Texas Liquor Control Bd. v. Diners' Club, Inc.

• Decision Date: 28 June 1961
• Docket Number: No. 10843,10843
• Citation: 347 S.W.2d 763
• Parties: TEXAS LIQUOR CONTROL BOARD, Appellant, v. DINERS' CLUB, INC., Appellee.
• Court: Texas Court of Appeals

Page 763

347 S.W.2d 763

TEXAS LIQUOR CONTROL BOARD, Appellant, v. DINERS' CLUB, INC., Appellee.

No. 10843.

Court of Civil Appeals of Texas, Austin.

June 28, 1961.

Rehearing Denied July 5, 1961.

Will Wilson, Atty. Gen., Riley Eugene Fletcher, Tom I. McFarling, Glenn R. Brown, Asst. Attys. Gen., for appellant.

Clark, Mathews, Thomas, Harris & Denius, Mary Joe Carroll, Austin, for appellee.

HUGHES, Justice.

This appeal is from an order granting a temporary injunction. The Texas Liquor Control Board, appellant, makes no contention that the Trial Court, from an equitable point of view, abused its discretion in awarding injunctive relief. Its position throughout is legal, not that equitable principles have been transgressed.

The Diners' Club, Inc., appellee, brought this suit alleging that it was in the credit card business. Such cards are issued to persons found to be worthy of credit and authorize such persons to purchase on credit from retail firms with which Diners' has an operating contract. Appellee operates in Texas and has invested substantial sums of money in its business.

The allegations of Diners' regarding the particular contracts involved in this suit are:

'It has individual contracts with individual retail liquor package stores located in such points as Amarillo, Austin, Big Spring, Dallas, Fort Worth, Houston, Odessa, San Antonio and Wichita Falls, Texas. By the terms of such contracts as Plaintiff has with the various individual owners and operators of retail liquor package stores, Plaintiff agrees to purchase, and the individual retail liquor package store operator agrees to sell to Plaintiff, all valid charge accounts of Plaintiff's credit card members, without recourse on the individual owner and operator of the retail package stores, at a discount rate of Six and One-Fourth per cent (6 1/4%) of the amount of the total invoice or charge account. After the purchase by Plaintiff from a retail package store of the valid charge account of a member holding one of Plaintiff's credit cards, the account belongs to Plaintiff and the obligation to collect the account purchased by Plaintiff rests entirely upon it. Such contracts and agreements as Plaintiff has with retail liquor package stores located within the State of Texas are valid and legal contracts. Such contracts and agreements have created and vested in Plaintiff a valuable right in which Plaintiff is entitled to protection.'

The legality of these contracts is fully averred.

It was further alleged that on June 30, 1960, the Board issued and caused to be brought to the knowledge of retail permit holders with whom Diners' had contracts, the following order and directive:

'Texas Liquor Control Board

State Office Building

201 E. 14th Street

Austin 11, Texas

June 30, 1960

'To: All District Supervisors

'Subject: Credit Card Arrangements By Package Stores

'An investigation has been made in regard to credit card arrangements such as the Diner's Club Plan, American Express Plan, Beverage Gift Service Plan, and the Hilton Carte Blanche Plan in which retail package stores have entered into contract with the aforementioned credit plans.

'Please be advised that such contracts violate the Texas Liquor Control Act, Section 17(23) of Article 666 of the Penal Code which prohibits the use of a permit by any other than the person or persons name appearing on such permit.

'Secondly, such a contract is in violation of Section 17(22) of Article 666 of the Penal Code which makes it a violation to use or exercise any privilege of a permit except at the licensed place of business.

'Third, such a contract in its entirety gives the commercial credit plan an interest in the package store business, and when they enter into such contract with more than give package stores, they violate this provision. The contract also violates the co-operative advertising law of Section 23(a) of Rule and Regulation 8B-1 as adopted by this Board.

'Fourth, Section 4a of Article 666 makes it a violation to solicit orders for the purpose of sale without first having procured a permit of the class required for such privilege. The credit card companies are soliciting orders for the sale of liquor in violation of this provision.

'Each District Supervisor is requested to contact any permittees operating under any commercial credit plan such as those listed above and advise each permittee participating in such a plan that administrative action will be taken against their permit if they persist in entering into a contract with the aforementioned credit plans or others of similar nature.

's/ James O. Strong

t/ James O. Strong

Supervisor

Marketing Practices Unit.'

As a result of this order, Diners' alleged many retailers with whom it had contracts cancelled them.

The Trial Court made unchallenged findings supporting the substance of these allegations, and made other findings relative to the necessity for the issuance of a temporary injunction enjoining enforcement of the order and directive of June 30, 1960.

The Board's first point is that this suit is a suit against the State, and that legislative consent has not been procured.

The solution of this problem depends upon the applicability, vel non, of the rule stated in Cobb v. Harrington, 144 Tex. 360, 190 S.W.2d 709, 712, 17 A.L.R. 837, and quoted in Haden Co. v. Dodgen, 158 Tex. 74, 308 S.W.2d 838, as follows:

'The acts of officials which are not lawfully authorized are not acts of the State, and an action against the officials by one whose rights have been invaded or violated by such acts, for the determination or protection of his rights, is not a suit against the State within the rule of immunity of the State from suit.'

It is our opinion that the nature of the case pleaded,...