DocketNumber: No. 34,703.
Citation Numbers: 34 N.W.2d 725, 227 Minn. 1
Judges: FRANK T. GALLAGHER, JUSTICE.
Filed Date: 7/30/1948
Status: Precedential
Modified Date: 1/12/2023
This action was commenced when George Benz Sons, Inc., a Minnesota corporation engaged in the business of manufacturing and wholesaling intoxicating liquors as defined by M.S.A.
The position of plaintiff and interveners from the inception of the litigation was that the statute in question is unconstitutional because it is violative of the due process clause of Minn. Const. art.
Prior to the adoption of the section of the statute which plaintiff and interveners have attacked, M.S.A.
"The license fees to be paid before the issuance of licenses shall be as follows:
"(a) Any manufacturer, as herein defined, shall pay to the state, an annual license fee in the sum of $2,500, except that brewers of intoxicating malt beverages shall pay to the state an annual license fee of $500, and except that a manufacturer of wines containing not more than 24 per cent of alcohol by volume shall pay to the state an annual license fee of $250.
"(b) Any wholesaler, as herein defined, shall pay to the state an annual license fee in the sum of $2,500, except that wholesalers of wine containing not more than 24 per cent of alcohol by volume and wholesalers of beer containing more than 3.2 per cent of alcohol by volume, shall pay to the state an annual license fee of $250.
"(c) The maximum license fee for an 'Off sale' license in the cities of the first class shall be the sum of $250; in all cities and villages of over 10,000 population, except cities of the first class, the maximum license fee for an 'Off sale' license shall be $200; in all cities and villages with a population between 5,000 and 10,000, the maximum license fee shall be $150; in all cities, villages and boroughs of 5,000 population, or less, the maximum license fee shall be $100. All such license fees for 'Off sale' licenses shall be payable to the municipalities issuing the license. Where such licenses shall be issued for less than one year, a fee may be a pro rata share of the annual license fee."
Intoxicating liquor is defined by M.S.A.
"The terms 'intoxicating liquor' and 'liquor' when used in sections
The amendment to §
"Any manufacturer of wines containing not more than 24 per cent of alcohol by volume shall pay to the state an annual license fee of $1,000; and any wholesaler of wines containing not more than 24 per cent of alcohol by volume shall pay to the state an annual license fee of $1,000. No person or corporation licensed under the provisions of clauses (a) and (b) to manufacture or sell intoxicating liquors at wholesale may be licensed to manufacture wines or sell wines at wholesale, directly or indirectly or through a subsidiary or affiliate corporation or by any officer, director, stockholder or partner thereof, nor shall any person or corporation licensed to manufacture wines or sell wines at wholesale as provided in this clause be granted a license to manufacture or to sell intoxicating liquors at wholesale, directly or indirectly or through a subsidiary or affiliate corporation or by any officer, director, stockholder or partner thereof. The provisions of Subsection C herein shall take effect and be in force from and after July 1, 1947."
The statute contains no definition of "wine," but the liquor control commissioner has defined "wine" in liquor regulation No. 1, 1944, § 1D, as follows:
"The term 'wine' means (1) wine as defined in the United States Internal Revenue Act of 1890 as amended, and in accordance with the 1937 United States Internal Revenue Regulation No. 7 pertaining to the production and fortification of wine and amendments thereto and (2) other alcoholic beverages not so defined, but made in the manner of wine, including sparkling and carbonated wine, wine made from condensed grape must, wine made from other agricultural products than the juice of sound ripe grapes, imitation wine, compounds sold as wine, vermouth, cider, perry and sake, in each instance only if containing not less than 7 per centum, and not more than 24 per centum of alcohol by volume."
(The foregoing is more clearly defined in regulation No. 14, 1944, which clarifies the standards.) Following the enactment of the liquor control act of 1934, manufacturers and wholesalers licensed under §
The license of plaintiff to manufacture and wholesale intoxicating liquors expired on December 22, 1947. Prior to the expiration of this license and on December 5, 1947, plaintiff applied to defendant, as state liquor control commissioner, for a license as of December 22, 1947, and for one year thereafter, to manufacture and sell at wholesale the intoxicating liquors defined in §
The allegations of the complaints in intervention indicate that interveners have a legal interest in the determination of the constitutionality of the amendment to §
On December 30, 1947, the temporary restraining order issued December 20, 1947, was vacated, and in lieu thereof defendant was restrained from enforcing the amendment insofar as it modified or changed the rights of plaintiff and others similarly situated to manufacture or sell intoxicating liquors and wines in any manner different from the rights they had under the law prior to the enactment of L. 1947, c. 528. Defendant was otherwise authorized to enforce the provisions of c. 528 except as limited by the provisions of the order. The order of December 30 provided that the restraint was to be in effect until "the determination of the application for a temporary injunction," the hearing on which was set for January 12, 1948. The motion for a temporary injunction was heard on that day, and on February 11, 1948, the district court issued the order vacating the temporary restraining order and denying the motion for a temporary injunction.
