Massachusetts Wholesalers of Malt Beverages, Inc. v. Attorney General

• Decision Date: 19 February 1991
• Citation: 567 N.E.2d 183,409 Mass. 336
• Parties: MASSACHUSETTS WHOLESALERS OF MALT BEVERAGES, INC., et. al. 1 v. ATTORNEY GENERAL (and a companion case). 2
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 183

567 N.E.2d 183

409 Mass. 336

MASSACHUSETTS WHOLESALERS OF MALT BEVERAGES, INC., et. al.¹ v. ATTORNEY GENERAL (and a companion case). ²

Supreme Judicial Court of Massachusetts Suffolk.

Argued Oct. 1, 1990.

Decided Feb. 19, 1991.

H. Glenn Alberich (Alice E. Moore with him), for Massachusetts Wholesalers of Malt Beverages, Inc., and others.

Toni G. Wolfman, for Massachusetts Soft Drink Ass'n & others.

George K. Weber, Asst. Atty. Gen. (Pasqua Scibelli, Asst. Atty. Gen., with him), for the Atty. Gen.

John Mirick, for Consol. Beverages, Inc., was present but did not argue.

Larry L. Varn & William J. Curry, for Burke Distributing Corp., Stuart R. Rossman & John F. Donohue, for Coca Cola Bottling Co. of New England, John F. Adkins & Terry J. Tsagaris, for L. Knife & Sons, Inc., Howard M. Miller & Daniel A. Shapiro, for Brockton Wholesale Beverage Co., John Houlihan, for Quality Beverage, Inc., and James Quarles, for United Liquors Ltd. & others, joined in a brief.

Before LIACOS, C.J., and WILKINS, ABRAMS, NOLAN and O'CONNOR, JJ.

O'CONNOR, Justice.

This case requires us to construe the so-called "bottle bill," G.L. c. 94, §§ 321-327 (1988 ed.), and, more particularly, § 323(g). Section 323(g) provides as follows: "Any bottler or distributor who receives deposits and/or handling charges under this chapter shall segregate said deposits or handling charges in a fund which shall be maintained separately from all other revenues. Said bottler or distributor shall report on a monthly basis to the alcoholic beverage control commission in a manner prescribed by said commission, the amount of said deposits or handling charges received and the amount refunded." There are two questions before us: (1) Do the "deposits" and "handling charges" referred to in § 323(g) become the property of the bottlers and distributors when the bottlers and distributors receive them, or do the bottlers and distributors hold them in trust for consumers with the result that unclaimed deposits ultimately escheat to the Commonwealth as abandoned property? (2) Must bottlers and distributors maintain separate bank accounts for those "deposits" and "handling charges," or would they comply with § 323(g) by only accounting for them separately, using standard and consistent accounting practices, thereby allowing the bottlers and distributors to commingle those and other monies?

This controversy arose when the Alcoholic Beverages Control Commission ("ABCC"), the agency responsible for over-seeing the reporting and refunding of deposits under § 323(g), sent letters to certain bottlers and distributors to inform them of the requirements of the bottle bill and associated ABCC regulations, 204 Code Mass.Regs. §§ 3.00-3.08. The letters indicated that, if the companies did not comply with the regulations, the ABCC would refer the matter to the Attorney General for enforcement pursuant to G.L. c. 94, § 327. Massachusetts Wholesalers of Malt Beverages, Inc., and Massachusetts Soft Drink Association then brought an action seeking a declaration that "section 323(g) is fully satisfied by establishment and maintenance of an accounting fund for container refund values and/or handling charges," and also seeking preliminary and permanent injunctions restraining the Attorney General from taking any action against them that would be inconsistent with that statutory interpretation. On the same day that the Attorney General answered that complaint, the Commonwealth commenced an enforcement action against several members of Massachusetts Wholesalers of Malt Beverages, Inc., and Massachusetts Soft Drink Association. The Commonwealth alleged that the defendants had violated § 323(g) by not depositing the money in controversy in separate bank accounts. The Commonwealth further asserted that the defendant bottlers and distributors held that money in trust for consumers, and that the defendants had violated their fiduciary duty by commingling the money with their own money.

