State v. Lambert

• Citation: 68 Wis.2d 523,229 N.W.2d 622
• Decision Date: 03 June 1975
• Docket Number: No. S,S
• Parties: STATE of Wisconsin, Respondent, v. Mitchell LAMBERT, Appellant. tate 91.
• Court: Wisconsin Supreme Court

Page 622

229 N.W.2d 622

68 Wis.2d 523

STATE of Wisconsin, Respondent, v. Mitchell LAMBERT, Appellant.

No. State 91.

Supreme Court of Wisconsin.

June 3, 1975.

Walther & Halling, Milwaukee, for appellant; David L. Walther and Virginia W. Sperry, Milwaukee, of counsel.

Victor A. Miller, Atty. Gen., and Bruce A. Craig and David J. Becker, Asst. Attys. Gen., Madison, for respondent.

HEFFERNAN, Justice.

On August 20, 1971, Mitchell Lambert, a master distributor for Holiday Magic, Inc., was found guilty of the charge of promoting participation in a chain distributor system, in violation of Wisconsin Administrative Code Ch. Ag 122.03. ¹ That regulation was promulgated pursuant to sec. 100.20, Stats. ² Intentional failure to obey a regulation adopted pursuant to the Administrative Code is subject to the penalties imposed by sec. 100.26(3). ³

The county court fined Lambert $2,000 and sentenced him to one year of imprisonment, but placed him on probation. The county court's judgment was appealed to the circuit court for Milwaukee County; and on April 17, 1973, the judgment of the county court was affirmed by order. Lambert has appealed from that order to the Supreme Court.

The underlying administrative regulation, Ch. Ag 122.03, was considered and found constitutional by this court in H M Distributors of Milwaukee, Inc. v. Department of Agriculture (1972), 55 Wis.2d 261, 198 N.W.2d 598.

The validity of sec. 100.20, Stats., was also challenged. This court held that the department regulations did not exceed the delegated statutory authority, that they were promulgated in accordance with the required rule-making procedures, that they were not vague or overbroad, and that they did not violate constitutional rights of freedom of speech or the right to make economic investments.

The general trade practices of Holiday Magic, for whom Lambert was a master distributor, are outlined in the H M Distributors case. In the instant case, the challenge to the same statutes is similar. The H M Distributors case was for declaratory judgment to determine the validity of the rules. In this case, the question is directed to the appropriateness and constitutionality of a criminal conviction under the same statutes and regulations.

On this appeal, the sufficiency of the evidence, assuming the regulations and statutes are constitutional and valid, is not questioned. Lambert attacks the enforcement scheme on the grounds that art. IV, sec. 1, of the Wisconsin Constitution, which reserves the legislative power of the state to the senate and assembly, cannot be delegated to an administrative agency to create a crime or call for the imposition of penalties. Lambert argues that it is the Administrative Code provisions, Ag 122.01, ff., rather than the statute, that define a prohibited chain distributor scheme. He contends that the Code, rather than the statute, sets the standards, and accordingly legislative power has been unconstitutionally delegated to the Department of Agriculture.

The defendant's argument is without merit. The only question posed is whether the legislature's delegation set reasonable limits for agency action and whether the agency stayed within those limits in promulgating the rules. We conclude that the legislature set proper limits in sec. 100.20(1), Stats., that the Department of Agriculture confined its rules to the limits imposed, and that it was constitutionally proper for the legislature in sec. 100.26(3) to authorize the imposition of criminal penalties for the violation of Department rules adopted pursuant to sec. 100.20.

Legislative powers may be delegated to administrative agencies. State ex rel. Wisconsin Inspection Bureau v. Whitman (1928), 196 Wis. 472, 220 N.W. 929. The issue is not whether legislative power may be delegated, but whether the legislature has sufficiently limited and defined its delegation of power to an administrative agency, so that it is the will of the legislature that is being carried out and not that of the agency. United Gas, Coke & Chemical Workers of America, Loc. 18, CIO v. Wisconsin Employment Relations Board (1949), 255 Wis. 154, 38 N.W.2d 692; Olson v. State Conservation Comm. (1940), 235 Wis. 473, 293 N.W. 262.

The delegation of legislative power to the Department of Agriculture to make rules is set forth in sec. 100.20(1), Stats.:

'(1) Methods of competition in business and trade practices in business shall be fair. Unfair methods of competition in business and unfair trade practices in business are hereby prohibited.'

