Opinion ID: 2310114
Heading Depth: 1
Heading Rank: 4

Heading: vagueness and uncertainty

Text: The final question relates to whether the Act is invalid by reason of the vagueness, generality and indefiniteness of § 6-13-1 (d) which provides that: The terms `cost to the retailer' and `cost to the wholesaler' as defined in paragraphs (a) and (b) shall mean bona fide costs; and sales to consumers, retailers and wholesalers at prices which cannot be justified by existing market conditions within this state shall not be used as a basis for computing replacement costs with respect to sales by retailers and wholesalers   . Our discussion of this question will relate only to such portion of the section as concerns cost to the retailer since here it is retailers who are respondents. The Act in § 6-13-1 (a) prescribes a formula for the calculation of cost by the retailer. Starting with the invoice price or replacement cost of the merchandise to him within thirty days prior to the sale, whichever is lower, less all trade discounts except customary discounts for cash, the retailer adds (1) freight charges not otherwise included in the merchandise cost; (2) cartage to the retail outlet if performed or paid for by him which cost is deemed to be three-fourths of one per cent of the cost of the merchandise, unless a lower cost is claimed and proved; and (3) a markup to cover in part the cost of doing business, which markup in the absence of proof of a lesser cost is deemed to be six per cent of the total cost at the retail outlet. After calculating his cost as prescribed by the detailed formula above set forth, the retailer is then required by § 6-13-1 (d) to recompute and to exclude from replacement cost any sales to consumers, retailers, and wholesalers which cannot be justified by existing market conditions within this state   . The provision at issue has several times been passed on by the courts and where its constitutionality was challenged on the grounds of vagueness, generality, and indefiniteness it has on each occasion been held void. McIntire v. Borofsky, 95 N.H. 174, 59 A.2d 471; Daniel Loughran Co. v. Lord Baltimore Candy & Tobacco Co., 178 Md. 38, 12 A.2d 201; State v. Walgreen Drug Co., 57 Ariz. 308, 113 P.2D 650; State v. Consumers Warehouse Market, Inc., 183 Kan. 502, 329 P.2d 638. In reaching a like conclusion, we can add nothing to the observations of the Maryland court in Blum v. Engelman, 190 Md. 109, 57 A.2d 421, where summarizing its earlier discussion in Daniel Loughran Co., supra, of a provision similar to that before us, the court said 190 Md. at page 112, 57 A.2d at page 422. The 1939 Act was annulled on account of two provisions. One of these provisions was to the effect that sales `at prices which cannot be justified by existing market conditions' should not be used as a basis for computing costs.    This provision required a dealer to make a survey of `existing market conditions,' and thereupon determine whether such conditions justified a certain price, and from that price the cost was to be computed. The dealer's computation was not conclusive, and accordingly if his analysis of `existing market conditions' was not correct, and it was determined in a judicial proceeding that the conditions did not justify the price, then, even though he honestly believed that his survey justified that price, his computation would be rejected, and he would stand as a violator of the law. In our judgment, the provision lacks that degree of reasonable certainty which it was incumbent upon the legislature to provide when it prohibited sales below cost, and we hold that such vagueness, uncertainty and indefiniteness make it defective. We are not unaware that in Rust v. Griggs, 172 Tenn. 565, 113 S.W.2d 733, a similar clause was held constitutional, but in that case the challenge was on the ground of a violation of the interstate commerce rather than the due process clause, and we are also mindful that in Blum v. Engelman, supra, a like conclusion was reached as to the Maryland Act but only after it had been amended by the elimination of the existing market conditions clause held defective in Daniel Loughran Co., supra. That we hold the clause in question void is not, however, fatal to the remaining portions of the Act, the invalid existing market conditions provision being clearly separable from the remainder which in § 6-13-8 the legislature stipulated shall not be affected thereby. We answer question numbered 3 in the negative. The papers in the cases with our answers to the questions certified are remitted to the superior court for further proceedings.