KIRBY v. ALCOHOLIC BEVERAGE CONTROL APPEALS BOARD

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Court of Appeal, First District, Division 1, California.

Edward J. KIRBY, Director of the Department of Alcoholic Beverage Control of the State of California, Petitioner, v. ALCOHOLIC BEVERAGE CONTROL APPEALS BOARD of the State of California and Richard Corsetti, Respondents.

Civ. 25168.

Decided: August 02, 1968

Thomas C. Lynch, Atty. Gen. of State of California, L. Stephen Porter, Deputy Atty. Gen., San Francisco, for petitioner. Leo K. Gallant, Senior Counsel, Alcoholic Beverage Control Appeals Board, Sacramento, for respondent Appeals Board. J. Bruce Fratis, San Francisco, for respondent Rechard Corsetti.

For Opinion on Hearing see, 81 Cal.Rptr. 241, 459 P.2d 657.

This is a review of the decision of the Alcoholic Beverage Control Appeals Board following the issuance of a writ of review upon the application of the Department of Alcoholic Beverage Control (Bus. & Prof.Code, § 23090 et seq.).

On November 23, 1966, an accusation was filed by the Department of Alcoholic Beverage Control (hereinafter referred to as ‘Department’) against the retail offsale general license of Richard Corsetti (hereinafter referred to as ‘licensee’), doing business as ‘Dick's Fine Foods.’ The accusation alleged that the licensee made retail sales of distilled spirits on September 27, 1966, at prices less than those listed in the minimum Retail Price Schedule duly filed with the Department, in violation of Business and Professions Code section 24755 and California Administrative Code, Title IV, Rule 99(a).

Following a hearing before a hearing officer of the Office of Administrative Procedure, a proposed decision was issued finding the allegations of the accusation to be true and recommending suspension of licensee's alcoholic beverage license for fifteen days. The Department rejected the proposed decision of the hearing officer and independently decided the case pursuant to Government Code section 11517, subdivision (c). The decision of the Department, which issued on April 19, 1967, incorporated by reference the findings of fact and determination of the issues appearing in the hearing officer's proposed decision and ordered revocation of the license.

An appeal with respondent Alcoholic Beverage Control Appeals Board (hereinafter referred to as ‘Appeals Board‘) was filed by the licensee on May 9, 1967. The decision of the Appeals Board, issued on July 12, 1967, reversed the decision of the Department. The Appeals Board found that the evidence in the record failed to establish publication of the minimum price schedule in compliance with the requirements of Business and Professions Code section 24755.1

This review presents three questions: (1) Whether the publication of the minimum retail price schedule in a trade journal of general circulation in the licensee's trade area, pursuant to california Administrative Code, Title IV, Rule 99(a), satisfies the publication requirements of section 24755; (2) whether rule 99(a) and section 24755 are constitutionally valid; and (3) whether section 24755.1, precluding revocation of the licensee's alcoholic beverage license for violation of section 24755, is constitutionally valid.

The first two questions were recently answered by this court in Reimel v. Alcoholic Bev., etc., Appeals Bd. (1967) 256 A.C.A. 188, 197–204, 64 Cal.Rptr. 26, wherein we held that the subject mode of publication is proper and that rule 99 and section 24755 are constitutionally valid.2 With respect to the question of the publication requirement, we note that the Appeals Board determined that the evidence in the present record failed to establish that there had been a proper publication of the minimum prices involved in the transaction which was the subject of these proceedings. This determination, however, was based on prior decisions of the Appeals Board holding that, as a matter of law, the publication of the minimum retail prices for distilled spirits in a trade journal in general circulation in the trading area affected does not meet the statutory requirements. These decisions were before us in Reimel, supra. Accordingly, since the factual background with respect to publication is the same in the present case as in Reimel, supra, the parties have treated the question as one of law involving statutory interpretation. The question being one of law, we do not concern ourselves with the substantiality of the evidence, but hold that the publication is sufficient as a matter of law under our holding in Reimel, supra.

We now turn to the remaining question involving the constitutionality of section 24755.1, which purports to limit the Department to monetary penalties for the subject violations. Although reversal on the publication issue precluded consideration by the Appeals Board of the applicability of section 24755.1, the parties have stipulated that we may consider and determine the issue of the constitutionality of section 24755.1.

Section 24755.1, effective September 17, 1965, provides that violations of section 24755, which prohibits the retail sale of alcoholic beverages at less than the price contained in minimum retail price schedules filed with the Department, shall be punished solely by monetary penalties, specifically providing that no criminal penalties shall be imposed and that no license shall be suspended or revoked for a violation of such section.3

The determination of the instant constitutional question depends upon the interpretation and meaning of article XX, section 22, of the California Constitution which, in relevant part, provides: ‘The State of California * * * shall have the exclusive right and power to license and regulate the manufacture, sale, purchase, possession and transportation of alcoholic beverages within the State, * * *. The Department of Alcoholic Beverage Control shall have the exclusive power, except as herein provided and in accordance with laws enacted by the Legislature, to license the manufacture, importation and sale of alcoholic beverages in this State, * * *. The department shall have the power, in its discretion, to deny, suspend of revoke any specific alcoholic beverages license if it shall determine for good cause that the granting or continuance of such license would be contrary to public welfare or morals, of that a person seeding of holding a license has violated any law prohibiting conduct involving moral turpitude. * * * The provisions of this section shall be self-executing, but nothing herein shall prohibit the Legislature from enacting laws implementing and not inconsistent with such provisions.’

In Wilke & Holzheiser, Inc. v. Dept. of Alcoholic Bev. Control, 65 Cal.2d 349, 369–371, 55 Cal.Rptr. 23, 420 P.2d 735, the question of the constitutionality of section 24755.1 was presented, but was not reached. The Supreme Court held that section 24755.1 did not apply retroactively to offenses which occurred before its effective date. (See also Reimel v. Alcoholic Bev. etc. Appeals Bd., supra, 256 A.C.A. 188, 205–206, 64 Cal.Rptr. 26.) The Supreme Court did recognize, however, that determination of the constitutionality of section 24755.1 would require determination of two questions: ‘first, whether that section constitutes an invalid limitation upon the power vested in the department by article XX insofar as it eliminates the department's discretionary power to suspend or revoke a license for violation of the retail price maintenance provisions; and, second, whether that section constitutes an invalid extension of the power vested in the department by article XX insofar as it adds the power to impose mandatory fines for violation of the retail price maintenance provisions.’ (P. 371, 55 Cal.Rptr. p. 38, 420 P.2d p. 750.) In Wilke, it was noted, moreover, that ‘the provisions of section 24755.1 are clearly inseverable, and if we were to decide that article XX invalidates the provision requiring the department to impose fines, then we should be compelled to conclude, as a matter of legislative interpretation, that all of section 24755.1, including its prohibition against license suspension or revocation, is inoperative.’ (Fn. 18, p. 371, 55 Cal.Rptr. p. 38, 420 P.2d p. 750.)

Section 22 of article XX of the California Constitution4 grants to the State of California the exclusive right and power, subject to certain federal laws, to license and regulate the manufacture, sale, purchase, possession and transportation of alcoholic beverages within the state. Under that section the Legislature is empowered to enact laws which implement and are not inconsistent with its provisions. (See Vinnicombe v. State of California, 172 Cal.App.2d 54, 57–58, 341 P.2d 705.) It must be noted, however, that section 22 also creates the Department of Alcoholic Beverage Control and gives to that department certain specified powers, which fall into two categories. The first deals with the Department's licensing and fee collecting powers; the second, with the Department's right to deny, suspend or revoke licenses.

The power of the Department to license and collect fees is designated in section 22 as an ‘exclusive power’ which must be exercised as provided in that section and ‘in accordance with laws enacted by the Legislature.’ This proviso, however, does not appear in the language delineating the power of the Department to deny, suspend or revoke licenses. This latter power, however, is not designated in section 22 as an exclusive power. Moreover, it is limited in its exercise to the denial, suspending or revoking of licenses when the Department determines for good cause that the granting or continuance of a license would be contrary to public welfare of morals, or that a person seeking or holding a license has violated any law prohibiting conduct involving moral turpitude.

The language in section 22 that ‘The department shall have the power, in its discretion, to * * * suspend or revoke any * * * license if it shall determine for good cause that the * * * continuance of such license would be contrary to public * * * morals' is not qualified by any of the surrounding language. Its meaning is clear and unequivocal. Therefore, there is no need to apply external aids in its interpretation. Accordingly, we hold that section 22 must be interpreted to mean that the Department has been granted a constitutional right to deny, suspend or revoke a license upon the grounds specified in section 22, and that, although the Legislature may adopt reasonable procedural requirements for its enforcement, it may not curtail, take away, or unreasonably burden this right. (Vinnicombe v. State of California, supra, 172 Cal.App.2d at p. 56, 341 P.2d 705; Chester v. Hall, 55 Cal.App. 611, 616, 204 P. 237; Bergevin v. Curtz, 127 Cal. 86, 88, 59 P. 312; Chesney v. Byram, 15 Cal.2d 460, 463, 101 P.2d 1106.)

