Johnson v. Martignetti

Citation375 N.E.2d 290,374 Mass. 784
PartiesMarvin T. JOHNSON et al. v. Ferdinand F. MARTIGNETTI et al.
Decision Date11 April 1978
CourtUnited States State Supreme Judicial Court of Massachusetts

Howard M. Miller, Boston, for Ferdinand F. Martignetti & another.

Benjamin Goldman, Boston, for Y & M Trust.

James N. Esdaile, Jr., Boston, for Marvin T. Johnson & others.

Thomas Miller, Asst. Atty. Gen., for Attorney General.

Before HENNESSEY, C. J., and QUIRICO, BRAUCHER, WILKINS and LIACOS, JJ.

HENNESSEY, Chief Justice.

On February 20, 1975, fourteen taxpayers brought an action pursuant to G.L. c. 138, § 60, and G.L. c. 139, § 16A, 1 seeking to abate the use of a building on the ground that it was being used unlawfully as a liquor nuisance. Their claim of unlawful use was based on G.L. c. 138, § 15, commonly known as the "multiple ownership law," which provides, in substance, that no person or combination of persons, directly or indirectly, shall be granted more than three liquor licenses for the sale of alcoholic beverages to be consumed away from the premises.

The named defendants include various individuals controlling six corporations, which in turn hold eight package store licenses, and which do business under the name of "Martignetti Liquors." 2 Additionally, the trustees of Y & M Trust, owners of the Woburn real estate on which one of the defendant corporations does business, were named as defendants. All defendants denied that they had violated G.L. c. 138, § 15. Further, by way of a motion to dismiss, the defendants challenged the constitutionality of the multiple ownership law on due process and equal protection grounds. The Attorney General was permitted to intervene and be heard on the asserted constitutional claims.

After considering testimony, numerous exhibits, and a statement of agreed facts, the judge denied the defendants' motion to dismiss and concluded that the various defendants were a "combination of persons" holding more than three liquor licenses in violation of G.L. c. 138, § 15. As a result, the judge (1) permanently enjoined the individual and corporate defendants from maintaining an illegal liquor nuisance at their Woburn location (hereinafter Plaza Package Store), (2) ordered the individual and corporate defendants to remove all property from the Plaza Package Store within thirty days after final judgment, and (3) enjoined the owner of the premises from using, leasing, or renting the location as a package store for a period of one year from the date of the judgment.

In light of our decision in Powers v. Sixty Broadway, Inc.,--- Mass. --- a, 356 N.E.2d 704 (1976), the defendants now concede that, "in combination," they do own or control more than three package store licenses in violation of G.L. c. 138, § 15. Their arguments on appeal are thus directed toward the constitutionality of § 15 and toward the propriety of the injunction under G.L. c. 139, § 16A. For the reasons discussed below, we conclude that § 15 is neither unconstitutionally vague nor violative of the defendants' rights to equal protection. We further conclude that the terms of the injunction are not inconsistent with the provisions of G.L. c. 139, § 16A. Accordingly, we affirm.

The facts are as follows. Martignetti Liquor operations were begun originally by Carmen Martignetti and his wife. Their sons, Anthony, Ferdinand, and Joseph, began their work in the family business when they were children. In 1963, the elder Martignettis transferred to Anthony, Ferdinand, Joseph, and their respective wives, all their stock holdings in Martignetti Grocery Co., Inc., and Orlandella Grocery Co., Inc. As a result of this transfer, the family of each Martignetti son now controls 33 1/3% of the eligible voting stock in the Martignetti and Orlandella corporations.

Subsequent to the 1963 transfer, the Martignetti brothers acquired other package stores, including the Plaza Package Store located in Woburn. 3 At present, the Martignetti brothers and their wives control, in the aggregate, 100% of the voting stock of eight package stores. None of the individuals, however, owns stock in corporations holding more than three package store licenses.

Several indicia of common operations led the judge to conclude that "over the years by design and collusion the three primary individuals, Joseph, Ferdinand and Anthony Martignetti . . . have constructed . . . a tightly interconnected liquor chain . . . ." The judge found that the defendant corporations and individuals participated in a common scheme of advertising, bookkeeping, pension plans, liability and insurance policies, discounting techniques, pricing, hiring, and financing corporate debt. The judge further found: a common design to promote the name "Martignetti Liquors" with reference to all the stores; a history of interconnecting loan transactions which suggested common use of corporate and trust assets; and a system whereby each of the individual defendants had authority to act on behalf of the other corporations in which he was not an officer or director. In light of these findings, the judge concluded that "(t)he business transactions which have occurred and are continuing to occur between the various entities paid little if any attention to the separateness of the corporations, and are bound together in a common business."

