Opinion
No. 569.
February 28, 1936.
Patterson Patterson, of Seattle, Wash., for plaintiff.
George W. Hamilton, Atty. Gen., State of Washington, and L. C. Brodbeck, Asst. Atty. Gen., State of Washington, for defendants.
Before HANEY, Circuit Judge, and CUSHMAN and BOWEN, District Judges.
In Equity. Suit by the Pacific Fruit Produce Company against Clarence D. Martin, Governor of the State of Washington, and others, wherein plaintiff applied for an interlocutory injunction, and defendant filed a motion to dismiss the bill of complaint, and to strike certain allegations.
Interlocutory injunction granted, and motion to dismiss denied.
This suit is before the court upon an application for an interlocutory injunction, pursuant to the provisions of section 266 of the Judicial Code (28 U.S.C.A. § 380).
Defendants have moved to dismiss the bill of complaint and also to strike certain of its allegations.
The prayer of the complaint is that chapter 158, p. 494, of the Laws of the State of Washington 1935 and chapter 174, p. 606, of the Laws of the State of Washington, 1935, relating to intoxicating liquor, both in part, be decreed to be void and of no effect, and that the defendants be restrained and enjoined from their enforcement.
The bill of complaint, in part, alleges:
"VI. That plaintiff is informed and believes, and on information and belief alleges the fact to be that at all times hereinafter mentioned Premier-Pabst Corporation was, and now is a corporation incorporated under the laws of the State of Delaware, and a citizen and resident of the State of Delaware, and not a resident of, or doing business in, the State of Washington, nor subject to its jurisdiction.
"That plaintiff is informed and believes, and on information and belief alleges the fact to be that at all times hereinafter mentioned Premier-Pabst Sales Company has been and now is a corporation incorporated under the laws of the State of Wisconsin, and a citizen and resident of the State of Wisconsin, and not a resident of, or doing business in, the State of Washington, nor subject to its jurisdiction.
"VII. That for more than two years last past plaintiff has been and now is engaged, within the State of Washington, in the business of distributing as wholesaler and selling and handling as wholesaler, of beer and malt beverages, and duly licensed as such, and that at the present time plaintiff operates and maintains fourteen (14) distributive units, which units are located at: Seattle, Everett, Bellingham, Yakima, Olympia, Tacoma, Aberdeen, Pullman, Spokane, Walla Walla, Wenatchee, Kelso, Ellensburg, and Cle Ellum, in said state, for the sale and distribution of beer and malt beverages within said state, its operations encompassing the entire State of Washington. That during all of said period, the great bulk of the beer and malt beverages which the plaintiff has marketed has been beer and malt beverages manufactured by the Premier-Pabst Corporation, which has been marketed under the label, trade name and trade mark of `Pabst Blue Ribbon Beer,' `Pabst Blue Ribbon Ale,' etc., which products are manufactured by the Premier-Pabst Corporation. That the name `Pabst' and the name `Pabst Blue Ribbon' as applied to beer and malt liquors is well and favorably known, not only in the State of Washington, but throughout the United States, both on account of the excellence of the products manufactured under that name, and on account of the excellent reputation of the manufacturer thereof, which has been built up over a long period of years. That plaintiff has expended a vast amount of money in advertising, soliciting and building up an extensive demand for the beer and malt beverages bearing the name, label, or trade mark of `Pabst' or `Pabst Blue Ribbon,' and as a result, therefore, has a large force of employees engaged in such business, and owns and operates an extensive trucking and warehouse system. That during all of said times and at present plaintiff has complied with all the laws of the State of Washington relative to the distribution and dispensing of beer and malt beverages in its operations, and has paid to Washington Liquor Control Board the annual license fees required by law; that plaintiff is the owner and holder of fourteen (14) wholesalers' licenses, issued to plaintiff pursuant to the provisions of the above mentioned statutes, for which plaintiff has paid in license fees to the State of Washington, the sum of Three Thousand Five Hundred Dollars ($3,500.00) and that the licenses which have been issued thereby to plaintiff are of great value, and of value vastly in excess of $3,000.00.