The foregoing interpretation, however, does not require the conclusion that the Legislature may not extend the power vested in the Department pursuant to section 22 by adding the power to impose mandatory fines for violation of the retail price maintenance provisions. Although the power to deny, suspend or revoke upon the grounds specified in section 22 may not be curtailed, restricted or impaired by the Legislature, it is apparent that the people in adopting section 22 did not propose or intend that the penalty assessment ordered by the Department must be restricted solely to suspension or revocation. Section 22 does not so provide, but only states that ‘The department shall have the power, in its discretion, to deny, suspend or revoke’ a license upon the grounds specified. Since section 22 provides that the state has the exclusive right and power to license and regulate the manufacture, sale, purchase, possession and transportation of alcoholic beverages, it is apparent from a reading of that section that, except as therein provided, that right and power is vested in the Legislature. The extent to which it may be exercised is further made clear by the provision that ‘The provisions of this section shall be self-executing, but nothing herein shall prohibit the Legislature from enacting laws implementing and not inconsistent with such provisions.’ The interpretation we make, moreover, is further buttressed by the language in section 22 pertaining to the Alcoholic Beverage Control Appeals Board and authorizing an appeal to such board from a decision of the Department ‘ordering any penalty assessment.’ (Emphasis added.)

We conclude, in the light of the foregoing, that the Legislature is empowered by section 22 to add mandatory fines as penalty assessments for alcoholic beverage control violations. The attempt of the Legislature to add fines for violation of the retail price maintenance provisions pursuant to the provisions of section 24755.1 must, however, be held inoperative. The prohibition of that section against license suspension or revocation is unconstitutional, because it curtails, restricts and impairs the constitutional right given to the Department by section 22 to suspend or revoke licenses. As already pointed out, Wilke & Holzheiser, Inc. v. Dept. of Alcoholic Bev. Control, supra, 65 Cal.2d 349, 371, 55 Cal.Rptr. 23, 420 P.2d 735 (fn. 18) states that the provisions of section 24755.1 are clearly inseverable and that if one provision of the section is invalidated by article XX, all of section 24755.1 is inoperative.

Under article XX, section 22, for the present license revocation to stand, the selling of liquor at cut-rate and bargain prices below the mandatory minimum consumer prices must come within the meaning or purview of ‘public welfare or morals,’ because the licensee has not violated any law prohibiting conduct involving moral turpitude. In Allied Properties v. Dept. of Alcoholic Beverage Control, 53 Cal.2d 141, 346 P.2d 737, retail price maintenance provisions were upheld on the grounds that the prevention of disorderly marketing conditions in the sale of alcoholic beverages and the removal of some of the factors which may lead to intemperance were public welfare and morals objectives. The prevention of price-cutting, bargain sales and price wars in the retail sale of liquor were found to be reasonable means to eliminate some of the causes of said evils. (Pp. 145–149, 346 P.2d 737.)

The holding in Allied Properties, supra, was reaffirmed in Wilke & Holzheiser, Inc. v. Dept. of Alcoholic Bev. Control, supra, 65 Cal.2d 349, 55 Cal.Rptr. 23, 420 P.2d 735. Noting that the declared purposes of the Alcoholic Beverage Control Act in general (§ 23001) and of its retail price maintenance provisions in particular (§ 24749) were entirely legitimate, the Supreme Court held that the promotion of temperance in the consumption and marketing of alcoholic beverages constituted proper legislative objectives and that the price maintenance provisions bore a reasonable relationship to those purposes. (P. 360, 55 Cal.Rptr. 23, 420 P.2d 735.)

In Wilke, supra, Justice Tobriner noted that it was not irrational to assume that retail price maintenance tends to reduce excessive purchases of alcoholic beverages and thus promotes temperance. (65 Cal.2d at pp. 360–361, 55 Cal.Rptr. 23, 420 P.2d 735.) That such is the ‘declared policy of the State’ is evident from the language of section 24749 stating the policy of the state with respect to alcoholic beverages fair trade contracts and price posting. Section 24749 states: ‘It is the declared policy of the State [to regulate etc. the sale of liquor] for the purpose of fostering and promoting temperance * * *. In order to eliminate price wars which unduly stimulate the consumption of alcoholic beverages * * *, it is hereby declared as the policy of this State that the sale of alcoholic beverages should be subjected to certain restrictions and regulations.’ (Emphasis added.)

Specifically, significant is the recital in section 23001 that the Alcoholic Beverage Control Act is ‘for the protection of the * * * welfare * * * and morals of the people of the State, * * * and to promote temperance in the use and consumption of alcoholic beverages,’ and the established rule that the Department has a broad range of power and discretion in determining what is contrary to public welfare or morals. (Mercurio v. Dept. of Alcoholic, etc., Control, 144 Cal.App.2d 626, 632, 301 P.2d 474; Harris v. Alcoholic Bev., etc., Appeals Bd., 238 Cal.App.2d 24, 30, 47 Cal.Rptr. 424.)

It seems clear to us, therefore, that the ‘declared policy of the State’ is an expression of what constitutes the public welfare, and that section 24755.1 does not purport to change this policy. Moreover, it seems irrefutable that the Department could reasonably, in its discretion, determine it to be promotive of the public welfare that a law enacted for the public good be obeyed and that price cutters do not place law-abiding competitors at an economic disadvantage. Accordingly, it follows that any violation of the price-fixing provisions of section 24755 is contrary to public welfare.

In Allied Properties, supra, and Wilke, supra, administrative decisions of the Department which suspended or revoked licenses for selling distilled spirits in violation of the mandatory retail price maintenance provisions of the Alcoholic Beverage Control Act were upheld. Other appellate decisions have made similar determinations in other cases involving violation of mandatory retail price maintenance provisions. (See DeMartini v. Department of Alcoholic Beverage Control, 215 Cal.App.2d 787, 30 Cal.Rptr. 668; Cohon v. Dept. of Alcoholic Bev. Control, 218 Cal.App.2d 332, 32 Cal.Rptr. 723; United Liquors, Inc. v. Dept. of Alcoholic Bev. Cont., 218 Cal.App.2d 450, 32 Cal.Rptr. 603; Dave's Market, Inc. v. Dept. of Alcoholic Beverage Control, 222 Cal.App.2d 671, 35 Cal.Rptr. 348; Reimel v. Alcoholic Bev. etc. Appeals Bd., supra, 256 A.C.A. 188, 64 Cal.Rptr. 26; and see Peck's Liquors, Inc. v. Superior Court, 221 Cal.App.2d 772, 34 Cal.Rptr. 735.)5

The decision of the Department is affirmed.

DISSENTING OPINION

I disagree with my colleagues on the issue of the constitutionality of section 24755.1.

In Wilke & Holzheiser, Inc. v. Dept. of Alcoholic Bev. Control (1966) 65 Cal.2d 349, 55 Cal.Rptr. 23, 420 P.2d 735, the court referred to the statutory history and to the issue of the constitutionality of section 24755.1, as follows: ‘Prior to the enactment of section 24755.1 (Stats.1965, ch. 742, § 1; effective September 17, 1965) violation of the retail price maintenance provisions of the Alcoholic Beverage Control Act subjected the transgressor not only to the discretionary suspension or revocation of his license (Bus. & Prof.Code, § 24200) but also to punishment as a misdemeanant by a fine of not more than $500 and/or a county jail term of not more than six months (Bus. & Prof.Code, § 25617). By enacting section 24755.1 the Legislature replaced this method of enforcement with a system of mandatory fines leviable by the Department of Alcoholic Beverage Control in the amount of $250 for the first illegal sale and $1,000 for each subsequent such sale in any three-year period. Pending any appeal from the imposition of a fine, the new section required a licensee to pay under protest a fine, which was recoverable with interest if the appeal succeeded, or to execute a surety bond in the amount of the fine. The failure to perform either undertaking within 30 days provoked an automatic suspension of the license pending performance.

‘Article XX, section 22, of the California Constitution empowers the Department of Alcoholic Beverage Control ‘in its discretion’ to ‘deny, suspend or revoke any specific alcoholic beverage license if it shall determine for good cause that the granting or continuance of such license would be contrary to public welfare or morals, * * *’ At the same time, section 22 empowers the Legislature to ‘provide for the issuance of all types of [alcoholic beverage] licenses' and gives to the Department of Alcoholic Beverage Control ‘the exclusive power * * * in accordance with laws enacted by the Legislature, to license the * * * sale of alcoholic beverages. * * *’ (Italics added.)

‘If we were to hold section 24755.1 applicable to the judgments here on appeal, we would be compelled to decide, first, whether that section constitutes an invalid limitation upon the power vested in the department by article XX insofar as it eliminates the department's discretionary power to suspend or revoke a license for violation of the retail price maintenance provisions; and, second, whether that section constitutes an invalid extension of the power vested in the department by article XX insofar as it adds the power to impose mandatory fines for violation of the retail price maintenance provisions.18 We reach neither of these

two constitutional questions, however, since we hold that section 24755.1 does not apply to any of the four judgments here on appeal.

The Department, the Appeals Board and the majority assert that the new section does constitute an invalid limitation upon the power vested in the Department under section 22 of article XX, because the Constitution gives the Department plenary power to deny, suspend or revoke a license when the granting or continuance of such license would be contrary to public welfare or morals, and because a violation of the fair trade provisions of the Alcoholic Beverage Control Act is per se a violation of public welfare and morals which authorizes the Department to exercise its plenary powers.

