Request By:
Mr. Gerald B. Reams, Jr.
Kibbey & Reams
C.C. Cline Building
2718 Louisa Street
Catlettsburg, Kentucky 41129
Opinion
Opinion By: Steven L. Beshear, Attorney General; By: Suzanne Guss Assistant Attorney General
This is in response to your request for an opinion of this office regarding the legality of "lay-away" sales of alcoholic beverages in Kentucky by a retail package liquor, wine and malt beverage store.
You have stated that lay-away sales would involve the payment for desired items over a period of time (approximately two - three months), culminating in full payment to the retailer-seller by the customer-purchaser. Delivery by the retailer-seller to the customer-purchaser of the desired items would not be made until after full cash payment has been received by the retailer-seller.
You have asked whether this type of marketing scheme would violate the provisions of KRS 244.040, KRS 244.300 and 804 KAR 3:080.
KRS 244.040 provides in part:
(1) No brewer or distributor shall sell any alcoholic beverages to any person in this state for any consideration except cash paid at or before the time of delivery. . .
KRS 244.040 applies only to brewers, wholesalers and distributors and has no application to retailers.
Roppel v. Shearer, Ky., 321 S.W.2d 36 (1959). The same may be said for 804 KAR 3:080, which is derived from KRS 244.040.
KRS 244.300 provides, in part:
No retailer of distilled spirits and wine shall sell, deliver or give away, or cause, permit or procure to be sold, delivered or given away any distilled spirits or wine on credit . . .
The question is whether the "lay-away" plan proposed involves the sale of wine or distilled spirits on credit. (The sale of malt beverages on credit or by means of a "lay-away" plan is not prohibited). The answer depends upon whether the terms of the "lay-away" plan at the outset involve a contract to sell rather than a present sale, with title passing on payment and delivery. See Vold, Law of Sales, 2nd Ed., p. 144, n. 50. If the transaction represents a contract to sell on the part of the retailer or an option to purchase on the part of the customer-purchaser, title has not passed and no binding sale for credit has occurred. See
Holland v. Brown, Utah, 394 P.2d 77, 78-79 (1964);
People v. Canadian Fur Trappers' Corp., 248 NY 159, 161 NE 455, 458-459 (1928). On the other hand, if the lay-away plan involves a present sale with only payment and delivery postponed, title will immediately pass to the customer-purchaser:
Under such plans the customer selects an existing identified article in a deliverable state. He makes a down payment on it. It is marked with his name, and set aside for him by the seller. It is to be delivered to him when he calls for it and pays the balance of the price. In this simple form this deal seems clearly a present sale within the meaning of the Uniform Sales Act, sec. 19, Rule 1. The deal is unconditional. The goods are identified. They are in a deliverable state. It is only payment and delivery that have been postponed. Nothing is mentioned to show a different intention.
Vold, Law of Sales, 2nd Ed., p. 144, n. 50. See also KRS 355.2-401. Under these circumstances, the retailer-seller would clearly have completed a sale and passed title without receiving full remuneration. In other words, he would have sold distilled spirits or wine on credit, in violation of KRS 244.300, thereby possibly subjecting himself to the penalty set forth in KRS 244.990(1). Thus, the precise wording of the lay-away plan will determine whether the retailer-seller has engaged in a sale for credit.
We trust the foregoing has provided you with the information you requested. If you have any questions, please contact us.