PRINTER'S NO. 244
No. 244 Session of 1989
INTRODUCED BY GREENLEAF, SALVATORE AND GREENWOOD, JANUARY 23,
1989
REFERRED TO LAW AND JUSTICE, JANUARY 23, 1989
AN ACT
1 Amending the act of April 12, 1951 (P.L.90, No.21), entitled, as
2 reenacted, "An act relating to alcoholic liquors, alcohol and
3 malt and brewed beverages; amending, revising, consolidating
4 and changing the laws relating thereto; regulating and
5 restricting the manufacture, purchase, sale, possession,
6 consumption, importation, transportation, furnishing, holding
7 in bond, holding in storage, traffic in and use of alcoholic
8 liquors, alcohol and malt and brewed beverages and the
9 persons engaged or employed therein; defining the powers and
10 duties of the Pennsylvania Liquor Control Board; providing
11 for the establishment and operation of State liquor stores,
12 for the payment of certain license fees to the respective
13 municipalities and townships, for the abatement of certain
14 nuisances and, in certain cases, for search and seizure
15 without warrant; prescribing penalties and forfeitures;
16 providing for local option, and repealing existing laws,"
17 providing for private sales of wine.
18 The General Assembly of the Commonwealth of Pennsylvania
19 hereby enacts as follows:
20 Section 1. Section 431 of the act of April 12, 1951 (P.L.90,
21 No.21), known as the Liquor Code, reenacted and amended June 29,
22 1987 (P.L.32, No.14), is amended to read:
23 Section 431. Malt [and], Brewed and Wine Beverages
24 Manufacturers', Distributors' and Importing Distributors'
25 Licenses.--(a) The board shall issue to any person a resident
1 of this Commonwealth of good repute who applies therefor, pays
2 the license fee hereinafter prescribed, and files the bond
3 hereinafter required, a manufacturer's license to produce and
4 manufacture malt [or], brewed or wine beverages, and to
5 transport, sell and deliver malt [or], brewed or wine beverages
6 at or from one or more places of manufacture or storage, only in
7 original containers, and in the case of malt or brewed beverages
8 in quantities of not less than a case of twenty-four containers,
9 each container holding seven fluid ounces or more, or a case of
10 twelve containers, each container holding twenty-four fluid
11 ounces or more, except original containers containing one
12 hundred twenty-eight ounces or more which may be sold separately
13 anywhere within the Commonwealth. Licenses for places of storage
14 shall be limited to those maintained by manufacturers on July
15 eighteenth, one thousand nine hundred thirty-five, and the board
16 shall issue no licenses for places of storage in addition to
17 those maintained on July eighteenth, one thousand nine hundred
18 thirty-five. The application for such license shall be in such
19 form and contain such information as the board shall require.
20 All such licenses shall be granted for the calendar year. Every
21 manufacturer shall keep at his or its principal place of
22 business, within the Commonwealth daily permanent records which
23 shall show, (1) the quantities of raw materials received and
24 used in the manufacture of malt [or], brewed or wine beverages
25 and the quantities of malt [or], brewed or wine beverages
26 manufactured and stored, (2) the sales of malt [or], brewed or
27 wine beverages, (3) the quantities of malt [or], brewed or wine
28 beverages stored for hire or transported for hire by or for the
29 licensee, and (4) the names and addresses of the purchasers or
30 other recipients thereof. Every place licensed as a manufacturer
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1 shall be subject to inspection by members of the board or by
2 persons duly authorized and designated by the board, at any and
3 all times of the day or night, as they may deem necessary, for
4 the detection of violations of this act or of the rules and
5 regulations of the board, or for the purpose of ascertaining the
6 correctness of the records required to be kept by licensees. The
7 books and records of such licensees shall at all times be open
8 to inspection by members of the board or by persons duly
9 authorized and designated by the board. Members of the board and
10 its duly authorized agents shall have the right, without
11 hindrance, to enter any place which is subject to inspection
12 hereunder or any place where such records are kept for the
13 purpose of making such inspections and making transcripts
14 thereof.