A review of constitutional and legislative history of the provisions involved demonstrates that the power conferred upon the Department by the provisions of the Constitution is not as broad as respondents assert. The necessity of giving full effect to and reconciling each of the provisions in the particular section of the Constitution leads to the conclusion that the Legislature has plenary power with respect to price control of retail sales. Furthermore, although prior precedents have upheld the right of the Legislature to enact price control legislation on the grounds, among others, of public welfare and morals, such precedents recognize that such a determination is a matter of legislative discretion and not a matter of morals or welfare per se. Since the Legislature could repeal the price control provisions without creating a moral vacuum, it may determine such consequences for a violation of such price control as it wishes to impose.

The first sentence of the first paragraph of section 22 of article XX declares: ‘The State of California, subject to the internal revenue laws of the United States, shall have the exclusive right and power to license and regulate the manufacture, sale, purchase, possession and transportation of alcoholic beverages within the State, and subject to the laws of the United States regulating commerce between foreign nations and among the state shall have the exclusive right and power to regulate the importation into and exportation from the State, of alcoholic beverages.’ With the exception of the euphemistic substitution of the words ‘alcoholic beverages' for ‘intoxicating liquor’ by the last amendment, November 6, 1956, effective January 1, 1957, this declaration reads as it did when first adopted November 8, 1932, and through amendments approved in 1934 and 1954. Except as expressly otherwise limited by the Constitution, the legislative power of the state is vested in the State Legislature. (Cal.Const., art. III, § 1 and art. IV, § 1 [the repeal, rephrasing, and reenactment of these sections November 8, 1966 did not materially affect the statement of the principle for which they are cited]; In re Madera Irrigation Dist. (1891) 92 Cal. 296, 307–308, 28 P. 272, 14 L.R.A. 755, and see Allied Properties v. Dept. of Alcoholic Beverage Control (1959) 53 Cal.2d 141, 147, 346 P.2d 737.) Affirmation of this aphorism is found in the prohibition contained in the second sentence of section 22 which was addressed to the Legislature and added to the first paragraph when it was recast by amendment adopted November 2, 1954 and effective January 1, 1955. The people then determined: ‘In the exercise of these rights and powers, the Legislature shall not constitute the State or any agency thereof a manufacturer or seller of alcoholic beverages.’

The second paragraph manifests the public concern with the type of premises where alcoholic beverages may be sold and served for consumption.1 The original amendment in 1932 was silent as to what entity should control the premises where wine and beer could be served and consumed. Presumably it fell to the Legislature under the principle enunciated above. The Legislature placed control with the state Board of Equalization (Stats.1933, ch. 658, § 5, p. 1700). In 1934 the provisions, discussed below, which vested the licensing power in a state administrative agency first appeared. In addition the section then stated, ‘Until the Legislature shall otherwise provide, the privilege of keeping, buying, selling, serving and otherwise disposing of intoxicating liquors in [the premises where sale, service, consumption and disposition was permitted (see fn. 1, supra)], [and] the privilege of keeping, buying, selling and otherwise disposing of beers on any premises open to the general public shall be licensed and regulated under the applicable provisions of the so-called State Liquor Control Act, California Statutes 1933, Chapter 658, insofar as the same are not inconsistent with the provisions hereof, * * *.’2 Similar provisions are found in the eighth paragraph of the 1954 revision, and the ninth paragraph of the 1956, current, revision. The provisions manifest a clear intent that on-sale premises shall be licensed and regulated as the Legislature shall provide. Moreover, in 1956 the second paragraph was first prefaced with the following declaration: ‘All alcoholic beverages may be bought, sold, served, consumed and otherwise disposed of in premises which shall be licensed as provided by the Legislature. In providing for the licensing of premises, the Legislature may provide for the issuance of, among other licenses, licenses for the following types of premises where the alcoholic beverages specified in the licenses may be sold and served for consumption upon the premises: * * *.’ The descriptions of the types of premises which follow reflect that the Legislature was to be vested with discretion, within constitutional guidelines, in creating classifications.3

The third paragraph, added in 1956, verbalizes the public's concern with the use of alcoholic beverages by those under the age of 21 years. The fourth, sixth, seventh, and eighth paragraphs which stem from the 1954 revision create the administrative machinery of the Department of Alcoholic Beverage Control with its director, and establish the Alcoholic Beverage Control Appeals Board and define its jurisdiction. Before examining the powers conferred upon the Department, mention should be made of one other provision which defines the power of the Legislature.4

In 1932 after dealing with the question of on-sale premises, the original amendment stated: ‘* * * the Legislature may authorize, subject to reasonable restrictions, the sale in retail stores of liquor contained in original packages, where such liquor is not to be consumed on the premises where sold.’ This language has been retained throughout all revisions of the amendment, and in 1956 the following language was added: ‘[The Legislature] * * * may provide for the issuance of all types of licenses necessary to carry on the activities referred to in the first paragraph of this section, including, but not limited to, licenses necessary for the manufacture, production, processing, importation, exportation, transportation, wholesaling, distribution, and sale of any and all kinds of alcoholic beverages.’

The fifth paragraph defines the powers of the Department as follows: ‘The Department of Alcoholic Beverage Control shall have the exclusive power, except as herein provided and in accordance with laws enacted by the Legislature, to license the manufacture, importation and sale of alcoholic beverages in this State, and to collect license fees or occupation taxes on account thereof. The department shall have the power, in its discretion, to deny, suspend or revoke any specific alcoholic beverage license if it shall determine for good cause that the granting or continuance of such license would be contrary to public welfare or morals, or that a person seeking or holding a license has violated any law prohibiting conduct involving moral turpitude. It shall be unlawful for any person other than a licensee of said department to manufacture, import or sell alcoholic beverages in this State.’ This language is first found in the 1954 revision which created the Department, but it stems from provisions enacted in 1934 when the licensing power was first conferred upon an administrative agency by the Constitution.5

Each revision has provided: ‘All constitutional provisions and laws inconsistent with the provisions hereof are hereby repealed.’ In 1954 the provisions now found in the fourteenth paragraph were first inserted. They read, ‘The provisions of this section shall be self-executing, but nothing herein shall prohibit the Legislature from enacting laws implementing and not inconsistent with such provisions.’ The last clause of paragraph fourteen is declaratory of an established principle of constitutional law. (Chesney v. Byram (1940) 15 Cal.2d 460, 463–465, 101 P.2d 1106; Vinnicombe v. State of California (1959) 172 Cal.App.2d 54, 56–58, 341 P.2d 705; Chester v. Hall (1921) 55 Cal.App. 611, 615–617, 204 P. 237.) It does not indicate which particular provisions are self-executing or the extent to which they can be implemented by legal enactment.

It is contended that the delegation of powers to the administrative agency, at least since it was recast in two sentences by the 1954 revision (see fn. 5, supra, and preceding text), is two-fold: First ‘the exclusive power * * * to license,’ which concededly must be ‘in accordance with laws enacted by the Legislature,’ and, second, free of any legislative restraint, ‘the power in its discretion to deny, suspend or revoke any specific alcoholic beverages license if it shall determine for good cause that the granting or continuance of such license would be contrary to public welfare or morals, or that a person seeking or holding a license has violated any law prohibiting conduct involving moral turpitude.’

The second premise fails to consider that if the power to license is to be in ‘accordance with laws enacted by the Legislature,’ those laws in turn must of necessity affect the denial, suspension or revocation of licenses. (See Harris v. Alcoholic Bev., etc., Appeals Bd. (1964) 228 Cal.App.2d 1, 6, 39 Cal.Rptr. 192.) That the Legislature is to have some powers in such matters is also clear from the other provisions of section 22 which have been set forth above. The constitutional grant in the second sentence of the fifth paragraph can be reconciled with the other constitutional provisions if it is interpreted as meaning that despite the broad powers conferred upon the Legislature with respect to the licensing and regulation of all phases of the alcoholic beverage business it may not provide for the granting or continuance of a license when such action would violate the constitutional standards, or otherwise interfere with the administrative agency's power to enforce such standards.

This construction is consistent with existing precedents. In Torres v. Dept. of Alcoholic Bev. Control (1961) 192 Cal.App.2d 541, 13 Cal.Rptr. 531, the court stated: ‘* * * the authority of the Department to deny the granting of a license upon the ground that its issuance would be contrary to public welfare or morals is derived from self-executing provisions of the Constitution; exists independently of any legislation; and may not be restricted by statute. [Citations.]’ (192 Cal.App.2d at p. 550, 13 Cal.Rptr. at p. 537.) Torres involved the denial of a license and the appellate court reversed the trial court which had overruled the denial of the license. The Department's findings that there was an undue concentration of alcoholic beverage licenses in the vicinity, and that further licensed premises would aggravate an existing enforcement problem were upheld as sufficient to show that the issuance would be contrary to public welfare and morals.

