State, Department of Commerce v. Gallatin Dairies, Inc. , 221 Mont. 492 ( 1986 )

No. 85-600
IN THE SUPREME COURT OF THE STATE OF MONTANA
1986
STATE OF MONTANA, DEPARTMENT
OF COMMERCE,
Plaintiff and Respondent,
GALLATIN DAIRIES, INC., a Montana
general cooperative association, and
ASSOCIATED FOOD STORES, INC., a Utah
corporation,
Defendants and Appellants.
APPEAL FROM: District Court of the First Judicial District,
In and for the County of Lewis & Clark,
The Honorable Thomas Honzel, Judge presiding.
COUNSEL OF RECORD:
- v,
.
For Appellant:
Cok & Wheat; Michael D. Cok argued for Gallatin
Dairies, Bozeman, Montana
Crowley Law Firm; James P. Sites, Billings, Montana
(For Assoc. Food Stores)
For Respondent:
Geoffrey Brazier argued, Dept. of Commerce, Helena,
Montana
Submitted: May 1 3 1 1 9 8 6
Decided: June 5 , 1 9 8 6
Filed: JUN 5 - 1986
Clerk
Mr. Justice William E. Hunt, Sr., delivered the Opinion of
the Court.
Gallatin Dairies (Gallatin) and Associated Food Stores
(Associated) appeal the order of the Lewis and Clark County
District Court holding that Associated could not purchase
milk at jobber prices in Montana.
We affirm.
The appellants raise the following issues on appeal:
1. Did the District Court err in denying appellants'
motion to dismiss based upon collateral estoppel?
2. Did the District Court err in determining that
Associated must pay wholesale price for milk purchased within
Montana?
Gallatin processes and markets milk produced by member
dairy farmers and is a licensed distributor under Montana's
Milk Price Control Act, S 81-23-101, et seq. MCA (the Act).
Associated is a Utah corporation, qualified to do business in
Montana. It is owned by various independent retail stores
who are members of Associated and it is taxed as a
cooperative. Associated buys groceries from manufacturers
and brokers, warehouses them, and resells to retailers, both
members and nonmembers.
In 1980, Associated petitioned the State for permission
to distribute milk. Although it could not be licensed
because it did not fit within any license category under the
Act, the District Court allowed Associated to distribute milk
without a license pursuant to this Court's decision in
Albertson's v. Department of Business Regulation (1979), 184
Mont. 12, 601 P.2d 43. Associated purchased no milk in
Montana until April, 1985. Beginning in April, 1985,
Associated and Gallatin arranged for Associated to purchase
milk from Gallatin at jobber prices and distribute it only to
Associated member stores. Jobber prices are 80% of
wholesale. Neither Associated nor Gallatin made an
application for a special price to the Milk Control Board.
The Department of Commerce, through the Milk Control
Bureau, sought a preliminary injunction in the Lewis and
Clark County District Court to prevent Gallatin from selling
milk to Associated at jobber prices. It also sought a
declaratory judgment as to whether wholesale or jobber prices
apply to the sales of the milk products in question.
Gallatin and Associated moved to dismiss the State's
complaint on the ground of collateral estoppel which the
District Court denied. After the State withdrew its
application for a preliminary injunction, the parties
stipulated to submitting the price issue on cross-motions for
summary judgment.
After the parties filed briefs, the District Court
permitt.ed Ed McHugh, a licensee under the Milk Control Act,
to intervene and participate in oral argument. On September
19, 1985, the District Court held that Associated could not
purchase milk at jobber prices in Montana, and must pay
Gallatin the wholesale price. This appeal followed.
The first issue is whether the doctrine of collateral
estoppel bars the District Court from ruling that Associated
must purchase milk wholesale prices?
The elements of collateral estoppel are as follows:
(1) the party adversely affected by estoppel has
had a full and fair opportunity to litigate the
critical issues; (2) the assertion of estoppel by
a stranger to the original judgment would create
analogous results in the latter case; (3) the
party affected by estoppel has sound reasons why he
or she should not be bound by the previous
judgment; (4) the previous judgment was the result
of thorough litigation; and (5) there was an
appeal from the original judgment.
