Case ID: ohio-st_167/html/0061-01.html
Source: Caselaw Access Project
Author: {"author": "\n      Per Curiam.\n     \n      Herbert, J.,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

The Pompei Winery, Inc., d. b. a. Pioneer Wine Co., Appellant, v. Board of Liquor Control, Appellee.
    (No. 35094
    Decided November 27, 1957.)
    
      
      Mr. Frank V. Opaskar, for appellant.
    
      Mr. William Saxbe, attorney general, and Mr. S. Noel Melvin, for appellee.
   Per Curiam.

Appellant advances numerous arguments attacking the validity of the above statute and regulation, but, in essence and as confined to the facts of the instant case, its contentions are that Section 4301.13, Revised Code, is unconstitutional; that Section 1, Article VII of Regulation 3 of the Board of Liquor Control, is unconstitutional in that it is arbitrary, discriminatory and in derogation of the power delegated bv the General Assembly through Section 4301.13; and that Section 1, Article VII of Regulation 3, is in contravention of Section 8, Article I of the Constitution of the United States — the “interstate commerce clause.”

It is apparent at the outset that most of appellant’s contentions may lie answered in the language, unanimously adopted by this court in the per curiam opinion in the case of Frankenstein v. Leonard et al., Board of Liquor Control, 134 Ohio St., 251, 16 N. E. (2d), 424, that “extended discussion is unnecessary inasmuch as most of the contentions * # * require merely a recital and reapplication of fundamental and decisive pronouncements already made by this court,”

The most cursory examination of that and the following cases indicates clearly the practically unlimited extent of legislative power to control the manufacture, distribution and sale of alcoholic beverages which is recognized by the law, and the great extent to which this power has been allowed to be exercised and delegated without judicial interference: State Board of Equalization of California v. Young’s Market Co., 299 U. S., 59, 81 L. Ed., 38, 57 S. Ct., 77; Ziffrin, Inc., v. Reeves, Commr., 308 U. S., 132, 84 L. Ed., 128, 60 S. Ct., 163; United States v. Frankfort Distilleries, Inc., 324 U. S., 293, 89 L. Ed., 951, 65 S. Ct., 661; State, ex rel. Wetterstroem, v. Department of Liquor Control, 129 Ohio St., 185, 194 N. E., 372; State, ex rel. Zugravu, v. O’Brien, 130 Ohio St., 23, 196 N. E., 664; Frankenstein v. Leonard, supra; and State, ex rel. Superior Distributing Co., v. Davis et al., Tax Commission, 132 Ohio St., 308, 7 N. E. (2d), 652.

From the law expounded in those cases, it is seen that the liquor industry of any state in the union exists, if at all, only at the will and pleasure of the people of that particular state, either by popular vote or through their legislative body, and then only according to the laws prescribed by such people or legislative body and the rules and regulations of any administrative body to which authority has been lawfully delegated. And it is of prime importance to recognize the fact that control of its liquor industry by a state is not subject to the constitutional sanctions and limitations ordinarily attendant to an exercise of its general police power by a state.

The liquor industry of the entire nation was divested of any of such constitutional guaranties when it was divested of legal existence by the Eighteenth Amendment to the Constitution of the United States, and the Twenty-first Amendment cannot be said to have returned to the liquor industry any of the protection and guaranties which may have existed prior to the passage of the Eighteenth Amendment.

See United States v. Frankfort Distilleries, Inc., supra (324 U. S., 293), wherein Justice Frankfurter, in a concurring opinion, said:

‘ ‘ The Twenty-first Amendment made a fundamental change, as to control of the liquor traffic, in the constitutional relations between the states and national authority. Before that amendment — disregarding the interlude of the Eighteenth Amendment —alcohol was for constitutional purposes treated in the abstract as an article of commerce just like peanuts and potatoes. As a result, the power of the states to control the liquor traffic was subordinated to the right of free trade across state lines as embodied in the Commerce Clause. The Twenty-first Amendment reversed this legal situation by subordinating rights under the Commerce Clause to the power of a state to control, and to control effectively, the traffic in liquor within its borders. * *

“* * * if a for jqs own sufficient reasons deems it a desirable policy to standardize the price of liquor within its borders either by a direct price-fixing statute or by permissive sanction of such price fixing in order to discourage the temptations of cheap liquor due to cutthroat competition, the Twenty-first Amendment gives it that power and the Commerce Clause does not gainsay it.”

See, also, State, ex rel. Zugravu, v. O’Brien, supra (130 Ohio St., 23), wherein it was found by this court, with regard to the Liquor Control Act, that, “under its statutory provisions, natural and artificial persons may engage in the liquor traffic only to the extent to ivhich they are permitted to do so.”