Attention is then directed to the question of whether pricing practices can of themselves offend public welfare and morals. An examination of other cases involving the denial, suspension or revocation of a license, reveals no case where the administrative body, without legislative sanction,6 found that pricing practices of themselves violated the standards imposed by section 22.7

In Irvine v. State Board of Equalization (1940) 40 Cal.App.2d 280, 104 P.2d 847, which upheld the right of the Legislature to prescribe the proceedings to be taken before a license could be revoked, the court stated: ‘It is only where the legislative action impairs the powers granted by the Constitution, or defeats the exercise of such powers, that it is without force or effect.’ (40 Cal.App.2d 280, 285, 104 P.2d 847, 850.)

The Department does not have absolute and unlimited power under the constitutional provisions. It must exercise judicial discretion in determining the penalty to be imposed, and abuse of discretion may be curbed by the Appeals Board and the courts. (Harris v. Alcoholic Bev. etc. Appeals Bd. (1965) 62 Cal.2d 589, 594–595, 43 Cal.Rptr. 633, 400 P.2d 745.) Similarly, the Department must exercise such judicial discretion in denying a licenses despite legislative authorization (§ 23780) to refuse the issuance of a license for premises located in the vicinity of certain favored institutions. (Martin v. Alcoholic Bev., etc., Appeals Bd. (1961) 55 Cal.2d 867, 875–876 and 880, 13 Cal.Rptr. 513, 362 P.2d 337; and see Weiss v. State Board of Equalization (1953) 40 Cal.2d 772, 775, 256 P.2d 1; Bailey v. Dept. of Alcoholic Bev. Control (1962) 201 Cal.App.2d 348, 351, 20 Cal.Rptr. 264; Torres v. Dept. Aloholic Bev. Control, supra, 192 Cal.App.2d 541, 544, 13 Cal.Rptr. 531.)

‘In order to establish ‘good cause’ for suspension of [a] * * * license, something more must be shown than that many * * * patrons were homosexuals and that they used [the] restaurant and bar as a meeting place.' (Stouman v. Reilly (1951) 37 Cal.2d 713, 717, 234 P.2d 969, 971.) Nor can the Legislature (former § 24200, subd. (e), repealed Stats.1963, ch. 1040, § 9, p. 2333) ‘ * * * authorize revocation of a license without requiring anything more to be shown than that the premises are a resort for certain classes of person, * * *’. (Vallerga v. Dept. Alcoholic Bev. Control, supra, 53 Cal.2d 313, 318, 1 Cal.Rptr. 494, 497, 347 P.2d 909, 912.)

Even though the Department's rule-making power is derived directly from the Consitution, the Department cannot make regulations in conflict with other terms of the Constitution or valid statutes. In Harris v. Alcoholic Bev., etc., Appeals Bd. (1965) 235 Cal.App.2d 479, 45 Cal.Rptr. 450 the court upheld an Appeals Board decision which had reversed the Department's denial of license. The court held that the legislative declaration in section 172e of the Penal Code that the restrictions in sections 172, 172a, 172b, 172d and 172g of that code should not apply to bona fide eating places so as to preclude licensing such premises, invalidated a rule of the Department which purported to impose other conditions. (235 Cal.App.2d at pp. 481–482, 45 Cal.Rptr. 450, applying Harris v. Alcoholic Bev., etc, Appeals Bd., supra, 228 Cal.App.2d 1, 6–7, 39 Cal.Rptr. 192.) In the latter case the court concluded: ‘The order of priority with respect to jurisdiction, accordingly, is as follows: (1) The Constitution is the supreme expression; (2) To the extent that it does not conflict with the Constitution, the Legislature may act; (3) To the extent that it does not conflict with the Constitution, or with lawful acts of the Legislature, the Department may act through its rules and regulations.’ (228 Cal.App.2d at p. 7, 39 Cal.Rptr. at p. 196.) The former case is also significant because the court examined the record and found that a recital ‘* * * ‘issuance of the license would be contrary to the provisions of Department's Rule 61.1, thereby being contrary to public welfare and morals, * * *’ (Italics added)' did not indicate that the license had been denied on grounds other than failure to comply with the rules. (235 Cal.App.2d at pp. 483–484, 45 Cal.Rptr. at p. 453.) So in this case, where the findings of fact only show a violation of section 24755, the recital in the determination ‘* * * grounds for suspension or revocation of such license exist and the continuance of such license would be contrary to public welfare and morals as set forth in Article XX, Section 22 of the State Constitution, and Section 24200(a) Business and Professions Code’ cannot be resorted to in order to establish an offense other than that actually found to have been committed.

In Nelson v. Reilly (1948) 88 Cal.App.2d 303, 198 P.2d 694, the court was presented with the question of whether the constitutional provision, as enacted in 1936 and the law as it existed prior to the adoption of section 55.6 in 1947 (Stats. 1947, ch. 657, p. 1698, see infra) gave the administrative agency the power to require by rule that a retailer enter into a fair trade contract. The court held that the issue was rendered moot by the enactment of the new provisions. (88 Cal.App.2d at p. 306, 198 P.2d 694.)

‘The Legislature may properly, * * * provide that certain conduct is contrary to public welfare, and the department may rely upon the legislative declaration without taking evidence as to the detrimental effect upon public welfare. ‘ (Louis Stores, Inc. v. Dept. of Alcoholic Beverage Control (1962) 57 Cal.2d 749, 759, 22 Cal.Rptr. 14, 19, 371 P.2d 758, 763.) In the cited case the court upheld enforcement of the provisions of section 23779 of the Business and Professions Code which gave the Department power to revoke a wholesale license in its discretion whenever the licensee fails for a period of 45 days to make sales to retail licensees other than himself. (57 Cal.2d at pp. 759–761, 22 Cal.Rptr. 14, 371 P.2d 758.) It is questionable whether this restriction, and many others8 found in the Alcoholic Beverage Control Act curtail evils of such a nature that they would be contrary to public welfare or morals so as to justify a denial, suspension or revocation of a license in the absence of a legislative declaration.

There is nothing in the foregoing decisions to show that price cutting is itself contrary to public welfare or morals. An analysis of the cases upholding the fair trade provisions of the Alcoholic Beverage Control Act reveals that the Legislature's power to act in the field was discretionary and that there is no absolute requirement that such conduct be proscribed as contrary to public welfare or morals.

In Wilke & Holzheiser, Inc. v. Dept. of Alcoholic Bev. Control, supra, the court defined its task as follows: ‘[W]e simply determine whether the statute reasonably relates to a legitimate governmental purpose.’ (65 Cal.2d at p. 359, 55 Cal.Rptr. at p. 30, 420 P.2d at p. 742.) The court looked to the general purpose of the Alcoholic Beverage Control Act as set forth in Business and Professions Code section 23001,9 and the specific declaration concerning the purpose of the retail price maintenance provisions as set forth in section 24749.10 (Id., p. 360, 55 Cal.Rptr. 23, 420 P.2d 735.) The court found it could not call irrational the assumption that retail price maintenance would tend to reduce excessive purchases of alcoholic beverages and thereby promote temperance. (Id., pp. 360–361, 55 Cal.Rptr. 23, 420 P.2d 735; and see Allied Properties v. Dept. of Alcoholic Beverage Control (1959) 53 Cal.2d 141, 148, 346 P.2d 737.) The court observed, ‘That the Legislature did not also seek to prevent intemperance by limiting the volume of liquor sales, by regulating competition among producers and wholesalers, or by establishing high liquor prices generally, creates no constitutional infirmity.‘ (65 Cal.2d at p. 361, 55 Cal.Rptr. at p. 31, 420 P.2d at p. 743.) The right of the Legislature to select any reasonable approach to the problem of intemperance, and its right to revise the approach taken were each recognized.11

From the foregoing it may be concluded that the Legislature may provide for retail price maintenance and for the suspension or revocation of a license for violation of its mandate in order to provide temperance. There is nothing in the discussion reviewed which indicates that the public welfare or morals requires either retail price fixing or the specific penalties originally authorized, if the Legislature should have, as it did in 1965, a change of heart.12

The court further upheld the second declared legislative purpose. (See fn. 10, supra.) ‘To the extent that retail price maintenance provisions eliminate retail price wars in the liquor industry, they undeniably discourage * * * disruptive practices.’ (Id., p. 362, 55 Cal.Rptr. p. 32, 420 P.2d p. 744. See also Allied Properties v. Dept. of Alcoholic Beverage Control, supra, 53 Cal.2d at pp. 148–149, 346 P.2d 737.) In answering the contention that price cutting could be curtailed under existing fair trade laws the court declared, ‘The possibility that ‘other less stringent * * * regulations might have sufficed is not our concern; that is a matter lying within the discretion of the legislative body.’ [Natural Milk, etc., Assn. of California v. City and County of San Francisco (1942) 20 Cal.2d 101, 115, 124 P.2d 25, 33.]' (Id., p. 363, 55 Cal.Rptr. p. 32, 420 P.2d p. 744; fn. omitted.)

The court expressly noted that the administrative sanctions (Bus. & Prof. Code, § 24200) and criminal penalties (Bus. & Prof. Code, § 25617) were prescribed by the Legislature, and concluded, ‘the provision of public sanctions can hardly convert an otherwise constitutional grant of authority into an unconstitutional delegation of legislative power.’ (Id., p. 369, 55 Cal.Rptr. p. 37, 420 P.2d p. 749. See also Allied Properties v. Department of Alcoholic Beverage Control, supra, 53 Cal.2d at p. 150, 346 P.2d 737.)

