Source: https://casetext.com/case/boller-beverages-inc-v-davis
Timestamp: 2019-01-22 04:58:45
Document Index: 629875054

Matched Legal Cases: ['§ 5301', '§ 201', '§ 201', '§ 203', '§ 203', '§ 205', '§ 5', '§ 5']

Boller Beverages, Inc. v. Davis, 38 N.J. 138 | Casetext
38 N.J. 138 (N.J. 1962)
Boller Beverages, Inc.
Supreme Court of New JerseyJun 29, 1962
38 N.J. 138•183 A.2d 64•
Metromedia, Inc. v. Director, Div. of Taxation
…A critical aspect of this definition is the "general applicability and continuing effect" of the…
…The court concluded that the action taken by the Director was invalid and set it aside. In Boller Beverages,…
Argued January 8, 1962 —
Mr. Joseph M. Jacobs argued the cause for petitioner ( Messrs. Harrison and Jacobs, attorneys; Mr. Jacobs, of counsel).
Mr. Samuel B. Helfand, Deputy Attorney General, argued the cause for defendant ( Mr. David D. Furman, Attorney General of New Jersey, attorney; Mr. Helfand, of counsel).
On the one hand, it is clear that the Twenty-First Amendment did not give to the states complete and exclusive control over commerce in intoxicating liquors and that the power of Congress to regulate foreign and interstate commerce therein continues except as modified by the amendment. William Jameson Co. v. Morgenthau, 25 F. Supp. 771 ( D.D.C. 1938), decree vacated on procedural grounds, 307 U.S. 171, 59 S.Ct. 804, 83 L.Ed. 1189 (1939); U.S. v. Frankfort Distilleries, Inc., 324 U.S. 293, 65 S.Ct. 661, 89 L.Ed. 951 (1945). Cf. Motor Cargo, Inc. v. Division of Tax Appeals, 10 N.J. 580 (1952). As Mr. Justice Black said in his concurring opinion in Carter v. Virginia, 321 U.S. 131, 64 S.Ct. 464, 88 L.Ed. 605 , 612 (1944), "Though the precise amount of power [the Amendment] has left in Congress to regulate liquor under the Commerce Clause has not been marked out by decisions, this much is settled: local, not national, regulation of the liquor traffic is now the general Constitutional policy."
Having power absolutely to prohibit manufacture, sale, transportation, or possession of intoxicants, was it permissible for Kentucky to permit these things only under definitely prescribed conditions? Former opinions here make an affirmative answer imperative. The greater power includes the less * * *. The state may protect her people against evil incident to intoxicants * * * and may exercise large discretion as to means employed." ( 308 U.S., at p. 138, 60 S.Ct., at p. 167, 84 L.Ed., at p. 135.)
The concept was expressed in Frankfort Distilleries, Inc., as "the state's full authority to determine the conditions upon which liquor can come into its territory and what will be done with it after it gets there * * *" ( 324 U.S., at p. 299, 65 S.Ct., at p. 664, 89 L.Ed., at p. 956.) In terms of the Commerce Clause, Mr. Justice Frankfurter put the matter this way in his concurring opinion in the same case:
"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." ( 324 U.S., at p. 300, 65 S.Ct., at p. 665, 89 L.Ed., at p. 957.)
To turn to the federal statutes and regulations concerning bottles and labels for packaging distilled spirits: The statute relating to bottles is contained in the Internal Revenue Code, now found in 26 U.S.C.A. § 5301 ( Supp. 1962), Pub.L. 85-859, Title II, § 201, Sept. 2, 1958, 72 Stat. 1374. It reads:
Federal control over labels derives from the Federal Alcohol Administration Act of 1935, 27 U.S.C.A. § 201 et seq. ( Supp. 1962). The statute deals with a variety of matters within the sphere of national power. It first requires, "[in] order effectively to regulate interstate and foreign commerce in distilled spirits, wine, and malt beverages, to enforce the twenty-first amendment, and to protect the revenue and enforce the postal laws with respect to distilled spirits, wine, and malt beverages" (§ 203), a basic permit from the Secretary of the Treasury, inter alia, to engage in the business of distilling spirits, §§ 203 and 204. The provisions respecting labeling, and comparable ones dealing with advertising, are found in § 205, the purpose and intended scope of which are plain from the caption: "Unfair competition and unlawful practices." The section also regulates exclusive outlets, the "tied house," commercial bribery and consignment sales. One aim of these latter provisions has been defined to be the prohibition of practices analogous to those proscribed by the federal anti-trust laws. Black v. Magnolia Liquor Co., 355 U.S. 24, 78 S.Ct. 106, 2 L.Ed.2d 5 (1957).
