Court Opinion

ID: 9607445
Source: CourtListenerOpinion
Date Created: 2023-08-22 02:58:53.994329+00
Date Added: 2024-06-11T18:02:39.043108
License: Public Domain

PETERS, J.
I dissent. The constitutionality of the price provisions of the Alcoholic Beverage Control Act, commonly known as the liquor fair trade law, is the basic question here involved. In 1959, in Allied Properties v. Department of Alcoholic Beverage Control, 53 Cal.2d 141 [346 P.2d 737], the constitutionality of the statute was upheld in a 4-to-3 decision. In June of this year this court decided to reconsider that decision. Upon such reconsideration the majority have reaffirmed Allied Properties, supra. I dissented in 1959 and I dissent now.
The issues in 1959 were whether the statute accomplished its avowed purpose under the police power, and whether it involved an illegal delegation of legislative power. The issues are the same now. The majority in the instant case adopt the same faulty reasoning and come to the same erroneous conclusions as did the 1959 majority, and on the same grounds. The majority opinion here involved, although couched in different language than the 1959 opinion, adds nothing significant to a discussion of the constitutional principles involved. Its greatest deficiency is its failure to give significance to the decisions in other states, and to writings by legal scholars since 1959. As will be later pointed out, such decisions and writings1 demonstrate a definite national trend, both in the field of liquor price regulation and in fair trade cases generally, to hold such statutes unconstitutional. This trend should not be so lightly disregarded.
In my opinion, as a matter of law, the liquor fair trade law is violative of due process in that it is designed to accomplish a purpose diametrically opposed to its avowed purpose and is not justified under the police power, and involves an illegal delegation of legislative power. These conclusions are as sound now as when I expressed them in my dissent in 1959, and are now supported by the definite weight of authority.
*379That the statute, as a matter of law, is intended and designed to accomplish a purpose contrary to its avowed purpose and is not justified under the police power is demonstrated by an examination of the pertinent constitutional and statutory provisions.
The Department of Alcoholic Beverage Control was created by section 22 of article XX of the Constitution. The fifth paragraph of that section provides in part that the department “shall have the exclusive power, except as herein provided and in accordance with laws enacted by the Legislature, to license the manufacture, importation and sale of alcoholic beverages in this State, and to collect license fees or occupation taxes on account thereof. The department shall have the power, in its discretion, to deny, suspend or revoke any specific alcoholic beverage license if it shall determine for good cause that the granting or continuance of such license would be contrary to public welfare or morals, or that a person seeking or holding a license has violated any law prohibiting conduct involving moral turpitude. ’ ’ The section declares that its provisions are self-executing but that nothing therein shall prohibit the Legislature from enacting laws implementing and not inconsistent with such provisions.
The liquor fair trade law is a part of the Alcoholic Beverage Control Act, which was adopted “for the protection of the safety, welfare, health, peace, and morals of the people of the State, to eliminate the evils of unlicensed and unlawful manufacture, selling, and disposing of alcoholic beverages, and to promote temperance in the use and consumption of alcoholic beverages.” (Bus. & Prof. Code, § 23001.) Section 24749 of the Business and Professions Code adopted in 1961 states the purpose of the liquor fair trade law even more specifically: “It is the declared policy of the State that it is necessary to regulate and control the manufacture, sale, and distribution of alcoholic beverages within this State for the purpose of fostering and promoting temperance in their consumption and respect for and obedience to the law. In order to eliminate price wars which unduly stimulate the sale and consumption of alcoholic beverages and disrupt the orderly sale and distribution thereof, it is hereby declared as the policy of this State that the sale of alcoholic beverages should be subjected to certain restrictions and regulations. ’ ’
The liquor fair trade law, unlike the general fair trade statutes, is mandatory and operates as follows. Section 24750 of the Business and Professions Code authorizes fair trade *380contracts prohibiting the buyer from reselling, except at the price stipulated by the seller, alcoholic beverages which bear the trade-mark, brand, or name of the producer or owner and are in fair and open competition with others of the same general class. Willfully and knowingly advertising, offering for sale, or selling any alcoholic beverage at less than the price stipulated in any such contract, whether the person so advertising, offering for sale, or selling is or is not a party to the contract, is declared to be unfair competition and is actionable at the suit of any person damaged thereby. (Bus. & Prof. Code, § 24752.) Section 24755 of the Business and Professions Code, as it read at the time of the transactions under consideration,' required that all distilled spirits sold at retail be sold pursuant to a contract executed under the above provisions and prohibited the violation of such contracts by licensees.