Nothing is found in either Wilke & Holzheiser, Inc. or Allied Properties which makes the validity of the price maintenance provisions dependent on the provisions of section 22 of article XX, or which compels the conclusion that the protection of the public welfare or morals would require or even authorize the administrative body to take steps on its own initiative to curtail the practices which the Legislature has singled out for regulation. The fact that each case refers to the administrative body's constitutional power to revoke or suspend (65 Cal.2d at p. 370, 55 Cal.Rptr. 23, 420 P.2d 735, and 53 Cal.2d at p. 145, 346 P.2d 737) does not compel the conclusion that this power could be used in the field of price regulation in the absence of legislative sanction for its exercise. In Wilke & Holzheiser, Inc., the constitutional power was alluded to only as it existed prior to the adoption of section 24755.1 and the creation of the problem discussed herein. In Allied Properties the court noted, ‘[T]here is no contention that, if the statutes and rules violated are valid, the suspension constitutes an abuse of discretion.’ (53 Cal.2d at p. 146, 346 P.2d at p. 739.)

On the other hand there is authority for the proposition that price cutting in and of itself would not justify the Department in taking action under the Constitution in the absence of legislative authority.

In Wilke & Holzheiser, Inc., supra, it was recognized that the courts in other jurisdictions which have passed on the constitutionality of measures requiring that each producer of liquor establish a price below which retail distributors may not sell his brand have reached divergent conclusions. (65 Cal.2d at p. 355, fn. 2 and text; p. 356, fn. 3, and text, 55 Cal.Rptr. 23, 420 P.2d 735.) With this recognition of the state of the law, it is obvious that the decision of the Supreme Court upholding the power of the Legislature to act in the field in no way implied that price cutting in and of itself was contrary to public welfare or morals, and could be curtailed without any legislative enactment.

In Schenley Industries, Inc. v. Munro (1965) 237 Cal.App.2d 106, 46 Cal.Rptr. 678, the court examined the Department's power to prohibit quantity sales of distilled spirits to retailers at discounts greater than the reduction in cost from the cost of a sale in a one-case lot. The court examined the applicable statutory and constitutional provisions. It noted that the power conferred by the first sentence of the fifth paragraph of section 22 of article XX (see fn. 5 and accompanying text, supra) ‘is clearly limited by the proviso that it must be exercised ‘in accordance with the laws enacted by the Legislature.’' (237 Cal.App.2d at p. 111, 46 Cal.Rptr. at p. 681; see also Blatz Brewing Co. v. Collins (1945) 69 Cal.App.2d 639, 645, 160 P.2d 37.) It rejected the contention that the power to fix wholesale price discounts could be justified and supported by the second sentence of the constitutional provision; and concluded, ‘We hold that the price-regulating of quantity sales of distilled spirits to retailers does not come within the meaning or purview of ‘public welfare or morals' as that term is used in article XX, section 22, of our Constitution.’ (Id., at p. 112, 46 Cal.Rptr. at p. 682.)

It has been recognized that the price control provisions with respect to alcoholic beverages need not depend on the general police power. ‘The power of the states to control the traffic in liquor under the Twenty-first Amendment is unconditional and includes complete prohibition as well as any restriction falling short of prohibition even if discriminatory in nature and unconnected to public health, safety or morals [citations].’ (Dave's Market, Inc. v. Dept. of Alcoholic Beverage Control (1963) 222 Cal.App.2d 671, 680, 35 Cal.Rptr. 348, 354.)

The distinction between countenancing conduct which is contrary to public welfare or morals, and the discretion to prescribe the action to be taken when such conduct has been evidenced, even though it be conduct in violation of a constitutional provision, was noted in Reynolds v. State Board of Equalization, supra, where the court stated: ‘Although it may be conceded that under this section there would be an abuse of discretion if the board purported to authorize the sale of liquor for consumption on the premises when the business there conducted failed to meet the prescribed qualifications, it does not necessarily follow that the board is required, as a matter of law, to revoke, rather than suspend, the license. Neither the language nor purpose of the section compels such a conclusion.’ 29 Cal.2d at p. 140, 173 P.2d at p. 553.)

It is concluded that since there is no constitutional grant of power to the Department to deny, suspend or revoke a license because of price cutting, the Legislature's withdrawal of the right of the Department to so act when the legislative proscriptions against price cutting are violated does not conflict with any constitutional power of the Department, and must be upheld.

This conclusion is further buttressed by the history of legislative action with respect to control of the prices at which alcoholic beverages are sold. The court observed in Reynolds v. State Board of Equalization, supra, 29 Cal.2d 137, 140, 173 P.2d 551, 553: ‘It is well settled that ‘When the Constitution has a doubtful or obscure meaning or is capable of various interpretations, the construction placed thereon by the Legislature is of very persuasive significance.’ (Delaney v. Lowery, 25 Cal.2d 561, 569, 154 P.2d 674, 678. * * *)'

The original post-repeal ‘State Liquor Control Act’ (Stats.1933, ch. 658, pp. 1697, et seq.) contains no reference to price control. Nor does the original ‘Alcoholic Beverage Control Act’ (Stats.1935, ch. 330, pp. 1123, et seq.) deal with the subject. In 1937 (Stats.1937, ch. 758, § 65, pp. 2159–2161) the Legislature added section 38e to the act. This section provided for the filing and posting of prices charged for beer by manufacturers, importers and wholesalers, required adherence to the filed and posted prices, made a violation a misdemeanor, and subjected the violator to suit for injunction and damages by a qualified trade association. The provisions were substantially the same as those now found in sections 25000–25010 of the code.13 Significantly the last paragraph provided as follows: ‘The board shall not suspend or revoke the license of any licensee for a violation of the provisions of this section or a regulation adopted pursuant thereto unless such licensee shall have committed, within a period of one year, at least three separate violations of the provisions of this section or of any rule or regulation adopted by the board pursuant thereto and such violations shall have been proven by all or any of the following methods, to wit: (1) a conviction for misdemeanor or (2) a judgment in a civil suit for injunction as herein provided or (3) by a finding of the board if hearing is held in accordance with sections 40 to 48 inclusive herein, in which event the board may suspend or revoke the license of such licensee.’ (Cf. Bus. & Prof. Code, § 25010.) At the same time the grounds for suspension or revocation of license were amended to note the limitation quoted above. (Sec. 40, ground ‘2’ as amended by Stats.1937, ch. 758, § 67, p. 2161; and cf. Bus. & Prof. Code, § 24200, subd. (b).)

At the same time the Legislature authorized fair trade contracts for sale and resale of any alcoholic beverage. (Alco holic Beverage Control Act, § 55.5 as added by Stats.1937, ch. 758, § 88, pp. 2173–2174; cf. Bus. & Prof. Code, §§ 24750, 24751, 24752 and 24753.) No mention is made of any penalty other than civil suit at the instance of any person damaged by a violation of the contract.14

For ten years there was no further regulation of prices by legislative action. The Department and the board point out that in 1939 the State Board of Equalization promulgated rule 49 which purported to place liquor under mandatory minimum retail price controls. The board reportedly enforced this rule through disciplinary actions from 1939 to March 1944, when the rule, which had been renumbered 22 in 1941, was suspended because of conditions engendered by the war. The provisions were reinstated in 1947 as rule 99. A court test of the constitutionality of the rule was averted by the adoption of new legislation in that same year. (See Nelson v. Reilly, supra, 88 Cal.App.2d 303, 305, 198 P.2d 694.) Schenley Industries, Inc. v. Munro, supra, 237 Cal.App.2d 106, 46 Cal.Rptr. 678, indicates that the earlier rules went beyond the scope of legislative or constitutional authority.

In 1947 provisions substantially the same as those found prior to the 1961 amendments in sections 24754, 24755, 24756 and 24757, were added by section 55.6 of the act. (Stats.1947, ch. 657, § 1, p. 1698.) These provisions included the following: ‘All distilled spirits sold at retail shall be, and any other alcoholic beverage may be, sold pursuant to a contract executed under the provisions of Section 55.5 of this act. No licensee shall violate any of the provisions of said contract.’ (Cf. § 24755 prior to 1961 amendment.) This amendment subjected the violator to suspension or revocation under the provisions of section 40 of the act which then provided: ‘The following are the grounds which constitute a basis for the suspension or the revocation of licenses: 1. When the continuance of such license would be contrary to public welfare or morals; but proceedings under Section 40 upon this ground shall not be deemed a limitation upon the board's authority to proceed under Article XX, Section 22 of the Constitution of this State. 2. Except as limited by Section 38e hereof, the violation or the causing of the permitting of a violation by a licensee of (a) this act, (b) any rules and regulations of the board adopted under the provisions of this act, (c) any other penal provisions of law of this State prohibiting or regulating the sale, exposing for sale, use, possession, giving away, adulteration, dilution, misbranding or mislabeling of alcoholic beverages or intoxicating liquors.’ (Stats.1945, ch. 1495, § 3, p. 2773; and cf. § 24200, subds. (a) and (b).) It was subsequently determined that a violation also subjected the violator to the general criminal penalties of the act. (See Peck's Liquors, Inc. v. Superior Court (1963) 221 Cal.App.2d 772, 777–785, 34 Cal.Rptr. 735; and Wilke & Holzheiser, Inc. v. Dept. of Alcoholic Bev. Control, supra, 65 Cal.2d 349, 370, 55 Cal.Rptr. 23, 420 P.2d 735.)