From this it is undeniable that the General Assembly of Ohio has the power to prescribe that there shall be a minimum price established for the sale of any particular liquor, and that it may delegate the fixing of such minimum price to a properly constituted agency such as the Ohio Board of Liquor Control.

Thus, by the enactment of Section 4301.13, Revised Code, the General Assembly has merely exercised a power which it undeniably has.

Appellant, however, raises a further question by arguing that Section 1, Article VII of Regulation 3, is invalid because it contravenes a stated legislative policy or purpose in establishing minimum prices on bottled wines in Ohio. It contends that such a legislative purpose is expressed by the title of the act wherefrom Section 4301.13 was derived, i. e., Amended Substitute Senate Bill No. 159, which title is as follows:

“AN ACT

“To provide for the sale of bottled wine under fair trade regulations and for that purpose to authorize the Board of Liquor Control to adopt such regulations, and to enact supplemental Section 6064-3a [Section 4301.13, Revised Code].”

Appellant contends that the purpose of the General Assembly was to limit the Board of Liquor Control in determining the minimum prices at which bottled wine may be sold to a formula whereby the only determination of such minimum price would be based on “fair trade” principles.

The court notes, however, that the fundamental purpose of the Liquor Control Act in the first instance is to absolutely control the liquor industry in the state of Ohio as a matter of social and public policy, and that its purpose is not merely to provide “fair competition” between liquor distributors or retailers.

It is at once apparent that appellant’s view of legislative restrictions on the delegation of power to the board to fix minimum prices on bottled wine would preclude the board from any consideration of social or public policy in reaching a “fair trade” minimum price. This would, of course, be in direct contravention of the basic and fundamental tenets of the entire liquor control program, and clearly such an incompatible purpose should not and will not be read into legislation on this subject.

Nowhere in the body of the act as enacted by the General Assembly does there appear any reference to Ohio or any other “fair trade” legislation, and if the General Assembly had intended the Board of Liquor Control to be guided thereby it would surely have so stated in no uncertain terms.

It is our conclusion regarding this contention of appellant that the board, in formulating Section 1, Article VII of Regulation 3, did not abrogate or extend the powers delegated to it by Section 4301.13, Revised Code, and that such regulation is a valid exercise of such delegated power.

Objection is also made to the delegation of power to fix minimum prices for the sale of bottled wine on the basis that such delegation includes no legislatively prescribed standards. Certainly the police power of the state with respect to liquor control is at least coextensive with the police power of the state with respect to public health, and in the second paragraph of the syllabus of Weber v. Board of Health, 148 Ohio St., 389, 74 N. E. (2d), 331, this court said:

“Where a law relates to a police regulation for the protection of public health, and it is impossible or impractical to provide specific standards, and to do so would defeat the legislative object sought to be accomplished, such law is valid and constitutional without providing such standards. ’ ’

Considering the changing social and economic factors involved when dealing with the liquor industry and the fundamental purpose of the Liquor Control Act, it is not unreasonable to conclude that the fixing of rigid standards by the General Assembly as to the minimum price of bottled wine might well defeat the legislative purpose in enacting the measure in the first instance.

It is, then, neither surprising nor unlawful that the General Assembly vested the Board of Liquor Control, which is in constant touch with the situation in Ohio, with discretion regarding this particular piece of legislation.

In conclusion, we find that the enactment by the General Assembly of Section 4301.13, Revised Code, delegating authority to the Board of Liquor Control to establish minimum prices for the sale of bottled wine in Ohio, was within the general powers of the General Assembly concerning its control of the manufacture, distribution and sale of liquor in the state of Ohio; that Section 4301.13, Revised Code, is not unconstitutional because of a lack of prescribed standards for the establishment of such minimum price; that Section 1, Article YII of Regulation 3 of the Board of Liquor Control, including therein the formula established by the board for reaching a minimum price for the sale of bottled wine in Ohio, is neither in contravention nor in excess of the power granted that board by the General Assembly through Section 4301.13; and that Section 4301.13, Revised Code, is not violative of Section 8, Article I of the Constitution of the United States, the “interstate commerce clause,” since that clause of the federal Constitution does not apply at all to state liquor traffic.

It follows that the judgment of the Court of Appeals must be, and it hereby is, affirmed.

Judgment affirmed.

Weygandt, C. J., Zimmerman, Stewart, Bell, Taet and Matthias, JJ., concur.

Herbert, J., dissents.

Herbert, J.,

dissenting. I fully agree with the statement from the Frankenstein case quoted at the outset of the per curiam opinion. It should be so apparent that Section 4301.13, Revised Code, is constitutional by all the standards since the adoption of the Twenty-first Amendment that further discussion is unnecessary.

