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People v. Select Specialties

December 06, 2000

THE PEOPLE OF THE STATE OF ILLINOIS, PLAINTIFF-APPELLANT,
v.
SELECT SPECIALTIES, LTD., F/K/A SHERMER SPECIALTIES, SELECTIONS, LTD., AN ILLINOIS CORPORATION; CHATEAU WINES, LTD., D/B/A ESTATE WINES, AN ILLINOIS CORPORATION; ROBERT R. POPOVICH, INDIVIDUALLY, AS OWNER OF SELECT SPECIALTIES, LTD., AND AS PRESIDENT OF CHATEAU WINES, LTD.; AND SHERYLE L. HENRY, AS PRESIDENT OF SELECT SPECIALTIES, LTD., DEFENDANTS-APPELLEES.



Appeal from Circuit Court of Sangamon County No. 96CH62 Honorable Patrick W. Kelley, Judge Presiding.

The opinion of the court was delivered by: Justice Knecht

In March 1996, the State brought an enforcement action against the defendants, Select Specialties, Ltd.; Chateau Wines Ltd.; Robert Popovich; and Sheryle Henry, alleging they violated the Illinois Liquor Control Act of 1934 (Act) (235 ILCS 5/1-1 et seq. (West 1996)) by promoting wines through furnishing samples to the public, exposing wines for sale, and taking orders for wine at public events without a liquor license. The trial court denied the State's motion for summary judgment and granted defendants' request for summary judgment. The trial court found the Act did not specifically require defendants to have a liquor license before engaging in the complained-of conduct. The State appeals. We reverse and remand with directions.

I. BACKGROUND

In 1989, Popovich created Chateau Wines, Ltd. (Chateau), which sold wine to consumers under a valid liquor license. In June 1994, Popovich created a second company, Shermer Specialties, Selections, Ltd., also to sell wine to consumers. In July 1994, the Illinois Liquor Control Commission (Commission) granted a liquor license to this second company. Popovich soon changed the name of the second company from Shermer Specialties, Selections, Ltd., to Select Specialties, Ltd. (Select).

In August 1994, the Commission revoked Popovich's liquor license for Chateau because he failed to file tax returns and pay retailer's occupation tax. The Commission then instituted proceedings to revoke Popovich's second liquor license for Select based on revocation of his first license. A few days later, Menard County revoked Popovich's county liquor license based on the Commission's revocation. In September 1994, defendants changed the registered agent of Select from Popovich to Henry. Popovich, Henry, and Select argue Henry was the sole proprietor of Select by December 1994. Henry has never applied for a state liquor license. In October 1994, the Commission revoked Popovich's liquor license for Select.

In March 1995, Henry applied to hold a concession at the Illinois State Fair. In July 1995, Henry applied for a temporary liquor license from Sangamon County for Select to use at the Illinois State Fair. No evidence suggests Henry applied for a state liquor license. Sangamon County issued a temporary liquor license, which was to expire August 21, 1995. The State argues Popovich, Henry, and Select took orders at the Illinois State Fair between August 11 and 20, 1995. The State argues defendants took invoices, which had the name and address of Select at the top, by tallying the wine order, figuring shipping and total price, and specifying a method of payment.

Popovich denied any sale of wine took place at this event. Defendants argue they merely "promoted" the wines of Connoisseur Encounters Company, Inc. (Connoisseur). Connoisseur, a licensed retailer of alcohol products, sells wine through its Shermer Specialties Division from a business location in Northbrook, Illinois. Connoisseur's wine promoters typically promote through public or private showings of wines. Connoisseur informs the event sponsor the individual promoting the wine does so with the explicit approval of the company and no actual sales will take place at the event.

Defendants argue Connoisseur's wine promoters do not have the authority to enter into sales or bind Connoisseur to any contract. Instead they (1) display the wine products of the company, (2) explain and describe those products, (3) and offer samples of wine in less than one ounce. If an individual expresses interest in purchasing wine, then he or she fills out a "preference form." Defendants transmit the form to Connoisseur and Connoisseur determines if it will accept the preference and make the sale by invoicing the customer, receiving payment, and delivering the order. Defendants testified they cannot accept money, deliver merchandise, or commit Connoisseur to effect a sale of its product, and they are only independent contractors of Connoisseur. Connoisseur compensates a promoter for each individual referred to it through the preference process. Defendants testified Connoisseur made its practice of using promoters known to the Commission.

On August 18, 1995, Jack Hoban, an investigator with the Illinois Attorney General's office, went to Select's booth at the Illinois State Fair. Popovich stated Hoban attempted to pay for wine at the booth, but Popovich informed him he must fill out a preference form. Popovich would then send the form to Connoisseur. Defendants then showed Hoban some wines and Hoban filled out a form in which he selected 12 bottles of wine to be shipped cash on delivery. After this transaction, an investigator for the Commission inspected the booth. After finding it did not have a state liquor license, he shut the booth down. The State also alleged Popovich sold wine at an earlier event in 1995 and from a graphic design studio known as Kopy Katz, which Henry and another person own. Popovich denied any sales of wine took place and asserted the State's evidence of other sales was from a disgruntled employee.

In March 1996, the State filed a two-count complaint against defendants, along with attached affidavits setting out the facts. One count alleged violations of the Consumer Fraud and Deceptive Business Practices Act (815 ILCS 505/1 et seq. (West 1996)), alleging defendants failed to deliver wine to about 160 consumers after the consumers paid for the wine. The parties settled this claim.

The State brought the second count under the Act (235 ILCS 5/1-1 et seq. (West 1996)), alleging defendants sold wine without a liquor license. The State asked the court to find defendants to be a nuisance, permanently enjoin them from selling liquor without a license, declare all contracts created through the use of illegal conduct rescinded, and order restitution.

In conjunction with the complaint, the State filed a motion for a temporary restraining order (TRO), seeking to freeze assets, provide access to business premises, impound documents, and appoint a receiver. The court granted a TRO, which temporarily restrained defendants from offering for sale, selling, or otherwise soliciting and executing wine purchase agreements with Illinois consumers. Shortly after this TRO, the parties entered into an agreed preliminary injunction. The court enjoined defendants from offering for sale, selling, or soliciting consumers for the purchase of alcohol with one exception. The exception allowed defendants to "solicit leads for a licensed retailer so long as [d]efendants clearly and conspicuously disclose orally and in writing (via order forms, signage, etc.) that [d]efendants are merely promoters of wine and are not licensees." The State later sought to remove this exception. The court did so because the Act does not allow such activities.

Defendants answered the complaint and the proceedings continued. In October 1998, the State filed a motion for summary judgment, arguing defendants were violating the Act by exposing wine for sale without a state liquor license. Defendants answered they were independent contractors of and promoters for Connoisseur, and this activity did not require licensing under the Act. Moreover, defendants answered they never actually sold wine, but instead accepted preference forms, which in turn had to be accepted by Connoisseur. The State replied since the Act did not permit the activities of defendants, they were violating it.

The circuit court denied the State's motion for summary judgment. However, the court entered judgment for defendants, upon their oral motion for summary judgment. The court ruled for defendants "[b]ecause Illinois statutes do not expressly require [d]efendant[s] to have a liquor ...


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