15 (b) The board shall issue to any reputable person who
16 applies therefor, pays the license fee hereinafter prescribed,
17 and files the bond hereinafter required, a distributor's or
18 importing distributor's license for the place which such person
19 desires to maintain for the sale of malt [or], brewed or wine
20 beverages, not for consumption on the premises where sold, and
21 in the case of malt or brewed beverages in quantities of not
22 less than twenty-four containers, each container holding seven
23 fluid ounces or more, or twelve containers, each container
24 holding twenty-four fluid ounces or more, except original
25 containers containing one hundred twenty-eight ounces or more
26 which may be sold separately and such containers to be the
27 original containers as prepared for the market by the
28 manufacturer at the place of manufacture. The board shall have
29 the discretion to refuse a license to any person or to any
30 corporation, partnership or association if such person, or any
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1 officer or director of such corporation, or any member or
2 partner of such partnership or association shall have been
3 convicted or found guilty of a felony within a period of five
4 years immediately preceding the date of application for the said
5 license: And provided further, That, in the case of any new
6 license or the transfer of any license to a new location, the
7 board may, in its discretion, grant or refuse such new license
8 or transfer if such place proposed to be licensed is within
9 three hundred feet of any church, hospital, charitable
10 institution, school or public playground, or if such new license
11 or transfer is applied for a place which is within two hundred
12 feet of any other premises which is licensed by the board: And
13 provided further, That the board shall refuse any application
14 for a new license or the transfer of any license to a new
15 location if, in the board's opinion, such new license or
16 transfer would be detrimental to the welfare, health, peace and
17 morals of the inhabitants of the neighborhood within a radius of
18 five hundred feet of the place proposed to be licensed. The
19 board shall refuse any application for a new license or the
20 transfer of any license to a location where the sale of liquid
21 fuels or oil is conducted. The board shall require notice to be
22 posted on the property or premises upon which the licensee or
23 proposed licensee will engage in sales of malt [or], brewed or
24 wine beverages. This notice shall be similar to the notice
25 required of hotel, restaurant and club liquor licensees.
26 Except as hereinafter provided, such license shall authorize
27 the holder thereof to sell or deliver malt [or], brewed or wine
28 beverages in quantities above specified anywhere within the
29 Commonwealth of Pennsylvania, which, in the case of
30 distributors, have been purchased only from persons licensed
19890S0244B0244 - 4 -
1 under this act as manufacturers or importing distributors, and
2 in the case of importing distributors, have been purchased from
3 manufacturers or persons outside this Commonwealth engaged in
4 the legal sale of malt [or], brewed or wine beverages or from
5 manufacturers or importing distributors licensed under this
6 article.
7 Each out of State manufacturer of malt [or], brewed or wine
8 beverages whose products are sold and delivered in this
9 Commonwealth shall give distributing rights for such products in
10 designated geographical areas to specific importing
11 distributors, and such importing distributor shall not sell or
12 deliver malt [or], brewed or wine beverages manufactured by the
13 out of State manufacturer to any person issued a license under
14 the provisions of this act whose licensed premises are not
15 located within the geographical area for which he has been given
16 distributing rights by such manufacturer. Should a licensee
17 accept the delivery of such malt [or], brewed or wine beverages
18 in violation of this section, said licensee shall be subject to
19 a suspension of his license for at least thirty days: Provided,
20 That the importing distributor holding such distributing rights
21 for such product shall not sell or deliver the same to another
22 importing distributor without first having entered into a
23 written agreement with the said secondary importing distributor
24 setting forth the terms and conditions under which such products
25 are to be resold within the territory granted to the primary
26 importing distributor by the manufacturer.
27 When a Pennsylvania manufacturer of malt [or], brewed or wine
28 beverages licensed under this article names or constitutes a
29 distributor or importing distributor as the primary or original
30 supplier of his product, he shall also designate the specific
19890S0244B0244 - 5 -
1 geographical area for which the said distributor or importing
2 distributor is given distributing rights, and such distributor
3 or importing distributor shall not sell or deliver the products
4 of such manufacturer to any person issued a license under the
5 provisions of this act whose licensed premises are not located
6 within the geographical area for which distributing rights have
7 been given to the distributor and importing distributor by the
8 said manufacturer: Provided, That the importing distributor
9 holding such distributing rights for such product shall not sell
10 or deliver the same to another importing distributor without
11 first having entered into a written agreement with the said
12 secondary importing distributor setting forth the terms and
13 conditions under which such products are to be resold within the
14 territory granted to the primary importing distributor by the
15 manufacturer. Nothing herein contained shall be construed to
16 prevent any manufacturer from authorizing the importing
17 distributor holding the distributing rights for a designated
18 geographical area from selling the products of such manufacturer
19 to another importing distributor also holding distributing
20 rights from the same manufacturer for another geographical area,
21 providing such authority be contained in writing and a copy
22 thereof be given to each of the importing distributors so
23 affected.
