Peerless Wholesale Liquors v. Liquor Control Comm'n

THIRD DIVISION
April 29, 1998

No. 1-96-4188

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.)
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)Appeal from the
Circuit Court of
Cook County

No. 95 CH 2165

Honorable
Lester Foreman,
Judge Presiding.


JUSTICE CAHILL delivered the opinion of the court:
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 paragraph of section
6-9 applies to Peerless.
We review an agency's interpretation of a statute de novo.
Board of Education of Community High School District No. 155 v.
Illinois Educational Labor Relations Board, 247 Ill. App. 3d 337,
344, 617 N.E.2d 269 (1993). When an administrative agency is
charged with administering a statute, its interpretation is
entitled to substantial deference by a reviewing court. This
deference is appropriate because the agency can apply its unique
experience and expertise to its interpretation. Illinois
Consolidated Telephone Co. v. Illinois Commerce Comm'n, 95 Ill. 2d 142, 152-53, 447 N.E.2d 295 (1983). But we are not bound by an
agency's interpretation of a statute. Envrite Corp. v. Illinois
Environmental Protection Agency, 158 Ill. 2d 210, 214, 632 N.E.2d 1035 (1994). And "'[w]here the language of the act is certain and
unambiguous the only legitimate function of the courts is to
enforce the law as enacted by the legislature.'" Abrahamson v.
Illinois Department of Professional Regulation, 153 Ill. 2d 76, 91,
606 N.E.2d 1111 (1992), quoting Certain Taxpayers v. Sheahen, 45 Ill. 2d 75, 84, 256 N.E.2d 758 (1970).
We are persuaded by the unambiguous language of the statute
that territorial restrictions in the fourth paragraph do not apply
to Peerless. The fourth paragraph mandates that "[n]o person to
whom such right is granted shall sell *** such alcoholic liquor
within [the master distributor's] geographical area to a retail
licensee if the premises specified in such retailer's license are
located outside such geographical area." 235 ILCS 5/6-9 (West
1996). "Such right" must refer back to the only rights mentioned
in section 6-9: the rights given by a manufacturer, nonresident
dealer, distributor, importing distributor, or foreign importer to
a person to sell its liquor products wholesale. Peerless was never
granted "such right."
The Commission contends that the fourth paragraph of section
6-9 applies to Peerless because the "right" referred to is the
"right to resell at wholesale granted by the grandfather clause to
sub-distributors, in addition to referring to the 'right' to sell
at wholesale granted to master distributors." The Commissioner's
argument would be persuasive if the word "right" appeared in the
grandfather clause other than in reference to the "rights" of
master distributors. It does not. On the contrary, the authority
for Peerless to remain in business granted by the paragraph is in
derogation of the "right" enjoyed by those to whom the paragraph
generally applies. That is usually the purpose of a grandfather
clause.
The Commission further argues that the first paragraph of
section 6-9 reflects "the legislature's intent to restrict the
geographic distribution areas of all distributors." But the first
paragraph reads in part 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 liquor products sold to such persons and to
restrict the geographic area or areas within which such persons
sell *** liquor at wholesale ***." (Emphasis added.) 235 ILCS
5/6-9 (West 1996).
The language limits geographical areas of master distributors.
Even if we read this section as declaring a policy of territorial
restrictions on distributors, we cannot assume that the legislature
intended that the "such rights" language later invoked also applied
the same restrictions on subdistributors.
The statute does require that a subdistributor's "business
address [be] within the geographical area for which the [master
distributor] from whom the purchases are made has the right to sell
[the liquor]," and that its "sales [be] made within [that]
geographical area." 235 ILCS 5/6-9(3), (4) (West 1996). Had the
legislature intended to prohibit the sale of liquor by
subdistributors to retailers whose business address is outside the
master distributor's territory, it could have said so.
We reject the Commission's contention that we should defer to
the Commission's interpretation of the statute on this issue. The
interpretation of the words "person to whom such right is granted"
does not require an expertise peculiar to the Commission. It does
not require a specialized knowledge of the liquor industry or a
probe into legislative intent. Where the language of a statute is
clear, we need not look further to determine the legislative
intent. See Solich v. George & Anna Portes Cancer Prevention
Center of Chicago, Inc., 158 Ill. 2d 76, 81, 630 N.E.2d 820 (1994).
The Commission argues that when we construe the statute, we
must consider consequences that may result from each construction
and "should select the construction which leads to a logical
result." See Quick v. Quick, 213 Ill. App. 3d 97, 100, 571 N.E.2d 1206 (1991). The Commission maintains that reading the statute to
allow Peerless to sell liquor to retailers outside its master
distributor's area places Peerless in a position superior to other
distributors in the state. The Commission overlooks the
grandfather clause. Peerless and subdistributors similarly
situated are already exempt from the most comprehensive restriction
of the statute: that they be chosen and registered by the brand
owner.
The Commission also suggests that master distributors could
use Peerless as a "shell or conduit through which it could sell to
every retailer in the state." This is a loophole argument that
would carry weight if the statute were ambiguous and we were
required to divine legislative intent.
If the Commission is right about the consequences of giving
sub-distributors different territorial restrictions, it is the
responsibility of the legislature to amend the statute and the duty
of the Commission to make its concerns known to the legislature.
We do not have the authority to rewrite it. Tavern Liquor Supply
Co. v. Illinois Liquor Control Comm'n, 71 Ill. App. 3d 1008, 1012,
390 N.E.2d 337 (1978).
The Commission finally argues that its decision should be
upheld because Peerless was found in violation of the Commission's
administrative rule 100.60. 11 Ill. Adm. Code 100.60 (1996).
Rule 100.60 requires those who own or control trademarks, brands or
names of alcoholic liquor sold in Illinois to register the names of
persons to whom they grant the right to distribute liquor at
wholesale. The rule further restricts a retailer from buying
liquor "from any distributor not having distributing rights in the
geographical area in which the place of business of such retailer
is situated." 11 Ill. Adm. Code 100.60 (1996).
Administrative rules cannot be read to limit or extend the
scope of a statute. Du-Mont Ventilating Co. v. Department of
Revenue, 73 Ill. 2d 243, 247-48, 383 N.E.2d 197 (1978); Wesko
Plating, Inc. v. Department of Revenue, 222 Ill. App. 3d 422, 425-
26, 584 N.E.2d 162 (1991).
Reversed.
GORDON and COUSINS, JJ., concur.