PRICE DANIEL 

Auen~~~.'iIkxas 

ATT..Rh-RY ~~iS~z*..x. 

August 8, 1952 

Hon. Coke R. Stevenson, Jr. 

Administrator 

Texas Liquor Control Board 

Austin, Texas Opinion po. v-1500 

Re: Application of Saction 37 

of Article 666-17; Vernon's Penal Code, to the 

sale of confiscated alcoholic beverages by the 

Dear Mr. Stevenson: Texas Liquor Control Board. 

Your request for the opinion of this office reads 

in part as follows: 

"We desire your valued opinion on each of 

the following questions relating to the action 

of this Department in advertising for, accepting or rejecting sealed bids for the purchase 

of confiscated alcoholic beverages from this 

Department. 

"(1) Whether or not this Department has 

the authority to reject a high bid received 

from a Package Store Permittee whose name IS 

carried on the Board's Delinquent Account List 

at the time the bids are opened. 

"(2) Whether or not the Board has the authority in advertising for the sale of confiscated alcoholic beverages, to also publish 

notice that bids will not be accepted from any 

permlttee whose name appears on the Board's 

Delinquent Account List at the time the sealed 

bids are opened." 

Article 666-30, Vernon's Penal Code, provides, 

In part, a8 follows: 

"(a) All alcoholic beverages and the containers thereof, and any device in which the 

alcoholic beverage Is packaged, equipment, and 

other property forfeited to the State, unless 
Hon. Coke R. Stevenson, Jr., page 2, (V-1500) 

otherwise herein provided, and all illicit 

beverages and the containers thereof, and 

any device in which the alcoholic beverage 

Is packaged Is forfeited to the State, shall 

be turned over to the Board for public or 

private sale In such place and manner as It 

may deem best: provided, that the Board 

shall exercise diligent effort to obtain the 

best available price for anything thus sold: 

provided, further, that any bill of sale 

executed by the Board or Administrator shall 

convev a nood and valid title to the nurchaser as-to any such property sold. *The 

Board shall sell alcoholic beverages only to 

the holders of qualified permits or licenses." 

(Emphasis added.) 

Code, 

Sectlon 37 of Article 666-17, Vernon's Penal 

provides: 

"It shall be unlawful for any Wholesaler, Class B Wholesaler, Class A Winery 

or Wine Bottler to sell any alcoholic beverage, nor shall any Package Store Permittee, Wine Only Package Store Permittee, 

or other retailer purchase any alcoholic 

beverage, except for cash or on terms requiring payment by the purchaser as follows: 

On purchases made from the first to fifteenth day inclusive of each calendar month, 

payment must be made on or before the twentyfifth day of the same calendar month: and, 

on purchases made from the sixteenth to the 

last day inclusive of each calendar month, 

payment must be made on or before the tenth 

day of the succeeding calendar month. Every 

delivery of alcoholic beverage must be accompanied by an invoice of sale giving the 

date of purchase of such alcoholic beverage. 

In the event any Package Store Permittee, 

Wine Only Package Store Permittee, or other 

retail dealer becomes delinquent in the payment of any account due for alcoholic beverages purchased, (that is, if he fails to 

make full payment on or before the date hereinbefore provided) then it shall be the duty 

of the Wholesaler, Class B Wholesaler, Class 

A Winery or Wine Bottler to report the fact 

immediately to the Board or Administrator Ln 
Eon. Coke R. Stevenson, Jr., page 3, (V-1500) 

writing. Any Packsge Store Permittee, Wine 

Only Package Store permittee, or other retail dealer who becomes delinquent shall not 

be permitted to purchase alcoholic beverages 

from any Wholesaler, Class B Wholesaler, 

Class A Winery or Wine Bottler until said delinquent account is paid in full, and the 

delinquent account shall be cleared from the 

records of the Board before any Wholesaler, 

Class B Wholesaler, Class A Winery or Wine 

Bottler will be permitted to sell alcoholic 

beverages to him. Any Wholesaler, Class B 

Wholesaler, Class A Winery or Wine Bottler 

who accepts postdated checks, notes or memoranda or who participates in any scheme, 

trick or deViC8 to assist any Package Store 

Permittee, Wine Only Package Store Permittee 

or other retail dealer In the violation of 

this Section shall likewise be guilty of a 

violation of this Section. The Board shall 

have the power and it shall be its duty to 

adopt rules and regulations Riving full 

Porte and effect to this section.,” (Emphasis 

added. ) 

In Texas Liquor Control Board v. Floyd, 117 S.W. 

