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10/22/87 Federated Distributors, v. J. Thomas Johnson

October 22, 1987

FEDERATED DISTRIBUTORS, INC., ET AL., PLAINTIFFS-APPELLANTS

v.

J. THOMAS JOHNSON, AS DIRECTOR OF THE DEPARTMENT OF REVENUE, ET AL., DEFENDANTS-APPELLEES

THE DISAGREEMENT BETWEEN FEDERATED AND THE DEPARTMENT CENTERS AROUND DIFFERING INTERPRETATIONS OF THE ILLINOIS LIQUOR CONTROL ACT. (ILL. RE

v.

STAT. 1985, CH. 43, PAR. 94 ET SEQ.) THE FOLLOWING PROVISIONS OF THE ACT ARE RELEVANT TO THE RESOLUTION OF THIS APPEAL:



APPELLATE COURT OF ILLINOIS, FIRST DISTRICT, FOURTH DIVISION

516 N.E.2d 471, 163 Ill. App. 3d 27, 114 Ill. Dec. 316 1987.IL.1575

Appeal from the Circuit Court of Cook County; the Hon. Earl Arkiss, Judge, presiding.

APPELLATE Judges:

JUSTICE LINN delivered the opinion of the court. JOHNSON and JIGANTI, JJ., concur.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE LINN

Plaintiff Federated Distributors, Inc. (Federated), brings this appeal seeking reversal of a trial court order which upheld the constitutionality of an Illinois Department of Revenue (the Department) ruling imposing a $2-per-gallon tax on a product produced by Federated. The tax in question was imposed pursuant to the Liquor Control Act of 1934 (Ill. Rev. Stat. 1985, ch. 43, par. 94 et seq.) (the Act). Under the Act, manufacturers of wine or wine coolers containing less than 14% alcohol must pay a $ .23-per-gallon tax, while manufacturers of "spirits" must pay a $2-per-gallon tax. Federated manufactures "New Products," a spirit-based fruit-flavored drink similar to a "wine cooler." Although New Products contains less than 14% alcohol, the Department determined that because the alcohol in New Products was obtained from distillation rather than fermentation, the Act required Federated to pay the $2-per-gallon tax.

Soon thereafter, Federated requested administrative review of the Department's ruling in the circuit court of Cook County. However, after hearing the parties' respective positions, the trial court affirmed the Department's decision.

Federated now appeals, contending that there exists no real and substantial difference between New Products and wine coolers and that New Products should be taxed at the rate applicable to wine or wine coolers rather than at the rate applicable to hard liquors. Federated asserts that the Act, as applied to New Products pursuant to the Department's ruling, is discriminatory and unconstitutional.

We reverse.

Background

"Sec. 1-2. This Act shall be liberally construed, to the end that the health, safety and welfare of the People of the State of Illinois shall be protected and temperance in the consumption of alcoholic liquors shall be fostered and promoted by sound and careful control and regulation of the manufacture, sale and distribution of alcoholic liquors." Ill. Rev. Stat. 1985, ch. 43, par. 94.

"Sec. 1-3.02. 'Spirits' means any beverage which contains alcohol obtained by distillation, mixed with water or other substance in solution, and includes brandy, rum, whiskey, gin, or other spirituous liquors, and such liquors when rectified, blended or otherwise mixed with alcohol or other substances." Ill. Rev. Stat. 1985, ch. 43, par. 95.02.

"Sec. 1-3.03. 'Wine' means any alcoholic beverage obtained by the fermentation of the natural contents of fruits, or vegetables, containing sugar, including such beverages when fortified by the addition of alcohol or spirits, as above defined." Ill. Rev. Stat. 1985, ch. 43, par. 95.03.

"Sec. 8-1. A tax is imposed upon the privilege of engaging in business as a manufacturer or as an importing distributor of alcoholic liquor other than beer at the rate of [$ .23] per gallon for wine containing 14% or less of alcohol by volume, [$ .60] per gallon for wine containing more than 14% of alcohol by volume, and $2.00 per gallon on alcohol and spirits manufactured and sold or used by such manufacturer, or as agent for any other person, or ...


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