"VIII. That continuously since the latter part of April, 1933, and at present, plaintiff has been and now is purchasing from Premier-Pabst Sales Company, a corporation, beer and malt beverages, consisting principally of beers and malt beverages bearing the trade mark and label `Pabst Blue Ribbon Beer' and `Pabst Blue Ribbon Ale,' the average annual purchases therefor, for the State of Washingtion, being of the approximate gross amount of $500,000.00. That each and all of said sales have been consummated on written or telegraphic order by plaintiff directed to said Premier-Pabst Sales Company, a corporation, at Milwaukee, Wisconsin; which orders have been, in all cases, accepted outside the State of Washington, and, in all cases, call for delivery to the plaintiff f. o. b. railroad cars at Milwaukee, Wisconsin, or Peoria, Illinois. That said sales have been entirely consummated outside of the State of Washington, and in the States of Wisconsin and Illinois, and that payment therefor has been made by plaintiff to Premier-Pabst Sales Company, a corporation, at Milwaukee, Wisconsin. That the title to said beer and malt beverages so purchased, and in each specific purchase, passes to plaintiff from Premier-Pabst Sales Company, a corporation, at Milwaukee, Wisconsin, and outside of the State of Washington. Said beer is delivered to plaintiff f. o. b. cars at Milwaukee, Wisconsin, or Peoria, Illinois, consigned to plaintiff at a branch in the State of Washington, duly licensed to receive same, and that a substantial part of such beer, when so received, is, after its arrival in Washington, transferred out of said State in interstate commerce for sale in other States and the Territory of Alaska. That after said sales being so consummated, and title to said beer and malt beverages transferred to plaintiff, and the beer and malt beverages placed on board cars, the same are carried and transported to plaintiff by rail, at plaintiff's expense, and through interstate commerce from either Peoria, Illinois, or Milwaukee, Wisconsin, to the branch to which consigned. That plaintiff is informed and believes and on information and belief alleges the fact to be that Premier-Pabst Corporation is in fact the brewer and manufacturer of the so-called `Pabst' beer and malt beverages which plaintiff purchases from Premier-Pabst Sales Company. That plaintiff does not purchase its merchandise from Premier-Pabst Corporation, but that said purchases are made from Premier-Pabst Sales Company, a corporation, and title to said merchandise passes from said corporation to plaintiff.
"IX. That plaintiff has on hand at the present time in the State of Washington in excess of $30,000.00 worth of beer and malt beverages bought from Premier-Pabst Sales Company, a corporation, of the kind known as Pabst beer and Pabst Ale, and bearing the label `Pabst' or `Pabst Blue Ribbon Beer' or `Pabst Blue Ribbon Ale,' in the manner as hereinabove set out. That if the threatened acts of the defendants are in fact carried out, plaintiff will be unable to sell or dispose of any of said beer within the State of Washington. That the business of selling Pabst beer and malt liquors in the manner aforesaid has been and will continue to be profitable to the plaintiff. That the annual value thereof to plaintiff is greatly in excess of the sum of $3,000.00. That plaintiff intends to and will be able, unless prevented by the defendants, to continue to sell and market said Pabst beer and malt liquors in the manner herein described, and will continue, if permitted so to do, to derive profits therefrom largely in excess of $3,000.00 per year.
"X. That plaintiff has fully complied with all the laws of the State of Washingtion relative to the distribution and dispensing of beer and malt beverages by it, and with the rules and regulations of the `Washington State Liquor Control Board', but that, nevertheless, defendants threaten to cancel and terminate plaintiff's wholesaler's distributing licenses solely upon the ground and for the reason that Premier-Pabst Corporation, a Delaware Corporation, has failed to procure a wholesaler's distributor's license, and to appoint a statutory agent, as purported to be required by section 2 of chapter 158 of the Laws of 1935, of the State of Washington, aforesaid, which section purports to amend Section 23 of Chapter 62 of the Laws of Extraordinary Session of 1933. That the defendants threaten after cancelling plaintiff's said licenses, to prevent plaintiff from thereafter engaging in the business of selling or distributing beer and malt liquors or possessing or dealing in the same. That unless restrained and enjoined from so doing, defendants will unlawfully and without right cancel and terminate plaintiff's wholesale distributor's licenses in said State, and having cancelled said licenses will then proceed to prevent plaintiff from further engaging in the sale, possession, handling, and distributing of beer and malt liquors in said state, and will prevent the sale by plaintiff of the beer and malt liquors now in its possession; all to the great, irreparable loss, injury and damage to plaintiff. That plaintiff is in no sense the agent of the Premier-Pabst Sales Company, nor of the Premier-Pabst Corporation; owns no stock in, or securities of either of said last named companies, and has no interest in or control of said last named companies, direct or indirect, that its only relations with said last named companies consist in the purchasing of beer from the Premier-Pabst Sales Company, as hereinbefore set out. * * *
"XII. That a large amount of beer and malt liquors are manufactured within the State of Washington, and that the threatened actions of the defendants and the enforcement of the provisions of subsection 5 of section 2 of chapter 158 of the Session Laws of 1935, will unlawfully discriminate within the State of Washington between the marketing of and sale of beer produced in that state and the marketing and sale of beer produced in other states of the United States, to the detriment and disadvantage of beer produced in other parts of the United States.
