Court Opinion

ID: 4010659
Source: CourtListenerOpinion
Date Created: 2016-07-06 11:12:43.371966+00
Date Added: 2024-06-11T13:56:52.035485
License: Public Domain

The act involved, instead of being general in its application, which seems to be the common understanding of it held by retailers, applies only to the very limited class of merchandise the price of which is governed by contract between the manufacturer and the retailers who on purchasing an article have agreed that they will not sell it for less than the price fixed by the manufacturer.  When the price has been so fixed the act directly involved prohibits retailers who have received notice that the price of the article has been so fixed from granting stamps redeemable in cash in connection with sale of the article when the amount received, less the redemption value of the stamps, is less than the price fixed by the manufacturer.  In Weco Products Co. v. Reed Drug Co.225 Wis. 474, 274 N.W. 426, this court, following Old DearbornDistributing Co. v. Seagram-Dist. Corp. 299 U.S. 183,57 Sup. Ct. 139, 81 L. Ed. 109, 106 A.L.R. 1476, held a statute constitutional that provided that articles, the prices of which have been fixed as above stated, may not be sold at less than the price so fixed.  The opinion of the court herein holds, and I think correctly, that the statute involved applies only to sales covered by that statute.
The effect of delivering such stamps as are here involved in connection with sales is merely to allow a discount upon sales made for cash or prompt payment.  Merchants commonly *Page 62 
allow such discounts for prompt payment of goods sold on account, and allowing such discounts is a legal practice.  Utility rate commissions approve such practice, and no one would think of questioning its legality.  Such allowances are commonly as great or greater than the redemption value of the stamps here involved.  To permit the practice last stated and forbid the practice here involved is to exalt the mere mechanics of a thing over the reason for it.  To permit merchants not using stamps redeemable in cash to allow discounts for prompt payments and to prohibit merchants issuing such stamps, as stated, from allowing them is in my opinion an illegal discrimination violative of the equality clause of the Fourteenth amendment.
It seems to me that the opinion of the court makes two assumptions that are erroneous.  One is that the statute does not make a classification of merchants into those who issue the prohibited stamps and those who do not use them.  Reading ofRast v. Van Deman  Lewis, 240 U.S. 342, 351,36 Sup. Ct. 370, 60 L. Ed. 679, shows that the statutes there involved were considered as making such classification, but that it was considered not discriminatory because there was a reasonable basis for the classification, and if the stamps were redeemable in merchandise the public welfare was affected through the "seduction and evil" involved that might be considered as leading to improvident purchases.  The other erroneous assumption is the statement of the opinion that the opinion of the United States supreme court in Tanner v. Little, 240 U.S. 369,36 Sup. Ct. 379, 60 L. Ed. 691, held that the Rast Case, supra, covered the situation where coupons were issued redeemable in cash only.  This is expressly disavowed by the opinion in theTanner Case.  It is there said, p. 381, "And we may say here, as we said in Rast v. Van Deman  Lewis, that we are not concernedwith consideration of a business in which coupons, etc., are issued or used and not redeemed in merchandise." *Page 63 
The opinion of the court seems to take the position that prohibition of the issue of trading stamps redeemable in cash is justified as an exercise of the police power because the issue of stamps redeemable in goods may be prohibited under that power.  This, in my opinion, is erroneous because prohibition of the use of stamps redeemable in cash is not within the reason of the prohibition of the use of stamps redeemable in goods. This is pointed out in the Trading Stamp Cases, 166 Wis. 613,166 N.W. 54.  True, the issuance of stamps redeemable in cash was not within the issues of that case, but the issuance of stamps redeemable in goods was within those issues, and as the reasons given for upholding the prohibition of the class of stamps there involved do not apply to the issuance of those here involved that case is not authority for prohibition of "the issuance of trading stamps as a business device" as the opinion of the court herein says it is.  Nor do either of the two other cases cited constitute such authority.  The cases, so far as they involve trading stamps, involve those "redeemable in premiums." The basis of the ruling that the statute in the RastCase, supra, made a legal classification of stores using trading stamps and those not using them was that while the use of stamps "redeemable in premiums" or prizes "may not be called in an exact sense a `lottery,' may not be called `gaming,' it may, however, be considered as having the seduction and evil of such."  Opinion, p. 365.  The case of Tanner v. Little, supra, also involved stamps redeemable in goods although it gave the purchaser the option to redeem the stamps in cash.  The option, however, left in the act involved the "seduction and evil" feature likened in the quotation above to "gaming" and a "lottery."
The police power covers prohibitions of trade practices that may be considered as detrimental to public health, public safety, public morals, and that nebulous and indefinite thing — public welfare.  Obviously neither of the first two are here involved. *Page 64 
The third is not involved unless we can say, as said in the RastCase of stamps redeemable in goods, that using stamps redeemable in cash has "the seduction and evil" of a "lottery" and "gaming" and thus affects public morals.  To me it seems obvious that it cannot be so said.  As to public welfare, I am unable to perceive that any possible element or effect upon public welfare is involved.  The objection to the use of the trading stamps here involved is apparently not by or in the interest of the public, but solely in the supposed interest of merchants who do not use or wish to use trading stamps redeemable in cash as a means of inducing sales for cash or prompt payment, who are objecting under the false impression that the statute is of general instead of the very limited application first herein pointed out.
