Reynolds v. Louisiana Bd. of Alcoholic Beverage Control

• Decision Date: 13 December 1965
• Docket Number: No. 47762,47762
• Citation: 248 La. 639,181 So.2d 377
• Court: Louisiana Supreme Court
• Parties: Lawrence J. REYNOLDS, d/b/a Larry & Katz and John Schwegmann, Jr., and Paul Schwegmann v. LOUISIANA BOARD OF ALCOHOLIC BEVERAGE CONTROL.

Page 377

181 So.2d 377

248 La. 639

Lawrence J. REYNOLDS, d/b/a Larry & Katz and John

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

No. 47762.

Supreme Court of Louisiana.

Dec. 13, 1965.

Dissenting Opinion Dec. 21, 1965.

Rehearing Denied Jan. 17, 1966.

George A. Bourgeois, Baton Rouge, Sehrt, Boyle & Wheeler, Clem H. Sehrt, Peter J. Butler, New Orleans, for defendant-relator.

Stone, Pigman & Benjamin, Saul Stone, Paul O. H. Pigman, New Orleans, for respondents.

HAMLIN, Justice:

We granted Certiorari (Art. VII, Sec. 11, La.Const. of 1921) in these consolidated cases in order that we might review a judgment of the Court of Appeal (La.App., 173 So.2d 57), which decreed Subsection D of Section 80 of Title 26 of the Louisiana Revised Statutes, as enacted by Section 6, of Act 463 of 1962, unconstitutional, null, and void; ordered, adjudged, and decreed that there be judgment in favor of plaintiff Lawrence J. Reynolds, d/b/a Larry & Katz, and against the defendant, Louisiana Board of Alcoholic Beverage Control (hereinafter designated as the Board), permanently enjoining and prohibiting it, its officers, agents, and employees from enforcing the provisions of LSA-R.S. Title 26, Section 80, Subsection D, and from withholding from said plaintiff a wholesale liquor permit on account of any provision of said Subsection D; and ordered, adjudged, and decreed that there be judgment in favor of John Schwegmann, Jr., and Paul Schwegmann against the defendant Board, permanently enjoining and prohibiting it, its officers, agents, and employees from enforcing the provisions of LSA-R.S. Title 26, Section 80, Subsection D, and from whthholding from said plaintiffs a wholesale liquor permit on account of any provision of said Subsection D. The judgment of the Court of Appeal reversed two separate judgments of the trial court (the matters were consolidated for trial in the trial court, but separate judgments were rendered) which were rendered in favor of the Board; the trial court also dismissed plaintiffs' suits at their costs.

Lawrence J. Reynolds, d/b/a Larry & Katz, and John Schwegmann, Jr. and Paul Schwegmann instituted these proceedings on December 3, 1962. They alleged that under the provisions of LSA-R.S. 26:80(D), Act 463 of 1962, the Board had denied them wholesale liquor permits; ¹ they prayed that LSA-R.S. 26:80(D) be declared unconstitutional and that they be granted injunctive relief.

Section 1 of Act 463 of 1962 amended and re-enacted Subsection (9) of Section 2 of Title 26 of the Louisiana Revised Statutes of 1950 to define a 'Liquor Wholesaler' as follows:

'(9) 'Liquor wholesaler' means any dealer who sells any alcoholic beverage to other licensed liquor wholesale dealers or to licensed retail liquor dealers in the state or who sells alcoholic beverages for delivery beyond the borders of the state in amounts to be fixed by the board, or who imports any alcoholic beverages into the state and who meets the standards set forth in this Chapter.'

Section 6 of Act 463 of 1962 added and enacted Subsection D of Section 80 of [248 La. 645] Title 26 of the Louisiana Revised Statutes of 1950; it recites:

'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 five (5) per cent 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 on distillery, or liquor manufacturer;

'(5) Maintains sales of liquor to retailers generally within his immediate trade area, making sales to at least twenty (20) per cent of the retailers in said area with separate sales to retailers accounting for at least 50% Of the gallonage handled by him.'