24 (b.1) (1) Any person in this Commonwealth or elsewhere who
25 shall purchase or in any manner whatsoever acquire or otherwise
26 succeed to the business of a manufacturer, assets or rights to
27 import, market, ship into this Commonwealth or distribute a
28 brand of beer or wine, or to use and exploit any trademark
29 incorporated as part of a brand of beer or wine produced by such
30 a manufacturer shall be obligated to all terms of the
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1 manufacturer's franchise agreements in effect on the effective
2 date of the purchase, acquisition or succession, or, if earlier,
3 at the time the agreement contemplating the purchase,
4 acquisition or succession is actually made.
5 (2) "Purchase" or "acquisition," for purposes of this
6 section, includes, but is not limited to, a purchase,
7 acquisition, lease, license or assignment of all or a
8 controlling interest in the capital stock or operating assets,
9 including brand trademarks rights; merger; any corporate
10 reorganization or consolidation; and also, without limitation,
11 any license, cross-license, joint venture or other agreement or
12 arrangement, directly or indirectly, transferring, substituting
13 or materially changing the person or persons authorized by the
14 one owning or controlling a brand or any trademark as part of a
15 brand, to produce, import, ship, market or distribute the brand
16 of beer or wine into or within this Commonwealth.
17 (3) "Manufacturer," as used in this subsection, shall mean
18 any person, including any agent of such person, who (i) is
19 licensed as a manufacturer of malt [or], brewed or wine
20 beverages located within the Commonwealth of Pennsylvania, (ii)
21 holds a distributor or importing distributor license, or (iii)
22 manufactures any malt or wine beverage, has title to any malt or
23 wine beverage products or has the contractual right to
24 distribute any malt or wine beverage product, whether licensed
25 in this Commonwealth or not, who enters into an "agreement" with
26 any importing distributor licensed to do business in this
27 Commonwealth.
28 (c) The aforesaid licenses shall be issued only to reputable
29 individuals, partnerships and associations who are, or whose
30 members are, citizens of the United States and have for two
19890S0244B0244 - 7 -
1 years prior to the date of their applications been residents of
2 the Commonwealth of Pennsylvania or to reputable corporations
3 organized or duly registered under the laws of the Commonwealth
4 of Pennsylvania. Such licenses shall be issued to corporations
5 duly organized or registered under the laws of the Commonwealth
6 of Pennsylvania only when it appears that all of the officers
7 and directors of the corporation are citizens of the United
8 States and have been residents of the Commonwealth of
9 Pennsylvania for a period of at least two years prior to the
10 date of application, and that at least fifty-one per centum of
11 the capital stock of such corporation is actually owned by
12 individuals who are citizens of the United States and have been
13 residents of the Commonwealth of Pennsylvania for a period of at
14 least two years prior to the date of application: Provided, That
15 the provisions of this subsection with respect to residence
16 requirements shall not apply to individuals, partners, officers,
17 directors and owners of capital stock, of corporations licensed
18 or applying for licenses as manufacturers of malt [or], brewed
19 or wine beverages, nor shall the provisions of this subsection
20 with respect to stockholder requirements apply to corporations
21 licensed or applying for licenses as manufacturers of malt [or],
22 brewed or wine beverages.
23 (d) (1) All distributing rights as hereinabove required
24 shall be in writing, shall be equitable in their provisions and
25 shall be substantially similar as to terms and conditions with
26 all other distributing rights agreements between the
27 manufacturer giving such agreement and its other importing
28 distributors and distributors shall not be modified, cancelled,
29 terminated or rescinded by the manufacturer without good cause,
30 and shall contain a provision in substance or effect as follows:
19890S0244B0244 - 8 -
1 "The manufacturer recognizes that the importing distributor and
2 distributor are free to manage their business in the manner the
3 importing distributor and distributor deem best and that this
4 prerogative vests in the importing distributor and distributor
5 the exclusive right to establish a selling price, to select the
6 brands of malt [or], brewed or wine beverages they wish to
7 handle and to determine the efforts and resources which the
8 importing distributor and distributor will exert to develop and
9 promote the same of the manufacturer's products handled by the
10 importing distributor and distributor. However, the manufacturer
11 expects that the importing distributor and distributor will
12 price competitively the products handled by them, devote
13 reasonable effort and resources to the sale of such products and
14 maintain a reasonable sales level." "Good cause" shall mean the
15 failure by any party to an agreement, without reasonable excuse
16 or justification, to comply substantially with an essential,
17 reasonable and commercially acceptable requirement imposed by
18 the other party under the terms of an agreement.