As supporting the proposition that the instant act is within the police power, the opinion also relies on cases holding that the trade practice of selling a commodity for less or paying more for it in one community than others for the purpose of destroying a competing business in that commodity may be prohibited under that power, citing Central Lumber Co. v.South Dakota, 226 U.S. 157, 33 Sup. Ct. 66, 57 L. Ed. 164, 42 L.R.A. (N.S.) 804.  Like cases are State ex rel. Youngv. Standard Oil Co. 111 Minn. 85, 126 N.W. 527; State v.Drayton, 82 Neb. 254, 117 N.W. 768, 23 L.R.A. (N.S.) 1287; State v. Bridgeman  Russell Co. 117 Minn. 186,134 N.W. 496; and State v. Fairmount Creamery Co.153 Iowa, 702, 133 N.W. 895, 42 L.R.A. (N.S.) 821.  These are "stifling competition" cases, and neither in their facts nor their reasoning do they bring the instant case within the police power.
The opinion quotes a statement from Nebbia v. New York,291 U.S. 502, 54 Sup. Ct. 505, 78 L. Ed. 940, 89 A.L.R. 1469, as citing the Rast Case, supra, in support of the price fixing by legislative enactment involved in the Nebbia Case. *Page 65 
The Rast Case is not authority to the point suggested.  It did not involve price fixing by legislative enactment.  But if the statute here involved be considered as price fixing from the standpoint of legislative enactment it is unconstitutional because the merchandise involved under the statute is not affected with a public interest.  New State Ice Co. v. Liebmann,285 U.S. 262, 52 Sup. Ct. 371, 76 L. Ed. 747; Old Dearborn DistributingCo. v. Seagram-Dist. Corp., supra.  The last word upon the rule that prices cannot constitutionally be fixed by legislative enactment is the case last above cited, which was decided later than the Nebbia Case.  It is there said, p. 192, that —
"The right of the owner of property to fix the price at which he will sell it is an inherent attribute of the property itself, and as such is within the protection of the Fifth and Fourteenth amendments.  Tyson  Brother v. Banton, 273 U.S. 418,429; Wolff Co. v. Industrial Court, 262 U.S. 522, 537;Ribnik v. McBride, 277 U.S. 350; Williams v. Standard OilCo. 278 U.S. 235; New State Ice Co. v. Liebmann, 285 U.S. 262. These cases hold that, with certain exceptions, which need not now be set forth, this right of the owner cannot be denied by legislative enactment fixing prices and compelling such owner to adhere to them."
Every case of the United States supreme court upholding legislative price fixing, as distinguished from retail prices fixed by the manufacturer, involved commodities clearly affected with a public interest or involved the fixing of wages at not below a standard declared as necessary for protection of the health or morals of the workers.
It is further to be noted that the discounts here involved are so trivial in amount as not to bring this case within the purpose of the statute involved in the Weco Case.  A discount of two per cent on sales for cash or prompt payments of accounts by retailers is not a matter of concern to a manufacturer who *Page 66 
has sold his article to retailers who have agreed not to sell his article at less than the price fixed by him.  So small a discount cannot affect the manufacturer's "good will" in his articles, or injuriously affect the reputation of that article, or destroy or diminish the manufacturer's sales of it at his regular wholesale price.  The sole purpose of the statute involved in the WecoCase was, as said in Old Dearborn Co. v. Seagram Corp.,supra, p. 198, "to afford a legitimate remedy for an injury to the good will which results from the use of trade-marks, brands or names."  It is in these things that the statute involved in the Weco Case aimed to protect the manufacturer and his contracts.  Classification, to be valid under the equality clause of the Fourteenth amendment, must bear some reasonable relation toward accomplishing the purpose of the statute that prescribes the classification.  The classification here involved, which by necessary implication puts merchants who use trading stamps redeemable in cash in one class, and those not using them but doing the same thing without using them that the merchants using them do by using them in another class, has no relation to accomplishing the purpose of the statute involved in the Weco Case.
The opinion quotes from a case decided by a superior court of California, a trial court of no greater, if as great, weight as authority as the court from which the judgment here involved is appealed.  So far as the quotation recites that granting parking privileges and the like are legitimate trade practices I agree with it.  But I do not agree that a two per cent discount has any considerable "direct relationship to the price of the merchandise purchased."  The selling price of the merchandise remains as the manufacturer fixes it.  The discount is trivial and utterly inconsequential to the manufacturer.  Why hang the constitutionality of the instant statute upon a mere trifle — and upon a thing that is entirely outside the purpose of the statute the instant statute is aimed to support, and has no effect whatever toward effecting that purpose. *Page 67 
For the reasons above stated I think the statute involved should be declared unconstitutional, and the decision of the trial court upheld.