Opinion
No. 29770
Decided October 6, 1943.
Department of Liquor Control — Broad powers conferred by Liquor Control Act to maintain state liquor monopoly — Section 6064-1 et seq., General Code — Department authorized to buy spirituous liquor and make contracts — Section 6064-8, General Code — Contract to purchase liquor for future delivery and pay in advance, valid.
1. Broad powers are conferred upon the Department of Liquor Control of the state of Ohio by the Liquor Control Act, Section 6064-1 et seq., General Code, for the expressed purpose of enabling such department to establish and maintain a state monopoly of the distribution of spirituous liquor and the sale thereof in packages or containers. That department is specifically authorized by the provisions of Section 6064-8, General Code, to perform various functions, among others "to manufacture, buy, import, possess, and sell spirituous liquors * * *; to borrow money to inaugurate and carry on its business, and * * * to make and enter into leases and contracts of all descriptions within the scope of its functions as defined in the Liquor Control Act."
2. A contract executed by the Department of Liquor Control for the purchase of liquor to be delivered in the future, which contract requires the payment of a stipulated portion of the purchase price in advance of delivery, is within the authority conferred by law upon the department and is valid.
IN MANDAMUS.
This action originated in this court. The relator is the duly appointed, qualified and acting Director of Liquor Control of the state of Ohio, and the respondent is the Auditor of State of the state of Ohio.
The essential averments of the relator's petition are that he agreed to enter into a contract with the American Distilling Company, Foster Company, and the First National Bank of Chicago for the purchase and delivery of 100,000 cases of whiskey, at a price of $19.24 a case. The terms of this contract require the relator to pay the sum of $1,000,000 as an advance deposit at the rate of $10 a case. This money is to be deposited in the First National Bank of Chicago and is to be paid over to Foster Company upon the delivery by them of warehouse receipts representing sufficient whiskey to furnish the 100,000 cases of whiskey contracted for. On the 16th day of September, 1943, relator issued an order for the purchase of 100,000 cases of whiskey and in connection therewith issued a voucher, approved by the Director of Finance of the state of Ohio, to the respondent, requesting the respondent to draw a warrant upon the Treasurer of State, as custodian of the liquor control rotary fund, for $1,000,000 in favor of the First National Bank of Chicago, so that relator may comply with such contract. Relator asks for a writ commanding the respondent to issue this warrant.
The answer of the respondent admits that there are sufficient moneys in the liquor control rotary fund, properly appropriated and unencumbered, for the payment of such warrant, and alleges that he has made an examination of the proposed contract and found that all the parties to the contract except the Ohio Department of Liquor Control are nonresidents of the state of Ohio; that "by the provisions of said contract it is recited that prior to the execution of the contract the Ohio Department of Liquor Control has deposited with the First National Bank of Chicago as depositary," the sum of $1,000,000; and that by the provisions of the contract the depositary is authorized and instructed to pay such money to Foster Company upon the deposit with the First National Bank of Chicago, whiskey warehouse receipts or "rights to receive" such warehouse receipts of a maximum value of $309,542.
Respondent alleges that the voucher presented represents no valid claim against the state of Ohio legally due, in accordance with the provisions of Section 243, General Code, for the reason that there is now nothing due to any parties who propose to enter into a contract. Respondent further alleges that this arrangement constitutes "a scheme to finance Foster Company and the American Distilling Company in the purchase and bottling of whiskey to be subsequently sold and delivered to the state of Ohio Department of Liquor Control"; that by the provisions of the proposed contract, the state of Ohio becomes the lender of $1,000,000 of public money to Foster Company, a nonresident partnership; and that the First National Bank of Chicago holds as security for that loan either rights to receive warehouse receipts or warehouse receipts of the maximum value of $309,542. Respondent therefore prays that the petition of relator be dismissed.
To this answer the relator filed a demurrer, and by agreement of counsel the case is before this court for final determination on the demurrer.
Mr. Thomas J. Herbert, attorney general, Mr. E.G. Schuessler and Mr. John P. Walsh, for relator.
Mr. Charles S. Druggan and Mr. Robert L. Drury, for respondent.
The respondent, Auditor of State, relies upon the provisions of Section 243, General Code, as authority for his refusal to issue the warrant requested by the relator. This section provides as follows:
"The Auditor of State shall examine each voucher presented to him, or claim for salary of an officer or employee of the state, or per diem and transportation of the commands of the national guard, or sundry claim allowed and appropriated for by the General Assembly, and if he finds it to be a valid claim against the state and legally due, and that there is money in the state treasury duly appropriated to pay it and that all requirements of law have been complied with, he shall issue thereon a warrant on the Treasurer of State for the amount found due, and file and preserve the invoice in his office. He shall draw no warrant on the Treasurer of State for any claim unless he finds it legal, and that there is money in the treasury which has been duly appropriated to pay it."