"XIII. That on or about the _____ day of October, 1935, the defendant Lindberg, acting in his own behalf and on behalf of each and all of the other defendants, and on behalf of the Washington State Liquor Control Board, as such, sent the following telegram to the Premier-Pabst Corporation:
"`Amendment of last Legislature requires out of state brewers whose products are sold in this state to secure wholesalers license and appoint statutory agent Stop Board is without power or discretion to change the law Stop Unless you see fit to comply with Washington Law, Board will be compelled to refuse or cancel licenses to those selling your product in this state.
"`Washington State Liquor Control Board
"`By W.J. Lindberg.'
and that plaintiff is informed and believes and on information and belief states the fact to be that, simultaneously therewith, and under the same circumstances, similar telegrams were sent to a large number of other Eastern manufacturers and sellers of beers now being sold in the State of Washington under circumstances substantially similar to those under which plaintiff is engaged in the sale of Pabst beer and malt liquors. * * *
"XV. That the plaintiff operates a place of business at Portland, Oregon, and a place of business at Lewiston, Idaho. That notwithstanding the plaintiff has taken out licenses for all branches of its business located within the State of Washington which are engaged in the sale and distribution of beer and malt liquors, defendants insist that plaintiff in addition procure licenses covering the branches of plaintiff located in the Cities of Portland, Oregon and Lewiston, Idaho, and threatened to cause the arrest of employees and officers of plaintiff for failing to take out such licenses for said branches so located outside of the State of Washington, and that plaintiff verily believes and alleges the fact to be that unless restrained by order of this court, the defendants will do as threatened, to the irreparable loss and damage of plaintiff. That the sole and only purpose of the defendants in threatening to do as aforesaid and in doing as aforesaid, is and would be to enforce the provisions of subsection 5 of section 2, chapter 158 of the Session Laws of 1935 of the State of Washington, which is set out in a preceding paragraph hereof, and that said act and the threatened actions of the defendant are in violation of the Constitution of the United States for the reasons heretofore given, and are in addition illegal and void for the reason that the branches of the plaintiff located in the states of Oregon and Idaho are without the territorial limits of the State of Washington and beyond its jurisdiction, and for the further reason that said actions are not authorized by any law of the State of Washington."
The sections of the liquor control acts of which complaint is particularly made, and the enforcement of which is threatened, are "parts of" section 2, chapter 158, p. 499, Sess. Laws 1935, State of Washington and section 3, chapter 174, p. 610, Sess. Laws 1935, State of Washington.
Section 2 of chapter 158 (Rem.Rev. Stat.Wash. § 7306 — 23) in part, provides:
"Sec. 2. That section 23 of chapter 62 of the Laws of the Extraordinary Session of 1933, the same being section 7306 — 23 of Rem.Rev.Stat., be amended and the subsections thereof renumbered to read as follows:
"Section 23. There shall be the following classes of licenses, at the annual license fees hereinafter set forth: * * *
"5. License to brewers and beer wholesalers to sell beer, manufactured within or without the state, to licensed wholesalers and/or to holders of retail licenses under subsection 6, 7, 8, 11, 12, and 14 hereof; fee: $250.00; for each distributing unit.
"For the purpose of this act brewers and beer wholesalers whose products are sold by licensees in this state, but whose plant or principal place of business is located elsewhere, shall be deemed to be beer wholesalers within the provisions of this act and shall obtain wholesalers' licenses and appoint statutory agents in this state, upon whom process may be served."
Section 3 of chapter 174 (Rem.Rev.Stat. Wash. § 7306 — 27) in part, provides:
"Sec. 3. That section 27 of chapter 62 of the Laws of the Extraordinary Session of 1933, the same being section 7306 — 27 Remington's Revised Statutes, be amended to read as follows: * * *
"2. A. The board may, in its discretion, with or without hearing, suspend or cancel any license; and all rights of the licensee to keep or sell beer or other liquors thereunder shall be suspended or terminated, as the case may be. In any case where the board in its discretion grants a hearing, said hearing shall be summary and upon oral or written testimony."
Other related provisions of the statutes are as follows:
"Every person who violates the provisions of section 7306 — 28 shall be guilty of a gross misdemeanor." Section 7306 — 92, subsec. 1, Rem.Rev.Stat.