Sec. 100.20(2), Stats., specifically authorizes the Department to issue general orders implementing the prohibitions set forth in sec. (1). The identical language, which appeared as sec. 110.04(1)(a), enacted as ch. 182, Laws of 1935, was found to be an appropriate standard by which the legislature could constitutionally delegate legislative powers, limited in scope, to the governor to promulgate codes under the little NRA, the Wisconsin Recovery Act. The standards were found sufficient and the delegation of authority was upheld in Petition of State ex rel. Attorney General (1936), 220 Wis. 25, 264 N.W. 633.

A question that would ordinarily flow from a determination that the delegation is proper is whether the Department of Agriculture in fact stayed within the delegated statutory limits by the promulgation of Ch. Ag 122 of the Administrative Cdde. We need not discuss that question here, for it was specifically decided affirmatively in H M Distributors of Milwaukee, supra.

Additionally, contrary to the assertions of the defendant on this appeal, the legislature may constitutionally create a criminal penalty for violation of the Department's rule. Sec. 100.26(3), Stats., makes a violation for any provision of sec. 100.20 or any regulation made under that section punishable by fine or by imprisonment or by both. The propriety and constitutionality of imposing criminal sanctions for the violation of a properly enacted administrative regulation was upheld in United States v. Grimaud (1911), 220 U.S. 506, 31 S.Ct. 480, 55 L.Ed. 563. Therein, the United States Supreme Court stated that the Congress could confer, within limits, legislative powers to an administrative agency, i.e., the power to 'fill up the details' necessary for the enforcement of statutory guidelines by the promulgation of administrative rules and regulations, '. . . the violation of which could be punished by fine or imprisonment fixed by Congress, or by penalties fixed by Congress, or measured by the injury done.' Grimaud, p. 517, 31 S.Ct. p. 483.

The Wisconsin legislature specifically assigned criminal sanctions for the violation of Department of Agriculture rules and regulations promulgated pursuant to the legislature's delegation of authority. Sec. 100.26(3), Stats., which sets the criminal penalty for a violation of Ch. Ag 122, is, under the holding of Grimaud, constitutional. It is the legislature, not the agency, which has determined that violations of agency rules are punishable as crimes. The cases to the contrary cited by the defendant are inapposite to this proposition.

Lambert argues, however, that sec. 100.20(1), Stats., is unconstitutionally vague, because it does not sufficiently define unfair methods of competition or unfair trade practices and, hence, fails to give notice of the practices prohibited. While that may well be true in respect to the statute when considered alone, the technique employed by the legislature--the delegation to an agency to 'fill up the details'--is designed to give specificity to the nature of prohibited trade practices. The administrative regulation under which Lambert is charged is specific, and Ch. Ag 122.01, 122.02, and 122.03, as we held in H M Distributors, supra, are not void for vagueness.

Lambert also asserts that the prohibition of the promotion of chain distributor schemes infringes on protected areas of free speech and the regulation is therefore unconstitutional under the First Amendment of the United States Constitution and the equivalent free speech provisions of the Wisconsin Constitution. That general proposition was advanced by the same attorney in H M Distributors, supra, decided by this court on June 30, 1972. The rule of law and the rationale employed by this court in disposing adversely of that issue then is substantially dispositive of the freedom-of-speech issue in this case. It is surprising and inexplicable that the attorney for the defendant made no reference to the discussion of the free-speech issue ruled on in the earlier case. We therein stated:

'The United States Supreme Court has held that the constitutional protection afforded free speech does not apply to commercial advertising, and we find entirely and obviously correct the federal appeals court holding that the nonapplicability extends to the promoting of products.' (pp. 272, 273 of 55 Wis.2d, p. 605 of 198 N.W.2d)

We pointed out in H M Distributors that the right to prohibit or to curtail such oral conduct derives from the fact that under properly promulgated and constitutional regulations, the promotion itself is criminal in nature. In H M Distributors, we relied primarily upon Valentine v. Chrestensen (1942), 316 U.S. 52, 54, 62 S.Ct 920, 86 L.Ed. 1262. That case held flatly that the constitutional protected afforded free speech does not apply to commercial matters.

In a supplementary memorandum to their brief, attorneys for the defendant on this appeal urge that the pronouncements of the Valentine case in respect to free speech recently have been so modified by cases of the United States Supreme Court as to give some constitutional protection to commercial utterances. We do not disagree with counsel in that position. Two cases, Pittsburgh Press Co. v. Pittsburgh Commission on Human Relations (1973), 413 U.S. 376, 93 S.Ct. 2553, 37 L.Ed.2d 669, and Lehman v. City of Shaker Heights (1974), 418 U.S. 298, 94 S.Ct. 2714, 41 L.Ed.2d 770, have...