The Court of Appeal correctly recognized that the sale of alcoholic beverages in Louisiana is a lawful calling. It also correctly recognized that under the police power of the State, Art. XIX, Sec. 18, La.Const. of 1921, such business may be regulated, (State v. Nejin, 140 La. 793, 74 So. 103; City of Bogalusa v. Bullotta, 181 La. 159, 159 So. 309; Ziffrin Inc. v. Reeves, 308 U.S. 132, 60 S.Ct. 163, 84 L.Ed. 128), and that such regulations must be pursuant to a legitimate exercise of the State's police power, which includes the respecting of constitutional guarantees (Schwegmann Bros. v. Louisiana Board of Alcoholic Beverage Control, 216 La. 148, 43 So.2d 248, 14 A.L.R.2d 680). The Court further correctly observed that there must be a real and substantial relationship between the regulations imposed and the prevention of injury to the moral, social, or economic welfare of the public, but concluded that such a relationship does not exist in the instant case between the statute involved and the purpose for which it was enacted. Because of its conclusion, the Court of Appeal found LSA-R.S. 26-80(D) unconstitutional. ²

In this Court the Board contends that the Court of Appeal erred in holding that LSA-R.S. 26:80(D) has no reasonable relationship to the moral, social, or economic welfare of the citizens of the State of Louisiana. Alternatively, the Board argues that the Court of Appeal erred in declaring the entirety of LSA-R.S. 26:80(D) unconstitutional.

Plaintiffs, respondents, contend that the instant statute is invalid and unconstitutional because of its invidious legislative discrimination imposing substantial and onerous burdens on the business activities of respondents in the wholesale distribution of alcoholic beverages. Respondents further contend that the instant statute is invalid 'on the ground that the statute bears no substantial relationship to the public health and welfare, on the ground that the means adopted are not necessary for the accomplishment of any proper legislative purpose, and on the ground that the statute preempts the wholesale liquor business for present licensees--in violation of due process guarantees.'

The stipulated facts of record set forth that:

'13--The use by the plaintiffs of their wholesale licenses for a number of years prior to the effective date of Act 463 of 1962, the use by the plaintiffs of their 1962 wholesale licenses from the effective date of the Act through December 3, 1962, when these proceedings were instituted, and the continuation by the plaintiffs of their wholesale activities under protection of the Temporary Restraining Order issued by the court in these proceedings, have been restricted to importation of alcoholic beverages for sale and transfer to the respective retail licensees described in Paragraph 1--C and 2--C of this stipulation. (1--C states that 'Reynolds, d/b/a Larry and Katz, has been the holder of retail liquor licenses for a number of years, * * *'; 2--C states that 'The Schwegmanns own stock in a corporation which operates six super markets which have held and continue to hold retail liquor licenses issued in the name of Schwegmann Brothers Giant Super Markets, * * *') * * * The effect of the importation of these alcoholic beverages by the plaintiffs under their respective wholesale licenses and under the Temporary Restraining Orders has been to avoid a requirement by the associated retail permittees described in Paragraphs 1--C and 2--C to deal with and compensate wholesale permittees other than the plaintiffs in connection with the importation of these alcoholic beverages.'

Our interpretation of the above stipulation is to the effect that as wholesalers, plaintiffs sell only to themselves as retailers. In other words, their wholesale liquor business is restricted to distribution and sale of liquor to retail businesses owned and controlled by them.

The stipulation of facts further sets forth that only three wholesale permittees (plaintiffs and one other company not now engaged in the wholesale liquor business) did not qualify for the issuance of a 1963 wholesale liquor license; fifty-three out of fifty-six previously licensed wholesale dealers were able to comply with all provisions of Subsection D of Section 80.

The stipulation further states that to obtain brand representation from a distillery or manufacturer is relatively a simple thing, and that at any time, any reputable wholesale dealer, without too much effort, can obtain representation of one or more brands from a distillery or manufacturer, though the best known brands are customarily exclusive with certain named wholesalers.

The test of whether the instant statute is a valid exercise of the police power in the constitutional sense depends on whether under all of the existing circumstances the regulation is reasonable, and whether it is really designed to accomplish a purpose properly falling within the scope of the police power. City of Baton Rouge v. Rebowe, 226 La. 186, 75 So.2d 239. 'We have no right to review the policy of wisdom of legislation because our jurisdiction is confined to determining the applicability, legality or constitutionality of laws. Lionel's Cigar Store v. McFarland, 162 La. 956, 967, 111 So. 341.' Mouledoux v. Maestri, 197 La. 525, 2 So.2d 11. See, Nebbia v. People of State of New York, 291 U.S. 502, 54 S.Ct. 505, 78 L.Ed. 940.

These consolidated cases were tried in the district court on stipulations of facts. We find no contradiction in the stipulations nor in the record to the following statement set forth in the Board's brief filed in this...