The department is authorized to adopt such rules as it determines to be necessary for the administration of the above provisions (Bus. & Prof. Code, § 24757), and rule 99 adopted by the department at that time provided in part that no manufacturer or wholesaler shall sell distilled spirits except pursuant to a fair trade contract as provided for by sections 24750 and 24755, that copies of such fair trade contracts shall be filed with the department, and that no licensee shall advertise or offer for sale alcoholic beverages at retail at a price less than the minimum resale price provided for by a fair trade contract filed with the department pursuant to this rule. (Cal.Admin. Code, tit. 4, § 99, subds. (a), (b), (f).)
The Legislature has enumerated the following as grounds for the suspension or revocation of licenses: (1) when the continuance of a license would be contrary to public welfare or morals, but proceedings under this statutory ground are not a limitation upon the department’s authority to proceed under section 22 of article XX of the Constitution; (2) the violation by a licensee of any rules of the department adopted pursuant to the Alcoholic Beverage Control Act; (3) the violation of any penal provisions of law prohibiting or regulating the sale of alcoholic beverages. (Bus. & Prof. Code, § 24200.)
• Section 25617 of the Business and Professions Code provides that the violation of any of the provisions of the Alcoholic Beverage Control Act for which another penalty or punishment is not specifically provided for in the act is a misdemeanor punishable by a fine of not more than $500 or by imprisonment in the county jail for not more than six months, or both,-and the section has been held to apply to violations of *381the liquor fair trade provisions. (Peck’s Liquors, Inc. v. Superior Court, 221 Cal.App.2d 772 [34 Cal.Rptr. 735].)
Thus, the fair trade provisions of the Alcoholic Beverage Control Act, together with the disciplinary power given the Department of Alcoholic Beverage Control directly by the Constitution, comprise a mandatory price-fixing system whereby the producers or wholesalers of branded or trademarked alcoholic beverages fix the retail prices of those beverages, and adherence to the prices is guaranteed by threat of imposition by the state of civil and criminal sanctions upon noncomplying retailers. The law operates to require the producer or distributor of a branded or trade-marked alcoholic beverage that is in fair and open competition with others of the same general class to enter into a contract with a retailer establishing a retail price before making any sales within the state. Thereafter, all retailers, whether or not parties to the contract, are required to adhere to that price under threat of a civil suit by the producer or distributor, suspension or revocation of their license by the Department of Alcoholic Beverage Control, and possible criminal penalties.2 (See Cal.Const., art. XX, §22; Bus. & Prof. Code, §§ 24750-24757, 25617; Cal. Admin. Code, tit. 4, § 99.)
The liquor fair trade law is to be distinguished from the general Fair Trade Act applicable to all branded or trademarked commodities sold at retail which are in free and open competition with others of the same general class. This general act was adopted in the depression and is similar to the Fair Trade Acts adopted during that period by a number of other states. (Stats. 1931, eh. 278, § 5, p. 583, now Bus. & Prof. Code; §§ 16900-16905; see 19 Ohio St.L.J. 748.) The primary objective of these acts has been regarded as the protection of *382the producer’s goodwill or property interest in his brand or trade-mark (Old Dearborn etc. Co. v. Seagram etc. Corp., 299 U.S. 183, 193 [81 L.Ed. 109, 57 S.Ct. 139, 106 A.L.R. 1476]; Max Factor & Co. v. Kunsman, 5 Cal.2d 446, 455-463 [55 P.2d 177]), whereas the asserted purpose of the liquor fair trade law is to promote temperance in the consumption of alcoholic beverages (Bus. & Prof. Code, §§ 23001, 24749). The general act is permissive rather than mandatory; only a small portion of all commodities sold at retail are fair-traded. (See Fulda, Resale Price Maintenance, 21 U.Chi.L.Rev. 175, 179.) It is enforced only by private suits, not by criminal penalties or revocation or suspension of licenses by an administrative body.
This court has upheld the California Fair Trade Act against attacks on grounds of violation of due process (Max Factor & Co. v. Kunsman, supra, 5 Cal.2d 446) and unlawful delegation of legislative power (Scovill Mfg. Co. v. Skaggs etc. Drug Stores, 45 Cal.2d 881 [291 P.2d 936]). Although the Fair Trade Acts have recently been the subject of criticism by several legal scholars,3 and the trend of authority in other states has shifted toward holding the acts unconstitutional,4 *383the differences in both purpose and operation between the mandatory liquor price-fixing act and our general Fair Trade Act require that they be analyzed separately and show that the validity of one is not dependent upon the constitutionality of the other.
