In re 1650 Cases of Seized Liquor

• Decision Date: 11 September 1998
• Docket Number: No. 97-349.,97-349.
• Citation: 721 A.2d 100
• Parties: In re 1650 CASES OF SEIZED LIQUOR.
• Court: Vermont Supreme Court

721 A.2d 100

In re 1650 CASES OF SEIZED LIQUOR.

No. 97-349.

Supreme Court of Vermont.

September 11, 1998.

William H. Sorrell, Attorney General, and William Griffin, Chief Assistant Attorney General, Montpelier, for Plaintiff-Appellee.

Russell D. Barr, Daniel A. Seff and William L. Durrell, Law Offices of Russell D. Barr, Stowe, for Defendant-Appellant. Present: DOOLEY, MORSE, JOHNSON and SKOGLUND, JJ., and CORSONES, District Judge, Specially Assigned.

DOOLEY, J.

The Saint Regis Mohawk Tribe appeals from a decision of the Washington District Court forfeiting 1650 cases of liquor the Tribe was transporting through the State of Vermont without a liquor control permit. See 7 V.S.A. § 63(a). The Tribe presents several arguments as to why the Tribe's liquor could not be seized and forfeited under Vermont's liquor control enforcement statutes. See id. §§ 561-601. We affirm.

The Tribe employed a California liquor broker (Manormead) to purchase 1650 cases of liquor from Jenkins Spirits Corp., a Londonderry, New Hampshire, distiller. The liquor was purchased free on board, and thus title passed to the Tribe when the common carrier (Advantage Transportation Inc.) picked up the liquor from Jenkins Spirits.

On April 12, 1996, during transport of the liquor to the Tribe's reservation in Messina, New York, the truck was stopped by the Vermont State Police on Interstate 89 near Middlesex, Vermont. The truck did not have a permit to transport alcohol as required by 7 V.S.A. § 63(a), and the bill of lading indicated that the liquor was being shipped to Manormead in Santa Barbara, California, and not to the Tribe's reservation in Messina, New York. The Department of Liquor Control (DLC) determined that the "spirituous liquor" was being transported unlawfully and seized the liquor pursuant to 7 V.S.A. § 561(a)-(b). On April 16, 1996, the State filed a forfeiture complaint arguing that the liquor should be forfeited pursuant to 7 V.S.A. § 568 because the Tribe lacked a permit pursuant to § 63(a). The Tribe opposed forfeiture, arguing primarily that the truck had a valid bill of lading and that an unwritten Liquor Control Board (LCB) policy allowed a bill of lading to substitute for a transport permit. The State then amended its complaint to allege that the truck's bill of lading could not substitute for a transport permit because it did not state the real destination of the liquor.

The case went forward to an evidentiary hearing on June 11, 1996, with the Tribe arguing that (1) the liquor shipment complied with the LCB's rule that a bill of lading may substitute for a § 63(a) permit; (2) the LCB's characterization of its bill-of-lading rule amounts to an unconstitutional ex-post-facto law; (3) transportation of liquor without a permit is not a "use contrary to law" within the meaning of 7 V.S.A. § 568 and, therefore, could not serve as the basis for a forfeiture; (4) innocent ownership is a defense to a liquor forfeiture proceeding arising out of an alleged permit violation; (5) § 568 is unconstitutionally vague; and (6) the forfeiture of the liquor is an unconstitutionally excessive fine against the Tribe.

On June 18, 1997, the court issued its decision and order, holding that the bill of lading in this case did not satisfy the LCB requirements as a substitute for a § 63(a) transport permit. The court determined that the bill of lading did not properly include the name of the receiver/consignee and did not specify the place the freight was to be delivered. Thus, the court found that the liquor was being transported unlawfully and further found that liquor being transported unlawfully was subject to forfeiture by the State. This appeal followed.

First, the Tribe argues that the liquor was not illegally transported because the truck driver had a valid bill of lading. The statute central to this argument is 7 V.S.A. § 63(a), which provides:

(a) All spirituous liquors imported or transported into this state shall be imported or transported by and through the liquor control board. A person, partnership, association or corporation importing or transporting or causing to be imported or transported into this state any spirituous liquors shall be imprisoned not more than one year, or fined more than $1,000.00, or both. However, it shall be lawful for a person to import or transport spirituous liquor into this state by first obtaining a permit from the liquor control board and a person may import or transport not more than eight quarts of spirituous liquors into this state in his or her own private vehicle or in his or her actual possession at the time of such importation without permit.

