Traffic Jam & Snug, Inc. v. Liquor Control Com'n
| Decision Date | 06 July 1992 |
| Docket Number | Docket No. 121491 |
| Citation | 194 Mich.App. 640,487 N.W.2d 768 |
| Parties | TRAFFIC JAM & SNUG, INC., Dylan Enterprises, Inc., and Ben Edwards, Petitioners-Appellants, v. LIQUOR CONTROL COMMISSION, Respondent-Appellee. |
| Court | Court of Appeal of Michigan — District of US |
Thomas M. Burns, Jr., Detroit, for petitioners-appellants.
Frank J. Kelley, Atty. Gen., Gay Secor Hardy, Sol. Gen., and Arthur E. D'Hondt and Thomas J. Giachino, Asst. Attys. Gen., for respondent-appellee.
Before MacKENZIE, P.J., and WAHLS and V.J. BRENNAN, JJ.
Petitioners appeal by leave granted from an order of the Wayne Circuit Court that upheld a declaratory ruling of the Liquor Control Commission (LCC). The LCC had found that it was prohibited by statute from licensing as a brewer a corporation that is a wholly owned subsidiary of a retail licensee. We agree and affirm.
Petitioner Traffic Jam & Snug, Inc., operates a restaurant, bakery, and cheese factory and holds class C and specially designated merchant liquor licenses. Petitioner Dylan Enterprises, Inc., owns the realty where Traffic Jam is located, and both Traffic Jam and Dylan Enterprises are solely owned by petitioner Ben Edwards. Edwards desired to add a "mini-brewery" to Traffic Jam for the purpose of brewing and selling beer to Traffic Jam patrons for consumption on and off the premises. Such an arrangement is commonly known as a "brewpub," i.e., a restaurant or bar that produces one or more types of beer on its premises, frequently in an area where patrons can observe the brewing process. Edwards intended to create a corporation that would be a wholly owned subsidiary of Traffic Jam & Snug, Inc., license the subsidiary as a brewer, and then have the subsidiary sell its product to Traffic Jam and other retail licensees . 1 Edwards sought a declaratory ruling from the LCC, framing the issue as follows:
Acknowledging that MCL 436.31 [MSA 18.1002] prohibits a manufacturer from having any interest in any other vendor, does MCL 436.31 [MSA 18.1002] prohibit a corporate retail licensee from owning a subsidiary corporation licensed as a manufacturer (brewer)?
The LCC found that M.C.L. Sec. 436.31; M.S.A. Sec. 18.1002 barred petitioners' proposed arrangement and, hence, the LCC was without authority to license the proposed subsidiary corporation as a brewer. Petitioners appealed to the circuit court, which ruled in favor of the LCC's interpretation of Sec. 31. This appeal followed. Although we recognize that several valid arguments are made by petitioners in opposition to the LCC's determination, we believe that they must fail in light of the Legislature's intent in enacting the Liquor Control Act, M.C.L. Sec. 436.1 et seq.; M.S.A. Sec. 18.971 et seq., an intent that is overwhelmingly manifested in the act.
The Liquor Control Act imposes several bars to the creation of "tied-house" systems of alcoholic beverage production, distribution, and sale.
"Tied house" statutes are aimed at preventing the integration of manufacturing, wholesale, warehouse, and retail outlets in the liquor industry.... It has been a fear ... that economic power at one level in this four-tiered system (manufacturers, warehouses, wholesalers, and retailers) could be transferred to another level in order to gain control at the second level. [Borman's, Inc. v. Liquor Control Comm, 37 MichApp 738, 746; 195 NW2d 316 (1972).]
Section 31 proscribes several types of business arrangements that tend to foster vertical integration. Expressions of the Legislature's intent to prevent vertical integration in the state's liquor industry, and a few narrow exceptions for certain situations, may also be found elsewhere in the Liquor Control Act. 2 Section 31 provides, in part:
(1) Except as provided in section 31a, a manufacturer, mixed spirit drink manufacturer, warehouseman, wholesaler, outstate seller of beer, outstate seller of wine, outstate seller of mixed spirit drink, or vendor of spirits shall not have any financial interest, directly or indirectly, in the establishment, maintenance, operation, or promotion of the business of any other vendor.
(2) Except as provided in section 31a, a manufacturer, mixed spirit drink manufacturer, warehouseman, wholesaler, outstate seller of beer, outstate seller of wine, outstate seller of mixed spirit drink, or vendor of spirits or a stockholder of a manufacturer, mixed spirit drink manufacturer, warehouseman, wholesaler outstate seller of beer, outstate seller of wine, outstate seller of mixed spirit drink, or vendor of spirits shall not have an interest by ownership in fee, leasehold, mortgage, or otherwise, directly or indirectly, in the establishment, maintenance, operation, or promotion of the business of any other vendor.