In 1949 (Stats.1949, ch. 574, § 1, p. 1064) section 55.65 (cf. Bus. & Prof.Code, §§ 24850–24881) was added to the Alcoholic Beverage Control Act. It set up a detailed program for fair trade in the sale, resale and purchase of wine. The section prohibited practices in violation of its provision. (§ 55.65, subd. (a); Stats.1949, ch. 571, § 1, p. 1064; and cf. Bus. & Prof. Code, § 24862), and in violation of the provisions of the general Unfair Trade Practices Act (§ 55.65, subd. (1); Stats.1949, ch. 574, § 1, p. 1069; and cf. Bus. & Prof. Code, § 24877). Here again the Legislature purported to fix the penalties for violations. Subdivision (n) of section 55.65 provided as follows: ‘(n) Penalties. For a violation of any of the provisions of this section or rules and regulations adopted pursuant hereto, the board may suspend or revoke a license as follows: For a first offense, not exceeding ten days' suspension; For a second offense, not exceeding thirty days' suspension; For a third offense, the board may suspend or revoke a license.’ (Stats.1949, ch. 574, § 1, p. 1069.)

At the same time the Legislature amended section 55.6 (supra) to give recognition to the new provisions (Stats.1949, ch. 574, § 3, p. 1071; and cf. Bus. & Prof.Code, § 24755 prior to 1961 amendment); and section 40, supra, to expressly note the express provisions for suspension and revocation provided by section 55.65 (Stats.1949, ch. 574, § 2, pp. 1070–1071; and cf. Bus. & Prof.Code, § 24200, subd. (b).)

The heretofore unchallenged action of the Legislature in prescribing penalties for violation of pricing practice restrictions, as now found in sections 24880 and 25010, is persuasive evidence that the Legislature has such power in connection with restrictions which are imposed, not by the Constitution, but by the provisions adopted by the Legislature itself in sections 24749–24755, inclusive. It is true that the addition of section 24755.1 in 1965 (Stats.1965, ch. 742, § 1, p. 2151) was not, as in the case of the former sections, attended by a limitation or proviso, in the provisions in subdivision (b) of section 24200 which set forth the statutory grounds for suspension or revocation of licenses. Nor was there any modification of the legislative purpose set forth in section 24749. Nevertheless, if it does not offend the Constitution, the later more specific enactment should control. (Warne v. Harkness (1963) 60 Cal.2d 579, 588, 35 Cal.Rptr. 601, 387 P.2d 377; Buena Vista W.S. Dist. v. Shields (1932) 126 Cal.App. 241, 248–250, 14 P.2d 559, 15 P.2d 861; Nelson v. Reilly, supra, 88 Cal.App.2d 303, 306, 198 P.2d 694; Code Civ.Proc., § 1859; People v. Moroney (1944) 24 Cal.2d 638, 644, 150 P.2d 888.)

There remains for consideration the question of whether the Legislature has invalidly extended the power of the Department by adding the power to impose mandatory fines for violation of the retail price maintenance provisions. (See Wilke & Holzheiser, Inc. v. Dept. of Alcoholic Bev. Control, supra, 65 Cal.2d at p. 371, 55 Cal.Rptr. 23, 420 P.2d 735.)

The Department complains that the Legislature cannot withdraw from the courts the power to fix criminal penalties. As has been demonstrated there is no constitutional requirement that the Legislature or the Department regulate the retail price of liquor. If the Legislature elects to do so it may, as it did from 1937 to 1947, omit any reference to criminal penalties, and leave those in the industry subject only to civil liability. (See Bus. & Prof.Code, § 24752; and cf. Fair Trade Act, §§ 16900–16905, particularly § 16904, with Unfair Practices Act, §§ 17000–17101, particularly § 17100.) The more fundamental question is whether the Legislature may delegate the power to levy ‘monetary penalties' to an administrative agency when the penalties have all the earmarks of a fine. (See Sawyer v. Barbour (1956) 142 Cal.App.2d 827, 834–836, 300 P.2d 187.)

The Department and the board rely upon the general principle that the Legislature cannot delegate judicial powers because of the division of powers prescribed by article III of the State Constitution, and the vesting of judicial power in the courts by the provisions of section 1 of article VI. They refer to numerous instances in which attempted delegation of judicial authority has been invalidated by the courts.15

In Dare v. Bd. of Medical Examiners (1943) 21 Cal.2d 790, 136 P.2d 304, the court observed, ‘This court has held in numerous cases that such a board [created by the Legislature] does not and cannot exercise judicial functions unless authorized so to do by the Constitution.’ (21 Cal.2d at p. 794, 136 P.2d at p. 307.) In Covert v. State Board of Equalization, supra, 29 Cal.2d 125, 173 P.2d 545, the court noted the distinction and stated, ‘An examination of the Constitution of California shows that the State Board of Equalization, unlike most other agencies of statewide authority see Laisne v. California State Board of Optometry, 19 Cal.2d 831, 123 P.2d 457, has specifically been given quasi judicial, or adjudicating power, that is, the right to make determinations of fact which are not subject to reexamination in a trial de novo in the superior court.’ (29 Cal.2d at p. 131, 173 P.2d at p. 548.) It has been recognized that the Constitution also has conferred limited judicial power on other agencies.16

The power to be exercised is limited by the constitutional grant. The Legislature cannot give the administrative agency judicial power to adjudicate an award not authorized by the constitutional provision. (Yosemite L. Co. v. Industrial Acc. Com. (1922) 187 Cal. 774, 783–784, 204 P. 226, 20 A.L.R. 994.) It is urged that the powers conferred on the Department to determine that the continuance of a license would be contrary to public welfare or morals for the purpose of suspending or revoking a license does not embrace the power to determine if the licensee has violated the fair trade contract and price posting provisions of the Alcoholic Beverage Control Act for the purpose of imposing a fine as prescribed by the Legislature.

It is obvious that the Department and board believe that they have had and still have power to adjudicate whether there has been a violation of the provisions in question, despite the fact that the Legislature has purported to withdraw the criminal and license control sanctions which brought the violations within the Department's power to impose suspension or revocation. The question remains whether the new sanctions transcend the Department's jurisdiction. Several considerations lead to the conclusion that they do not.

The broad powers conferred on the Legislature by the provisions of the first, second, ninth, eleventh and fourteenth paragraphs of section 22 of article XX have been referred to at length above. ‘The power of the states to control the traffic in liquor under the Twenty-first Amendment is unconditional and includes complete prohibition as well as any restriction falling short of prohibition even if discriminatory in nature and unconnected to public health, safety or morals [citations].’ (Dave's Market, Inc. v. Dept. of Alcoholic Beverage Control, supra, 222 Cal.App.2d 671, 680, 35 Cal.Rptr. 348, 354. See also Amer. Distil. Co. v. State Bd. of Equal. (1956) 144 Cal.App.2d 457, 465, 301 P.2d 495.) In other words, by reason of the nature of the business, and the absolute power of the Legislature to impose reasonable regulations, it may do so and provide for their administration free of usual constitutional restraints.

Moreover, the enforcement of laws and regulations controlling the sale of alcoholic beverages by indirect monetary penalties, has been sanctioned by legislative authorization for compromises of suspensions as provided in sections 23095–23098 of the Business and Professions Code. (See Reimel v. Alcoholic Bev. etc. Appeals Bd., supra, 256 A.C.A. 188, 204–205, 64 Cal.Rptr. 26.) Since 1957 the Department has been authorized to make the findings required by section 23095, as it has been amended from time to time, including a finding ‘that the payment of the sum of money will achieve the desired disciplinary purposes.’ It has been further authorized to determine the estimated daily gross sales of the offender and to fix the sum of money according to a formula within limits prescribed by the Legislature. No such powers are mentioned in section 22 but the exercise of such powers with legislative sanction has not been judicially overruled.

Support for the provisions regarding compromise, and for the provisions of section 24755.1 can be found in Reynolds v. State Board of Equalization, supra, where the court said: ‘Under the general principle that the greater contains the less (adopted as a maxim by Civ.Code, § 3536), it has frequently been held that statutes authorizing a board or commission to revoke, terminate, or dismiss include the lesser penalty of suspension or limitation. [Citations.] The Legislature has interpreted section 22 of article XX of the Constitution as conferring a power to suspend. Both the Liquor Control Act of 1933 (Stats.1933, ch. 658, §§ 19, 20, 22, 23 and 25) and the superseding Alcoholic Beverage Control Act of 1935 (Stats.1935, p. 1123; 2 Deering's Gen. Laws, Act 3796, § 38e, 40–43, 46, 48.6) authorized suspension as well as revocation. It is well settled that ‘When the Constitution has a doubtful or obscure meaning or is capable of various interpretations, the construction placed thereon by the Legislature is of very persuasive significance.’ Delaney v. Lowery, 25 Cal.2d 561, 569, 154 P.2d 674, 678.' (29 Cal.2d at p. 140, 173 P.2d at p. 553.) So here the Legislature has twice interpreted the powers of the Department as including the power necessary to adjudicate the facts necessary for a money penalty rather than a suspension or revocation.

