Kirby v. Alcoholic Beverage Control Appeals Board

459 P.2d 657, 71 Cal. 2d 1200, 81 Cal. Rptr. 241, 1969 Cal. LEXIS 314

• Court: California Supreme Court
• Decided: October 21, 1969
• Docket: S. F. 22622
• Status: Published

Opinions

MOSK, J.

This is a review of the decision of the Alcoholic Beverage Control Appeals Board which reversed a decision of the Department of Alcoholic Beverage Control ordering revocation of a retail off-sale general liquor license. (Bus. & Prof. Code, § 23090 et seq.)

On November 23, 1966, an accusation was filed by the Department of Alcoholic Beverage Control (hereinafter department) against the retail off-sale general license of Richard Corsetti (hereinafter the licensee), doing business as “Dick’s Fine Foods.” The accusation alleged that the licensee made retail sales of distilled spirits on September 27, 1966, at prices less than those listed in the minimum retail price schedule duly filed with the department, in violation of Business and Professions Code section 24755 and California Administrative Code, title 4, rule 99(a).

Following a proceeding before a hearing officer of the Office of Administrative Procedure, a decision was proposed finding the allegations of the accusation to be true and recommending suspension of licensee’s alcoholic beverage license for 15 days. The department rejected the proposed decision of the hearing officer and independently determined the case pursuant to Government Code section 11517, subdivision (c). The decision of the department, which issued on April 19, 1967, incorporated by reference the findings of fact and determination of the issues appearing in the proposed decision and ordered revocation of the license.

An appeal to the respondent Alcoholic Beverage Control Appeals Board (hereinafter appeals board) was filed by the licensee, and on July 12, 1967, the appeals board reversed the decision of the department. The appeals board found that the evidence in the record failed to establish publication of the minimum price schedule in compliance with the requirements of Business and Professions Code section 24755.¹

We meet three questions on this review: (1) whether the publication of the minimum retail price schedule in a trade journal of general circulation in the licensee’s trade area, pursuant to the former provisions of California Administrative Code, title 4, rule 99 (k), satisfies the publication requirements of section 24755; (2) whether rule 99 and section 24755 are constitutionally valid; and (3) whether section 24755.1, precluding revocation of the licensee’s alcoholic beverage license for violation of section 24755, is constitutionally valid.

The first two queries were recently answered in Reimel v. Alcoholic Bev. etc. Appeals Bd. (1967) 256 Cal.App.2d 158, 167-174 [64 Cal.Rptr. 26], hearing denied, in which it was held that the subject mode of publication is proper and that rule 99 and section 24755 are constitutionally valid. (See also our discussion in Samson Market Co. v. Alcoholic Bev. etc. Appeals Bd., post, at pp. 1215-1221 [81 Cal.Rptr. 251, 459 P.2d 667].) The appeals board determined that the evidence in the present record failed to establish that there had been a proper publication of the minimum prices involved here. This determination, however, was based on prior decisions of the appeals board holding that as a matter of law the publication of the minimum retail prices for distilled spirits in a trade journal in general circulation in the trading area affected does not meet the statutory requirements. The'court decided to the contrary on identical issues in Reimel, supra. Accordingly, we need not concern ourselves with the factual substantiality of the evidence, but hold that the publication is sufficient as a matter of law pursuant to Reimel, supra.

The remaining question is the constitutionality of section 24755.1. That section, effective September 17, 1965, provides that violations of section 24755, which prohibits the retail sale of alcoholic beverages at less than the price contained in minimum retail price schedules filed with the department, shall be punished solely by monetary penalties, specifically providing that no criminal penalties shall be imposed and that no. license shall be suspended or revoked for a violation of such section.²

It is contended that section 24755.1 infringes upon the powers granted to the department by article XX, section 22, of the California Constitution. Paragraph five of that section provides: “The Department of Alcoholic Beverage Control shall have the exclusive power, except as herein provided and in accordance with laws enacted by the Legislature, to license the manufacture, importation and sale of alcoholic beverages in this State, and to collect license fees or occupation taxes on account thereof. The department shall have the power, in its discretion, to deny, suspend or revoke any specific alcoholic beverage license if it shall determine for good cause that the granting or continnanee of sucb license would be contrary to public welfare or morals, or that a person seeking or holding a license has violated any law prohibiting conduct involving moral turpitude. ...” (Italics added.)

