Texas Alcoholic Beverage Commission v. Major Brands of Texas, Inc.

• Decision Date: 21 March 1973
• Docket Number: No. 12007,12007
• Citation: 492 S.W.2d 616
• Parties: 1973-2 Trade Cases P 74,676 TEXAS ALCOHOLIC BEVERAGE COMMISSION, Appellant, v. MAJOR BRANDS OF TEXAS, INC., Appellee.
• Court: Texas Court of Appeals

Page 616

492 S.W.2d 616

1973-2 Trade Cases P 74,676

TEXAS ALCOHOLIC BEVERAGE COMMISSION, Appellant, v. MAJOR BRANDS OF TEXAS, INC., Appellee.

No. 12007.

Court of Civil Appeals of Texas,

Austin.

March 21, 1973.

Crawford C. Martin, Atty. Gen., and Jay Floyd, Asst. Atty. Gen., Austin, for appellant.

Frank J. Adelman, San Antonio, for appellee.

PHILLIPS, Chief Justice.

Appellant Commission is here on appeal from a judgment of the trial court declaring Article 666--15 1/2, subd. A(9)(b), Vernon's Ann. Texas Penal Code, unconstitutional on the ground of vagueness and permanently enjoining the appellant from enforcing this provision of the Code with respect to those nonresident sellers with whom appellee has business dealings or to appellee's purchaser as a holder of a Texas wholesaler's permit under the Texas Liquor Control Act; and further, enjoining the Appellant Commission from doing any act which would in any way apply Article 666--15 1/2, subd. A(9)(b) V.T.P.C.

We reverse and render this judgment.

Appellant is before us on two points of error, briefed together, contending that the trial court erred in holding Article 666--15 1/2, subd. A(9)(b), Vernon's Texas Penal Code, unconstitutional and in enjoining the enforcement of this provision of the Penal Code. We sustain these points.

Appellee filed this suit in the trial court contending that it is the holder of a Texas Wholesaler's Permit authorizing it to purchase and import liquors into the State of Texas. It alleges, and it is agreed, that it can only purchase alcoholic beverages from the holders of a Nonresident Seller's Permit issued by appellant. Its primary contention, sustained by the trial court, is that the 'primary American source of supply' provision in Article 666--15 1/2, subd. A(9)(b) is unconstitutionally vague in violation of the Texas Penal Code, the Constitution of the State of Texas, and the Constitution of the United States. This provision is as follows:

'(b) It shall be unlawful for any holder of a Nonresident Seller's Permit to solicit, accept, or fill any order for any distilled spirits or wine unless the permit holder is the primary American source of supply for the brand of distilled spirits or wine sold or sought to be sold.'

It is basic that any legislative enactment is presumed to be valid; that one attacking a statute has the burden of showing it to be clearly prohibitive of some constitutional provision. Texas National Guard Armory Board v. McCraw, 132 Tex. 613, 126 S.W.2d 627 (1939); Smith v. Davis,426 S.W.2d 827 (Tex.Sup.1968); Texas State Board of Barber Examiners v. Beaumont Barber College, 454 S.W.2d 729 (Tex.Sup.1970).

The applicability of these presumptions to any provision of the Texas Liquor Control Act is emphasized by the directive in Article 666--2, Vernon's Texas Penal Code, that:

'This entire Act shall be deemed an exercise of the police power of the State for the protection of the welfare, health, peace, temperance, and safety of the people of the State, and all its provisions shall be liberally construed for the accomplishment of that purpose.'

To begin with, no person may engage in any phase of the alcoholic beverage industry unless such authority is specifically granted by the Commission. Article 666--4, V.T.P.C. Distilled spirits and most wines sold in Texas are produced out-of-state. In order to provide the Commission with a means of enforcement over such out-of-state producers, the Act requires that those who are authorized to import--that wholesalers--purchase only from holders of Nonresident Seller's Permits. Article 666--15(6)(7) and (7a), V.T.P.C.

A Nonresident Seller's Permit authorizes the holder thereof to solicit or take orders for liquor from Texas permit holders authorized to import liquor into this State and to ship liquors into this State. Article 666--15 1/2, subd. A(1)(a) and (b), V.T.P.C. Article 666--56, V.T.P.C., provides that a nonresident seller, in order to make any shipment into the State of Texas, must obtain a certificate of label approval from the Commission.