Finally, it is noted that the provisions defining the powers of the Alcoholic Beverage Control Appeals Board have since their first adoption in 1954 read: ‘When any person aggrieved thereby appeals from a decision of the department ordering any penalty assessment, issuing, denying, transferring, suspending or revoking any license * * *.’ (Const., art. XX, § 22, 7th par. emphasis added.) Moreover, in 1958 the following provisions were added to the code: ‘The department may, on its own motion at any time before a penalty assessment is placed into effect and without any further proceedings, reconsider the penalty, but such reconsideration shall be limited to its reduction.’ (Stats.1959, ch. 544, § 1, p. 2509; and see present § 24211: emphasis added.)

It is concluded that the provisions of section 24755.1 which impose mandatory fines for violation of the retail price maintenance provisions do not constitute an invalid extension of the power vested in the Department by section 22 of article XX of the Constitution.

The Department and the board urge that the 1965 amendment is not reasonably adopted to carry out the purposes of the Legislature. They claim that although it will have a significant impact on a licensee with small gross sales, it may not have much effect on a large volume dealer, who can write off the penalties as a cost of doing business. This overlooks the provision that each sale in violation of section 24755 shall constitute a separate violation. In Wilke & Holzheiser, Inc. v. Dept. of Alcoholic Bev. Control, supra, the court recognized the right of the Legislature to vary the means of enforcement. The opinion states: ‘The Legislature's alteration of the method for enforcement of a statute, * * * ordinarily reflects its decision that the revised method will work greater future deterence and achieve greater administrative efficiency. * * * The enactment of section 24755.1 constitutes just such an attempted improvement in the machinery of enforcement. The Legislature determined that the imposition of mandatory fines, which become immediately payable despite appeal or mandate, would prove more effective in enforcing the statute than criminal prosecution, or discretionary suspension and revocation of licenses, which often involve substantial procedural delays. (See, e. g., the stay provisions of Code Civ.Proc., § 1094.5, subd. (f).)’ (65 Cal.2d at p. 372, 55 Cal.Rptr. at p. 39, 420 P.2d at p. 751.)

It is not, however, the function of the courts to pass on the wisdom or the efficacy of the legislative program when it falls within constitutional bounds. (Wilke & Holzheiser, Inc., supra, at p. 363, 55 Cal.Rptr. 23, 420 P.2d 735.)

The same considerations refute the contention that the legislation is improper because it substitutes monetary penalties, which may rise to $1,000, for criminal penalties (§ 25617) which carried a maximum fine of $500.

‘The familiar rules * * * require that ‘The Constitution and the statute are to be read together,’ and that if ‘the terms of a statute are by fair and reasonable interpretation capable of a meaning consistent with the requirements of the Constitution, the statute will be given that meaning, rather than another in conflict with the Constitution.’ (County of Los Angeles v. Legg (1936) 5 Cal.2d 349, 353, 55 P.2d 206, 207.)' (County of Madera v. Gendron (1963) 59 Cal.2d 798, 801, 31 Cal.Rptr. 302, 304, 382 P.2d 342, 344, 6 A.L.R.3d 555. See also Erlich v. Municipal Court (1961) 55 Cal.2d 553, 558, 11 Cal.Rptr. 758, 360 P.2d 334; and Sawyer v. Barbour, supra, 142 Cal.App.2d 827, 833, 300 P.2d 187; and cf. Wilke & Holzheiser, Inc. v. Dept. of Alcoholic Bev. Control, supra, 65 Cal.2d 349, 359–360, 55 Cal.Rptr. 23, 420 P.2d 735; and Allied Properties v. Dept. of Alcoholic Beverage Control, supra, 53 Cal.2d 141, 146 and 148, 346 P.2d 737.)

In the application of these principles it is concluded that the Legislature has plenary power over retail pricing practices, may dictate the practices to be followed and may provide the penalties for their violation. Nothing herein should be construed as abrogating the right of the Department to suspend or revoke a license on the grounds set forth in the Constitution where such grounds involve conduct other than that proscribed by section 24755.

I would reverse the decision of the Alcoholic Beverage Control Appeals Board and direct the board to reverse the decision of the Department of Alcoholic Beverage Control with respect to the penalty imposed, and remand the case to the Department for the imposition of the proper penalty for the established violation in accordance with section 24755.1.

FOOTNOTES

1.  Unless otherwise indicated, all statutory references are to the Business and Professions Code.

2.  A petition for a hearing by the California Supreme Court was denied.

3.  Section 24755.1, in pertinent part, provides: ‘No criminal penalties shall be imposed on any licensee for a violation of the provisions of Section 24755 nor shall the license of a licensee be suspended or revoked for a violation of such section.‘The penalties imposed by the department for violations of such section shall be confined solely to monetary penalties for each violation committed during 36 consecutive months and shall be in the following amounts:‘For the first violation, two hundred fifty dollars ($250); for the second and subsequent violations, one thousand dollars ($1,000) * * *.’

4.  The reference hereafter to section 22 has reference to section 22 of article XX of the California Constitution.

5.  We are not unmindful of the holding in Schenley Industries, Inc. v. Munro, 237 Cal.App.2d 106, 46 Cal.Rptr. 678, where it was held that price regulating of quantity sales to retailers does not come within the meaning or purview of ‘public welfare or morals' as that term is used in article XX, section 22 of the California Constitution. This case is distinguishable on the basis that it involves wholesale prices and discounts and not retail sales of alcoholic beverages to consumers of such beverages. This distinction was recognized in the decision. (P. 113, 46 Cal.Rptr. 678.)

FN18. No fines are directly involved in these proceeding, but the provisions of section 24755.1 are clearly inseverable, and if we were to decide that article XX invalidates the provision requiring the department to impose fines, then we should be compelled to conclude, as a matter of legislative interpretation, that all of section 24755.1, including its prohibition against license suspension or revocation, is inoperative. (65 Cal.2d at pp. 370–371, 55 Cal.Rptr. at p. 37–38, 420 P.2d at p. 749–750.).  FN18. No fines are directly involved in these proceeding, but the provisions of section 24755.1 are clearly inseverable, and if we were to decide that article XX invalidates the provision requiring the department to impose fines, then we should be compelled to conclude, as a matter of legislative interpretation, that all of section 24755.1, including its prohibition against license suspension or revocation, is inoperative. (65 Cal.2d at pp. 370–371, 55 Cal.Rptr. at p. 37–38, 420 P.2d at p. 749–750.)

1.  As adopted in 1932 the provision read:‘* * * no public saloon, public bar or barroom or other public drinking place where intoxicating liquors to be used for any purpose shall be kept, bought, sold, consumed or otherwise disposed of, shall ever be established, maintained or operated within the State; provided, further, subject to the above provisions, that in hotels, boarding houses, restaurants, cafes, cafeterias and other public eating places, wines and beer may be served and consumed with meals furnished in good faith to the guests and patrons thereof, * * *.’In 1934 the section was amended to read: ‘Intoxicating liquors, other than beers, shall not be consumed, bought, sold, or otherwise disposed of for consumption on the premises, in any public saloon, public bar or public barroom within the State; provided, however, that subject to the aforesaid restriction, all intoxicating liquors may be kept and may be bought, sold, served, consumed, and otherwise disposed of in any bona fide hotel, restaurant, cafe, cafeteria, railroad dining or club car, passenger ship, or other public eating place, or in any bona fide club after such club has been lawfully operated for not less than one year.’The same prohibition was continued in 1954.

2.  The section then provided that the administrative agency could change the fees for licensed premises. This power was given to the Legislature in the 1954 and 1956 amendments.

3.  The constitutional guidelines are: ‘(a) For bona fide public eating places, as defined by the Legislature. (b) For public premises in which food shall not be sold or served as in a bona fide public eating place, but upon which premises the Legislature mall permit the sale or service of food products incidental to the sale and service of alcoholic beverages. No person under the age of 21 years shall be permitted to enter and remain in any such premises without lawful business therein. (c) For public premises for the sale and service of beers alone. (d) Under such conditions as the Legislature may impose, for railroad dining or club cars, passenger ships, common carriers by air, and bona fide clubs after such clubs have been lawfully operated for not less than one year.’ (Emphasis added.)

4.  The tenth paragraph, the provisions of which are first found in the 1954 revision, reserved the excise taxing powers to the State Board of Equalization when the Department was created. The twelfth paragraph preserves the directive, first promulgated in 1934, which requires the Legislature to apportion taxes between governmental entities in such manner as it may deem proper.

5.  The 1934 revision read: ‘The State Board of Equalization shall have the exclusive power to license the manufacture, importation and sale of intoxicating liquors in this State, and to collect license fees or occupation taxes on account thereof and shall have the power, in its discretion, to deny or revoke any specific liquor license if it shall determine for good cause that the granting or continuance of such license would be contrary to public welfare or morals. It shall be unlawful for any person other than a licensee of said board to manufacture, import or sell intoxicating liquors in this State.’