The respondent contends that before he may issue the warrant demanded he must find that there is a valid claim against the state which is legally due, that there is money in the treasury duly appropriated to pay it, and that all requirements of law had been complied with. He asserts that the warrant in question constitutes an advance payment for merchandise to be subsequently delivered, and therefore that there is no legal claim against the state which is due.
The relator's contention is based upon the provisions of the Liquor Control Act, being Section 6064-1 et seq., General Code, and particularly Section 6064-8, General Code, wherein authority is conferred upon the Department of Liquor Control to "establish and maintain a state monopoly of the distribution of such liquor and the sale thereof in packages or containers; and for such purpose to manufacture, buy, import, possess, and sell spirituous liquors in the manner provided in the Liquor Control Act; * * * to borrow money to inaugurate and carry on its business * * *," together with the further provision:
"The Department of Liquor Control shall have power * * * to make and enter into leases and contracts of all descriptions within the scope of its functions as defined in the Liquor Control Act * * *."
It is further provided by Section 6064-8, General Code, that "any and all obligations of the department created under authority of this paragraph shall be a charge only upon the moneys received by the department from the sale of spirituous liquor pursuant to the Liquor Control Act and its other business transactions in connection therewith, and shall not be general obligations of the state of Ohio."
It is to be observed that the obligations of the department created under this statute are not general obligations of the state but a charge only against moneys received from the sale of liquor. Under the provisions of Section 6064-10, General Code, these moneys are paid to the Treasurer of State as custodian thereof. That section further provides as follows:
"The moneys in the custody of the Treasurer of State for the use of the Department of Liquor Control shall be known as the 'liquor control rotary fund' and shall be disbursed on the order of the Auditor of State, in form prescribed by him, on the Treasurer of State as custodian as aforesaid, pursuant to vouchers or invoices signed by the Director of the Department of Liquor Control, and approved by the Director of Finance as provided in Section 154-28 of the General Code, in such form as the Auditor of State shall prescribe."
The primary question presented to the court is whether the Department of Liquor Control, in the execution of the contract in question, acted within and pursuant to the authority conferred upon it by statute. It must be conceded that the Department of Liquor Control is precluded from the exercise of any acts beyond the scope of the authority conferred upon it by law, such as, for instance, the purchase of real estate, which is specifically inhibited by the provision wherein it is authorized "to lease or in any manner except by purchase, acquire the use of any land or building required for any of such purposes." (Italics ours.)
The Auditor of State may question the legality of a payment sought to be made for such inhibited purpose. The contract here in question, however, clearly comes within the specific authority conferred by the provisions of the Liquor Control Act hereinbefore referred to. The Department of Liquor Control is authorized to manufacture, buy, import, possess and sell spirituous liquors. The expressed purpose of the statute is, through the Department of Liquor Control, "to establish and maintain a state monopoly of the distribution of such liquor and the sale thereof in packages or containers."
The department is authorized to enter into contracts of all descriptions within the scope of its functions as defined by the Liquor Control Act. Language could scarcely be formulated to state more clearly a purpose to confer upon the Department of Liquor Control all the power and authority essential to establish, maintain and conduct the very extensive business entrusted to it. The Department of Liquor Control, having been placed in full charge of the liquor business in which the state decided to engage, was delegated the power and discretion essential to carry out that purpose. The method of payment for the liquor purchased is clearly within the scope of the authority conferred and is a matter within the discretion of the department, just as is the price to be paid. Purchases may be made on credit or payment made in advance. Those are questions to be determined by the department. The statute specifically authorizes the department to borrow money to pay for liquor purchased. Authority, full and complete, is conferred to administer all the affairs of the department. In this case, the department chose to pay in advance, evidently deeming such arrangement advantageous or possibly necessary to procure the merchandise essential to meet the demands of its customers. The authority so to do is clear and the legality of the contract is manifest.
The question of the wisdom of the terms of such contract is not for the consideration of the Auditor of State. That is not his function, and that question is not before this court for consideration or determination. The auditor may question the legality but not the wisdom of the terms and provisions of such contract.
We deem it unnecessary to consider or discuss other questions presented by brief and in oral argument.
Since the contract is in accord with the authority clearly conferred upon the Department of Liquor Control, warrants for payments in accordance with its terms should be issued. The demurrer to the answer is therefore sustained and, the respondent not desiring to plead further, the writ is allowed.
Writ allowed.
WEYGANDT, C.J., HART, ZIMMERMAN, BELL, WILLIAMS and TURNER, JJ., concur.