                                 Office of the !&tornep @eneral
                                          Btate of lltexae


DAN MORALES                            February 26,199l
 ATTORSLY
      ‘ESERAL




 Honorable Erwin W. Barton                      Opinion No. DM-5
 chairman
 Human Services Committee                       Re: Whether section 102.51 of the Alcoholic
 Texas House of Representatives                 Beverage    Code    imposes    a territorial
 P. 0. Box 2910                                 limitation on the resale of beer by persons
 Austin, Texas 78769-2910                       who purchase from general distributors
                                                (RQ-2151)




 Dear Representative   Barton:


          You ask about the territory in which a local beer distributor may resell beer that the
 local distributor purchased from a general beer distributor.        Your question requires an
 interpretation of both section 102.51 and section 102.52 of the Alcoholic Beverage Code.
 Section 102.51 provides in part:


                (a) Each holder of a manufacturer’s or nonresident manufacturer’s
           license shall designate territorial limits in this state within which the
           brands of beer the licensee manufactures may be sold by general, local,
           or branch distributor’s licensees.

                (b) Each holder of a general, local, or branch distributor’s license
           shall enter into a written agreement with each manufacturer from
           which the distributor purchases beer for distribution and sale in this
           state setting forth the sales territory within which each brand of beer
           purchased by that distributor may be distributed and sold. No holder of
           a general, local, or branch distributor’s license shall make any sales of
           any brand of beer outside the sales territory specified in the written
           agreement.



        Section 102.52 provides as follows:




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Honorable     Erwin W. Barton - Page 2     (DM-5)


                  (a) Nothing in Section 102.51 of this code limits or alters the right
            of a holder of a general, local, or branch distributor’s license to sell
            beer to any other holder of a general, local, or branch distributor’s
            license, except that a distributor who has purchased~ beer from another
            distributor may distribute and sell the beer only within a territory for
            which the manufacturer of the brand has designated that it may be sold
            by a distributor.

                (b) A holder of a general, local, or branch distributor’s license may
            not purchase, possess, transport, or sell any brand of beer outside of the
            county in which the distributor’s licensed premises are located unless
            the distributor has a written assigned territory from the holder of a
            manufacturer’s or nonresident manufacturer’s license covering that
            brand of beer.


         You interpret sections 102.51 and 102.52 to mean that local distributors are
“required to limit beer distribution to the territories of the General Distributors from
whom they purchase the beer.” See Penerallv Alto. Bev. Code (is 64.01, 66.01 (holder of
general distributor’s license or branch distributor’s license may sell beer to and receive
beer from general, local, or branch distributors).      You also inform us that some local
distributors have taken the position that those provisions permit them to resell a particular
brand in any part of the state in which the manufacturer permits the sale of that brand. We ’
think that both of those interpretations are incorrect. The statutes make clear that a local
distributor may distribute a particular brand of beer only in the territory assigned to the
local distributor by the manufacturer, regardless of whether the local distributor purchased
the beer directly from the manufacturer or from another distributor.

         In response to your suggestion that a local distributor may resell a brand of beer
purchased from a general distributor in the territory assigned to the general distributor, we
note that subsection (b) of section 102.51 states that a holder of a local distributor’s license
may not “make any sales of any brand of beer outside the sales territory specified in the
written agreement.” Nothing in that language suggests that the territorial limitation applies
only to beer a distributor purchases directly from a manufacturer.      Further, subsection (b)
of section 102.52 states that a holder of a local distributor’s license may not sell any brand
of beer outside the county of the distributor’s licensed premises “unless the distributor has a
written assigned territory from the holder of a manufacturer’s                  or nonresident
manufacturer’s license covering that brand of beer.” Those provisions clearly disallow the
possibility that a local distributor can expand his assigned territory for a brand of beer by
purchasing beer from a general distributor rather than a manufacturer.




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Honorable    Erwin W. Barton - Page 3     ( DM-5 )



        Those provisions also negate the local distributors’ suggestion that a local
distributor who purchases a brand of beer from a general distributor, rather than a
manufacturer, may sell that beer in any territory in which that brand may be sold by any
distributor. Subsection (a) of section 102.52 does contain a clause stating that “a distributor
who has purchased beer from another distributor may distribute and sell the beer only
within a territory for which the manufacturer of the brand has designated that it may be
sold by a distributor.” Standing alone, that language might support the local distributors’
suggestion. That interpretation is, however, in direct conflict with subsection (b) of section
102.51 and subsection (b) of section 102.52, both of which limit a local distributor’s
authority to sell beer to the territory assigned to the local distributor by the manufacturer.
Since’ subsection (b) of section 102.51 and subsection (b) of section 102.52 were both
enacted later than subsection (a) of section 102.52, those provisions prevail. Texas Stat%
      d of Pharmacv v. Kittman, 550 S.W.2d 104 (Tex. Civ. App. -- Tyler 1977, no writ)
(when statutes conflict, later-enacted prevails); s Acts 1983, 68th Leg., ch. 959, at 5229
(amending subsection (b) of section 102.51); Acts 1979, 66th Leg., ch. 33, at 55 (adding
subsection (b) to section 102.52); Acts 1975,64th Leg., ch. 20, 9 1, at 41 (adding substance
and basic language of section 102.52(a)). In conclusion, a local distributor may sell a brand
of beer only in the territory assigned to him by the manufacturer of that brand, regardless
of whether the local distributor purchased the beer from the manufacturer or from another
distributor.

                                        SUMMARY

                A local beer distributor may resell a particular brand of beer that
            he purchases from a general distributor only in the territory in which
            the local distributor is authorized by the manufacturer to sell that
            brand.

                                                     Very truly yours,


                                                .,   .be,                /afo,L
                                                     DAN      MORALES
                                                     Attorney General of Texas

WILL PRYOR
First Assistant Attorney General




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Honorable   Erwin W. Barton - Page 4   (DM-5)




MARY KELLER
Executive Assistant Attorney General

RENEA HICKS
Special Assistant Attorney General

SUSAN GARRISON
Acting Chairman, Opinion Committee

Prepared by Sarah Woelk
Assistant Attorney General




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