State ex rel. Jackson v. William J. Lemp Brewing Co.

The opinion of the court was delivered by Benson, J.: The defendant excepted to the finding that the conveyance to Edwin A. Lemp was made to evade responsibility for violations of law. The recital of the proceedings of the corporate meeting at which the transfer was ordered and the course of business of the defendant in the state appear to warrant the inference. The property was used after the conveyance — 709 — precisely as it had been used before—for the sale of the beer received from the defendant; and the defendant’s bar fixtures were used 'in the various places just as they were used before—to promote the sale of the beer so furnished by the defendant. Mr. Baum continued to collect the rents and look after the property in Leavenworth, but accounted therefor to Mr. Lemp instead of the Lemp brewing company. In view of these facts the particular motive for the transfer is not very important. The defendant also excepted to the finding concerning the use made of the property in Crawford county, and the returns for taxation made by Mr. Knecht, the agent in charge. The evidence shows that these tracts, situated in the mining districts, were purchased upon the advice of Mr. Knecht, a wholesale liquor dealer at Minden, Mo., who was handling the Lemp beer. Mr. Knecht arranged with the defendant to put up small buildings on these tracts for use in making sales of beer bought by him from the defendant. He ordered and paid for the beer, and it was shipped to him at Minden “f. o. b.” the cars at St. Louis. He delivered it by wagons to the various places occupied by his tenants on the defendant’s lands in Crawford county, and took back the empty kegs and cases. The defendant furnished bar fixtures for these places, which were shipped to Mr. Knecht at Minden, and by him placed in the premises, where they femained in the various buildings for the use of the different tenants until taken by the receivers. The finding that these bar fixtures were listed for taxation for the year 1907 by S. W. Knecht, as agent for the defendant, is supported by certified copies of the returns. When asked if he made such return Mr. Knecht said: “I can’t say that I have.” When asked if he could say that he had not, he answered: •"‘No, I can’t do that either.” The finding is therefore supported by the evidence. In any event the property belonged to the defendant and was subject to taxation; — 710 — it was the duty of the defendant to have it listed for that purpose. Besides, the taxes upon this and other property of the defendant so listed by Mr. Knecht were paid by him and credit was given to him for the amount by the defendant. The only importance of this matter of assessment and taxation is the evidence it affords that the defendant had this property in the state, and the bearing that the latter fact may have upon the question whether it was engaged in business here in violation of law, as found by the commissioner. This finding is challenged, and is the principal subject of contention. The defendant argues that it was not doing any business in this state, hence that “it was not in Kansas,” and therefore can not be ousted therefrom. The real estate, whether owned by the corporation or its secretary, was being used in violation of law to promote the sale of the beer manufactured by the defendant. The bar fixtures necessary for the unlawful use and to promote the. sale of its product were supplied by the defendant. The greater the quantity of beer sold by these means the greater would be the sales by the defendant. Thus the defendant by furnishing the fixtures, to say nothing of the real estate, was aiding and abetting in the violation of the laws of this state, and to that extent at least was doing business here. The rents for the defendant’s warehouse at Coffeyville, the internal revenue tax upon its business there and the charges of the drayman for delivering beer were paid through its Kansas City branch. These payments were entered upon its books, which were regularly checked up by its traveling auditor. The manager of that office testified that he knew that the company had a warehouse at Coffeyville, which city was within the territory of the Kansas City branch. In the light of this evidence the claim of the defendant that it was ignorant of these transactions at Coffeyville is not sustained. A traveling salesman of the defendant took orders for beer at Coffeyville, and when a — 711 — sufficient number of orders had been taken to make up a car-load the beer was shipped to that city, consigned to the various purchasers, but received by a drayman employed by this salesman and paid by the defendant’s agents, who stored it in the warehouse where the revenue stamp was posted, and from which place it was taken by the various purchasers or delivered to them by the drayman. Some of it was taken from the cars by purchasers before being stored in the warehouse. The salesman testified: “Ques. Who looked after this beer that was shipped to Coffeyville in car-load lots after its arrival there? Ans. This drayman, Mr. Bouilly. “Q. How would he know that there was a car of Lemp beer at Coffeyville to be unloaded ? A. We would write him to that effect, and, besides, the customers would tell him to look out for a car; that there was one coming. Furthermore, I would see him every time I would