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Peerless Wholesale Liquors Inc. v. Illinois Liquor Control Commission

April 29, 1998

PEERLESS WHOLESALE LIQUORS, INC., PLAINTIFF-APPELLANT,
v.
ILLINOIS LIQUOR CONTROL COMMISSION AND ASSOCIATED BEER DISTRIBUTORS OF ILLINOIS, DEFENDANTS-APPELLEES. NWS, INC., JUDGE & DOLPH, LTD. AND ROMANO BROTHERS BEVERAGE CO., INTERVENORS-APPELLEES.



Appeal from the Circuit Court of Cook County No. 95 CH 2165 Honorable Lester Foreman, judge Presiding.

The opinion of the court was delivered by: Justice Cahill

Section 6-9 of the Illinois Liquor Control Act of 1934 (235 ILCS 5/6-9 (West 1996)(the Act) is not an easy statute to wander through without getting lost. It establishes registration requirements and a scheme for the geographical restriction of wholesale liquor sales in Illinois, pauses to carve out an exception on those restrictions for certain wholesalers who were in business before 1979 (a grandfather clause), and then resumes with more restrictions. The issue before us is the impact of the final restriction on the grandfathered wholesalers. The Illinois Liquor Control Commission (Commission) concluded that the restriction applied. The trial court agreed, but not without a struggle. We conclude that the restriction imposed on the grandfathered wholesalers by the Commission and the trial court cannot survive a plain reading of the statute. We reverse.

Section 6-9 reads in part:

"The legislature hereby finds and declares that *** it is necessary to restrict the purchase of alcoholic liquors at wholesale *** to those persons selected by the manufacturer, distributor, importing distributor or foreign importer who owns or controls the trade mark, brand or name of the alcoholic products sold to such persons, and to restrict the geographic area or areas within which such persons sell such alcoholic liquor at wholesale ***.

Each manufacturer, non-resident dealer, distributor, importing distributor, or foreign importer who owns or controls the trade mark, brand or name of any alcoholic liquor shall register with the State Commission *** the name of each person to whom such manufacturer, non-resident dealer, distributor, importing distributor, or foreign importer grants the right to sell at wholesale in this State any such alcoholic liquor, specifying the particular trade mark, brand or name of alcoholic liquor as to which such right is granted, the geographic area or areas for which such right is granted and the period of time for which such rights are granted to such person. *** [O]nly those persons registered by the manufacturer, non-resident dealer, distributor, importing distributor or foreign importer, shall have the right to sell at wholesale in this State, the brand of alcoholic liquor specified on the registration form.

However, a licensed Illinois distributor who has not been registered to sell a brand of alcoholic liquor, but for a period of 2 years prior to November 8, 1979 has been engaged in the purchase of a brand for resale from a licensed Illinois distributor who has the right to sell that brand at wholesale, may continue to purchase and resell the brand at wholesale ***, provided that:

*** (3) His licensed business address is within the geographical area for which the licensed Illinois distributor from whom the purchases are made has the right to sell said brand or brands of alcoholic liquor; and (4) His sales are made within the geographical area for which the licensed Illinois distributor from whom the purchases are made has the right to sell the brand or brands of alcoholic liquor.

No person to whom such right is granted shall sell at wholesale in this State any alcoholic liquor bearing such trade mark, brand or name outside of the geographical area for which such person holds such selling right, as registered with the State Commission, nor shall he sell such alcoholic liquor within such geographical area to a retail licensee if the premises specified in such retailer's license are located outside such geographical area." (Emphasis added.) 235 ILCS 5/6-9 (West 1996).

Peerless Wholesale Liquors, Inc., the plaintiff, was not granted rights to sell liquor at wholesale by a manufacturer, nonresident dealer, distributor, importing distributor, or foreign importer. Peerless' authority to distribute liquor stems from the grandfather clause in the third paragraph of section 6-9.

In June 1993, the Commission cited Peerless for selling liquor to retailers outside its master distributor's territory in violation of section 6-9. A hearing was held before the Commission. The Associated Beer Distributors of Illinois (ABDI), a trade association of beer distributors in Illinois, was allowed to intervene in the proceedings.

The Commission presented documentation that, in 1991, Miller Brewing Company gave the right to sell Miller products, within a certain geographic area, to Zema Systems Corporation. The evidence before the Commission established that Peerless purchased liquor from Zema, that Peerless sold that liquor to retailers located outside Zema's geographical area, but that the sales were made at Peerless' place of business within Zema's geographical area.

After the hearing, the Commission found Peerless in violation of section 6-9 and imposed a $5,000 fine. Peerless' petition for rehearing was denied.

Peerless filed a petition for administrative review before the circuit court. After oral arguments on the petition, the circuit court reversed the Commission's decision. But the circuit court granted motions to reconsider and then affirmed the Commission's decision. The court reasoned that the legislature could not have intended to give subdistributors different territorial restrictions than master distributors.

Peerless raises six issues on appeal, but our Disposition requires that we address only the first: that the Commission and circuit court erred in finding that the fourth ...


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