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Walgreen Co. v. Liquor Control Com.





APPEAL from the Circuit Court of Kankakee County; the Hon. JOHN F. MICHELA, Judge, presiding.


Defendant, the Illinois Liquor Control Commission (hereinafter the Commission), appeals from a ruling of the circuit court of Kankakee County in administrative review finding that Rule 24 of the Commission is unconstitutionally void and from the court's order enjoining the Commission from enforcing the Rule.

The facts of the case follow. On April 8, 1980, plaintiff Walgreen Co., as holder of 141 separate liquor licenses in Illinois, was cited by the Commission for having committed 208 violations of Rule 24.

The Commission's Rule 24 reads as follows:

"Rule 24. Transactions Involving Use of Checks and their Equivalent

No person shall sell or furnish alcoholic liquor at retail to any person on credit or on a passbook or order on a store, or in exchange for any goods, wares or merchandise, or payment for any services rendered. The use, however, of money orders, traveler's checks, drafts or checks or the equivalent of any of the foregoing shall not be deemed the extension of credit within the meaning of the foregoing provisions if not post-dated and if deposited and collected in due course promptly.

The use of credit cards or other authorizations, irrespective of form, when presented to and honored by a retail licensee for payment for alcoholic liquor consumed at retail on the premises, shall be deemed equivalent to the use of bank checks or bank drafts, if the retail licensee honoring such credit cards or authorizations receives payment in due course from such agency on a non-recourse basis.

A retail licensee honoring credit cards or authorizations issued by a non-licensed agency under this Regulation may not advertise the same in any way except by dignified signs in the interior or on the exterior of the licensed premises or by a table card."

The violations occurred during a period from December 20, 1978, through April 1, 1980. They involved newspaper advertising in which logos for VISA and Master Charge appeared along with advertisements for both alcoholic liquor and other nonalcoholic products marketed by Walgreen's. None of the advertisements in question were devoted solely to liquor.

During the period of the violations, the Commission duly notified appropriate representatives of Walgreen's, and the Commission's agents conducted meetings with such representatives to warn Walgreen's that failure to comply with Rule 24 would result in formal administrative proceedings against Walgreen's. Walgreen's asked whether or not it was the Commission's interpretation that the Rule would be violated if the liquor advertisements without logos were segregated from the nonalcoholic products advertised with logos on other sections of the same newspaper sheet. Alternatively, Walgreen's asked whether or not the Rule would be violated were liquor advertisements placed on pages other than those containing the logos and nonalcoholic products. The Commission apparently failed to respond to these questions. The advertisements continued. Finally, on May 14, 1980, the Commission entered its order finding Walgreen's guilty of 208 violations of Rule 24 and imposing a $20,000 fine against the company. This was the maximum fine allowable under the Liquor Control Act. Ill. Rev. Stat. 1979, ch. 43, par. 108(1).

Walgreen's appealed the Commission's order to the circuit court pursuant to the Administrative Review Act (Ill. Rev. Stat. 1979, ch. 110, par. 264 et seq.). In addition to its arguments on the merits of the Commission's ruling, Walgreen's attacked the constitutionality of the Rule both on its face and as applied by the Commission in the instant case. Walgreen's requested that the order of the Commission be stayed and that the Commission be temporarily and permanently enjoined from enforcing Rule 24.

On November 10, 1980, the circuit court filed a memorandum of opinion finding, inter alia, the following: 1) Rule 24 violates plaintiff's constitutional right of commercial free speech; 2) Rule 24 is void as a violation of the doctrine of separation of powers; 3) Rule 24 violates plaintiff's constitutional right to equal protection; and 4) Rule 24 is vague, arbitrary and unreasonable, thereby violating plaintiff's constitutional right to due process of law. A judgment was entered accordingly in which the fine imposed by the Commission was vacated and the Commission was permanently enjoined from enforcing Rule 24. The Commission appeals from that order.

Initially, we note that the only portion of Rule 24 which the Commission sought to enforce in the instant case is the third paragraph. The Commission argues on appeal that if that paragraph can be severed without doing violence to the remaining paragraphs, then it would be proper to limit the scope of our ruling to only the third paragraph, thereby preserving the first two paragraphs for future challenges by parties directly affected by the provisions therein. Our inquiry is two-pronged — first, is the paragraph severable; secondly, if so, should the paragraph be severed for the purposes of the instant appeal.

Credit sales are dealt with generally in section 13 of article VI of the Liquor Control Act (Ill. Rev. Stat. 1979, ch. 43, par. 134). The third paragraph of Rule 24, however, represents a substantial departure from any of the provisions in section 134. It deals specifically with the retail licensee's advertisement of the fact that non-licensed agency credit cards, such as VISA and Master Charge, may be used for the purchase of alcoholic liquor. Examination of the remaining two paragraphs of Rule 24 reveals that they are closely ...

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