The majority in Allied Properties (supra, 53 Cal.2d 141), and the majority here, conclude that the liquor fair trade law is a proper exercise of the police power. The requirement that alcoholic beverages be sold pursuant to fair trade contracts is regarded as bearing a reasonable relation to the valid objectives of promoting orderly marketing conditions and promot*384ing temperance since it prevents retail. price-cutting and bargain sales by eliminating price competition at the retail level. It is reasoned that, as in the case of the general Fair Trade Act, there is no delegation of legislative power because the price determinations made by producers and wholesalers are contractual and not legislative in character; they are “merely ‘the facts in contemplation of which the Legislature acted, and upon the existence of which the provisions of the enactment were to be applicable.’ ” (Allied Properties v. Department of Alcoholic Beverage Control, supra, 53 Cal.2d 141, 151.) The majority see no significant difference with regard to delegation between the general Fair Trade Act and the liquor fair trade law. The mandatory nature of the latter is viewed as restricting rather than increasing the authority of the price setter, and the additional sanctions available in the enforcement of the liquor fair trade law are not regarded as affecting delegation on the theory that they are prescribed by the Legislature and not by the producers or wholesalers.
These arguments, in my opinion, are unsound. It is the' general rule that in determining whether legislation is a valid exercise of the police power, the inquiry of the court is limited to determining whether the object of the statute is one for which the police power may legitimately be invoked and, if so, whether the statute bears a reasonable and substantial relation to the object sought to be obtained. (Wholesale Tobacco Dealers v. National etc. Co., 11 Cal.2d 634, 643 [82 P.2d 3, 118 A.L.R. 486].) It is, of course, not the province of the judiciary to question the wisdom of economic policy as long as it may reasonably be deemed to promote the public welfare, and if the statute has a reasonable relation to a proper legislative purpose, and is neither arbitrary nor discriminatory, the requirements of due process are satisfied. (Nebbia v. New York, 291 U.S. 502, 537 [78 L.Ed. 940, 54 S.Ct. 505, 89 A.L.R. 1469]; Max Factor & Co. v. Kunsman, supra, 5 Cal.2d 446, 456.) When, however, the statute bears no reasonable relation to the legislative purpose, it is invalid. (Blumenthal v. Board of Medical Examiners, 57 Cal.2d 228, 233 [18 Cal.Rptr. 501, 368 P.2d 101].)
There can be no doubt at all that the promotion of temperance in the consumption of alcoholic beverages is a proper subject of state regulation. The state has wide powers with respect to the regulation of traffic in alcoholic beverages and can prohibit their production and sale altogether. (Ziffrin v. Reeves, 308 U.S. 132, 138-139 [84 L.Ed. 128, 60 S.Ct. 163]; cf. *385Sandelin v. Collins, 1 Cal.2d 147,153 [33 P.2d 1009, 93 A.L.R 956].)
It is apparent from an analysis of the liquor fair trade law, however, that it bears no relation at all to the purported objective of promoting temperance. While the stated purpose of the law is to restrict the sale and consumption of alcoholic beverages, the use of fair trade contracts as a means necessarily guarantees that that objective will not be achieved. By attempting to achieve temperance in the sale of alcoholic beverages by regulation of the retail price through the use of this type of fair trade law, the Legislature has used the very form of regulation which is designed to promote rather than restrict trade. As has already been pointed out, the stated purpose of general Fair Trade Acts is to protect the goodwill of the producer in his brand name or trade-mark and in this way to promote and encourage trade by preventing unfair competition. (Old Dearborn etc. Co. v. Seagram etc. Corp., supra, 299 U.S. 183, 195; Max Factor & Co. v. Kunsman, supra, 5 Cal.2d 446, 454-455.) To this end, each brand or trademark owner is given the uncontrolled discretion to decide whether or not and at what amount to fix the price at which his product will be sold at retail. Active competition and a healthy trade are assured by the fact that uniform prices are maintained only as to the same brand and the prices are set by those having the greatest interest in promoting the product.
The liquor fair trade law does not prevent, and indeed is designed to insure, competition between different brands. The price-fixing scheme is imposed only upon a branded or trademarked alcoholic beverage “which is in fair and open competition with alcoholic beverages of the same general class produced by others.” (Bus. & Prof. Code, § 24750.) A producer may enter into extensive competition or engage in a price war with competing distillers, and where, as in the alcoholic beverage industry, there exists a great variety of different brands of the same product type, competition between brands is likely to have as great an effect upon prices at the retail level as competition between retailers with regard to the same brands.
