Reeves v. Simons

• Decision Date: 13 March 1942
• Citation: 289 Ky. 793
• Parties: Reeves et al. v. Simons.
• Court: United States State Supreme Court — District of Kentucky

289 Ky. 793

Reeves et al. v. Simons.

Court of Appeals of Kentucky.

March 13, 1942.

1. Constitutional Law; Intoxicating Liquors. — The Distilled Spirits and Wine Fair Trade Act is not unconstitutional as in violation of constitutional provisions relating to separation of the executive, legislative and judicial branches of government on ground that the act permits Alcoholic Beverage Control Board to exercise judicial functions in conducting hearings and depriving dealers of their licenses, since although board acts in a quasi judicial capacity it is not exercising "judicial power" within constitutional provision forbidding one department from usurping another's function (Ky. Stats. Supp. 1939, secs. 2554b-97 to 2554b-222; Ky. Stats. Supp. 1941, sec. 2554e-1 et seq.; Constitution, secs. 27-29, 109).

2. Statutes. — The provision of Distilled Spirits and Wine Fair Trade Act that the act shall be administered under the Alcoholic Beverage Control Law does not violate constitutional provision forbidding provisions of law from being extended or conferred by reference to its title only, since the manner of procedure may be provided by reference to other sections of statutes without violating the constitutional provision (Ky. Stats. Supp. 1939, secs. 2554b-97 to 2554b-222; Ky. Stats. Supp. 1941, sec. 2554e-1; Constitution, sec. 51).

3. Constitutional Law; Intoxicating Liquors. — The Distilled Spirits and Wine Fair Trade Act is not unconstitutional on ground that provision for minimum mark-up resale price violates the "due process of law" clause of the Fifth and Fourteenth Amendments to the Federal Constitution (Ky. Stats. Supp. 1939, sec. 4748i-1; Ky. Stats. Supp. 1941, secs. 2554e-1 to 2554e-3; U.S.C.A. Constitution Amendments 5, 14).

4. Constitutional Law; Intoxicating Liquors. — The provision of the Distilled Spirits and Wine Fair Trade Act relating to minimum mark-up resale price is not unconstitutional as in violation of constitutional provision forbidding the granting of exclusive emoluments or privileges except for public service, on theory that the mark-up in resale price was for the sole benefit of dealers (Ky. Stats. Supp. 1939, sec. 4748i-1; Ky. Stats. Supp. 1941, secs. 2554e-1 to 2554e-3; Constitution, sec. 3).

5. Constitutional Law. — Courts are not concerned with the wisdom or appropriateness of legislation, but public benefit to be derived therefrom and adequacy thereof are primarily for Legislature, and unless it is clear that statute has no reasonable relation to a proper legislative purpose and is arbitrary and discriminatory and without substantial basis, the courts will not interfere.

Appeal from Franklin Circuit Court.

Hubert Meredith, Attorney General, Harry D. France, Assistant Attorney General, and Dodd & Dodd for appellants.

Stanley B. Mayer for appellee.

Before William B. Ardery, Judge.

OPINION OF THE COURT BY SIMS, COMMISSIONER.

Reversing.

This action was instituted by Eli Simons, doing business as the Kentucky Distillers Wholesale Liquor Company, to enjoin the members of the Kentucky State Alcoholic Control Board from revoking his permit as a wholesale liquor dealer for alleged violations of the Distilled Spirits And Wine Fair Trade Act (Chapter 13 Acts of 1940, now Section 2554e-1 et seq., Kentucky Statutes, Baldwin's 1941 Supplement) by granting rebates. The chancellor granted a temporary injunction which this court refused to dissolve, and while the action was pending on its merits plaintiff's permit expired. By an amended petition he sought to recover $3,230.84 in taxes on the ground that this Act under which it was paid was unconstitutional.