The labeling provisions in subsection (e) thereof make it unlawful to sell, ship or deliver in interstate or foreign commerce "any distilled spirits, wine, or malt beverages in bottles, unless such products are bottled, packaged, and labeled in conformity with such regulations, to be prescribed by the Secretary of the Treasury, with respect to packaging, marking, branding, and labeling and size and fill of container" as will, in specified particulars, protect the consumer from deception and prohibit unfair practices. The fundamental purpose is obviously to require the furnishing of full and accurate information to the consumer as to the exact nature, quality and quantity of the product. William Jameson Co. v. Morgenthau, supra ( 25 F. Supp. 771); Continental Distilling Corporation v. Humphrey, 101 U.S. App. D.C. 210, 247 F.2d 796 ( D.C. Cir. 1957). The implementing regulations, 27 C.F.R. § 5.1, et seq., deal with the particulars mentioned in the statute in great detail and provide that no person shall bottle distilled spirits or remove the same from his plant without first obtaining a "Certificate of Label Approval" evidencing that the label complies with all requirements of the regulations. 27 C.F.R. § 5.50. Petitioner's approval of the label affixed to the jar container, therefore, goes no further than evidencing compliance with these standards imposed only for the purposes mentioned in the valid exercise of federal authority.
In view of the vast reservoir of power bestowed upon the states to regulate the liquor traffic and protect against its evils within their borders pretty much as they see fit, we can see no sound reason why additional state regulation of bottles and labels to further legitimate local policy could be said to run afoul of the Commerce Clause of the Federal Constitution. While no reported decision involving the precise question has been found, the United States Supreme Court has gone to great lengths in sustaining other highly restrictive state regulation which undoubtedly greatly affected interstate commerce. State Board of Equalization v. Young's Market Co., 299 U.S. 59, 57 S.Ct. 77, 81 L.Ed. 38 (1936); Mahoney v. Joseph Triner Corp., 304 U.S. 401, 58 S.Ct. 952, 82 L.Ed. 1424 (1938); Indianapolis Brewing Co. v. Liquor Control Com., Mich., 305 U.S. 391, 59 S.Ct. 254, 83 L.Ed. 243 (1939); Joseph S. Finch Co. v. McKittrick, 305 U.S. 395, 59 S.Ct. 256, 83 L.Ed. 246 (1939); Ziffrin v. Reeves, supra ( 308 U.S. 132, 60 S.Ct. 163, 84 L.Ed. 128 ); Carter v. Virginia, supra ( 321 U.S. 131, 64 S.Ct. 464, 88 L.Ed. 605 ). This court's decision in the factually very different case of Motor Cargo, Inc. v. Division of Tax Appeals, supra ( 10 N.J. 580) does not suggest the contrary. Nor do the federal bottle and label regulations earlier summarized, considering their limited nature and purpose, amount to federal occupation of the field to the exclusion of state action, even if that concept has any proper place here, a subject which we need not consider. Again no exact precedent has been located, but decisions in other states lend support to the conclusion. In Terre Haute Brewing Co. v. Liquor Control Comm., 291 Mich. 73, 288 N.W. 339 (1939), the Michigan Supreme Court upheld the action of that state's authorities in refusing state approval of a federally approved label used by an out-of-state brewer because it was too much like one already authorized for a local manufacturer, an item not covered by the federal regulations. Cf. State ex rel. American Distilling Co. v. Patterson, 133 Conn. 345, 51 A.2d 141 ( Sup. Ct. Err. 1947). In neither case does it appear that any federal question was raised. One can only surmise it was thought such a contention would be too lacking in merit.
In considering the question presented, it is important to have in mind the purposes of alcoholic beverage regulation in this State and the scheme of control which has been set up to carry out those policies. And in this field, one always starts with the proposition that the business, so prone to evils, is one not of right and is peculiarly subject to strict governmental control in every phase. Therefore the authority to regulate is broadly said to be practically limitless. Franklin Stores Co. v. Burnett, 120 N.J.L. 596, 598 ( Sup. Ct. 1938); Hudson Bergen County Retail Liquor Stores Association v. Hoboken, 135 N.J.L. 502 , 503 ( E. A. 1947); Mazza v. Cavicchia, 15 N.J. 498 , 505-506 (1954); X-L Liquors v. Taylor, 17 N.J. 444 , 449 (1955); Fanwood v. Rocco, 33 N.J. 404 , 411-412 (1960).
The delegation of rule-making authority is broad indeed. Section 39 spells it out: "The [Director] may make such general rules and regulations and such special rulings and findings as may be necessary for the proper regulation and control of the manufacture, sale and distribution of alcoholic beverages and the enforcement of this chapter, in addition thereto, and not inconsistent therewith * * *." It then goes on in a second paragraph to specify some 30 detailed categories which general rules and regulations may cover, some of which relate to matters also the subject of specific statutory sections and others of which are not otherwise mentioned in the act, and winds up with sweeping authority to promulgate regulations relating to "practices unduly designed to increase consumption of alcoholic beverages * * * and such other matters whatsoever as are or may become necessary in the fair, impartial, stringent and comprehensive administration" of the law. The Director has exercised this power fully through the making of voluminous regulations and the courts have consistently and sympathetically sustained them in view of the nature and inherent evils of the business, the policies and aims expressed by the Legislature and the broad grant of authority. e.g., X-L Liquors v. Taylor, supra ( 17 N.J. 444); Mazza v. Cavicchia, supra ( 15 N.J., at pp. 506-509).