Furthermore, there is no limit to the number of brands that can be put on the market for each type of alcoholic beverage. The same product may be sold at the retail level at different prices so long as different labels are used. Thus, a manufacturer can establish different prices for the same product to increase consumption. Wholesalers and retailers can and often *386do set their own prices for liquor merely by purchasing it in bulk and selling it under their own brand name. Indeed, one retailer may own many brand names and be in direct competition with the producer of the liquor which he buys who is selling it at that store under his own brand name.5 Retailers may also compete for the exclusive privilege of handling certain brands. As a result, competition is not limited to the producing or manufacturing level but exists at the wholesale and retail levels as well.
The conclusion that the liquor fair trade law has no relation to promoting temperance is reinforced, and in fact is compelled, by the fact that no standards or limitations are placed on the power to fix the price at which liquor will be sold at retail and that that power is given to those who are not only private persons having no responsibility to the government but are those most interested in promoting the trade in alcoholic beverages and in making the greatest profit. Nothing in the act gives the department or any other official arm of the government any voice or control in the establishment of the retail price.
Although the United States Supreme Court has since the late 1930s generally upheld price-fixing regulations as a means of promoting the public welfare, the price-fixing power in those cases considered was either given to a government agency and accompanied by adequate standards (see, e.g., Nebbia v. New York, supra, 291 U.S. 502, 515-520) or its exercise was subject to the approval of a government commission (see, e.g., Sunshine etc. Coal Co. v. Adkins, 310 U.S. 381, 399 [84 L.Ed. 1263, 60 S.Ct. 907]).
The majority in Allied Properties, supra, referred to a number of states which have upheld price regulation of alcoholic beverages. (53 Cal.2d at p. 147.) In most of these states the regulations involved were significantly different from the California mandatory liquor fair trade law with regard to standards and controls over the prices fixed. In Rhode Island, Kentucky, and Arkansas retail prices were required to be set at certain percentages above cost. (Nocera Bros. Liquor Mart v. Liquor Control Hearing Board, 81 R.I. 186 [100 A.2d 652] ; *387Reeves v. Simons, 289 Ky. 793 [160 S.W.2d 149, 150] ; Gipson v. Morley, 217 Ark. 560 [233 S.W.2d 79, 80].) The percentages were set either hy statute or administrative regulation and prices were therefore not subject to the uncontrolled discretion of the producer or wholesaler. Maryland does not attempt to regulate the retail price of alcoholic beverages, but only requires the filing of wholesale prices so that manufacturers and wholesalers will have adequate time to meet competing prices. (Maryland Ann. Code, art. 2B, § 109; Dundalk Liquor Co. v. Tawes, 201 Md. 58 [92 A.2d 560].) In Ohio the state liquor control commission establishes the price of liquor and determines the minimum markups for sales of beer and wine at retail. (Ohio Rev. Code, § 4301.02-19; Pompei Winery v. Board of Liquor Control, 77 Ohio L.Abs. 292 [149 N.E.2d 733].) While liquor prices in Massachusetts are established by fair trade contracts, the Alcoholic Beverage Control Commission must approve all prices as not being excessive, inadequate or discriminatory. (Mass. G.L., ch. 138, § 25c; Supreme Malt Products Co. v. Alcoholic Beverages Control Com., 334 Mass. 59 [133 N.E.2d 775, 777] ; see also, Kansas Stats. Ann., §§ 41-1111 to 41-1116.)
Prices established under our liquor act, on the other hand, may be set extremely low or prohibitively high and need not have any relation to the amount of retail sales or any other factor tending to further the purpose for which the act was assertedly designed. Since no standards are provided, there can be no review of prices to assure that they are not either excessive or inadequate. There is no assurance that those authorized to set prices will naturally tend to set them high to avoid excess consumption. On the contrary, the price setters are those most interested in maximizing the trade and profit in alcoholic beverages and least concerned with restricting sales at the retail level. In giving the power to regulate retail prices of alcoholic beverages to producers and brand owners, the Legislature could not have chosen a group less disposed to assure temperance in the sale and consumption of alcoholic beverages.6
*388We should not close our eyes to the fact that the act attempts to reduce consumption through regulation of prices rather than volume, and those who most require moderation are least influenced by inflated prices. To the extent the act is effective, it operates to promote temperance only in those who cannot afford the artificially high prices. (See Dunsford, State Monopoly and Price-Fixing in Retail Liquor Distribution, 1962 Wis.L.Rev. 454, 482-485.)
