Court Opinion

ID: 9844691
Source: CourtListenerOpinion
Date Created: 2023-09-24 03:06:48.046761+00
Date Added: 2024-06-11T09:15:40.056398
License: Public Domain

SOSA, Justice, dissenting. I respectfully dissent. I find merit in the last ground proffered by the trial court in granting the injunction: the distributorship could not be taken from Southwest without Olympia showing good faith and good cause, or more specifically, Olympia violated § 46-9-17, N.M.S.A. 1953 (Supp.1975) of the Alcohol Beverages Franchise Act. The Theodore Hamm Company’s oral contract with Southwest clearly fell within the terms of the Alcohol Beverages Franchise Act. The question is whether Olympia falls within the terms of the Act. I feel that Olympia, by purchasing Hamm s assets and continuing to supply Hamm’s beer on an order-to-order basis, falls within the terms of the Act. Having found that the Act applies to the relationship between Olympia and Southwest, I now deal with Olympia’s arguments that the Act is unconstitutional in that it impairs the obligation of contracts, and violates the due process and equal protection clauses of the New Mexico and United States Constitutions. U.S.Const. art. I, § 10, U.S.Const. amend. XIV; § 1; N.M. Const, art. II, § 19; N.M.Const. art. II, § 18. Olympia argues that to apply the Act to franchises existing before its enactment would be an impairment of its contractual relationship with Southwest, that is, a new clause would be added to the existing relationship: Olympia could not terminate supplies of Hamm beer to Southwest except for good cause. Olympia cites to various cases holding that the application of such an act to franchise agreements entered into before passage of the act is violative of the impairment of contracts clause. United States Brewers’ Association v. State, 192 Neb. 328, 220 N.W.2d 544 (1974); Globe Liquor Co. v. Four Roses Distillers Company, 281 A.2d 19 (Del.1971), cert.denied, 404 U.S. 873, 92 S.Ct. 103, 30 L.Ed.2d 117; Cf. Superior Motors, Inc. v. Winnebago Industries, Inc., 359 F.Supp. 773 (D.S.Car.1973); Annot., 67 A.L.R.3d 1299. Southwest, on the other hand, argues that the impairment of contracts clause, when balanced against the state’s police power to protect the public health, safety, and welfare of its citizens by controlling the distribution of alcoholic beverages pursuant to the broad powers invested in the states by U.S.Const. amend. XXI, see Seagram & Sons v. Hostetter, 384 U.S. 35, 86 S.Ct. 1254, 16 L.Ed.2d 336 (1966), must give way. Cf. California v. LaRue, 409 U.S. 109, 93 S.Ct. 390, 34 L.Ed.2d 342 (1972); Ruiz v. Economics Laboratory, Inc., 274 F.Supp. 14 (D.C.P.R.1967). I agree. From its early absolute character, see Sturges v. Crowninshield, 17 U.S. (4 Wheat.) 122, 4 L.Ed. 529 (1819), Dartmouth College v. Woodward, 17 U.S. (4 Wheat.) 518, 4 L.Ed. 629 (1819), the impairment of contracts clause has been weakened in light of state police powers and has yielded to the right of a state to legislate to protect vital interests of the people. Home Bldg. & L. Assn. v. Blaisdell, 290 U.S. 398, 54 S.Ct. 231, 78 L.Ed. 413 (1934); cf. W. B. Worthen Co. v. Thomas, 292 U.S. 426, 54 S.Ct. 816, 78 L.Ed. 1344 (1934). One such vital state interest is control of alcoholic beverages. U.S.Const. amend. XXI; Seagram & Sons v. Hostetter, supra; California v. LaRue, supra. The test then becomes whether the legislation reasonably protects those interests of a state when balanced against the contractual rights arising between parties. W. B. Worthen Co. v. Thomas, supra; Home Bldg. & L. Assn. v. Blaisdell, supra. An examination of- the Act is therefore necessary. Section 46-9-17 was added as an additional method of control to the existing three-tier system of controlling the distribution of alcoholic beverages in New Mexico. § 46-5-1 et seq., N.M.S.A. 1953; § 46-9-1 et seq., N.M.S.A. 1953. This three-tier system 1 separates and regulates the sale of alcoholic beverages on the supply, wholesale, and retail levels. Section 46-9-17 seeks to regulate business practices between alcoholic beverage wholesalers and suppliers,2 in particular it seeks to prevent tied houses and similar means of control by suppliers over wholesalers and, indirectly, over retailers. These direct and indirect means of control are not imaginary. See Adolph Coors Company v. F.T.C., 497 F.2d 1178 (10th Cir. 1974), cert. denied, 419 U.S. 1105, 95 S.Ct. 775, 42 L.Ed.2d 801 (1975). I would hold that the Act is a reasonable exercise of the state’s power to regulate the sale and distribution of alcoholic beverages and does not unconstitutionally impair the obligation of contracts clause. Thus I would affirm the decision of the trial court.  . For a more detailed study of the three-tier system of control of alcoholic beverages, see F. Switzer, The Three-Tier System of Distribution in the Wine and Spirits Industry (1975).   . Chapter 325 [1975] N.M. Laws 1878 states in its title: “An Act Regulating Business Practices Between Alcoholic Beverage Wholesalers And Suppliers; Defining Unlawful Acts; Providing for Civil Actions and Penalties; Declaring An Emergency.”