Two possible interpretations of this paragraph have been suggested: either the two sentences quoted above are independent, and the department’s power over “licensing” is qualified but its power over denial, suspension or revocation for defined cause is limitless and absolute; or the two sentences are interrelated and must be read together, so that the department’s power over denial, suspension or revocation, like its power over “licensing” in general, is subject to reasonable legislative enactment. We conclude that the latter construction is correct.

The context of section 22 itself indicates the proper interpretation of paragraph five. The qualified power to “license” granted in the first sentence does not apply merely to the authority to issue licenses in the sense that a bureaucratic functionary delivers licenses over the counter. It necessarily encompasses the overall power to control licensing procedures. Thus the initial sentence of section 22, which sets out the general basis for the allocation of powers that follows, provides : ‘ ‘ The State of California . . . shall have the exclusive right and power to license and regulate” manufacture, sale, etc., of alcoholic beverages. (Italics added.) This is obviously a declaration by the state that it shall have plenary power in the entire field of “licensing,” subject only to superseding federal authority. The same power to “license” is then allocated or delegated to the department in the first sentence of paragraph five, all subject to qualification by legislative enactment. In addition, in paragraph five and elsewhere in section 22, where specific aspects of “licensing” are intended, specific terms are employed (e.g., “. . . if it shall determine for good cause that the granting or continuance of such license . . “When any person aggrieved . . . appeals from a decision of the department ordering any penalty assessment, issuing, denying, transferring, suspending or revolting any license . . . .”).

“Licensing,” then, is the generic term — the whole — which includes within it numerous parts': “issuing, denying, transferring, suspending or revoking” of licenses. It is axiomatic that “The greater contains the less.” (Civ. Code, §3536.) When sentence one of paragraph five delegates to the Legislature control of the department’s power over “licensing,” that control extends to the entire field of licensing, including the aspects of denial, suspension and revocation specified in sentence two. The latter sentence simply states the terms and conditions under which the department, still subject to legislative enactment, shall exercise the negative aspects of that licensing power.³

Even apart from the clear language of the section, however, logic also compels the foregoing conclusion. It would seem incongruous for the state to give to the Legislature control over the power to “license” — i.e., the power to grant, deny, suspend or revoke — and then immediately deny or drastically limit its control over the latter three functions. Certainly a power to determine under what circumstances licenses shall be granted necessarily implies a determination under what circumstances licenses shall be denied. The department’s contrary interpretation of paragraph five is tantamount to giving to one baseball umpire the power to call balls, and to another the power to call strikes. There would necessarily arise situations, such as that involved in the instant case, in which the Legislature determined circumstances in which to grant (or continue) a license, and the department determined to deny (or revoke) a license under identical conditions. If the department were to prevail, it would in effect be exercising a veto, an ultimate control, over the Legislature’s power to regulate the issuance of licenses; yet section 22 clearly grants to the Legislature the superior power over licensing. It is far more consistent with state constitutional purposes to hold that in the case of a conflict the ultimate power rests with the Legislature by virtue of the broad language of sentence one.⁴ (Cf. Harris v. Alcoholic Bev. etc. Appeals Bd. (1964) 228 Cal.App.2d 1, 7 [39 Cal.Rptr. 192].)

We do not suggest that the Legislature may eliminate or tamper at will with the power of the department to deny, suspend of revoke licenses or to exercise its constitutionally granted discretion in that regard. The department itself, in its earlier administrative construction (see fn. 4, ante),^properly assessed the Legislature’s task under section 22 as the reasonable control, not the elimination of the department’s discretion.