"Any person doing any act required to be licensed under this act without having in force a license issued to him under this act shall be guilty of a violation of this act." Section 7306 — 28, Rem.Rev.Stat.
"Neither the board nor any member or members thereof shall be personally liable in any action at law for damages sustained by any person because of any acts performed or done or omitted to be done by the board or any employee of the board in the performance of his duties and in the administration of this act." Section 7306 — 62a, Rem.Rev.Stat.
Plaintiff, in its complaint, asserts that the enactments of which complaint is made violate provisions of the Federal and State Constitutions and particularizes the violations as follows:
"XI. That the threatened action of the defendants and each of them, and the above named statutes of the State of Washington, in so far as they purport to authorize or permit such acts, are repugnant to and in violation of the Constitution of the United States, in that:
"(a) They violate article 1, section 8, of the Constitution of the United States, delegating to the Congress thereof the power to regulate commerce amongst the several states, in that they attempt to regulate commerce between the states.
"(b) They violate article 1, section 10 of the Constitution of the United States in that said acts attempt to impair the obligations of contracts.
"(c) They violate the Fourteenth Amendment to the Constitution of the United States in that they attempt to deprive plaintiff of property without due process of law, and deny to plaintiff, a person within its jurisdiction, equal protection of the laws.
"That chapter 158 of the Laws of 1935 of the State of Washington, and the whole thereof, in so far as it deals with intoxicating liquor other than wine, is invalid and repugnant to and in violation of article 2, section 19, of the Constitution of the State of Washington, which provides:
"`No bill shall embrace more than one subject, and that shall be expressed in the title.'
in that the title to said act limits the scope thereof to Wine and Wineries, and the subject of the regulation of beer and malt liquors, and dealing therein, is not included in the title thereto.
"That the provisions of section 3 of chapter 174, reading, in part, as follows:
"`The Board may, in its discretion, with or without hearing, suspend or cancel any license; and all rights of the licensee to keep or sell beer or other liquors thereunder shall be suspended or terminated, as the case may be.'
are repugnant to and in violation of article 1, section 8 of the Constitution of the United States, and of the Fourteenth Amendment to the Constitution of the United States; and that the defendants threaten and propose, and unless restrained and enjoined, will, use the power claimed to be conferred upon them by said above quoted provisions, as a cloak or device for the arbitrary and capricious violation of the rights possessed by plaintiff under the above mentioned provisions of the Constitution of the United States, and the hereinafter mentioned provisions of the Constitution of the State of Washington; and that said provision is likewise repugnant to and in violation of the following provisions of the Constitution of the State of Washington, to-wit:
"Section 3 of article 1 (Due Process Clause); section 12 of article 1 (Equal Rights Clause); section 1 of article 2 (as amended, which defines the legislative power) in that same is an unlawful delegation of legislative power; section 19 of article 2; section 28 of article 2; section 1 of article 4 (that the judicial power shall be vested in the courts of the State);
and that the proposed cancellation of the licenses of plaintiff is arbitrary and capricious, and solely for the purpose of regulating commerce between the states, and that the said proposed action of the defendants in cancelling said licenses is in violation of and repugnant to each of the provisions of the Constitution of the United States and of the State of Washington, specified above, and that the sole and entire purpose of the threatened action of the defendants in cancelling the license of plaintiff is, by indirection, to attempt to compel strangers to plaintiff, who are nonresidents of the State of Washington, and not subject to its jurisdiction, and over whom plaintiff has no control, to comply with the provisions of subsection 5 of section 2 of chapter 158, Session Laws of 1935, and particularly with the following provision thereof, which provides:
"`For the purpose of this act brewers and beer wholesalers whose products are sold by licensees in this state, but whose plant or principal place of business is located elsewhere, shall be deemed to be beer wholesalers within the provisions of this act and shall obtain wholesalers' licenses and appoint statutory agents in this state, upon whom process may be served.'"
Defendants move to dismiss the bill of complaint upon the following grounds:
"I. That two or more causes of the action are joined therein over some of which this court has no jurisdiction.
"II. That plaintiff is not the real party in interest therein; that this action is instituted and prosecuted for and on behalf of the Premier-Pabst Corporation and the Premier-Pabst Sales Company, alleged to be non-residents of the State of Washington and who are the real parties in interest; that plaintiff has made no showing by their bill as would entitle it to relief in equity because it clearly appears therefrom that the right of action, if any exists, belongs to either the Premier-Pabst Corporation or the Premier-Pabst Sales Company and not to said plaintiff, as it nowhere appears that said nonresident companies or corporations have refused to come into a court of equity for the purpose of enjoining these defendants because of the acts and doings by them alleged in the said bill to have been committed and threatened to be committed.