The validity of Section 1, Article VII of Regulation 3 of the Board of Liquor Control, presents an entirely different question, however. Granting, also, that the fundamental purpose of the Liquor Control Act is to absolutely control the liquor industry in Ohio as a matter of social and public policy, as stated in the per curiam opinion, it should be noted that at the time of the original passing of the Liquor Control Act future amendments were clearly contemplated. Paragraph (G) of Section 4301.04, Revised Code, provides in substantially the same language as originally adopted:

“The board may submit to the Governor amendments to any laws affecting the sale of intoxicating liquor in this state when it deems desirable.”

The over-all power of the Legislature not being in dispute, we must then look to its intent in the enactment of Section 4301.13, Revised Code. When this act was passed in 1949, it was captioned:

“AN ACT

“To provide for the sale of bottled wine under fair trade regulations and for that purpose to authorize the Board of Liquor Control to adopt such regulations, and to enact supplemental Section 6064-3o.” (Emphasis added.)

This act has not since been amended (although some excess verbiage was stricken when it was recodified as Section 4301.13, Revised Code). It seems obvious, therefore, at least to the writer, that the Legislature did not intend to vest the board with the same broad powers in respect to its functions under this section as it concededly has in its other operations. While the per curiam opinion states that nowhere in the act is there any reference to Ohio or any other “fair trade” legislation, it should be noted that this phrase does not have quotation marks around it in the caption of the act. It would seem to follow, therefore, that the Legislature clearly intended ordinary acceptance of the words.

Coming then to consideration of Article VII of Regulation 3, let us quote the preamble:

“This article is promulgated pursuant to the provisions of Section 6064-3a of the General Code (R. C. 4301.13) to avoid economic and social consequences which flow from unfair competition and improper practices in the sale and distribution of alcoholic beverages. It is hereby declared to be the policy and intent of the board, in promulgating this article to advance the social control of an alcoholic beverage and to stabilize the sale and distribution of bottled wine in Ohio. It is intended to eliminate practices in the sale and distribution of wines in - Ohio tohich cause intemperance and improper usage of bottled wines.” (Emphasis added.)

Had this declared purpose of the Board of Liquor Control been set forth in the legislative enactment, this court would have had before it only the question of the reasonableness of the formula which follows in Section 1 of the Article. The important point, however, on which I dissent from the per curiam ruling is that the Legislature, in its enactment of Section 4301. 13, Revised Code, specifically limited the board in adopting regulations thereunder “to provide for the sale of bottled wine under fair trade regulations.” Citations of authorities can neither add to nor subtract from a conclusion on this point.

The case of Blackman v. Board of Liquor Control, 95 Ohio App., 177, 113 N. E. (2d), 893, apparently was considered to be controlling by the Court of Appeals here. From a reading of that opinion it does not appear that the court there was considering anything other than the power of the board to establish Article VII of Regulation 3. It did not go into the formula devised.

Without going into all the ramifications of the provisions set up in the formula of Section 1, Article VII of Regulation 3, it is quite apparent that the board was being guided by its declared policy “to advance the social control of an alcoholic beverage and * * * eliminate practices in the sale and distribution of wines in Ohio which cause intemperance” when it fixed a 16% bottling cost markup, as admittedly the record before the board in this case establishes by the board’s own witness, an employee, that 12% was adequate as contrasted with the appellant’s contention that 7% was adequate so far as establishing the fair price.

There are other factors in the formula, such as inclusion of taxes prior to another markup percentage, which, if the article is examined as a fair trade regulation, merit severe criticism, but further discussion of them would be of no avail here. Suffice it to say that the record in this case clearly discloses an artificially rigged price, the effect of which is tending toward the destruction of the wine bottling industry in this state. Such a result, even though unfortunate, would of course be valid if accomplished under clear legislative approval.

In my opinion, not only does the board exceed its power when in the promulgation of this article it goes beyond fair trade considerations in the normal acceptance of those words, but, in the exercise of such power, affirmed by the per curiam opinion here, it has drafted a wholly unreasonable regulation and one which is sadly in need of revision in the light of reality testified to by its own employee, Chief of the Beer and Wine Division.

I am still of the belief that, although the Legislature has complete power to declare the policy of this state with respect to the fixing of retail wine prices, it did not delegate to the Board of Liquor Control, by Section 4301.13, Revised Code, the power to regulate social evils in connection with the wine industry and to eliminate alleged sales practices causing intemperance, and, further, that the Board of Liquor Control here has promulgated a wholly unreal and unreasonable regulation which has resulted in a most unfair trade regulation.

The principles set forth in the case of Weber v. Board of Health, 148 Ohio St., 389, 14 N. E. (2d), 331, could well be cited in support of this dissenting opinion as could also the ruling in the case of Serrer v. Cigarette Service Co., 148 Ohio St., 519, 76 N. E. (2d), 91, even recognizing the distinction that in the Server case the industry sought to be regulated was not operating under privilege by the state.