The granting of discretionary price-fixing power to private persons is also an unlawful delegation of legislative authority, and is so arbitrary as to amount to a denial of due process. (Carter v. Carter Coal Co., 298 U.S. 238, 311 [80 L.Ed. 1160, 56 S.Ct. 855]; State Board of Dry Cleaners v. Thrift-D-Lux Cleaners, 40 Cal.2d 436, 448-449 [254 P.2d 29] ; Blumenthal v. Board of Medical Examiners, supra, 57 Cal.2d 228, 235-236.)
It is the position of the majority in Allied Properties (supra, 53 Cal.2d 141) and the position of the majority here, not that such delegation is proper, but that the liquor fair trade law does not involve a delegation of price-fixing authority at all. The reasoning is adopted from Scovill Mfg. Co. v. Skaggs etc. Drug Stores, supra, 45 Cal.2d 881, which involved the general Fair Trade Act, and held that there was no unlawful delegation in that statute. There it is stated: “Here the acts of private parties in entering into contracts for the sale of commodities constitute the facts in contemplation of which the Legislature acted, and upon the existence of which the provisions of the enactment were to be applicable. The private contracts are no more legislative in character than are other acts or conduct of private parties undertaken as a prerequisite to the application of a statute. The consequence that the statute has become applicable, and conduct in violation thereof has become actionable is in no way due to the exercise of any assumed legislative power on the part of the contracting par*389ties.” (Scovill Mfg. Co. v. Skaggs etc. Drug Stores, supra, 45 Cal.2d at p. 888.)
The Scovill decision is based on the theory that when a retailer purchases goods with knowledge of a price restriction established in a contract to which he is not a party, he has impliedly agreed to abide by such restriction and that prices are therefore established, not by the exercise of assumed legislative power, but voluntarily by contracts between private parties.
Whatever may be the validity of this reasoning with regard to entering into permissive contracts under the general Fair Trade Act,7 it is clear that the liquor fair trade law, because of its mandatory character and its administrative and penal enforcement, is a price-fixing act rather than a law designed to enforce private contracts. Under the general Fair Trade Act, at least one party has discretion to determine whether his product will be fair-traded. The producer or brand owner of liquor, however, must set the price which is to be “implied” in all sales to retailers. When a product cannot be sold except pursuant to a fair trade contract, it is evident that this contract is merely being used as a price-setting device. Indeed, *390since 1961, prices are set by filing a schedule with the department rather than entering into fair trade contracts. (Bus. & Prof. Code, § 24755, as amended by Stats. 1961, ch. 635, §4.)
The method of enforcement in the liquor fair trade law conclusively demonstrates that the act does not merely enforce private contracts. Prices established pursuant to the general Pair Trade Act are maintained by the usual contractual remedies of private suit for injunction and damages. (Bus. & Prof. Code, § 16904.) On the other hand, the state itself, through the power of the Department of Alcoholic Beverage Control to suspend and revoke licenses, is the principal enforcer of retail liquor prices.
The majority apparently argue that the function performed by those establishing prices in fair trade contracts is determinative of whether there has been a delegation of legislative power and that the function performed by the producer under both acts, being merely to set the price of his product on the basis of his own personal interest, is the same. It is not, however, the function performed by the price setter, but the effect the law gives to the exercise of that function, that is crucial to the question whether there has been a delegation of legislative power. (See 1 Davis, Administrative Law Treatise, § 2.15, pp. 145-147.) The function performed by two private contracting parties may be the same, but the imposition of the law upon those parties of the obligation thereby created would not amount to a delegation whereas the imposition of the obligation upon all people in this state or in a particular industry may well amount to a delegation of legislative power. However minimal may be the delegation of authority when the law implies a known price term in a contract and makes it enforceable by the normal contractual remedies of damages and injunction, it cannot be denied that there is a delegation of state power when the effect given the specification of a price in a fair trade contract is its enforcement against those not parties to the contract by an administrative agency of the state.
The general Pair Trade Act provides a private remedy for a private purpose. The liquor act provides a public remedy for a public purpose. It is therefore evident that the liquor fair trade law, rather than affording a method for assuring that private parties live up to their voluntary agreements, is a price-fixing act.
■ Once the act is seen for what it really is and what many authorities recognize it to be, that is an authorization to pro*391ducers and brand owners to fix the price at which liquor must be retailed, its invalidity becomes obvious. “While the delegation of governmental authority to an administrative body is proper in some instances, the delegation of absolute legislative discretion is not. To avoid such a result it is necessary that a delegating statute establish an ascertainable standard to guide the administrative body." (State Board of Dry Cleaners v. Thrift-D-Lux Cleaners, supra, 40 Cal.2d 436, 448.)
