Indiana Alcoholic Beverage Commission v. McShane
| Decision Date | 09 September 1976 |
| Docket Number | No. 2--276A76,2--276A76 |
| Citation | 170 Ind.App. 586,354 N.E.2d 259 |
| Parties | INDIANA ALCOHOLIC BEVERAGE COMMISSION et al., Appellants (Defendants below), v. Thomas J. McSHANE et al., Appellees (Plaintiffs below). |
| Court | Indiana Appellate Court |
Theodore L. Sendak, Atty. Gen., John D. Shuman, Asst. Atty. Gen., Indianapolis, for appellants.
Joseph F. Quill, Frank E. Spencer, Indianapolis, for appellees.
Defendants-Appellants, Indiana Alcoholic Beverage Commission and James D. Sims, Morris Tobian, Austin E. Barker, and William H. Warren as Members of the Indiana Alcoholic Beverage Commission (the ABC), appeal a permanent injunction in favor of Plaintiffs-Appellees, Thomas J. McShane, Gerald L. McKeand, Herbert A. Miller, and Robert B. Lynch, Jr. (McShane), mandating the ABC to effectively enforce its present rules and regulations preventing the advertising of alcoholic beverage prices and the gift or sale of alcoholic beverages by wholesalers to retail permittees free of cost or at prices below the invoice prices customarily charged, until such practices are allowed by law and enacted by the Indiana General Assembly. The ABC claims reversible error in that the trial court lacked subject matter jurisdiction due to failure to exhaust administrative remedies and lack of standing by McShane, erroneous Findings and Conclusions and wrongful invasion by the trial court of the statutory discretion of the ABC.
We reverse and remand.
The facts and evidence consisting of the proceedings before the ABC and the trial court are essentially undisputed:
On September 16, 1975, the ABC resolved to reevaluate certain of its rules and regulations. It was moved and passed that '. . . the Commission take all proper steps to research and commence the de-promulgation of those regulations which they interpret to be those regulations which are in conflict with price advertising as the (sic) tend to depress a basic free enterprise system.'
On October 7, 1975, the ABC formally resolved '. . . that the Executive Secretary execute all necessary steps to start the process of repealing Regulation 4, Rule 6 and 18; Regulation 6, 7, 10, 12, 17, 19, 26, 28, 32 and 40.' (See Special Findings of Fact, infra.) A public hearing was subsequently set for October 28, 1975 and notice was published pursuant to IC § 4--22--2--4.
On October 27, 1975, McShane obtained a temporary restraining order against the ABC and its members in Marion County Superior Court, Room No. 1, prohibiting the public hearing scheduled for the next day. The restraining order was later dissolved and trial was held on McShane's 'Amended Complaint for Injunction.'
On December 19, 1975, the trial court entered its 'Findings and Judgment,' as follows:
SPECIAL FINDINGS OF FACT
1. That the Plaintiff, Thomas J. McShane, is the holder of a beer, wine and liquor retailer's permit issued to restaurants; the plaintiff, Gerald L. McKeand, is the holder of a beer, wine and liquor dealer's permit issued to drug stores; and, the plaintiff, Herbert A. Milller, is the holder of a beer, wine and liquor dealer's permit issued to package stores; each such permit issued by the defendant, Indiana Alcoholic Beverage Commission.
2. That the Defendant Indiana Alcoholic Beverage Commission is a legal entity having certain powers and duties under and pursuant to Public Law No. 55, Acts 1973, and subsequent amendments thereto, and the Defendants, James D. Sims, Morris Tobian, Austin E. Barker and William H. Warren, are members of said Commission and were made party Defendants herein as such members.
3. The said Defendant Commission has heretofore adopted and there are presently in force its certain Regulation 4, Rules 6, 15 and 18, and Regulation 5, Section 3, which provide as follows:
Burns' Adm. Rules and Regulations, (12--641)--6
Reg. 4, Rule 6. Signs advertising price prohibited.--No holder of a permit to sell at retail alcoholic beverages shall display, or permit to be displayed upon the windows or any part of the licensed premises where it may be visible from the exterior any sign which advertises the price of alcoholic beverages, or the size of containers, glasses or mugs in which such alcoholic beverages are offered for sale.
Reg. 4, Rule 15. NEWSPAPER ADVERTISING.--Manufacturers, wholesalers and salesmen of alcoholic beverages, or the agent or representative thereof, may advertise alcoholic beverages by brand name or brand names, or the place where the same may be obtained at wholesale, in any newspaper or magazine which circulates generally to the public and which has a regular net paid subscription list.
