Central Liquor Co. v. Oklahoma Alcoholic Beverage Control Board

1982 OK 16, 640 P.2d 1351, 1982 Okla. LEXIS 183
CourtSupreme Court of Oklahoma
DecidedFebruary 9, 1982
Docket57284, 57394
StatusPublished
Cited by19 cases

This text of 1982 OK 16 (Central Liquor Co. v. Oklahoma Alcoholic Beverage Control Board) is published on Counsel Stack Legal Research, covering Supreme Court of Oklahoma primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Central Liquor Co. v. Oklahoma Alcoholic Beverage Control Board, 1982 OK 16, 640 P.2d 1351, 1982 Okla. LEXIS 183 (Okla. 1982).

Opinion

*1353 HODGES, Justice.

The seminal question presented is whether non-resident sellers of intoxicants can be compelled to sell Oklahoma wholesalers substantial quantities of alcoholic beverages for resale in other states at prices controlled by the Oklahoma Statutes.

In 1978, appellees, Central Liquor Company, a partnership comprised of Robert Z. and Franklin Naifeh (Central) and Stuart Carey, d/b/a Metro Beverage Company (Metro), and other licensed wholesalers, began to purchase large quantities of popular brands of liquors from non-resident sellers, including Heublein, Inc. (Heublein), and Joseph E. Seagram & Sons, Inc. (Seagram), appellants, for resale outside the State of Oklahoma. From 1978 until 1980, although the market for intoxicants in Oklahoma has remained constant or increased gradually, total annual sales of wine and liquor increased 51% from 24.7 million to 37.2 million liters. Seventy percent of the increase consisted of products shipped for resale outside the State of Oklahoma. By 1980, 23% of all products sold by licensed Oklahoma liquor wholesalers were resold to wholesalers in other states, principally California, who were not franchised distributors of Heu-blein and Seagram products. Central received 41 million dollars in 1980 from out-of-state sales, which comprised 76% of all out-of-state sales; and during the last three months of 1980, Metro derived 3.6 million dollars from out-of-state sales. The effect of the “Oklahoma connection” is pellucidly dramatized by the shift in sales of products. The growth of sales through Oklahoma parallels the comparable decline in business by franchised California wholesalers.

There are no distilleries located in Oklahoma. Central, Metro, and other Oklahoma wholesalers obtain the intoxicating beverages which they sell from warehouses maintained by Heublein, Seagram, and other licensed non-resident sellers in other states. Seagram furnishes some of its brands from a warehouse in Oklahoma City, and Heu-blein products are sold from shipping points in Michigan and California. Products destined for the Oklahoma wholesalers’ out-of-state customers are either filled from inventory in the wholesaler’s warehouse or sent by direct shipment. Prior to March 5, 1981, 75-80% of Metro’s out-of-state business was handled by direct shipment. Central also used direct shipment to conduct a substantial portion of its out-of-state business.

The legality of the out-of-state shipments was challenged, and Richard Crisp, the Director of the Oklahoma Alcoholic Beverage Control Board (ABC Board), sought an Attorney General’s Opinion. The Attorney General held in Op.Atty.Gen. No. 81-57 (March 5, 1981) that neither the forced sale clause of the Okla.Const. art. 27, § 3 1 and 37 O.S.1971 § 533, 2 nor the price affirma *1354 tion statute, 37 O.S.1971 § 536.1, 3 required non-resident sellers to sell to Oklahoma wholesalers at the lowest price charged for that spirit anywhere in the United States if it were for consumption outside the state; nor was it required that non-resident sellers fill the entire quantity of each order submitted by an Oklahoma wholesaler if the product were intended for use, distribution or consumption outside the state.

Following the issuance of the Attorney General’s Opinion, Central began routing all goods through its Oklahoma warehouse before transporting them to out-of-state customers. The ABC Board implemented the Attorney General’s Opinion by permitting non-resident sellers to request information from each Oklahoma wholesaler concerning the amount of each purchase order to be distributed in Oklahoma. Central sought declaratory and injunctive relief, challenging the Attorney General’s Opinion, and seeking to prevent the ABC Board’s enforcement of the Opinion. Seagram, Heu-blein and Metro were permitted to intervene.

At the trial on the merits, the district court vacated the Attorney General’s Opinion; enjoined the ABC Board from enforcing the Opinion or from the implementation of any procedures to determine the ultimate destination of wines or spirits shipped to Oklahoma wholesalers; determined that every non-resident seller is required to supply each Oklahoma wholesaler every alcoholic beverage ordered at the lowest price charged anywhere in the United States, regardless of the destination of the product; and held, pursuant to 37 O.S.Supp. 1978 § 521(e), 4 Oklahoma wholesalers were permitted to sell unlimited quantities of wine and spirits at Oklahoma prices to out-of-state customers.

Although several questions are urged on appeal, the dispositive issue is whether the trial court’s conclusion, that every non-resident seller is required to supply each Oklahoma wholesaler every alcoholic beverage ordered at the lowest price charged anywhere in the United States, is warranted by the Oklahoma Constitution and Oklahoma Alcoholic Beverage Control Act, 37 O.S.1971 § 502, et seq.

The fundamental rule of statutory construction is to ascertain, and, if possible, give effect to the intention and purpose of the Legislature as expressed in the statute. 5 The Act does not provide any basis for the requirement that non-resident sellers of intoxicants sell unlimited quantities of alcoholic beverages for resale in other states at prices controlled by § 533.1. Rather, the Act reflects that the Legislature intended to make available intoxicating beverages under a variety of controls for the people of Oklahoma for use within the State of Oklahoma. Title 37 O.S.1971 § 503, 6 provides that it is an exercise of the state police power for the protection of the welfare, *1355 health, peace and safety of .the people of the state. The ballot title repealing prohibition stated, “Shall a constitutional amendment repealing the Prohibition Ordinance and . . . providing for regulations and restrictions on the manufacture, sale, distribution and taxation of alcoholic liquor in the State of Oklahoma be approved by the people?” 7 The requirement that non-resident manufacturers sell unlimited quantities on demand by Oklahoma wholesalers for the purpose of resale for ultimate consumption in other states is unrelated to the legislative intent to protect the welfare, health, safety, peace and temperance of the citizens of this state. The police power must be exercised in the public interest with scrupulous concern for private rights guaranteed by the Constitution. It may not be utilized for the benefit of a private company. 8 The interests of the people of this state can scarcely be served by shipments of alcoholic beverages destined for consumption in another state. It is apparent that the Oklahoma Legislature did not intend the unlimited supply and affirmation price controls to apply to sales in other states. Neither the ABC Act nor the Constitutional Amendment reflects an intent either to regulate or force sales outside the State of Oklahoma.

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Bluebook (online)
1982 OK 16, 640 P.2d 1351, 1982 Okla. LEXIS 183, Counsel Stack Legal Research, https://law.counselstack.com/opinion/central-liquor-co-v-oklahoma-alcoholic-beverage-control-board-okla-1982.