"III. That said bill of complaint does not state facts sufficient to constitute a valid cause or causes of action in equity against these defendants, either severally or jointly, or as constituting an administrative department of the State of Washington."
The foregoing statement does not include trial amendments of the bill of complaint filed after the hearing, for the reason that, because of the conclusion reached, added statement is unnecessary.
The motion of the defendants to strike certain of the allegations of the bill of complaint will be denied.
The motion to dismiss, in so far as it is stated in paragraphs I and II of the motion, will be denied without discussion.
The statutes of which particular complaint is made, section 2 of chapter 158, p. 499 of the Session Laws of 1935 (Rem.Rev. Stat.Wash. § 7306 — 23) and section 3 of chapter 174, p. 610, of the Session Laws of 1935 (Rem.Rev.Stat.Wash. § 7306 — 27), if construed and applied as described in the bill of complaint, in conjunction, violate the commerce clause, article 1, § 8, cl. 3 of the Constitution of the United States, unless the Twenty-First Amendment repealed the commerce clause, in so far as interstate commerce in intoxicating liquor is concerned. This it did not do. Young's Market Co. v. State Board of Equalization (D.C.) 12 F. Supp. 140; Joseph Triner Corporation v. Arundel (D.C.) 11 F. Supp. 145.
While it may be conceded that the intent of the Wilson Act, 26 Stat. 313 ( 27 U.S.C.A. § 121), the Webb-Kenyon Act, 37 Stat. 699, 49 Stat. 877 ( 27 U.S.C.A. § 122), the Act of March 22, 1933, 48 Stat. 19, § 6, referred to in defendants' brief as the "Collier Act," repealed and in part re-enacted, 49 Stat. 877, § 202, subdivision (a), and subdivision (b), 27 U.S.C.A. § 122, and the Twenty-First Amendment, was to take from intoxicating liquor the protection of the interstate commerce laws in so far as necessary to deny them an advantage over the intoxicating liquors produced in the state into which they were brought, yet, none of them show an intent or purpose to so abdicate control over interstate commerce as to permit discrimination against the intoxicating liquor brought into one state from another.
It has been contended, upon behalf of defendants, that section 2 of chapter 158, supra, of which complaint is made, does not so discriminate. With this contention we are unable to agree. This enactment, in the case of intoxicating liquor made and purchased without the state, denies to the owner the right to use it as he could use it if made within the state. If made within the state, both the owner and the state could reach the manufacturer and compel observance of its law or obtain relief for its violation, but neither the owner nor the state has such power over the outside manufacturer who in no way is within the state.
Defendants, in their brief, state: "Plaintiff is the exclusive sales agency of the Pabst products in the state of Washington." If such be the fact it is in no way made to appear, either by the bill of complaint or by any showing made upon the motions now considered.
It follows that section 2 of chapter 158, supra, is void, not only because it violates the commerce clause, article 1, § 8, cl. 3, but also the Fourteenth Amendment, in that its enforcement, as proposed, would take from the plaintiff its property without due process of law, and also in that it denies plaintiff the equal protection of the law. Young's Market Co. v. State Board of Equalization (D.C.) 12 F. Supp. 140.
If the decision of the District Court for the Eastern District of Pennsylvania in Premier-Pabst Sales Corporation v. Grosscup, et al. (D.C.) 12 F. Supp. 970, is opposed to any of the conclusions which we have reached we feel constrained, both upon reason and the persuasiveness of the authorities herein cited, to so hold without qualification.
If interstate commerce is to be taxed, in addition to that necessary to defray the expense of inspection, the power to do so is that of the federal government and not that of the state.
The orderly and secure regulation of the manufacture and sale of property in each of the states by such states and of the regulation and fostering of commerce between them require that neither trammel nor encroach upon that authority which belongs to the other. The authority of neither is to be extended by construction of constitution or statute beyond what is clearly implied from the recognized authority of each. This enactment attempts to reach beyond the state's actual authority and take something from that of the nation, a sister state and the individual.
The determination reached obviates the necessity of any discussion concerning the validity of the statute under the State Constitution. It also obviates the necessity of considering the validity of section 3 of chapter 174, supra, disassociated from section 2 of chapter 158, supra.
An interlocutory injunction will issue.
The motion to dismiss will be denied.
Any order based upon the foregoing rulings will be tentatively settled before the local judge upon notice.
The clerk is directed to notify the attorneys for the parties of the filing of this decision.