Title: In re 1650 Cases of Seized Liquor

State: vermont

Issuer: Vermont Supreme Court

Document:

In re 1650 Cases of Seized Liquor  (97-349); 168 Vt. 314; 721 A.2d 100

[Filed 11-Sep-1998]

       NOTICE:  This opinion is subject to motions for reargument   under
  V.R.A.P. 40 as well as formal revision before  publication in  the Vermont
  Reports.  Readers are requested  to notify the Reporter of Decisions, 
  Vermont Supreme  Court, 109 State Street,  Montpelier, Vermont 05609-0801
  of  any errors in order that corrections may be made before  this opinion
  goes to press.

                                 No. 97-349

In re 1650 Cases of Seized Liquor	       Supreme Court
                                               On Appeal from 
                                               District Court of Vermont
  					       Unit No. 3, Washington Circuit
 					       May Term, 1998

David T. Suntag, J.

       William H. Sorrell, Attorney General, and William Griffin,   Chief
  Assistant Attorney General, Montpelier, for Plaintiff-Appellee.

       Russell  D.  Barr,  Daniel A. Seff and William  L.   Durrell,  Law
  Offices of Russell D. Barr, Stowe, for Defendant-Appellant.

PRESENT: Dooley,  Morse, Johnson and Skoglund, JJ., and  Corsones,
         D.J. Specially Assigned

       DOOLEY,  J.   The Saint Regis Mohawk Tribe appeals from  a decision
  of the Washington District Court  forfeiting 1,650  cases of liquor the
  Tribe was  transporting through the State of Vermont without  a liquor
  control permit.  See 7 V.S.A.  §  63(a). The  Tribe presents several
  arguments as to why the Tribe's  liquor could  not be seized and forfeited
  under Vermont's  liquor control enforcement  statutes.   See  id.  
  §§  561-601.    We affirm.

       The Tribe employed a California liquor broker  (Manormead) to purchase 
  1650  cases  of liquor from  Jenkins  Spirits  Corp.,  a Londonderry,  New
  Hampshire  distiller. The liquor  was  purchased free  on board and  thus
  title passed to the Tribe when the common carrier (Advantage Transportation
  Inc.) picked up the  liquor from Jenkins Spirits. On  April 12, 1996,
  during transport of the liquor to  the Tribe's  reservation in Messina,
  New York, the  truck was  stopped by  the  Vermont  State Police on 
  Interstate 89  near  Middlesex, 

  

  Vermont.  The truck did not  have a permit to transport alcohol as
  required  by  7 V.S.A. § 63(a), and  the  bill  of  lading
  indicated  that the liquor was being shipped to Manormead in Santa 
  Barbara,  California  and  not  to  the  Tribe's reservation  in Messina, 
  New  York.   The  Department of Liquor  Control  (DLC) determined that
  the "spirituous liquor" was  being  transported unlawfully and  seized the
  liquor pursuant to 7  V.S.A. § 561(a)  -  (b).  On April 16, 1996,
  the State filed a forfeiture complaint arguing that the liquor should be 
  forfeited pursuant to 7  V.S.A.  § 568 because the  Tribe lacked a
  permit pursuant to section 63(a).  The Tribe  opposed forfeiture arguing
  primarily that  the  truck had a  valid bill of lading and that an
  unwritten Liquor  Control  Board (LCB) policy allowed a bill  of  lading 
  to  substitute for a transport permit.  The State then amended  its
  complaint  to  allege that the truck's bill of lading could  not
  substitute for  a transport permit because it did not  state  the real
  destination of the liquor.

       The case went forward to an evidentiary hearing on  June 11, 1996, 
  with  the  Tribe  arguing that  (1)  the liquor  shipment complied with
  the LCB's rule that a bill  of lading may substitute for a section 63(a)
  permit; (2)  the LCB's characterization of its bill-of-lading rule  amounts
  to an unconstitutional  ex-post-facto law;  (3)  transportation of liquor
  without a permit is not a "use  contrary to law" within the meaning of 7
  V.S.A. § 568 and, therefore, could  not serve as the basis for a 
  forfeiture;  (4) innocent ownership is a defense to a liquor forfeiture 
  proceeding arising  out of an alleged permit violation; (5)  section  568 
  is unconstitutionally vague; and (6) the  forfeiture of the liquor is an
  unconstitutionally excessive fine against the Tribe.

       On  June 18, 1997, the court issued its decision and  order, holding
  that the bill of lading in this case did not  satisfy  the LCB 
  requirements as a substitute for a  section  63(a)  transport permit.	The  
  court determined that the bill of lading  did  not properly include the
  name of the receiver/consignee and did  not specify  the  place the
  freight was to be  delivered.   Thus,  the court found that the liquor was 
  being transported unlawfully  and further  found  that liquor  being 
  transported  unlawfully  was subject to  forfeiture by the State.  This
  appeal followed.