The question for determination is whether the 1947 amendment is violative of the limitations contained in the state and federal constitutions. The trial court considered this the decisive point when it said in part in its memorandum:
"In this matter the decisive point seems to be the propriety of the statutory mandate which separates wholesale dealers in wine from wholesale dealers in hard liquor and does not permit the wholesale dealer in either of these types of liquor from dealing in the other."
Upon appeal, the principal contention is that the amendment is violative of the equal protection clauses of the state and federal constitutions. Pertinent provisions of the state constitution are as follows:
Art. 1, § 2. Rights and privileges. "No member of this State shall be * * * deprived of any of the rights or privileges secured to any citizen thereof, unless by the law of the land, or the judgment of his peers."
Art. 4, § 33. Against special legislation. "* * * The legislature shall pass no local or special law * * * granting to any corporation, *Page 9 association or individual any special or exclusive privilege, immunity or franchise whatever, * * *."
The pertinent provision of the federal constitution is as follows:
Art. XIV, § 1. "* * * No state shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; * * * nor deny to any person within itsjurisdiction the equal protection of the laws." (Italics supplied.)
The argument of plaintiff and interveners in support of their claim that the trial court erred in holding the amendment constitutional may be summarized as follows:
That the power of the legislature to regulate intoxicating liquor is limited by the
1. At the outset, it must be conceded that there are certain fundamental principles of law governing the manufacture and sale of intoxicating liquors which are undisputed:
(a) The legislature possesses all legislative power not withheld or forbidden by the terms of the state or federal constitutions. Williams *Page 10
v. Evans,
(b) No one has the absolute right in this state to engage in the business of selling intoxicating liquors. It is a privilege subject to the police power of the state that can be granted only by proper licensing authority. Giozza v. Tiernan,
No one can acquire a vested right to continue, when once licensed, in a business, trade, or occupation which is subject to legislative control and regulation under the police power of the state. The rights and liberty of the citizen are all held in subordination to such reasonable regulations and restrictions as the legislature may prescribe from time to time. State v. Hovorka,
(c) "Except where the constitution has imposed limitations upon the legislative power, it must be considered as practically absolute; and to warrant the judiciary in declaring a statute invalid they must be able to point out some constitutional limitation which the act clearly transcends." State v. Corbett,
(d) Conceding that the state has the power to control and regulate the sale of intoxicating liquors, it must also be conceded that in doing so it has the power to make necessary classifications. "The exercise of the legislative process necessarily involves classification." Lyons v. Spaeth,
In Anderson v. City of St. Paul,
"It is settled by repeated decisions of this Court that the equal protection clause does not take from a State the power to classify in the adoption of police laws, but admits of the exercise of a wide scope of discretion, and avoids what is doneonly when it is without any reasonable basis and therefore ispurely arbitrary; and that one who assails the classification must carry the burden of showing that it does not rest upon any reasonable basis, but is essentially arbitrary." (Italics supplied.)
The comparative numbers in classifications made by the legislature are not determinative of its right to classify, except that the fewer in the class the more closely will the court examine the legislation.
"* * * it is to be remembered that one alone may constitute a class as well as a thousand; but, the fewer there are in a class, the more closely will courts scrutinize an act to see if its classification constitutes an evasion of the constitution." Hamlin v. Ladd,
(e) The separate clauses of the
2. Conceding, then, that the legislature possesses all legislative powers not withheld or forbidden by the state or federal constitutions; that no one has the absolute right to engage in the business of selling intoxicating liquors; that it is a privilege subject to the police power of the state; that no one, once licensed, can acquire a vested right to continue in the business; that it is subject to legislative control and regulation under the police power; that the legislature has the power to make classifications which are reasonable and not arbitrary; that in considering a classification courts are obliged to *Page 12 give the law the benefit of the doubt; that the burden of proving the unreasonable and arbitrary character of the law is upon him who asserts it; and that the classification by the legislature is presumed to be fair until the contrary is established, we come to the question whether the act here underconsideration is so unreasonable and arbitrary as to offend the provisions of both the state and the federal constitutions.