go down there, and he would know what orders I would take and would be on the lookout for the car. “Q. Then he would look out for the car and when it came he would unload the beer? A. He would unload the beer, distribute it to these different parties who had ordered, and what they could n’t take at the time would be put in this warehouse. “Q. And then when they needed more beer he would take it out of the warehouse and distribute it to them, would he? A. They would go to the bank and lift their drafts or orders attached to the drafts for the goods there belonging to them. I would sometimes give him a copy of the orders I had taken for these different parties and he would know what each one was to get out of the car and could keep track of it in that way.” “Q. Who paid Mr. Bouilly for looking after the warehouse and unloading the cars of beer and storing it; distributing and storing it? A. Why, we would pay him so much a car for handling the goods and delivering to these different parties, which was added to the amount which we would charge the customer.” The fact that the revenue stamp was sent to Kansas City and this warehouse closed in March, 1907, ought not to preclude a fair consideration of the course of — 712 — business before that date as evincing the purposes and intent of the company and its attitude with reference to the laws of this state. . The evidence also shows that the defendant had agents in this state soliciting and taking orders for beer subject to the approval of the company, which shipped the beer “f. o. b.” the cars at St. Louis. Under the construction of the Wilson act (26 U. S. Stat. at L. p. 313) by the supreme court of the United States, this manner of dealing in intoxicating liquors is doing business in this state. (Delamater v. South Dakota, 205 U. S. 93, 27 Sup. Ct. 447, 51 L. Ed. 724; Phillips v. Mobile, 208 U. S. 472, 28 Sup. Ct. 370, 52 L. Ed. 578.) In the Delamater case it wa-s held that where the salesman of a liquor firm doing business at St. Paul, Minn., was engaged in the business of soliciting orders from residents of South Dakota, which were accepted and the liquor shipped accordingly from St. Paul to the purchasers in South Dakota, this was a violation of the laws of the latter state imposing a license charge upon “the business of selling or offering for sale” intoxicating liquors within the state, and that this statute of South Dakota was not repugnant to the commerce clause of the constitution of the United States. The court said: “Of course if the owner of the liquor in another state had a right to ship the same into South Dakota as an article of interstate commerce, and, as such, there sell the same in the original packages, irrespective of the laws of South Dakota, it would follow that the right to carry on the business of soliciting in South Dakota was an incident to the right to ship and sell, which could not be burdened without directly affecting interstate commerce. But as by the Wilson act the power of South Dakota attached to intoxicating liquors, when shipped into that state from another state after delivery but before the sale in the original package, so as to authorize South Dakota to regulate or forbid such sale, it follows that the regulation by South Dakota of the business carried on within its borders of soliciting proposals to purchase intoxicating liquors, even though — 713 — such liquors were situated in other states, can not be held to be repugnant to the commerce clause of the constitution, because directly or indirectly burdening the right to sell in South Dakota, a right which by virtue of the Wilson act did not exist. ... It having been thus settled that under the Wilson act a resident of one state had the right to contract for liquors in another state and receive the liquors in the state of his residence for his own use, therefore it is insisted the agent or traveling salesman of a non-resident dealer in intoxicating liquors had the right to go into South Dakota and there carry on the business of soliciting from residents of that state orders for liquor to be consummated by acceptance of the proposals by the non-resident dealer. The premise is sound, but the error lies in the deduction, since it ignores the broad distinction between the want of power of a state to prevent a resident from ordering from another state liquor for his own use and the plenary authority of a state to forbid the carrying on within its borders of the business of soliciting orders for intoxicating liquors situated in another state, even although such orders may only contemplate a contract to result from final acceptance in the state where the liquor is situated. The distinction between the two is not only obvious, but has been foreclosed by a previous decision of this court.” (Pages 100, 102.) In the opinion in Crigler v. Shepler, (post,) the effect of the foregoing decision upon the rule announced in The State v. Hickox, 64 Kan. 650, 68 Pac. 35, is stated. The construction placed upon the commerce clause of the federal constitution and upon the Wilson act by the supreme court of the United States must prevail. Our conclusion is that the findings and the evidence warrant the conclusion that the defendant was at the commencement of this action engaged in business in this state in violation of its laws. A judgment of ouster will therefore be entered as prayed for.