ELIGIBILITY FOR LICENSE AS AGENT OF WINE WHOLESALER AND IMPORTER

OFFICES AND OFFICERS ‑- STATE ‑- LIQUOR CONTROL BOARD ‑- LIQUOR ‑- LICENSES ‑- ELIGIBILITY FOR LICENSE AS AGENT OF WINE WHOLESALER AND IMPORTER

Neither RCW 66.28.010 nor RCW 66.28.020 prohibit a person who has a contract vendor's interest in a restaurant holding a retail liquor license in the state of Arizona from legally serving as a licensed agent of a wine wholesaler and importer in the state of Washington.

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                                                                 January 12, 1979

Honorable Donn Charnley
State Representative, 44th Dist.
19344 ‑ 11th Avenue N.W.
Seattle, Washington 98177                                                                                                                 Cite as:  AGLO 1979 No. 1

Dear Sir:

            By letter previously acknowledged you requested our opinion on several questions pertaining to the provisions of RCW 66.28.010 and 66.28.020.  For the purpose of dealing with the underlying factual basis for your request, however, we have narrowed your inquiry to a single question which we paraphrase as follows:

            Do either RCW 66.28.010 or RCW 66.28.020 prohibit a person who has a contract vendor's interest in a restaurant holding a retail liquor license in the state of Arizona from legally serving as a licensed agent of a wine wholesaler and importer in the state of Washington?

            We answer this question in the negative for the reasons set forth in our analysis.

             [[Orig. Op. Page 2]]

                                                                     ANALYSIS

            Introduction:

            The underlying factual circumstances, as we understand them, involve a person who formerly was a retail liquor licensee in the state of Arizona.  Then, when the business which required such licensure was sold, he retained a contract vendor's security interest therein.  Now this person seeks employment as a licensed agent of a wine wholesaler and importer licensed by the state of Washington.1/

             Preliminary Considerations:

            At the outset, when considering any question involving the traffic in intoxicating liquor, it is helpful to keep in mind certain recognized legal principles.  To begin with, there is no natural or constitutional right to sell or engage in the business of selling or dispensing intoxicating liquor.  Randles v. State Liquor Control Board, 33 Wn.2d 688, 206 P.2d 1209 (1949).  Secondly, the dominion of the State Liquor Control Board over the regulation, supervision and licensing of the retail sale of intoxicating liquors is, by legislative enactment, broad and extensive.2/  Quan v. State Liquor Control Board, 69 Wn.2d 373, 382, 418 P.2d 424 (1966); see alsoPronto Market No. 1 v. Alcoholic Bev. Cont. App. Bd., 61 Cal.App.3d 545, 132 Cal.Rptr. 236 (1976).  Under the liquor code, a liquor license is a temporary permit to engage in a business which would otherwise be unlawful.  Quan,supra.  Also, it is within the province of the legislature to impose restraints and limitations upon the traffic in liquor more drastic than might appear  [[Orig. Op. Page 3]] to be necessary if applied to traffic in such ordinary commodities as corn, wheat, shoes, groceries and similar articles of commerce and trade.  Fitzpatrick v. Liquor Control Commission, 316 Mich. 83, 25 N.W.2d 118 (1946).

            Statutes Involved:

            Two sections of the state liquor code are here involved.  The first of them, RCW 66.28.010, codifies § 90 of the original, 1933, "Steele Act,"3/ adopted after the repeal of prohibition, and provides in relevant part as follows:

            "No manufacturer, importer, or wholesaler, or person financially interested, directly or indirectly, in such business, whether resident or nonresident, shall have any financial interest, direct or indirect, in any licensed retail business. . . .

            ". . .

            "Financial interest, direct or indirect, as used in this section, shall include any interest, whether by stock ownership, mortgage, lien, or through interlocking directors, or otherwise. . . ."

            The second statute, RCW 66.28.020, was added to the liquor code in 19454/ and provides, in material part, as follows:

            "No manufacturer or wholesaler of, or person otherwise dealing in, distilled spirits, or person financially interested, directly or indirectly, in such business, whether resident or nonresident, shall have any financial interest, direct or indirect, in the business of any licensed wine importer or wine wholesaler or licensed beer importer or beer wholesaler. . . ."