The two actions were consolidated in the Superior Court, and the parties cross-moved for summary judgment in both actions. After a hearing on those motions, a judge ordered the entry of a judgment in the action initiated by Massachusetts Wholesalers of Malt Beverages, Inc., and Massachusetts Soft Drink Association declaring, favorably to the Attorney General's position, that § 323(g) "requires the bottlers and distributors to segregate the deposits they collect in separate bank accounts for consumers until consumers seek the refunds to which they are entitled." In addition, the judge ordered that "[j]udgment shall also enter for the Commonwealth on Count I" in the action begun by the Commonwealth. Count I was the Commonwealth's assertion that § 323(g) required separate bank accounts. In that same action commenced by the Commonwealth, however, the judge ordered the entry of judgment for the bottlers and distributors on the Commonwealth's Counts II and III. In those counts, the Commonwealth asserted that the defendants held the "container deposits" in trust for "Massachusetts consumers." In explanation of her order for judgment in the consolidated actions, the judge reasoned that "the plain meaning of the words in § 323(g), combined with a workable construction of the entire statute, compel[led her] to reject the bottlers' and distributors' interpretation of the first sentence of § 323(g)." She also reasoned, however, that the "absence of legislative direction, express or implied, [with respect to the disposition of 'unclaimed deposits'] leads to the fair inference that the unclaimed deposits belong to the bottlers and distributors."

Following the above-described order, the judge reported the matter to the Appeals Court pursuant to G.L. c. 231, § 111 (1988 ed.), and Mass.R.Civ.P. 64, 365 Mass. 831 (1974), and stayed further proceedings pending an Appeals Court determination. We then granted the Commonwealth's application for direct appellate review. We now affirm in part and reverse in part the order of the Superior Court judge. We affirm the determination that the "unclaimed deposits" are the property of the bottlers and distributors under G.L. c. 94, § 323(g). We reverse the judge's decision that § 323(g) requires bottlers and distributors to establish and maintain a separate bank account for "deposits and/or handling charges."

General Laws c. 94, § 321, defines several terms used throughout the bottle bill. We set out the relevant parts of some of those definitions as follows: A " '[b]everage container' [is] any sealable bottle, can, jar, or carton [not including those made of biodegradable material] ... produced for the purpose of containing a beverage." The term, " '[r]euseable beverage container,' [means] any beverage container so constructed and designed that it is structurally capable of being refilled and resold by a bottler at least ten times after its initial use." "Any person who purchases a beverage in a beverage container for use or consumption with no intent to resell such beverage [is a] '[c]onsumer.' " A "[d]ealer" is "any person ... who engages in the sale of beverages in beverage containers to consumers in the commonwealth." "Distributor" is defined by § 321 as "any person who engages in the sale of beverages in beverage containers to dealers in the commonwealth including any bottler who engages in such sales."

Chapter 94, § 322, provides in pertinent part: "Every beverage container sold or offered for sale in the commonwealth shall have a refund value of not less than five cents." Section 323 provides in pertinent part as follows: "(a) Every consumer shall deposit with the dealer the refund value of each beverage container purchased from that dealer; (b) [With an exception not here material], a dealer shall accept from any person during his business hours any empty beverage container of the type, size and brand sold by the dealer within the past sixty days and shall pay that person the refund value of each beverage container returned; (c) [With an exception not here material], a distributor shall accept from any dealer any empty beverage container of the type, size and brand sold by the distributor within the past sixty days and shall pay the dealer the refund value of the beverage container plus a handling fee of at least one cent per container if the empty beverage container is presented at the time of and at the location at which the dealer obtains filled beverage containers from the distributor; (d) [With an exception not here material), a bottler shall accept from a distributor or a dealer any empty reuseable beverage container of the type, size and brand sold by the bottler within the past sixty days and shall pay the distributor or dealer the refund value of the reuseable beverage container plus a handling fee of at least one cent per container if the empty reuseable beverage container is presented at the time and at the location where the distributor or dealer obtains filled reuseable beverage containers from the bottler; provided, however,...