1. The defendants argue that, in proscribing any "person, firm, corporation, association, or other combination of persons, directly or indirectly" from holding, in the aggregate, more than three package store licenses, the provisions of G.L. c. 138, § 15, are impermissibly vague (emphasis added). They assert that § 15 violates due process because the average person, exercising economic and business knowledge, cannot determine from the above-quoted language precisely what activity is permitted or proscribed. We disagree.

A statute is not to be invalidated under the void-for-vagueness doctrine where the challenged provisions are merely general in nature, requiring a person to conform his or her conduct "to an imprecise but comprehensible normative standard." Coates v. Cincinnati, 402 U.S. 611, 614, 91 S.Ct. 1686, 1688, 29 L.Ed.2d 214 (1971). Rather, the doctrine is applied to strike down statutes in which "no standard of conduct is specified at all." Id. at 614, 91 S.Ct. at 1688. See generally Jaquith v. Commonwealth, 331 Mass. 439, 441-442, 120 N.E.2d 189 (1954); Parker v. Levy, 417 U.S. 733, 755, 94 S.Ct. 2547, 41 L.Ed.2d 439 (1974); United States v. Petrillo, 332 U.S. 1, 7-8, 67 S.Ct. 1538, 91 L.Ed. 1877 (1947); United States v. L. Cohen Grocery Co., 255 U.S. 81, 89, 41 S.Ct. 298, 65 L.Ed. 516 (1921).

The statute in question suffers from no such infirmity. The phrase "combination of persons" has a well established common law meaning, both generally and in the context of alcoholic beverage regulation. In general terms, the existence of a combination may be found where two or more persons engage in a mutuality of action designed to effect a common result. See generally Antoine v. Commonwealth Trust Co., 266 Mass. 202, 206, 165 N.E. 12 (1929); Commonwealth v. Dyer, 243 Mass. 472, 488-489, 138 N.E. 296 (1922); Cornellier v. Haverhill Shoe Mfrs. Ass'n, 221 Mass. 554, 559, 562, 109 N.E. 643 (1915); Commonwealth v. Hunt, 4 Met. 111, 121-125 (1842); Black's Law Dictionary 333 (rev. 4th ed. 1968); 1 von Kalinowski, Antitrust Laws and Trade Regulation § 6.01(1) at 6-2 to 6-4 (1975). Even more specifically, this court has stated that, in the area of alcoholic beverage regulation, the existence of a "combination of persons" is a question of fact which may be inferred from such circumstantial evidence as: common group insurance policies, bookkeeping offices, employees, and bonus formulas; substantial intercompany dealings; common use of various assets; and a decision- making pattern whereby the owner of one business entity has authority to act on behalf of others. See Cleary v. Cardullo's, Inc., 347 Mass. 337, 349, 198 N.E.2d 281 (1964). See also Powers v. Sixty Broadway, Inc., --- Mass. ---, --- b, 356 N.E.2d 704 (1976). There is thus ample guidance as to proscribed activity in the Legislature's use of the phrase "combination of persons."

Similarly, the meaning of the statute's proscription against direct or indirect holdings of more than three licenses is readily ascertainable. Because G.L. c. 138 may properly be read as a whole, e. g., Cleary v. Cardullo's, Inc., supra at 347, 198 N.E.2d 281, we may refer to related statutory provisions to determine the meaning of the phrase in § 15. Cf. Lantner v. Carson, --- Mass. ---, --- c, 373 N.E.2d 973 (1978). Section 15A of c. 138 indicates that, with regard to the granting of liquor licenses, the broad legislative concern with direct or indirect license holdings is, more specifically, a concern with business entities which have a " direct or indirect beneficial interest" in a licensed establishment. The terms of § 15A suggest a definite guideline as to the meaning of this phrase. The section provides that a holding of less than 10% of the outstanding voting stock of a corporation owning a liquor license does not constitute a direct or indirect beneficial interest within the meaning of the statute. The logical, reasonable inference is that a holding of more than 10% of the voting stock of an establishment owning a liquor license would tend to support an inference that there was a "direct or indirect" interest under c. 138's statutory scheme.

Greater exactitude in statutory terms is not required by the due process clause. We have recognized that "(r)egulation of trade practices must be in broad terms" (emphasis added). Commonwealth v. Gustafsson, 370 Mass. ---, --- d, 346 N.E.2d 706 (1976). Accord, Papachristou v. Jacksonville, 405 U.S. 156, 162, 92 S.Ct. 839, 31 L.Ed.2d 110 (1972). Thus, in the area of economic regulation, due process requirements are met where, as here, the statute in question sets forth...

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