Opinion
No. 78-906
Decided April 5, 1979.
Department of revenue suspended liquor licensee's license for violation of regulation prohibiting introduction of foreign substance into alcoholic liquor container. District court rescinded the order holding the regulation to be unconstitutional and unconstitutionally applied to licensee. Department appealed.
Reversed
1. INTOXICATING LIQUORS — Statement of Proof — On Label — Alcoholic Liquor Container — Prima Facie Evidence — Alcoholic Content — When Received — Liquor Licensee. The statement of proof on the label of a container of alcoholic liquor is prima facie evidence of the alcoholic content thereof at the time the container is received by liquor licensee.
2. Regulation — Presumption — Alcoholic Content — Different from Label — — Introduction — Foreign Substance — Not Violative — Due Process — Liquor Licensee. There is no violation of due process inherent in revenue department regulation which establishes presumption between alcoholic liquor bottle having alcoholic content different from that shown on the label and there being something in the bottle which was not there when bottle was received by liquor licensee.
3. Bottle Label — 86 Proof — Expert Testimony — 40 Proof — Evidence Sufficient — Support Finding — Violation of Regulation — Introduction of Foreign Substance. Where label on liquor bottle indicated alcoholic content of 86 proof and department of revenue presented expert testimony that the sample was only 40 proof, and that evaporation would normally be responsible for a decrease of only 3% or 6 proof, the evidence was more than sufficient to support the department's conclusion that licensee had violated regulation prohibiting introduction of any foreign substance into liquor containers.
4. Liquor Code Regulations — Presumed Valid — Burden — Challenging Party — Clear and Convincing Showing — Invalidity. Regulations under the liquor code are presumed to be valid, and the burden is upon the party challenging their constitutionality to establish by a clear and convincing showing beyond a reasonable doubt the asserted invalidity.
Appeal from the District Court of the County of Montrose, Honorable Jerry D. Lincoln, Judge.
Frank F. Woodrow, for plaintiff-appellee.
J. D. MacFarlane, Attorney General, David W. Robbins, Deputy Attorney General, Edward G. Donovan, Assistant Attorney General, Yvette P. Fossum, Assistant Attorney General, for defendant-appellant.
After a hearing, the Executive Director of the Department of Revenue (department) entered an order suspending plaintiff's liquor license for two days based on a violation of Department of Revenue Regulation No. 47-105.4A, 1 Code Colo. Reg. 203-2. The district court rescinded the order, holding that the application of the regulation to plaintiff, and Regulation No. 47-105.4C, were unconstitutional. We reverse and reinstate the order of suspension.
Under § 12-47-105, C.R.S. 1973 (1978 Repl. Vol. 5), the department has express authority to promulgate regulations covering "sampling and analysis of products [and] standards of purity and labeling . . . ." Regulation No. 47-105.4 provides in pertinent part:
"A. No licensee for the sale of alcoholic liquors for consumption on the premises where sold shall maintain thereon any container of alcoholic liquor which contains any such substance other than that contained at the time such container was received by or delivered to the licensee.
"C. If sampling analysis or other means shall establish that any such licensee has upon the licensed premises any bottle or other container which contains liquor of a different brand, type, or alcoholic content than that which appears on the label thereof, such licensee shall be deemed to have violated this regulation."
The evidence at the hearing showed that during an inspection of plaintiff's premises an employee of the department took a sample from a bottle of whiskey which was labelled 86 proof. Two expert witnesses testified that they each analyzed the sample. One expert concluded that the alcoholic content of the sample was 40 proof. This witness also testified that, although evaporation might be responsible for part of the proof deficiency, in his opinion, "Something else had to happen to that liquid to cause that much proof deficiency." The other expert, using a different test, concluded that the alcoholic content of the sample was 68 proof, and opined that the proof deficiency was consistent with loss by evaporation.
The district court stated that because alcohol evaporates, "a strict interpretation of this regulation would place every retail liquor outlet in violation of this regulation." The court then held that the application of the regulation to plaintiff, and subsection C of the regulation, "has been an unreasonable exercise of the State's Police Power" because "the hearing officer made no allowance whatsoever for any normal evaporation nor do the rules and regulations make any provision for this."
