Seagram Distillers Co. v. Jones

• Decision Date: 03 September 1976
• Citation: 548 S.W.2d 667
• Parties: SEAGRAM DISTILLERS COMPANY, a division of Joseph E. Seagram & Sons, Inc., Plaintiff-Appellee, v. Carl A. JONES et al., Defendants-Appellants.
• Court: Tennessee Court of Appeals

Page 667

548 S.W.2d 667

SEAGRAM DISTILLERS COMPANY, a division of Joseph E. Seagram

& Sons, Inc., Plaintiff-Appellee, v. Carl A. JONES et al., Defendants-Appellants.

Court of Appeals of Tennessee, Middle Section.

Sept. 3, 1976.

Certiorari Denied by Supreme Court Feb. 7, 1977.

Thomas Wardlaw Steele and Joel M. Leeman, Gullett, Steele, Sanford, Robinson & Merritt, Nashville, for plaintiff-appellee.

R. A. Ashley, Jr., Atty. Gen. of Tenn., William C. Koch, Jr., Asst. Atty. Gen. of Tenn., for appellant Tennessee Alcoholic Beverage Commission.

Daniel W. Oehmig, Chattanooga, for defendant-appellant Southern Distributors Corp.

Tyree B. Harris, Hooker, Keeble, Dodson & Harris, Nashville, for defendant-appellant Lipman Bros., Inc.

OPINION

SHRIVER, Judge.

The Case

This is an appeal by the Tennessee Alcoholic Beverage Commission and other named defendants from the action of the Sixth Circuit Court of Davidson County, Tennessee, in granting a motion for summary judgment and entering an order holding that Rule No. 0100-3-13(7) of the Rules of the Tennessee Alcoholic Beverage Commission violates the due process clauses of the Federal and State Constitutions and, hence, is void.

The Pleadings and Proceedings Below

On March 7th, 1975, Seagram Distillers Company filed its "Original Complaint and Petition for Writ of Certiorari" in the Circuit Court of Davidson County, seeking a review of the decision of the Alcoholic Beverage Commission wherein the request of petitioner to transfer its distributorship of certain brands of vodka was denied. The petition also prayed for a declaratory judgment as to the rights of the parties.

Said complaint, in pertinent part, recites that on or about November 1, 1974 petitioner requested permission of the respondent Commission to transfer its distributorship of Wolfschmidt Vodka from Lipman Bros., Inc., in Nashville, Tennessee to the Tennessee Wine & Spirits Company in Nashville, and from Southern Distributors Corp., in Chattanooga, Tennessee, to Athens Distributing Company of Chattanooga.

It is averred that at its regular monthly meeting on January 10, 1975, held in Nashville, Tennessee, the Commission denied petitioner's request for the above mentioned transfers of distributorships and it is alleged that said action was erroneous and illegal in that:

(a) It was arbitrary and not supported by material evidence.

(b) The laws of Tennessee do not confer on the Commission power to require its permission for the transfer of a distributorship by a manufacturer from one distributor to another and its rules and regulations which require its permission to make such transfer is an illegal effort to exercise legislative power.

(c) The denial of petitioner's request violates petitioner's rights under the Fifth and Fourteenth Amendments to the Federal Constitution and Article 1, Section 8, and Article 11, Section 8, of the Constitution of Tennessee, the same being an unconstitutional interference with the right of petitioner to contract freely.

Under these circumstances it is alleged that petitioner is entitled to have a Court declare its rights in the premises and to have a declaratory judgment to the effect that the action of the respondent Commission is void and, further, that petitioner is entitled to an injunction restraining the Commission from attempting to interfere with petitioner's right to contract with such persons as it may choose.

On April 4, 1975 defendant, Lipman Bros., Inc. filed a motion to dismiss the petition for certiorari and a similar motion was filed by Southern Distributors Corporation.

On September 23, 1975, the Trial Judge held that the petition for certiorari should be dismissed. His Order states:

"The Court is of the opinion that the question raised by the complaint is properly before the Court in accordance with the prayer for a declaratory judgment. The writ of certiorari is unnecessary for consideration of all matters raised. The writ of certiorari is a discretionary writ and should not be issued unless necessary.

It is, therefore, ORDERED that the writ of certiorari is dismissed as improvidently granted. The cause is retained for consideration of a declaratory judgment.

It is further ORDERED that the record before the Commission be retained as evidence for the use of any party."