In examining the pertinent parts of L. 1947, c. 528, which amended M.S.A.
The mere fact that the legislature has created a classification in the liquor industry does not in itself make the law offensive in a constitutional sense. If the legislature had had some conceivable purpose in restricting wine licenses at the manufacturing-wholesale level in the manner done here and if there were any reasonable relationship between such purpose and the terms of the amendment, the legislation would have to be held valid. *Page 13
While there is nothing in the record which discloses the number of licensed manufacturers and wholesalers of intoxicating liquors and wines in the state as compared with licensed retailers of the same products, the court takes judicial notice of the fact that there are a great many more retailers than manufacturers or wholesalers. At the time the act was supposed to become effective, namely, July 1, 1947, it appears that there were approximately 19 manufacturers and wholesalers who had licenses the previous year to handle both liquors and wines, and six manufacturers and wholesalers who had exclusive wine licenses. While we have said that it is not the number which constitutes a class, as one alone may do so, we are still compelled, in view of the common knowledge of the existence of a much larger class of retailers than manufacturers and wholesalers, to scrutinize the act and to try to ascertain whether the limited classification of manufacturers and wholesalers and the license restrictions imposed on this class violate the constitutions.
While defendant in his brief contends that it is not for the court to search for or suggest reasons why a distinction may have been made in the act under consideration between the handling of wine and the handling of liquor, he suggests that the following situation might have been taken into consideration by the legislature:
(a) The matter of "tie-in" sales, whereby the wholesaler of liquor, in times when whiskey is hard to get, might compel the retailer to buy large quantities of wine in order to secure a small quantity of whiskey, resulting in the possibility of the retailer being compelled to dispose of surplus wines through legal or illegal channels or sales. Defendant refers to other reasons, pointed out by the trial court, which may have influenced the legislature in adopting the legislation, such as:
(b) The fact that the legislature might have believed that a separation of the businesses would accelerate the increase in wine sales and slow up the increase in the sale of hard liquors; it might have believed that such a separation would tend to increase the number of wine manufacturers and wholesalers; *Page 14
(c) It might have considered that the regulation of advertising and the control of labeling contained in certain regulations of the commissioner would be made easier;
(d) It might have considered that the separation at the wholesale level might tend to reduce the number of crimes, divorces, and juvenile neglects and delinquencies by reducing the consumption of hard liquor, sometimes blamed as a contributing factor for such conditions, rather than the use of wine or beer, thus having in mind the public welfare, health, and morals.
Assuming for the present that the legislature may pass laws to accomplish any of these objectives, we inquire whether the statute as passed has any reasonable or proper relation to such legitimate legislative purposes.
It is our opinion that the law under consideration has no reasonable relationship to any of the purposes above suggested which might have motivated the legislature, because:
(a) If the purpose was to prevent so-called "tie-in" sales, it would seem to us that the legislature could have done so by the simple expedient of forbidding forced "tie-in" sales and by making persons carrying on this practice liable, civilly or criminally, for doing so, or by providing for the cancellation of license. It seems to us to be unreasonable to justify the present amendment by conjecturing as to the possibility that the amendment might have been motivated legislatively by a desire to improve trade practices in the liquor business. If it was the intention of the legislature to prevent "tie-in" sales on the wholesale level, the amendment is silent as to a prevention of the same practice on the retail level, and it would seem only reasonable that if the practice is obnoxious on the wholesale level it would also be so on the retail level.
(b) If the legislature was motivated by the thought that the act would accelerate the increase in wine sales and slow up the increase in the sale of hard liquors, its reason for doing so must have been on some theory of promoting sobriety by increasing the use of wine rather than hard liquors by the public in general. To attempt to justify the act on such a theory puts us in a wide field of conjecture *Page 15
and speculation as to whether public tastes can be so simply controlled. Neither can we conclude that the legislature might have believed that the separation would increase the number of wine manufacturers and wholesalers, inasmuch as M.S.A.
(c) Again we enter the field of conjecture when considering whether the legislature had in mind that the passage of the amendment would ease the duties of the commissioner in the administration of certain regulations pertaining to advertising and the control of labeling. We have examined regulations Nos. 8, 13, and 14 referred to, and it is our opinion that the law was not intended merely to facilitate the regulation of advertising and the control of labels in the commissioner's office.