Reverting to the precise question before us, we have no doubt that New Jersey may, by legislation or general rule, reasonably regulate bottles and labels in furtherance of any of the general statutory purposes or pursuant to any specific statutory provision. But the question is, has it done so? We are not referred to any specific provision of the act dealing with either subject nor do we find any regulation concerning bottles. The Director has, however, legislated with respect to labels. By Regulation 24, he says that federal regulations relating to labeling "are made a part hereof and shall also apply to alcoholic beverages packaged purely for intrastate shipment within New Jersey." We take it this means that he has adopted the federal regulations as his own and has gone no further. There is, of course, no contention that the label in question transgresses the federal enactment in any particular. In passing it may be noted that no warrant for the Director's action here may be found under his regulations requiring the listing of minimum resale prices before any alcoholic beverage may be sold in the State at wholesale or retail. These regulations make no reference to any requirements as to the packaging of beverages and have for their only object the promotion of temperance and the prevention of undue stimulation of sales, goals aimed at by prohibition of indiscriminate price cutting. Butler Oak Tavern v. Division of Alcoholic Beverage Control, 20 N.J. 373 , 385 (1956); Duff v. Trenton Beverage Co., 4 N.J. 595 , 608 (1950). We must conclude there is no statutory provision which itself directly governs nor is there an implementing regulation which can ground the Director's action in this case.
Since the ruling in question the Director has promulgated Rule 6 of Regulation No. 21 which provides that
We recognize full well that by the very nature of the administrative process, including as it does both legislative and executive functions in one body or person, and in the necessary day-to-day working of that process, an agency is confronted continually with requests for concrete interpretation or construction of its regulations and for advance views on whether certain proposed conduct or activity is permissible, which most agencies respond to as a matter of routine. On his own initiative, the administrator may also find it important to issue more detailed interpretations or applications of the statute and his regulations for the future guidance of all persons who may be affected. (We are speaking of so-called rulings which have sufficient formality and dignity to go beyond the point of what have been called advisory opinions, though the line may be shadowy. See Rutherford Lodge No. 547 v. Hock, 1 N.J. Super. 223 ( App. Div. 1949); Passaic County Retail Liquor Dealers Association v. Board of Alcoholic Beverage Control, 37 N.J. Super. 187, 194-197 ( App. Div. 1955).) And this kind of ruling may partake of both rule-making and adjudication, thus fuzzing over two theoretically distinct processes. See In re Port Murray Dairy Co., 6 N.J. Super. 285 , 293 ( App. Div. 1950). It is also of interest to note that this power has been viewed as inherent in the administrative process or arising by necessary implication and is not dependent on express statutory grant. 1 Davis, Administrative Law Treatise 271 (1958), citing Electrolux Corp. v. Miller, 286 N.Y. 390, 36 N.E.2d 633 ( Ct. App. 1941).
Highly desirable it is, in the interest of convenient, expeditious and efficient administration, that this sensible course of action be permitted full rein. See Central Home Trust Co. v. Gough, 5 N.J. Super. 295 , 300 ( App. Div. 1949). We think the type of administrative action we have been discussing certainly falls within the permissible scope of "special ruling." Perhaps we should add that such rulings are, moreover, subject to judicial review, cf. Kravis v. Hock, 136 N.J.L. 161 , 164 ( E. A. 1947); City of Passaic v. Kingsley, 47 N.J. Super. 265 , 268 ( App. Div. 1957), certif. den. 26 N.J. 170 (1958), and that if the ruling is directed at a specific situation involving a single interest, the dissatisfied party should also be first entitled to a trial-type hearing in the agency, if he desires it, before attacking the ruling in the courts. Cf. Bechler v. Parsekian, 36 N.J. 242 (1961).
What the Director has done in the instant case, however, goes far beyond the type of administrative action mentioned and any acceptable scope or exercise of this nebulous power. This was not a request by an interested party for an advance view of legality or an interpretation or construction of an existing statute or regulation of general application. It amounts to ad hoc legislation and a simultaneous determination of violation thereof in a particular situation, on the Director's own initiative and without a trial-type hearing, where prior thereto the alleged transgression had not been covered or proscribed by statute or regulation. See Mitchell v. Cavicchia, 29 N.J. Super. 11 , 15 ( App. Div. 1953). Whatever are the outer limits of "special ruling or finding," this is not within them, and for sound reason. As has already been pointed out, it is the antithesis of legislation to make law from case to case and after the fact. Where an administrative agent is given full rule-making power, he must in all fairness, bottom an alleged violation on general legislation before he may rule in a particular case. The general mandate, either statutory or administrative, must precede the specific violation. Cf. Kravis v. Hock, supra ( 136 N.J.L. 161). The ruling cannot be sustained.