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NO. 4-99-0976

6 December 2000

IN THE APPELLATE COURT

OF ILLINOIS

FOURTH DISTRICT

JUSTICE KNECHT delivered the opinion of the court:

In March 1996, the State brought an enforcement action against the defendants, Select Specialties, Ltd.; Chateau WinesLtd.; Robert Popovich; and Sheryle Henry, alleging they violated the Illinois Liquor Control Act of 1934 (Act) (235 ILCS5/1-1 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 aliquor license. The trial court denied the State's motion for summary judgmentand granted defendants' request for summary judgment. The trial court found theAct did not specifically require defendants to have a liquor license beforeengaging in the complained-of conduct. The State appeals. We reverse and remandwith directions.

I. BACKGROUND

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

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

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

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

Defendants argue Connoisseur's wine promoters do not have the authority to enterinto sales or bind Connoisseur to any contract. Instead they (1) display the wineproducts of the company, (2) explain and describe those products, (3) and offersamples of wine in less than one ounce. If an individual expresses interest inpurchasing wine, then he or she fills out a "preference form." Defendantstransmit the form to Connoisseur and Connoisseur determines if it will accept thepreference and make the sale by invoicing the customer, receiving payment, anddelivering the order. Defendants testified they cannot accept money, delivermerchandise, or commit Connoisseur to effect a sale of its product, and they areonly independent contractors of Connoisseur. Connoisseur compensates a promoterfor each individual referred to it through the preference process. Defendantstestified Connoisseur made its practice of using promoters known to the Commission.

On August 18, 1995, Jack Hoban, an investigator with the Illinois AttorneyGeneral's office, went to Select's booth at the Illinois State Fair. Popovichstated Hoban attempted to pay for wine at the booth, but Popovich informed him hemust 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 inwhich he selected 12 bottles of wine to be shipped cash on delivery. After thistransaction, an investigator for the Commission inspected the booth. Afterfinding it did not have a state liquor license, he shut the booth down. The Statealso alleged Popovich sold wine at an earlier event in 1995 and from a graphicdesign studio known as Kopy Katz, which Henry and another person own. Popovichdenied any sales of wine took place and asserted the State's evidence of othersales was from a disgruntled employee.

In March 1996, the State filed a two-count complaint against defendants, alongwith attached affidavits setting out the facts. One count alleged violations ofthe Consumer Fraud and Deceptive Business Practices Act (815 ILCS 505/1 et seq.(West 1996)), alleging defendants failed to deliver wine to about 160 consumersafter 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. (West1996)), alleging defendants sold wine without a liquor license. The State askedthe court to find defendants to be a nuisance, permanently enjoin them fromselling liquor without a license, declare all contracts created through the use ofillegal conduct rescinded, and order restitution.

In conjunction with the complaint, the State filed a motion for a temporaryrestraining order (TRO), seeking to freeze assets, provide access to businesspremises, impound documents, and appoint a receiver. The court granted a TRO,which temporarily restrained defendants from offering for sale, selling, orotherwise soliciting and executing wine purchase agreements with Illinois consumers. Shortly after this TRO, the parties entered into an agreed preliminaryinjunction. The court enjoined defendants from offering for sale, selling, orsoliciting 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 orderforms, signage, etc.) that [d]efendants are merely promoters of wine and are notlicensees." The State later sought to remove this exception. The court did sobecause 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 violatingthe Act by exposing wine for sale without a state liquor license. Defendantsanswered they were independent contractors of and promoters for Connoisseur, andthis activity did not require licensing under the Act. Moreover, defendantsanswered they never actually sold wine, but instead accepted preference forms,which in turn had to be accepted by Connoisseur. The State replied since the Actdid not permit the activities of defendants, they were violating it.

The circuit court denied the State's motion for summary judgment. However, thecourt 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 license to engage in the activities participated in." The State appeals.

II. ANALYSIS

A reviewing court conducts a de novo review of an award of summary judgment. Olson v. Etheridge, 177 Ill. 2d 396, 404, 686 N.E.2d 563, 566 (1997). Summaryjudgment is proper where the pleadings, depositions, admissions, affidavits, andexhibits on file, when viewed in the light most favorable to the nonmoving party,show the movant is entitled to judgment as a matter of law. Petrovich v. ShareHealth Plan of Illinois, Inc., 188 Ill. 2d 17, 30-31, 719 N.E.2d 756, 764 (1999). Summary judgment is a harsh remedy and should only be granted when the right ofthe moving party is clear and free from doubt. Colvin v. Hobart Brothers, 156Ill. 2d 166, 169-70, 620 N.E.2d 375, 377 (1993).

The State argues the trial court erred in granting summary judgment, because theactions of the defendant are not allowed under the Act without a license. The Actprovides as follows:

"No person shall manufacture, bottle, blend, sell, barter, transport, deliver,furnish or possess any alcoholic liquor for beverage purposes, except as speciallyprovided in this Act ***." 235 ILCS 5/2-1 (West 1996).