The department now contends that even if section 24755.1 does not unconstitutionally limit its powers under section 22, it unconstitutionally extends those powers by adding the authority to impose mandatory fines for violation of section 24755. (Cf. Wilke & Holzheiser, Inc. v. Department of Alcoholic Beverage Control (1966) 65 Cal.2d 349. 371 [55 Cal.Rptr. 23, 420 P.2d 735].) The language of section 22 does not support this objection. Not only is the department granted exclusive jurisdiction over the field of “licensing,” but paragraph seven of section 22 provides for appeal “from a decision of the department ordering any penalty assessment, issuing, denying, transferring, suspending or revoking any license . . . (Italics added.) As we have explained, however, these powers of the department are subject' to legislative control. The Legislature is therefore authorized by section 22 to add mandatory fines as penalty assessments for violations of alcoholic beverage control laws.

In short, the Constitution grants the authority to license exclusively to the Department of Alcoholic Beverage Control, except as qualified by appropriate legislative enactment. We conclude that the Legislature has not exceeded its power by enactment of section 24755.1, which qualifies the department’s jurisdiction over licensing in cases involving the Legislature’s minimum price statute. Since it appears there would have been no violation, and thus no grounds for discipline, had there been no legislatively enacted minimum price statute in existence, the circumstances of the instant case demonstrate this subject to be a particularly appropriate area for the exercise of legislative control over departmental discretion.

The decision of the department is reversed, and the matter is remanded for reconsideration of penalty within the limitations of section 24755.1 of the Business and Professions Code.

Traynor, C. J., McComb, J., Peters, J., and Burke, J., concurred.

1 Unless otherwise indicated, all statutory references are to the- Business and Professions Code.

2 Seetion 24755.1, in pertinent part, provides: “No criminal penalties shall be imposed on any licensee for a violation of the provisions of Section 24755 nor shall the license of a licensee be suspended or revoked for a violation, of such section.

“The penalties imposed by the department for violations of such section shall be confined solely to monetary penalties for each violation committed during 36 consecutive months and shall be in the following amounts:

“For the first violation, two hundred fifty dollars ($250); for the second and subsequent violations, one thousand dollars ($1,000). . ,

3 The department insists that the two sentences of paragraph five are separate and distinct, and most therefore he read independently. However, the original version of section 22, before amendment into its present form, contained the same language as the present, paragraph five, without the clause regarding legislative enactment, but in one sentence-. “The State Board of Equalization shall have the exclusive power to license the manufacture, importation and sale of intoxicating liquors in this state, or to collect license fees or occupation taxes on account thereof and shall have the power, in its discretion, to deny or revoke ....’’ (Italics added.) The sentence was grammatically divided in 1954, when verbiage was added and the text became cumbersome; but the original language was retained, with no indication that the power to deny or revoke in the second part of the original sentence was thereafter to be severed from and made wholly independent of the overall power to “license” referred to in the first part of that original sentence.

4 It is significant, in the area of administrative interpretation, to note the statement of the former Director of the Department of Alcoholic Beverage Control, Bussell S. Munro, in response to a legislative attempt to eliminate entirely the language in sentence two of paragraph five regarding departmental discretion and replace it with absolute dependence on legislative enactment. After reviewing some of the many statutes which set out and regulate the penalties for various liquor law violations (e.g., Bus. & Prof. Code, §§24200.5, 24205, 24880, 25010), Mr. Munro stated his opposition to the proposed amendment as follows:

“The department does not contend that the foregoing statutes, or others limiting its discretion are unconstitutional or ineffective. The appellate courts have held that the Legislature has plenary power to regulate the alcoholic beverage industry and to limit the discretion of the enforcement agency. The department has no quarrel with those decisions. Our objection is not to the control of discretion. We do object to the elimination of discretion.” (Appendix to Journal of Senate (1959 Beg. Sess.) Yol. 1, Bep. of Senate Interim Com. on Alcoholic Beverage Industry, pp. 15-16.)

Of course, the very existence of the above statutes regulating penalties for liquor law violations, being an implicit assertion by the Legislature that it has the constitutional power to control departmental discretion, “is of very persuasive significance.” (Delaney v. Lowery (1944) 25 Cal.2d 561, 569 [154 P.2d 674].)