19 (2) After January 1, 1980, no manufacturer shall enter into
20 any agreement with more than one distributor or importing
21 distributor for the purpose of establishing more than one
22 agreement for designated brand or brands of malt [or], brewed or
23 wine beverages in any one territory. Each franchise territory
24 which is granted by a manufacturer shall be geographically
25 contiguous.
26 (3) Except for discontinuance of a brand or a valid
27 termination for good cause, the purchaser of the assets of the
28 manufacturer as defined in this act shall become obligated to
29 all the territorial and brand designations of the agreement in
30 effect on the date of purchase. Purchase of assets as defined
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1 for the purposes of this act shall include, but not be limited
2 to, the sale of stock, sale of assets, merger, lease, transfer
3 or consolidation.
4 (4) The court of common pleas of the county wherein the
5 licensed premises of the importing distributor or distributor
6 are located is hereby vested with jurisdiction and power to
7 enjoin the modification, rescission, cancellation or termination
8 of a franchise or agreement between a manufacturer and an
9 importing distributor or distributor at the instance of such
10 importing distributor or distributor who is or might be
11 adversely affected by such modification, rescission,
12 cancellation or termination, and in granting an injunction the
13 court shall provide that no manufacturer shall supply the
14 customers or territory of the importing distributor or
15 distributor by servicing the territory or customers through
16 other importing distributors or distributors or any other means
17 while the injunction is in effect: Provided, however, That any
18 injunction issued under this subsection shall require the
19 posting of sufficient bond against damages arising from an
20 injunction improvidently granted and a showing that the danger
21 of irrevocable loss or damage is immediate and that during the
22 pendency of such injunction the importing distributor or
23 distributor shall continue to service the accounts of the
24 manufacturer in good faith.
25 (5) The provisions of this subsection shall not apply to
26 Pennsylvania manufacturers whose principal place of business is
27 located in Pennsylvania unless they name or constitute a
28 distributor or importing distributor as a primary or original
29 supplier of their products subsequent to the effective date of
30 this act, or unless such Pennsylvania manufacturers have named
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1 or constituted a distributor or importing distributor as a
2 primary or original supplier of their products prior to the
3 effective date of this act, and which status is continuing when
4 this act becomes effective.
5 Section 2. Section 505.2 of the act, is amended to read:
6 Section 505.2. Limited Wineries.--Holders of a limited
7 winery license may:
8 (1) Produce wines and wine coolers only from fruits grown in
9 Pennsylvania in an amount not to exceed two hundred thousand
10 (200,000) gallons per year.
11 (2) Sell wine and wine coolers produced by the limited
12 winery or purchased or consigned in bulk in bond or in sealed
13 case lots from [another] one or more Pennsylvania limited
14 [winery] wineries or from a private wine wholesaler or retailer
15 on the licensed premises, under such conditions and regulations
16 as the board may enforce, to the board, to individuals and to
17 hotel, restaurant, club and public service liquor licensees, and
18 to Pennsylvania winery licensees: Provided, That a limited
19 winery shall not, in any calendar year, purchase wine produced
20 by other limited wineries in an amount in excess of fifty per
21 centum of the wine produced by the purchasing limited winery in
22 the preceding calendar year.
23 (3) Separately or in conjunction with other limited
24 wineries, sell wine and wine coolers produced by the limited
25 winery or purchased or consigned as provided in clause (2) on no
26 more than five board-approved locations other than the licensed
27 premises, with no bottling or production requirement at those
28 additional board-approved locations and under such conditions
29 and regulations as the board may enforce, to the board, to
30 individuals and to hotel, restaurant, club and public service
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1 liquor licensees.
2 Section 3. This act shall take effect in 60 days.
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