Court Opinion

ID: 9685595
Source: CourtListenerOpinion
Date Created: 2023-08-24 14:51:44.280937+00
Date Added: 2024-06-11T18:18:08.400107
License: Public Domain

McCown, Spencer, and Bosiaugh, JJ.,
dissenting.
The real issue here is whether a statute prohibiting the giving or receiving of any discount of any kind between a liquor wholesaler and a retailer is reasonable or arbitrary.
The state could completely prohibit the sale of alcoholic liquors if it wished. It is also true that the liquor business, if permitted, is constitutionally subject to regulation more strict than an ordinary lawful business. This certainly does not mean that if a law “applies equally to all wholesalers and retailers of alcoholic *86liquors, it is evident that it is not discriminatory.” If that be true, there is no constitutional protection for anyone engaged in the legal liquor business.
When the liquor business is lawful, as it now is, the regulations provided therefor must be pursuant to a legitimate exercise of the state’s police power, which precludes regulation that is arbitrary and discriminatory. See, Shoot v. Illinois Liquor Control Commission, 30 Ill. 2d 570, 198 N. E. 2d 497; 1 Davis, Administrative Law Treatise, § 7.12, p. 456 (1958).
The basic determination which must be made is whether the statute or regulation “ * * is really designed to accomplish a purpose properly falling within the scope of the police power. * * * In every case it must appear that the means adopted are reasonably necessary and appropriate for the accomplishment of a legitimate object within the domain of the police power. A statute to be within this power must also be reasonable in its operation upon the persons whom it affects, must not be for the annoyance of a particular class, and must not be unduly oppressive. * * * In order to sustain legislative interference by virtue of the police power, either by a statute or a municipal ordinance, it is necessary that the act should have some reasonable relation to such objects, or, for more specific examples, to the public welfare or public health. Moreover, the law must tend toward the accomplishment or promotion of such purposes in a degree that is perceptible and clear, •either in preventing some offense or manifest evil or in furthering some such object.’ ” Reynolds v. Louisiana Board of Alcoholic Bev. Con., on rehearing, 249 La. 170, 185 So. 2d 810.
Statutes or regulations dealing with liquor pricing, including quantity discounts, ordinarily are supported only on grounds that higher 'prices tend to promote temperance or tend to eliminate price wars and ruinous competition. The statute involved here clearly cannot be justified under either ground.- There is nothing *87which regulates the setting or the amount of wholesale prices, and the statute does not even purport to deal with retail prices. It simply prohibits any discounts, rebates, and inducements of any kind by a wholesaler to a retailer. Neither is the statutory regulation directed at the elimination of discriminatory discounts or rebates, but, instead, it is directed at all discounts, whether justified or not and regardless of whether the discounts are offered to all dealers under the same terms and conditions.
The legislative history of this act, as well as the language, make it glaringly apparent that the purpose of the statute was “to protect the little retailer from the volume dealer * * * by nullifying the natural competitive advantage of volume sales.” See Terry Carpenter, Inc. v. Nebraska Liquor Control Com., 175 Neb. 26, 120 N. W. 2d 374. That protection is at the expense of the consuming public. The record establishes that fact without contradiction.
The statute concededly will redistribute sales to retail dealers, by destroying the natural competitive advantage of volume purchasing. The majority opinion speculates as to the economic problems of small dealers which might possibly result from the absence of the no-discount statute. If those fears had any validity, it would have become apparent long ago. There is already a 35-year history of the operation of the legal liquor industry in Nebraska under quantity discounts without any evidence of economic disaster. In fact, the Chairman of the Liquor Commission acknowledged that the number of liquor retailers has not decreased.
Article XV, section 9, Constitution of Nebraska, specifically gives the Legislature the power to enact laws “for the prevention of unfair business practices and unconscionable gains in any business or vocation affecting the public welfare.” Chapter 59, R. R. S. 1943, currently condemns price fixing, price control, and price discrimination in general. Neither the Legislature nor the Liquor Control Commission needed any other authority *88to outlaw discriminatory discounts not allowed to all retail liquor dealers on the same terms and conditions. That constitutional provision and those statutory provisions did not authorize the legislative declaration that anyone offering or receiving a discount of any kind for any reason is conclusively presumed to do so for an illegal but undefined purpose. This is true even though the business be the liquor business.
The trial court specifically found: “The law includes all forms of price variations among customers without regard to whether or not those variations, reflect a legitimate differential in cost to the seller * * *. The law is so broad that it legislates into the statute what should be reserved as an issue of fact for the courts to determine in appropriate cases. The act in effect sets up. a conclusive presumption that whoever offers a price differential does so without cost or other justification and with intent to destroy competition in the liquor industry. * * *
“There is no requirement in L.B. 151 that the effect of any discrimination in price must be to tend to lessen competition, to create a monopoly or to injure, destroy or prevent competition. Instead, L.B. 151 creates a conclusive presumption that anyone offering a discount does so for some illegal although undefined purpose.”
Those findings are fully supported by the evidence. This court has previously indicated its approval of the principles of constitutional protection of fair competition in business generally, and specifically as to the liquor business. See Terry Carpenter, Inc. v. Nebraska Liquor Control Com., supra.
A statute designed for the private welfare of one class of licensed liquor retailers, which bears no real or substantial relationship to the general health, morals., or welfare of the public is unconstitutional. At best, it arbitrarily disregards the realities of fair competition in a free enterprise system.
*89The judgment of the district court was correct and should have been affirmed. ■