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F. & A. Distributing Co. v. Division of Alcoholic Beverage Control

Decided: November 6, 1961.

F. & A. DISTRIBUTING COMPANY, A CORPORATION, APPELLANT,
v.
DIVISION OF ALCOHOLIC BEVERAGE CONTROL AND WILLIAM HOWE DAVIS, DIRECTOR, RESPONDENTS



For affirmance -- Chief Justice Weintraub, and Justices Jacobs, Francis, Proctor, Hall, Schettino and Haneman. For reversal -- None. The opinion of the court was delivered by Francis, J.

Francis

[36 NJ Page 35] The Director of Alcoholic Beverage Control suspended the wholesale liquor license of F. & A. Distributing Company, a corporation, for 25 days. The action resulted from a finding that F. & A. had violated Rule 4(a) of Regulation 39 which prohibits sale and delivery of alcoholic beverages on credit to any retail licensee who, at the time of the sale, is on the Default List published by the Division.

An appeal from the order was taken to the Appellate Division of the Superior Court, but we certified it before argument there.

On February 23, 1945 the then Director of Alcoholic Beverage Control promulgated Regulation 39, Rule 4(a) of which now provides:

"No manufacturer or wholesaler shall sell or deliver any alcoholic beverages except for payment in cash on delivery to any retail licensee who is at the time of the delivery listed on the Default List."

The Default List is made up of retail licensees who have not made payments for their liquor purchases in accordance with certain rules also prescribed by the Director.

Extension of credit as an evil to be controlled in the business of selling intoxicating drink has long been a matter of public concern. See Act, February 24, 1797, Paterson's Laws 235. The Director issued Regulation 39 because of a belief that the granting of credit in the situation described would undermine an orderly market "within the trade itself" and would eventuate in public harm. There can be no reasonable doubt as to his authority in the matter. R.S. 33:1-23; 33:1-39. Appellant does not suggest the contrary.

In the administration of Rule 4(a) of Regulation 39, the Director adopted a policy under which, in the absence of aggravating circumstances and any violation of other rules or regulations, an offending wholesaler might be granted a "special permit." This designation implied that in such cases formal disciplinary proceedings would not be instituted; instead, the violator would be permitted to pay a monetary penalty in a sum fixed by the Director. That course was not followed in this case.

The record reveals also that on February 1, 1958, the Director notified the industry of a change in attitude

"regarding many so-called 'technical violations' of Regulations Nos. 34 and 39 * * * which in the past were the subject of warning letters or special permits in lieu of proceedings. In the future, aggravated violations of this kind * * * will be the subject of

disciplinary proceedings resulting in suspension or revocation of license or solicitor's permit where guilt is found." Bulletin 1207, Item 3.

F. & A. is a wholesaler of alcoholic beverages. The evidence adduced in the Division shows conclusively that over a substantial period of time credit was granted for purchases made from F. & A. by two retailers who were on the Default List. The defense interposed in the disciplinary proceeding was that the credit was extended by the solicitor or salesman without the knowledge or authorization of any of its officers or supervisory personnel. There is no need to detail the proof on this aspect of the case. We agree that it was ample to put the credit manager on inquiry as to the salesman's method of operation. And we have no doubt that the slightest investigation would have disclosed the violation of Rule 4(a) to him. The Hearer, who saw and heard the witnesses, reported to the Director that: "It is difficult to believe that such improper tactics on the part of the solicitor employed by defendant took place over such a long period of time without anyone in authority having knowledge thereof." After ...


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