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Grand Union Co. v. Sills

Decided: November 16, 1964.

THE GRAND UNION COMPANY, A DELAWARE CORPORATION, ET AL., PLAINTIFFS-APPELLANTS,
v.
ARTHUR J. SILLS, ATTORNEY GENERAL OF NEW JERSEY, AND WILLIAM HOWE DAVIS, DIRECTOR, ETC., DEFENDANTS-RESPONDENTS, AND HERMAN ADES, PHILIP SOSNI, ET AL., INTERVENERS-DEFENDANTS-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 Jacobs, J.

Jacobs

The Law Division of the Superior Court upheld the constitutionality of Chapter 152 of the Laws of 1962, N.J.S.A. 33:1-12.31 et seq. which is designed to limit retail liquor licenses to two per person without, however, disturbing present multiple holdings. Grand Union Co. v. Sills, 81 N.J. Super. 65 (1963). An appeal was taken to the Appellate Division and while it was pending there we certified it. R.R. 1:10.

The plaintiffs are corporations and individuals who have interests in establishments which hold annual licenses authorizing the retail sale of alcoholic beverages. After the passage of Chapter 152 they filed a complaint seeking a declaration of unconstitutionality on various grounds. They attacked the legislation as being "without justification in any observable public purpose" and as having been enacted "only for the economic enhancement of private competitive interests." And they complained about ambiguities and uncertainties in the legislative terminology and arbitrary and discriminatory consequences. Grand Union Co. v. Sills, supra, 81 N.J. Super., at pp. 72-74. In support of their basic attack the plaintiffs tendered expert testimony bearing on the probable economic effects of the legislation, and evidence bearing on the identities of the private organizations which sponsored the enactment.

Professor Markham of Princeton University and Professor Baldwin of Dartmouth College were engaged by the plaintiffs to make a study of New Jersey's alcoholic beverage industry and the impact of Chapter 152. While their general qualifications as economists were undisputed they admittedly had not made any previous studies and had not had any previous experience in the alcoholic beverage field. Their report expressed the view that the legislation would curtail the growth of a group of retailers which has "served the public interest well by their promotion of private brands selling at far lower retail prices than national brands of comparable quality." They acknowledged that they were concerned with the economic

impact of the legislation and not with its "sociological or psychological" aspects and that their study did not encompass any examination of experiences in other states where comparable legislation has been in effect.

Professor Baldwin testified that he considered it to be in the public interest to sell liquor for lower prices and he voiced disapproval of a former New Jersey Commissioner's view that "price competition was not desirable in the field of liquor and that because of special characteristics of the industry, normal free enterprise was not appropriate in this area." Later in his testimony Professor Baldwin pointed out that his earlier statement in support of price competition in the liquor field was conditioned upon the belief "that the total consumption is not particularly responsive to price." Still later he acknowledged that when dealing with liquor sales in chain supermarkets there was the likelihood that the housewife would increase her purchases of liquor although he viewed her purchases as probably related to what is "socially an acceptable type of drinking."

Professor Markham voiced the same thought with respect to increased purchases by housewives. He said he was not quite sure that the large chain store's sales of its private labels at one-third less "would induce any greater consumption" than the sales of the higher priced national brands by the small retailers. He was of the opinion that Chapter 152 would tend to restrict price reductions in the sale of liquor, would tend to curtail local advertising by the group of retailers which is economically most capable of engaging in such advertising, and would curb the growth of the chain store operation in the liquor field. He acknowledged that since, almost everywhere within the State, the maximum number of allowable licenses has already been issued, any significant increase in chain liquor stores would necessitate the purchase of outstanding licenses and the displacement of individual retail operators.

The plaintiffs' evidence as to the sponsorship of the enactment consisted of excerpts from periodicals and newspapers.

These indicated that organizations of liquor dealers, particularly retail liquor dealers, supported and solicited support of the enactment as anti-monopoly legislation which would curb chain store liquor operations and aid small liquor dealers. There were no legislative committee reports and no reports of legislative debates. Although the plaintiffs sought to introduce the oral testimony of a single legislator, this testimony was properly excluded by the trial court. See Two Guys from Harrison, Inc. v. Furman, 32 N.J. 199, 226-228 (1960); 2 Sutherland, Statutory Construction § 5013, at p. 504 (3 d ed. 1943). When Governor Hughes signed the bill into law, he issued a formal statement which referred to the exceptional nature of the liquor industry and the great need for its rigid control and noted that "to the extent that free enterprise, in its full theoretical sense, collides with effective alcoholic beverage control, it manifestly must yield to the public welfare."

