Case Name: GENERAL SALES & LIQUOR CO. v. BECKER et al.
Court: United States District Court for the Eastern District of Missouri
Jurisdiction: United States
Decision Date: 1936-02-10
Citations: 14 F. Supp. 348
Docket Number: No. 11603
Parties: GENERAL SALES & LIQUOR CO. v. BECKER et al.
Judges: Before FARIS, Circuit Judge, and DAVIS and MOORE, District Judges.
Reporter: Federal Supplement
Volume: 14
Pages: 348–353

Head Matter:
GENERAL SALES & LIQUOR CO. v. BECKER et al.
No. 11603.
District Court, E. D. Missouri, E. D.
Feb. 10, 1936.
Robert L. Aronson, of St. Louis, Mo., and Arthur R. Felsen and James R. Mc-Murdo, both of East St. Louis, 111., for plaintiff.
Roy McKittrick, Atty. Gen., of Missouri, Edward H. Miller, Asst. Atty. Gen., of Missouri, and Fred M. Switzer, Jr., and James T. Blair, both of St. Louis, Mo., for defendants.
Before FARIS, Circuit Judge, and DAVIS and MOORE, District Judges.

Opinion:
DAVIS, District Judge.
The plaintiff in this action seeks a temporary and a permanent injunction restraining the defendants from enforcing certain sections of the Liquor Control Act of the State of Missouri, on the ground that said sections infringe the commerce clause of the.Constitution (Const, art. 1, § 8, cl. 3) and the equal protection clause of the Fourteenth Amendment.
The case was heard by a statutory three-judge court.
The application for a temporary injunction and the case on the merits were submitted to the court at the same time.
Finding of Facts.
The facts were stipulated by the parties, and the court adopts the same by reference as the finding of facts in this cause, the same as though they were expressly set out herein.
The Statutes.
The Liquor Control Act of Missouri, Laws of Missouri 1935, p. 273, § 21-a-2 (Mo.St.Ann. § 4525g—25a, p. 4689), provides in part: "It shall be unlawful for any person, firm, partnership or corporation residing without this state to solicit, receive or take orders for the sale of intoxicating liquor within this state except by or through a duly licensed wholesale liquor dealer who shall be considered for the purpose of this Act as the agent of said non-resident person, firm, partnership or corporation or to haul or transport intoxicating liquor, or cause to be hauled or transported intoxicating liquor, in any manner whatsoever in or into this state, for sale, or storage and sale in this state, unless the same has been ordered by such duly licensed wholesale liquor dealer. The books and records of all such licensees, and their principals, as to sales made for delivery in Missouri, shall be at all times open to the inspection of the Supervisor of Liquor Control."
Section 30-d (Mo.St.Ann. § 4525g—33d, p. 4689) provides: "It shall be unlawful for any person in this state holding a license or permit to sell beer or malt liquors or holding any retail liquor dealer's license or permit, to purchase any such beer, malt liquor, or intoxicating liquor, from any person other than the brewer, manufacturer, or distiller thereof, or a regularly licensed wholesaler or distributor of beer, malt liquor, or other intoxicating liquor, in the case of malt liquor, and other intoxicating liquor, brewed, manufactured or distilled, in this state; or, to purchase from any brewer, manufacturer, or distiller, any intoxicating liquor, manufactured outside of this state, except through a wholesaler or distributor, in this state holding, and operating under, a license or permit issued by the Supervisor of Liquor Control."
Comment.
The act further provides that a wholesale dealer in this state shall pay an annual license fee of $500, and that a nonresident must pay the same fee in order to sell intoxicating liquors in this state. The plaintiff has paid this fee and is authorized to sell liquors in this state. Plaintiff cannot, however, sell directly to a retail liquor dealer, but must sell to a wholesale dealer in this state, or through such wholesale dealer to the retail dealer.
This constitutes the basis of the contention in this case. The plaintiff contends to require it to pay the same license fee that the Missouri wholesale dealer is required to pay, and then to prohibit plaintiff from selling liquor to the retail dealer as the resident wholesale dealer may do, places a burden upon interstate commerce, and deprives plaintiff of the equal protection of the law under the Fourteenth Amendment.
