Opinion ID: 2615125
Heading Depth: 2
Heading Rank: 3

Heading: state's police power

Text: Brewers claim that the trial court erred in denying them an opportunity to prove that the statutory scheme of the Act had the effect of dictating price-fixing, without any substantial relation to the public health, safety or general welfare. Brewers therefore argue that the Act amounts to a preferential price-fixing scheme which is an improper exercise of New Mexico's police power in violation of N.M. Const. art. 2, Sections 4 and 18. We disagree. Section 4 provides in pertinent part: All persons    have certain natural, inherent and inalienable rights, among which are the rights of enjoying and defending life and liberty, of acquiring, possessing and protecting property     Section 18 provides in pertinent part: No person shall be deprived of life, liberty or property without due process of law; nor shall any person be denied equal protection of the laws     We have held that if the manufacture and sale of liquor is lawful, then statutes which provide for the regulation of the business are limited by constitutional guarantees and must fall within the proper exercise of New Mexico's police power. Drink, Inc. v. Babcock, 77 N.M. 277, 421 P.2d 798 (1966). In determining whether a statute amounts to a proper exercise of police power, courts must indulge every presumption in favor of the validity of the legislation. [T]he state may adopt an economic policy reasonably deemed to promote the public welfare, and may enforce such a policy by appropriate legislation without contravening due process so long as such legislation has a reasonable relation to a proper legislative purpose and is neither arbitrary nor discriminatory. Id. at 280, 421 P.2d at 800 (citation omitted). The legislation reviewed in Drink, Inc., specifically delegated and permitted manufacturers the power to contractually fix the minimum price for their product at the retail level. In Drink, Inc., we held that the fair-trade contract and markup provisions of the Liquor Control Act constituted unreasonable legislation, and was not an appropriate exercise of New Mexico's police power. In so holding, we stated that: We want to make it clear that the legislature has the power to act on the subject of below-cost sales and their effect on free competition, and may adopt legislation relating to the establishing of prices on alcoholic beverages with the view and purpose of regulating and controlling the liquor business in the interest of the public welfare. We are here only concerned with the fair-trade contract and mandatory uniform markup provisions discussed. The police power was not validly exercised in the enactment of these specific provisions. Id. at 284, 421 P.2d at 803 (emphasis added). In marked contrast, the Act does not permit Brewers to establish the minimum wholesale or retail prices of their beer through non-signor or vertical agreements provisions as was the case in Drink, Inc. Instead, the Act requires Brewers to sell their products to Wholesalers at a price no higher than the lowest price at which such item of liquor was sold by the brand owner, or any related person, to any wholesaler anywhere in any other state of the United States or in the District of Columbia, or to any state or state agency which owns and operates retail liquor stores during the immediate preceding calendar month. NMSA 1978, § 60-12-6. [4] In reviewing a comparable constitutional argument, the United States Supreme Court in Seagram specifically rejected assertions that New York's Section 9 violated due process and equal protection clauses of the Fourteenth Amendment. The Court stated: We cannot say that the legislature acted unconstitutionally when it determined that only by imposing the relatively drastic `no higher than the lowest price' requirement of § 9 could the grip of the liquor distillers on New York liquor prices be loosened. (Footnote omitted.) In a variety of cases in areas no more sensitive than that of liquor control, this Court has upheld state maximum price legislation. Id. 384 U.S. 1 at 48, 86 S.Ct. at 1262-1263 (citations omitted). By virtue of the Twenty-first Amendment, the states have been conferred with something more than a nominal degree of authority over public health, welfare and morals when they act to regulate the liquor business. In light of this authority, the Act is neither arbitrary nor discriminatory. Therefore, we hold that the Act does not violate the police powers of New Mexico.