Although the Commission is empowered to issue such rules and regulations as are deemed necessary under Article 666--6, V.T.P.C., the Commission and its administrator decided shortly after the statute in issue was enacted that no such rules and regulations were necessary.

Appellee offered no testimony from a nonresident seller that the statute in issue was vague, indefinite or incapable of understanding . In fact, the evidence in a companion case ¹ discloses that there are more than 200 active operating nonresident seller's permits issued by the appellant with each holder thereof submitting to the appellant that he is the primary American source of supply for the brand or brands sought to be sold in Texas.

The principal testimony concerning the construction of this term was presented by Mr. Joe Darnall, the appellant's hearing officer and attorney, a witness called by appellee. Darnall testified at length concerning the construction of the term and its relationship to production, importation, distilling and marketing. Darnall testified that 'primary American source' as applied by appellant is the first source in the channels of commerce that sells to wholesale Texas markets in the United States; that this could be from any one of a number of different points, but the common denominator is the first source in the chain of commerce that sells to liquor wholesalers in the United States. Darnall went on to explain that there are a number of different ways in which a person might be the primary American source. It might be the original producer of the product if he sells directly to liquor wholesalers. That it is a practice in the industry sometimes for the producer to sell his entire output to another person who then has 'cornered the market, so to speak' and thus becomes the exclusive seller to the market. He further explained that there might be an exclusive agent for the U.S. market without having an exclusive agency for the rest of the world. It might be a winery, selling to liquor wholesalers; it might be a bottler. It's the first point in the channel of commerce . The highest level that sells to wholesalers in the United States.

The only professions of inability to understand the statute by anyone affected by it have come from appellee and two Oklahoma wholesalers whose positions have been, this day, ruled against by this Court. ² It is also interesting to note that these two wholesalers have never claimed to be a primary American source.

Darnall further testified that there was complete agreement among the members of the Commission staff that the term 'American', as used in the statute, meant sale to American markets and that nothing else in the statute appeared to present even a potential question as to interpretation.

Appellee's major effect to demonstrate unconstitutional vagueness was by examination of appellant's hearing officer Darnall. Darnall was repeatedly asked hypothetical questions about who would or would not be a primary American source of supply under certain circumstances, and whether, under certain circumstances, there might be more than one primary American source for the same brand of distilled spirits or wines. In response to these hypothetical possibilities, Darnall answered that the probabilities of any one of them ever happening was extremely remote, and further, that it was inconceivable that a situation would arise in which there would ever be more than two possible primary American sources. That although the Commission has authority to issue rules and regulations to supplement any provision of the Texas Liquor Control Act and to make public its construction of any statute considered to be unclear, no such action has ever been taken with regard to the statute here involved. The statute is meaningful to the Commission, has been uniformly enforced and applied without any complaints from either the wholesale level or the nonresident seller level of the industry other than those made by appellee and the two Oklahoma wholesalers mentioned above.

A review of this evidence discloses that appellee has failed to establish the criteria necessary under the law to hold the statute unconstitutional because of vagueness. In Texas Liquor Control Board v. Attic Club, Inc., 457 S.W.2d 41 (Tex.Sup.1970), appeal dism ., 400 U.S. 986, 91 S.Ct. 459, 27 L.Ed.2d 435 the Court held that a statute is fatally vague only when it exposes a potential actor to some risk or detriment without giving him fair warning of the proscribed conduct; or when a required course of conduct is stated in terms so vague that men of common intelligence must guess at what is required; or, when there is a substantial risk of miscalculation by those whose acts are subjected to regulation. It is impossible for any of these contingencies to occur in the case before us for the simple reason that before one may qualify as a primary American source, he must secure a nonresident seller's permit from the Commission. His qualification is then passed upon by the Commission with no mystery whatsoever attendant to his future status.

Irrespective of the Commission's required action on application for a nonresident seller's permit and even if one were required to determine the 'primary American source', at his peril, appellee has failed to demonstrate that the term in question is not readily ascertainable, or understandable, by those in the trade. In construing a statute, Section 1 of Article 10, Vernon's Civil Statutes...