Opinion ID: 1565085
Heading Depth: 1
Heading Rank: 7

Heading: is the kentucky milk marketing law violative of kentucky constitution, section 2

Text: Section 2 of our Constitution is simple, short and expresses a view of governmental and political philosophy that, in a very real sense, distinguishes this republic from all other forms of government which place little or no emphasis on the rights of individuals in a society. It is as follows: § 2. Absolute and arbitrary power denied. Absolute and arbitrary power over the lives, liberty and property of free men exists nowhere in a republic, not even in the largest majority.  (Emphasis added). While there are numerous cases which have been decided on the basis of this bulwark of individual liberty, the number is relatively few, in view of its potential importance to our jurisprudence. Section 2 is a curb on the legislature as well as on any other public body or public officer in the assertion or attempted exercise of political power. Sanitation Dist. No. 1 v. City of Louisville, 308 Ky. 368, 213 S.W.2d 995 (1948). Whatever is contrary to democratic ideals, customs and maxims is arbitrary. Likewise, whatever is essentially unjust and unequal or exceeds the reasonable and legitimate interests of the people is arbitrary, Id. No board or officer vested with governmental authority may exercise it arbitrarily. If the action taken rests upon reasons so unsubstantial or the consequences are so unjust as to work a hardship, judicial power may be interposed to protect the rights of persons adversely affected. Wells v. Board of Education of Mercer County, Ky., 289 S.W.2d 492, 494 (1956). Our function is to decide a test of regularity and legality of a board's action by statutory law and by the constitutional protection against the exercise of arbitrary official power. Id. Section 2 is broad enough to embrace the traditional concepts of both due process of law and equal protection of the law. Pritchett v. Marshall, Ky., 375 S.W.2d 253, 258 (1963). Unequal enforcement of the law, if it rises to the level of conscious violation of the principle of uniformity, is prohibited by this Section. City of Ashland v. Heck's, Inc., Ky., 407 S.W.2d 421 (1966); Standard Oil v. Boone County Bd. of Sup'rs, Ky., 562 S.W.2d 83 (1978). The question of reasonableness is one of degree and must be based on the facts of a particular case. Boyle Cty. Stockyards Co. v. Commonwealth, etc., Ky.App., 570 S.W.2d 650 (1978). The majority of this Court believes that the Kentucky Milk Marketing Law, on its face, and in its enforcement by the Commission in this particular case, is violative of Section 2 of the Kentucky Constitution. As we have previously said, [10] the statutory purpose of the law is to prevent monopolies and unfair practices in the sale of milk and milk products. As we have also said, the law is in reality and in practice not an anti-monopoly statute, but is rather a minimum mark-up law. We believe an enactment of such a nature is an arbitrary exercise of power by the General Assembly over the lives and property of free men. Even though we decide this case on Kentucky Constitutional grounds, we are cognizant that minimum mark-up laws (unless authorized as state action) are violative of the Sherman Anti-Trust Act. Alcoholic Beverage Control Board v. Taylor Drug Stores, Ky., 635 S.W.2d 319 (1982). The effect of the Kentucky Milk Marketing Law is price fixing by requiring minimum mark-ups. This certainly, by any criteria, is arbitrary and is inimical to the public interest. It is an invasion of the right of merchants to sell competitively, and of the public to buy competitively in the open market. In the case of General Electric Co. v. American Buyers Cooperative, Ky., 316 S.W.2d 354 (1958), we held sections of Kentucky's Fair Trade Act unconstitutional. The Act enforced price fixing not only against parties to a minimum resale agreement, but also against a nonsignee if he knowingly breaches a resale agreement which was made between the producer and a third person. In effect the statute approved agreements by which a producer could require purchaser-retailer to resell the property at a certain invoice mark-up. In language relevant to the present case, we said: Our Bill of Rights declares as one of the great and essential principles of liberty and free government and as inherent and inalienable . . . the right of acquiring and protecting property . . . This is free enterprise. Our economic system is founded upon competition  the life of trade. It is an established principle that the constitutional guaranty of the right of property protects it . . . from any unjustifiable impairment or abridgement of this right, such as depriving the owner of any of its essential attributes or such as restricts or interrupts its common necessary or profitable use. . . . The right of the owner to fix the price at which his property shall be sold is an inherent attribute of the property itself . . . Supplemental to this property right provision is § 2 of the Constitution which forbids the exercise of arbitrary power of government over the property of free men. (Emphasis added). Id. at page 360. The Kentucky Milk Marketing Law, whether interpreted as a minimum mark-up law or interpreted as simply requiring that a retailer may not sell below cost, is clearly an arbitrary interference with the right of the owner to fix the price at which his property shall be sold. Id. It is an arbitrary interference with the free flow of commerce  the free enterprise system  and is not justified or to be justified by the police power of the state. It is clearly a violation of the letter and spirit of Section 2 of our Bill of Rights.