Brown-Forman Distillers Corporation v. Stewart

520 S.W.2d 1
CourtSupreme Court of Missouri
DecidedMarch 12, 1975
Docket58799
StatusPublished
Cited by16 cases

This text of 520 S.W.2d 1 (Brown-Forman Distillers Corporation v. Stewart) is published on Counsel Stack Legal Research, covering Supreme Court of Missouri primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Brown-Forman Distillers Corporation v. Stewart, 520 S.W.2d 1 (Mo. 1975).

Opinions

PER CURIAM.

This is an action in which Brown-Forman Distillers Corporation, et al, (appellants) 1 seek (1) a judgment declaring void regulations numbered 28 and 4(g) of the Supervisor of Liquor Control (respondent) and (2) a decree enjoining their enforcement. The trial court denied relief and Brown-Forman, et al., appealed. The court of appeals, Kansas City district, in an opinion by Somerville, J., reversed and remanded, holding regulation 4(g) valid and a part of regulation 28 void. On application of respondent, we ordered the case transferred to this court and decide it “the same as on original appeal.” Mo. Const. Art. V, § 10, V.A.M.S.

We have determined from our review that the decision of the court of appeals correctly states the law and adopt, with minimal changes, the opinion of Somer-ville, J.

Regulation 28 reads:

“All spirituous liquor and wine wholesalers shall register with the Supervisor of Liquor Control the brands of alcoholic beverages which they handle and distribute in this State, and no spirituous liquor and wine wholesaler shall add an additional brand to his stock without first securing the written approval of the Supervisor of Liquor Control. No distiller, rectifier, out-of-state solicitor, importer or other person shall be permitted, after the effective date of this regulation, to transfer a brand from one spirituous liquor and wine wholesaler to another or to create dual distributorships on the same items without reasonable cause, which cause must be submitted to the Supervisor of Liquor Control in writing. If any spirituous liquor and wine wholesaler affected objects to the transfer, the objection must be submitted to the Supervisor of Liquor Control in writing. After due examination the Supervisor of Liquor Control shall cither approve or disapprove the transfer. If the Supervisor of Liquor Control disapproves the transfer the brand shall remain in status quo.”

The last four sentences of this regulation are italicized to indicate the only portion thereof attacked by appellants. No attack is made upon the first sentence of the regulation.

Regulation 4(g) reads:

“(1) No manufacturer, distiller, wine maker or wholesaler of alcoholic beverages shall conduct or participate in any promotional contest or activity in connection with the sale or distribution of such bever[4]*4ages or any other type of contest or activity promoting the sale or distribution of alcoholic beverages, nor shall they allow, permit, or suffer any employee to participate in any such contest or activity whereby the employee is paid, or otherwise rewarded or compensated on the basis of his success in the contest or activity, or receives any bonus, payment or other reward based upon his production in selling or promoting sales of such alcoholic beverages.

“(2) These provisions shall not apply to manufacturers or wholesalers who deal exclusively in malt alcoholic beverages, nor shall they apply where the pay or compensation of the employee is based upon his total production in selling or promoting sales of all the various brands of intoxicating beverages dealt in by the manufacturer, distiller, wine maker or wholesaler, -provided that, if such pay or compensation is increased and such increase is only temporary and shall not continue and be in effect for at least one year, there is no exception and paragraph (1), above, applies.”

Appellants attack all of this regulation.

Evidence adduced at the trial disclosed that each appellant has written or oral contracts with their respective Missouri wholesalers. The various contracts, so far as pertinent to the issues on appeal, can be generally characterized as being terminable without cause or notice, without cause but with notice of termination, or without right of renewal and early termination for cause. Appellants offered two witnesses who each tendered the like opinion that the contractual rights of appellants to cancel contracts with wholesalers in accordance with the terms of the respective contracts were valuable rights, which, in effect, were destroyed or taken away by regulation 28, and that regulation 4(g) adversely affected each appellant because it prohibited all advertising by appellants. The referred to witnesses further testified that the relationship between distiller-manufacturers and wholesalers “is really a partnership” and “a franchise,” and that there were verbal, as well as written obligations and commitments on the part of both distiller-manufacturers and wholesalers which, depending upon a change of circumstances or conditions, such as failure on the part of a wholesaler to maintain adequate sales management or to maintain adequate credit, might necessitate moving part or all of a distiller-manufacturer’s line of products from one wholesaler to another. Appellants’ witnesses acknowledged that distiller-manufacturers could exert undue pressure or influence on wholesalers to “push” a particular product resulting in evasion or violation by such wholesalers of the provisions of the Liquor Control Law (Chapter 311)2 and valid regulations promulgated thereunder, but denied that the respective companies which they represented had ever engaged in any such tactics or terminated the contract of any of their wholesalers for failure to respond to such influence or pressure.

Respondent’s evidence disclosed that regulation 28 was promulgated to eliminate illegal practices engaged in by wholesalers in order to keep a distiller-manufacturer’s line because of the dominant control possessed by distiller-manufacturers over wholesalers in view of the power to transfer the right of distribution from one wholesaler to another and to create dual distributorships. Respondent’s evidence further disclosed that former regulation 28, directed towards the aforementioned problem, was unworkable because it compelled a wholesaler to commit “economic suicide” by reporting to the Supervisor of Liquor Control undue pressures and influence exerted on him by distiller-manufacturers. The former regulation read:

“No manufacturer, licensed by the State of Missouri, including one who blends or bottles intoxicating liquor, or his agent, shall, directly or indirectly, threaten to remove, or remove a line, from a wholesaler because of the refusal or failure of said [5]*5wholesaler to evade or disobey any existing laws or regulations of the State of Missouri relating to intoxicating liquor. Upon receipt of information indicating such conduct, said licensee will be cited to appear for a hearing before the Supervisor of Liquor Control to show cause why the license should not be suspended or revoked.”

Respondent’s evidence further disclosed that regulation 4(g) was designed to control any promotional contest whereby the compensation to a salesman of a distiller-manufacturer or wholesaler was based on the sale of a particular brand or item, because such contests encouraged violation of the liquor laws, but that regulation 4(g) did not outlaw all advertising by distiller-manufacturers.

It becomes important to circumscribe the grounds upon which appellants attack the validity of the regulations in question by first pointing out certain aspects involving rule-making authority possessed by respondent which appellants do not question. Appellants concede, arguendo, the following: (1) respondent, by virtue of the last sentence of § 311.336, and subparagraphs (6) and (10) of § 311.660, possesses authority to promulgate valid

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Brown-Forman Distillers Corporation v. Stewart
520 S.W.2d 1 (Supreme Court of Missouri, 1975)

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Bluebook (online)
520 S.W.2d 1, Counsel Stack Legal Research, https://law.counselstack.com/opinion/brown-forman-distillers-corporation-v-stewart-mo-1975.