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Honorable Erwin W.Barton chairman Human Services Committee Texas House ofRepresentatives P.O. Box2910 Austin, Texas 78769-2910 May 17,199l

Opinion No. DM-SA (Clarification)

Re: Whether section 102.51of the Alcoholic Beverage Code imposes a territorial limitation on the resale of beer by local distributors (RQ-2151)

Dear Representative Barton:

You ask about the territory in which a local beer distributor may resell beer. Your question requires an interpretation ofboth section 102.51and section 102.52 ofthe Alcoholic Beverage Code. Section 102.51provides inpart:

(a) Each holder of a marmfacturer’s or nonresident mamrfacturer’s license shall designate territorial limits in this state within which the brands ofbeer the licensee mamrfactures maybe soldbygeneral, local, orbranch distributor’s licensees.
(b) Each holder of a general, local, or branch distributor’s license shall enter into a written agreement with each manufacturer from which the distributor purchases beer for distribution and sale in this state setting forth the sales territory within which each brand of beer purchased by that distributor may be distributed and sold. No holder of a general, local, or branch distributor’s license shag make any sales of any brand of beer outside the sales territory specified in the written agreement.

Section 102.52provides asfollows:

(a) Nothing in Section 10251 ofthis code limits or alters the right of a holder of a general, local, or branch distributor’s

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license to sell beer to any other holder of a general, local, or branch distributor’s license, except that a distributor who has purchased beer from another distributor may distribute and sell the beer only within a territory for which the mamtfacturer of the brand has designated that it maybe soldby a distributor.
(b) A holder of a general, local, or branch distributor’s license may not purchase, possess, transport, or sell any brand of beer outside of the county in which the distributor’s licensed premises are located unless the distributor has a written assigned territory from the holder of a manufacturer’s or nonresident manufacturer’s license covering that brand ofbeer.

You interpret sections 102.51and 102.52to mean that local distributors are required to limit beer distribution to the territories in which general distributors may resell beer. SeegenenrllyAlto. Bev. Code 5%64.01. 66.01 (holder of general distributor’s license or branch distriiutor’s license may sell beer to and receive beer from general, local, or branch distributors). You also inform us that some local distributors have taken the position that those provisions permit them to resell a particular brand in any part ofthe state in which the manufacturer permits the sale of that brand. Neither of these interpretations is entirely correct. The correct interpretation depends on whether the local distributor purchased beer directly from a manufacturer or from a general distributor. When the local distributor purchases beer directly from the manufacturer, the statutes make clear that the distributor may distribute a particular brand ofbeer only in the territory assigned to the local distriiutor by the manufacturer. When a local distributor purchases beer from another distributor, sections 102.51 and 102.52limit the territory where the local distributor may resell the beer to the territory assigned to the general distributor by the manutkturer from whom the general distrib.utor originally purchased the beer.

In response to your suggestion that a local distributor may resell a brand of beer purchased from a general distriiutor in the territory assigned to the general distributor, we note that subsection (b) of section 102.51states that a holder of a local distributor’s license may not “make any sales of any brand ofbeer outside the sales territory specified in the written agreement.” Nothing in that language suggests that the territorial limitation applies only to beer a general distributor purchases directly from a manufacturer. Further, subsection (b) of section 102.52

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states that a holder of a local distributor’s license may not sell any brand of beer outside the county ofthe distributor’s licensed premises “unlessthe distributor has a written assigned territory from the holder of a manufacturer’s or nonresident mamtfacturer’s license covering that brand of beer.” Those provisions clearly disallow the possibility that a local distributor can expand his assigned territory or a territory assigned to a general distributor by purchasing beer from the general distributor rather than from the manufacturer.

Those provisions negate the local distributors’ suggestion that a local distributor who purchases a brand ofbeer from a general distributor, rather than a manufacturer, may sell that beer in any territoty in which that brand may be sold by my distributor. Subsection (a) ofsection 102.52does contain a clause stating that “a distriiutor who has purchased beer from another distributor may distribute and sell the beer only within a territory for which the manufacturer of the brand has designated that it may be sold by a distributor.” Standing alone, that language might support the local distributors’ suggestion. That interpretation is, however, in direct conflict with subsection (b) of section 102.51and subsection (b) of section 102.52, both ofwhichlimit a local distributor’s authority to sellbeer to the territory assigned to the general distributor by the manufacturer when the local distributor purchases from the general distributor. Since subsection (b) of section 102.51and subsection (b) of section 10252 were both enacted later than subsection (a) of section 102.52, those provisions prevail. Taas StateBoard ofPharmacyv.K&man, 550 S.W.2d 104 (Tex. Civ.App.--Tyler 1977,no writ) (when statutes conflict, later-enacted prevails);
see Acts 1983,6&h Leg., ch. 959, 0 1, at 5229 (amending subsection (b) of section 102.51);Acts 1979, 66th Leg., ch. 33, $ 9, at 55 (adding subsection (b) to section 102.52);Acts 1975.64th Leg.,ch.20,s 1,at 41 (adding substance and basic language of section 102.52(a)). In conclusion, a local distributor who purchases beer from a general distributor may sell a brand of beer only in the territoty assigned to the general distributor by the manufacturer ofthat brand.

SUMMARY
A local beer distributor may resell a particular brand of beer that he purchases from a general distributor only in the territory in which the general distributor is authorized by the mamtfacturer to sell that brand. When a local distributor purchases beer from a manufacturer, the local distributor may

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only resell the beer in the territory specified in his written agreement with the manufacturer.

DAN MORALES Attorney General ofTexas
WlLL PRYOR First Assistant Attorney General

MARY KELLER Executive Assistant Attorney General
RENEAHICKS Special Assistant Attorney General
MADEJXINE B.JOHNSON Chair, Opinion Committee Prepared by Sarah Woelk Assistant Attorney General

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