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 ofArticle 666-17; Vernon's Penal Code, to the sale of confiscatedalcoholic beveragesby the DearMr. 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 questionsrelating to the action of this Department in advertising for, accepting or rejecting sealedbids for the purchase of confiscatedalcoholicbeverages from this Department.
"(1)Whether or not this Departmenthas the authority to reject a high bid received from a Package Store Permitteewhose name IS carried on the Board's DelinquentAccount 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 permltteewhose name appears on the Board's DelinquentAccount 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, unlessHon. Coke R. Stevenson,Jr., page 2, (V-1500)

otherwiseherein 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 availableprice for anything thus sold: provided, further, that any bill of sale executedby the Board orAdministrator 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 qualifiedpermits or licenses." (Emphasisadded.)

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

"It shall be unlawful for any Wholesaler, Class B Wholesaler, ClassA Winery
or Wine Bottler to sell any alcoholicbeverage, nor shall any Package Store Permittee,Wine Only Package Store Permittee,
or other retailerpurchase any alcoholic beverage,except for cash or on terms requiring paymentby the purchaser as follows: On purchasesmade from the first to fifteenth day inclusive of each calendarmonth, paymentmust be made on or before the twentyfifth day of the same calendarmonth: and,
on purchasesmade from the sixteenth to the last day inclusive of each calendarmonth, paymentmust be made on or before the tenth day of the succeeding calendarmonth. Every delivery of alcoholic beveragemust be accompaniedby an invoice of sale giving the date ofpurchase of such alcoholicbeverage. 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 alcoholicbeverages purchased, (that is, if he fails to make full payment on or before the date hereinbeforeprovided) then it shall be the duty of theWholesaler, Class B Wholesaler, Class A Winery orWine Bottler to report the fact immediately to the Board orAdministrator LnEon. Coke R. Stevenson,Jr., page 3, (V-1500)

writing. Any Packsge Store Permittee,Wine Only Package Store permittee, or other retail dealerwho becomes delinquent shall not be permitted to purchase alcoholic beverages from any Wholesaler, Class B Wholesaler, Class A Winery orWine Bottler until said delinquentaccount is paid in full, and the delinquentaccount shall be cleared from the records of the Board before any Wholesaler, Class B Wholesaler, Class A Winery orWine Bottler will be permitted to sell alcoholic beverages to him. Any Wholesaler, Class B Wholesaler, ClassA 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 likewisebe 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:

“TheTexas Liquor Control Board Is by virtue of the law an administrativebranch 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 privilegesbe extended to persons to sell liquors,and second,whether or not such persons so favored have breached the conditionsunder which theprivilege has been granted.

”

. . . It has been held that the Act under considerationmust 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 ofArticle 666-17 Is discussed InAttorney General OpinionV-1126 (1950). As pointed out in that opinion, the provision is one for the purpose of maintaining the independenceof 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 Legislaturehas prohibited the extension of creditby the latter to the former beyond the time stipulated. To make the prohibitionagainst excessive extension of credit effective, the Legislaturehas provided, in effect, that upon violation of the provisions, the retailer Is prohibited from purchasing liquor from thewholesalers and the latter
are also prohibited from selling to him. The sanction against the retailer Is, in practicaleffect, 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 reportingmachinery set up by the Board under the act.

UnderArticle 666-30, inmaking provision for disposition,

of confiscated liquor theBoard Is authorized to sell such liquor,but only to "qualified"licensees and permittees. The questionhere Is whether a retailer in such delinquency status i8 a "qualified" licenseeor permitteeat the time of the sale.

It is our opinion that only a permittee or licenseewho is "qualified"to purchase liquor for resale is "qualified"to purchase confiscated liquor from the Board. There is no specific statutorydefinition of "quallflednpermittees or licensees,.anditisnecessazy to look to the purpose and scheme of the statute in this respect to determinewho 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 certainlynot one whose general~dlsqualiflcatlonarises 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. SeeArticle 666-15,Vernon's Penal Code. Therefore, a "qualified"licensee or permittee must not only hold a licensewhich authorizes generally the purchase of the type of liquorput up for sale by the Board, but in our opinion,his privilege of purchasing liquors under such license or permitmust 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 confiscatedalcoholic beverages,may state the conditionson 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 confiscatedalcoholicbeverages to retailerswho 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 suchretailers and may state such disqualificationin advertising for bids on such liquor.

APPROVED:

Red McDaniel StateAffairs Mvision

Mary E. Wall ReviewingAssistant

Charles S. Mathews First Assistant Yours very truly,

PRICE DANIEL Attorney General

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