Holders of permits to sell at retail alcoholic beverages may advertise alcoholic beverages by brand name or brand names, or the place where the same may be obtained at retail, in any newspaper or magazine which circulates generally to the public and which has been published at regular monthly intervals or oftener for two consecutive years subsequent to December 31, 1943.
Such advertisements shall not promote gambling, games of chance or contain offers of financial awards as inducements to purchase the alcoholic beverages advertised.
Such advertisements shall not refer, directly or indirectly, to the alcoholic content of alcoholic malt beverages.
Such advertisements shall conform to the approved label upon the immediate container of the alcoholic beverages so advertised.
No manufacturer, wholesaler or salesman of alcoholic beverages, or the agent or representative thereof, shall pay in whole or in part for any advertisement, advertising any premises covered by a permit to sell at retail alcoholic beverages.
Reg. 4, Rule 18. Price advertising.--Prices of any alcoholic beverages may be advertised by its brand name in such media as herein permitted providing said brand of beverage is offered for sale under a fair trade contract on file with the Indiana alcoholic beverage commission.
Reg. 5, Section 3. FREE BEVERAGES PROHIBITED.--No manufacturer, wholesaler or salesman shall give the holder of a permit to sell at retail alcoholic beverages, nor the employees of such retailers, any alcoholic beverage free of cost, nor shall they sell alcoholic beverages to such permittee, or his employees, below the invoice price customarily charged for such alcoholic beverages.
No holder of a permit to sell at retail alcoholic beverages, nor the employees of such permittees, shall accept, free of cost, alcoholic beverages nor shall they purchase alcoholic beverages at a price below that customarily charged for such alcoholic beverages, from any manufacturer, wholesaler or salesman of alcoholic beverages.
No manufacturer or salesman of alcoholic beverages shall give, free of cost, or sell any alcoholic beverages to the holder of a permit to sell alcoholic beverages at wholesale below the invoice customarily charged for such alcoholic beverages.
No holder of a permit to sell at wholesale alcoholic beverages shall accept free of cost, or purchase any alcoholic beverages below the invoice price customarily charged by such manufacturer or salesman of alcoholic beverages.
4. That wholesalers of alcoholic beverages are giving alcoholic beverages free of cost to holders of permits to sell at retail alcoholic beverages, and are selling alcoholic beverages to such permittees below the invoice prices customarily charged for such alcoholic beverages; and such deliveries free of cost and discounts deducted from the invoice price customarily charged for such alcoholic beverages are being justified and extended to the said retail permittees on the basis of quantity sales, sometimes called 'deals' in the regulated industry, the effect of which 'deals' being that the more alcoholic beverages purchased the lower the prices, either by means of cash discounts or by means of delivery of specified additional quantities of alcoholic beverages free of cost with the large quantity orders.
5. That the Indiana Alcoholic Beverage Commission is not effectively enforcing said Regulation 4, Rules 6 and 15, and Regulation 5, Section 4, and has adopted a policy to take action to permit price advertising of alcoholic beverages on the basis that the alcoholic beverage industry is a part of a basic free enterprise system.
6. That the advertising of prices of alcoholic beverages by means of signs visible from the exterior of the premises of retail permit holders, and by means of public advertising, such as newspapers and magazines, tends to increase rather than limit the sale of alcoholic beverages.
7. That the Plaintiffs, as holders of retail permits, have an interest in the lawful and effective regulation of the alcoholic beverage industry, and there is no remedy available to them at law to secure the lawful and effective regulation by the Defendants of the alcoholic beverage industry concerning price advertising and sales of alcoholic beverages at reduced retail prices based on the quantity sold.
8. That unless required by the relief herein sought by the Plaintiffs from this Court, the Defendants will not effectively enforce their said rules and regulations to prevent price advertising and the sale, delivery and purchase of alcoholic beverages by retail permittees from wholesalers free of cost or at prices below the invoice prices customarily charged for such alcoholic beverages.
1. The law is with the Plaintiffs and against the Defendants.
2. The alcoholic beverage industry is regulated under the police power of the State of Indiana and is neither a basic free enterprise system nor a part of a basic free enterprise system.
3. It is the public policy of the State of Indiana, unless and until changed by the General Assembly of Indiana, that the manufacture, possession, sale and...
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