2d 53C (Tex. civ. App. 1938)) the court said: 

“The Texas Liquor Control Board Is by 

virtue of the law an administrative branch 

of the State government, to wNch has been 

delegated, by law, certain functions , among 

which are determining in the first place to 

whom and when shall certain privileges be 

extended to persons to sell liquors, and 

second, whether or not such persons so favored have breached the conditions under 

which the privilege has been granted. 

” . . . It has been held that the Act 

under consideration must be liberally construed by the courts so as to make it effective) according to the expressed and implied intention of the Legislature.” 

The purpose of Section 37 of Article 666-17 Is 

discussed In Attorney General Opinion V-1126 (1950). As 

pointed out in that opinion, the provision is one for the 

purpose of maintaining the independence of the wholesale 

and retail levels of the liquor Industry in Texas. 
Hon. Coke R. Stevenson, Jr., page 4, (V-1500) 

In order to make the provisions against affiliation between retailer and wholesaler effective, the Legislature has prohibited the extension of credit by the latter to the former beyond the time stipulated. To make the 

prohibition against excessive extension of credit effective, the Legislature has provided, in effect, that upon 

violation of the provisions, the retailer Is prohibited 

from purchasing liquor from the wholesalers and the latter 

are also prohibited from selling to him. The sanction 

against the retailer Is, in practical effect, a suspension 

of the privilege of purchasing liquor for resale until the 

account Is paid and the payment reported in the due course 

of the operation of the reporting machinery set up by the 

Board under the act. 

Under Article 666-30, in making provision for 

disposition, of confiscated liquor the Board Is authorized 

to sell such liquor, but only to "qualified" licensees 

and permittees. The question here Is whether a retailer 

in such delinquency status i8 a "qualified" licensee or 

permittee at the time of the sale. 

It is our opinion that only a permittee or licensee who is "qualified" to purchase liquor for resale 

is "qualified" to purchase confiscated liquor from the 

Board. There is no specific statutory definition of 

"quallfledn permittees or licensees,.and itisnecessazy to 

look to the purpose and scheme of the statute in this 

respect to determine who the Legislature Intended should 

be qualified to purchase confiscated liquor. It is not 

reasonable to assume' that one who is disqualified from 

purchasing liquor at wholesale generally is to be considered qualified to purchase confiscated liquor, and 

certainly not one whose general~dlsqualiflcatlon arises 

from a violation of the statute. 

As a matter of fact, Only a r8latiV8ly few 

classes of permittees are expressly authorized to purchase liquor for resale to either dealers or consumers, 

and fewer still are authorized to purchase the finished 

and packaged product. See Article 666-15, Vernon's 

Penal Code. Therefore, a "qualified" licensee or permittee must not only hold a license which authorizes 

generally the purchase of the type of liquor put up for 

sale by the Board, but in our opinion, his privilege of 

purchasing liquors under such license or permit must be 

currently In effect. 
Hon. Coke R. Stevenson, Jr., page 5, (V-1500) 

It is our opinion that the Board, in advertlslng for the sale of confiscated alcoholic beverages, may 

state the conditions on which bids will be accepted. 

Since the Board must reject bids received from delinquent 

permittees, It may publish a notice that such bids will 

not be accepted. 

SUMMARY 

The Liquor Control Board is not authorized to sell confiscated alcoholic beverages 

to retailers who are delinquent in their wholesale purchase accounts, Under the provisions 

of Section 37 of Article 666-17, Vernon’s Penal 

Code. The Board must reject bids by such retailers and may state such disqualification in 

advertising for bids on such liquor. 

APPROVED: 

Red McDaniel 

State Affairs Mvision 

Mary E. Wall 

Reviewing Assistant 

Charles S. Mathews 

First Assistant 

Yours very truly, 

PRICE DANIEL 

Attorney General 

JD/rt/ec