In the Law Division, Judge Lyons found that the plaintiffs' testimony fell far short of demonstrating that the statute did not embody a lawful use of the police power to attain a proper public purpose. He noted that the professors had confined their testimony to economic considerations thereby excluding other factors which are specially applicable in the field of liquor control; and he explicitly disagreed with their view that liquor consumption is not likely to be affected by price stimulations. Grand Union Co. v. Sills, supra, 81 N.J. Super., at p. 72. He pointed out that the legislation was entitled to the various presumptions of constitutionality which attend on judicial review of statutory enactments (Hudson County News Co. v. Sills, 41 N.J. 220, 227 (1963), appeal dismissed, 378 U.S. 583, 84 S. Ct. 1914, 12 L. Ed. 2 d 1036 (1964); Fried v. Kervick, 34 N.J. 68, 74 (1961)) and to aid from the doctrine that factual support for the legislative judgment would be presumed, and absent a sufficient showing to the contrary, the court would assume that the enactment rested "upon some rational basis within the knowledge and experience of the Legislature." Reingold v. Harper, 6 N.J. 182, 196

(1951); Hudson County News Co. v. Sills, supra, 41 N.J., at p. 228; United States v. Carolene Products Co., 304 U.S. 144, 152, 58 S. Ct. 778, 82 L. Ed. 1234, 1241 (1937). Finally, he stressed that Chapter 152 was legislation aimed at liquor and not at essential commodities such as food and clothing; in sharp contrast to liquor, those commodities are sold freely and society's interest is in stimulating rather than in retarding their sale.

Because of its inherent evils, liquor has always been dealt with as a subject apart. Borough of Fanwood v. Rocco, 33 N.J. 404, 411 (1960); Hudson Bergen County Retail Liquor Stores, Ass'n v. Board of Com'rs of City of Hoboken, 135 N.J.L. 502, 506 (E. & A. 1947); Paul v. Gloucester County, 50 N.J.L. 585, 595 (E. & A. 1888). Its sale may be prohibited entirely or permitted under severe restrictions. Borough of Fanwood v. Rocco, supra, 33 N.J., at p. 411; Bumball v. Burnett, 115 N.J.L. 254, 255 (Sup. Ct. 1935); Ziffrin, Inc. v. Reeves, 308 U.S. 132, 138, 60 S. Ct. 163, 84 L. Ed. 128, 135 (1939). In colonial days there were laws licensing and restricting the sale of liquor and, after the revolution, there were comparable enactments which, though revised from time to time, always gave clear recognition to the dangers and the need for controls. Allinson, Acts of The General Assembly 1702-1776, c. 158, pp. 102-107; Paterson Laws of New Jersey 1800, pp. 235-240; Statutes of New Jersey (1847 Rev.), c. 10, pp. 576-589; Paul v. Gloucester County, supra, 50 N.J.L., at p. 596; Meehan v. Board of Excise Commissioners, 73 N.J.L. 382, 383 (Sup. Ct. 1906), aff'd, 75 N.J.L. 557 (E. & A. 1908); Hudson Bergen County Retail Liquor Stores Ass'n v. Board of Com'rs of City of Hoboken, supra, 135 N.J.L., at p. 507. See Byse, "Alcoholic Beverage Control Before Repeal," 7 Law & Contemp. Prob. 544 (1940).

Despite the licensing restrictions, abuses in the liquor industry prevailed during the nineteenth century and early twentieth century, and gave rise to much public concern. The tied house system (30 Am. Jur. Intoxicating Liquors § 38, at p.

551 (1958)) contributed to sales stimulations which ran counter to the goal of temperance, and relations between liquor and legislative interests were oftentimes unholy in nature. In 1844 the territorial legislature of Oregon adopted a prohibition law and its action was followed by similar enactments in many states, not, however, including New Jersey. In 1919 a national policy of prohibition became effective through the adoption of the eighteenth amendment and sales of alcoholic beverages became unlawful in our State as well as elsewhere. The unfortunate experiences of the prohibition era need not be recounted here; suffice it to note that in 1933 the national policy was terminated through the adoption of the twenty-first amendment. Control was returned to the states which immediately set about to establish their own systems. Seventeen states adopted some form of public monopoly. See Shipman, "State Administrative Machinery For Liquor Control," 7 Law & Contemp. Prob. 600, 612 (1940). This had the high virtue of eliminating sales stimulations but it involved the displacement of private operation by public operation. The New Jersey ...


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