Milgram Food Stores, Inc. v. Ketchum

• Decision Date: 13 July 1964
• Docket Number: No. 1,No. 50159,50159,1
• Citation: 384 S.W.2d 510
• Parties: MILGRAM FOOD STORES, INC., a Corporation, Respondent, v. Hollis M. KETCHUM, Supervisor, Department of Liquor Control, State of Missouri, Appellant
• Court: Missouri Supreme Court

Page 510

384 S.W.2d 510

MILGRAM FOOD STORES, INC., a Corporation, Respondent, v. Hollis M. KETCHUM, Supervisor, Department of Liquor Control State of Missouri, Appellant.

No. 50159.

Supreme Court of Missouri, Division No. 1.

July 13, 1964.

Motion for Rehearing or to Transfer to Court En Banc Denied

Sept. 14, 1964.

A. E. Margolin, F. Philip Kirwan, Harry H. Terte, Solbert M. Wasserstrom, Kansas City, for respondent, Margolin & Kirwan, Kansas City, of counsel.

Thomas F. Eagleton, Atty. Gen., Jeremiah D. Finnegan, Asst. Atty. Gen., Jefferson City, for appellant.

HYDE, Presiding Judge.

Licenses of respondent were suspended for a 25-day period by the State Supervisor of Liquor Control for violation of Regulation 15(f)(5) made under authority of Sec. 311.660(6). (Statutory references are to RSMo and V.A.M.S.) As authorized by Sec. 311.700, this decision was reviewed by the Circuit Court, on application of respondent, and the court found Sec. 311.660(6) unconstitutional as 'an unwarranted attempt to delegate legislative functions to the Supervisor.' The court also declared the Regulation involved to be invalid and the Supervisor has appealed.

The Regulation involved, applicable to all licensees, was as follows: '(f) The term 'advertisement' as used herein includes any advertisement through the medium of radio, television, motion pictures, public address systems, newspapers or other publications or any sign or outdoor billboard or other printed or graphic matter.

'No advertising of intoxicating liquor shall contain: * * *

'(5) Any statement offering any coupon, premium, prize or rebate as an inducement to purchase intoxicating liquor.'

The Supervisor's finding of violation was: 'That on or about November 28, 1962, you, by an advertisement folder, sent through the United States Mail and by said advertisement being made available at all 19 of your stores, offered a premium or a prize as an inducement to purchase intoxicating liquor, to wit: in that you offered a Santa Claus bottle cover free of charge to anyone who purchased certain brands of scotch whiskey from any of your nineteen stores.'

Respondent's advertisement, listing many other items, contained the following statement:

'FREE Santa Claus

Bottle Cover!

You Must See to Believe!

EXCLUSIVE OFFER

ONLY AT MILGRAM

With Each Bottle Purchased of These 4 Internationally Famous Scotches, You Receive FREE A Santa Claus Bottle Cover, With his Bright Red Velvety Coat, And His Happy Smile Gleaming Through His Long White Whiskers!

Squeeze His Shining Red Nose and He Says 'Hello'

Choice Of:

WHITE HORSE

BLACK AND WHITE

BALLANTINE'S

JOHNNIE WALKER RED

All 100 Percent Scotch Whisky

Distilled and Bottled in

Scotland'

Respondent claims these cloth bottle covers, made in Japan and costing eleven cents each, were substantially the same as Christmas wrappings customarily used in the liquor trade, many of which were claimed to be more elaborate and expensive, as well as decanters, carafes and other containers valuable for other uses, in which liquor was sold during the Christmas season. The Supervisor's refusal to admit such evidence is claimed to be erroneous and is also the basis for a claim by respondent that his action was arbitrary, capricious and unreasonable. Apparently, these things were furnished by the manufacturers and not by Missouri licensees so Regulation 15(f)(5) was not applicable to them.

Sec. 311.660 commences as follows: 'The supervisor of liquor control shall have the authority to suspend or revoke for cause all such licenses; and to make the following regulations, without limiting the generality of provisions empowering the supervisor of liquor control as in this chapter set forth as to the following matters, acts and things: * * *.'

Subsections 1 to 5 of Sec. 311.660 specify matters for regulations such as nature, form and capacity of liquor packages, official seal and label to be attached to liquor packages, forms for license applications and other necessary forms, terms and conditions of licenses, proof and conditions for obtaining duplicate licenses for those lost or destroyed. Subsections 7 to 9 authorize regulations for examination of books and records, subpoenas and processes, production of papers, taking testimony and for forms of labels. Subsection 10 authorizes 'such other rules and regulations as are necessary and feasible for carrying out the provisions of this chapter, as are not inconsistent with this law.'