The department contends that the district court erred in addressing subsection C because only subsection A was involved in this case, and that, in any event, subsection C is not unconstitutional. We agree that the presumption in subsection C is not unconstitutional, and that the regulation was not unconstitutionally applied in this case.
Regulation No. 47-105.4, as noted above, was promulgated pursuant to an express grant of legislative power by the General Assembly. Thus it is a "legislative regulation," see 1 K. Davis, Administrative Law Treatise § 5.03 (1958 Supps. 1970; 1976), and is subject to the same standards of due process as is a statute. See Duke Molnar Wholesale Liquor Co. v. Martin, 180 Cal. App.2d 873, 4 Cal. Rptr. 904, cert. denied, 364 U.S. 870, 81 S.Ct. 112, 5 L.Ed.2d 92 (1960); Davis, supra. And although a violation of the liquor code may be the subject of a criminal action, see § 12-47-130, C.R.S. 1973 (1978 Repl. Vol. 5), no criminal charges were brought in this case. Thus the applicable standard is that which applies to civil statutory presumptions.
Such a presumption meets the requirements of due process if there is a rational connection between the fact proved and the fact presumed. Usery v. Turner Elkhorn Mining Co., 428 U.S. 1, 96 S.Ct. 2882, 49 L.Ed.2d 752 (1976). See Harrison v. Albright, 40 Colo. App. 227, 577 P.2d 302 (1977). Cf. People v. Lorio, 190 Colo. 373, 546 P.2d 1254 (1976) (stricter test in criminal case). Whether that test is met in this case depends, preliminarily, on whether the statement of alcoholic content on the label can be accepted as accurately reflecting the alcoholic content at the time the container was received by plaintiff.
[1] The Federal Alcohol Administration Act, 27 U.S.C. § 205(e) (1976), and regulations promulgated thereunder, 27 C.F.R. §§ 5.31-5.42 (1978), require that the alcoholic content of liquor be truthfully stated on the label. The regulations also require that all bottles be labelled and that strip stamps be affixed at the time of filling "in such a manner that on opening the container the stamp will be broken . . . ." 27 C.F.R. §§ 5.31, 201.545 (1978). Given the presumption that people obey the law, see Frisco v. Brower, 171 Colo. 441, 467 P.2d 801 (1970); Wilson v. Mosko, 110 Colo. 127, 130 P.2d 927 (1942), we hold that the statement of proof on the label is prima facie evidence of the alcoholic content at the time the bottle was received by plaintiff.
[2] Absent evidence that the label was incorrect at the time the bottle was filled, or that the strip stamp was broken when the bottle was received, there is a rational connection between the fact proved — alcoholic content different from that stated on the label — and the fact presumed — something in the container which was not there when the container was received. Therefore the presumption of subsection C does not violate due process.
[3] We also disagree with the district court's conclusion that the regulation was unconstitutionally applied to plaintiff. The expert testimony that the sample was only 40 proof, and that evaporation would normally be responsible for a decrease of only 3% or 6 proof, was more than sufficient to support the department's conclusion that plaintiff had violated the regulation. See Dolan v. Rust, 195 Colo. 173, 576 P.2d 560 (1978). And this same evidence shows that we are not concerned here with a situation in which mere evaporation coupled with a strict interpretation of the regulation has resulted in a charged violation of the regulation.
Plaintiff's final contention, that the regulation may be enforced arbitrarily, is not supported by any evidence.
[4] Regulations under the liquor code are presumed to be valid, "and the burden is upon the party challenging the constitutionality to establish by a clear and convincing showing beyond a reasonable doubt the asserted invalidity." Moore v. District Court, 184 Colo. 63, 518 P.2d 948 (1974); 4-D Brothers, Inc. v. Heckers, 33 Colo. App. 421, 522 P.2d 749 (1974). Plaintiff has failed to meet this burden.
The order of the district court is reversed and the cause is remanded with directions to reinstate the order of suspension.
JUDGE ENOCH and JUDGE VAN CISE concur.