The Twenty-First Amendment, effective December 5, 1933, provides: "Sec. 2. The transportation or importation into any State, Territory, or possession of the Unit-" ed States for delivery or use therein of intoxicating liquors, in violation of the laws thereof, is hereby prohibited."
The Webb-Kenyon Act, 27 U.S.C.A. § 122 provides: "that the shipment or transportation of intoxicating liquor" from any place into a State "to be received, possessed, sold, or in any manner used in violation of any law of such State is hereby prohibited."
Clark Distilling Co. v. Western Maryland R. Co., 242 U.S. 311, 37 S.Ct. 180, 61 L.Ed. 326, L.R.A.1917B, 1218, Ann.Cas. 1917B, 845, holds that the Webb-Kenyon Act is constitutional:
(1) That Congress may properly prevent the shipment of liquor into a state in violation of the law of that state.
(2) That'the movement of liquor in interstate commerce and the receipt and possession and right to sell prohibited by the state law were in express terms divested by the Webb-Kenyon Act of their interstate character.
(3) Congress by the Webb-Kenyon Act released and surrendered to the states the authority to regulate interstate commerce of intoxicating liquors into the several states, and made its importation into a particular state subject to the laws of that state.
McCormick & Co. v. Brown, 286 U.S. 131, 52 S.Ct. 522, 76 L.Ed. 1017, 87 A.L.R. 448, holds:
(1) That Webb-Kenyon Act was not repealed by the Eighteenth Amendment, or National Prohibition Act (27 U.S.C.A. § 1 et seq.).
(2) That alcoholic preparations, made and sold for medicinal, mechanical, toilet, and culinary purposes, held subject to provisions of the West Virginia prohibition statute, and regulations thereunder, by which nonresident manufacturers and wholesalers, though holding federal permits issued under the National Prohibition Act, are required to obtain state permits and pay state license fees before shipping such products into the state, even to purchasers holding state licenses as retail dealers.
Congress has from time to time enlarged its control over interstate commerce, and occasionally it seems to have withdrawn its control over such commerce. The Webb-Kenyon Act is such an instance. So far as intoxicating liquors are concerned, when transported in interstate com.merce, they cease to be under national control to the extent that the states have enacted statutes governing the transportation, sale, and use within their boundaries. So the Supreme Court has determined in McCormick & Co. v. Brown, supra.
The adoption of the Twenty-First Amendment has without doubt limited and qualified the commerce clause to the extent that state laws, regulating the importation of liquor into a state, place no prohibited burden upon commerce. This conclusion is in complete accord with that of the District Court in Joseph Triner Corporation v. Arundel, 11 F.Supp. 145, where it was determined that the purpose of the amendment was not to except intoxicating liquors from the provisions of the commerce clause. The amendment does recognize the authority of the state to regulate the movement of liquor into the state, and where availed of, as in this case, the importation of intoxicating liquors in violation of local law is outside the commerce clause.
The state statute attacked in this case places restrictions upon the disposition of intoxicating liquors shipped by nonresidents into Missouri. They can only be sold in a certain manner and to certain dealers. They may not be sold and delivered directly to retail liquor dealers. This gives this plaintiff no cause of complaint that a burden has been placed upon interstate commerce, because the state having acted, the liquor imported has to that extent lost its character as an article in interstate commerce. There is no basis for the contention made by plaintiff that the statute must» fall because it places a restriction upon commerce between the státes.
Cases determined prior to the Webb-Kenyon Act, upon which plaintiff relies, are no longer controlling.
Equal Protection Clause of the Fourteenth Amendment.
The equal protection clause does not prevent the state from making classifications of persons in the enactment of laws under the police power, but permits wide discretion in that regard, and avoids what is done only when it is without any reasonable basis, and purely arbitrary. Even in the absence of proof, if any state of facts can reasonably be conceived that would sustain the classification, the existence of that state of facts will be assumed. The burden is on the party who assails the classification to show that it is arbitrary. Lindsley v. Natural Carbonic Gas Co., 220 U.S. 61, 78, 31 S.Ct. 337, 55 L.Ed. 369, Ann.Cas.l912C, 160. See cases cited therein.
In Rippey v. Texas, 193 U.S. 504, 24 S.Ct. 516, 48 L.Ed. 767, the court said that a state may prohibit the sale of intoxicating liquor absolutely, or it may prohibit it conditionally.
