Joseph E. Seagram & Sons, Inc. v. Hostetter

• Decision Date: 08 April 1965
• Citation: 45 Misc.2d 956,258 N.Y.S.2d 442
• Parties: JOSEPH E. SEAGRAM & SONS, INC., et al., Plaintiffs, v. Donald S. HOSTETTER, Chairman, John C. Hart, William H. Morgan, Benjamin H. Balcom, Robert E. Doyle, constituting the State Liquor Authority, and Louis J. Lefkowitz, Attorney General of the State of New York, Defendants.
• Court: New York Supreme Court

Page 442

258 N.Y.S.2d 442

45 Misc.2d 956

JOSEPH E. SEAGRAM & SONS, INC., et al., Plaintiffs, v. Donald S. HOSTETTER, Chairman, John C. Hart, William H Morgan, Benjamin H. Balcom, Robert E. Doyle, constituting the State Liquor Authority, and Louis J. Lefkowitz, Attorney General of the State of New York, Defendants.

Supreme Court, Special Term, Albany County.

April 8, 1965.

Lord, Day & Lord, New York City, for plaintiffs.

Louis J. Lefkowitz, Atty. Gen., Albany, Ruth Kessler Toch, Asst. Sol. Gen., Robert L. Harrison, Asst. Atty. Gen., for defendants.

ELLIS J. STALEY, Jr., Justice:

This is a motion for an order restraining the defendants pending the determination of the issues in this action from:

1. Requiring plaintiffs to comply in any manner with any part of section 9, ch. 531 of the Laws of 1964.

2. Requiring those plaintiffs who sell their brands of liquor to wholesalers located in other states as well as to wholesalers in the State of New York to file a schedule of prices at which such liquor is sold to wholesalers in states other than New York 'irrespective of the place of sale or delivery' as required by section 7, ch. 531 of the Laws of 1964.

3. Requiring plaintiffs to include in their schedule of prices filed pursuant to section 101-b of the Alcoholic Beverage Control Law the 'net bottle and case price paid by the seller' as required by section 7, ch. 531 of the Laws of 1964.

A cross motion is made by the defendants for an order dismissing the complaint herein or, in the alternative, for judgment declaring section 9 of ch. 531 of the Laws of 1964 and section 7 of ch. 531 of the Laws of 1964 (Alcoholic Beverage Control Law, § 101-b, subd. 3, par. [a]) to be in all respects constitutional and valid. Section 7 and section 9, as herein referred to, in each instance shall mean section 7 and section 9 of ch. 531 of the Laws of 1964.

Section 9 added new paragraphs (d), (e), (f), (g), (h), (i), (j) and (k) to subdv. 3 of section 101-b of the Alcoholic Beverage Control Law. Section 7 enacted certain amendments to subdvs. 2, 3, and 4 of section 101-b and added new subdv. 6 to said section.

The provisions of section 7 require monthly schedules of brand owners', distillers' or manufacturers' bottle and case prices and discounts to wholesalers, as well as the net bottle and case price paid by the seller and of wholesalers' prices and discounts to retailers. The sale of liquor or wine to or by a wholesaler or retailer is prohibited unless the required schedules are filed and, in the case of a wholesaler, such prohibition applies irrespective of the place of sale or delivery. Schedules are not required to be filed for an item under a brand owned exclusively by one retailer and sold at retail within the state exclusively by such retailer.

Discrimination in price or discounts and the granting of discounts other than as provided in the section is declared to be unlawful. Penalties are also provided for making any sale or purchase in violation of the provisions of the section or for making a false statement in any schedule or for failing or refusing to comply with the provisions of the section.

In essence section 9 requires that, in addition to the schedules required by section 7, there must be filed an affirmation by the brand owner, or by the wholesaler designated as agent for the purpose of filing the schedule if the owner of the brand is not licensed by the liquor authority that the bottle and case price of liquor to wholesalers set forth in the schedule is no higher than the lowest price at which such item was sold by such brand owner or such wholesaler or any related person to any wholesaler anywhere in any other State of the United States or in the District of Columbia or to any state which owns and operates retail liquor stores in the month immediately preceding the month in which the schedule is filed. A similar affirmation is required concerning sale to retailers. In the event an affirmation is not filed with respect to an item of liquor the schedule for which the affirmation is required is deemed invalid and such item may not be sole to or purchased by a wholesaler during the period covered by the schedule. Provision is made for determining the lowest price for which any item was sold elsewhere and the making of a false statement in an affirmation is declared to be a misdemeanor.