             [[Orig. Op. Page 4]]

            Consideration of the Question:

            Both RCW 66.28.010 and 66.28.020, like their counterparts in numerous other states, are aimed at a situation commonly known as the "tied house" and, as explained in 48 C.J.S., Intoxicating Liquors, § 197:

            ". . . their purpose is to prevent the integration of retail and wholesale outlets and to remove the retail dealer in intoxicating liquors from financial or business obligations to the wholesaler. . . ."

            See also,Pickerill v. Schott, Fla., 55 So.2d 716 (1951) wherein the Florida court, in discussing that state's "tied house" law, observed as follows:

            "It was not the purpose or intent of the Act to grant a special privilege to wholesalers, manufacturers, or distributors denied to others but it was to prevent as far as possible by regulation an evil which existed, and the legislature has determined that this regulation is in the public interest and is a proper exercise of the police power.  There is nothing unreasonable or arbitrary about this regulation, and there was no abuse of legislative discrimination.

            "Similar legislation has been adopted in the states of Alabama, Arizona, Kansas, California, Colorado, Connecticut, Delaware, Idaho, Illinois, Indiana, Iowa, New Jersey, New Mexico, New York, Ohio, Pennsylvania, Rhode Island, South Dakota, Tennessee, Texas, and Wisconsin.  One of the best reasoned opinions on this question will be found in the case of Weisberg v. Taylor, 409 Ill. 384, 100 N.E.2d 748, 750, decided by the Illinois Supreme Court in June, 1951.  In that case the Court said:  'The evils of the "tied house" have long been recognized and most, if not all, of the States, including our own, have prohibited the furnishing by manufacturers or distributors of buildings, bars, equipment, or loans of money to a retailer.   [[Orig. Op. Page 5]] The restriction or curbing of credit by legislative enactment is but a logical extension of these prohibitions and is directly connected with the evils long recognized in the "tied house." . . .'"

            Accordingly, even though the two statutes were adopted some twelve years apart they are to be construed together as statutes in pari materia.5/

             At the same time, as in the interpretation of any statutes, the legislative will is the all important or controlling factor.  73 Am.Jur.2d, Statutes, § 145.  In determining legislative intent, the first resort of the courts is to the content and subject matter of the legislation because the intention of the lawmakers is to be deduced, if possible, from what is said.  Gilmore v. Hershaw, 83 Wn.2d 701, 521 P.2d 934 (1974).  Where the language of a statute is plain, free from ambiguity, and devoid of uncertainty, there is no room for construction because the meaning will be discovered from the wording of the statute itself.  But where an act has a doubtful or ambiguous meaning it is the duty of the court to adopt a construction that is reasonably liberal in furtherance of the obvious or manifest purpose of the legislature.  State v. Houck,supra.

            (1)RCW 66.28.010:

            Bearing the foregoing principles in mind we will first consider RCW 66.28.010,supra.  Repeated for ease of reference, this statute provides, in pertinent part, as follows:

             [[Orig. Op. Page 6]]

            "No manufacturer, importer, or wholesaler, or person financially interested, directly or indirectly, in such business, whether resident or nonresident, shall have any financial interest, direct or indirect, in any licensed retail business. . . ." (Emphasis supplied)

            Clearly, in our judgment, a person who is employed as the licensed agent of a licensed wine wholesaler and importer must be deemed thereby to be financially interested in the business of his employer-principal.  Therefore, under the first statute, RCW 66.28.010, such a person may not, at the same time, have ". . . any financial interest, direct or indirect, in any licensed retail business. . . ."  Assuming that a contract vendor's interest is such a financial interest the question presented under this statute is whether the prohibition extends to the holding of such an interest in an out-of-state licensed retail business‑-as opposed to a retail liquor business licensed by, and located in, the state of Washington.

            Did the legislature intend this legislation to have such a sweeping extraterritorial impact?  We think not.  Once it has been determined that a statute is ambiguous, or partly so, it is a cardinal rule that it is proper to take into consideration the particular evils at which the legislation is aimed.  73 Am.Jur.2d, Statutes, § 157.  The exertion of influence or the potential for the exertion of influence, or the control or potential for control over the operations of the retail business, or the control or potential control over the source of supply or the products to be sold by a retail liquor licensee appear to be the legitimate areas of concern that have spawned, almost universally, tied house legislation and justified its continued and vigorous enforcement.  We do not see, however, how any of those abuses or evils, by any reasonable stretch of the imagination, could be found in a situation where a Washington licensed wine wholesaler or importer, or one of his licensed agents, has a financial interest in a retail liquor licensed establishment in Arizona.  And, as we earlier observed, in quoting an excerpt from 48 C.J.S., Intoxicating Liquors, § 197, the legislative purpose behind tied house legislation was to remove the retail dealer in intoxicating liquors from being under the wholesaler's business or financial thumb.  Thus, as was further observed in this same text source:

            ". . . there are limits beyond which such statutes, as properly construed, are not applicable. . . ."