(d) There is much merit in the trial court's suggested reason that the legislature might have had in mind the public welfare, health, and morals in separating the wine and hard liquor industry at the wholesale level, on the theory that the reduction of the use of hard liquor might in turn reduce the deplorable number of crimes, divorces, and juvenile neglects and delinquencies often attributed to the use of intoxicating liquor. The learned trial judge is probably correct when he says that it is "hard liquor rather than wine or beer that is blamed as a contributing factor to the crime, the divorce, the neglect, or the delinquency." We agree that any "switch" or discontinuance of the use of beverages that tends to bring about such deplorable conditions would be desirable and commendable. If the *Page 16 legislature had that in mind at the time the act was passed, it, too, is to be commended.
However, in passing on the legality of this amendment, we must determine whether it is arbitrary and unreasonable. To us, it appears that an act which attempts to regulate and control the liquor industry for the benefit of the public welfare, health, and morals, if such is the purpose, by merely separating the wine and liquor businesses at the manufacturing or wholesale level, and which does nothing about separating the same businesses at the retail level, is both arbitrary and unreasonable. We say this in view of the fact that no effort has been made in the act to separate any other combinations of intoxicating liquors, such as those of whiskey-beer, liquor-cordial, or beer-wine, and in further view of the fact that it is well known that the number of retailers in intoxicating liquors in this state vastly exceeds the number of wholesalers. It is also common knowledge that the retailer of intoxicating liquors is in much closer contact with the consuming public, whose welfare, health, and morals are more immediately affected, than are the wholesalers or manufacturers. We cannot see how it can reasonably be said under any stretch of the imagination that it is detrimental to the public welfare, health, and morals to permit a comparatively few manufacturers and wholesalers of intoxicating liquor to handle both wines and liquors, and at the same time permit a much greater number of retailers of the same products to have both wines and liquors on their shelves to be served or delivered, across the bar or otherwise, directly to the consumer. It seems to us that if we are considering the public welfare, health, and morals the retailers' influence over the consumer, for good or bad, is, because of closer contact, much greater than that of the manufacturers or wholesalers. We believe that an amendment which attempts to single out the manufacturers and wholesalers only, which does nothing about the retailers of the same products, and which attempts to separate the sale of hard liquors and wines only on the manufacturing and wholesale level and does nothing about a similar separation on the retail level creates a situation where the law attempts to select particular individuals *Page 17 from a class and impose upon them special limitations from which others of the same class are exempt.
"To operate uniformly, a law must bring within its influence all who are in the same condition and treat them alike." State v. Pehrson,
For the present it may be conceded that these monopolistic tendencies in the liquor business at the wholesale level warrant and indeed may require legislative or administrative attention. However, if it was the design of the legislature to combat monopoly it would have done so by a more direct and effectual method than that contained in the amendment now under consideration. The Clayton Act, the Sherman Anti-Trust Act, and the Robinson-Patman Act *Page 19
are designed to prevent monopolistic practices insofar as they affect interstate commerce. M.S.A.
In State v. Pehrson,
"* * * The rights of all persons must rest upon the same rule under similar circumstances, and classification must be based on some difference which bears a reasonable and just relation to the act in respect to which the classification is proposed, and can never be made arbitrarily and without any such basis." *Page 20
In Joseph Triner Corp. v. Mahoney (D.C.)
"* * * If there in fact exists a reasonable basis for permitting the importation of liquor bearing a registered brand and for prohibiting the importation of the same kind and quality of liquor bearing an unregistered brand or a brand which is not subject to registration, we are unable to visualize it."
This decision was reversed by the United States Supreme Court (Mahoney v. Joseph Triner Corp.
In Glicker v. Michigan Liquor Control Comm. (6 Cir.)
"The fact that the appellant is in the liquor business does not release the state from the restrictions on its regulatory powers above referred to. It may authorize the state to impose more stringent regulations against those engaged in that business than are imposed against those engaged in other callings, 'but it affords no justification for discriminating between persons similarly situated who may be, or may desire to become, engaged in that calling.' State ex rel. Galle v. City of New Orleans,
See, also, 48 C.J.S., Intoxicating Liquors, §§ 33, 38, and 39. *Page 21
In Francis v. Fitzpatrick,
"* * * But neither the power of the state absolutely to prohibit all traffic in alcoholic liquors nor the legislative declaration that a permit constitutes a privilege and not property renders inapplicable constitutional guaranties such as that of the equal protection of the laws."
In State ex rel. Greenberg v. Erickson,
In State v. Comer,
"* * * An exemption differentiating in treatment without substance to fortify it is violative of the equal protection of the laws (see 12 Am. Jur., Constitutional Law, §§ 480-482, 508, where long established general principles, supported by cases, are fully stated). Likewise, it is offensive to Minn. Const. art.
