Court Opinion

ID: 5756823
Source: CourtListenerOpinion
Date Created: 2022-01-12 17:07:49.993433+00
Date Added: 2024-06-11T08:41:26.381188
License: Public Domain

Per Curiam.

Respondent State Liquor Authority instituted a proceeding against the petitioner, claiming that petitioner violated section 101 (subd. 1, par. [c]) of the Alcoholic Beverage Control Law and rule 11 of the Rules of the State Liquor Authority (9 NYCRR 86). After a hearing respondent decided that there was such a violation and issued a warning to respondent together with a bond claim for $2,500.
In this review pursuant to article 78 of the CPLR, petitioner claims that the statutory section and the rule promulgated in implementation of it are void as being an unconstitutional delegation of legislative power; that the trial procedure involved a denial of due process; and that the acts complained of do not constitute a violation of either the statute or the rule. We are all in accord that the first two objections are not well taken and that no discussion of the points is warranted. The majority believes that the last claim is well founded and mandates that the decision and order of the respondent be annulled.
Section 101 of the Alcoholic Beverage Control Law makes it unlawful for a manufacturer or wholesaler to make a gift or render any service, directly or indirectly, to any licensee under the statute which may tend to influence such licensee to purchase the manufacturer’s product. Rule 11 of the Authority’s rules *287seeks to define what is a gift or service by enumerating* those things that are not so regarded, consisting for the most part of advertising display matter, including such articles as ash trays, bottle stops and the like.
There is no dispute as to the acts performed by petitioner, Late in 1964 petitioner organized a subsidiary called .Schenley Charge Plan, Inc., and on November 1, 1964, this company put its plan into operation. The plan was generally similar to the pattern of commercial credit charge plans, with certain significant differences. The points of similarity were that credit cards were issued. Holders of these cards could make purchases on credit at restaurants which had previously agreed to recognize them. These restaurants billed Schenley Charge Plan, Inc. for the sales so made. This company paid the charges and, in turn, billed the card holders. The points of difference are that cards were not issued to the public generally but only to officers and employees who were on a management level and had expense accounts of the petitioner, and to officers and employees of similar grade of petitioner’s suppliers and advertising agencies. There was no general solicitation of restaurants to accept these credit cards. Prospective card holders were asked for the names of restaurants which they usually patronized and from this a list was made up. It was pointed out to each restaurant contacted that this was not a promotional scheme to increase sales and, in fact, at least one restaurant on this list did not serve liquor at all. No charge was made to the restaurants in connection with this activity. The expenses wore borne by petitioner.
It is apparent that it is respondent’s own interpretation of the statute that not all gifts or services are inhibited by it. The list of exceptions in rule 11 makes this clear. By sanctioning these the Authority must have concluded that certain gifts or services do not improperly tend to influence licensees to purchase the products of the manufacturer or wholesaler. For instance, the rule permits the distributor to clear the beer service pipes of a customer when an emergency arises from their becoming clogged. Advertising material which also serves to embellish or decorate the licensee’s establishment may be the subject of gift, as well as small articles used in the dispensing of drinks or for the convenience of the licensee’s customers. The interpretation must be that the statute does not interdict services or gifts which are either customary or de minimis.
Applying that to the situation presented, it is seen that, while the service rendered is material, it primarily benefits petitioner’s own staff and related personnel. It is not supplied to restan*288rants generally bnt only to those already patronized by these people. It was established in the proof that the restaurant trade favors the activity of commercial credit arrangements generally called diners’ clubs because it accredits the particular restaurant-participant and increases the latter’s business. It is for this service that restaurants enrolled with commercial enterprises pay. Petitioner’s venture here had neither of these aspects. There was no advertising which drew patrons to the participating restaurants, and the selection of the same was limited to institutions which already enjoyed the patronage of the persons who would use the cards. Nor can it be claimed that any material advantage was obtained by the fact that dinner checks were paid subsequently by petitioner instead of by the customers themselves. The fact that the restaurants enrolled in petitioner’s venture paid nothing is not significant. They received nothing of any moment.
It is argued that whether or not this enterprise represented a service which would tend to influence licensees to purchase petitioner’s products is a question within the respondent’s competence to decide. So it is, provided there is any proof to support the conclusion. The record is barren of any proof short of the nature of the activity itself. "Whatever else there is in the record supports a conclusion directly contrary to that reached by the Authority. It follows that there is no substantial evidence to warrant the determination.
Determination of the respondent State Liquor Authority should be annulled on the law, with costs and disbursements to petitioner.