Subsection 6, relied on as authority for the regulation claimed to have been violated by respondent, is as follows:

'(6) Establish rules and regulations for the conduct of the business carried on by each specific licensee under the license, and such rules and regulations if not obeyed by every licensee shall be grounds for the revocation or suspension of the license.'

Respondent's contention, which was the basis of the trial court's decision, is that Sec. 311.660(6) attempts to give the Supervisor arbitrary discretion without a definite standard for his guidance and is an unwarranted attempt to delegate legislative functions and thus delegates power to make law instead of conferring authority or discretion as to its execution. Respondent relies on such cases as State ex rel. Triangle Fuel Co. v. Caulfield, 355 Mo. 330, 196 S.W.2d 296; State ex rel. Continental Oil Co. v. Waddill, Mo.Sup., 318 S.W.2d 281; Automobile Club of Missouri v. City of St. Louis, Mo.Supp., 334 S.W.2d 355, 83 A.L.R.2d 612. Respondent also cites and relies on State ex rel. Anderson v. Mermis, 187 Kan. 611, 358 P.2d 936. That case involved fixing prices of liquor by the director of the State Control Board on the basis of suggested prices by licensed distributors and retailers. The court (l. c. 938) said: 'This is the delegation of a fundamental duty of the legislature. Whether there should be minimum prices set upon liquor is at least debatable, and it is for the legislature to determine whether such prices are to be imposed under the police power of the state. We are of the opinion, that the police power of the state is for the legislature to apply, and we believe this delegation of the ultimate use of the police power is sufficient to render the statute unconstitutional.' The court noted (1. c. 939): 'Nowhere in the statute is the director given any authority over the reasonableness of the prices suggested'; and stated: '[W]e are content to believe that it is fundamental that the legislature may not leave to the discretion of administrative officials the question of the application of the police power in a certain field. This is quite different from the usual method in which the legislature determines that a danger to public welfare should be regulated under the police power, and then assigns to administrative officers the matter of working out regulations under guide posts announced by the legislature.' Thus the Kansas case involved the making of policy that the Legislature had to decide and not the delegation of authority to make rules for administration of a policy which the Legislature had decided to put into effect. In Anheuser-Busch, Inc. v. Walton, 135 Me. 57, 190 A. 297, cited by respondent, the Liquor Commission attempted to increase fees and taxes by regulations; and the court held the Legislature had not given the Commission any authority to do so.

However, respondent says our Legislature has not seen fit to declare any policy concerning advertising of intoxicating liquor except to make unlawful window displays of intoxicating liquor (Sec. 311.350) and prohibiting misrepresentation of brands sold or offer of substitution of liquor of one manufacturer for that of another (Sec. 311.360) and claims the Supervisor cannot enlarge on those provisions. Nevertheless, this does show some indication of policy to limit inducing sales by advertising, especially the prohibition of window displays. Furthermore, Regulation 15(f)(5) concerns not only advertising but stimulating sales by offers of a prize or premium in an advertisement. Regulation 15(f) does not prohibit advertising but only false, misleading, untruthful and obscene statements in advertising and this seems in accord with Sec. 311.360. It does regulate advertising in certain other respects in addition to subparagraph (5) such as prohibiting licensees' signs in dance halls, places of entertainment and restaurants that do not have licenses and prohibiting use of loud speakers or public address systems other than regular radio advertising, which is not involved in this case.

It has been held proper to regulate advertising of liquor to discourage artificial stimulation of liquor consumption; 48 C.J.S. Intoxicating Liquors Sec. 197, p. 328; 30 Am.Jur. 549, Intoxicating Liquors, Sec. 35; Annotation, 19 A.L.R.2d 1114. In Commonwealth v. Anheuser-Busch, Inc., 181 Va. 678, 26 S.E.2d 94, this was done by regulations under statutory authority stated in very broad terms. The State Control Board's authority was to 'make reasonable regulations, not inconsistent with this act * * * as the board shall deem necessary to carry out the purposes and provisions of this act, etc.' (including prevention of specified illegal acts but not mentioning advertising). The Board's regulation permitted only licensed dealers to advertise. The court held the Board could require the billboards of Anheuser-Busch (which was unlicensed) to be taken down, saying: 'The police powers of the State with reference to the control of intoxicating liquors is to be distinguished from its powers to regulate traffic in other things. It would be different if the business sought to be followed was one of the ordinary pursuits in which all persons are enabled to engage. * * * To unduly encourage, by display advertisements throughout the State, the use of alcoholic stimulants, or to stimulate that use, is highly undesirable.'

The State says Sec. 311.660(6) does not vest the Supervisor with arbitrary discretion to make rules and...