We hold the amendment to be unreasonable and arbitrary in violation of the equal protection clauses of the state and federal constitutions.
Reversed.
PER CURIAM.
In his petition for rehearing, respondent contends that appellant Benz company made no objection to any part of L. 1947, c. 528, except *Page 22
the portion which provides that any person licensed to manufacture and wholesale intoxicating liquor may not have a license to manufacture and wholesale wine. All of c. 528, including the license fee provision, was attacked on constitutional grounds in the complaints of interveners Ed. Phillips Sons Company and Griggs Cooper Company, which brought before us the constitutionality of the license fee provisions of the amendment, as well as the separation feature of intoxicating liquor and wine. We set forth in the original opinion that the "allegations of the complaints in intervention indicate that interveners have a legal interest in the determination of the constitutionality of the amendment to §
The only pertinent changes made by L. 1947, c. 528 (hereinafter referred to as the amendment) in clause (a) of M. S. A.
The only pertinent changes made by the 1947 amendment in clause (b) of the old law was the omission in that clause of "wholesalers of wine containing not more than 24 per cent of alcohol by volume" from those who were required to pay to the state an annual license fee of $250.
Clause (c) of the amendment is new, and provides in the first sentence that manufacturers and wholesalers of wines shall pay an annual license fee of $1,000 instead of $250, as provided in the old law. The next sentence of clause (c) of the amendment provides for the separation of the manufacture and wholesale of intoxicating liquors from wines. Clause (c) of the old law became clause (d) of the amendment and contained identically the same language as before, and was neither specifically attacked by the contesting parties nor considered by us.
M.S.A.
"* * * If any provision of a law is found to be unconstitutional and void, the remaining provisions of the law shall remain valid, unless the court finds the valid provisions of the law are so essentially *Page 23 and inseparably connected with, and so dependent upon, the void provisions that the court cannot presume the legislature would have enacted the remaining valid provisions without the void one."
Respondent argues that there should be a rehearing for the purpose of clarifying the court's decision. He claims that he does not know from the decision whether it was the intention of the court to hold L. 1947, c. 528, unconstitutional in its entirety or only that part of it which provides that a wine manufacturer and wholesaler cannot have a hard liquor manufacturer's and wholesaler's license.
It is our intention to hold clauses (a), (b), and (c) of the amendment unconstitutional, since it appears to us that the valid provisions of these clauses are so essentially and inseparably connected with and dependent upon the void provisions that this court cannot presume that the legislature would have enacted the remaining valid provisions without the void ones. It is reasonable to believe that when the legislature attempted to separate the manufacturing and wholesaling of intoxicating liquors from wines and increase the license fees for wines from $250 to $1,000 it must have considered that the elimination of intoxicating liquor manufacturers and wholesalers from the sale of wine would justify an increase in the license fees for manufacturers and wholesalers of wine. Otherwise we do not think that it would have singled out the wine manufacturers and wholesalers alone for an increase in the license fee unless it believed that the separation feature of the amendment was valid. In declaring clauses (a), (b), and (c) of the amendment unconstitutional, it does not change the license provisions contained in clauses (a), (b), and (c) of the old law (M.S.A.
Petition for rehearing denied. *Page 24
Francis v. Fitzpatrick , 129 Conn. 619 ( 1943 )
Hamlin v. Ladd , 217 Minn. 249 ( 1944 )
Mahoney v. Joseph Triner Corp. , 58 S. Ct. 952 ( 1938 )
Paron v. City of Shakopee , 226 Minn. 222 ( 1948 )
Lyons v. Spaeth , 220 Minn. 563 ( 1945 )
Giozza v. Tiernan , 13 S. Ct. 721 ( 1893 )
Invention Marketing, Inc. v. Spannaus , 279 N.W.2d 74 ( 1979 )
Federal Distillers, Inc. v. State , 304 Minn. 28 ( 1975 )
Jacobsen v. Anheuser-Busch, Inc. , 392 N.W.2d 868 ( 1986 )
State v. Saugen , 283 Minn. 402 ( 1969 )
Haskell's Inc. v. Sopsic , 306 N.W.2d 555 ( 1981 )
Northern States Power Company v. Esperson , 274 Minn. 451 ( 1966 )
Minnesota Automatic Merchandising Council v. Smith , 667 N.W.2d 159 ( 2003 )
State v. Northwestern Preparatory School, Inc. , 228 Minn. 363 ( 1949 )