Wilke & Holzheiser, Inc. v. Department of Alcoholic Beverage Control

Decision Date01 December 1966
Docket NumberS.F. 22212
Citation65 Cal.2d 349,55 Cal.Rptr. 23
CourtCalifornia Supreme Court
Parties, 420 P.2d 735 WILKE AND HOLZHEISER, INC., Plaintiff and Appellant, v. DEPARTMENT OF ALCOHOLIC BEVERAGE CONTROL and Alcoholic Beverage Control Appeals Board, Defendants and Respondents.

Cerf, Robinson & Leland, Marcel E. Cerf and Herbert A. Leland, San Francisco, for plaintiff and appellant.

M. Mitchell Bourquin, Barbagelata, Broderick, Carmazzi & Arnold, Rinaldo A. Carmazzi, San Francisco, Leslie, Schiffer & Rubin and Daniel A. Schiffer, Los Angeles, as amici curiae on behalf of plaintiff and appellant.

Thomas C. Lynch, Atty. Gen., E. G. Funke, Asst. Atty. Gen., Wiley W. Manuel and L. Stephen Porter, Deputy Attys. Gen., for defendants and respondents.

Shirley, Saroyan, Cartwright & Peterson and Lowell H. Sucherman, San Francisco, as amici curiae on behalf of defendants and respondents.

TOBRINER, Justice.

Plaintiff Wilke and Holzheiser, Inc., appeals from four separate judgments, each denying a writ of mandate seeking review of administrative decisions of the Department of Alcoholic Beverage Control which suspended or revoked the licenses of plaintiff's San Francisco liquor stores. In each decision the department found that plaintiff had sold distilled spirits in violation of the mandatory retail price maintenance provisions of the Alcoholic Beverage Control Act. (Bus. & Prof.Code, §§ 24749--24757.) 1

Plaintiff asks that we reverse these judgments on the grounds that the price maintenance provisions violate constitutional imperatives and that, in any event, section 24755.1 of the Business and Professions Code precludes the imposition of the penalties of license suspension and revocation. Plaintiff further asks that we reverse the judgments because of errors in the administrative proceedings which the trial court refused to review. For reasons which we explain hereinafter, we hold that the price maintenance provisions do not transgress constitutional requirements, that section 24755.1 does not apply to the instant case, and that the alleged errors in the administrative proceedings do not call for reversal.

1. Constitutionality of the retail price maintenance provisions

At the outset we note that several states in addition to our own have adopted measures requiring that each producer of liquor establish a price below which retail distributors may not sell his brand. The courts which have passed on the constitutionality of such measures have reached divergent conclusions. 2 In this court the matter is not one of first impression: In Allied Properties v. Dept. of Alcoholic Beverage Control (1959) 53 Cal.2d 141, 346 P.2d 737, we held that the retail price maintenance provisions here involved were constitutional. In so deciding, we rejected the arguments which plaintiff asks us to accept now.

Plaintiff urges us to reconsider Allied Properties on the ground that the majority of other state courts which have subsequently passed on the constitutionality of general fair trade legislation authorizing retail price maintenance agreements have held such legislation unconstitutional as applied to nonsigners. 3 Not one of these subsequent decisions, however, has brought to light any relevant consideration which was not thoroughly argued when we decided Allied Properties. Under such circumstances, we would ordinarily be most reluctant to reopen a matter so recently and so unequivocally settled by a decision of this court. We have decided to do so here only because of the importance of the issue raised and because of plaintiff's contention as to the contrary trend of the decisions in other jurisdictions; we seek to foreclose any possibility that our silence might engender unwarranted speculation about the continued vitality of Allied Properties. Having reconsidered Allied Properties, we reaffirm its holding that the mandatory retail price maintenance provisions of the Alcoholic Beverage Control Act are constitutional.

The provisions in question operate as follows: Section 24750 of the Business and Professions Code authorizes fair trade contracts prohibiting the buyer from reselling, except at the price stipulated by the seller, alcoholic beverages which bear the trademark, brand, or name of the producer or owner and are in fair and open competition with others of the same general class. Section 24752 declares that wilfully and knowingly advertising, offering for sale, or selling any alcoholic beverage at less than the price stipulated in any such contract, whether the person so doing is or is not a party to the contract, constitutes unfair competition and founds an action by any person damaged thereby. Section 24755, as it read at the time of the transactions under consideration, required that any branded liquor sold at retail be sold pursuant to a contract executed under the above provisions and prohibited the violation of such contracts by liquor licensees. 4