In the Thrift-D-Lux case this court considered an act providing for the creation of a State Board of Dry Cleaners consisting of six members appointed by the Governor from various levels of the cleaning industry and one appointed from the general public. The board was authorized to establish minimum price schedules for cleaning, dyeing, and pressing services within specified areas on petition of 75 percent of the licensed cleaners in those areas. Those prices were required to be reasonable and just with regard to what will enable cleaners, dyers or pressers in the various areas to furnish modern, proper, healthful and sanitary services, using such appliances and equipment as will minimize the danger to public health and safety incident to such services. The prices were enforced by injunctive relief. While some members of the court felt that the board took on an official character and that sufficient standards were provided, the act was held to constitute an unlawful delegation of legislative power to those directly interested in the regulations they were authorized to promulgate. (40 Cal.2d at p. 448.)
In Blumenthal v. Board of Medical Examiners, supra, 57 Cal.2d 228, 235, we relied on Thrift-D-Lux in holding that the requirement of serving a five-year apprenticeship in this state or of having been licensed for five years in another state in order to obtain a license as a dispensing optician was an arbitrary delegation of legislative power in that it conferred upon presently licensed dispensing opticians the unlimited and unguided power to exclude from their profession any or all persons.
The delegation by the liquor fair trade law of the power to fix retail prices is clearly more arbitrary than the delegation in Thrift-D-Lux, which contained some standards and was directed to a group having at least the color of an administrative body. The present delegation of price-fixing power is, as in the Blumenthal case, a delegation to purely private persons who are directly interested in the consequences of their action
*392unaccompanied by any guide as to how that power should be exercised. Such a delegation violates due process guaranteed by the federal Constitution and is an unlawful delegation of legislative power under our own Constitution. (Carter v. Carter Coal Co., supra, 298 U.S. 238, 311; Cal. Const., arts. III, § 1, and IV, § l.)8
The conclusion that the statute is unconstitutional makes it unnecessary for me to discuss whether the 1961 amendments to the act are retroactive under the rules announced in In re Estrada, 63 Cal.2d 740 [48 Cal.Rptr. 172, 408 P.2d 948].
I would reverse the judgment.
McComb, J., concurred.
Appellant’s petition for a rehearing was denied December 28, 1966. McComb, J., and Peters, J., were of the opinion that the petition should be granted.

See discussion in footnotes 3 and 4, infra.

In 1961 the fair trade provisions of the Alcoholic Beverage Control Act were changed in at least two important respects. Pair trade requirements were no longer limited to alcoholic beverages which are in fair and open competition with others of the same general class, and the minimum resale prices are now established by the filing of price schedules with the department as well as by contracts specifying the price at which the buyer may resell the beverages. (Stats. 1961, eh. 635, § 4.) Although the violation of such contract still gives rise to a private right of action by any person damaged thereby, section 24755 as it now stands prohibits sales of distilled spirits at less than the price filed with the department rather than at other than the price stipulated in the fair trade contract. (Bus. & Prof. Code, § 24755, as amended by Stats. 1961, eh. 635, § 4.)
These changes do not affect the instant ease since they became effective on September 15, 1961, after the transactions and administrative decisions which are the subject of the present action. (DiGenova v. State Board of Education, 57 Cal.2d 167 [18 Cal.Rptr. 369, 367 P.2d 865].)

The criticism has been leveled mainly at the view expressed by the United States Supreme Court in Old Dearborn etc. Co. v. Seagram etc. Corp., supra, 299 U.S. 183, and by this court in Max Factor, supra, that the purpose of fair trade is to protect the producer’s goodwill. Pressure for the passage of Pair Trade Acts, it is pointed out, came not from producers, but from distributor and retailer organizations. Writers suggest that the real purpose of fair trade is to assure artificially high profits to retailers by eliminating competition at the retail level and that legislation designed to benefit one economic interest group at the expense of the consuming public is contrary to public policy. (See, e.g., Fulda, Resale Price Maintenance, supra, 21 U.Chi.L.Rev. 175; Shulman, The Fair Trade Acts, 49 Yale L.J. 607; 69 Yale L.J. 168; 15 Stan.L.Rev. 309; 63 Dick.L.Rev. 107.)

In 1955 when this court dealt with the constitutionality of our general Pair Trade Act in Scovill, supra, the Pair Trade Acts of only 19 states other than our own had been tested in the state courts of last resort although fair trade laws then existed in 44 states. The Scovill decision listed 14 of those 19 states as upholding the constitutionality of their acts while in only 5 states were the acts held to be unconstitutional.