(3) Except as provided in section 31a, a manufacturer, mixed spirit drink manufacturer, warehouseman , wholesaler, outstate seller of beer, outstate seller of wine, outstate seller of mixed spirit drink, or vendor of spirits shall not have an interest directly or indirectly by interlocking directors in a corporation or by interlocking stock ownership in a corporation in the establishment, maintenance, operation, or promotion of the business of any other vendor.
(4) Except as provided in section 31a, a person shall not buy the stocks of a manufacturer, mixed spirit drink manufacturer, warehouseman, wholesaler, outstate seller of beer, outstate seller of wine, outstate seller of mixed spirit drink, or vendor of spirits and place the stock in any portfolio under an arrangement, written trust agreement, or form of investment trust agreement and issue participating shares based upon the portfolio, trust agreement, or investment trust agreement, and sell the participating shares within this state.
The act's statutory definition of "manufacturer" includes brewers, M.C.L. Sec. 436.2j; M.S.A. Sec. 18.972(10), while "vendor" means a person licensed by the LCC to sell alcoholic liquor, M.C.L. Sec. 436.2m(1)(g); M.S.A. Sec. 18.972(13)(1)(g), including retailers.
The primary goal of the judicial interpretation of statutes is to ascertain and give effect to the intent of the Legislature. State Treasurer v. Wilson, 423 Mich. 138, 143, 377 N.W.2d 703 (1985); Joy Management Co. v. Detroit, 176 Mich.App. 722, 730, 440 N.W.2d 654 (1989). Statutes are to be construed as a whole; constructions that render a statute or any part of it surplusage are to be avoided. Niggeling v. Dep't of Transportation, 183 Mich.App. 770, 775, 455 N.W.2d 415 (1990). The rules of statutory construction serve as guidelines to assist in determining legislative intent, Rios v. Dep't of State Police, 188 Mich.App. 166, 169, 469 N.W.2d 71 (1991), but once the intention of the Legislature is discovered, it must prevail regardless of any conflicting rule of statutory construction, Attorney General v. American Way Life Ins. Co., 186 Mich.App. 679, 682, 465 N.W.2d 56 (1991). Furthermore, the courts will give some deference to the interpretation of a statute by the agency involved in implementing it. Id., at 683, 465 N.W.2d 56.
Petitioners claim that Sec. 31, by its plain terms, is intended to govern tied-house arrangements initiated by manufacturers, wholesalers, and other enumerated licensees with other vendors, but that the Legislature's failure to list retailers among the licensees shows that it did not intend Sec. 31 to govern arrangements entered into by retailers. Petitioners rely on the familiar rule of statutory construction that the express mention of one thing implies the exclusion of others. See In re Lemmer, 191 Mich.App. 253, 256, 477 N.W.2d 503 (1991). According to petitioners, restrictions on vertical integration by retailers are addressed by a different section of the act, M.C.L. Sec. 436.19d; M.S.A. Sec. 18.990(4), which provides, in part:
(2) A specially designated distributor or specially designated merchant or any other retailer shall not hold a mixed spirit drink manufacturer, wholesale, warehouse, outstate seller of beer, outstate seller of mixed spirit drink, or outstate seller of wine license.
Noticeably lacking from Sec. 19d is the express prohibition of a retail licensee holding a manufacturer license for the brewing of beer. Petitioners conclude that the Legislature's failure in Sec. 19d to restrict the holding of a brewer's license by a retailer shows an intent to allow the practice, 3 and further, that if Sec. 31 were interpreted so as to include retailers, then Sec. 19d would be rendered superfluous. Niggeling, supra.
Although we recognize these arguments, we believe that the LCC's determination was correct. The LCC followed the reasoning of California Beer Wholesalers Ass'n v. Alcoholic Beverage Control Appeals Bd., 5 Cal.3d 402, 96 Cal.Rptr. 297, 487 P.2d 745 (1971), a case remarkably similar to this case. 4 California Beer Wholesalers Ass'n concerned a corporation organized into two divisions managed and controlled by the same officers and directors. The retail division possessed numerous retail alcoholic beverage licenses. The corporation appealed from the initial denial of its wholesale division's application for a beer and wine wholesaler's license. California's tied-house statutes in relevant part (1) prohibited wholesalers from owning, directly or indirectly, any interest in a retail license, 5 (2) prohibited any retail licensee from holding any ownership or interest, directly or indirectly, in a distilled spirit manufacturer, 6 and (3) contained no express prohibition with regard to a retail licensee holding any interest in a beer and wine wholesaler. The Supreme Court of California summarized:
Once the retailer of alcoholic beverages acquires a wholesale beer and wine license, that retailer automatically "holds" the wholesale license; he is accordingly a beer and wine wholesaler "holding" a retail liquor license, and this integration of licenses is...
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