In Eberle v. Michigan, 232 U.S. 700, 34 S.Ct. 464, 58 L.Ed. 803, a. state law prohibited the sale of liquor by merchants, but permitted its sale by druggists, but the court said this did not infringe the equal protection clause.
La Tourette v. McMaster, 248 U.S. 465, 39 S.Ct. 160, 63 L.Ed. 362, held that a state statute, prohibiting a nonresident from se- • curing a license as an insurance broker, unless the applicant has for two years been a licensed insurance agent, did not conflict with the Fourteenth Amendment.
No principle is better settled than-that the state in the exercise of its police powers, in doing what it conceives to be necessary to promote public morals, the public health, and the public safety, may prohibit the manufacture and sale of intoxicating liquor, or may regulate and supervise the manufacture and sale of such liquors in such manner as it conceives to be necessary and proper. Mugler v. Kansas, 123 U.S. 623, 8 S.Ct. 273, 31 L.Ed. 205; Kidd v. Pearson, 128 U.S. 1, 9 S.Ct. 6, 32 L.Ed. 346. In so legislating it may be that private property is destroyed, that some class of individuals are prohibited from or restricted in engaging in the business of selling liquors, but this has never been construed as being prevented by the Fourteenth Amendment.
The necessity for the full exercise of its authority by the state was never greater than it is at this time. These courts have seen something of the liquor traffic, and the efforts of the national and state authorities to curb, regulate, and confine it in lawful channels. The argument that state activity is not necessary, that it is a mere pretense, "a formula or catchword," that federal supervision is adequate and efficient, is not convincing. In spite of all the attempts to regulate, a very large percentage of the hard liquor on the market today has been illegally manufactured outside of all the regulatory measures adopted. The court can properly observe what everybody knows. The situation does call for the strictest regulation of the business by all of our governmental agencies, national and state.
The plaintiff argues that "wholesale liquor dealers who are nonresidents of this state and wholesale dealers who reside here, are persons of the same class." This is an alignment of liquor dealers not made by the statute in question. Stated in this manner, the difference in privileges granted to resident and nonresident dealers in liquor is accentuated. The statutory denomination of liquor dealers, other than retail dealers, is "wholesale liquor dealer" who must be a resident, and "person, firm, partnership or corporation residing without this state" who may become a "licensee" to sell liquor in this state. The designation of both groups as wholesalers is plaintiff's designation and not that of the statute.
The Missouri Liquor Control Act (Mo. St.Ann. § 4525g*— 1 et seq., p. 4689) permits a nonresident to sell intoxicating liquors in this state. The act specifically requires the Supervisor to inspect liquor to ascertain that it is pure, and that the product is properly labeled, stamped, and in the designated containers. It would be an impossible task for the state to inspect premises and product, and enforce regulations beyond its boarders. It would be next to impossible to inspect receipts of liquor by all of the thousands of retailers in this state to whom this nonresident seeks to be permitted to sell liquor. But whether it is possible or not, the state has seen fit to provide its own method of regulation.
To this end, and possibly for other reasons, the state has limited the sales of liquor made by nonresidents to sales made to wholesale dealers in this state, or to retail dealers, when the transaction is made through such wholesale dealers. The wholesale dealer is by the act made the agent of the nonresident whose transaction he handles.
In this manner the state has undertaken to supervise and regulate the sale of liquor in this state by nonresidents. If it is a fact, as it seems to be, that resident wholesalers enjoy privileges withheld from nonresident dealers, there is a perfectly obvious basis therefor. The classification made of dealers entitled to sell liquor to retailers in this state is a reasonable one, and not a mere arbitrary grouping of them, for the purpose of conferring some advantage to a particular class. The Missouri statute does not deny plaintiff any privilege granted it by the equal protection clause.
Conclusions of Law.
1. The Liquor Control Act of Missouri, section 21-a-2 and section 30-d (Mo.St.Ann. § 4525g—25a, 4525g—33d, p. 4689), are not unconstitutional and void by reason of infringing either the commerce clause, or the equal protection clause, of the Constitution.
2. The plaintiff is not entitled to have the enforcement of said statutes enjoined.
3. The temporary restraining order should be dissolved, a temporary and a permanent injunction should be denied, and plaintiff's bill dismissed on the merits.