At present, 45 states other than our own have adopted fair trade laws and the laws have been tested in the courts of last resort in all states but 4. The 5 states which had held their laws unconstitutional at the time of Scovill have not changed their position. Of the 14 which had upheld the validity of their fair trade laws, Oregon, Washington, Pennsylvania, and Louisiana have reversed their position. Of the 22 states which have considered the constitutionality of their fair trade laws for the first time since Scovill, more than 2-to-l have decided against constitutionality.
At present, 24 states have held their fair trade laws unconstitutional. (General Elec. Co. v. Wahle, 207 Ore. 302 [296 P.2d 635]; Remington Arms Co, v. Skaggs, 55 Wn.2d 1 [345 P.2d 1085]; Olin Mathieson *383Chemical Corp. v. White Cross Stores, Inc., 414 Pa. 95 [199 A.2d 266] ; Dr. G. H. Tichenor etc. Co. v. Schwegmann Bros. etc. Markets, 231 La. 51 [90 So.2d 343, 60 A.L.R.2d 410]; Liquor Store, Inc. v. Continental Distilling Corp. (Fla.) 40 So.2d 371; Grayson-Robinson Stores v. Oneida, Ltd., 209 Ga. 613 [75 S.E.2d 161]; Shakespeare Co. v. Lippman’s etc. Sporting Goods Co., 334 Mich. 109 [54 N.W.2d 268]; McGraw Elec. Co. v. Lewis & Smith Drug Co., 159 Neb. 703 [68 N.W.2d 608]; Union Carbide 4 Carbon Corp. v. White River Distributors, Inc., 224 Ark. 558 [275 S.W.2d 455]; Rogers-Kent, Inc. v. General Elec. Co., 231 S.C. 636 [99 S.E.2d 665] ; General Elec. Co. v. American, Buyers Coop. (Ky.) 316 S.W.2d 354; Bissell Carpet Sweeper Co. v. Shane Co., 237 Ind. 188 [143 N.E.2d 415]; Remington Arms Co. v. G.E.M. Inc., 257 Minn. 562 [102 N.W.2d 528]; Bulova Watch Co. v. Zale Jewelry Co. (Wyo.) 371 P.2d 409; Quality Oil Co. v. E. I. Du Pont De Nemours & Co., 182 Kan. 488 [322 P.2d 731]; General Elec. Co. v. Thrifty Sales, 5 Utah 2d 326 [301 P.2d 741]; Union Carbide & Carbon Corp. v. Skaggs Drug Center, Inc., 139 Mont. 15 [359 P.2d 644]; American Home Products Corp. v. Homsey (Okla.) 361 P.2d 297; Bulova Watch Co. v. Robinson Wholesale Co., 252 Iowa 740 [108 N.W.2d 365]; Skaggs Drug Center v. General Elec. Co., 63 N.M. 215 [315 P.2d 967]; Olin Mathieson Chemical Corp. v. Francis, 134 Colo. 160 [301 P.2d 139]; General Elec. Co. v. A. Dandy Appliance Co., 143 W.Va. 491 [103 S.E.2d 310] Zale-Las Vegas, Inc. v. Bulova Watch Co., 80 Nev. 483 [396 P.2d 683] ; Bulova Watch Co,, v. Zale Jewelry Co., 274 Ala. 270 [147 So.2d 797].)
Seventeen states other than our own have held their fair trade laws constitutional. (Burroughs Wellcome & Co. v. Johnson Wholesale Perfume Co., 128 Conn. 596 [24 A.2d 841]; Klein v. National Pressure Cooker Co., 31 Del. Ch. 459 [64 A.2d 529] ; Goldsmith v. Mead Johnson & Co., 176 Md. 682 [7 A.2d 176]; W. A. Sheaffer Pen Co. v. Barrett, 209 Miss. 1 [45 So.2d 838]; General Electric Co. v. Packard Bamberger & Co., Inc., 14 N.J. 209 [102 A.2d 18]; Bourjois Sales Corp. v. Dorfman, 273 N.Y. 167 [7 N.E.2d 30, 110 A.L.B. 1411]; Eli Lilly & Co. v. Saunders, 216 N.C. 163 [4 S.E.2d 528, 125 A.L.R. 1308]; Miles Laboratories, Inc. v. Owl Drug Co., 67 S.D. 523 [295 N.W. 292] ; Frankfort Distillers Corp. v. Liberto, 190 Tenn. 478 [230 S.W.2d 971] ; Weco Products Co. v. Reed Drug Co., 225 Wisc. 474 [274 N.W. 426] ; Budson Distributors, Inc. v. Upjohn Co., 174 Ohio 487 [190 N.E.2d 460]; General Elec. Co. v. Kimball Jewelers, 333 Mass. 665 [132 N.E.2d 652]; Kinsey Distilling Sales Co. v. Foremost Liquor Stores, 15 Ill.2d 182 [154 N.E.2d 290] ; Standard Drug Co. v. General Elec. Co., 202 Va. 367 [117 S.E.2d 289]; United States Time Corp. v. Ann & Hope Factory Outlet (R.I.) 205 A.2d 125; General Elec. Co. v. Telco Supply Inc., 84 Ariz. 132 [325 P.2d 394] ; Corning Glass Works v. Max Dichter Co., 102 N.H. 505 [161 A.2d 569].)

