Reynolds v. Louisiana Bd. of Alcoholic Beverage Control

• Decision Date: 08 March 1965
• Docket Number: Nos. 1717,1718,s. 1717
• Citation: 173 So.2d 57
• Parties: Lawrence J. REYNOLDS, d/b/a Larry & Katz, v. LOUISIANA BOARD OF ALCOHOLIC BEVERAGE CONTROL. John SCHWEGMANN, Jr. and Paul Schwegmann v. LOUISIANA BOARD OF ALCOHOLIC BEVERAGE CONTROL.
• Court: Court of Appeal of Louisiana — District of US

Page 57

173 So.2d 57

Lawrence J. REYNOLDS, d/b/a Larry & Katz, v. LOUISIANA BOARD OF ALCOHOLIC BEVERAGE CONTROL.

John SCHWEGMANN, Jr. and Paul Schwegmann v. LOUISIANA BOARD OF ALCOHOLIC BEVERAGE CONTROL.

Nos. 1717, 1718.

Court of Appeal of Louisiana, Fourth Circuit.

March 8, 1965.

Rehearing Denied April 5, 1965.

Writ Refused in No. 1717 and Granted in No. 1718, June 7, 1965.

Stone, Pigman & Benjamin, Saul Stone and Paul O. H. Pigman, New Orleans, for plaintiffs-appellants.

George A. Bourgeois and Sehrt, Boyle & Wheeler, Peter J. Butler, New Orleans, for defendant-appellee.

Before CHASEZ, HALL and BARNETTE, JJ.

CHRIS T. BARNETTE, Judge pro tem.

These cases present identical questions and were consolidated for the purpose of trial and have been consolidated in this Court for the purpose of briefing and argument. One opinion will suffice and will apply equally in both cases.

Appellants are wholesale liquor distributors in the City of New Orleans holding Louisiana wholesale liquor permits for a number of years including 1962. Appellant Reynolds, doing business under the name of Larry and Katz, also holds a retail liquor license and operates a retail liquor store at an address other than that for which his wholesale permits were issued. He makes no sales to retail stores other than that owned and operated by himself. Appellants Schwegmann own stock in a corporation which operates six supermarkets for retail sales of groceries, meats, produce, and numerous other items including alcoholic beverages. In connection with these sales Schwegmann Brothers Giant Super Markets holds retail liquor licenses for its several retail stores. The wholesale liquor business conducted by these appellants is restricted to distribution and sales of liquor exclusively through the affiliated retail stores owned and controlled by them.

The defendant-appellee, Louisiana Board of Alcoholic Beverage Control, refused to issue 1963 Wholesale Liquor Permits to appellants for the alleged failure of appellants to meet certain requirements set forth in LSA-R.S. Title 26, known as 'The Alcoholic Beverage Control Law,' as amended by Act 463 of 1962, and especially Section 80, Subsection D, in the following particulars as set forth in a registered letter of November 21, 1962, addressed to each appellant, stating as follows:

'Your application for a 1963 Wholesale Liquor Permit is being withheld and denied by the Louisiana Board of Alcoholic Beverage Control for the reason that you cannot qualify under R.S. 26:80(D) in that your operation does not maintain sales of liquor to retailers generally within your immediate trade area; in that your operation does not make sales of liquor to at least twenty (20%) per cent of the retailers in your area; and in that your operation does not have separate sales of liquor to retailers accounting for at least fifty (50%) per cent of the gallonage handled by you.'

The letters to each applicant were identical except that the letter to the Schwegmanns contained the additional statement:

'* * * and, finally, in that you store wholesale liquor stock on the premises of a retail establishment.'

By stipulation of facts filed in the record, it is agreed that appellants have not violated any legislation or Board regulation at any time prior to the effective date of the act in question and that they meet all the requirements for issuance of a wholesale permit except some of those added by Subsection D of Section 80 of LSA-R.S. Title 26; these provisions having been added by Act 463 of 1962. It is for these reasons, and only these reasons, as the foregoing letter indicated, that their permits have been withheld and denied.

Section 80, Subsection D of LSA-R.S. Title 26 was added by Act 463 of 1962 and provides as follows:

'D. No wholesale permit shall be issued or held after issuance by any person unless at all times throughout the license year he meets the standards set forth as follows:

'(1) Maintains warehouse space either owned or leased by the wholesaler, or dedicated to his use in a public warehouse and such space shall be sufficient to store at one time either:

'(a) A stock of liquor equal to ten per cent or more of the wholesaler's annual case volume of liquor sales to retailers within this state, or

'(2) Maintains at all times in the warehouse a stock of liquor owned by him, not consigned, nor then sold, consisting of not less than 5% Of his annual sales to retailers, and whose cost of acquisition is fifty thousand dollars or more;

'(3) Maintains delivery equipment which shall be leased, owned or dedicated to his use;

'(4) Maintains brand representation with at least one distillery, or liquor manufacturer '(5) Maintains sales of liquor to retailers generally within his immediate trade area, making sales to at least 20% Of the retailers in said area with separate sales to retailers accounting for at least 50% Of the gallonage handled by him.