Beckman v. Chamberlain (Mont. 1983), 673 P.2d 480, 481, 40
St.Rep. 2044, 2045.
Appellants argue that Judge Meloy ' s 1980 decision
permitting Associated to distribute milk without a license
impliedly decided the issues of this case. Since Associated
was allowed to distribute milk at wholesale prices, it must
be implied that it may purchase that milk at jobber prices.
Any other holding would not make sense. We do not agree.
The District Court correctly found that collateral
estoppel did not apply. The party adversely affected by
estoppel (the Department) has not had a full and fair
opportunity to litigate critical issues of this case because
in 1980 Associated represented that it was a retailer and
wanted to purchase milk at wholesale prices out of state.
Now it wants to purchase milk at jobber prices within the
state. Also the assertion of estoppel by Gallatin is an
assertion by a "stranger1' to the original judgment. The
substantive issue in this case (the price at which Associated
must purchase milk in this State) was not litigated in the
1980 case. The appeal from the 1980 judgment was dismissed
and, therefore, not decided. Collateral estoppel does not
bar the Department from litigating this case.
The second issue is whether the District Court erred in
determining that Associated must pay the wholesale price for
milk purchased in Montana? Resolution of this issue depends
upon determining the status of Associated under the Act.
Associated claims it does not fit within any category under
the Act, but essentially functions as a jobber and is
therefore entitled to jobber prices. The Department argues
that Associated is a retailer subject to wholesale prices.
We agree with the Department.
A jobber is defined in 5 8.79.101(1) ( 1 , A.R.M. as:
... any independent businessman other than a
store, wholesale qrocery purchasing organization,
or wholesale grocery broker, who has no financial
connection with any distributor other than
acquiring the distributor's packaged product and
distributing and selling the same, and whose
business practices and policies are within his
exclusive province to establish, and not subject to
any influence or control from the distributor.
(Emphasis added.)
The District Court correctly concluded that because the
activity and function of jobber is specifically covered by
the Act, one must qualify as a jobber in order to qualify for
jobber prices. Associated does not qualify as a jobber. As
a wholesale grocery purchasing organization, Associated is
precluded from being a jobber by the definition under the
regulations. Further $ 81-23-305 (1), MCA, expressly
prohibits a jobber from being financially interested in the
conduct or operation of the business of a retailer.
Associated is financially interested in the operation of its
member stores. In addition, while Associated performs some
of the functions of a jobber, that does not make it a jobber.
Almost everything that a person in the chain of distribution
of milk does is an activity that jobbers perform. Associated
still does not fall within the definition of a jobber.
Associated is a retailer. A retailer is defined at S
81-23-101 (1)(r), MCA, as:
... a person selling milk in bulk or in packages
over the counter at retail or for consumption on
the premises and includes but is not limited to
retail stores of all types, restaurants,
boardinghouses, fraternities, sororities,
confectionaries, public and private schools,
including colleges and universities, and both
public and private institutions and
instrumentalities of all types and description.
Section 8.79.101(1)(n), A.R.M. defines "stores" to mean:
... any grocery ...
or similar mercantile
establishment, whether rural or urban, which sells
milk over the counter or on the premises to
customers at retail, and, unless otherwise
distinguished herein, includes chain stores,
supermarkets, and wholesale food purchasing
organizations. (Emphasis added.)
Clearly, Associated meets the definition of a retailer
under the Act and regulations. A retailer includes a
"store." A store is defined as including "wholesale food
purchasing organizations."
Because Associated is a retailer and not a jobber, the
District Court correctly concluded that "the correct price
for transactions between Gallatin Dairies and Associated
Foods is the wholesale price.
The order of the District court#s affirmed.
/
T-YQ
We Concur: I
Chief Justice