor shall any hereditory emoluments, privileges or honors ever be granted or conferred in this State.'

' § 21. No person shall be taken or imprisoned, or disseized of his estate, freehold, liberties or privileges; or outlawed, or in any manner destroyed or deprived of his life, liberty or property, except by the judgment of his peers or the law of the land; nor shall any person, under any circumstances, be exiled from the State.'

It is apparent that none of these sections contains a specific prohibition against the type of legislation here enacted. If there is a prohibition it will have to be discovered from the general spirit of the sections, or from some inner essence deemed implicit though not explicit in the words. Furthermore, discovery of such a prohibition would negative the State's regulatory authority under the police power, a constitutional concept which in the past has been held to justify numerous governmental controls exercised over the liquor business.

A practically unlimited right to regulate the liquor traffic has from early times been conceded to the State. 'The state has this right, because the authority to sell liquor is a mere privilege, which the state may grant or withhold, as it pleases, or, if it grants this permission at all, it may do so under any conditions which it cares to impose; and this is true * * * even though these conditions are so onerous as to amount to virtual or absolute prohibition of that traffic.' Wade v. Horner, 115 Ark. 250, 258, 170 S.W. 1005, 1008, Ann.Cas.1916E, 167. 'The sale of intoxicating liquors is not a matter of right protected by constitutional guarantees. It is only a privilege, to be exercised under the police power. The General Assembly, in legislizing the traffic, can impose such restrictions as it deems appropriate.' Cook, Com'r, v. Glazer's Wholesale Drug Co., 209 Ark. 189, 195, 189 S.W.2d 897, 900. Accord, Ziffrin, Inc., v. Reeves, 308 U.S. 132, 60 S.Ct. 163, 84 L.Ed. 128.

The only case in which this Court has previously had occasion to pass on the validity of a price-fixing statute is Noble v. Davis, 204 Ark. 156, 161 S.W.2d 189, 190, holding unconstitutional an enactment which authorized minimum price schedules for barbers. Acts 1941, Act No. 432. The decision was that the business of the barber 'is one of common right,' and that prices charged for barber services have no such effect upon the public peace, health, safety and welfare as to justify a statute fixing minimum prices in a field of business which is one of common right. ¹ Noble v. Davis, affords us but little aid in passing upon the validity of a statute designed to regulate a type of business which is admittedly not one of common right.

There are several cases from other jurisdictions in which liquor price-fixing plans have been denied enforcement, but they likewise do not give us much aid. They come from the states of Illinois, New York, Louisiana, and Florida.

The case of Illinois Liquor Control Commission v. Chicago's Last Liquor Store, 403 Ill. 578, 88 N.E.2d 15, held the Illinois liquor price control act, Ill.Rev.Stat.1947, c. 43, § 94 et seq., to be invalid because it violated an Illinois constitutional prohibition against revival or amendment of an earlier act by reference merely. That is a legislative drafting technicality which the Arkansas act completely avoids.

Levine v. O'Connell, 275 App.Div. 217, 88 N.Y.S.2d 672, 674, invalidated the New York statute on the ground that it improperly delegated the price-fixing power to a state board. General Business Law, McK.Consol.Laws, c. 20, § 369-a et seq. The New York Court said: 'We assume, but without deciding, that it would be within the competence of the legislature to determine that mandatory price-fixing in the sale of alcoholic beverages would be a proper exercise of the police power. The important point for this case is that the legislature has not done so; on the contrary [it] purports to authorize the State Liquor Authority 'in its discretion" to establish a price fixing plan. Under the Arkansas act there is no such improper delegation of legislative power to an administrative board; the enactment itself lays down the price fixing rule.

The Louisiana holding appears in Schwegmann Bros. v. Louisiana Board of Alcoholic Beverage Control, 216 La. 148, 43 So.2d 248, 257. The statute there was similar to that enacted in Arkansas, and its stated purpose was the regulation and control of the liquor traffic so that it 'may not cause injury to the economic, social and moral well-being of the people of the State.' Act No. 360 of 1948. The Louisiana Court held that the fixing of wholesale and retail package liquor prices was insufficient by itself to achieve the end sought, that there were too many liquor sales transactions in which prices were left unregulated, that the act was not comprehensive enough to accomplish what it purported to accomplish. Particular emphasis was laid on the fact that there was no regulation of prices on sales of liquor over the bar by the drink, a type of sale which we do not allow in Arkansas, and therefore have no occasion to regulate. No objection is made that the Arkansas statute is not sufficiently comprehensive; no argument is made that it does not regulate enough, rather it is urged that it regulates too much. The Louisiana Court concluded: 'It is to be clearly understood that we are not holding that the Legislature cannot under any circumstances adopt legislation, pursuant to the state's police power, relating to the establishing of prices on intoxicants with the view and purpose of regulating the liquor traffic and protecting the general welfare of the people. That broad question is not presented by this case * * *.' Contrariwise, that broad question is specifically the one that now is before the Arkansas Court.

The other state in which a liquor price-fixing plan has been invalidated is Florida, where in Liquor Store v. Continental Distilling Corp., Fla., 40 So.2d 371, 375, the Florida Court refused to enforce an act which authorized manufacturers to fix binding retail prices on 'brand name' goods sold for resale in the state. F.S.A. § 541.01 et seq. The Court pointed out: 'It is well to remember also that this act applies to every kind of article including such necessities as food and drugs.' Then it was stated: '* * * a law which provides for the fixing of minimum prices should contain a yardstick as a guide for the establishment of such ground level prices. The power to determine those prices should not be left to the unleashed discretion of the trade-name owner but should be confined with impregnable specified boundaries. A definite measuring stick should be set forth in the body of the act. This statute contains no such rule.' The Arkansas statute does contain such a rule, a very specific one, and besides it sets up a price fixing structure only for the liquor business, as distinguished from all retail businesses.

In contrast with these cases is Reeves v. Simon, 289 Ky. 793, 160 S.W.2d 149, 151, which sustained Kentucky's Distilled Spirits and Wine Fair Trade Act, Acts 1940, c. 13, a price fixing measure similar to Arkansas' Act 282 of 1949. The decision was squarely on the constitutionality of the enactment. In the course of its opinion the Kentucky Court said:

'The proof shows that due to price-cutting...