Although the chancellor held the Act to be unconstitutional, he refused to adjudge plaintiff a recovery of the tax for the reason given in his written opinion that plaintiff had made $38,000 in a single year while operating under this statute, and because he only pleads he paid part of this tax under protest. The Board appeals from so much of the judgment as holds the Act to be unconstitutional, but no cross-appeal was prosecuted by plaintiff. Therefore, the sole question before the court is the constitutional one.

Plaintiff's challenge of constitutionality is under Sections 3, 19, 27, 28, 29, 51 and 109 of the Kentucky Constitution, and under the due-process clause of the Fifth and Fourteenth Amendments to the Federal Constitution.

The 1940 session of the General Assembly passed what is known as the Distilled Spirits And Wine Fair Trade Act (Chapter 13, page 90, Acts 1940, now Section 2554e-1 et seq., Kentucky Statutes, Baldwin's 1941 Supplement). This statute rigidly controls the sale of liquor and wine from the distiller to the wholesaler, and from the wholesaler to the retailer. Section 2554e-1 is to the effect that except as is otherwise provided the Act shall be administered under the Alcoholic Beverage Control Law of 1938 (Chapter 2 of the Acts of that year, now Sections 2554b-97 to 2554b-222, Kentucky Statutes, Baldwin's 1939 Supplement). It is argued by plaintiff that Sections 27, 28, 29 and 109, Kentucky Constitution (which relate to the separation of the executive, legislative and judicial branches of our government, and to the establishment of courts) are violated by the Act because it permits the Board to exercise judicial functions in conducting hearings and depriving dealers of their licenses if it finds they have violated the Act. This question was decided adversely to plaintiff's contention in Keller v. Kentucky Alcoholic Beverage Control Board, 279 Ky. 272, 130 S.W. (2d) 821, and Bloemer v. Turner, 281 Ky. 832, 137 S.W. (2d) 387. In the Keller case it was written there is no constitutional objection to an administrative board ascertaining facts and administering the law; that although it acts in a quasi judicial capacity, it is not exercising judicial power within the meaning of the Constitution forbidding one branch of government from usurping the functions of another. Section 2554b-147 makes provision for a judicial review of the Board's action.

Plaintiff further urges that Sec. 2554e-1 in providing the Act shall be administered under the Alcoholic Beverage Control Law of 1938 violates that part of Section 51 of our Constitution which forbids the provisions of a law from being extended or conferred by reference to its title only. It has been several times written that the manner of procedure may be provided by reference to other sections of the Statutes without doing violence to Section 51. Hart v. Com., 207 Ky. 343, 269 S.W. 300; Clark v. Com., 209 Ky. 184, 272 S.W. 430; Carey-Reed Co. v. Sisco, 251 Ky. 22, 64 S.W. (2d) 430.

Under Section 2554e-2 no distiller, rectifier, blender, wholesaler, vintner, or retailer who holds a license in this State to sell distilled spirits or wines may sell same without complying with the provisions of this law and all sales must be made according to a fair trade contract as defined under the Fair Trade Act, Section 4748i-1, Kentucky Statutes, Baldwin's 1939 Supplement. Such contracts must provide for the following minimum mark-up resale prices without discount: From the distillers, rectifiers, blenders, producers or owners to the wholesalers, no less than 15%; from vintners to wholesalers, not less than 20%; from wholesalers to retailers, not less than 33 1/3% in less than case lots and not more than 10% in units of one case or more. In this section there is embraced an inhibition against donations, free goods, bribery or rebates, before or after sales, and such are considered violations of the minimum mark-up price, which shall include bottling and other charges, plus all taxes and all transportation. Any licensee who shall sell or purchase, or offer so to do, at less than the minimum mark-up price is subject to the penalties prescribed in the Act.

Section 2554e-3 requires all distillers or producers licensed in the State to file with the Department as many copies as it may require of the fair trade contracts under which it is proposed to sell liquor or wine, not less than ten days prior to the offer of sale, which contracts shall give the brand, age, proof, sale price and minimum resale price, and the name and address of the wholesaler to whom same is offered for sale. The following section requires the wholesaler to likewise file with...