PRICE   DANIEL
                              Auen~~~.'iIkxas
ATT..Rh-RY
        ~~iS~z*..x.

                                August 8,    1952


          Hon. Coke R. Stevenson, Jr.
          Administrator
          Texas Liquor Control Board
          Austin, Texas               Opinion po. v-1500

                                       Re:    Application of Saction 37
                                              of Article 666-17; Ver-
                                              non's Penal Code, to the
                                              sale of confiscated alco-
                                              holic beverages by the
          Dear Mr. Stevenson:                 Texas Liquor Control Board.
                    Your request for the opinion of this office reads
          in part as follows:
                      "We desire your valued opinion on each of
                 the following questions relating to the action
                 of this Department in advertising for, accept-
                 ing or rejecting sealed bids for the purchase
                 of confiscated alcoholic beverages from this
                 Department.
                      "(1) Whether or not this Department has
                 the authority to reject a high bid received
                 from a Package Store Permittee whose name IS
                 carried on the Board's Delinquent Account List
                 at the time the bids are opened.
                      "(2) Whether or not the Board has the au-
                 thority in advertising for the sale of confis-
                 cated alcoholic beverages, to also publish
                 notice that bids will not be accepted from any
                 permlttee whose name appears on the Board's
                 Delinquent Account List at the time the sealed
                 bids are opened."
                    Article 666-30,   Vernon's Penal Code, provides,
          In part, a8 follows:
                      "(a) All alcoholic beverages and the con-
                 tainers thereof, and any device in which the
                 alcoholic beverage Is packaged, equipment, and
                 other property forfeited to the State, unless
Hon. Coke R. Stevenson, Jr., page 2, (V-1500)


     otherwise herein provided, and all illicit
     beverages and the containers thereof, and
     any device in which the alcoholic beverage
     Is packaged Is forfeited to the State, shall
     be turned over to the Board for public or
     private sale In such place and manner as It
     may deem best: provided, that the Board
     shall exercise diligent effort to obtain the
     best available price for anything thus sold:
     provided, further, that any bill of sale
     executed by the Board or Administrator shall
     convev a nood and valid title to the nur-
     chaser as-to any such property sold. *The
     Board shall sell alcoholic beverages only to
     the holders of qualified permits or licenses."
     (Emphasis added.)
          Sectlon 37 of Article 666-17, Vernon's Penal
Code,provides:
         "It shall be unlawful for any Whole-
    saler, Class B Wholesaler, Class A Winery
    or Wine Bottler to sell any alcoholic bev-
    erage, nor shall any Package Store Per-
    mittee, Wine Only Package Store Permittee,
    or other retailer purchase any alcoholic
    beverage, except for cash or on terms re-
    quiring payment by the purchaser as follows:
    On purchases made from the first to fif-
    teenth day inclusive of each calendar month,
    payment must be made on or before the twenty-
    fifth day of the same calendar month: and,
    on purchases made from the sixteenth to the
    last day inclusive of each calendar month,
    payment must be made on or before the tenth
    day of the succeeding calendar month. Every
    delivery of alcoholic beverage must be ac-
    companied by an invoice of sale giving the
    date of purchase of such alcoholic beverage.
    In the event any Package Store Permittee,
    Wine Only Package Store Permittee, or other
    retail dealer becomes delinquent in the pay-
    ment of any account due for alcoholic bev-
    erages purchased, (that is, if he fails to
    make full payment on or before the date here-
    inbefore provided) then it shall be the duty
    of the Wholesaler, Class B Wholesaler, Class
    A Winery or Wine Bottler to report the fact
    immediately to the Board or Administrator Ln
Eon. Coke R. Stevenson, Jr., page 3, (V-1500)