             [[Orig. Op. Page 7]]

            InEnos v. Hanff, 152 N.W. 397 (1915), the Nebraska Supreme Court applied the principle thusly:

            ". . . we ought not to assume that, in enacting a statute in the legitimate exercise of police power, the legislature has intended a construction which, although unnecessary to the furtherance of the main purpose of the statute, might result in the arbitrary confiscation of property. . . ."

            (2)RCW 66.28.020:

            We thus answer your question in the negative as far as RCW 66.28.010 is concerned and turn now to RCW 66.28.020, supra, here also repeated for ease of reference, in relevant part, as follows:

            "No manufacturer or wholesaler of, or person otherwise dealing in, distilled spirits,or person financially interested, directly or indirectly, in such business, whether resident or nonresident, shall have any financial interest, direct or indirect, in the business of any licensed wine importer or wine wholesaler or licensed beer importer or beer wholesaler. . . ." (Emphasis supplied)

            Under this statute the order of things is reversed.  A person who is,inter alia, financially interested in the business of dealing in distilled spirits is prohibited from having any financial interest in ". . . the business of any licensed wine importer or wine wholesaler or licensed beer importer or beer wholesaler. . . ."  Once again, a licensed agent of a licensed beer and wine importer or wholesaler would, by reason of that employment relationship, have such an interest.  Quaere:  Would he, as a contract vendor of a licensed retail liquor business in Arizona, also have an interest in the business of a person dealing in distilled spirits, as that term is used in RCW 66.28.020, so as to be barred by the statute from serving in the capacity of a licensed agent of a Washington beer and/or wine importer and wholesaler?

             [[Orig. Op. Page 8]]

            Both RCW 66.28.010 and 66.28.020 contain the phrase "whether resident or nonresident."  In the case of RCW 66.28.010, however, that phrase was unimportant in terms of our consideration of your question because it there modifies ". . . manufacturer, importer, or wholesaler, or person financially interested . . . in such business" rather than ". . . any licensed retail business. . . ."  Here, on the other hand, the phrase is significant since in RCW 66.28.020 it relates to the disqualifying interest with which we are concerned; i.e., that of a ". . . manufacturer or wholesaler of, or person otherwise dealing in, distilled spirits, or person financially interested, directly or indirectly, in such business. . . ."  Thus, within the ambit of the latter statute the fact that the business in which the prospective ". . . licensed agent of a wine wholesaler and importer in the state of Washington . . ." has a contract vendor's interest is in Arizona is not, by itself, dispositive of the matter.  Instead, the issue remains as to whether that interest causes him to be ". . . dealing in distilled spirits, or . . . financially interested, directly or indirectly, in such business . . ." for the purpose or purposes of RCW 66.28.020.6/

             The phrase "dealing in distilled spirits" in the statute is nowhere defined therein or elsewhere in the state liquor laws.  Yet the purpose of the prohibition seems clear; i.e., to bar the control or improper influencing of Washington beer and wine wholesalers by manufacturers, wholesalers and other persons similarly dealing in distilled spiritous liquor products.  Bearing this in mind it is our opinion thatas used in RCW 66.28.020, the words "dealing in distilled spirits" do not encompass the business of a retail liquor establishment such as a restaurant or cocktail lounge‑-regardless of where situated.  And, for that reason, we therefore also answer your question in the negative as it pertains to this second statute.  It is not a violation of RCW 66.28.020 for a person having a contract vendor's financial interest in aretail liquor business to serve as a licensed agent of a wine wholesaler and importer in the state of Washington.7/

             [[Orig. Op. Page 9]]