       First,  the Tribe argues that the liquor was not illegally
  transported because the truck 

  

  driver had a valid  bill of  lading. The  statute central to this argument
  is 7  V.S.A. §  63(a), which provides:

       (a) All spirituous liquors imported into this  state shall be imported
  by and  through the liquor control  board. A person, partnership,   
  association or corporation  importing or causing to be  imported into
  this state any spirituous  liquors shall be imprisoned not
  more than one  year,  or  fined more  than $1,000.00 or both.   However, 
  it  shall  be  lawful for a person to import  or transport  spirituous 
  liquor into this  state by  first  obtaining a permit from the liquor
  control  board  and a  person  may  import  or transport not  more  than 
  eight  quarts of spirituous liquors into this  state in his  or her  own  
  private vehicle or in  his  or her actual possession  at  the time 
  of such importation  without permit.

  Although the statute requires the transporter to  obtain a  permit from 
  the  LCB,  the  board has  adopted a policy  that  allows  a complying bill
  of  lading to serve as a permit.  According to  the  testimony  of the
  director of enforcement of the DLC  and  minutes of a January 17, 1996 LCB
  meeting, a  bill of lading is considered a  substitute  for  a  section
  63(a) permit for transport  through Vermont to a destination outside
  Vermont if the bill  of lading contains (1) a description of the freight 
  being shipped, (2)  the name and address of the  shipper (consignor), and
  (3) the name  of the  consignee and the place freight is to be delivered.

       As  indicated in the statement of facts, the  truck in  this case  had
  a bill of lading describing  the liquor that was seized. The  bill of
  lading  described the consignee as Manormead and  the  destination as its
  office in Santa Barbara,  California,  although the  recipient was actually
  the  Tribe and the delivery was to  be made  to its  reservation in
  Messina, New York.  Because the  bill  of  lading  failed  to accurately
  describe the  consignee  or  the place of delivery, the DLC  determined
  that it did not comply with the  LCB policy and that the Tribe had
  violated 7 V.S.A.  § 63(a).

       The  Tribe argues that the bill of lading was  accurate  and that  the 
  liquor shipment was simply  diverted from Manormead  to the  Tribe  as  is  
  authorized by § 7-303  of  the  Uniform  Commercial Code, 9A V.S.A.
  § 7-303, which  provides:

     Section 7-303. Diversion; reconsignment; change of instructions

  

       (1) Unless the bill of lading otherwise  provides,  the carrier may 
    deliver  the  goods to  a person or destination  other than that stated
    in the bill or  may  otherwise dispose of the goods on instructions  from

       (a) the holder of a negotiable bill; or

       (b)  the  consignor  on  a  non-negotiable  bill notwithstanding
            contrary instructions  from the consignee; or

       (c) the consignee on a non-negotiable  bill in the absence  of 
           contrary instructions  from  the consignor, if the goods have   
           arrived at the billed destination of if the
           consignee is in possession of  the bill; or

      (d) the consignee on a non-negotiable  bill if  he is  entitled as
          against the consignor to dispose of them.

  Therefore, the Tribe asserts, a bill of lading need  not  disclose the 
  true  or actual place of delivery  as long as the reason  for the 
  discrepancy is that  the freight was diverted pursuant to  9A V.S.A.  
  § 7-303(1).  See id., Official Comment 1  (diversion is  very common
  commercial practice); see  generally J. White & R. Summers,  Uniform
  Commercial  Code § 29-3, at 347  (4th  ed. 1995) ("the beauty of
  7-303 is that it recognizes the  facts  of life . . . . Under Section 7-303
  the carrier can  determine who is authorized to instruct the carrier to
  divert or the  like").

       The  Tribe misses the point of the LCB  enforcement  policy. It  does 
  not state that any  valid bill of lading will substitute for a transport 
  permit.  Instead, it states that a bill of lading  that  meets  three
  requirements will substitute for a  transport permit.	The fact that
  the trucker was  carrying a valid bill  of lading  is  irrelevant to
  compliance with the LCB  policy,  unless the  bill of lading met the
  specific  requirements of the  policy. Thus,  section  7-103 of the
  U.C.C., 9A  V.S.A.  §  7-103, confirms  that the provision of the
  article on documents of title is  subject  to  any  regulatory statute of  
  the  state,  or  any regulation issued pursuant to a  regulatory statute.

       The  Tribe argues, however, that diversion of  goods is  not
  inconsistent  with  the enforcement  policy because  the  bill  of lading 
  properly  described the relationship between  the  shipper and the 
  purchaser,  in  this case  Jenkins  Spirits Corp.  and Manormead, and
  that the LCB enforcement  policy required no  more. Relying  on  the 
  wording of  the enforcement  policy,  and  the testimony  of  the DLC
  enforcement director, the trial court  held  that  the bill of lading must 

  

  state the actual place  of delivery, and the one covering the liquor failed 
  to do so.

       In  resolving this issue, we first emphasize  that the Tribe is  not
  arguing that it complied with  the statute by obtaining  a transport 
  permit.  Nor  is it attacking the validity of  the  LCB enforcement  
  policy  which goes beyond  the  statute.   Thus,  we  assume  the policy is
  valid, and the only question we  resolve  is whether the Tribe fit within
  it.

       The  enforcement  policy is essentially a regulation.  We apply the
  same rules of statutory construction to a  regulation as we  do to a
  statute.  See Rogers v.  Watson, 156 Vt. 483, 490, 594 A.2d 409,  413
  (1991). We defer to an agency's construction  of its  own  regulation. 
  See In re Towle, 164 Vt. 145, 152,