6.  The cases are legion in which the courts have upheld the suspension or revocation of a license for violation of the price control provisions of the act when the conduct involved was unconditionally prohibited by the provisions of the Alcoholic Beverage Control Act and was attended by criminal sanctions. (See Reimel v. House (1968) 259 A.C.A. 532 66 Cal.Rptr. 434; Reimel v. Alcoholic Beverage, etc., Appeals Board (1968) 256 A.C.A. 188, 64 Cal.Rptr. 26; Dave's Market, Inc. v. Dept. of Alcoholic Beverage Control (1963) 222 Cal.App.2d 671, 35 Cal.Rptr. 348; United Liquors, Inc. v. Dept. of Alc. Bev. Control (1963) 218 Cal.App.2d 450, 32 Cal.Rptr. 603; Cohon v. Dept. of Alcoholic Bev. Control (1963) 218 Cal.App.2d 332, 32 Cal.Rptr. 723; DeMartini v. Department of Alcoholic Beverage Control (1963) 215 Cal.App.2d 787, 30 Cal.Rptr. 668; and note Bus. & Prof.Code, § 24200, subd. (b). Cf. Const., art. XX, § 22; § 24200, subd. (a); and are Harris v. Alcoholic Bev., etc., Appeals Bd. (1965) 235 Cal.App.2d 479, 483–484, 45 Cal.Rptr. 450.)

7.  The administrative agency's power to act under the constitutional mandate has been recognized in the following circumstances: Repeated violations of provisions of the act (§§ 23300 and see 23355, 23951 and 23953) which prohibit certain acts by an unlicensed person (Martin v. Alcoholic Bev., etc., Appeals Bd. (1959) 52 Cal.2d 287, 291, 341 P.2d 296); Conduct in violation of provisions of the Penal Code (§ 337a, subd. 3, prohibiting taking, holding and forwarding bets upon horse races) (MacFarlane v. Dept. Alcoholic Bev. Control (1958) 51 Cal.2d 84, 91, 330 P.2d 769); Serving alcoholic beverages in premises which failed to comply with the specific constitutional requirements (Reynolds v. State Board of Equalization (1946) 29 Cal.2d 137, 139, 173 P.2d 551, 174 P.2d 4); Where the premises are operated in such a manner as to make them a law enforcement problem for the police (Harris v. Alcoholic Bev. Con. Appeals Bd. (1963) 212 Cal.App.2d 106, 118, 28 Cal.Rptr. 74); Violation of a federal price control statute which carried criminal penalties (Moore v. State Board of Equalization (1946) 76 Cal.App.2d 758, 765, 174 P.2d 323); Denial of an off-sale license for premises located in proximity to a school (Weiss v. State Board of Equalization (1953) 40 Cal.2d 772, 775, 256 P.2d 1; and see Hansen v. State Board of Equalization (1941) 43 Cal.App.2d 176, 180, 110 P.2d 453); Prohibition by rule of the acceptance of alcoholic beverages by females employed on the premises (Mercurio v. Dept. Alcoholic etc. Control (1956) 144 Cal.App.2d 626, 631–634, 301 P.2d 474); Revocation of a license where illegal sale of narcotics were conducted on the premises (Endo v. State Board of Equalization (1956) 143 Cal.App.2d 395, 397, 300 P.2d 366.).

8.  Sections 23771–23772, prohibiting manufacturers from holding wholesaler's license (see Harris v. Alcoholic Bev., etc., Appeals Bd. (1964) 61 Cal.2d 305, 309, 38 Cal.Rptr. 409, 392 P.2d 1); § 23778 requiring maintenance of a reasonable stock of goods (see Duke Molner, etc., Liquor Co. v. Martin (1960) 180 Cal.App.2d 873, 881–882, 4 Cal.Rptr. 904); § 23779, revocation for failure to actively engage as bona fide wholesaler (see, in addition to Louis Storex, supra; Borun Bros. v. Department Alcoholic Beverage Control (1963) 215 Cal.App.2d 503, 508–510, 30 Cal.Rptr. 175; and Koehn v. State Board of Equalization (1958) 166 Cal.App.2d 109, 112, 333 P.2d 125); former § 23793 prohibiting transfer to premises within 200 feet of existing premises (see Harris v. Alcoholic Bev., etc., Appeals Bd. (1965) 238 Cal.App.2d 23, 28–29, 47 Cal.Rptr. 424. Cf. Regulatory provisions found in §§ 25600–25665).

9.  Section 23001, which stems from Stats.1937, ch. 758, § 2, pp. 2126–2127, provides in part: ‘This division is an exercise of the police powers of the State for the protection of the safety, welfare, health, peace, and morals of the people of the State, to eliminate the evils of unlicensed and unlawful manufacture, selling, and disposing of alcoholic beverages, and to promote temperance in the use and consumption of alcoholic beverages.’

10.  Section 24749, as added by Stats.1961, ch. 635, § 1, p. 1835, after the decision in Allied Properties v. Department of Alcoholic Beverage Control (1959) 53 Cal.2d 141, 346 P.2d 737, provides: ‘It is the declared policy of the State that it is necessary to regulate and control the manufacture, sale, and distribution of alcoholic beverages within this State for the purpose of fostering and promoting temperance in their consumption and respect for and obedience to the law. In order to eliminate price wars which unduly stimulate the sale and consumption of alcoholic beverages and disrupt the orderly sale and distribution thereof, it is hereby declared as the policy of this State that the sale of alcoholic beverages should be subjected to certain restrictions and regulations. The necessity for the enactment of provisions of this chapter is, therefore, declared as a matter of legislative determination.’

11.  ‘The selectivity of our Legislature's approach to the problem of intemperance might reflect a variety of entirely legitimate considerations. * * * Legislative revision of a statute cannot be equated to its death knell by judicial decree.’ (Wilke & Holzheiser, Inc. v. Dept. of Alcoholic Bev. Control (1966) 65 Cal.2d 349 at pp. 361 and 362, and cf. p. 372, 55 Cal.Rptr. at pp. 31–32, 420 P.2d at p. 743–744.)

12.  The Legislature may have rationally realized that the price control provisions do not in fact aid the cause of temperance, but merely reduce the impecunious intemperant user to the purchase of off-brands of more questionable quality. At the same time it may have found a residue of merit in seeking to avoid disruptive sales practices by the substituted penalties.

13.  The power of the Department with reference to the pricing of beer is the subject of the opinion in Ralph's Grocery Co. v. Reimel (1967) 255 A.C.A. 165, 62 Cal.Rptr. 914, which indicates that the constitutional powers vested in the Department do not include the power to fix prices. (255 A.C.A. at pp. 167–168, 62 Cal.Rptr. 914.) A hearing was granted by the Supreme Court, L.A. 29530. December 13, 1967, and the matter was argued May 7, 1968. (See also Blatz Brewing Co. v. Collins (1945) 69 Cal.App.2d 639, 653–654, 160 P.2d 37.)

14.  The section provisions in part: ‘Wilfully and knowingly advertising, offering for sale, or selling any alcoholic beverage at less than the price stipulated in any contract entered into pursuant to the provisions of this section, whether the person to advertising, offering for sale, or selling is or not a party to the contract, is unfair competition and is actionable at the suit of any person damaged thereby.’ (Cf. Bus. & Prof.Code, § 24752.)

15.  Temescal Water Co. v. Dept. of Public Works (1955) 44 Cal.2d 90, 97–99, 280 P.2d 1 (Water Commission's power to adjudicate rights in the flow of a stream); Dare v. Bd. of Medical Examiners (1943) 21 Cal.2d 790, 794–795, 136 P.2d 304 (Board of Medical Examiners ruling subject to independent judgment of the courts on trial de novo); Laisne v. Cal. St. Bd. of Optometry (1942) 19 Cal.2d 831, 833–835 and 845–848, 123 P.2d 457 (scope of review of board's finding); Ray v. Parker (1940) 15 Cal.2d 275, 289, 101 P.2d 665; Jersey Maid Milk Products Co. v. Brock (1939) 13 Cal.2d 620, 651–652, 91 P.2d 577 (Director of Agriculture's power to adjudicate damages for complainant for violation of Milk Stabilization Act); Drummey v. State Bd. of Funeral Directors (1939) 13 Cal.2d 75, 81–82, 87 P.2d 848 (nature and scope of review of board's finding); and cf. Greif v. Dullea (1944) 66 Cal.App.2d 986, 1008–1009, 153 P.2d 581 (distinguishing local from state administrative agencies).

16.  Boren v. State Personnel Board (1951) 37 Cal.2d 634, 637–638, 234 P.2d 981; Sandstrom v. Cal. Horse Racing Board (1948) 31 Cal.2d 401, 412–413, 189 P.2d 17, 3 A.L.R.2d 90; Rudolph v. Athletic Commission (1960) 177 Cal.App.2d 1, 6–7, 1 Cal.Rptr. 898: Board of Harbor Comm'rs., etc. v. Excelsior Redwood Co. (1891) 88 Cal. 491, 493, 26 p. 375.