    writing. Any Packsge Store Permittee, Wine
    Only Package Store permittee, or other re-
    tail dealer who becomes delinquent shall not
    be permitted to purchase alcoholic beverages
    from any Wholesaler, Class B Wholesaler,
    Class A Winery or Wine Bottler until said de-
    linquent account is paid in full, and the
    delinquent account shall be cleared from the
    records of the Board before any Wholesaler,
    Class B Wholesaler, Class A Winery or Wine
    Bottler will be permitted to sell alcoholic
    beverages to him. Any Wholesaler, Class B
    Wholesaler, Class A Winery or Wine Bottler
    who accepts postdated checks, notes or memo-
    randa or who participates in any scheme,
    trick or deViC8 to assist any Package Store
    Permittee, Wine Only Package Store Permittee
    or other retail dealer In the violation of
    this Section shall likewise be guilty of a
    violation of this Section. The Board shall
    have the power and it shall be its duty to
    adopt rules and regulations Riving full
    Porte and effect to this section.,”(Emphasis
    added. )
          In Texas Liquor Control Board v. Floyd, 117 S.W.
2d 53C (Tex. civ. App. 1938)) the court said:
         “The Texas Liquor Control Board Is by
    virtue of the law an administrative branch
    of the State government, to wNch has been
    delegated, by law, certain functions, among
    which are determining in the first place to
    whom and when shall certain privileges be
    extended to persons to sell liquors, and
    second, whether or not such persons so fa-
    vored have breached the conditions under
    which the privilege has been granted.
          ” . . . It has been held that the Act
     under consideration must be liberally con-
     strued by the courts so as to make it ef-
     fective) according to the expressed and im-
     plied intention of the Legislature.”
          The purpose of Section 37 of Article 666-17 Is
discussed In Attorney General Opinion V-1126 (1950). As
pointed out in that opinion, the provision is one for the
purpose of maintaining the independence of the wholesale
and retail levels of the liquor Industry in Texas.
Hon. Coke R. Stevenson, Jr., page 4, (V-1500)


          In order to make the provisions against affilia-
tion between retailer and wholesaler effective, the Legis-
lature has prohibited the extension of credit by the lat-
ter to the former beyond the time stipulated. To make the
prohibition against excessive extension of credit effec-
tive, the Legislature has provided, in effect, that upon
violation of the provisions, the retailer Is prohibited
from purchasing liquor from the wholesalers and the latter
are also prohibited from selling to him. The sanction
against the retailer Is, in practical effect, a suspension
of the privilege of purchasing liquor for resale until the
account Is paid and the payment reported in the due course
of the operation of the reporting machinery set up by the
Board under the act.
          Under Article 666-30, in making provision for
disposition,of confiscated liquor the Board Is authorized
to sell such liquor, but only to "qualified" licensees
and permittees. The question here Is whether a retailer
in such delinquency status i8 a "qualified" licensee or
permittee at the time of the sale.
          It is our opinion that only a permittee or li-
censee who is "qualified" to purchase liquor for resale
is "qualified" to purchase confiscated liquor from the
Board. There is no specific statutory definition of
"quallfledn permittees or licensees,.and itisnecessazyto
look to the purpose and scheme of the statute in this
respect to determine who the Legislature Intended should
be qualified to purchase confiscated liquor. It is not
reasonable to assume'that one who is disqualified from
purchasing liquor at wholesale generally is to be con-
sidered qualified to purchase confiscated liquor, and
certainly not one whose general~dlsqualiflcatlon arises
from a violation of the statute.
          As a matter of fact, Only a r8latiV8ly few
classes of permittees are expressly authorized to pur-
chase liquor for resale to either dealers or consumers,
and fewer still are authorized to purchase the finished
and packaged product. See Article 666-15, Vernon's
Penal Code. Therefore, a "qualified" licensee or per-
mittee must not only hold a license which authorizes
generally the purchase of the type of liquor put up for
sale by the Board, but in our opinion, his privilege of
purchasing liquors under such license or permit must be
currently In effect.
Hon. Coke R.   Stevenson, Jr., page 5, (V-1500)


          It is our opinion that the Board, in advertls-
lng for the sale of confiscated alcoholic beverages, may
state the conditions on which bids will be accepted.
Since the Board must reject bids received from delinquent
permittees, It may publish a notice that such bids will
not be accepted.

                         SUMMARY
            The Liquor Control Board is not author-
     ized to sell confiscated alcoholic beverages
     to retailers who are delinquent in their whole-
     sale purchase accounts, Under the provisions
     of Section 37 of Article 666-17, Vernon’s Penal
     Code.  The Board must reject bids by such re-
     tailers and may state such disqualification in
     advertising for bids on such liquor.
                                   Yours very   truly,
                                     PRICE DANIEL
APPROVED:                          Attorney General
Red McDaniel
State Affairs Mvision
Mary E. Wall
Reviewing Assistant
Charles S. Mathews
First Assistant
JD/rt/ec