The Tennessee Alcoholic Beverage Commission, hereinafter referred to as the Commission, filed its answer on October 22, 1975. Thereafter, Lipman Bros. and Southern Distributors Corp. filed their answers and Lipman Bros. filed interrogatories directed to Seagram Distillers.

On January 2, 1976 Seagram Distillers filed a motion for summary judgment and, on January 5th, filed its answers to the interrogatories.

The motion for summary judgment, pursuant to Rule 56, Tennessee Rules of Civil Procedure, asserts that the ground for such motion is that there is no genuine issue as to any material fact in this cause and that it presents a pure question of law and, further, that petitioner, as a matter of law, is entitled to a judgment to the effect that the action of the Commission in refusing permission to transfer certain wholesale distributorships, as alleged in the complaint, is void as being in excess of the lawful powers of that administrative agency or, alternatively, that such action denies the plaintiff rights guaranteed under the Constitution of the United States and the State of Tennessee.

Certain affidavits were filed in support of the motion and interrogatories and responses thereto were filed.

After a hearing the Court entered the following order:

"Order on Motion for Summary Judgment

This cause came on to be heard upon plaintiff's motion for summary judgment 'to the effect that the action of the Alcoholic Beverage Commission in refusing to it permission to transfer certain wholesale distributorships, as alleged in the complaint . . . is void as being in excess of the lawful powers of that administrative agency or, alternatively, that such action denied to the plaintiff rights guaranteed under the Constitution of the United States and the State of Tennessee.'

The action involved was taken pursuant to a regulation which was stipulated by all parties to be in these words:

'(7) Approval Required to Transfer to Another Wholesaler. No manufacturer, importer or other person shall be permitted to transfer a brand from one wholesale distributor to another without written approval of the Commission. Requests for approval of a transfer must be submitted in writing and a copy of said request must at the same time be sent to the wholesale distributor in whose name the brand is then requested.

After due consideration the Commission shall either approve or disapprove the transfer . . .'

If it be unclear, the above refers to the marketing of liquor and the word 'brand' refers to a particular brand of liquor.

The motion for summary judgment can only be granted if the above quoted regulation, read in conjunction with the statutes relating to liquor, is in violation of a Constitution on its face. The Court is of the opinion that the regulation does violate the due process clauses of both the Federal and State Constitutions.

A careful search of the statutes reveals no provision regulating the relationship between manufacturer and wholesaler. Nothing is required of the relationship. No standards for sales, contracts, or dealings are stated.

The motion for summary judgment is granted.

It appears to the Court that the maintenance of the status quo will not cause any irreparable loss. It is, therefore, ORDERED that, for the full protection of rights of appeal, the plaintiff will make no change in its distributor relationship for a period of sixty (60) days.

This decision is based upon the statutes, the stipulated regulation and principles of law. Therefore, an appeal is granted to the Supreme Court upon proper bonds being filed.

Enter this 12th day of January, 1976.

/s/ James M. Swiggart

JUDGE"

Motions for a new trial were filed by the defendants and, pursuant to said motions, the order of the Court was amended by including in full the regulation of the Commission which is in question.

The order was further amended by providing that the Commission and its members be permanently enjoined from enforcing or attempting to enforce the foregoing regulation against plaintiff in connection with the transfers of distributorships complained of in the original petition.

Assignments of Error

Appellants, Lipman Bros., Inc., and Southern Distributor Corp., each filed five assignments of error which are essentially identical. The Commission filed four assignments which are, in substance, the same as four of the assignments filed by the other appellants. These assignments will be discussed together.

Assignment No. 1 by all three appellants is that the Court erred in failing to hold that the plaintiff is estopped to challenge the constitutionality of the Commission Rule 0100-3-.13(7) because of the Company's repeated acceptance of the rule's benefit in the past.

In support of this assignment, appellants assert that one who accepts a statute by acquiescing in it after its passage, or by accepting benefits under it is estopped to deny its validity, citing and relying on Waldauer v. Britton, 172 Tenn. 649, 113 S.W.2d 1178 (1938), where the Court quoted with approval from Am.Jur. as follows:

"The general rule, supported by many authorities, is thus stated in 11 American Jurisprudence, 767:

'Estoppel is most frequently applied in cases involving constitutional law where persons, in some manner, partake of advantages under statutes. The rule is well settled that one who voluntarily proceeds under a statute and claims benefits thereby conferred will not be heard to question its constitutionality in order to avoid its burdens.' "

In 16 Am.Jur.2d, pp. 331-332, in discussing this question, it is said:

"Certainly such a person will not be allowed to retain his advantage or keep his consideration and then repudiate...