Hostetter v. Idlewild Bon Voyage Liquor Corporation, No. 116

• Court: United States Supreme Court
• Writing for the Court: STEWART
• Citation: 12 L.Ed.2d 350,84 S.Ct. 1293,377 U.S. 324
• Parties: Donald S. HOSTETTER, et al., etc., Appellants, v. IDLEWILD BON VOYAGE LIQUOR CORPORATION
• Docket Number: No. 116
• Decision Date: 01 June 1964

377 U.S. 324 84 S.Ct. 1293 12 L.Ed.2d 350 Donald S. HOSTETTER, et al., etc., Appellants,

v.

IDLEWILD BON VOYAGE LIQUOR CORPORATION.

No. 116. Argued March 23, 1964. Decided June 1, 1964.

Irving Galt, New York City, for appellants.

Charles H. Tuttle, New York City, for appellee.

Mr. Justice STEWART delivered the opinion of the Court.

The Twenty-first Amendment to the Constitution, which repealed the Eighteenth, provides in its second section that 'The transportation or importation into any

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State, Territory, or possession of the United States for delivery or use therein of intoxicating liquors, in violation of the laws thereof, is hereby prohibited.' This appeal requires consideration of the relationship of this provision of the Twenty-first Amendment to other provisions of the Constitution, particularly the Commerce Clause.¹

The appellee (Idlewild) is engaged in the business of selling bottled wines and liquors to departing international airline travelers at the John F. Kennedy Airport in New York. Its place of business is leased from the Port of New York Authority for use solely as 'an office in connection with the sale * * * of in-bond wines and liquors.' Idlewild accepts orders only from travelers whose tickets and boarding cards indicate their imminent departure. A customer gets nothing but a receipt at the time he gives his order and makes payment. The liquor which he orders is transferred directly to the departing aircraft on documents approved by United States Customs, and is not delivered to the customer until he arrives at his foreign destination.

The beverages sold by Idlewild are purchased by it from bonded wholesalers located outside New York State who deal in tax-free liquors for export. Merchandise ordered by Idlewild is withdrawn from bonded warehouses on approved Customs documents, copies of which are mailed by the wholesalers both to Idlewild and to the United States Customs Office at the airport. A third sealed copy of the document is given to the bonded trucker who delivers it to the Customs Office at the airport after he has transported the shipment to Idlewild's place of business. The contents of each shipment are recorded by Idlewild, as are withdrawals from inventory

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whenever a sale is made, and when an entire shipment has been sold, these records are turned over to Customs officials. Idlewild's records and its physical inventory, as well as the transfer of the liquor from the bonded trucks to Idlewild's premises and from those premises to the departing aircraft, are at all times open to inspection by the Bureau of Customs. Before Idlewild commenced these business operations in 1960, the Bureau of Customs inspected its place of business and explicitly approved its proposed method of operations.

Idlewild commenced doing business in the spring of 1960. A few weeks later, the New York State Liquor Authority, whose members are the appellants in this cast, informed Idlewild, upon the advice of the Attorney General of New York, that its business was illegal under the provisions of the New York Alcoholic Beverage Control Law, because the business was unlicensed and unlicensable under that law.² Idlewild thereupon brought the present

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action for an injunction restraining the appellants from interfering with its business, and for a judgment declaring that the provisions of the New York statute, as applied to its business, were repugnant to the Commerce Clause of the Constitution, and, under the Supremacy Clause, to the Tariff Act of 1930, under which the Bureau of Customs had approved Idlewild's business operations.³

After lengthy procedural delays,⁴ a three-judge District Court granted the requested relief. 212 F.Supp. 376. The court expressed doubt that the New York Alcoholic Beverage Control Law was intended to apply to a business such as that carried on by Idlewild, both because of the manifest irrelevance to such a business of many of the law's provisions,⁵ and because the New York courts

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had held that the law was inapplicable to the sale of liquor in the Free Trade Zone of the Port of New York. During v. Valente, 267 App.Div. 383, 46 N.Y.S.2d 385. See also Rosenblum v. Frankel, 279 App.Div. 66, 108 N.Y.S.2d 6. In view of the posture of the litigation, the court declined, however, to defer deciding the merits of the controversy pending a construction of the statute by the New York courts, although recognizing that 'a technical application of the doctrine of abstention' would under ordinary circumstances counsel such a course.

On the merits the court concluded, after reviewing the relevant cases, that the Commerce Clause rendered constitutionally impermissible New York's attempt wholly to terminate Idlewild's business operations. The court conceded that New York has broad power under the Twenty-first Amendment to supervise and regulate the transportation of liquor through its territory for the purpose of guarding against a diversion of such liquor into domestic channels, but pointed out that 'the Liquor Authority has neither alleged nor proved the diversion of so much as one bottle of plaintiff's merchandise to users within the state of New York.' 212 F.Supp., at 386. We noted probable jurisdiction, Hostetter v. Idlewild B. V. L. Corp., 375 U.S. 809, 84 S.Ct. 43, 11 L.Ed.2d 46, and for the reasons which follow, we affirm the judgment of the District Court.