Section 24757 authorizes the Department of Alcoholic Beverage Control to adopt such rules as it finds necessary for the administration of section 24755. Rule 99, as adopted and effective at the time of the instant transactions, provided in part that no manufacturer or wholesaler should sell branded liquor except pursuant to a fair trade contracts as provided for by sections 24750 and 24755, that copies of such contracts should be filed with the department, and that no licensee should advertise, offer for sale, or sell alcoholic beverages at a retail price less than the minimum resale price stipulated in a contract filed with the department pursuant to this rule. (Cal.Admin.Code, tit. 4, § 99, subds. (a), (b), (f).) Business and Professions Code section 24200 provides in relevant part that the department may suspend or revoke a license when the licensee had violated any rule promulgated by the department pursuant to the Alcoholic Beverage Control Act or any other penal prohibition or regulation of the sale of alcoholic beverages. 5 Plaintiff first contends that these provisions are unconstitutional because they exceed the police power of the state. In passing upon the validity of that contention, we exercise an extraordinary power over a coordinate branch of government and perform a correspondingly narrow function: we simply determine whether the statute reasonably relates to a legitimate governmental purpose. In so doing, we find the requisite relationship in the absence of an unquestionable contrary showing. (Los Angeles Met. Transit Authority v. Public Util. Comm. (1963) 59 Cal.2d 863, 867, 31 Cal.Rptr. 463, 382 P.2d 583; Wholesale T. Dealers, etc. v. National, etc., Co. (1938) 11 Cal.2d 634, 646, 82 P.2d 3, 118 A.L.R. 486.) We must not confuse reasonableness in this context with wisdom. "The doctrine * * * that due process authorizes courts to hold laws unconstitutional when they believe the legislature has acted unwisely * * * has long since been discarded. * * * ' Ferguson v. Skrupa, 372 U.S. 726, 728--730, 83 S.Ct. 1028, 10 L.Ed.2d 93.' (Joseph E. Seagram & Sons v. Hostetter (1966) 384 U.S. 35, 47, 86 S.Ct. 1254, 1262, 16 L.Ed.2d 336.) 6

To incant these precepts in form and ignore them in substance is to disregard the most basic postulates of representative government; yet, as one court has observed, 'the courts of last resort that have rejected fair trade acts on constitutional grounds seem to have * * * done so because of an unwillingness to accept the legislative judgment as to the economic facts.' (Home Utilities Co. v. Revere Copper and Brass, Inc., supra, 209 Md. 610, 617, 122 A.2d 109, 112.) 7 On such debatable matters the Legislature properly serves as the court of last resort. When, as in this case, 'appeal is made to liberties which derive merely from shifting economic arrangements' (Kovacs v. Cooper (1949) 336 U.S. 77, 95, 69 S.Ct. 448, 458, 93 L.Ed. 513 (Frankfurter, J., concurring)), the judgment of the Legislature reaches this tribunal with a momentum for respect lacking when the Legislature tampers with 'those liberties of the individual which history has attested as the indispensable conditions of an open as against a closed society.' (Ibid.) With these admonitions in mind, we turn to plaintiff's contention that the retail price maintenance provisions of the Alcoholic Beverage Control Act bear no reasonable relation to any legitimate governmental purpose.

The Legislature adopted the Alcoholic Beverage Control Act 'for the protection of the safety, welfare, health, peace, and morals of the people of the State, to eliminate the evils of unlicensed and unlawful manufacture, selling, and disposing of alcoholic beverages, and to promote temperance in the use and consumption of alcoholic beverages.' (Bus. & Prof.Code, § 23001.) With regard to the retail price maintenance provisions specifically, the Legislature made its purpose plain: 'It is the declared policy of the State that it is necessary to regulate and control the manufacture, sale, and distribution of alcoholic beverages * * * for the purpose of fostering and promoting temperance in their consumption and respect for and obedience to the law. In order to eliminate price wars which unduly stimulate the sale and consumption of alcoholic beverages and disrupt the orderly sale and distribution thereof, it is hereby declared as the policy of this State that the sale of alcoholic beverages should be subjected to certain restrictions and regulations. The necessity for the enactment of provisions of this chapter is, therefore, declared as a matter of legislative determination.' (Bus. & Prof.Code, § 24749.)

The promotion of temperance in the consumption of alcoholic beverages and of orderly conditions in their marketing clearly constitute proper legislative objectives. The declared purposes of the Alcoholic Beverage Control Act in general and of its retail price maintenance provisions in particular are therefore entirely legitimate, and we...

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