'E. No wholesale permit shall be issued or held after issuance by any person who does not in good faith actually carry on or intend to carry on a bona fide wholesale business by sale to retail permittees of the alcoholic beverages on hand, and the board may revoke any wholesale permit when the permittee fails for a period of 45 days actively and in good faith to engage in the wholesale business, and shall revoke any wholesale permit for any other violation of this Sub-section or the rules and regulations adopted pursuant to the enforcement hereof. ¹

'F. Sale by a wholesaler to himself as a retailer, or as a partner in a retail establishment is not a bona fide wholesale transaction. No wholesaler shall store any of his stock on the premises of any retail establishment.

'G. Persons engaged primarily in the sale, handling, distribution, and storage of alcoholic beverages which are ultimately delivered or transported beyond the borders of the state are exempt from complying with the standards above set forth.

'H. The board may adopt and publish rules and regulations for the enforcement of this section. Added Acts 1962, No. 463, § 6.'

Appellants have attacked the constitutionality of Act 463 of 1962, particularly the foregoing Subsection D, and seek injunctive relief against the enforcement of the provisions thereof enjoining the defendant from refusing to issue to them wholesale liquor permits on account of alleged failure to meet the so-called standards enumerated in said Subsection D. From a judgment against them dismissing their suits at their costs, they have appealed.

Act 463 of 1962, amending several sections of LSA-R.S. Title 26, covers a number of subjects in addition to that in Section 80, Subsection D. Appellants question the constitutionality of the act on this account contending that it is in contravention of LSA Constitution, Article III, Section 16, restricting legislation to embrace but one object. This attack is without merit and appellants have not pursued it in briefs and argument. Furthermore a discussion of this point is not necessary to a decision of the more serious questions before us. Neither do we find it necessary to discuss the question of constitutionality of Section 9 of the act amending LSA-R.S. 26:106, which limits the injunctive jurisdiction to cases in which certain administrative remedies have first been exhausted. Accordingly we have confined our opinion to the question of constitutionality of Section 6 of the act and more particularly Subsection D thereof, cited as LSA-R.S. 26:80, Subsection D.

Unless appellants have been denied some constitutional right by the application of the law to them, they have no right or cause of action for complaint, and it would be unnecessary to consider whether or not the act is within the reasonable exercise of the police power of the state.

That they do have a constitutional right to engage in the wholesale liquor business on an equal and nondiscriminatory basis with other persons has been clearly settled by our Supreme Court in Schwegmann Bros. v. Louisiana Board, etc., 216 La. 148, 43 So.2d 248, 14 A.L.R.2d 680 (1949), and any denial or limitation of that right is an unconstitutional invasion of such right unless it can be justified as a reasonable exercise of the police power of the state.

In Schwegmann Bros. v. Louisiana Board, etc., supra, the Board of Alcoholic Beverage Control vigorously argued that the plaintiff had no inherent right to engage in the liquor business and had no right to attack the statute as unconstitutional. It contended, as in the instant case, that the statute grants a privilege, subject to such limitations as the state may see fit to impose from time to time. In answer to this argument the Supreme Court said in that case at pp. 252--253 of 43 So.2d:

'* * * They argue: 'Matters which are considered as rights when applied to other circumstances under different conditions, cease to be rights and become mere conditions of the privilege when applied to the liquor traffic, because, first, no one has an inherent right to engage in the liquor traffic, and second, he is free to accept or renounce the conditions by accepting or refusing the license. Having voluntarily accepted the license, he is no longer free to renounce the conditions.'

'Further, they say:

"Going one step further, not only has no man an inherent right to sell intoxicating liquors, but he has neither property rights, contract rights, nor vested rights in his license, once obtained.

"Actually, the only right a citizen has with reference to the sale by him of intoxicating liquors is his right to comply with the statute and to enforce compliance with the statute as against arbitrary administration of the statute by administrative bodies. In other words his sole right is the right to demand and retain such rights as are granted in the statute, upon a showing of non-compliance, or arbitrary abuse, on the part of the administering authority.'

'And in support of the arguments they cite and quote from numerous...