We hold first that the District Court did not err in declining to defer to the state courts before deciding this controversy on its merits. The doctrine of abstention is equitable in its origins, Railroad Comm'n of Texas v. Pullman Co., 312 U.S. 496, 500—501, 61 S.Ct. 643, 85 L.Ed. 971, and this Court has held that, even

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involved, 'reference to state courts for construction of statute should not automatically be made.' N.A.A.C.P. v. Bennett, 360 U.S. 471, 79 S.Ct. 1192, 3 L.Ed.2d 1375. Unlike many cases in which abstention has been held appropriate, there was here no danger that a federal decision would work a disruption of an entire legislative scheme of regulation.⁶ We therefore accept the District Court's decision that abstention was unwarranted here, where neither party requested it and where the litigation had already been long delayed, despite the plaintiff's efforts to expedite the proceedings. ⁷

Turning, then, to the merits of this controversy, the basic issue we face is whether the Twenty-first Amendment so far obliterates the Commerce Clause as to empower New York to prohibit absolutely the passage of liquor through its territory, under the supervision of the United States Bureau of Customs acting under federal law,⁸ for delivery to consumers in foreign countries. For it is not disputed that, if the commodity involved here were not liquor, but grain or lumber, the Commerce Clause would clearly deprive New York of any such power. Lemke v. Farmers Grain Co., 258 U.S. 50, 42 S.Ct. 244, 66 L.Ed. 458; Texas & N.O.R. Co. v. Sabine Tram Co., 227 U.S. 111, 33 S.Ct. 229, 57 L.Ed. 442; State of Oklahoma v. Kansas Nat. Gas Co., 221 U.S. 229, 31 S.Ct. 564, 55 L.Ed. 716.

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This Court made clear in the early years following adoption of the Twenty-first Amendment that by virtue of its provisions a State is totally unconfined by traditional Commerce Clause limitations when it restricts the importation of intoxicants destined for use, distribution, or consumption within its borders. Thus, in upholding a State's power to impose a license fee upon importers of beer, the Court pointed out that '(p)rior to the Twenty-First Amendment it would obviously have been unconstitutional to have imposed any fee for that privilege. The imposition would have been void, * * * because the fee would be a direct burden on interstate commerce; and the commerce clause confers the right to import merchandise free into any state, except as Congress may otherwise provide.' State Board of Equalization of California v. Young's Market Co., 299 U.S. 59, 62, 57 S.Ct. 77, 78, 81 L.Ed. 38.⁹ In the same vein, the Court upheld a Michigan statute prohibiting Michigan dealers from selling beer manufactured in a State which discriminated against Michigan beer. Indianapolis Brewing Co. v. Liquor Comm'n, 305 U.S. 391, 59 S.Ct. 254, 83 L.Ed. 243. 'Since the Twenty-first Amendment, * * * the right of a state to prohibit or regulate the importation of intoxicating liquor is not limited by the commerce clause * * *.' Id., 305 U.S. at 394, 59 S.Ct. at 255. See also Finch & Co. v. McKittrick, 305 U.S. 395, 59 S.Ct. 256, 83 L.Ed. 246.

This view of the scope of the Twenty-first Amendment with respect to a State's power to restrict, regulate, or prevent the traffic and distribution of intoxicants within its borders has remained unquestioned. See California v. Washington, 358 U.S. 64, 79 S.Ct. 116, 3 L.Ed.2d 106. Thus, in Ziffrin, Inc. v. Reeves, 308 U.S. 132, 60 S.Ct. 163, 84 L.Ed. 128, there was involved a Kentucky statute, 'a long, comprehensive measure (123 sections)

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designed rigidly to regulate the production and distribution of alcoholic beverages through means of licenses and otherwise. The manifest purpose is to channelize the traffic, minimize the commonly attendant evils; also to facilitate the collection of revenue. To this end manufacture, sale, transportation, and possession are permitted only under carefully prescribed conditions and subject to constant control by the state.' Id., 308 U.S. at 134, 60 S.Ct. at 165. The Court upheld a provision of that 'comprehensive measure' which prohibited a domestic manufacturer of liquo from delivering his product to an unlicensed private carrier. The Court noted that 'Kentucky has seen fit to permit manufacture of whiskey only upon condition that it be sold to an indicated class of customers and transported in definitely specified ways. These conditions are not unreasonable and are clearly appropriate for effectuating the policy...