            We base this conclusion on two separate grounds.  First, applying a further principle of statutory construction commonly identified by the Latin phraseejusdem generis we reason that the total phrase "or person otherwise dealing in, distilled spirits, or person financially interested . . . in such business" has reference to other persons like manufacturers or wholesalers;i.e., suppliers to the ultimate retailer rather than the retailer himself.  As explained inState v. Thompson, 38 Wn.2d 774, 777, 232 P.2d 87 (1951):

            ". . . Theejusdem generis principle of statutory interpretation is well known and citation of available and extensive authority is not indicated.  The principle requires that general terms appearing in a statute in connection with precise, specific terms, shall be accorded meaning and effect only to the extent that the general terms suggest items or things similar to those designated by the precise or specific terms.  In other words, the precise terms modify, influence or restrict the interpretation or application of the general terms where both are used in sequence or collocation in legislative enactments. . . ."

            Here, the precise terms are "manufacturer" and "wholesaler"‑-but not "retailer."  Moreover, it also seems to us to be of some related significance to note that in 1945, when RCW 66.28.020 was first enacted,8/ there were no retailers of distilled spirits at all in this state‑-other than the state itself through the Liquor Control Board.  Our present system of permitting the sale of liquor by the drink (although still not by the bottle) by licensed retail establishments did not come into existence until after the passage of Initiative 171 in 1948.

            Our second ground for concluding as we do involves a constitutional consideration.  While it is true that under the Twenty-first Amendment to the United States Constitution  [[Orig. Op. Page 10]] the states have considerable power to regulate, and even prohibit, the traffic of liquor within their boundaries that power is not unrestricted by other constitutional provisions.  Thus, inCalifornia v. La Rue, 409 U.S. 109, 34 L.Ed.2d 342, 93 S.Ct. 390 (1972),9/ the court had occasion to analyze the import of the Twenty-first Amendment in relation to other constitutional provisions, and, commencing at page 114, stated:

            ". . . While the States, vested as they are with general police power, require no specific grant of authority in the Federal Constitution to legislate with respect to matters traditionally within the scope of the police power, the broad sweep of the Twenty-first Amendment has been recognized as conferring something more than the normal state authority over public health, welfare, and morals.  In Hostetter v Idlewild Liquor Corp., 377 U.S. 324, 330, 12 L.Ed.2d 350, 84 S.Ct 1293 (1964), the Court reaffirmed that by reason of the Twenty-first Amendment 'a State is totally unconfined by traditional Commerce Clause limitations when it restricts the importation of intoxicants destined for use, distribution, or consumption within its boarders.'  Still earlier, the Court stated in State Board v Young's Market Co., 299 U.S. 59, 64, 81 L.Ed 38, 57 S.Ct 77 (1936):

                        "'A classification recognized by the Twenty-first Amendment cannot be deemed forbidden by the Fourteenth.'

            ". . . These decisions did not go so far as to hold or say that the Twenty-first Amendment supersedes all other provisions of the United States Constitution in the area of liquor regulations.  In Wisconsin v. Constantineau, 400 U.S. 433, 27 L.Ed.2d 515, 91 S.Ct 507 (1971), the fundamental notice and hearing requirement of the Due Process Clause of the Fourteenth Amendment was held applicable to Wisconsin's statute providing for the public posting of names of persons who had engaged in excessive drinking.  But the case for upholding state regulation in the area covered by the Twenty-First Amendment is undoubtedly strengthened by that enactment:

                         [[Orig. Op. Page 11]]

                        "'Both the Twenty-first Amendment and the Commerce Clause are parts of the same Constitution.  Like other provisions of the Constitution, each must be considered in the light of the other, and in the context of the issues and interests at stake in any concrete case.'  Hostetter v Idlewild Liquor Corp., 377 U.S., at 332, 12 L.Ed.2d 350."

            Thus, a classification when it impinges upon a fundamental right (e.g.. the right to hold a property or contract interest in a retail liquor business in another state) must bear a fair and substantial relation to a permissible legislative object.  See, also,Women's Liberation Union of Rhode Island, Inc. v. Israel, 379 F.Supp. 44 (1974); andKahn v. Shevin, 416 U.S. 351, 40 L.Ed.2d 189, 94 S.Ct. 1734 (1974).  In short, it is one thing for a state to restrict ability of certain persons to own or be financially interested in licensed retail liquor business within that state's own boundaries (as by RCW 66.28.010, supra) but it is another thing for the state to purport to restrict such ownership or interest where the property involved is located in another state.