The intent of the Legislature in making these amendments is set forth in section 8 which provides as follows:

'In enacting section eleven of this act, it is firm intention of the legislature (a) that fundamental principles of price competition should prevail in the manufacture, sale and distribution of liquor in this state, (b) that consumers of alcoholic beverages in this state should not be discriminated against or disadvantaged by paying unjustifiably higher prices for brands of liquor than are paid by consumers in other states, and that price discrimination and favoritism are contrary to the best interests and welfare of the people of this state, and (c) that enactment of section eleven of this act will provide a basis for eliminating such discrimination against and disadvantage of consumers in this state. In order to forestall possible monopolistic and anticompetitive practices designed to frustrate the elimination of such discrimination and disadvantage, it is hereby further declared that the sale of liquor should be subjected to certain further restrictions, prohibitions and regulations, and the necessity for the enactment of the provisions of section nine of this act is, therefore, declared as a matter of legislative determination.'

The first two causes of action of the complaint seek a declaratory judgment determining (1) that section 9 is unconstitutional and void in that it deprives the plaintiffs named in the first cause of action of liberty and property without due process of law; it is an arbitrary, capricious and unreasonable exercise of the state's police power; is inconsistent with the declared policy of the Alcoholic Beverage Control Law as expressed in sections 2 and 101-b (1) of that law; it will not serve to cure the possibility of monopolistic and anti-competitive practices; it contravenes the terms and policy of the Sherman Act, 15 U.S.C. §§ 1-7; it is in direct conflict with the Robinson-Patman Act, 15 U.S.C. §§ 13a, 13b, and 21a; it violates the Constitution of the United States by interfering with commerce among the states: it violates the Constitution of the State of New York and the Constitution of the United States in that it is discriminatory; (2) that section 7 (Alcoholic Beverage Control Law, § 101-b, Subdv. 3, par. [a]) is unconstitutional and void in that it violates the Constitution of the United States by interfering with commerce among the states and with foreign commerce and deprives the plaintiffs of property without due process of law; (3) that section 9 (Alcoholic Beverage Control Law, § 101-b, subd. 3, par. [f]) violates the Constitution of the State of New York and the Constitution of the United States in that it deprives the plaintiff named in the second cause of action of liberty and property without due process of law; it is an arbitrary, capricious and unreasonable exercise of the state's police power; it is likely to cause unwitting violations of the laws of New York and of other states and of the federal anti-trust laws; it is vague and indefinite.

The third and fourth causes of action of the complaint seek an injunction enjoining and restraining the defendants and their successors from imposing any sanctions or penalties for failure to submit the affirmations and verifications required by section 9 and for failure to file the prices and schedules required to be filed by section 7 on the ground that said sections are unconstitutional and void.

The cross motion by the defendants for judgment declaring section 9 and section 7 (Alcoholic Beverage Control Law, § 101-b, subdv. 3, par. [a]) to be, in all respects, constitutional and valid is, in effect, a motion for summary judgment.

In weighing a challenge of unconstitutionality of a statute the Courts observe the legal principles; that a legislature enactment carries with it an exceedingly strong presumption of constitutionality; that every intendment is in favor of the statute's validity; that the heavy burden of demonstrating unconstitutionality beyond a reasonable doubt rests upon the one who attacks a statute as unconstitutional and that only as a last unavoidable result do Courts strike down a legislative enactment as unconstitutional. (I.L.F.Y. Co. v. Temporary State Rent Comm., 10 N.Y.2d 263, 219 N.Y.S.2d 249, 176 N.E.2d 822; Wiggins v. Town of Somers, 4 N.Y.2d 215, 173 N.Y.S.2d 579, 149 N.E.2d 869; Lincoln Bldg. Associates v. Barr, 1 N.Y.2d 413, 153 N.Y.S.2d 633, 135 N.E.2d 801; New York State Thruway Authority v. Ashley Motor Court, Inc., 12 A.D.2d 223, 210 N.Y.S.2d 193, affd. 10 N.Y.2d 151, 218 N.Y.S.2d 640, 176 N.E.2d 566; Matter of Roosevelt Raceway, Inc. v. Monaghan, 9 N.Y.2d 293, 213 N.Y.S.2d 729, 174 N.E.2d 71, App. Dis. 368 U.S. 12, 82 S.Ct. 123, 7 L.Ed.2d 75; Matter of Ahern v. South Buffalo Ry. Co., 303 N.Y. 545, 104 N.E.2d 898, affd. 344 U.S. 367, 73 S.Ct. 340, 97 L.Ed. 395; Martin v. State Liquor Authority, 43 Misc.2d 682, 252 N.Y.S.2d 365, affd. 15 N.Y.2d 707, 256 N.Y.S.2d 336, 204 N.E.2d 496.

The judgment of the Courts will not be substituted for that of the Legislature to determine whether the legislation will accomplish the desired end or can be effectively administered.

Courts no longer employ the due process clause of the Constitution to invalidate State Laws regulatory of business and industrial conditions merely because such laws are deemed unwise or improvident. (Williamson v. Lee Optical Co. of Okl., 348 U.S. 483, 75 S.Ct. 461, 99 L.Ed. 563; Gail Turner Nurses Agency, Inc. v. State of New York, 17 Misc.2d 273, 190 N.Y.S.2d 720.)

Nor will the Court sit as a superlegislature to...