Although the statute requires the transporter to obtain a permit from the LCB, the board has adopted a policy that allows a complying bill of lading to serve as a permit. According to the testimony of the director of enforcement of the DLC and minutes of a January 17, 1996 LCB meeting, a bill of lading is considered a substitute for a § 63(a) permit for transport through Vermont to a destination outside Vermont if the bill of lading contains (1) a description of the freight being shipped, (2) the name and address of the shipper (consignor), and (3) the name of the consignee and the place freight is to be delivered.

As indicated in the statement of facts, the truck in this case had a bill of lading describing the liquor that was seized. The bill of lading described the consignee as Manormead and the destination as its office in Santa Barbara, California, although the recipient was actually the Tribe and the delivery was to be made to its reservation in Messina, New York. Because the bill of lading failed to accurately describe the consignee or the place of delivery, the DLC determined that it did not comply with the LCB policy and that the Tribe had violated 7 V.S.A. § 63(a).

The Tribe argues that the bill of lading was accurate and that the liquor shipment was simply diverted from Manormead to the Tribe as is authorized by § 7-303 of the Uniform Commercial Code, 9A V.S.A. § 7-303, which provides:

§ 7-303. Diversion; reconsignment; change of instructions

(1) Unless the bill of lading otherwise provides, the carrier may deliver the goods to a person or destination other than that stated in the bill or may otherwise dispose of the goods on instructions from

(a) the holder of a negotiable bill; or

(b) the consignor on a non-negotiable bill notwithstanding contrary instructions from the consignee; or

(c) the consignee on a non-negotiable bill in the absence of contrary instructions from the consignor, if the goods have arrived at the billed destination of if the consignee is in possession of the bill; or

(d) the consignee on a non-negotiable bill if he is entitled as against the consignor to dispose of them.

Therefore, the Tribe asserts, a bill of lading need not disclose the true or actual place of delivery as long as the reason for the discrepancy is that the freight was diverted pursuant to 9A V.S.A. § 7-303(1). See id., Official Comment 1 (diversion is very common commercial practice); see generally 3 J. White & R. Summers, Uniform Commercial Code § 29-3, at 347 (4th ed. 1995) ("The beauty of 7-303 is that it recognizes the facts of life. . . . Under 7-303 the carrier can determine who is authorized to instruct the carrier to divert or the like.").

The Tribe misses the point of the LCB enforcement policy. It does not state that any valid bill of lading will substitute for a transport permit. Instead, it states that a bill of lading that meets three requirements will substitute for a transport permit. The fact that the trucker was carrying a valid bill of lading is irrelevant to compliance with the LCB policy, unless the bill of lading met the specific requirements of the policy. Thus, § 7-103 of the U.C.C., 9A V.S.A. § 7-103, confirms that the provision of the article on documents of title is subject to any regulatory statute of the state, or any regulation issued pursuant to a regulatory statute.

The Tribe argues, however, that diversion of goods is not inconsistent with the enforcement policy because the bill of lading properly described the relationship between the shipper and the purchaser, in this case Jenkins Spirits Corp. and Manormead, and that the LCB enforcement policy required no more. Relying on the wording of the enforcement policy, and the testimony of the DLC enforcement director, the trial court held that the bill of lading must state the actual place of delivery, and the one covering the liquor failed to do so.

In resolving this issue, we first emphasize that the Tribe is not arguing that it complied with the statute by obtaining a transport permit. Nor is it attacking the validity of the LCB enforcement policy which goes beyond the statute. Thus, we assume the policy is valid, and the only question we resolve is whether the Tribe fit within it.

The enforcement policy is essentially a regulation. We apply the same rules of statutory construction to a regulation as we do to a statute. See Rogers v. Watson, 156 Vt. 483, 490, 594 A.2d 409, 413 (1991). We defer to an agency's construction of its own regulation. See In re Towle, 164 Vt. 145, 152, 665 A.2d 55, 61 (1995). Here, the court's construction of the enforcement policy as requiring that the bill of lading state the actual place of delivery is consistent with the plain meaning of the words of the policy. See Carter v. Gugliuzzi, 168 Vt. ___, ___, 716 A.2d 17, 21 (1998) (in absence of definition in statute, words are given their plain meaning). Moreover, the DLC director of enforcement testified the enforcement policy has always required that the bill of lading indicate the actual destination of the liquor shipment. The court properly relied on this testimony.

We also agree with the trial court that the purpose of Vermont's liquor control statutory scheme would be undermined by the Tribe's interpretation of the enforcement policy. Section 63(a)'s permit...