It has been argued, for example, that fair trade actually contributes to the weakening of the competitive position of the independent retailer by encouraging the development of private brands sold at prices substantially below those of the fair-traded items to which the independent dealer is largely confined. (See Herman, A Note On Fair Trade, 65 Yale L.J. 23, 29.)

New York has repealed its mandatory liquor fair trade law because it found that compulsory resale price maintenance had had no significant effect upon the consumption of alcoholic beverages, upon temperance, or upon the incidence of social problems related to alcohol. (See Seagram v. Hostetter, 384 U.S. 35, 39 [16 L.Ed.Sd 336, 86 S.Ct. 1254].)
The California act cannot be sustained on the basis of tending to further what has been regarded as “incidental objectives.” While it may *388be argued that the act was designed to promote orderly marketing conditions, this objective was clearly meant to be incidental to and in furtherance of the primary objective of promoting temperance.
Protecting a producer’s goodwill in Ms brand or trade-mark cannot be regarded as an incidental objective since the act is mandatory and it is not conceivable that the purpose of the Legislature was to force all producers to set retail prices for their own benefit when in most cases such protection is not required and retail price fixing is generally regarded as against the economic interest of the producer. (See Fulda, Resale Price Maintenance, supra, 21 U.Chi.L.Eev. 175, 208-209; Telser, Why Should Manufacturers Want Fair Trade?, 3 J. Law & Econ. 86-87.)

Scovill was itself based upon a decision of the United States Supreme Court in 1936 which upheld the Illinois general Fair Trade Act against attack on grounds of due process and summarily disposed of the issue of delegation with the statement that since the products were acquired by the noneontraeting retailers with knowledge of the restriction, it “ran with the acquisition and conditioned it.” (Old Dearborn etc. Co. v. Seagram etc. Corp., supra, 299 U.S. 183, 194.)
This implied contract theory, first enunciated by Old Dearborn in a perfunctory manner and in terms confusing property with contract rights, has been rejected in a similar situation by the United States Supreme Court (Schwegmann Bros. v. Calvert Distillers Corp., 341 U.S. 384 [95 L.Ed. 1035, 71 S.Ct. 745, 19 A.L.R.2d 1119]) and has been criticized by many state courts and legal scholars. (See, e.g., General Elec. Co. v. Wahle, supra, 207 Ore. 302 [296 P.2d 635]; Remington Arms Co. v. Skaggs, supra, 55 Wn.2d 1 [345 P.2d 1085]; Bulova Watch Co. v. Zale Jewelry Co., supra (Wyo.) 371 P.2d 409; 1 Davis, Administrative Law Treatise, § 2.14, p. 147; 45 Minn.L.Rev. 169, 181; 47 Iowa L.Rev. 208, 214; 37 Colum.L.Rev. 447, 459-460; State Board of Dry Cleaners v. Thrift-D-Lux Cleaners, supra, 40 Cal.2d 436, 452, dissenting opinion of Traynor, J.) As these authorities have recognized, the device of implying agreement to requirements or regulations known to contracting parties could as well be used to justify a law requiring a whole industry to follow in its sales contracts such conditions as to price or quality as are fixed by two private individuals in their uncontrolled discretion. When the alternative to following established prices or other conditions is not renegotiation of sales contracts but inability to enter into such contracts, enforcement of the prices upon nonsigners should, as noted by the United States Supreme Court, be regarded as price fixing by compulsion. (Schwegmann Bros. v. Calvert Distillers Corp., supra, 341 U.S. at pp. 390-395.)

Seetion 1 of article III provides for the separation of the executive, legislative and judicial powers of this state, and prohibits any branch from delegating any portion of its authority to one of the other branches. Section 1 of article IV vests in the state Legislature the exclusive legislative function.