The cardinal rule in statutory construction is to give effect to legislativeintent. Solich v. George & Anna Portes Cancer Prevention Center of Chicago, Inc.,158 Ill. 2d 76, 81, 630 N.E.2d 820, 822 (1994); Central Illinois Public ServiceCo. v. Illinois Commerce Comm'n, 268 Ill. App. 3d 471, 483, 644 N.E.2d 817, 825-26(1994). The primary guide as to intent is the language of the statute. Solich,158 Ill. 2d at 81, 630 N.E.2d at 822. Words in the statute should be given theirpopularly understood meaning. International Bureau of Fraud Control, Ltd. v.Clayton, 188 Ill. App. 3d 703, 710, 544 N.E.2d 416, 421 (1989), citing Kozak v.Retirement Board of the Firemen's Annuity & Benefit Fund, 95 Ill. 2d 211, 215, 447N.E.2d 394, 396 (1983). Where the statutory language is unclear, a court may lookbeyond it, but where it is clear the court must give it effect. Solich, 158 Ill.2d at 81, 630 N.E.2d at 822. When the language is unclear, a primary source forconstruing the statute is the purpose behind the law and the evils the law isdesigned to remedy. Solich, 158 Ill. 2d at 81, 630 N.E.2d at 822. Courts avoidinterpretations that would render part of a statute meaningless or void. FraudControl, 188 Ill. App. 3d at 710, 544 N.E.2d at 421, citing Harris v. ManorHealthcare Corp., 111 Ill. 2d 350, 362-63, 489 N.E.2d 1374, 1379 (1986).

The Act is to be liberally construed toward protecting the public health, safety,and welfare and toward promotion of temperance in the consumption of alcohol bycareful control and regulation of the manufacture, sale, and distribution ofalcoholic liquor. 235 ILCS 5/1-2 (West 1996).

A strict or technical construction of any of its provisions detrimental to thepublic interest should be avoided. Carrigan v. Liquor Control Comm'n, 19 Ill. 2d230, 236, 166 N.E.2d 574, 577-78 (1960). The business of selling liquor is notfavored; no inherent right exists to carry it on and it may be entirely prohibited. Daley v. Berzanskis, 47 Ill. 2d 395, 398, 269 N.E.2d 716, 718 (1971). Ifthe Act is to have any meaning, it must be interpreted as starting from a point ofprohibition. The Act then provides exceptions where persons may conduct certainactivities involving alcohol as long as they have a valid liquor license. 235ILCS 5/2-1, 5-1 (West 1996). The State argues the Act prohibits what it does notpermit. We agree. The Act must expressly permit the actions of the defendants inthis case or they are in violation of the Act. There is no express permission fortheir conduct, and we conclude they violated the Act.

Moreover, the State contends defendants sold liquor without a license, which theAct specifically prohibits. Defendants argue they never sold wine but merelypromoted it. They argue the way in which they promoted the wine did not constitute "selling" under the Act. This court must determine if defendants' acts, asalleged, constitute "selling" under the Act.

"Sale" is defined in the Act as "any transfer, exchange[,] or barter in anymanner, or by any means whatsoever *** and includes and means all sales made byany person, whether principal, proprietor, agent, servant[,] or employee." 235ILCS 5/1-3.21 (West 1996). The term "'[t]o sell' includes to keep or expose forsale and to keep with intent to sell." 235 ILCS 5/12-3.22 (West 1996).

Defendants state in their affidavit they furnished amounts of wine to the publicto expose the wine for a later sale through giving out samples of wine. Althoughthe sale would be consummated at a later time, under the liberal constructionrequired by the Act such activities would fulfill the Act's definitions of "sale"and "to sell" because they exposed wine for ultimate sale. See 235 ILCS 5/1-3.21,1-3.22 (West 1996). Without a license or applicable exception, such actions wereunlawful. 235 ILCS 5/2-1, 10-1(a), 10-7 (West 1996).

The form defendants contend is merely a "preference form" is strikingly similar toa sales invoice. The form lists the name and address of Select at the top andprovides lines to tally the wine order, figure the subtotal, add shipping andappropriate tax, and figure the total price. The form also lists the type ofpayment a consumer selects, through either providing a credit card number,attaching a check, or specifying the wine be sent cash on delivery. Althoughdefendants did not ship the product or cash the consumer's check, they conducted a"sale" within the meaning of the Act. Both the intent behind the Act (seeHassiepen v. Marcin, 24 Ill. App. 3d 97, 100, 320 N.E.2d 572, 575 (1974)) andcommon sense dictate the finding of a sale under the Act. Although defendantslater added the terms "all wines are delivered by Shermer Specialties, which willappear on all credit card receipts and statements" in small print at the bottom ofthe form, this does not change the result: defendants are selling alcohol withouta license. The language of the statute is sufficiently comprehensive to includeany person, natural or artificial, and any kind of a sale or device used in lieuof a direct sale. People ex rel. Stevenson v. Law & Order Club, 203 Ill. 127,131, 67 N.E. 855, 857 (1903).

Finally, defendants contend the Commission, through its regulatory activities,recognizes conduct comparable to defendants' and does not require licensure underthe Act. In May 1997, the Commission promulgated a regulation requiring thelicensure or registration of "tasting" representatives. 11 Ill. Adm. Code